Annual Report 2012 Reference Document
Transcription
Annual Report 2012 Reference Document
Annual Report 2012 Reference Document This document is an English translation of Crédit Coopératif’s reference document. This translation has no legal value. The only official version of this document is the French version, which has been submitted to the French financial market authority on 25 March 2013 in compliance with Article 212‑13 of the Authority's General Regulations, as deposition by number D.13-0308. It may be used to support a financial operation provided that it is complemented by a short form prospectus that has been approved by the Financial Markets Authority. This document has been prepared by the issuer and is the responsibility of its signatories. Copies of this document may be obtained free of charge from Crédit Coopératif at: 12 Boulevard Pesaro – Corporate Life Department - CS 10002 - 92024 Nanterre cedex, or online at the Crédit Coopératif website: (www.credit-cooperatif.coop/informations-financieres/activite-et-resultats/), or on the website of the Financial Markets Authority (AMF) at www.amf-france.org. 2 1 Contents B / Crédit Coopératif Group management report 1. 2012 Crédit Coopératif Group activity . . . . . . . . . . . 38 Editor's foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2. Corporate social responsibility . . . . . . . . . . . . . . . . . . 50 Crédit Coopératif Group . . . . . . . . . . . . . . . . . . . . . . . . . 4 3. Group architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Crédit Coopératif within Groupe BPCE . . . . . . . . . . . . . . 6 Organisation of the Crédit Coopératif Group . . . . . . . . 7 Crédit Coopératif Group Board of Directors . . . . . . . . . 8 Executive Management . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Press release: results and key figures . . . . . . . . . . . . . . 11 A / Chairman’s report on the proceedings of the Board of Directors and internal control procedures 1. Organisation and preparation of the proceedings of the Board of Directors . . . . . 16 2. Internal control procedures . . . . . . . . . . . . . . . . . . . . . . . . 28 4. Board of Directors and Executive Management . . . 79 5. Company and consolidated financial statements 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6. Risk exposure and risk management . . . . . . . . . . . . . 93 7. Distribution and appropriation of earnings . . . . . . 107 8. Outlook for 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 C/ Crédit Coopératif Group financial statements 1. Crédit Coopératif Group consolidated financial statements (IFRS) . . . . . . . . . . . . . . . . . . . . . . 110 2. Crédit Coopératif company financial statements . . . 172 Statutory auditors' reports . . . . . . . . . . . . . . . . . . . . . . . . . 210 Draft resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Cross-reference table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Statement by the individual responsible for the reference document . . . . . . . . . . . . . . . . . . . . . . . . 223 Branch contact details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 3 Editor's foreword The UN's decision to declare 2012 the International Year of Cooperatives clearly demonstrated the relevance of the cooperative model in the modern world. This model, with its democratic governance, has also proven economically effective, with recognition at both international level and in France, where the government has created a Ministry for the Social and Socially Responsible Economy. We are delighted with this development. In order to continue building on this cooperative culture over the next decade, we need to stress the ways in which this model offers a different solution, both for the economy and for people. Crédit Coopératif's economic activity is based on a core principle: a bank working to build a fairer world. It is this approach that sets us apart from the rest. In 2012, Crédit Coopératif Group sustained a high level of activity despite difficult economic circumstances. Balance sheet collection activities, boosted by higher levels of savings, were satisfactory given the highly competitive environment. Lending activities, meanwhile, were exceptional, demonstrating the Group's ability to finance the real economy – and the social and socially responsible economy in particular – and to build relationships with its members founded on trust and that create genuine value. The Group also gained more customers (up 4%), demonstrating its ability to meet the needs of companies, general interest bodies and individuals looking for a reliable banking partner in a context of growing mistrust of the banking sector as a whole. These results can be partially explained by the shared interests that unite Crédit Coopératif and its members. As a cooperative organisation, the bank listens to its customers in both its formal governance structures and its local cooperative bodies. It is this attentiveness to customers' needs that underpins its model. In applying this principle, the bank relies on its ability to develop innovative new products and services and adapt to its customers' needs. In 2013, Crédit Coopératif will continue in this same vein, including the introduction of a new information system to ensure it is better placed to support its members and provide them with the useful services they need. We also believe that it is our responsibility as a cooperative bank, and indeed in our own interests, to continue operating in a way that respects both people and the environment. In 2013, we will therefore continue our policy of developing innovative financial services to support the social and environmental needs of our customers, placing particular emphasis on helping them to grow and invent new forms of entrepreneurship. We are also committed to improving our own governance, as well as recognising the value of our human capital and mitigating the environmental impacts of our corporate practices. To ensure that we are held to account as objectively and fully as possible, we have decided to adopt the Global Reporting Initiative (GRI) sustainable development reporting standards. The GRI has certified this annual report at the very highest possible level (level A). This is not a new approach. In 2012, we joined the Global Alliance for Banking on Values (GABV), an organisation with 21 member banks from across the globe, all of which share a common goal to place people, the environment and transparency at the very core of their banking activities. This is yet another demonstration of our commitment in this area. We also believe that the creation of a public investment bank, and the introduction of a draft bill on the social and socially responsible economy, both of which are expected in 2013, will give much-needed support to the social and socially responsible economy of which Crédit Coopératif is a part. In 2013, we will also celebrate our 120th anniversary. We intend to mark the occasion by demonstrating that Crédit Coopératif continues to focus on a long-term commitment to its customers, through both good and bad times. We also want to show how, now more than ever, the innovative, cooperative and sustainable model that we have adopted is able to support economic growth in a sector that is crucial to our society. Jean-Louis Bancel Chairman François Dorémus Chief Executive 4 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Crédit Coopératif is a variable-capital popular bank cooperative limited company. Its origins go back to the late 19th century when a group of co-operators decided to set up their own bank. Over the last 120 years, the bank's chosen mission, as outlined in its Statement of Principles, has been to be a cooperative bank at the service of those who operate in the social and socially responsible economy, striving to respect individuals and their environment. A cooperative bank The core of Crédit Coopératif's capital (80 %) is provided by its customers. Individual members hold all of the voting rights at the General Meeting, based on the "one person, one vote" principle. The Board of Directors is made up of individual member representatives. Individual shareholders are also invited to take part in the bank's cooperative life. Capital is ring-fenced, and a significant portion of this capital is used to create non-distributable reserves. These reserves are collectively owned property that form part of the bank's equity and help to secure its long-term future. Customers with a high level of social utility Credit Coopératif's carefully selected customer base comprises companies in the social and socially responsible economy, and companies whose economic model is involves "joint and different powers of action". These include associations, cooperatives, groupings of entrepreneurs and their members, mutual associations, social entrepreneurs and small and medium-sized businesses. These customers operate in a wide range of different sectors, from social, social/medical, healthcare, welfare to work, personal services, environment, culture and knowledge, education and research and social housing, to industry, services, distribution, retail, agriculture, waterborne transport and eco-activities. Crédit Coopératif also continues to attract rising numbers of personal customers. Responsible management Crédit Coopératif believes strongly in its cooperative principles, and has broadened the scope of this commitment to include corporate social responsibility. The bank's commitment in this respect may be measured through the composition of its Board of Directors and the allocation of loans by sector. In its asset management activities, the bank has a tax haven exclusion policy which, in 2012, it extended to cover its loan activity. Its asset management company, Ecofi Investissements, also operates in line with a very strict responsible management policy. Through the Crédit Coopératif Foundation and its various other support operations, the Crédit Coopératif Group aims to play a leading role in building a society that is fair for all. In 2011, it set up an innovative, pioneering voluntary contribution on currency transactions (CVTC-Change Solidaire) to help fund development projects. In order to measure its corporate social responsibility, Crédit Coopératif Group uses the GRI (Global Reporting Initiative) international standards, along with a range of additional standards that reflect the principles of the cooperative movement. The Group's actions have received international recognition, as demonstrated by its membership of the Global Alliance for Banking on Values (GABV), a network of 21 banks all of which share a common goal to place people, the environment and transparency at the very core of their activities. Serving every aspect of the real economy Crédit Coopératif Group is an overarching organisation that covers the banking and financial institutions that depend on it for financial solidity. Together, they form the Crédit Coopératif Group, a complete banking group with a national network. Some of these take the form of subsidiaries: BTP Banque (banking network dedicated to the construction industry), Bati Lease (property leasing), and Ecofi Investissements (asset management). Others (mainly cooperatives) are associated with member movements or groups. The Group offers its customers all of the services that they need on a daily basis or when faced with the challenge of a large-scale project: • socially responsible finance: Crédit Coopératif is a pioneer • day-to-day banking services: accounts, methods of payment, cash flow management, processing of international transactions, insurance, savings and investments. Wherever possible, the proposed products include a socially responsible version. • loans and finance: loans of all lengths, classic loans and leasing, including credit access facilitation methods (mutual guarantees, sureties, etc.) and with a strong commitment to delivering financial inclusion solutions in partnership with players in the personal and business micro-credit sector. Crédit Coopératif is a partner of various public schemes, both in France and in Europe. The bank also has recognised expertise in supporting individual and business environmental schemes. also an expert in engineering and services for socially res- in socially responsible finance. It offers a unique range of socially responsible savings and investment products. It is ponsible funders (Adie, Caisse Solidaire, France Active, France Initiative, Nef, local associations, etc.): refinancing, guarantee, provision of equity capital, security issuance, etc. • growth support services: assistance with business or association restructuring or transfer arrangements (capital financing, shareholding and growth capital operations). • social engineering: save-as-you-earn schemes, service employment vouchers, luncheon vouchers, etc. in conjunction with partners from within the social economy or Groupe BPCE. Crédit Coopératif Group 5 6 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Presentation Crédit Coopératif within Groupe BPCE Financial organisation 3.8 million members 20% (CCIs) 19 Banques Populaires within the Fédération Nationale des Banques Populaires 4.3 million members 65,000 members 80% 20% (CCIs) 17 regional Banques Populaires and Casden 80% 80% * Credit Coopératif 49% 20% (CCIs) 17 regional Caisses d’Épargne 1% 50% Part of the Fédération Nationale des Caisses d’Épargne Central body Groupe BPCE Natixis (72.4 %, the remainder being floating capital) BPCE parent companies BPCE subsidiaries Crédit Coopératif has a specific position and status within Groupe BPCE, which is established by an agreement that links it to the group. As well as recognising its national mission as a player in the social and socially responsible economy, it states that Crédit Coopératif, its subsidiaries and partner entities shall keep their own identities, specific characteristics and customers, as well as their management autonomy, their freedom to enter into commitments and their internal operating and financial rules. Crédit Coopératif holds 1% of the capital of BPCE, the common tool of the Banques Populaires and Caisses d’Épargne. It is one of the parent companies within Groupe BPCE, which is a decentralised cooperative group. BPCE, acting as the central body Other subsidiaries Banque Palatine – Crédit Foncier de France – BPCE Assurances (46.3%), BPCE International – BPCE Outre-Mer Equity relationship *V ia local savings societies. described in the Monetary and Financial Code, is answerable to the banking authorities for Crédit Coopératif compliance and ensures its liquidity and solvency. Natixis, a subsidiary of Groupe BPCE, has a 20% holding in the capital of Crédit Coopératif in the form of cooperative certificates of investment (CCI), which are non-voting securities. The remaining 80 % of the capital is provided by Crédit Coopératif's customers. Crédit Coopératif thus combines the benefits of a cooperative bank that belongs to its customers with the resources available to a large banking group. 7 Members Crédit Coopératif Subsidiaries Partner institutions BTP Banque Examples of partnership shareholdings Bank Development capital BTP Capital Investissement Banque Edel Banque Populaire Développement Ecofi Investissements Financial credit companies Groupe Esfin Ides Caisse Solidaire Rhône Dauphiné Développement BTP Capital Conseil Croissance Nord-Pas-de-Calais Financière de Champlain Esfin Gestion Société financière de la Nef Socoden Gedex Distribution Transméa Socorec Bati Lease Intercoop Social housing Financial guarantee companies CMGM Société Française d’Habitations Economiques Nord Financement Copronord Sofigard Habitation Familiale Intercop Location Tise Sofindi Socially responsible finance Sofirif Sofiscop France Active Garantie Sofiscop Sud-Est Sifa Somudimec Somupaca International CoopEst SG Bank BNDA Merkur Bank The establishments shown in this simplified organisation chart are listed opposite and in the Group Architecture section on page 70. Crédit Coopératif Group Organisation of the Crédit Coopératif Group 8 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Presentation Crédit Coopératif Group Board of Directors at 31 December 2012 Directors Jean-Louis Bancel Chairman of the Board of Directors Jean-Claude Detilleux Deputy Vice-Chairman Caisse Mutuelle de Garantie des Industries Mécaniques et Transformatrices des Métaux (CMGM – mechanical and metal-processing industries’ mutual-guarantee fund) Vice-Chairwoman of the Board of Directors Martine Clément ESFIN Vice-Chairman of the Board of Directors Hugues Sibille Fédération Nationale de la Mutualité Interprofessionnelle (FNMI – national federation of interprofessional mutual societies) Vice-Chairman of the Board of Directors Maurice Ronat Union Nationale des Associations de Parents, de Personnes Handicapées Mentales et de leurs Amis (UNAPEI – national union of associations for the mentally disabled, their parents and friends) Vice-Chairman of the Board of Directors Jean Gabain Association Nationale des Coopératives Financières (ANCF national association of financial cooperatives) Gilbert Hennique Chantal Chomel Representative of category “C” shareholders Confédération Générale des Scop (CG Scop - general confederation of SCOPs) Patrick Lenancker Conseil National du Crédit Coopératif (CNCC – national council of Crédit Coopératif) Philippe Antoine Fédération des enseignes du commerce associé (FCA - retail trade association) Guy Leclerc Fédération Nationale de la Mutualité Française (FNMF – French mutual societies’ national federation) Gérard Vuidepot Fédération Nationale des Coopératives de Consommateurs (FNCC – national federation of consumers’ cooperatives) Nadia Dehors Fédération Nationale des Sociétés Coopératives d’HLM (FNSC D’HLM – national federation of cooperative low-income housing boards) Daniel Chabod Garantie Mutuelle des Fonctionnaires (GMF – public employees’ mutual guarantee institution) Patrice Forget Mutuelle générale de l’éducation nationale (MGEN – teachers’ mutual society) Jacques Hornez Union Nationale des Associations de Tourisme et de Plein Air (UNAT – national union of associations for tourism and open-air activities) Christine Bouyer Union sociale pour l’habitat (social union for housing) Michel Amzallag Executive Committee of the Board of Directors at 31 December 2012 Jean-Louis Bancel Chairman Jean-Claude Detilleux Deputy Vice-Chairman Hugues Sibille Vice-Chairman ESFIN Employee-elected directors The following people also attend meetings of the Board of Directors : Claire Besson Françoise Girma-Romeyer Jean-Denis Nguyen Trong Fabienne Roy Works Council representative Isabelle Renon Statutory auditors Non-voting directors Conseil National du Crédit Coopératif (CNCC – national council of Crédit Coopératif) Jean-Marie Miramon Fédération Française des Coopératives et Groupements d’Artisans (FFCGA – French trade association of self-employed and small-business cooperatives and groups) Bernard Martineau Société Coopérative d’Entraide-Fonds d’Expansion Confédéral (Socoden-FEC – cooperative mutual-aid society – confederal economic-development fund) Jacques Landriot Incumbents : KPMG AUDIT: Fabrice Odent SOFIDEEC "BAKER TILLY": Cyrille Baud Substitutes : Pascal Brouard Christian Lairy Société coopérative pour la rénovation et l’équipement du commerce (SOCOREC – cooperative society for retailers’ renovation and capital investment) Hervé Affret Société financière de la Nef Jean-Luc Seignez Union Nationale Interfédérale des Oeuvres et Organismes Privés Sanitaires et Sociaux (UNIOPSS) Hubert Allier Michel Vallade Representative of category “C” shareholders Martine Clément Vice-Chairwoman Maurice Ronat Vice-Chairman Jean Gabain Vice-Chairman Philippe Antoine Secretary Caisse Mutuelle de Garantie des Industries Mécaniques et Transformatrices des Métaux (CMGM – mechanical and metal-processing industries’ mutual-guarantee fund) Fédération Nationale de la Mutualité Interprofessionnelle (FNMI – national federation of interprofessional mutual societies) Union Nationale des Associations de Parents, de Personnes Handicapées Mentales et de leurs Amis (UNAPEI – national union of associations for the mentally disabled, their parents and friends) Conseil National du Crédit Coopératif (CNCC – Crédit Coopératif National Council) Crédit Coopératif Group 9 10 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Presentation Executive Management The Executive Management consists of a Chief Executive, François Dorémus, and two Deputy Chief Executives, Pierre Valentin and Jean-Paul Courtois . The Executive Management is supported by a Management Committee, which deals with operational aspects of Crédit Coopératif's business. François Dorémus Chief Executive Stéphane Coste PA to the Chief Executive Christian Mamet Group Risk and Compliance Division Frédéric Toussaint Communication Division Bruno Maillard Bernard Pagès Pierre Valentin Jean-Paul Courtois Development Division Commercial Division Finance Division Human Resources and Production and Banking Services Division Jean-Florent Girault Information Systems and General Services Division Pascal Zakowski General Secretariat Division 11 Crédit Coopératif Group 2012: strong performance supporting our dynamic, socially useful customers Despite the tense economic environment, 2012 saw commercial activity in good shape at Crédit Coopératif Group, allowing net banking income to grow by 4.2%. The Group share of net profit was €27.2 million. At its meeting of 6 March 2013, the Board of Directors of Crédit Coopératif approved the 2012 financial statements of Crédit Coopératif Group, composed of Crédit Coopératif, its subsidiaries (BTP Banque, Bati Lease and Ecofi Investissements) and associated institutions. Crédit Coopératif and its subsidiaries represent the core of the business. These financial statements will be submitted to members between 12 April and 17 May at the 23 regional general meetings of Crédit Coopératif, and then on 30 May to individual bearers of members' shares at the plenary meeting. More customers for Crédit Coopératif and its subsidiaries across all segments The number of customers of Crédit Coopératif and its subsidiaries grew by 3.9 % in 2012 and is now in excess of 300,000. Of these, 70,000 are corporate entities, mainly based in the social economy (principally cooperatives, mutual companies, associations and general interest bodies). The number of private customers (4.7 % of the total), excluding legally protected adults, rose by 7.1 %. Sustained deposit collection activity The activities of Crédit Coopératif and its subsidiaries in collecting deposits (€14.15 billion on average in the year) were characterised by strong growth in balance-sheet resources (sight deposits up 6%, savings up 39.8%). UCITS exposures, which have been falling since 2009 across the sector, are now stabilising (down 2 %). Total deposit collections rose by 3.8 %, boosted in particular by general interest body customers. Strong growth on the lending side across all segments The loan exposure of Crédit Coopératif and its subsidiaries (€9.5 billion on average in the year) rose by 14 %, broadly in line with average growth since 2006. Medium and long-term loan exposure remains highly dynamic, with new investment credits reaching €2.2 billion, confirming the trend seen in the last three years. This is a continuation of the high level of dis- 1. Under IFRS. The audit procedures for the consolidated financial statements for the financial year ending 31 December 2012 have been finalised for the most part. The statutory auditor’s report on approval of the consolidated financial statements will be sent after verification of the information in the management report and implementation of the procedures required to finalise the reference document. Within the framework of partnership agreements, Crédit Coopératif guarantees the liquidity and solvency of various credit institutions, primarily cooperatives, to their customers: Banque Edel, Caisse solidaire, Société financière de la Nef, Gedex Distribution, Socorec, CMGM, Nord Financement, Sofigard, Sofindi, Sofirif, Sofiscop, Sofiscop Sud Est, Somudimec and Somupaca. France Active Garantie (FAG) and Caisse de Développement de la Corse (Cadec) are now consolidated according to the equity method. Crédit Coopératif Group Press release: 2012 results 7 March 2013 12 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Press release: 2012 results bursements recorded in 2011, in response to strong demand from businesses, associations and general interest bodies. The increase in short-term applications of funds (€975.8 million, up 18.8%) reflects changes in the bank's activities, particularly in terms of advance funding in the social housing sector and funding for the agricultural cooperatives sector, which has recently recorded strong growth. Signature commitments (€2.5 billion) rose by 6%. The Group's net banking income, including associated institutions, stood at €423.3 million at 31 December 2012, up 4.2%. This change is primarily a reflection of the Group's strong performance against a background of low rates. The Group's general expenses, including associated institutions, stood at €319.9 million (up 7.4%). Payroll expenses (€184.4 million) rose by 5.3%. As announced in the H1 results, other management costs (€135.5 million, up 10.3%) were affected by non-recurring expenditure, such as the completion of Head Office refurbishment work and removal costs associated with transferring staff back to the premises, which have been fully renovated to High Environmental Quality (HEQ) standards and offer staff a brand new, modern working environment. Additional cost items included new investment in IT infrastructure and an increase in the Group's tax burden following the French government's decision, in August 2012, to impose a banking levy. The operating ratio is 75.6%. Improving this figure as part of carefully managed growth remains an important objective. Gross operating profit (€103.5 million) fell by 4.4%. The cost of risk (€49.1 million) rose in comparison with 2011, when the level was low due to reversals of provisions. The 2012 figure is broadly in line with previous years. After tax and deduction of non-controlling interests, the Group share of net profit was €27.2 million (€51.2 million in 2011), down 46.9%. This fall is largely due to the rise of the cost of risk to a more normal level and an adjustment in the assessed value (€6.9 million) of BPCE securities held by Crédit Coopératif. Net income in Crédit Coopératif's financial statements stood at €22.6 million. Including carried-forward income, distributable profit was €25.8 million. The following allocation of profits will be proposed to members at the General Meetings: legal reserve: €3.3 million; return to members and associated customers: €14 million (proposed payment for members' shares at 2.5% gross); cooperative rebate: €500K; dividends to CCIs: €4million; profit carried forward: €3.8 million. Crédit Coopératif 's capital increase by members and associated customers stood at €72.4 million, ensuring that the Group retained a highly satisfactory level of solvency against tighter statutory requirements: Tier One stands at 11.06% and the Group's solvency ratio is 11.35%. Crédit Coopératif welcomes the announcement, by Groupe BPCE, of a simplified structure under which parent companies are able to buy back CCIs held by Natixis, although this change has had no impact on the 2012 results. Once the operation has been finalised and the Articles of Association duly updated in 2013, all of Crédit Coopératif's capital will once again be held by its members and customers. 13 This confirms Crédit Coopératif Group's capacity to provide finance for the real economy and its ability to meet the needs of its diverse customer base, and in particular to offer new products and services to its selected customer markets, general interest bodies, cooperatives, SMEs and like-minded individuals. With its new "Agir" account, launched in April 2012, the Group now offers individuals a way of funding a sector of their choice through their deposits. In 2012, shared product holders paid in a total of €4.9 million. Generally speaking, the level of deposits collected from customers is such that the Group is able to maintain sufficient liquidity to fund its lending activity. The Group also conducted a bond issue in July (fully subscribed by customers), with a share of revenue from this issue paid to an association – Agronomes et Vétérinaires sans Frontières – under an innovative social scheme. As a key funding provider for the social and socially responsible economy, as well as for SME/SMIs, Crédit Coopératif Group has closely monitored government plans to steer more funding towards the productive economy (through a public investment bank in particular). For the second year running,. Crédit Coopératif paid its voluntary contribution on currency transactions (CVTC-Change solidaire). Over two years, this contribution raised a donation of €150,000 to support a Geres project in the Indian Himalayas, a project which has now been completed. The contribution will go to a similar project in Morocco in 2013. Demonstrating the importance that it places on the impact of its activities, Crédit Coopératif was accepted as a member of the Global Alliance for Banking on Values (GABV). It is the only French member of this international network of 21 banks, which aims to develop an effective, sustainable banking model. Crédit Coopératif Group has obtained Global Reporting Initiative (GRI) certification for its 2012 reference document. This initiative is an internationally recognised benchmark for sustainable development information reporting. The A rating awarded to Crédit Coopératif signifies that the bank has achieved the highest possible score for the content of its extra-financial reporting. Crédit Coopératif also continued its efforts to be closer to its customers, opening a new office in Brest and new branches in Paris (Convention) and Lyon (Part Dieu). The aim of these changes is to strengthen the Group's ability to serve the real economy, and the social and socially responsible economy in particular – an area that has come under close scrutiny from the government. The United Nations' decision to designate 2012 as the International Year of Cooperatives demonstrated the important role that cooperatives have to play in building a better world, and confirmed the effectiveness of Crédit Coopératif's cooperative model. In 2013, the Group celebrates its 120th anniversary. This is an opportunity to demonstrate its desire to support those who are working for change and looking to build a better world. http://www.credit-cooperatif.coop/ Communication Division Press contacts: Claude Sevaistre +33 (0)1 47 24 89 71 – +33 (0)6 16 36 16 47 Tiara de Cerval – + 33 (0)1 47 24 83 47 Crédit Coopératif Group In 2012, Crédit Coopératif Group saw a substantial rise in its loan activity across all corporate customer segments. Signs of a deteriorating economic situation in H2, however, led to a relative increase in customer risk. 14 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Press release: 2012 results Key figures at 31 December 2012 Results (in millions of euros) 2012 2011 Change Net banking income 423.3 406.3 General expenses -319.9 -298.0 4.2% 7.4% Gross operating income 103.5 108.3 -4.5% Cost of risk -49.1 -29.4 +67.2% Not significant Other items (1) -9.6 -0.1 Corporation tax -17.5 -27.6 -36.6% Net income (group share) 27.2 51.2 -46.8% (1) Results according to the equity method, gains or losses on other assets, deduction made for non-controlling interests. Abbreviated balance sheet (in billions of euros) Assets Interbank operations and securities portfolio Customer loans 2012 2011 2.68 3.38 Liabilities Interbank operations and bond issues 2012 2011 3.07 3.05 11.46 10.02 Customer deposits 9.98 9.08 Miscellaneous 0.52 0.30 Miscellaneous 0.38 0.45 Fixed assets 0.27 0.25 Equity capital 1.49 1.39 14.92 13.96 14.92 13.96 TOTAL Financial indicators TOTAL Others Solvency ratio Tier One ratio Operating ratio Return on equity 2012 2011 11.35% 11.80% 11.06% 11.14% 75.56% 73.34% 2.26% 4.49% at 31/12/2012 Employees of the Crédit Coopératif UES (Crédit Coopératif, BTP Banque, Ecofi Investissements - enrolled staff) Current customers number of corporate entities Business indicators (in billions of euros) Exposures from loans to customers Exposures from customers’ bank finance UCITS exposures 2012 2011 Change 11.46 10.02 14.4% 9.98 9.08 9.9% 5.96 5.99 -0.5% 2,060 302,000 71,300 Members (mainly corporate entities) approx. 40,000 Associated customers (share-holding individuals) approx. 25,000 Crédit Coopératif Network 73 branches, 1 online branch 2 affiliated branches, BTP Banque Network 40 branches 15 Chairman's report on the proceedings of the Board of Directors and internal control procedures 16 28 Procedures for preparing and organising the proceedings of the Board of Directors Internal control procedures 16 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures In accordance with Article L.225-37 of the Commercial Code, the Chairman of the Crédit Coopératif Board of Directors hereby submits this report concerning: • the procedures for preparing and organising the proceedings of the Board of Directors • the internal control procedures implemented within Crédit Coopératif • any limitations placed by the Board of Directors on the remit of the Chief Executive. Most of the share capital in Crédit Coopératif is held by various groups that make up the social economy, such as mutual societies, cooperatives and associations, in addition to a broad customer base comprising small and medium-sized businesses and personal customers. The composition of the Board of Directors takes account of these different sectors. Crédit Coopératif’s Corporate Governance Charter, adopted by the Board of Directors on 15 September 2005, details the operating principles and methods of Crédit Coopératif’s decisionmaking bodies. It is available on the Crédit Coopératif website: www.credit-cooperatif.coop (in the "Qui sommes-nous?" section – in French only) (GRI 4.8). ➔➔1.1 Composition of the Board of Directors 1.1.1 Directors The Board of Directors is composed of 18 directors, who are appointed by the General Members’ Meeting for a term of six years (15 corporate entities and 3 individuals), and four employee-elected directors. The corporate entity directors mainly represent the movements and trade federations that represent the members of Crédit Coopératif. The first section of this report, which deals with the procedures for organising and preparing for the proceedings of the Board of Directors, has been prepared with the assistance of the Board of Directors's secretariat. The second section, which covers internal control procedures, has been prepared with the help of the Compliance and Continuous Control managers. The GRI indicators outlined in the Chairman's Report have been gathered by Crédit Coopératif's CSR unit. The chief qualities expected of a director are business experience, a personal commitment to the proceedings of the Board, an understanding of the business and financial world and major social and societal issues, the ability to work together while respecting each other’s opinions, the courage to speak up even when in a minority, a sense of responsibility to member shareholders and other interested parties, and integrity. The 2012 Annual Report was presented to the Audit Committee on 27 February 2013 and to the Board of Directors of Crédit Coopératif on 6 March 2013. In order to be a member of the Board of Directors, individuals require undisputed merit and must own at least one share in Crédit Coopératif. 1. Procedures for preparing and organising the proceedings of the Board of Directors Anyone who is aged 68 or over may not be appointed as a director or as a permanent representative director of a corporate entity for the first time. The number of directors and permanent representatives above the age of 68 may not be more than one third of the total number of directors in office. According to the rules of Board of Directors, directors or their permanent representatives may not remain in post beyond the age of 73. The Crédit Coopératif Board of Directors operates in compliance with the principles of corporate governance set out in the rules of procedure for the Board of Directors and the Crédit Coopératif articles of association adopted on 30 May 2012. Given these principles and its political foundations, Crédit Coopératif strives to implement not only proper corporate governance, but also and more specifically, cooperative governance for the benefit of its customer-members, in accordance with an active policy of promoting membership (GRI 4.1). The terms of office of directors come to an end at the close of the Ordinary General Meeting of members convened to vote upon the financial statements for the past financial year and held in the year during the course of which the mandates of the aforementioned directors expire. Directors may always be re-elected and the mandate of permanent representatives may always be renewed. Crédit Coopératif is a cooperative whose members are corporate entities. The latter are grouped into federations or associations. Corporate entities standing for directors at the General Meeting 17 The directors therefore have an automatic duty to represent the needs of the movement that appointed them, although they should consider themselves as the representatives of all members and should act as such in the performance of their duties. Call for applications to represent individual category "P" shareholders on the Board of Directors In order to continue boosting its share capital through individual customer subscriptions, Crédit Coopératif created a new type of preferential members' shares, known as "P shares" in 2012. Holders of P shares have a specific political advantage, as they are able to select candidates for a dedicated directorship post to represent their interests. Crédit Coopératif launched a call for applications among P share holders on 31 August 2012, based on a participatory and democratic process, under which Regional Committees identify suitable candidates as part of a so-called "P share holder support" procedure. Following this consultation process among P share holders, those applicants who received more than 10% of the total vote were presented to the Remuneration and Recruitment Committee. Based on the opinion of the Committee, the Board of Directors of Crédit Coopératif will submit one or more of the eligible applicants to the General Meeting. Supervisory Boards and gender equality in the workplace. Under this law, from the General Meeting in 2014, the Board must contain a minimum quota of 20% of each gender. The law sets out a gradual gender equality calendar, with the quota rising to 40% from 2017 onwards. 1.1.2 Employee-elected directors The Board of Directors includes four employee-elected directors. At least one of these is a senior executive representative. The employee-elected directors are elected for a term of 3 years, which can be renewed. The last elections were held in March 2011. At 31 December 2012, the employee-elected directors were Claire Besson, Jean-Denis Nguyen Trong, Fabienne Roy and Françoise Girma-Romeyer. At its meeting of 13 March 2012, the Board of Directors decided to allocate 4 hours in credit to each employee-elected director per Board meeting, and 3.5 hours per specialist committee meeting, to give them sufficient time to prepare properly for the meetings (GRI 4.4). 1.1.3 Non-voting directors Pursuant to Article 25 of the Crédit Coopératif Articles of Association, an unlimited number of non-voting directors may be appointed by the General Meeting or by the Board of Directors, subject to ratification by the subsequent General Meeting. Gender equality on the Board of Directors The non-voting directors may be chosen from the membership or beyond. They are appointed for a maximum term of 6 years, coming to an end at the close of the Ordinary General Meeting of members convened to vote upon the financial statements for the past financial year and held in the year during the course of which their mandates expire. The non-voting directors may always be re-elected. There is no age limit for nonvoting directors. At 31 December 2012, 4 of the 18 directors appointed by the General Members' Meeting were women and 14 were men, meaning that 22% of the directors were women. The non-voting directors attend meetings of the Board of Directors in a consultative capacity. The composition of the Board of Directors complies with the provisions of the French law of 27 January 2011 concerning balanced gender representation on Boards of Directors and The Board of Directors may remunerate the non-voting directors by making a payment from the directors’ fees allocated by the General Meeting to its members. A total of 17 applications were received, with two of the applicants receiving more than 10% of the total vote. Turnout stood at 25%. Chairman's report are chosen from the largest federations or associations, which represent major business with the bank, with the aim of obtaining balanced representation of member movements. The purpose of the chosen business lines, and the associated governance procedures, give the Board of Directors the expertise it requires to understand changes in the economic and social environment in which Crédit Coopératif operates (GRI 4.7). 18 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures At 31 December 2012, the number of non-voting directors was 7, comprising 6 legal entities and 1 individual representing bearers of “C” shares. 1.1.4. Director independence The concept of "independent directors" is now one of the cornerstones of public listed company governance rules. According to the Afep/Medef code, a director may be said to be "independent" if he/she has no relationship whatsoever with the company, its group or its management, that may affect his/her judgement. • are legitimate and representative of the diversity of the bank’s membership • are the representatives and guarantors of the membership’s common interest. As a consequence, the meeting of Crédit Coopératif’s Board of Directors on 23 June 2009 considered that its members are independent if they can fulfil the four criteria outlined above (democratic election by the membership, responsibility to the membership, representativeness, defence of the membership’s common interest). The corporate governance principles that apply to cooperative companies, however, are radically different. At the core of these cooperative companies lies a central body – its membership. Crédit Coopératif's membership – which mainly consists of corporate entity customers represented by the head of their network – helps to set the bank's strategy and plays a major role in the Group's cooperative life (GRI 4.3). 1.1.4 Ethical standards Furthermore, the Afep/Medef and AMF recommendations concerning the "independence" of directors, and limits on the number of such directors, do not strictly apply to Crédit Coopératif. The ethical standards recommended to members of the Board of Directors are also detailed in the Crédit Coopératif Corporate Governance Charter. The Board of Directors of Crédit Coopératif defends this position on the following bases: • the dual position of the member as both shareholder and customer of the bank is one of the founding principles of cooperative banking • its composition must reflect, with as harmonious a distribution as possible, the composition of Crédit Coopératif's membership • provisions to protect against conflicts of interests are in place, insofar as the bank's internal regulations state that all members of the Board of Directors have the duty to declare any (even potential) conflict of interest that might affect them and to abstain from voting in such a situation • a director who has no business – either direct or indirect – with Crédit Coopératif Group has no interest in sitting on the Board of Directors. In the light of the above, the Board of Directors of Crédit Coopératif considers that its members (with the exception of the employee-elected directors): • are democratically elected by the membership on the principle of "one person, one vote" • are solely responsible to the members who elected them The bank's rules state that no member of the Board of Directors of Crédit Coopératif should expose himself or herself to conflicts of interest in terms of business relations between Crédit Coopératif and its Group and the members or customers that he or she represents (GRI 4.6). A Charter outlining the rights and obligations of directors is also under development. In compliance with the law, any agreements concluded between Crédit Coopératif and one of its directors, whether a corporate entity or actual person, or with any company that shares a senior manager or director with Crédit Coopératif, must be submitted to the Board of Directors of Crédit Coopératif and the General Meeting, as part of the Special Auditor’s Report on Regulated Agreements, insofar as these agreements do not relate to current operations. During the course of meetings of the Board of Directors of Crédit Coopératif, privileged information concerning Crédit Coopératif and Natixis, the listed arm of Groupe BPCE, may be disclosed. The members of the Board of Directors are individually notified of their entry in the list of “permanent insiders” of Crédit Coopératif and in the list of “permanent insiders” of Natixis, created within Crédit Coopératif. They also receive notification reminding them of the key legislation and regulatory provisions that apply to the holding, communication and use of privileged information, and of the sanctions that may be imposed if these rules are breached. 19 1.2.1 The powers of the Board of Directors In addition to the powers expressly stipulated in law and by the Articles of Association of Crédit Coopératif, Crédit Coopératif’s Corporate Governance Charter confers on the Board of Directors the following powers: • To set policies and strategies in order to serve the needs of members and customers • To create a list of the executive officers and their powers, especially for information that must be published by law (companies’ register, etc.) and for the supervisory authorities (BPCE, the Autorité de contrôle prudentiel (ACP), etc.) • To deal with all questions relating to the smooth operation of the company and to consider and settle matters relating to this operation • To supervise the Executive Management’s implementation of its policies and management of the company • To verify that its policies and strategies help to meet the needs of members and customers • To supervise the risk control policy, to finalise the financial statements and to monitor the quality of financial information issued to members and third parties in the event of a public issue. The Board of Directors examines any proposals from the Conseil National du Crédit Coopératif, including issues raised in the Regional Committees. The Board of Directors must examine its policy on the return on capital and the distribution of surpluses, and submit its proposals to the General Meeting. It ensures that its decisions are properly notified and understood. The Board of Directors is gradually incorporating social and environmental responsibility matters into its work. It provides members and other stakeholders with extra-financial information, in particular via its management report (GRI 4.9). 1.2.2 Meetings of the Board of Directors In 2012, the Board of Directors met 11 times: • 11 January at 09:00 for 4 hours 13 minutes, attended by 16 directors • 8 February at 09:09 for 3 hours 53 minutes, attended by 16 directors • 13 March at 09:00 for 5 hours 54 minutes, attended by 17 directors • 4 April at 09:05 for 4 hours 9 minutes, attended by 17 directors • 30 May at 09:06 for 1 hour 23 minutes, attended by 14 directors, and at 15:57 for 1 hour 36 minutes, attended by 12 directors • 4 July at 09:06 for 4 hours 24 minutes, attended by 14 directors • 30 August at 09:08 for 3 hours 40 minutes, attended by 18 directors • 26 September at 09:12 for 3 hours 50 minutes, attended by 17 directors • 30 October at 09:30 for 2 hours, attended by 12 directors • 12 December at 09:00 for 6 hours 5 minutes, attended by 18 directors The global attendance rate for meetings of the Board of Directors is 71%. Each meeting of the Board of Directors was quorate. The main items discussed at these Board meetings were as follows: • Corporate life, internal procedures and membership: -- renewal of the terms of the Chairman and Deputy ViceChairman -- changes in the operation of the Board of Directors -- changes in the composition of the Board of Directors -- the procedure for appointing a director to represent P share holders -- the composition of the specialist committees -- activities of the Audit Committee, the Risk Committee and the Remuneration and Recruitment Committee -- the analysis report on the distinction between the functions of the Chairman and the Chief Executive -- variable remuneration of executive officers and financial market staff -- the allocation of hours in credit for employee-elected directors -- members joining and leaving the company -- remuneration of shares for 2011 and objectives for 2012 -- moratorium on the sale of C shares and the launch of the sale of P shares -- the procedure for appointing a director to represent P share holders -- the cooperative life action plan -- the 2012 Cooperative Report -- the 2011 Annual Report Chairman's report ➔➔1.2 Role and operation of the Board of Directors 20 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures -- current agreements and regulated agreements concluded by Crédit Coopératif -- renewal of the Crédit Coopératif Foundation -- the Crédit Coopératif internal control report • Crédit Coopératif’s strategy and the economic environment: -- milestones for the implementation of the medium-term plan -- planned changes to the Crédit Coopératif information system and the tender procedure -- cooperative outreach -- communication guidelines for 2012 -- the commercial action plan for 2012 -- Accounts and forecasts: -- adoption of the company financial statements and consolidated financial statements -- activity and profit forecasts -- monthly performance indicators -- Group quarterly and half-yearly accounts -- the Interim Financial Report -- the 2013 budget • Transfers, acquisition of shares and restructuring operations: -- the creation of CoopMed and the associated capital increase -- the capital increase for Banque Edel -- the capital increase for Banque Edel BTP Capital Investissement • Banking activities: -- financial operations -- bond issues • Groupe BPCE: -- the issue of super-subordinated securities by BPCE -- Groupe BPCE activity and financial results -- the end of the BPCE integration period and the Groupe BPCE solvency contribution mechanism On 26 September 2012, the Board of Directors had an opportunity to discuss economic, social and environmental performance, following a presentation by the Crédit Coopératif CSR unit. A decision was taken to discuss this agenda item at least one per year henceforth (GRI 4.9). 1.2.3 Information for the Board of Directors The dates of Board meetings are scheduled sufficiently in advance to ensure directors have proper and complete information. For this purpose, a provisional annual schedule was presented and adopted at the meeting of 26 September 2012 for the year 2013. All documents and information required to allow members of the Board of Directors to prepare usefully for meetings are distributed ahead of the Board meeting, in principle seven days in advance. In addition to the information received, individual directors may request any documents that they believe to be necessary to perform their duties. In 2012, Board members were given access to an extranet, providing online access to all Board documentation and meeting minutes. 1.2.4. Assessment of the Board of Directors Every two years, the Board of Directors includes, in the agenda of its meeting, a self-assessment questionnaire covering its own operations. This review also covers all committees created by the Board. The results of the 2010 questionnaire showed that sentiment towards the operation of the Board of Directors and its directors was largely positive. Some areas for improvement were identified, however, and the Board of Directors subsequently drew up an action plan covering eight key aspects. Improvements implemented in 2012 include the creation of a directors' extranet, better cooperation between directors and company executives on clearly defined issues, greater involvement from directors through the introduction of hours in credit for employee-elected directors, and limits on the number of employees attending Board and committee meetings. A Directors' Charter is currently under development. An in-house training session for Board members will take place in H1 2013, following the appointment of the new Board. A new questionnaire was issued in December 2012, receiving responses from 17 directors. The results and accompanying recommendations were presented to, and debated by the Board of Directors at its meeting on 13 February 2013. The overall results revealed a very positive opinion. The main areas for improvement identified were the excessive length of the agendas and meetings, and a need to focus presentations and discussions on key issues for the company and the Group (GRI 4.10). 21 The Chairman finalises the agenda and organises and directs the proceedings of the Board. He ensures that the directors are able to fulfil their duties, taking particular care to ensure that they have access to the necessary information and documents in good time. Lastly, he ensures that representatives of the employees’ representative bodies are duly invited. 1.3.1. Executive Committee of the Board of Directors The task of the Executive Committee of the Board of Directors is to convene a group to discuss Crédit Coopératif's strategy and its implementation. The Executive Committee may therefore submit proposals to the Board. In addition, it ensures the smooth running of the various specialist committees created by the Board. The Executive Committee of the Board of Directors currently consists of the Chairman, the Deputy Vice-Chairman, the ViceChairmen representing the major customer sectors, and a Secretary. Nadia Dehors, chair of the Audit Committee, has been a permanent invited member of the Executive Committee since 26 September 2012. The Chief Executive, François Dorémus, and the Deputy Chief Executives, Pierre Valentin and Jean-Paul Courtois, also attend meetings of the Executive Committee. The Executive Committee met 15 times in 2012: 5 January, 25 January, 23 February, 13 March, 28 March, 2 May, 13 June, 29 August, 12 September, 26 September, 17 October, 13 November, 26 November, 4 December and 19 December, for an average of 2 hours. The following issues were discussed during these meetings: • the composition of the Board of Directors • the composition of the specialist committees • the comitology of Crédit Coopératif • the company's social context • the audit on the identity and values of Crédit Coopératif • communication guidelines for 2012 • the 2012 Cooperative Report and the General Meetings • the application procedure to appoint corporate directors in 2013 • an analysis of revised costing management measures • the revised costing for 2012 • the budget guidelines for 2013 • the strategy of Crédit Coopératif, and the medium-term plan in particular • planned changes to the Crédit Coopératif information system • the issue of super-subordinated securities by BPCE • the end of the BPCE integration period and the Groupe BPCE solvency contribution mechanism 1.3.2. The specialist committees of the Board of Directors The proceedings of the Board of Directors are supported by specialist committees which were set up to promote better corporate governance. The Audit Committee Under article 823-19 of the French Commercial Code and article 4 of Regulation 97-02 of the French Banking Regulation Committee of 21/02/1997, amended, concerning the internal control of credit institutions and investment companies, all credit institutions are required to have an Audit Committee. Nadia Dehors has chaired the Audit Committee since 30 May 2012. At 31 December 2012, the Audit Committee was comprised as follows: • Fédération Nationale des Coopératives de Consommateurs (FNCC – national federation of consumers’ cooperatives) Nadia Dehors, Chair of the Committee • Association Nationale des Coopératives Financières (ANCF - national association of financial cooperatives) Gilbert Hennique • Jean-Claude Detilleux, Deputy Vice-Chairman • Fédération Nationale des Sociétés Coopératives d’HLM (FNSC D’HLM – national federation of cooperative low-income housing boards) Daniel Chabod • Garantie Mutuelle des Fonctionnaires (GMF – public employees’ mutual guarantee institution) Patrice Forget • Société Coopérative pour la Rénovation et l’Equipement du Commerce (SOCOREC – cooperative society for retailers’ renovation and capital investment) Hervé Affret Chairman's report ➔➔1.3. Preparation and organisation of the proceedings of the Board of Directors 22 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures • Union Nationale des Associations de Tourisme et de Plein Air (UNAT – national union of associations for tourism and open-air activities) Christine Bouyer • Jean-Denis Nguyen Trong Employee-elected director The Audit Committee met four times in 2012: • 7 March for 3 hours 32 minutes • 13 June for 3 hours 6 minutes • 29 August for 3 hours 47 minutes • 19 December for 3 hours 41 minutes The Committee specifically investigated: • internal audit reports • implementation of audit recommendations • the annual internal control report • items in the Groupe BPCE 2012 accounts • Crédit Coopératif Group adopted financial statements • the interim financial statements of the Crédit Coopératif Group • the report of the accounts controller • updates on outstanding accounting items • updates on the work of the ACP • the draft 2011 Annual Report • the Intercoop organisation mission The Risk Committee Under article 823-19 of the French Commercial Code and article 4 of Regulation 97-02 of the French Banking Regulation Committee of 21/02/1997, amended, concerning the internal control of credit institutions and investment companies, all credit institutions are required to have a Risk Committee. The Risk Committee of Crédit Coopératif is chaired by Philippe Antoine, permanent representative of the Conseil National du Crédit Coopératif (CNCC) on the Board of Directors. At 31 December 2012, the Risk Committee was comprised as follows: • Conseil National du Crédit Coopératif (CNCC – national council of Crédit Coopératif) Philippe Antoine, Chairman of the Committee • Caisse Mutuelle de Garantie des Industries Mécaniques et Transformatrices des Métaux (CMGM – mechanical and metal-processing industries’ mutual-guarantee fund) Martine Clément • Chantal Chomel Representative of category “C” shareholders • Jean-Claude Detilleux Deputy Vice-Chairman • ESFIN Hugues Sibille • Fédération des enseignes du commerce associé (FCA - retail trade association) Guy Leclerc • Fédération Nationale de la Mutualité Interprofessionnelle (FNMI – national federation of interprofessional mutual societies) Maurice Ronat • Fédération Nationale des Coopératives de Consommateurs (FNCC – national federation of consumers’ cooperatives) Nadia Dehors • Claire Besson Employee-elected director The Risk Committee met five times in 2012: • 25 January for 4 hours 8 minutes • 28 March for 4 hours 5 minutes • 6 June for 3 hours 56 minutes • 12 September for 3 hours 58 minutes • 14 November for 3 hours 52 minutes The Risk Committee specifically investigated: • Credit risks: -- the credit risk situation -- lending decisions taken on the basis of home consultation and monitoring of dossiers -- changes in the cost of risk -- LBO analysis -- changes in the solvency ratio • Financial risks -- changes in the Crédit Coopératif financial assets portfolio -- changes to the rules concerning counterparty limits -- overall interest rate risk and overall liquidity risk -- risk monitoring in subsidiaries and partner institutions -- the transfer of securities held by Ecofi Investissements UCITS – Spanish securitisation instruments -- analysis of shareholdings • Operating risks and activity compliance -- mapping of operating risks -- key outsourced activities -- tax inspection -- the ACP mission on the anti-money-laundering system -- monitoring exercises conducted as part of the Crédit Coopératif Business Continuity Plan (BCP) 23 The Remuneration and Recruitment Committee Under article 511-41-1 of the French Monetary and Financial Code, which came into force on 22 April 2011, all credit institutions with a balance sheet total exceeding €10 billion are required to have a Remuneration and Recruitment Committee. The Remuneration and Recruitment Committee makes proposals to the Board of Directors on any issue relating to the personal status of the executive officers, especially their remuneration and pensions arrangements, within the framework of Crédit Coopératif Group policy in this area. Martine Clément has chaired the Remuneration and Recruitment Committee since 30 May 2012. At 31 December 2012, the Committee was comprised as follows: • Caisse Mutuelle de Garantie des Industries Mécaniques et Transformatrices des Métaux (CMGM – mechanical and metal-processing industries’ mutual-guarantee fund) Martine Clément, Chair of the Committee • Fédération Nationale de la Mutualité Interprofessionnelle (FNMI – national federation of interprofessional mutual societies) Maurice Ronat • Fédération Nationale des Coopératives de Consommateurs (FNCC – national federation of consumers’ cooperatives) Nadia Dehors • Michel Vallade Representative of category “C” shareholders During 2012, the Remuneration and Recruitment Committee met on three occasions: 7 March, 13 June and 12 September 2012. The Committee specifically investigated the following issues: • The volume of Directors’ fees to be paid to members of the Board of Directors • The number of hours due in credit to employee-elected directors • The fixed and variable remuneration of executive officers • The variable remuneration of financial market staff and risk-takers and controllers ➔➔1.4. Powers of the executive officers Pursuant to the Articles of Association of Crédit Coopératif, the Board of Directors votes on the organisation of the Chairman and Executive Management roles every three years. In 2007, the Board of Directors decided to separate these two roles and assign responsibility for Executive Management of Crédit Coopératif to a Chief Executive. This decision was renewed in January 2010. A new threeyear term commenced in January 2013. In September 2012, the Board of Directors appointed Martine Clément, Vice-Chair of the Board of Directors, to conduct an analysis and produce recommendations in order to enable the Board to address the issue of how the Chairman and Executive Management roles are organised in full possession of the facts. Martine Clément submitted her report to the meeting of the Board of Directors on 12 December 2012, and the report was examined at the meeting of 10 January 2013. Following discussions, the Board of Directors decided to renew the separate Chairman and Executive Management roles for a further three-year term. 1.4.1. Powers delegated to the Chairman On 28 May 2009, the Board of Directors conferred on JeanLouis Bancel all of the powers necessary to meet the relevant statutory criteria, namely: • the ability to effectively determine the orientation of Crédit Coopératif's business • the right to accounting and financial information and internal control • the right to determine how equity is used. At its meeting of 10 November 2010, the Board of Directors confirmed the specific powers conferred to its Chairman on 28 May 2009, comprising in particular the following powers: • to guarantee the consistency, solidity and development of the Crédit Coopératif Group • to ensure the proper implementation of Crédit Coopératif Group strategy • to guarantee proper operations and to supervise audit activities • to decide on and supervise the implementation of agreements concluded with BPCE • to supervise and monitor procedures for the delegation of powers and decision-making, especially by fixing limits for line-management levels according to the type of commitments Chairman's report • Disputed loans -- business of the Disputed Loans department -- monitoring of the largest disputed cases 24 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures • to supervise the powers delegated to Crédit Coopératif from partner institutions • to represent Crédit Coopératif in organisations relating to the cooperative and social economy At its meeting of 4 April 2012, the Board of Directors reappointed Jean-Louis Bancel as Chairman of Crédit Coopératif and decided to renew the powers listed above. 1.4.2. Powers delegated to the Chief Executive On 28 September 2010, the Board of Directors unanimously appointed François Dorémus as Chief Executive, with effect from 15 November 2010. The meeting of the Board of Directors of Crédit Coopératif held on 10 November 2010 fixed the mandate of François Dorémus at five years, i.e. up to and including 15 November 2015. It conferred on the Chief Executive more extensive powers to act in all situations in the name of the company, and to represent the company in its relationships with third parties. These powers included, with the agreement of the Chairman, the ability to delegate further. On 10 January 2013, the Board of Directors accepted the Chief Executive's proposal to renew the mandate of Pierre Valentin, Deputy Chief Executive with responsibility for finance, for a term of three years. At its meeting of 4 July 2012, the Board of Directors appointed Jean-Paul Courtois as Deputy Chief Executive with responsibility for human resources and banking service production. The Deputy Chief Executives hold more extensive powers in order to be able to act on behalf of the company in all situations within their area of responsibility. With the agreement of the Chief Executive and of the Chairman, these powers include the ability to delegate further. As required, the powers of the Deputy Chief Executive were confirmed by the Chief Executive and the Board of Directors at the meeting of 13 December 2011. However, at the meeting of 17 June 2005, during which the Board of Directors reviewed the powers conferred upon the Chief Executive, the Board decided to put the following conditions in place: • in relation to loans and guarantees, the Chief Executive shall have sole decision-making powers for any requests that do not exceed: -- €5,000,000 for counterparties with a rating of up to 11 -- €8,000,000 for counterparties with a rating of between 6 and 10 -- €10,000,000 for counterparties with a rating of between 1 and 5, subject to a global exposure limit of 5% of the equity of Crédit Coopératif (Banques Populaires rating system). In the case of amounts exceeding these limits, decisions are taken by the Chief Executive following consultation with a Vice-Chairman and two directors selected according to the sector. When applying these limits, any discount authorisations, authorisations backed by assignment of receivables (Dailly) and guarantees are included at half of their value. • In terms of shareholdings, the Chief Executive has sole decision-making power for requests that do not exceed €500,000. These powers include the option of delegating. Beyond this, the decision is taken by the Board of Directors. ➔➔1.5. Principles and rules for determining remuneration of executive officers and people whose professional activities have a significant impact on the risk profile of the business. Crédit Coopératif is bound by the requirements of Regulation 97-02 of the French Banking Regulation Committee relating to the internal control of credit institutions, modified by the order of 13 December 2010 relating to the controls on remuneration of personnel who undertake activities that are likely to have a significant impact on the risk profile of the business. The following people are affected by these provisions: • Jean-Louis Bancel, as Chairman • François Dorémus, as Chief Executive • Pierre Valentin, as Deputy Chief Executive • Jean-Paul Courtois, as Deputy Chief Executive • Hugues Sibille, as Executive Officer • Christian Mamet, as Risk Manager • Loïc Fontant, as Compliance Manager • Luc Boscaro, as Audit Manager • The Chief Executives of the main subsidiaries of Crédit Coopératif (Claude Lavisse, Christophe Couturier, Richard Kurfurst, Hugues Sibille, Dominique de Margerie) • The financial market professionals at Crédit Coopératif (11 employees in the trading room and similar). 25 The remuneration policy is agreed annually by the Board of Directors, on the basis of the proposals presented by the Board’s Remuneration and Recruitment Committee. 1.5.2. Main features of the remuneration policy At its meeting of 28 September 2010, the Board of Directors of Crédit Coopératif fixed the ceiling on the variable part of the remuneration of the Chairman and the Chief Executive at 30%. The Board of Directors’ meeting of 10 March 2011 fixed the same limit for all other personnel affected by the order of 13 December 2010, with the exception of the trading staff, whose variable remuneration ceiling is set at 33%. The Board of Directors’ meeting of 13 March 2012 decided to raise, from €20K to €30K, the variable remuneration ceiling above which the variable remuneration spread rules do not apply, and above which these same rules apply from the 1st euro paid. For financial market staff Within its Financial Operations Department, Crédit Coopératif has 11 financial market staff. For the 2012 financial year, these staff had variable remuneration calculated against set targets. At its meeting of 13 March 2012, the Board of Directors accepted the following proposals submitted by the Remuneration and Recruitment Committee: • to divide the 2012 targets for financial market staff between the "pair net banking income share" (50%) and the "qualitative value" (50%), based on target criteria. These criteria relate to branch training and support, group work, individual conduct and quality of work. For treasurers, the main assessment criteria are quality of work, quality of personal skills, personal commitment, capacity to reflect and proactivity. These quality criteria are assessed by the individual's direct line manager. • for the Finance Manager, to maintain the division mechanism between the net banking income share and the qualitative share at 40% and 60% of variable remuneration respectively. The guaranteed variable remuneration for new recruits lasts for only one year; it may be extended on a pro rata basis where recruitment occurs during the year. Crédit Coopératif is a cooperative company which does not issue financial instruments indexed against the creation of long-term value. Consequently, the entire variable remuneration of financial market staff is paid in cash. The payment of half of the variable remuneration element earned by financial market staff is spread over three years, on a pro rata basis, with three equal payments planned for 2014, 2015 and 2016. This deferred variable remuneration element may be cancelled if the earnings from the corresponding activity are negative, on the understanding that this relates solely to that part of the variable remuneration due to be paid at the close of the year under consideration. For executive officers The variable remuneration for executive officers is only guaranteed for one year. It is set annually by the Board of Directors, on the basis of a proposal from the Remuneration and Recruitment Committee. At its meeting of 4 July 2012, the Board of Directors set the collective variable remuneration targets for executive officers for the 2012 financial year at 30% of the fixed remuneration, divided as follows: • 90 % based on three performance criteria calculated against consolidated financial statements of Crédit Coopératif Group, namely net banking income, operating ratio and net income • 10 % based on qualitative criteria, to be assessed by the Executive Committee of the Board of Directors. The three collective performance criteria adopted by the Board of Directors at its meeting of 4 July 2012 are as follows: • a net banking income target of €428 million • an operating ratio target of 73.1% • a net income target of €42.8 million. Two of these three targets must be achieved in order for the variable remuneration element to be paid out, one of which must be the target relating to net banking income. At 31 December 2012, net banking income stood at €423.3 million, the operating ratio at 75.56% and net profit at €27.1 million. As none of the quantitative targets had been achieved, the Board of Directors, at its meeting of 6 March 2012, ruled that the executive officers would not be entitled to Chairman's report 1.5.1. The decision-making process used to define the remuneration policy 26 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 1 / The proceedings of the Board of Directorsand internal control procedures the quantitative share of their variable remuneration for the 2012 financial year. The Board did, however, decide to allocate the 10% qualitative share to the executive officers, based on the recommendation of the Remuneration and Recruitment Committee. Crédit Coopératif is a cooperative company which does not issue financial instruments indexed against the creation of long-term value. Consequently, the entire variable remuneration is paid in cash. For those managers with control functions The variable remuneration elements paid to the Risk Manager, Compliance Manager and Audit Manager are set by the Remuneration and Recruitment Committee. For subsidiary managers. For the managers of Crédit Coopératif’s subsidiaries, decisions regarding their variable remuneration element are taken by the relevant decision-making bodies for each subsidiary. 1.5.3. Information relating to the total consolidated remuneration of the executive officers and financial market staff For the 2012 financial year, the remuneration paid to the executive officers, namely Jean-Louis Bancel, François Dorémus, Pierre Valentin, Jean-Paul Courtois and Hugues Sibille, is as follows: • gross fixed remuneration: €995,010.05 • gross variable remuneration: €27,600.03 As none of the executive officers received gross variable remuneration in excess of €30K for 2012, the spread rules do not apply, and all sums due will be paid in 2013. For the 2012 financial year, the remuneration paid to the financial market staff is as follows: • gross fixed remuneration: €744,942 • gross variable remuneration: €223,746 -- of which remuneration below the lower gross variable remuneration threshold of €30K that was set by the Board • of Directors as being payable immediately: €142,905 -- of which gross variable remuneration paid in 2013: €183,327 -- of which variable remuneration in 2014: €13,473 -- of which variable remuneration in 2015: €13,473 -- of which variable remuneration in 2016: €13,473 ➔➔1.6. The Conseil National du Crédit Coopératif (CNCC) The CNCC is an association that was created voluntarily by Crédit Coopératif to bring together corporate entity members, customers and partners of Crédit Coopératif Group. Since March 2011, it has been chaired by the Conférence Permanente des Coordinations Associatives (CPCA – Permanent Conference of Associative Coordinations), represented by Jacques Henrard. The CNCC has a number of constituent bodies. Some of these group together participants by geographical location (the Branch Boards and Regional Committees), while others represent national movements. The CNCC assists in coordinating the cooperative movement. As a consultative body and a provider of information on the Group’s outlook and on the challenges that it faces, the CNCC is represented on the Board of Directors of Crédit Coopératif by a director and non-voting director, in order to give voice to the expectations expressed at Branch Board and Regional Committee level. Entities within the CNCC The branch board is the forum for expressing customers’ needs, a stepping-stone in the development of the branch and, where applicable, a forum for challenging Crédit Coopératif through the branch. The Regional Committee is a forum in which the representatives of the various customer movements can meet with their counterparts throughout the region. Its task is to express customers’ expectations, monitor the state of the economy, represent the Group’s values and, where applicable, provide support to the branch general managers and their deputies. The Conference of Territorial Committee Chairmen is the body at national level to which expectations expressed by Branch Boards and Regional Committees can be fed back. The Conseil National du Crédit Coopératif (CNCC) brings together representatives of the various groupings of members and customers of the Crédit Coopératif Group. Divided into colleges, these groupings include the Chairmen of the Regional Committees sitting as the Territorial Committees (first college) and the representatives of the national movements of Crédit Coopératif members and customers (second college) as well as representatives of establishments that are associated with Crédit Coopératif and members of the Board of Directors. The Executive Board of the CNCC is elected by the General Meeting for a term of two years. It currently has 10 members. In 2012, it has continued to monitor cooperative movement coordination and quality-related activities. 27 The Conseil National du Crédit Coopératif Branch board Branch board Branch board Regional committee National customer federations Branch board Regional committee Conference of Chairmen Partner institutions General meeting of CNCC Chairman's report CNCC Executive Committee Cooperative principles The cooperative principles adopted by the International Cooperative Alliance (ICA) constitute guidelines by which cooperatives put their values into practice. There are seven key values: voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; cooperation among cooperatives; and concern for community. In France these international principles take the form of specific provisions governing the operation of cooperatives, as set out in the law of 10 September 1947 regarding the status of cooperative organisations: • dual status: Crédit Coopératif's customers may also be capital providers for the bank. As such, they hold the dual position of both partner and co-operator, i.e. both customers and owners of their bank. • voluntary and open membership: customers have the option to own part of the capital of their bank, provided that they meet the criteria set out in the articles of association and are approved by the Board of Directors. At Crédit Coopératif, membership status is limited to customers who are corporate entities. The members of Crédit Coopératif form the body of the Crédit Coopératif General Meeting. • the "one person, one vote" rule: all members hold equal voting rights at General Meetings, in accordance with the cooperative principle of "one member, one vote", regardless of the number of shares they hold. In 2012, almost 10% of the members attended the General Meeting or voted by correspondence. • non-distributable reserves: each year, at least of 15% Crédit Coopératif's profit is set aside as reserves. These reserves cannot be distributed; they represent the collective property of current and future members and the joint heritage of previous generations. They can only be distributed to members under certain exceptional circumstances. The purpose of these reserves is to secure the long-term future of the cooperative project. • limited remuneration of capital: part of annual earnings can be paid out to members in the form of remuneration reflecting the shares that they hold (€14 million in 2012 for B, C and P shares, i.e. remuneration amounting to 2.5% of the nominal share value). • cooperative rebate: Crédit Coopératif can also redistribute part of its annual earnings in the form of a rebate paid out to its members in proportion to the value of the transactions made with each member. The amount paid out by Crédit Coopératif as a cooperative rebate from the earnings for 2012 was €500,000. 28 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 2 / Internal control procedures 2.1.1. Persons involved in internal control 2. Internal control procedures Crédit Coopératif’s internal control system is defined in a charter approved by the Audit Committee. This system ensures that risks are covered, fully assessed and managed in accordance with the guidelines laid down by the Board of Directors. It forms part of the global internal control system implemented by BPCE and is based on the principles and benchmark documents approved by the BPCE Supervisory Board. The system is the subject of regular reports to BPCE, which is also able to conduct its own controls. It is organised strictly independently of both the periodic control and permanent control processes; the first of these being attached to the Chairman of Crédit Coopératif and the second to the Chief Executive. The Risk and Compliance Manager is responsible for continuous control, covering all risk assessment, non-compliance risk prevention and financial irregularity prevention mechanisms. He/she is also the Compliance Manager for the Investment Departments. Crédit Coopératif's internal control encompasses all of the business lines and institutions that make up the Crédit Coopératif Group. ➔➔2.1. General organisation The internal control system is based on: • Amended regulation 97.02 of the Banking Regulation Committee on the internal control of credit institutions and investment companies • The General Regulation of the Autorité des Marchés Financiers applicable to investment services • The Groupe BPCE charters, set out in five separate documents: "risks" (loans, markets, operational), "compliance", "audit", "business continuity plan", "IT systems security" • Crédit Coopératif's corporate governance charter • In-house memos signed by the Chief Executive defining the duties and objectives of the various control departments • Agreements with partner institutions, stipulating the breakdown of risk control responsibilities between Crédit Coopératif resources and resources in each of the institutions. The internal control system is organised on three levels, the first two representing permanent control and the third periodic control. First level: the control of processes is primarily the responsibility of each activity. This takes the form of self-inspection carried out prior to or at the same time as performance. It is the responsibility of each employee, within the framework of actions undertaken in the performance of his/her duties and forms the subject of ongoing supervision by line managers. Self-inspection is based on a framework of procedures available to staff on the Crédit Coopératif Group intranet. Each activity is responsible for writing its own procedures and for the proper application of first-level controls. Second level: independently of operational activities, checks are carried out to ensure compliance with rules as well as the existence, permanence and relevance of first-level controls. Second-level control evaluates the level of risk and helps to define risk policy. This is carried out by a risk and compliance management department, which reports to the Chief Executive and covers the following risk types: credit, financial, operational, non-compliance and combating financial irregularities. This management unit is responsible for all of the institutions within the Crédit Coopératif Group. It has a dedicated branch control team and works with the Business Continuity Plan Manager (RPCA), the IS Security Manager (RSSI), and the Personal and Assets Protection Manager (RSPB), and can also draw on a network of control correspondents based in the business lines and the main partner institutions. An accounting control inspector, separate from the accounting teams, reports to the Accounts and Management Control Manager and is thus also part of the internal control procedure. Third level: periodic control is undertaken by the Internal Audit Department, which is one of the internal control operators. Internal Audit also contributes to the supervision of the global internal control system. As an independent body, it has jurisdiction over all the activities of Crédit Coopératif (Head Office and branches) as well as over all the structures related to Crédit Coopératif (subsidiaries, partner credit institutions – finance companies providing credit and guarantees, and the main shareholdings in partners) and outsourced activities. The Internal Audit Department acts by means of investigations and assignments. Its remit is to intervene in all of the areas necessary to fulfil its mission. The Chairman and Chief 29 The Internal Audit Department works according to rules laid down in its charter, and applies the professional standards of the French Institute of Internal Audit and Control (IFACI). Investigations are carried out on the basis of a provisional audit programme based on a model of the activities and a risk map. The audit programme may, however, be modified over the course of the year in light of the operational constraints of the missions or any urgent new requests, with the approval of the Chairman. This schedule is assessed by the Executive Management and the central body, BPCE, then submitted to the Chairman. Each mission results in a joint report, which is issued to those units that have been audited. Once the latter have responded to the Internal Audit recommendations, this report becomes definitive and is sent to the Chairman, Executive Management and the heads of the units in question. On completion of these missions, an action plan covering the areas for improvement is produced and subsequently monitored by Internal Audit. 2.1.2. The role of the Board of Directors The Board of Directors monitors and ensures control of the main risks incurred by Crédit Coopératif Group institutions and verifies the quality and reliability of the internal control system, in accordance with the regulations. It also examines the internal control report submitted to the Banking Commission. The Board has set up two Committees – the Audit Committee and Risk Committee – which deal, respectively, with issues relating to the quality of the system for controlling risks and the risk situation. The Audit Committee examines the annual company and consolidated accounts, the main findings from risk monitoring, the results of internal control, the main conclusions of audits and action taken in line with its recommendations. At the level of the various risks identified by the internal control procedure – credit, market, operational and compliance risks – the Risk Committee deals with cases in dispute as well as those cases that exhibit particular risks. Risk Committee meetings are attended by Executive Management, members of the Board of Directors, managers of the risk control departments and, for the Audit Committee, the statutory auditors. 