Annual report 2015

CREDIT IMMOBILIER DE FRANCE DEVELOPPEMENT
French corporation (société anonyme)
Capital stock: €124,821,703
26-28 Rue de Madrid, 75008 Paris, France
Corporate and Commercial Registry n° 379 502 644 RCS Paris
“CIFD” or “The Company”
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CREDIT IMMOBILIER DE FRANCE DEVELOPPEMENT–“CIFD”
French Corporation (Société Anonyme) with Capital Stock of €124,821,703
Registered Office: 26-28 Rue de Madrid, 75008 Paris, France
Corporate and Commercial Registry n° 379 502 644 RCS Paris
(The “Company”)
CONTENTS
PRESENTATION OF THE CREDIT IMMOBILIER DE FRANCE GROUP…………………………………………………………… 3
SIGNIFICATIVE EVENT OF THE YEAR……………….………………………………………………………………….………………………5
PARENT COMPANY FINANCIAL REVIEW …………………………………….……………………………………………………….……16
APPENDIXES TO THE REPORT OF THE DIRECTORS…………………………………….………………………………………………53
FINANCIAL STATEMENTS…………………………………….……………………………………………………….……………………………60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS……………………………………………………………….…………65
INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS ……………………………109
DECLARATION BY THE CORPORATE OFFICER RESPONSIBLE FOR REPORTING……………………………………………113
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I. PRESENTATION OF THE CREDIT IMMOBILIER DE FRANCE GROUP
1. SUMMARY: THE COMPANY IN ORDERLY RESOLUTION
Crédit Immobilier de France is a banking network that has been in orderly resolution since late-November 2013.
In its decision dated 27 November 2013 the European Commission approved the orderly resolution plan (”the Plan”),
under which Crédit Immobilier de France ceased all new loan originations and the Republic of France granted it a
permanent State guarantee. That same day, the Republic of France and the CIF Group signed the protocol specifying
the terms and conditions of the State guarantee.
The Plan includes measures intended to prevent any distortion of competition. As Crédit Immobilier de France has
been barred from originating loans, its sole activity now consists in managing its residual assets and liabilities for
extinction no later than 2035.
Under the terms of the European Commission’s decision, the shareholders shall assume the costs of the orderly
resolution, and the Group will preserve its earnings in order to maintain a capital adequacy ratio of no less than 12%
throughout the orderly resolution period. Accordingly, the special shareholders’ meeting of Crédit Immobilier de
France Développement (CIFD) on 6 November 2013 approved the creation of a preferred share reserved for the
Republic of France and issued it on 28 November 2013. This share allows the State, as preferred shareholder, to
receive a preferred dividend taken from CIFD’s funds available for distribution if it receives no payment of
commissions in remuneration for the State guarantee; the payment of commissions may be deferred if such payment
would cause the capital adequacy ratio to fall below 12%.
Under the terms of the protocol establishing the permanent State guarantee, responsibility for implementing and
monitoring the Plan falls, on the one hand, to a monitoring committee whose members are representatives of
France’s Treasury Department, corporate officers of CIFD, and a government commissioner, and on the other hand, to
an independent expert designated in accordance with conditions set by the Republic of France and the European
Commission. On 27 January 2014 the European Commission approved the appointment of the firm of Duff & Phelps as
independent expert.
Furthermore, the Plan requires that the Crédit Immobilier de France Group simplify its organization and centralize its
corporate governance. As part of simplification efforts, the shareholders of the financial subsidiaries swapped their
shares for CIFD shares on 10 December 2014. Following the share swaps and buybacks, CIFD owned virtually all the
shares of the Group’s financial subsidiaries. Three financial subsidiaries were merged with the parent company in
2015 and six more are scheduled to be merged in 2016.
CIFD is the central entity (“organe central”) and financial holding company of the Crédit Immobilier de France network
as construed under Section L.511-30 and 517-1 of France’s Monetary and Financial Code (CMF). Since 1 January 2008
the Group has comprised the regional finance subsidiaries (SFRs), Banque Patrimoine et Immobilier–BPI, Caisse
Centrale du Crédit Immobilier de France (3CIF), and CIF Euromortgage.
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2. GROUP ORGANIZATION CHART
As of 31 December 2015 the Crédit Immobilier de France Group has been organized as follows:
French Republic
UES-AP
Union Economique et Sociale pour
l’Accession à la Propriété
1 preferred share
without voting rights
CIFD
54 SACICAPs
Sociétés Anonymes Coopératives d’Intérêt
Collectif pour l’Accession à la Propriété (1)
100%
100%
100%
6 Regional Finance
Subsidiaries (SFR)
Bretagne (BRE)
Centre Ouest (CCO)
Crédit Immobilier de France Développement
Central entity, financial holding company,
and finance company
100%
100%
BPI
CIF€
3CIF
Banque Patrimoine
Immobilier
Crédit Immobilier
de France
Euromortgage
Caisse Centrale du
Crédit Immobilier
de France
(3)
(2)
(2)
Centre Est (CCE)
Ile de France (IDF)
Nord (CNO)
Sud Ouest (CSO)
2% (9% series B
subordinated units)
(2)
10% (42% series B
subordinated units)
GIE CIF Services (4)
(1)
(2)
(3)
(4)
75% (100% series A
senior notes)
1% (3% series B
subordinated units)
CIF Assets (FCT)
12% (46% series B
subordinated units)
GIE i-CIF (4)
Direct or indirect ownership
100% Series B subordinated units
100% Series A senior notes
consortium created by Group entities (CIFD, 3CIF, BPI, and six “SFR“ regional finance subsidiaries)
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SIGNIFICANT EVENT OF THE YEAR
CONTINUED APPLICATION OF THE ORDERLY RESOLUTION PLAN OF THE CREDIT IMMOBILIER DE FRANCE GROUP
In order to ensure compliance with the targets set forth in the Plan, the CIF Group is proceeding with its orderly
resolution in four major phases:
•
adaptation of operations and cessation of commercial operations
•
organizational simplification and centralization of governance
•
merger of processing units corresponding to the attrition of the loan portfolio
•
management on the basis of a simplified and centralized corporate organization.
In accordance with the Plan, organizational simplification and centralized governance are intended to harmonize
management methods and ensure the secure operation of the Group’s entities. Once the organizational changes have
been completed, a single unit will hold the outstanding loans originated by the SFRs, and it will manage that portfolio
until the loans are amortized or sold.
The following operations have been or will be executed pursuant to that policy:
•
the transfer of the SFRs’ shares that were held by legal entities other than the Company itself; this transfer
was completed during the Special Shareholders’ Meeting convened on 10 December 2014
•
updates to the Articles of Incorporation of CIFD, which is the sole entity managing the loan portfolios of the
SFRs
•
the transfer to CIFD of mortgage loans outstanding by the SFRs as they are merged with the parent company,
which will manage those portfolios until the loans are amortized or sold
•
successive mergers of the SFRs with CIFD: Crédit Immobilier de France Rhône Alpes Auvergne (CIF RAA) on 1
June 2015, Crédit Immobilier de France Méditerranée (CIF Med) and Crédit Immobilier de France Ouest (CIF
Ouest) on 1 December 2015. The SFR merger process will be completed by year-end 2016, in accordance with
the draft plan presented by the Republic of France and approved by the European Commission. Crédit
Immobilier de France Sud-Ouest (CIF SO), Crédit Immobilier de France Centre Ouest (CIF CO), and Crédit
Immobilier de France Ile de France (CIF IDF) will be merged in the first half of 2016; Crédit Immobilier de
France Nord (CIF Nord), Crédit Immobilier de France Bretagne (CIF Bret), and Crédit Immobilier de France
Centre Est (CIF CE) will be merged in the second half of 2016.
Change in the Company’s Banking Status Corresponding to its Role as Sole Entity Managing the Subsidiaries’ Loan
Portfolios
At its meeting on 8 July 2014, the Board of Directors of CIFD, after weighing the legal and financial considerations,
voted to designate CIFD as the sole entity to manage the subsidiaries’ loans outstanding.
In its decision dated 2 March 2015, the Prudential and Resolution Supervisory Authority (ACPR), France’s banking
industry supervisor, authorized CIFD to operate as a financial company in order to allow it to manage the loans
outstanding that were originated by the SFRs and transferred to it, in application of the Plan approved by the
European Commission on 27 November 2013.
CIFD’s special shareholders’ meeting on 28 May 2015 amended CIFD’s articles of incorporation, and in particular the
company purpose, adding financial company status to the original status of central entity and financial holding
company.
Completion of the Mergers of CIF RAA, CIF Med, and CIF Ouest
Steps taken in 2015 to streamline the Group’s organization included the following:
•
preparations to make CIFD an operational unit, involving:
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o
adjustments following CIFD’s change in status, particularly concerning its new IDs
o
the installation of centralized tools needed to handle accounting and regulatory filings
o
interfacing between credit systems and CIFD’s head office systems, particularly the accounting and
regulatory reporting software and reconciliation
•
legal, accounting, and human resources preparations for the mergers
•
technical preparations for the mergers, including the design, construction, final development, integration,
and reception of the following:
•
o
the engine for changing all 156 counters in the Xloan software program in order to generate a single
ID format for all parameters for the purpose of managing data exchanges with third parties, such as
the Banque de France, Société de Gestion des Financements et de la Garantie de l’Accession Sociale
à la Propriété, welfare centers (CAF), CNP, and others (with the technical merger of credit bases to
occur at a later date)
o
adaptation of the SEPA I/O financial flow processing chains
o
parameterizing and deployment of the Tribank tool for decentralized management of purchases,
commitments, budgets, disbursements, and vouchers
complete operational implementation of the merger (execution of changes, preparation for the
implementation of organizational changes and tools, communication with customers and third parties).
THE OPERATING ENVIRONMENT
The Fixed-Income Market
Apart from the impact of the Greek debt crisis, which was limited to a precise period, the fixed-income market was
dominated by two opposing factors in 2015:
•
expectations that the US Federal Reserve System (“Fed”) would begin raising its rates following more than
seven years of quantitative easing, in correlation with the fundamentals of the US economy but also, and
more indirectly, those of China and the emerging economies, and
•
accelerated quantitative easing by the European Central Bank (ECB) through a new series of exceptional
measures to fight deflation, stimulate lending, and give the Southern European countries more time to
implement the reforms required to narrow their budget deficits.
The ECB’s most recent measures had the greatest impact on the European market: continued purchases of private
covered bonds (starting in 2009) and purchases of government securities in 2015. These measures affected securities
that are not directly concerned but are close to government securities, such as those of 3CIF, the only Group entity
authorized to issue securities bearing the State guarantee of the Republic of France.
The ECB’s 22 January 2015 announcement of plans to purchase €60 billion of securities per month (€40 billion of
government paper and €20 billion of private securities) until September 2016 (March 2017 following the deadline
extension at year-end 2015), for a total of €1.1 trillion (beginning with purchases of public-sector securities on 9
March 2015), strongly influenced prices. At the same time, it pushed the deposit facility rate further below zero,
to -0.30% on 9 December 2015 from -0.20% on 10 September 2014.
The ECB expanded the scope of its securities purchases until 3 December2015, with the inclusion of regional and localauthority paper in the Public-Sector Purchase Program (PSPP).
Whereas these measures had enabled 3CIF to issue bonds at a narrower spread over the benchmark French Treasury
bond (OAT) early in the year, by mid-year the markets were demanding issue premiums to offset the impact of ECB
interventions and the Greek debt crisis.
By year-end only longer-dated French Treasury securities, with maturities of 5 years and up, offered positive yields.
The yield on the 5-year segment alone, slid from close to 0.28% in January 2015 to nearly 0% in April before
rebounding to 0.55% in June and ending the year at 0.10%.
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The spread on the 10-year swap vs. 6-month Euribor behaved in a similar fashion: Having begun the year around
0.80% it fell to 0.45% in April before peaking at 1.29% in June and ending the year at 1%.
The Credit Market
The credit market experienced a strong recovery in 2015, rising by 15.7% to €142 billion. Loan buyouts tended to
boost the statistics, accounting for up to 40% of gross originations at some banks.
Origination activity has remained dynamic, and the recovery is well under way, buoyed by auspicious lending
conditions and a re-emergence of demand that began a year ago. Following a typically sluggish month of August,
lending increased in September and October. The rebound was even more pronounced than in previous years, having
reached levels not seen since 2006-07.
Lending activity softened in November and December with the approaching winter slowdown. Year-on-year activity
excluding loan buyouts showed quarterly increases of 20.9% in euro terms and 11.8% in number of loans granted.
After a slight decline in November, these rates stabilized at 2.20% on average in December 2015, corresponding to
2.23% for first-time purchases of new housing and 2.18% for first-time purchases of existing housing stock.
The Real Estate Market
The residential real estate market has picked up since early-2015, with a double-digit increase in sales volume for both
new and existing housing stock (745,000 units). This market rebound—though still too early to call a sustainable
recovery—may be ascribed to historically low interest rates on loans, the impact of the Pinel Act on rental property
investments, and looser eligibility rules for interest-free “PTZ” loans for purchases until 2017. Prices of existing homes
continued their slow decline in H1 2015, but the tendency shifted in the closing months of the year, especially in Paris.
The cumulative decline in existing home prices since the correction began late in 2011 is still relatively small (–7%)
compared with the cumulative increase of 150% from 1998 to 2011.
The corporate real estate market remained extremely dynamic, with €26 billion in investments in France, compared
with an average of €16 billion for the decade. The Ile de France (metropolitan Paris) region accounted for 78% of the
market. Scarcity in Paris’s central business district created strong competition for the best assets and pushed values
higher thanks to a sharp decline in yields over the past five years. This market’s soundness may be ascribed to
abundant cash, easy access to financing, and investors’ smaller appetite for other asset classes due to considerable
volatility in the equity markets, risks related to sovereign debt, and low yields on fixed-income investments.
CORPORATE GOVERNANCE
Centralization of Specialized Committees Reporting Directly to CIFD’s Board of Directors
The CIF Group has moved to simplify its committee structure in application of the Order of 20 February 2014 and the
Decree of 3 November 2014 concerning internal control.
The new organization affects the specialized risk, remunerations, and appointments committees mandated by
France’s Monetary and Financial Code.
On 8 July 2015 CIFD’s Board of Directors decided to centralize the specialized committees at the level of CIFD and
eliminate those at the subsidiaries, as described below:
•
creation of a single Audit Committee at CIFD and elimination of the audit committees of the financial
subsidiaries, pursuant to Article L. 823-20 of France’s Commercial Code (CC)
•
creation of a single Risk Committee at CIFD with responsibility for 3CIF and CIF Euromortgage
•
creation of a single Remunerations Committee and a single Appointments Committee at CIFD with
responsibility for 3CIF and CIF Euromortgage.
The Remunerations Committees at one SFR and at BPI may be retained until the merger, without prejudice to
CIFD’s Remunerations Committee, which is empowered to examine all matters concerning the conditions under
which the company representatives of the SFRs and BPI are remunerated.
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The boards of directors of the subsidiaries concerned are apprised of recommendations formulated by these
committees.
Territorial Organization of the Group and its Operating Subsidiaries
In accordance with the orientations defined in the orderly resolution plan, and with commitments undertaken, the
CIFD Group must now organize its operations on a simplified, centralized basis.
This phase began in 2013 with the Diapason program to harmonize work practices in the activities required for the
Group’s continued operation. It continued in 2014-15 with the organization and management of administrative
sectors, thus defining a centralized/local organizational framework for processes, procedures, and operational
committees.
After dissolving the companies that were merged with CIFD in 2015, local-level organizations were retained at existing
sites and establishments were created for the Lyon/Grenoble, Marseille/Montpellier, and Nantes/Ifs sectors.
An administrative sector is a community of experts working to harmonize, modernize, and professionalize their branch
irrespective of geographic considerations.
Administrative sectors:
•
operate under one or more representatives per sector or establishment
•
hold meetings at regular intervals
•
serve all staff members working in the same branch, particularly on issues of training and tool development,
while centralizing and prioritizing requests
•
enumerate processes in a harmonized operational manner, and prepare and maintain a database of rules and
operating procedures
•
function as cost centers.
They monitor regulatory and legal developments affecting their branch and, after validation by the General
Management, they set a Group-wide policy for their branch and disseminate rules and procedures in a way that is
compatible with Group policy.
In relation with the management audit function, they:
•
create operational checklists as required by General Management
•
ensure that yearly targets are met by all Group entities
•
guarantee the availability of tools and resources so that staff members can complete their tasks (back office
requests, computer tools, etc.)
A reference framework proposed in November 2015, which was submitted to the Group’s staff representatives for
consultation until late-January 2016, defined these relations and future developments.
EXTINCTIVE MANAGEMENT
Management of Loans Outstanding and Debt Collection
In accordance with the orderly resolution plan, the Collection and Litigation Division and the Customer Relations
Division, both created in 2014, managed the loan collection and management administrative sectors as described
below:
•
The loan collection and management administrative sector hold monthly meetings to discuss activity and
define operating rules. Within the framework established during development of the Diapason project, the
Collection and Litigation Division, the Customer Relations Division, and sector heads at the subsidiaries
drafted and validated more than sixty essential rules and operating procedures in 2015.
•
Group-wide collection checklists were improved and additional quality indicators were integrated. At
meetings between CIFD’s executive committee and the general management of the various financial
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operating subsidiaries, monthly checklists provided a basis for monitoring favorable factors, factors that
require oversight, and action plans and initiatives set up in the various subsidiaries.
•
A summary management checklist and monthly reports covering the main management tasks, progress
reports, and invoicing for services rendered were put into service starting in April 2015.
•
Regular visits were made to the subsidiaries to ensure implementation of Diapason recommendations.
•
They participated in post-merger efforts at subsidiaries that had been merged with the parent company
during the year, and defined rules, operating procedures, and operational adaptations to be made to tools.
•
They helped the Group Risk, Permanent Control, and Compliance Division determine risk policy (delegation
rules). In particular, they helped define and implement new methods for calculating writedowns under the
risk and collection policy.
•
They developed a management tool for updating customers’ financial data and leverage ratios to help ensure
collection in situations such as loan renegotiations.
THE NEW METHOD FOR EVALUATING IMPAIRMENT
The orderly resolution plan obliges the Group to manage its assets with the objective of extinction, while maximizing
their value. In this particular context, CIF’s goal is to optimize the collection rate on its receivables, taking into account
allowances and other cost factors (financial carrying costs and those related to guarantees and operational
management).
A new risk and collection policy has been formulated to satisfy this need, relying on a collection approach that is both
more active and more selective:
•
segmenting portfolios according to their future risk profile (special-mention, substandard, and
nonperforming loans) and identifying the most sensitive loans that may warrant preventive measures or
steps to secure collection
•
harmonizing practices and standardizing administrative stages with the aim of shortening processing time
•
formalizing decision-making criteria and renegotiating loans on the basis of algorithms designed to minimize
their overall financial impact.
Alongside these new rules, statistical cost and risk forecasting tools and methods have been improved based on a
homogeneous set of parameters:
•
developing a new provisioning simulation model that adheres to the principle of expected loss by calculating
more precisely the probability of default and the amount of loss in the event of default
•
introducing a standard method for calculating the impairment of individual loans in close relationship with all
parties concerned, entailing the construction of a centralized processing engine for individual loans that
provides a permanent and easily accessible audit trail.
This change in evaluation technique is intended to improve risk-forecasting accuracy and to adhere to industry
practices based on a more systematic approach and a finer segmentation of receivables:
•
In the case of doubtful loans, expected loss is measured from the moment a loan is classified as
nonperforming. Collateral is written down according to a statistical formula based on observed loss rates on
CIF’s composite portfolio in recent years, weighted for the probability of some form of collection (amicable
sale, auction, or forced sale). In exceptional cases, a standard allowance is set up when notice is received that
the loan in question is eligible for a debt workout, and it is maintained until the decision is made to refer the
loan to the Banque de France for restructuring.
•
Collective allowances have been set up for substandard performing loans. They apply to segments comprising
loans that have an above-average probability of future default risk and reclassification as nonperforming.
Performing loans include those classified as “restructured and performing” following workouts or
restructurings. Collective allowances are also set up for loans on which two payments have been missed and
for those whose amortization profile is problematic.
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The above statistical parameters are to be continuously monitored and periodically reassessed as a function of actual
portfolio performance. The new measures comprise rules for frequent mortgage guarantee and collateral appraisals
using methods that may be standard or differentiated to reflect the status and amount of the loan.
In addition to being reviewed according to this comprehensive policy, the most prominent loans are delegated to a
specialized credit committee for systematic assessments. These committees may refer the most sensitive cases to the
Group level for further action.
FINANCIAL MANAGEMENT OF THE GROUP
Financing for the Group
The Group raised only €2.5 billion in funding in the markets compared with an initial projection of €3.2 billion. This
decrease reflects early loan repayments, which accounted for 11.37% of total repayments during the year, as well as
3CIF’s sale of its RMBS portfolio in February 2015 for €838 million and the June 2015 sale of various securities with a
face value of €74 million.
3CIF raised €820 million in debt issues through private placements, including negotiable certificates of deposit and
EMTNs maturing for the most part in less than 18 months, and through €1,650 million in two public debt issues: an
€850 million issue floated in January 2015 (with a value date of 5 February 2015) and an €800 million issue floated in
July 2015 (with a value date of 31 July 2015) after tension in the markets had subsided in the wake of Greece’s debt
negotiations.
Investors showed increasing interest in 3CIF issues not only for their spread over French government securities, but
also thanks to their qualification as Level 1 High Quality Liquid Assets (HQLA) for paper satisfying the Basel III Liquidity
Coverage Ratio (LCR) and as a result of the European Central Bank’s policy of quantitative easing.
Centralization of Financial Risk Management
The Group has reorganized its financial risk management. With the consent of the ACPR, it now manages its interestrate risk on a consolidated basis.
This reorganization is better suited to the Group’s new situation:
•
The minority interests in the SACICAPs have been eliminated, and all Group companies are now virtually
100%-owned by CIFD. In the near future, CIFD will have merged with all of its subsidiaries except CIF
Euromortgage.
•
The cessation of loan originations has essentially obviated the need to manage interest-rate risk at the local
level. Upcoming hedging operations will simply be adjustments mostly in relation to disposals of fixed-rate
assets or to differences in actual early loan repayments with respect to the models used to determine
interest-rate exposure.
•
The Group’s information system provides an accurate view of consolidated interest-rate exposure.
The Group Finance Division is responsible for managing funding and interest-rate risk. At the Group level, the Balance
Sheet Management and Asset Optimization Committee makes operational decisions concerning financial risk
management, superseding the ALM committees that previously existed at the subsidiaries.
CIF Euromortgage continues to ensure its own financial risk management, remaining within its very narrow interestrate limits. Like other Group companies, it hedges its exposure using swaps.
SOCIAL RELATIONS
The 20 December 2013 Staff/Management Agreement
CIFD, representatives of the Crédit Immobilier de France economic and social grouping, and all representative labor
unions (UNSA, CFDT, CFTC, and SNB/CFE-CGC) signed the staff/management agreement on 20 December 2013. This
agreement defines:
•
assistance for staff members who are still on the job
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•
assistance for staff members whose contracts will be terminated on economic grounds
•
measures to help staff members find work outside the Group pending the implementation of a job-saving
plan, by suspension of their employment contract
•
early retirement and retirement measures.
This agreement defines measures for managing problems raised by the restructuring and organizational simplification
mandated under by the orderly resolution plan that was validated by the European Commission on 27 November
2013, and in particular, its impact on the Group’s 2,200 staff members whose jobs will be eliminated in the short,
medium, or long term.
Collective Agreements
Collective bargaining to harmonize collective statuses under the 20 December 2013 staff/management agreement
began in December 2014 and continued in 2015.
Some of the negotiations led to the signing of economic and social grouping collective agreements in 2015 (such as
those concerning telecommuting and the Group-wide compulsory annual negotiation). In order to promote
harmonization efforts, CIFD’s general management took the initiative of repudiating some collective standards
(unilateral commitments, collective practices and agreements) within the Crédit Immobilier de France economic and
social grouping, as the 20 December 2013 staff/management agreement calls for negotiating economic and social
grouping collective agreements that are ultimately intended to replace the collective arrangements in force at the
companies that comprise the economic and social grouping. Industry-wide collective agreements have not been
repudiated.
Prior to repudiation, information and consultation procedures were organized for staff representatives of the
economic and social grouping from 24 June to 29 July 2015, and then at each of the entities concerned.
Staff members of Caisse Centrale du Crédit Immobilier de France benefit from collective agreements at the level of
the Crédit Immobilier de France economic and social grouping:
•
the 20 December 2013 social management agreement and its amendments dated 18 November 2015
•
the 30 June 2014 profit-sharing agreement and its amendments dated 30 June 2015
•
the 17 February 2015 economic and social grouping agreement concerning multi-site telecommuting
•
the Group-wide compulsory annual negotiation, for which an agreement was signed on 10 July 2015.
All provisions concerning telecommuting from home and multi-site telecommuting were instituted on an
experimental basis in 2015 by three test entities (BPI, CIF Centre-Est, and GIE I-CIF). Following the very positive report
issued by the joint commission set up to monitor application of the agreement, CIFD’s general management decided
to extend application of the agreement to all other entities of the Crédit Immobilier de France economic and social
grouping in the first quarter of 2016.
On 18 November 2015, all staff labor representatives of the economic and social grouping signed Amendment 1 to the
staff/management agreement, thereby extending the external mobility arrangement by suspending the work contract
of the holding company CIFD and of employees of merged entities as of 1 June 2015.
Staff Negotiations at the Level of the Economic and Social Grouping in 2015
In 2015 negotiations on the following topics took place at the economic and social grouping:
•
harmonization of work time
•
harmonization of budgets for the social and cultural activities of the staff committees
•
narrowing of fixed remuneration gaps and harmonization of variable remuneration.
Information and Consultation on the Planned Merger of Crédit Immobilier de France Rhône-Alpes Auvergne (RAA)
with Crédit Immobilier de France Développement (CIFD) and its Related Consequences
11
In accordance with France’s labor laws, staff representatives were regularly given information and consulted on the
proposed merger of CIF RAA with CIFD, and on the merger’s consequences.
The proposed merger, and in particular, its impact on organization and staff, has been set forth in a French-language
document entitled “Document d’information en vue de consultation sur le projet de fusion CIFD / CIF RAA et ses
conséquences associées“.
Under this procedure the Hygiene, Security, and Working Conditions Committee Coordinating Body designated the
firm Orseu to conduct an assessment pursuant to Section L.4616-1 of France’s Labor Code (CT).
The Hygiene, Security, and Working Conditions Committee Coordinating Body was able to consult the assessment
report before issuing its opinion on 12 January 2015. Then, RAA’s Hygiene, Security, and Working Conditions
Committee and staff delegates of GIE CIF Services issued their opinion on the proposed merger on 13 January 2015.
Once those three bodies issued their opinions, the central staff committee of the economic and social grouping, the
unified staff delegation of GIE CIF Services, and the staff committee of CIF RAA issued their respective opinions on 28
January, 30 January, and 9 February 2015, respectively.
Information and Consultation on the Company’s Three-Year Strategy—Employment Outlook for Each Staff Category
This consultation is mandated by CT § L.2323-7-1, which states that every year the staff committee is to be consulted
on the company’s strategic orientations and on their impact on business, employment, developments in job
qualifications, the organization of work, and recourse to subcontracting, temporary employment, temporary
employment contracts, and internships.
In addition to legal obligations, those conditions that concern the staff/management agreement and the agreement
on supervising restructurings, signed on 20 December 2013, call for an information and consultation procedure
addressing the following issues:
•
updating the Group’s strategy over the duration of the orderly resolution
•
professional or internal geographical mobility
•
major orientations for occupational training and the objectives of training plans (high-priority employee and
position categories)
•
recourse to additional training schemes
•
the outlook for recourse to the various types of employment contracts, part-time employment, internships,
and efforts to minimize unstable forms of employment
•
identifying the positions that are likely to be the most seriously affected, both qualitatively (job description,
required skills) and quantitatively (increase or decrease)
•
pertinent data for assessing the development of outstandings and the corresponding staff needs by activity,
both Group-wide and for each entity, updating information produced for the orderly resolution plan and for
its duration
•
an updated business plan
•
an update of the forecast timetable for mergers and other organizational changes that may impact the
location of jobs over the following three years.
The information produced is intended to present the outlook for the following three years for each professional
category concerned:
•
involving either the elimination of positions, or
•
the transfer of positions to another location following an organizational change during the period.
All factors covered under this information and consultation procedure provide a basis for informing employees about
their job outlook, in terms of professional category and geographic sector.
These arrangements were set up in the highly particular context of the orderly resolution and extinctive management
of Crédit Immobilier de France.
12
Elected representatives of the central staff committee and Management took note of the termination on 24 February
2015 of the information and consultation procedure involving the central staff committee in respect of CT § L.2323-71 and Article 6 of the 20 December 2003 staff/management agreement.
Information and Consultation on the Planned Merger of Crédit Immobilier de France Méditerranée (CIF Med) and
Crédit Immobilier de France Ouest (CIF Ouest) with Crédit Immobilier de France Développement (CIFD) and its
Related Consequences
The General Management of Crédit Immobilier de France presented staff representatives with a plan to merge Crédit
Immobilier de France Méditerranée (CIF Med) and Crédit Immobilier de France Ouest (CIF Ouest) with Crédit
Immobilier de France Développement (CIFD) and its related consequences.
The proposed merger, and in particular, its impact on organization and staff, has been set forth in a French-language
document entitled “Document d’information en vue de consultation sur le projet de fusion de l’entité Crédit Immobilier
de France Méditerranée (CIF MED) et de l’entité Crédit Immobilier de France Ouest (CIF OUEST) avec l’entité Crédit
Immobilier de France Développement (CIFD) et ses conséquences associées”, which was presented to staff
representatives of the entities concerned on 3 June 2015. The proposed merger of CIF Med with CIFD was presented
in a single document along with that of CIF Ouest and CIFD.