2.1.3. Persons involved in external control Crédit Coopératif’s statutory auditors must carry out the following tasks permanently and independently: verifying the Company’s accounting figures and documents, checking the compliance of accounts with current rules, and checking the consistency of the annual financial statements and the reliability of the information provided in the management report of the Board of Directors. At the General Meeting convened to vote upon the financial statements for the financial year 2006, the auditors’ appointment was renewed for a term of six years. New statutory auditors will be appointed at the General Meeting convened to vote upon the financial statements for the financial year 2012. Leaving aside the auditors' role, Crédit Coopératif is also subject to control by BPCE, in its role as the central body, and by the regulators. In 2011, the ACP conducted an assessment of Crédit Coopératif's anti-money-laundering arrangements, both as a banking institution and as the head of Crédit Coopératif Group. Its conclusions were submitted in H2 2012. An action plan is currently being developed to deliver the required changes. ➔➔2.2. Risk monitoring and control The Crédit Coopératif Group's activities expose it to five major categories of risk: • Credit risks • Financial risks • Overall balance sheet management risks • Operating risks • Non-compliance risks. These risks are managed by three departments, which are attached to the Group Risk and Compliance Division. 2.2.1. Credit risk The reform of the solvency ratio – Basel II ratio – has led Crédit Coopératif to organise its monitoring in order to respond to regulatory requirements, in particular as regards credit risks. A number of different tools have been developed in this respect, in conjunction with Groupe BPCE, to assess commitments using the Basel II rating system and to monitor the quality of the loan portfolio using an alert management system. Chairman's report Executive are also informed of all hindrances to the performance of its duties. 30 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 2 / Internal control procedures Analysis Monitoring exposures Loan files are analysed by the Commitments Department on the basis of formally enacted and defined procedures and channels of referral. The investigations use analytical charts into which is entered the accounting, financial and appraisal information gathered by the commercial teams in interviews with their customers. This method is supplemented by external information (from Banque de France and court records) and internal information (summaries of the customer relationship produced by the management system, ratings). Risk is analysed using a consolidated approach to the commitments for a given group. Summaries of the situation by sector of activity and by major customer type are submitted to Executive Management and the Risk Committee by the Group Credit Risk Department, with an appraisal of any changes in the quality of risks. This method is also used to handle the cost of the risk, which is reported quarterly, broken down by customer sector and branch, and grouped by general office. The specific nature of Crédit Coopératif’s business sectors, in particular the associations sector, is reflected in the Commitments Department, which has specialists to deal with each type of customer. Managing doubtful debts/disputed loans The rules for downgrading loans to doubtful and doubtful and compromised are set out in a specific set of procedures. Decisions and delegations of powers For highly doubtful risks, the Group Credit Risk Department Every loan application is formally recorded using a standard file adapted to each market segment. This makes for uniform, efficient loan processing. Loan decisions are based on a system of delegated powers that depend on the nature and amount of the facilities applied for, and the ratings provided by the tools developed by BPCE to calculate the solvency ratio. conducts a quarterly assessment of provisions and suggests Ratings Customers are given the rating derived from the tools developed from the application of pillars 1 and 2 of the Basel II rules. Monitoring commitments The Group Credit Risk Department monitors risks individually and using global approaches by means of a number of alert systems, and by analysing the quality of exposures. any changes to existing practices, in the presence of the Chief Executive and the Disputed Loans Department. Each candidate file for moving into the disputed loan category is examined beforehand by the Group Credit Risk Department. This department performs an initial evaluation of the risk, after which the required provisions are determined by the Disputed Loans Department. These provisions are reviewed quarterly at a committee meeting attended by Executive Management and the technical departments involved in managing the loans. 2.2.2. Financial risks The Chief Financial Officer is responsible for managing liquidity, placing financial products with customers, own-account management, Group asset/liability management and the A weekly committee is attended by managers from the Commitments Department and the Group Credit Risk Department, and by Disputed Loans Department managers where necessary. The committee makes decisions on the loan files that pose the greatest risk, laying down a plan of action. A report is written for each decision. monitoring and management of the bank’s portfolio of share- A regular round-up is carried out on the control of the commitments of each branch, on the basis of alert indicators and the quality of its risk assessment. The proceedings are summarised in the form of a rating awarded to each branch. manager, who reports to the Risk Manager, is independent of holdings. The Financial Risk Department is responsible for ensuring continuous financial risk control in the strict sense, and also carries out various other controls on financial transactions. Its Financial Management, and his responsibilities have been defined in accordance with the Charter on controlling financial risks defined at Groupe BPCE level. 31 The Financial Risk Department therefore: Market risks in liquidity and own-account management • calculates own-account management results for presentation at each meeting of the Financial Committee • calculates the value-at-risk indicators in own-account management at regular intervals (maximum loss at 10 days with a 99% probability level) • controls the valuations used in accounting or in the IFRS appendices, in addition to the market parameters and the methods used in the analytical models • is responsible for inputting data into the BPCE risk monitoring systems and conducting the controls set under Group BPCE benchmarks • conducts various spot or regular studies or controls on more specific subjects; the risks per major asset class are analysed regularly and the results of this analysis are presented to the Risk Committee and the Audit Committee on a quarterly basis • monitors the risk exposure of the associates’ financial operations, the details of which are sent to it on a regular basis • reports to the Financial Committee, the Risk Committee, the Audit Committee and the Central Risk Committee on the outcome of these checks and the analysis • suggests any necessary changes to the financial risk exposure limits to the Central Risk Committee • monitors compliance with the limits set: -- the internal limits set by Crédit Coopératif for its exposure to financial risks -- as well as adherence to the limits in the Groupe BPCE's "market risks" benchmark standard. A financial committee, composed of Executive Management, the Chief Financial Officer, those responsible for the management of third-party assets, financial risk control, liquidity and overall balance sheet management meets every fortnight. It defines the major guidelines for own-account management and sets risk limits; in particular, all extraordinary financial operations require the Committee's prior approval. The Financial Risk Department works closely in this regard with the internal control correspondents in the front and back office, who perform a certain number of first-level controls on financial operations, and with the internal control correspondents in the partner institutions. Market transaction and trading portfolio risks The trading portfolio is deliberately limited and its position, calculated each day, remains significantly below the capital adequacy declaration threshold (Capital Adequacy Directive concerning market risks). Crédit Coopératif is thus not subject to the constraints set out in regulation 95-02. Furthermore, the most sensitive limits are monitored on a daily basis and, over and above the trading portfolio, the own-account management positions and also the performance recorded are calculated and monitored every day. • a counterparty risk stemming from purchases of private bonds held in the investment portfolio with a relatively short remaining life (€120 million over 3 years when the medium-term portfolio is created and with less than 1 year remaining) and, to a lesser extent, with short-term liquidity management of less than 12 months • risk associated with shares primarily resulting from the share risk associated with units in UCITS held in the investment portfolio • market risk inherent in some alternative UCITS (the three lines of securitisation instruments in a contractual UCITS to a total value of €33 million were sold on the market prior to the end of 2012) • other positions that might be taken up on the financial markets that are more marginal (there were no such transactions during 2012). These different transactions are carried out within the framework of authorised limits for counterparties, duration, amount or risk taken (sensitivity or stop loss), with an overall limit for a given risk and lower limits for particular responsibilities or types of transaction. Thus: • the value of the bond portfolio is limited • maximum exposure limits per counterparty have been set for both bond portfolio management and liquidity management • interest rate risk assumed by the treasurer as part of liquidity management and management of the bond portfolio referred to above is subject to specific daily limits, calculations and monitoring, with a first-level control being carried out by the treasurer and a second-level control by the Financial Risk Department; the interest rate risk of this activity is furthermore integrated into the overall exposure to changes in rates as part of own-account management, which is also monitored and subject to a more general limit Chairman's report The market risks entered into by Crédit Coopératif are essentially: 32 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 2 / Internal control procedures • the proportion of equity risk and interest-rate risk inherent in the UCITS in the portfolio is evaluated by means of transparent analysis of UCITS and is reconciled with the limits after also taking any possible stock index contracts concluded for hedge purposes into account • for the currency risk, there are two limits which are checked daily: -- a first limit is fixed for the currency trader for the transactions that he/she carries out and for which he/she is responsible -- the overall currency position is also monitored day-byday on the basis of the balances of the accounts in question, which enables possible delays or anomalies to be identified when transactions are posted to the accounts • structured operations, which are complex by nature, are limited to transactions conducted with customers and that are always hedged on markets, using “mirror” or “back to back” transactions. The Financial Risk Department performs second-level control of compliance with fixed limits, on which it reports to the Financial Committee and, in emergencies, to Executive Management; it relies primarily for its controls on frontoffice and back-office data, the consistency of which is checked on a daily basis through automated reconciliation of transactions as recorded in the two different software packages. Transactions are processed within the framework of internal procedures that control the activity and relate to: • market risks: -- currency transaction management -- primary and secondary bond markets -- monitoring and control of market risks. • operating risks inherent to trading room activities: -- checking the entry of transactions by branches on debt instruments issued by Crédit Coopératif -- management of trading tickets from the front office to the back office -- issue of confirmation notes for transactions performed directly by traders with customers with direct access to the trading room -- first-level controls by traders and by the activity manager for the day’s transactions entered in the front-office software. Counterparty risk is monitored using a specific procedure: • the Financial Committee decides on the applications that must be submitted to it for each potential counterparty; the Financial Risk Department ensures that the limits are adhered to: positions generated by back-office management software are fed into a dedicated application in which the agreed limits are compared with the commitments recorded; any possible anomalies must be explained, corrected or justified. The scope of this monitoring also includes the balance of the foreign correspondents in the International Affairs Department. • rules have been set to limit amounts and terms depending on the nature of the counterparty, the counterparty's rating and the portfolio concerned (these rules are validated by the Crédit Coopératif Board of Directors). 2.2.3. Overall balance sheet management risks A dedicated committee (the ALM committee) is devoted to global asset/liability management at Group level. Positions are calculated and reported by an assets/liabilities management unit, which reports to Financial Management. This calculation is made using the QRM software package, which all Banques Populaires network institutions use. The software parameters are provided and set centrally by BPCE Asset/Liability Management, and activity forecasts are entered in line with budgetary forecasts. For its part, the Financial Risk Department is responsible for second-level control, in accordance with the ALM Risk benchmark, which standardises the controls to be carried out within Groupe BPCE. Overall interest rate risk Crédit Coopératif is exposed to interest rate and liquidity risks in connection with its source of funds collection activity and the distribution of loans to customers. The overall interest rate risk is measured quarterly under Groupe BPCE’s benchmark document, which determines the limits to be imposed on each of the Group's institutions. Measuring the effect of changes in rates on the forecast interest margin The interest margin for the next four years is calculated on the basis of a certain number of different scenarios (including a reduction or increase in all rates of 100 basis points, as well as a reduction in long-term rates and a rise in short-term rates); Group limits are set to restrict the impact on the interest margin over the next two years on a worst case basis. Calculating fixed-rate shortfalls These shortfalls are calculated on the basis of the difference between the forecast average exposure in the form of fixedrate sources of funds and exposure in the form of fixed-rate applications of funds. Variable-rate products are considered as being fixed until the next date on which rates are to be set. All the sources and applications in the balance sheet and offbalance-sheet statement are scheduled either according to their contractual provisions, as is the case for loans, or according to a conventional schedule (for sight deposits, each level of stock development is depreciated using the straight-line method, over a period that varies according to the category of customer). Any shortfalls noted for various maturities must be below a decreasing percentage of the amount of equity. Sensitivity of the net asset value of the balance sheet This sensitivity, calculated each quarter on the basis of the fixed-rate shortfalls in the static balance sheet, and shortfalls in relation to inflation, is an indicator that was introduced as a means of meeting the Basel Committee's recommendations on measuring the overall interest rate risk. If this limit (which stands at 20% of equity capital) is exceeded, this is considered a "significant" incident and must be declared immediately to the ACP in accordance with regulation 97.02. Liquidity risk Crédit Coopératif is, in structural terms, a lender on the interbank market, but it is also in receipt of long-term sources of funds as part of its activity and according to its requirements. A dual limit is fixed for the borrowing position that it may hold from day to day: there is an internally-defined limit for market positions, and also a second limit defined under the BPCE Asset/Liability Management benchmark, which takes account of positions adopted with Groupe BPCE institutions (in 2012, the majority of the day-to-day transactions concerned involved BPCE). The liquidity risk is also measured within the framework of the Groupe Banque Populaire risk benchmark document in the following manner: • first, using a classic calculation of shortfalls over the full life of the balance sheet (sources of funds minus applications of funds), the shortfall must never exceed 15% of the amount of the assets • second, using a calculation based on three-month liquidity shortfalls in the dynamic balance sheet (but without financial forecasts) and carried out for three crisis scenarios: -- a first scenario known as the "signature stress" scenario: a cyclical liquidity crisis triggered by a loss of confidence in Groupe BPCE's financial solidity preventing any access to the capital markets (conservative hypothesis); this translates into a fall in customer deposits (overall levels and inflows/outflows) and the creation of new credit in some segments (most of the investment securities portfolio can be transferred in one month). -- a second scenario known as the "systemic stress" scenario: a liquidity crisis affecting the financial system as a whole, resulting in the general closure of the capital markets and major restrictions on the ability to transfer assets; with all institutions finding themselves in the same situation, the fall in DAT production is weaker (resulting in extra cost), whilst the creation of new credits could, in contrast, be higher than during a signature crisis. -- finally a third mixed scenario, combining a liquidity crisis that affects the financial system as a whole and a more obvious confidence crisis affecting the Group; the effect on sources of funds is the worse of the two scenarios above but the fall in the creation of new credit could also be even greater with a negative impact on image. The available assets and realisable receivables should be sufficient to limit the lack of sources in each of these three scenarios. The liquidity ratio is also monitored for each institution, with implementation of a ratio forecast for the end of each month to ensure that the statutory ratio of 100% is maintained, while making the most effective use of liquidity within Crédit Coopératif Group and within Groupe BPCE. Overall currency risk The overall currency position, as measured via the accounts, is determined and monitored every day to ensure that it remains below the internally-defined limit. This limit is below the threshold at which a specific capital adequacy declaration must be made for currency risk, under Regulation CRB 95-02 (directive on capital adequacy with regard to market risks, now incorporated into the so-called McDonough or Basel II regulation of February 2007). Note: because the limits set for the trading room and the International Affairs Department are extremely low, the majority of currency risk involves shareholdings acquired in foreign currencies: mainly Tise, a subsidiary bought in zlotys in 2008 and BNDA, a shareholding purchased in CFA francs in 2011. Chairman's report 33 34 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 2 / Internal control procedures 2.2.4. Operating risks Control of operating risks is based on an internal control system, which combines prevention and control and is applied to all activities. This system is primarily the responsibility of the line managers in operational departments. It is based on detailed procedures and on continuous monitoring of activity. With regard to the prudential rules emanating from Basel II, Crédit Coopératif has implemented a system specifically designed to manage operating risks. This is based on a methodology that is common to all of the institutions in Groupe BPCE and draws partly on the benchmark standards and methods and partly on a management tool, PARO. The benchmark document sets out, in particular, the standards applicable to collecting and monitoring incidents as well as to risk assessment. In addition to providing a typology of standardised risks, the benchmark document was updated in 2012 to include a new rating scale from the risk control system – DMR – and an indicator section, ensuring that the system is consistent across the board. In 2012, BPCE delivered a second version of the tool to include these changes and its amended standardised risk benchmark. This set of rules was applied during the first. annual rating campaign launched by BPCE in 2012. A database of the accounting losses relating to operating risks has been regularly updated since 2005. Deployment of the "incidents" feature of PARO in the business lines, since its delivery in 2009, is used to detect significant risks and ensure that corrective measures are in place; the analysis of the risk rating revision process also includes provisions for event histories. The process used to maintain the Crédit Coopératif Group Business Continuity Plan in an operational condition continued in 2012, in compliance with Groupe BPCE methodology. The existing disaster recovery procedures have already proved effective and have enabled Crédit Coopératif to continue critical activities during a wide-ranging user fallback exercise. This exercise was conducted successfully in a real-life situation when Crédit Coopératif's Head Office was closed prior to the move to the new premises. 2.2.5. Non-compliance risks Non-compliance risk is defined as "the risk of legal, government or disciplinary penalties, considerable financial loss or damage to reputation, resulting from failure to comply with measures pertaining to banking and financial activities, whether legislative or regulatory in nature, or pertaining to professional or ethical standards, or instructions from the management body issued, in particular, according to the guidelines set out by the decision-making body". In accordance with amended regulation CRBF 97-02 - and under the responsibility of the Deputy Risks and Compliance Manager, who is also the Investment Departments Control Manager - two teams dedicated to monitoring risks of noncompliance are involved in preventive measures, monitoring, alerts and protecting the reputation of the institution among its customers, employees and partners. One team covers legal and regulatory compliance for the investment departments, while the other deals with issues relating to the prevention of money laundering and the financing of terrorism. In 2012, efforts were made to step up the internal control system so as to improve detection of non-compliance risks and to continue making adjustments to the system in line with regulatory changes, particularly with regard to anti-money laundering rules. Monitoring of the risk of legal non-compliance and the investment departments is based on: • a regulation watch system • a staff training plan • a procedure that verifies the compliance of new products and processes • a set of regularly monitored ethics rules (GRI SO2) • a malfunction monitoring system, with an alert procedure available to the staff • a check for compliance with professional obligations. A first-level unit monitors money laundering and financing of terrorism in branches using a computerised system to detect unusual operations. At a second level, the specialist team ensures that the alerts it receives are correctly handled by the branches. It analyses suspicious situations and, where necessary, reports them to TRACFIN (the French Finance Ministry's anti-money-laundering unit). This unit monitors the consistency and compliance of the detection system. An additional control has also been introduced to assess the compliance of banking and financial transactions and commitments, with the new guidelines concerning tax havens and legal safe-havens put in place in 2012. 35 Description Number of people responsible for compliance Number of people responsible for anti-money-laundering Number of employees having received anti-money-laundering training (in two years) Percentage of employees having received anti-money-laundering training (in two years) Number of fines and financial penalties Total value of significant fines (financial sanctions from administrative authorities, excluding the tax authority) Percentage and total number of business units analysed for risks related to corruption* Number of risk assessments (related to corruption) conducted for business units* Number of incidents of corruption attributable to Crédit Coopératif Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations Number of non-monetary sanctions for non-compliance with environmental laws and regulations Total number of legal actions for anti-competitive behaviour Total number of incidents of noncompliance with regulations and voluntary codes concerning product and service information and labelling Total number of incidents of noncompliance with regulations concerning marketing communications Number of grievances related to human rights filed, addressed, and resolved through formal grievance mechanisms Number of non-monetary sanctions and cases brought through dispute resolution mechanisms Unit 2012 2011 2010 GRI FTE 2.6 2 2 PR6 FTE 4.4 4.4 4.8 SO3 709 467 216 SO3 % 35.59 23.33 10.77 SO3 / 0 2 1 SO8 €K 0 0 2,123 SO8 & PR9 % N/A N/A N/A SO2 / N/A N/A N/A SO2 / 0 0 0 SO2 / 0 0 0 PR8 €K 0 0 0 EN28 / 0 0 0 EN28 / 0 0 N/A SO7 / 0 0 N/A PR4 / 1 0 N/A PR7 / 0 0 N/A HR11 / 0 0 0 SO8 *The notion of corruption, in the sense of the GRI benchmark document, does not match the monitoring activities conducted elsewhere ➔➔2.3. Organisation of the internal control procedures for accounting and financial information The duties and organisation of accounting departments are presented in a standardised document. Each task is identified, classified by the nature of the role and assigned to a named manager. Periodic operations and pinpoint actions are detailed in a schedule; the procedures describing the conditions applied to checks of the principal transaction processing systems are recorded. All banking operations carried out by the various authorised units are recorded using dedicated IT applications, and, to a lesser extent, using direct accounting entries. Within the framework of a general, centralised processing system, the computerised accounting system produces standardised, referenced elementary account posting entries, based on an organised framework known as the “rules of the game”. These incorporate predefined accounting schedules and use a general system of accounts, the operation of which complies with rules set and administered by the Accounts Department (chart of accounts, accounting schedules, authorisations etc.). Accounting and financial information is based on the chronological recording of transactions, the keeping of documentary evidence, and the drafting of accounting procedures, which are currently under development. End-to-end responsibility for the accounting process lies with the Accounts Department, which defines the accounting checks to be performed by each of the management units. In addition, there is an accounts controller who reports directly to the Accounts Department and Management Control. This officer performs these roles in accordance with the accounting and regulatory revision charter defined by the central body. The accounts controller produces a quarterly report on all of the accounting controls carried out, reports on any significant anomalies and issues recommendations. The internal control of accounting information is broken down into three levels: • decentralised self-inspection, by staff in the operations departments, of the conditions under which banking operations are performed • continuous accounting control, performed by the operating departments and by the Accounts Department. The departments and branches send monthly reports justifying general account balances for centralised control by the Accounts Department; the latter also reconciles the inventories and accounting balances. • pending transactions that display anomalies are reported immediately to the relevant line manager and the Continuous Control Department. • an additional accounting control, independent of the operating departments and the accounts production managers, is also carried out Chairman's report GRI benchmark – compliance indicators 36 Crédit Coopératif Group I Annual Report 2012 Chairman’s report 2 / Internal control procedures • finally, periodic control, which is managed: -- by Crédit Coopératif’s Audit Department, performing targeted missions within branches and central departments -- by the statutory auditors, as part of their scheduled annual audits of financial statements at 30 June and 31 December for all companies within the Crédit Coopératif Group and, since the 2007 financial year, a quarterly audit of Crédit Coopératif’s accounts • externally, by the central body's Audit Department and the ACP. Managers responsible for spending commitments or disbursements never handle the payment process. Main accounting control procedures Progress in accounting controls is recorded as it happens using a monitoring table, analysed at regular intervals by the Accounts Department line management and summarised by the accounts controller every quarter in the form of a report to the Accounts and Management Control Department and to the central body. In addition, the accounts controller produces a half-yearly security chart for the information of the Continuous Control Department, the Accounts Manager and Operations. Within this framework, various alerts are issued for pending transactions (amount, direction, duration, type, etc.), the balances of anomalous accounts and the difficulties experienced by the counterparty units. The statutory reports are compiled at regular intervals using a dedicated tool that combines certain attributes generated by the various management systems with the accounting information. Documents are cross-checked to ensure the consistency of the information produced. These reports are produced on the company accounts and at Crédit Coopératif Group level and submitted to the central body. The Accounts Department performs a monthly calculation of net banking income and a quarterly calculation of earnings after corporation tax; these elements are checked against the budget data. This regular frequency helps to make the process more reliable. The schedule for finalising the financial statements is distributed to the units concerned, specifying the information required and the deadlines. The Group’s financial statements are drawn up every quarter in accordance with IFRS standards and the statutory auditors validate the consolidation files for Crédit Coopératif every quarter. They conduct an audit of the consolidated financial statements when they are closed on 30 June and at each annual closing. In addition to the work of the statutory auditors, the quality of the accounting process is inspected by the Crédit Coopératif Audit Department, the BPCE Audit Department and the departments of the ACP. 37 Crédit Coopératif Group Management Report 38 50 70 79 86 93 107 108 2012 Crédit Coopératif Group activity Corporate social responsibility Group architecture Board of Directors and Executive Management Company and consolidated financial statements 2012 Risk exposure and risk management Distribution and appropriation of earnings Outlook for 2013 38 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity 1 - 2012 Crédit Coopératif Group activity Economic conditions in 2012: a European threat to global business In 2012, the eurozone was a greater cause for global economic concern than it had been in 2011. Having said this, the year can be divided into two distinct periods: before and after 26 July, the date on which the European Central Bank (ECB) made clear its intentions to protect the euro. Once again, the euro came under threat from a domino effect, driven by developments in the sovereign debt crisis. Europe became the single largest element of downward pressure on the global economy, which slowed down more in 2012 than it had in 2011. The eurozone fell into recession due to uncertainties over the long-term future of the single currency, wide-ranging austerity measures that were scheduled to last longer than anticipated, and a sharp fall in activity in the zone's southern states due to a structural lack of competitiveness. From summer onwards, the ECB made a decisive intervention that helped to protect the eurozone. It fulfilled its role as the "lender of last resort" for Member States in difficulty and requiring a loan, provided that the countries concerned submit an official request for assistance to the European Financial Stability Facility. It also provided large-scale refinancing support for eurozone banks. In July, the ECB lowered its headline interest rate by 25 basis points to 0.75%. These key actions would not have been possible without the relaunch of the European project, with measures including the ratification of the European Fiscal Compact, approval of the European Stability Mechanism by Germany's Federal Constitutional Court, development of the proposed European Banking Union and effective use of Europe's existing solidarity mechanisms, including the historic restructuring of Greece's public debt by private investors. France remained in the middle ground in Europe, between Germany at one extreme, where economic growth slowed drastically to just 0.9% in 2012, and other peripheral countries in deep recession, such as Spain (-1.4%), Italy (-2%), Portugal (-3%) and Greece (-6.6%). France's resistance to downward economic pressure can be attributed to the fact that it relies less on global trade than other Member States. However, its economy has not yet returned to pre-crisis levels in terms of GDP and employment. Its economy suffers from a structural competitive deficit, following a movement which began in its manufacturing sector back in 2000 (Gallois report). Economic conditions in France have deteriorated since summer 2011, with a combina- tion of both external and internal forces to blame. The country's GDP growth stagnated at 0.1% in 2012, compared with 1.7% in 2011. Mandatory contributions rose to historic levels in 2012, reducing the public deficit to 4.5% of GDP. The business investment cycle ground to a halt, with investors preferring to play the waiting game, businesses showing little profitability, and the introduction of a more demanding tax regime. The unemployment figures rose sharply, passing the three million mark in August. The personal tax burden rose by around one percentage point of household income. Inflation remained at an average of 2%, despite a significant fall in December (1.3%). For the first time since 1984, the purchasing power of French households fell. This meant that consumer purchases – the traditional engine of the economy – fell significantly. France will now need to revise its growth model in light of this downward trend. France lost its triple-A credit rating in 2012. Despite this, France's long-term interest rates – which have been affected by economic stagnation, a growing aversion to excessive deflationary risk and prudent monetary policy – reached abnormally low levels. These low rates have created a safe-haven environment and boosted potential for diversification, as seen with both German and American interest rates. The 10-year OAT rate even fell slightly below 2% in December, compared with an annual average of 2.52%. The stock markets all showed similar trends, with two clearly identifiable periods: a strong downward trend in the spring, followed by a recovery from summer onwards following the ECB's new strategy announcement and the perceived end of systemic European risk. Despite falling to a low of 2,950 points on 1. June, the CAC 40 (which became less volatile towards the end of the year), rose by 15.2% overall in 2012, reaching 3,641 points on 31 December. ➔➔1.1. Activity by customer segment The number of customers with an active Crédit Coopératif or BTP Banque account stood at 302,736 at the end of 2012, which represents an increase of 4% compared with 2011. 1.1.1. Cooperatives and company groups The economic environment was particularly challenging for French companies in 2012, with growth remaining stagnant and investment levels falling. Despite this, Crédit Coopératif increased its lending to businesses by 10%, in terms of both liquidity loans and investment credits. As the long-standing bank of choice for production cooperatives (SCOPs), Crédit Coopératif maintained its support for these co- 39 Buoyed by its partnership with Coop de France, Crédit Coopératif has also made substantial progress in the agricultural cooperatives (and subsidiaries) sector. Following a difficult year in 2011, activity in this sector grew by 40% in 2012, in terms of both transaction volumes and new deposits and loans. Crédit Coopératif's partnership with Union Finances Grains, for example, involved around €50 million of guarantee exposures to fund cooperative cereal stocks. While the regulatory situation remained somewhat unclear, Crédit Coopératif continued to build on its recognised expertise in supporting renewable energy deployment in France. In 2012, it reached its target of delivering €130 m of eco-finance loans to SMEs as part of its three-year partnership with the European Investment Fund (EIF). Furthermore, Crédit Coopératif extended its support provision to eco-companies, widened the scope of its provision to companies in environmental sectors such as recycling and waterborne transport, and to a network of eco-companies through its partnership with PEXE. Crédit Coopératif also joined forces with Socorec, a financial institution operating in the retail trade sector. The bank has incorporated Socorec's financial products and services into its own offering, and this combined expertise has enabled Crédit Coopératif to provide better growth support to city-centre retail trade brands. Overall, Crédit Coopératif maintained its growth in this area, with a 14% rise in loans to groups associated with the FCA (retail trade association) and a 7% rise in transaction volumes. Following the launch of the Croissance PMI Ile de France guarantee fund, in partnership with the Fédération des Industries Mécaniques (Federation of Mechanical Industries) and Caisse Mutuelle de Garantie de la Mécanique (CMGM), Crédit Coopératif now covers 18 of mainland France's 21 regions, offering participatory loans to help SMEs fund their growth and boost their resources. Crédit Coopératif has also continued to show its support for French manufacturing companies, both through traditional loans (up 3% in 2012) and by helping to strengthen their financial structures. Total customer numbers in the cooperative and company group sector rose by 3% in 2012. 1.1.2. Associations, foundations and general interest bodies Crédit Coopératif is the bank of choice for general interest bodies and services. These include associations, foundations, mutual benefit organisations, social housing organisations, local public companies, collective interest cooperative companies, denominational organisations, trade unions and works councils. These organisations all have a common goal: to help to build balanced, fair society through their work in fields such as health, social action, housing, education, integration, international solidarity, culture, welfare, sport, social cohesion and associated tourism. In order to support these organisations and help them grow, Crédit Coopératif develops products and services that cater for their specific economic, legal and fiscal characteristics. It gives these organisations access to its recognised expertise in this field, and develops strong links with their members and representative movements. In 2012, the deepening public finance crisis had a direct or indirect impact on all general interest bodies. Yet this is precisely the time at which the public needs general interest bodies to help maintain social cohesion and find ways to soften the effects of the crisis. Crédit Coopératif continued to act as a partner to its members throughout this difficult period. It maintained and extended its housing and social housing funding activities by delivering assisted loans from Caisse des Dépôts, and giving associations access to resources from the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB). Crédit Coopératif has in-depth knowledge and experience of its customer sectors. It maintains this expertise by attending major events organised by its partners, where it has an opportunity to discuss changes to its products and services to ensure that they meet the needs of its customers. Examples of such events include H’expo and the annual conferences of the HLM movement, FNMF, UNAPEI and FEHAP. General interest bodies are constantly changing to adapt to their environment. Crédit Coopératif helps organisations in the sector with governance, organisation, resource diversification and fund-raising matters. Crédit Coopératif gave its full support to the local public sector, through both direct funding provision to Management report operative and participatory companies by playing an active role in the movement's 10th annual conference. Crédit Coopératif works with around 75% of all SCOPs and SCICs (general interest body cooperatives), helping them with their day-to-day operations and providing support at key moments in their development (start-ups, takeovers, growth, investment, etc.). 40 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity departmental and regional councils, and a range of services for general interest bodies covering entire areas and regions. growing numbers of eco-housing construction projects on its books. Crédit Coopératif revised its range of investments to meet the security and performance needs of general interest bodies – and regulatory needs for "Livre II" licensed mutual health organisations – and to reflect the regulatory restrictions governing financial institutions. Each and every Crédit Coopératif employee, working with the bank's pool of around 230,000 individual customers, is guided by the same core principles: to be a bank that offers accurate and high-quality advice through its range of products and services, and to be useful bank that funds a more human and real economy. In 2012, the number of "general interest bodies and services" among the bank's customer base (across all sectors) rose by 1.5%. Total transaction volumes handled on behalf of these customers rose by 4%. 1.1.3. A bank serving private individuals Following a strong increase in the number of like-minded customers in 2011, Crédit Coopératif gained around 13,000 new individual customers in 2012, all of whom share the bank's cooperative and socially responsible values. These customers joined through Crédit Coopératif's 70 physical branches and its new and improved online bank (MonCreditCoopératif.coop). The bank also gained 13,000 new legally protected adult customers, through specialist associations in this field becoming customers of Crédit Coopératif (see 1.1.4.). Crédit Coopératif is France's leading provider of ethical and socially responsible savings solutions, with a wide range of day-today financing products and services for the real economy. As such, it is able to offer simple, clear solutions to individual customers looking for financial transparency, innovation and social responsibility. The success of the bank's "Agir pour une économie plus humaine" range, its various UCITS products and other socially responsible investment products resulted in record donations of around €5 million to its 52 partner associations and foundations, an increase of 30% on the 2011 figure. In 2012, Crédit Coopératif also reaffirmed its commitment to innovation in socially responsible finance, launching its Agir account, the first chequebook account that allows individual customers to choose how the money in their account is used. Account holders are able to choose one of the four areas available. Crédit Coopératif also boosted its loan provision for eco-housing projects in 2012, through changes to its Prévair products and 1.1.4. Legal guardians of protected adults In 2012 Crédit Coopératif continued to improve its Astel and Tuteur PRO (AT Services) product offering, comprising specifically designed software and banking services that have been geared towards the needs of protected adults (Astel card) and their legal guardians. This professional software package, intended for legal guardians of protected adults, is designed to help manage all the bank accounts of a protected adult, regardless of whether these are held at Crédit Coopératif or with other banks. It also simplifies the budget management process, allows legal guardians to send digital documents to the courts via the new legal portal, automates the recurring transaction handling process and provides a facility for service billing. The software is designed to be userfriendly and has been co-developed with customers via their regional Astel clubs. Such has been the success of this offering, that 13,000 new protected adult accounts were opened with Crédit Coopératif in 2012 and the bank continues to secure a growing portion of their day-to-day savings through a specific range of products tailored to the needs of this customer segment. Crédit Coopératif has adapted its offering by selecting a range of savings products in line with the wishes of judges and protected adult management representatives (savings accounts, life insurance, fixedterm investments), and a range of loan products to allow protected adults to purchase a property as their primary residence, carry out home improvements such as energy efficiency developments, or purchase a specially adapted vehicle. In-depth legal work was also conducted in the banking sector in 2012 with all players in this customer segment, helping to secure various aspects of day-to-day activity (overdrafts, legality of "LEP" low-income passbook accounts, etc.). 41 In 2012, Crédit Coopératif maintained its position as the supporting bank of choice for the associations sector, with a customer base comprising around 20,000 small and medium-sized associations. It helped associations to deliver a wide range of general interest activities, including cultural, social inclusion and environmental projects. Subscriptions to the Esprit Associations service package increased by 12%. This easy-to-manage package is extremely popular with association managers. Crédit Coopératif also offers socially responsible products for small and medium-sized associations. These are outlined in its Guide de l’Épargne Éthique et Solidaire (ethical and socially responsible savings guide). In direct response to the needs of small and medium-sized associations, which have been adversely affected by public funding cuts, Crédit Coopératif has joined forces with other players in the social economy to create a new range of support tools. As the bank of choice for the social and socially responsible economy, Crédit Coopératif supports the work of job-creating associations, helping them to grow and secure their future. Working with organisations such as the Réseau National des Maisons des Associations, it helps to address the challenges of association sector employment and encourages cooperation between various supporting bodies. 1.1.6. Building and civil engineering companies and institutional investors Crédit Coopératif Group is able to support companies and institutional investors in the building and civil engineering sector via its subsidiary, BTP Banque, which has been dedicated to this sector for more than 90 years. The close links between BTP Banque and professional organisations in the building and civil engineering industry mean that the bank is perfectly placed to offer tailored solutions to companies in this sector. BTP Banque has a strong presence across France, with a network of 40 branches. In 2012, the bank saw a substantial increase in its customer base, with an 8.8% rise in current accounts and a 20% rise in shortterm credit facilities. Crédit Coopératif boosts its SME financing activity through its European partnerships In 2012, Crédit Coopératif signed a new 10-year, €100 million refinancing agreement with the European Investment Bank (EIB). This is the 14th loan agreement between Crédit Coopératif and the EIB, demonstrating Crédit Coopératif's commitment to grant loans to very small businesses. A new loan envelope is expected to be introduced in the near future. Until December 2012, Crédit Coopératif continued to benefit from guarantees from the European Investment Fund (EIF) for its SME portfolio in the environmental sector. This guarantee was obtained through the European Union's Competitiveness and Innovation Framework Programme, covering a portfolio of loans of more than €100 million. The Council of Europe Development Bank (CEB) allocated long-term resources to Crédit Coopératif to finance a number of sectors, including the social/medical, education and professional training sectors. The results of an audit, conducted in 2012, on a previous loan were highly satisfactory, demonstrating the potential for even closer collaboration in the coming years. In 2012, Crédit Coopératif introduced its first ever refinancing agreement through a German public institution, the KFW. This refinancing agreement, which targets the renewable energies sector, means that Crédit Coopératif has access to long-term resources that enable it to offer competitive loans to its business customers. To date, Crédit Coopératif has benefited from €40 million of exposures, 29% of which has already been consumed. Management report 1.1.5. A bank for small and medium-sized associations 42 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity Based on these results, BTP Banque was able to achieve its medium-term ambitions for the 2009 to 2012 period. These were based around improving the quality of its customer relationships and diversifying its commercial products and services in line with the specific needs of the sector. ➔➔1.2. Business lines at the service of the real economy As part of its philosophy of providing a complete banking service, Crédit Coopératif Group, via its two national banking networks, Crédit Coopératif and BTP Banque, and specialist business line subsidiaries, provides the full range of banking, financial and technical products and services that companies, general interest bodies and individual customers expect of a bank, for their operations in France and abroad. It is also developing specialist expertise and tailor-made solutions with its customers' movements and professional organisations. To cater for their specific characteristics, it has installed powerful IT systems that can be placed at the disposal of partners, such as the bank's associates, to handle their management requirements. To guarantee enhanced reliability, the Group has installed secure equipment and created a business continuity plan. 1.2.1. Financing Credit and facilitating access to credit are the core activity of the Crédit Coopératif Group. The Group's aim is to meet all the requirements of both corporate entities and individual customers alike. To facilitate access to credit, mutual guarantee mechanisms (specialised guarantee funds, SME-SMI financial cooperatives) are used on a regular basis. Crédit Coopératif Group is also a partner of French public systems such as PLS (social loans for rented housing), PSLA (social loans for accessible housing) and the Fonds de Cohésion Sociale (social cohesion fund) to guarantee micro-loans. Assignment of receivables is a very common practice, especially for not-for-profit organisations and the building and civil engineering sector. The completion guarantee offer is highly dynamic, mainly thanks to a highly efficient online management tool. Equipment leasing Under the Coopamat brand name, Crédit Coopératif Group offers financing for equipment and vehicle leasing for SME/SMIs from all sectors, tradespeople and associations. This financing solution is extremely popular because of the simplicity and speed with which the arrangements can be put in place, as well as the flexible rates available. In 2012, equipment leasing production activities stood at €127 million, an increase of 11% compared with 2011. Property leasing Crédit Coopératif carries out commercial property leasing activities via its subsidiary, Bati Lease. As the property financing arm of the Crédit Coopératif Group, now operating under the Crédit Coopératif Lease brand, Bati Lease offers property financing services to Crédit Coopératif Group’s market segments in all of its regions, while Bati Lease Invest offers them rental finance. Over the course of 2012 Bati Lease continued to work on behalf of Crédit Coopératif in its core market segment. Despite a difficult economic climate and a fall in business investment levels, activity remained satisfactory with €172.5 million of financing agreements granted to 83 companies. In 2013, a close partnership will be developed with the Crédit Coopératif network as part of a distribution agreement to encourage balanced and shared growth with Crédit Coopératif branches. Intercoop is a property leasing company that focuses on commercial property, that is being wound up by Bati Lease. Its activities focus on legacy management and extensions of existing operations. 1.2.2. Savings and investments Savings Crédit Coopératif provides its customers with a full range of classic savings products (bank savings accounts, registered home ownership savings plans, term accounts, short-term loans) together with socially responsible savings products, for which it is the recognised specialist at national level. The bank's socially responsible savings products enable savers who so wish to share some of the interest they receive with Crédit Coopératif’s partner associations operating in all the social fields (environment, international solidarity, help for people with disabilities, support for renewable energy sources, integration etc.). Many customers, driven by a desire to secure their finances in a time of crisis, have decided to save substantial amounts in both 43 With this upward trend and high-quality cooperation between the bank's professionals and partner association staff, shared savings products reached a level not seen since the launch of "Faim et Développement" in 1983, France's first. shared savings product. Total donations exceeded €5 million in 2012. Crédit Coopératif also has a full range of life insurance investment schemes, with contracts in euros or multi-support contracts, in partnership with the Mutavie (Groupe MACIF) and Groupe MMA Vie insurance companies. Asset management Crédit Coopératif Group's asset management activity continued to grow in 2012 despite an economic environment that was once again challenging, with volatile markets, a raft of new finance laws and falling yields on insurance companies' euro assets. Despite this, the Group maintained strong levels of asset management activity for legally protected adults, like-minded customers and individuals. Furthermore, the progress made in the business leader segment in 2011 continued in 2012, with the support of the market divisions and the Crédit Coopératif and BTP Banque branch networks. The approach taken with the majority of these customers is to help resolve the sheer range of problems and issues encountered, whether through investments or investment loans. These products help to develop customer loyalty, and enable the Group to improve the level of support that it provides. They generate investment opportunities by releasing liquidity in the form of long-term securities. In 2012, the Group also overhauled its asset management product offering to include a portfolio management product and investment advice services, as well as SCPI (property investment trust) shares. These new products and services have been added to the existing range, including the responsible and socially responsible investment products that are now included in life insurance policies with certain insurance companies through brokerage agreements. Furthermore, the bank's asset management activities were closely linked with the project to reorganise the Crédit Coopératif network, with the aim of bringing asset management teams closer to their customers and making them better able to meet their needs. Financial intermediation Crédit Coopératif’s financial solidity and its position as a net lender on the money markets make it a much-sought-after counterparty on the Paris stock exchange, where it maintains many active relationships. Its ability to make economic analyses and evaluate market risks, and the rigorous separation between its own-asset operations and operations carried out for its customers enable it to operate in the most efficient and secure manner. This activity is boosted by fact that it shares Groupe BPCE’s rating. Its work is built around three main types of services: • an offer covering investments in certificates of deposit or negotiable medium-term notes across all maturities. With the ability to meets its customers’ needs in terms of volume and maturities, Crédit Coopératif issued negotiable debt securities worth a total of €1.5 billion as at the end of 2012. • a bond investment offer for the primary and secondary bond markets. Thanks to the partnership entered into with medium-sized banks in the UGP (Union de garantie et de placement), Crédit Coopératif Group participates in most Paris bond issues, thus providing its customers with special access to the market. • an offer covering swaps and rate risk hedge instruments adapted to suit customer requirements, especially those of borrowers. This has grown well over the year against a background of low rates and uncertainty about the future of rates. The nominal value of interest rate swaps or other hedging instruments based on interest rates entered into with customers totalled €275 million in 2012. Third-party asset management Within Crédit Coopératif Group, third-party asset management is carried out by a specialist subsidiary, Ecofi Investissements, which celebrated its 40th anniversary in 2012. Ecofi Investissements manages investment products and solutions across all asset classes. These are offered to institutional investors and private individuals via the company's partner distributors and using the Crédit Coopératif and BTP Banque networks. Ecofi Investissements is a pioneer in ethical and socially responsible finance with 30 years' expertise in this area. It offers Management report traditional products managed by a bank with cooperative values, and in socially responsible products, where they are able to support good causes while still having access to their cash. As such, 2012 was close to a record year for bank savings collections, with levels rising over 20% among like-minded individual customers. This trend accelerated towards the end of 2012 with an increase in the ceilings for "Livret A" and LDD accounts. 44 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity a full range of UCITS products, including socially responsible funds, shared funds, socially responsible investment (SRI) funds, and thematic sustainable development funds, with a strong focus on socially responsible save-as-you-earn schemes. In 2012, 18 of Ecofi Investissements' UCITS funds were awarded the "Finansol" label, while 10 UCITS funds received the "Novethic ISR" label – both testament to the quality and transparency of these funds. Despite the ongoing economic crisis, the total amount under management by Ecofi Investissements stood at €6.45 billion at 31 December 2012, a slight increase on the 2011 figure. The value of monetary UCITS funds fell slightly. This stability was underpinned by a growth in bond UCITS funds – particularly short- term variants – and in socially responsible and shared UCITS funds, including those arranged through socially responsible FCPEs (employee investment funds). In 2012, two new products were released to respond to changing economic conditions and meet new customer demands: As a leader in fixed-income and fixed-term UCITS funds, Ecofi Investissements expanded its range with the introduction of Ecofi Sélection Crédit 2015. The second product, Ecofi Patrimoine Diversifié, builds on Ecofi Investissements' broad range of asset management expertise working with institutional customers. It is designed to meet the needs of this customer segment in terms of diverse investment choices. Ecofi Investissements: an innovative asset management company with a rigorous approach to SRI The overhaul of Ecofi Investissements' socially responsible investment process (GRI FS1) In 2012, Ecofi Investissements overhauled its business analysis and selection process, based on two key principles: • consistency with the values of Crédit Coopératif, such as anti-tax-haven policies and responsible customer relations • consideration of potential risk factors, including an in-depth analysis of controversies in which businesses have been involved, and greater weighting assigned to practical, quantitative indicators that look beyond what companies say. This process is based on extra-financial rating agencies Vigeo, Sustainalytics and Ethifinance, as well as on internal SRI research. The new process takes two forms: a "Committed SRI" filter for the ethical and socially responsible range and a "Responsible SRI" filter for the majority of our traditional range. Shareholder dialogue policy (GRI FS5) Shareholder engagement covers all actions taken by a company's shareholders to improve its environmental, social and governance (ESG) practices. This engagement may come in one of two forms: • participation in General Meetings • direct dialogue with companies. An systematic voting policy and an individual and collective company dialogue process lie at the heart of the SRI management process. In 2012, Ecofi Investissements voted at 200 General Meetings, opposing an average of 38% of management-proposed resolutions (compared with an average of 18% among other French asset management companies). With respect to shareholder dialogue, Ecofi Investissements focused on the topic of diversity and gender equality in 2012. In September 2012, Ecofi Investissements published a detailed Voting and Dialogue Report to communicate about its activities in these areas (FS12). Ecofi Investissements is one of few asset management companies that reports on the ESG performance of all companies within its SRI funds. It also reports on the socially responsible stakeholders financed through its UCITS funds. 45 GRI benchmark – indicators concerning asset management Unit 2012 2011 2010 GRI Percentage of assets subject to ESG criteria % 69.9* 75 N/A FS10 Percentage of committed SRI funds in total amount under management (at 31/12) % 5.9* 8.5 7.5 FS11 Percentage of responsible SRI funds in total amount under management (at 31/12) % 64* 70 77 FS11 Exposures from committed SRI funds (31/12) €K 378,949* 550,897 565,464 FS7 Exposures from socially responsible funds (31/12) €K 181,280 153,004 161,163 FS7 Exposures from finance provided to approved socially responsible companies via socially responsible UCITS funds (at 31/12) €K 13,360 13,343 11,915 FS7 Number of socially responsible companies in socially responsible UCITS funds / 53 47 38 FS10 Market share of exposures from socially responsible UCITS funds compared with the Finansol benchmark (open funds and employee investment funds) % N/A** 6.9 7.9 FS6 Market share of exposure from shared UCITS funds compared with the Finansol benchmark % N/A** 43.6 41.6 FS6 Number of the Group's products approved by Finansol / 24 24 23 2.10 Number of Ecofi products approved by Novethic / 10 10 8 2.10 The new website (www.credit-cooperatif.coop/particuliers/) allows customers to view their account details online and carry out transactions, as well as offering opportunities to act in the interest of a more human economy. It provides practical answers about how money circulates and Crédit Coopératif's commitments. As well as launching a new online sign-up service, the bank's ebranch MonCréditCoopératif.coop (www.mon-credit-cooperatif. coop/), formerly known as Coopab@nque, welcomes new customers and enables the bank to manage its relationships with individual customers online. It features new contact channels such as a named customer care adviser, a direct hotline, a callback facility and a secure messaging service. Soon, customers will be able to sign up for savings products online. Technological services * The variations observed in 2012 were due to a more selective process ** Results available for previous year only 1.2.3. Banking services Crédit Coopératif Group customers have access to all of the classic banking services at rates that put the Group in an attractive position on the market. Developing the bank's online business In line with its policy to boost its presence in the individual banking market, Crédit Coopératif has chosen to reach out to customers through a broader range of channels. As well as its inbranch advisers, all potential new customers can now join the bank online, irrespective of their location. The new SEPA (Single Euro Payments Area) system means that all debit and credit transfers are now being harmonised across 32 countries. As of 1. February 2014, all domestic credit and debit systems will migrate to the SEPA credit (SCT) and debit (SDD) systems. SEPA represents a major challenge for Crédit Coopératif. It already handles SEPA credit and debit payments for all customers via Coopatrans. New services were introduced throughout 2012, and these will be finalised in 2013. This will provide customers with a full range of services by the 1. February 2014 deadline. Online banking services are provided through Coop@net and BTPnet (services that give customers direct, real-time access to their accounts and the ability to make transactions online, without having to visit a branch), Coopatrans (a secure electronic payment and statement exchange system), Coopimport (online letter of credit and bank guarantee application services), and NetPrélévement (for managing and monitoring draw downs and outstanding payments). These services are regularly supplemented with new functionalities, including SEPA transition-related services. Management report Description An improved website dedicated to individual customers was launched in June 2012. It is simpler, more functional and contains a greater breadth of information. 46 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity Services linked to current account management provide added value: merging accounts, payment of balances, standing orders in Coop@net and BTPnet for example. Financial cash flow processing services and payment instruments are provided for small and large customers alike. These paperless services are suited to all types of payment method, including cheques, card payments, SEPA debits and transfers, TIP, TEP, and rollout of the new online card purchase security system. In the area of electronic payments, Crédit Coopératif provides secure systems for payment by bank cards via solutions (the Cirra and Paybox products) that range from electronic payment terminal equipment to systems adapted to specific activities. Its online payment solution is well suited, amongst other things, to collecting donations and paying subscriptions. In 2012, Crédit Coopératif helped its customers to complete the migration from the Etebac protocol to the new Ebics and Swifnet protocols, or to file exchange via the secure Coopatrans website. International operations Crédit Coopératif is in a position to provide financial exchanges and support its customers’ activities at an international level. With at its Head Office experts and a worldwide network of correspondents, it is able to provide a full range of products and services: currency management, guarantees, standby letters of credit, standard letters of credit, advances in business currencies, confirmation of export letters of credit, assignment of receivables against foreign customers and Assurance Coface services. Crédit Coopératif possesses an efficient automated management tool and qualified back-offices to process payments to or from all countries and in more than 100 currencies. For exchanges between European countries, it participates in the Target2 and EBA settlement systems and is part of the SEPA initiative. Alongside these financial flow processing services, advisory services and expertise, Crédit Coopératif develops direct international operations. Crédit Coopératif develops direct relationships with foreign banks operating in similar sectors, while drawing on partner networks (Febea, GABV) and other European cooperative and ethical banks with which it has signed partnership agreements. Its partnerships with these foreign banks help to further the cause of the social and socially responsible economies in these countries. Crédit Coopératif also supports its customers who wish to set up business, expand or invest abroad. In 2012, as part of the UN's International Year of Cooperatives, Crédit Coopératif helped to launch the Global Development Co-operative Fund, an investment fund for cooperatives in developing nations. The GDC Fund was created by Co-operative Bank UK, an institution with which Crédit Coopératif intends to develop closer ties. GRI benchmark – micro-finance indicators Description Unit 2012 2011 2010 GRI Annual production of personal micro-credits (Fonds de Cohésion Sociale) €K 1,405 1,200 1,180 FS14 Annual production of professional micro-credits (France Active) €K 590 981 N/A FS14 Annual production of professional micro-credits (ADIE) €K 2,301 371 N/A FS14 Number of personal micro-credit partners / 136 132 126 FS14 Number of share acquisitions in micro-finance institutions €K 13 11 7 FS14 Total value of shares acquired in micro-finance institutions €K 7,545 6,654 4,524 FS14 Total value of micro-finance institutions refinancing €K 17,779 16,879 13,729 FS14 1.2.4. Financial engineering There are specialist departments and companies in the Crédit Coopératif Group that support companies and associations or mutual organisations in their operations involving financial restructuring, development and diversification, liabilities management, creation of subsidiaries, transfers, etc. Equity capital provider The Esfin-Ides Group provides equity capital for entities in the social economy, especially cooperatives (Ides) and small and medium-sized firms in all business sectors (Esfin Participations). The operations of these companies, which range in value from €1 to €1.5 million in liaison with the other entities in the Crédit Coopératif Group and its partners, offer solutions to the problems of company transfer and financing for growth in particular; they are designed with medium-term objectives in mind in partnership with the shareholders and the management teams of the structures concerned. 47 Crédit Coopératif, an expert in the micro-finance sector > International operations Crédit Coopératif invests in its customers and partners, all of which are involved in international solidarity or are experts in this field. SIDI, Entrepreneurs du Monde, Investisseurs & Partenaires (I&P), FIDES and ADIE International, meanwhile, are "social promoters" of projects and providers of responsible micro-finance, in line with the values of Crédit Coopératif. Crédit Coopératif currently has €8 million of investment in 18 organisations in this sector (micro-finance institutions, companies and investment funds), operating primarily in rural areas in Eastern Europe and Africa. In 2012, this portfolio was extended: • via investments in funds: FEFISOL, an innovative fund that invests in local currencies in Sub-Saharan Africa to support micro-finance and producers' organisations, and I&P Afrique Entrepreneurs, an SME and microfinance institution fund in Sub-Saharan Africa • and directly in FIDES Bank, a micro-finance bank in Namibia, alongside KfW, Investisseurs et Partenaires and FIDES, the project operator. Crédit Coopératif supported the growth of CoopEst, an investment company that works with financial institutions in the social economy, including microfinance institutions, in Eastern Europe. CoopEst actively supports around 30 institutions in eight countries (Albania, Bulgaria, Kosovo, Lithuania, Macedonia, Moldova, Poland and Romania). Building on this success, Crédit Coopératif is currently developing CoopMed, a similar investment company that works with organisations in southern and eastern Mediterranean countries. Finally, Crédit Coopératif works with a range of different networks, including the European Microfinance Network, the annual Convergences 2015 Forum and the European Venture Philanthropy Association. > Operations in France Crédit Coopératif supports project initiators through the provision of micro-credit. • Personal micro-credit is a French system managed by Caisse des Dépôts. It involves consumer loans 50% underwritten by the Fonds de Cohésion Sociale and aimed at people who are currently being reintegrated into society or the workplace. The products that Crédit Coopératif provides to these people are standard loans (i.e. not special credit mechanisms for "excluded" people), working with a network of more than 136 local partners including Croix Rouge Française, Secours Catholique, Missions Locales, the Initiative France network, Boutiques de Gestion, departmental, city and regional councils, Restos du Cœur, Associations Familiales and Régies de Quartiers. • Professional micro-credit, meanwhile, is designed to support business start-up projects and is based on a tri-partite relationship between the project initiator, the supporting network and the bank. Crédit Coopératif provides support to local stakeholders working with the beneficiaries. As a partner of ADIE from the outset, it and has helped to finance more than 50,500 entrepreneurs. This partnership was renewed in 2012. Crédit Coopératif is also involved with France Active Garantie (FAG) and Société d’Investissement de France Active (SIFA). It is also a partner of 26 France Active regional funds. Management report Crédit Coopératif is a bank with a strong commitment to the micro-finance sector, both in France and abroad. Due to its close relationship with NGOs, Crédit Coopératif has been involved in this sector since the 1980s. Since then, it has developed an active share acquisition policy in sectoral support bodies and micro-finance funds, as well as directly in international micro-finance institutions. 48 Crédit Coopératif Group I Annual Report 2012 Management report 1 / 2012 Crédit Coopératif Group activity In 2012, Ides invested €2.63 million in 11 plans as well as in SCOPs, collective interest cooperative companies (SCICs), and members of retail and trade cooperatives and associations. Ides is a partner of the Future Investment Programme (FIP), managed by Caisse des Dépôts. Esfin Participations acquired a capital share in three new companies and stepped up its presence in seven other companies, representing a total investment of €2.6 million. BTP Capital Investissement, a subsidiary of Crédit Coopératif Group, is a venture capital company. For almost 40 years, it has been injecting equity and quasi-equity capital into SMEs in the building and civil engineering and associated sectors. Its indepth knowledge of the sector has made a recognised player in its market. It provides long-term support to companies in this sector, irrespective of the economic conditions, environment and issues. Its activities are centred on operations involving LBOs (primary or secondary), development capital, acquisitions of minority stakes and partial buyouts of majority shareholders. This makes BTP Capital Investissement a preferred partner in the transfer, development or sustainability of SMEs in the building and civil engineering sector. It only ever acquires minority stakes, either alone or with investment partners. These investments are long-term (7 years on average) and, in terms of value, range between €75,000 and €1,500,000. As such, they are accessible to the majority of businesses in the sector. In 2012, shareholding portfolio transactions accounted for total new investment of €675K and divestiture of €729K, with net added value of €573K. A total of 47 projects were undertaken. Five of these are at the advanced study stage or are currently being finalised. As such, the investment prospects for 2013 are positive. Company transfers with over twenty years’ experience and in-depth knowledge of the sector. BTP Capital Conseil consults on aspects relating to business valuation, and also carries out introduction activities, supporting sellers who have entrusted it with managing their sale from the introduction of potential buyers through to signature of the final contracts, all in complete confidentiality. It was in contact with more than 100 entrepreneurs throughout 2012, primarily via the BTP Banque branch network, with the support of the Fédérations Départementales du Bâtiment, and also through direct contact channels. Issue of association securities and bonds In July 2012, Crédit Coopératif helped one of its association customers, Acted (one of the first French international solidarity NGOs), to issue association securities. In total, €3.2 million of association bonds and securities were issued to socially responsible and social investors. Association securities are a type of bond that allows associations to boost their equity. They were launched in 1985 but have only be used on rare occasions, as their potential benefits are largely unknown. This operation with Acted has drawn interest from several other associations, who see this as a way to boost their capital at a time when public grants and subsidies are on the decline. 1.2.5. Social engineering Crédit Coopératif provides advice and solutions for those customers who attach importance to their remuneration policy and the dynamism of their wages policy. In this context, it helps them to introduce save-as-you-earn schemes in partnership with Natixis Interépargne, a specialised subsidiary of Groupe BPCE and the leading provider of save-as-you-earn schemes in France. Similarly, it offers retirement savings solutions. It also offers endof-career benefit management services. These contracts stem from the partnership with Assurances Banque Populaire. BTP Capital Conseil, a subsidiary that is 80% owned by BTP Banque, is entirely dedicated to the transfer of SMEs in the construction and civil engineering sectors. Where appropriate, it helps customers set up “Compte Epargne Temps” schemes (time savings accounts) based on a remodelled product that Interépargne is soon to introduce. In order to meet the needs of this sector, BTP Capital Conseil provides its customers with a personal approach that allows them to benefit from the expertise of a specialist organisation In 2012, Crédit Coopératif reaffirmed its determination to assist its customers in their social engineering projects and advised them on opportunities arising from the French pension reform law. 49 1.2.6. Insurance mediation Crédit Coopératif acts as an insurance intermediary, offering a range of insurance products to its customers and members: • individual customers have access to payment protection contracts (and the MUTLOG 2021202 group contract in particular) for mortgages, personal loans and consumer loans • individual customers, protected adults and business leaders have access to an extended range of insurance products, both life insurance and capitalisation • it also offers providential cover, with key person insurance policies that enable business leaders to ensure the longterm durability of their businesses and organisations • there are also other means of payment guarantee policies aimed at individuals, companies and associations. In order to meet the needs of its members and customers, the Group is currently looking at ways to harmonise its range of insurance products. Delegation. Branches are now designed to provide a space that meets customer expectations, where sales staff listen closely to customer needs and provide the right advice. The spatial organisation of branches will be reviewed as part of projects launched in 2013. The Distribution unit's second task is to look at the multi-channel distribution strategy, to ensure that it reflects specific customer needs and the development model. The ultimate aim is to achieve consistency across all channels, including online, mobile, the e-branch and the customer relations centre. The main goal in this respect is to review the market-specific distribution policy, the range of existing channels and customer contact points with Crédit Coopératif, to ensure that these reflect its customer segments and the specific needs of each segment. The objective also involves developing the business by making it easier for new customers to join the bank and by improving communication with partners. As well improving physical proximity to our customers, these new channels and contact points are making it easier for customers to manage transactions remotely. This reflects a genuine customer need and, in turn, helps to improve our relationships with our customers as we support their projects. ➔➔1.3. Distribution and quality 1.3.2. Quality and customer relations 1.3.1. Distribution and the "local touch" Under the French law of 1947 relating to the status of cooperatives, one of the founding principles of a cooperative company is its duty to improve the products and services that it provides to its members. For Crédit Coopératif, the drive to deliver an everimproving service to the bank's members and customers therefore comes as second nature. In 2012, Crédit Coopératif extended its branch network with two new sites: the Paris Convention and Lyon Part-Dieu branches. These branches are dedicated to businesses and general interest bodies. The number of local sites available to customers, members and partners now stands at 73, including the MonCréditCopératif.coop e-branch and two offices. In line with its development goals, Crédit Coopératif created a new Distribution unit in 2012, within its Development Division. The task of this unit is to conduct a new analysis of the existing network and identify key locations for the future, in line with the needs of Crédit Coopératif's different customer segments. As well as this analysis of the geographical coverage of the network, work has also been carried out on the distribution model, involving different types of branch. This work has followed on from the new commercial organisation implemented in the Lyon In 2012, Crédit Coopératif pursued this objective by implementing action plans targeting the needs expressed by members and customers in satisfaction surveys, at local cooperative body meetings and through suggested improvements made by customers and members. These included the introduction of direct hotlines for corporate entity customers, improved pricing information, an overhaul of the complaint handling process and the launch of a continuous improvement process to identify and resolve any potential reasons for customer dissatisfaction. Management report The 2012 financial year closed with an increase of 11% in the save-as-you-earn scheme contract portfolio and almost 15% in the amount of assets. The end-of-career benefit management portfolio rose by 9% in terms of the number of contracts, and 11% in terms of total exposures managed. 50 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility For 2013, Crédit Coopératif has drawn up a list of key priorities to improve the service that it delivers: • a stronger continuous improvement programme through the Quality and Cooperative Movement Committee (handling customer problems, communication, etc.) • gradual improvement of customer processes • regular member and customer satisfaction surveys. The Crédit Coopératif Group Quality process relies on active contribution from member and customer representatives. Customers will receive feedback on the complaint handling process and the Quality process at the General Meetings in spring 2013. Crédit Coopératif Group therefore has three aims in this respect: to improve customer and member satisfaction (quality indicators, loyalty, etc.), to become more effective (compliance, process efficiency, problem resolution, etc.) and to make the work of its employees as easy as possible. 