Under this procedure the Hygiene, Security, and Working Conditions Committee Coordinating Body designated a
consulting firm on 30 June 2015 to conduct an assessment in application of CT § L.4616-1. The Hygiene, Security, and
Working Conditions Committee Coordinating Body was able to consult the assessment report on 1 September 2015
before issuing its opinion on 16 September 2015. The Hygiene, Security, and Working Conditions Committees of CIF
Med and CIF Ouest and staff delegates of GIE CIF Services issued their opinions on 17, 18, and 22 September,
respectively.
These opinions were then forwarded to the central staff committee of the economic and social grouping and to the
unified staff delegations of CIF Med and GIE CIF Services, and to the CIF Ouest, which issued their opinions on 23
September 2015 (central staff committee of the economic and social grouping) and 25 September 2015 (staff
committee of CIF Ouest, unified staff delegations of CIF Med and GIE CIF Services).
Second Job-Saving Plan (PSE 2)
The orderly resolution plan ultimately requires the total cessation of all activities by the Group. In light of their nature,
their cessation may take place in stages with respect to the organization. This requirement has led CIF to decrease
steadily its management and monitoring activities. Those functions not impacted by the first round of layoffs are now
impacted, due to the decrease in business following the cessation of loan originations and in light of the smaller
number of events concerning loans receivable, in execution of the orderly resolution plan.
Both support functions (e.g., human resources, accounting, control, auditing) and operational functions
(management, loan collection/litigation) are concerned.
On 7 May 2015 the Management of Crédit Immobilier de France submitted two plans to staff representatives:
•
one for restructuring and staff reductions (Part II of France’s Labor Code)
•
one for the layoff plan and the accompanying job-saving plan (Part I of France’s Labor Code).
An initial meeting of the central staff committee was held on 21 May 2015. At first, the proposal concerned no more
than 141 layoffs. It called for the elimination of 230 jobs (including 91 that were vacant), the creation of four jobs, and
the possible modification of two jobs.
The central staff committee of the economic and social grouping was regularly informed and consulted concerning the
conditions of a method agreement entitled “Accord d’UES relatif aux modalités d’information et de consultation des
instances représentatives du personnel de l’UES Crédit Immobilier de France en application de l’article L.1233-21 du
Code du travail” at its meeting on 8 July 2015. The staff committee (or unified staff delegations) of the various entities
of the economic and social grouping covered by the agreement were also regularly informed and consulted on the
conditions of this method agreement negotiated with the aim of reducing tensions between employees and
management.
13
At the close of the information and consultation procedure involving staff representatives, the proposal called for
eliminating 214 positions (including 79 that are vacant), creating five positions, and reducing layoffs to a maximum of
137 from the 141 initially proposed.
The information and consultation procedure concerning the job-saving plan included the appointment of:
•
an accounting firm to assist the central staff committee through the consultation procedure concerning the
layoff of 10 or more employees in any given 30-day period (CT§ L.2325-35)
•
a hygiene, security, and working conditions consulting firm by the Hygiene, Security, and Working Conditions
Committee Coordinating Body of the economic and social grouping, as authorized by law in cases of major
projects that modify hygiene, security, or working conditions (CT§ L. 4614-12).
The information and consultation procedure concluded with opinions issued in respect of the various projects:
•
on 1 September 2015 by the Hygiene, Security, and Working Conditions Committee Coordinating Body
•
on 8 September 2015 by the central staff committee of the economic and social grouping
•
on 9, 10, and 11 September 2015 by all the staff committees.
The information and consultation procedure ended on 11 September 2015.
Following this procedure, on 1 October 2015, the unilateral layoff document and the job-saving plan were forwarded
to the Regional Directorate for Companies, Competition, Consumption, Work, and Employment, which issued its
approval on 20 October 2015.
In application of the job-saving plan, a voluntary departure phase was held from 12 September to 11 November 2015,
followed by an internal reclassification phase from 12 November 2015 to 11 January 2016.
Subject to internal reclassifications, the 137 layoffs contained in the job-saving plan will be carried out in three
notification phases: mid-January 2016, late-March 2016, and late-June 2016.
October 2015 Employee Representative Elections Harmonized at the Level of the Economic and Social Grouping
In application of the 6 March 2013 collective agreement concerning the recognition of the CIF economic and social
grouping, simultaneous and identical employee representative elections were held in all units of the economic and
social grouping over the period from 15 October to 5 November 2015.
A collective agreement organizing employee representative elections at the CIF economic and social grouping was
signed on 31 August 2015 by all the labor unions concerned. It allowed for electronic voting for the following
employee representatives: staff delegates, staff committee members, and unified staff delegation members.
The results of the first round of elections to designate three labor unions to serve on the staff committee of the
economic and social grouping were as follows:
•
CFTC received 32.87% of the votes cast
•
SNPSCI-UNSA received 31.48% of the votes cast
•
CFDT received 20.04% of the votes cast.
The other labor unions that participated were: SNB/CFE-CGC (6.65%), CGT (5.70%), and SUD (3.26%).
The pre-electoral framework agreement for re-electing the members of the central staff committee was signed on 4
November 2015 by all the labor unions concerned. This agreement cleared the way for the election of the 40 staff
representatives to the central staff committee.
The completion of these elections was a prerequisite for undertaking new information and consultation procedures
with staff representatives concerning the proposals presented below.
Information in Preparation for a Consultation on the Proposed Definition of an Organization Reference Framework
for the Administrative Sectors of the economic and social grouping of Crédit Immobilier de France
14
The purpose of this proposal is to define an organization reference framework covering the content of missions for
each entity, as well as the hierarchical and/or functional relationships between the central units and the local entities
of Crédit Immobilier de France. This organizational framework is based on the notion of administrative sector, defined
as a community of experts working to harmonize, modernize, and professionalize their branch irrespective of
geographic considerations.
An information document in preparation for a consultation on a proposed definition of an organization reference
framework for the administrative sectors of the economic and social grouping of Crédit Immobilier de France was
submitted to staff representatives of the entities of the economic and social grouping on 19 November 2015.
This framework is used as a working basis for mergers and developments in the organization that are required under
the orderly resolution plan. Its purpose is to encourage the sharing of competencies within the economic and social
grouping and to continue welcoming teams from the operating subsidiaries who are joining the entity Crédit
Immobilier de France Développement.
It describes the missions of each administrative sector and the hierarchical and functional relationships that are
destined to be established following each merger, or following the end of the information/consultation period
concerning the process of bringing their organization into conformity in the case of companies that have already been
merged.
Information in Preparation for a Consultation on the Planned Merger of Crédit Immobilier de France Centre-Ouest
(CCO), Crédit Immobilier de France Sud-Ouest (CSO), and Crédit Immobilier de France Ile de France (IDF) with Crédit
Immobilier de France Développement (CIFD) and its Related Consequences
As part of the continued execution of the orderly resolution plan and the process of organizational simplification, the
management of Crédit Immobilier de France has undertaken an information procedure in preparation for a
consultation on the planned merger of Crédit Immobilier de France Centre-Ouest (CCO), Crédit Immobilier de France
Sud-Ouest (CSO), and Crédit Immobilier de France Ile de France (IDF) with Crédit Immobilier de France
Développement (CIFD) and its related consequences.
An information document for consultation on this proposed merger was submitted to staff representatives on 19
November 2015 in order to take into account previous mergers and the organization reference framework for the
administrative sectors referred to above.
Information in Preparation for a Consultation on the Post-Merger Plan to Bring Establishments and Local Entities of
Crédit Immobilier de France Développement (CIFD) into Conformity
As part of efforts to simplify its organization, centralize its corporate governance, and regroup operating subsidiaries
within a centralized organization as called for in the orderly resolution plan, staff representatives have been informed
and consulted on two post-merger plans to bring establishments and local entities of Crédit Immobilier de France
Développement (CIFD) into conformity. These projects concern:
•
CIFD’s Lyon/Grenoble establishment
•
CIFD’s Marseille/Montpellier and Nantes/Ifs establishments.
15
PARENT COMPANY
FINANCIAL REVIEW
2015
16
ACTIVITY IN 2015
CORPORATE GOVERNANCE
Board of Directors and General Management
At year-end 2015 the Board of Directors had 10 members:
•
Yannick Borde, Chairman
•
Stéphane Bonnois
•
Patricia Festivi
•
Dominique Guérin
•
Dominique Lambecq
•
Jacky Lecointe
•
Jean-Luc Lips
•
Hervé Magne
•
Bernard Sevez.
Messrs. Martin and Soutif resigned from the Board of Directors in December 2015. At its meeting on 10 February
2016, the Board of Directors took note of their resignation.
At its meeting on 12 May 2015, the Board of Directors appointed Jérôme Lacaille as Chief Executive Officer with effect
from 1 June 2015.
At its meeting on 14 October 2015, the Board of Directors appointed Thierry Gillouin as Deputy Chief Executive Officer
with effect from 19 October 2015. He previously held the position of Chief Executive Officer from 21 April to 31 May
2015, replacing François Morlat, who completed his term as Chief Executive Officer on 21 April 2015.
Messrs. Lacaille, Chief Executive Officer, and Gillouin, Deputy Chief Executive Officer, are both corporate officers as
construed under CMF § L.511-13.
The list of the directorships and functions held by Company representatives and members of the Board of Directors at
the close of the year is appended to this report.
Government Commissioner
By a decree dated 9 September 2014, Didier Bruneel was appointed Government Commissioner to the Board of
Directors, replacing Jean-Paul Redouin. Mr. Bruneel has been attending Board meetings since 10 September 2014.
Central Staff Committee Representatives
Two employees on the Central Staff Committee, Laurent Grandgeorge and Olivier Magnaudet, designated by the
Central Staff Committee on 18 November 2015, have been attending Board meetings. They replaced Carine Mazzoni
and Christelle Lesven (who replaced Serge Poutchnine) as of the Board meeting on 10 February 2015.
The Central Staff Committee has also designated these two employees to attend shareholders’ meetings.
Specialized Committees Reporting to the Board of Directors
The 2013 Bank Regulation Act (Law #2013-672 of 26 July 2013) and the Order of 20 February 2014, which transposed
into French law Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the
activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD IV) stress
the need for credit institutions and investment firms to have a sound corporate governance organization and reaffirm
the importance of separating control functions from operational functions.
17
As an extension of legislative and regulatory changes, particularly the Decree of 3 November 2014 mandating the
creation of specialized committees at institutions with total assets of €5 billion or more, the Company created Risk
and Appointments Committees starting early in 2015, in addition to the Audit and Remunerations Committees.
At year-end 2015 the specialized committees had the following members, chosen from among the members of the
Board of Directors and designated by it at its meeting on 10 February 2015:
•
Audit Committee
Patricia Festivi, Jacky Lecointe, Hervé Magne, Gérard Martin, and
Michel Soutif
•
Appointments Committee
Yannick Borde, Dominique Guérin, and Jacky Lecointe
•
Remunerations Committee
Stéphane Bonnois, Dominique Guérin, and Jacky Lecointe
•
Risk Committee
Patricia Festivi, Jacky Lecointe, Hervé Magne, Gérard Martin, and
Michel Soutif.
The terms of the members of the specialized committees shall end at the same time as their terms as directors.
DELIBERATIONS OF THE BOARD OF DIRECTORS
The Board of Directors held 11 meetings during the year.
Board meetings were devoted to discussions of the following issues:
•
organizational simplification and centralized governance: the Board examined the Company’s merger with
the subsidiaries Crédit Immobilier de France Rhône Alpes Auvergne, Crédit Immobilier de France
Méditerranée, and Crédit Immobilier de France Ouest
•
the Group’s checklist, monitoring of collection and loan loss allowances, which were regularly presented to
the Board to enable the Company’s General Management and Board to manage risks and detect any possible
variances for the purpose of anticipating corrective measures
•
reviewing a plan to control operating expenses in 2015, following proposals to revise the initial budget
•
reviewing measures to optimize investments benefiting from the internal guarantee, and an external review
of credit risks
•
the reorganization of specialized committees within the Group, as part of simplification efforts, and the
corresponding update to Book III of the By-Laws (submitted for the approval of this shareholders’ meeting)
•
reviewing the risk and collection policy, and the corresponding adoption of the new Book II of the By-Laws by
the Board meeting on 9 December 2015, of which the shareholders’ meeting is to be informed
•
closing the parent company and consolidated books at and for the year ended 31 December 2014 submitted
for the approval of the 28 May 2015 shareholders’ meeting
•
amendments to the Company’s Articles of Incorporation following its authorization to operate as a financial
company, approved by the 28 May 2015 shareholders’ meeting
•
the presentation by the Chief Executive Officer, at the Board meeting on 9 December 2015, of an assessment
of the CIF Group’s general situation, including an evaluation of its credit risk and of the cost of social
restructuring measures, as well as strategic orientations
•
reviewing the deliberations of the Audit, Risks, and Remunerations Committees
•
updates on the Group’s projects and activities, particularly 3CIF’s sale of its RMBS portfolio in February 2015,
the plan to readjust the reserves of CIF Assets, the presentation of regulatory changes to the European
solvency ratio, and the plan to dismantle CIF Assets
•
reviewing the annual report on consolidated internal auditing forwarded to the ACPR
•
the Group’s labor-management relations, with a review of negotiations in progress (harmonization of
collective statuses, negotiations at the level of the economic and social grouping) and implementation of the
second job-saving plan (PSE 2)
18
•
the Company’s approval, in its capacity as central entity, of corporate officers (as construed under CMF
§ L.511-13) pending ACPR ratification: Jean Vergnaud as Deputy Chief Executive Officer, and Alain Giraud as
Chief Executive Officer of Banque Patrimoine et Immobilier (“BPI“); Virginie Marquant as Deputy Chief
Executive Officer of Cautialis; Jérôme Lacaille as Chief Executive Officer, and Patrick Amat as Deputy Chief
Executive Officer of Caisse Centrale du Crédit Immobilier de France (3CIF); and Dominique Fossat as Chief
Executive Officer of Crédit Immobilier de France Nord (“CIF Nord“).
The Board of Directors convened the annual shareholders’ meeting on 28 May 2015. The term of
PricewaterhouseCoopers Audit as independent auditor was renewed for a six-year period to expire at the close of the
shareholders’ meeting convened to approve the financial statements at and for the year ended 31 December 2020.
Jean-Baptiste Deschryver was appointed alternate auditor for a six-year period to expire at the close of the
shareholders’ meeting convened to approve the financial statements at and for the year ended 31 December 2020,
replacing Etienne Boris, whose term had expired.
A special shareholders’ meeting convened simultaneously approved amendments to the Articles of Incorporation, in
particular those to the corporate purpose, adding financial company status to CIFD’s original status of central entity
and financial holding company.
CHANGES TO THE BY-LAWS
Centralization of the Audit Committee at CIFD—Amendments to Book III of the By-Laws
The adoption of a new organization of specialized committees, and in particular the centralization of the Audit
Committee at CIFD, pursuant to CC § L.823-20, raised the need to amend the Group’s By-Laws.
Amendments to Book III and its appendix (Crédit Immobilier de France Internal Control Charter) concern the
following:
•
permanent control: henceforth, the head of the Group Risk, Permanent Control, and Compliance Division
shall present to the Company’s Audit Committee an annual review of a given subsidiary’s permanent control
system, replacing the presentation made by the head of permanent control of the subsidiary to the local
audit committee (corresponding amendment to Section 8, paragraph on “the head of permanent control at
each entity”)
•
regional internal auditors report to the Chairman of the Board of Directors, replacing the chairman of the
local audit committee (corresponding amendment to Section 10)
•
matters concerning the audit committees of the financial subsidiaries are eliminated (deletion of Section 13
of Book III and Sections II.3/III of the Internal Control Charter).
In application of Article 17 of CIFD’s Articles of Incorporation, the amendments to Book III and the Internal Control
Charter approved by the Board of Directors (at its meeting on 8 July 2015) must be submitted for the approval of the
annual shareholders’ meeting (Draft Resolution 12).
Risk and Collection Policy—Adoption of the New Book II of the Group’s By-Laws
At its meeting on 9 December 2015 the Board of Directors approved the new Book II “Risk and Collection Policy” in
accordance with Article 17 of the Company’s Articles of Incorporation.
The general principles laid down in the new Book II “Risk and Collection Policy” concern the following:
•
an organization of the risk management function in compliance with the Decree of 3 November 2014; this
organization refers to an internal clarification of the decision-making committees and delegation frameworks
concerning loan management
•
a standardized definition of balance sheet segmentation, making it possible to identify the points to monitor
and the scope of measures to take to alleviate the related risks
•
standardization of the main management and collection procedures
•
standardization of asset valuation rules combined with a proactive collateral management strategy.
19
Furthermore, a chapter was added concerning the principles of managing financial counterparties.
In application of Article 17 of CIFD’s Articles of Incorporation, the shareholders’ meeting is informed of the new Book
II “Risk and Collection Policy” approved by the Board of Directors.
MERGERS OF CIF RAA, CIF MEDITERRANEE, AND CIF OUEST WITH CIFD
Legal Considerations
The mergers of Crédit Immobilier de France Rhône Alpes Auvergne (CIF RAA) and Crédit Immobilier de France
Méditerranée (CIF Med) with CIFD are governed by the simplified merger organization mentioned in CC § L. 236-11, as
CIFD continually owned all the share capital of CIF RAA and CIF Med between the time it filed the merger plans with
the court registrar and the actual execution of the mergers.
Accordingly, the mergers of CIF RAA and CIF Med with CIFD did not necessitate:
•
the approval of the merger by the special shareholders’ meetings of the companies concerned
•
the intervention of a certified appraiser
•
the preparation of reports by the boards of directors of the companies concerned
•
a new share issue by CIFD, as no shares were swapped for those of CIF RAA and CIF Med.
The merger of Crédit Immobilier de France Ouest (CIF Ouest) with CIFD is governed by the simplified merger
organization mentioned in CC § L. 236-11-1, as CIFD owned 99.99% of the share capital of CIF Ouest between the time
it filed the merger plans with the court registrar and the actual execution of the merger. One single minority
shareholder owned 18 shares of the company.
Accordingly, the merger of CIF Ouest with CIFD did not necessitate:
•
the approval of the merger by the special shareholders’ meeting of CIFD
•
the preparation of reports referred to in CC § L. 236-9 and § L. 236-10 insofar as CIFD offered to purchase the
shares owned by the minority shareholder of CIF Ouest, prior to the merger, at a price corresponding to their
value, which was determined to be the par value of those shares.
However, as CIF Ouest had a minority shareholder, the merger necessitated:
•
the approval of the merger by the special shareholders’ meeting of CIF Ouest
•
the calculation of a swap ratio
•
a new share issue by CIFD.
Consultation of Staff Representatives
In accordance with France’s Labor Code, staff representatives were regularly informed and consulted on the proposed
mergers of CIF RAA, CIF Med, and CIF Ouest with CIFD, and on the mergers’ consequences.
Approval of the Proposed Mergers
The proposed merger of CIF RAA with CIFD was approved by CIFD’s Board of Directors at its meeting on 14 April 2015
and by CIF RAA’s Board of Directors at its meeting on 22 April 2015.
The proposed merger of CIF Med with CIFD was approved by CIFD’s Board of Directors at its meeting on 14 October
2015 and by CIF Med’s Board of Directors at its meeting on 16 October 2015.
The proposed merger of CIF Ouest with CIFD was approved by CIFD’s Board of Directors at its meeting on 14 October
2015, by CIF Ouest’s Board of Directors at its meeting on 15 October 2015, and by CIF Ouest’s shareholders’ meeting
on 26 November 2015.
20
Accounting and Financial Considerations
The conditions for the mergers were based on the financial statements at and for the year ended 31 December 2014
for the companies concerned.
Assets and liabilities were transferred at their net book value at 31 December 2014.
The net book value transferred to CIFD was as shown below:
•
CIF RAA: €128,103,992.02, plus a merger bonus of €87,925,835.06
•
CIF Med: €100,553,936.25, plus a merger bonus of €63,192,266.79
•
CIF Ouest: €125,700,179, plus a merger bonus of €91,257,223.54.
CIF Ouest and CIFD used net book value at 30 June 2015 as the basis for setting the swap ratio for their merger. The
swap ratio was one CIF Ouest share for three CIFD shares. Both companies agreed that the 18 CIF Ouest shares would
be swapped for 54 CIFD shares.
Accordingly, CIFD increased its capital by €54 corresponding to the creation of 54 new Class A shares with a par value
of €1 each, to be given to the minority shareholder of CIF Ouest in exchange for his CIF Ouest shares. The merger
premium was €248.71.
Effective Date
For accounting and tax purposes, the mergers became effective retroactively on 1 January 2015. For legal purposes,
the CIF RAA merger took effect on 1 June 2015, and the CIF Med and CIF Ouest mergers took effect on 1 December
2015. Once those mergers legally took effect, the merged entities were dissolved ipso jure, without necessitating their
liquidation.
REGULATED AGREEMENTS (CC § L.225-38)
In 2015 the Board of Directors authorized the following agreements governed by CC § L.225-38:
•
the agreement concerning indemnification of the Chief Executive Officer in the event that his appointment is
revoked (Board decision, 10 June 2015). This agreement is in accordance with the 21 July 2010 decision of
CIFD’s Board of Directors that set the indemnification that could be paid to managers who are remunerated
company representatives of the Group’s credit institutions and financial companies.
•
the agreement concerning severance pay for the Chief Executive Officer, in the amount of one month per
year of seniority up to a maximum of 15 months, in the event of his retirement (Board decision, 10 June
2015). This agreement is in accordance with the 21 July 2010 decision of CIFD’s Board of Directors that set
the indemnification that could be paid to managers who are remunerated company representatives of the
Group’s credit institutions and financial companies.
•
the agreement concerning indemnification of the Deputy Chief Executive Officer in the event that his
appointment is revoked (Board decision, 9 December 2015). This agreement is in accordance with the 21 July
2010 decision of CIFD’s Board of Directors that set the indemnification that could be paid to managers who
are remunerated company representatives of the Group’s credit institutions and financial companies.
•
the agreement concerning severance pay for the Deputy Chief Executive Officer, in the amount of one month
per year of seniority up to a maximum of 15 months, in the event of his retirement (Board decision, 9
December 2015). This agreement is in accordance with the 21 July 2010 decision of CIFD’s Board of Directors
that set the indemnification that could be paid to managers who are remunerated company representatives
of the Group’s credit institutions and financial companies.
At its meeting on 10 February 2015, the Board authorized the following new agreements governed by CC § L.225-38
whereby the costs of the function of Chief Executive Officer exercised by a CIFD employee would be borne by the
subsidiary concerned. These authorized agreements were approved by the shareholders’ meeting on 28 May 2015
and were presented in the Special Report of the Independent Auditors on regulated agreements for the year ended 31
December 2014.
•
The following agreements, previously authorized by the Board of Directors, continued to apply in 2015:
21
o
Agreements whereby the costs of the function of Chief Executive Officer exercised by a CIFD
employee would be borne by the subsidiary concerned (Board decision, 10 February 2015):
the agreement made on 16 June 2015 between CIFD and CIF Centre Ouest concerning
Emmanuel Ballif’s function as Chief Executive Officer of that subsidiary
the agreement made on 6 July 2015 between CIFD and CIF Sud Ouest concerning Olivier
Dumont’s function as Chief Executive Officer of that subsidiary
the agreement made on 6 July 2015 between CIFD and CIF Ouest concerning Florent Le
Grelle’s function as Chief Executive Officer of that subsidiary; this agreement ended with
those companies’ merger on 1 December 2015
The agreements between CIFD and CIF Centre Est concerning Marc Iltis’s function as Chief
Executive Officer of that subsidiary, and between CIFD and BPI concerning Gérard Gauger’s
function as Chief Executive Officer of that subsidiary, were not signed in 2015.
•
o
agreement between CIFD and GIE Procivis Ouest Services, SACICAP Procivis Mayenne, and SACICAP
Procivis CIPA-CIV, whereby the costs of the function of Chairman of the Board at those three units
would be borne by CIFD (authorization renewed by Board decision, 10 February 2015)
o
agreements between CIFD and Cegeris concerning CIFD’s current account advances to Cegeris up to
a maximum amount of €250,000 (Board decisions, 12 February 2013 and 19 June 2013), and an
agreement concerning a €700,000 current account advance to Cegeris in liquidation (Board decision,
25 February 2014)
o
the Protocol concerning the Permanent Guarantee granted to the Group, between the Republic of
France, CIFD, 3CIF, and CIF Euromortgage, signed in the presence of CIF Assets and the Banque de
France (Board decision, 13 November 2013)
o
the framework agreement between CIFD and 3CIF concerning resources that 3CIF might have to
furnish CIFD, in maximum annual amounts of €1 billion remunerated at a rate between 3-month
Euribor and 75bp over 3-month Euribor, to enable CIFD to provide CIF Euromortgage with additional
funds at the request of the rating agencies on the occasion of each benchmark covered bond issue
(Board authorization, 27 May 2010). Over the course of 2015, CIFD made a number of partial
repayments of these loans, for a total of €76,200,000. As of 31 December 2015, aggregate funding
provided by 3CIF to CIFD under this framework agreement totaled €1,631,900.
o
the comprehensive authorization covering specific loans by CIFD to CIF Euromortgage subject to the
following conditions and limits: maximum annual amount of €1 billion; maximum term of 50 years
with the possibility of granting undated subordinated loans; interest rate between 3-month Euribor
and 75bp over 3-month Euribor (Board authorization, 27 May 2010, ratified for 2011 by the Board
decision on 12 July 2011). As of 31 December 2015, aggregate funding provided by CIFD to 3CIF
under this authorization totaled €330 million in subordinated loans and €1.10 billion in loans
without preferred creditor status. CIFD did not make any total or partial repayments of these loans
in 2015.
o
the €12 million participating loan granted by CIFD to Procivis Immobilier (Board authorization, 24
June 2009)
o
commitments to purchase Series B subordinated units of the securitization vehicle
€41,800,000 by CIF Ile-de-France, €36,400,000 by CIF Sud-Ouest, €31,100,000 by CIF
€21,200,000 by CIF Centre Ouest, €7,600,000 by CIF Bretagne, and €5,200,000 by CIF
total of €143,300,000. CIFD held €1,767,900,000 of CIF Assets Series B subordinated
December 2015.
CIF Assets:
Centre Est,
Nord, for a
units at 31
Following the mergers completed in 2015, the shareholders are hereby informed of agreements, previously
authorized by the Boards of Directors of the merged companies, that continued to apply for CIFD starting
from the date each merger legally took effect in 2015. The following agreements are governed by CC § L.22538:
o
service agreements for managing “social mission” loans outstanding that were initially executed
between CIF Méditerranée and SACICAP Vaucluse, as well as SACICAP FDI
22
o
service agreements for managing “social mission” loans outstanding that were initially executed
between CIF Ouest and Procivis Mayenne, as well as Procivis CIPA-CIV
o
service agreement for managing “social mission” loans outstanding that were initially executed
between CIF RAA et Procivis Savoie.
Pursuant to CC § L.225-40-1, agreements reached in years prior to 2015 that continued to apply during the year were
subject to an annual review by the Board of Directors of the company that approved their continued application
(meetings on 9 December 2015 and 13 April 2016).
Moreover, by virtue of the exemption granted under Section 38 of the Order of 31 July 2014 concerning agreements
governed by CC § L.225-39, the Board of Directors chose not to proceed with the annual review, stipulated in CC
§ L.225-40-1, of agreements reached in prior years between CIFD and 3CIF and/or CIF Euromortgage as those two
companies are wholly-owned subsidiaries of CIFD as construed under CC § L.225-39 (Board meeting, 14 April 2015).
APPROPRIATION OF 2014 RESULTS OF OPERATIONS
The Shareholders’ Meeting on 28 May 2015 voted to charge the 2014 net loss of €235,322,434.98 against the special
reserve from the capital reduction.
Following the appropriation of the net loss for 2014, the special reserve from the capital reduction had a balance of
€344,849,607.28.
INFORMATION ON REMUNERATIONS PAID IN 2015 (CMF § L.511-73)
In application of CMF § L.511-73, the annual shareholders’ meeting is consulted on the total amount of remunerations
of all natures paid during the year to persons referred to in CMF § L.511-71.
These persons include corporate officers, risk-takers, auditors, and any other employees whose total emoluments
place them in the same remuneration category if their activity has a meaningful impact on the profile of the company
or group.
In 2015 the total amount of remunerations of all natures paid during the year to persons referred to in CMF § L.51171 was €1,737,013.74.
The consultation concerning these remunerations constitutes Draft Resolution 13.
INFORMATION ON AGREEMENTS BETWEEN COMPANY REPRESENTATIVES AND SUBSIDIARIES
The final paragraph of CC § L.225-102-2 lists the following agreements: agreements between Crédit Immobilier de
France Bretagne and its Chief Executive Officer, authorized by that company’s Board of Directors, concerning the
indemnification of the Chief Executive Officer in the event that his appointment is revoked or if he retires. These
agreements were formulated on the basis of decisions made by CIFD’s Board of Directors at its meeting on 21 July
2010.
SHAREHOLDING STRUCTURE—CHANGES AND ANALYSIS
Since 1 December 2015, the Company has had share capital of €124,821,620, represented by 124,821,620 shares with
a par value of €1.00. CIFD’s capital stock was increased by €54—to €124,821,620 from €124,821,566—through the
issue of 54 new class A common shares with a par value of €1.00.
The new share issue corresponded to CIFD’s merger with Crédit Immobilier de France Ouest, as described above, and
the inclusion of a new individual (Guy Moreau) among CIFD’s shareholders.
The shares are divided into two classes:
•
124,821,619 A shares, which are common shares, and
•
one B share, which is a nonvoting preferred share issued in application of CC § L.228-11 et seq.