2. Corporate social responsibility ➔➔2.1. Information concerning Crédit Coopératif's CSR and sustainable development strategy 2.1.1. Benchmark documents Values and principles Crédit Coopératif's activities are guided by the seven principles of the International Cooperative Alliance, which underpin its activities and inform its corporate social responsibility (CSR) commitments. These principles are as follows: voluntary and open membership; democratic member control; member economic participation; education, training and information; autonomy and independence; cooperation among cooperatives; and concern for community. In France these international principles take the form of specific provisions governing the operation of cooperatives, as set out in the law of 10 September 1947 regarding the status of cooperative organisations. CoopFr, the organisation that represents the cooperative movement in France, has set out seven values based on the principles. These values, to which Crédit Coopératif also adheres, are: democracy, solidarity, responsibility, sustainability, transparency, proximity and service. Charters, initiatives and memberships These values and principles are reflected in Crédit Coopératif's Statement of Principles and Corporate Governance Charter. Crédit Coopératif's commitments are also outlined in other specific documents, such as its decision to sign the Charte de la Diversité (diversity charter) and Ecofi Investissements' position as a signatory to the Principles for Responsible Investment. Groupe BPCE (Crédit Coopératif is a BPCE parent company) is also a signatory to the United Nations Global Compact, demonstrating its commitment to adopt, support and apply human rights principles and labour, environmental and anticorruption standards. Crédit Coopératif is a member (and in some cases a founder) of several initiatives designed to promote the cooperative model and the other aspects outlined above. It has been a founding member of FEBEA (European Federation of Ethical and Alternative Banks) since 2001. FEBEA's primary mission is to develop ethical and socially responsible finance in Europe. FEBEA launched Europe Active, a project that highlights the major impact of social inclusion policies on employment and business creation across the European Union, and the need for a favourable environment in which businesses can grow and secure funding through the alternative finance sector. In global terms, banks of all shapes and sizes have been united since 2009 within the GABV (Global Alliance for Banking on Values). These banks have adopted a set of six principles, with the aim of unifying their activities in pursuit of a more ethical and sustainable banking model: 1.Triple bottom line approach (humanity, the environment and transparency) at the heart of the business model 2.Grounded in communities, serving the real economy and enabling new business models to meet the needs of both 3.Long-term relationships with clients and a direct understanding of their economic activities and the risks involved 4.Long-term, self-sustaining, and resilient to outside disruptions 5.Transparent and inclusive governance 6.All of these principles embedded in the culture of the bank. 51 GRI benchmark – indicators concerning participation in public policy development and lobbying Description Unit 2012 2011 2010 GRI Alliance Coop Internationale and AIBC €K 47.6 47.7 54 4.13 CoopFr €K 52.8 50 47.9 4.13 Global Alliance for Banking on Values €K 25 / / 4.13 FEBEA (European Federation of Ethical and Alternative Banks) €K 30 30 35 4.13 Significant public grants and assistance received €K 0 0 0 EC4 As the bank of choice for the social and socially responsible economy, Crédit Coopératif makes a contribution to legal and regulatory developments relating to this sector, and in particular to the preparation of the future French Social Economy Law, scheduled for adoption in 2013 (GRI SO6). CSR governance and implementation In 2012, Crédit Coopératif's Management adopted a number of CSR and sustainable development strategies and proposed programmes, which were subsequently presented to the Board of Directors. These issues will now appear on the agenda of a Board meeting on an annual basis. Crédit Coopératif considers the positive and negative impacts of its activities, and its associated responsibilities, in its dayto-day banking activities and in its role as a cooperative company (GRI EC9). The bank's CSR guidelines are informed by the recommendations of standard ISO 26000. They are based around three principles: • To exercise our banking activities in a manner that helps to promote sustainable development • To build trust and harmonise our commitments • To adapt our corporate practices. As an intermediary between savers and project initiators, Crédit Coopératif has an inherent responsibility when it comes to social issues due to the impact of its funding activities. As a company, it also has to consider its direct impacts, particularly in social and environmental terms. A market-based approach Crédit Coopératif operates in an environment marked by drastic economic, social and environmental changes. Its goal is to help deliver the transitions needed, while seizing the opportunities that arise from these changes by closely monitoring the types of business and project that it funds, providing a tailored offering, and adopting responsible banking practices (GRI EC9). The banking environment is affected by a number of important trends: • social imbalances caused by excesses in the market economy and its increasing financialisation • limited natural resources, fluctuating energy prices and global warming • the impact of these threats and opportunities on customers' activities, and the associated repercussions for their banking risk profiles • changes to international and French laws and regulations governing banking activities. A risk-based approach As well as considering the various types of banking risk that exist, Crédit Coopératif's vocation and the nature of its business mean that it has to pay special attention to societal risks and adopt a sustainable approach to its operations (GRI DMA Economy). The general interest principle and, to a certain extent, the precautionary principle (GRI 4.11) are taken into account when selecting and developing new customer segments (GRI DMA Society), and when marketing a new product or ascertaining that the right balance between customer requirement and understanding has been achieved (GRI DMA Product Responsibility). As the majority of Crédit Coopératif's business is located in France, it addresses the issue of human rights through its responsible purchasing practices, with work ongoing in this area (GRI DMA Human Rights). A corporate practice-based approach Crédit Coopératif intends to continue incorporating CSR considerations into its human resource management processes, with the aim of strengthening social cohesion and developing an internal culture of sustainable development (GRI DMA Management report Crédit Coopératif applied successfully for admission to the GABV in 2012 and is involved in several of the network's programmes. Prior to its admission, it had already contributed to a comparative study between members of the alliance and so-called Global Systemically Important Financial Institutions (GSIFIs), entitled "Strong and straightforward: The Business Case for Sustainable Banking"). The GABV has set itself ambitious objectives, raising an investment fund of €250 million to boost the equity of sustainable banks and enable them, in return, to lend €2 billion to communities, individuals and environmental projects. The GABV's goal is to touch the lives of a billion people with sustainable banking by 2020. 52 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility Labour Practices). In terms of the environment, an outline action plan to deploy existing initiatives and manage the direct impacts of these initiatives more effectively was adopted in 2012 (GRI DMA Environmental Performance). 2.1.2. Crédit Coopératif Group stakeholders Identification of stakeholders and relationships with them (GRI 4.14 and GRI 4.15) Crédit Coopératif's key stakeholders are its member companies and employees. These stakeholders are represented at various levels of its governance structure, in a manner that exceeds legal obligations. These include resources dedicated to local cooperative movements, employee representatives sitting on the Board of Directors, and four employee-elected directors. Within Crédit Coopératif, there exists a tri-partite relationship between the bank, the customer and the customer's partner movement. This relationship is the key vehicle through which dialogue is engaged and the bank listens to its customers' needs to create a suitable range of banking products and services. A broader, second circle of stakeholders also exists, including suppliers and service providers, other banks, supervisory authorities, international organisations and civil society groups. Crédit Coopératif engages in constructive dialogue with all of these stakeholders. It plays an active role in sustainable finance implementation projects (the Convergences 2015 Forum, Pôle Finance Innovation, Club Finance de l’ORSE, etc.) (GRI 4.16). Key topics and concerns that have been raised through stakeholder engagement (GRI 4.17) As a cooperative bank, Crédit Coopératif's ongoing objectives are to improve the quality of its services (see dedicated section) and listen to the needs of its customers and members, as expressed through satisfaction surveys, at local cooperative body meetings and through its complaints handling process. Sustained pressure on banks from civil society and public authorities continued in 2012, in a difficult economic climate. The Group has made every effort to respond to this pressure in an open and effective manner. Internally, one of the key concerns raised by stakeholders related to employees' material labour conditions and customer service in the branch network. In 2012, a total of €16 million was assigned to network real estate renovation work. This programme of work included a focus on occupational risks. Commitments to stakeholder communities Alongside its commercial activities, Crédit Coopératif provides financial support, and human and material resources, to projects and organisations that help to build a more harmonious society (education and research, health, integration, environment, housing, international solidarity, social economy, socially responsible finance, micro-finance, philanthropy, etc.). In 2012, Crédit Coopératif allocated some €3.2 million to patronage activities (direct or through the Crédit Coopératif Foundation), non-commercial partnerships and staff time. It was also able to allocate €4.9 million of donations to similar projects and organisations through fund collection from its customers' sharing products. Details of these activities are outlined in the Group's institutional brochure, which can be viewed on the Crédit Coopératif website. Details of the direct action taken by the Crédit Coopératif Foundation can be found on the dedicated web page at: www. credit-cooperatif.coop/fondation/ The positive economic impacts of the Group's commercial activities are described in the Chairman's Report. ➔➔2.2. Labour relations information 2.2.1. Information concerning labour relations within the company The following information concerns employees of the Crédit Coopératif UES (Crédit Coopératif, BTP Banque and Ecofi Investissements), all of whom are located in France. 2.2.1.1. Developing a Career and Skills Management process The Crédit Coopératif Group places special emphasis on ensuring that is has the right number of staff in the right place. It has developed a career management programme to help its employees manage progress and develop in network and support roles. By systematically raising awareness among employees of vacancies and staging interviews initiated by Human Resources Managers who travel throughout the network, we have been able to identify and encourage internal mobility between roles and geographical locations. The Group's continued growth in 2012 resulted in a net increase of enrolled staff of 62. The total headcount at 31 December 2012 was 2,058 employees. 53 The number of staff on apprenticeship and intern contracts rose, with 50 such contracts introduced in 2012. In total, 60% of these apprentices were hired at the end of their apprenticeships, almost all of these in sales roles. A "skills transfer" training programme was launched in 2011 and repeated in 2012, with more than 65 tutors receiving training. GRI benchmark – indicators concerning employment Description 2012 2011 enrolled staff 2,058 1,996 2,004 LA1 Number of employees on temporary contracts enrolled staff 0 1 6 LA1 Number of employees on fixed-term contracts enrolled staff 140 119 138 LA1 Total workforce employed by the organisation at 31/12 (UES, excluding seasonal workers) Unit 2010 GRI Percentage of women % 59.67 59.32 58.33 LA1 Percentage of men % 40.33 40.68 41.67 LA1 Percentage of bank staff % 45.72 46.64 45.86 LA1 Percentage of executives (all classifications) % 54.28 54.16 54.14 LA1 Total number of new employee hires enrolled staff 323 293 309 LA2 Total number of employees who left the organisation enrolled staff 261 301 273 LA2 Of which retirees enrolled staff 39 47 47 LA2 Of which dismissals enrolled staff 4 9 7 LA2 Of which resignations enrolled staff 39 50 41 LA2 Of which total number of men enrolled staff 74 107 90 LA2 Of which total number of women enrolled staff 187 194 183 LA2 Of which number of employees under the age of 30 enrolled staff 136 162 152 LA2 Of which number of employees over the age of 50 enrolled staff 49 71 61 LA2 Average workforce service length years 11.81 12.05 12.01 LA2 Allocation to social benefit schemes (Works Council budget) €K 3,274 4,030 3,755 LA3 2.2.1.2. Improving skills through training and real-life practice The 2012 Training Plan comprised several key stages: • assisting staff with IT changes and upgrades (CRM, changes to electronic payments, FICP reminders, changes to NetPrélèvement, simplified new customer sign-up procedure) • providing managerial practice training to all managers • supporting staff through the new commercial organisation arrangements at the Lyon and Grenoble branches. The aim of the Training Plan is to combine individual training with a collective element designed to meet the company's skills development needs. This is reflected in the introduction of personalised training programmes that cover our core business requirements. The GPEC (Future Career and Skills Management) project continued in 2012. Having prepared the network business line skills benchmark documents in 2011, the HR Division continued its work in this area in 2012 for the bank production business lines. The skills benchmark documents set out the expected skills within each business line. They help to give staff a clear picture of what the company expects from them and help them to identify potential mobility opportunities. They are also used at skills appraisal interviews and to help identify support needs. Skills appraisal interviews are conducted using an electronic document. In total, 95% of staff had such an interview with their manager. With this high feedback rate, it is possible to identify training requirements and career and geographical mobility wishes. Management report The number of staff on fixed-term contracts rose by 20%. This substantial increase, mainly concerning recruitments at the end of 2012, reflected the Group's desire to promote internal mobility (vacant posts due to internal mobility, pending final appeal). The number of fixed-term employments to cover for maternity leave or increased workload remained stable (up 3% for the first reason and up 4% for the second). In total, 322 new staff were recruited in 2012 (compared with 293 in the previous year) and 48 employees were moved from fixed-term to permanent contracts (compared with 37 in 2011). 54 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility 2.2.1.4. Salaries policy GRI benchmark – indicators concerning training Description Unit 2012 2011 2010 GRI Number of employees having received training enrolled staff N/A* 1,782 1,520 LA10 Number of bank staff having received training enrolled staff N/A* 769 643 LA10 Number of executives having received training enrolled staff N/A* 1,013 877 LA10 Total number of hours devoted to staff training hours N/A* 55,949 54,252 LA10 Average hours of training per year per employee hours N/A* 31.4 35.7 LA10 Average hours of training per year per executive hours N/A* 30 35 LA10 Average hours of training per year per member of bank staff hours N/A* 25 34 LA10 enrolled staff N/A* 85 36 LA11 Number of hours assigned to the DIF (Right to Individual Training) scheme hours N/A* 1,711 857 LA11 % of qualified annual appraisal interviews conducted % 95 91 71 LA12 Number of beneficiaries of the DIF (Right to Individual Training) scheme * Results available for previous year only 2.2.1.3. Occupational risk prevention In 2011, a joint assessment of psychosocial risks was initiated. This assessment is overseen by a joint committee, comprising members of Management, the social/medical department and staff representatives from the Works Council and the Health, Safety and Working Conditions Committee (CHSCT). The assessment is being conducted by a specialist firm (GRI LA8). It involves three distinct phases: • an initial round of exploratory interviews with a representative sample of employees • an IT-based questionnaire for all employees in the UES, with a 62% response rate • in-depth interviews to gain further insight, based on the initial results of the questionnaire. The assessment was completed in early 2012. It provided a better overview of risk factors within the Group. Work is now underway on preparing and implementing a prevention plan (GRI LA9). GRI benchmark – indicators concerning occupational health and safety Description Number of work-related accidents and travel-related accidents Number of days' absence linked to work-related accidents and travel-related accidents Unit 2012 2011 2010 GRI / 23 36 72 LA7 days 538 348 636 LA7 Occupational illness rate % 0 0 0 LA7 Absence rate for work-related accidents % 0.08% N/A N/A LA7 Absence rate for travel-related accidents % 0.05% N/A N/A LA7 Number of working days lost through illness days 14,782 11,499 11,370 LA7 / 0 0 0 LA7 Number of deaths due to workrelated accidents or occupational illnesses As in previous years, provisions negotiated within the Banque Populaire business were also applied within the Crédit Coopératif Group. A universal pay rise was awarded in March 2012, covering all employees with a gross salary below €60,000 full-time equivalent. As well as this national measure, 2012 also saw other salary changes, such as the simultaneous triggering of both shareholding and profit-sharing, as well as matching contributions paid on amounts invested in the two save-as-you-earn schemes (PEE and PERCO). In the middle of the year, individual salary increases were brought in, along with an exceptional salary agreement that saw almost all employees in every category awarded an increase, except for the very highest earners. GRI benchmark – indicators concerning the salary policy Description Unit 2012 2011 2010 GRI Ratio of standard entry level wage compared to national minimum wage % 113.35 105.12 N/A EC5 Coverage of the organization's defined benefit plan obligations % 100 100 100 EC3 Basic monthly salary, full-time nonexecutives, men € 2,290 2,226 2,163 LA14 Basic monthly salary, full-time nonexecutives, women € 2,282 2,163 2,160 LA14 Basic monthly salary, full-time executives, men € 4,792 4,685 4,683 LA14 Basic monthly salary, full-time executives, women € 3,959 3,807 3,813 LA14 Number of women having received a salary adjustment in line with gender equality requirements / 373 0 N/A LA14 Pay scale (highest 10% / lowest 10%) / 4.84 4.22 N/A LA14 Pay scale (highest 10% / lowest 10%) / 16.8 18.5 N/A LA14 Number of employees having received an individual pay rise (as a % of total enrolled staff) % 20.99 22.60 N/A LA14 Total amount of bonuses and variable remuneration €K 3,405 2,331 N/A LA14 Number of employees receiving 90% of all bonuses and variable remuneration / 915 882 N/A LA14 Commission: average annual proportion of variable part in the network (in salary months) % 0.50 0.32 N/A FS15 55 2.2.1.5. Equality, diversity and equal opportunity GRI benchmark – indicators concerning non-discrimination in the workplace With respect to its gender equality policy, the Group's workforce Description Unit 2012 2011 2010 GRI comprised around 60% women (80.6% among bank staff and Percentage of branches managed by a woman (Crédit Coopératif and BTP Banque) % 19.15 18.95 18.94 LA13 Percentage of women on the Management Committee % 0.00 0.00 14.2 LA13 The Group is continuing to pursue its ambition to increase the per- Percentage of total male workforce in executive roles % 78.07 78.45 78.20 LA13 centage of women among its executives. In 2012, this ambition Percentage of total female workforce in executive roles % 38.19 37.50 36.95 LA13 Salary ratio (women to men) in nonexecutive roles / 1.00 0.97 1.00 LA14 Salary ratio (women to men) in executive roles / 0.83 0.81 0.81 LA14 55.49 N/A LA13 41.99% among executives) at the end of 2012. was supported through direct recruitment, with women accounting for 51% of new recruits and 58% of promotions to executive roles. Similarly, in 2012, 373 women benefited from a gender equality salary adjustment. At present, the average monthly sala- Average age of Management Committee members years 55.50 Percentage of employees holding foreign citizenship % 2.04 2.00 1.84 LA13 Percentage of employees under the age of 30 % 21.97 20.99 22.85 LA13 Percentage of employees aged between 30 and 50 % 49.85 50.50 48.85 LA13 Percentage of employees over the age of 50 % 28.18 28.51 28.29 LA13 Number of disabled employees / 68 78 62 LA13 Total percentage of employees with a disability (excluding reduction and ESAT training centres) % 3.22 3.53 3.08 LA13 ment makes the following provisions: Total percentage of employees with a disability (including reduction and ESAT training centres) % 4.25 4.61 3.90 LA13 • a recruitment plan Total number of incidents of discrimination and corrective actions taken / 0 2 N/A HR4 ries (full-time equivalent) for women are equal to or higher than those for men in 11 of our 16 classification levels. In 2011, Crédit Coopératif signed a professional integration and job retention agreement for disabled people within Groupe BPCE. This agreement continued in 2012. It covers a three-year period, from 1. January 2011 to 31 December 2013. The agree- • a professional integration and training plan • collaboration with the protected persons sector • awareness-raising, communication and training campaigns 2.2.1.6. Collective bargaining Through negotiations with social partners, Management signed two agreements with the majority of the representa- • a dedicated structure and ring-fenced resources. tive union organisations in 2012. The following measures have In 2012, the Mission Handicap campaign continued its work on been introduced: a range of activities to improve job retention among disabled • An agreement to supplement the existing collective retire- people. These included providing workstation layout advice and ment savings scheme (Plan d’Epargne Retraite Collectif), in conducting workplace situation studies and assessments, with line with the Group's desire to encourage saving among its the support of a specialist association. It also conducted disa- staff. The savings payments arrangements are based on the bled worker recognition campaigns, working in conjunction employee's remuneration and are designed to favour those with the Crédit Coopératif social services department. with the lowest earnings. • The universal salary increase agreement mentioned in para- Crédit Coopératif is a signatory to the Charte de la Diversité (di- graph 2.2.2.4. versity charter). The company is dedicated to respecting and pro- Furthermore, negotiations on trade union rights continued in moting its commitments as set out in this charter, particularly 2012 and led to the submission of an agreement, in early 2013, with respect to recruitment and career management – aspects to representative union organisations for their approval and which it views as key areas for progress. signature. Management report • a job retention and career management plan 56 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility GRI benchmark – indicators concerning the relationship between Management and employees Description Unit 2012 2011 2010 Percentage of employees covered by collective bargaining agreements % 100 100 100 GRI LA4 Minimum notice period(s) regarding significant operational changes days 14 14 14 LA5 Percentage of total workforce represented in joint managementworker committees % 100 100 100 LA6 Number of collective agreements signed during the financial year / 2 3 10 LA7 2.2.2. Social utility of banking activities Financial services tailored to specific customer types As well as Crédit Coopératif's major role in micro-credit in France and micro-finance abroad (see p.47 - GRI FS14), the Group has also developed specific services and expertise that enable it to serve socially useful sectors. The majority of its products and services are designed in conjunction with the leaders of networks and movements that represent these sectors (GRI FS15). GRI benchmark – indicators concerning financing activities in socially useful sectors Description Unit 2012 2011 2010 GRI / 756 781 N/A FS7 €K 79,588 74,630 70,857 FS7 Number of cultural companies and associations as customers / 9,463 9,264 N/A FS7 Exposures from medium- and long-term loans to the cultural sector (at 31/12) €K 30,213 22,000 N/A FS7 Number of customers in the health and social care sector / 6,748 6,594 5,401 FS7 Number of customers in the social housing and very simple social housing sector / 1,360 1,348 1,345 FS7 Number of social loans for rented housing (PLSs) / 23 15 16 FS7 Exposures from social loans for rented housing (PLSs) €K 153,574 167,000 135,000 FS7 Estimated market share in the fairtrade sector % 52.5 50 N/A FS7 Number of Astel cards (for legal guardianship customers) / 49,601 43,002 N/A FS7 Number of customers in the associated tourism sector Exposures from medium- and long-term loans to the associated tourism sector (at 31/12) Financial services for all regions Although the network covers the whole of France, it is nevertheless a relatively small network, with Crédit Coopératif branches all located in city centres. The bank acts in the regions through the finance it provides to regional players such as local authorities, social housing and very simple social housing organisations, semi-public companies, local public companies and integration organisations. Generally speaking, the social economy has proven that it is more resilient to relocation phenomena. Furthermore, the Group is continuing its efforts to make its branches more accessible to people with reduced mobility. GRI benchmark – indicators concerning financing activities in the local sector Description Unit 2012 2011 2010 GRI Total annual production concerning finance for the local public sector €K 324,900 268,914 N/A EC8 Total annual production concerning finance for public-private partnerships €K 14,804 9,067 28,439 EC8 Total annual production concerning finance for the social housing sector €K 100,080 53,731 N/A EC8 Total annual production concerning finance for the social economy sector (as defined by INSEE) €K 394,853 390,076 N/A EC8 Percentage of all branches accessible to people with reduced mobility % 44,5 42 N/A FS13 Useful, innovative and socially responsible financial services One of the major innovations in 2012 was the Agir account, a deposit account that allows customers to allocate the value of their deposit to one of three activity sectors: "Agir pour la planète" (the environment), which covers renewable energies, eco-businesses, energy efficiency projects and environmental protection organisations; "Agir pour une société plus juste" (a fairer society), which covers disabilities, support for vulnerable people, projects aimed at children and the elderly, social housing, universities and research; and "Agir pour entreprendre autrement" (different powers of action), which covers inclusion, fair-trade and cooperatives. The Agir account is the latest addition to a range of "Agir pour une économie plus humaine" products, based on the principles of socially responsible finance and savings. GRI benchmark – indicators concerning socially responsible and tacked products Description 2012 2011 2010 GRI Socially responsible sharing savings collected (exposures) Unit €K 493,957 415,260 351,000 FS7 Total donations made since the creation of sharing products €K 47,863 42,815 38,967 FS7 Exposures from the Agir account (at 31/12) €K 13,828 / / FS7 The "CVTC-Change solidaire" is a voluntary contribution of 0.01% on the value of currency transactions that the bank handles on its own behalf or on behalf of its customers. This 57 Human rights vigilance Crédit Coopératif makes every effort to ensure that the finance it provides cannot be used to fund or underwrite blatant infringements of human rights. Although its exposure to this type of activity is low in France, due to the nature of the business, the bank pays close attention to this issue when making decisions about operations abroad (GRI HR1 and GRI FS11). ➔➔2.3. Environmental information Crédit Coopératif approaches the issue of environmental responsibility in two ways. Firstly, it finances environmental projects and eco-businesses through a dedicated selection policy and a range of specific products and services. Secondly, it attempts to mitigate the direct environmental impacts of its internal corporate practices. 2.3.1. Considering the impacts of financing activities Crédit Coopératif's environmental policy is based on a clear desire to support those sectors that make a positive environmental contribution, to promote and encourage best practice, and to adopt a vigilant approach to the projects that it finances (GRI FS8). Targeted customers and dedicated products and services Over many years, Crédit Coopératif has developed in-depth expertise and a range of products and services to support the transition towards a more environmentally friendly economy: • providing finance for stakeholders directly involved with the environment: renewable energies, eco-businesses, recycling, energy efficiency, environmental protection associations • promoting assessment programmes in partnership with expert bodies: Carbone INDDIGO assessment, 123Environnement environmental certification, etc. • providing finance to collective and individual eco-housing projects • introducing investment and savings products to support these activities • introducing sharing products to support environmental associations. Individuals are able to benefit from eco-housing loans, with interest rates and terms adjusted according to the environmental quality of the property concerned (bioclimatic aspects and quality of materials) and an "overall cost" approach (adjustment of the maximum loan amount or repayment term according to annual energy consumption, in kWh/m2/year (GRI FS5). GRI benchmark – indicators concerning environmental financing activities Description Total shareholdings in companies in the environmental sector Number of eco-loans to corporate entities Unit 2012 2011 2010 GRI €K 471 587 301 FS8 / 186 190 34 FS8 Exposures from eco-loans to corporate entities €K 93,751 66,117 2,701 FS8 Exposures from loans to stakeholders in the renewable energies sector €K 403,820 395,000 85,157 FS8 Exposures from finance to general interest bodies in the environmental sector €K 9,137 9,399 5,152 FS8 Percentage of total finance to the energy sector allocated to renewable energies % 97.1 N/A N/A FS8 Number of sustainable development savings accounts at 31/12 / 47,784 45,784 N/A FS8 Exposures from sustainable development savings accounts at 31/12 €K 191,236 155,427 146,625 FS8 Exposures from individual ecoloans at 31/12, excluding EcoPTZ (interest-free eco-loans) €K 35,834 24,057 N/A FS7 Exposures from Ecofi sustainable development UCITS funds (at 31/12) €K 27,091 23,511 23,022 FS8 Donations from customers and Crédit Coopératif from socially responsible products to environmental bodies or networks €K 971 968 652 FS8 Multiple partnerships Crédit Coopératif is a member of several organisations in the renewable energy sector, including the Syndicat des Énergies Renouvelables (renewable energy board) and Observer. It holds a directorship in Enercoop SCIC, a 100% green energy supplier. It has recognised expertise in the sector, as a signatory to the first European Investment Fund (EIF) agreement to provide finance to eco-innovation projects. Alongside Orée, Crédit Coopératif is a partner of the French Ministry of the Environment, Sustainable Development and Energy's "Prix Management report contribution is donated to GERES (Groupe Energies Renouvelables, Environnement et Solidarités – renewable energy sources, environment and solidarity group). Crédit Coopératif covers the cost of this contribution itself, with no impact on the exchange rates offered to customers on these transactions. 58 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility Entreprises et Environnement" (enterprise and environment awards), which are awarded each year at the Pollutec trade fair. Gradual application of ESG (Environment, Social and Governance) criteria–– As part of its tracking and transparency commitment, Crédit Coopératif took part in the first initiative launched by Utopies and Friends of the Earth. The purpose of this initiative was to provide a mechanism whereby personal customers could calculate the CO2 emissions generated by their savings. The calculator is available at: www.epargneclimat.fr/. In 2011 and 2012, it took part in implementation projects addressing the complex issue of how to measure emissions caused by financing activities (GRI EN26). sectors that make a positive contribution and demonstrate Impact on biodiversity and the natural environment Crédit Coopératif has demonstrated a clear desire to prioritise best practice through its products and services. The Group's potential indirect impacts, through its financing activity, are complex and, as such, are particularly difficult to analyse. This is further complicated by a series of interwoven technical, economic and social phenomena, and a lack of adequate measurement tools. The Group nevertheless remains attentive to this issue, as demonstrated by its decision to engage with or avoid certain sectors (GRI EN6). It is also careful to ensure that the recipient or beneficiary of The majority of Crédit Coopératif sites are located in urban areas, mainly in city centres. The Group's activities therefore have a relatively minor impact on biodiversity as none of its branches are located in protected areas such as Nature Reserves. Furthermore, the location of Crédit Coopératif's branches does not provide an accurate reflection of its commitment to regional equality – a commitment that it supports through local partnerships. its finance does not pose a demonstrable environmental or social risk. This care and attention informs every stage of the process, from initial project instruction to the final finance decision. Work is now underway to formalise this approach, to clarify certain rules concerning sensitive sectors that are unrepresented or under-represented in the business, and more generally to improve the way in which ESG risks are considered in the risk management process (GRI FS1, GRI FS3, GRI FS2). GRI benchmark – indicators concerning biodiversity and the natural environment Unit 2012 2011 2010 GRI Number of branches located in nature reserves Description / 0 0 0 EN11 Number of branches in rural areas / 0 0 0 EN11 Number of branches in sensitive urban zone (ZUSs) / 2 2 2 EN11 Number of ecosystem protection or restoration projects supported / 14 16 13 EN13 2.3.2. Direct environmental impacts and impact reduction activities 2.3.2.1. Impacts The Group continues to report on its resource consumption, and is working to organise its reporting in this area. This is essential to the Group's ability to measure and reduce the di- The Group's main impact on biodiversity is therefore indirect in nature, through its finance activities. In short, Crédit Coopératif is able to take action on biodiversity through its products and services, and by analysing the profile and practices of its counterparties (GRI EN14). rect environmental impacts of its activities. Similarly, it is of- Furthermore, Crédit Coopératif has launched or maintained 14 partnerships with ecosystem protection and restoration bodies. At present, there is no reason to adhere strictly to the Equator Principles, given the size and location of the projects that the Group finances, the majority of which are governed by French law (GRI EN12). coming years in both its financial and extra-financial report- ten difficult to isolate costs and investments connected specifically with environmental protection, such as those included in property renovation operations. Nevertheless, the Group will attempt to assess these impacts more effectively in the ing (GRI EN30). Between 2010 and 2012, the Group moved its Head Office to two temporary backup sites and, as such, it was unable to measure energy and fluid consumption levels effectively. 59 follows: 880 tCO2eq for staff transport and 800 tCO2eq for visitors and incoming goods transportation (GRI EN29). Description Unit 2012 2011 2010 GRI Quantity of paper consumed tonnes 186 187 183 EN1 / 1,953 2,043 3,015 EN1 m3 N/A N/A 8,369 EN1 Description Unit 2012 2011 2010 GRI EN2 Scope 1 of the Carbon Assessment (tCO2eq) tCO2eq N/A 1,295 N/A EN16 Scope 2 and 3 of the Carbon Assessment (tCO2eq) tCO2eq N/A 15,585 N/A EN17 Reductions achieved through voluntary initiatives to reduce greenhouse gas emissions tCO2eq 578 N/A N/A EN18 Number of ink and toner cartridges consumed Total water consumption GRI benchmark – indicators concerning greenhouse gas emissions Total amount of recycled paper purchased, out of the total amount of paper purchased (in tonnes) tonnes Volume of electrical and electronic equipment (WEEE) collected tonnes Volume of waste recycled tonnes 211 88 77 EN22 Volume of waste produced tonnes N/A N/A N/A EN1 Total energy consumption for heating kWh N/A N/A N/A EN4 Total energy consumption for cooling kWh N/A N/A N/A EN4 2.3.2.2. Impact reduction activities Estimated energy saved due to conservation and efficiency improvements kWh N/A N/A N/A EN5 An analysis of the results of the greenhouse gas emissions assessment has revealed those areas where improvement is required, and as such the Group has set a target to reduce its emissions by 5% by 2015. This will involve reducing the energy consumption of its buildings, emissions produced through employee travel, and paper consumption. 0 10 0 N/A 0 N/A EN22 Total expenditure on water €K N/A N/A N/A EN8 Total expenditure on natural gas €K N/A N/A N/A EN3 Total expenditure on domestic heating oil €K N/A N/A N/A EN3 Total expenditure on electricity €K N/A N/A N/A EN3 The electricity that the Group consumes is produced from undifferentiated sources (GRI EN4). Other than at Head Office, water consumption is divided into multiple small units across the country. As such, it is difficult to achieve genuine economies of scale over water consumption. Energy resources (gas, fuel oil, water, cooling and heating) are partially monitored, but resource consumption is gradually becoming more centralised through the introduction of common administrative management, multitechnical maintenance and reorganisation of the purchasing function. Greenhouse gas emissions Pursuant to article 75 of the Grenelle Law, Crédit Coopératif conducted a new assessment of its greenhouse gas emissions in 2012, including its three main subsidiaries in the scope of this assessment. The assessment was conducted using a Groupe BPCE tool designed in conjunction with Carbone 4. It covers direct emissions and emissions connected with energy consumption, as well as certain types of indirect emissions connected with purchasing, assets, and employee and visitor travel. The figure for 2011 stood at 16,880 tonnes of CO2 equivalent (tCO2eq), but this figure cannot be compared with the result of the previous assessment in 2008 (14,000 tonnes) due to changes in the methodology and the temporary move from the Nanterre Head Office during renovation work. Transport-related emissions accounted for around 10% of the total, broken down as GRI benchmark – indicators concerning greenhouse gas emission reduction activities Description Unit 2012 2011 2010 GRI Number of sites with videoconferencing facilities / 4 0 0 EN7 Number of sites with environmental certification / 1 0 0 EN7 Number of sites with an employee transport plan (PDE) / 0 0 0 EN7 Number of branches in protected areas or biodiversity-rich areas / 0 0 0 EN11 Number of dedicated sustainable development staff (FTE) / 2 2 2 EN30 Property renovation work The main initiative that has enabled Crédit Coopératif to reduce its carbon emissions is the renovation of its Head Office, which was completed in 2012 (GRI EN7). The building has received high environmental quality certification ("NF Bâtiments Tertiaires associé à démarche HQE" and "HPE Phase réalisation pour l’opération de restructuration du siège"), having been awarded a very high energy performance label ("Très Haute Performance Energétique" or THPE) (RT2005). Based on estimated energy consumption of the old building standing at 230 kWh/m2/year, and the theoretical energy performance of the new "THPE" Head Office at less than 137 kWh/ m2/year, the energy savings associated with the new building are in the region of 578 tonnes of carbon equivalent. Management report GRI benchmark – indicators concerning resource consumption 60 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility A major branch renovation programme is underway. In 2012, six new branches were opened, including three transfers and three brand new branches. There are plans to incorporate environmental criteria into the specifications for new branch creation, transfer, renovation and extension work on a gradual basis. A property renovation charter has been drawn up (finalised in 2007). This charter includes sustainable development criteria (choice of materials, IT equipment, consumption levels etc.) and accessibility criteria for those with reduced mobility. The purchasing function A responsible procurement policy is an important part of the CSR strategy of any organisation that places orders and issues invitations to tender. In 2012, a purchasing function was created. This new structure will, over time, take over all purchasing processes and incorporate CSR considerations into its procedures including, where applicable, Groupe BPCE tools and projects, such as the "AgiR" project to organise purchasing processes in line with the ISO 26000 standard, and the "Phare" (disability and responsible purchasing) policy, which has won the "Trophée des Achats Responsables" responsible purchasing awards. CSR criteria are already included in the majority of invitations to tender issued. Crédit Coopératif Group has a sustainable procurement policy, which is based on two key pillars. All potential service providers are assessed against around 60 different criteria, 15 of which concern the environment and ethics: checking certifications, and assessing the supplier's energy consumption, employee safety and gender equality practices. An office supply and IT consumable management system is in place, providing greater control over consumption levels and leading to the creation of a product catalogue in which 86% of items are environmentally friendly. Finally, as the bank of choice for the social economy, Crédit Coopératif Group has a broad range of suppliers and service providers from within this sector, and particularly from within the protected persons sector (GRI EC6). Almost all of the Group's service providers and suppliers are located in France, meaning that the majority of its human rights concerns are social in nature. Although this is an important concern, there are no specific measurements in this area at present (GRI HR2). GRI benchmark – indicators concerning responsible purchasing Description EA/ESAT workforce invoices concerning supplies and services Invoice payment deadline Staff transport With the return of staff to the Group's old Head Office premises, it is now better placed to interact with the area and its local stakeholders. The Hauts de Seine Chamber of Commerce and Industry launched a consultation process with businesses located in the La Défense Seine Arche area. Crédit Coopératif has attended several workshops, with a view to launching an ambitious inter-company employee transport plan (Plan de Déplacement Inter-Entreprise). In 2012, the aim of the workshops was to gather data and organise a survey to be sent to all employees of the companies concerned. ➔➔2.4. Information concerning the company's other sustainable development commitments Tax haven and legal safe haven policy and activities per country Crédit Coopératif Group does not invest in or finance entities located in countries or territories with sub-standard regulatory arrangements (so-called tax havens and legal safe havens) unless such investment or financing is justified in the internal control procedures section (GRI FS9). Based on the Tax Justice Network's classification of financially secretive jurisdictions, Crédit Coopératif has drawn up a set of guidelines governing the placement of own-account financial and banking assets. These guidelines are followed by both Crédit Coopératif and its subsidiaries. They include a list of countries and operations concerned, and outline situations in which a decision may be taken to exclude a particular jurisdiction. Furthermore, Crédit Coopératif publishes data concerning its activities in each country, as conducted by its subsidiaries and consolidated entities. Financial management principles Unit 2012 2011 2010 GRI €K extax 87.9 65.7 138.7 EC6 days 35 37.5 37 EC6 Percentage of calls for tenders for general resources including CSR criteria % 100 100 N/A HR1 Average weighting of CSR criteria across all these calls for tender % 14 10 N/A EC6 Percentage of eco-certified suppliers in the Fiducial supply catalogue % 88 86 76 EC6 Percentage of suppliers that have undergone human rights screening % N/A N/A N/A HR2 Crédit Coopératif is careful to apply a reasoned, non-speculative own-account financial management policy, based on a "patient" management principle. Its rate hedging products are indexed exclusively against interest rates and inflation, and it does not offer exotic financial products or products indexed against agricultural raw material prices (except where this is justified in the customer's business activity, such as products indexed against the wheat price for agricultural cooperatives). 61 GRI benchmark – indicators concerning responsible financial management Description Unit 2012 2011 2010 GRI Percentage of the share portfolio rated by Vigéo % 44 74 67 FS8 Percentage of the bond portfolio rated by Vigéo % 100 98 92 FS8 Average weighted score of exposures in the own-account share portfolio (out of 20) / 11.57 12.53 11.43 FS8 Average weighted score of exposures in the own-account bond portfolio (out of 20) / 12.7 11.2 13.1 FS8 Cooperative dividend and CSR As in 2011, Crédit Coopératif participated in an initiative by the Fédération Nationale des Banques Populaires to promote the unique nature of its members' cooperative model (GRI EC1). This initiative, known as "Dividende Coopératif & RSE" (cooperative dividend & CSR), involves the creation of a new tool to measure and qualify the actions taken by the Banques Populaires in support of its members, consumers and society as a whole. It measures all resources mobilised in favour of these three stakeholders by the Banques Populaires. In 2012, the total value of the cooperative dividend stood at €3.2 million. Transparency and education Crédit Coopératif places strong emphasis on its role as an educator and, as such, is committed to communicating in a clear, appropriate manner. It communicates about its activities and principles via a range of different channels, both internally through training sessions and its intranet, and externally through its Regional General Meetings and public communications from its directors and employees. It has also published a range of documents in line with this objective, including pricing guides and its "how money circulates" diagram, and these documents are updated on a regular basis (GRI FS6). Specific social action taken by the Crédit Coopératif Foundation In 2012, the Crédit Coopératif Foundation either launched or maintained 80 partnerships designed to improve knowledge about, develop and promote the social and socially responsible economy. It provided support to both university laboratories and specialist think-tanks. It awarded more than 60 prizes across France, with a view to encouraging new, local initiatives with high added social, economic, cultural or technological value from movements and bodies operating in the social and socially responsible economy (associations, mutual associations and cooperatives). The Crédit Coopératif Foundation received the "Grand Mécène de la Culture" award in recognition of its work. The Crédit Coopératif Foundation also maintained its partnerships with stakeholders working to combat exclusion and provide access for disabled people to citizenship, through sport and culture. One such example was the support that it provided to the Fédération Française de Sport Adapté (FFSA) and the Fédération Française Handisport (FFH) at the London Paralympic Games. In 2012, the Crédit Coopératif Foundation had an opportunity to pursue its vocation under the auspices of the International Year of Cooperatives, which provided an opportunity to build new bespoke partnerships to promote the cooperative movement both in France and abroad. ➔➔2.5. Information concerning extra-financial reporting methodologies Process for defining report content As with the previous Reference Document (GRI 3.1 & 3.2), this report is based on the Global Reporting Initiative (GRI) benchmark, an international standard designed to produce more rigorous and transparent extra-financial reporting. The choice of subjects, the order in which they appear and the layout of the associated content is also based on the GRI principles (GRI 3.5): • relevance – only significant information is included, based on its impact and connection with the Group's activities • data accuracy – in terms of both quality and quantity • clarity – with respect to the topics covered and vocabulary used • comparability – based on the choice of indicators, their titles, units and consistency over multiple years • regularity – the information is released in an annual publication • balance – between positive and negative information. The majority of the extra-financial information reporting covers Crédit Coopératif and its main subsidiaries. The scope may vary depending on the topic in question. In the majority of cases, it covers Crédit Coopératif as a standalone entity (GRI 3.6). All Human Resources data relates to the Crédit Coopératif UES (comprising Crédit Coopératif, BTP Banque and Ecofi Investissements). With respect to greenhouse gas emissions, Management report Since 2009, its own-account financial assets portfolio has undergone annual extra-financial analysis using Vigéo data. 62 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility the scope includes all consolidated entities over which Crédit Coopératif has operational control; as such, the figures include 100% of subsidiary data (GRI 3.8). ucts themselves (GRI 3.10). Overall, there have been few such changes since the 2011 Annual Report, other than a more rigorous application of the GRI methodology (GRI 3.11). Methodological limitations and precautions The statutory auditors did not consider the extra-financial information, due to changes to the legal framework and the fact that it was not possible to clarify the new role assigned to the statutory auditors pursuant to article 225 of the "Grenelle II" Law in time. Nevertheless, Crédit Coopératif wished to ensure that its extra-financial information met the requirements of GRI certification, the leading organisation for extra-financial reporting, in terms of both organisation and exhaustiveness (GRI 3.13). The majority of the limitations outlined in this report relate to environmental data. The reporting process is still under development in this area. Given the national structure of the branch network, the different building occupancy arrangements involved and the recent move back to the renovated Head Office, it has not been possible to produce exhaustive reporting for 2012 (GRI 3.7). The extra-financial information contained in this report is collected on an annual basis from key business lines and stored in a central database to ensure that it can be properly tracked and is fully comparable. The report explains how the various calculations are made. These calculations are intended to be as simple as possible, to ensure that they can be universally understood (GRI 3.9). All re-statements and measurement method and scope changes are clearly indicated, wherever such changes have taken place. Measurement methods for certain financial products may vary in line with changes to the prod- As such, the relevant topics addressed in this report, namely labour relations information, environmental information and social information, are approached from two angles – corporate practices and banking activities. This report is designed in such a way that it may easily be used by the stakeholders identified above. It is intended first and foremost for customers, members and employees, to supplement the ongoing dialogue with these stakeholders through a range of statutory and voluntary bodies. ➔➔2.6. GRI cross-reference table # Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document Chosen scope: CC / UES / Group 1. Strategy and Analysis 1.1 Statement from the most senior decision-maker of the organization. / ● Editor's foreword Group 1.2 Description of key impacts, risks, and opportunities in two concise sections. / ● MR - 2.1.1 Group / ● The Group Group ● The Group MR - 1.1 Group Organisation of the Group Group 2. Organizational Profile 2.1 Name of the organization. 2.2 Primary brands, products, and/or services. 2.3 Operational structure of the organization, including main divisions and subsidiaries. / / ● 2.4 Location of organization's headquarters. / ● Group Group 2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. / ● MR - 2.1.1 MR - 3.4.2 Appendix - Countryspecific reporting 2.6 Nature of ownership and legal form. / ● MR - 3.1 CC 2.7 Markets served (including geographic breakdown, sectors served, and types of customers/ beneficiaries). / ● MR - 1.1 Group 2.8 Scale of the reporting organization (no. of employees, net turnover, quantity of services provided, total finance) / ● Key figures UES 2.9 Significant changes during the reporting period regarding size, structure, or ownership. / ● Organisation of the Group Group Comments 63 Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document 3-b ● MR 1.2 2.10 Awards received in the reporting period. 3. Report Parameters Report profile 3.1 Reporting period for information provided. / 3.2 Date of most recent previous report. / 3.3 Reporting cycle. / 3.4 Contact point for questions regarding the report or its contents. / Chosen scope: CC / UES / Group Group ● ● ● MR - 2.5 / MR - 2.5 / MR - 2.5 / ● Branch contact details / MR - 2.5 Group MR - 2.5 Group Scope and areas covered by the report 3.5 Process for defining report content / 3.6 Boundary of the report. / ● ● 3.7 State any specific limitations on the scope or boundary of the report. / ● MR - 2.5 Group 3.8 Basis for reporting on joint ventures and subsidiaries that can significantly affect comparability from period to period. / ● MR - 2.5 Group 3.9 Data measurement techniques and the bases of calculations. / ● MR - 2.5 Group 3.10 Explanation of the effect of any re-statements of information provided in earlier reports. / ● MR - 2.5 Group 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. / ● MR - 2.5 Group GRI content index Table identifying the location of the Standard Disclosures in the report. / Third-party verification Policy and current practice with regard to seeking external assurance for the report. / 3.12 3.13 Comments ● MR - 2.6. / ● Group MR - 2.5 4. Governance, Commitments, and Engagement 4.1 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. / ● CR – 1.4 CC 4.2 Indicate whether the Chair of the highest governance body is also an executive officer. / ● CR - 1.4.1 CC 4.3 State the number of members of the highest governance body that are independent and/or non-executive members. 3-b ● CR -1.1 CR - 1.1.4 CC 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. 3-b ● CR - 1.1.2 CC 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance. / ● CR - 1.5 CC 4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided. / ● CR - 1.1.4 CC 4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization's strategy on sustainable development topics. / ● CR - 1.1.1 CC 4.8 Statements of mission or values, codes of conduct, and principles. / ● CR - 1 CC 4.9 Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance. / ● CR - 1.2.1 CR - 1.2.2 CC Management report # 64 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility # Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document Chosen scope: CC / UES / Group 4.10 Processes for evaluating the highest governance body's own performance, particularly with respect to CSR. / ● CR - 1.2.4 CC External engagements 4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization. / ● MR - 2.1.1 CC 4.12 Externally developed charters, principles, or other initiatives to which the organization subscribes or endorses. 3-b ● MR - 2.1.1 CC 4.13 Memberships in associations 3-b ● MR - 2.1.1 CC Dialogue with stakeholders 4.14 List of stakeholder groups engaged by the organization. 3-b ● MR - 2.1.1 CC 4.15 Basis for identification and selection of stakeholders with whom to engage. 3-b ● MR - 2.1.1 CC 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. 3-b ● MR - 2.1.1 CC 4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns. 3-b ● MR - 2.1.1 CC 5. Performance indicators 5.1 Managerial approach 5.1.1 Impact of services and products Management Product portfolio / ● MR - 2.3 UES FS1 Policies with specific environmental and social components applied to business lines/investment types. / ● MR - 2.3 UES FS2 Procedures for assessing and screening environmental and social risks in the portfolio. / ● MR - 2.3 UES FS3 Processes for monitoring clients' implementation of and compliance with environmental and social requirements included in agreements -or transactions. / ● MR - 2.3 UES FS4 Process(es) for improving staff competency to implement the environmental and social policies and procedures as applied to business lines. / ● MR - 2.2.1.2 UES FS5 Interactions with clients/investees/business partners regarding environmental and social risks and opportunities. / ● MR - 2.3.1 UES ● ● MR - 1.2.2 UES Audits Active ownership 5.2 Performance indicators Product portfolio MR - 1.2.2 UES FS6 Percentage of the portfolio for business lines by specific region, size and by sector. / ◒ MR - 6.1.2 UES FS7 Monetary value of products and services designed to deliver a specific social benefit for each credit line. / ● MR - 2.3.1 UES FS8 Monetary value of products and services designed to deliver a specific environmental benefit for each credit line. / ● MR - 1.2 MR - 2.2.2 UES FS9 Comments Audit Coverage and frequency of audits to assess implementation of environmental and social policies and risk assessment procedures. / Active ownership ● MR - 2.4 UES Information available in other publications (balance sheet diagram) 65 # Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document FS10 Percentage and number of companies held in the institution's portfolio with which the reporting organization has interacted on environmental or social issues. / ● MR - 1.2 FS11 Percentage of assets subject to positive and negative environmental or social screening. / ● MR - 2.2.2 FS12 Voting policy(-ies) applied to environmental or social issues for shares over which the reporting organization holds the right to vote shares or advises on voting. / ● MR - 1.2 5.2.1 Economic Chosen scope: CC / UES / Group UES UES UES Economic performance EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. / ● MR - 2.4 Group EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change. 2-d ● MR - 2.1.1 UES EC3 Coverage of the organization's defined benefit plan obligations. 1-a ● MR - 2.2.1.4 UES EC4 Significant financial assistance received from government. / ● MR - 2.1.1 UES Market presence EC5 Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation. 1-a ● MR - 2.2.1.4 UES EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation. 3-a ● MR - 2.3.1.2 UES EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation. 3-a ● / Indirect economic impacts EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. / ● MR - 2.2.2 EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts. / ● MR - 2.1.1 5.2.2 Environmental Materials Majority of activities located in France UES Group EN1 Materials used by weight or volume. - direct materials - non-renewable materials 2-c ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move EN2 Percentage of materials used that are recycled input materials. 2-c 3-c ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move Energy EN3 Direct energy consumption by primary energy source. 2-c EN4 Indirect energy consumption by primary source. 2-c ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move Management report Comments 66 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility # Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document Chosen scope: CC / UES / Group Comments Non-exhaustive reporting, partially connected with the Head Office move EN5 Energy saved due to conservation and efficiency improvements. 2-c ◒ MR - 2.3.1.1 UES EN6 Initiatives to provide energy-efficient or renewable energy based products and services. 2-c ● MR - 2.3.1 UES EN7 Initiatives to reduce indirect energy consumption and reductions achieved. 2-c ◒ MR - 2.3.1 UES Unable to quantify at present Water EN8 Total water withdrawal by source. / ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move EN9 Water sources significantly affected by withdrawal of water. / ● / Water consumption not significant EN10 Percentage and total volume of water recycled and reused. / ● / Water consumption not significant Biodiversity EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. 2-e ● MR - 2.3.1 UES EN12 Description of significant impacts of activities, products, and services on biodiversity. 2-e ● MR - 2.3.1 UES EN13 Habitats protected or restored. 2-e ● MR - 2.3.1 UES EN14 Strategies, current actions, and future plans for managing impacts on biodiversity. 2-e ● MR - 2.3.1 UES EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations. 2-e ● / Emissions, effluents and waste Activity located in city centres in France EN16 Total greenhouse gas emissions in tonnes (tCO2eq): scope 1 2-d ● MR - 2.3.1.1 UES + Batilease EN17 Other relevant indirect greenhouse gas emissions by weight (tCO2eq): scope 2 and 3 2-d ● MR - 2.3.1.1 UES + Batilease EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. 2-d ● MR - 2.3.1.1 UES + Batilease EN19 Emissions of ozone-depleting substances by weight. 2-d ● MR - 2.3.1.1 UES + Batilease EN20 NOx, SOx, and other significant air emissions by type and weight. 2-b ● / EN21 Total water discharge by quality and destination. 2-b ● / Service activity Service activity Total weight of waste by type and disposal method. 2-b ◒ MR - 2.3.1.1 UES Non-exhaustive reporting, partially connected with the Head Office move EN23 Total number and volume of significant spills. 2-b ● / Service activity EN24 Weight of transported, imported, or exported waste. 2-b ● / Service activity EN25 Identity and biodiversity value of water bodies. ● / Service activity Products and services EN22 EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. 2-b ● MR - 2.3.1 UES EN27 Percentage of products sold and their packaging materials that are reclaimed by category. 2-b ● / Service activity 67 EN28 EN29 Compliance 2-a Transport 2-d Overall 5.2.3 Human Rights Investment and procurement practices Location in the reference document Chosen scope: CC / UES / Group ● CR – 2.2.5 UES ● MR - 2.3.1.1 UES 2-a ● MR - 2.3.1 UES HR1 Percentage and total number of significant investment agreements and contracts that include human rights clauses. 3-e ● MR - 2.2.2 UES HR2 Percentage of significant suppliers, contractors, and other business partners that have undergone human rights screening. 3-c ● MR - 2.3.1 UES HR3 Total hours of employee training on policies and procedures concerning aspects of human rights. / ● / Non-discrimination HR4 Total number of incidents of discrimination and corrective actions taken. 1-f Freedom of association and collective bargaining HR5 Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be at significant risk. 3-c HR6 HR7 HR8 Child labour Operations and suppliers identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour. Prevention of forced and compulsory labour Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of all forms of forced or compulsory labour. ● MR - 2.2.1.5 ● Security practices Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights. / Indigenous rights Majority of operations and suppliers based in France / ● Majority of operations and suppliers based in France / 3-c UES 3-c ● Majority of operations and suppliers based in France / ● Majority of activities located in France / Majority of activities located in France / Total number of incidents of violations involving rights of indigenous people. 5.2.4 Labour Practices and Decent Work Employment 3-e Majority of activities located in France HR9 Comments Significant environmental impacts of transporting products and members of the workforce. EN30 Indicator reported: ● fully ◒ partially ● irrelevant Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations Total environmental protection expenditures and investments by type (expenditure to mitigate direct negative environmental impacts). Gr. II Art. 225 Title ● LA1 Total workforce by employment type, employment contract, and region, broken down by gender. 1-a ● MR - 2.2.1.1 UES LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region. 1-a ● MR - 2.2.1.1 UES LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. 1-a ● MR - 2.2.1.1 UES Management report # 68 Crédit Coopératif Group I Annual Report 2012 Management report 2 / Corporate social responsibility # Title Labour/management relations Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document Chosen scope: CC / UES / Group LA4 Percentage of employees covered by collective bargaining agreements. 1-c ● MR - 2.2.1.6 UES LA5 Minimum notice period(s) regarding significant operational changes 1-c ● MR - 2.2.1.6 UES Occupational health and safety LA6 Percentage of total workforce represented in joint management-worker committees 1-d ● MR - 2.2.1.6 UES LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by gender. 1-d ● MR - 2.2.1.3 UES LA8 Education, training, counselling, prevention, and risk-control programs in place regarding risks and safety. 1-d ● MR - 2.2.1.3 UES LA9 Health and safety topics covered in formal agreements with trade unions. 1-d ● MR - 2.2.1.6 UES Training and education LA10 Average hours of training per year per employee by gender and by employee category. 1-e ◒ MR - 2.2.1.2 UES LA11 Programs for skills management and lifelong learning. 1-e ● MR - 2.2.1.2 UES LA12 Percentage of employees receiving regular performance and career development reviews by gender. 1-e ● MR - 2.2.1.2 UES Diversity and equal opportunity LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, and other indicators of diversity. 1-f ● MR - 2.2.1.5 UES LA14 Ratio of basic salary of men to women by employee category. 1-f ● MR - 2.2.1.5 UES 5.2.5 Society Local Communities SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs. 3-a ● MR - 2.2.2 UES FS13 Access points in low-populated or economically disadvantaged areas by type. 3-a ● MR - 2.2.2 UES FS14 Initiatives to improve access to financial services for disadvantaged people. 3-e ● MR - 2.2.2 MR - 1.2.3 UES UES Corruption SO2 Percentage and total number of business units analyzed for risks related to corruption. 3-d ● CR - 2.2.5 SO3 Percentage of employees trained in organization's anti-corruption policies and procedures. 3-d ● CR - 2.2.5 UES SO4 Actions taken in response to incidents of corruption. 3-d ● CR - 2.2.5 UES Public policy SO5 Public policy positions and participation in public policy development and lobbying. / ● MR - 2.1.1 UES SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country. / ● MR - 2.1.1 UES Anti-competitive behaviour Comments Figures for current year available on 15/04, submission date of tax declaration no. 2483 69 # Title Gr. II Art. 225 Indicator reported: ● fully ◒ partially ● irrelevant Location in the reference document Chosen scope: CC / UES / Group SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes. / ● CR - 2.2.5 UES Compliance SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. / 5.2.6 Product responsibility Customer health and safety ● CR - 2.2.5 UES PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. 3-d ● / Regulated financial services activity PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle. 3-d ● / Regulated financial services activity Product and service labelling PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements. / ● / PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling. / ● CR - 2.2.5 UES PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. / ● MR - 1.3.2 UES FS15 Policies for the fair design and sale of financial products and services. / ● MR - 2.2.2 MR - 2.3.1 UES FS16 Initiatives to enhance financial literacy. 3-e ● MR - 2.4 UES Regulated financial services activity Marketing communications PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship. / ● MR - 1.3.2 UES PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications. / ● CR – 2.2.5 UES Customer privacy PR8 PR9 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. 3-e Compliance Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services. / ● MR - 1.3.2 UES ● MR – 1.3.2 UES Management report Comments 70 Crédit Coopératif Group I Annual Report 2012 Management report 3 / Group architecture Corporate purpose 3. Group architecture ➔➔3.1. Crédit Coopératif Legal status Crédit Coopératif is a variable-capital popular bank cooperative limited company, governed by the following legal provisions, concerning: 1."banques populaires" in the French Monetary and Financial Code 2.cooperatives under French law no. 47-1775 of 10 September 1947 regarding the status of cooperative organisations 3.credit institutions in the French Monetary and Financial Code 4.investment service providers in the French Monetary and Financial Code 5.commercial companies, including provisions concerning variable capital, in the French Commercial Code 6.companies in the French Civil Code. As well as the legal provisions and the regulatory texts drawn up for their application, Crédit Coopératif is also governed by the following contractual provisions: 1.decisions of a general nature issued by the central body (BPCE) under the powers delegated to it by the French Monetary and Financial Code, and within the framework of the agreement signed by Crédit Coopératif and BPCE, particularly those relating to the system of guarantees for the Banques Populaires and Caisses d’Épargne network 2.the Articles of Association of Crédit Coopératif 3.the resolutions adopted during the General Meetings of Crédit Coopératif 4.the resolutions adopted by the Board of Directors of Crédit Coopératif. Issuer legislation Company subject to French law. Date of incorporation 23 March 1989 The Company will cease to exist on 23 March 2088, except in the case of early dissolution or renewal. The purpose of the Company is as follows: • to undertake all banking operations with commercial, industrial, cooperative, agricultural or free-market businesses, whether in the form of an individual or a company, and in a broader sense, with any other groups or corporate entities, members or otherwise, to assist its personal customers. • to partake in all manner of operations underwritten by a mutual guarantee company in accordance with paragraph 3, chapter 5, section 1, book 4 of the French Monetary and Financial Code, to allocate to account or savings plan holders any credit or loans allocated for the purpose of financing their property projects, to receive deposits from any person or company, and generally to perform all banking operations referred to under section 1, book 3 of the French Monetary and Financial Code. • to conduct all related operations referred to under Article L. 311-2 of the French Monetary and Financial Code, to provide the investment services referred to under articles L. 321-1 and L. 321-2 of the above-mentioned code, and to exercise any other banking activity permitted by law and regulations. In this respect, it may notably perform insurance brokerage operations, and it may also participate in public and private loan issues. Furthermore, it may conduct property agency activities involving properties owned by third parties. These activities may include purchase, sale, exchange, letting and sub-letting (both seasonal and non-seasonal), of both unfurnished and furnished properties and non-building properties. • to make the property and movable asset investments required to carry out its activities, to take out or acquire short-term security investments on its own behalf, to acquire shares in any companies, groupings or associations, and more generally to conduct any type of operation which is directly or indirectly related to the purpose of the company and which may contribute to its development or execution. • in the context of its specific activities, aside from the operations provided for under points 1 to 3 above, to undertake operations of any kind within the social and socially responsible economy sector. In particular, it may develop activities and set up partnerships with any organisation, company, or public or private body as well as with any local or regional authority. In addition, the company and its directors are committed to a broader representative role with cooperative organisations and entities within the social and socially responsible economy, both in France and abroad. 71 The Board of Directors has the final say in the organisation of member movement representation within the Regional Committees, as well as within member movements, financial institution movements and organisations of all types, who are partners of the Company, within the Conseil National du Crédit Coopératif. It also approves the Articles of Association of the Conseil National du Crédit Coopératif. The Company may exercise its activities in France and abroad on its own behalf, for third parties or in collaboration and, in general, carry out financial, commercial, property or movable asset operations or provide services that are directly or indirectly related to the purpose of the company. BTP Banque BTP Banque is the banking partner of thousands of businesses in the building and civil engineering sectors. It is entirely familiar with their specific needs, having been created in 1919 at the initiative of building and civil engineering trade unions. It now works closely with professional organisations in the sector, as demonstrated by the composition of its bodies. It is a professional and specialised bank that focuses on businesses and institutions in the sector. Crédit Coopératif holds 99.9% of its capital, and it joined the Crédit Coopératif Group in 1996; it is also linked to the Group via an association agreement. Supervisory Board Trade and Companies’ Register Jean-Louis Bancel, Chairman Didier Ridoret, Vice-Chairman and Co-Chairman Nanterre 349 974 931 – APE 6419 Z Jean-Claude Detilleux The following documents may also be consulted in electronic format on the Crédit Coopératif Group website: • annual financial reports for the years 2008 to 2011 • half-year financial reports from June 2008 to 2011 • corporate governance and internal control reports from 2008 to 2011. Crédit Coopératif website: www.credit-cooperatif.coop/informations-financieres/ information-reglementee/ Fédération Française du Bâtiment,represented by Jean-Yves Robin Fédération Nationale des Travaux Publics,represented by Patrick Bernasconi Fédération Nationale des SCOP du BTP, represented by Jacques Petey Société Mutuelle d’Assurance du Bâtiment et des Travaux Publics (SMA BTP),represented by Christian Baffy Congés Intempéries BTP Caisse de la région de Paris, represented by Gaston Coppin Fédération Française du Bâtiment Grand Paris, represented by Michel Sénéchal Congés Intempéries BTP Union des Caisses de France,represented by Norbert Monti Jacques Chanut Crédit Coopératif,represented by François Dorémus Ecofi Investissements,represented by Christophe Couturier BTP Capital investissement,represented by Stéphane Currenti BTP Capital Conseil, represented by Emmanuèle Gasnot Bati Lease,represented by Richard Kurfürst SMAvie BTP,represented by Alain Dupont Philippe Ghazarian,employee-elected representative Murielle Goiran,employee-elected representative Alain Sionneau,non-voting director Executive Board ➔➔3.2. Subsidiaries Claude Lavisse, Chairman Jean-Marc Wolff, Chief Executive in thousands of euros at 31 December 2012 BTP Banque Ecofi Investissements BTP Capital Conseil BTP Capital Investissement Esfin Gestion SA Tise Intercoop Intercop Location Bati Lease Financière Champlain Balance sheet total Net banking income Net income 1,166,037 52,723 8,130 52,511 20,561 -2,743 306 325 44 23,961 868 286 1,589 2,303 272 16,038 583 148 235,703 3,169 1,699 10,144 -50 -89 614,774 11,193 3,276 1 113 1 187 -992 Pierre Valentin, Chief Executive Catherine Van Rompu Works Council representative Franck Du Marais Bati Lease Bati Lease is a subsidiary in which Crédit Coopératif has held a 95% stake since 2006. It is the ninth . largest property finance leasing operator in France, with an offer built around investment finance for companies in the form of property finance leasing and long-term leasing. Management report A hard copy of all documents relating to Crédit Coopératif (memorandum and articles of association, letters and other documents, financial information records), including those of its subsidiaries, for each of the two financial years prior to the publication of this document, may be viewed at Crédit Coopératif's Head Office. 72 Crédit Coopératif Group I Annual Report 2012 Management report 3 / Group architecture Board of Directors Board of Directors François Dorémus,Chairman Claude Lavisse, Chairman Chief Executive and director, Richard Kurfürst Crédit Coopératif, represented by Alain-Camille Jan Crédit Coopératif, represented by David Arnout BTP Banque, represented by Marc Wolff Intercoop, represented by Patrick Fellous BTP Capital Investissement, represented by Stéphane Currenti BTP Banque, represented by Claude Lavisse Esfin Participations, represented by Dominique de Margerie Finorpa, represented by Jean-Marie Duvivier Chief Executive René Dufour Emmanuèle Gasnot Régis Naye Bati Lease Invest, represented by Jean-Denis Nguyen Trong Chief Executive Richard Kurfürst Esfin Gestion As a 60% subsidiary of Crédit Coopératif, Esfin Gestion has AMF approval to manage investment vehicles in non-listed companies. Its team of specialists manage IDES (investment of own funds in social economy bodies) and Esfin Participations portfolios (SME investments). In all it makes up a portfolio containing almost 150 investment lines and managed assets of €97 million. Esfin Gestion is also responsible for shaping the activity of Equisol, a cooperative company created at the behest of the Ile de France region and designed to provide capital to regional companies that operate in the socially responsible economy. Esfin Gestion also assists with the preparation of Sofinei dossiers. BTP Capital Investissement BTP Capital Investissement, a 66.85% subsidiary of Crédit Coopératif (BTP Banque 40%, Crédit Coopératif 26.85%), is a venture capital company that invests equity capital and quasi-equity capital in SMEs in building and civil engineering and related sectors during business start-up operations, organic or external growth operations or company transfers. With this specialisation, its expertise, its governing bodies comprising representatives of the profession, and its highly skilled employees, it is an established and recognised player in its market. At 31 December 2012, its portfolio comprised 31 shareholding lines (in shares or convertible bonds) invested in 29 companies or groups of companies, and two venture capital mutual investment funds. Board of Directors Chairman, Dominique de Margerie Chief Executive and director, Stéphane Currenti Supervisory Board BTP Banque, represented by Claude Lavisse Jean-Louis Bancel, Chairman Crédit Coopératif, represented by Alain-Camille Jan Alain-Camille Jan, Vice-Chairman SMA-BTP, represented by Maxence Hecquard, non-voting director Jean-Claude Detilleux Oséo S.A., represented by François Chollet François Dorémus Crédit Foncier de France, represented by Xavier Roux Hugues Sibille Placoplâtre, represented by Thierry Fournier, non-voting director Pierre Valentin Fédération Française du Bâtiment, represented by Bernard Coloos Executive Board BTP Capital Conseil, represented by Emmanuèle Gasnot Dominique de Margerie, Chairman Intercoop, represented by François Dorémus Pascal Trideau BTP Capital Conseil BTP Capital Conseil specialises in consulting services concerning the transfer of building and civil engineering firms. On the strength of its experience and knowledge of SMEs in the building and civil engineering sector, it plays a significant role in the company transfer market within the profession. For this purpose, it essentially relies on the BTP Banque branch network and the relevant professional organisations. Crédit Coopératif holds a 19.98% stake in BTP Capital Conseil. Ecofi Investissements Ecofi Investissements is the third-party asset management company of the Crédit Coopératif Group. Active in the field for 40 years, Ecofi Investissements is a "société anonyme" (joint stock company) with capital of €4.4 million. It is a small-scale organisation with 65 employees, which manages €6.45 billion of assets covering the full range of investment products and solutions across all asset classes. With Crédit Coopératif, Ecofi Investissements has become a pioneer and leader in socially responsible finance. 73 Board of Directors Board of Directors Norbert Monti, Chairman Tristan de Vasselot, Chairman and Finance Director Pierre Domin Management Alain de Vaucresson BTP Banque, represented by Claude Lavisse Philippe Chalvet, Chief Executive and Private Asset Management Director BTP Capital Conseil, represented by Pierre Valentin Christophe Couturier, Chief Executive of Ecofi Investissements Congés Intempéries BTP – Union des Caisses de France, represented by Alain Bernard, non-voting director Crédit Coopératif, represented by Jean-Claude Detilleux Fédération Française du Bâtiment Grand Paris, represented by Nicole Cuvillier Fédération Française du Bâtiment, represented by Didier Ridoret, non-voting director Fonds de Garantie des Assurances Obligatoires de Dommages (FGAO), represented by François Werner Ides Investissements, represented by Hugues Sibille Intercoop, represented by Jean-Louis Bancel Prima SA, represented by Jean Castagne Intercop Location, represented by François Dorémus Société Mutuelle d’Assurances BTP, represented by Pierre-Louis Carron Syndicat des Entrepreneurs de Construction Paris-Ile-de France, represented by Olivier Le Lamer Union Centrale du Crédit Coopératif, represented by Bruno Maillard Chief Executive Christophe Couturier Intercoop Intercoop is a property finance leasing company and a Crédit Coopératif subsidiary, dedicated to commercial property, which now devotes its activity to managing its asset base and to expanding its prior operations. Crédit Coopératif will now be carrying out its property leasing transactions via BatiLease. It is a "société par actions simplifiée" (simplified joint stock company), and Crédit Coopératif holds 82.4% of its capital of €4,856,280. It is also linked to Crédit Coopératif via an association agreement. Board of Directors François Dorémus, Chairman Chief Executive Richard Kurfürst Deputy Chief Executive Works Council representative Isabelle Renon Financière de Champlain Having acquired an initial 58% stake in 2010, Ecofi Investissements took ownership of 100% of Financière de Champlain's shares in December 2012. Created in 2000, Intercop Location Created out of what was formerly Sicomi Coop, which carried out property finance leasing transactions under the Sicomi arrangements, Intercop Location is being wound up. Crédit Coopératif holds a 90.7% share in the company. Board of Directors François Dorémus, Chairman Chief Executive Sylviane Grison Financière de Champlain is a management company that specialises in the sustainable development sector. Its actions focus on three areas: collective action fund management, including environment and health sector funds (€22.5 million); delegated management for individuals who wish to put their savings to good use (€10 million); and real asset management, offering innovative investment products that are separate from financial markets and instead linked to sustainable resource management (€7 million). Following the appointment of a new Chairman in June 2012, the business is currently undergoing a restructuring programme, including the creation of new synergies with Ecofi Investissements and Crédit Coopératif Group. Tise Tise has been a subsidiary of Crédit Coopératif since 2008. In 2009, it completed its first loan operations, most of which were intended to pass on finance from key European funds to the associations sector and to innovative SMEs in Poland. At 31 December 2012, Tise had financed more than 350 projects worth a total of €18 million. In 2012, Tise joined forces with Poland's state bank BGK to create two regional loan funds, with the aim of supporting SME investments. This fund is cofinanced by the FEDER fund as part of the JEREMIE initiative. Tise holds a 4.75% shareholding of €4.9 million, on behalf of Crédit Coopératif, in SG Bank SA, a bank representing the second largest network of cooperative banks in Poland (207 member banks). Management report François Lett 74 Crédit Coopératif Group I Annual Report 2012 Management report 3 / Group architecture Supervisory Board Wlodzimierz Grudzinski, Chairman Karol Sachs, Vice-Chairman Pierre Valentin Alain-Camille Jan Executive Board Michal Radziwill, Chairman Joanna Wardzinska, Vice-Chairwoman associations). Crédit Coopératif is the leading shareholder, holding with around 61% of its shares and 39% of voting rights. Caisse Solidaire employs 4 people. It is an official "socially responsible company", and its products are Finansol-approved. Chairman Bruno Maillard Chief Executive Yaël Zlotowski ➔➔3.3. Non-subsidiary partner institutions Crédit Coopératif's partner institutions are independent companies that are legally linked to Credit Coopératif by means of an association agreement. The agreement stipulates that Crédit Coopératif is the guarantor of the liquidity and solvency of these institutions and assists them from an administrative and technical standpoint, in particular to enable them to comply with their regulatory and prudential obligations. Crédit Coopératif does not systematically hold capital stakes in its partner institutions, but it draws up consolidated financial statements that include these institutions. Banque Edel Banque Edel is a general partnership managed as a partnership between the E. Leclerc Movement and Crédit Coopératif. It is primarily intended for shareholders in the E. Leclerc Movement, its suppliers and consumers. It has a range of products and services that are specifically designed with companies in the distribution sector in mind: processing bank card payments, installing ATMs, operating credits, and investment products. It is also interested in personal customers, for whom it has developed a specific range of personal loans. Edel employs 142 people. Crédit Coopératif holds 34% of Edel's capital. Société financière de la Nef Société Financière de la Nef, created in 1988 by Association La Nef, is a credit institution associated with Crédit Coopératif, which ensures its liquidity and solvency. It aims to bring together borrowers and savers who wish to share monetary solidarity and responsibility links. It funds sustainable development projects, with high environmental and social utility. An independent credit organisation, it was approved by the state as a "socially responsible company" in 2003. Like Crédit Coopératif, Société Financière de la Nef is a founding member of Finansol and FEBEA (European Federation of Ethical and Alternative Banks). It offers a range of savings products which it manages directly (capital subscription, term deposit accounts and an original product: the Nef savings plan). It also has a specific partnership with Crédit Coopératif, which manages a chequebook account and a socially responsible savings account on its behalf, distributed in its branches. Société Financière de la Nef employs 67 people. Chairman of the Supervisory Board Jean-Luc Seignez Chairman of the Executive Board Jean-Marc de Boni Co-Managers Galec, represented by Thierry Aumont Crédit Coopératif, represented by Pierre Valentin Chief Executive Richard Pouillaude Caisse Solidaire This cooperative status institution created in 1997, with the support of the Nord-Pas-de-Calais region, the Caisse des Dépôts and Crédit Coopératif, collects local socially responsible savings deposits with a term of more than two years, earning little or no interest, to be used to finance projects of high social use (creation of companies – most often by job seekers – and support for Gedex Distribution Gedex Distribution is a public limited company, created in 1975, which grants loans to members of its parent company, Gedex, a cooperative of retail merchants in the building materials and DIY supplies sector. As such, Gedex is a member of the Fédération des Enseignes du Commerce Associés (FCA) and is a group associated with Socorec. Chairman and Chief Executive Philippe Jarrier Deputy Chief Executive Yves Martin-Delahaye 75 Socorec Socorec was created in 1963 by groups of merchants, who came together to form an organisation which has now become the Fédération des Enseignes du Commerce Associé (FCA). It is a financial company with cooperative status which facilitates access to financing for its affiliate merchants. Its activities include engineering, credit and financial guarantees. Over its 50 years of existence, it has acquired experience and knowledge of its customer base, which makes it a key partner for groups and their members. Socorec employs 20 people and was approved by the state as a "socially responsible company" in June 2011. Chairman of the Board of Directors Yves Martin-Delahaye Chief Executive Hervé Affret Chairman of the Supervisory Board Gilbert Hennique Chairman of the Executive Board Thierry Dujardin Sofigard Sofigard is a financial cooperative for SMEs and SMIs. It was created in 1993 by Medef du Gard, with the support of the Perrier Group. It advises SMEs and SMIs in the department on how to prepare their financial dossiers and provides them with its guarantee. In 2012, loan disbursements counter-guaranteed by Sofigard totalled €4 million. Chairman of the Supervisory Board Jean-Marc Roumeas Chairman of the Executive Board Bruno Mazoyer CMGM Chairman of the Board of Directors Martine Clément Sofindi Sofindi was created in 1987, at the initiative of Medef de Charente in partnership with Crédit Coopératif. It advises SMEs and SMIs in the Poitou-Charentes region on searching for financing and provides them with its guarantee. It has developed expertise in the image sector. In 2012, counter-guaranteed loan disbursements totalled €11 million. This financial cooperative employs four people. Chairman of the Supervisory Board François Le Grelle Chairman of the Executive Board Philippe Sutre Sofirif Chief Executive Sofirif is a cooperative public limited company that was cre- Patrick Gerion ated in 1984 by the Groupement Régional Interentreprises du Val-d'Oise and the GIE-SACV de Cergy-Pontoise, a major coop- Nord Financement This financial cooperative guarantees financing for industrial and service SME/SMIs in the Nord-Pas-de-Calais region. It was founded in 1982 as a partnership between Crédit Coopératif and Maison des Professions, which has since become Entreprises et Cités. Nord Financement employs five people. In 2012, loan disbursements counter-guaranteed by Nord Financement totalled €8 million. erative group of service companies. It guarantees financing for SME/SMIs and its remit covers the entire Île-de-France region. Sofirif employs two people. Chairman of the Supervisory Board Jean-Claude Monti Chairman of the Executive Board Michel Mélé Management report Caisse Mutuelle de Garantie de la Mécanique (CMGM) is a mutual cooperative guarantee company and the financial instrument of the Fédération des Industries Mécaniques (Federation of Mechanical Industries) and its 39 affiliated professional unions, in association with the French aerospace industries association (GIFAS) and the federations that represent the electrical and electronic sectors, foundries and plastics industry. It advises and guarantees SMEs and SMIs that are members of these federations and participates in financing transactions on the French and export markets (guarantees, advances on contracts, export pre-financing and investment finance). In 2012, loan disbursements counter-guaranteed by CMGM totalled around €29 million. CMGM has a mission to develop partnerships with other federations in the industry and with professional associations. CMGM employs five people. 