23
In 2015 the following share transfers took place upon the completion of mergers:
•
the transfer of all shares held by SACICAP de Picardie to SACICAP Aisne Somme Oise
•
the transfer of all shares held by SACICAP La Ruche to SACICAP SCCI Arcade
•
the transfer of all shares held by CNP IAM to CNP Assurances.
Following the operations that took place in 2015, no shareholder directly owns a shareholding interest greater than
one-twentieth of the share capital. Only SACICAP Procivis Nord indirectly owns a shareholding interest greater than
one-twentieth of the share capital.
The list of shareholders and their ownership interests at 31 December 2015 is appended to this report.
ACQUISITIONS OF MATERIAL SHAREHOLDING INTERESTS (CC § L.233-6)
Pursuant to CC § L.233-6, the shareholders are hereby informed that the Company did not acquire any significant new
shareholding interests in other companies during the year.
In application of CC § L.233-15, the list of the Company’s subsidiaries and affiliates is appended to the financial
statements.
VALUATION OF CIFD’S INVESTMENTS IN AFFILIATED COMPANIES
As part of the Group’s restructuring, CIFD now owns nearly 100% of the capital stock of the SFRs following the share
contribution of shares by the SACICAPs in December 2014. The valuations used for those contributions are based on
the same valuations as those of the shares recorded in CIFD’s balance sheet at 31 December 2013. The €588.6 million
in aggregate writedowns in the balance sheet at 31 December 2013 were allocated item by item on the basis of the
valuations stipulated in the contribution agreements approved by the Special Shareholders’ Meeting on 10 December
2014.
Value Impairment Test at 31 December 2015
At year-end 2015 those shares were subjected to a value impairment test conducted on a consolidated basis limited
to CIFD and its subsidiaries using discounting projections of paid-up shareholders’ equity flows over the period of the
orderly resolution (from 2015 to 2035). Pursuant to the demands of the European Commission, as they apply to CIFD’s
common shareholders:
•
no distributions are to be made before year-end 2017
•
the Group must maintain a regulatory capital adequacy ratio of 12%
•
distributions shall be limited to a maximum of €650 million, discounted at an annual rate of 8% starting at 31
December 2013; any residual amounts to be distributed shall accrue to the Republic of France, holder of the
preferred share referred to above.
In setting the discount rate at 8% in 2013, the European Commission explicitly factored in the usual criteria of
required yield and systematic risk on the underlying assets.
However, in light of the Group’s orderly resolution, CIFD has chosen to apply an average discount rate of 3.52 % over
the period (4.17% in 2013, 3.28% in 2014), which is more consistent with the Group’s situation. It has determined that
rate taking the following factors into account:
•
the yield on benchmark French Treasury bonds (OAT) at 30 June 2015 with corresponding annual maturities,
considering the changing nature of flows, mostly in the initial years
•
the market risk premium, which has been estimated at 5% (as in 2013)
•
beta, which measures sensitivity to market risk. In light of the orderly resolution and the State guarantee
covering their funding, the various SFRs have the following risk profile:
o
a high concentration of flows in the initial years of the business plan
o
no new originations, and thus a high degree of predictability of future returns
24
o
•
low risk from customer defaults and no funding risk thanks to the State guarantee and the mass of
funding secured in the initial years of the plan.
±1% sensitivity of the discount rate would have an impact of –€49.4 million/€49.2 million on the Group’s
valuation.
A sample group consisting of bank securities is not pertinent because France has no listed specialized real estate
lenders, the SFRs have ceased operating in the markets, and for other reasons as well.
Consequently, analyses covered entities that operate in regulated business sectors and are exposed to very limited
risks or have finite lifetimes (utilities and concessions).
For reasons of the State guarantee, which covers funding, only the unleveraged beta (corresponding to the beta of the
economic assets) was taken into consideration. (In the case of SFRs, financial leverage does not generate additional
risk similar to that of the companies included in the samples.) Beta, thus computed, amounts to 0.5, giving a betaadjusted risk premium of 5% x 0.5 = 2.5%.
Using the discount rate chosen by CIFD, as explained above, the net book value of investments in affiliates was €578.6
million at 31 December 2015. The valuation of the Group including CIFD at 31 December 2015 was allocated item by
item in proportion to the valuations used for the share contribution of shares by the SACICAPs in December 2014. An
additional €38.3 million writedown was thus recognized, as shown below:
Company name
Number of shares
Gross value
Writedown in 2015
Allowance
Net value
BRT
CIF Bretagne
9,183,400
116,036,180.44
4,984,789.87
40,768,476.95
75,267,703.49
CCE
CIF Centre Est
8,999,989
109,353,759.71
3,945,537.69
49,777,895.57
59,575,864.14
FCO
CIF Centre Ouest
3,082,532
76,331,787.77
2,412,118.42
39,908,937.46
36,422,850.31
CNO
CIF Nord
4,459,094
109,743,411.82
4,935,412.98
35,214,407.87
74,529,003.95
CSO
CIF Sud Ouest
13,947,948
168,514,866.56
6,829,523.01
65,394,612.04
103,120,254.52
IDF
CIF Ile de France
5,567,961
63,955,831.95
1,828,806.74
36,341,461.90
27,614,370.05
BPI
BPI
1,173,850
89,999,486.64
2,317,007.98
55,013,949.62
34,985,537.02
3CIF
Caisse Centrale
764,789
206,017,338.34
11,067,339.50
38,906,632.84
167,110,705.50
CEM
CIF Euromortgage
1,999,994
107,199,674.80
0.00
107,199,674.80
0.00
49,179,557
1,047,152,338.03
38,320,536.19
468,526,049.05
578,626,288.98
Total
Shareholdings in the companies CIF RAA, CIF Med, and CIF Ouest were eliminated in 2015 following their merger with
CIFD during the year. Their net valuations at year-end 2014 were €40.18 million, €37.36 million, and €34.44 million,
respectively.
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
CORPORATE GOVERNANCE
Appointments Committee
The Appointments Committee has met on three occasions since the start of 2016.
It reviewed potential candidates to be recommended to the Shareholders’ Meeting for appointment to the Board of
Directors. Recommendations were based on two criteria: balanced male/female representation on the Board and
satisfying the qualifications required to be an outside director.
The Appointments Committee has recommended three individuals to be appointed to the Board of Directors. It
considers that Diane Lamarche satisfies the criteria to be an outside director.
At the recommendation of the Appointments Committee, the Board of Directors coopted the candidates proposed,
including for the post of outside director.
25
Ratification of the Directors Coopted by the Board of Directors
At its meeting on 10 February 2016, the Board of Directors took note of the resignation of two of its members, and
appointed two directors on a provisional basis:
•
André Legeard, director, to replace Gérard Martin for the remainder of his term, which shall expire at the
close of the shareholders’ meeting convened to approve the financial statements at and for the year ended
31 December 2016
•
Michel Bouzat, director, to replace Michel Soutif for the remainder of his term, which shall expire at the close
of the shareholders’ meeting convened to approve the financial statements at and for the year ended 31
December 2016.
At its meeting on 13 April 2016, the Board of Directors took note of the resignation of Stéphane Bonnois at its meeting
on 10 February 2016, and appointed as outside director on a provisional basis:
•
Diane Lamarche, director, to replace Stéphane Bonnois for the remainder of his term, which shall expire at
the close of the shareholders’ meeting convened to approve the financial statements at and for the year
ended 31 December 2016.
In accordance with the law, these provisional appointments are to be ratified (Draft Resolutions 9, 10, and 11,
respectively) at the shareholders’ meeting convened for 31 May 2016.
Approval of Corporate Officers by the Company in its Capacity as Central Entity
In respect of CMF § L.511-13, the Board of Directors has designated the following individuals as corporate officers of
Banque Patrimoine et Immobilier, pending their ratification by the ACPR: Philippe Thémé, Chief Executive Officer,
replacing Alain Giraud, and Jean-Marc Rossi, Corporate Secretary, replacing Jean Vergnaud (meetings on 10 February
and 9 March 2016).
In respect of CMF § L.511-13, the Board of Directors has designated the following individual as corporate officer of CIF
Euromortgage, pending his ratification by the ACPR: Olivier Airiau, Chief Executive Officer, replacing Francis Gleyze,
Deputy Chief Executive Officer. It confirmed the appointment of Patrick Amat, second Deputy Chief Executive Officer,
as corporate officer (meeting on 9 March 2016).
Appointment of Two Members of the Audit Committee and the Risk Committee
At its meeting on 10 February 2016, the Board of Directors appointed Yannick Borde and Michel Bouzat to the Audit
Committee, replacing Gérard Martin and Michel Soutif, who had resigned from the Board.
The Board also appointed Yannick Borde and Michel Bouzat to the Risk Committee, replacing Gérard Martin and
Michel Soutif, who had resigned from the Board.
The terms of the two new members of those committees will end at the expiration dates of their terms as Board
members.
Appointment of A Member of the Remunerations Committee
At its meeting on 13 April 2016, the Board of Directors appointed Diane Lamarche to the Remunerations Committee,
replacing Stéphane Bonnois.
APPROVAL OF THE MERGERS OF CIF CENTRE OUEST, CIF ILE DE FRANCE, AND CIF SUD-OUEST WITH CIFD
Since the balance sheet date, the Board of Directors has had to review the planned simplified mergers of CIF Centre
Ouest, CIF Ile de France, and CIF Sud-Ouest with CIFD.
At its meeting on 9 March 2016, the Board:
•
acting in its capacity as central entity, approved the simplified mergers of those three subsidiaries with CIFD
•
approved the merger proposals
26
•
gave full powers to the Chief Executive Officer to sign the simplified merger proposals in the name of, and on
behalf of, CIFD.
The legal and operational considerations for completing the mergers of CIF Centre Ouest, CIF Ile de France, and CIF
Sud-Ouest with CIFD are described as events occurring after the balance sheet date.
RESULTS IN 2015
APPROPRIATION OF THE NET LOSS FOR 2015
Before presenting the reports of the Independent Auditors, we will proceed with a reading of the balance sheet and
statement of operations.
In the year ended 31 December 2015, the Company reported a net loss of €415,620,139.
We recommend that you carry forward the net loss of €415,620,139 for 2015 as retained losses.
After allocating the net loss for 2015, retained losses will amount to €415,620,139.
DIVIDENDS DISTRIBUTED IN PREVIOUS YEARS
In application of Section 243bis of France’s Tax Code, the shareholders are reminded that no dividends have been
distributed for the previous three years.
NON-TAX-DEDUCTIBLE CHARGES
Non-tax-deductible charges referred to under Section 39-4 of France’s Tax Code totaled €61,341 in 2015.
INFORMATION ON PAYMENTS DUE
Pursuant to CC § L.441-6-1, amounts due to suppliers at 31 December 2015 could be analyzed as follows:
Invoices payable
Balance at 31 December 2015 (€)
within 30 days
within 45 days
within 60 days
beyond 60 days
1,212,370
106,902
11,932
0.00
FIVE-YEAR FINANCIAL SUMMARY
The five-year financial summary is presented in appendix.
27
ACTIVITY
MANAGEMENT OF LOANS OUTSTANDING (OPTIMIZATION OF OUTSTANDINGS GUARANTEED BY THIRD PARTIES)
Summary of the Management Activity
In 2015 home loans outstanding contracted more quickly than foreseen in either the orderly resolution plan or the
2015 budget.
It is important to draw a distinction between the change in monetary terms and in number of loans in the portfolio. In
euro terms, gross outstandings fell by 16.3% to €22.76 billion, from €27.2 billion. Performing loans declined by 17.4%
to €20.86 billion. At the same time, the number of loans in the portfolio decreased at a slower pace—by 12%, or
36,500—to 299,925 loans. The number of performing loans contracted by 12.6%, representing 36,000 loans. Similarly,
the average principal balance amounted to €75,600, down by 5.5% from year-end 2014.
The contraction in 2015 could be ascribed above all to a considerable amount of loan buyouts among banks. The
decline in the Group’s loan outstandings in euro terms reflects a very high amount of early repayments: €3.09 billion,
or 11.4% of performing loans.
Administration could be analyzed according to four main activities:
•
processing early repayment requests
•
processing requests that entail a change in the amortization schedule
•
processing other customer requests
•
ensuring that periodic payments are automatically debited and recorded when they come due (bulk
processing).
Overall, activity among the administrative staff rose significantly in Q2 and Q3 before easing starting in October 2015.
This situation can clearly be seen in the increase in requests for early repayment simulations, which rose from 5,300 in
January to 7,200 in March and 8,700 in July, before falling back to 5,700 in December.
Overall, activity increased significantly for the management teams in the second and third quarters of the year before
ebbing in October.
Starting in April 2015, monthly reports have enabled the Group to ascertain the number of administrative tasks
carried out both at each entity and at the consolidated level. In 2015, building on methods defined by Diapason, this
administrative sector introduced and optimized the procedural framework for executing essential tasks involved in
managing the loan portfolio.
Early Repayments
The Group’s portfolio lost 42,439 loans, totaling €3.09 billion, with 60% of the amount of early repayments
corresponding to buyouts by competing institutions1.
Early repayments accounted for 67% of the decrease in loans outstanding in 2015 (compared with 7% in the budget).
They occurred most frequently between June and October, accounting for €290 million to €375 million per month.
The spike in early repayments was all the more noticeable as their volume was particularly low in 2014.
Judging by the analysis provided by Crédit Agricole2, stating that the share of loan buyouts accounted for some 30%
(€80 billion) of home loan originations in 2015, the Group’s portfolio did not suffer from aggravated pressure from
competing institutions. The €3.09 billion in early repayments corresponded to 3.75% of all loan buyouts whereas the
portfolio accounted for 3.26% of the total calculated by the Banque de France at year-end 2014.
1
2
This is the reason given by customers, at CIF’s request.
Economic report: Crédit Agricole, Perspectives n° 16/023, 25 January 2016, page 7.
28
In 2015, 99% of the early repayments made reimbursed the entire remaining principal balance of the loans concerned.
There were very few partial early repayments (only 450 in 2015). However, the requirement, as of November 2015, to
apply the proportionality rule to early repayments, where the financing plan includes a “PTZ” interest-free loan,
should cause the share of partial early repayments to grow.
Customer Requests that Potentially Entail a Change in the Amortization Schedule
The loan adjustment activity includes requests for renegotiated lending terms, contractual transformation to a fixedrate basis, maturity extensions, and changes to repayment amounts. It also includes operations intended to make
loans outstanding more secure, which began in 2015 with the Group Risk, Permanent Control, and Compliance
Division.
The €967 million in loans adjusted in 2015 included:
•
€401 million in renegotiated fixed-rate loans or loans converted from mixed- to fixed-rate amortization
•
€27 million in loans being converted from mixed- to fixed-rate amortization that were made more secure
•
€539 million in loans that were contractually converted to fixed-rate amortization.
In this area, two important decisions had a major impact on activity:
•
the reformulation of the financial aspects of the Group’s loan adjustment policy
•
the start-up of an operation to make mixed-rate loans more secure during the initial amortization period.
Mixed-rate loans are the first stage in an overall effort to make all loans more secure. This project will gradually be
expanded according to orientations defined by the Group Risk, Permanent Control, and Compliance Division. The
purpose of the undertaking is to reschedule loans by encouraging borrowers to exercise the option to amortize on a
contractual fixed-rate basis when the deadline approaches for their loans to switch to revisable-rate amortization. This
ongoing operation concerned 7,000 loans in 2015: 2,200 loans were made more secure, and another 5,600 could have
been.
Ensuring Collection of Mixed-Rate Loans—2015
100%
80%
60%
40%
20%
0%
80%
80%
58%
Loans analyzed
Borrowers contacted/action required
Adequately secure loans/action required
57%
53%
Insufficiently secure loans
Proposals sent/action required
The outcomes of renegotiations initiated by customers were highly contrasted in 2015. Until July, lending rates
offered on renegotiations combined with strong customer demand caused the amount of adjusted loans outstanding
to increase to €50 million per month, and even more from April to July.
Starting in August, when rates were revised upward, following the reformulation of the financial aspects of the
Group’s loan adjustment policy, and eligibility criteria were made more stringent, loan adjustments fell sharply and
appreciably, to €2 million or less per month in December.
Efforts to make loans more secure had a positive impact on contractual conversions to fixed-rate amortization.
Between 300 and 500 of such conversions were validated each month, with a peak of 621 in July.
29
Renegotiation proposals generated more than 20,000 simulations in 2015.
Excluding BPI, the Group granted 2,016 maturity extensions in 2015, representing 0.7% of loans in the portfolio. On
average, maturity extensions concerned two or three monthly payments (2.36).
Altogether, at year-end 2015, 13,642 loans (4.6% of the total) had a maturity extension in progress.
Excluding BPI, monthly repayment adjustments affected 1,001 loans (about 80 to 90 per month), with repayment
amounts increasing in 58% of all cases. The exercise of these contractual options generated 4,100 simulations.
A customer relationship management tool currently known as GRC-ARI will be deployed in the first half of 2016 to
optimize the procedure of granting and processing loan adjustments, as well as to improve the continuity and fluidity
of contacting customers and issuing reports.
Other Customer Requests
This activity essentially comprises processing inflows and simple requests for information, furnishing certificates, and
handling customer requests to apply or modify guarantees or insurance.
Group creditor insurance claims were invoked in a high number of cases: 4,400 in 2015.
POLICY FOR MANAGING REAL ESTATE ASSETS
Real estate assets are managed in keeping with two main objectives: industrializing the issuance of appraisals and
accelerating the disposal of operating and nonoperating premises subject to price optimization.
Safeguarding the value of mortgage guarantees is a key aspect of the Group’s collection and writedown policy.
Collateral is valued by teams of appraisers and mobile problem-solvers who have achieved a high degree of
professionalism and productivity thanks to an in-house appraisal tool introduced in 2015 and to training and coaching
sessions led by seasoned experts. To satisfy the demand for appraisals of all asset classes, and handle higher volumes
resulting from stricter updating rules, the real estate division has developed a method for appraising housing
complexes under management and executing appraisals based on documentation.
Efforts to shrink the residential real estate portfolio could be seen in the sale of 196 units in 2015 and the rigorous
selection of properties purchased at auction. After peaking at 562 units valued at €64 million at 30 June, the
residential real estate portfolio contained only 479 units at year-end. In light of carrying costs and the general market
downturn, particularly affecting units with a low degree of liquidity or situated in rural areas, the Group maintained its
policy of liquidating the portfolio at market prices.
The diffuse and heterogeneous portfolio of 314 managed institutional residences, which belong to a narrow, lowgrowth, secondary market, was written down by €10.6 million in 2015 following a reappraisal.
The Bordeaux head office of CIF Sud-Ouest and 12 of the Group’s operating branches were sold during the year,
bringing the number of operating branches left in the portfolio to 12, with a value on the order of €4 million at 31
December 2015.
GROUP INFORMATION SYSTEMS
In 2015 the Group Information Systems Division continued to implement constructive projects aimed at creating a
foundation for the company project centered on CIFD, while ensuring the unification of IT tools and processes.
Loan Management: Migration of Subsidiaries
The Unified Parameterization Model for the Xloan solution, which was defined in 2011, enabled the Group to validate
the functional and organizational model. The SFRs have steadily migrated to this model. Unification of the Credit
system using Xloan was achieved when CIF Centre Est completed convergence on schedule in October 2015.
30
The harmonization of information systems along the Xloan/UPM model (excluding BPI) has been completed, and all
the SFRs are now using the same tool. Each remaining Xloan installation is based on a technical framework specific to
the corresponding SFR.
The framework thus created will allow for technical mergers in keeping with the changing status of the entities in
question.
SFR Mergers
As an extension of the migrations, the Group Information Systems Division has been working on the merger of the
SFRs with CIFD, involving two major operations:
•
the creation of an operational unit within CIFD and the installation of the Evolan accounting software
solution. This framework has been operational since 1 January 2015.
•
the merger of the SFRs with CIFD and the processing of accounting operations using CIFD’s system. The first
subsidiary, CIF RAA, joined this system in April 2015, and CIF Med and CIF Ouest joined it in November 2015.
Invoicing and tangible-asset management have been harmonized using the Tribank software solution.
Technical Mergers/Establishments
The SFRs that have migrated to Xloan are using the same tool, each within a dedicated technical environment. The
final stage will consist in merging the dedicated Xloan systems within a single Xloan system. This task can be achieved
according to milestones corresponding to the implementation of transitional platforms.
The Group Information Systems Division has set up tools to prepare for the technical and organizational mergers at a
pace that is currently being set. Completion is expected to take place in 2017.
Information System Transformation Plan
More generally speaking, the Group Information Systems Division has begun to simplify and rationalize the
information system in cooperation with the administrative sectors. It is proceeding according to three stages:
•
analyzing the various tools currently being used within the Group and determining their differences
•
defining the target tools for the period 2016-18 in cooperation with the administrative sectors (e.g., payroll,
accounting, banking back office, absentee management, call centers) in order to unify their IT profile and
activities
•
specifying the pathway from the existing configuration to the target configuration, identifying the resources
required as well as timeframes.
This approach is steadily being expanded upon with the administrative sectors. It will enable the Group to optimize
business both at the level of the administrative sectors and at that of information systems, while minimizing costs.
Accordingly, the management audit and accounting administrative sectors and the Group Risk, Permanent Control,
and Compliance Division have undertaken a significant project to validate a new architecture aimed at ensuring data
coherence and quality.
Acquisition of the Source Code for the Xloan Solution
The transfer of competence to in-house teams was completed in 2015, which will enable them to manage this
software application autonomously after the supplier, MCO, completes its final delivery in April 2016. Source code will
be managed in-house starting in July 2016.
SEPA
The Single Euro Payments Area (SEPA) payment-integration standard has been incorporated into the information
system with the Group’s new partner, BRED.
31
FUNDING, HEDGING, AND LIQUIDITY MANAGEMENT FOR THE GROUP
Caisse Centrale du Crédit Immobilier de France (3CIF), a credit institution licensed to operate as a bank, serves the
Group by raising financing for the Group’s entities, buying financial instruments to hedge the interest-rate and
currency risks incurred by Group units, and trading those instruments in the markets, and managing the Group’s
liquidity reserves.
3CIF conducts no proprietary business. It has no direct or indirect exposure to any assets considered to be risky or
toxic.
Group Funding
The Group raised only €2.5 billion in funding in the markets compared with an initial projection of €3.2 billion. This
decrease reflects the large amount of early loan repayments, which reached 11.37% of the outstanding during the
year, and 3CIF’s sale of its RMBS portfolio in February 2015 for €838 million and the June 2015 sale of various
securities with a face value of €74 million.
3CIF, the sole Group entity authorized to issue securities bearing the State guarantee, raised €820 million in debt
issues through private placements, including negotiable certificates of deposit and EMTNs maturing for the most part
in less than 18 months, and through €1,650 million in two public debt issues: an €850 million issue floated in January
2015 (with a value date of 5 February 2015) and an €800 million issue floated in July 2015 (with a value date of 31 July
2015) after tension in the markets had subsided in the wake of Greece’s debt negotiations.
Investors showed increasing interest in 3CIF issues not only for their spread over French government securities, but
also for reasons of their qualification as Level 1 High Quality Liquid Assets (HQLA) for paper satisfying the Basel III
Liquidity Coverage Ratio (LCR) and as a result of the European Central Bank’s policy of quantitative easing.
Moreover, since the Group returned to the markets in January 2014, it has systematically sought out investors not
only from Europe, but also from Asia and, to a lesser extent, Africa and the Americas, as a means of consolidating its
notoriety. French investors accounted for only 17% of 3CIF’s public issues, behind Germany and Austria (22%),
followed by Asia (16%) and the Benelux countries (15%). The Scandinavian countries continued to be active investors,
whose share has stayed at a relatively constant 7%.
Issue spreads over benchmark French Treasury securities hit a historic low in January 2015, at 12 basis points, rising to
17bp in July only due to the Greek debt crisis and to the issue premiums that the markets were demanding to offset
the impact of ECB interventions on sovereign and quasi-sovereign debt, regardless of issuer.
At 31 December 2015, State-guaranteed debt outstanding stood at €9,517 million versus total consolidated debt of
€22.1 billion.
Liquidity Management
3CIF manages the Group’s liquidity reserves. It provides CIFD and the SFRs with “evergreen” credits, and it uses all of
CIF Assets’s and part of CIF Euromortgage’s excess cash to cover its short-term funding needs. CIF Euromortgage has
been directly investing the remainder of its excess cash in negotiable fixed-rate French Treasury bills (BTF) since 2014,
following authorization from the Monitoring Committee, or making deposits with the Banque de France, following its
opening of an account in August 2015. Before it opened that account, CIF Euromortgage took the excess cash that it
could not invest in BTFs, for lack of market instruments corresponding to its management needs, and placed it with
3CIF. In turn, 3CIF reinvested those funds in the market, made unsecured overnight loans in the interbank market to
banks approved by the Risk Committee, or deposited them in its account with the Banque de France. The fact that CIF
Euromortgage has opened its own account with the Banque de France will help mitigate the expense incurred through
recourse to the internal guarantee.
Optimization of Recourse to the Internal Guarantee
A large amount of early loan repayments prompted the Group to redeem €175 million in State-guaranteed securities
in order to minimize the cost of the State guarantee and attenuate the impact of negative interest rates on its
deposits with the Banque de France.
32
The Group has continued to limit its recourse to the internal guarantee. After the Monitoring Committee authorized
CIF Euromortgage (the only Group entity with a cash surplus) to place its excess cash in BTFs starting in 2014, rather
than lending it to 3CIF (which would have left those funds in its account with the Banque de France or made
unsecured overnight loans in the interbank market to banks approved by the Risk Committee, generating commissions
payable in respect of the internal guarantee), CIF Euromortgage opened an account with the Banque de France,
enabling it to fine-tune its cash management. The ability to make those central bank deposits has become even more
crucial as the yield on BTFs has fallen even lower than the –0.30% rate charged on Banque de France deposits at yearend.
Even before dismantling CIF Assets and restructuring CIF Euromortgage, to be completed no later than year-end 2017,
the Group renegotiated with the rating agencies the amounts that Group entities must place in the CIF Assets
guarantee fund. It was agreed that the guarantee fund could be decreased by €1.1 billion without jeopardizing the
AAA/Aaa rating of CIF Assets senior notes, thus lowering the amount subject to the internal guarantee as those funds
are not held by 3CIF.
RISK MANAGEMENT
CUSTOMER CREDIT RISK MANAGEMENT AND MONITORING
The Group Risk and Permanent Control, and Compliance Division reports directly to the company’s General
Management, thus ensuring its independence. It monitors and manages credit, financial, and operating risks. It also
organizes and manages the Group’s permanent control organization, and its purview includes responsibility for
handling noncompliance risks.
The organization was further strengthened early in 2015 with the appointment of a new head of the Group Risk and
Permanent Control, and Compliance Division and the implementation during the year of a major program to
consolidate the risk management function. The consolidation program has entailed:
•
strengthening the Division’s teams and management at several levels through the recruitment of a new
assistant risk manager; the appointment of a second assistant manager for operational risks, permanent
control, and compliance; and the addition of a head of information systems security late in 2014, who also
reports to the Group Risk and Permanent Control, and Compliance Division
•
reformulating risk and collection policy for the orderly resolution process and to achieve more active
management of receivables in order to optimize net assets
•
deepening the model used to forecast allowances for risk and reviewing the means for determining individual
and collective allowances.
At the same time, a new risk governance organization has been set up and a new committee organization has been
defined, entailing the creation of a specialized Risk Committee to work together with the risk policy executive
committee and with internal financial management and risk monitoring committees.
The Risk Committee has been given the following missions in accordance with the Decree of 3 November 2014:
•
advising the Board of Directors on its review of risk policies in place, to ensure compliance with requirements
and targets
•
helping the Board verify the effectiveness of arrangements and procedures set up to measure and monitor
exposures
•
examining the compatibility between incentives created by risk management policy and CIFD’s remuneration
practices, on the one hand, and CIFD’s position with respect to its risk exposure
•
providing the Board with essential information gained from analyzing and monitoring the risks related to its
activity.
MANAGING CUSTOMER CREDIT RISK
In 2015 the Risk and Permanent Control Division’s Customer Credit Risk department greatly expanded upon its analysis
of exposures and portfolios:
33
•
establishing a standardized segmentation at the Group level
•
developing a loan watch list and a new collection scoring system
•
expanding product checklists for the risk committees
•
updating tools used to simulate risk provisions.
On these bases, new efforts were undertaken to make the collection of mixed-rate loans, loans with a particular risk
profile (e.g., those with payments in arrears), and bullet loans more secure.
Although the weak economy continued to impact borrower solvency and cause additional borrowers to require debt
workouts, loan losses began to decline in the second half of the year following the peak that occurred between late2014 and early-2015.
In contrast, loan loss allowances were raised significantly at year-end 2015 for the following reasons:
•
downward valuations of collateral
•
a change in the method used to calculate individual writedowns (taking into account a more statistical
approach consisting in calculating the risk at term once loans are classified as doubtful), the introduction of
collective allowances, and the recovery of allowances on some disputed claims. These developments are the
result of in-depth technical work conducted in close cooperation with the supervisor, and they have enabled
the Group to align its practices with those of the industry and adopt a credit risk management system that is
suited to the orderly resolution procedure.
MANAGING OPERATIONAL RISKS
According to the way in which operational risks are defined and categorized, CIFD’s activity exposes it to risk of loss
resulting from deficiencies or failures ascribable to procedures, staff, internal systems, or external events.
The operational risk management organization was left unchanged in 2015, including for the subsidiaries that were
merged with CIFD.
The CIF Group deals with operational risk as part of comprehensive system it has developed for measuring and
monitoring it. Operational risk management is based on identifying, and then regularly evaluating, the operational
risks incurred by each of the Group’s entities. The results of these efforts are used to create action plans that are
aimed at attenuating established and identified risks at each subsidiary and that are monitored every year. The Group
has also set up a system for quarterly reporting of incidents and material losses, along with specific action plans.