76 Crédit Coopératif Group I Annual Report 2012 Management report 3 / Group architecture Sofiscop Société Financière des Scop is a cooperative public limited company created in 1987 by Union Régionale des Scop de l’Ouest. Its geographical remit now extends across the whole of the country with the exception of the south-east. A financial instrument of the SCOP movement, it facilitates access to financing for production cooperative companies by providing its guarantee for loans obtained and by advising them in the preparation of their financial dossiers. Chairman of the Supervisory Board Jean-François Moreve Chairman of the Executive Board Jean Pierre Ducol public limited company created in 1985 which guarantees financing for the SME and SMI sector in the PACA region. It is supported by the Region and departmental guarantee funds. In 2012, counter-guaranteed loan disbursements totalled €12 million. Somupaca employs two people. Chairman of the Supervisory Board Jean-Louis Picoche Chairman of the Executive Board Jean-Pierre Marlier ➔➔3.4. Examples of partnership shareholdings 3.4.1. Examples of shareholdings in France Sofiscop Sud-Est Banque Populaire Développement Created in 1992 from the extension of the SCR PACA to all of the SCOPs in the Provence-Alpes-Côte d’Azur and RhôneAlpes regions, Sofiscop-Sud-Est is authorised to provide these companies in these two regions with guarantees for their investment credits. A BPCE development capital company, Banque Populaire Développement makes capital investments in non-listed companies across France. Chairman of the Supervisory Board Bruno Lebuhotel Chairman of the Executive Board Franck Rossi Somudimec Udimec (Union départementale des industries métallurgiques, électriques et connexes de l'Isère) created this cooperative public limited company in the interest of its SMI members in 1977. Somudimec then expanded its guarantee activity to cover SMIs in the Rhône-Alpes, Burgundy, Auvergne and Franche Comté regions, and opened a branch in L’Isle-d’Abeau, a fast-growing business park in the north of Isère. Somudimec is supported by the Rhône-Alpes region. It employs 19 people. In 2012, counter-guaranteed loan disbursements totalled around €68.5 million. Chairman of the Supervisory Board Gilles Ramillon Chairman of the Executive Board Thierry Uring Somupaca An initiative of Medef du Var and Medef du Vaucluse, subsequently joined by Udimétal Bouches-du-Rhône and then by all of the UIMM in the region, Somupaca is a cooperative Crédit Coopératif became one of its shareholders in 2004 following its contribution to the balance of its Sopromec Participations holdings. In 2011, it participated in a capital increase of €4.3 million, giving it 4.32% of the capital, i.e. a total holding of €30.1 million. Croissance Nord – Pas-de-Calais Croissance Nord-Pas-de-Calais makes capital investments in non-listed SMEs in the Nord – Pas-de-Calais region. It is the equity investment arm of the IRD Nord – Pas-de-Calais, which holds the majority of its shares. Crédit Coopératif is a shareholder with 3.12% along with regional banking institutions. Groupe Esfin-Ides Groupe Esfin–Ides, in which Crédit Coopératif is the main shareholder, makes equity investments in entities that operate in the social economy and in small and medium-sized businesses. Its Chairman is Hugues Sibille, Vice-Chairman of Crédit Coopératif. Crédit Coopératif is the major shareholder in Groupe Esfin with 38% of the capital, alongside its social economy partners (mutual insurance companies, Confédération Générale des Scop, and FNMF). Esfin’s two main subsidiaries are: Institut de Développement de l’Economie Sociale (Ides) and Esfin Participations, which are managed by Esfin Gestion, a 60% subsidiary of Crédit Coopératif. Esfin also has a European dimension with significant shareholdings in entities such as CoopEst, Soficatra (a company that invests equity capital in 77 IRD Nord-Pas-de-Calais The Institut Régional de Développement (IRD) is the leading independent regional investor. It is listed on the Paris stock exchange and 17.38% of its capital is held by Crédit Coopératif. Driven by a fertile Crédit Coopératif partnership with consular and professional organisations, IRD is a key driver of business growth and jobs in the Nord-Pas-de-Calais region. It has four areas of activity: capital investment, intermediation, property and consulting, through which it is able to support and meet the needs of businesses in the Nord-Pas-de-Calais region. Rhône Dauphiné Développement Rhône Dauphiné Développement is an investment capital company, set up in 1974, that operates primarily in the RhôneAlpes region. Since the beginning, Crédit Coopératif has been the major shareholder along with Caisse des Dépôts et Consignations, regional banking institutions and professional organisations. At 31 December 2012, Crédit Coopératif held a 19.44% stake in Rhône Dauphiné Développement, following its participation in a capital increase of €669K. Socoden Socoden (société coopérative de développement et d’entraide) is a financial company that was set up in 1965 by the SCOP movement to finance creation, growth and aid for SCOPs in difficulty, by providing support that is different from that available through traditional financing channels (banks, public authorities etc.). Socoden is financed solely by and for SCOPs and it is run by representatives of SCOPs. Over the last ten years, Socoden has been involved in half of all SCOPs, either at its creation or in the course of its business life. At 31 December 2012, Crédit Coopératif held a 2.04% stake in the capital of Socoden. Its ambition, over and above financial returns, is to support staff and involve them in a long-term takeover of their business. Transméa provides support for business takeovers involving companies that are either in good shape or in difficulty, or in a transitional phase, in all business sectors and regardless of company size. At 31 December 2012, Crédit Coopératif held a 10% stake in the capital of Transméa. France Active Garantie France Active Garantie is a financial company in which Crédit Coopératif is the second bank shareholder after Caisse des Dépôts. It provides access to bank loans to jobless people or those in economic hardship who want to create their own company, to structures set up to achieve integration through economic activity and to socially responsible companies by guaranteeing such loans. All project initiators can take advantage of the expert advice and assistance provided by financial and legal specialists, as well as ongoing support. This project developer support mechanism is the reason for its high success rate. In line with its desire to support the growth of France Active Garantie, Crédit Coopératif participated in a capital increase in 2011, bringing its percentage shareholding to 20% and confirming its position as the leading bank shareholder. Sifa Société d'Investissement France Active (Sifa) is a socially responsible investment company whose purpose is to strengthen the equity of companies that create jobs especially for people in economic and social hardship: integration structures via economic activity that help to develop trading activity, adapted work companies, companies in difficulty taken over by their employees, or other socially responsible companies. The shareholders, alongside the France Active association, include financial institutions (including Crédit Coopératif), major companies and socially responsible companies' mutual investment funds. At 31 December 2012, Crédit Coopératif held a 0.69% stake in the capital of Sifa. Transméa Transméa is an innovative venture capital company, set up at the initiative of the Union régionale des SCOP de Rhône-Alpes and dedicated to employee takeovers of businesses throughout the area. It provides the necessary support and financing to employees who wish to take over their business. Copronord Habitat In 2004, Crédit Coopératif acquired a stake in Copronord Habitat, a social housing cooperative created in 2003. It is a social housing developer that sells new-build homes as high-quality primary residences at an affordable price. Copronord gives its customers the Management report cooperatives in different European countries) and Sicoop (which was set up in 2009 in Catalonia based on the Ides model). 78 Crédit Coopératif Group I Annual Report 2012 Management report 3 / Group architecture opportunity to purchase "secure" property, developing personal relationships with each and every customer founded on a principle of customer service. Copronord is a member of Habitat Réuni, a cooperation organisation comprising 25 social housing organisations and cooperatives, all with a strong local grounding and a determination to remain independent, yet with a desire to pool their resources to achieve their objectives. Crédit Coopératif is one of two partner banks of Habitat Réuni. At 31 December 2012, Crédit Coopératif held a 0.65% stake in the capital of Copronord. Habitation Familiale Habitation Familiale is a social housing cooperative created in 1894. Crédit Coopératif decided to become a shareholder in 2005, based on its long-standing human and socially responsible values. Its strong growth and ongoing commitment to research and experimentation make it a key player in the social housing sector in Ille-et-Vilaine and Brittany. It manages a portfolio of 4,000 social housing units in 140 co-owned properties and has ambitious social access construction targets. At 31 December 2012, Crédit Coopératif held a 6.51% stake in the capital of this cooperative. Société Française d’Habitations Economiques Société Française d’Habitations Economiques (SFHE) is a social housing company created in 1891. Crédit Coopératif acquired a stake in the company in 2001 to support its social vocation. It manages a portfolio of 9,500 housing units and has been a key player in the social housing sector in the south of France for 120 years. As a social landlord with a commitment to combating exclusion, SFHE plays a major role in urban inclusion policies in the areas that it covers and is also involved in re-integration through work for jobseekers in certain neighbourhoods. It also develops housing solutions for elderly people in need of care and provides five residential homes for highly vulnerable people and those in urgent need of assistance. SFHE is a subsidiary of Groupe Arcade, a major player on the national stage (rented property portfolio of 79,000 housing units, with 3,200 new housing units constructed in 2011). Crédit Coopératif is also a shareholder in Groupe Arcade and has a close partnership and an excellent relationship with this parent company. At 31 December 2012, Crédit Coopératif held a 0.36% stake in the capital of this company. 3.4.2. Examples of shareholdings abroad CoopEst CoopEst is an investment company, created in 2005 at the initiative of Crédit Coopératif. It is dedicated to financing the social economy in the countries of Eastern Europe. It provides longterm loans (subordinated and/or convertible) to cooperative banks and financial institutions involved in financing the social economy or making active contributions to strengthening the local socio-economic conditions for small businesses. At the end of 2012, CoopEst had investment exposures of around €34 million, spread across around 30 institutions in nine countries. Crédit Coopératif remains heavily involved, holding 30% of the capital and bonds issued by CoopEst. SG Bank Crédit Coopératif Group already has a presence in Poland through Tise. In June 2011, through Tise, Crédit Coopératif acquired a 4.79% stake in SG Bank, a representative bank formed from the merger of two Polish cooperative banks, GBW and MBR. Through this new shareholding, both Tise and Crédit Coopératif will be able to expand their financial and commercial activity in Poland. In 2012, SG Bank posted net income of 25 million PLN (€6 million). This represented a reduction on the 2011 figures, due to less favourable economic conditions in certain sectors such as construction caused by a slow-down in economic growth. Nevertheless, economic growth still remained at a respectable level (2.5% in 2012). BNDA (Banque Nationale de Développement Agricole – Mali) In July 2011, Crédit Coopératif and BPCE IOM each acquired a 9.7% stake in BNDA. Despite recent events in Mali, BNDA weathered the storm and posted net banking income figures in 2012 that remained unchanged from the 2011 figures (22 billion CFA francs, or €33.5 million) and net profit of 2 billion CFA francs (€3 million), compared with 5 billion CFA francs (€7.6 billion) in 2011, due to its need to increase provisions in relation to events. Merkur Bank Merkur Bank is a Danish cooperative bank created in 1982. Its mission is to fund socially, environmentally and culturally useful projects. The bank continued to grow in 2012, with a 10% increase in its balance sheet total and a 21% rise in net banking income. It also joined both FEBEA and GABV. Crédit Coopératif has been a member of Merkur Bank since 2010, through the conversion of a €1 million subordinated loan, representing 4.24% of the bank's capital. 79 4. Board of Directors and Executive Management ➔➔4.1. Remits and functions at 31 December 2012 Directors and permanent representatives Company Legal status Position Jean-Louis Bancel BTP Banque plc Chairman of the Supervisory Board Ecofi Investissements plc Permanent representative of Intercoop on the Board of Directors Esfin gestion plc Chairman of the Supervisory Board Compagnie Européenne de cautions et de garanties plc Director Institut régional de développement Nord-Pas-de-Calais plc Member of the Board of Directors Mutuelle centrale finances (MCF) Code on Mutual Societies Chairman Fondation Infectiopole Foundation Permanent representative of Credit Coopératif on the Board of Directors Fondation internationale du handicap Foundation Permanent representative of Credit Coopératif on the Board of Directors CoopFr Association Member of the Board of Directors Office de coordination bancaire et financière Association Member of the Board of Directors Eurecos International Director International Cooperative Alliance Association Member of the Board of Directors International Co-operative Banking Association Association Chairman Jean-Claude Detilleux National administrative public institution Qualified individual on the Board of Directors Agence régionale de développement Ile de France Association Chairman of the Executive Board International Cooperative Alliance – NGO Association Director and Member of the Executive Committee BTP Banque plc Member of the Supervisory Board Conseil supérieur de la coopération Organisation created by decree Vice-Chairman Conseil supérieur de l’économie sociale et solidaire Organisation created by decree Member Coopératives Europe Association Director CoopFr Association Ecofi-Investissements Esfin gestion Equisol Chairman plc Permanent representative of Crédit Coopératif on the Board of Directors plc Member of the Supervisory Board Cooperative plc Chairman and Chief Executive Banque Populaire Foundation Corporate foundation Director Crédit Coopératif Foundation Corporate foundation Chairman Institut régional de développement Nord-Pas-de Calais plc Natixis Private Equity plc Chairman plc Permanent representative of Crédit Coopératif on the Board of Directors SICAV Epargne Ethique Action Social Economy Europe Association Vice-Chairman of the Supervisory Board Vice-Chairman Management report Agence national des services à la personne 80 Crédit Coopératif Group I Annual Report 2012 Management report 4 / Board of Directors and Executive Management Company Legal status Position Martine Clément on behalf of CMGM CMGM MEDEF Europe Commission Cooperative plc Association Enterprise Policy Group (Business Chamber) of the European Commission Rexecode Vaneau industrielle et commerciale - VIC Chairwoman Vice-Chairwoman Member Association Member of the Board of Directors LLP Manager Association Director BML Property investment company Manager Comptaburo Property investment company Manager Galerie Florane Property investment company Manager La Chaussade Property investment company Manager Société Christian Pouviot et associés plc Director Société d’expertise comptable et d’Audit du Centre plc Director Jean Gabain on behalf of Unapei Adapei de la Nièvre Maurice Ronat on behalf of FNMI Conseil supérieur de la Mutualité Code on Mutual Societies Representative of the Fédération Nationale de la Mutualité Française EOVI Mutuelles Présence Code on Mutual Societies Chairman FNMF Code on Mutual Societies Vice-Chairman FNMI Code on Mutual Societies Fonds de Gestion de la Couverture Maladie Universelle Haut-Conseil pour l’avenir de l’assurance maladie Chairman Representative of the Fédération Nationale de la Mutualité Française Representative of the Fédération Nationale de la Mutualité Française Matmut Code on Mutual Societies Director Mutualité de la Loire Code on Mutual Societies Chairman Mutuelles Présence Code on Mutual Societies Chairman Union de mutuelles Groupe EOVI Code on Mutual Societies Chairman Association Chairman Adie Association Permanent representative of Crédit Coopératif, director Association internationale logiciels libres (Ai2L) Association Chairman Avise Association Chairman Conseil National de l’Insertion par l’Activité Economique (CNIAE) Association Member Conseil National du Crédit Coopératif Association Member Conseil supérieur de l’économie social et solidaire Association Vice-Chairman A.I.M.V. Hugues Sibille on behalf of ESFIN CoopEst plc (Belgian law) Permanent representative of Ides, director CoopMed plc (Belgian law) Chairman Ecofi Investissements plc Permanent representative of Ides, director Esfin plc Chairman and Chief Executive plc Member of the Supervisory Board Esfin Gestion Esfin Participations Filstrans France Active Crédit Coopératif Foundation Fondation Macif Simplified plc plc (Belgian law) Association Corporate foundation Foundation Chairman Representative Member of the Executive Committee Permanent representative of Crédit Coopératif, director Director 81 Company Legal status Ides plc Les Rencontres du Mont-Blanc Association Mouvement des entrepreneurs sociaux Association Position Chairman and Chief Executive Treasurer Vice-Chairman Sicoop plc (Spanish law) Permanent representative of Esfin, director SoFicatra plc (Belgian law) Permanent representative of Esfin, director, Vice Chairman Sofinei plc Permanent representative of Ides, director Scopinvest plc Permanent representative of Esfin, director Michel Amzallag on behalf of Union sociale pour l’habitat Union sociale pour l’habitat Association Adviser to the Economic and Financial Studies Department Association Chairman ATES Association Director EPAF Association Director L’office Association Director UCEL Association Director Vacances ouvertes Association Director Philippe Antoine on behalf of CNCC Formasup - Paris Christine Bouyer on behalf of Unat Daniel Chabod on behalf of FNSC D’HLM Simplified plc FNSC D’HLM Association Chairman Federal Adviser Fonds commun de placement Gambetta FCPE (employee investment fund) Chairman of the Supervisory Board Gestion patrimoine immobilière EURL (single owner limited company) Manager GIE Gambetta EIG Director GIE Gambetta immobilier EIG Director and permanent representative of Gestion Patrimoniale Immobiliere (Member) Ides plc Non-voting director SACICAP de l’Anjou plc Chairman and Chief Executive SA d’HLM Gambetta Locatif plc Permanent representative of SACICAP de l’Anjou (Director) Société de garantie de l’accession à la propriété des organismes d’HLM plc Chairman and Chief Executive SCIC Coopérative foncière et immobilière de l’agglomération de Tours plc Chairman of the Board of Directors SCIC d’HLM "Coin de Terre et Foyer" plc Chairman of the Executive Board SCIC d’HLM Gambetta PACA plc Director SCIC d’HLM Gambetta Ile-de-France plc Director PROCIVIS Immobilier plc Director Union sociale pour l’habitat Association Member of the Executive Committee Chantal Chomel representative of category “C” shareholders Conseil supérieur de la coopération Organisation created by decree Member Conseil supérieur de l’économie sociale et solidaire Organisation created by decree Member CoopFr Association under the law of 1901 Director Groupe ESA Association under the law of 1901 Director Haut conseil de coopération agricole Public institution with legal status Member of the Legal Affairs Section Management report Compagnie immobilière des Pays de la Loire 82 Crédit Coopératif Group I Annual Report 2012 Management report 4 / Board of Directors and Executive Management Company Legal status Position Coopérateurs de Normandie Picardie Cooperative plc with variable capital Director FIRES – Supplementary pension fund Institution governed by the social security code Nadia Dehors on behalf of FNCC Permanent representative of Les Coopérateurs de Normandie-Picardie on the Board of Directors Ides plc Permanent representative of the FNCC on the Board of Directors Institut de développement coopératif régional Normandie-Picardie (IDCR) plc Chairwoman and Chief Executive Société de courtage, gestionnaire et conseil en assurances (SACM) Cooperative plc with variable capital Permanent representative of Les Coopérateurs de Normandie-Picardie on the Board of Directors Patrice Forget on behalf of GMF AGSI Assistance protection juridique EIG Director Simplified plc Director Azur GMF mutuelles d’assurances associées (AGMAA) plc Deputy Chief Executive CCR plc Director and Chairman of the Audit Committee COVEA finance COVEA LUX COVEA RE CSE ICO, CSE insurance services CSE Safeguard GMF Assurances GMF Financial services Simplified plc Member of the Supervisory Board plc (Luxembourg) Director Mutual reinsurance undertaking Director US corporation Director plc US corporation Director, Chief Executive Director GMF Vie plc Chairman of the Board of Directors Groupement de fournitures et moyens informatiques EIG Director La Sauvegarde plc Director Téléassurances plc Director Univers mutualité Mutuelle 45 (mutual health organisation) Director and Vice-Chairman Gilbert Hennique on behalf of ANCF Alliansys - Nord création ANCF Hennique et Fils Consultants Canaux Capcil CogeForm Procivis Nord Croissance Nord-Pas-de-Calais Groupement interprofessionnel paritaire pour l’emploi et le logement Inovam Simplified plc Director Association Chairman LLP Manager Property investment company Manager Simplified plc Director Association Director Social housing company Director Simplified plc Director Association Simplified plc Chairman Director IRD Nord-Pas-de-Calais plc Director Nord Financement plc Chairman of the Supervisory Board Résalliance Conseil Saint-Omer expansion Vilogia Vilogia Primo plc Director Simplified plc Director Social housing company Director Simplified plc Director 83 Company Legal status Position Cooperative public limited company Director Jacques Hornez on behalf of MGEN Casden-Banque Populaire CNP Fructipierre plc Property investment trust Non-voting director Member of the Supervisory Board GAIA MGEN Mutuelle Livre II (licensed mutual health organisation) Director plc (Monaco) Director Simplified plc Chairman and Chief Executive Commission d’examen des pratiques commerciales Federation Member on behalf of the FCA Conseil du commerce de France Federation Director and Chairman of the Competition and Consumer Committee Parnasse MAIF Chairman of the Supervisory Board Guy Leclerc on behalf of FCA AD Albertville Conseil national de la consommation Organisation created by decree Member of the Payment Deadline Observatory Coop Fr Association Fédération des enseignes du commerce associé Federation Chairman Fédération professionnelle du sport Federation Director Intercop-Location plc Intersport Belgium plc Director Permanent representative of FCA on the Board of Directors Director Le Rallye Montluçon Simplified plc Chairman and Chief Executive Monnier Chalon-sur-Saône Simplified plc Chairman and Chief Executive LDS Albertville Simplified plc Chairman and Chief Executive Le Mans Sport Simplified plc Director SDC Concarneau Simplified plc Director A Cappella Cooperative production enterprise Chairman and Chief Executive Arpège Cooperative production enterprise Chairman and Chief Executive CCCI Grand Lille Consular chamber Associate Member CECOP Association Vice-Chairman CGSCOP Association Chairman Conseil économique et social et environnemental (CESE) Conseil national du Crédit Coopératif (CNCC) Assembly Association Vice-Chairman, Employment and Labour section, Secretary of the CESE Member of CNCC and Executive Committee Management report Patrick Lenancker on behalf of CG SCOP 84 Crédit Coopératif Group I Annual Report 2012 Management report 4 / Board of Directors and Executive Management Employee-elected directors Company Legal status Position Claire Besson Crédit Coopératif plc Crédit Coopératif Foundation Director of the small and medium-sized associations market Corporate foundation Crédit Coopératif employee-elected director Françoise Girma-Romeyer Crédit Coopératif plc Management assistant Crédit Coopératif plc Key account and project finance director Bati Lease plc Permanent representative of Bati Lease Invest on the Board of Directors Chèque Domicile plc Permanent representative of Crédit Coopératif Jean-Denis Nguyen Trong Approval Committee of the Fonds de Cohésion Sociale State guarantee fund Representative of the Fédération bancaire française France Active Garantie plc Permanent representative of Crédit Coopératif Ides plc Permanent representative of Crédit Coopératif Sogama Crédit Associatif plc Permanent representative of Crédit Coopératif plc Head of small and medium-sized associations and representative organisations Fabienne Roy Crédit Coopératif Executive Management Company Legal status Position François Dorémus – Chief Executive Bati Lease plc Chairman of the Board of Directors BTP Banque plc Permanent representative of Credit Coopératif on the Supervisory Board BTP Capital Investissement plc Permanent representative of Intercoop on the Board of Directors Ecofi Investissements plc Permanent representative of Intercop Location on the Board of Directors Esfin Gestion plc Intercoop Member of the Supervisory Board Simplified plc Chairman of the Board of Directors Intercop Location plc Chairman of the Board of Directors Natixis Assurances plc Director Natixis Lease plc Director ACEP Burkina plc Director Babyloan plc Member of the Strategy Committee Pierre Valentin, Deputy Chief Executive Banque EDEL General partnership BTP Banque plc Member of the Executive Board and Chief Executive Cogitam plc Director CoopEst (Belgium) plc Director Ecofi-Investissements plc Permanent representative of BTP Capital Conseil on the Board of Directors Ecosol La Coopérative Cooperative Esfin Gestion Esfin Participations plc Permanent representative of Crédit Coopératif and Co-Manager Director Member of the Supervisory Board Simplified plc Director Equisol plc Director Fri Rhône-Alpes – Siparex plc Director Sicoop (Spain) plc Director plc (Belgian law) Director SoFicatra Tise (Poland) plc Member of the Supervisory Board Union Centrale du Crédit Coopératif plc Director 85 ➔➔4.2. Remuneration and benefits paid during the year 4.2.1. Remuneration and benefits in kind Crédit Coopératif's executive officers, whose term of office and remuneration are set by the Board of Directors, are: • Jean-Louis Bancel, Chairman of Crédit Coopératif • Hugues Sibille, Deputy Vice-Chairman • François Dorémus, Chief Executive • Pierre Valentin, Deputy Chief Executive • Jean-Paul Courtois, Deputy Chief Executive Gross variable remuneration for the previous financial year, paid during the course of the financial year Executive officer Year Jean-Louis Bancel 2012 €265,000.06 €19,873.00 François Dorémus 2012 €265,005.00 €19,875.38 Pierre Valentin 2012 €190,000.07 €28,500.01 Hugues Sibille 2012 €199,999.93 €29,998.99 Jean-Paul Courtois 2012 €98,247,38 TOTALS Gross fixed remuneration Deferred variable remuneration €11,168.33 Social reintegration Directors’ fees Total €3,463.45 €5,701.56 \ €305,206.40 €5,972.33 €5,697.31 \ €296,550.02 €10,550.00 €4,430.38 €3,698.69 \ €237,179.15 €11,384.00 €4,576.10 €4,138.25 \ €250,097.27 €3,137.00 €1,690.35 €33,102.33 €21,763.79 €20,926.16 \ €75,004.99 €920,005.06 Benefits in kind \ €0.00 €79,832.34 €1,168,865.18 * On a pro rata basis since appointment 4.2.2. Allotments of free shares Conditions for exercising the options: The company’s executive officers were allotted free shares in Natixis, as were all the staff of Crédit Coopératif Group, under the same conditions (60 shares per person). The shares were allotted on 12 November 2007, with acquisition on 12 November 2009 and share availability as from 14 November 2011. • Price: €22.15 • Exercise period: between 29 January 2011 and 28 January In 2008, the executive officers of Crédit Coopératif asked not to be granted any share subscription or purchase options that may be issued by Natixis. No options were exercised by the 4.2.3. Share subscription or purchase options granted to each of the company’s executive officers and options exercised by them company’s executive officers during 2012. There are currently no plans concerning subscription and purchase of shares in Crédit Coopératif, either for the company’s executive officers or for salaried staff not holding positions as executive officers. Executive officers who have Chief Executive status are covered In 2007, the Board of Directors of Natixis announced to Crédit Coopératif that it had decided to allot Natixis share subscription options to the Crédit Coopératif executive officers under the following conditions: officer. • Jean-Louis Bancel • Hugues Sibille • Pierre Valentin service, with an upper limit of €335,000. This scheme was 4,800 options 4,800 options 4,800 options 4.2.4. Termination of appointment commitments by the complementary Chief Executives' pension scheme, which is reserved for executive officers of Groupe Banque Populaire under the rules pertaining to that category of In this respect, the combined amount of all pensions paid to a senior manager may not exceed 50% of the salary while in introduced prior to 1 May 2005, i.e. before French Law 2005842 of 26 July 2005 came into force. Management report 2014. 86 Crédit Coopératif Group I Annual Report 2012 Management report 4 / Board of Directors and Executive Management 4.2.5. Directors’ fees to be paid to members of the Board of Directors for the 2012 financial year ANCF (Association Nationale des Coopératives Financières) 5,600 C.G. S.C.O.P. (Confédération Générale des SCOP) 1,600 Chantal Chomel, representative of category “C” shareholders 10,400 C.M.G.M. (Caisse Mutuelle de Garantie des Industries Mécaniques et Transformatrices des Métaux) 16,000 C.N.C.C. (Conseil National du Crédit Coopératif) (director) 16,800 CNCC (Conseil National du Crédit Coopératif) (non-voting director) 8,000 Jean-Claude Detilleux 15,200 ESFIN 15,200 F.C.A. (Fédération des Enseignes du Commerce Associé) 9,600 F.F.C.G.A. (Fédération Française des Coopératives et Groupements d’Artisans) 8,800 F.N.C.C. (Fédération Nationale des Coopératives de Consommateurs) 11,200 F.N.M.F. (Fédération Nationale de la Mutualité Française) 0 F.N.M.I. (Fédération Nationale de la Mutualité Interprofessionnelle) 12,000 F.N.S.C. D’HLM (Fédération Nationale des Sociétés Coopératives d’HLM) 6,800 G.M.F. (Garantie Mutuelle des Fonctionnaires) 6,000 M.G.E.N. (Mutuelle Générale de l’Education Nationale) 3,200 Michel Vallade, representative of category “C” shareholders 8,000 Société Financière de la Nef 6,400 SOCODEN-FEC (Société Coopérative d’Entraide-Fonds d’expansion Confédéral) 2,400 SOCOREC (Société Coopérative pour la Rénovation et l’Equipement du Commerce) 10,400 U.N.A.P.E.I. (Union Nationale des Associations de Parents, de Personnes Handicapées Mentales et de leurs Amis) 10,800 U.N.A.T. (Union Nationale des Associations du Tourisme) 7,200 U.N.I.O.P.S.S. (Union Nationale Interfédérale des Œuvres et Organismes Privés, Sanitaires et Sociaux) 4,000 Union Sociale pour l’Habitat 4,000 TOTAL 199,600 Financial statements of Crédit Coopératif 5. Company and consolidated financial statements 2012 ➔➔5.1. Applicable accounting standards Consolidated financial statements As of 1 January 2007, companies whose shares may be traded on a regulated market are required, in accordance with the European regulation of 12 March 2002, to draw up their consolidated financial statements in accordance with IFRS standards. Crédit Coopératif complies with this obligation and, since 1 January 2007, has been preparing its consolidated financial statements in accordance with these international accounting standards. The annual financial statements are drawn up in accordance with the regulations applicable to credit institutions and in compliance with generally-accepted French accounting principles. The rules on the publication of financial statements have been applied in accordance with regulation No. 91-01 of 16 January 1991 of the Accounting Rules Committee, including all updates up to rule No. 2010-08 of 7 October 2010 of the Accounting Standards Board applicable to credit institutions.– The standards for presentation of the intermediate operating totals comply with the recommendations of the Conseil National de la Comptabilité (French national accounting council), and the main changes are as follows: • reclassification of non-recurring items as net banking income or operating expenses depending on their type • reclassification of gains and losses on fixed assets as net banking income, except for gains or losses made on operating property and equity investments. 87 5.2.1 Business activity in 2012 In the 2012 financial year, Crédit Coopératif's commercial activity progressed well overall, in terms of both collection and application of funds. Balance sheet resources rose by 9%, thanks to impressive savings figures (up 40%), along with a rise in sight deposits (up 6%). The only negative result in this area was in terms of term deposits, which fell by 10% due to exceptionally low interest rates. Faced with these same difficulties, UCITS exposures remained relatively stable (down 2%), with total fund collection figures rising 3.4% overall. Performance was even better in terms of applications of funds, which rose by 14% overall thanks to double-digit growth across all types of support: current accounts were up 24%, the portfolio rose by 13% and medium and long-term credits increased by 14%. The creation of new credits remained at the high level seen last year, despite a slow-down at the end of the year, standing at €2.2 billion. This included significant growth in the general interest bodies sector (up 8%). 5.2.2. Results Net banking income This positive trend in commercial activity is reflected in net banking income, which stood at 4.2%. Nevertheless, low interest rates had a negative impact on interest margin, which only rose by 1.8%. The rate on "Livret A" accounts – used as the benchmark for all savings products – remained high, whereas all other rates, against which fund application remuneration is indexed, continued to fall throughout the year. These inconsistent trends led to an erosion of the margin rate, preventing the bank from reaping the full benefits of volume effects. The rise in net banking income is mainly attributable to a growth in commission, although this is not accurately reflected in the accounting figures (up 3.6%). Fund transport costs (€2 million) are currently accounted for under net banking income in order to harmonise the financial statements of the Banques Populaires and the Caisses d'Épargne. On a harmonised basis, total commission received rose significantly (up 5.3%), reflecting the growth in activity. Furthermore, the fall in commission from third-party asset management seen in previous years did not materialise in 2012. In fact, given that certain UCITS funds exceeded their yield target for the year, total commission in this area re- turned to growth (up 2.6%) despite the fact that exposures remained stable. Alongside these key figures, net banking income in partner institutions also rose (up 12%), in addition to increases from certain non-operating products, including some from the central body. The fine paid in 2010 with respect to cheque images (€2.1 million) was also refunded. General expenses Despite strong performance in net banking income, general expenses rose at a faster rate (up 7.4%), mainly reflecting exceptional costs incurred through the completion of renovation works on the Head Office in 2012, which had started back in 2009 (€7 million). Overall, this situation was well managed by Crédit Coopératif and its subsidiaries, with payroll expenses remaining within budget (up 5%), while other management costs did not exceed the forecasts other than through unforeseeable expenses, such as the doubling of the banking levy (€2.1 million). In fact, considering all institutions directly managed by Crédit Coopératif, the evidence points to tight cost control. Excluding exceptional costs, general expenses rose by 3.3%, which remained below the rate of growth of net banking income and below the budget forecast. However, expenses rose at a faster rate among partner institutions (up 11.7%), further accentuating the gap between general expenses and net banking income and resulting in a negative impact on the operating ratio, which stood at 75.6%. Gross income and net income As a result, gross operating income stood at €103.5 million, a 4.5% fall on the 2011 figure. Following a particularly low level in 2011 as a result of substantial reversals of provisions (€29.4 million), the cost of risk returned to a more normal level (€49.1 million, compared with €45.4 million in 2010 and €60.4 million in 2009). It is also important to stress the impact of impairment of two of our shareholdings: BPCE securities, the value of which fell by €6.9 million, and poor performance from Financière de Champlain, which led to a write-down of goodwill in this asset management company, representing a €1.1 million loss in the Group's financial statements. Management report ➔➔5.2. Consolidated financial statements 2012 88 Crédit Coopératif Group I Annual Report 2012 Management report 5 / Company and consolidated financial statements 2012 After deduction of tax and non-controlling interests, the Group share of net income stood at €27.2 million, representing a significant fall compared with 2011. This result was broadly expected however and, excluding the impairment of BPCE securities, the Group share of net income was similar to the budget forecast. ➔➔5.3. Financial statements of Crédit Coopératif 2012 5.3.1. Business activity in 2012 In spite of the tough economic climate in 2012, Crédit Coopératif continued to grow its business activity, improving on its overall position in 2011 despite variations in performance in different segments. The growth in fund applications (up 15.7%) was substantially higher than the rise in fund collection activities (up 3.7%). Sight deposits (€3.2 billion) fell short of the budget target (down 2.8%), although the shortfall at 30 June was not significant (down 0.6%). While overall growth compared with 2011 was positive (up 5.9%), the slow-down recorded at 30 June (up 7.3%) was less than half of the trend for the previous year (up 12.2%). Savings (€2.4 billion) played a key role in the growth of fund collection. Performance in this area easily exceeded the budget (up 16.6%). Growth on 2011 (up 39.7%) was even higher than the exceptional figure posted last year (up 24.6%). This change can be explained by the significant discrepancy between the "Livret A" rate (which remained stable) and short-term rates such as Eonia and Euribor 3 months (which fell continuously throughout the year). It was further accentuated by the introduction of new savings accounts with higher ceilings (€3 million). As a result of this unfavourable rate situation, term deposits (€1.8 billion) fell by 13.2% compared with 2011 and were 16.8% short of the target. This discrepancy between term deposit and savings performance meant that, for this first time, savings represented the dominant portion of remunerated fund collection in 2012, unlike in previous years, when term deposits occupied this position. UCITS subscriptions (€3.1 billion) had been falling since 2010, but the downward trend was less marked in 2012 (down 6.6% compared with a fall of 19.0% in 2011). Applications of funds (€8.3 billion) were above the budget objective (up 2.8%), representing a 15.7% increase on 2011 and even better performance than last year (up 12.9%). Furthermore, the growth in short-term applications was higher than the growth in medium- and long-term credits for the first time. Short-term applications (€841.2 million) were substantially higher than the target (up 17.2%), representing an 18.8% increase on 2011, a rate more than twice that achieved last year (up 8.1%). This is the highest rate for at least 10 years, marking a break in a long-term trend. Current accounts (€515.1 million) exceeded the budget by 26.0%. While in previous years the current account figure fell in the second half of the year, it increased steadily throughout the year, thanks in particular to advance funding for CDC loans. While average growth stood at 24.8% for the year, it peaked at 50.5% in the month of December alone. Cash flow and the commercial portfolio (€326.2 million) also posted impressive performance for the year, increasing by 10.5% compared with 2011 and far exceeding the budget (up 5.5%). Here too, the trend involved an acceleration over the course of the year, with a strong increase at the end of the year. After two quarters of moderate increases, an 18.5% rise was posted in Q4. Confirmed credits (€124.7 million) were above the budget target (up 12.6%) and were 13.3% up on 2011, with particularly strong growth in Q3. Average monthly exposures rose from €115.2 million in June to €142.2 million in August, falling off slightly thereafter (€134.4 million in December). Medium and long-term applications of funds (including property leases) stood at €7.3 billion, exceeding the budget target by 1.3%. Growth (15.4%) remained stable throughout the year, unlike the acceleration seen in short-term application of funds. This was despite a slow-down in disbursements in the second half of the year, which rose by only 2.0% over the year as a whole. 5.3.2. Shareholdings The Crédit Coopératif portfolio of shareholdings stood at €448.6 million, an increase of 4.6% compared with 2011. The main investment operations were as follows: • Transfer of BTP Capital Investissement securities to SMA BTP, BTP Prévoyance and BTP Banque, totalling €5 million. Crédit Coopératif's percentage shareholding fell from 79.4% to 32.4%. 89 (14% stake). • Transfer of our shareholding in SAS Polylogis (€74K). Crédit Coopératif remains a shareholder, however, holding one share. • Continuation of the 4.2% stake in SAS ABC Microfinance, which manages the Babyloan.org website, i.e. an additional shareholding of €10K, bringing the total to €110K. • Participation in the capital increase for Banque Edel, totalling €1 million. Crédit Coopératif holds a 29% stake, with a total shareholding of €5.8 million. • Additional investment of €140K in FIDES Bank Namibia. Crédit Coopératif holds a 10% stake in this micro-finance bank, with a total shareholding of €324K. • A €50K investment in SCIC HLM Habitat de l’Ill, representing a 5% stake. • A €25K investment in SEM Oryon, representing a 1.5% stake. • A €30K investment in SEM d’aménagement de la Ville de Nanterre (SEMNA), representing a 0.8% stake. At 31 December 2012, the main shareholdings were as follows: • BPCE: €198.7 million and a 1.01% stake • Banque Populaire Développement: €30.1 million and a 4.44% stake • BTP Banque: €24.1 million and a 99.96% stake • USCC: €22.1 million and a 100% stake • Ecofi Investissements: €21.8 million and a 99.1% stake • Intercoop: €21.5 million and an 82.4% stake • Esfin: €18.2 million and a 38.1% stake • Bati Lease: €16.7 million and a 94.9% stake • Intercop Location: €8.5 million and a 90.7% stake • BNDA: €7.7 million and a 9.70% stake • Tise: €6.28 million and a 100% stake • Esfin Participations: €6 million and a 16.1% stake. 5.3.3. Equity capital and fixed assets Equity capital stood at: • €1,140 million at 31 December 2012, before allocation of income, compared with €1,075.1 million at 31 December 2011 • €1,122.4 million at 31 December 2012, after allocation of income, compared with €1,057.1 million at 31 December 2011. Capital stood at €806.2 million at 31 December 2012, compared with €743.7 million at 31 December 2011. The distribution of capital between A, B and C shares and cooperative certificates of investment changed from the distribution at 31 December 2011, and a new share category (P shares) was introduced. At 31 December 2012, distribution of capital was as follows: • A shares: €47.3 million (€93.9 million at 31 December 2011) • B shares: €396.1 million (€305.1 million at 31 December 2011) • C shares: €188.7 million (€196.0 million at 31 December 2011) • P shares: €12.9 million • Cooperative certificates of investment (CCIs): €161.2 million (€148.7 million at 31 December 2011). The shareholdings portfolio amounted to €448.6 million, compared with €428.8 million at 31 December 2011. Net fixed assets amounted to €25.8 million, compared with €26.1 million at 31 December 2011. 5.3.4. Income statement Net banking income stood at €281.9 million, up 2.4% on the 2011 figure (€275.3 million) and 2.6% down on the forecast (€289.5 million). The rise in net banking income does not fully reflect performance, due to unfavourable margin rate changes. The interest margin on customer operations rose by €2.5 million, falling short of the budget target (€9.6 million). This situation can be explained by falling margin rates. There are also several other negative factors: • The rate structure, which was already unfavourable in 2011, continued to deteriorate throughout the year, with the "Livret A" rate (the headline rate for all savings) remaining at 2.25%, while the benchmark rates against which fund applications are indexed continued to fall. • The rate on new fixed-rate medium- and long-term credits was below the rate on sources of funds, despite an increase in the margin rate on internal transfers, which meant that it was not possible to compensate for the fall in this internal transfer rate. • Falling monetary rates had a more rapid effect on shortterm applications of funds, for which falling indices are accounted for on a month by month basis, than on term resources, the rate of which is fixed over the term chosen by the customer; furthermore, customers tended to choose longer terms to gain better remuneration. Management report • A €118K investment in SCI Cap Vacances La Grande Motte 90 Crédit Coopératif Group I Annual Report 2012 Management report 5 / Company and consolidated financial statements 2012 • Strong competition on deposits also led to an increase in spreads on term deposits at the end of the year. • Finally, the strong growth in short-term credits was accompanied by a fall in the average commercial margin rate (discrepancy between the index and the customer rate). The apparent increase in net commission was penalised – both in terms of the target and in comparison with 2011 – by the reclassification of fund transport costs (€2.0 million) in net banking income under general operating costs. Under a consistent scope, the increase in net commission would have been €3.5 million, slightly below the target (down €0.5 million). • Net income from banking operations rose by €0.7 million, falling short of the budget target by €2.3 million. This decline can be explained by the fact that no rate revision was carried out on 1 July last year. • Net receipts from method of payment management, excluding fund transport costs (€2.0 million), rose by €2.0 million, exceeding the budget target (€1.7 million). • Commission on financial transactions was in line with the budget (€0.1 million above), rising by €0.4 million over the year. The increase from customer swap sale products and the fact that BPCE paid out on SFH operations for the first time more than compensated for the fall in commission on OPCVM investments. • Commission from online service subscriptions and teletransmissions operations rose by €0.3 million, in line with the budget target. Current non-operating products exceeded the budget forecast (up €3.5 million) and represented an improvement on 2011 (up €0.9 million). This discrepancy between the actual figures and the budget was primarily due to: • repayment of the fine paid with respect to inter-bank commission on cheque images, as imposed by the competition authority in 2010 (€2.1 million) • remuneration by BPCE of the super-subordinated security issued in March 2012 (€1.7 million) and surplus fund collection from members' shares compared with Crédit Coopératif's budget (€1.1 million). These aspects compensated for the fall in dividends received from ICP (down €1.2 million) and Banque Populaire Développement (down €0.9 million). Total personnel expenses (€122.0 million), up 6.9% compared with compared with 31 December 2011 (€114.1 million), represented a saving of 0.6% in relation to the budget (€122.7 million). On average, 1,436 FTE (full-time equivalent) employees worked for Crédit Coopératif during the year under review. This represented an increase of 37 FTEs compared with the situation at 31 December 2011 (1,399 FTEs), returning to a similar level to that recorded in 2010 (1,429 FTEs). Half of the additional staff came from the commercial network, with each regional delegation increasing its workforce by 2 to 4 FTEs, in particular following the opening of the ParisConvention and Lyon-Part-Dieu branches. The majority of additional Head Office staff were in banking production backoffice roles, as well as in development and distribution positions. Furthermore, the annual review of personnel re-billing arrangements between Group companies, based on the activity of different Head Office departments, meant that Crédit Coopératif was assigned more IT department employees. Personnel expenses grew by around €7.8 million year-on-year. Of this, €3.8 million was related to fixed salaries and social costs. The main components were new recruits, payment of variable remuneration elements following good results in 2011, and an increase in the fixed social security contribution (up €0.5 million) and payroll taxes (up €0.6 million). All other personnel expense increases combined totalled €2.8 million, including an additional payment agreement (up €0.9 million) and introduction of the necessary provisions (especially paid holidays and end-of-career benefits). Finally, following detailed updates to Head Office support function tasks (IT in particular), and changes to their distribution among different member companies of the de facto grouping, Crédit Coopératif now re-bills less to other members, resulting in an additional cost of €1.2 million. Other management expenses and depreciation (€96.5 million) increased by 7.4% compared with 2011 (€89.9 million) and exceeded the budget by 1.9% (€94.7 million). More than half of this additional €6.6 million concerned property costs, including the move back to the iconic renovated building on Boulevard Pesaro. This resulted in substantial costs in terms of overlapping rental expenses, as well as rental, vacation and restoration costs linked to the backup sites used for the past three years. Other substantial costs incurred in 2012 included the doubling of the banking levy (up €1.8 million), the brand awareness campaign (up €0.5 million), support for the launch of the e-branch (up €0.4 million) and IT costs (up €0.4 million), following adjustments to billing arrangements in line with use of the IT service supplied by GIE USCC to its members. 91 In total, general expenses (€218.5 million) rose by 7.1% compared with the previous year (€204.0 million), roughly in line (0.5% higher) with the budget of €217.5 million. • A net reversal for depreciation on securities of €1.1 million (including a reversal of €2.3 million on Lehman Brothers and an allocation of €1.2 million on Landsbanki). The new income from gains and losses on financial assets includes: Gross operating profitstood at €63.4 million, compared with €71.2 million in 2011, representing an €8.7 million shortfall on the budget target (€72.1 million). The cost of risk represented a net expense of €38.9 million, a 91.1% increase in 2011, but almost identical to the same figure in 2010 (€39.4 million). In 2012, the amount allocated to the cost of risk included the following main components: • €35.4 million in net depreciation for customer receivables (€13.8 million in 2011), or €59.1 million in total depreciation compared with €51.2 million in 2011, and €23.6 million on reversed provisions (€37.4 million in 2011) • €3.7 million net allocation of depreciation imputed for the effect of time (€2.5 million in 2011) • €1.1 million net allocation of provisions for risks and recovery of impaired receivables, minus non-covered losses (compared with €2.0 million in 2011) • €0.2 million reversal for social depreciation (collective basis), compared with an allocation of €1.9 million in 2011 • A capital gain of €8.6 million on the transfer of BTP Capital Investissement securities • An allocation of €3.0 million for depreciation of BPCE securities, and a reversal of the same amount from the Fonds Régional de Solidarité (FRS). The Fonds pour Risques Bancaires Généraux (FRBG) was allocated €3.3 million, compared with €1.7 million in 2011, in addition to the allocation of €9.6 million made last year under the Groupe BPCE guarantee mechanism. Net income stood at €22.6 million (compared with €21.3 million in 2011), following a tax burden of €7.9 million for the period (€18.2 million in 2011). 5.3.5 Events after the end of the financial year No major event with a material effect on the company financial statements or consolidated financial statements occurred between the financial year-end and the date on which this report was prepared. Company results for the last five financial years 2008 2009 2010 2011 2012 (1) Registered capital 493,718,765 535,555,936 743,718,786 743,718,786 806,218,776 Number of shares issued 25,900,000 28,643,421 39,014,756 39,014,756 42,294,532 6,475,001 6,475,001 9,753,689 9,753,689 10,573,361 736,718,848 570,779,296 540,599,751 587,063,628 607,954,099 84,247,590 62,177,588 70,586,020 57,384,305 63,541,758 7,621,256 528,593 11,059,836 18,160,813 7,883,274 183,264 671,909 1,368,038 1,851,021 1,697,020 Income after tax and charges calculated (depreciation and provisions) 18,758,920 18,806,743 20,661,287 21,269,158 22,623,114 Income distributed by shares 13,499,849 11,397,392 12,314,460 13,869,406 14,547,691 3,554,776 2,962,313 4,164,825 4,164,825 4,030,000 Number of CCIs issued Operations and results for the financial year Turnover excluding tax Income before tax and charges calculated (depreciation and provisions) Corporation tax Employee profit sharing for the financial year Income distributed by CCIs Income per share Income after tax, but before charges calculated (depreciation and provisions) 2.84 1.76 1.22 0.80 1.05 Income after tax and charges calculated (depreciation and provisions) 0.58 0.54 0.42 0.44 0.43 Dividend distributed to each type B, C and P registered share 3.6% 3.0% 2.8% 2.8% 2.5% Dividend distributed to each CCI 3.6% 3.0% 2.8% 2.8% 2.5% Dividend distributed to each type A registered share Personnel Average number of staff employed during the financial year 1,560 1,623 1,663 1,676 1,688 Wage costs 67,673,244 72,560,066 73,029,592 74,276,387 77,401,424 Amounts paid under company benefit schemes (company social security and benefit schemes) 34,580,157 36,587,860 37,774,865 39,041,682 40,836,059 1. Subject to approval by the Ordinary General Meeting Management report Capital 92 Crédit Coopératif Group I Annual Report 2012 Management report 5 / Company and consolidated financial statements 2012 Intermediate operating totals (in thousands of euros) Sections + +/- At 31/12/2012 Net income from interest At 31/12/2011 224,503 Income from variable-income securities 220,823 2,830 5,283 51,294 48,906 + Net commission + Income from trading and investment portfolios 1,174 1,312 + Other net operating income 2,083 (1,072) +/- Proportion of income from companies consolidated according to the equity method = Net banking income 281,883 275,252 - General operating and depreciation charges 218,478 204,028 117,696 109,917 99,991 93,385 . Payroll . Other administrative costs = +/= +/= . Depreciation charges 791 726 Gross operating income 63,405 71,224 (38,946) (20,383) 24,459 50,841 Cost of risk Operating income Net income from fixed assets Current pre-tax profit +/- Extraordinary income +/- Proportion of income from companies consolidated according to the equity method +/= Corporation tax Appropriation to/Reversal from the FGBR and regulated provisions Net income 5,167 (51) 29,626 50,791 (7,883) (18,161) 880 (11,334) 22,623 21,296 Information relating to subsidiaries and shareholdings at 31 December 2012 Companies or groups of companies Capital Equity capital other than share capital Proportion of equity held Book value of securities held Amount for Outstanding guarantees loans and and advances endorsements granted by provided by the company the company Turnover for the latest financial year Net profit or loss for the latest financial year Dividends received by the company during the financial year A. Detailed information relating to shareholdings with a value exceeding 1% of the capital of the company required to declare them I - Subsidiaries (at least 50% of the capital held by the company) GIE USCC 8,700,000 Intercoop 4,856,280 21,482,398 96.07 % 22,096,430 4,336,359 82.37% 21,532,525 27,500,000 Intercop Location 4,573,800 5,532,771 90.70% 8,536,883 Bati Lease 9,065,280 24,318,696 94.89% 16,708,632 Ecofi Investissement 4,445,154 8,626,906 99.08% 21,779,604 50,000,000 3,832,045 99.96% 24,059,690 BTP Banque 0,991,572 35,148,150 154,398 43,384,342 1,698,926 79,624,550 3,275,620 6,097,500 -2,743,247 58,068,731 8,130,199 -88,618 409,314,382 100,006,200 860,168 II - Shareholdings (10% to 50% of the capital held by the company) Esfin Participations 31,251,738 4,186,986 16.11% 6,000,368 810,112 -239,475 15,173 IRD Nord - Pas-de-Calais 44,274,913 1,051,000 17.38% 5,652,172 7,307,000 3,191,000 75,681 Rhone Dauphine Dev 13,770,000 1,024,096 19.44% 2,674,324 -287,437 108,469 EDEL 77,085,140 135,000 29.13% 5,812,635 8,491,000 4,728,000 4,493,240 5,694,718 38.08% 18,159,754 133,848 -235,913 16,985,892 5,113,461 32.41% 4,131,371 492,448 285,905 Esfin BTP Capital Investissement 80,000,000 5,000,000 580,640 B. General information relating to other subsidiaries or holdings I – Subsidiaries not mentioned in § A a) French subsidiaries (taken together) b) Foreign subsidiaries (taken together) II – Shareholdings not mentioned in § A a) French companies (taken together) b) Foreign companies (taken together) 2,837,866 201,600 5,662,092 5,627,298 6,008,930 306,000 317,754 93 Activities per country exercised by subsidiaries and consolidated entities in 2012 % shareholding Tise COOPEST country of origin Net banking income (€) Staff (FTE) Income (€) Tax paid (€) 100% Poland 557,000 6 141,000 18,400 28% Belgium 1,041,370 0.5 516,711 99,832 6. Risk exposure and risk management In 2012, Crédit Coopératif refined the risk control system for its financial operations, reviewing both its limits system and the way in which its operational processes are organised. In terms of credit risk, the Crédit Coopératif bank and network updated its knowledge of Basel II standards and practices. This training programme helped to improve risk control. This system ensures that risks are covered, fully assessed and managed in accordance with the guidelines laid down by the Board of Directors. Adaptations continued to be made to the anti money laundering system, with work undertaken to update customers' statutory files and implement new monitoring scenarios targeting specific risk profiles. It is organised in order to guarantee strict independence of risk control functions from operational lines and by distinguishing three levels of monitoring: ➔➔6.1. Credit risk • continuous control, carried out at first level in the business lines, within the normal framework of their responsibility, and at second level by dedicated local and central teams organised according to type of risk – credit, financial, operational/compliance • periodic control is carried out at third level by an audit team, whose missions extend over all the bank’s business lines in accordance with a multi-year programme. This organisation is detailed in the report of the Chairman of the Board of Directors on Crédit Coopératif’s internal control procedures. The status of the system for controlling and evaluating risk is reported at regular intervals to dedicated committees. The main committees involved are: • the Audit Committee and the Risk Committee, other bodies of the Board of Directors • the Central Risk Committee (which addresses all risks) • the Operational and Compliance Risk Committee • the Control Function Coordination Commission. 6.1.1. A high-quality portfolio Breakdown of Crédit Coopératif's customer commitments (balance sheet and off-balance-sheet) excluding financial products, by Basel II risk class as at 31/12/2012 1% Appreciable risk 4% Low risk 4% Doubtful Douteux 24% Very good risk Risque sensible Risque médiocre Risque moyen 31% Medium risk Bon risque 36% Good risk Très bon risque Non noté Douteux Management report Crédit Coopératif Group’s risk management is based on an organisation that complies with legislation and regulations, in particular, Regulation 97-02, as last amended, of the French Banking and Finance Regulatory Committee. This organisation is reflected in an internal control system, which forms part of the practices and procedures for risk assessment within the Groupe BPCE. The control system is defined in a charter approved by the Audit Committee. 94 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management 6.1.2. A diverse portfolio dominated by Corporate commitments See also Appendix 9 to the Crédit Coopératif financial statements, which gives a breakdown of exposures by economic agent. Breakdown of Crédit Coopératif's customer commitments (balance sheet and off-balance-sheet) 6.1.3. Risk management system There is a system in place to guarantee close monitoring of credit risk: branches have information tools at their disposal that allow them to check compliance with authorised limits on Particuliers a daily basis. This monitoring is supplemented by second-level controls performed on each loan file individually by the Group Retail Credit Risk Department based on its own specific alarm criteria. At least once a month, all positions that have exceeded Corporate their limits are reviewed by means of exchanges of information with each of the branches. These controls are in turn supplemented by missions performed by the Group's Internal Audit Department acting on behalf of Executive Management. Sensitive files are monitored by a Difficult Business Committee meeting, which convenes weekly and decides on the guidelines to be followed in agreement with the Commitments Department, the Group Credit Risk Department and the technical units. A specialised Credit Risk Reporting Committee assesses the quality of risk management. excluding financial products, by Basel II segment as at 31/12/2012 8% Individuals 12% Retail 12% Corporate Loan portfolio breakdown by segment: breakdown of Crédit Coopératif's customer balance-sheet commitments by Basel II sub-segment excluding financial products at 31/12/2012 (in €K) 25% Bank 6% 37% Companies Government and public authorities 6.1.4. Risk management policy and objectives In 2012, the bank continued to improve the tools and procedures dedicated to Basel II processing, working jointly with BPCE. As a result of these developments, together with continuous monitoring of customer data, Crédit Coopératif has considerably enhanced the levels of reliability of Basel II information, Banquenow integrated into all its procedures covering delegations, risk management and pricing of medium and longParticuliers term exposures. du secteur public AllEntités customers have now received a rating using the tools that incorporates this approach to risks. 8% Public sector organisations Financements spécialisés This environment strengthens the management of credit risk Associations et assimilés and provides Crédit Coopératif with more extensive informaAssurances tion databases allowing it to analyse its activity in more precise detail. 2% Specialist financing OPCVM (Lignes de trésorerie) 15% 6.1.5. Risk approval procedures Associations État et administration publique 1% Insurance undertakings, licensed mutual health organisations and capitalisation companies 0% UCITS 6% Individuals Every loan decision is taken on the basis of the same princiEntreprises ples, regardless of the Crédit Coopératif Group institution involved: • every commitment requires prior authorisation Particuliers Entrepreneur individuel 95 • authorisations are granted by Head Office or by the branches with the appropriate authority, which depends on the type and amount of credit facility applied for When adjusted for the volume of exposures the cost of risk is, relatively speaking, below the cost in the years 2008-2010. • loan applications are processed on the basis of a structured application file tailored to each type of customer This situation, however, cannot hide the fact that the economic situation was unstable, with SME/SMIs once again getting into difficulty in the final months of the year. • the Commitments Department analyses the application files for which it is responsible, acting completely independently of the commercial subsidiaries • authorisations lapse after a maximum of twelve months and the situation in each case is reviewed at least annually • joint analysis and the right of veto of the Group Credit Risk Department apply to applications that fall within the remit of the Commitments Committee for Crédit Coopératif and that fulfil specific criteria tailored to each subsidiary or partner institution. 6.1.6. Continuous control of credit risk Continuous control is based on the Basel II rating system for customers, which is based on objective financial and economic information. As a result, our risk policy continues to combine the requisite level of prudence in what is an uncertain environment, a desire to support the customers that we have historically supported and our ambition of opening up to new markets that have been studied in advance by our specialist departments. In order to ensure that the Group continues to boost its business activities in an environment where risks are described and managed, a number of risk policy memos have been issued. To manage these risks, the Credit Risk Department uses a loan file monitoring system based on Basel II ratings, which summarises financial information from other Banques Populaires, as well as internal queries and alarm tools designed to detect difficulties. The ratings of Corporate customers are reviewed by their manager at least once a year. Meanwhile, the ratings of other customers (Retail) are reviewed on a monthly basis. • the overall trend in the quality of loan exposures • the quality of the largest exposures • the detailed situation of customers with the highest exposures. Cost of risk at 31/12/2012 Analysis of the change in cost of risk excluding collective provisions and the effect of time (change in % and in volume of the cost of risk, in €K) 6.1.7. Credit risk monitoring: changes compared with the previous period The main change compared with the 2011 financial year was the training programme to improve knowledge and understanding of Basel II among all employees concerned, in both the network and the Head Office credit division. Short term + medium- to long-term 60,000 3.0% 54,687 50,000 2.5% 40,000 6.1.8. Changes in the cost of risk 35,289 32,846 30,000 The upward trend in the cost of risk seen at the end of 2011 continued through 2012. The cost of risk on credit operations stood at €35.3 million, representing an absolute-value increase on 2011 (a year that saw substantial reversals of provisions). 1.5% 20,000 10,000 2.0% 31,895 0.90% 0.62% 1.0% 16,202 0.47% 0.40% 0.21% 0 0.5% 0.0% 31/12/2008 31/12/2009 31/12/2010 31/12/2011 31/12/2012 Management report Executive Management receives detailed information through reports, particularly from the Group's Central Risk Committee, on: 96 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management ➔➔6.2. Market risks Market risks are risks that arise as a result of developments on financial markets (level of rates, currency exchange rates, prices on stock markets, etc.) which are unfavourable for the bank and result in: • a future reduction in income or an increase in expenses (the amount of interest in particular) • a reduction in the value of assets or an increase in the value of liabilities, in particular for investment income entered in the balance sheet at fair value. Crédit Coopératif Group’s market risks relate principally to Crédit Coopératif S.A. In the main, market risks for this company relate to: • financial instruments in the trading portfolio, where changes in valuations affect the income statement (these are principally derivatives) • securities and UCITS shares in which surplus cash is placed (as the majority of these securities are classified as available for sale, changes in their valuation change the amount of equity) • cash flow hedge derivatives and imperfections in fair value hedges concluded in order to guarantee overall interest rate risk hedging (macro coverage) and micro-hedging of this same interest rate risk. Note: according to IFRS 7, market risk includes interest rate risk considered in very general terms, including the overall interest rate risk (covered in a second section devoted to structural balance-sheet risks; this first section is limited to market risks in a narrower, more traditional sense). Crédit Coopératif’s trading portfolio As part of the consolidation conducted in line with IFRS standards, the trading portfolio comprises securities classified in the market to market portfolio in line with French standards and derivative instruments that are not classified as hedging instruments. Accordingly, it contains non-speculative operations such as derivatives sold to the bank's customers (e.g. rate swaps designed to convert variable-rate loans into fixed-rate loans) and the corresponding market hedging operations, either because it was not deemed necessary to officially record these in hedging files, or because IFRS standards do not permit it (such as with hedging one derivative against another). Crédit Coopératif’s trading portfolio is deliberately limited below the thresholds stipulated in the French regulation of 20 February 2007 on the solvency ratio, and in particular in the section relating to prudential monitoring of market risks. These limits are €20 million for the maximum position and €15 million for the average position (exceeding these limits would result in calculation of specific equity consumption in relation to market risks). Crédit Coopératif Group is therefore not subject to this regulation, which includes provisions for possible additional equity capital with respect to market risks. In 2012, the maximum trading portfolio position was €7.3 million and, at 31 December 2012, this position (calculated on a prudent basis) was below €1 million. Month-end trading portfolio position in 2012, in euros 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 January March February May April July June September November August October December All variations in the value of financial instruments within the portfolio have an impact on the income statement. Its sensitivity to the various risk factors can be assessed on the basis of the following elements: • the sensitivity of the trading portfolio valuation to a uniform rise in interest rates of 100 basis points is only approximately €475 K 97 equivalent to a negative share exposure (or "sell" position) of €5.8 million of share risk. The valuation of stock index contracts concluded may therefore change fairly significantly. Nevertheless, it should be noted that as the majority of hedged UCITS were classified at fair value as an option, changes in their valuation can offset changes in the valuation of hedging derivatives in the income statement, even if securities are not, strictly speaking, part of the trading portfolio. Cash and own-account management The market risks borne by Crédit Coopératif lie mainly within the framework of its own-account management (investment of surplus cash considered as stable) and in its short-term liquidity management. As own-account investment amounts fell significantly in 2012, the associated risks also fell accordingly. 6.2.1. Counterparty risk The counterparty risk, which is basically a counterparty default risk (the credit risk for financial products), also constitutes a price risk through variations in the credit spread. For each counterparty, a request for an authorised limit has been examined and passed by the Financial Committee in line with the applicable rules, and the amounts thus authorised are reviewed periodically and may be reduced or withdrawn, depending on the economic or financial environment and, in some cases, changes in the ratings assigned to the counterparties concerned. Moreover, a minimum external rating is required depending on the portfolio (bond portfolio or liquidity management) and the type of counterparty (corporate or interbank), in all cases complying with the rule set by the Group Risk Committee for interbank counterparties; only commitments undertaken in the framework of partnerships may be exempt from these rules. In the main, counterparty risk is situated in the six activity segments presented hereafter in paragraphs a) to f). a) Own-account short-term securities portfolio The purpose of this portfolio is to invest surplus cash amounts considered as stable. In 2012, this portfolio was managed on the basis of various limits: • overall amount below €350 million (average annual exposure) • limit on the commitment amounts for a single counterparty at a maximum of €10 million, except for commitments to Groupe BPCE entities • maturity of less than one year for 75% of the portfolio, with the remaining 25% limited to 18-month maturity if guaranteed by an AAA-rated state. In 2012, the portfolio consisted of private counterparty bonds, the vast majority of which were interbank bonds, classified in the investment portfolio in French accounting. All of the bonds held in this portfolio had a residual maturity of less than 12 months at end-2011. As this portfolio was not renewed in 2012, and in accordance with the Groupe BPCE liquidity management strategy introduced in summer 2011, the nominal exposure of €365 million at end-2011 stood at zero by end-2012 (with an average of €142 million over the year). b) Own-account longer medium-term securities portfolio This is a portfolio of €120 million, created in early 2011. It comprises private bonds from major European corporations which, at the date of purchase, had a residual maturity of more than two years but no more than three years. In this portfolio, the amount per counterparty was limited to €5 million; where any of the securities of these counterparties were also contained in the short-term portfolio described above, the overall amount per counterparty remained below €8 million across both portfolios. Furthermore, the residual maturity of investments in this portfolio now stands at around one year. c) Securitisation Directly held securitisation portfolio: this portfolio, with a nominal overall value of €17.4 million, comprises unrated mezzanine tranches of two asset securitisation funds, with assets consisting of loans to French SMEs (over a 10-year term), these securities only having been acquired as an investment because Crédit Coopératif had previously decided to provide a guarantee for Management report • risk hedging for UCITS shares, at 31 December 2012, was 98 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management these two securitisation tranches organised by one of its customers (GIAC). Of this €526 million of state-backed securities, €176 million concerns OATs that matured in April 2012, with the remaining securities due to mature between 2013 and 2020. New OATs This securitisation portfolio constitutes a significant risk, as Crédit Coopératif had to allocate a provision of €1.8 million (in 2009 and 2010) for the first of the two securitisations. In 2012, an additional provision of €600K was made with respect to this securitisation, and provisions of €400K also had to be made for the second securitisation. were purchased in July 2012 to renew the liquidity reserve, but Note: the risk and the associated provision primarily concern the guarantee provided rather than the financial investment subsequently made by purchasing all of the securities in the guarantee tranche. €200 million of inflation-linked Natixis negotiable medium-term Other securitisation In late 2011, Crédit Coopératif invested in monetary UCITS of Ecofi Investissements, accounting for €33 million of senior tranches of high-quality, AAA-rated Spanish securitisations, with a triple protection mechanism: • by the lower-level tranches • for the two largest securitisations, by the value of guarantees covering the receivables which, on average, was much higher than the remaining exposure • by the acquisition price of these securities, which was calculated using a model based on extreme stress scenario criteria for the Spanish economy. These securitisations were sold on the markets in 2012 at a price above their purchase price. this time amounting to only €150 million. The portfolio of French state-backed securities therefore fell slightly to €500 million at end-2012. In late 2010 and early 2011, Crédit Coopératif also invested in notes, with a 10-year term, in order to hedge its exposure to the risk of inflation rises through its banking activity (resulting in an increase in the rate for Livret A savings accounts, along with other savings account). f) Miscellaneous exposures Crédit Coopératif also has €47 million of exposure in a loan and securities portfolio, mainly comprising commitments to "partner" institutions: refinancing institutions for micro-finance institutions, foreign social economy banks, and private companies in the social and socially responsible economy sector. Finally, some of its residual exposure (€3 million) concerns convertible bonds. d) Liquidity management In summary, the counterparty risk on financial operations, regis- Interbank loans are made or short-term securities acquired within the framework of short-term liquidity management. At end-2012, this activity had diminished significantly, limited almost exclusively to short-term finance provision to Crédit Coopératif Group partners and a few pension funds, representing a total value of less than €62 million. tered as assets in the balance sheet, may be broken down as e) Balance sheet management As part of the overall interest rate risk management policy, €526 million of French and Belgian government securities, or securities providing similar counterparty guarantees (CADES bonds), were acquired several years ago. They are classified as being “held until maturity” under IFRS and the counterparty risk can be considered as very low, although the recent sovereign debt crisis is raising fears over Belgian securities. Crédit Coopératif holds €82 million of Belgian securities, rated AA+ by Standard & Poor’s, which are due to mature in 2015 and 2017. follows: Tables and graphs showing the breakdown of exposures using various criteria Breakdown of financial commitments at year-end 2012 by type of counterparty 2011 2012 Sovereign 19.83% 30.73% Intra-group 65.70% 58.96% Banks 8.08% 2.80% Companies 5.73% 6.45% Securitisation 0.66% 1.07% 99 As at 31 December 2012, 89% of the counterparty risk was concentrated in the states of France and Belgium (totalling €418 million and €82 million respectively) or in counterparties belonging to Groupe BPCE. Country Securitisation Companies Banks 30.73% Titrisation Sovereign 91.86 % 4.60 % 6.53 % Germany 1.11 % 0.92 % Italy 0.67 % 0.57 % United Kingdom 0.66 % 0.61 % Eastern Europe 0.52 % 1.59 % Scandinavia 0.49 % 0.68 % Miscellaneous 0.09 % 0.14 % Spain 0.00 % 0.00 % Breakdown of financial assets at year-end 2012 by country of origin Banques Intragroupe 1.59% Eastern Europe Souverain Intra-group 2012 88.96 % Benelux and Switzerland Entreprises 58.96% 2011 France 1.07% 6.45% 2.80% Breakdown of financial assets by country of origin ers Div 0.68% Scandinavia 0.14% Miscellaneous 0.61% es qu rdi No E st United Kingdom UK 0.57% I Italy D 0.92% Germany Values expressed in euros CC Group Non-Group Titrisation Total 500,000,000 Entreprises 880,459,328 Groupe BPCE Long-term liquidity/ ALM 380,459,328 Subsidiary partner institutions 558,959,123 Mediumterm bonds (< 3 years) 20,000,000 99,700,000 Souverain 119,700,000 68,219,718 68,219,718 400,459,328 558,959,123 667,919,718 1,627,338,168 ce 6.53% n Fra Benelux and Switzerland 88.96% France 558,959,123 Intragroupe At 31 December 2012, 99.8% of the counterparty risk was concentrated in issuers or counterparties belonging to the European Union. Crédit Coopératif holds no financial assets related to entities located in Greece, Spain, the Republic of Ireland or Portugal. Breakdown of financial assets at end-2012 by country of origin, excluding exposures to Crédit Coopératif Group or Groupe BPCE Breakdown of bond portfolios excluding investments in Groupe BPCE entities Country Breakdown of bond portfolios by sector Telecommunications Energy Food Automotive Water Construction Manufacturing Luxury Institutional catering 21.10 % 19.80 % 15 % 15 % 10 % 5 % 5 % 5 % 5 % 2011 2012 France 76.3 % Benelux and Switzerland 13.4 % 75.4 % 15 % Germany 3.2 % 2.2 % Italy 2.0 % 1.4 % United Kingdom 1.9 % 1.5 % Eastern Europe 2.9 % 2.5 % Scandinavia 0.3 % 1.6 % Miscellaneous 0.1 % 0.3 % Management report Banques Miscellaneous TOTAL lux né Bé Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management Breakdown by rating category excluding exposure to Groupe BPCE institutions 2011 2012 6.2.3. Interest rate risk Aggregate 2011 Aggregate 2012 AAA 48.79 % 62.58 % 48.79 % 62.58 % AA+ 0.82 % 1.50 % 49.62 % 64.08 % AA 9.01 % 12.28 % 58.63 % 76.36 % AA- 1.87 % 0.00 % 60.50 % 76.36 % A+ 10.44 % 0.75 % 70.94 % 77.11 % A 5.41 % 2.20 % 76.35 % 79.31 % A- 7.53 % 5.99 % 83.87 % 85.29 % BBB+ 3.68 % 2.99 % 87.56 % 88.29 % BBB 5.93 % 2.25 % 93.49 % 90.53 % BBB- 0.00 % 0.75 % 93.49 % 91.28 % BB+ 1.29 % 1.45 % 93.49 % 92.74 % BB 0.00 % 0.00 % 94.78 % 92.74 % BB- 0.00 % 0.00 % 94.78 % 92.74 % CCC 0.00 % 0.00 % 94.78 % 92.74 % NR 5.22 % 7.26 % 100.00 % 100.00 % 100.00 % 100.00 % Total Breakdown of financial assets by rating at end-2012 0.75% 1.45% BB+ BBB- 7.26% NR • the proportion of the interest rate risk contained in the portfolio of UCITS shares, which would not be covered by an interest rate hedge • the interest rate risk taken or accepted within the framework of liquidity management. A limit has been set for this exposure generated by own-account management. In 2012, the limit was halved in comparison with the limit in place for 2011, equivalent to the risk associated with a 10-year loan of €37.5 million. 