The Group’s permanent control organization is responsible for monitoring and management operational risk, relying
on operational risk mapping and permanent control management indicators as revised in 2014. A major update of
operational procedures was conducted in 2015 following the initial mergers of the financial subsidiaries with CIFD,
and mapping and related permanent control operations will be updated as new organizational processes are carried
out.
In 2015 CIFD worked on a program to prevent critical situations that the Group could face as a result of its resolution
and successive job-saving plans. The aim of this program is to determine whether the Group incurs critical risks if
some staff members leave the organization, and to seek out ways to hedge the risks that might arise from such
departures.
The newly created Internal Control Coordinating Committee met in 2015 to examine major internal control issues,
alongside the Operational Risk and Business Continuity Committee that was organized in the second half of the year.
NONCOMPLIANCE RISK
In 2015, work on the compliance project concerned the prevention of money laundering and financing for terrorism.
In particular, it involved revisions of training materials in line with developments in the Group’s activity, and initial
updates to the Group’s in-house standards.
34
Within the context of the orderly resolution, the head of compliance had no reason to issue any written opinions on
new products or on significant changes to existing products.
Updates were started on the outsourcing system and will continue in 2015. This operation is intended to enrich halfyearly reporting from subsidiaries (credit institutions and financial companies) and establishments. As a result, the
Group is now better equipped to evaluate the systems used to verify malfunctions and update the mapping used for
job-saving plans, as well as to determine the degree of criticality of possible collateral risks.
The Group-wide system for neutralizing risks pertaining to France’s Data Protection Authority (CNIL) remained
unchanged in 2015. Under this system, each Group entity is legally and materially responsible for its own reports to
CNIL. During the year, the Group and individual entities appointed nationwide and local-level CNIL coordinators, who
carry out the same missions, the nationwide coordinator having responsibility for the central entities.
Group-wide alerts received since 2006 have all been closed, and no CIF Group entities issued any alerts in 2015.
The compliance organization provides second-level permanent control for the CIF Group as stipulated in Section 11a)
of the Order of 3 November 2014 in order to prevent non-compliance risks and safeguard the Group’s image and
reputation. At the level of the subsidiaries that are still operating independently, the local risk and permanent control
departments are responsible for this control.
MANAGING FINANCIAL COUNTERPARTY RISK
Most of CIFD’s risk exposure related to financial counterparties is borne by 3CIF and CIF Euromortgage. The Risk Policy
Executive Committee, whose meetings are attended by representatives of the Financial Division and the Risk,
Permanent Control, and Compliance Division, sets individual limits per counterparty for each of these two entities.
3CIF and CIF Euromortgage incur most of their risks in two forms: forward transactions (swaps, caps, FRAs) that they
use to manage the Group’s interest-rate risk, and holdings of securities issued by non-Group entities, that 3CIF
purchases to manage the Group’s liquidity. Additionally, 3CIF and CIF Euromortgage make very short-term
investments of the Group’s cash surpluses in the interbank market or deposits them with the Banque de France.
At 31 December 2015 the Group’s off-balance sheet commitments totaled €43,047 million (nominal). The Group does
not trade in these instruments; those that it holds are used to hedge interest-rate and currency risk.
In order to improve risk control, Group entities other than 3CIF are not authorized to purchase financial instruments
directly in the markets. To satisfy their hedging needs, they must turn to 3CIF, which is the central unit in charge of
hedging interest-rate risk.
When dealing with non-Group entities, 3CIF and CIF Euromortgage only enter into forward transactions with
counterparties under ISDA- and FBF-type framework agreements that include collateralization clauses.
At 31 December 2015, the nominal amount of forward instruments held by the CIFD Group could be analyzed as
follows: 9% involved counterparties to which the Group has given an in-house rating of AAA to AA–, 89% involved
counterparties rated A+ to A–, and the remaining 2% involved counterparties were rated BBB+ to BBB–.
Portfolio of Securities Issued by Non-Group Entities
At 31 December 2015, the Group held a €579 million portfolio of securities issued by non-Group entities. 3CIF held
this entire portfolio.
3CIF created this portfolio in line with its liquidity management for the Group. It consists mostly of securities eligible
for ECB repo funding, including government securities and those of government agencies and supranational issuers, as
well as covered bonds. 3CIF sold its entire RMBS portfolio in February 2015.
At 31 December 2015, the portfolio of government securities had a net book value of €447 million (face value). It
comprised securities from eight Western European countries, roughly 18% of which corresponded to exposures to
Italy, Spain, and Portugal.
35
All of the securities of government agencies and supranational issuers, and all of the covered bonds of non-Group
issuers that 3CIF held at 31 December 2015 (€132 million), had an in-house rating of AAA.
MANAGING FINANCIAL RISKS (LIQUIDITY, INTEREST-RATE, CURRENCY)
In the second half of 2015 the Group switched to managing its financial risks on a consolidated basis, with the consent
of the ACPR.
This reorganization is better suited to the Group’s new situation for the following reasons:
•
The minority interests in the SACICAPs have been eliminated, and all Group companies are now 100%-owned
by CIFD.
•
The Group is undergoing orderly resolution and the cessation of loan originations has essentially obviated the
need to manage interest-rate risk at the local level. Upcoming hedging operations will simply be adjustments
mostly in relation to disposals of fixed-rate assets or to differences in actual early loan repayments with
respect to the models used to determine interest-rate exposure.
•
The Group’s information system, especially Fermat, provides an accurate view of consolidated interest-rate
exposure.
The Group Finance Division is responsible for managing funding and interest-rate risk. At the Group level, the Balance
Sheet Management and Asset Optimization Committee makes operational decisions concerning financial risk
management, subsuming the ALM committees that previously existed at the subsidiaries.
Consequently, 3CIF is no longer subject to individual limits.
CIF Euromortgage continues to ensure its own financial risk management, and it must remain within its very narrow
interest-rate limits. It hedges its exposure using swaps.
INTEREST-RATE RISK ON THE BANK PORTFOLIO
This is the risk generated by the impact of interest-rate fluctuations on fixed-rate lending and borrowing positions
both on and off the balance sheet.
The Group Balance Sheet Management and Asset Optimization Committee organizes and determines the methods
used for managing interest-rate risk based on recommendations from 3CIF’s Asset-Liability Management department
that are validated by CIFD’s Board of Directors. They measure interest-rate risk exposure in the event of adverse
movements in market parameters.
The following units monitor financial risks:
CIFD’s Board of Directors
The Board is responsible for organizing and supervising the management of the Group’s financial risks. As such:
•
It determines the Group’s ALM standards and limits.
•
It has put the Group Risk Policy Executive Committee and the Group Balance Sheet Management and Asset
Optimization Committee in charge of determining the Group’s ALM policy, both at the consolidated level and
for CIF Euromortgage.
•
On behalf of the Group’s shareholders, it monitors risks and the asset-liability management implemented by
the Group Risk Policy Executive Committee and the Group Balance Sheet Management and Asset
Optimization Committee.
In order to comply with new regulations, CIFD has organized a risk committee reporting to the Board of Directors for
the purpose of informing it of the Group’s risk policy in all areas of its operations (see above).
The Group Balance Sheet Management and Asset Optimization Committee
36
CIFD’s Board of Directors has delegated to the Balance Sheet Management and Asset Optimization Committee the
task of determining ALM policy for the consolidated Group.
The Balance Sheet Management and Asset Optimization Committee bases its decisions on information provided by
the Group Finance Division’s ALM department, the Management Audit department, and on data generated by a single
software tool used to measure ALM risks for all the subsidiaries.
Accordingly, the Balance Sheet Management and Asset Optimization Committee:
•
monitors the Group’s profitability
•
proposes solutions for optimizing CIF’s profitability, as well as corrective measures in the event of any variance
with respect to the budget
•
formulates the strategy for managing shareholders’ equity with the aim of optimizing the return on net assets
•
proposes and monitors funding policy according to orientations defined and validated by CIFD’s Board of
Directors
•
proposes and monitors balance sheet management criteria, maturity mismatches, and interest-rate and liquidity
exposures submitted for the approval of CIFD’s Board of Directors
•
monitors market conditions and market exposures, as well as their impact on funding efforts
•
monitors the main developments and changes at the financial subsidiaries, the means for funding outstandings
(such as securitization), and the quality of the various portfolios
•
ensures overall coherence between general developments concerning outstandings, funding guaranteed and nonguaranteed debt, and controlling margins (net interest margin).
The following are members of the Balance Sheet Management and Asset Optimization Committee:
•
the Chief Executive Officer, who is Chairman of the Committee
•
Deputy Chief Executive Officers
•
the Chief Financial Officer
•
the head of the Group Risk, Permanent Control, and Compliance Division
•
the head of the General Inspection and Internal Audit Division
•
a Group-level head of a territory
•
the head of the ALM department
•
the head of the Funding and Investor Relations Department
•
the head of the Management Audit Department
•
the deputy head of the Financial Risk Department.
Group Finance Division
The Group Finance Division’s ALM department has the following missions:
•
recommending to the Group Balance Sheet Management and Asset Optimization Committee the financial
risk standards and indicators to be used by the Group
•
making recommendations to the Group Balance Sheet Management and Asset Optimization Committee
concerning tools, models, and ALM conventions (including conventions pertaining to early repayments and
rules for treating the decrease in shareholders’ equity) that the Group Finance Division uses to assess
exposure to financial risks
•
recommending ALM policy decisions to the Group Balance Sheet Management and Asset Optimization
Committee of ALM risks at the consolidated level
•
informing the Group Balance Sheet Management and Asset Optimization Committee of ALM risk exposure at
the consolidated level and at each of the subsidiaries
37
•
measuring and supervising the Group’s ALM risk management
•
applying and monitoring application of the Group Balance Sheet Management and Asset Optimization
Committee’s decisions.
The Group Balance Sheet Management and Asset Optimization Committee is responsible for asset-liability
management at CIF Euromortgage.
Since late-2007, all Group companies have relied on a single tool, Fermat, for monitoring. Using this tool, they access a
shared database for analyzing risks specific to each operating unit, as well as those at the consolidated level, in terms
of ALM conventions, methods, and product management.
The interest-rate risk position is determined using an in-house method that measures the sensitivity of the Group’s
earnings and assets. Limits are defined for the consolidated Group and for CIF Euromortgage. The following limits
apply to the consolidated Group:
•
The sensitivity of the Group’s net income to a 1-point adverse movement in interest rates must not exceed
€25 million.
•
The sensitivity of the net asset value of the balance sheet to all risks of parallel shift and rotation in the yield
curve must not exceed €140 million.
The Group has defined three major indicators for measuring and monitoring its interest-rate risk. Every quarter, it
analyzes the risk it would incur on its fixed-rate and options positions in the event of two scenarios (±1- and ±2-point
parallel shifts in the yield curve) and measures the sensitivity of income over a moving 12-month period. It also
assesses the sensitivity of the NPV of the balance sheet to a ±1-point rotation in the yield curve.
The financial risks at 31 December 2015 were presented to the Group Balance Sheet Management and Asset
Optimization Committee at its meeting on 24 March 2016.
At 31 December 2015, the results of those analyses were as follows:
•
The sensitivity of income to a 1-point parallel shift in the yield curve over one year was €22 million, compared
with an authorized limit of €25 million.
•
The sensitivity of the NPV of the balance sheet to a 2-point parallel shift in the yield curve was €68 million,
compared with an authorized limit of €140 million.
The Group’s interest-rate risk exposure remained within authorized limits throughout 2015.
LIQUIDITY MISMATCH AND FUNDING RISK
Liquidity mismatch risk is the risk that the Group would be unable to finance its assets and/or honor its commitments.
Loss of investor confidence or a widespread liquidity crisis would cause the Group to have difficulty accessing the
financial markets.
The Group Finance Division manages the Group’s liquidity under the supervision of the Group Balance Sheet
Management and Asset Optimization Committee.
CIF Group’s Liquidity Mismatch Risk Management: Rules, Methods, Limits, and Participants
The CIF Group manages its liquidity on a consolidated basis. 3CIF, which benefits from the State guarantee of the
Republic of France, is the Group’s issuing arm and is central to operational liquidity management.
Based on recommendations by the Group Balance Sheet Management and Asset Optimization Committee, CIFD’s
Board of Directors sets liquidity limits, which it reviews at least once a year, and more frequently whenever required.
Every year, the Group Balance Sheet Management and Asset Optimization Committee establishes a funding program
for the following 12 months based on a consolidated maturity schedule prepared by the Finance Division, and it
assesses future needs for subsequent years. In particular, it factors in future needs (extending beyond 12 months)
when calibrating the term of borrowings planned in the program. The program, its execution, and any possible
38
changes to it are examined at every meeting of the Group Balance Sheet Management and Asset Optimization
Committee. Any important changes in the program are submitted to CIFD’s Board of Directors for approval.
The Finance Division:
•
presents the liquidity situation to CIFD’s Board of Directors at least once every quarter, and more frequently
whenever required
•
prepares a consolidated maturity schedule of assets and liabilities until complete amortization or repayment
for the Group Balance Sheet Management and Asset Optimization Committee on a quarterly basis. This
schedule factors in adjusted and documented forecasts of early repayments and reclassifications of loans as
nonperforming. Securities in 3CIF’s liquidity reserve are presented according to their actual maturity
schedule.
•
submits a proposed funding program every year to the Group Balance Sheet Management and Asset
Optimization Committee for the following 12 months. The Finance Division informs the Committee of
progress on the program at each of its meetings, and recommends changes as needed.
Under the terms of the guarantee protocol, only securities issued by 3CIF with a term of three months to
five years are eligible for the State guarantee. Issue maturities in the funding program must be planned to
ensure balance with respect to future borrowing needs, and they must provide three months of financial
autonomy (see below).
•
establishes, at least twice a month, a consolidated maturity schedule of the Group’s assets and liabilities for
the following 12 months. The schedule for home loans is updated quarterly, factoring in adjusted and
documented forecasts of early repayments and reclassifications of loans as nonperforming.
Liabilities (especially borrowings) and collateral given or received are adjusted to reflect their actual values.
Monthly or smaller increments are used to prepare maturity schedules.
To take into account the risk of volatility of collateral given or received, the risk that early repayments may
be smaller than expected, and the more general risk of a time lag between disbursements and collections, a
buffer is factored into the Group’s funding needs and its amount is regularly reassessed using consistent
criteria. This buffer currently stands at €410 million.
•
determines the timing of securities issues for subsequent months based on the maturity schedule and the
applicable funding program for the 12-month period
•
files a request every quarter with France’s Treasury Department for authorization to issue securities for the
following half-year, and requests prior authorization from Agence France Trésor for any planned public issue
of €1 billion or more
•
sets the issue schedule and completes securities issues in accordance with the following financial autonomy
requirement: At all times, with respect to the 12-month consolidated maturity schedule and factoring in the
buffer to compensate for the risk of volatility of certain assets or liabilities, the Group must have strictly
positive cash flow for the subsequent three months.
At year-end 2015 the Group’s liquidity coverage ratio (LCR) as construed under Basel III standards, which took effect
on 1 January 2015, was 416% compared with a minimum requirement of 60% as of 1 October 2015, 70% as of 1
January 2016, 80% as of 1 January 2017, and 100% as of 1 January 2018.
Provisional Liquidity Gap to be Financed
CIF’s consolidated balance sheet consists entirely of euro-denominated assets and liabilities (with the exception of
bonds issued in foreign currencies, which have all been swapped for euros). Thus, its needs are only in euros.
For this reason, the Group’s financing needs consist in raising funding to cover a liquidity gap in euros that is known in
advance (except for loans subsequently reclassified as nonperforming, early repayments, and cash collateral).
In 2015, 3CIF maintained its securities issues within the limits attached to the State guarantee of the Republic of
France: €28 billion (€16 billion in “external” guarantees covering new borrowings by 3CIF on the markets and €12
billion in “internal” guarantees covering cash investments by CIF Euromortgage and CIF Assets with 3CIF).
39
Liquidity Risk Exposure
After the Republic of France granted the CIF Group its State guaranty, first on a provisional basis in February 2013 and
then on a permanent basis in November 2013, there was a radical change in liquidity mismatch risk exposure of both
the Group and 3CIF (now the Group’s sole funding arm, as CIF Euromortgage no longer issues securities).
The Group established new liquidity mismatch risk rules and limits to reflect its orderly resolution (having ceased
originating loans that would require funding) and its status as issuer of State-guaranteed securities. These rules and
limits are described above.
PERMANENT CONTROL
The permanent control system remained unchanged in 2015, including for the subsidiaries that were merged with
CIFD.
This system relies on an operational risk map and on permanent control performance indicators that were updated in
2014. It incorporates a function for issuing reports on the execution and results of permanent control operations that
are provided to individual entities or to CIFD.
A major update of operational procedures was conducted in 2015 following the initial mergers of the financial
subsidiaries with CIFD, and mapping and related permanent control operations will be updated as new organizational
processes are carried out.
The Internal Control Coordinating Committee (renamed the Internal Control Executive Committee) met in the first half
of 2015 to plan out the program for the year, discuss the organization of regulatory surveillance, and identify and
monitor high-priority operational risks. In the second half, it monitored these risks with greater precision at meetings
of the Operational Risk and Business Continuity Committee.
In addition to the Group’s main operational risks, this committee focused its attention on complaints, risks arising
from sensitive situations in relation to the orderly resolution, information systems security, business continuity plans,
and new efforts to resume procedures related to the Group’s transformation. It also began to discuss a plan to adapt
internal control in order to update the operational risk policy and implement it at the end of the first half of 2016.
It presented its main conclusions to the Risk Committee that reports to the Board of Directors.
PERIODIC CONTROL
As the Group’s central entity, CIFD must ensure that all Group companies execute high-quality periodic audits using
the appropriate resources.
Periodic control has been placed under the responsibility of the General Inspection and Internal Audit Division, which
answers directly to CIFD’s Chief Executive Officer.
The purview of the General Inspection and Internal Audit Division extends to all companies in which CIFD has a
meaningful direct or indirect ownership interest, or to which it provides essential services, as well as to all other units
of the CIFD network. Inspectors from this division operate inside these entities to verify their risk control, their
operational security, and the reliability of their financial information.
At its meeting on 8 July 2015, CIFD’s Board of Directors replaced the local audit committees with a Group-wide audit
committee. Internal auditors who previously reported to audit committee chairpersons now report to Board
chairpersons.
Close cooperation between the various team members ensures the coherence and effectiveness of the Group’s
periodic control. This cohesiveness is supported by:
•
the fact that regional internal auditors answer directly to the General Inspection and Internal Audit Division
until their entity is merged with CIFD, at which time the relationship becomes hierarchical
40
•
the participation of the head of the General Inspection and Internal Audit Division at local audit committee
meetings until 8 July; after that date, an invitation to attend Board meetings to transmit Group audit
committee information to the Boards until the entities are merged
•
regular exchanges of information thanks, in particular, to conferences that are held for all inspectors and
auditors. These conferences offer an opportunity to discuss developments concerning regulations, share
experience on missions conducted, develop common methods, and learn about new banking requirements.
Topics discussed in 2015 included Basel III/CRD IV and regulatory and prudential developments, with an
emphasis on capital and liquidity ratios.
•
regular teleconferences to discuss the audit plan and missions being executed
•
nationwide audit missions based on work programs prepared at the central level with the assistance of
auditors
•
regional audit results of entities that have not been merged with CIFD, which are forwarded to the General
Inspection and Internal Audit Division
Twelve audit missions were mandated in 2015, including one on outsourced services, one entitled “CIF’s General
Management and Information Systems: Management Data and Decision-Making Assistance”, and one on amicable
collection procedures. A special mission was devoted to responsibilities in connection with the handling of the
Apollonia affair, and an external mission was conducted on a review of procedures for monitoring credit risk and
allowances that led to a reformulation of risk and collection policy.
Each mission was covered in a report containing the various viewpoints, and the conclusions were presented to the
Group Audit Committee.
Major changes were made in 2014 to the methods used to monitor the execution of recommendations. They were
further enhanced with regular information from the General Management Committee concerning the status of
recommendations and the implementation of an escalation procedure at the Audit Committee for recommendations
that were not fully executed on schedule. As of year-end 2015, all Group recommendations had been entered into a
single database containing just under 300 recommendations. The objective is to guarantee the quality of
recommendations issued and to ensure that they are implemented in a timely fashion.
The audit committee met six times in 2015. It reviewed the individual company and consolidated annual and interim
(if applicable) financial statements of CIFD, CIF Euromortgage, and 3CIF before they were presented to the Board of
Directors. The chairman of the audit committee informed CIFD’s Board of Directors of discussions that were held. At
its meeting on 9 April 2015, the audit committee reviewed the internal control report for 2014 before submitting it to
the ACPR.
HUMAN RESOURCES
HEADCOUNT
At 31 December 2015, CIFD Group had a staff of 1,0673 employees.
Analysis of Employees by Administrative Sector (% of actual persons)
Administrative Sector
Accounting
Amicable collection
7.30%
11.05%
Audit
2.43%
Banking flows
0.66%
Business development
0.19%
Corporate services
3.93%
3 Number of actual persons holding unlimited- or limited-duration employment contracts, work-study jobs, or jobs outside the Group on a
suspended employment contract, excluding PSE-1 employees and those with preretirement status.
41
Credit
1.12%
Customer relations
1.12%
Finance
7.49%
General management
3.09%
Human resources
7.68%
Information technology
10.86%
IT front office, Organization
4.03%
Legal
1.12%
Litigation
9.08%
Loan disbursement (administration)
0.09%
Loans, Customer quality control
17.98%
Marketing and Communication
1.12%
Real estate
1.50%
Real estate appraisal
3.37%
Risks, Permanent control, Compliance
4.40%
Tax
0.37%
Grand total
100.00%
Group Training Programs in 2015
In their training efforts, the units that comprise the economic and social grouping include Group training programs,
which are suited to the ongoing orderly resolution and the reorientation of the Group’s activities on managing its
home loans outstanding and especially on protecting the portfolio.
Implementation of the orderly resolution has necessitated changes that affect the operational management of
training programs, whose content and pedagogical methods must continually be revised. It has required increasing
efforts to train managers and remaining teams in change management and to bolster their managerial skills.
Training sessions were planned to meet these needs in 2015. Particular emphasis was placed on controlling risks,
strengthening core competencies (management, collection, and litigation), and supporting the management
community. Support was provided for activity in real estate appraisal, management, and sales, covering the
specificities of each of these branches.
An assessment of training in 2015 reveals the effort made by most of the Group’s entities, which devoted over 1.6% of
payroll to continuing education.
This financial commitment illustrates the Company’s drive to enhance its staff members’ employability.
Overall, in 2015, more than 1,000 employees embarked on outside training programs and 2,700 days of training were
provided in accordance with the orderly resolution plan.
Staff/Management Relations
The CIF Group central staff committee met on 27 occasions in 2015. It was informed and consulted on the following
points:
•
the restructuring plan and staff reductions (Part I of France’s Labor Code)
•
the layoff plan and the accompanying job-saving plan (Part II of France’s Labor Code)
•
the proposed economic and social grouping agreement concerning telecommuting from home and multisite telecommuting
•
the proposed merger of Crédit Immobilier de France Rhône-Alpes Auvergne (CIF RAA) with Crédit Immobilier
de France Développement (CIFD) and related consequences
42
•
the proposed first amendment to the collective agreement on social management and the supervision of
reorganizations of the Crédit Immobilier de France’s economic and social grouping (extension of external
mobility at Crédit Immobilier de France Développement)
•
the proposed concerted repudiation of certain collective standards (collective agreements, practices, and
unilateral commitments) by entities comprising the Crédit Immobilier de France economic and social
grouping.
Information intended for consultation at the CIF Group central staff committee and the staff committees of the
various entities, on the following procedures, began in 2015 and continued into 2016:
•
the proposed mergers of Crédit Immobilier de France Centre-Ouest (CCO), Crédit Immobilier de France Ilede-France (CIF IDF), and Crédit Immobilier de France Sud-Ouest (CSO) with Crédit Immobilier de France
Développement (CIFD) and related consequences
•
the proposed definition of a reference framework of the organization of the lines of business at entities
comprising the Crédit Immobilier de France economic and social grouping.
GROUP REMUNERATION POLICY
Remuneration and Risk Policies
Under Group-wide arrangements, CIFD’s remunerations committee reviews the Company’s remuneration policy on an
annual basis. It makes recommendations to CIFD’s Board of Directors concerning the conditions of all remunerations
of company representatives, and every year it reviews the remuneration of “sensitive” staff members referred to in
CMF § L.511-71: risk-takers, auditors, and any other employees whose total emoluments place them in the same
remuneration category if their activity has a meaningful impact on the profile of the company or group. It monitors
the remuneration of the heads of risk management and compliance. CIFD defines its remuneration policy in
accordance with its commitments to the Republic of France and to the European Commission within the framework of
the orderly resolution plan.
In particular, CIFD applies remuneration principles that have been defined by national supervisory organizations and
the Capital Requirements Directive CRD IV. This approach concerns both fixed remunerations (not performancerelated) and possible variable remunerations (performance-related), the general principles of which apply to all staff
members.
One of these principles is to bring remuneration policies and practices into alignment in order to achieve a balance
between fixed and variable remunerations that does not encourage excessive risk-taking, and to develop systems for
ascertaining the relationship between performance and performance-related remuneration.
Remunerations and Conditions of Employment of Heads of Financial Operating Subsidiaries (Non-Salaried Company
Representatives)
The average gross fixed remuneration for heads of subsidiaries amounted to €114,731.05 in 2015. Members of the
management of 3CIF, Banque Patrimoine et Immobilier, CIF Centre-Est, CIF Centre-Ouest, and CIF Sud-Ouest are
salaried employees of CIFD. CIF Rhône Alpes Auvergne was merged with CIFD on 1 June 2015; CIF Méditerranée and
CIF Ouest were merged with CIFD on 1 December 2015.
The variable portion of their remuneration for 2015 ranged from 0% to 17% of their fixed remuneration.
Remuneration of Group Employees
At its meeting on 10 February 2015, the Board of Directors of CIFD recommended that the Group maintain its payroll
stable, in light of consolidated economic parameters available at that date, without prejudice to compulsory annual
negotiations.
Allowances for Restructuring Under the Staff/Management Agreement
The Group has recorded severance pay under liabilities and nonrecurring expenses because it is bound by the orderly
resolution plan to terminate the employment contracts of all staff members before they reach the legal retirement
43
age. It is also under contractual obligation (by virtue of the Staff/Management Agreement) to offer employees
compensation in the form of payments and/or benefits when it terminates their employment contracts. Some
indemnities are payable irrespective of the reason for staff departures. Their payment is certain (if vested) but the
date of payment is unknown (e.g., training).
According to Standard CRC 2000-06 (“if an entity has an obligation with respect to a third party, and the obligation will
probably or certainly necessitate a disbursement of funds in favor of that party without the expectation of receiving at
least an equivalent counterpart from that party), CIF considers that information-, counseling-, and training-related
expenses, and expenses for training employees not covered by the first job-saving plan, should be excluded from the
allowance because those expenditures benefit CIF.
Crédit Immobilier de France and its subsidiaries have used the projected unit credit method to determine the present
value of its defined benefit obligations, the corresponding cost of services rendered during the fiscal year, and, if
applicable, the cost of past services (i.e., discounted rights acquired at 31 December 2015).
CIF has used objective and mutually compatible actuarial assumptions, which are its best estimates of variables that
will determine the ultimate cost to be reported.
These assumptions include:
•
a demographic assumption covering the future characteristics of today’s staff members who satisfy the
necessary conditions for rights to benefits; this demographic assumption concerns mortality during the
employment period. Application of the method that takes this parameter into consideration, as refined in
2015, led to the decision to set up an additional allowance of €403 thousand.
•
no assumptions for staff turnover taken into account at 31 December 2015, considering that the take-up rate
reflects this variable in part
•
an assumption of the take-up rate for each of the measures agreed to in negotiations between CIF and
employee representatives (i.e., the Staff/Management Agreement)
•
financial assumptions concerning the following factors:
o
the discount rate
o
future levels of salaries and staff benefits (rate of 0.30% used at 31 December 2015).
The actuarial assumptions used are mutually compatible because they reflect the economic relationships that exist
between certain factors, such as the rate of increase in salaries and discount rates.
Financial assumptions have been based on market expectations at the balance sheet date (31 December 2015) for the
period during which obligations must be discharged.
Actuarial assumptions pertaining to the discount rate have a large impact. The rate used reflects the time value of the
payment commitment but does not reflect the actuarial risk. Moreover, the discount rate does not reflect the specific
credit risk to which CIF’s creditors are exposed, nor does it reflect the risk of discrepancies between actual
commitments that become known in the future and actuarial assumptions made beforehand.
The discount rate applied to post-employment benefit obligations has been determined with reference to a market
rate at the balance sheet date for investment grade corporate bonds with a term equivalent to those of CIF’s
commitments. That rate stood at 0.40% at 31 December 2015.
At 31 December 2015 allowances for social commitments, calculated on the basis of the assumptions mentioned
above, totaled €231,134 thousand. This aggregate allowance concerns all salaried employees, including those who
were on the payroll at year-end 2015 but could be laid off starting in January 2016.
44
FINANCIAL RESULTS
BALANCE SHEET
CIFD had total consolidated assets of €27.36 billion at 31 December 2015, down €7.87 billion from €35.23 billion at 31
December 2014.