6.2.4. Share risk Concerning the position at the end of December 2012, this risk resided primarily in the share component of UCITS shares, which represented a total of €6.3 million, and directly held shares, which represented €1 million. BBB 2.99% BBB+ 5.99% 2.2% A 0.75% A+ At end-2012, the rate risk concerning own-account management, which forms part of the overall rate risk, primarily resided in: At 31 December 2012, exposure stood at less than a third of this limit, equivalent to a fixed-rate, 10-year loan of €11.1 million. 2.25% A- The overall interest rate risk, across the whole balance sheet, is monitored by the Assets/Liabilities Management unit, in line with the rules of the BPCE GAP reference document (detailed in paragraph 6.3). 12.3% AAA AA+ ] BBB ,B ,B B+ »B +, There are two limits to the overall share risk authorised in the framework of own-account management: [A +, A, A] [A +, A, A] BB A [B B BB • a “net” position limit of +/- €4.25 million for 2012, i.e. after hedging the share risk borne by some UCITS; actual exposure at end-2012 stood at just €1.8 million, slightly lower than the equivalent figure at end-2011 (€2.1 million) • a higher "gross" position limit before hedging of +/- €12.5 million, which is designed to limit the consequences of the ineffective nature of the hedges– "gross" exposure at end2012 stood at €7.3 million, slightly higher than the exposure of €6.8 million at end-2011. • 57% concerned finance granted as part of a partnership relationship • 36% concerned mezzanine tranches of unrated securitisations • 7% concerned convertible bonds. AA Commitments with respect to unrated counterparties were distributed as follows: A AA Non-Group commitments fell by €210 million between 2011 and 2012. The only renewed lines were €150 million of statebacked securities and €2.3 million of commitments to unrated partner companies. NR B, B B- ] AA 62.6% 1.5% The share component of UCITS is 90% hedged by sales of futures contracts on share index markets, but the hedging is not fully effective due to the fact that the individual behaviour of the shares comprising the UCITS portfolio does not correlate 100% with that of the hedging index (leaving a residual risk known as a "specific" risk). BB 100 101 Note: both of the limits in force in 2012 were half of those in Capital or performance guarantees place in 2011; these lower limits will remain effective in 2013. Crédit Coopératif provided capital or performance guarantees for some Ecofi Investissement UCITS, totalling €386 million at end-2012 (compared with €458 million at end-2011). The management company does not rely on that guarantee alone, and applies a prudent management policy to provide customers with the guaranteed performance levels, wherever possible, without calling on Crédit Coopératif’s guarantee. The currency risk from financial transactions resulting from own-account management is limited to an overall value, in euros, of €0.5 million. Exposure remained at a lower level than this limit throughout 2012. At end-2012, however, it stood at €1.1 million. This exceedance of the €0.5 million limit was authorised, on a temporary basis, to allow Financial Management to retain a dividend of just over €1 million, received in US dollars with respect to partial payment of a doubtful debt relating to Lehman Brothers, in the original currency. Other operations, including forward currency transactions carried out with customers or any refinancing operations in other currencies, are almost always hedged, eliminating practically all residual risk. 6.2.6. Other sources of risk Structured products Crédit Coopératif does not hold any structured products on its own account. Structured products issued or sold to the bank’s customers are systematically hedged on the markets. UCITS investments At the end of 2012, €23 million out of a total of €41.5 million invested in UCITS (2011: €75 million) was invested in monetary UCITS managed by the Group’s management company (Ecofi Investissements). Among the other UCITS shares held, some concern what are known as alternative or quantitative UCITS, changes in the The performance of some of these UCITS is exposed to the risk of falls in stock market values or rate rises. Furthermore, the drop in overnight rates makes it more difficult to provide, without risk, at least the performance levels guaranteed to customers, when the fund composition is changed to reduce exposure to market risks. On the basis of stress scenarios and prudent management rules, the risk to which Crédit Coopératif could be exposed in the coming years for these amounts in live guaranteed UCITS is estimated monthly, leading us to consider that the risk is negligible as at the end of 2012. Note: the choice of counterparty for directly held products constituting the funds guaranteed must be approved by the Financial Committee, in the same way as for own-account investments. Venture capital mutual investment funds Crédit Coopératif has invested, or made a commitment to invest in, several venture capital mutual investment funds, generally in conjunction with its partners (BTP Capital Investissement, Nef, Natixis, etc.), representing a total of €10.9 million. 6.2.7. Summary of the sensitivity of results and equity to various market risk factors This summary is limited to Crédit Coopératif and excludes possible changes in the valuations of shareholdings. The amounts are given in thousands of euros. value of which are theoretically not correlated with those of the markets. The corresponding exposures are subject to a Sensitivity to an increase in interest rates specific limit and represented €10 million (compared with €15 Interest rate risk million at end-2011). With volatility of between 10% and 12%, this total of €10 million is equivalent to €25 million of UCITS at a volatility of 4% (the limit having been set at €45 million and the position at end-2011 standing at €40 million). Impact in thousands of euros of a uniform increase of 1% in the rate curve 2011 2012 Income Equity capital Income Equity capital 533 -4,843 833 -4,205 Management report 6.2.5. Currency risk due to financial transactions 102 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management The increased sensitivity to interest rate increases with respect to income is primarily due to a short-term operation (a macro- Other price variation risk Value at Risk in thousands of euros at 99% over a 10-day period hedging operation) that occurred in late 2012, but for which a hedging file was not created. 2011 2012 Income Equity capital Income Equity capital 261 572 228 516 The decreased sensitivity to interest rate rises with respect to equity capital is due to the sensitivity of securities in bond and liquidity portfolios that are not hedged against interest rate The scope of this VaR consists of UCITS shares, related futures hedging, and other directly held shares within the framework risks. of own-account management. The risks associated with this VaR from changes in price and currency risk 2012. portfolio remained largely unchanged between 2011 and The calculation of VaR consists of a statistical evaluation of the potential maximum loss that could be incurred over a period of 10 working days at a confidence level of 99% (in other words, the risk Currency risk Value at Risk in thousands of euros at 99% over a 10-day period of incurring a loss of an amount that is greater than this “Value at Risk” in this 10-day period is less than 1%). Although this method is best suited to the scope of a trading portfolio with daily monitoring of exposure to risks arising from speculative positions that can usually be cut off quickly, it remains worthy of use as a standard. However, it is only valid in cases were a number of assumptions about statistical market behaviour turn out to be true, which is not always the case, especially during times of crisis. This is why this type of analysis should be supplemented by analysing the consequences of a certain number of crisis scenarios, as is done later in 2011 2012 Income Equity capital Income Equity capital 250 0 233 0 Although the currency position included an additional $1 million, the VaR fell due to the fact that the exchange rates concerned were less volatile in 2012 than they had been in 2011. The position in CFA francs with respect to the shareholding in BNDA is excluded from the statistical calculation due to the fact that the value of the CFA franc is linked to the euro; the risk of potential unlinking cannot be ignored, however, and a stress scenario has been assessed in this respect, as detailed below. this report. Aggregation of risks Risk of variation in prices due to changes in the credit spread To provide an aggregate view of the effect of the various mar- Value at Risk in thousands of euros at 99% ket risks, a Value at Risk is shown for overall exposure to the over a 10-day period 2011 various market risks for positions as at 31/12/2011 and 2012 Income Equity capital Income Equity capital 0 2,702 0 4,246 The effect on net profit is zero since the securities concerned are only classified as being available for sale. The rise in Value at Risk (with impact on equity capital) can largely be explained by the classification of €150 million of OATs purchased in 2012 as securities available for sale (the VaR of these OATs alone is €3.8 million). 31/12/2012. In thousands of euros Type of risk Currency Price: Shares and UCITS Rates Credit Set-off Overall 2011 Income 2011 Equity capital 250 261 -202 309 Total Income 250 233 619 228 2,702 2,702 -554 -828 2,720 2,743 -142 320 572 Equity capital Total 233 516 537 4 246 4 246 -585 -613 4,177 4,171 103 Crisis scenarios For each of the risks identified (currency, share, interest rate and credit), Crédit Coopératif has drawn up crisis scenarios enabling it to supplement the Value at Risk approach, doing its utmost to base its forecasts on scenarios that have actually occurred. Thus, in the light of studies of past financial crises, seven historical-type scenarios were adopted at year-end 2012. They are set out in the table below with indications of the corresponding loss (only the alternative UCITS crisis scenario has been created artificially). These are crisis scenarios that develop over a period of 10 business days. Scenario Description 2012 • €172 million (over 50%) invested in Crédit Coopératif products: negotiable debt securities, term accounts and members' shares • a little over €50 million in other Groupe BPCE institutions • €16 million in monetary or guaranteed capital products • €14 million in negotiable debt securities or term accounts of French banks (€8 million) or foreign banks • €12 million in securities in companies, most of which have a link with the business sector • €8 million in alternative UCITS • €8 million in shares or share UCITS. ➔➔6.3. Structural balance-sheet risks 6.3.1. Overall interest rate risk Currency First two weeks of December 2008 Fall in exchange rates of up to 11% for the euro against the dollar -795 Currency July 2001 Fall of 12% in the zloty rate against the euro -628 Aggregate of strongest adverse movements for UCITS held -393 25% fall in stock markets -751 Alternative Shares Investments of subsidiaries and partner institutions total a little over €300 million (€316 million at end-2012), including: Black Monday 1987 Rates Interest rate rise ranging from Interest rate rise in 0.55% over 3 months to 0.11% October 2009 over 10 years -1,845 Currency 12 January 1994 : 50% fall in the value of the CFA franc -3,847 Bank and Corporate Credit Spread Collapse of Lehman Brothers Sovereign Debt Credit Spread Eurozone crisis November 2011 Instant 50% fall in the value of the CFA franc The overall interest rate risk is measured each quarter in the scope of the Groupe BPCE benchmark and using the balancesheet management software used by the whole Banques Populaires network. Measuring the effect of changes in rates on the forecast interest margin The interest margin is calculated for a specific number of interest rate development scenarios over the coming four years. Rise in credit spreads: - AAA: + 6 basis points - AA: + 18 basis points - A: + 129 basis points - BBB or unrated: +158 basis points -4,361 Rise in credit spreads for OATs + 77 basis points -7,978 Note : the distribution of these losses between income and equity capital would be similar to those that appear in the calculations of VaRs in the previous table Crédit Coopératif faces an interest rate and liquidity risk in connection with its normal activity of collecting sources of funds and lending to customers. For four of these scenarios (a uniform decrease or increase of 100 basis points in all rates, flattening or expanding the rate curve by a contrary change of 50 basis points in short rates and long rates), Group limits are set in order to limit the impact on the interest margin for the next two years. The limits are set at 6% for the first year and 9.5% for the following year (the difference being calculated in relation to the results obtained in accordance with the scenario considered the most probable, according to economic experts). At the end of September 2012, Crédit Coopératif did not seem to be too sensitive to a uniform change in rates (almost half as sensitive as in the previous year). On this occasion, however, its was sensitive to rising rather than falling interest rates, at Management report Type of risk in thousands of euros 6.2.8. Investments of subsidiaries and partner institutions 104 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management least in one scenario in which the "Livret A" rate rose by 0.75% while short-term and long-term rates rose by a uniform 1%. Under this scenario, the interest margin would drop by 0.6% in the first year and 1.3% in the second year (a combined fall of 1%, compared with 1.8% a year earlier). Calculating fixed-rate shortfalls These shortfalls are calculated on the basis of the difference between the forecast exposure in the form of fixed-rate sources of funds and the exposure in the form of fixed-rate applications of funds. Variable-rate products are considered as being fixed until the next date on which rates are to be set. All the sources and applications of funds in the balance sheet and off-balance-sheet statement are scheduled either according to their contractual provisions, as is the case for loans, or according to a conventional schedule (for sight deposits, each level of stock development is depreciated using the straightline method, over a period that can vary between 5 and 20 years according to the customer). The new Groupe BPCE ALM benchmark has set limits on the amount of shortfalls that are expressed as a percentage of the amount of equity that decreases in line with the maturity of the analysis. The initial percentage is 95%. As at the most recent observation based on the financial statements of 30 September 2012, Crédit Coopératif easily complies with the limits imposed by the Group, with the value of shortfalls over all maturities being less than 50% of these limits. In particular, the amount of the initial fixed-rate shortfalls was €400 million, as in the previous year. Note: in addition to the fixed-rate shortfalls, shortfalls on the "inflation" index are also calculated. Two different correlation hypotheses between the "Livret A" rate and inflation are used (50% and 100%, in line with the provisions of the Livret A formula). The hedging activities undertaken in 2011 continued in early 2012, with €300 million of inflation swaps. However, due to strong rises in savings account exposures in 2012, Crédit Coopératif remained exposed to increased in inflation and the "Livret A" rate at end-2012 (it has, however, benefited from the fall in these rates applied in mid-January 2013). Basel II indicator In accordance with the recommendations of the Basel II directive, this indicator measures balance sheet value sensitivity to a sudden interest rate rise of 2%. According to the latest calculation (September 2012), Crédit Coopératif's balance sheet value would fall by 3.7% of equity in the event of such an interest rate rise, compared with the Group benchmark limit of 20% (this limit is now also used as the "significant incident" declaration threshold to the ACP for exposure to interest rate change risk). This sensitivity is lower than the 5.4% figure observed in the previous year. 6.3.2. Liquidity risk Crédit Coopératif is, in structural terms, a lender on the interbank market, but it is also in receipt of long-term sources of funds as part of its activity and according to its requirements (which are, in particular, the subject of a one-year evaluation in the budgetary procedure). Exposure to liquidity risk is measured in the context of the Groupe BPCE benchmark: • each month, using the calculation of static liquidity shortfalls (forecast exposures from applications of funds minus forecast exposures from sources of funds based on schedules stipulated by contract or agreement, as for the calculation of shortfalls at fixed rate). At the end of September 2012, the ratio of funds to applications was over 95% across all maturities, with the limit set at 85% in the Group benchmark. It stood at 93% at the end of September 2011. • quarterly, using the calculation of dynamic shortfalls (including new activity forecasts) that result from the simulation of three different liquidity crisis scenarios relating to a duration of three months (signature crisis, systemic crisis and mixed crisis); this three-month duration is sufficient to allow the sale, when needed, of available liquid assets and to realise all possible receivables at ECB level. At the end of September 2012, the inclusion of new budget forecasts led to a slight lack of funds under the mixed scenario, from the second month. In addition, Crédit Coopératif: • conducts a weekly calculation of the forecast cash flows for the next 7 days (this report forming part of a statutory declaration at the end of each quarter) 105 • also forecasts the ratio of the end-of-month statutory liquidity coefficient at one month (statutory ratio that measures liquidity requirement coverage at one month, based on available resources) • expanded the scope, in 2012, of the receivables that may be mobilised if required, to include: -- receivables from some local authorities -- receivables from certain Crédit Coopératif Group institutions that did not previously participate in reporting in Banque de France's TRICP collateral management system (Bati Lease and Banque Edel). 6.3.3. Overall currency risk As at the end of 2012, the overall currency position of Crédit Coopératif converted into euros was €15.6 million, remaining below the limit set on the institution’s overall currency risk exposure, which is 1.5% of equity (equating to approximately €20 million). This limit is below the prudential 2% equity threshold stipulated by the regulation of February 2007, above which a requirement for specific equity must be calculated and taken into account in the McDonough solvency ratio calculation. ➔➔6.4. Operating risks According to official texts, operating risks comprise risks arising as a result of unsuitability or failure of internal procedures, systems or personnel, or external events, including low-probability events that entail a high risk of loss. These include the risk of internal and external fraud. When calculating its equity requirements, Groupe BPCE currently applies the Basel II standard method. Within the framework of Basel II prudential regulations, Crédit Coopératif has been progressively setting up an operating risk management system since 2005. Operating risks are inherent in all the bank’s activities. Measurement and control of these risks come under the direct responsibility of each business line, which deals with declarations of any losses and incidents, identification and evaluation of risks and risk hedging. This risk management is monitored by the managerial structure in each business line and is, of course, integrated into their continuous control programmes. It is managed by a dedicated team within the Operating Risks, Compliance and Controls Department, and relies on the operating departments and their Continuous Control correspondents, as close as possible to the business line and knowledge of processes. The system is then supervised by Executive Management, via dedicated committees. rency risk, as a result of its commercial activities with its customers and its potential refinancing expressed in foreign currencies. However, it also maintains limited buffer supplies of other currencies held by its correspondents in other countries to allow it to support its customers’ activities (their equivalent value in euros is limited to €1.5 million overall). Importantly, it has shareholdings acquired in foreign currencies, which are not covered by a currency risk hedge: the most significant of these is in Tise (zlotys), and it also has a holding in BNDA (CFA francs). The slight increase in exposure at end2012, standing at just over €1 million, is primarily due to several new, low-value shareholdings in the micro-credit sector in Africa. These shareholdings were acquired as part of a dedicated envelope of €5 million that was ring-fenced several years ago and has been used gradually over time. The system used to measure and monitor risk is based on a methodology shared across all Groupe BPCE institutions, which is geared around the standards and methods defined in the benchmark document and the PARO management tool. In 2012, BPCE formalised its Operating Risks policy and enhanced the benchmark document. As well as setting out the organisational principles for operating risks and incident collection, the benchmark document defines the standards that apply to assessing and monitoring risks. In 2012, it included both the risk control system (Dispositif de Maîtrise des Risques – DMR), which has led to improvements in control assessment, and a database of potentially recurrent or critical risks for Groupe BPCE, to be listed for each institution. These changes have helped to make the system more unified and consistent. Indicators represent the third "pillar" of the system, alongside incidents and risk mapping. These indicators are designed to act as advanced detectors of areas of vulnerability. The first set of indicators covers activities such as anti money laundering, the Business Continuity Plan, savings and accounting, and is scheduled for deployment in 2013. In 2012, BPCE also delivered the second version of its PARO tool, including two new Management report Crédit Coopératif has a quasi-systematic hedge policy for cur- 106 Crédit Coopératif Group I Annual Report 2012 Management report 6 / Risk exposure and risk management "indicators" and "alerts" modules, the DMR and the updated version of the standardised risk benchmark document. The first. annual risk mapping campaign, launched by BPCE in 2012, applied these new methodologies. The evaluation of risks using single risk benchmarks and rankings guarantee comparability and make it easier to rank them. Risks that require controlling, whose impact is deemed to be high in financial terms or in terms of image, are tracked as a priority on the basis of action plans. Loss databases for all institutions within the Crédit Coopératif Group, dating back to 2005, have been expanded through the deployment of the "incidents" module in the PARO tool. This deployment was launched back in 2009, in line with the change and deployment management strategy as determined by BPCE. All incidents, irrespective of their type and impacts (loss, loss of revenue, risk to image, etc.), can be declared as soon as they are known, and evaluated on an ad hoc basis. The risk rating back-testing system also includes an event history element. In terms of the Business Continuity Plan, the focus in 2012 was on improving the organisation of Crédit Coopératif Group BCP management and control system, in line with the Groupe BPCE Business Continuity Good Practice guide. This is the new benchmark framework, shared across the entire Group, setting out both governance rules and operating rules for continuity at Group level. Furthermore, work to maintain the BCP in good working order continued in line with the applicable procedures and multiyear exercise programme. A wide-ranging user fallback exercise, involving secure Head Office movement operations, was successful with Crédit Coopératif able to continue critical activities during the twoday closure of its nominal sites in connection with the move. This operation provided yet another opportunity to demonstrate the effectiveness of the disaster recovery resources (staff fallback site) and the procedures set out in the BCP for the units concerned. This exercise also involved mobilisation of the Crisis DecisionMaking Unit to monitor the move and the BCP operations, thereby demonstrating the strong commitment to business continuity from Crédit Coopératif's Executive Management. An additional week-long telephone architecture emergency exercise was also conducted, as well as various BCP exercises relating to key outsourced services throughout 2012. All of these exercises were successful, demonstrating the effectiveness of the existing solutions. In 2013, the focus will be on incorporating further disaster scenarios and improving the existing alert and crisis management system, including so-called "progressive" disasters. ➔➔6.5. Non-compliance risks Dedicated teams in the Continuous Control Department monitor non-compliance risks. The teams are composed of members of the Operating Risk, Compliance and Controls Department. They carry out both prevention and control activities, operating completely independently from the commercial, financial and production business lines. The two regulatory functions are exercised under the responsibility of the Deputy Director of Risks and Compliance, who is: • the Head of Compliance, responsible for compliance with obligations in respect of the Autorité de Contrôle Prudentiel • the Head of Compliance for Investment Services, responsible for compliance with obligations towards the Autorité des Marchés Financiers. These actions relate to control of the non-compliance risk, defined as “the risk of legal, government or disciplinary penalties, considerable financial loss or damage to reputation, resulting from failure to comply with measures pertaining to banking and financial activities, whether legislative or regulatory in nature, or pertaining to professional or ethical standards, or instructions from the management body issued, in particular, according to the guidelines set out by the decision-making body.” The Compliance team helps to ensure operational compliance with all internal standards (rules of procedure, code of ethics). The scope of the Compliance team’s power to intervene extends to all legislative and regulatory provisions governing banking and financial activities, the Data Protection Law, actions to combat money laundering, the financing of terrorism, as well as policies determined by Executive Management. 107 The team’s supervision activities entail regular controls. These controls are delegated to Continuous Control correspondents, who work closely with the business lines, and a team of network controllers. In this case, the Compliance team monitors implementation and execution of these controls. The team also carries out controls directly, particularly in relation to ethics. During 2012, as well as working on statutory projects, the Compliance team updated the ethics procedures and integrated the Groupe RCSI control tool. The Compliance team includes a dedicated unit as part of efforts to prevent money laundering and financing of terrorism. It continued to adapt the supervision system in line with the regulatory situation and typologies of customer risk. Accordingly, improvements were made to the system in four areas over the year: • application of the BPCE standard on the risk-based approach • delivery of a major staff training exercise, comprising both e-learning and classroom training, to raise awareness of issues surrounding the fight against money laundering and the financing of terrorism • an overhaul of the anti money laundering and financing of terrorism procedure for all staff • adoption of the Group's continuous control tool: PILCOP. The monitoring system operates at two levels: the branches, which check the warnings sent daily, relying on their knowledge of their customers and information from the Head Office team that ensures the quality of the checks undertaken at branch level. This team analyses dubious cases and where necessary declares them to TRACFIN. Pursuant to the mechanism provided by articles L.441-6-1 and D.441-4 of the French Commercial Code, Crédit Coopératif complies with the legal lead time of 30 days, which applies to the payment of sums due to creditors from the date of receipt of goods or the provision of services, unless other terms are agreed between the parties. 7. Distribution and appropriation of earnings The earnings for the financial year show a net profit of €22,623,114.02 and the balance sheet shows carried-forward profit of €3,167,610.84; therefore in accordance with article 42 of the Articles of Association, the General Meeting resolves to distribute said profit, totalling €25,790,724.86, as follows: • legal reserve, 15% of net profit: €3,393,467.00 • profit carried forward: €3,819,566.46 • remuneration of P shares at the rate of 2.50% on a pro rata basis: €76,420.40 • remuneration of C shares at the rate of 2.50% on a pro rata basis: €4,968,456.03 • remuneration of B shares at the rate of 2.50% on a pro rata basis: €9,002,814.97 • remuneration of cooperative certificates of investment (CCIs) at 2.50% of their nominal value: €4,030,000.00 • payment of a cooperative rebate to members, to be distributed in proportion to the value of transactions made by each member with the Crédit Coopératif: €500,000. Pursuant to article 243 of the General Tax Code, the amount of interest and rebates distributed in the last three financial years are as follows: Financial year A shares B shares C shares CCIs Rebate 2009 - €6,575,445 €4,321,947 €2,962,313 €500,000 2010 - €6,979,898 €4,834,562 €4,164,825 €500,000 2011 - €7,879,452 €5,239,954 €4,164,825 €750,000 Cooperative rebate The rebate is a feature of the cooperative status, set out in Article 15 of the French Law of 10 September 1947 on the status of cooperatives. Its purpose is to distribute part of the annual income to those members who made the largest contribution towards earning that income. Crédit Coopératif is one of the few cooperative banks in Europe that has maintained this specific cooperative principle. The rebate is distributed among the members of the Crédit Coopératif on a pro rata basis, according to their loan transactions with their bank: it takes the form of a discount on the interest paid to Crédit Coopératif during the 2012 financial year. Management report Preventative actions are reflected particularly in monitoring regulatory watch, implementing a validation procedure for new products, formulating and monitoring a policy for managing conflicts of interest and rolling out an employee training and awareness enhancement plan. In addition, an ethics warning system was maintained in good working order. This system centralises information on errors detected in the application of legislation, regulations, professional standards and codes of conduct. 108 Crédit Coopératif Group I Annual Report 2012 Management report 8 / Outlook for 2013 8. Outlook for 2013 Following historically high results in 2011, caused in particular by the low cost of risk resulting from the reversal of provisions, 2012 was less impressive but nevertheless remained on budget, excluding exceptional elements. This drop in performance can largely be attributed to exceptional costs incurred by Crédit Coopératif in connection with its decision to maintain its chosen pace of investment. As well as these factors specific to Crédit Coopératif, 2012 also saw an unusual interest rate situation, with discrepancies between high regulated savings rates and lower market rates. Consequently, margin on operations with customers fell, while strong commercial activity led to increased fund collection and loan activity, which compensated for this erosion of margin. The economic and financial climate in 2013 remains uncertain, and the pace of the Group's growth may therefore be affected by a largely stagnant economy and restrictive interest rates. Through its commercial policy, however, Crédit Coopératif will continue to offer the right partnerships and the right products and services to customers, in line with their specific needs. Work will continue on improving the branch network, and Crédit Coopératif will boost its presence across all distribution channels. Commercial coordination mechanisms will also be improved. Upgrades are also underway on the Crédit Coopératif Group information system. These projects should improve the quality of the services that the Group provides to its customers. They are based on a clear desire to build closer ties with all partners, members and customers of the Group's companies. The ambitious budget targets for 2013 are a strong signal of the Crédit Coopératif Group's growing capacity and its ability to support the projects of the customers it works with. Furthermore, as Crédit Coopératif celebrates its 120th anniversary against a backdrop of economic and social uncertainty, these ambitious targets also demonstrate how the cooperative, partnership model is able to meet the needs that arise from this context. 109 Crédit Coopératif Group financial statements 110 172 Crédit Coopératif Group consolidated financial statements (IFRS) Crédit Coopératif company financial statements 109 110 Crédit Coopératif Group I Annual Report 2012 Crédit Coopératif Group Consolidated financial statements (IFRS) at 31 December 2012 1. Consolidated balance sheet Assets in thousands of euros Notes Funds, central banks 31/12/2012 31/12/2011 351,809 168,044 Financial assets recognised at a fair value through profit or loss 5.1.1 84,217 45,436 Derivative hedging instruments 5.2 34,012 24,456 1,202,055 Available-for-sale financial assets 5.3 943,487 Loans and receivables relating to credit institutions 5.5.1 678,543 1,186,949 Loans and receivables relating to customers 5.5.2 11,460,330 10,023,207 Revaluation differential for portfolios hedged using interest rates 16,677 Held-to-maturity financial assets 5.6 567,755 752,705 Current tax assets 5.7 21,621 13,278 Deferred tax assets 5.7 10,276 17,093 Accruals and miscellaneous assets 5.8 490,537 274,564 Shareholdings in companies consolidated according to the equity method 5.9 43,844 42,480 Investment properties 5.10 10,922 16,542 Tangible assets 5.11 180,955 166,794 Intangible assets 5.11 24,779 20,985 Goodwill 5.12 4,519 5,551 14,924,283 13,960,139 Non-current assets intended for transfer Deferred profit-sharing Total assets Liabilities in thousands of euros Notes 31/12/2012 31/12/2011 Central banks Financial liabilities at fair value through profit or loss Derivative hedging instruments 5.1.2 84,723 47,022 5.2 54,448 22,467 1,246,885 Debts to credit institutions 5.16.1 1,911,991 Debts to customers 5.16.2 8,669,736 7,139,762 5.17 2,164,362 3,464,081 Debts in the form of securities Revaluation differential for portfolios hedged using interest rates 13,263 23,795 Deferred tax liabilities Current tax liabilities 5.8 3,189 10,509 Accruals and miscellaneous liabilities 5.18 332,538 380,596 Liabilities linked to non-current assets intended for transfer Technical reserves of insurance companies Provisions 5.20 34,805 31,915 Subordinated debt 5.21 161,845 206,708 Equity capital 1,493,383 1,386,398 Equity capital – Group share 1,311,414 1,222,878 Capital and associated bonuses 902,024 817,510 Consolidated reserves 374,846 340,105 7,333 14,088 Gains and losses entered directly as equity capital Income for the period Minority interests Total liabilities 27,210 51,175 181,969 163,520 14,924,283 13,960,138 111 2. Consolidated income statement in thousands of euros Notes Financial year 2012 Financial year 2011 Interest and similar income 6.1 482,519 482,668 Interest and similar expenses 6.1 (185,010) (193,914) Commission (income) 6.2 168,176 170,260 Commission (expenses) 6.2 (59,158) (66,869) Net gains or losses on financial instruments at fair value through profit or loss 6.3 3,236 2,667 Net gains or losses on available-for-sale financial assets 6.4 7,005 3,760 Income from other activities 6.5 15,457 19,412 Expenses on other activities 6.5 (8,889) (11,724) 423,336 406,259 6.6 (302,456) (282,162) (17,431) (15,799) 103,449 108,298 (49,138) (29,386) Net banking income General operating costs "Net amortisation and impairment charges on tangible and intangible assets Gross operating income Cost of risk 6.7 Operating income 54,311 78,912 Proportion of net income from companies consolidated according to the equity method 6.8 2,721 1,924 Gains or losses on other assets 6.9 (6,858) 632 Variations in the value of goodwill 6.10 (1,096) 1,499 49,078 82,967 6.11 (17,483) (27,582) 55,385 Profit before tax Corporation tax Income net of tax for activities halted or in the process of transfer Net income 31,595 Minority interests (4,385) (4,210) Net income – Group share 27,210 51,175 in thousands of euros Notes Net income Conversion rate adjustment Financial year 2012 Financial year 2011 31,595 55,385 481 (518) Variations in the value of available-for-sale financial assets (6,080) (28,128) Variations in value for the period affecting the equity capital (4,706) (25,632) Variations in value for the period linked to income (1,374) (2,496) (679) (264) Variations in the value of derivative hedging instruments Variations in value for the period affecting the equity capital Variations in value for the period linked to income 373 1,157 (1,052) (1,421) (17) 122 Actuarial gains and losses on defined benefit plans Proportion of unrealised gains and losses entered directly as equity capital for companies using the equity method 784 719 Gains and losses entered directly as equity capital (net of tax) Tax (5,511) (28,069) Net income and gains and losses entered directly as equity capital 26,084 27,316 Group share 20,454 24,283 5,630 3,033 Minority interests 5.7 Group financial statements 3. Net income and gains and losses entered directly as equity capital Groupe BPCE 112 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 4 - Table of variations in equity capital Capital and associated reserves in thousands of euros Equity capital at 31 December 2010 Gains and losses entered directly as equity capital Consolidated reserves Capital Reserves 635,222 121,991 321,156 Allocation of income for the financial year 2010 Equity capital at 1 January 2011 Variation in fair value for instruments Conversion reserves (465) Availablefor-sale financial assets 38,156 Derivative hedging instruments 3,291 36,309 635,222 121,991 357,465 Net income Group share 36,309 Total equity capital Group share Equity capital – minority share Total consolidated equity capital 1,155,660 148,302 1,303,962 1,155,660 148,302 1,303,962 12,344 12,344 (166) (16,679) (36,309) (465) 38,156 3,291 Movements linked to relations with shareholders Capital increase and effect of acquisitions/ disposals on interest Reclassification Equity capital component within payment plans based on shares Distribution (16,513) (16,513) Effect of mergers Effect of subsidiary and partner institution cross-holdings on the parent company 60,296 871 61,167 Sub-total 60,296 (15,642) 44,654 12,179 56,833 (27,019) (1,171) (28,190) 51,175 51,175 4,210 55,385 Gains and losses entered directly as equity capital (518) (26,328) (173) 61,167 Other variations Income Other variations (1,719) Sub-total (1,719) (518) (26,201) (173) 51,175 49,583 4,210 53,793 340,104 (983) 11,955 3,117 51,175 1,222,878 163,520 1,386,398 Equity capital at 31 December 2011 Allocation of income for the financial year 2011 695,520 121,991 51,175 127 (1,592) (51,175) (1,592) 113 4 - Table of variations in equity capital (continued) Capital and associated reserves in thousands of euros Equity capital at 1 January 2012 Gains and losses entered directly as equity capital Capital Reserves 695,520 121,991 Total equity capital Group share Equity capital – minority share Total consolidated equity capital 1,222,878 163,520 1,386,398 1,703 64,204 13,110 77,314 (18,035) (18,035) (280) (18,315) Consolidated reserves 391,279 Variation in fair value for instruments Conversion reserves (983) Availablefor-sale financial assets 11,955 Derivative hedging instruments Net income Group share 3,117 Movements linked to relations with shareholders Capital increase and effect of acquisitions/ disposals on interest 62,501 Reclassification Equity capital component within payment plans based on shares, Distribution Effect of mergers Effect of subsidiary and partner institution cross-holdings on the parent company 22,013 (100) 21,913 Sub-total 84,514 (16,432) 68,082 12,830 80,912 (6,756) 1,234 (5,522) 27,210 27,210 4,385 31,595 Gains and losses entered directly as equity capital 481 (6,805) (432) 21,913 Other variations Income Sub-total Equity capital at 31 December 2012 780,034 121,991 0 481 (6,805) (432) 27,210 27,210 4,385 31,595 374,847 (502) 5,150 2,685 27,210 1,311,414 181,969 1,493,383 Group financial statements Other variations 114 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 5. Table of cash flows in thousands of euros Financial year 2012 Financial year 2011 Profit before tax 49,078 82,967 Net amortisation charges on tangible and intangible assets 18,664 15,799 Impairment of goodwill Net charges for provisions and impairment Proportion of income from companies consolidated according to the equity method Net losses/net gains on investment activities Income/charges from financing activities 1,096 (394) 41,333 9,769 (1,387) (1,924) (29,963) (2,778) 4,886 Other movements (101,562) Total non-monetary elements included within net income before tax (66,933) 5,853 Flows linked to operations with credit institutions 482,930 538,886 340,737 (388,099) (1,109,851) 486,088 Flows linked to operations with customers Flows linked to other operations affecting financial assets and liabilities Flows linked to other operations affecting non-financial assets and liabilities (14,619) (344,230) (12,041) (36,211) (20,241) Net increase/(reduction) in assets and liabilities from operational activities (666,625) 603,993 Net cash flows generated by operating activities (A) (684,480) 692,813 208,318 (421,057) Tax paid Flows linked to financial assets and holdings Flows linked to investment properties 5,149 (1,838) Flows linked to tangible and intangible assets (34,970) (37,559) Net cash flows linked to investment operations (B) 178,497 (460,454) Cash flows from or to shareholders 55,692 44,097 Cash flows from financing activities (43,429) 150,054 12,263 194,151 Net cash flows linked to financing operations (C) Effect of a variation in exchange rates (D) Net flows of cash and cash equivalents (A + B + C + D) Funds and central banks (net balance of assets and liabilities accounts) Funds and central banks (assets) 211 196 (493,509) 426,706 168,035 220,623 168,035 220,623 Central banks (liabilities) Demand operations with credit institutions (net balance of assets and liabilities accounts) 659,367 180,073 Overdrafts on current accounts 253,265 206,302 Demand accounts and loans 500,000 165,000 Demand accounts in credit (93,898) (191,229) Opening cash flow 827,402 400,696 Funds and central banks (net balance of assets and liabilities accounts) 351,809 168,035 351,809 168,035 Demand repurchase operations Funds and central banks (assets) Central banks (liabilities) Demand operations with credit institutions (net balance of assets and liabilities accounts) Overdrafts on current accounts (17,916) 659,367 60,221 253,265 Demand accounts and loans Demand accounts in credit 500,000 (78,137) (93,898) 333,894 827,402 (493,509) 426,706 Demand repurchase operations Closing cash flow Variation in net cash position 115 6. Notes to the Group’s financial statements Note 1. General framework ➔➔1.1. Groupe BPCE Groupe BPCE comprises the network of Banques Populaires, Caisses d’Épargne, the BPCE central institution and its subsidiaries. Groupe BPCE 8.6 million members 80% 19 Banques Populaires 80%1 50% 17 Caisses d’Epargne 50% 20% (CCIs2) Retail Banking and Insurance: subsidiaries • Crédit Foncier de France (100%) 20% (CCIs2) BPCE Central body 72.3%4 • Banque Palatine (100%) • BPCE Assurances (46.37%)3 Corporate Banking, Savings and Specialist Financial Services • Nexity (41.42%)5 • Coface (100%) Natixis • BPCE International et Outre-mer (100%) Retail banking and insurance Financial shareholdings 27.7% Floating 1. Via local savings societies (SLEs) 2. C CIs: cooperative certificates of investment (financial right but no voting right). A structural simplification project is currently ongoing, with the plans being submitted first to the employee representative bodies and then to the various governance bodies, for approval. Once this operation is completed, customer-members will own 100% of their bank (via their SLEs for the Caisses d’Epargne). 3. With Caisses d’Epargne's stake in BPCE Assurances, the Group owns 60% of the company. 4. Percentage of voting rights held by BPCE. 5. Via CE Holding Promotion. Two networks: Banques Populaires and Caisses d’Épargne The network of Banques Populaires encompasses the Banques Populaires, mutual guarantee companies whose sole corporate purpose is guaranteeing loans issued by these banks. The network of Caisses d’Épargne encompasses the Caisses d’Épargne et de Prévoyance, local savings societies and the Fédération Nationale des Caisses d’Épargne. The Banques Populaires are 80% owned by their members and 20% by Natixis through its cooperative certificates of investment (CCI). Similarly, 80% of the capital of the Caisses d’Épargne is owned by local savings societies (sociétés locales d’épargne - SLE) and 20% is held by Natixis through CCIs. At local level, SLEs are cooperative societies whose variable capital is held by the members. Their purpose is to develop membership, in line with the general guidelines of the Caisse d’Épargne to which they are affiliated. They are not permitted to carry out banking operations. Group financial statements Groupe BPCE is a cooperative group whose members own the two local banking networks: the 19 Banques Populaires and 17 Caisses d’Épargne. The central institution, Groupe BPCE, is owned equally by these two networks. 116 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) BPCE BPCE is a central institution according to French banking law and a credit institution with banking authorisation, created under French law no. 2009-715 of 18 June 2009. It is a French joint stock company governed by a Board of Directors and a Supervisory Board. Its capital is equally owned by the 17 Caisses d’Épargne and 19 Banques Populaires. The work of BPCE is guided by the cooperative principles of the Banques Populaires and Caisses d’Épargne. In particular, BPCE is tasked with representing affiliates in dealings with the supervisory authorities, defining the range of products and services brought to market, organising depositors’ guarantees, approving directors and overseeing the operation of the institutions in the Group. As a holding company, BPCE is responsible for the activities at the head of the group. It holds the subsidiaries jointly owned by both networks in the retail banking, finance banking and financial services sectors, as well as their production systems. It also determines the Group’s strategy and development policy. BPCE's main subsidiaries are organised into three main groups: • Natixis, a listed organisation of which BPCE owns 72%, which covers the finance and investment banking, savings banking and financial services sectors • the retail banking and insurance sector (including Crédit Foncier, Banque Palatine and BPCE International et Outre Mer (formerly Financière Océor)) • subsidiaries and financial shareholdings. In tandem, in the financial arena, BPCE’s work includes centralising surplus resources and conducting all financial transactions for Group growth and refinancing purposes, with responsibility for selecting the most effective operator for these missions acting in the Group’s interest. In addition, it offers banking services to the entities in the Group. ➔➔1.2. Guarantee mechanism Pursuant to article L.512-107 6 of the French Monetary and Financial Code, the purpose of the guarantee and solidarity system is to guarantee the liquidity and solvency of Groupe BPCE and its affiliate institutions, as well as to organise the financial solidarity mechanism within the networks of Banques Populaires and Caisses d’Épargne. BPCE is responsible for taking all necessary measures to organise the solvency guarantee for both the Group and each of the networks, in particular by implementing the appropriate Group internal solidarity mechanisms and by creating a common guarantee fund to both networks, for which it also determines the operating rules and the trigger methods, in addition to existing funds of the two networks, as well as the contributions of the affiliated institutions for the appropriation and reconstitution of the guarantee. BPCE manages the Banques Populaires Network Fund, the Caisses d’Épargne et de Prévoyance Network Fund and sets up the Mutual Guarantee Fund. A deposit was entered by the Banks in the accounts of BPCE with respect to the Banques Populaires Network Fund (€450 million) in the form of a 10-year fixed deposit account, renewable indefinitely. A deposit was entered by the Caisses in the accounts of BPCE with respect to the Caisses d’Épargne et de Prévoyance Network (€450 million) in the form of a 10-year fixed deposit account, renewable indefinitely. The Mutual Guarantee Fund consists of deposits by the Banques Populaires and the Caisses d’Épargne in the accounts of BPCE in the form of 10-year fixed deposit accounts, renewable indefinitely. As at 31 December 2012, a total of €337 million has been deposited. The fund will be increased each year at a rate of 5% of the contribution of the Banques Populaires, Caisses d’Epargne and their subsidiaries to the Group’s consolidated income. The total deposits made with BPCE for the Banques Populaires Network Fund, the Caisses d’Épargne et de Prévoyance Network Fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3% of the Group’s weighted assets. In the individual accounts of each institution, deposits made under the guarantee and solidarity system result in an equivalent amount identified under a dedicated section of the institution's equity capital. The Executive Board of BPCE has full authority to mobilise the resources of the various contributors without delay and in the order agreed, on the basis of prior authorisations granted to BPCE by the contributors. 117 ➔➔1.3. Significant events Sovereign risk exposure Crédit Coopératif has no direct exposure to sovereign risks, other than the states of France and Belgium. Capital increase During the first half of the year, Crédit Coopératif conducted a capital increase by issuing a total of €49,999K of members' shares and €12,499K of cooperative certificates of investment, fully subscribed by Natixis. Investment in super-subordinated securities issued by BPCE On 26 March 2012, Crédit Coopératif invested in undated super-subordinated securities issued by BPCE SA. These undated super-subordinated securities were designed to be eligible for use as additional Tier 1 capital as part of the new Basel III rules (currently being transposed in the European Union by the Fourth Capital Requirements Directive). These instruments meet the 16 criteria concerning an additional Tier 1 instrument, as set out in article 49 of the draft directive. They may be automatically converted into ordinary shares in BPCE SA in the event of a fall in the Tier 1 base capital ratio (Common Equity Tier 1 - CET 1) or the base capital ratio (Tier 1 ratio) of BPCE SA Group. This conversion clause is an embedded, separable derivative, which was separated from the host contract (classified as AFS). The fair value of this embedded derivative, at 31 December 2012, was not significant. As such, the derivative was not included in the financial statements for the year ended 31 December 2012. Move to new premises Following the General Meeting of 30 May 2012, Crédit Coopératif's new Head Office address came into effect. The move to the new premises began in September 2012. ➔➔1.4. Events after the end of the financial year BPCE SA and Natixis presented a draft proposal to dramatically simplify the structure of Groupe BPCE to their respective Supervisory Boards and Boards of Directors on 17 February 2013. The planned operation involves the purchase, by the Banques Populaires and Caisses d’Epargne, of all cooperative certificates of investment (CCI) that they have issued, and which are currently held by Natixis. Following the dissolution of the CCIs, once purchased, by each of the Banques Populaires and Caisses d’Epargne, the capital of each institution would then be owned in its entirety by their members. The reduction in Natixis' weighted exposures, connected with the holding of these CCIs, would enable Natixis to pay part of its surplus capital to its shareholders through an exceptional dividend issue. Finally, in order to ensure that resources are allocated appropriately within the Group, BPCE SA would reimburse its super-subordinated securities held by the Banques Populaires and Caisses d’Epargne and reduce the capital of BPCE SA in favour of the Banques Populaires and Caisses d’Epargne. The operation will be submitted to the Boards of the Banques Populaires and Caisses d’Epargne (equal shareholders of BPCE SA), BPCE SA and Natixis for their decision, following consultation of the employee representative bodies. This operation is planned to take place in Q3 2013. ➔➔2.1. Regulatory framework ➔➔2.2. Reference documentation In accordance with European Regulation 1606/2002 dated 19 July 2002 on the application of international accounting standards, the Group has drawn up its consolidated financial statements for the financial year ended 31 December 2012 in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union and applicable on this date, excluding a number of measures in IAS 39 concerning hedge accounting requirements1. The standards and interpretations used and described in the annual financial statements at 31 December 2011 have been supplemented by the standards, amendments and interpretations which must be applied from the financial year starting on 1 January 2012. In particular, these concern the amendments to IFRS 7 "Financial Instruments: Disclosures" concerning disclosures with respect to financial asset transfers, and "Improved Group financial statements Note 2. Applicable accounting standards and comparability 118 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) disclosures about financial instruments" concerning guarantees received. The other standards, amendments and interpretations adopted by the European Union and mandatory in 2012 do not have a significant impact on the Group's financial statements. Crédit Coopératif Group took the decision not to proceed with early application of the texts adopted by the European Union at 31 December 2012 but that had not come into force on this date: • amendment to standard IAS 1 "Presentation of Financial Statements" adopted by the European Commission on 5 June 2012 and mandatory for financial years starting from 1 July 2012. This amendment is designed to improve financial information concerning "Net income and gains and losses entered directly as equity capital". Gains and losses entered directly as equity capital will need to presented in such a manner that those elements that may be recycled in net income are shown separately from those that will never be recycled in net income. • amendment to standard IAS 19 "Employee Benefits" adopted by the European Commission on 5 June 2012 and mandatory for financial years starting from 1 January 2013 on a retrospective basis. This amendment makes changes to how pension and similar benefits are accounted for and presented, focusing in particular on actuarial gains and losses, which will now be fully recognised in equity capital, the costs of past services, which will now be posted immediately to income, and the expected return on hedging assets, which will be replaced with financial income determined in accordance with the discount rate used for the gross liabilities. This impact of these methodological changes, excluding their tax effect, are mentioned in note 8.2.2. • standard IFRS 13 "Fair Value Measurement" adopted by the European Commission on 11 December 2012 and mandatory for financial years starting from 1 January 2013. IFRS 13 described how to measure fair value but does not amend the conditions under which fair value is applied. This standard will be applied prospectively. This impacts of applying these standards on the Group's financial statements are currently being determined. 2.3. Use of estimates In preparing its financial statements, the Crédit Coopératif Group is required to make various assumptions and estimates that entail uncertainty with regard to their actual occurrence at a future date. These estimates are based on the information available on the year-end date and require judgement on the part of those preparing the financial statements. Final future results may differ from these estimates. In the particular case of the financial year ended on 31 December 2012, accounting estimates which require assumptions to be made are used mainly for the evaluation of the following items: • financial instruments at fair value, determined on the basis of valuation techniques (note 4.1.6) • total impairment of financial assets and, more particularly, long-term impairment of available-for-sale financial assets and impairment on a separate basis or calculated on the basis of portfolios (note 4.1.7) • provisions entered under liabilities and, more particularly, the home savings provision (note 4.5) • calculations concerning charges related to retirement commitments and future company benefits schemes (note 4.10) • deferred taxes (note 4.12) • goodwill impairment testing (note 3.4.3). 2.4. Presentation of the financial statements and year-end date In the absence of an imposed model under the IFRS guidelines, the summary report format used complies with the format stipulated by National Accounting Council Recommendation no. 2009 R 04 of 2 July 2009. The consolidated financial statements are drawn up on the basis of the accounts at 31 December 2012. The Group’s consolidated financial statements for the year ended 31 December 2012 were drawn up by the Board of Directors on 6 March 2013. They will be submitted to the General Meeting for approval on 30 May 2013. 119 Note 3. Consolidation methods and principles ➔➔3.1. Scope of consolidation and consolidation Joint control methods Joint control involves shared control between a limited number of partners or shareholders where no shareholder is able to impose its decisions on the others, and involves a contractual agreement setting out the terms by which joint control is exercised, i.e. the unanimous agreement of the parties sharing control is required for strategic decisions. Crédit Coopératif, a variable-capital cooperative bank joint stock company, is the consolidating entity. 3.1.1. Control exercised by the Group The consolidated financial statements of the Crédit Coopératif Group encompass: • the accounts of Crédit Coopératif • the accounts of all the credit institutions (subsidiaries or otherwise) that have signed an association agreement with Crédit Coopératif, under which the latter is the guarantor of the liquidity and solvency of these institutions and provides administrative and technical assistance • the accounts of all institutions whose consolidation has a significant impact on the Group’s consolidated financial statements and over which the consolidating entity exercises significant control or influence over its management. To assess the type of control exercised by the Group over an entity, the scope of voting rights to take into consideration encompasses potential voting rights inasmuch as these can be exercised or converted at any time. These potential voting rights may result from options on ordinary shares on the market for example, or the conversion of bonds into new ordinary shares, or stock warrants attached to other financial instruments. However, potential voting rights are not taken into account when determining the equity percentage. Note that companies whose contribution to the consolidated financial statements is not significant are not included in the scope of consolidation. Significant influence Significant influence is the power to participate in but not control a company’s financial and operating policies. Significant influence is presumed to exist when the Group directly or indirectly owns at least 20% of the voting rights. 3.1.2. Consolidation methods The consolidation methods depend on the type of control exercised by the Group over the entities for consolidation. Full consolidation Companies over which the Group has sole control are fully consolidated. Proportional consolidation Companies over which the Group has joint control with a limited number of co-investors are proportionally consolidated. Equity method Companies over which the Group exercises significant influence are consolidated according to the equity method. ➔➔3.2. Specific case Sole control is measured by the power to govern the financial and operating policies of a company and results from directly or indirectly holding the majority of the voting rights, or from the power to appoint or remove the majority of the members of the governing bodies, or from the right to direct financial and operations policies by virtue of a management contract or clauses in the Articles of Association. Separate legal structures, created specifically to manage an operation or a series of similar operations (special purpose entities) are consolidated when they are controlled in substance by the Group, even in the absence of an equity relationship. The following criteria are used to assess control in substance: • the entity’s activities are conducted solely on behalf of the Group and for the benefit of the latter Group financial statements Specific case of special purpose entities Sole control 120 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) • the Group holds decision-making and management authority over the everyday activities of the entity or the assets constituting the entity; such authority may be delegated by the creation of an autopilot mechanism • the Group has the ability to obtain the majority of the benefits of the entity’s activities • the Group is exposed to the majority of the risks related to the entity. The scope does not include entities that operate as part of a fiduciary arrangement, with assets managed on behalf of third parties and in the interest of different stakeholders. Also, the scope does not include the Group's employee pension and mutual funds. There are no special purpose entities included in the scope of consolidation of the Crédit Coopératif Group. ➔➔3.3. Consolidation rules The consolidated financial statements are drawn up according to standard accounting methods for similar transactions in similar circumstances. Significant adjustments required to harmonise the evaluation methods of the consolidated companies have been carried out. 3.3.1. Conversion of foreign entity accounts The consolidating entity’s accounts are presented in euros. The balance sheets of foreign subsidiaries and branches whose operating currency is not the euro are converted into euros at the year-end exchange rate. Income statement items are converted at the average rate for the period - a value similar to the transaction rate in the absence of any significant fluctuations. Conversion rate adjustments arise from the difference in: • the valuation of the income for the financial year at the average rate and closing rate • the conversion of equity capital (excluding income) between the historic rate and the closing rate. They are entered in equity under the item "Conversion reserves” for the Group’s share, and under “Minority interests” for the non-Group share. 3.3.2. Elimination of intra-Group transactions The impact of internal Group transactions on the balance sheet and consolidated income statement has been eliminated. Dividends and capital gains and losses on disposals between companies in the Group have also been eliminated. If required, losses from the disposal of assets reflecting actual impairment have been maintained. 3.3.3. Business combinations Operations conducted prior to 1 January 2010 Business combinations are accounted for using the purchase method, with the exception of combinations that involve mutual entities and entities under common control, which were explicitly excluded from the scope of application of the previous version of the IFRS 3 standard. The cost of a business combination is equal to the total of the fair value – on the acquisition date – of the assets received, liabilities incurred or assumed and equity capital instruments issued to obtain control of the purchased company. Those costs linked directly to the operation form part of the acquisition cost. All assets, liabilities and identifiable potential liabilities of the purchased entities are posted at their fair value on the acquisition date. This initial assessment may be reviewed within 12 months of the acquisition date. Goodwill, which represents the difference between the cost of the combination and the buyer's equity share in the assets, liabilities and potential liabilities at their fair value, is posted in the assets section of the buyer's balance sheet (if positive) or directly as a loss (if negative). Where the Group increases its equity share in an entity which it already controls, the purchase of additional securities results in an additional goodwill posting, determined by comparing the purchase price of the securities and the net asset share acquired. Goodwill is posted in the operating currency of the acquiree and is converted at the year-end exchange rate. On the acquisition date, the goodwill is allocated to one or more cash generating units (CGU) likely to enjoy the benefits of the acquisition. CGUs were defined within the Group’s chief business lines and constitute the most detailed level used by 121 management to determine the return on investment of an activity. Positive goodwill undergoes impairment testing at least once a year, and whenever objective signs of loss of value appear. Impairment testing involves comparing the net book value (including goodwill) of each CGU or group of CGUs with its recoverable amount, which corresponds to the higher of an asset's market value and going concern value. The market value is determined as the fair sale value less selling costs, for a transaction carried out under conditions of normal competition between knowledgeable and willing parties. This estimate is based on available market information, taking into account the particular circumstances. The going concern value is calculated according to the most appropriate method, generally by discounting future estimated flows. When the recoverable amount is lower than the book value, irreversible impairment of the goodwill is posted in income. Operations conducted from 1 January 2010 onwards • On the date on which an entity is taken over, minority interests may be assessed: -- Either at their fair value (which involves assigning a portion of the goodwill to minority interests) -- Or at their portion of the fair value of all the acquired entity's identifiable assets and liabilities (this method is similar to that used for operations prior to 31 December 2009). A choice must be made between these two methods for each business combination. Regardless of the choice made at takeover, all increases in the equity share in an entity that is already under control will automatically be posted as equity capital. • On the takeover date, any portion held previously by the Group must be reassessed at its fair value and offset against the income statement. Where the acquisition is conducted in stages, the goodwill is determined with reference to its fair value on the takeover date. • When control of a consolidated company is lost, any portion retained by the Group must be reassessed at its fair value and offset against the income statement. 3.3.4 Repurchase agreement on minority interests • Combinations of mutual entities are now included in the scope of application of the IFRS 3 standard • Costs linked directly to business combinations are now posted in the income for the period • Supplements are now included in the acquisition cost at their fair value on the takeover date, including supplements of a potential nature. Depending on the settlement method, supplements are now offset: -- no posting will be made in relation to future equity capital and price revisions -- or future debts and revisions are offset against the income statement (financial debts) or according to the relevant standards (other debts not covered by the IAS 39 standard). The Group has not entered into commitments with minority shareholders of certain fully consolidated companies to buy out their shares. In accordance with IAS 32, when minority shareholders are granted written puts for their investment, their share of the net assets of subsidiaries should be treated as debt and not as equity capital. The difference between this commitment and minority interests, which are the counterpart of debt, is recognised differently according to whether the commitments to buy out minority interests were concluded before 1 January 2010, which is when the amended IFRS 3 and IAS 27 standards came into force (recognition in goodwill), or afterwards (recognition in equity capital). Group financial statements The operations described above have been adjusted subject to the revised IFRS 3 and IAS 27 standards as detailed below: 122 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 4. Accounting principles and evaluation methods ➔➔4.1. Financial assets and liabilities 4.1.1. Loans and receivables The “Loans and receivables” item includes loans and advances to credit institutions and customers, as well as certain securities not listed on an active market when they are not held for trading purposes (see note 4.1.2). Loans and receivables are initially entered at their fair value plus the costs directly related to their issue and less the income directly attributable to their issue. On subsequent reporting dates, they are valued at amortised cost according to the effective interest rate method. The effective interest rate is the rate at which future cash flows are discounted at the initial value of the loan. This rate includes the discounts recorded when loans are granted at below market interest rates, as well as the transaction income and costs directly linked to the granting of loans, assessed as an adjustment of the actual return on the loan., To date, the Crédit Coopératif Group has not recognised a discount on its loans and receivables. No internal costs have been included in the calculation of the amortised cost. • financial assets at fair value through profit or loss • held-to-maturity investments • loans and receivables • available-for-sale financial assets. Financial assets and liabilities at fair value through profit or loss This category includes: • financial assets and liabilities held for trading, i.e. acquired or issued initially with the intention of selling or buying back in the short term • and financial assets and liabilities that the Group elected to initially recognise at fair value through profit or loss applying the option offered by IAS 39. The conditions under which this option is applied are described in note 4.1.4 “Financial assets and liabilities at fair value through profit or loss as an option”. The fair value at inception of securities classified in this category is determined by applying the bid price. At the reporting date, these assets are valued at fair value, and variations in fair value for the period are entered under the item “Net gains or losses on financial instruments at fair value through profit or loss”. Held-to-maturity financial assets External costs mainly consist of commission paid to third parties for setting up loans. In the main, these consist of commission paid to business introducers. This portfolio includes securities with a fixed or determinable income and a fixed maturity date that the Group intends and has the ability to hold until maturity. Income directly attributable to the issue of new loans mainly consists of set-up fees charged to customers and re-billed costs. Commission received in respect of financing commitments, for which drawdown will not take place, is spread on a straight-line basis over the term of the commitment. Except in limited cases, IAS 39 prohibits the disposal or transfer of these securities before maturity, otherwise the entire portfolio must be reclassified at Group level and access to this category will be denied for the current financial year and the following two years. Exceptions to the rule apply in the following cases: Income and expenses relating to loans with an initial term of less than one year are spread on a pro rata basis, with no recalculation of the effective interest rate. For variable- or adjustable-rate loans, the effective interest rate is re-calculated each time the rates are re-set. 4.1.2. Securities Securities are classified in assets in one of the four categories set out by standard IAS 39: • a significant deterioration in the issuer’s credit quality • a change in tax regulations cancelling or significantly reducing the tax exemption on interest earned on investments held to maturity • a major business combination or significant withdrawal of activity (sale of a sector, for example) requiring the sale or transfer of held-to-maturity investments in order to maintain the entity’s existing situation in terms of interest rate risk or its credit risk policy 123 • a change in legal or regulatory provisions significantly modifying either the definition of an eligible investment or the maximum amount of certain types of investment, requiring that the entity dispose of a held-to-maturity asset • a significant increase in capital requirements forcing the entity to restructure by selling held-to-maturity assets • a significant increase in the risk weighting of held-to-maturity assets in terms of prudential capital regulations. In the exceptional disposal cases outlined above, the income from these disposals is posted under the item “Net gains or losses on available-for-sale financial assets”. Instruments contracted to hedge these securities against interest rate risk are not permitted. At the reporting date, they are valued at fair value and variations in the fair value are posted directly in equity capital as gains or losses (except for monetary assets in foreign currencies, for which variations in fair value relating to the exchange rate component affect profit or loss). The principles for determining fair value are described in note 4.1.6. In the event of disposal, these variations in fair value are transferred to profit or loss. Current or acquired revenues on fixed-income securities are entered under the item “Interest and similar income”. Revenues from variable-income securities are entered under the item “Net gains or losses on available-for-sale financial assets”. Registration date of securities Loans and receivables The "Loans and receivables" portfolio consists of non-derivative financial assets with fixed or determinable income, which are not traded on an active market. Moreover, these assets may not be exposed to a risk of substantial loss not related to a worsening of the credit risk. Certain securities can be classified in this category when they are not listed on an active market. They are initially recognised at their fair value, plus transaction costs and less the discount and transaction income. They then follow the accounting, valuation and impairment rules for loans and receivables. Where a financial asset recognised under loans and receivables is disposed of before maturity, the income from this disposal is posted under the item “Net gains or losses on available-for-sale financial assets”. Available-for-sale financial assets This category consists of the financial assets not included in previous portfolios. Available-for-sale financial assets are initially recognised at their fair value, plus transaction costs. Securities are entered in the balance sheet on the date of settlement/delivery. Rules applied in the case of partial disposal The “first in - first out" method is used in the case of partial disposal of a line of securities. 4.1.3. Debt and equity capital instruments issued Financial instruments issued are classified as debt instruments or equity capital instruments according to whether or not the issuer has a contractual obligation to deliver liquidities or another financial asset, or to exchange the instruments under potentially unfavourable conditions. This obligation must arise from the clauses and conditions in the contract, and not merely from purely economic constraints. Funded debt Funded debt (which is not classified as financial liabilities measured at fair value through profit or loss) is initially entered at its value, less transaction costs, and is valued at the reporting date using the amortised cost method using its effective interest rate. These instruments are entered in the balance sheet as debts to credit institutions, debt to customers and debts represented by a security. Subordinated debt Subordinated debt is distinguished from receivables or bonds issued, as repayment only takes place after all the preferential Group financial statements Securities held to maturity are initially recognised at their fair value, plus transaction costs directly attributable to the acquisition of these securities. They are then valued at amortised cost in accordance with the effective interest rate method, including premiums and discounts and acquisition costs, if these are significant. 124 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) or unsecured creditors have been paid, but before the repayment of loans, participating securities and deeply subordinated securities. Subordinated debt that the issuer is obliged to reimburse is classified as debt and initially entered at fair value less transaction costs. Members' shares The interpretation of IFRIC 2, covering members’ shares and similar instruments in cooperative entities, specifies the provisions of IAS 32, setting out that a member’s contractual right to request redemption of these shares does not automatically create an obligation for the issuer. Classification is determined after examining the contractual conditions. Classification is determined after examining the contractual conditions. According to this interpretation, members’ shares are deemed to be equity capital if the entity has an unconditional right to refuse redemption, or if legal provisions or the entity’s Articles of Association prohibit or greatly limit redemption. By virtue of existing provisions in its Articles of Association, relative in particular to the minimum capital level, the members’ shares issued by the Group entities concerned are considered as equity capital. Alignment of accounting with performance management and measurement The option applies in the case of a group of assets and/or liabilities managed and valued at fair value, provided that this management strategy is based on a documented risk management policy or investment strategy and that internal reporting is based on fair value measurement. Combined financial instruments comprising one or more embedded derivatives An embedded derivative is a component of a "hybrid" contract (financial or otherwise) that matches the definition of a derivative., It must be extracted from the host contract and accounted for separately when the hybrid instrument is not valued at fair value through profit or loss and the economic characteristics and associated risks of the embedded derivative are not closely linked to the host contract. It is possible to apply fair value as an option where the embedded derivative substantially modifies the flows of the host contract and where separately recognising the embedded derivative is not specifically prohibited by IAS 39 (for example, a pay-out option embedded in a debt instrument). The option allows fair value measurement of the entire instrument, which means that the embedded derivative does not have to be extracted, recognised or valued separately. 4.1.5. Derivatives and hedge accounting 4.1.4. Financial assets and liabilities at fair value through profit or loss as an option According to the amendment to IAS 39 adopted by the European Union on 15 November 2005, an entity may initially classify financial assets and liabilities as at fair value through profit or loss; however this election is irrevocable. Compliance with the conditions set out in the standard must be verified ahead of entering an instrument at fair value as an option. This option may only be elected in the following situations: Elimination or significant reduction in an accounting mismatch The option may be applied to eliminate distortions arising from applying different valuation rules to instruments managed in the framework of the same strategy. A derivative is a financial instrument or other contract with the following three characteristics: • its value fluctuates in line with variations in an interest rate, financial instrument price, commodity price, exchange rate, price or rate index, credit rating or index, or other variable, provided that in the case of a non-financial variable, it is not specific to one of the parties to the contract (sometimes called the "underlying") • it requires no initial investment, or an investment that is smaller than would be required for other types of contracts expected to display a similar response to changes in market factors • it is settled at a future date. All derivative financial instruments are initially recognised in the balance sheet on the trading date at the fair value at inception. At each reporting date, regardless of the management intention governing their retention (trade or hedge), they are valued at fair value. 125 Derivative financial instruments are classified into two categories: Trading derivatives Trading derivatives are entered in the balance sheet under “Financial assets at fair value through profit or loss”, and under “Financial liabilities at fair value through profit or loss”. Actual and unrealised gains and losses are entered in the income statement under the item “Net gains or losses on financial instruments at fair value through profit or loss”. Hedging derivatives To classify a derivative in the accounts as a hedging instrument, from inception, the hedge relationship (hedge strategy, type of risk hedged, description and characteristics of the item hedged and the hedging instrument) must be documented. Moreover, the effectiveness of the hedge must be proven at inception and verified retrospectively. Moreover, the effectiveness of the hedge must be proven at inception and verified retrospectively. Derivatives concluded in the context of hedge relationships are designated according to their objective. Fair value hedging Fair value hedging is designed to reduce the risk of variation in the fair value of an asset or liability on the balance sheet or of a firm commitment (in particular hedging the rate risk of fixed-rate assets and liabilities). The revised value of the derivative is entered in profit or loss symmetrically with the revised value of the hedged item, at the level of the risk hedged. Any hedging ineffectiveness is recognised in the income statement under "Net gains or losses on financial instruments at fair value through profit or loss”. Accrued interest on the hedging derivative is entered in the income statement symmetrically to the accrued interest on the hedged item. For a hedge of an identified asset or liability, the revised value of the hedged component is presented in the balance sheet under the same item as the hedged item. If a hedge relationship is interrupted (management decision, breach of the effectiveness criteria or sale of the hedged item before maturity), the hedging derivative is transferred to the trading portfolio. The amount of the revised value entered in the balance sheet for the hedged item is amortised over the residual life of the initial hedge. If the hedged item is sold before maturity or redeemed in advance, the aggregate amount of the revised value is entered in the income statement for the period. Cash flow hedges The aim of cash flow hedging is to hedge items exposed to variations in cash flows attributable to a risk associated with a balance sheet item or future transaction (rate risk hedge on variable-rate assets and liabilities, future transactions hedge (future fixed rates, prices, exchange, etc.)). The effective portion of variations in the fair value of a derivative is entered on a specific line of gains or losses, posted directly as equity capital, while the ineffective portion is recognised in the income statement under "Net gains or losses on financial instruments at fair value through profit or loss”. Accrued interest on the hedging derivative is entered in the income statement, under "interest and similar income", symmetrically to the accrued interest on the hedged item. Hedged instruments are still recognised according to the rules that apply to their accounting classification. If the hedging relationship is interrupted (breach of the effectiveness criteria, sale of the derivative or hedged item no longer held), the aggregate amounts entered in equity capital are transferred to profit or loss over the life of the hedge when the hedged transaction itself affects the profit or loss, or taken immediately in profit or loss if the hedged item is no longer held. Specific cases of portfolio hedging (macro-hedging) Cash flow hedging documentation Crédit Coopératif Group documents its macro-hedging of interest rate risk under cash flow hedging (hedging of loan and borrowing portfolios). Group financial statements With the exception of derivatives classified in the accounts as cash flow hedges or net investments denominated in other currencies, variations in the fair value are recognised in the income statement for the period. 