Changes in assets corresponded principally to:
•
a €4.7 billion decrease in customer items reflecting the cessation of loan originations and an increase in early
repayments
•
a €3.3 billion decrease in the securities portfolio reflecting CIF Euromortgage’s disposal of €2.3 billion in
French Treasury notes (BTF) and 3CIF’s disposal of €0.9 billion in external RMBSs
•
a €0.6 billion decrease in accrued assets and other assets, primarily reflecting the €0.4 billion decrease in
cash collateral received
•
a €0.7 billion increase in interbank items, corresponding essentially to CIF Euromortgage’s opening of an
account with the Banque de France (€1 billion), which was offset by a €0.5 billion decrease in 3CIF’s account
with the Banque de France as part of the Group’s cash management operations aimed at ensuring
compliance with the liquidity coverage ratio (LCR).
Changes in liabilities and shareholders’ equity corresponded principally to:
•
a €1.7 billion decrease in interbank items, mainly reflecting the partial repayment of €1.6 billion in LTRO
loans granted by the European Central Bank
•
a €5.1 billion decrease in the item “debt securities” corresponding to a €2.9 billion decrease ascribable to
3CIF (€2.7 billion decrease in interbank and money market securities and €0.1 billion decrease in bonds) and
a decrease of €2.2 billion in bonds ascribable to CIF Euromortgage
•
the net loss for the year, which decreased shareholders’ equity by €0.4 billion
•
a €0.5 billion decrease in accrued liabilities and other liabilities, primarily reflecting a €0.3 billion decrease in
cash collateral given and a €0.1 billion decrease corresponding to the allocation of interest-free loans.
OFF-BALANCE SHEET
Derivatives, exclusively for hedging, amounted to €45.1 billion (notional amounts), versus €63.4 billion at 31
December 2014. Of that amount, 86.3% corresponded to interest-rate swaps.
Financing commitments given to customers declined a slight €0.04 billion, to €0.02 billion, from €0.06 billion at 31
December 2014.
Guarantees given amounted to €0.03 billion at 31 December 2015, versus €0.06 billion at year-end 2014, representing
a decrease of €0.03 billion.
Guarantees received totaled €1.02 billion, down €0.26 billion from €1.28 million at 31 December 2014.
Other commitments given stood at €0.65 billion at year-end 2015, versus €3.28 billion a year earlier, following the
extinction of Pool 3G in 2015 (corresponding to a decrease of €2.7 billion) and the decrease of €0.2 billion in the gross
value of securities of subsidiaries posted as collateral to the Republic of France.
OPERATING STATEMENT
CIFD reported a net loss of €390.1 million, which was €185 million greater than the net loss in 2014.
Gross operating income rose €43.3 million (–268.6%), reflecting a €12 million (5.9%) increase in net banking income
and a €31.3 million (14.2%) decrease in operating expenses. There was a €264.4 million (186.1%) increase in
provisions for risk, a €45.8 million increase in net nonrecurring income, a €10.9 million increase in the corporate
income tax charge, and a €1.1 million increase in net proceeds of long-term investments and recaptures of goodwill.
45
Consolidated net banking income amounted to €217.1 million in 2015, up €12 million (5.9%), as described below:
•
a €16.7 million increase in interest margin, reflecting:
o
a €14.0 million increase ascribable to 3CIF and CIF Euromortgage:
a €2.8 million increase ascribable to 3CIF, mainly reflecting:
•
a €14.3 million decrease in net revenues after a decrease in expenses, including:
o
a €29.7 million decrease related to internal transactions
o
a €10.6 million decrease related to external cash holdings
o
a €25.9 million decrease in the cost of debt
•
a €10.2 million increase in equalization payments received on swaps with
Rabobank
•
a €7.1 million increase reflecting the reclassification of the cost of the State
guarantee to 3CIF as commission expense in 2015, whereas it had been included in
net interest margin in 2014
an €11.3 million increase ascribable to CIF Euromortgage, as shown below:
o
•
an €89.0 million decrease in expenses on external transactions
•
attenuated by a €77.7 million decrease in net revenues essentially on internal
transactions
a €2.7 million increase ascribable to CIFD and the operating subsidiaries:
a €25.2 million increase in penalties charged on early loan repayments reflecting increases
both in the amount of early loan repayments and in the individual penalties assessed
a €24.4 million increase in “PTZ” interest-free loan subsidy recaptures related to early loan
repayments
a €25.5 million increase in reversals of doubtful loan provisions net of charges
a €4.0 million decrease in interest due on doubtful loans
a €1.4 million decrease in late payment fees and penalties
a €67.0 million decrease in interest margin as described below:
•
a €16.0 million decrease attributable to volumes
•
a €51.0 million decrease attributable to interest
a €32.9 million increase in revenues from the securities portfolio essentially ascribable to
3CIF, including a €21.4 million increase in writedowns recognized in 2014 and €11.1 million
in capital gains on disposals
o
a €26 million decrease in commissions, including:
a €15.8 million decrease in volume discounts on death/disability insurance policies
ascribable to the decrease in premiums related to the drop in the amount of loans
outstanding
a €5.5 million decrease in the cost of the State guarantee, including:
•
a €7.0 million decrease ascribable to 3CIF in respect of a reclassification as
commissions in 2015
•
a €1.5 million increase related to the optimization of amounts subject to the
internal guarantee
a €4.6 million decrease in invoicing for services rendered in relation to the 10.9% decrease
in the number of loans
o
an €11.7 million decrease in other banking income net of expenses, reflecting:
a €0.3 million increase in capital losses on loan securitizations and deferred interest
46
a €12.5 million decrease in gains from auctions, including an €11.9 million charge net of
reversals essentially concerning SFSE, CIFD (RAA), and BPI
a €0.3 million increase in additional excess spread receivable on amortizations allocated to
the prior year
a €0.2 million increase in rental income.
The gross margin on average credit outstandings stood at 0.86%, representing an increase of 15 basis points
compared with 0.72% in 2014.
Operating expenses totaled €189.9 million in 2015, down €31.3 million (14.2%) compared with 2014.
•
Payroll costs were €32.9 million lower, primarily among the SFRs, representing a decrease of €34 million
following the completion of the first job-saving plan in mid-2014.
•
Net provisions for risks and expenses were up €0.8 million, mainly in respect of retirement commitments and
staff disputes.
•
Reinvoiced expenses were up €0.9 million.
•
Depreciation and amortization charges were €2.1 million higher.
•
Outside services were up €3.6 million, including a €6.4 million increase in relation to the Single Resolution
Fund.
•
Taxes other than income tax were down €5.7 million, essentially reflecting lower tax bases (e.g.,
shareholders’ equity, net banking income) and rates in relation to 3CIF and CIF Euromortgage (increase in
local, corporate solidarity, and systemic risk taxes).
The Group’s cost/income ratio improved, to 87.5% versus 107.8% in 2014.
Provisions for risk amounted to €406.5 million in 2015; that figure was €264.4 million higher than in 2014. The sizable
increase may be ascribed to the CIFD Group’s new credit risk coverage policy.
The ratio of risk allowances to average credit outstandings stood at 1.62%, versus 0.49% in 2014.
Net writedowns and provisions amounted to €356.3 million in 2015 (of which €278.5 million corresponded to the new
risk policy), compared with €110.5 million in 2014. Loan losses totaled €56.4 million versus €36.3 million in 2014.
Net nonrecurring expense of €4.2 million, versus €50 million in 2014, represented an increase of €45.8 million and
corresponded to:
•
•
•
a €48.2 million increase related to the Staff/Management Agreement:
o
a €203.1 million increase in write-offs during the year
o
a €173.6 million decrease in reversals of provisions
o
an €18.7 million increase in provisions
a €2.1 million decrease related to bank branches:
o
a €3.3 million increase in net capital gains on disposals
o
a €1.7 million decrease in recaptures of depreciation
o
a €3.5 million decrease in losses on rent and charges on bank branches and executive vehicles at the
end of leasing contracts
an €0.3 million earn-out on the sale of Sofiap recorded in 2014.
There was a corporate income tax charge of €7.3 million in 2015, versus a corporate income tax asset of €3.5 million
in 2014, decreasing results of operations by €10.9 million.
47
EUROPEAN CAPITAL ADEQUACY RATIO AND LEVERAGE
At 31 December 2015 the European solvency ratio (Basel III) stood at 12.95% (core tier-one capital ratio: 12.30%),
compared with 12.82% a year earlier. At that same date, the leverage ratio stood at 4.91% versus 5.21% at year-end
2014.
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
CONTINUED IMPLEMENTATION OF THE ORDERLY RESOLUTION PLAN
PREPARATIONS FOR CIFD’S MERGERS WITH ITS SUBSIDIARIES CIF SO, CIF CO, AND CIF IDF IN THE FIRST HALF OF 2016
Legal preparations for CIFD’s mergers with its subsidiaries Crédit Immobilier de France Sud-Ouest (“CIF SO”), Crédit
Immobilier de France Centre Ouest (“CIF CO”), and Crédit Immobilier de France Ile de France (“CIF IDF”) began late in
2015 and continued in the first quarter of 2016. These operations are the third step in the program for merging the
Group’s financial subsidiaries with CIFD.
Legal Considerations
The merger of CIF SO with CIFD is governed by the simplified merger organization mentioned in CC § L. 236-11, as CIFD
has continuously owned, and will continue to own, all the share capital of CIF SO between the time it filed the merger
plans with the court registrar and the actual execution of the mergers.
Accordingly, the merger of CIF SO with CIFD will not necessitate:
•
the approval of the merger by the special shareholders’ meetings of the companies concerned
•
the intervention of a certified appraiser
•
the preparation of reports by the boards of directors of the companies concerned
•
a new share issue by CIFD, as no shares are being swapped for those of CIF SO.
However, one or more CIFD shareholders representing at least 5% of the capital stock could request that a special
shareholders’ meeting be convened to vote on the proposed merger.
The mergers of CIF CO and CIF IDF with CIFD are governed by the simplified merger organization mentioned in CC § L.
236-11-1, as CIFD has continuously owned, and will continue to own, 99.99% of the share capital of CIF CO and CIF IDF
between the time it filed the merger plans with the court registrar and the actual execution of the mergers
Accordingly, the mergers of CIF CO and CIF IDF with CIFD will not necessitate:
•
the approval of the mergers by the special shareholders’ meeting of CIFD4
•
the preparation of reports referred to in CC § L. 236-9 and § L. 236-10 insofar as CIFD offered to purchase the
shares owned by the minority shareholders of CIF CO and CIF IDF, prior to the mergers, at a price
corresponding to their value, which was determined to be the par value of those shares.
However, as CIF CO has one minority shareholder and CIF IDF has two minority shareholders, the mergers will
necessitate:
•
the approval of the mergers by the special shareholders’ meeting of each subsidiary concerned
•
the calculation of a swap ratio
•
a new share issue by CIFD.
4 However, one or more CIFD shareholders representing at least 5% of the capital stock could request that a special shareholders’ meeting be
convened to vote on the proposed merger.
48
Consultation of Staff Representatives
In accordance with France’s Labor Code, staff representatives were regularly informed and consulted on the proposed
mergers of CIF SO, CIF CO, and CIF IDF with CIFD, and on the mergers’ consequences.
Approval of the Proposed Mergers
The proposed merger of CIF SO with CIFD was approved by CIFD’s Board of Directors at its meeting on 9 March 2016
and by CIF SO’s Board of Directors at its meeting on 11 March 2016.
The proposed merger of CIF CO with CIFD was approved by CIFD’s Board of Directors at its meeting on 9 March 2016
and by CIF CO’s Board of Directors at its meeting on 10 March 2016. A special shareholders’ meeting will be convened
on 21 April 2016 to approve the proposed merger.
The proposed merger of CIF IDF with CIFD was approved by CIFD’s Board of Directors at its meeting on 9 March 2016
and by CIF IDF’s Board of Directors at its meeting on 11 March 2016. A special shareholders’ meeting will be convened
on 21 April 2016 to approve the proposed merger.
Accounting and Financial Considerations
The conditions for the mergers were based on the financial statements at and for the year ended 31 December 2015
for the companies concerned.
Assets and liabilities were transferred at their net book value at 31 December 2015.
The net book value transferred to CIFD was as shown below:
•
CIF SO: €255,382,426.60, plus a merger bonus of €152,262,156.84
•
CIF CO: €101,487,421, plus a merger bonus of €65,064,241.50
•
CIF IDF: €68,133,489, plus a merger bonus of €40,519,058.46.
CIF SO, CIF IDF, and CIFD used net book value at 31 December 2015 as the basis for setting the swap ratios for their
mergers.
As the CIF CO/CIFD swap ratio was one CIF CO share for eight CIFD shares, both companies agreed that the swap
would be executed on the basis of eight CIFD shares for one CIF CO share.
Accordingly, CIFD is to increase its capital by €80 corresponding to the creation of 80 new Class A shares with a par
value of €1 each, to be given to the minority shareholder of CIF CO in exchange for his CIF CO shares. The merger
premium is €249.
As the CIF IDF/CIFD swap ratio was one CIF IDF share for three CIFD shares, both companies agreed that the swap
would be executed on the basis of three CIFD shares for one CIF IDF share.
Accordingly, CIFD is to increase its capital by €3 corresponding to the creation of three new Class A shares with a par
value of €1 each, to be given to the minority shareholder of CIF IDF in exchange for his CIF IDF shares. The merger
premium is €18.
These two new share issues would bring CIFD’s capital stock to €124,821,703.
Effective Date
For accounting and tax purposes, the mergers will become effective retroactively on 1 January 2016. For legal
purposes, they will take effect either on 1 May 2016 or no later than 1 June 2016 if CIFD holds a special shareholders’
meeting.
Once these mergers legally take effect, the merged entities will be dissolved ipso jure, without necessitating their
liquidation.
49
Management of the Loan Portfolio (Optimization of Recourse to the External Guarantee)
The objective in 2016 is to continue to control developments in loans outstanding as their amount decreases.
In 2015, as an extension of the framework and methods defined in Diapason, the administrative sector began to
deploy and then optimize the rules and procedures describing the operations that are required to manage the loan
portfolio.
The Group must adjust its approach to handling early repayment requests. Depending on market conditions and the
inclination of competing institutions to buy out loans, the Group will adapt its loan rescheduling policy as a function of
changes in requests for early loan repayments.
Requests that could impact the amortization schedule—which include renegotiations, switching to a contractual fixed
rate, deferring payments, and modulations, as well as operations to secure collection undertaken in 2015—will
continue in 2016.
In this respect, two major decisions made in 2015 will continue to apply:
•
the reformulation of the financial aspects of the Group’s loan adjustment policy (lending rates revised
upward and eligibility criteria made more restrictive)
•
efforts to make mixed-rate loans more secure during the initial amortization period.
In the first half of 2016 the Group will launch an operation to ensure the collection of loans on which the amount of
periodic payments could increase by at least 20% in 2016 and in the future.
A customer relationship management tool currently known as GRC-ARI will be deployed in the first half of 2016 to
optimize the procedure of granting and processing loan adjustments, as well as to improve the continuity and fluidity
of contacting customers and issuing reports. This tool will enable the Group to update customer data (e.g., revenues,
charges, marital status) to determine specific steps to take in order to ensure collection.
SOCIAL RELATIONS AND HUMAN RESOURCES ADJUSTMENTS
In order to reconcile the obligations to inform and consult staff representatives with the constraints of deadlines for
implementing the orderly resolution plan, Management and the labor unions representing staff members negotiated
a framework agreement concerning the timetables and means for informing and consulting staff representatives of
the economic and social grouping Crédit Immobilier de France on the proposed definition of a reference framework
for organizing the entities of the economic and social grouping, legal simplification (mergers), and a plan to bring the
post-merger organization into conformity.
This agreement was signed on 7 January 2016 by the General Management of Crédit Immobilier de France
Développement and two labor unions representing more than 50% of the employees of the economic and social
grouping (CFDT and SNPSCI-UNSA). It set an end date no later than 17 February 2016 for the staff representative
information and consultation procedures concerning the three projects described earlier:
•
the proposed mergers of Crédit Immobilier de France Centre-Ouest (CCO), Crédit Immobilier de France Ile-deFrance (CIF IDF), and Crédit Immobilier de France Sud-Ouest (CSO) with Crédit Immobilier de France
Développement (CIFD)
•
post-merger plans to bring CIFD’s Lyon/Grenoble establishment and local entities into conformity and related
consequences
•
post-merger plans to bring CIFD’s Marseille/Montpellier and Nantes/Ifs establishments and local entities into
conformity and related consequences.
On 19 January 2016 the Hygiene, Security, and Working Conditions Committee Coordinating Body of the Crédit
Immobilier de France Group issued its opinion on the proposed definition of a reference framework for organizing the
entities of the economic and social grouping, reflecting the opinions and resolutions of all of the hygiene, security, and
working conditions committees of the economic and social grouping.
50
The central staff committee of the economic and social grouping was consulted on the same project on 20 January
2016 after having been informed of the opinions issued by the staff committees/unified staff delegations of all the
entities comprising the economic and social grouping, as well as the opinion of the Hygiene, Security, and Working
Conditions Committee Coordinating Body of all the hygiene, security, and working conditions committees of the
economic and social grouping.
At their respective meetings, on 16 and 17 February 2016, the Hygiene, Security, and Working Conditions Committee
Coordinating Body and the central staff committee issued their opinions on the following three projects:
•
the proposed mergers of Crédit Immobilier de France Centre-Ouest (CCO), Crédit Immobilier de France Ile-deFrance (CIF IDF), and Crédit Immobilier de France Sud-Ouest (CSO) with Crédit Immobilier de France
Développement (CIFD)
•
post-merger plans to bring CIFD’s Lyon/Grenoble establishment and local entities into conformity and related
consequences
•
post-merger plans to bring CIFD’s Marseille/Montpellier and Nantes/Ifs establishments and local entities into
conformity and related consequences.
ORGANIZATION
Adaptation of the Organization of the Administrative Sectors Within the Group
Work on harmonizing and centralizing management that began in 2013 with the Diapason program has focused on
administrative sectors. An administrative sector is a community of experts working to harmonize, modernize, and
professionalize their branch irrespective of geographic considerations.
Administrative sectors:
•
operate under one or more representatives per sector or establishment
•
hold meetings at regular intervals
•
serve all staff members working in the same branch, particularly on issues of training and tool development,
while centralizing and prioritizing requests
•
enumerate processes in a harmonized operational manner, and prepare and maintain a database of rules and
operating procedures
•
function as cost centers.
The administrative sectors are grouped together under the supervision of a sector head with local correspondents at
each subsidiary/establishment. The local correspondents are hierarchically (real estate administrative sector) or
functionally (management and collection administrative sectors) subordinate to the sector head.
They monitor regulatory and legal developments affecting their branch and, after validation by the General
Management, they set a Group-wide policy for their branch and disseminate rules and procedures in a way that is
compatible with Group policy.
In relation with the management audit function, they:
•
create operational checklists as required by General Management
•
ensure that annual targets are met by all Group entities
•
guarantee the availability of tools and resources so that staff members can complete their tasks (reporting
tools, computer tools, etc.).
REFINANCING
Caisse Centrale du Crédit Immobilier de France (“3CIF”) has not issued any securities since the balance sheet date.
3CIF has proceeded with the following redemptions:
51
•
a €210,000,000 guaranteed bond issue
•
a €3,000,000 non-guaranteed bond issue.
GOING CONCERN
The financial statements have been prepared on a going concern basis, the justification for which is now the European
Commission’s approval of an orderly resolution plan including a State guarantee, as described above, as well as the
fact that CIFD will ensure that its subsidiaries receive funding under the orderly resolution plan.
The Plan includes the following principles:
•
Loan originations ceased as of the date of the decision to grant the permanent guarantee.
•
The residual portfolios of assets, liabilities, and derivatives will be held to maturity and managed in such a
way as to maximize their value. The Plan contains measures aimed at reorganizing the management and
collection of the portfolios, with the key objective of ensuring repayment. These measures include retaining
key talent within the organization, standardizing the methods employed by the operating subsidiaries, and
streamlining the organization.
In light of the decision to hold the loan portfolios to maturity, the activity of managing these portfolios satisfies the
criterion for preparing the financial statements on a going concern basis, and the Company’s assets have been valued
accordingly. The going concern principle is based on the Group’s implementation of an orderly resolution plan
including a permanent State guarantee from the Republic of France, approved by the European Commission, and its
decision to hold all its portfolios to maturity.
52
APPENDIXES TO THE
REPORT OF THE BOARD OF DIRECTORS
A. List of Directorships Held by Company Representatives and
Members of the Board of Directors
B. Five-Year Financial Summary
C. Ownership Interests
53
A – List of Directorships Held by Company Representatives and
Members of the Board of Directors
The list of the directorships and functions held by Company representatives and members of the Board of Directors at
the close of the year is presented below.
Yannick Borde – Chairman
Born 31 March 1966 at Bühl (Baden) (Germany )
Domiciled at 30 Rue de Sacjas – 53940 Saint Berthevin
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Chairman and Board member of Caisse Centrale du Crédit Immobilier de France (SA)
Chairman and Board member of CIF Euromortgage (SA)
Chairman and Board member of Union Economique et Sociale pour l’Accession à la Propriété (UESAP)
(Cooperative SA with variable capital)
Chairman and Board member of Procivis Mayenne (SACICAP)
Chief Executive Officer of Procivis CIPA-CIV (SACICAP)
Chief Executive Officer of Compagnie Procivis Ouest Immobilier (SA)
Deputy Chief Executive Officer and Board member of Proviva (SA – SCPHLM)
Chief Executive Officer of Pierres et Territoires de France Ouest (SAS)
Chief Executive Officer of Procivis Ouest Maisons Individuelles (SAS)
Chief Executive Officer of Maisons d'en France Loire Atlantique (SAS)
Chairman of Immo de France Ouest (SAS)
Chief Executive Officer of Procivis Ouest Habitat (SAS)
Board member of Procivis Immobilier (SA)
Board member of Immo de France (SAS)
Chief Executive Officer and Board member of Procivis Ouest Services (GIE)
Board member and President of I-ADB Ouest (GIE)
Member of the Executive Committee and Vice President of Union Sociale pour l’Habitat – USH (Association)
Board member of ESH Espace-Domicile
Representative of the jurisdiction Laval Agglomération on the Board of Laval Mayenne Amenagements (SEM)
Representative of the jurisdiction Laval Agglomération on the Board of Laval SPLA (SPL).
Jérôme Lacaille – Chief Executive Officer
Born 31 October 1967 at Berne (Switzerland)
Domiciled at 85 Boulevard Pasteur – 75015 Paris
•
•
•
•
Chief Executive Officer of Permanent representative of Caisse Centrale du Crédit Immobilier de France (SA)
Permanent representative of Crédit Immobilier de France Développement on the Board of CIF Euromortgage (SA)
Permanent representative of Crédit Immobilier de France Développement on the Board of Banque Patrimoine et
Immobilier (SA)
Permanent representative of Crédit Immobilier de France Développement on the Board of Crédit Immobilier de
France Sud-Ouest (SA)
Thierry Gillouin – Deputy Chief Executive Officer
Born 13 March 1962 at Neuilly-sur-Seine (Hauts-de-Seine)
Domiciled at 1 Rue Duhesme – 75018 Paris
•
•
•
Permanent representative of Crédit Immobilier de France Développement on the Board of Caisse Centrale du
Crédit Immobilier de France (SA)
Permanent representative of Crédit Immobilier de France Développement on the Board of CIF Centre Ouest (SA)
Board member and President of Banque Patrimoine et Immobilier – BPI (SA).
54
Stéphane Bonnois – Director
Born 16 October 1945 at Honfleur (Calvados)
Domiciled at La Chartreuse, 15 Rue Marengo - 13006 Marseille
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Chairman and Chief Executive Officer of SACICAP Midi Méditerranée (SA)
Chairman of the Management Board of Société Nouvelle d’HLM de Marseille (SA)
Chief Executive Officer of Unicil (consortium)
Chief Executive Officer of GIE HLM Unicil (consortium)
Chief Executive Officer of La Phocéenne d'Habitations (SA)
Chief Executive Officer and Director of Société Domicil (SA d’HLM) and Representative of La Phocéenne
d'Habitations (SA)
Chief Executive Officer of CIL Méditerranée (Association)
Chief Executive Officer of Sofiparcil (SAS)
Deputy Chief Executive Officer of Locacil (SA)
Deputy Chief Executive Officer of Immocil (SA)
Co-Manager of Logecil (SARL)
Co-Manager of Promocil (SARL)
President of Habitat Pluriel (Association)
Permanent Representative of SACICAP Midi Méditerranée on the Board of Sofiparcil
Permanent Representative of SACICAP Midi Méditerranée on the Board of and Chairperson of Compagnie
Immobilière Méditerranée Holding (SAS)
Permanent Representative of Compagnie Immobilière Méditerranée Holding on the Board of and Chairperson of
Compagnie Immobilière Méditerranée (SAS)
Permanent Representative of Compagnie Immobilière Méditerranée Holding on the Board of and Chairperson of
Compagnie Immobilière Méditerranée Maisons Individuelles - CIMMI (SAS)
Representative of the association CIL Méditerranée, Director of Office HLM 13 Habitat
Director of Union Economique et Sociale pour l’Accession à la Propriété (UESAP) (Cooperative SA with variable
capital)
Patricia Festivi – Director (Vice-Chairwoman)
Born 23 May 1959 in the region of Oran (Algeria)
Domiciled at 57 bis Rue du Docteur Maunoury – BP 80325 – 28006 Chartres Cedex
•
•
•
•
•
•
Chairwoman and Chief Executive Officer of Procivis Eure et Loir (SA)
Chairwoman of CIF Ile de France (SA)
Chairwoman and Chief Executive Officer of Pierres et Territoires de France Eure-et-Loir
Permanent Representative of SACICAP La Ruche on the Board of and Chairperson of SA d'HLM France Loire (ESH)
Director of USH Centre
Director of Coopérative d’HLM Vie et Lumière
Dominique Guérin – Director
Born 6 June 1958 at Lyon
Domiciled at 61 Rue des Carrières – 34160 St Génies des Mourgues
•
•
•
•
•
•
•
•
Board member of Caisse Centrale du Crédit Immobilier de France (SA)
Board member of CIF Euromortgage (SA)
Chief Executive Officer of FDI Habitat (SA)
Chief Executive Officer of FDI SACICAP (SA)
Board member and President of FDI Développement (SAS)
Board member and President of FDI Promotion (SAS)
Board member of Groupama Méditerranée – Caisse Locale Montpellier (Cooperative)
Permanent representative of FDI SACICAP on the Board of Procivis Immobilier (SA)
55
•
•
•
•
•
•
•
Permanent representative of FDI SACICAP on the Board of Coopérative HLM la Petite Propriété (Cooperative
d’HLM)
Permanent representative of FDI SACICAP on the Board of SACICAP Vaucluse (SA)
Board member of Languedoc Mutualité (Association)
Board member of MEDEF Montpellier-Sète-Centre Hérault (Association)
Member of the Foundation Musée Fabre – Montpellier (Foundation)
Member of the Foundation Sup de Co – Montpellier (Foundation)
Member of the Foundation ICM (Val d’Aurelle) – Montpellier (Foundation)
Dominique Lambecq – Director
Born 25 February 1964 at Arras (Nord Pas de Calais)
Domiciled at 1 Rue du Guesclin – 35000 Rennes
•
•
•
•
•
•
•
•
•
•
•
•
Board member of Caisse Centrale du Crédit Immobilier de France (SA)
Board member of CIF Euromortgage (SA)
Chief Executive Officer of CIF Bretagne (SA)
Board member of Union Economique et Sociale pour l’Accession à la Propriété (UESAP) (Cooperative SA with
variable capital)
Chief Executive Officer of SACICAP du Finistère (SA)
Chief Executive Officer of SACICAP du Morbihan (SA)
Chief Executive Officer of Polimmo Développement (SARL)
Manager of Domaine de Kerandon (SARL)
Chairman of Procivis Participations (SA)
Permanent Representative of Société Centrale de Coopération Immobilière Arcade on the Board of Aiguillon
Construction (SA d’HLM)
Board member of Les Ajoncs (SA d’HLM)
Board member of Immo de France (SA)
Jacky Lecointe – Director
Born 27 November 1949 at Liévin (Pas de Calais)
Domiciled at 18 Avenue Foch - 59005 Lille cedex
•
•
•
•
•
•
•
•
•
•
Board member of Caisse Centrale du Crédit Immobilier de France (SA)
Board member of CIF Euromortgage (SA)
Board member of Banque Patrimoine et Immobilier (SA)
Chairman and Board member of Crédit Immobilier de France Nord (SA)
Vice President of Procivis Nord (SA)
Chairman of Holding Immobilière du Square Foch (SAS)
Board member of Société Régionale des Cités Jardins (SA d’HLM)
Board member of Procivis Participations (SA)
Chairman of Maisons d’en France (SA)
Board member of Société Centrale de Coopération Immobilière Arcade (SA)
Jean-Luc Lips – Director
Born 16 April 1954 at Barr (Bas-Rhin)
Domiciled at 15a Rue des Prunelles – 67560 Rosheim
•
•
•
•
Chairman and Director of Crédit Immobilier de France Centre-Est (SA)
Chairman and Director of Procivis Immobilier (SA)
Chief Executive Officer of Procivis Alsace (SA)
Director and Chief Executive Officer of Compagnie Immobilière de Procivis Alsace – CIPA (SAS)
56
•
•
•
•
•
•
•
•
•
•
•
Permanent Representative of CIPA on the Board and Chairperson of Oikos (SAS)
Permanent Representative of CIPA on the Board and Chairperson of Pierres et Territoires de France Alsace (SAS)
Permanent Representative of CIPA on the Board and Chairperson of Sasik (SAS)
Manager of Tradigestion Immobilier (SARL)
Director and Chairman of Immo de France (SA)
Director and Chairman of AMELOGIS – Société Coopérative de Promotion Immobilière du Bas Rhin (SA)
Director of Office Public d’Urbanisme Social du Bas Rhin (OPUS 67)
Director of Citivia (SEM)
Director of Viabitat 67 (GIE)
Permanent Representative of Procivis Immobilier on the Board of Cautialis (Cooperative)
Chairman and Director of Immo de France (SA).