126 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) In these cases, portfolios of exposures that may be hedged are evaluated, for each maturity band, on the basis of: • assets and liabilities; the entity bears a risk of variability in future cash flows on variable-rate assets/liabilities because the next rate-fixing levels are not known in advance. • future transactions deemed to be highly probable (forecasts). In the case of an assumption of constant assets and liabilities, there is a risk of variability in future cash flows on a future fixed-rate loan for the entity because the rate at which the future loan will be granted is not known. Similarly, the entity is deemed to bear a risk of variability in future cash flows on future refinancing in the market. The IAS 39 standard does not permit a net position to be designated by maturity band. The hedged item is seen as equivalent to a portion of one or more portfolios of identified reviewable-rate portfolios of instruments (portion of variable-rate sources or applications). The effectiveness of the hedges is measured by creating a ‘hypothetical' instrument for each maturity band, and comparing changes in its fair value since inception with those of the derivatives to be documented as hedges. The characteristics of this instrument are identical to those of the hedged item. The effectiveness test is conducted by comparing variations in the value of the hypothetical instrument with the hedging derivative. The method requires the creation of a schedule with maturity bands. When the hedging relationship is discontinued and if the hedged item still exists on the balance sheet, or if it is still highly likely to continue, aggregate unrealised gains or losses entered in equity capital are spread over the life of the hedge. If the derivative has not been cancelled, it is reclassified as a trading derivative and subsequent variations in its fair value will be entered in profit or loss. Fair value hedging documentation Crédit Coopératif documents its macro-hedging of interest rate risk under fair value hedging by applying the provisions of standard IAS 39 as adopted by the European Union (so-called 'carve-out'). The version of IAS 39 as adopted by the European Union omits certain provisions concerning hedge accounting that appear to be incompatible with the overall interest rate risk reduction strategies implemented by European banks. The European Union carve-out allows entities to account for inter-bank interest rate risk hedging alongside fixed-rate transactions with customers (loans, savings accounts, customer sight deposits). The majority of the macro-hedging instruments used by the Group are simple rate swaps, designated as fair value hedging of resources and fixed-rate applications from inception. Macro-hedging derivatives are accounted for using the sample principles as those outlined above for fair value macro-hedging. The effectiveness of the hedge must be shown both prospectively and retrospectively. In the case of a macro-hedging relationship, the adjusted value of the hedged component is recognised in its entirely under "Revaluation differential for portfolios hedged using interest rates". The prospective test is verified if the nominal amount of the items to hedge is greater than the notional amount of the hedging derivatives for each target maturity band of the schedule. The effectiveness of hedging is ensured when derivatives compensate for the interest rate risk of the hedged fixed-rate asset portfolio. Retrospective testing is used to calculate the retrospective effectiveness of the hedge at different reporting dates. Two effectiveness tests are carried out: At each reporting date, variations in the ex-coupon fair value of hedging derivatives are compared with those for hypothetical derivatives. The ratio of their respective variations must be between 80% and 125%. When the hedged instrument is sold or the future transaction is no longer highly probable, the aggregate unrealised gains or losses entered in equity capital are immediately transferred to profit or loss. • a basis test: for simple swaps designated as hedging from inception, a check is conducted to ascertain that there is no over-hedging, both prospectively on the hedge relationship designation date, and retrospectively at each annual closing • a quantitative test: for other swaps, the fair value variation of the real swap should compensate for the fair value variation of a hypothetical instrument that perfectly reflects the hedged component of the asset. These tests are conducted both prospectively on the hedge relationship designation date, and retrospectively at each annual closing. 127 In the event of a break in the hedge relationship, this difference is amortised on a straight-line basis over the residual term of the initial hedge, if the hedged asset has not been recognised. It is entered directly as income if the hedged elements no longer appear on the balance sheet. Macro-hedging derivatives may also be disqualified when the face value of the hedged instruments falls below the notional value of the hedges, due primarily to early loan repayments or deposit withdrawals. 4.1.6. Determining fair value General principles Fair value is the amount for which an asset may be exchanged or a liability cleared, under conditions of normal competition between knowledgeable and willing parties. When initially recognised, the fair value of a financial instrument is usually equal to the trade price, i.e. the value paid or received. For financial instruments, the prices quoted on an active market constitute the best indication of fair value. Entities should give priority to prices quoted on active markets where they exist. If there are no prices quoted, fair value can be calculated using an appropriate method, in accordance with the normally-accepted evaluation methods on the financial markets, favouring observable valuation parameters on the markets over data specific to the entity. Lastly, if there is insufficient observable data on the markets, fair value may be determined using a valuation method based on internal models. The selected model must be calibrated periodically by comparing its results with recent transaction prices. The absence of an active market and of observable data may be documented based on the following criteria: • significant fall in the volume of transactions and level of activity on the market • significant difficulty in obtaining quotations • small number of contributors or no contribution from the main players in the market • steep differences in prices available over time between the various players on the market • prices very different from the intrinsic value of the asset and/or significant gaps between bid and ask (wide price range). These criteria must be adapted to the characteristics of the target assets and may be supplemented using any other additional evidence which shows that the asset is no longer listed on an active market. If there are no recent transactions, this demonstration requires judgement. Over-the-counter instruments valued using recognised models and directly or indirectly observable parameters (level 2) Standard instruments A number of products, especially over-the-counter derivatives, standard rate swaps, forward rate agreements, caps, floors and vanilla options are valued using a valuation model. Valuations obtained may be based on observable parameters and on widely-accepted market-standard models (discounted future cash flows, price interpolation techniques) for the financial instrument in question. The widely-accepted nature of these models and the observ- These are securities and derivatives, such as futures and options, listed on organised markets, located in identifiably liquid areas (active market). A market is considered to be active if the prices are easily and regularly available from a stock market, broker, trader, price evaluation service or regulatory agency, and if these prices represent actual and regular transactions on the market under normal conditions of competition. able nature of the parameters have been documented for these instruments. Complex instruments Some complex and/or long-maturity financial instruments are valued using an accepted internal model based on observable market parameters calibrated in line with observable data such as rate curves, implicit volatility ranges of options, data arising from market consensus or on active over-the-counter markets. Group financial statements Instruments valued on the basis of quoted prices (non-adjusted) on an active market (level 1) 128 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) The observable nature of the parameter has been demonstrated for all of these instruments. In terms of methodology, the observability of parameters is based on four conditions that remain inextricably linked: • the parameter is derived from external sources (from a recognised contributor if possible) • the parameter is updated periodically • the parameter is representative of recent transactions • its characteristics are identical to those of the transaction. The margin generated from trading these financial instruments is immediately recognised in profit or loss. The fair value of instruments obtained using valuation models is adjusted to take account of counterparty risks, modelling risks and parameter risks. Level 2 includes the following in particular: • primarily standard over-the-counter derivatives • securities not listed on an active market, the fair value of which is determined from observable market data: e.g. use of market data from comparable listed companies or using the multiple income method • UCITS shares for which the net asset value is not calculated and published daily, but which is published on a regular basis or for which recent, observable transactions are available. Over-the-counter instruments valued using unrecognised models or a substantial portion of non-observable parameters (level 3) When the valuations obtained cannot be based on observable parameters or on accepted market-standard models, the valuation obtained will be considered to be non-observable. Specific cases Fair value of financial instruments recognised at amortised cost For financial instruments not valued in the balance sheet at fair value, the stated fair value calculations represent the best estimate on the reporting date and are based on models that incorporate a certain number of assumptions. In a number of cases, the book value is deemed to represent the fair value. These are: • variable-rate assets and liabilities, where changes in interest have no significant impact on the fair value because the sensitivity to credit risk is not significant over the period • short-term financial assets and liabilities (whose initial term is less than or equal to one year) because the sensitivity to interest rate and credit risks is not significant over the period • liabilities due on demand • transactions on a regulated market (particularly regulated savings products), the prices of which are set by public authorities. Fair value of the loans portfolio The fair value of loans is determined on the basis of internal valuation models, which involve discounting future recoverable flows of capital and interest over the remaining term at the production rate for the month for loans in the same category and with the same maturities. Early repayment options are taken into account in the form of an adjustment to the loan amortisation profile. Fair value of debts For fixed-rate debts to credit institutions and customers over a term of more than one year, fair value is assumed to correspond to the present value of future cash flows at the market rate on the reporting date. 4.1.7 Impairment of financial assets Impairment of securities Impairment of securities other than those classified in the portfolio of financial assets at fair value through profit or loss is assessed individually, provided there is an objective impairment index resulting from one or more loss events occurring after initial recognition of the asset, and that these events have an impact on future estimated cash flows of the financial asset, which can be reliably estimated. Impairment rules differ according to whether the securities are equity instruments or debt instruments. For equity instruments, a sustained fall or significant reduction in value is deemed to be an objective indicator of impairment. In view of the explanations provided by IFRIC in July 2009 and the recommendations of the market regulatory authorities, 129 the Group has had to review the criteria for classifying impairment situations for listed equity instruments. A decline in the value of a security in excess of 50% or for more than 36 months relative to its historical cost now constitutes an objective indicator of prolonged impairment requiring recognition of an impairment of income. Moreover, these impairment criteria are supplemented by a lineby-line analysis of assets that have declined in value by more than 30% or for more than six months compared to their historical cost, or in the case of events likely to characterise a significant or prolonged decline. If the Group estimates that the entire value of an asset cannot be recovered, an impairment charge is entered in the income statement. For unlisted equity instruments, a qualitative analysis of the position is conducted. Impairment of equity instruments is irreversible and cannot be recovered through profit or loss. Losses are entered under item “Net gains or losses on available-for-sale financial assets". Unrealised gains subsequent to impairment are deferred in equity until disposal of the securities. • there are objective indices of impairment on an individual or portfolio basis: these involve “triggering events” or “loss events” which identify a counterparty risk and which occur after the initial recognition of the loans in question. At individual level, the criteria used to assess the incurred nature of a credit risk include the existence of debts which have remained unpaid for more than three months (six months for property and nine months for debts on local and regional authorities) or, regardless of any such unpaid debts, the existence of an incurred credit risk or litigation procedures • these events result in the recognition of incurred losses. Impairments are determined as the difference between the amortised cost and the recoverable amount, i.e. the present value of future estimated recoverable cash flows, taking into account the effect of guarantees. For short-term assets (term of less than 1 year), future cash flows are not discounted. Impairment is determined overall, without distinguishing between interest and capital. Probable losses relating to off-balance-sheet commitments are recorded as provisions posted in the balance sheet under liabilities. There are two types of impairment entered in cost of risk: For debt instruments, such as bonds or securities resulting from securitisation (AbS, CMbS, RMbS, CDO cash), an impairment is recognised when a counterparty risk is recorded. • individual impairment • impairment on a portfolio basis. Individual impairment Impairment of debt instruments can be reversed through profit or loss if the issuer’s position improves. These impairments and reversals are entered under “Cost of risk”. Impairment of loans and receivables The IAS 39 standard sets out the methods for calculating and recognising recorded impairments of loans. A receivable is impaired if the following two conditions are met: Individual impairment is calculated on the basis of a schedule, determined according to the historical data on credit loss experience by category of receivable. Guarantees are taken into consideration to determine the amount of impairment and, when a guarantee covers the entire risk of default, no impairment is recognised. Impairment on a portfolio basis Impairment on a portfolio basis covers risks not recorded at individual level. In accordance with IAS 39, these are included in a group of uniform risk portfolios which are subjected to a collective impairment test. Crédit Coopératif Group's outstanding debts are included in uniform groups according to their sensitivity to changes in risk, based on the Group's internal rating system. Impairment tests are performed on portfolios involving counterparties whose rating has deteriorated substantially since they were granted and are there- Group financial statements The impairment indicators used for debt securities, irrespective of their destination portfolio, are identical to those used to assess ascertained risk on loans and receivables on an individual basis. For perpetual floating-rate notes, particular attention is also paid when, under certain conditions, the issuer cannot pay the coupon or extend the issue beyond the planned redemption date. 130 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) fore deemed to be sensitive. These outstanding debts are impaired, although the credit risk cannot be allocated to different counterparties within these portfolios on an individual basis, and provided that there is objective evidence of a decline in the value of the outstanding debts concerned. The impairment amount is determined on the basis of historical data indicating the likelihood of default upon maturity and expected losses; these values are adjusted where necessary to take into account particular circumstances on the reporting date. If required, an additional sector- or geographical-based analysis is carried out. This generally involves an "expert" assessment including a range of different economic factors that concern the population in question. Impairment on a portfolio basis is determined according to expected losses upon maturity for the basis in question. 4.1.8 Reclassification of financial assets Several types of reclassification are allowed: • Reclassifications authorised prior to the amendments to standards IAS 39 and IFRS 7, as adopted by the European Union on 15 October 2008: These notably include "Available-for-sale financial assets" reclassified as "Held-to-maturity financial assets". Any fixed-income security with a set maturity date defined as "Held-to-maturity financial assets" may be reclassified if the Group changes its management strategy and decides to hold the security to maturity. The Group must also have the ability to hold this instrument to maturity. • Reclassifications authorised since the amendments to IAS 39 and IFRS 7 adopted by the European Union on 15 October 2008: These standards define the terms for reclassifying nonderivative financial assets at fair value (with the exception of those initially designated at fair value as an option) to other categories: -- Reclassification of trading securities as "Available-forsale financial assets” or “Held-to-maturity financial assets”. All non-derivative financial assets may be reclassified provided the Group is capable of proving the existence of “rare circumstances” justifying the reclassification. It should be noted that the IASB has characterised the financial crisis of the second half of 2008 as a “rare circumstance”. Only fixed- or determinable-income securities can be reclassified in the category “Held-to-maturity financial assets”. Moreover, the institution must have the intention and ability to hold these securities to maturity. Securities entered in this category cannot be hedged against interest rate risk. -- Reclassification of trading securities or available-for-sale securities as "Loans and receivables”. Any non-derivative financial asset that meets the definition of “Loans and receivables” and, in particular, any fixed-income security not listed on an active market, may be reclassified provided that the Group modifies its management intention and decides to retain this security for the foreseeable future or to maturity., In addition, the Group must have the intention and ability to hold these securities in the medium or long term. Reclassifications are at fair value on the date of reclassification. The fair value on the date of reclassification becomes the new amortised cost for instruments transferred to categories valued at amortised cost. A new effective interest rate is then calculated on the date of reclassification to bring this new amortised cost into line with the repayment value, which means that the security has been reclassified with a discount. For securities that were included as available-for-sale assets, the new discount spread over the residual life of the security will normally be offset by amortising the recognised unrealised loss in profit and loss, posted directly in equity capital on the date of reclassification and reversed on an actuarial basis in the income statement. In the event of impairment after the date of reclassification of a security that was included in available-for-sale financial assets, the recognised unrealised loss in profit and loss posted directly in equity capital on the date of reclassification is immediately reversed in the income statement. 4.1.9 Derecognition of financial assets or liabilities A financial asset (or group of similar assets) is derecognised if the contractual rights to future cash flows from the asset have expired or when these contractual rights, together with prac- 131 tically all the risks and benefits of ownership of the asset, have been transferred to a third party. for their original category. The receivable is recognised at face value under “Loans and receivables”. In similar cases, any rights and obligations created or retained during the transfer are recognised separately as financial assets and liabilities. Security lending operations If the Group has neither transferred nor retained almost all of the risks and benefits, but retains control of the asset, it remains on the balance sheet to the extent of the Group’s involvement in the asset. If the Group has neither transferred nor retained almost all of the risks and benefits, but has not retained control of the asset, it is derecognised and all rights and obligations created or retained during the transfer are recognised separately as financial assets and liabilities. If all the conditions for derecognising a financial asset are not met, the Group keeps the asset in the balance sheet and records a liability representing the obligations arising when the asset is transferred. A financial liability (or part of a financial liability) is derecognised only when it has been discharged, i.e. when the obligation specified in the contract has been discharged, cancelled or has expired. Reverse repurchase operations These securities are not derecognised in the assignor's accounts. A liability representing a commitment to refund cash received (securities delivered on reverse repo) is identified. This debt constitutes a financial liability entered at amortised cost and not at fair value. Financial asset restructuring operations The Group considers that restructuring operations that have resulted in substantial changes to the asset should lead to recognition since the rights to the initial cash flows have, in substance, expired. This applies in particular to: • restructuring operations that have resulted in a change of counterparty, particularly where the credit quality of the new counterparty differs significantly from that of the former counterparty • restructuring operations designed to move from highly structured indexing to simple indexing since the two assets are not subject to the same risks. Financial liability restructuring operations A substantial change to the terms of an existing borrowing instrument should be recognised through the termination of the old debt and its replacement with a new debt. In order to judge whether the change is substantial, the 10% threshold set by IAS 39 is used, based on discounted cash flows including and fees and charges. Where the difference is 10% or more, all costs and charges incurred are recognised as profit or loss when the debt is terminated. The Group considers that other changes may also be deemed substantial, such as a change in issuer (even within the same group) or a change of currency. ➔➔4.2. Investment properties The assets received are not recognised in the assignee's books, but a receivable is recorded with respect to the assignor representing the cash loaned. The amount disbursed in respect of the asset is recognised under "Repo securities received". In accordance with IAS 40, investment property is property held for the intention of earning rent and capital appreciation. On subsequent reporting dates, the securities continue to be valued in the vendor’s accounts in accordance with the rules Investment property is recognised in exactly the same way as tangible assets (see note 4.3). Group financial statements When derecognising a financial asset, a disposal gain or loss is entered in the income statement at an amount equal to the difference between the book value of this asset and the counterparty value received. Lending/borrowing of securities cannot qualify as a transfer of financial assets within the meaning of standard IAS 39. Accordingly, these operations do not give rise to derecognition of the securities loaned. Borrowed securities are recognised in their original category and valued accordingly. For the borrower, the borrowed securities are not recognised. 132 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Property leased under an operating lease may have a residual value that will reduce the depreciable base of the asset. For other types of tangible asset, the useful life is generally between 5 and 10 years. Gains or losses from disposal of investment property are entered in profit or loss under “Net income or expenses from other activities”. Impairment testing is conducted on intangible assets when possible indicators of loss of value are identified at the year-end. In this case, the new recoverable value of the asset is compared to the net book value of the intangible asset. If there is a loss of value, depreciation is recognised in profit or loss. ➔➔4.3. Fixed assets This item includes operating tangible assets, property acquired with a view to operating leases, tangible assets acquired under finance leases and property temporarily not let within the framework of a finance lease. Non-trading property companies (SCI) are treated as tangible assets. In accordance with IAS 16 and IAS 38, tangible or intangible assets are recognised as an asset if: This depreciation is reversed in the event that the recoverable value is modified or the indicators of loss of value are no longer evident. The accounting treatment adopted for intangible assets used in operations and financed using finance leases is stated in note 4.9. • it is probable that the future economic benefits associated with this asset will flow to the company • the cost of this asset can be measured reliably. Property leased under an operating lease is listed in the assets section of the balance sheet, under tangible assets. Operating assets are entered at their acquisition cost, plus any acquisition expenses directly attributable to them. Where it meets the criteria for assets, software created is recognised at production cost, including direct external and payroll expenditure. ➔➔4.4. Assets intended for transfer and related liabilities The component-based approach is applied to all constructions. After initial recognition, assets are valued at cost less cumulative depreciation and losses in value. The depreciable base takes the residual value into account, when it can be measured and is significant. Fixed assets are depreciated over the consumption period of the expected economic benefits, which generally corresponds to the life of the asset. Where the use of one or more components of a capital asset is different or procures different economic benefits, these components are depreciated over their own useful life. The Group has applied the following depreciation periods for the Banques Populaires: • external walls/roofing/waterproofing: 20 to 40 years • foundations/frameworks: 30 to 60 years • external refurbishment: 10 to 20 years • technical installations: 10 to 25 years • interior fittings: 8 to 15 years. If a decision is made to sell non-current assets with a high probability that this sale will take place within 12 months, the assets concerned are separated in the balance sheet under “Non-current assets intended for transfer”. Liabilities related to them are also presented separately in a dedicated item, “Liabilities linked to noncurrent assets intended for transfer”. Once they are classed in this category, non-current assets are no longer amortised and are valued at their lowest book value or at fair value less costs to sell. Financial instruments continue to be valued according to the principles of IAS 39. ➔➔4.5. Provisions Provisions other than those relating to employee benefits, home savings, signature commitment risks and insurance contracts primarily concern litigation, fines, tax risks and restructuring. Provisions are defined as liabilities whose maturity or amount is not precisely set but which can be reliably estimated. These liabilities constitute an actual or implicit legal obligation resulting from a past event and are likely or certain to entail an outflow of resources for settlement purposes. 133 Provisions are discounted when the discounting impact is significant. Provisions and reversals of provisions are entered in profit or loss on the appropriate lines for the nature of the future expenditure covered. Commitments with respect to home savings contracts Home savings accounts (CEL) and home savings plans (PEL) are savings products offered to individuals whose characteristics are defined by the 1965 law on home savings and the orders made under this law. The home savings system generates two types of commitments for institutions selling these products: • the commitment in the future to grant loans to customers at the contractually-agreed rate at the time of opening the home savings plan, or at a rate that depends on the savings phase for home savings accounts • the commitment to remunerate savings in the future at the contractually-agreed rate at the time of opening and for an indeterminate period for home savings plans, or at a rate set every six months according to an indexing formula laid down by law for home savings accounts. Commitments that entail potentially unfavourable consequences are evaluated for each generation of home savings plan and for all home savings accounts. The risks attached to such commitments are covered by a provision the amount of which is determined by discounting the future results reached on the outstanding risks: • outstanding risk savings are the uncertain future level of savings plans existing at the date on which the provision is calculated. This is estimated statistically, taking the subscriber saver behaviour into account, for each future period, using the difference between probable savings outstanding and the minimum expected savings outstanding. • outstanding loans at risk correspond to the outstanding amounts on loans already made but not yet due on the date of calculation, and future loans estimated statistically, taking customer behaviour and acquired and projected rights attaching to the home savings accounts and plans into account. The results for future periods in the savings phase are calculated, for a given generation, by calculating the difference between the regulated rate offered and the expected remuneration for a competing savings product. The results for future periods for the credit phase are determined by the difference between the fixed rate at the start of the contract for PELs or a rate relating to the savings period for the CEL contracts and the anticipated rate of the nonregulated environment. When the algebraic sum of the measure of future commitments in the savings phase and the loan phase for the same generation of contracts reflects a potentially unfavourable position for the Group, a provision is constituted, with no offset between generations. Commitments are estimated using the Monte Carlo method to reflect the uncertainty regarding potential changes in rates and the consequences on modelled future customer behaviour and on amounts outstanding at risk. The provision is entered in the balance sheet under liabilities and variations are entered in interest margin. ➔➔4.6. Interest income and expenses Interest income and expenses are recognised in the income statement for all financial instruments valued at amortised cost using the effective interest rate method. The effective interest rate is the rate that exactly reflects future cash outflows or inflows over the expected life of the financial instrument so as to obtain the net book value of the financial asset or liability. The calculation of this rate incorporates the transaction costs and income, premiums and discounts. Transaction costs and income that form an integral part of the effective rate of the contract, such as set-up fees or commissions paid to business introducers, are similar to additional interest. ➔➔4.7. Commission on services provided Commission is recognised in profit or loss according to the type of service provided and the method for recognising the financial instruments to which the service relates: • commission related to ongoing services are spread in profit or loss over the service provision period (commission on methods of payment, custody fees for securities held on deposit, etc.) Group financial statements The amount recognised in provisions is the best estimate of the expenditure required to settle the current obligation on the period-end date. 134 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) • commission related to one-off services are entered in profit or loss in full when the service is completed (commission on movements of funds, payment incident penalties, etc.) • commission related to the execution of a significant transaction is recognised in profit or loss in full on completion of the transaction. Commission that forms an integral part of actual return on the instrument, such as financial commitment or loan granting commission, is recognised and amortised as an adjustment of the actual return on the loan over the estimated life of the loan concerned. Commission of this type is therefore included in interest income, and not under the "Commission" item. Trust commission or similar is commission that leads to the holding of or investment in assets on behalf of individuals, pension funds or other institutions. Trust transactions cover asset management and retention activities on behalf of third parties in particular. ➔➔4.8. Currency transactions The accounting rules depend on whether the elements used in the foreign currency transactions by the Group are monetary or non-monetary. On the reporting date, monetary assets and liabilities denominated in foreign currencies are converted at the year-end exchange rate in the operating currency of the Group entity on whose balance sheet they are recognised. Exchange gains or losses arising from this conversion are recognised in profit or loss. However, there are two exceptions to this rule: • only the component of the exchange gain or loss calculated on the amortised cost of available-for-sale financial assets is recognised in profit or loss, the remainder is entered in equity capital • exchange gains or losses on monetary elements designated as cash flow hedges or forming part of a net investment in a foreign entity are recognised in equity capital. Non-monetary assets recognised at historical cost are valued at the exchange rate on the date of the transaction. Non-monetary assets recognised at fair value are valued at the year-end exchange rate. Exchange gains or losses on non-monetary elements are recognised in profit or loss if the gain or loss on the non-monetary element is entered in profit or loss, and in equity capital if the gain or loss on the non-monetary element is entered in equity capital. ➔➔4.9. Finance leases and similar operations Lease contracts are analysed according to their substance and financial reality and are either operating leases or finance leases, depending on the case. 4.9.1 Finance lease contracts A finance lease contract is defined as a lease contract when substantially all the risks and rewards inherent to ownership of an asset are transferred to the lessee. It is treated as a capital asset acquisition by the lessee financed by a loan granted by the lessor. IAS 17, which covers lease contracts, sets out five examples of situations for determining whether a contract may be considered a finance lease or an operating lease: • the contract transfers ownership of the asset to the lessee at the end of the lease term • the lessee has the option to purchase the assets at a price sufficiently lower than their fair value at the end of the contract term so that, at the inception of the contract, it is reasonably certain that the option will be exercised • the lease contract term covers the majority of the economic life of the asset • at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset • the asset is of a specialised nature such that only the lessee can use it without making major modifications. Furthermore, IAS 17 describes three indicators of situations that could lead to classification as a finance lease: • if the lessee cancels the lease contract, the losses incurred by the lessor associated with the cancellation are borne by the lessee (capital loss on the asset, etc.) • gains or losses from variations in the fair value of the residual are borne by the lessee • the lessee has the ability to continue the lease at a rent that is substantially lower than the market rent. When the contract is commenced, the lease is entered in the lessor’s balance sheet as a receivable at an amount equal to the net investment in the lease contract, corresponding to the present value of the minimum payments due at the interest rate implicit in the contract plus any unguaranteed residual value accruing to the lessor. 135 reviewed on a regular basis. A reduction in the estimated unguaranteed residual value leads to a change in the allocation profile of the income over the full contract term (a new amortisation schedule is calculated) and a charge is recognised to correct the amount of financial income already entered. Impairment charges for finance lease operations are determined based on the same method as that described for loans and receivables. Finance lease income corresponding to interest is recognised in the income statement under “Interest and similar income”. Finance lease income is recognised in profit or loss through the interest rate implicit in the lease, which reflects a constant periodic rate of return on the lessor’s net outstanding amount. The interest rate implicit in the lease is the discount rate that makes the following equal: • the present value of the minimum payments receivable by the lessor plus the unguaranteed residual value, and • the entry value of the asset (fair value at inception plus direct initial costs, i.e. costs specifically incurred by the lessor to set up a lease contract). In the lessee's accounts, finance contracts and lease option contracts are reflected in the acquisition of an asset financed by a loan. ➔➔4.10. Employee benefits Group employees receive different types of benefits, which are classified into four categories: 4.10.1 Short-term benefits Short-term benefits chiefly comprise salaries, annual paid holidays, profit sharing, shareholding and bonuses, which relate to the financial year under consideration and are paid within 12 months of the year-end. The costs are recognised as an expense for the financial year, including amounts remaining due at the year-end. 4.10.2 Long-term benefits Long-term benefits are generally linked to length of service and are paid to current employees after more than 12 months from the end of the financial year. These are mainly long-service awards. These commitments are subject to a provision equal to the value of the commitments at year-end. These assets are valued based on an actuarial method incorporating demographic and financial assumptions, such as age, length of service, probability of being present on the date the benefit is granted and the discount rate. This calculation makes a load distribution over time depending on the period of staff employment (projected unit credit method). 4.10.3 Termination benefits not transferred to the lessee. These are benefits paid to employees at the end of their employment contract and before retirement, irrespective of whether the employee is laid off or accepts voluntary redundancy. A provision is constituted to cover termination benefits. Those paid more than 12 months after the period-end date result in discounting. The asset is recognised in the lessor's accounts as a capital as- 4.10.4 Post-employment benefits set and is amortised over the lease period. The depreciable base Post-employment benefits encompass payments on retirement, pensions and retirement benefits. 4.9.2 Operating lease contracts An operating lease contract is a contract for which substantially all the risks and rewards inherent to the asset leased are is understood to exclude residual value. Rents are recognised in profit or loss over the term of the lease contract. The asset is not recognised in the lessee’s assets. Payments made under the contract are entered according to the straight-line method over the lease period. These benefits can be divided into two categories: defined contribution plans (which do not represent a commitment to be funded by the company) and defined benefit plans (representing a commitment for the company, which must be valued and funded). Group financial statements In accordance with IAS 17, unguaranteed residual values must be 136 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) The Group’s employee benefits that are not covered by contributions entered as costs and paid into retirement or insurance funds are recognised as liabilities in the balance sheet. The valuation method used is the same as that described above for long-term benefits. Recognition takes account of the value of the assets constituted to cover the commitments and unrecognised actuarial elements. Actuarial gains and losses on post-employment benefits, indicative of differences in the assumptions (early departures, the discount rate, etc.) or ascertained from the actuarial assumptions and actual calculations (performance of plan assets, etc.) are amortised using the so-called corridor rule, i.e. the part that exceeds a variation of plus or minus 10% of liabilities or assets. abilities, regardless of the date on which the tax becomes due or collectible. The tax rate and fiscal rules used for calculating deferred taxes are those set out in taxation legislation in force and which will be applicable when the tax becomes collectible or due. Netting of deferred taxes is carried out in each tax entity. The tax entity corresponds either to the entity itself, or to a tax integration group, where one exists. The Group only records deferred tax assets if it is probable that the entity concerned has a prospect of recovering the assets within a given time frame. Deferred taxes are recognised as a tax income or tax expense in the income statement, except those relating to: The annual charge in respect of defined benefit plans includes the cost of services rendered in the year, the financial cost of the updating of commitments, the expected returns on plan assets and amortisation of any unrecognised elements. • unrealised gains and losses on available-for-sale financial assets • and fluctuations in the fair value of cash flow hedge derivatives, ➔➔4.11. Deferred taxes for which the relevant deferred taxes are entered in unrealised gains and losses recognised directly in equity capital. Deferred taxes are recognised when there are temporary differences between the book value and tax basis of assets or li- No discounting is conducted when calculating deferred tax. 137 Note 5. Notes relating to the balance sheet 5.1. Financial assets and liabilities at fair value through profit or loss These assets and liabilities comprise transactions negotiated for trading, including derivative financial instruments, and some assets and liabilities that the Group has elected to recognise at fair value from the date of acquisition or issue, under the option offered by IAS 39. 5.1.1. Financial assets recognised at a fair value through profit or loss in thousands of euros 31/12/2012 Trading By option 31/12/2011 Total Trading By option Total Government and similar securities Bonds and other fixed-income securities Fixed-income securities Shares and other variable-income securities 66 4,897 4,963 62 79,254 41,164 84,217 41,226 4,210 4,272 Loans to credit institutions Loans to customers Loans Reverse repurchase operations Trading derivatives Total financial assets at fair value through profit or loss 79,254 79,320 4,897 41,164 4,210 45,436 Conditions for classification of financial assets at fair value through profit or loss as an option in thousands of euros Accounting inconsistency Management at fair value Embedded derivatives Financial assets at fair value by option Fixed-income securities Shares and other variable-income securities 4,897 4,897 4,897 4,897 Loans and reverse repurchase operations Total 5.1.2. Financial liabilities at fair value through profit or loss in thousands of euros 31/12/2012 31/12/2011 Reverse repurchase operations Other financial liabilities Financial liabilities held for trading purposes Trading derivatives 79,582 41,898 5,141 5,124 5,141 5,124 84,723 47,022 Fixed deposit accounts and inter-bank loans Debts in the form of securities Subordinated debt Reverse repurchase operations Other financial liabilities Financial liabilities at fair value by option Total financial liabilities at fair value through profit or loss Group financial statements Fixed deposit accounts and loans to customers 138 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Conditions for classification of financial liabilities at fair value through profit or loss as an option Accounting inconsistency in thousands of euros Management at fair value Financial liabilities at fair value by option Embedded derivatives Fixed deposit accounts and inter-bank loans Fixed deposit accounts and loans to customers Debts in the form of securities 5,141 5,141 5,141 5,141 Subordinated debt Reverse repurchase operations Total Financial liabilities at fair value as an option include fixed-rate negotiable medium-term notes which can be converted to reviewable-rate. Financial assets and liabilities at fair value through profit or loss as an option and credit risk in thousands of euros 31/12/2012 Fair value Amount contractually due at maturity 31/12/2011 Difference Difference attributable to credit risk Amount contractually due at maturity Fair value Difference Difference attributable to credit risk Fixed deposit accounts and inter-bank loans Fixed deposit accounts and loans to customers Debts in the form of securities 5,141 5,063 78 5,124 5,069 55 5,141 5,063 78 5,124 5,069 55 Subordinated debt Reverse repurchase operations Total The contractually-due amount of borrowings is the amount of capital remaining at the financial year-end date plus un-matured, non-accrued interest. For securities, the repayment value is generally used. 5.1.3. Trading derivative instruments The notional amount of financial instruments does not constitute an indication of the volume of activity and does not reflect the market risks attached to these instruments. Negative or positive fair values represent the replacement value of these instruments. These values can fluctuate widely in line with developments in the market. in thousands of euros 31/12/2012 Notional Interest rate instruments Positive fair value 31/12/2011 Negative fair value 2,410,087 74,465 74,832 129,470 770 30,320 59 2,569,877 Notional Positive fair value Negative fair value 1,858,994 37,725 38,082 838 92,459 954 1,596 59 25,940 263 261 75,294 75,729 1,977,393 38,942 39,939 286,320 3,960 3,853 265,032 2,222 1,959 286,320 3,960 3,853 265,032 2,222 1,959 2,856,197 79,254 79,582 2,242,425 41,164 41,898 Share instruments Currency instruments Other instruments Firm transactions Interest rate instruments Share instruments Currency instruments Other instruments Conditional transactions Credit derivatives Total of trading derivative instruments 139 5.2. Derivative hedging instruments value hedges chiefly to hedge fixed-rate loans, securities, deposits and subordinated debts. Derivatives designated as hedging instruments are those that comply with the conditions of IAS 39 from the inception of the hedge relationship and throughout its duration, and in particular with the condition requiring formal documentation of the existence of effective hedge relationships between the derivatives and the hedged items, both prospectively and retrospectively. Fair value hedges are chiefly interest rate swaps to hedge against exposure to fluctuations in the fair value of fixed-rate instruments due to changes in market rates. These hedges convert fixed-rate assets or liabilities into variable-rate items. The Group uses fair in thousands of euros Fair value hedging Interest rate instruments Currency instruments Firm transactions Cash flow hedges allow the Group to freeze or limit the variability in cash flows linked to instruments yielding interest at a variable rate. Cash flow hedging is also used for overall rate risk management purposes. 31/12/2012 Notional Interest rate instruments Currency instruments Other instruments Firm transactions Interest rate instruments Currency instruments Other instruments Conditional transactions Fair value hedging is also used for overall rate risk management purposes. Positive fair value 31/12/2011 Negative fair value Notional Positive fair value Negative fair value 1,577,580 1,961 30,747 51,378 563 1,612,090 23,946 22,133 1,579,541 30,747 51,941 1,612,090 23,946 22,133 1,579,541 30,747 51,941 1,612,090 23,946 22,133 684,389 3,863 688,252 3,265 295,908 510 334 3,265 2,296 211 2,507 295,908 510 334 688,252 3,265 2,507 295,908 510 334 2,267,793 34,012 54,448 1,907,998 24,456 22,467 Interest rate instruments Other instruments Conditional transactions Cash flow hedges Credit derivatives Total of derivative hedging instruments 5.3. Available-for-sale financial assets These are non-derivative financial assets that have not been classified in one of the other categories (financial assets at fair value, held-to-maturity financial assets or loans and receivables). 31/12/2012 31/12/2011 173,532 Bonds and other fixed-income securities 372,687 Impaired securities 53,496 57,273 Fixed-income securities 599,715 787,440 Shares and other variable-income securities 406,583 472,956 730,167 Loans to credit institutions Loans to customers Loans Gross value of available-for-sale financial assets 1,006,298 1,260,396 Impairment of doubtful debts (48,194) (50,083) Long-term impairment of shares and other variable-income securities (14,617) (8,258) 943,487 1,202,055 8,419 14,430 Total financial assets available for sale Gains and losses entered directly as equity capital for available-for-sale financial assets (before tax) Group financial statements in thousands of euros Government and similar securities 140 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) During the 2011 financial year, no available-for-sale financial assets were reclassified into a different financial asset category. criteria judged reasonable. The prudential restrictions that apply to the activities concerned, including the main expected impacts of Basel III, have been taken into account in the valuation exercise. During the 2012 financial year, no available-for-sale financial assets were reclassified into a different financial asset category. The revalued net assets of BPCE include the intangible assets held by BPCE SA and the overhead costs of the central body. Available-for-sale financial assets are impaired if there are indications of impairment when the Group considers that it may not recover the investment. The valuation work conducted with respect to the financial statements for the 2012 financial year therefore resulted in the recognition of impairment of €6,860K on BPCE securities. This impairment is recorded under gains and losses on other assets. At 31 December 2012, the net book value of BPCE securities stood at €195,722K. A decline in value in excess of 50% relative to the historical cost or a decline for more than 36 months is considered an indication of impairment for listed variable-income securities. The value of securities of the central body is determined by calculating a revalued net asset that includes the revaluation of the main subsidiaries of BPCE. 5.4. Fair value of financial assets and liabilities The main subsidiaries of BPCE are valued on the basis of multi-year forecasts, discounted to reflect expected dividend flows (Dividend Discount Model). The expected dividend flow forecasts are based on business plans created from the strategic plans of the entities concerned, as well as on technical 5.4.1. Hierarchy of the fair value of financial assets and liabilities The table below gives the breakdown of financial instruments by type of price or valuation model as at 31 December 2011: At 31 December 2012, the breakdown was as follows: in thousands of euros 31/12/2012 Listing on an active market (level 1) Valuation techniques, using observable data (level 2) Valuation techniques, using non-observable data (level 3) Total FINANCIAL ASSETS Securities 66 Derivatives Other financial assets Financial assets held for trading purposes Securities 66 66 79,254 79,254 79,254 79,320 4,897 4,897 4,897 4,897 Other financial assets Financial assets at fair value through profit or loss as an option Securities 382,492 560,995 943,487 382,492 560,995 943,487 34,012 34,012 79,582 79,582 79,582 79,582 5,141 5,141 5,141 5,141 54,448 54,448 Other financial assets Available-for-sale financial assets Derivative hedging instruments FINANCIAL LIABILITIES Securities Derivatives Other financial liabilities Financial liabilities held for trading purposes Securities Other financial liabilities Financial liabilities at fair value through profit or loss as an option Derivative hedging instruments 141 At 31 December 2011, the breakdown was as follows: in thousands of euros 31/12/2011 Listing on an active market (level 1) Valuation techniques, using observable data (level 2) Valuation techniques using non-observable data (level 3) Total FINANCIAL ASSETS Securities 62 Derivatives 62 41,164 41,164 41,164 41,226 Other financial assets Financial assets held for trading purposes 62 Securities 4,210 4,210 4,210 4,210 Other financial assets Financial assets at fair value through profit or loss as an option Securities 329,256 872,799 1,202,055 329,256 872,799 1,202,055 24,456 24,456 41,998 41,998 41,998 41,998 Other financial assets Available-for-sale financial assets Derivative hedging instruments FINANCIAL LIABILITIES Securities Derivatives Other financial liabilities Financial liabilities held for trading purposes Securities Other financial liabilities Financial liabilities at fair value through profit or loss as an option Derivative hedging instruments 5,124 5,124 5,124 5,124 22,467 22,467 5.5. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable income, which are not traded on an active market. The vast majority of the Group’s lending is classified as belonging to this category. 5.5.1. Loans and receivables relating to credit institutions Individual impairment 31/12/2012 31/12/2011 678,597 1,187,936 (54) (987) 678,543 1,186,949 Impairment on a portfolio basis Total loans and receivables relating to credit institutions At 31 December 2012, the fair value of loans and receivables relating to credit institutions stood at €828,307K (€1,188,110 at 31 December 2011). Group financial statements in thousands of euros Loans and receivables relating to credit institutions 142 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Breakdown of loans and receivables relating to credit institutions in thousands of euros 31/12/2012 31/12/2011 Overdrafts on current accounts 60,357 Reverse repurchase operations 1 Accounts and loans 258,153 606,507 921,743 Finance lease operations Subordinated loans and participatory loans 4,425 4,353 Securities similar to loans and receivables 7,253 2,700 Impaired loans and receivables Total loans and receivables relating to credit institutions 54 987 678,597 1,187,936 Pursuant to the amendment to IAS 39, no financial assets in the "Loans and receivables relating to credit institutions" category were reclassified into a different financial asset category during the financial year concerned. At 31 December 2012, receivables on transactions with the network stood at €84,714K (€686,883K at 31 December 2011). "Livret A" and LDD passbook savings account funds centralised at the Caisse des Dépôts and present on the "Overdrafts on current accounts" line totalled €268,403K at 31 December 2012 (€173,125K at 31 December 2011). 5.5.2. Loans and receivables relating to customers in thousands of euros Loans and receivables relating to customers 31/12/2012 31/12/2011 11,789,871 10,345,093 Individual impairment (311,497) (302,873) Impairment on a portfolio basis (18,044) (19,013) 11,460,330 10,023,207 Total loans and receivables relating to customers Pursuant to the amendment to IAS 39, no financial assets in the "Loans and receivables relating to customers" category were reclassified into a different financial asset category during the financial year concerned. The fair value of loans and receivables relating to customers amounted to €11,631,115K at 31 December 2012 (€10,208,009K at 31 December 2011). Breakdown of loans and receivables relating to customers in thousands of euros Overdrafts on current accounts Loans to financial customers 31/12/2012 31/12/2011 807,274 540,098 2,172 50 704,146 647,031 Credit for equipment 7,022,566 6,155,876 Home loans 1,017,510 888,659 Liquidity loans Credit for export Other credit Reverse repurchase operations Subordinated loans Other aid to customers Securities similar to loans and receivables 5,187 9,172 429,106 420,375 56,600 46,016 33,261 9,283,303 8,154,424 28,747 33,912 Other loans and receivables relating to customers 975,302 966,958 Impaired loans and receivables 695,245 649,701 11,789,871 10,345,093 Total loans and receivables relating to customers 143 5.6. Held-to-maturity financial assets These are non-derivative financial assets with fixed or determinable payments, with a determined maturity date and which the Group has the clear intention and the means to hold until maturity. in thousands of euros 31/12/2012 31/12/2011 Government and similar securities 167,959 Bonds and other fixed-income securities 399,796 350,925 401,780 Gross total of held-to-maturity financial assets 567,755 752,705 567,755 752,705 Impairment Total held-to-maturity financial assets Crédit Coopératif did not conduct any transfers or disposals during the financial year in question. The fair value of financial assets held to maturity amounted to €616,433K at 31 December 2012 (€763,918K at 31 December 2011). 5.7. Current and deferred tax Analysis of deferred tax assets and liabilities by type Deferred taxes determined according to temporary differences are based on the accounting sources detailed in the following table (positive amounts relate to deferred tax assets while negative amounts refer to deferred tax liabilities): in thousands of euros Unrealised gains on UCITS 31/12/2012 31/12/2011 1,069 862 Provisions for corporate liabilities 271 250 Provisions for home savings activity 421 357 6,213 6,546 298 5,726 Provisions on a portfolio basis Other non-deductible provisions Other sources of temporary differences Deferred tax linked to temporary shortfalls Deferred tax linked to the activation of deferrable fiscal losses 7,165 3,321 15,436 17,062 390 845 Fair value of financial instruments for which the variation is posted to reserves (2,177) (2,933) Unrealised leasing reserves (3,325) (3,241) Other balance sheet valuation items (2,917) (2,803) Deferred tax linked to valuation methods within IFRS guidelines (8,418) (8,977) Deferred tax linked to consolidation adjustments and eliminations (321) (2,346) NET DEFERRED TAX 7,087 6,584 On the assets side On the liabilities side 10,276 17,093 (3,189) (10,509) Group financial statements Entered into the accounts 144 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Analysis of deferred taxes recognised directly in equity capital during the financial year in thousands of euros Financial year 2012 Gross Conversion rate adjustment Tax Financial year 2011 Net of tax 481 Variations in the value of available-for-sale financial assets Variations in the value of derivative hedging instruments Proportion of unrealised gains and losses entered directly as equity capital for companies consolidated using the equity method Total gains and losses entered directly as equity capital Group share Net of tax Tax 481 (518) (6,080) 534 (5,546) (28,128) 628 (27,500) (679) 250 (429) (264) 91 (173) (17) 122 784 (5,511) (28,788) 719 (28,069) (7,691) 935 (6,756) (27,682) 790 (26,892) 1,396 (151) 1,245 (1,106) (71) (1,177) (17) (6,295) Minority interests Gross (518) 122 5.8. Accruals and miscellaneous assets in thousands of euros 31/12/2012 Collection accounts 31/12/2011 57,056 56,264 Pre-paid charges 3,437 4,721 Deferred income 30,746 32,216 Other accruals 189,338 68,820 Accruals – assets 280,577 162,021 37 12,300 64,788 10 Guarantee deposits paid Settlement accounts for receivables relating to securities transactions Proportion of reinsurers in technical provisions Miscellaneous receivables Miscellaneous assets Total accruals and miscellaneous assets 145,135 100,234 209,960 112,544 490,537 274,565 5.9. Shareholdings in companies consolidated according to the equity method The Group’s main shareholdings consolidated according to the equity method concern the following companies: in thousands of euros 31/12/2012 Esfin 31/12/2011 19,185 19,283 Coopest 2,771 2,616 France Active Garantie 2,137 1,981 CADEC Caisse de Garantie Immobilière du Bâtiment Total shareholdings in companies consolidated according to the equity method 3,493 3,462 16,258 15,138 43,844 42,480 5.10. Investment properties in thousands of euros 31/12/2012 Gross value Aggregate depreciation and impairment 31/12/2011 Net value Gross value Aggregate depreciation and impairment Net value Investment properties entered in the accounts at historical cost Total investment properties 33,886 (22,964) 10,922 43,090 (26,548) 16,542 33,886 (22,964) 10,922 43,090 (26,548) 16,542 145 5.11. Fixed assets in thousands of euros 31/12/2012 Gross value 31/12/2011 Aggregate depreciation and impairment Net value Gross value Aggregate depreciation and impairment Net value Tangible assets Land and buildings 90,877 (6,421) 84,456 99,510 (33,437) 66,073 174,423 (77,925) 96,499 141,314 (40,593) 100,721 265,300 (84,345) 180,955 240,824 (74,030) 166,794 Leased movable assets Equipment, movable assets and other tangible assets Total tangible assets Intangible assets Leasehold rights Software 8,304 (6,436) 1,868 7,949 (6,086) 1,863 74,829 (60,934) 13,895 67,643 (54,931) 12,712 Other intangible assets 9,031 (15) 9,016 6,411 (1) 6,410 Total intangible assets 92,164 (67,385) 24,779 82,003 (61,018) 20,985 5.12. Goodwill Goodwill in thousands of euros Net book value 31/12/2012 31/12/2011 Acquisitions Disposals Conversion rate adjustment 64 (85) 5,615 5,551 Other variations Gross closing value Aggregate closing impairment (1,096) Net closing value 4,519 5,551 Breakdown of main sources of goodwill in thousands of euros Net book value 31/12/2012 Intercop Location Ecofi Investissements 31/12/2011 217 217 3,546 3,546 Financière de Champlain Tise Total goodwill 1,096 756 692 4,519 5,551 In accordance with regulations, goodwill undergoes impairment testing based on a measurement of the going concern value of the cash generating units (CGU) to which it is allocated. For Ecofi Investissements, the goodwill was valued on the basis of a medium-term plan setting out forecast income data for 2013 to 2018. Going concern value is calculated by discounting the future cash flows from the CGU according to the medium-term plans drawn up in the context of the Group's budgetary process. These tests led the Group to recognise impairment of €1,096K on goodwill against Financière de Champlain for the 2012 financial year. Group financial statements Impairment tests 146 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 5.13. Debts to credit institutions and customers Debts which are not classed as financial liabilities at fair value through profit or loss are valued based on the amortised cost method and entered under “Debts to credit institutions” or “Debts to customers” in the balance sheet. 5.13.1. Debts to credit institutions in thousands of euros Demand accounts 31/12/2012 31/12/2011 71,712 98,528 Reverse repurchase operations Related receivables Demand payables to credit institutions Loans and fixed deposit accounts Reverse repurchase operations 1 44 71,713 98,572 1,489,661 1,144,521 344,058 Related receivables Fixed-term payables to credit institutions Total payables to credit institutions 6,559 3,792 1,840,278 1,148,313 1,911,991 1,246,885 At 31 December 2012, debts on transactions with the network stood at €488,819K (€80,583K at 31 December 2011). The fair value of debts to credit institutions stood at €1,939,020K at 31 December 2012 (€1,265,537K at 31 December 2011). 5.13.2. Debts to customers in thousands of euros Current accounts in credit Livret A (passbook savings account) Livret Jeune (young person's savings account) 31/12/2012 31/12/2011 4,305,290 4,089,106 355,413 257,200 7,145 5,651 PEL/CEL (home savings plans/home savings accounts) 123,687 116,793 Sustainable development savings account 192,512 156,106 PEP (popular savings account) Other specially-regulated savings accounts Related receivables Specially-regulated savings accounts Demand deposits and borrowings Fixed deposit accounts and borrowings Related receivables Other customer accounts 23,097 23,984 2,227,019 1,351,419 163 229 2,929,036 1,911,382 180,137 152,466 1,065,071 818,101 12,366 12,550 1,257,574 983,117 177,395 156,111 On demand Fixed term Related receivables Reverse repurchase operations 441 46 177,836 156,157 8,669,736 7,139,762 Other debts to customers Total debts to customers Fixed deposit accounts include €110,851K in loans taken out from the SFEF (Société de Financement de l’Économie Française). At 31 December 2012, the fair value of debts to customers totalled €8,692,916K (€7,160,761K at 31 December 2011). 147 5.14. Debts in the form of securities Debts in the form of securities are broken down by nature, apart from subordinated securities classified under “Subordinated debt”. in thousands of euros 31/12/2012 Bond issues 31/12/2011 256,960 383,323 67,656 165,685 1,831,270 2,886,774 2,155,886 3,435,782 8,476 28,299 2,164,362 3,464,081 Short-term loan notes and savings bonds Interbank market securities and negotiable debt securities Other debts in the form of securities Total Related receivables Total debts in the form of securities At 31 December 2012, the fair value of debts in the form of securities totalled €2,177,363K (€3,407,780K at 31 December 2011). 5.15. Accruals and miscellaneous liabilities in thousands of euros 31/12/2012 31/12/2011 Collection accounts 48,264 60,131 Pre-paid income 22,702 22,510 Charges to be paid 56,033 50,347 Other payables accrued 33,336 65,769 160,335 198,757 Accruals - liabilities 7,909 5,876 Miscellaneous creditors Settlement accounts for payables relating to securities transactions 164,294 175,963 Miscellaneous liabilities 172,203 181,839 332,538 380,596 Total accruals and miscellaneous liabilities 5.16. Provisions Provisions primarily concern employee benefits and risks on home savings products. 31/12/2011 Increase Unused reversals Use Provisions for employee benefits 1,758 613 Provisions for home savings activity 1,037 201 16,396 6,880 (327) Provisions for disputes 7,656 2,309 (297) Others 5,068 1,404 Other provisions 30,157 10,794 Total provisions 31,915 11,407 Provisions for off-balance-sheet commitments (16) (525) Other movements (2) (14) 31/12/2012 1,828 1,224 (4,818) 2,094 20,225 Provisions for property development activities Provisions for restructuring (1) Including variations in scope and monetary parity. (130) (2,404) 7,134 (2,320) 242 4,394 (624) (7,282) (68) 32,977 (640) (7,807) (70) 34,805 Group financial statements in thousands of euros 148 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 5.16.1. Amounts collected for home savings accounts in thousands of euros 31/12/2012 31/12/2011 Amounts collected for home savings plans (PEL) outstanding in place for less than 4 years in place for more than 4 years and less than 10 years in place for more than 10 years Amounts collected for home savings plans outstanding Amounts collected for home savings accounts outstanding Total amounts collected for home savings outstanding 8,911 2,950 34,293 30,882 56,418 58,016 99,622 91,848 23,185 21,118 122,807 112,966 5.16.2. Outstanding loans granted for home savings accounts in thousands of euros 31/12/2012 Outstanding loans provided for home savings plans 31/12/2011 402 531 Outstanding loans provided for home savings accounts 2,410 2,125 Total outstanding loans provided for home savings 2,812 2,656 5.16.3. Provisions created for home savings accounts in thousands of euros 01/01//2012 Allocations/Reversals 31/12/2012 Provisions created for home savings plans in place for less than 4 years in place for more than 4 years and less than 10 years in place for more than 10 years 6 66 72 595 (478) 117 53 635 688 Provisions created for home savings plans 654 223 877 Provisions created for home savings accounts 383 (36) 347 1,037 187 1,224 Provisions created for home savings plan loans Provisions created for home savings account loans Provisions created for home savings loans Total provisions created for home savings accounts 5.17. Subordinated debt Subordinated debt is distinguished from receivables or bonds issued, as repayment only takes place after all the preferential or unsecured creditors have been paid. in thousands of euros 31/12/2012 31/12/2011 Fixed-term subordinated debt 69,999 116,997 Non-fixed-term subordinated debt 31,046 27,946 52,681 51,869 153,726 196,812 437 1,915 Non-fixed-term super-subordinated debt Preference shares Guarantee deposits of a mutual nature Total Related receivables Revaluation of the hedged component Total subordinated debt 7,682 7,981 161,845 206,708 149 At 31 December 2012, the fair value of subordinated debts totalled €169,908K (€196,539K at 31 December 2011). Subordinated debt progression over the course of the financial year in thousands of euros 31/12/2011 Fixed-term subordinated debt Issue Redemption 116,997 Non-fixed-term subordinated debt Other movements (46,998) 31/12/2012 69,999 27,946 3,100 31,046 51,869 1,868 (1,056) 52,681 196,812 4,968 (48,054) 153,726 Non-fixed-term super-subordinated debt Preference shares Guarantee deposits of a mutual nature Total 5.18. Ordinary shares and equity instruments issued 5.18.1. Members’ shares and cooperative certificates of investment in thousands of euros 31/12/2012 Number Nominal 31/12/2011 Capital Number Nominal Capital Members' shares Opening value 39,014,756 €15.25 594,975 Capital increase 3,278,688 €15.25 50,000 39,014,756 42,293,444 €15.25 644,975 39,014,756 9,753,689 €15.25 148,744 9,753,689 819,672 €15.25 12,500 10,573,361 €15.25 161,244 €15.25 594,975 Capital reduction Other variations Closing value 594,975 Cooperative certificates of investment Opening value Capital increase €15.25 148,744 Capital reduction Other variations 9,753,689 148,744 Group financial statements Closing value 150 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 6. Notes relating to the income statement 6.1. Interest and similar income and expenses It also includes outstanding and matured coupons of fixedincome securities recognised in the portfolio of available-forsale financial assets and hedging derivatives, provided that the accrued interest on cash flow hedge derivatives is entered in profit or loss symmetrically to the accrued interest on the hedged item. This item comprises the interest on financial assets and liabilities valued at amortised cost, calculated according to the effective interest rate method, i.e. loans and borrowings on interbank transactions and customer transactions, the portfolio of held-to-maturity assets, debts in the form of securities and subordinated debt. in thousands of euros Financial year 2012 Income Expenses Financial year 2011 Net Income Expenses Net Loans and receivables relating to customers 359,290 (76,673) 282,617 345,085 (60,868) - Customer operations (excluding specially regulated) 359,967 (26,556) 333,411 344,661 (27,983) 316,678 (677) (50,117) (50,794) 424 (32,885) (32,461) Loans and receivables relating to credit institutions 14,166 (21,331) (11,635) Finance lease operations 40,197 - Specially regulated fixed-term loans and accounts Debts in the form of securities and subordinated debt 284,217 (7,165) 15,106 (26,741) 40,197 32,392 56 32,448 //// (57,291) (57,291) (401) (80,281) (80,682) Derivative hedging instruments 24,242 (27,906) (3,664) 38,388 (26,080) 12,308 Available-for-sale financial assets 18,601 18,601 6,822 6,822 Held-to-maturity financial assets 23,646 23,646 43,352 43,352 2,377 1,924 1,924 Impaired financial assets 2,377 Other interest income and expenses Total interest income and expenses 482,519 (1,809) (1,809) (185,010) 297,509 482,668 (193,914) 288,754 6.2. Commission income and expenses ment incident penalties, etc.), execution of an important transaction and commission related to trust and similar activities, resulting in the Group holding or investing assets on behalf of its customers. Commission is entered according to the type of service provided and the method for recognising the financial instruments to which the service relates. This item includes in particular commission related to ongoing services (commission on methods of payment, custody fees for securities held on deposit, etc.), commission related to one-off services (commission on movements of funds, pay- However, commission similar to additional interest and which forms an integral part of the effective rate in the contract is entered in the interest margin. in thousands of euros Financial year 2012 Income Interbank and cash transactions Expenses Financial year 2011 Net Income Expenses Net (178) (1,827) (2,005) 332 (2,330) (1,998) Customer operations 60,207 (6,897) 53,310 56,098 (8,091) 48,007 Financial services provided 10,534 (3,182) 7,352 9,260 (4,429) 4,831 985 271 Sale of life insurance products Methods of payment Securities transactions Trust activities Financial instrument and off-balance-sheet transactions Other commission Total commission 985 271 65,286 (47,943) 17,343 69,959 (51,701) 4,268 (12) 4,256 5,639 (40) 25,643 26,973 25,643 1,138 (254) 884 1,192 293 957 1,250 536 168,176 (59,158) 109,018 170,260 18,258 5,599 26,973 (278) 914 536 (66,869) 103,391 151 6.3. Net gains or losses on financial instruments at fair value through profit or loss This item records gains and losses on financial assets and liabilities held for trading, or recognised at fair value through profit or loss as an option, including the interest generated by these instruments. The line “Income from hedging transactions” includes the revaluation of fair value hedging derivatives, as well as the symmetrical revaluation of the hedged item, the counterparty of the revaluation at fair value of the macro-hedged portfolio and the ineffective portion of cash flow hedges. Financial year 2012 Financial year 2011 Income from financial instruments for trading in thousands of euros 610 2,335 Income from financial instruments at fair value through profit or loss as an option 445 559 1,625 (180) Income from hedging operations - Ineffectiveness of fair value hedging * Variation in the fair value of a hedging instrument 573 (180) (19,962) (12,386) 20,535 12,206 * Variation in the fair value of hedged items attributable to hedged risks - Ineffectiveness of cash flow hedging 1,052 - Ineffectiveness of net currency investment hedging Income from currency operations Total net gains or losses on financial instruments at fair value through profit or loss 556 (47) 3,236 2,667 6.4. Net gains or losses on available-for-sale financial assets This item includes dividends from variable-income securities, the proceeds from the disposal of available-for-sale financial assets and other financial assets not measured at fair value, and the loss in value of variable-income securities entered due to prolonged impairment. in thousands of euros Financial year 2012 Financial year 2011 Income from transfer 5,144 2,201 Dividends received 2,047 2,608 (186) (1,049) 7,005 3,760 Long-term depreciation of variable-income securities Total net gains or losses on available-for-sale financial assets 6.5. Income and expenses from other activities • income and expenses relating to investment properties (rents and charges, proceeds of disposals, impairment and depreciation), • income and expenses from operating leases, • income and expenses from property development (sales revenue, purchases consumed). in thousands of euros Financial year 2012 Income Expenses Financial year 2011 Net Income Expenses Net Income and expenses from insurance activities Income and expenses from property activities Income and expenses from leasing operations Income and expenses from investment properties 3,711 (1,196) 2,515 12,111 (9) (9) (6,373) 5,738 436 (1,042) (606) Other income and expenses from banking operations 11,310 (6,651) 4,659 7,301 (5,342) 1,959 Total income and expenses from other activities 15,457 (8,889) 6,568 19,412 (11,724) 7,688 Group financial statements This item includes the following in particular: 152 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 6.6. General operating costs General operating costs primarily comprise payroll, including salaries and net re-invoicing operations, payroll charges and employee benefits (such as retirement expenses). This item also comprises all administrative expenses and external services. in thousands of euros Financial year 2012 Financial year 2011 Payroll costs (184,409) (175,145) Taxes and duties (13,732) (11,968) External services (104,048) (84,701) Other expenses Other administrative costs Total general operating costs (267) (10,348) (118,047) (107,017) (302,456) (282,162) The breakdown of payroll expenses is given in note 9.1. 6.7. Cost of risk This item includes the net cost of provisions set aside to cover the credit risk, regardless of whether impairment is calculated individually or on the basis of portfolios of uniform receivables. It also encompasses loans and receivables and fixed-income securities with a recorded counterparty risk. Losses associated with other types of instruments (derivatives or securities at fair value as an option) incurred as a result of the failure of the counterparty are also included in this item. in thousands of euros Allocations Interbank operations Customer operations Net reversals (1,269) 1,747 (6,880) 5,145 (91,992) 43,153 Allocations Interbank operations (40) Customer operations (78,608) Other financial assets Commitments by signature Total cost of risk 2011 Financial year 2012 879 35,382 Commitments by signature in thousands of euros Recoveries of amortised debts 879 (83,843) Other financial assets Total cost of risk 2012 Losses on receivables not hedged Net reversals (1,177) 864 9 (48,774) 487 (1,735) (1,177) Losses on receivables not hedged 873 Recoveries of amortised receivables (49,143) Financial year 2011 (40) 52,566 (1,397) 901 (26,538) (177) 93 (84) (5,938) 3,214 (2,724) (84,763) 55,873 (1,397) 901 (29,386) 6.8. Proportion of the net income of companies consolidated according to the equity method in thousands of euros Financial year 2012 Financial year 2011 Esfin (84) CoopEst 155 63 France Active Garantie 156 423 Cadec Caisse de Garantie Immobilière du Bâtiment Proportion of the net income of companies consolidated according to the equity method (214) 249 453 2,245 1,199 2,721 1,924 153 6.9. Gains and losses on other assets This item comprises the proceeds from the disposal of tangible and intangible operating assets as well as capital gains or losses on the sale of equity securities included in the scope of consolidation. in thousands of euros Financial year 2012 Financial year 2011 64 632 Gains or losses from disposals of tangible and intangible operating assets Gains or,losses from disposals of consolidated holdings (6,922) Other Total gains or losses on other assets (6,858) 632 6.10. Variations in the value of goodwill in thousands of euros Financial year 2012 Financière Champlain Financial year 2011 (1,096) Cadec 1,499 Total variations in the value of goodwill (1,096) 1,499 6.11. Corporation tax in thousands of euros Financial year 2012 Current taxes Deferred taxes Corporation tax Financial year 2011 (17,336) (28,491) (147) 909 (17,483) (27,582) Reconciliation between the total tax burden recognised in the accounts and the theoretical burden Financial year 2012 Net income (Group share) Variations in the value of goodwill Proportion of minority interests in consolidated companies Proportion of the net income of companies consolidated according to the equity method Financial year 2011 27,210 51,175 1,096 (1,499) 4,385 4,210 (2,721) (1,924) Tax 17,483 27,582 Pre-tax profit and variations in the value of goodwill (A) 47,453 79,545 Taxation rate under general French law (B) Charge (income) resulting from theoretical taxation at the applicable rate in France (AxB) Additional welfare contribution Effect of variations in deferred taxes not recorded Effect of permanent differences Taxation at a reduced rate and exempted activities Effect of the posting of earlier tax deficits Taxes relating to earlier financial years, tax credits and other taxes Other items Corporation tax Effective tax rate (tax charge on income linked to taxable income) 33.33% 33.33% (15,816) (26,512) (1,031) (1,622) (458) (537) (2,603) 1,503 156 244 - 28 2,430 1,923 (162) (2,609) (17,483) (27,582) 36.84% 34.67% Group financial statements in thousands of euros Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 7. Notes relating to capital Some of the information on risk management required by IFRS 7 is presented in the risk management report and forms an integral part of the audited accounts. 7.1. Position at 31 December 2012 Crédit Coopératif is a joint stock company with variable capital. Its capital is divided into members’ shares and cooperative certificates of investment, fully released, with a nominal value of €15.25 each. The status of the capital is recognised as members’ shares in cooperatives in as much as the entity has a discretionary right to refuse the redemption of shares, the sale of members’ shares being subject to approval by the Board of Directors of Crédit Coopératif. These authorisations confirm their status as share capital under IFRS standards. At 31 December 2012, the total number of members who held A and B shares, excluding SAS Crédit Coopératif Banque Populaire, stood at 39,910. The number of holders of C shares (priority interests without voting rights) was 27,300 and the number of holders of P shares (preferential shares) was 3,622. None of these members holds more than 5% of total capital. The 39,910 members of Crédit Coopératif have a vote during General Meetings, according to the cooperative principle of “one person, one vote”. At 31 December 2012, the number of votes was therefore 39,910, representing a total shareholding of €416,765,511.50, or 53.46% of total capital (A and B shares), excluding SAS Crédit Coopératif BPCE. 7.1.1. Change in capital (excluding SAS Crédit Coopératif Banque Populaire) 800 At 31 December 2012, the share capital of Crédit Coopératif amounted to €806,218,776.25, broken down as follows: • 3,103,072 A shares held by members, representing a total of €47,321,848.00 • 24,225,814 B shares held by members, representing a total of €369,443,663.50 • 12,374,958 C shares held by partner individuals, representing a total of €188,718,109.50 • 842,927 P shares held by partner individuals, representing a total of €12,854,636.75 • 10,573,361 CCIs (cooperative certificates of investment), representing a total of €161,243,755.25 • 1,746,673 B shares held by SAS Crédit Coopératif BPCE, representing a total of €26,636,763.25. Natixis, a subsidiary of BPCE, holds all the cooperative certificates of investment (non-voting securities). These represent a constant portion of at least 20% of the total equity capital of Crédit Coopératif. In order to maintain a constant ratio between CCIs and members' shares, SAS Sociétariat Crédit Coopératif Banque Populaire has been created. It is a subsidiary of Intercoop, which is itself a subsidiary of Crédit Coopératif. Its purpose is to regulate Crédit Coopératif’s share capital through the subscription and redemption of members’ shares. 161 700 149 600 Total (in €M) 154 149 500 P shares 189 C shares 196 99 179 400 99 300 125 200 CCIs 164 369 305 230 B shares A shares 264 159 100 0 42 42 43 45 47 2008 2009 2010 2011 2012 7.1.2. Distribution of capital and voting rights Conditions for changes in capital The maximum amount of share capital within which Crédit Coopératif’s paid-up capital may freely be increased, as well as the terms and conditions for such an increase, are set out in the Board of Directors' report and following authorisation from the BPCE, by the Extraordinary General Meeting. Increases in the paid-up capital take place through the entry of new members approved by the Board of Directors of Crédit Coopératif or through subscriptions of new members’ shares - of the same or of different categories - by members with the approval of the Board of Directors. 