Hervé Magne – Director
Born 5 October 1950 at Enghien-Les-Bains (Val d’Oise),
Domiciled at 8 Place Winston Churchill, BP50288 - 87008 Limoges
•
•
•
•
Director of Crédit Immobilier de France Centre-Ouest (SA)
Chairman and Chief Executive Officer of Procivis Limousin (SA)
Director of Procivis Participations (SA)
Board member of Union Economique et Sociale pour l’Accession à la Propriété (UESAP) (Cooperative SA with
variable capital)
Bernard Sevez – Director
Born 15 October 1947 at Chambéry (Savoie),
Domiciled at 195 Rue du Villaret - 73230 Saint Alban Leysse
•
•
•
•
•
•
•
•
Chairman of Procivis Savoie (SA)
Chairman of Savoiexpo (Association)
Chairman of Saint Benoît (Retirement home)
Director of CIS-CAP (SAS)
Director of CIS Promotion (SA)
Director of Procivis Participations (SA)
Director of Dolin (SAS)
Director of Entreprises Habitat (Association).
57
B - Five-Year Financial Summary
2015
2014
2013
2012
2011
Financial position at year-end
Capital stock (euros)
124,821,620
124,821,566
85,961,748 1,310,057,039 1,310,057,039
Number of shares outstanding
124,821,620
124,821,566
85,961,748
85,961,748
85,961,748
(449,626,144) (229,478,642) (758,287,717)
38,866,482
34,837,336
Results of operations (euros)
EBITDA
Nonrecurring income (expenses)
(1,308,278)
(9,354,145)
(15,144,464)
Corporate income tax (1)
35,272,003
3,510,352
16,458,608
473,517
1,471,985
(415,620,139) (235,322,435) (756,973,573)
39,339,999
36,309,321
0.4576
0.4224
Untaxed provisions
Net income (loss)
0
42,280
Per-share data (euros)
EBITDA
(3.3297)
(1.8853)
(8.8059)
(1)
In 2010, 2011, and 2012 the impact of dividends received by CIFD was restated at the level of the tax consolidation
entity.
58
C - Ownership Interests
TRADUCTIONS A INSERER DANS VOTRE TABLEAU
Code CB
Code CDC
Actionnaires
N° Ordre
Capital au 31/12/2014
Nombre actions
Capital (act. = 1,00 €)
Capital au 31/12/2015
Nombre actions
Capital (act. = 1,00 €)
% de détention du capital
CB Code
CDC Code
Shareholders
Serial #
Capital at 31/12/2014
Number of shares
Value of shares (par value = €1.00)
Capital at 31/12/2015
Number of shares
Value of shares (par value = €1.00)
% ownership interest
59
CRÉDIT IMMOBILIER DE FRANCE DEVELOPPEMENT
Financial Statements
At and for the Year Ended 31 December 2015
1.
2.
3.
ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
OFF-BALANCE SHEET AND INCOME STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
60
CIFD Consolidated Balance Sheet
ASSETS, € thousands at 31 December
Notes
2015
2014
Due from credit institutions
10, 20, 21
1,277,809
573,754
Customer items
11, 20, 21
22,027,479
26,707,493
578,904
3,875,498
Leasing and related assets
Bonds, equities, and other fixed- and variable-income
securities
12, 15, 20, 21
Investments by insurance companies
Long-term equity investments and investments in
affiliated companies
13, 15, 20
7,064
9,925
Tangible and intangible assets
14, 15, 20
112,577
140,619
0
0
3,355,568
3,924,778
27,359,401
35,232,067
Goodwill
Accrued assets and other assets
16, 20
Total assets
The attached notes are an integral part of the financial statements.
61
LIABILITIES AND SHAREHOLDERS’ EQUITY,
€ thousands at 31 December
Notes
Due to credit institutions
17, 21
292,794
1,996,039
Customer items
21
44,098
194,961
Debt securities
18, 21
22,124,441
27,217,836
19
3,250,055
3,837,694
0
0
321,950
269,374
Subordinated debt
0
0
Fund for general banking risks
0
0
37
18
1,326,026
1,716,145
124,822
461,697
1,129,607
(390,099)
124,822
216,755
1,579,660
(205,092)
27,359,401
35,232,067
2015
2014
Underwriting reserves of insurance companies
Accrued liabilities and other liabilities
Goodwill
Allowances
Minority interests
Shareholders’ equity excluding fund for general banking
risks (Group)
20
22
8, 22
Capital stock
Additional paid-in capital
Consolidated reserves and other
Net income for the period
Total liabilities and shareholders’ equity
The attached notes are an integral part of the financial statements.
62
CIFD Consolidated Off-Balance Sheet
Commitments given, € thousands at 31 December
Notes
Banking commitments
2015
2014
66,804
188,382
Financing commitments
23 A
22,016
62,141
Guarantees
23 B
2,987
6,259
41,800
119,982
Securities to be delivered
Commitments received, € thousands
at 31 December
Notes
Banking commitments
2015
2014
6,669
8,015
Financing commitments
23 A
0
18
Guarantees
23 B
6,669
7,997
—
—
Securities to be received
INSURANCE BUSINESS COMMITMENTS
The attached notes are an integral part of the financial statements.
63
CIFD Consolidated Statement of Operations
€ thousands, year ended 31 December
Interest and related income
Interest and related expense
Income from variable-income securities
Fee and commission income
Fee and commission expense
Net gain (loss) on trading securities
Net gain (loss) on investment portfolios and related
securities
Other banking income
Other banking expense
Notes
2015
25
26
1,629,076
(1,234,717)
51
40,954
(215,215)
5
1,845,756
(1,468,084)
2
64,946
(213,236)
(44)
28
11,946
(20,865)
29
30
19,141
(34,119)
10,482
(13,808)
217,123
205,149
(181,020)
(214,411)
(8,896)
(6,815)
27,208
(16,076)
27
27
Net banking income
2014
General operating expenses
Depreciation, amortization, and provisions on tangible and
intangible assets
Gross operating income (loss)
31
Provisions for risk
Operating income (loss)
32
(406,471)
(379,263)
(142,093)
(158,169)
33
723
(378,541)
(405)
(158,574)
34
35
(4,211)
(7,347)
0
(1)
(50,030)
3,529
0
(17)
(390,099)
(205,092)
Share in earnings of companies carried under the equity
method
Net gain (loss) on disposals of long-term investments
Income (loss) before tax and nonrecurring items
Net nonrecurring items
Income tax
(Amortization) or recapture of goodwill
Minority interests
Net income (loss) attributable to the Group
The attached notes are an integral part of the financial statements.
64
Notes to the Consolidated Financial Statements of
Crédit Immobilier de France Développement Group
At and for the Year Ended 31 December 2015
Crédit Immobilier de France Développement (CIFD) Group prepares its consolidated financial statements in
accordance with Standard CRC 99-07, amended in part by Standard ANC 2014-07 of France’s accounting standards
authority, concerning rules for consolidation and preparing financial statements by companies operating in France’s
banking sector.
1. Background and Organization Chart
Crédit Immobilier de France is a banking network that has been undergoing orderly resolution since late-November
2013.
On 27 November 2013 the European Commission approved Crédit Immobilier de France’s orderly resolution plan
(“the Plan”) and authorized the Republic of France to extend its permanent State guarantee to Crédit Immobilier de
France. That same day, the Republic of France and the CIF Group signed a final agreement concerning that guarantee.
The Plan contains measures intended to prevent competitive distortion. As the Group can no longer originate loans,
its only activity is the extinctive management of its assets and liabilities over the period until 2035.
Crédit Immobilier de France Développement, the central entity, acquired the status of financial company in 2014 as
construed under CMF § L.511-30 and § L.517-1.
Since 1 January 2008, the Group companies that are part of the CIFD banking network are the financial companies,
Banque Patrimoine et Immobilier (BPI), Caisse Centrale du Crédit Immobilier de France (3CIF), and CIF Euromortgage.
As of 31 December 2015 the Crédit Immobilier de France Group has been organized as follows:
65
French Republic
UES-AP
Union Economique et Sociale pour
l’Accession à la Propriété
1 preferred share
without voting rights
CIFD
54 SACICAPs
Sociétés Anonymes Coopératives d’Intérêt
Collectif pour l’Accession à la Propriété (1)
100%
100%
6 Regional Finance
Subsidiaries (SFR)
Bretagne (BRE)
Centre Ouest (CCO)
Centre Est (CCE)
100%
Crédit Immobilier de France Développement
Central entity, financial holding company,
and finance company
100%
100%
BPI
CIF€
3CIF
Banque Patrimoine
Immobilier
Crédit Immobilier
de France
Euromortgage
Caisse Centrale du
Crédit Immobilier
de France
(3)
(2)
(2)
Ile de France (IDF)
Nord (CNO)
Sud Ouest (CSO)
(2)
2% (9% series B
subordinated units)
10% (42% series B
subordinated units)
GIE CIF Services (4)
(1)
(2)
(3)
(4)
75% (100% series A
senior notes)
1% (3% series B
subordinated units)
CIF Assets (FCT)
12% (46% series B
subordinated units)
GIE i-CIF (4)
Direct or indirect ownership
100% Series B subordinated units
100% Series A senior notes
consortium created by Group entities (CIFD, 3CIF, BPI, and six “SFR“ regional finance subsidiaries)
1.1. State Guarantee
On 27 November 2013 the European Commission authorized the Republic of France to extend its permanent State
guarantee to Crédit Immobilier de France. That same day, the Republic of France, CIFD, 3CIF, and CIF Euromortgage, in
the presence of CIF Assets and the Banque de France, signed a final agreement setting forth the principal terms of
conditions of the two-part guarantee:
•
The Republic of France granted an “external” guarantee of €16 billion covering securities issued by 3CIF as of 28
February 2013 to refinance Crédit Immobilier de France’s assets.
•
The Republic of France also granted an “internal” guarantee of €12 billion covering both cash investments made
by CIF Euromortgage and CIF Assets with 3CIF and amounts due by 3CIF in respect of forward instruments
transactions with CIF Euromortgage and CIF Assets.
66
In exchange, the CIF Group has been placed in orderly resolution and undertaken a number of commitments, including
ceasing all new loan originations as of the date of signature of the final agreement and remunerating the Republic of
France as follows:
•
3CIF was to pay a basic commission of 5 basis points on the amounts guaranteed.
•
CIFD is to pay in full a charge for the implementation of the guarantee, equal to €5 million and due on 28
November 2013. CIFD paid this amount by offsetting it against the price of a preferred share purchased by the
Republic of France.
•
CIFD is to pay supplementary commissions of 145 basis points on the average amount of guaranteed securities
outstanding per year (external guarantee) and 148 basis points on the average balance of guaranteed deposits
per year (internal guarantee). These supplementary commissions are payable if no restrictive events of payment
occur, if their payment does not cause the Group’s consolidated capital adequacy ratio (as calculated at 31
December of the last completed fiscal year) to fall below 12%, or if their payment does not jeopardize any other
ratio calculated on the basis of shareholders’ equity.
Throughout 2015, CIF Euromortgage and CIF Assets enjoyed the benefit of the State guarantee on their cash deposits
and forward instruments transactions with 3CIF. At 31 December 2015 these exposures covered by the State
guarantee amounted to €2.7 billion.
At 31 December 2015 the gross value of its subsidiaries’ securities that CIFD pledged as collateral to the Republic of
France amounted to €578.6 million.
In 2015, the Group recorded a charge of €212.2 million corresponding to the basic commission. It also recorded a
supplementary commission because it complied with the requirement of maintaining its capital adequacy ratio at or
above 12% at year-end 2015.
1.2. Group Restructuring
In order to ensure compliance with the targets set forth in the Plan, the orderly resolution of the CIF Group is being
conducted in four major phases:
•
adaptation of operations and cessation of commercial operations
•
organizational simplification and centralization of governance
•
merger of processing units corresponding to the attrition of the loan portfolio
•
management on the basis of a simplified and centralized corporate organization.
In accordance with the Plan, organizational simplification and centralized governance are intended to harmonize
management methods and ensure the secure operation of the Group’s entities. Once the organizational changes have
been completed, a single unit will hold the outstanding mortgage loans originated by the SFRs, and it will manage that
portfolio until the loans are amortized or sold.
The following operations have been or will be executed pursuant to that policy:
•
the transfer of the SFRs’ shares that were held by shareholders other than CIFD itself; this transfer was
completed during the Special Shareholders’ Meeting convened on 10 December 2014
•
updates to the Articles of Incorporation of CIFD, the sole entity managing the loan portfolios of the SFRs,
which took place at the Special Shareholders’ Meeting convened on 28 May 2015
•
the transfer to CIFD of loans outstanding by the SFRs as they are merged with the parent company, which will
manage those portfolios until the loans are amortized or sold
•
successive mergers of the SFRs with CIFD: Crédit Immobilier de France Rhône Alpes Auvergne (CIF RAA) on 1
June 2015, and Crédit Immobilier de France Méditerranée (CIF Med) and Crédit Immobilier de France Ouest
(CIF Ouest) on 1 December 2015. The SFR merger process will be completed by year-end 2016, in accordance
with the draft plan presented by the Republic of France and approved by the European Commission. Crédit
Immobilier de France Sud-Ouest (CIF SO), Crédit Immobilier de France Centre Ouest (CIF CO), and Crédit
67
Immobilier de France Ile de France (CIF IDF) will be merged in the first half of 2016; Crédit Immobilier de
France Nord (CIF Nord), Crédit Immobilier de France Bretagne (CIF Bret), and Crédit Immobilier de France
Centre Est (CIF CE) will be merged in the second half of 2016.
2. Significant Events of the Period and Comparability of Periods
2.1. Simplified Mergers of the SFRs Rhone Alpes Auvergne, Méditerranée, and Ouest
The merger of these subsidiaries took place in two stages:
•
CIF RAA was merged on 1 June 2015 with effect retroactive to 1 January 2015
•
CIF Med and CIF Ouest were merged on 1 December 2015 with effect retroactive to 1 January 2015.
These mergers had no impact on the Group’s consolidated shareholders’ equity.
In order to benefit from the subsidiaries’ loan management expertise, an operational platform system has been set up
to ensure the durability of their loan management activities.
2.2 Changes in the System for Assessing Credit Risk
As part of changes in the Group’s Risk and Collection Policy, entailing a reduction in the time period for carrying
doubtful loans, and in what continues to be an uncertain economic environment, the CIFD Group updated its credit
risk provisioning policy in 2015. The procedures, based on in-house surveys of historical losses, provide an approach to
risk exposure on customer loans outstanding that corresponds to the Group’s strategy as it undergoes resolution, as
well as to the orientations of the Group’s Risk and Collection Policy.
The Group has changed the way it estimates impairment. It now estimates impairment on individual doubtful loans
based on:
•
a systematic appraisal of collateral when loans are classified as doubtful
•
the calculation of writedowns of capital when loans are classified as doubtful, as a function of the value of
collateral and the average collection rate observed in the initial months of collection.
Accordingly, customer loans were written down by an additional €206.2 million.
•
collective allowances covering performing loans on which there is an established risk. A €70.6 million
allowance was set up at 31 December 2015 to cover estimated losses in the case of the following risk factors:
o
loans with more than two payments in arrears
o
restructured performing loans
o
receivables resulting from purchased and bundled loans
o
loans arranged by deal flow providers that are considered to be problematic.
Profit-sharing has been determined based on the earlier method for calculating provisions for risk, in keeping with the
agreement.
2.3 3CIF’s Medium- and Long-Term Guaranteed Issues on the Bond Markets
3CIF made three new State-guaranteed issues totaling €1,750 million.
2.4 3CIF’s Sale of its RMBS Portfolio
On 26 February 2015, 3CIF sold its entire portfolio of external RMBSs, which had a gross book value of €887.8 million
at 31 December 2014. This disposal generated a capital loss of €24.7 million. At the same time, it wrote back a €25.3
million allowance on the portfolio. The impact on the 2015 financial statements was a gain of €0.6 million.
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2.5 Restructuring Under the Staff/Management Agreement
In accordance with the orderly resolution plan, CIF held talks with the Group’s employee representatives, and on 20
December 2013 they reached a staff/management agreement that defines:
•
assistance for staff members who are reassigned to new positions within the CIF Group
•
assistance for staff members whose contracts will be terminated on economic grounds
•
measures to help staff members find work outside the Group pending the implementation of a job-saving
plan, by suspension of their employment contract
•
early retirement and retirement measures.
Under the orderly resolution plan the Group has implemented job-saving plans, the first of which began in 2014 and
should end in 2016 with the departure of the employees concerned. Accordingly, the corresponding allowance
previously set up was written back and credited against accrued expenses.
CIF has recorded severance pay under liabilities and nonrecurring expenses because it is obliged, under the orderly
resolution plan, to terminate the employment contracts of all staff members before they reach the legal retirement
age. CIF is also under contractual obligation (by virtue of the staff/management agreement) to offer employees
compensation in the form of payments and/or benefits when it terminates their employment contracts.
Crédit Immobilier de France and its subsidiaries have used the projected unit credit method to determine the present
value of their defined benefit obligations, the corresponding cost of services rendered during the fiscal year, and, if
applicable, the cost of past services (i.e., discounted rights acquired at 31 December 2015).
CIF has used objective and mutually compatible actuarial assumptions, which are its best estimates of variables that
will determine the ultimate cost to be reported. These assumptions include:
•
a demographic assumption covering the future characteristics of today’s staff members who satisfy the necessary
conditions for rights to benefits; this demographic assumption concerns mortality during the employment period.
Application of the method that takes this parameter into consideration, as refined in 2015, led to the decision to
set up an additional allowance of €403 thousand.
•
no assumptions for staff turnover taken into account at 31 December 2015, considering that the take-up rate
reflects this variable in part
•
an assumption of the take-up rate for each of the measures agreed to in negotiations between CIF and employee
representatives (i.e., the staff/management agreement)
•
financial assumptions concerning the following factors:
•
the discount rate
•
future levels of salaries and staff benefits (rate of 0.30% used at 31 December 2015).
Financial assumptions have been based on market expectations at the balance sheet date (31 December 2015) for the
period during which obligations must be discharged, ending late-December 2018.
Actuarial assumptions pertaining to the discount rate have a large impact. The rate used reflects the time value of the
payment commitment but does not reflect the actuarial risk. Moreover, the discount rate does not reflect the specific
credit risk to which CIF’s creditors are exposed, nor does it reflect the risk of discrepancies between actual
commitments that become known in the future and actuarial assumptions made beforehand.
69
The discount rate applied to post-employment benefit obligations has been determined with reference to a market
rate at the balance sheet date for investment grade corporate bonds with a term equivalent to those of CIF’s
commitments. That rate stood at 0.40% at 31 December 2015.
At 31 December 2015, the allowance for the staff/management agreement, based on the above assumptions,
amounted to €231.1 million. This allowance concerns all employees, including those on the payroll at year-end 2015
who were potentially subject to layoffs under the second staff/management agreement undertaken in January 2016.
2.6 Contributions to the Single Resolution Fund
Pursuant to Order 2015-1024 of 20 August 2015 transposing the Bank Recovery and Resolution Directive (BRRD) into
French law, for the first time, companies concerned by the resolution mechanism have been asked to contribute to a
resolution fund.
All French institutions contributed to the same fund in 2015. In accordance with Article 2 of Decision 2015-CR-01 of 24
November 2015, there are two parts to the contribution to the resolution fund: a set contribution equal to 70% of the
total amount (operating expense) and a guarantee deposit equal to 30% of the total amount (receivable) paid in cash
to the Deposit Guarantee and Resolution Fund.
Accordingly, the CIFD Group has recorded a charge of €6,358 thousand and a guarantee deposit of €2,625 thousand.
2.7 Termination of Swap Contracts by Rabobank
In January 2015 Rabobank exercised its option to terminate a €10 million (notional) swap contract, generating a loss of
€0.7 million. This macro-hedging swap was not replaced, as 3CIF remained within its interest-rate position, and 3CIF
posted the corresponding charge directly to the income statement in accordance with Section 2526-1 of Standard ANC
2014-07 of France’s accounting standards authority.
In May 2015 Rabobank exercised its option to terminate a €25 million (notional) swap contract, this time generating a
gain of €13.2 million. At the same time, Rabobank indicated its wish to terminate its remaining €20 million (notional)
swap contract, which 3CIF accepted, generating a loss of €2.2 million. As 3CIF continued to remain within its interestrate position, it posted the net gain of €11 million on these two transactions directly to the income statement.
3. Events Occurring After the Balance Sheet Date
3.1 Timetable for Mergers in 2016
Mergers of the SFRs with CIFD will continue, with three planned for 1 May 2016 concerning Ile de France, Sud-Ouest,
and Centre Ouest.
The final three mergers, planned for 1 November 2016, will concern Bretagne, Nord, and Centre Est.
3.2 Eligibility of Covered Bonds
By virtue of Section 80 of Decision 2015-01 of the Governor of the Banque de France concerning the non-conformity of
secured loans received by the Group’s FCT and pledged as collateral for the covered bonds issued by CIF Euromortgage,
the eligibility of CIF Euromortgage’s covered bonds for ECB system repo financing was suspended on 18 February 2016.
This suspension has not affected the qualification of the covered bonds issued by CIF Euromortgage with respect to
French law, and they continue to confer preferred creditor status under CMF § L.513-11.
CIF Euromortgage and the Crédit Immobilier de France Group have informed the market that they were making their
best efforts to ensure that CIF Euromortgage covered bonds comply with the criteria stipulated in Section 129 ¶1 (d)
to (f) of Regulation (EU) No. 575/2013 as early as the beginning of Q2 2016 and entitle bank investors to the
corresponding preferential treatment, as well as to eligibility for ECB system repo financing subject to the approval of
the monetary authorities.
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3.3. The Second Job-Saving Plan
This plan, to be executed in 2016, will entail the elimination of 137 jobs. An allowance has been set up to cover the
cost of these layoffs (see Note 2.5.).
4. Principles and Methods of Consolidation
4.1 Presentation of the Financial Statements
The consolidated financial statements are presented in thousands of euros. Amounts indicated in the consolidated
financial statements are rounded off to the nearest decimal and reflect individual figures that have been rounded off.
Arithmetic operations on rounded-off figures may diverge from aggregates or subtotals as presented.
4.2 Going Concern
The financial statements have been prepared on a going concern basis, following the European Commission’s approval
of an Orderly Resolution Plan including the granting of a permanent guarantee of the Republic of France at the close
of the provisional phase, as described above, and in light of the fact that CIFD will provide funding for its subsidiaries
under the Orderly Resolution Plan.
The Plan is based on the following principles:
•
Loan originations have ceased at all units as of the date of the decision has been made to grant the
Permanent Guarantee.
•
The residual portfolios of assets, liabilities, and derivatives are to be held to maturity and managed in such a
way as to maximize their value. This provision particularly concerns the loan portfolio and the portfolio of
debt securities held to maturity. The Plan includes measures aimed at reorganizing the management and
collection of the portfolios, with the key objective of ensuring repayment. These measures include retaining
key talent within the organization, standardizing the methods employed by the operating subsidiaries, and
streamlining the organization.
In light of the decision to hold the loan and debt securities portfolios to maturity, the activity of managing these
portfolios satisfies the criterion for preparing the financial statements on a going concern basis, and those assets have
been valued accordingly. Preparation of the financial statements on a going concern basis is predicated on the
implementation of an Orderly Resolution Plan including the Guarantee of the Republic of France, approved by the
European Commission, and the decision that residual portfolios are to be held to maturity.
4.3 Specificity With Respect to the Group’s Shareholding Structure
Minority interests reflected in the consolidated financial statements correspond to the cooperative home loan
companies (SACICAPs), which are also shareholders of the parent company CIFD. In order for the Group’s results to be
understood in economic terms, they must be viewed on the basis of minority interests included.
4.4 Consolidation
Significant companies, in which CIFD exercises exclusive control, whether directly or indirectly (by holding the majority
of voting rights), as well as the FCT (ad hoc entity) are fully consolidated. Companies in which CIFD directly or
indirectly holds between 20% and 50% of the voting rights and exercises significant influence are carried under the
equity method. Some insignificant companies are neither consolidated nor carried under the equity method for
reasons of their total assets, shareholders’ equity, and earnings.
4.5 Intra-Group Transactions and Harmonization of Financial Statements
Intra-group transactions between Group companies are eliminated in consolidation, as are dividends received from
consolidated companies and results of intra-group transactions. Significant restatements primarily concern the
alignment of items needed for the harmonization of valuation methods used by consolidated companies to the CIFD
Group’s accounting principles.
71
4.6 Purchase Discrepancies
Purchase discrepancies are analyzed and broken down into their various components. In particular, the loan and
borrowing portfolios of purchased companies are marked to market at the acquisition date. The difference between
historical cost and market value corresponds to goodwill. Residual unallocated goodwill is posted to consolidated
assets or liabilities, depending on whether it is positive or negative, and is amortized as necessary. Goodwill is
amortized according to the nature of the underlying assets and liabilities.
4.7 Deferred Tax
Deferred tax must be recorded on all timing differences between the book and tax values of assets and liabilities,
uniformity restatements, and goodwill identified at the time CIFD consolidates subsidiaries.
Each company’s tax rate is used for calculating deferred tax. The standard tax rate is 34.43%, but for companies with
revenues exceeding €250 million, making them liable for the temporary 10.70% surtax on revenues, the tax rate is
38%.
The liability method is used, whereby deferred tax recorded in prior periods is adjusted in the event of a change in the
tax rate. The corresponding impact is reflected as an increase or decrease in the income tax charge.
In light of the circumstances, and for lack of a forecast on which to base the collectibility of deferred tax debits within a
sufficiently short amount of time, the Group has chosen, for reasons of conservatism, to write down its subsidiaries’
net deferred tax position.
4.8 “CICE” Competitiveness and Employment Tax Credit
Pursuant to the briefing note issued by France’s accounting standards authority (ANC) on 28 February 2013, and the
note issued on 23 May 2013 by the supervisory authority governing France’s independent auditors (CNCC), CIFD
Group has recognized the “CICE” competitiveness and employment tax credit according to the following principles and
methods:
•
The tax credit is recorded at the same time as the corresponding remunerations are incurred (payment of
salaries and recognition of liabilities corresponding to remunerations due).
•
The tax credit is posted to a sub-account for “Income taxes, taxes, and related contributions on
remunerations – CICE” whose contra sub-account is “Other receivables – government”.
CICE funds amounted to €905.9 thousand in 2015 and were used to finance recruiting and training expenses and to
help develop human resource tools.
4.9 Recognition of Results
The results of purchased companies are reflected in the financial statements as of the date that CIFD obtains control.
5. Accounting Policies and Valuation Methods
The financial statements have been prepared in accordance with French generally accepted accounting principles.
•
Foreign-Currency Receivables, Payables, and Commitments
Assets, liabilities, and off-balance sheet commitments denominated in foreign currencies are valued at the official spot
exchange rates prevailing at the close of the period.
Results of foreign exchange operations are determined in accordance with Standard ANC 2014-07 – Book II – Title 7.
Foreign currency gains and losses, both realized and unrealized, are carried to the income statement.
72
•
Securities Portfolio
In accordance with Standard ANC 2014-07 – Book II – Title 3, securities are classified under the following categories:
trading securities, securities available for sale, debt securities held to maturity, equity securities held for medium-term
investment, long-term equity investments, and investments in affiliated companies.
The method used to value securities depends on the purpose of the transaction irrespective of the type of security
(equities, bonds, Treasury bills, certificates of deposit, negotiable promissory notes, money market securities, etc.).
Rules concerning the accounting treatment of securities transactions, amended by Standard ANC 2014-07, have been
applied in the manner described below.
•
Trading Securities
These are securities that are bought and sold with the intention of resale or repurchase in the short term and that can
be traded on liquid markets.
Trading securities are initially recognized at cost, including expenses and accrued interest receivable. They are marked
to market at the end of each accounting period and the net valuation difference is reflected in the income statement
under income or expenses. If they are held for more than six months, they are reclassified as securities available for
sale and marked to market at that date.
The CIFD Group does not hold a portfolio of trading securities.
•
Securities Available for Sale
This category is used to record securities that do not fall under any other categories. At the end of each accounting
period, these securities are valued individually or as homogeneous groups at the lower of cost or estimated value.
Provisions are recorded for unrealized losses but unrealized gains are not recognized. Premiums and discounts,
representing the difference between the purchase price (excluding accrued interest) and the redemption price are
amortized over the remaining life of the securities.
Securities available for sale are recorded at cost at their purchase date. Purchase costs are taken directly to the
income statement, in accordance with the option granted in Section 2371-2 of Standard ANC 2014-07.
Dividends and interest are recorded in the income statement on a cash basis under “income from variable-income
securities.”
At the time of sale, the cost of the securities is determined using the first in–first out (FIFO) method.
Gains and losses on disposals, and provisions/reversals for impairment of these securities are recorded in the income
statement under “net gain (loss) on securities available for sale.”
Some securities available for sale may be used as hedging instruments. By analogy with Section 4 of Standard ANC
2014-07 pertaining to designated hedges, capital gains or losses realized on these securities when the hedge is
unwound are taken to the income statement in the same way as the income and expenses on the underlying
instruments, over the residual life of the hedged instruments.
•
Equity Securities Held for Medium-Term Investment
These securities correspond to investments made for portfolio management purposes, with the aim of achieving a
profit in the medium term but without investing durably in the development of the issuer’s business. They include
venture capital investments.
Equity securities held for medium-term investment are stated at the lower of cost and fair value, determined by
reference to the issuer’s general earnings outlook and the intended holding period. The fair value of listed securities is
determined primarily on the basis of the average market price calculated over a sufficiently long period.
73
•
Debt Securities Held to Maturity
These are fixed-income securities that were previously recorded as trading securities or securities available for sale
but have been reclassified, or that are purchased with the intention of holding them until maturity and that are either
match-funded or hedged against interest rate risks. They are stated at cost, excluding accrued interest, and any
difference between the purchase price and the redemption price is amortized over the remaining life of the securities.