155 Capital may also be increased by the issue of cooperative certificates of investment and non-voting priority interestbearing shares. The Crédit Coopératif Board of Directors set a subscription ceiling for B, C and P members’ shares subscribed outside the framework of financial support: Capital may also be increased by the issue of cooperative certificates of investment and non-voting priority interest-bearing shares. • 20,000 B shares for corporate entities, equivalent to €305,000 • 5,000 C shares for individuals, equivalent to €76,250 • 5,000 P shares for individuals, equivalent to €76,250. Any individual or corporate entity, regardless of whether or not they participate in Crédit Coopératif's banking operations and services, is permitted to become a member and hold members' shares. Each member's liability is limited to the nominal value of the shares in their possession. Ownership of a share implies full adherence to the Company's Articles of Association and to decisions made by the General Meeting. Crédit Coopératif’s capital is divided into four categories of members’ shares: • A shares may only be owned by corporate entities, sole traders or directors. They confer member status. • B shares may only be held by holders of A shares. They confer a specific benefit, consisting of an interest payment as resolved by the General Meeting even when no interest is paid on A shares. • C shares are non-voting priority interest-bearing shares. These shares were available for subscription by individuals until 29 June 2012. Holders of C shares benefit from a preferred entitlement to an interest payment of 0.50%. Where this remuneration is not paid in full for three consecutive financial years, the holders of C shares acquire a right to vote, within the limits set out in article 11 b of the law of 10 September 1947. • P shares, issued from 2 July 2012 onwards, are non-voting preferential shares reserved for individuals. Where the financial statements of Crédit Coopératif for a given year are in surplus, holders of P shares are entitled to an interest rate as proposed by the Board of Directors of Crédit Coopératif each year and voted upon by members at the General Meeting convened to vote upon the financial statements. The preferential nature of the shares relates to the fact that the Special Assembly of P Shareholders may nominate several candidates for election to directorship posts by the General Assembly. Members' shares are allocated to a named entity and held in individual accounts in accordance with the relevant regulations. The only interest receivable for members' share is that set annually by the General Meeting; however the amount of interest may not exceed the maximum amount mentioned in article 14 of the law of 10 September 1947 concerning cooperation. Interest is paid nine months after the end of the financial year concerned. The payment methods are set by the General Meeting or, where this is not the case, by the Board of Directors. The General Meeting, when deciding whether to approve the accounts for the financial year, has the right to offer each member an option between payment of all or part of the interest due in relation to their members' shares in cash or in members' shares. The rights of cooperative certificates of investment Cooperative certificates of investment are non-voting securities. They confer a remuneration entitlement set by the Annual General Meeting in accordance with the results for the financial year. This remuneration is at least equal to that paid for members’ shares. Holders of cooperative certificates of investment attend a special meeting to approve or reject any decision modifying their rights. 7.1.3. Employee shareholdingin the capital At 31 December 2012: • Five Group employees held five A shares as directors and 348 Group employees directly held 169,721 C shares, representing €2,588,245.25 and 10,736 P shares, representing €163,724. • Employees also indirectly held two A shares and 2,808 B shares in the framework of a mutual fund, equivalent to €42,852.50. Group financial statements The respective rights of members’ shares 156 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Therefore employees held a total of 183,272 members’ shares, directly and indirectly, equivalent to an overall value of €2,794,898, i.e. 0.35% of Crédit Coopératif’s capital. 7.2. Authorisations for capital increases The Extraordinary General Meeting of Crédit Coopératif on 30 May 2012: • decided to enact a capital increase of €37,499,994 through the private issue of 2,459,016 nominative cooperative certificates of investment to Natixis, at a nominal value of €15.25 and fully released as cash upon subscription. This capital increase is taking place in two stages. The first portion of CCIs was issued in the 2012 financial year, up to a maximum of €12,499,998. The second shall be issued, covering the remaining value, during the 2013 financial year. • gave the Board of Directors the power to set the subscription opening and closing dates, to conduct the capital increase and, in general, to take all necessary steps and carry out all required activities to bring the capital increase to conclusion. Using the powers acquired as a result of this decision, the Board of Directors decided, at its meeting on 30 May 2012, to issue an initial portion of CCIs representing €12,499,998 and to increase the capital of Crédit Coopératif to €806,218,776.25 by issuing 3,278,688 B shares, representing €49,999,992, subscribed by Natixis on 29 June 2012. 7.3. Public offer of members' shares In accordance with order no.2009-80 of 22 January 2009 on the reform of public issue, the AMF (Autorité des Marchés Financiers) requested the Banques Populaires, including Crédit Coopératif, to place itself under the "public offer" regime, as defined by: • article L 512-1 of the French Monetary and Financial Code, which defines members' shares as "capital shares", thus distinguishing them from financial instruments • article 212-38-1 of the AMF's general regulations, which sets out the subscriber information requirements in the form of a "prospectus", yet maintains an exception for subscriptions related to the supply of a product or service, such as those associated with the obtention of bank lending by representatives of the consumer membership. In 2012, Crédit Coopératif prepared a "prospectus for the public offer of Crédit Coopératif,members' shares", which was rubber-stamped by the AMF on 18/06/2012, under approval number 12-272. This prospectus accompanies the forecast issue of a gross total of €350,000,005, representing 22,950,820 members' shares issued at nominal value, over an estimated period of 12 months from the approval date. A supplement to this prospectus was prepared to accompany the final proposal to holders of C shares, to convert their shares into P shares. The supplement was rubber-stamped on 30/07/12 under approval number 12-391. The prospectus and its supplement are available, free of charge, from Crédit Coopératif branches, Head Office and online at the Crédit Coopératif website: www.credit-cooperatif.coop/societaires/ and on the AMF website: www.amf-france.org 7.4. Regulatory ratios 7.4.1. Liquidity As regards liquidity, the Group is structurally in surplus. The liquidity ratio exceeds the requirement imposed for each of the institutions (100%). At end-2012, Crédit Coopératif’s liquidity ratio was 109.05% and BTP Banque’s stood at 306.32%. 7.4.2. Control of major risks For the purposes of controlling major risks, the regulations limit the weighted risks in respect of a single beneficiary to 25% of equity capital. The Crédit Coopératif Group has developed a wide risk spread, with only one weighted unit commitment for the same beneficiary exceeding 10%, but which is limited to less than 10.84% of equity capital. At end-2012, this commitment consisted of a guarantee granted to an Ecofi Investissement UCITS. 7.4.3. Management of capital and capital adequacy The Group is governed by French prudential regulations transposing the following European Directives into French law: "Capital adequacy of investment firms and credit institutions" and "Financial conglomerates". Effective from 1 January 2008, the Basel II capital adequacy ratio calculation methods are defined in the order dated 20 February 2007 of the French Ministry for the Economy, Finance and Industry as the ratio between overall prudential capital and the sum of: 157 • equity capital requirements to meet the credit risk calculated using the standard approach or the internal ratings method, depending on the Group entity concerned • equity capital requirements for prudential monitoring of market risks and operating risks. There is a ceiling on some components of core capital. In particular, hybrid instruments, minority shareholdings and preference shares, taken together, may not represent more than 50% of core capital. Prudential equity capital is determined in accordance with Regulation No. 90-02 of the French Banking and Financial Regulatory Committee dated 23 February 1990 concerning equity capital. Supplementary capital (Tier 2) is subdivided into two levels: 31/12/2012 31/12/2011 1,283,681 1,188,176 Minority interests 179,405 162,220 Prudential adjustments (including goodwill and intangible assets) (26,881) (24,828) Core capital (Tier 1) before deduction 1,436,205 1,325,568 Supplementary capital (Tier 2) before deduction 128,072 147,167 (185,838) (144,520) (92,486) (71,178) (93,352) (73,342) 1,378,439 1,328,215 Capital deductions of which deduction of core capital of which deduction of supplementary capital Prudential capital Prudential capital is broken down into two categories, from which a number of deductions are made. Core capital (Tier 1) is determined based on the Group’s accounting equity, excluding gains or losses entered directly as filtered equity capital, with the addition of minority shareholdings, Tier One hybrid issues (chiefly perpetual subordinated debt) and after deduction of goodwill and intangible assets. The total of supplementary capital admitted is limited to a maximum of 100% of the core capital. Tier 2 supplementary capital is limited to 50% of core capital. Deductions from capital consist mainly of equity capital elements (shareholdings and subordinated debt) in entities in the banking sector in which the Group holds more than 10% of the capital, or shareholdings in the banking sector consolidated according to the equity method. These deductions are allocated equally between core capital and supplementary capital. Pursuant to the French Ministerial Order of 20 February 2007, the Group is obliged to continuously comply with a capital adequacy ratio of at least 8%. During 2012, the Crédit Coopératif Group complied with prudential capital adequacy ratios. This stood at 11.35% at 31 December 2012. Group financial statements in thousands of euros Equity capital – Group share • supplementary Tier 1 capital corresponding to perpetual subordinated debt and some financial instruments • supplementary Tier 2 capital including, in particular, longterm subordinated debt and some preference shares. The amount of subordinated debt included in Tier 2 capital has fallen gradually over the last five years, having been allowed to run until maturity. The amount has fallen by 20% per year. 158 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 8. Exposure to risk ➔➔8.1. Credit and counterparty risk The risk management report contains information concerning the credit risk management requirements of the IFRS 7 standard: The risk management report sets out the procedures and methods for managing and evaluating credit risk, risk concentration, the quality of performing financial assets, as well as the analysis and breakdown of amounts outstanding. 8.1.2 Overall exposure to credit and counterparty risk 8.1.1 Measurement and management of credit risk Credit risk is incurred when a counterparty is unable to meet its obligations and may materialise as a change in the quality of the loan or even counterparty default. The commitments exposed to credit risk include existing or potential receivables, and particularly loans, debt securities, title deeds, performance swaps, performance bonds or confirmed or unused commitments. The table below sets out the exposure of all the financial assets of Crédit Coopératif Group to credit risk. This credit risk exposure (calculated without taking account of the effect of unrecognised offsets and collaterals) corresponds to the net book value of the financial assets. Net amounts outstanding at 31/12/2012 in thousands of euros Net amounts outstanding at 31/12/2011 Financial assets at fair value through profit or loss (excluding variable-income securities) 79,254 41,164 Derivative hedging instruments 34,012 24,456 Available-for-sale financial assets (excluding variable-income securities) 551,520 738,211 Interbank operations 678,543 1,186,948 Customer operations 11,460,330 10,023,207 Held-to-maturity financial assets Exposure of commitments on the balance sheet Financial guarantees provided Signature commitments Exposure of signature commitments and financial guarantees provided Overall exposure to credit risk 567,755 752,705 13,371,415 12,766,691 2,983,914 2,893,522 979,839 973,856 3,963,753 3,867,378 17,335,168 16,634,069 The risk management report sets out the procedures and methods for managing and evaluating credit risk, risk concentration, the quality of performing financial assets, as well as the analysis and breakdown of amounts outstanding. 8.1.3. Impairment and provisions for credit risk in thousands of euros Available-for-sale financial assets 31/12/2011 50,083 Interbank operations 987 Customer operations 321,886 Allocation Reversal 1,180 84,333 Unused reversals (1,730) (620) (879) (54) (35,382) Other variations (1) 31/12/2012 (718) 48,195 (13,098) (28,198) 329,541 54 Held-to-maturity financial assets Other financial assets Impairment deducted from assets Exposure of signature commitments and financial guarantees provided Total impairment and provisions for credit risk 3,174 90 (17) (2,084) 1,163 376,130 85,603 (38,008) (13,772) (31,000) 378,953 16,396 6,880 (4,818) (327) 2,094 20,225 392,526 92,483 (42,826) (14,099) (28,906) 399,178 159 8.1.4. Financial assets in arrears Assets in arrears are performing financial assets with payment incidents. The amounts given in the table below do not include amounts overdue for technical reasons, i.e. amounts overdue due to a discrepancy between the value date and the recognition date in the customer account. Assets in arrears (capital remaining due and interest accrued for loans and the total overdraft amount for current accounts) are broken down by the age of the arrears amount as follows: Non-impaired amounts outstanding in arrears in thousands of euros <= 90 days > 90 days <= 180 days > 180 days <= 1 year Impaired amounts outstanding (net value) > 1 year Debt instruments Loans and advances Total outstanding amounts at 31/12/2012 5,301 5,301 217,491 889 680 108 383,748 602,916 217,491 889 680 108 389,049 608,217 Security instruments covering these outstanding amounts Other financial assets Total Impaired amounts outstanding (net value) Non-impaired amounts outstanding in arrears in thousands of euros <= 90 days Debt instruments Loans and advances > 90 days <= 180 days > 180 days <= 1 year > 1 year Total outstanding amounts at 31/12/2011 11 24 22 7,191 7,248 139,686 1,540 3,679 230 346,913 492,048 139,697 1,564 3,679 252 354,104 499,296 0 Security instruments covering these outstanding amounts Other financial assets Security instruments covering overdue or impaired financial assets The contract security acceptance policy is implemented before the assets are declared as overdue or doubtful. In fact, the choice of securities is made when the loan decision is made. This choice reflects the quality of the customer, the type of loan and the estimate of changes in the risk relating to the loan. Crédit Coopératif Group does not limit its choice of securities and leaves all options open, within the legal limits. Securities received by Crédit Coopératif on contracts issued can be grouped into the following major categories: • financial (deposit, security deposit, delegation, collateral security, etc.) • tangible (preferential right, mortgage, pledge, collateral security, warrant, retention of title, etc.) • intangible (collateral security) • receivables (transfer, delegation) 0 • surety (certificate, joint, not joint) • by signature (guarantee, first demand, guarantee fund, bank acceptance, letter of intent, counter-guarantee). 8.1.5. Restructured loans and receivables The following table gives the book value of restructured loans and receivables (renegotiation as a result of financial difficulties experienced by the debtor) classified as performing loans: in thousands of euros 31/12/2012 31/12/2011 21,316 22,807 21,316 22,807 Available-for-sale financial assets Loans and receivables relating to credit institutions Loans and receivables relating to customers Held-to-maturity financial assets Total restructured loans and receivables Group financial statements Total 160 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 8.1.6. Credit risk reduction mechanisms: assets obtained by taking possession of guarantees • and, more generally, any market factor that is capable of affecting the value of portfolios. The following table gives the book value of assets by type (securities, property, etc.) obtained by taking possession of guarantees or by other forms of credit enhancement. The systems for measuring and monitoring market risks are described in the risk management report. in thousands of euros 31/12/2012 The risk management report contains information concerning the market risk management requirements of the IFRS 7 standard. 31/12/2011 Non-current assets held with a view to sale Tangible assets Investment properties 8.3. Overall interest rate risk and currency risk Equity capital and debt instruments Other Total assets obtained by taking possession of guarantees 27,569 24,654 27,569 24,654 For the bank, the rate risk represents the impact of an unfavourable trend in interest rates on its annual results and the value of its assets. The currency risk is the risk of the impact on profitability of fluctuations in the exchange rate. ➔➔8.2. Market risk The risk management report contains information concerning the interest rate risk management requirements of the IFRS 7 standard. Market risk is the risk of incurring a financial loss due to changes in market factors, in particular: • interest rates: the interest rate risk is the risk of fluctuation in the fair value or in the future cash flows of a financial instrument due to changes in interest rates • exchange rates • prices: the price risk results from fluctuations in market prices, irrespective of whether they are caused by factors specific to the instrument or its issuer, or by factors that affect all instruments traded on the market. Variable-income securities, share derivatives and raw materials derivatives are subject to this risk Currency risk management is also detailed in the risk management report. ➔➔8.4. Liquidity risk The liquidity risk is the risk that the bank will be unable to honour its commitments or its scheduled payments at a given time. The risk management report contains information about refinancing procedures and the methods and procedures for managing the liquidity risk as required by standard IFRS 7. Sources and applications of funds by residual maturity in thousands of euros Less than 3 months Between 3 months and 1 year Between 1 and 5 years More than 5 years Perpetual Total Central banks Trading derivative instruments Other financial liabilities at fair value through profit or loss Derivative hedging instruments Debts to credit institutions Debts to customers Debts in the form of securities 79,582 //// //// //// 3,265 701 822 353 54,448 //// //// //// Financial liabilities by maturity Financing commitments provided Guarantee commitments provided 54,448 5,141 365,367 902,797 532,308 1,911,991 241,641 680,984 50,958 8,669,736 428,295 700,432 701,813 333,822 //// //// //// 1,308,141 2,364,097 25,881 8,399,143 77,681 917,441 208,000 5,340 585,663 105,034 83,566 11,780 585,663 313,034 88,906 11,780 2,164,362 //// 58,283 161,845 58,283 13,047,105 213,340 Guarantee commitments in favour of credit institutions Guarantee commitments in favour of customers //// 111,519 Financing commitments provided in favour of credit institutions Financing commitments provided in favour of customers 79,582 7,696,153 Revaluation differential for portfolios hedged using interest rates Subordinated debt //// 786,043 999,383 4,645 4,645 473 4,537 8,759 5,631 2,725,047 2,744,447 473 4,537 8,759 5,631 2,729,692 2,749,092 161 Note 9. Employee benefits ➔➔9.1. Payroll costs Financial year 2012 in thousands of euros Salaries and emoluments Financial year 2011 (105,510) (100,921) Expenses associated with defined contribution plans and contributions (12,630) (11,676) Other welfare and fiscal costs (62,675) (57,584) Incentives and shareholdings Total payroll costs (3,593) (4,964) (184,408) (175,145) The average number of serving personnel during the financial year was 2,159 employees. ➔➔9.2. Employee benefits Crédit Coopératif Group employees receive different types of benefits: • pensions and similar benefits: retirement payments and retirement benefits • other benefits: long-term service bonuses. 9.2.1. Analysis of assets and liabilities on the balance sheet in thousands of euros Financial year 2012 Pensions Present value of funded commitments Fair value of regime assets Other commitments Financial year 2011 Total Pensions Other commitments Total 14,218 2,483 16,701 12,748 2,750 15,498 (10,061) (1,693) (11,754) (9,938) (1,652) (11,590) Fair value of redemption rights Present value of non-funded commitments Unrecognised actuarial elements Unrecognised cost of past services (22) (22) (3,097) (3,097) (2,152) (2,152) Balance sheet: net balance 1,038 790 1,828 658 1,098 1,756 Employee benefits (liabilities) 1,038 790 1,828 658 1,098 1,756 Group financial statements Employee benefits (assets) 162 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) 9.2.2. Variation of amounts recognised in the balance sheet in thousands of euros 31/12/12 Other commitments Pensions Actuarial debt at the start of the period Total 12,722 2,772 15,494 Cost of services rendered 646 208 854 Financial cost 467 108 575 Paid services (827) (140) (967) Actuarial gains and losses 1,174 (465) 709 Cost of past services 36 36 Others (conversion rate adjustments, period variations) Actuarial debt at the end of the period 14,218 2,483 16,701 Fair value of assets at the start of the period (9,776) (1,490) (11,266) (284) (206) (490) (2) (3) (5) 17 6 Expected return on assets Contributions received Paid services Actuarial gains and losses for the financial year Others (conversion rate adjustments, period variations) Fair value of assets at the end of the period -16 23 (16) (10,061) (1,693) (11,754) 4,157 790 4,947 Fair value of redemption rights at the start of the period Expected return on redemption rights Contributions paid or received Paid services Actuarial gains and losses for the financial year Others (conversion rate adjustments, period variations) Fair value of redemption rights at the end of the period Net balance of commitments Unrecognised actuarial elements Unrecognised cost of past services Balance sheet: net balance (22) (22) (3,097) (3,097) 1,038 790 1,828 At 31 December 2012, hedging assets of the Crédit Coopératif UES pension fund were divided as follows: 84.3% bonds, 8.4% shares and 7.3% property assets. The expected return on the fund's assets has been calculated on the basis of the return obtained in 2011. standard on the recognised amount of the provision at 31/12/2012 is €2,681K, broken down into three components: Amended standard IAS 19 is applicable from 1 January 2013, and applied retroactively from 1 January 2012. - €725K from changes to the net provision expense through profut or loss The provision for the pension fund at 31/12/2012 stood at €619K. Under revised IAS 19, the amount of the provision for this fund at 31/12/2012 stood at €3,300K. The impact of this + €1,270K from the recognition of actuarial gains and losses for the 2012 financial year as equity capital (other elements of overall income). + €2,136K from the balance of actuarial gains and losses and past services at the opening on 1 January 2012. 163 Experience-related adjustments from defined benefit plans Experience-related adjustments represent variations in assets or liabilities that are not connected with changes to actuarial assumptions. in thousands of euros 31/12/12 31/12/11 31/12/10 31/12/09 31/12/08 Present value of funded commitments (1) 16,267 15,040 15,228 16,356 Fair value of regime assets (2) 11,739 11,601 11,443 10,935 10,417 Balance sheet: net balance 28,006 26,641 26,671 27,291 22,251 Experience-related adjustments to liabilities – (losses) / gains As a % of (1) Experience-related adjustments to assets – (losses) / gains As a % of (2) 11,834 (334) 325 (387) 773 191 (2.05%) 2.16% (2.54%) 4.73% 1.61% (24) (13) 38 / (159) (0.20%) (0.12%) 0.33% / (1.53%) 9.2.3. Actuarial cost of defined benefit plans The various components of the costs associated with defined benefit plans are entered under the "Payroll costs" item. in thousands of euros Financial year 2012 Other commitments Pensions Financial year 2011 Total Pensions Other commitments Total Cost of services rendered 646 208 854 572 213 Financial cost 467 108 575 441 96 (284) (206) (490) (147) (288) (288) (555) 17 21 287 1 288 (850) (285) (1,135) (252) 42 (210) Expected return on hedging assets 785 537 (147) Expected return on redemption rights Actuarial gains and losses Cost of past services 21 Other Total cost of defined benefit plans 850 (178) 672 (538) 9.2.4. Main actuarial assumptions as a percentage 31/12/2012 31/12/2011 Other commitments Pensions Other commitments Pensions Discount rate 3.18% 3.18% 3.75% 3.75% Expected return on redemption rights 1.40% 1.40% 1.50% 1.50% The following mortality tables are used: TF00/02 for retirement payments, long-service bonuses and other benefits. Sensitivity of commitments to variations in the main assumptions 31 December 2012 In thousands of euros Retirement payments Total value Social security liabilities - discount rate 3.18% and, pay rise rate 2.20% Variation in value Long-service awards Variation in % 13,784 Total value Variation in value Variation in % 2,483 Variation + 1% of the discount rate 12,496 (1,288) (9.35)% 2,296 (187) (7.52)% Variation - 1% of the discount rate 15,300 1,516 10.99% 2,699 216 8.69% Variation + 1% of the pay rise rate (including inflation) 15,367 1,583 11.48% 2,592 109 4.38% Variation - 1% of the pay rise rate (including inflation) 12,418 (1,366) ( 9.91)% 2,388 (95) ( 3.81)% Group financial statements 9.2.5 164 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 10. Segment reporting ➔➔10.1. Income statement in thousands of euros Net banking income General and similar costs Gross operating income Current pre-tax profit Third party asset management Local bank Capital investment Group total 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 400,660 382,942 21,684 21,747 992 1,570 423,336 406,259 (296,886) (275,490) (22,410) (21,805) (591) (667) (319,887) (297,962) 103,774 107,452 (726) (58) 401 903 103,449 108,297 50,795 82,236 (2,045) (57) 328 788 49,078 82,967 ➔➔10.2. Balance sheet Assets in thousands of euros 31/12/12 Assets recognised at fair value through profit or loss Third party asset management Local bank 31/12/11 31/12/12 Capital investment 31/12/11 31/12/12 84,217 45,436 Available-for-sale financial assets 897,567 1,155,876 23,252 20,890 Loans and receivables relating to credit institutions 678,198 1,186,821 345 128 Loans and receivables relating to customers 11,460,073 10,023,207 Held-to-maturity financial assets 567,755 752,705 973 909 3,546 4,642 1,176,351 743,132 7,984 1,058 1,097 14,865,134 13,908,085 35,127 26,718 24,022 Goodwill Other assets Total assets Group total 31/12/11 22,668 31/12/12 31/12/11 84,217 45,436 943,487 1,202,055 678,543 1,186,949 11,460,330 10,023,207 567,755 752,705 4,519 5,551 46 1,185,432 744,236 25,335 14,924,283 13,960,138 25,289 257 Liabilities in thousands of euros 31/12/12 Financial liabilities at fair value through profit or loss Third party asset management Local bank 31/12/11 31/12/12 31/12/11 Capital investment 31/12/12 Group total 31/12/11 31/12/12 31/12/11 84,723 47,022 84,723 47,022 Debts to credit institutions 1,911,991 1,246,885 1,911,991 1,246,885 Debts to customers 8,669,736 7,139,762 8,669,736 7,139,762 Debts in the form of securities 2,164,362 3,464,081 2,164,362 3,464,081 161,845 206,708 161,845 206,708 1,904,788 1,803,628 8,026 26,718 18,811 25,335 1,931,625 1,855,681 14,897,445 13,908,087 8,026 26,718 18,811 25,335 14,924,282 13,960,138 Subordinated debt Other liabilities Total liabilities 165 Note 11. Commitments ➔➔11.1. Financing and guarantee commitments securities received and the values given to non repo securities, recorded in different financial categories. The communicated amount is the nominal value of the given commitment. Equity capital instruments Financing commitments Loans and advances in thousands of euros Debt instruments 31/12/2012 31/12/2011 999,383 990,252 - credit institutions 213,340 26,132 - customers 786,043 964,120 766,601 925,842 Financing commitments provided to New confirmed credits Other commitments Financing commitments received - from credit institutions 19,442 38,278 1,354,090 636,780 1,354,090 636,780 - from customers 31/12/2012 31/12/2011 702,301 150,310 2,256,172 1,890,343 2,958,473 2,040,653 Other financial assets Total At 31 December 2012, receivables given as collateral in refinancing specifically include: • €1,727,562K of assigned accounts receivable from Banque de France as part of the TRICP process (€1,165,608K at 31 December 2011), • €158,740K of pledged receivables from SFEF (€180,439K at Guarantee commitments in thousands of euros in thousands of euros 31/12/2012 31/12/2011 31 December 2011) 5,205,964 4,783,865 • €274,950K of assigned accounts receivable as finance secu- - on behalf of credit institutions 2,500,017 1,902,924 rities from the European Investment Bank (EIB) (€317,885K - on behalf of customers 2,705,947 2,880,941 at 31 December 2011) 1,987,667 872,901 1,028,152 872,901 Guarantee commitments provided Guarantee commitments received - from customer credit institutions - from customers 959,515 Guarantee commitments provided include signature commitments and financial instruments given as security. • €28,828K of assigned accounts receivable from Banque de France as part of the mortgaging refinancing fund (€28,213K at 31 December 2011) • €54,592K of pledged home loans from BPCE SFH (48,698K at 31 December 2011) • €11,500K of pledged home loans from BPCE Home Loans. ➔➔11.2. Financial assets given as security The following table itemises the book value of financial assets given as security for liabilities or potential liabilities, such as repo 11.3. Financial assets received as security and which the entity can dispose of The Group has not recorded (significant) amounts of assets received as security and entered as assets in the balance sheet as part of financial guarantee contracts with a right of reuse. Group financial statements Financial instruments given as security include receivables pledged as security as part of refinancing mechanisms. 166 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 12. Transactions with affiliated parties The parties affiliated to the Crédit Coopératif Group are consolidated companies, including those companies consolidated according to the equity method, BPCE, Natixis and the main directors of the Group. ➔➔12.1. Transactions with consolidated companies For fully consolidated Group companies, transactions conducted during the financial year and existing outstanding amounts at the end of the period are fully excluded from the consolidation. The list of fully consolidated subsidiaries is communicated in the Group's scope of consolidation (see note 13). Under these conditions, the figures below include reciprocal operations with: • entities which exercise a significant influence on the Group, namely Natixis, which holds 20% of the equity capital of Crédit Coopératif through cooperative certificates of investment (entities exercising significant influence) • BPCE, the central body • entities over which the Group exercises a significant influence and which are consolidated according to the equity method (partner businesses). in thousands of euros 31/12/2012 Partner companies Loans 31/12/2011 Companies exercising significant influence Companies exercising significant influence Partner companies 8,445 Other financial assets 598,235 41 150,987 37,095 4,196 Other assets Total assets with affiliated entities Debts 686,636 28,609 32,826 714,261 749,222 32,826 1,424,136 462,584 562 372,312 Other financial liabilities 58,133 Other liabilities 17,471 Total liabilities relating to affiliated entities 23,239 30,604 24,691 4,196 538,188 562 3,142 50 4,822 136 (3,943) 69 (1,192) 1,334 (13,865) 674 (9,137) 793 (5,507) Interest and similar income and expenses Commission Net income from financial operations Net income from other activities 138 Total net banking income generated with affiliated entities 1,470 (14,528) Commitments provided 241,885 Commitments received 7,901 19,147 180,788 Long-term financial instrument transactions 7,070 1,298,539 Total commitments with affiliated entities 7,901 Remuneration and commitments Total amount of loans granted 305 Total amount of guarantees provided 534 Directors' fees 1,721,212 7,070 250 Advances and credits granted Body 836 1,081,164 ➔➔12.2. Transactions with directors in thousands of euros at 31 December 2012 427,607 Representative 135 1,101,147 167 Note 13. Asset transfers ➔➔Transferred financial assets, not derecognised 31 December 2012 Transferred financial assets, not fully derecognised, and associated liabilities Book value Book value of associated liabilities Securities Derivatives Other financial assets Financial assets held for trading purposes Securities Other financial assets Financial assets at fair value through profit or loss as an option Derivative hedging instruments Equity investments Other securities 172,500 174,986 172,500 174,986 Government and similar securities 167,959 169,204 Bonds and other fixed-income securities 122,642 121,235 290,601 290,439 463,101 465,425 Other financial assets Available-for-sale financial assets Loans and receivables relating to credit institutions Loans and receivables relating to customers Securities similar to loans and receivables relating to credit institutions Securities similar to loans and receivables relating to customers Loans and receivables TOTAL Repurchase and security lending operations Crédit Coopératif Group conducts repurchasing operations, as well as security lending operations. Depending on the terms of the agreement in question, the security may be transferred again by the assignee throughout the term of the repo or lending operation. The assignee must, however, return it to the assignor upon maturity of the opera- tion. The cash flows generated by the security are also transferred to the assignor. The Group considers that it has retained almost all risks and benefits associated with securities used in repo or lending operations. As such, these securities have not been recognised. Where a funded security has been the subject of a repo or lending operation, funding has been recognised under liabilities. Group financial statements Held-to-maturity assets 168 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 14. Scope of consolidation ➔➔14.1. Changes to the scope of consolidation during the 2012 financial year Significant shareholding changes during 2012 were as follows: • BTP Capital Investissement: reduction from 79% to 67% • Financière de Champlain: increase from 59% to 100%. 14.2. Scope of consolidation at 31 December 2012 % control % interest % integration Method of integration Credit institutions Consolidating entity Crédit Coopératif (SCA) Registered office: 12 Boulevard Pesaro CS 10002 - 92024 Nanterre Cedex C O N S O L I D ATI N G E NTITY Subsidiary partner credit institutions BTP Banque (SA) Registered office: 48 Rue La Pérouse CS 51686 - 75773 Paris Cedex 16 100.00 % 100.00 % 100% FC 98.36 % 98.36 % 100% FC 94.89 % 94.89 % 100 % FC 33.94 % 100 % FC 65.39 % 100 % FC 2.48 % 100 % FC 0.00 % 100 % FC 0.25 % 100 % FC 3.20 % 100 % FC 1.03 % 100 % FC 3.57 % 100 % FC 13.86 % 100 % FC 1.28 % 100 % FC 0.14 % 100 % FC 5.71 % 100 % FC 0.75 % 100 % FC 0.00 % 100 % FC Intercoop (SAS) Registered office: 12 Boulevard Pesaro CS 10002 - 92024 Nanterre Cedex Bati Lease Registered office: Parc du canon d’or, 7 rue Philippe Noiret BP 10025 – 59871 Saint-André Cedex Non-subsidiary partner credit institutions, Edel Registered office: Parc de la Plaine, 5 Avenue Marcel Dassault BP 5806 – 31505 Toulouse Cedex P Caisse Solidaire A 3-5 Rue Camille Guérin - 59800 Lille R Sofinef 8 Avenue des Canuts - 69517 Vaulx-en-Velin Socorec 77 Rue de Lourmel – 75015 Paris Sofigard 13 bis Boulevard Talabot – 30000 Nîmes Sofindi T N E R S H 11 Rue de Belat 16000 – Angoulême I Sofiscop P 37 Rue Jean Leclaire – 75017 Paris Sofiscop Sud-Est A Immeuble Woopa - 1 Av. des Canuts - 69120 Vaulx-en-Velin G Sofirif R Z.I. Béthunes BP 9032 – 95071 Cergy-Pontoise E Somupaca 9 Place de la Liberté - 83000 Toulon Somudimec 19 Rue des Berges - 38000 Grenoble C.M.G.M. 39-41 Rue Louis Blanc - 92038 Paris La Défense Cedex Nord Financement 2 Avenue Halley - 59650 Villeneuve-d’Ascq Gedex Distribution 6/8 Rue Louis Rouquier- 92300 Levallois-Perret E M E N T S 169 % control % interest % integration Method of integration 19.97 % 19.97 % 19.97 % EM 25.30 % 25.30 % 25.30 % EM Union des Sociétés du Crédit Coopératif (GIE) 100 % 99.56 % 100 % FC Transimmo (SARL) 100 % 100 % 100 % FC Société Civile Immobilière du Crédit Coopératif 100 % 100 % 100 % FC Société Civile Immobilière du Crédit Coopératif de Saint Denis 100 % 100 % 100 % FC SAS Tasta 70 % 70 % 100 % FC Other credit institutions France Active Garantie Registered office: 120 Rue de Réaumur - 75002 Paris Cadec Registered office: Résidence Diamand III, 6 Av de Paris - 20000 Ajaccio Companies of a financial nature BTP Capital Conseil SAS Sociétariat Crédit Coopératif Banque Populaire 100 % 99.96 % 100 % FC 98.36 % 98.36 % 100 %, FC 90.70 % 90.70 % 100 % FC 94.89 % 94.89 % 100 % FC 100 % 99.98 % 100 % FC 100 % 100 % 100 % FC 33.91 % 33.91 % 100 % FC 60.00 % 60.00 % 100 % FC 100 % 99.98 % 100 % FC 66.85 % 66.85 % 100 % FC 29.97 % 29.97 % 29.97 % EM 38.09 % 38.09 % 38.09 % EM 33.40 % 33.40 % 33.40 % EM Intercop Location Registered office: 12 Boulevard Pesaro CS 10002 - 92024 Nanterre Cedex Bati Lease Invest Registered office: Parc du canon d’or, 7 Rue Philippe Noiret BP 10025 - 59871 Saint-André Cedex Ecofi Investissements Registered office: 48 Rue Notre Dame des Victoires - 75002 Paris Tise Registered office: UL Nalewski 8/27 00158 Warsaw - Poland Moninfo Registered office: Parc de la Plaine, 5 Avenue Marcel Dassault BP 5806 - 31505 Toulouse Cedex Esfin Gestion Registered office: Immeuble Lafayette - La Défense 5 2 Place des Vosges - 92400 Courbevoie SAS Financière de Champlain 3 Rue de la Boétie - 75008 Paris Companies of a non-financial nature BTP Capital Investissement Registered office: 12 Boulevard Pesaro CS 10002 - 92024 Nanterre Cedex CoopEst Registered office: 2 Av Jules César – Woluwe Saint-Pierre 1150 Brussels – Belgium Esfin Registered office: Immeuble Lafayette - La Défense 5 2 Place des Vosges - 92400 Courbevoie Registered office: 6 Rue La Pérouse - 75016 Paris SCA: Société Coopérative Anonyme (cooperative public limited company) SAS: Société Anonyme Simplifiée (simplified public limited company) FC: Full consolidation EM: Equity method Group financial statements Insurance companies Caisse de Garantie Immobilière du Bâtiment 170 Crédit Coopératif Group I Annual Report 2012 Group financial statements Consolidated financial statements (IFRS) Note 15. Other information ➔➔15.1. Statutory auditors’ fees Statutory auditors' fees CAC KPMG 2012 Audit Statutory audit, examination of individual and consolidated financial statements Amount 393 Sofeec Baker Tilly 2011 % 100.0 % Amount 386 Variation % 100.0 % 2012 Amount 1.8% 278 2011 % 100.0 % Amount 272 Issuer 200 195 178 174 Fully integrated subsidiaries 193 191 100 98 Variation % 100.0% 2.2% Other verifications and services directly linked to the task of the statutory auditors Issuer Fully integrated subsidiaries Sub-total 393 100.0 % 386 100.0 % 1.8% 278 100 % 272 100.0 % 2.2% 393 100.0 % 386 100.0 % 1.8% 278 100.0 % 272 100.0 % 2.2% Services provided by the network to subsidiaries Legal, fiscal, welfare Other Sub-total Total Group financial statements 171 172 Crédit Coopératif Group I Annual Report 2012 Group financial statements Crédit Coopératif Group Financial statements of Crédit Coopératif Company financial statements at 31 December 2012 Financial statements ➔➔Balance sheet Assets in thousands of euros At 31/12/2012 At 31/12/2011 Funds, central banks, giro accounts 344,325 147,150 Government and similar securities 317,959 350,926 1,716,924 2,316,684 Receivables relating to credit institutions - On demand 37,842 731,400 - Fixed term 1,679,082 1,585,284 Receivables relating to customers 8,814,464 7,590,135 - Commercial debts - Other aid to customers - Overdrafts on current accounts 199,355 212,077 7,980,622 6,967,169 634,486 410,889 766,855 1,156,740 - Factoring Bonds and other fixed-income securities Shares and other variable-income securities 40,570 73,153 Holdings and other long-term securities 323,671 304,251 Shares in affiliated companies 124,905 124,530 Leasing and purchase-option rental 252,377 221,663 25,776 26,105 Other assets 341,293 193,518 Accruals 211,425 142,471 13,280,544 12,647,327 Operating leasing Intangible assets Tangible assets Capital subscribed but not paid up Own shares Total assets 173 ➔➔Balance sheet (continued) Liabilities in thousands of euros At 31/12/2012 At 31/12/2011 Central banks, giro accounts Debts to credit institutions - On demand 2,518,979 1,957,199 293,703 179,918 - Fixed term 2,225,276 1,777,281 Customer accounts in credit 7,376,564 6,110,645 2,786,618 1,782,588 125,308 120,486 3,649,171 3,574,148 Specially-regulated savings accounts - On demand - Fixed term Other debts - On demand - Fixed term Debts in the form of securities - Short-term loan notes - Interbank market securities and negotiable debt securities - Bond issues 815,467 633,424 1,861,261 3,036,649 68,497 167,300 1,538,779 2,479,626 253,984 389,722 - Other debts in the form of securities Other liabilities Accruals Provisions Subordinated debt 84,113 97,666 131,178 156,475 28,797 27,653 111,203 158,799 Fund for general banking risks 27,494 27,146 Equity capital excluding FGBR 1,140,955 1,075,095 - Capital subscribed 806,219 743,719 - Issue premiums 142,964 142,964 - Reserves 162,745 159,550 - Regulated provisions 3,236 4,465 - Balance carried forward (+/-) 3,168 3,100 22,623 21,296 13,280,544 12,647,327 - Revaluation differential - Income for the financial year (+/-) Total liabilities Group financial statements - Income pending approval 174 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif ➔➔Off-balance-sheet in thousands of euros At 31/12/2012 At 31/12/2011 Commitments provided Financing commitments Commitments in favour of credit institutions 452,009 218,061 Commitments in favour of customers 533,913 656,272 Guarantee commitments Commitments on behalf of credit institutions Commitments on behalf of customers 20,434 39,453 1,097,575 1,135,553 1,315,270 605,490 1,167,813 1,114,654 Commitments relating to securities Securities acquired with a buy-back or reversal facility Other commitments provided Commitments received Financing commitments Commitments received from credit institutions Guarantee commitments Commitments received from credit institutions Commitments relating to securities Securities sold with a buy-back or reversal facility Other commitments received 1,621 175 ➔➔Publishable income statement (period from 1 January to 31 December 2012) At 31/12/2012 At 31/12/2011 Income and expenses from banking operations + Interest and similar income + Interest and similar income from operations involving credit institutions + Interest and similar income from operations involving customers + Interest and similar income from bonds and other fixed-income securities + Other interest and similar income 417,154 403,336 38,040 40,253 293,545 279,349 80,073 81,838 5,495 1,896 (201,548) (190,300) + Interest and similar expenses for operations involving credit institutions 36,926 36,736 + Interest and similar expenses for operations involving customers 63,489 48,605 + Interest and similar expenses for bonds and other fixed-income securities 86,487 95,498 + Other interest and similar expenses 14,645 9,460 + Income from leasing and purchase-option rental operations 102,546 91,888 - Expenses from leasing and purchase-option rental operations (93,649) (84,101) + Interest and similar expenses + Income from operating leasing operations - Expenses from operating leasing operations + Income from variable-income securities 2,830 5,283 + Commission (income) 79,066 77,402 - Commission (expenses) (27,772) (28,496) (165) 1,311 +/- Gains or losses from trading portfolios +/- Net gain/loss on trading securities operations 203 119 +/- Net gain/loss on currency operations 535 482 +/- Net gain/loss on financial instrument operations (903) 710 +/- Gains or losses on investment portfolio and similar operations 1,340 1 + Other income from banking operations 3,248 66 + Income from property development operations + Other income - Other bank operating expenses 3,248 66 (1,166) (1,138) - Other expenses +/- Net banking income - General operating costs - Payroll - Other administrative costs - Allocations for depreciation and impairment on intangible and tangible assets +/- Gross operating income - Cost of risk +/- Operating income +/- Gains or losses on fixed assets 1,166 1,138 281,883 275,252 (217,687) (203,302) 117,696 109,917 99,991 93,385 (791) (726) 63,405 71,224 (38,946) (20,383) 24,459 50,841 5,167 (51) 5,167 (208) 29,626 50,791 +/- Gains or losses on tangible and intangible assets +/- Gains or losses on financial assets +/- Current pre-tax profit 157 +/- Extraordinary income - Corporation tax (7,883) (18,161) 880 (11,334) +/- Allocations to/reversals from FGBR (348) (11,319) +/- Allocations to/reversals from regulated provisions 1,229 (15) 22,623 21,296 +/- Allocations to/reversals from FGBR and regulated provisions +/- Income for the financial year Group financial statements - Expenses from property development operations 176 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix to the financial statements - Financial year 2012 I. General framework ➔➔1.1. Groupe BPCE Groupe BPCE comprises the network of Banques Populaires, Caisses d’Épargne, the BPCE central institution and its subsidiaries. Two networks: Banques Populaires and Caisses d’Épargne Groupe BPCE is a cooperative group whose members own the two local banking networks: the 19 Banques Populaires and 17 Caisses d’Épargne. The central institution, Groupe BPCE, is owned equally by these two networks. The network of Banques Populaires encompasses the Banques Populaires, mutual guarantee companies whose sole corporate purpose is guaranteeing loans issued by these banks. The network of Caisses d’Épargne encompasses the Caisses d’Épargne et de Prévoyance, local savings societies and the Fédération Nationale des Caisses d’Épargne. The Banques Populaires are 80% owned by their members and 20% by Natixis through its cooperative certificates of investment (CCI). Similarly, 80% of the capital of the Caisses d’Épargne is owned by local savings societies (sociétés locales d’épargne - SLE) and 20% is held by Natixis through CCIs. At local level, the aim of cooperative local savings societies, whose variable capital is held by the cooperative shareholders, is to develop membership, in line with the general guidelines of the Caisse d’Épargne to which they are affiliated. They are not permitted to carry out banking operations. BPCE BPCE is a central institution according to French banking law and a credit institution with banking authorisation, created under French law no. 2009-715 of 18 June 2009. It is a French joint stock company governed by a Board of Directors and a Supervisory Board. Its capital is equally owned by the 17 Caisses d’Épargne and 19 Banques Populaires. The work of BPCE is guided by the cooperative principles of the Banques Populaires and Caisses d’Épargne. In particular, BPCE is tasked with representing affiliates in dealings with the supervisory authorities, defining the range of products and services brought to market, organising depositors’ guarantees, approving directors and overseeing the operation of the institutions in the Group. As a holding company, BPCE is responsible for the activities at the head of the Group. It holds the subsidiaries jointly owned by both networks in the retail banking, finance banking and financial services sectors, as well as their production systems. It also determines the Group’s strategy and development policy. BPCE's main subsidiaries are organised into three main groups: • Natixis, a listed organisation of which BPCE owns 72%, which covers the finance and investment banking, savings banking and financial services sectors • the retail banking and insurance sector (including Crédit Foncier, Banque Palatine and BPCE International et Outre Mer (formerly Financière Océor)) • subsidiaries and financial shareholdings. In tandem, in the financial arena, BPCE’s work includes centralising surplus resources and conducting all financial transactions for Group growth and refinancing purposes, with responsibility for selecting the most effective operator for these missions acting in the Group’s interest. In addition, it offers banking services to the entities in the Group. ➔➔1.2. Guarantee mechanism Pursuant to article L.512-107 6 of the French Monetary and Financial Code, the purpose of the guarantee and solidarity system is to guarantee the liquidity and solvency of Groupe BPCE and its affiliate institutions, as well as to organise the financial solidarity mechanism within the networks of Banques Populaires and Caisses d’Épargne. BPCE is responsible for taking all necessary measures to organise the solvency guarantee for both the Group and each of the networks, in particular by implementing the appropriate Group internal solidarity mechanisms and by creating a common guarantee fund to both networks, for which it also determines the operating rules and the trigger methods, in addition to existing funds of the two networks, as well as the contribu- 177 BPCE manages the Banques Populaires Network Fund, the Caisses d’Épargne et de Prévoyance Network Fund and sets up the Mutual Guarantee Fund. A deposit was entered by the Banks in the accounts of BPCE with respect to the Banques Populaires Network Fund (€450 million) in the form of a 10-year fixed deposit account, renewable indefinitely. A deposit was entered by the Caisses in the accounts of BPCE with respect to the Caisses d’Épargne et de Prévoyance Network (€450 million) in the form of a 10-year fixed deposit account, renewable indefinitely. The Mutual Guarantee Fund consists of deposits by the Banques Populaires and the Caisses d’Épargne in the accounts of BPCE in the form of 10-year fixed deposit accounts, renewable indefinitely. As at 31 December 2012, a total of €168 million has been deposited. The fund will be increased each year at a rate of 5% of the contribution of the Banques Populaires, Caisses d’Epargne and their subsidiaries to the Group’s consolidated income. The total deposits made with BPCE for the Banques Populaires Network Fund, the Caisses d’Épargne et de Prévoyance Network Fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3% of the Group’s weighted assets. Where a Banque Populaire or a Caisse d’Epargne makes a deposit, an identified, equivalent amount is allocated to the fund for general banking risks of this institution, exclusively under the guarantee and solidarity system. The mutual guarantee companies whose sole corporate purpose is guaranteeing loans issued by a Banque Populaire benefit from the liquidity and solvency guarantee of the latter with which they are collectively approved, pursuant to article R.515-1 of the French Monetary and Financial Code. The liquidity and solvency of each of the Caisses de Crédit Maritime Mutuel are guaranteed first by the Banque Populaire which is its major shareholder and operator, according to the technical and functional securities between the Caisse and the Banque Populaire. The Executive Board of BPCE has full authority to mobilise the resources of the various contributors without delay and in the order agreed, on the basis of prior authorisations granted to BPCE by the contributors. ➔➔1.3. Significant events Crédit Coopératif issued 6,557,376 B members' shares, representing €99,999,984, subscribed on 8 February 2013 by SAS Sociétariat. At the same time, Natixis subscribed €24,999,996 of CCIs. On 26 March 2012, Crédit Coopératif invested in undated supersubordinated securities issued by BPCE SA. These undated super-subordinated securities are eligible for use as additional Tier 1 capital as part of the new Basel III rules (currently being transposed in the European Union by the Fourth Capital Requirements Directive). These instruments meet the 16 criteria concerning an additional Tier 1 instrument, as set out in article 49 of the draft directive. They may be automatically converted into ordinary shares in BPCE SA in the event of a fall in the Tier 1 base capital ratio (Common Equity Tier 1 - CET 1) or the base capital ratio (Tier 1 ratio) of BPCE SA Group. As the management intention with respect to this hybrid instrument is more in line with that of a variable-income security, it has been classified under "other long-term securities". Following the General Meeting of 30 May 2012, Crédit Coopératif's new Head Office address came into effect. The move to the new premises began on 10 September 2012. On 29 October 2012, Crédit Coopératif disposed of 85,929 of the 145,160 BTP Capital Investissement securities that it held, resulting in a capital gain on disposal of €8,555,408.01. ➔➔1.4. Events after the end of the financial year BPCE SA and Natixis presented a draft proposal to dramatically simplify the structure of Groupe BPCE to their respective Supervisory Boards and Boards of Directors on 17 February 2013. The planned operation involves the purchase, by the Banques Populaires and Caisses d’Epargne, of all cooperative certificates of investment (CCI) that they have issued, and which are Group financial statements tions of the affiliated institutions for the appropriation and reconstitution of the guarantee. 178 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif currently held by Natixis. Following the dissolution of the CCIs, once purchased, by each of the Banques Populaires and Caisses d’Epargne, the capital of each institution would then be owned in its entirety by their members. The reduction in Natixis' weighted exposures, connected with the holding of these CCIs, would enable Natixis to pay part of its surplus capital to its shareholders through an exceptional dividend issue. Finally, in order to ensure that resources are allocated appropriately within the Group, BPCE SA would reimburse its super-subordinated securities held by the Banques Populaires and Caisses d’Epargne and reduce the capital of BPCE SA in favour of the Banques Populaires and Caisses d’Epargne. The operation will be submitted to the Boards of the Banques Populaires and Caisses d’Epargne (equal shareholders of BPCE SA), BPCE SA and Natixis for their decision, following consultation of the employee representative bodies. This operation is planned to take place in Q3 2013. ➔➔2.3. Accounting principles and evaluation methods The accounts for the financial year are presented in a form identical to those of the previous financial year. The general accounting conventions have been applied with respect to the prudence principle, in line with the base principles of: • continuity of operations • consistency of accounting methods from one financial year to another • independence of financial years and, in line with the general rules for the drawing up of and presentation of annual accounts. The method used for the evaluation of accounting elements is the historic cost method and all of the items in the balance sheet are presented, where necessary, net of depreciation, provisions and value corrections. The main methods used are as follows: II. Accounting principles and methods ➔➔2.1. Evaluation and presentation methods applied The individual annual accounts of Crédit Coopératif are drawn up and presented in accordance with the rules of the Comité de la réglementation comptable (CRC) (French accounting regulation committee) and the Comité de la réglementation bancaire et financière (CRBF) (French banking and financial regulation committee). In accordance with CRBF Rule no. 9101, the presentation of the financial statements complies with the provisions of CRC regulations no. 2000-03 and 2005-04 relating to individual summary documents ➔➔2.2. Changes to accounting methods No change to accounting methods has affected the 2012 accounts. The other obligatory Accounting Standards Board texts adopted in 2012 have not have a significant impact on the individual accounts of the institution. The institution does not anticipate applying the texts adopted by the Accounting Standards Board when they are optional, except for when specifically mentioned. 2.3.1. Currency transactions Gains or losses related to exchange rate operations are determined in line with regulation no. 89-01 of the CRBF as amended by regulations no. 90-01 and 95-04. Assets, liabilities and off-balance-sheet commitments denominated in foreign currency are converted at the official exchange rate at the period-end date. Unrealised or final currency gains and losses are posted to income. Expenses and income paid or received are recorded on the date of the transaction. Assets and equity investments denominated in euros remain recorded at their acquisition cost. Non-settled conversion operations are valued at the periodend exchange rate. Carry-forwards and markdowns on fixed-term hedging foreign exchange contracts are spread on a pro rata basis in the income statement. Other fixed-term currency contracts and future financial instruments in other currencies are evaluated at the market price. Fixed-term exchange contracts or those covered by fixed-term instruments are revalued over the residual maturity. Brokerage swaps are recorded as operations linked to fixed-term purchases and sales of currency. Financial 179 2.3.2. Operations with credit institutions and customers Receivables relating to credit institutions cover all receivables held in relation to credit institutions in respect of banking operations with the exception of those in the form of a security. They included securities received on reverse repo, regardless of the type concerned, and those relating to repurchasing agreements. They are broken down between debts repayable on demand and fixed-term debts. Receivables in relation to credit institutions are recorded on the balance sheet at their nominal value or their acquisition cost for the buying back of debt plus un-matured, non-accrued interest and net of impairment in respect of the credit risk. Receivables relating to customers comprise financial support given to economic agents other than credit institutions, with the exception of those in the form of a security, the values received on reverse repo and debts relating to repurchasing agreements. They are broken down into commercial debts, overdrafts on current accounts and other financial support to customers. Customer loans are entered in the balance sheet at their nominal value or their acquisition cost for the buying back of debt plus un-matured, non-accrued interest and net of impairment in respect of the credit risk. Margin transaction commission and costs which are spread are included in the outstanding amounts for the loan concerned. Debts to credit institutions are presented according to their initial term (on demand or fixed-term) and debts to customers are presented according to their type (specially regulated savings accounts and other customer deposits). Repo and reverse repo operations in the form of a security or stock are included contingent on their counterparty. Accrued interest is recorded as related receivables. Received guarantees are recorded off balance sheet. They are subject to periodic re-evaluation. The book value of all of the guarantees taken on the same credit is limited to the outstanding amount of this credit. Restructured debt Restructured debt consists of debts held by counterparties who are in financial difficulty, resulting in credit institutions changing the initial characteristics (term, rate) in order to allow counterparties to honour the payment of instalments. During restructuring, the loan is subject to a discount equal to the amount of the differential between the original contractual cash flow expected and future cash flow expected for capital and interest as a result of the restructuring. The discount rate is the effective rate of interest for fixed rate loans or the last effective rate prior to the date of restructuring for variable rate loans. The effective rate corresponds to the contractual rate. This discount is recorded on the income statement as cost of risk and on the balance sheet as a reduction in the corresponding outstanding amount. It is reported on the income statement in the interest rate margin, using an actuarial method according to the term of the loan. A doubtful restructured debt can be reclassified as a performing debt when the terms are respected. These reclassified debts are specifically identified. When the debt subject to initial restructuring once again falls into arrears, regardless of the conditions for restructuring, the debt is declassified as doubtful debt. Doubtful debts Doubtful debts are made up of all the debts, outstanding or not, guaranteed or not, due by debtors of which a loan presents, at least, an incurred credit risk, as identified on an individual basis. A risk is incurred when the institution is unlikely to recover all or part of the sums owed by the counterparty notwithstanding the existence of guarantees or deposits. Doubtful debts are identified in line with the provisions of CRC regulation no. 2002-03 relating to dealing with credit risk, amended by CRC regulation no. 2005-03 of 25 November 2005, notably in the case of debts remaining unpaid for between three and six months for property and debts in relation to local and regional authorities. A compromised doubtful debt is a debt with significantly deteriorated prospects of recovery which is being considered for writing off in the long run. Debts exceeding their term, cancelled finance leasing contracts and loans of an indeterminate duration for which closure has been notified are presumed to have to be registered as compromised doubtful debts. The existence of guarantees covering almost all of the risks and the conditions for changes to the doubtful debt must be taken into consideration to qualify a compromised doubtful debt and to quantify the impairment. One year after its classification as a doubtful debt, a doubtful debt is presumed to be compromised, unless writing off in the long run is not being considered. Classification of a doubtful debt as a compromised doubtful debt has no knock-on effect, whereby other doubtful loans and Group financial statements swaps of currencies are subject to the provisions of CRBF regulation no. 90-15, amended. 180 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif commitments relating to the counterparty in question are classified under this category. Accrued interest and/or outstanding amounts not paid on doubtful debts are accounted as income from banking operations and impaired as of the said amount. Where the debt is qualified as compromised, the non-received accrued interest is not accounted. More generally, doubtful debts are re-registered as performing debts when the payments resume in a regular manner at amounts corresponding to the contractual instalments and when the counterparty is no longer a defaulting risk. Reverse repurchase operations Reverse repurchase operations are accounted in line with the provisions of CRBF regulation no. 89-07 and supplemented by Banking Commission instruction no. 94-06. The asset items put in repo are maintained on the assignor’s balance sheet, who records the representative amount of their debt paid to the assignee under liabilities. The assignee registers the representative amount paid of its debt to the assignor under assets. At each reporting date, the assets put in repo, as well as the assignee’s debt or the debt incumbent on the assignor, are evaluated according to the specific rules for each of these operations. Impairment For those debts for which recovery has become uncertain, impairment is recorded as a deduction under assets, in order to cover the risk of loss. The impairment is calculated separately for each debt, taking into account the current value of the received guarantees. They are determined on a quarterly basis (as a minimum), according to an analysis of the risk and the guarantees. The impairment covers non-received interest on outstanding doubtful debts, as a minimum. Impairment for probable losses incurred covers all the forecast losses calculated by the difference between the capital remaining due and the forecasted flow, discounted at the effective rate. For small debts with similar characteristics, a statistical estimation can be used. The impairment provisions and reversals for non-recovery risk are recorded under “Cost of risk”, with the exception of impairment relating to interest on presented doubtful debts, such as those impaired in "Interest and similar income". The reversal of impairment due solely to the passage of time is registered in “Interest and similar income”. Non-recoverable debts are registered in losses and the corresponding impairment is subject to a recovery. 2.3.3. Leasing and operating lease operations The CNC Emergency Committee opinion no. 2006-C states that assets for equipment leasing, property leasing, rental with a purchase option and operating leasing are recorded in the assets section of the lessor’s balance sheet. For this category of assets, in an exception to the rules of the General Accounting Plan on the accounting of assets, it is the notion of legal ownership that applies, not control. Assets are recorded at their entry value and the breakdown of assets by components does not apply to the lessor when maintenance/ replacement charges are contractually incumbent on the lessee. In the case of a breach of contract, the component approach applies in a prospective manner. Applying this same opinion, the lessor has the possibility to depreciate the assets in question in their individual accounts either for the term of the contract (financial depreciation corresponding to the fraction of the rent acquired) or for the normal duration of use of the asset (straight-line/diminishing depreciation). The chosen option applies to all of the affected assets in the same operation category. Pursuant to CRC regulation no. 2009-03, margin transaction commission and costs which are spread are included in the outstanding amounts for the loan concerned. Unpaid rental amounts are identified, accounted and provisioned in line with CRC regulation no. 2002-03 on credit risks. 2.3.4. Securities The term “securities” covers interbank market securities, treasury bills and other negotiable debt securities, bonds and other fixed-revenue securities (i.e. with a fixed return), shares and other variable-income securities. The accounting approach to securities transactions is chiefly governed by two texts: • CRC regulation no. 2008-17 amending CRBF regulation no. 90-01 of 23 February 1990 and supplemented by Banking Commission instruction no. 94-07, which defines the general rules for the accounting and valuing of securities 181 Securities are classified in the following categories: equity investments and shares in affiliated companies, other long-term securities, investment securities, portfolio activity securities, short-term investment securities and trading securities. For trading securities, short-term investment securities and portfolio activity securities, impairment is recorded under cost of risk for counterparty default risks where the impacts of the risk can be isolated. Trading securities These are securities acquired or sold with the intention of short-term resale or repurchase. To be eligible for this category, the securities must, from the date of their initial accounting, be available for trading on an active market and the market price must be both accessible and representative of actual transactions regularly occurring on the market in normal competition conditions. They can be fixed-income or variableincome securities. Trading securities are recorded at their acquisition price excluding fees and including, where applicable, accrued interest. In the event of a short sale, the debt is recorded under liabilities at the sale price of the securities, exclusive of fees. At the end of trading, they are valued at the market price of the most recent day: the overall balance of the differences resulting from fluctuations is recorded on the income statement. For UCITS and FCP shares, the market values correspond to available liquid values in the context of the market rate at the period-end date. Securities recorded among trading securities cannot, except where an exceptional market situation requires a change in strategy or where there is no longer an active market for fixed-income securities, be transferred to another accounting category and continue to follow the rules for presentation and valuing of trading securities up until their exit from the balance sheet by sale, integral redemption or passage into losses. Short-term investment securities Securities are considered as short-term investment securities if they are not entered in any other category. Short-term investment securities are recorded at their acquisition price, excluding fees. Where applicable, for fixed-income securities, accrued interest is posted to accounts offset against the income statement in the "Interest and similar income" section. Any difference between the acquisition price and the redemption value (premium or discount) of fixed-income securities is recorded in the income statement for the remaining duration of the security using the actuarial method. Short-term investment securities are valued at the lower of the acquisition price or the market price. For UCITS and FCP shares, the market values correspond to available liquid values in the context of the market rate at the period-end date. Unrealised capital losses are subject to impairment, which can be appreciated in terms of the uniform aggregate of securities, without compensation with the capital gains in other security categories. Gains from any hedging instruments, in the sense of article 4 of CRB regulation no. 88-02, are taken into account in the calculation of impairment. Unrealised gains are not recorded. Actual capital gains and losses on short-term investment securities and provisions and reversals of impairment are recorded under “Gains or losses on investment portfolio and similar operations”. Investment securities These are various fixed-income securities with a fixed maturity date which have been acquired or reclassified in the “Trading securities” or “Short-term investment securities” category with the manifest intention of, and capacity to, retain them up until their maturity. These securities must not be subject to an existing constraint, legal or otherwise, that would be likely to impact the intention to hold the securities until maturity. Securities classified as an investment security are not necessarily excluded from classification as elements hedged against interest rate risk. Investment securities are recorded at their acquisition price, excluding fees. Where they come from the investment portfolio, they are entered at their acquisition price and any previous impairment is reversed on the remaining lifespan of the securities in question. Group financial statements • CRBF regulation no. 89-07, supplemented by Banking Commission instruction no. 94-06, which sets out the rules relating to specific transfer operations such as the temporary transfer of securities. 182 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif The difference between the acquisition price and the redemption value of securities and the accrued interest related to these securities are recorded according to the same rules as those that apply to fixed-income investment securities. They may be subject to impairment if there is a strong possibility that the institution will not retain the securities until maturity due to new circumstances, or if there is a risk that the securities issuer will default. Unrealised gains are not recorded. Investment securities cannot, exceptions aside, be sold or transferred to another category of securities. Trading or fixed-income short-term investment securities reclassified as investment securities in accordance with the provisions of CRC regulation no. 2008-17 can, however, be transferred when the market on which they are exchanged becomes active once more. Portfolio activity securities Portfolio activity involves investing with the aim of drawing a medium-term capital gain, without the intention of long-term investment in the development of the issuing company's business or active participation in its operational management. In principle, this may only involve variable-income securities. This type of activity must be carried out in a substantial and long-term manner as part of a structured framework, resulting in recurring profitability primarily from capital gains on transfers. Portfolio activity securities are recorded at their acquisition price, excluding fees. At the year-end, they are marked on the balance sheet at the lower value of the historical cost or the going concern value. Unrealised capital losses are subject to a mandatory impairment. Unrealised gains are not recorded. Securities recorded among the portfolio activity securities cannot be transferred to another accounting category. Equity investments and shares in affiliated companies This category includes securities for which long-term possession is deemed useful to the activities of the company, as they confer notable influence over the administrative bodies of the issuing companies or control of said companies. Equity investments and shares in affiliated companies are recorded at their acquisition price, excluding fees. At the year-end, they are individually valued at the lower of their acquisition cost or their going concern value. The going concern value is calculated on the basis of criteria such as their strategic importance, the company's support or retention desire, the stock market price, the accounted net asset, the revalued net asset and forecasted elements. Unrealised capital losses, calculated per line of securities, are subject to impairment without compensation with capital gains in the security categories. Unrealised gains are not recorded. Securities recorded among equity investments and shares in affiliated companies cannot be transferred to another accounting category. Other long-term securities These are securities acquired in the interest of developing long-term business relationships by creating a special link with the issuing company, without influence over the management of the company for which the securities are held due to the low percentage of voting rights that they represent. Other long-term securities are recorded at their acquisition price, excluding fees. They are marked on the balance sheet at the lower value of the historical cost or the going concern value. The going concern value, for listed or non-listed securities, corresponds to what the company would agree to pay to obtain these securities if the company had to acquire them, taking into account the reason for their desire to hold these securities. Unrealised capital losses are subject to a mandatory impairment. Unrealised gains are not recorded. Securities recorded among other long-term securities cannot be transferred to another accounting category. Reclassification of financial assets In the interest of harmonisation and consistency with the IFRS rules, the CNC (National Accounting Council) published regulation no. 2008-17 of 10 December 2008 amending CRBF regulation no. 90-01 relating to the accounting of securities transactions. This regulation includes the provisions of opinion no. 2008-19 of 8 December 2008 relating to the transferring of securities out of the “Trading securities” 183 Reclassification out of the “Trading securities” category to the “Investment securities” and “Short-term investment securities” categories is now possible in the two following cases: a.where an exceptional market situation requires a change in strategy b.where fixed-income securities which have already been acquired are no longer tradable on an active market and if the institution has the intention and the capacity to hold them either for the foreseeable future or up until their maturity. Transfer from the “Short-term investment securities” category to the “Investment securities” category applies on the date of the transfer in one or another of the following conditions: a.where an exceptional market situation requires a change in strategy b.where fixed-income securities are not tradable on an active market. In its circular of 23 March 2009, the CNC stated that "The portfolio transfer options, and in particular the option to transfer securities from the short-term investment portfolio to the investment portfolio as set out in article 19 of CRB Rule no. 90-01, prior to its amendment by CRC regulation 2008-17, remain in force and are not revoked by this latest CRC regulation. As CRC regulation 2008-17 sets out additional inter-portfolio transfer options, these new transfer options shall apply in addition to those defined previously, from the date upon which this regulation comes into force, i.e. 1. July 2008." As such, it remains possible to reclassify securities from the short-term investment portfolio to the investment portfolio by recording a change of intention, provided that all investment portfolio criteria are met on the transfer date. 2.3.5. Tangible and intangible assets Accounting rules for assets are defined by: • CRC regulation 2004-06 concerning the posting and valuation of assets, and • CRC regulation 2002-10 concerning the depreciation and impairment of assets. Intangible assets An intangible asset is a non-monetary asset without physical substance. Intangible assets are recorded at their acquisition cost, which includes the purchase price and the associated fees. They are depreciated according to their probable duration of use. Software is amortised over a maximum period of 5 years. The share of supplementary depreciation from which software may benefit in accordance with fiscal provisions is recorded as accelerated depreciation. Business is not subject to depreciation but is impaired where applicable. Leasing rights are depreciated on a straight-line basis over the residual life of the lease and, where necessary, are subject to impairment on the basis of the market value. Tangible assets A tangible asset is an asset which is physically held – whether to be used in the production or supply of goods or services, to be leased to third parties, or for purposes of internal management – and which the entity expects to use beyond the current financial year. As constructions are assets comprising several elements with different uses from the outset, each element is accounted separately at its acquisition value and an individual depreciation plan is applied to each of the components. The depreciable amount is the gross value, minus the residual value where this latter is measurable, significant and sustainable. The main construction components are depreciated according to the period over which the anticipated economic advantages will be consumed, generally corresponding to the life of the asset: Item Useful life Land N/A Non-destructible external walls N/A External walls/roofing/waterproofing 20 - 40 years Foundations/frameworks 30 - 60 years External refurbishment 10 - 20 years Technical installations 10 – 20 years Technical improvements 10 - 20 years Interior fittings 8 - 15 years Other tangible assets are recorded at their acquisition cost, their production cost or their re-valued cost. The cost of assets denominated in other currencies is converted into euros at the exchange rate on the transaction date. Assets are depreciated according to the period over which the anticipated economic Group financial statements category and out of the “Short-term investment securities” category. 184 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif advantages will be consumed, generally corresponding to the life of the asset. Where appropriate, assets may be subject to impairment. Investment properties are non-operating assets and are recorded using the component method. 2.3.6. Debts in the form of securities Debts in the form of securities are presented by nature: shortterm loan notes, interbank market securities and negotiable debt securities, bonds and related securities, with the exclusion of subordinated securities which are classified in a specific line of the liabilities. Non-due interest accrued on these securities is recorded in a debt account offset against the income statement. Issue costs are recognised for the entire financial year or for the life of the corresponding loans. Issuing and redemption premiums are spread over the life of the loan through a deferred charges account. 2.3.8.1. Employee benefits Benefits paid to employees are recorded in accordance with CNC recommendation no. 2003-R-01. They are divided into four categories: Short-term benefits Short-term benefits chiefly comprise salaries, annual paid holidays, profit sharing, shareholding and bonuses, which relate to the financial year under consideration and are paid within 12 months of the year-end. The costs are recognised as an expense for the financial year, including amounts remaining due at the year-end. Long-term benefits Long-term benefits are generally linked to length of service and are paid to current employees after more than 12 months from the end of the financial year. These are mainly long-service awards. A provision is entered to the value of these commitments at year-end, minus the value of the assets constituted to cover these commitments. 2.3.7. Subordinated debt Subordinated debt includes the proceeds from the issuance of subordinated securities or loans, for both a fixed or unfixed duration, and security deposits of a mutual nature. Repayment, in case of debtor liquidation, is only possible after all other creditors have been paid. These commitments are valued based on an actuarial method incorporating demographic and financial assumptions, such as age, length of service, probability of being present on the date the benefit is granted and the discount rate. This calculation makes a load distribution over time depending on the period of staff employment (projected unit credit method). Accrued interest to be paid on the subordinated debt is recorded in a debt account offset against the income statement. Termination benefits 2.3.8. Provisions This item includes provisions to cover risks and charges, whether related or not related to banking transactions within the meaning of article L311-1 of the French Monetary and Financial Code, and related transactions as defined in article L311-2 of the same code, clearly specified as to their purpose, and for which the amount or due date cannot be precisely fixed. Unless covered by a specific law or regulation, the formation of such provisions shall be subject to the availability of an obligation owed to a third party and the lack of an equivalent counterparty from the third party, in accordance with the provisions of CRC regulation 2000-06. It includes a provision for employee benefits, a provision for counterparty risks and a home savings provision, as well as a provision for fiscal risk. These are benefits paid to employees at the end of their employment contract and before retirement, irrespective of whether the employee is laid off or accepts voluntary redundancy. A provision is constituted to cover termination benefits. Those paid more than 12 months after the period-end date result in discounting. Post-employment benefits Post-employment benefits encompass payments on retirement, pensions and retirement benefits. These benefits can be divided into two categories: defined contribution plans (which do not represent a commitment to be funded by the company) and defined benefit plans (representing a commitment for the company, which must be valued and funded). 185 The valuation method used is the same as that described above for long-term benefits. Recognition takes account of the value of the assets constituted to cover the commitments and unrecognised actuarial elements. Actuarial gains and losses on post-employment benefits, indicative of differences in the assumptions (early departures, the discount rate, etc.) or ascertained from the actuarial assumptions and actual calculations (performance of plan assets, etc.) are amortised using the so-called corridor rule, i.e. the part that exceeds a variation of plus or minus 10% of liabilities or assets. The annual charge in respect of defined benefit plans includes the cost of services rendered in the year, the financial cost of the updating of commitments, the expected returns on plan assets and amortisation of any unrecognised elements. Crédit Coopératif's commitments concern the following schemes: • pensions and similar benefits: retirement payments and retirement benefits • other benefits: long-term service bonuses. These commitments are calculated in accordance with the provisions of CNC recommendation 2003-R-01 (see appendix 49 below). 2.3.8.2. Home savings provisions Home savings accounts (CEL) and home savings plans (PEL) are savings products offered to individuals whose characteristics are defined by the 1965 law on home savings and the orders made under this law. The home savings system generates two types of commitments for institutions selling these products: • the commitment in the future to grant loans to customers at the contractually-agreed rate at the time of opening the home savings plan, or at a rate that depends on the savings phase for home savings accounts • the commitment to remunerate savings in the future at the contractually-agreed rate at the time of opening and for an indeterminate period for home savings plans, or at a rate set every six months according to an indexing formula laid down by law for home savings accounts. Commitments that entail potentially unfavourable consequences for the Group are evaluated for each generation of home savings plan and for all home savings accounts. The risks attached to such commitments are covered by a provision the amount of which is determined by discounting the future results reached on the outstanding risks: • outstanding risk savings are the uncertain future level of savings plans existing at the date on which the provision is calculated. This is estimated statistically, taking the subscriber saver behaviour into account, for each future period, using the difference between probable savings outstanding and the minimum expected savings outstanding. • outstanding loans at risk correspond to the outstanding amounts on loans already made but not yet due on the date of calculation, and future loans estimated statistically, taking customer behaviour and acquired and projected rights attaching to the home savings accounts and plans into account. The results for future periods in the savings phase are calculated, for a given generation, by calculating the difference between the regulated rate offered and the expected remuneration for a competing savings product. The results for future periods for the credit phase are determined by the difference between the fixed rate at the start of the contract for PELs or a rate relating to the savings period for the CEL contracts and the anticipated rate of the nonregulated environment. When the algebraic sum of the measure of future commitments in the savings phase and the loan phase for the same generation of contracts reflects a potentially unfavourable position for the Group, a provision is constituted, with no offset between generations. Commitments are estimated using the Monte Carlo method to reflect the uncertainty regarding potential changes in rates and the consequences on modelled future customer behaviour and on amounts outstanding at risk. The provision is entered in the balance sheet under liabilities and variations are entered in net banking income. 