Debt securities held to maturity are recorded at cost at their purchase date. Purchase costs are taken directly to the
income statement, in accordance with the option granted in Section 2371-2 of Standard ANC 2014-07.
Interest income on debt securities held to maturity is recorded in the income statement under interest income from
bonds and other fixed-income securities.
In accordance with regulations, no provisions are made for unrealized losses unless 3CIF intends to sell the related
securities in the near term, in which case a provision for market risks is recorded by means of a charge to “net gain
(loss) on disposals of long-term investments”, or if there exists a risk of default by the counterparty, in which case a
provision is reflected in the income statement under “provisions for risk”.
•
Long-Term Equity Investments
This category corresponds to shares and related instruments that the Group intends to hold for the long term in order
to earn a satisfactory return over that period, without taking an active part in the management of the issuer’s
business, but with the intention of fostering durable business relationships by creating special ties with the issuer.
Long-term equity investments are stated at the lower of cost and fair value. The fair value of listed securities that have
suffered a permanent impairment in value is mainly determined by reference to the market price closest to the end of
the accounting period. The fair value of unlisted securities is determined by reference to the underlying revalued
assets.
Dividends are recognized in the income statement on a cash basis, under “income from variable-income securities”.
•
Investments in Affiliated Companies
This category corresponds to investments in affiliates over which significant management influence is exercised, as
well as investments considered to be strategic to business development.
Investments in affiliated companies are stated at the lower of cost and fair value. The fair value of listed securities that
have suffered a permanent impairment in value is mainly determined by reference to the market price closest to the
end of the accounting period. The fair value of unlisted securities is determined by reference to the underlying
revalued assets, and they are written down if their book value is less than cost.
Gains and losses on disposals, as well as provisions and reversals, are recognized in the income statement under “net
gains (losses) on sales of fixed assets”. Dividends are reflected in the income statement under “income from variableincome securities”.
•
Method for Valuing Purchased Securities
Generally speaking, the market value of securities acquired is obtained automatically from quotations by several
providers. The latest available quotation is used if market volume is sufficient to ensure that it is relevant. Manually
entered prices may be used on an exceptional basis. If no market quotations are available, securities are valued
according to a valuation model, using manually entered discounted cash flow.
74
•
Loans
o
Effective Rate
Standard ANC 2014-07 – Book II – Title 1, concerning the recognition of fees, commissions, and transaction costs
received or paid by credit institutions when granting or purchasing loans, is applied to the financial statements. Fees,
commissions, and transaction costs include closing costs, commissions paid to deal flow providers, and marginal
transaction costs (variable remuneration paid to salespersons, advisory fees). Fees and commissions are allocated
over the life of the loan using the alternative method in proportion to the remaining principal balance.
•
Doubtful Loans
o
Credit Risk
Standard CRC 2002-03, amended by Standard ANC 2014-07, concerning the accounting treatment of credit risk at
companies operating in the banking sector, has been applied since 1 January 2003. This regulation requires that
rescheduled loans be presented under a specific heading, and that certain receivables and write-offs be reclassified.
Doubtful loans are those that are uncollectible and must be written down, as well as those that will ultimately have to
be written off.
Reclassification takes place:
o
when a default event occurs, unless no write-off is planned
o
one year after the loan is classified nonperforming; it is considered doubtful if it is expected to be written
off.
Doubtful receivables rescheduled at other than market conditions, and reclassified as rescheduled performing loans,
are written down (corresponding to the difference between the rescheduled interest rate and the original interest
rate) and immediately expensed (through a provision for risk) and bringing forward the term of the loan (net banking
income). The first payment incident involving a rescheduled loan entails its classification as doubtful.
Home loans that are in arrears for six months, or for a shorter period but with a risk of uncollectibility, are classified as
doubtful receivables for the remaining capital balance, principal in arrears, and interest due.
o
Writedowns of principal
Standard ANC 2014-07 requires that future collectible inflows be discounted to determine writedowns of doubtful
receivables. Provisional losses are equal to the difference between initial contractual inflows (less payments already
made) and discounted provisional inflows. Discounted provisional inflows are themselves determined by taking into
consideration the counterparty’s financial condition and economic outlook, collateral that has been, or can be, taken
less the cost of sale, the status of pending lawsuits, and other factors.
These rules have been adjusted to reflect the manner in which the Group now determines the amount of individual
writedowns. Adjustments mainly concern new criteria for appraising collateral and calculating the writedowns of
receivables, which consist in applying an impairment coefficient to foreseeable losses once receivables are classified
as doubtful.
Changes in rules for valuing collateral
Liens on collateral are valued using a model that was updated in 2015, which distinguishes between indicial and nonindicial methods depending on the nature of the collateral.
There are three non-indicial methods, which do not rely on index adjustment rates commonly used in real estate:
75
•
Comparison: This method, which values an asset by comparison with equivalent assets in a similar geographic
sector, is commonly used for residential real estate.
•
Capitalization (including the Gordon & Shapiro method): This method consists in capitalizing actual or estimated
rental income representing an asset’s value and is used for loans granted to finance rental properties.
•
Land and improvements: This method establishes separate valuations for raw land and improvements in the form
of buildings that are of recent construction, under construction, or damaged. Raw land is valued by comparison,
and improvements at new value.
Indicial methods, chosen as a function of the size of the real estate market (> 5,000 population), discount the value of
an asset by applying a coefficient that is commensurate with the given real estate sector (Perval database, BT01–all
trades works building index, commercial rent index). The asset valuation basis generally used is either net proceeds to
seller or market value.
Changes in rules for writedowns of principal
Loans that are included in a debt workout are written down by a standard 20% during the deferral period (if
applicable) until payments are resumed.
Unsecured loans that are classified as a loss following default are written off even if the borrower has complied with
the debt repayment plan.
o
Writedowns of interest
Interest in arrears on doubtful loans is systematically provisioned. The portion of interest not covered by expected
provisional cash flows is automatically charged against net banking income except when there is also a writedown of
principal on the loan, in which case it is reflected under provisions for risk.
The minimum writedown rule may also apply, in which case the amount of a writedown may not be less than the
interest in arrears that has been recorded on doubtful loans.
o
Collective allowances
Collective allowances are recorded under liabilities to cover performing loans on which there is an established risk.
They apply to all loans with a similar risk profile that have not been individually written down by each subsidiary and
on which a risk of loss has arisen since the time the loans were granted.
These allowances, determined on the basis of loss statistics, correspond to the weighted sum of expected losses
estimated according to various probability scenarios and represent the probable loss expected over the life of the
loans.
•
Housing Purchased at Auction
Housing purchased at auction is recorded in inventory at acquisition cost. The residual amount between the customer
receivable and the acquisition price is recorded under doubtful receivables.
An impairment test is conducted:
o
at each balance sheet date (annual and interim), and at least once a year, or
o
when there exists an indication of impairment (deterioration, dilapidation, changes made to urban
planning standards), or
o
if a sale is planned.
Assets are written down if their carrying value exceeds their current value (market value or value in use, whichever is
higher). Any loss in value is immediately charged in full to the income statement.
76
Writedowns of assets carried by Société Foncière Sud Est (SFSE), which are recognized as fixed assets for reasons of
the intention underlying their management, have been made consistent, generating a €7,402 thousand charge against
net banking income.
•
Subsidies for Interest-Free Loans
The French government compensates credit institutions for the fact that no interest is charged on Housing Ministry
interest-free customer loans.
For loans granted prior to 1 February 2005:
At the time the first payment is received from the government, the entire subsidy (portion received and not received)
is recorded as deferred revenue and then taken to income in stages, as established by France’s tax legislation
department (DLF; letter dated 7 April 1997).
The portion of the subsidy that is taken to income corresponds to the difference between the amount of interest on
conventional loans and the income from investing the subsidy that has not yet been taken to income. These two
factors are assessed at the actual rate of return on the loan, including the subsidy.
For loans granted as of 1 February 2005:
An income tax credit has been created to replace the previous system. In order to ensure coherent accounting
treatment, the method of allocating the income tax credit is identical to the one used for the previous interest-free
loan. It is charged to corporate income tax in equal increments over the term of the loan. In contrast, in terms of
taxation, this unquestionable claim is considered taxable income. One-fifth of it is recognized in the period in which
the credit institution disbursed the funds to the borrower, and the rest, in equal portions, over the following four
years (in accordance with Recommendation 2007-B of 2 May 2007 of the CNC’s emerging issues task force).
•
Deferred Charges
Standard ANC 2014-03 of 26 November 2014 has modified the accounting treatment of deferred charges, which are
now reflected as acquisition cost under assets or else taken to the income statement.
•
Fixed Assets
Standard CRC 2002-10, amended by Standard ANC 2014-03, is applied to the financial statements for years beginning
on or after 1 January 2005. CIFD Group has adopted the depreciated cost method and the component accounting
method for its buildings. An impairment test is conducted at the end of each annual and interim accounting period,
and the assets are depreciated over their estimated useful lives (see Note 14).
Operating buildings are depreciated over useful lives ranging from 5 to 40 years, depending on the nature of the
components.
Fixed assets are stated at cost, including non-recoverable value-added tax.
•
Debt Securities
Debt securities are classified as retail certificates of deposit, interbank and money market securities, and bonds and
notes. They do not, however, include subordinated debt securities, which are recorded under “Subordinated debt”.
Accrued interest is recorded separately, with the contra entry posted to the income statement. Bond issue and
redemption premiums are amortized over the life of the debt using the yield-to-maturity method. The corresponding
charge is recorded in the income statement under “Interest expense on bonds and other fixed-income securities”.
Bond issue costs are recorded in full in the periods in which they are incurred under “Fee and commission expense”.
77
•
Subordinated Debt
Subordinated debt includes all dated and undated debt securities and other borrowings that are subordinate in rank,
for repayment purposes, to all other debts of the borrower.
Any accrued interest is recorded separately, with the contra entry posted to the income statement.
•
Employee Benefits
• Pension Allowance
As pension commitments, excluding those for company representatives, are included in the staff/management
agreement, the corresponding allowances previously set up were reversed at 31 December 2013 and no new
allowances for pension commitments were set up during the year.
• Seniority Benefits
According to Recommendation ANC 2013-02 concerning long-term benefits, restated in Standard ANC 2014-07,
seniority benefits may be assessed as stipulated under Section 4 – Book I – Title III – Chapter II ¶2.
The calculation uses the same actuarial assumptions (mortality rates, staff rotation, revaluation assumptions, and
discount rates) as for the allowance in respect of the staff/management agreement.
•
Forward Financial Instruments and Options
In accordance with CRBF Regulation 90-15 amended by Standard ANC 2014-07 – Title v – Chapter II, different
accounting policies are used according to the instruments’ nature and original purpose (hedging or market
transactions).
•
Interest-Rate Swaps
Interest-rate swaps fall into four categories:
- Micro-hedging (allocated hedges)
- Macro-hedging (general hedges)
- Trading instruments
- Specialized management of trading portfolios
The first two categories are treated as loan or borrowing transactions and the interest differential received or paid is
recognized in the income statement on an accruals basis.
Interest revenues and expenses on trading instruments are also recognized on an accruals basis, but unrealized losses
with respect to the market value of the contracts at the balance sheet date are reflected as provisions in the income
statement, unlike in the case of hedging instruments.
CIFD Group does not have any open position.
Instruments acquired in connection with the specialized management of trading portfolios are individually valued at
fair value. The resulting unrealized gains or losses are recognized directly in the income statement. The valuation is
adjusted to reflect counterparty risks and the present value of future swap management costs.
CIFD Group does not undertake the specialized management of trading portfolios.
•
Currency Swaps
Spot transactions in progress are valued at the exchange rate prevailing at the end of the period.
78
Gains and losses on forward currency instruments are recognized in the income statement on an accruals basis, in the
form of either a contango or backwardation in the case of hedges of commercial transactions, or as accrued interest
when the instrument is intended to hedge long-term assets and liabilities in foreign currencies.
•
Options (Interest-Rate, Currency, and Equity) and Forward Instruments
The notional amounts of underlying instruments in options and forward contracts are recorded separately, depending
on whether the contracts are designated hedges or other contracts.
Income and expenses on hedging contracts are recognized in the same way as the income and expense on the
underlying securities. Premiums paid or received on options are reflected in the income statement in proportion to
the notional outstandings.
Trading positions in a given class of options or forward contracts are marked to market. Unrealized gains and losses on
contracts traded on a regulated exchange or equivalent are taken directly to the income statement. Provisions are
recorded in the income statement for unrealized losses on OTC contracts, whereas unrealized gains are not
recognized.
CIFD Group only engages in hedging operations.
Method for Valuing Forward Financial Instruments
In accordance with Standard ANC 2014-07 and Standard ANC 2014-03, which transpose EU directives on reporting the
fair value of financial instruments, CIFD Group reports the market value and volume of transactions at 31 December
2015 for each category of instrument in its notes to the financial statements.
The fair value of listed securities is the asking price at the valuation date for an asset held, or the bid price for an asset
to be purchased. For instruments traded over the counter, the Group estimates their fair value using valuation
methods including recent arm’s-length transactions, the fair value of a substantially identical instrument, discounted
cash flow, and option valuation models.
•
Financial Solidarity of CIFD Group
Pursuant to the Crédit Immobilier de France Group’s financial solidarity agreement, CIFD has pledged to respond to
any request from the Governor of the Banque de France to provide its finance subsidiaries with the financial support
needed to ensure their liquidity and solvency.
Every subsidiary, excluding CIF Euromortgage, has agreed to honor any request for funds by CIFD, within the limits of
its shareholders’ equity, in order to ensure the liquidity and/or solvency of another Group entity.
6. Accounting Principles and Methods Concerning Partial Asset Contributions to the
Regional Financing Subsidiaries
The cooperative home loan companies (“SACI”), shareholders of the regional financial subsidiaries, have made a
partial asset contribution of their lending units to the regional financial subsidiaries. Accordingly, a financial
revaluation was made of the portfolios of loans, borrowings, and financial instruments thus transferred, generating
discounts and premiums with respect to their face value. These discounts and premiums are amortized on an actuarial
basis.
Considering the number of loans and borrowings concerned by these contributions, it has not been possible to
amortize discounts and premiums for each individual item. Consequently, a net discount/premium was calculated for
the entire loan portfolio and borrowing portfolio, over the total residual life of the instruments, as these cooperative
home loan companies’ lending operations were contributed in full.
At the end of each accounting period, the discount/premium is calculated between net present values of the portfolio
contributed, on the basis of historical rates (internal rate of return based on the portfolio’s net book value and actual
79
funds flows), and the contribution rate (internal rate of return based on the portfolio’s contribution value and actual
funds flows).
The decision was made in 2015 to accelerate the allocation process as much as possible.
The change in discount/premium between the two periods corresponds to the amortization charge.
Net discounts/premiums reported in the financial statements are shown below:
2015
€ thousands, year ended 31 December
Net discount on the customer loan portfolio
Net premium on the portfolio of debt securities held to maturity
Net (discount) on the portfolio of borrowings
Net for the period
0
—
(208)
3,744
2014
7,815
31
(1,131)
2,018
A net premium of €3,744 thousand was recorded as “Interest and related income/expense” in the 2015 operating
statement.
7. Purchase Discrepancies
At 31 December 2015, a €2,485 thousand positive purchase discrepancy was recorded under “tangible and intangible
assets” in CIFD’s consolidated balance sheet. A €(1,071) thousand purchase discrepancy was recorded under
“allowances” in the balance sheet at 31 December 2014.
In light of the mergers completed in 2015 and planned for 2016, the decision has been made to take accelerated
amortization of all purchase discrepancies in 2015.
In 2015 a net amortization charge of €1,414 thousand on purchase discrepancies was recognized under “interest and
related income/expense”.
8. Capital Stock
CIFD’s capital stock may be analyzed as follows:
At 31 December
Capital stock (€ thousands)
Number of shares outstanding
Par value per share
2015
2014
124,822
124,821,566
1.00
124,822
124,821,566
1.00
80
9. Consolidated Entity
At 31 December
%
control
Crédit Immobilier de France
Développement (parent company)
BPI (formerly Banque Woolwich)
Société Foncière Patrimoine
Immobilier
Caisse Centrale du Crédit Immobilier
de France (3CIF)
CIF Assets (FCT)
CIF Centre Est (formerly FCI de
Bourgogne Franche Comté Allier )
CIF Centre-Ouest
CIF Euromortgage (Société de Crédit
Foncier)
CIF Ile de France
CIF Méditerranée (formerly CIF Sud)
CIF Nord (formerly F.R. de Crédit
Immobilier Nord Pas de Calais )
CIF Ouest (formerly CIF Normandie )
CIFRAA (formerly Sud Rhône-AlpesAuvergne )
CIF Sud-Ouest (formerly Financière de
l'Immobilier Sud Atlantique )
FR de Crédit Immobilier de Bretagne
GIE CIF Services
GIE-I-CIF
SCI 11-13
SCI Alexandre Ribot
SCI Madrid
SNC L'informatique pour les Prêts
Société Foncière Sud Est SAS
Société Méridionale de Gestion
Immobilière (SMGI)
FC = full consolidation
D = disposed
M = merged
2015
%
ownership
interest
2014
method
%
control
% ownership
interest
method
—
—
FC
—
—
FC
99.9
99.9
FC
99.9
99.9
FC
100.0
99.9
FC
100.0
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
100.0
100.0
FC
100.0
100.0
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
—
99.9
—
FC
M
99.9
99.9
99.9
99.9
FC
FC
99.9
99.9
FC
99.9
99.9
FC
—
—
M
99.9
99.9
FC
—
—
M
99.9
99.9
FC
99.9
99.9
FC
99.9
99.9
FC
99.9
100.0
100.0
—
99.0
100.0
100.0
100.0
99.9
99.9
99.9
—
98.9
99.9
100.0
99.9
FC
FC
FC
D
FC
FC
FC
FC
99.9
100.0
100.0
58.0
99.0
100.0
100.0
100.0
99.9
99.9
99.9
57.8
98.9
99.9
100.0
99.9
FC
FC
FC
FC
FC
FC
FC
FC
99.9
99.9
FC
99.9
99.9
FC
Cegeris, SNC Centre Est, and SNC FIRCI Immobilier are not reflected in the consolidated financial statements because
their financial data are not material.
SCI 11-13 was sold on 1 December 2015.
In 2015 three SFRs were merged with CIFD: CIF RAA on 1 June and CIF Méditerranée and CIF Ouest on 1 December. All
three mergers took effect retroactively at 1 January 2015.
81
Reiteration of the CIFD Group’s standards for consolidation:
The Group systematically consolidates subsidiaries that are credit institutions. Those that do not operate as credit
institutions are systematically consolidated only if they have total assets of at least €15 million and €3 million in
shareholders’ equity.
€ thousands
Assets
Buildings purchased at auction
Operating premises
Intangible assets
Financial assets
Cash and transferable securities
Other
LIABILITIES AND SHAREHOLDERS’ EQUITY
Financial debt
Shareholder advances
Allowances
Other
Shareholders’ equity
Capital stock
Reserves and unappropriated retained earnings
Net income
Revenues
(1)
SNC Centre Est (1)
SNC Firci Immobilier (1)
1,564
1,461
4,687
2,053
83
20
1,564
2,566
68
4,687
5,034
4,720
237
(3,393)
1
(2,631)
(763)
2,076
106
(453)
2
(455)
1,641
2015
2014
Financial information at and for the year ended 31 December 2015.
10. Interbank and Related Items
€ thousands, at 31 December
1,216,486
471,134
Loans and advances repayable on demand
59,573
62,601
Current accounts (1)
Overnight repos and overnight loans
Securities received under repurchase agreements
59,573
—
—
62,601
0
—
1,749
40,019
224
—
0
1,524
1,277,809
38,494
—
0
1,525
573,754
Cash and due from central banks
Term loans and advances
Term loans
Securities received under repurchase agreements
Participating loans
Other subordinated loans
Total
(1)
For the purposes of managing the Liquidity Coverage Ratio (LCR), the current accounts of credit institutions have been transferred in part to
3CIF’s and CIF Euromortgage’s accounts with the Banque de France.
82
11. Customer Items
A – Balances
€ thousands, at 31 December
Commercial loans
2015
2014
8
452
22,027,469
26,706,693
254,350
308,654
21,470,324
26,035,108
Equipment loans
28,061
31,522
Participating loans
12,972
13,458
(10)
0
261,772
317,951
2
348
22,027,479
26,707,493
32,625
42,914
Other customer receivables
Treasury facilities
Residential mortgages (1)
Other subordinated loans
Other customer loans
Overdrafts
Total
Including accrued interest
(1)
Including €14,833 million carried by CIF Assets at 31 December 2015 under the Group’s securitization program.
Gross customer items amounted to €22,829 million, down 16.2% from €27,250 million at 31 December 2014.
All lending operations have taken place in France.
83
B – Doubtful Customer Loans
2015
€ thousands, at 31 December
Gross
Writedowns
2014
Net
Net
Other customer receivables
Doubtful customer loans
Treasury facilities
Residential mortgages
Other customer loans
937,414
9
936,449
955
(415,633)
(2)
(414,849)
(782)
521,781
7
521,601
173
1,101,517
7
1,100,467
1,043
Loan losses
Treasury facilities
Residential mortgage
967,427
800
966,627
(385,562)
(800)
(384,762)
581,864
—
581,864
301,606
—
301,606
1,904,840
(801,194)
1,103,646
1,403,123
Total
Gross doubtful customer loans (including loan losses) amounted to €1,904,840 thousand at 31 December 2015 versus
€1,945,328 thousand at 31 December 2014. This item was equivalent to 8.34% of customer receivables at 31
December 2015, compared with 7.14% at 31 December 2014.
Writedowns totaled €801,194 thousand at 31 December 2015 (€542,206 thousand at 31 December 2014) and covered
42.06% of gross doubtful loans, versus 27.87% at 31 December 2014.
84
12. Bonds, Equities, and Other Fixed- and Variable-Income Securities
At 31 December 2015 no capital losses were recognized on the “securities available for sale” portfolio (versus €302
thousand at 31 December 2014). If the capital loss on an investment reduces its value below that of the designated
hedging instrument, the difference is covered by a writedown. The market value of listed debt securities held to
maturity is €604,038 thousand.
€ thousands
Securities available for sale (1)
Debt securities held to
maturity (2)
Equity securities held for
medium-term investment
Total
Including:
Accrued interest receivable
Writedowns
Listed securities
Public-sector issues
Government
securities and
equivalents
Bonds and
other fixedincome
securities
Equities and
Total at
other variable31 December
income
2015
securities
Total at
31 December
2014
39,676
38,022
678
78,376
1,028,174
403,840
96,688
—
500,527
2,847,324
443,516
134,710
678
578,904
3,875,498
7,979
—
3,389
(1)
131,398
—
—
—
11,368
(1)
131,398
435,537
15,295
(25,279)
1,456,105
2,770,091
435,537
(1)
3CIF sold its RMBS portfolio for €887.5 million.
(2) CIF Euromortgage sold its portfolio of French Treasury notes (BTF) for €2,275 million and placed the proceeds on deposit with the Banque de
France.
85
13. Long-Term Equity Investments and Investments in Affiliated Companies
Unconsolidated affiliates had an aggregate gross value of €11,570 thousand at 31 December 2015 versus €13,676
thousand a year earlier, representing a €(2,107) thousand change in gross value, mainly concerning the shareholder
advance to SNC Centre Est.
Principal Affiliated Companies Carried in the Balance Sheet
€ thousands, at 31 December
Procivis
Cegeris
SNC Centre Est
Banque Française de Crédit Coopératif
Crédit Coopératif
Maghreb Titrisation
GOBTP
Habitat Crédit
Other affiliated companies
Total
Writedowns
Net value
2015
Gross
% ownership
value
interest
4,961
9.65%
1,145
80%
4,720
100%
456
n/m
61
n/m
45
n/m
31
n/m
2
n/m
149
n/m
11,570
(4,506)
7,064
2014
Gross
% ownership
value
interest
4,961
9.65%
1,145
80%
6,820
100%
456
n/m
61
n/m
45
n/m
31
n/m
2
n/m
155
n/m
13,676
(3,751)
9,925
There was a €1,145 thousand writedown on Cegeris and a €3,360 thousand writedown on SNC Centre Est.
86
14. Tangible and Intangible Assets
€ thousands, at 31 December
Gross
2015
Depreciation and
amortization
2014
Net
Net
Intangible assets
Lease renewal rights
Other items comprising goodwill (1)
Software
Other
Total intangible assets
2,659
47,807
83,273
2,037
135,776
(2,579)
(47,807)
(71,759)
(57)
(122,203)
80
0
11,513
1,980
13,573
2,995
2,485
14,876
1,434
21,790
20,624
(18,678)
1,946
1,909
8,990
(8,616)
374
132
1,572
1,778
Tangible assets
Operating assets
Administrative buildings
Fixtures, plant assets, and
Related
Computer hardware
11,634
(10,061)
Non operating assets
Operating buildings (2)
Plant assets and fixtures
Façades
Acquisition cost
Carcassing
Technical installations
Land
Other equipment and furniture
Work in process inventory
Investment real estate
Plant assets and fixtures
Façades
Acquisition cost
Carcassing
Technical installations
Land
Total tangible assets
Total tangible and intangible assets
(1)
(2)
136,336
19,465
5,327
(52,349)
(15,861)
(781)
83,987
3.603
4,546
96,686
5,534
5,813
38,228
15,494
48,235
9,576
13
(15,276)
(11,738)
(11)
(8,683)
22,952
3,757
48,224
893
13
29,892
4,305
49,594
1,231
316
22,668
(9,597)
13,071
20,233
3,402
3,402
(1,892)
(1,306)
1,510
2,096
2,776
3,112
9,121
4,536
2,207
179,629
315,404
(3,484)
(2,175)
(740)
(80,624)
(202,827)
5,637
2,361
1,466
99,005
112,577
8,346
3,900
2,100
118,828
140,619
This item exclusively comprises €42,033 thousand in purchase discrepancies calculated when subsidiaries are consolidated by CIFD, as well as
€5,775 thousand corresponding to BPI’s gross value of business, written off at 31 December 2015.
Administrative buildings that are used solely for the Company’s own business were broken down into their constituent parts on 1 January 2005
in accordance with Standard CRC 2002-10. In 2015 the sale of SCI 11-13 and the SMGI buildings reduced this item by €9,295 thousand.
87
Depreciation methods and periods used for fixed assets
Tangible assets
Operating buildings
Land
not depreciable
Façades
40 years
straight-line
Carcassing
40 years
straight-line
Fittings and fixtures
10 years
straight-line
General technical equipment
15 years
straight-line
Technical installations
15 years
straight-line
Acquisition cost
5 years
straight-line
10 years
straight-line
5 years
straight-line
15 years
straight-line
10 years
straight-line
Other fixed assets
Fittings and fixtures (*)
Telephone systems
General technical equipment
(*)
Furniture (excluding antiques)
Furniture: antiques
not depreciable
Office equipment
5 years
straight-line
Vehicles
5 years
straight-line
Computer hardware
3 years
straight-line
Tools
10 years
straight-line
Software
3–8 years
straight-line
Software developed in-house
3–8 years
straight-line
Intangible assets
Lease renewal rights
(*)
not depreciable
Only concerns premises owned by others.
15. Long-Term Equity Investments
€ thousands
Investments in affiliated
companies (1)
Cost at 31
December
2014
Acquisitions
Disposals
or redemptions
2,861,000 6,137,000 (8,485,979)
Capital
increase
DepreciaCost at 31
Net at 31
tion and
Other
December
December
(2)
changes
amortiza2015
2015
tion
Consolidated
entity (3)
(6)
0
83
512,098
(4,506)
507,591
Intangible assets
138,105
2,223
(4,552)
—
(0)
(0)
135,777
(122,202)
13,573
Tangible assets
207,833
3,439
(19,789)
—
(11,856)
0
179,629
(80,624)
99,005
Total
3,206,938 6,142,664 (8,510,321)
(6)
(11,857)
83
827,503 (207,332)
620,170
(1)
The heading “investments in affiliated companies” shown above reflects the portfolio of debt securities held to maturity, investments in
affiliated companies, unconsolidated affiliates, and long-term equity investments.
(2)
Reclassifications have been made as follows:
•
In 2008, 3CIF reclassified securities available for sale as debt securities held to maturity. The entire initial writedown of 29,059 thousand
was recovered over the remaining life of the securities concerned as of 2015.
•
In 2010, 3CIF again reclassified €525 million in securities available for sale as debt securities held to maturity. €667 thousand of the
€1,724 thousand of the initial writedown has been recovered over the remaining life of the securities concerned. This recovery had a
positive impact of €83 thousand on the 2015 operating statement, compared with €307 thousand in 2014.
(3) Corresponds to the gross value of tangible assets of SCI 11-13 following its disposal.
88
16. Accrued Assets and Other Assets
A – Other Assets
€ thousands, at 31 December
2015
2014
67,161
84,837
—
733
56,509
57,768
—
—
268,949
372,289
2,304,216
2,697,434
Accrued interest
275
1,163
Doubtful accounts
253
238
—
—
2,697,088
3,213,299
Purchased options
Loss carryback
Inventory and other assets
Other assets
Other receivables
Pledges and cash disbursements (1)
Deferred taxes
Total
(1)
This item corresponds to cash deposits by some market counterparties with which 3CIF has entered into cash collateral agreements. These
agreements help promote an increase in transactions while limiting the level of reciprocal risk incurred by both parties.
89
B – Accrued Assets and Liabilities and Other
€ thousands, at 31 December
2015
2014
Collection accounts
24,669
29,581
Foreign currency adjustment accounts
10,764
12,377
251,782
243,776
9,387
12,786
Deferred expenses (2)
25,577
38,068
Prepaid expenses
11,556
7,035
Accrued income
324,649
367,712
96
144
658,480
711,479
Variance accounts (1)
Losses on hedging instruments
Other accruals
Total
(1)
(2)
CIF Euromortgage’s and 3CIF’s technical adjustments concerning off-balance sheet items.
This item reflects a change in the allocation of bond premiums on bonds issued by CIF Euromortgage and 3CIF.
17. Interbank and Related Transactions
€ thousands, at 31 December
Central banks
2015
2014
248
—
(372)
(381)
9
—
4,564
4,495
69
—
Term borrowings
Term borrowings (1)
292,919
292,919
1,991,475
1,991,475
Total
292,795
1,996,039
13,079
34,437
Borrowings repayable on demand
Current accounts
Overnight borrowings
Securities given under repurchase agreements
Including accrued interest
(1)
In the first half of 2015, 3CIF repaid €1.6 billion of ECB borrowings (LTRO).
90
18. Debt Securities
€ thousands, at 31 December
2015
2014
10,577,564
13,326,252
Bonds
9,051,216
11,408,906
Other debt securities
2,495,661
2,482,678
22,124,441
27,217,836
252,793
342,705
Interbank and money market securities
Total
Including accrued interest payable
(1)
(2)
Money market securities issued by 3CIF are covered by the State guarantee as per the Protocol signed on 27 November 2013.
This item corresponds exclusively to registered covered bonds issued by CIF Euromortgage.
19. Accrued Liabilities and Other Liabilities
A – Other Liabilities
€ thousands, at 31 December
Sold options
Other payables (2)
Pledges and cash receipts (1)
Accrued interest
Total
(1)
(2)
2015
2014
172
305
203,168
254,734
1,923,617
2,251,748
34
1,822
2,126,992
2,508,609
This item corresponds to cash deposits by some market counterparties with which 3CIF or CIF Euromortgage has entered into cash collateral
agreements. These agreements help promote an increase in transactions while limiting the level of reciprocal risk incurred by both parties.
This item reflects the recognition of €20,393 thousand in indemnities that will be due to staff members who have been notified that they are
being laid off under the job-saving plan approved in April 2014, pending their actual termination.
91
B – Accrued Liabilities and Other Liabilities
€ thousands, at 31 December
2015
2014
1,173
865
Foreign currency adjustment accounts (1)
18,029
19,914
Gains on hedging instruments
38,907
48,126
579,608
722,629
9,059
6,742
472,616
526,189
3,671
4,620
1,123,064
1,329,085
Collection accounts
Interest-free loan tax credit and subsidy
Deferred income
Accrued income
Other accruals
Total
(1)
This item corresponds to 3CIF’s cumulative gains on benchmark French Treasury bonds (OAT).
92
20. Changes in Depreciations, Amortizations, and Allowances
At 31
December
2015
At 31
December
2014
Additions
Reversals
Assets
Government securities and
equivalents
Due from credit institutions
Due from customers (6)
Bonds, equities and other fixed- and
variable-income securities
Investments in affiliated companies
Tangible and intangible assets (5)
Treasury shares
Other assets (2)
(599,870)
(549,374)
304,316
1,369
(843,555)
—
—
0
—
—
—
(542,206)
—
(527,390)
—
269,358
—
(957)
(2)
(801,194)
(25,279)
—
25,278
0
(0)
(3,751)
(22,275)
—
(6,359)
(755)
(10,474)
—
(10,754)
0
6,437
—
3,243
(0)
2,340
—
(15)
(4,506)
(23,968)
—
(13,885)
Liabilities and shareholders’ equity
Allowances for risk (4)
Valuation differences (1)
Pension allowance
Allowances for general operating
expenses
Allowances for income tax
Allowances for restructuring (3)
Other allowances
269,374
15,859
1,071
1,883
117,334
80,262
—
780
(63,852)
(12,699)
(1,074)
(934)
(906)
(960)
2
52
321,950
82,462
(1)
1,780
1,568
1,135
(1,197)
(51)
1,455
—
246,538
2,456
—
33,380
1,777
—
(47,312)
(636)
—
(0)
52
—
232,606
3,649
€ thousands
(1)
(2)
(3)
(4)
(5)
(6)
Other
changes
This item includes negative purchase discrepancies on the consolidation of CIFD subsidiaries, which were fully amortized as of 31 December
2015.
This item reflects €12,959 thousand in additions to allowances for assets acquired at auction.
This item principally reflects allowances for Group restructuring: the staff/management agreement for €(231,134) thousand (€(241,670)
thousand at 31 December 2014), and allowances for rent and charges on bank branches and executive vehicles for €(1,473) thousand (€(4,869)
thousand at 31 December 2014).
This item reflects a €70,646 thousand collective allowance set up in respect of CIF’s new credit risk provisioning policy.
This item reflects the reclassification of €1,762 thousand in prior-period depreciation and amortization concerning assets related to commercial
activity.
This item reflects a €206,183 addition to allowances in respect of changes to CIF’s new policy of writing down credit risk.
93
21. Maturity Structure of Financing Operations
Less than
3 months
3 months
to 1 year
1 to 5
years
More than
5 years
€ thousands
Central
banks,
accrued
interest,
doubtful
receivables,
writedowns
Total
Total, less
central banks,
accrued
interest,
doubtful
receivables,
writedowns
Assets
10,508
30
41,326
9,459
1,216,486
1,277,809
61,322
Customer items
Bonds and other fixed-income
securities (1)
613,018
700,902
3,916,185
15,643,215
1,154,158
22,027,479
20,873,321
0
0
44,933
86,388
3,389
134,710
131,321
Total
623,525
700,933
4,002,445
15,739,062
2,374,032
23,439,997
21,065,965
Due to credit institutions
11,473
40,437
123,674
103,989
13,221
292,794
279,573
Customer items
Debt securities and subordinated
debt
Other debt securities
38,465
169
988
4,453
23
44,098
44,076
1,000,000
2,444,766
4,447,056
1,006,700
152,694
9,051,216
8,898,522
263,000
407,600
9,951,800
2,350,727
100,098
13,073,225
12,973,127
Total
1,312,938
2,892,972
14,523,518
3,465,869
266,036
22,461,333
22,195,297
3,180,745
7,873,087
20,744,082
13,336,794
45,134,708
45,134,708
Due from credit institutions
Liabilities
Forward instruments
Over the counter
—
On regulated exchanges
Total
3,180,745
7,873,087 20,744,082 13,336,794
(1)
Excluding government securities and variable-income securities (see Note 12).
—
45,134,708
45,134,708
94
22. Statement of Changes in Shareholders’ Equity Excluding Fund for General Banking Risks
and Minority Interests
Capital
stock
€ thousands
At 31 December 2013
Net income for the period
Appropriation of earnings
Dividend
Contributions to CIFD
Change in consolidated entity and
methods
Other changes
At 31 December 2014
Net income for the period
Appropriation of earnings
Dividend
Contributions to CIFD
Change in consolidated entity and
methods
Other changes (1)
At 31 December 2015
85,962
38,860
Additional Consolidated Net income Shareholdpaid-in
reserves and (loss) for
ers’ equity
capital
unapprothe period excl. fund for
priated
general
retained
banking risks
earnings
5,000
1,582,263
(362,352)
1,310,873
(205,092)
(205,092)
(362,352)
362,352
—
—
211,755
250,615
359,755
124,822
216,755
(6)
1,579,660
(205,092)
—
(205,092)
(390,099)
205,092
Minority
interests
655,318
17
(151)
359,755
(610,372)
(6)
1,716,145
(390,099)
0
0
0
(44,794)
18
(1)
0
124,822
216,755
(20)
1,374,548
(390,099)
(20)
1,326,026
20
37
95
23. Off-Balance Sheet Items
A – Financing Commitments
€ thousands, at 31 December
2015
2014
Commitments received
From credit institutions
From customers (1)
– including interest-free loans
Commitments given
To credit institutions
To customers (2)
(1)
(2)
14
0
14
14
37
18
19
19
22,016
—
22,016
62,141
—
62,141
In accordance with banking regulations, commitments received from customers are not shown in the off-balance sheet statement as published.
Primarily, confirmed lines of credit.
B – Guarantees
€ thousands, at 31 December
Commitments received
From credit institutions
From customers (1)
2015
1,021,973
6,669
1,015,304
1,282,200
7,997
1,274,202
2,987
1,717
1,270
6,259
4,987
1,272
Commitments given
To credit institutions
To customers
(1)
2014
In accordance with banking regulations, commitments received from customers are not shown in the off-balance sheet statement as published.
C – Other Commitments (1)
€ thousands, at 31 December
Other commitments received (2)
Other commitments given (3)
(1)
(2)
(3)
2015
2014
2,786,851
2,779,867
650,626
3,278,463
In accordance with banking regulations, this item does not appear in the off-balance sheet statement as published.
This item reflects the State guarantee, in the amount of €2,737,034.
Primarily, €578.6 million (gross value) of subsidiaries’ securities pledged by CIFD as collateral to the Republic of France (€789.9 million at 31
December 2014).
96
D – Other Operations Involving Derivatives
Derivatives initiated by the Group consist of over-the-counter transactions and interest-rate or exchange-rate hedging
transactions.
€ thousands, at 31 December
Macrohedging
Interest-rate instruments
Over-the-counter
Forward contracts
FRAs and other
Swaps
Other forward contracts
Options
Caps, floors, and other
bought
sold
Puts
bought
sold
Currency instruments
Over-the-counter
Forward contracts
Cross-currency swaps
Currency swaps
Options
Currency call options
Currency put options
Total
28,211,597
143,238
143,238
28,354,835
Nominal value of contracts
2015
MicroOther
hedging
2014
Total
Total
1,890,000
10,649,827
1,890,000
38,861,424
57,999,379
3,043,447
2,985,385
58,063
3,186,686
3,128,622
58,063
3,725,892
3,618,014
107,878
1,196,598
1,196,598
1,650,657
45 134 708
63,375,928
16,779,872
—
97
Fair value of contracts
2015
€ thousands, at 31 December
Interest-rate instruments
Over-the-counter
Forward contracts
FRAs and other
Swaps
Other forward contracts
Options
Caps, floors, and other
bought
sold
Puts
bought
sold
Currency instruments
Over-the-counter
Forward contracts
Cross-currency swaps
Currency swaps
Options
Currency call options
Currency put options
Total
Macrohedging
Microhedging
—
(1,607,853)
2014
Other
Total
Total
(53)
1,106,625
(53)
(501,228)
—
5
(293,074)
129
129
14,177
15,070
(892)
14,306
15,199
(892)
14,141
14 113
28
—
—
328,077
—
—
328,077
359 485
(1,607,724)
1,448,826
0
(158,898)
80 557
24. Average Number of Employees on the Payroll
Year ended 31 December
2015
2014
Executives
Non-executive employees
500
444
518
460
Headcount employed
944
949
The above figures represent the number of staff members employed by the Group at 31 December 2015 (including
employees concerned by the first job-saving plan pending notification of their termination).
98
25. Interest and Related Income
€ thousands, year ended 31 December
Credit institutions
Customers
Bonds and other fixed-income securities
Other interest income
2015
237,410
921,063
438,245
327
261,008
1,047,828
525,516
5,462
1,074
526
30,957
5,416
1,629,076
1,845,756
Reversal of negative fair value increments on loans and borrowings
Provisions net of reversals (1)
Total
(1)
2014
This item reflects the application of the new risk provisioning policy:
•
a €1,698 thousand recovery of additional writedowns
•
a writedown for the cost of transferring collateral to the lender, in the amount of €12,600 thousand, including €2,519 thousand in
respect of a reclassification initially recorded under provisions for risk in 2014
•
€35,092 thousand recovery of a provision for carrying costs.
26. Interest and Related Expense
€ thousands, year ended 31 December
Credit institutions
Customers (1)
Bonds and other fixed-income securities
Subordinated debt
Other interest expense
2015
2014
(618,554)
(4,164)
(603,923)
(1)
(693,230)
(13,194)
(757,307)
63
Reversal of positive fair value increments on loans and borrowings
(2,485)
(954)
Deferred expenses
(5,590)
(3,462)
(1,234,717)
(1,468,084)
Total
(1)
This item reflects the cost of the State guarantee to 3CIF in 2014.
The table below has been prepared to provide a clearer picture of charges related to the State guarantee.
99
Impact of State Guarantee
€ thousands, year ended 31 December
2015
Interest and related expense on:
Credit institutions
Customers
2014
(7 068)
Commission expenses on:
Customers
(212,195)
(206,646)
Total
(212,195)
(213,714)
Following a reclassification in 2015 intended to ensure the consistency of 3CIF’s accounting entries, €(7,042) thousand
of interest and related expense was reclassified as commission expenses on customers.
100
27. Fee and Commission Income and Expense
€ thousands, year ended 31 December
2015
2014
Fee and commission income on:
Credit institutions
Customers
Securities transactions
Foreign exchange transactions
Forward financial instruments
Financial services
Other (1)
1
2,586
—
—
160
116
38,091
45
3,110
—
—
—
23
61,768
Total
40,954
64,946
Credit institutions
Customers (2)
Securities transactions
Foreign exchange transactions
Forward financial instruments
Financial services
Vendors and deal flow providers (net of transfers)
Other
(375)
(212,195)
(38)
—
(10)
(2,248)
(92)
(257)
(528)
(206,646)
(19)
—
—
(5,338)
(669)
(36)
Total
(215,215)
(213,236)
Fee and commission expense on:
(1)
(2)
This item includes €31,063 thousand in commission income on death/disability insurance policies, versus €46,869 thousand in 2014.
This item includes €(212,195) thousand in respect of the implementation charge and additional commissions on the permanent State guarantee
(€(206,646) thousand in 2014).
The table below has been prepared to provide a clearer picture of charges related to the State guarantee.
Impact of State Guarantee
€ thousands, year ended 31 December
2015
Interest and related expense on:
Credit institutions
Customers
2014
(7,068)
Commission expenses on:
Customers
(212,195)
(206,646)
Total
(212,195)
(213,714)
101
Following a reclassification in 2015 intended to ensure the consistency of 3CIF’s accounting entries, €(7,042) thousand
of interest and related expense was reclassified as commission expenses on customers.
28. Net Gain (Loss) on Investment Portfolios and Related Securities
€ thousands, year ended 31 December
Securities available for sale
Acquisition costs
Net capital gain (loss) realized (1)
(Provisions) and reversals (2)
Equity securities held for medium-term investment
Total
(1)
(2)
2015
2014
11,946
—
(13,332)
25,278
(20,865)
—
302
(21,167)
—
—
11,946
(20,865)
This item reflects a €26,285 thousand loss recorded by 3CIF on the sale of its RMBS portfolio (€24,672 thousand), which was offset by capital
gains of €11,069 thousand on the disposal of fixed-income securities and of €272 thousand on the disposal of government securities.
This item reflects the reversal of a writedown of the RMBS portfolio sold by 3CIF in 2015 in the amount of €25,278 thousand (provision charge
of €21,397 thousand in 2014).
102
29. Other Banking Income
€ thousands, year ended 31 December
2015
Expense transfers
Share of gains and losses on joint ventures
Other banking income (1)
2014
Other income (2)
12
17,388
1,740
1
8,525
1,956
Total
19,141
10,482
(1)
(2)
This item primarily reflects transactions involving real estate assets acquired at auction:
•
gains on disposals of buildings, in the amount of €13,200 thousand, versus €6,979 thousand in 2014
•
reversals of provisions in the amount of €3,084 thousand in 2015, versus €1,265 thousand in 2014
Rent received, amounting to €1,632 thousand in 2015 (€1,477 thousand in 2014).
30. Other Banking Expense
€ thousands, year ended 31 December
2015
2014
Amortization of deferred expenses
Share of gains and losses on joint ventures
Other banking expenses (1)
Other expenses
(33,499)
(620)
(15)
(13,716)
(77)
Total
(34,119)
(13,808)
(1)
This item primarily reflects transactions involving real estate assets acquired at auction:
•
losses on disposals of buildings, in the amount of €13,610 thousand, versus €7,423 thousand in 2014
•
writedowns, in application of the new risk provisioning policy, in the amount of €18,062 thousand in 2015, versus €4,295 thousand in
2014
103
31. General Operating Expenses
€ thousands, year ended 31 December
2015
2014
Payroll costs
Wages and salaries
Employee profit-sharing and incentives (1)
Payroll taxes
Other income on allocations at the effective rate
Other
( )
* including pension charges
(96,473)
(51,769)
(6,574)
(29,684)
0
(8,447)
(5,816)
(129,382)
(73,147)
(5,049)
(40,053)
81
(11,214)
(8,239)
Administrative expenses
Taxes other than income tax (2)
Outside services (3)
Other
(89,024)
(11,983)
(77,308)
266
(91,131)
(17,701)
(73,680)
250
614
550
Reinvoicing
4,671
5,525
(Provisions) and reversals
(808)
27
(181,020)
(214,411)
Amortization of deferred expenses (net of transfers)
Total
(1)
(2)
(3)
The criteria for calculating incentives were set out in a pro forma document excluding the new credit risk provisioning policy, which is not
covered in the Group incentive agreement.
Including €3,469 thousand in 2015 in respect of the new systemic risk tax and €696 thousand for prudential control by the ACPR.
This item reflects a €6,358 thousand contribution to the Single Resolution Fund set up in 2015.
The analysis of fees for services paid to the independent auditors of the CIFD Group, according to assignment and
auditor, is shown below as recognized in the 2015 operating statement:
104
Services, Audit Firm
Year ended 31 December
Auditing and certifying the financial statements
PwC
Mazars
Others
Other assignments
PwC
Mazars
Others
Subtotal
Legal, tax, and payroll
PwC
Mazars
Others
Other
PwC
Mazars
Others
Subtotal
Grand total
PwC
Mazars
Others
Total
2015
2014
1,816
892
725
199
714
354
360
1,992
946
816
229
42
42
2,530
2,033
2,530
1,246
1,085
199
2,033
988
816
229
32. Provisions For Risk
€ thousands, year ended 31 December
Provisions for risk on credit institutions
(Charges) net of reversals
Write-offs of bad debt
Recoveries of prior-period write-offs
Provisions for risk on customers
(Charges) net of reversals (1)
Write-offs of bad debt
Recoveries of prior-period write-offs
Guarantee fund costs
Provisions for risk on the securities portfolio and other
transactions
(Charges) net of reversals
Write-offs of bad debt
Recoveries of prior-period write-offs
Total
(1)
2015
2014
—
—
—
—
—
—
(406,677)
(356,272)
(56,380)
5,663
312
(141,664)
(110,541)
(36,283)
4,634
526
206
(429)
65
(1)
142
(445)
(1)
17
(406,471)
(142,093)
Following changes made to the policy of writedowns on credit risk, this item reflects:
•
a collective allowance in the amount of €70,646 thousand and additional writedowns of doubtful loans in the amount of €207,881
thousand (see Note 2.2.)
105
•
•
•
the recovery of €6,192 thousand in provisions on performing loans held by Apollonia customers
a €6,890 thousand provision for compliance risk
the reclassification under net banking income of €2,520 thousand on the cost of transferring collateral to the lender, which had
historically been recorded under provisions for risk.
33. Net Gain (Loss) on Disposals of Long-Term Investments
€ thousands, year ended 31 December
2015
2014
Investments in affiliated companies
Capital gains (losses) realized (1)
(Provisions) and reversals
663
1,418
(755)
(335)
(28)
(307)
Intangible assets (2)
(645)
(89)
Tangible assets (3)
704
19
Total
722
(405)
(1)
(2)
(3)
This item reflects the capital gain realized on the sale of SCI 11-13.
This item essentially reflects capital losses realized on lease renewal rights in the amounts of €289 thousand for CIFD and €300 thousand for CIF
Sud-Ouest.
This item essentially reflects the €1,025 thousand capital gain realized on SMGI’s sale of operating buildings less the €259 thousand capital loss
realized by CIF Centre-Ouest on the disposal of various pieces of office equipment.
34. Nonrecurring income
€ thousands, year ended 31 December
Nonrecurring expenses
2015
2014
(56,263)
(283,428)
Nonrecurring income
52,053
233,398
Total
(4,211)
(50,030)
The table below presents an analysis of nonrecurring income (expenses).
€ thousands, year ended 31 December
2015
2014
Exceptional amortization and depreciation (1)
Net capital gains (losses) on sales of bank branches
Staff/management agreement and job-saving plan expenses
Capital gain (loss) on the sale of Sofiap (2)
Net gain (loss) on provisions for rent and charges on
bank branches and executive vehicles
Other
(1,000)
1,639
(4,798)
0
745
(1,648)
(53,095)
257
296
3,835
(24)
(124)
Total
(4,211)
(50,030)
106
(1)
(2)
In light of the circumstances referred to above, assets used for commercial activity can no longer be carried at their going concern value for
reasons of the cessation of the loan origination business. Consequently, they are now carried at their sale value.
Corresponds to the earn-out on the Sofiap sale in 2014.
35. Income Tax
Income Tax Charge Attributable to the Group and to Minority Interests
2015
€ thousands, year ended 31 December
Attributable to the Group
Minority interests
Total
2014
(7,347)
3,529
0
0
(7,347)
3,529
The SFRs CIF IDF and CIF Nord received a tax notification in December 2015, which they have contested. In light of the
factors backing up their claims, no provisions were made in this respect in 2015.
Analysis of Deferred Income Taxes
In light of the circumstances, and for lack of a forecast on which to base the collectibility of deferred tax debits within
a sufficiently short amount of time, the Group has chosen, for reasons of conservatism, to write down its subsidiaries’
net deferred tax position by a net amount of €443,650 thousand.
€ thousands, year ended 31 December
2015
2014
Deferred tax Deferred tax Deferred tax Deferred tax
credits
debits
credits
debits
Timing differences
Provisions for paid leave
Provisions for pension commitments
Non-deductible provisions
Income and expenses subject to deferred taxation
Including deferment of commissions at the effective rate and
transaction costs
Other
Tax debit carryforwards
Other
Valuation adjustment
Other
Total deferred income taxes
Net deferred tax position
250,077
—
302
228,356
20,727
(23,491)
—
—
(16,938)
(6,390)
122,011
—
293
115,195
5,888
(18,095)
—
—
(8,489)
(9,484)
717
(5,711)
—
(6,668)
692
219,888
144
24
120
470,109
444,630
(163)
(2,802)
(167)
(4)
(163)
(26,459)
(980)
635
107,289
520
389
131
229,820
215,970
(122)
771
(1,003)
(821)
(182)
(18,327)
(4,477)
107
36. Proof of Tax
€ thousands, at 31 December
Net income of the consolidated entity
Income tax charge for the Group
Pre-tax income
2015
(390,099)
(7,347)
(382,751)
%
–1.92%
2014
(205,075)
3,529
(208,604)
Income tax rate, parent company
34,43%
34,43%
Theoretical income tax charge
131,794
71,829
Actual income tax rate
(1.92%)
1.69%
(139,141)
(68,300)
Variance
Dividend distribution tax
Impact of non-deductible expenses and non-taxable income
Impact of earnings surtax abatements on the income tax charge
Impact of differences in income tax rate and of the liability
method
Offsetting deferred income tax charge limit and not reported
over the tax loss
Tax credits and tax loss carry-forwards used
Gain on tax consolidation
Prior-period adjustments and other
Total
0
(8,236)
201
0.00%
2.15%
–0.05%
(72)
(2,927)
50
(1,616)
0.42%
(2,557)
(179,993)
47,03%
(69,106)
(5,402)
42,601
13,304
(139,140)
1.41%
(11,13)%
–3.48%
0
0
6,312
(68,300)
108
CIF DEVELOPPEMENT
Statutory Auditors’ report on the consolidated financial statements
For the year ended 31 December 2015
This is a free translation into English of the statutory auditors’ report on the financial statements issued in
French and it is provided solely for the convenience of English speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports,
whether modified or not. This information is presented below the audit opinion on the financial statements
and includes an explanatory paragraph discussing the auditors’ assessments of certain significant
accounting and auditing matters. These assessments were considered for the purpose of issuing an audit
opinion on the financial statements taken as a whole and not to provide separate assurance on individual
account balances, transactions, or disclosures.
This report also includes information relating to the specific verification of information given in the
management report and in the documents addressed to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
PricewaterhouseCoopers Audit
63, rue de Villiers
92200 Neuilly-sur-Seine
MAZARS
61, Rue Henri Regnault
92400 Courbevoie
CIF DEVELOPPEMENT
26-28 rue de Madrid
75008 Paris
Statutory Auditors’ report on the consolidated financial statements
For the year ended 31 December 2015
To the Shareholders,
In compliance with the assignment entrusted to us by your Shareholders’ Meeting, we hereby report to you,
for the year ended 31 December 2015, on:
the audit of the accompanying consolidated financial statements of CIF Développement;
the justification of our assessments;
the specific verifications and information required by law.
These consolidated financial statements have been approved by the Board of Directors. Our role is to express
an opinion on these consolidated financial statements based on our audit.
109
I - Opinion on the financial statements
We conducted our audit in accordance with professional standards applicable in France. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit 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
of the financial position of the Company as at 31 December 2015 and of the results of its operations for the
year then ended in accordance with French accounting principles.
Without qualifying our opinion, we draw your attention to the note 1.1 “State guarantee” and note 4.2 “Going
concern” of the financial statements, which recall that CIF Developpement's consolidated financial
statements as of 31 December 2015 have been prepared on a going concern basis.
The use of the going-concern basis is mainly supported by the following:
the orderly resolution plan reviewed and approved by the European Commission on 27 November 2013.
This plan includes particularly the decision to manage the company’s portfolios until their maturity and is
supported by:
o an external guarantee in respect of financial instruments issued by 3CIF to refinance CIF's assets
for an amount of €16 billion;
o an internal guarantee of up to €12 billion in respect of the amounts payable to CIF Euromortgage
and CIF Assets for cash investments in 3CIF, as well as the amounts payable by 3CIF with regard to
futures transactions entered into with CIF Euromortgage and CIF Assets.
We also bring your attention to notes 2.2 “Changes in the system for assessing credit risk”, 5 “Accounting
policies and valuation methods” and 11 “Customers items” of the consolidated financial statements, which
expose the change in estimates that occurred during the year and relative to the determination of
depreciations and provisions on client loans, and specifically the initial recognition of a collective provision
on performing loans carrying an established credit risk.
110
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:
Going concern
Our work consisted in assessing the elements retained by the Board of Directors in support of pursuit of the
going concern basis of preparation of the consolidated financial statements, and examining the applicable
supporting documentation including in particular the agreement for implementation of the final guarantee
between the French Republic, CIF Développement, 3CIF and CIF Euromortgage, the autonomous first
demand guarantee provided by the French Republic in respect of financial instruments issued by 3CIF and
the autonomous first demand guarantee provided by the French Republic in respect of deposits with 3CIF
made by CIF Euromortgage and CIF Assets, signed on 27 November 2013.
We also assessed the appropriateness of the company’s additional disclosures in the consolidated financial
statements with regard to the going concern basis of preparation of the consolidated financial statements.
Accounting estimates
Provisions for credit risks
Your Company records provisions and depreciations to cover the credit and counterparty risk inherent to its
business, as described in notes 2.2 “Changes in the system for assessing credit risk”, paragraph “Doubtful
loans” of the note 5 “Accounting policies and valuation methods”, paragraph B of the note 11 “Doubtful
customers loans” of the consolidated financial statements. As part of our assessment of the significant
estimates, we have examined the control system relative to the follow-up of credit risks, the appreciation of
non-recovery risks and their hedging by means of specific depreciations on the assets side of the balance
sheet, and by by means of collective provisions for non-allocated client risks on liabilities side.
Provisions for restructuring with regard to the social management agreement
Paragraph 2.5 " Restructuring under the staff/management agreement" sets out the accounting policy and
actuarial assumptions (in particular the discount rate) applicable to recognition and measurement of the
provision. To assess the provision, we verified the proper application of the stated accounting policy as well
as the elements included in the calculation of its amount as at 31 December 2015.
Rules and accounting policies
Your Company holds positions on securities and financial instruments. Note V “Accounting policies and
valuation methods” and paragraph D “Other operations involving derivatives ” of the Note 23 “Off-balance
sheet items” of the consolidated financial statements present the rules and methods applied for their
accounting.
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We have examined the control system relative to the classification and measurement of theses portfolios. We
have also assessed the application and the appropriateness of the accounting principles applied by the
Company and we have verified the disclosures included in the notes of the financial statements.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole,
and therefore contributed to the opinion we formed which is expressed in the first part of this report
III - Specific verifications and information
We have also performed, in accordance with professional standards applicable in France, the specific
verifications required by French law.
We have no comment 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 financial statements.
Neuilly-sur-Seine and Courbevoie, on 12 May 2016
The statutory auditor
PricewaterhouseCoopers Audit MAZARS
Antoine PRIOLLAUD
Partner
Virginie CHAUVIN
Partner
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CREDIT IMMOBILIER DE FRANCE DEVELOPPEMENT
French corporation (société anonyme)
Capital stock: €124,821,703
26-28 Rue de Madrid, 75008 Paris, France
Corporate and Commercial Registry n° 379 502 644 RCS Paris
DECLARATION BY THE CORPORATE OFFICER RESPONSIBLE FOR REPORTING
(CMF L.451-1-2 I)
___________________________________
I the undersigned, Jérôme Lacaille, Chief Executive Officer of Crédit Immobilier de France Développement–CIFD,
hereby declare that, to the best of my knowledge, the financial statements have been prepared in accordance with
applicable accounting standards and give a true and fair view of the assets, financial condition, and results of the
Company, and that the Report of the Board of Directors provides an accurate picture of the Company’s business
developments, results, and financial condition, as well as a description of the principal risks and uncertainties it faces.
To the best of my knowledge, the Report does not omit any information that could affect its impact.
Paris, 29 April 2016
Jérôme Lacaille
Chief Executive Officer
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