2.3.9. Fund for general banking risks These funds are intended to cover risks inherent in the activities of the entity, in accordance with the requirements of Group financial statements The Group’s employee benefits that are not covered by contributions entered as costs and paid into retirement or insurance funds are recognised as liabilities in the balance sheet. 186 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif article 3 of CRBF regulation 90-02 and Banking Commission instruction 86-05, amended. and similar income" and "Interest and similar expenses". Unrealised gains and losses are not recorded. They also include amounts allocated to the Regional Solidarity Fund as well as provisions created as part of the guarantee mechanism. Income and expenses relating to certain contracts, which constitute isolated open positions, are recorded in income in contract settlements or on a pro rata basis according to the nature of the instrument. Any unrealised losses detected in relation to market value are subject to a provision. This value is determined on the basis of the type of markets concerned (organised and similar or over-the-counter). For organised markets, instruments are permanently listed and have sufficient liquidity to justify their valuation at the market price. Unrealised gains are not recorded. 2.3.10. Financial futures Hedging transactions and market transactions on financial interest rate, currency or share futures are recognised in accordance with CRBF regulations 88-02 and 90-15, amended, and Banking Commission instruction 94 -04 amended by instruction 2003-03. Commitments related to these transactions are recorded in off-balance-sheet accounts at the nominal value of the contracts. On the reporting date, the amount of these commitments represents the volume of transactions not yet settled at closing. The accounting principles applied vary depending on the nature of the instruments and the original intentions of the operators. Firm transactions Swaps and similar contracts (future rate agreements, floor and ceiling rate guarantees) are classified based on the original intention in the following categories: • micro-hedging • macro-hedging (balance sheet hedging) • speculative positions/open, isolated positions • specialised management of a transaction portfolio. Amounts received or paid on the first two categories are recognised on a pro rata basis in the income statement. Income and expenses on instruments used to hedge an item or a set of homogeneous elements are recognised symmetrically to the inclusion of income and expenses on the hedged items. Income elements from the hedging instrument are recognised in the same item as income and expenses concerning hedged elements under "Interest and similar income" and "Interest and similar expenses". The "Gains and losses on trading portfolios" item is used when the hedged items are included in the trading portfolio. Income and expenses relating to financial futures designed to hedge and manage an overall rate risk are included on a pro rata basis in the income statement under the items "Interest Contracts covered by specialised management are valued using the replacement cost or bond methods, after taking into account a discount to reflect the counterparty risk and the present value of future management fees. Changes in value from one accounting period to another are recorded immediately in the income statement under "Gains and losses on trading portfolios". Cancellation or assignment adjustments are recognised as follows: • for operations classed as specialised management or in an open isolated position, the adjustments are reported immediately in the income statement • for micro- and macro-hedging operations, the adjustments are either depreciated over the remaining life of the formerly hedged element or reported immediately in the income statement. Conditional transactions The notional amount of the underlying instrument to which the option or futures contract refers is recorded by distinguishing between hedging contracts and contracts traded through market operations. For operations on interest rate, exchange or share options, the premiums paid or received are recorded in a suspense account. At the end of the year, where these options involve products listed on an organised market or similar, they are valued in the income statement. For over-the-counter markets, a provision is made for losses only. Unrealised gains are not recorded. At the point of resale, redemption, exercise or expiry, the premiums are recorded immediately in the income statement. For hedging operations, income and expenses are reported symmetrically to those relating to the hedged item. Vendor conditional instruments are not eligible for classification in macro-hedging. 187 The over-the-counter market can be likened to organised markets where institutions that act as market makers ensure permanent trading in realistic ranges, or where the underlying financial instruments are themselves listed on an organised market. Changes in the value of unlisted options are determined by a mathematical calculation. Commission and costs associated with the granting or acquisition of financial support are similar to supplementary interest and are spread over the effective life of the credit, on a pro rata basis according to the capital remaining due. 2.3.11. Interest and similar – Commission • commission paid in return for an instantaneous service: recorded once the services have been delivered • commission paid in return for an ongoing service or a discontinuous service with several, successive due dates spread over time: recorded as appropriate over the delivery of the service. Commission and costs associated with the granting or acquisition of financial support are similar to supplementary interest and are spread over the effective life of the credit, on a pro rata basis according to the capital remaining due. Other commission is recorded according to the nature of the service: 2.3.13. Corporation tax The tax charge which appears on the income statement represents corporation tax due for the financial year and the tax provision for tax-related IEGs. • commission paid in return for an instantaneous service: recorded once the services have been delivered • commission paid in return for an ongoing service or a discontinuous service with several, successive due dates spread over time: recorded as appropriate over the delivery of the service. As of the 2010 financial year, the Caisses d’Epargne and Banques Populaires have benefited from the provisions of article 91 of the finance law amendment for 2008, which extends the fiscal integration mechanism to mutual banking networks. 2.3.12. Income from variable-income securities The institution has signed a fiscal integration agreement with its parent company, which ensures that the tax debt which it would have had to pay in the absence of mutual fiscal integration is recorded in its accounts. Interest and commission similar in nature to interest are recorded in the income statement on a pro rata basis. Group financial statements Interest and commission similar in nature to interest are recorded in the income statement on a pro rata basis. Other commission is recorded according to the nature of the service: 188 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif III. Other information ➔➔3.1. Consolidation The individual accounts are included in the consolidated financial statements of Groupe BPCE. Pursuant to article 1. of CRC regulation 99-07, Crédit Coopératif prepares consolidated financial statements in accordance with international accounting standards. ➔➔3.2. Statutory Auditors' fees (according to decree no. 1487 of 30 December 2008) KPMG In thousands of euros (exc. tax) Financial year 2012 Amount Audit Statutory audit, certification, examination of individual and consolidated financial statements SOFIDEEC Financial year 2011 % Amount % Financial year 2012 Amount Financial year 2011 % Amount % 200 100 195 100 178 100 174 100 200 100 195 100 178 100 174 100 Other verifications and services directly linked to the task of the statutory auditors TOTAL ➔➔3.3. Guarantee commitments given in the context of refinancing provisions ➔➔3.6. Remuneration, advances, credits and liabilities for the benefit of Administration and Management bodies At 31 December 2012, receivables given as collateral in refinancing specifically include: • €1,794,262K of assigned accounts receivable from Banque de France as part of the TRICP process (€1,165,608K at 31 December 2011) • €158,740K of pledged receivables from SFEF (€180,439K at 31 December 2011) • €28,827K of assigned accounts receivable from Banque de France as part of the mortgaging refinancing fund (€28,213K at 31 December 2011) • €54,592K of assigned accounts receivable from BPCE SFH (€48,698K at 31 December 2011). ➔➔3.4. Personnel The average number of serving personnel during the 2012 financial year was: Clerical workers Executives Total 699 • Total amount of remuneration and retirement commitments allocated for the 2012 financial year: -- to Administration bodies. . . . . . . . . . . . . . . . €494 million -- to Management bodies . . . . . . . . . . . . . . . . . €445 million • Total amount of advances and credit granted in 2012: -- to Administration bodies . . . . . . . . . . . . . . . €135 million -- to Management bodies. . . . . . . . . . . . . . . . . . . . . €0 million ➔➔3.7. Individual right to training Under the individual right to training, acquired rights amounted to 135,919.08 hours at 31 December 2012, of which 133,711.23 hours remain available. ➔➔3.8. Sovereign risk exposure Crédit Coopératif has no direct exposure to sovereign risks, other than the states of France and Belgium. 840 1,539 ➔➔3.5. Incentives An incentive agreement was signed by Crédit Coopératif on 30 June 2010, for a period of three years from 1 January 2010. In line with this agreement, an expense has been recorded in payroll. IV. Information on the following items: balance sheet, off-balance-sheet and income statement -- Balance sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . notes 1-36 -- Off-balance-sheet. . . . . . . . . . . . . . . . . . . . . . . notes 37-41 -- Income statement. . . . . . . . . . . . . . . . . . . . . . . notes 42-53 189 Appendix 1. Central banks, giro accounts, government securities and interbank receivables In thousands of euros 2012 2011 Funds, central banks, giro accounts 344,325 147,150 Government and similar securities 317,959 350,926 1,716,924 2,316,684 Receivables relating to credit institutions - on demand - fixed term 37,766 726,652 1,667,279 1,580,794 11,879 9,238 2,379,208 2,814,760 - net doubtful debts - country risk provisions affected - non-allocated securities - related receivables Total Of which affiliated companies Of which BPCE network 1,991 10,776 84,717 686,883 Appendix 2. Breakdown by remaining term In thousands of euros < 3 months 3 months <T< 1 year 1 year <T< 5 years > 5 years not broken down Total at maturity Assets Government and similar securities Receivables relating to credit institutions Receivables relating to customers 317,959 2,845 55,133 75,383 184,598 712,730 176,479 425,472 402,183 60 1,716,924 15 8,814,464 1,541,234 649,138 2,862,883 3,761,194 Leasing receivables 21,270 58,693 152,934 10,178 243,075 Bonds and other fixed-income securities 17,107 197,000 306,733 246,015 766,855 2,295,186 1,136,443 3,823,405 4,604,168 Total 75 11,859,277 Liabilities Payables to customers Debts in the form of securities Subordinated loans Total 2,518,979 492,025 367,614 1,063,951 595,389 6,791,903 222,579 338,988 23,094 7,376,564 318,797 559,108 651,630 331,726 1,861,261 24,858 7,627,583 69,999 1,149,301 2,124,568 950,209 16,346 111,203 16,346 11,868,007 Group financial statements Payables to credit institutions 190 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 3. Details of government securities In thousands of euros 2012 Trading Short-term investment 2011 Investment Gross amounts Total Trading Short-term investment Investment Total 315,114 315,114 342,101 342,101 2,845 2,845 8,825 8,825 317,959 317,959 350,926 350,926 Impairment Related receivables Total Appendix 4. Performing interbank receivables In thousands of euros 2012 On demand Accounts and loans 37,766 2011 Fixed term Total On demand 1,401,246 1,439,012 234,118 Fixed term 726,652 Total 1,293,538 2,020,190 234,118 254,928 254,928 31,855 31,855 32,268 32,268 60 60 60 60 1,667,279 1,705,045 1,580,794 2,307,446 Financial loans Repo amounts received Repo securities received Fixed-term subordinated loans Non-fixed-term subordinated loans Total 37,766 726,652 Appendix 5. Operations involving customers - Assets In thousands of euros 2012 2011 Overdrafts on current accounts 622,313 Commercial debts 170,506 189,099 7,761,167 6,771,646 Other aid to customers Related receivables and non-posted items Net doubtful debts 404,462 29,369 34,032 231,109 190,896 8,814,464 7,590,135 Impairment for country risk affected Total 191 Appendix 6. Details of other aid to customers In thousands of euros 2012 Credit for export Liquidity and consumer credit Credit for equipment Home loans Other customer loans 2011 5,187 9,172 365,092 328,706 6,361,645 5,585,118 936,695 824,061 19,579 18,375 Repo amounts received Repo securities received 56,600 Subordinated loans Total 16,369 6,214 7,761,167 6,771,646 Appendix 7. Equipment leasing and operating leasing In thousands of euros 2012 Equipment leasing Customer amounts outstanding (financial amounts outstanding) Temporarily non-leased property Impairment Net doubtful loans outstanding Related receivables Total Operating leasing 2011 Equipment leasing Total Operating leasing Total 243,075 243,075 211,911 211,911 1,033 1,033 1,303 1,303 (77) (77) (190) (190) 15,504 15,504 15,234 15,234 304 304 327 327 259,839 259,839 228,585 228,585 Appendix 8. Changes in leasing and similar operations In thousands of euros 2011 Increases Decreases 2012 Leasing 428,485 127,896 88,042 468,339 (209,916) (83,755) (74,381) (219,290) Impairment (190) (237) Related receivables 2,783 Gross fixed asset values Depreciation Total 221,162 43,904 (349) (78) (622) 3,405 12,690 252,376 Group financial statements Article 29 provisions 192 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 9. Breakdown of amounts outstanding by economic agent In thousands of euros 2012 Credit institutions Operations involving credit institutions Non-financial companies Sole traders Individuals Private administrations Public admin. and social security Other 1,716,924 Total 1,716,924 Operations involving customers and leasing Performing amounts outstanding Doubtful debts 5,220,237 48,865 802,793 2,268,556 568,706 91,127 9,000,283 274,424 17,015 44,751 138,095 3 8,165 482,454 Not compromised 136,836 8,492 22,337 68,921 2 4,076 240,664 Compromised 137,588 8,523 22,414 69,174 2 4,090 241,790 (132,290) (8,540) (22,566) (69,263) (4,111) (236,771) Impairment of doubtful debts /assets Not compromised (50,597) (3,316) (8,776) (26,885) (1,598) (91,172) Compromised (81,693) (5,224) (13,790) (42,378) (2,513) (145,599) Of which: Subordinated debt Subordinated doubtful debt Impairment of subordinated doubtful debt 227,614 1,498 8 13,964 45 251 243,379 Doubtful debts relating to leasing Debts relating to leasing 16,811 111 1 1,031 3 19 17,975 Impairment of doubtful debts relating to leasing (2,311) (15) (3) (2,471) Impairment of debts relating to leasing (72) (142) (4) (77) Securities transactions Debts relating to fixedincome securities 458,620 105,122 Doubtful debts relating to securities 49,918 3,788 53,706 (44,588) (3,788) (48,375) Impairment of doubtful debts relating to securities 196,750 760,492 193 The data for the 2011 year were as follows: Appendix 9. financial Breakdown of amounts outstanding by economic agent In thousands of euros 2011 Credit institutions Operations involving credit institutions Non-financial companies Sole traders Individuals Private administrations Public admin. and social security Other 2,316,684 Total 2,316,684 Operations involving customers and leasing Performing amounts outstanding Doubtful debts 4,494,120 46,923 742,854 2,037,798 413,546 67,132 7,802,373 258,176 14,339 37,175 110,592 4 9,196 429,482 Not compromised 120,189 6,823 17,744 52,613 1 4,383 201,754 Compromised 137,987 7,516 19,431 57,980 2 4,813 227,728 (133,041) (7,464) (19,380) (57,564) (2) (4,791) (222,242) Not compromised (44,608) (2,722) (7,146) (20,970) (1,757) (77,203) Compromised (88,433) (4,743) (12,234) (36,594) (2) (3,033) (145,039) Impairment of doubtful debts Of which: Subordinated debt 6,219 15 6,235 Subordinated doubtful debt Impairment of subordinated doubtful debt Debts relating to leasing Doubtful debts relating to leasing Impairment of doubtful debts relating to leasing Impairment of debts relating to leasing 198,731 1,387 67 11,608 27 418 212,238 28,726 200 10 1,678 4 60 30,678 (13,240) (92) (4) (773) (2) (28) (14,140) (178) (1) (10) (190) Securities transactions Debts relating to fixedincome securities 810,507 140,778 Doubtful debts relating to securities 52,560 3,725 56,285 (45,683) (3,725) (49,408) 1,149,863 Group financial statements Impairment of doubtful debts relating to securities 198,578 194 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 10. Securities portfolio In thousands of euros 2012 Trading Short-term investment Bonds and similar items Gross values Impairment Net values Shares and similar items Gross amounts Impairment Net values Total 2011 Investment 228,752 (3,818) 224,934 TAP Total Short-term investment Trading 815,261 (48,406) 766,855 586,509 (44,588) 541,921 Investment 445,068 (3,743) 441,325 TAP Total 1,206,165 (49,426) 1,156,739 761,097 (45,683) 715,414 66 33,485 (880) 9,749 (1,850) 43,300 (2,730) 62 66,943 (1,765) 9,275 (1,362) 76,280 (3,127) 66 32,605 7,900 40,570 62 65,178 7,913 73,153 66 257,539 7,900 807,425 62 506,503 7,913 1,229,892 541,921 In thousands of euros 2012 Gross book value Short-term investment and portfolio activity securities (excluding loaned securities) 715,414 Fixed-income securities Variable-income securities Investment securities (excluding loaned securities) Market value Redemption value 224,500 224,856 43,234 41,730 525,249 576,521 Unrealised Unrealised capital gain capital loss 224,363 Impairment 360 30 30 1,226 2,730 2,730 517,950 Appendix 11. Bonds and other fixed-income securities In thousands of euros 2012 Trading Short-term investment 2011 Investment Total Trading Short-term investment Investment Total Gross values Listed securities 193,308 193,308 195,145 195,145 99,691 99,691 132,876 132,876 224,500 232,250 456,750 439,897 367,700 807,597 3,788 49,918 53,706 3,725 52,560 56,285 464 11,342 11,806 1,446 12,816 14,262 228,752 586,509 815,261 445,068 761,097 1,206,165 9,380 2,250 11,630 9,484 2,700 12,184 (3,818) (3,743) (44,588) (44,588) (45,683) (45,683) (3,818) (44,588) (48,406) (3,743) (45,683) (49,426) 224,934 541,921 766,855 441,325 715,414 1,156,739 issued by public bodies other issuers Unlisted securities issued by public bodies other issuers Loaned securities Borrowed securities Doubtful debts Related receivables Gross values sub-total of which subordinated securities Impairment and Provisions Impairment of doubtful debts (3,818) Impairment (3,743) Country risk provisions Provisions sub-total Total 195 Appendix 12. Shares and other variable-income securities In thousands of euros 2012 Trading Short-term investment 2011 TAP Total Short-term investment Trading TAP Total Gross values 2011 Listed securities Capitalisation UCITS other UCITS other securities 66 796 730 62 792 730 Unlisted securities Capitalisation UCITS other UCITS 32,288 64,640 (466) 9,749 9,283 403 9,275 9,678 32,552 9,749 42,367 65,773 9,275 75,110 (67) (82) (814) (1,849) (2,663) (1,682) (1,362) (3,044) (881) (1,849) (2,730) (1,764) (1,362) (3,126) 31,671 7,900 39,637 64,009 7,913 71,984 32,288 other securities 64,640 Related receivables Gross values sub-total 66 62 Impairment of listed securities (67) of unlisted securities (82) of own shares Provisions sub-total Total 66 62 Appendix 13. Changes in investment securities In thousands of euros 2011 Purchases Disposals Redemptions Conversion Discount/ premium Transfers Overall reclassification Other variations 2012 Government securities Gross value 342,101 150,000 (176,000) (986) (168,450) (2,022) 315,115 Income from disposals carried out Bonds and other FISs Gross value 761,097 (65,376) 525,249 Income from disposals carried out The institution has not reclassified any assets. Appendix 14. Holdings, shares in affiliated companies and other long-term securities Gross financial assets Impairment Net financial assets Conversion rate adjustment Related and other receivables Total 2012 2011 451,183 429,264 (4,948) (1,583) 446,235 427,681 640 1,100 1,701 448,576 428,781 Group financial statements In thousands of euros 196 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 15. Changes in equity investments and similar In thousands of euros 2011 Increases Conversions Decreases Other variations 2012 Gross values Holdings and other long-term securities 304,416 21,714 (143) (26) Shares in affiliated companies 124,530 4,966 (5,078) 488 429,264 26,680 (5,221) 462 (1,583) (3,542) (1,583) (3,542) 178 427,681 23,138 (5,043) Shares in property investment companies (2) 124,906 318 318 Sub-total 325,959 (2) 451,183 99 105 (4,921) 79 (105) Impairment Holdings and other long-term securities Shares in affiliated companies Shares in property investment companies Sub-total Net financial assets (26) (4,947) 462 (2) 446,236 Appendix 16. Tangible and intangible assets In thousands of euros 2012 Gross values Depreciation 2011 Impairment Net values Gross values Depreciation Impairment Net values Operating assets Intangible assets 4,999 (4,592) Tangible assets 38,371 (12,828) Sub-total 43,370 (17,420) Non-operating assets Total 535 (302) 43,905 (17,722) (407) 4,999 (4,592) 25,543 37,907 (12,045) (407) 25,543 42,906 (16,637) 233 535 (292) (407) 25,776 43,441 (16,929) (407) 25,862 (407) 25,862 (407) 26,105 243 197 Appendix 17. Changes in operating and non-operating assets In thousands of euros 2011 Increases Decreases Other 2012 Gross values Intangible operating assets Leasehold rights and trade goodwill 4,999 4,999 4,999 4,999 Software Other Sub-total Tangible operating assets Land 1,971 Buildings 20,333 Shares in property investment companies 15,332 Other Sub-total Non-operating assets 1,971 476 (15) 20,794 15,332 271 3 37,907 479 274 (15) 38,371 535 535 (4,999) (4,999) (4,999) (4,999) Depreciation and impairment Intangible operating assets Leasehold rights and trade goodwill Software Other Sub-total Tangible operating assets Land Buildings Other Sub-total Non-operating assets (11,983) (778) (62) (5) (12,761) (67) (12,045) (783) (12,828) (292) (10) (302) Appendix 18. Tangible operating assets - breakdown of buildings In thousands of euros 2012 Gross values Depreciation and impairment Net values Buildings 366 366 External walls/roofing/waterproofing 1,659 (585) 1,074 Foundations/frameworks 3,265 (1,267) 1,998 168 (41) 127 3,868 (2,008) 1,860 External refurbishment Technical installations Interior fittings 11,468 (8,860) 2,608 Total 20,794 (12,761) 8,033 Group financial statements Non-destructible external walls 198 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 19. Accruals and miscellaneous assets In thousands of euros 2012 2011 Other assets and miscellaneous applications of funds 341,293 Accruals 211,425 193,518 142,471 Total 552,718 335,989 Appendix 20. Other assets and miscellaneous applications of funds In thousands of euros 2012 Conditional instruments purchased Settlement of securities transactions 2011 445 504 63,353 6,741 277,495 186,273 341,293 193,518 Property development Other stocks and miscellaneous applications of funds Miscellaneous receivables Net doubtful debts Related receivables Total Appendix 21. Accruals – Assets In thousands of euros 2012 Collection accounts 2011 47,892 44,527 Adjustment accounts Variance accounts Potential losses on open hedging contracts 126 278 Pre-paid charges Potential losses on settled hedging contracts 2,315 2,424 Deferred income 22,249 24,798 1,841 1,877 Issue premiums to be carried forward Other expenses to be allocated Other accruals 137,002 68,567 Total 211,425 142,471 Appendix 22. Central banks, giro accounts and debts relating to credit institutions In thousands of euros 2012 2011 Central banks, giro accounts Accounts and borrowings on demand fixed term Other sums due Related receivables Total Of which affiliated companies Of which the Banques Populaires network 293,232 179,441 2,203,841 1,759,492 471 475 21,435 17,791 2,518,979 1,957,199 264,911 335,371 143,304 80,583 199 Appendix 23. Details of interbank resources In thousands of euros 2012 On demand Current accounts in credit Fixed term 293,232 Accounts and borrowings 2011 Total On demand 293,232 2,203,841 2,203,841 2,203,841 2,497,073 Fixed term Total 179,441 179,441 1,759,492 1,759,492 1,759,492 1,938,933 Amounts delivered in repo Securities delivered in repo Total 293,232 179,441 Appendix 24. Operations involving customers - Liabilities In thousands of euros 2012 2011 Accounts and borrowings on demand 6,438,526 5,280,914 943,561 745,009 96,412 77,804 fixed term Guarantee deposits Other sums due 7,198 6,918 7,485,697 6,110,645 Related receivables Total Appendix 25. Details of customer accounts - Liabilities In thousands of euros 2012 On demand Fixed term 2011 Total On demand Fixed term Total Specially-regulated savings accounts 2,786,618 125,308 2,911,926 1,784,570 118,405 1,902,975 Accounts and borrowings 3,651,908 527,061 4,178,969 3,496,344 359,642 3,855,986 113,356 113,356 110,851 110,851 Loans to financial customers Amounts delivered in repo Securities delivered in repo Total 6,438,526 177,836 177,836 943,561 7,382,087 5,280,914 156,111 156,111 745,009 6,025,923 Appendix 26. Debts in the form of securities In thousands of euros Short-term loan notes and savings bonds Interbank market securities Negotiable debt securities 2012 2011 67,145 165,261 20,000 20,000 1,515,263 2,441,216 575,790 1,159,929 subscribed by credit institutions subscribed by financial customers 68,000 203,000 subscribed by customers 871,472 1,078,287 251,928 383,428 Bonds issued Other debts in the form of securities Related receivables Total 6,925 26,744 1,861,261 3,036,649 Issuing and redemption premiums remaining for depreciation total €1,590K. The non-depreciated amount represents the difference between the initially received amount and the redemption price of debts in the form of securities. Group financial statements of which: 200 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 27. Accruals and miscellaneous liabilities In thousands of euros 2012 2011 Other liabilities 84,113 97,666 Accruals 131,178 156,475 Total 215,291 254,141 Appendix 28. Other liabilities In thousands of euros 2012 2011 Conditional instruments sold 194 257 Settlement of securities transactions 369 32 Deferred tax liabilities Securities liabilities Outstanding payments for securities not fully paid Miscellaneous creditors 4,721 6,367 78,644 90,825 185 185 84,113 97,666 Investment grant Allocated public funds Related receivables Total Appendix 29. Accruals - Liabilities In thousands of euros 2012 Collection accounts 2011 39,248 52,266 50 1,734 22,028 18,512 Charges to be paid 47,425 42,097 Other accruals 22,427 41,807 131,178 156,475 Adjustment accounts Variance accounts Potential gains on open hedging contracts Potential gains on settled hedging contracts 59 Pre-paid income Total Appendix 30. Summary of impairment and provisions In thousands of euros 2011 Increases Decreases Other 2012 Provisions deducted from assets Impairment for doubtful debts Impairment for market risks 271,733 67,599 (40,843) 5,324 4,439 (1,571) 1 298,489 8,193 277,057 72,038 (42,414) 1 306,682 10,260 2,628 (1,834) 11,054 16,924 1,397 (1,226) 17,095 469 333 (154) 648 28,797 Country risk provisions Total impairment Provisions for liabilities Provisions for counterparty risk Provisions for impairment risks Provisions for operating costs Provisions for employee benefits Extraordinary provisions Total provisions for liabilities Total 27,653 4,358 (3,214) 76,396 (45,628) Effect on income 30,768 201 Appendix 31. Provisions for liabilities In thousands of euros 2011 Increases Decreases Other variations 2012 Provisions for off-balance-sheet commitments Country risk provisions Sectoral provisions Provisions for customer disputes 10,260 2,628 (1,834) 11,054 10,260 2,628 (1,834) 11,054 Other customer provisions Provisions for employee benefits Expenses to be allocated Retirement benefits Long-service awards 10 319 459 14 (154) 329 319 469 333 (154) 648 16,924 1,397 (1,226) 17,095 16,924 1,397 (1,226) 17,095 27,653 4,358 (3,214) 28,797 VCF Mutual funds Other Provisions for impairment risks Securities portfolio and financial futures Financial assets Property development Other assets Provisions for future operating costs Provisions for taxes and duties Other operating provisions Extraordinary provisions Provisions for IT restructuring Provisions for extraordinary restructuring Other extraordinary provisions Total Appendix 32. Hedging of doubtful receivables In thousands of euros 2012 Gross values Impairment 2011 Net values Gross values Impairment Net values Interbank operations Doubtful Doubtful and compromised Operations involving customers and leasing 482,454 (236,771) 245,683 429,482 (222,242) 207,240 Doubtful 240,664 (91,172) 149,492 201,754 (77,203) 124,551 Doubtful and compromised 241,790 (145,599) 96,191 227,728 (145,039) 82,689 53,706 (48,375) 5,331 56,285 (49,408) 6,877 Securities portfolio and miscellaneous debtors Doubtful and compromised Total doubtful receivables 53,706 (48,375) 5,331 56,285 (49,408) 6,877 536,160 (285,146) 251,014 485,767 (271,650) 214,117 Doubtful 240,664 (91,172) 149,492 201,754 (77,203) 124,551 Doubtful and compromised 295,496 (193,974) 101,522 284,013 (194,447) 89,566 Group financial statements Doubtful 202 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 33. Subordinated debt In thousands of euros 2012 2011 Fixed-term subordinated debt 69,999 Non-fixed-term subordinated debt 16,345 16,346 Guarantee deposits of a mutual nature 24,445 23,558 414 1,898 111,203 158,799 Related receivables Total In thousands of euros Issue date Currency 29/01/86 EUR Issue amount 116,997 Capital outstanding Maturity date Reference rate 22,867 Undated Average monthly yield on bonds 16,345 16,346 30,000 31/12/12 31/12/11 Participating securities (1) CC PARTICIPATING SECURITY Other subordinated securities (2) CREDIT COOP 4% 17/12/14 TSR 17/12/04 EUR 30,000 17/12/14 4 % 30,000 CREDIT COOP 4.15% 17/11/16 TSR 17/11/06 EUR 40,000 17/11/16 4.15 % 39,999 CCCC 6% 28/06/12 B TSR 28/06/02 EUR 47,000 28/06/12 6 % Total 139,867 39,999 46,998 86,344 133,343 1- Participating securities: these are non-redeemable, except at par in the event of liquidation. Crédit Coopératif reserves the right to buy these securities back through the market (Public Offer for Purchase (“OPA”)) and to offer to exchange them (Public Offer for Exchange (“OPE”)). 2- Subordinated securities: in the event of liquidation, these securities will be redeemed to the holders after paying off all preferential or unsecured creditors. Crédit Coopératif reserves the right to apply early impairment through buy-backs on the market, and to buy these securities back through Public Offers for Purchase (“OPA”) or Public Offers for Exchange (“OPE”). Appendix 34. Fund for general banking risks In thousands of euros 2011 Mutual Guarantee Fund 9,729 Regional Solidarity Fund 15,717 General Fund Total Increases Decreases Other variations (2,952) 2012 6,777 15,717 1,700 3,300 27,146 3,300 5,000 (2,952) 27,494 203 Appendix 35. Equity capital In thousands of euros Equity capital at 31/12/07 before allocation Capital (1) 493,719 Issue premiums 142,964 Reg. prov. & inv. grants 3,358 Profit at 31/12/07 Distribution Equity capital at 31/12/07 after allocation 493,719 142,964 3,358 Reserves Revalua- and balance tion diff. carried forward Equity capital excluding FGBR FGBR 23,389 Equity capital 117,255 757,296 64,683 64,683 780,685 64,683 (15,951) (15,951) (15,951) 165,987 806,028 23,389 829,417 (1,359) (1,359) 22,030 829,302 Capital increase Conversion rate adjustment Changes in method Net allocation to regulated provisions 1,244 1,244 Net allocation to FGBR 1,244 Other variations Equity capital at 31/12/08 before allocation 493,719 142,964 4,602 Profit at 31/12/08 Distribution Equity capital at 31/12/08 after allocation Capital increase 493,719 142,964 4,602 165,987 807,272 18,759 18,759 18,759 (17,055) (17,055) (17,055) 167,691 808,976 41,837 22,030 41,837 831,006 41,837 Conversion rate adjustment Changes in method Net allocation to regulated provisions 89 89 Net allocation to FGBR 89 (12,728) (12,728) 9,302 860,204 Other variations Equity capital at 31/12/09 before allocation 535,556 142,964 4,691 Profit at 31/12/09 Distribution Equity capital at 31/12/09 after allocation 535,556 Capital increase 208,163 142,964 4,691 167,691 850,902 18,807 18,807 18,807 (14,360) (14,360) (14,360) 172,138 855,349 9,302 208,163 864,651 208,163 Conversion rate adjustment Changes in method Net allocation to regulated provisions (241) (1,162) (1,162) (1,162) (12,404) (12,645) (12,645) Net allocation to FGBR 6,524 6,524 15,826 1,065,531 Other variations Equity capital at 31/12/10 before allocation 743,719 142,964 4,450 Profit at 31/12/10 Distribution Equity capital at 31/12/10 after allocation 743,719 142,964 4,450 158,572 1,049,705 20,661 20,661 20,661 (16,583) (16,583) (16,583) 162,650 1,053,783 15,826 1,069,609 11,320 11,320 27,146 1,080,944 Capital increase Conversion rate adjustment Changes in method Net allocation to regulated provisions 15 15 Net allocation to FGBR 15 Other variations 743,719 142,964 4,465 Distribution Equity capital at 31/12/11 after allocation 743,719 Capital increase 62,500 142,964 4,465 162,650 1,053,798 21,296 21,296 21,296 (18,033) (18,033) (18,033) 165,913 1,057,061 27,146 62,500 1,084,207 62,500 Conversion rate adjustment Changes in method Net allocation to regulated provisions (1,229) (1,229) Net allocation to FGBR (1,229) 348 348 27,494 1,145,826 Other variations Equity capital at 31/12/12 before allocation 806,219 142,964 3,236 Profit at 31/12/12 165,913 1,118,332 22,623 22,623 188,536 1,140,955 22,623 Distribution Equity capital at 31/12/12 after allocation 806,219 142,964 3,236 27,494 1,168,449 (1) Equity capital breakdown at 31/12/2012: 3,103,072 A shares, 25,972,487 B shares, 12,374,958 C shares and 10,573,361 cooperative certificates of investment; all of these shares have a unit value of €15.25. Group financial statements Equity capital at 31/12/11 before allocation Profit at 31/12/11 204 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 36. Allocation of income Proposed allocation of income (in euros) Amount Determination of income to allocate Profit for the financial year 22,623,114.02 Profit carried forward 3,167,610.84 Drawing from statutory reserve Profit to be allocated 25,790,724.86 Allocation of profit Legal reserve (15% of 22,623,114.02) 3,393,467.00 Statutory reserve Special investment reserve Other reserves Dividends on A shares Dividends on B shares 9,002,814.97 Dividends on C shares 5,044,876.43 Dividends on CCI shares 4,030,000.00 Rebate 500,000.00 Profit carried forward 3,819,566.46 Total 25,790,724.86 Appendix 37. Financing commitments In thousands of euros 2012 2011 Financing commitments provided To credit institutions 452,009 218,061 To customers 533,913 656,272 New letters of credit Other new confirmed credits Other commitments 16,240 15,717 476,904 604,729 40,769 35,826 Total 985,922 874,333 Of which affiliated companies 238,669 191,929 1,315,270 605,490 1,315,270 605,490 Financing commitments received From credit institutions From customers Total Appendix 38. Guarantee commitments In thousands of euros 2012 2011 Guarantee commitments provided On behalf of credit institutions confirmation of new letters of credit other guarantees On behalf of customers 20,434 39,453 3,434 5,570 16,999 33,883 1,097,575 1,135,552 property surety 44,553 46,715 administrative and fiscal surety 51,364 49,275 other surety and guarantees provided 538,051 491,372 other guarantees provided 463,607 548,190 Total 1,118,009 1,175,005 Guarantee commitments received from credit institutions 1,167,813 1,114,654 477,928 466,844 59,005 44,794 Of which affiliated companies Of which BPCE network 205 Appendix 39. Operations involving financial futures In thousands of euros Notional and fair value 2012 Hedging 2011 Other operations Total Hedging Other operations Total Firm transactions Transactions on organised markets Interest rate contracts 135 135 Currency contracts 5,554 5,554 4,699 4,699 5,554 5,554 4,834 4,834 4,672,112 3,697,113 30,320 21,241 102,700 4,702,432 3,718,354 to be received 90,478 to be delivered 10,211 Financial assets Over-the-counter transactions Future interest rate agreements Interest rate swaps Other futures contracts 4,569,412 102,700 44,700 3,741,813 44,700 3,763,054 90,478 70,594 70,594 10,211 6,333 6,333 35,315 35,315 12,660 12,660 9,774 9,774 4,692 4,692 145,778 145,778 94,279 94,279 248,478 4,853,764 138,979 3,862,167 30,320 4,599,732 21,241 Future currency contracts Brokerage swaps Financial swaps to be received to be delivered Other currency contracts to be received to be delivered Total firm transactions 4,605,286 3,723,188 Conditional transactions Transactions on organised markets Interest rate options purchased sold Currency options purchased sold Other options purchased sold Over-the-counter transactions Interest rate options purchased 150,772 150,772 141,114 141,114 sold 135,548 135,548 123,918 123,918 286,320 286,320 265,032 265,032 286,320 286,320 265,032 5,140,084 3,988,220 Currency options purchased sold Other options sold Total conditional transactions Total financial and currency futures instruments 4,891,606 248,478 265,032 138,979 4,127,199 Commitments on interest rate derivatives traded over the counter mainly consist of interest rate swaps and FRAs for fixed-term transactions and rate guarantee agreements for conditional transactions. Commitments on currency instruments traded over the counter mainly consist of currency swaps. Group financial statements purchased 206 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 40. Classification of financial futures by portfolio In thousands of euros 2012 Microhedging Macrohedging Isolated open position 2011 Total Trading Isolated open position Macrohedging Microhedging Trading Total Firm transactions Future interest rate agreements Interest rate swaps 3,129,412 1,440,000 102,700 4,672,112 2,757,113 30,320 21,241 1,440,000 102,700 4,702,432 2,778,354 150,772 141,114 940,000 44,700 3,741,813 940,000 44,700 3,763,054 Interest rate and currency swaps Other futures contracts 30,320 3,159,732 21,241 Conditional transactions Interest rate options purchased 150,772 Interest rate options sold Total 141,114 135,548 135,548 123,918 123,918 286,320 286,320 265,032 265,032 4,988,752 3,043,386 3,446,052 1,440,000 102,700 940,000 44,700 4,028,086 Appendix 41. Information on over-the-counter transactions In thousands of euros 2012 Contracts Information on derivatives Nature of over-the-counter contracts Notional amount (including conditional instruments purchased) Breakdown by remaining term (excluding conditional instruments sold) < 1 year < 1 year and > 5 years > 5 years Gross replacement cost Positive Negative Potential credit risk for operations Credit risk for contracts traded over-the-counter Weighting Positive gross replacement cost Positive net replacement cost Potential credit risk Equivalent credit risk before security Security Equivalent credit risk after security relating to interest rates 4,853,204 150,772 relating to currency rates 145,777 937,877 2,157,151 1,758,177 145,555 222 117,853 131,556 40,190 Credit inst. 20 % 34,362 14,044 18,833 32,877 6,057 26,820 770 838 1,467 Customers 50 % 76,995 76,995 14,183 91,179 91,179 BP 0 % 7,266 7,266 8,640 15,906 15,906 Appendix 42. Interest and similar income and expenses In thousands of euros 2012 Income Operations involving credit institutions Operations involving customers Bonds and other fixed-income securities Expenses 2011 Net Income Expenses Net 34,784 (36,802) (2,018) 39,220 (36,736) 2,484 292,237 (66,124) 226,113 279,220 (51,989) 227,231 (9,871) 81,159 (83,652) (2,493) 81,950 (91,821) Subordinated debt 3,305 (4,724) (1,419) 1,072 (6,483) (5,411) Other 4,472 (9,958) (5,486) 1,862 (3,269) (1,407) Total 415,957 (201,260) 214,697 403,324 (190,298) 213,026 207 Appendix 43. Income and expenses from leasing and purchase-option rental operations In thousands of euros 2012 Income Leasing and financial leasing operations Rent Income from disposal Impairment Depreciation Other income and expenses 2011 Expenses Net Income Expenses Net 96,833 2,905 349 ///////// 2,414 102,501 ///////// (8,180) (237) (83,755) (264) (92,436) 96,833 (5,275) 112 (83,755) 2,150 10,065 87,590 3,046 182 ///////// 1,070 91,888 ///////// (6,919) (308) (76,618) (256) (84 101) 87,590 (3,873) (126) (76,618) 814 7,787 102,501 (92,436) 10,065 91,888 (84,101) 7,787 Operating lease operations Rent Income from disposal Impairment Depreciation Other income and expenses Total Appendix 44. Income from variable-income securities In thousands of euros 2012 2011 Dividends received on investment securities Dividends received on portfolio activity securities Dividends received on equity and related securities 21 102 2,707 25 122 5,136 Total 2,830 5,283 Appendix 45. Income from investment portfolio In thousands of euros Impairment Impairment reversals Losses on disposals Gains on disposals Other items 2012 Short-term investment (173) 1,045 (67) 1,022 21 Total 2011 102 (660) 1,045 (67) 1,022 123 Short-term investment (1,194) 4,257 (5,186) 2,227 25 (385) 1,463 129 TAP Total (487) 1,848 TAP Total (419) 316 122 (1,613) 4,573 (5,186) 2,227 147 19 148 Appendix 46. Commission 2012 Expenses Income 2011 Net Expenses Cash and interbank transactions Operations involving methods of payment Operations involving customers Securities transactions Currency transactions Off-balance-sheet commitments Financial services provided Consultancy activities (1,543) (20,934) (4,275) (5) 1,326 24,372 39,965 1,863 182 (217) 3,438 35,690 1,858 182 (1,249) (21,852) (4,444) (5) (1,015) 11,358 10,343 Total (27,772) 79,066 51,294 Income Net (947) 56 25,444 38,220 1,672 167 11 11,842 (1,193) 3,592 33,776 1,667 167 11 10,895 (28,497) 77,412 48,915 Group financial statements In thousands of euros 208 Crédit Coopératif Group I Annual Report 2012 Group financial statements Financial statements of Crédit Coopératif Appendix 47. Gains or losses from trading portfolios In thousands of euros 2012 2011 Trading securities 203 119 Currency transactions 535 482 Financial futures (903) 710 Total (165) 1,311 Appendix 48. General operating costs In thousands of euros 2012 2011 Payroll Salaries and emoluments (62,932) Pension contributions and related charges Other welfare contributions (8,923) (31,466) (29,752) (3) (1,089) Employee incentives Employee profit sharing Taxes and duties linked to remuneration "Payroll" sub-total (56,893) (9,216) (1,697) (1,851) (12,382) (11,409) (117,696) (109,917) Other operating costs (8,837) (7,550) Other general operating costs Taxes and duties (91,154) (85,835) "Other operating expenses" sub-total (99,991) (93,385) (217,687) (203,302) Total Appendix 49. Pension contributions and related charges Analysis of assets and liabilities on the balance sheet In thousands of euros Present value of funded commitments (a) Fair value of regime assets (b) In thousands of euros Pensions Other commitments 31/12/12 Other commitments Pensions 31/12/11 12,199 1,387 13,586 10,920 1,516 12,436 9,161 1,068 10,229 9,050 1,056 10,106 2,711 1,860 Fair value of redemption rights (c) Present value of non-funded commitments (d) Unrecognised elements: actuarial gains and losses and costs of past services (e) 2,711 1,860 Balance sheet: net balance (a) - (b) - (c) + (d) - (e) 327 319 646 10 460 470 Liabilities 327 319 646 10 460 470 Assets Analysis of expenses for the financial year In thousands of euros 2012 Pensions 2011 Other commitments Total Other commitments Pensions Total Cost of services rendered in the period 530 100 630 530 105 635 Financial cost 415 58 473 394 54 448 (126) (15) (141) (134) (14) (148) (174) (174) (547) (22) (569) 256 257 Expected return on hedging assets Expected return on redemption rights Actuarial gains and losses: depreciation for the financial year Cost of past services 256 257 Other (757) (110) (867) (740) (167) (907) Total 318 (141) 177 (240) (44) (284) Main actuarial assumptions (as a percentage) Pensions 31/12/12 Other commitments 31/12/11 31/12/12 31/12/11 Discount rate 3.18 % 3.75 % 3.18 % 3.75 % Expected return on hedging assets 1.40 % 1.50 % 1.40 % 1.50 % Expected return on redemption rights 209 Appendix 50. Cost of risk In thousands of euros 2012 2011 Reversals Losses not Recovenet Impaircovered ries of of impairment by depreciated ment debts provisions Impairment allocated Interbank amounts outstanding Customer amounts outstanding Miscellaneous securities and debtors Provisions Off-balance-sheet commitments General provisions Country risk provisions Total cost of risk (64,650) 27,767 (472) 180 (1,150) Net (37,175) Impairment Net reversals of impairment Losses not covered by provisions Recoveries of depreciated debts (56,023) 39,566 (634) 266 (16,825) 1 (1) (56,023) 39,567 (635) 266 (16,825) (1,150) (65,800) 27,767 (2,197) 1,759 (438) (2,693) 520 (2,173) (431) 248 (183) (2,007) 623 (1,384) (2,628) 2,007 (68,428) 29,774 (472) (472) 180 180 (38,325) Net (621) (4,700) 1,143 (38,946) (60,723) 40,710 (3,557) (635) 266 (20,382) of which: reversals for impairment that has ceased to be applicable 29,774 40,710 reversals for impairment used 10,766 10,482 total reversals 40,540 51,192 (10,766) (10,482) 29,774 40,710 losses covered by provisions,, net reversals Appendix 51. Extraordinary income No extraordinary income was posted for the 2012 financial year Appendix 52. Corporation tax Corporation tax amounted to €7,883 million. The provisions of article L. 511-45 of the French Monetary and Financial Code and the decree of 6 October 2009, issued by the French Economy Minister, require credit institutions to publish, in an appendix to their annual financial statements, information on their locations and activities in countries and territories that have not entered into an administrative assistance agreement with France for the exchange of information in connection with the fight against tax fraud and tax evasion. These obligations fit within the wider objectives of the worldwide fight against uncooperative havens, which were defined at OECD meetings and summits, and are also designed to combat money laundering and the financing of terrorism. Since its foundation, Groupe BPCE has adopted a prudent approach. It ensures that entities belonging to its networks are regularly informed about updates to the OECD list of territories that are considered as non-cooperative as regards the effective exchange of information for tax purposes as well as about the potential consequences of maintaining operations in uncooperative territories. In addition, lists of uncooperative territories have been integrated, in part, into enterprise resource planning solutions used in the fight against money laundering with the objective of ensuring appropriate due diligence for transactions with uncooperative countries and territories (implementation of Decree 2009-874 of 16 July 2009). At the level of the central body, an inventory of the Group’s locations and activities in uncooperative territories has been drawn up for the information of executive bodies. As of 31 December 2012, the institution has no operations or locations in such uncooperative territories. Group financial statements Appendix 53. Operations in uncooperative countries 210 Crédit Coopératif Group I Annual Report 2012 Statutory auditors' reports Representatives of the Statutory Auditors (members of the Compagnie Nationale des Commissaires aux Comptes (the French National Auditor Board)) KPMG Audit - Fiduciaire de France SOFIDEEC BAKER TILLY, represented by Mr Fabrice Odent represented by Mr Cyrille Baud 1 Cours Valmy - 92923 Paris La Défense Cedex, 138 Boulevard Haussmann, 75008 Paris, member of the Compagnie Régionale des Commissaires aux Comptes of Versailles., member of the Compagnie Régionale des Commissaires aux Comptes of Paris., Appointed by the Ordinary General Meeting of 18 May 2007; term expiring at the 2013 Ordinary General Meeting called to approve the accounts for 2012. Appointed by the Ordinary General Meeting of 18 May 2007; term expiring at the 2013 Ordinary General Meeting called to approve the accounts for 2012. 211 Statutory auditors' report, drawn up pursuant to Article L.225-235 of the Commercial Code, on the report from the Chairman of the Board of Directors of Crédit Coopératif S.A. Crédit Coopératif S.A. Registered office: 12 Boulevard de Pesaro - CS 10002 92024 Nanterre Cedex Registered capital: €806,218,776 Dear Sirs, In our capacity as the statutory auditors of Crédit Coopératif S.A., and pursuant to Article L. 225-235 of the Commercial Code, we submit to you our report on the report drawn up by your company’s Chairman in accordance with Article L. 22537 of that Code for the financial year ended 31 December 2012. It is the Chairman’s duty to draw up and put to the Board of Directors for approval a report listing the internal control and risk management procedures set up within the company and providing the other information required under the terms of Article L. 225-37 of the Commercial Code, concerning, in particular, the corporate governance systems. It is our task to: • communicate to you our comments on the information contained in the Chairman’s report regarding the internal control and risk management procedures relating to the generation and processing of accounting and financial information and • certify that the report contains the further information required by Article L.225-37 of the Commercial Code, with the proviso that our mission does not include verification of the veracity of this further information. We conducted our audit in accordance with professional standards applicable in France. These standards require us to conduct investigations so as to verify the concordance of the information concerning the internal control and risk management procedures relating to the generation and processing of the accounting and financial information contained in the Chairman’s report. These investigations consist specifically of: • acquainting ourselves with the internal control and risk management procedures relating to the generation and processing of the accounting and financial information on which the information presented in the Chairman’s report is based as well as existing documentation • acquainting ourselves with the work that enabled this information and the existing documentation to be compiled • determining whether any major deficiencies in internal control relating to the generation and processing of accounting and financial information which we may have noted during our audit are adequately described in the Chairman’s report. On the basis of this work, we have no comment to make on the information concerning the internal control and risk management procedures relating to the generation and processing of accounting and financial information, as set out in the report by the Chairman of the Board of Directors drawn up in accordance with Article L. 225-37 of the Commercial Code. We certify that the report drawn up by the Chairman of the Board of Directors contains the further information required by Article L.225-37 of the Commercial Code. Paris La Défense, 20 March 2013 Paris, 20 March 2013 KPMG Audit A division of KPMG S.A. Sofideec Baker Tilly Fabrice Odent Cyrille Baud Partner Partner 212 Crédit Coopératif Group I Annual Report 2012 Group financial statements Statutory auditors' reports Statutory auditors' report on the consolidated financial statements Crédit Coopératif S.A. Registered office: 12 Boulevard de Pesaro - CS 10002 92024 Nanterre Cedex Registered capital: €806,218,776 Year ended 31 December 2012 Dear Sirs, In pursuance of the task entrusted to us by your General Meeting, we present our report for the year ended 31 December 2012 on: • the inspection of the consolidated accounts of Crédit Coopératif S.A., as attached to this report, • the justification of our assessments, • the specific checks required by law. The consolidated accounts have been approved by your Board of Directors. Our responsibility is to express an opinion on these accounts, based on our audit. ➔➔ I. Opinion on the consolidated accounts We conducted our audit in accordance with the professional standards applicable in France: these standards require that we conduct checks so to obtain reasonable assurance as to whether the consolidated accounts are free of significant anomalies. An audit involves checking, through surveys or through other methods of selection, those elements supporting the amounts and disclosures in the consolidated accounts. An audit also includes an assessment of the accounting principles used, significant estimates made and the overall presentation of the accounts. We believe that the evidence we have obtained is a sufficient and appropriate basis for our opinion. We certify that the consolidated accounts are, pursuant to the IFRS standards as adopted by the European Union, consistent and sincere and fairly present the results of the assets, liabilities, financial situation and results of the entity comprising all the persons and entities included in the scope of consolidation. ➔➔ II. Justification of our assessment Pursuant to the provisions of article L.823-9 of the Commercial Code concerning the justification of our assessments, we bring to your attention the following: Accounting estimates Provisions for credit risk As stated in notes 4.1.1 and 4.1.7 of the appendices to the consolidated accounts, your Group sets aside impairment and provisions to cover credit risks inherent to its activities. As part of our assessment of significant estimates made in preparing the accounts, we examined the control system for monitoring credit and counterparty risks, and conducted an assessment of the risks of non-payment and the coverage of such risks under assets through impairment determined on an individual and portfolio basis. Impairment of available-for-sale financial assets Your Group records impairment on available-for-sale assets (note 4.1.7 of the appendices): for equity instruments where there is objective evidence of prolonged decline or significant decline in the value of those assets for debt instruments where there is a proven counterparty risk. We examined the control system for the identification of signs of loss of value, the valuation of the most significant lines, as well as estimates for which losses of value have been covered by impairment, where applicable. Valuation and impairment of other financial instruments Your Group holds positions on securities and other financial instruments. Notes 4.1.2, 4.1.3, 4.1.4, 4.1.5, 4.1.6 and 4.1.7 of the appendices to the consolidated accounts set out the accounting rules and methods relating to securities and financial instruments. We examined the control system for accounting classification and for determining the way in which these positions are valued. We audited the appropriateness of the Group's accounting methods and the information provided in the appendix notes and ensured that these are correctly applied. Our assessment also involved checking that these estimates are reasonable. 213 The assessments were made as part of our audit of the consolidated financial statements taken as a whole and therefore contributed to the formation of the opinion expressed in the first part of this report. III. Specific check related information provided in the management report, as required by law. We have no comment to make on the extent to which this information is faithful and consistent with the consolidated accounts. We also performed, in accordance with the professional standards applicable in France, a specific check of Group- Paris La Défense, 20 March 2013 Paris, 20 March 2013 KPMG Audit A division of KPMG S.A. Sofideec Baker Tilly Fabrice Odent Cyrille Baud Partner Partner 214 Crédit Coopératif Group I Annual Report 2012 Group financial statements Statutory auditors' reports Statutory auditors' report on the on the annual accounts Crédit Coopératif S.A. Registered office: 12 Boulevard de Pesaro - CS 10002 ➔➔2. Justification of our assessment Pursuant to the provisions of article L.823-9 of the Commercial Code concerning the justification of our assessments, we bring to your attention the following: 92024 Nanterre Cedex Registered capital: €806,218,776 Year ended 31 December 2012 In pursuance of the task entrusted to us by your General Meeting, we present our report for the year ended 31 December 2012 on: • the inspection of the annual accounts of Crédit Coopératif Accounting estimates Provisions for credit risk As stated in note II.2.3.2 of the appendices to the annual accounts, your company sets aside impairment and provisions to cover credit risks inherent to its activities. As part of our assessment of significant estimates made in preparing the accounts, we examined the control system for monitoring credit and counterparty risks, conducted an assessment of the risks of non-payment and the coverage of such risks under assets through impairment determined on an individual basis and, under liabilities, through provisions to cover non-assigned customer risks. S.A., as attached to this report • the justification of our assessments • the specific checks and information required by law. Valuation of equity securities, shares in affiliated companies and other long-term securities ➔➔1. Opinion on the annual accounts Equity securities, shares in affiliated companies and other long-term securities held by your company are valued at their going concern value as described in note II.2.3.4 of the appendices. As part of our assessment of these estimates, we examined the circumstances that led to the determination of going concern values for the major lines of the portfolio. We conducted our audit in accordance with the professional Valuation of other securities and financial instruments standards applicable in France: these standards require that Your company holds positions on securities and financial instruments. Notes II.2.3.4 and II.2.3.10 of the appendices set out the accounting rules and methods relating to securities and instruments financiers. We examined the control system for accounting classification and for determining the way in which these positions are valued. We audited the appropriateness of the company's accounting methods and the information provided in the appendix notes and ensured that these are correctly applied. The annual accounts have been approved by the Board of Directors. Our responsibility is to express an opinion on these accounts, based on our audit. we conduct checks so to obtain reasonable assurance as to whether the annual accounts are free of significant anomalies. An audit involves checking, through surveys or through other methods of selection, those elements supporting the amounts and disclosures in the annual accounts. An audit also includes an assessment of the accounting principles used, significant estimates made and the overall presentation of the accounts. We believe that the evidence we have obtained is a sufficient and appropriate basis for our opinion. We certify that the annual accounts are, under French accounting rules and accounting principles, consistent and sincere and fairly present the results of operations of the previous year and the financial position and assets of the company at the end of this financial year. Our assessment also involved checking that these estimates are reasonable. The assessments were made as part of our audit of the annual financial statements taken as a whole and therefore contributed to the formation of the opinion expressed in the first part of this report. 215 ➔➔3. Specific checks and information We also performed, in accordance with the professional standards applicable in France, the specific checks required by law. report and in the documents sent to shareholders on the financial position and annual accounts is faithful and consistent with the financial statements. As required by law, we checked that the necessary information We have no comment to make on the extent to which the information given in the Board of Directors' management on ownership and control has been included in the management Paris La Défense, 20 March 2013 Paris, 20 March 2013 KPMG Audit A division of KPMG S.A. Sofideec Baker Tilly Fabrice Odent Cyrille Baud Partner Partner report. 216 Crédit Coopératif Group I Annual Report 2012 Group financial statements Statutory auditors' reports Special Auditors' Report on Regulated Agreements ➔➔Agreements submitted to the General Meeting for approval Crédit Coopératif S.A. Registered office: 12 Boulevard de Pesaro - CS 10002 92024 Nanterre Cedex Registered capital: €806,218,776 Pursuant to article L. 225-40 of the Commercial Code, we have been advised of the following agreements with prior authorisation from your Board of Directors. General Meeting called to approve the financial statements for the financial year ended 31 December 2012 Leasing operation distribution agreement between Crédit Coopératif and Bati Lease Dear Sirs, As auditors of your company's accounts, we hereby present our report on regulated agreements. It is our task to inform you, on the basis of the information we have received, of the essential characteristics and methods of all agreements brought to our attention or which we have discovered while performing our work. It is not for us to ascertain the utility or appropriateness of such agreements, nor to actively search for other agreements which may exist. It is your responsibility, pursuant to article R. 225-31 of the Commercial Code, to assess the benefit of such agreements and commitments and to approve them. It is also our responsibility, where applicable, to provide you with the information required under article R. 225-31 of the Commercial Code concerning the execution of agreements previously approved by the General Meeting during the financial year concerned. We conducted all checks that we deemed necessary, pursuant to the professional doctrine of the Compagnie Nationale des Commissaires aux Comptes, in our fulfilment of this task. These checks involved verifying that the information we were given is consistent with the documents from which it originates. • Authorisation date: Board of Directors meeting, 30 August 2012. • Nature and purpose: Distribution, by Crédit Coopératif to its customers, of property finance leasing contracts managed by Bati Lease and partially guaranteed by Crédit Coopératif. • Person/entity concerned: Bati Lease, a subsidiary of Crédit Coopératif, and the shared directors of Crédit Coopératif and Bati Lease (François Dorémus and Jean-Denis Nguyen Trong). • Methods and procedures: In return for loans provided by Bati Lease and partially guaranteed by Crédit Coopératif, Crédit Coopératif will receive agent's commission amounting to half of all management fees received by Bati Lease above a threshold of €500, as well as risk commission amounting to 30% of Bati lease's net margin, calculated in proportion to the percentage guaranteed by Crédit Coopératif. • Effect: No loans were provided under the terms of this agreement in 2012. Service agreement covering services provided by Crédit Coopératif to Bati Lease • Authorisation date: 12 December 2012 • Nature and purpose: Identification of IT services provided by Crédit Coopératif employees to Bati Lease and billing for these services. • Person/entity concerned: Bati Lease, a subsidiary of Crédit Coopératif, and the shared directors of Crédit Coopératif and Bati Lease (François Dorémus and Jean-Denis Nguyen Trong). • Methods and procedures: Crédit Coopératif provides maintenance and update services with respect to the IT platform. IT services are calculated using the distribution coefficients applied to all companies in Crédit Coopératif Group. • Effect: income of €108,866 (exc. tax) was recognised for the 2012 financial year. 217 Amendment to the agreement concerning investment commission paid by Ecofi Investissements to Crédit Coopératif • Authorisation date: Board of Directors meeting, 12 December 2012. • Nature and purpose: Determination of the amount of investment commission paid by Ecofi Investissements to Crédit Coopératif on Ecofi Investissements UCITS sold through the Crédit Coopératif network. • Person/entity concerned: Ecofi Investissements, a subsidiary of Crédit Coopératif, and the shared directors of Crédit Coopératif and Ecofi Investissements (Jean-Louis Bancel, François Dorémus, Pierre Valentin, Jean-Claude Detilleux and Hugues Sibille). • Methods and procedures: For the 2012 financial year, and on an exceptional basis with respect to the regulated agreement of 19 June 2006 concerning investment commission paid by Ecofi Investissements to Crédit Coopératif, the remuneration rate is set at 30% (instead of 50%) of the management commission received by Ecofi Investissements on UCITS sold through the Crédit Coopératif network. • Effect: the total amount of investment commission paid by Ecofi Investissements was €3,342,360.47 at 31 December 2012. ➔➔Agreements already approved by the General Meeting Pursuant to article R. 225-30 of the Commercial Code, we were informed that the following agreements, approved by the General Meeting during previous financial years, continued during the past year. Cash flow management agreement between BTP Banque and Crédit Coopératif. • Authorisation date: Board of Directors meeting, 29 August 2008, renewed on 13 March 2012. • Nature and purpose: Management of BTP Banque's cash flow by Crédit Coopératif. • Person/entity concerned: BTP Banque, a subsidiary of Crédit Coopératif, and the shared directors of Crédit Coopératif and BTP Banque (Jean-Louis Bancel, Jean-Claude Detilleux, François Dorémus and Pierre Valentin). • Methods and procedures: This agreement is valid for three years and renewable by tacit extension for three-year periods. Crédit Coopératif S.A. will carry out trading operations for BTP Banque S.A. both on its own behalf and on behalf of its customers. Crédit Coopératif will also study various forecasting tables on behalf of BTP Banque concerning interest and liquidity risk management. • Effect: No remuneration has been recorded in relation to the execution of this agreement in 2012. Funding for Crédit Coopératif head office restructuring work • Authorisation date: Board of Directors meeting, 15 December 2009. • Nature and purpose: Refinancing of renovation work on Crédit Coopératif's Head Office through non-remunerated cash advances paid to Crédit Coopératif SCI. • Person/entity concerned: Crédit Coopératif SCI (property investment company), 99.9% of which is held by Crédit Coopératif. • Methods and procedures: -- the ongoing work is funded by cash advances from shareholders of Crédit Coopératif SCI (Crédit Coopératif and BTP Banque) until the premises are commissioned (scheduled completion date: 30 June 2012). No remuneration is paid in respect of these advances. -- The advances are restructured as loans by Crédit Coopératif to Crédit Coopératif SCI, on the basis of the final cost upon completion. • Effect: Crédit Coopératif has provided a cash advance of €102,124 to Crédit Coopératif SCI as at 31 December 2012. Social welfare scheme for executive officers • Authorisation date: Board of Directors meeting, 28 June 2011. • Nature and purpose: Allocation of an additional pension scheme to the Chief Executive of Crédit Coopératif, in line with the Group contract arranged by Groupe BPCE for all Banque Populaire Chief Executives. • Person/entity concerned: The Chief Executive of Crédit Coopératif, Mr. François Dorémus. • Effect: Crédit Coopératif is liable for a €420,000 annual contribution to the Groupe BPCE additional pension scheme, it being understood that this is a mutual contribution irrespective of the number of Chief Executives entitled to entry into this scheme at each participating bank. Liquidity agreement between Crédit Coopératif and Banque Edel • Authorisation date: Board of Directors meeting, 13 December 2011. • Nature and purpose: To improve Banque Edel's liquidity ratio by mobilising Banque Edel's receivables, through Crédit Coopératif, which are eligible for ECB refinancing. • Person/entity concerned: Banque Edel, a partner institution of Crédit Coopératif, and the shared director of Crédit Coopératif and Banque Edel (Pierre Valentin). 218 Crédit Coopératif Group I Annual Report 2012 Group financial statements Statutory auditors' reports • Methods and procedures: Banque Edel has no access to ECB refinancing. In order to enable Banque Edel to improve its liquidity ratio by mobilising its eligible receivables, the agreement (totalling €20,000,000, the approximate value of eligible receivables), billed at 0.05% (commitment commission received by Crédit Coopératif) gives Banque Edel the facility to obtain liquidity from Crédit Coopératif in line with the requirements of ECB calls for tender. • Effect: This agreement will, before drawdowns, reduce Crédit Coopératif's liquidity surplus by €20,000,000 and increase the liquidity surplus of Banque Edel by the same amount. Paris La Défense, 20 March 2013 Paris, 20 March 2013 KPMG Audit A division of KPMG S.A. Sofideec Baker Tilly Fabrice Odent Cyrille Baud Partner Partner 219 Draft resolutions Board of Directors meeting of 6 March 2013 Resolutions presented to the General Meeting by the Board of Directors ➔➔Resolution 1 The General Meeting, having considered the management report of the Board of Directors, the report of the Chairman of the Board of Directors and the Auditors' reports, approves the company financial statements for the year ended 31 December 2012, as presented. It approves, without exception or qualification, all transactions during the 2012 financial year and grants discharge to the directors for this financial year. ➔➔Resolution 2 The General Meeting, having considered the report of Management Board and the report of the Auditors, approves the consolidated financial statements of Crédit Coopératif for the year ended 31 December 2012, as presented, and the transactions reflected therein and described in these reports. ➔➔Resolution 3 In accordance with article 9 of the Articles of Association and on the proposal of the Board of Directors, the General Meeting sets a 2.50% interest rate to priority shares without voting rights, known as "C" shares, for the 2012 financial year. This interest will be paid, in cash, on 27 June 2013. In accordance with article 243 b of the General Tax Code, all remuneration paid to individuals is eligible for the 40% allowance set out in article 158-3-2° of the General Tax Code. ➔➔Resolution 4 In accordance with article 9 of the Articles of Association and on the proposal of the Board of Directors, the General Meeting sets a 2.50% interest rate to preferential shares without voting rights, known as "P" shares, for the 2012 financial year. This interest will be payable on 27 June 2013. Holders are offered the option to choose between payment of the interest in P shares or in cash. In accordance with article 243 b of the General Tax Code, all remuneration paid to individuals is eligible for the 40% allowance set out in article 158-3-2° of the General Tax Code. ➔➔Resolution 5 In accordance with article 9 of the Articles of Association and on the proposal of the Board of Directors, the General Meeting sets a 2.50% interest rate to specific-benefit shares, known as "B" shares, for the 2012 financial year. The interest will be payable on 27 June 2013. Holders are offered the option to choose between payment of the interest in B shares or in cash. In accordance with article 243 b of the General Tax Code, all remuneration paid to individuals is eligible for the 40% allowance set out in article 158-3-2° of the General Tax Code. ➔➔Resolution 6 In accordance with article 10bis of the Articles of Association and on the proposal of the Board of Directors, the General Meeting sets a 2.50% interest rate to cooperative certificates of investment, calculated at their nominal value, for the 2012 financial year. This sum will be paid on 27 June 2013. ➔➔Resolution 7 The earnings for the financial year show a net profit of €22,623,114.02 and the balance sheet shows carried-forward profit of €3,167,610.84; therefore in accordance with article 42 of the Articles of Association, the General Meeting resolves to distribute said profit, totalling €25,790,724.86, as follows: • legal reserve, 15% of net profit: €3,393,467.00 • profit carried forward: €3,819,566.46 • remuneration of C shares at the rate of 2.50% on a pro rata basis: €4,968,456.03 • remuneration of P shares at the rate of 2.50% on a pro rata basis: €76,420.40 • remuneration of B shares at the rate of 2.50% on a pro rata basis: €9,002,814.97 • remuneration of cooperative certificates of investment (CCIs) • at 2.50% of their nominal value: €4,030,000.00 • payment of a cooperative rebate to members, to be distributed in proportion to the value of transactions made by each member with the Crédit Coopératif: €500,000.00 Pursuant to article 243 of the General Tax Code, the amount of interest and rebates distributed in the last three financial years are as follows: Financial year A shares B shares C shares CCIs Rebate 2009 0 6,575,445 € 4,321,947 € 2,962,313 € 500,000 € 2010 0 6,979,898 € 4,834,562 € 4,164,825 € 500,000 € 2011 0 7,879,452 € 5,239,954 € 4,164,825 € 750,000 € 220 Crédit Coopératif Group I Annual Report 2012 Draft resolutions Draft resolutions ➔➔Resolution 8 ➔➔Resolution 14 The General Meeting, having heard the special report of the statutory auditors on agreements covered by articles 225-38 and following of the Commercial Code, approves the operations outlined therein. The General Meeting decides, pursuant to article 14 of the Articles of Association, to renew the mandate of the Fédération des enseignes du Commerce Associé (FCA) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 fi- ➔➔Resolution 9 nancial year. The General Meeting notes that equity capital amounted to €806,218,776.25 at 31 December 2012. ➔➔Resolution 15 The General Meeting decides, pursuant to article 14 of the ➔➔Resolution 10 Articles of Association, to renew the mandate of the Confédération générale des SCOP (CG SCOP) as a director, for The General Meeting decides, pursuant to article 14 of the Articles of Association, to appoint the Fédération des Etablissements Hospitaliers & d’Aide à la Personne (FEHAP) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 11 The General Meeting decides, pursuant to article 14 of the Articles of Association, to appoint the Fédération Française du Bâtiment (FFB) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 12 The General Meeting decides, pursuant to article 14 of the Articles of Association, to appoint the Conférence Permanente des Coordinations Associatives (CPCA) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 16 The General Meeting decides, pursuant to article 14 of the Articles of Association, to renew the mandate of the Fédération Nationale de la Mutualité Française (FNMF) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 17 The General Meeting decides, pursuant to article 14 of the Articles of Association, to renew the mandate of the Caisse Mutuelle de Garantie des industries Mécaniques et transformatrices des métaux (CMGM) as a director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 13 ➔➔Resolution 18 The General Meeting decides, pursuant to article 14 of the Articles of Association, to appoint Mrs Christiane Lecocq as a director, representing P share holders, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. The General Meeting decides, pursuant to article 25 of the Articles of Association, to appoint Mr Claude Gruffat, representing P share holders, as a non-voting director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. 221 ➔➔Resolution 19 ➔➔Resolution 21 The General Meeting decides, pursuant to article 25 of the Articles of Association, to appoint the Fédération Unie des Auberges de Jeunesse (FUAJ) as a non-voting director, for a term of six years. This mandate will expire after the General Meeting convened to approve the accounts for the 2018 financial year. The General Meeting decides, in accordance with regulations and pursuant to article 26 of the Articles of Association, and subject to approval by the Autorité de Contrôle Prudentiel, to appoint for a term of six years: ➔➔Resolution 20 The General Meeting decides, in accordance with regulations and pursuant to article 26 of the Articles of Association, and subject to approval by the Autorité de Contrôle Prudentiel: to appoint KPMG AUDIT FS I as statutory auditor (incumbent), for a term of six years to renew the mandate of SOFIDEEC, trading as SOFIDEEC BAKER TILLY, as statutory auditor (incumbent), for a term of six years. These mandates will expire after the General Meeting convened to approve the accounts for the 2018 financial year. • KPMG AUDIT FS II, as statutory auditor (substitute) to KPMG AUDIT FS I, to replace Mr Pascal Brouard • BBM & ASSOCIES, as statutory auditor (substitute) to SOFIDEEC, trading as SOFIDEEC BAKER TILLY, to replace Mr Christian Lairy. These mandates will expire after the General Meeting convened to approve the accounts for the 2018 financial year. ➔➔Resolution 22 The General Meeting gives full powers to the bearer of a copy or extract of the minutes of this meeting to conduct all publication and submission formalities as prescribed by law. 222 Crédit Coopératif Group I Annual Report 2012 Cross-reference table This reference document is consistent with the diagram in appendix XI as defined in EU Regulation no. 809/2004 of 29 April 2004. The latest financial information contained in this document is that of 31 December 2011. Pursuant to article 28 of European Commission Regulation no. 809/2004 of 29 April 2004, the following information is included for reference purposes in this reference document: • the consolidated financial statements for 2011 • extracts from the 2011 company financial statements • reports of the statutory auditors for the year 2011. This information is contained in the 2011 reference document of Crédit Coopératif filed with the AMF on 6 April 2012. The cross-reference table refers to the following items required by European Regulation no. 809/2004 (Appendix XI) under the so-called "Prospectus" Directive Headings within Appendix XI of European Regulation no. 809/2004 1. Persons responsible Reference document page number 223 2. Statutory auditors for the accounts 210 3. Risk factors 29 to 36, 93 to 107, 158 to 160 4. Information relating to the issuer 4.1. History and development of the Company 4 to 10, 70 to 71 4 5. Overview of activities 5.1. Principal activities 5.2. Principal markets 38 to 50 4 to 5, 38 to 42 38 to 44 6. Organisation chart 6.1. Summary description of the Group and the position of the issuer 6.2. List of major subsidiaries 6, 7, 10 115 to 117 7, 71 to 74 7. Information on trends 108 8. Profit forecasts or estimates 222 9. Administrative, management and supervisory bodies 9.1. Information relating to members of administrative and management bodies 9.2. Conflict of interest within administrative, management, supervisory and executive bodies 10. Principal shareholders 10.1. Issuer supervision 10.2. Agreement of which the issuer is aware and which, if implemented, may cause a change in the issuer's supervision 11. Financial information relating to the assets, financial situation and income of the issuer 11.1. Historical financial information 11.2. Financial statements 11.3. Verification of financial information 11.4. Date of latest financial information 11.5. Interim and other financial information 11.6. Legal and arbitration procedures 11.7. Significant change in financial or commercial situation 8 to 10, 16 to 27, 79 to 84 8 to 10, 16 to 27, 79 to 84 18 154 to 157 not applicable not applicable 86 to 93 109 to 209 209 to 218 222 11 to 13 222 222 12. Major contracts 216 13. Third party information, expert declarations and declarations of interest 223 14. Documents available to the public ➔➔Forecasts or estimates The 2012 reference document does not contain forecasts or estimates within the meaning of European Regulation no. 809/2004 of 29 April 2004. ➔➔Legal proceedings and arbitration For the last 12 months, there are no governmental or legal proceedings or arbitration outstanding or that could threaten the Bank, and which could have a significant impact on the financial situation or profitability of the issuer and/or the Group. 2 ; 71 ➔➔Significant change in the issuer's financial situation There has been no significant change in the Group's financial situation since the end of the last financial year for which financial statements have been published. ➔➔Major contracts Crédit Coopératif has not entered into any major contracts other than contracts entered into in the ordinary course of business. ➔➔Third party information, expert statements and declarations of interest Not applicable 223 Statement by the individual responsible for the reference document I hereby declare, after taking all reasonable steps required, that the information contained in this reference document is, to my knowledge, truthful and contains no omission likely to affect its scope. I certify that I am aware that the accounts are prepared in accordance with applicable accounting standards and give a fair presentation of the assets, liabilities, financial position and results of the company and the entities included in its scope of consolidation, and that the management report presents an accurate picture of developments, performance and the financial situation of the company and the entities included in the scope of consolidation and a description of the principal risks and uncertainties to which they are exposed. I have obtained, from the statutory auditors, an audit completion letter in which they confirm that they have checked the information relating to the financial situation and the accounts given in this reference document and that they have read the document in full. 25 March 2013, Nanterre, François Dorémus Chief Executive 224 Crédit Coopératif Group I Annual Report 2012 Branch contact details To contact a Crédit Coopératif branch: > Individual customers: Tel: 0 980 98 00 00 (+33 171 087 512 from abroad) >M onCréditCoopératif.coop, Crédit Coopératif's e-branch for individuals: Tel: 0 980 98 00 02* (+33 1 71 08 75 76 from abroad) >C ompanies, associations, mutual entities, other corporate entities, etc.: Tel: 0 980 98 00 01 (+33 171 087 511 from abroad) Branch opening hours can be found at: www.credit-cooperatif.coop under ‘’Nos agences’’ (Our branches) Region Alsace Aquitaine Auvergne Basse-Normandie Burgundy Brittany Centre Champagne-Ardenne Franche-Comté Haute-Normandie Ile-de-France Languedoc-Roussillon Limousin Lorraine Midi-Pyrénées Nord Pas-de-Calais Pays-de-la-loire Picardy Poitou-Charentes Provence-Alpes/ Côte-d'Azur/Corsica Rhône-Alpes Point of sale Strasbourg Agen Bayonne Bordeaux Meriadeck Bordeaux Merignac Bordeaux Quinconces Dax Pau Sarlat-la-Caneda Chamalieres Le Puy-en-Velay Caen Dijon Lorient Quimper Rennes Orleans Tours Reims Besancon Le Havre Rouen Paris Odeon Bobigny Cergy Creteil Evry Massy Melun Nanterre La Defense Paris Alesia Paris Convention Paris Courcelles Paris Gare De L'est Paris Nation Paris Opera Paris Pommier Saint Denis Versailles Carcassonne Montpellier Nimes Brive La Gaillarde Limoges Metz Nancy Toulouse Arras Dunkirk Lille Centre Lille Europe Angers Le Mans Nantes Amiens La Rochelle Niort Poitiers Aix En Provence Avignon Marseille Prado Nice Toulon Annecy Grenoble Grenoble Mistral Lyon Part Dieu Lyon Lyautey Lyon Saxe Saint Etienne Valence Address 1 1 quai Kléber 14 place Jean-Baptiste Durand 36 allées Marines Immeuble le Prisme - rue Marguerite Crauste Parc Cadera Nord – 77 avenue John-Fitzgerald Kennedy 3 place des Quinconces 28 cours du Maréchal-Joffre 24 rue Ronsard 58 rue de la République Centre Beaulieu III, 33 boulevard Berthelot 2 avenue André Soulier 10 place du Maréchal Foch 1 avenue Kellermann 10 boulevard Svob 6 rue de Falkirk 3 rue de l’Alma 69 boulevard Alexandre Martin 4 rue des Tanneurs 5 rue Gaston Boyer – Buropole 5 7 avenue des Montboucons 6 Cours Du Commandant Fratacci - Immeuble le Colbert 22 rue Alsace-Lorraine 122 boulevard Saint-Germain 1 rue Carnot 2 Mail des Cerclades 38-42 avenue Pierre Brossolette Parc Elysée - 17-19 rue Michel-Ange 2 place du Vieux Clocher 11 rue de la Brasserie Grüber 96 rue des Trois Fontanot 99 rue de la Tombe Issoire 147 rue de la Convention 80 rue de Courcelles 102 boulevard de Magenta 252 boulevard Voltaire 4 rue Auber 86 rue de Courcelles 4 rue Auguste Gillot 5 & 7 rue du Maréchal Foch 8 place Davilla 8 boulevard Victor Hugo 49 avenue Jean Jaurès 16 rue de l'Hôtel de ville 7 cours Jourdan 35bis avenue Foch 81 rue Saint-Georges 4 & 6 rue Raymond IV 5 boulevard de Strasbourg 3-5 rue du Président Wilson 16bis rue de Tenremonde Euralliance – 2 avenue Kaarst 21 boulevard Carnot 25 avenue François Mitterand 42 boulevard Guist'hau 5 place Léon Debouverie 27 quai Valin 7 place de la Comédie 4 rue du Chaudron d'Or Immeuble Hemilythe - 150 avenue Georges Pompidou 1 rue Saint-Jean le Vieux 214-216 avenue du Prado 5 rue Cronstadt 6 rue Adolphe Guiol 3 Place Marie Curie 29 avenue Félix Viallet 3 boulevard des Diables Bleus 103 avenue du Maréchal de Saxe 16 quai de Serbie 103 avenue du Maréchal de Saxe 12bis avenue de la Libération 15 boulevard Bancel * calls charges at national rate from landline or mobile networks E-mail [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] convention@creditcooperatif,coop [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Dunkirk Lille Arras Amiens Le Havre Rouen Reims Caen Metz Brest Nancy Quimper Lorient Rennes Le Mans Orléans Angers Nantes Strasbourg Tours Dijon Besançon Châlon-sur-Saône Poitiers Niort La Rochelle Lyon Clermont-Ferrand Limoges Brive-la-Gaillarde Saint-Étienne Le Puy Bordeaux Annecy L'isle d'Abeau Grenoble Valence Sarlat-la-Canéda Agen Dax Toulouse Bayonne Pau Updated on 25 March 2013 Boundary of Crédit Coopératif General Offices l Head offices of General Offices l Crédit Coopératif branches Crédit Coopératif offices l Major Accounts branch Crédit Coopératif Group Head Office Nîmes Avignon Aix-en-Provence Montpellier Marseille Toulon Carcassonne Paris Ile-de-France Cergy-Pontoise Nanterre Paris Versailles Saint-Denis Bobigny Créteil Massy Melun Évry Nice www.credit-cooperatif.coop Find us on Facebook and Twitter HDF 04/2013 – General Secretariat – Crédit Coopératif, variable-capital popular bank cooperative limited company – 349 974 931 RCS Nanterre – 12 Boulevard Pesaro CS 10002 - 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