20140519_General Meeting_ENG_Vdef2

Transcription

General Meeting of Shareholders
May 14th, 2014
Disclaimer
This presentation and the information contained therein are provided for informational purposes only. No
representation or warranty is made as to the adequacy, accuracy, reliability or completeness of such
information.
This presentation does not constitute - and shall not be interpreted as constituting - a public offer of securities
issued by Dexia or by any other entity of Dexia group.
Certain figures in this presentation have not been audited. In addition, this presentation contains projections
and financial estimates which are based on hypotheses, objectives and expectations linked to future events
and performances. No guarantee can be given as to the realization of these forecasts which are subject to
uncertainties relating to Dexia, its subsidiaries and their assets (such as, inter alia, changes within the
industry and in the general economic climate, the development of the financial markets, changes in the
policies of central banks and/or governments, or of regulations at global, regional or national level). The actual
results could significantly differ from the projected results. Unless required by law, Dexia shall not be obliged
to publish any modifications or updates of these forecasts.
The information included in this presentation, insofar as it relates to parties other than Dexia, or is extracted
from external sources, has not been subject to independent verification.
Neither Dexia, nor any of its affiliated companies, or their representatives can be held liable for any
negligence or any damages which may result from the use of this presentation or anything related to this
presentation.
2
Shareholders’ Meeting
Agenda
I. Evolution of the Dexia Group against the background of a still tepid
economic recovery
II. Implementation of the orderly resolution plan
III. Annual results 2013 and Q1 2014
IV. Activity of the board of directors and dedicated committees
V. Compensation policy 2013
VI. Company project: what future profile for the Group?
3
Shareholders’ Meeting
Agenda
I. Evolution of the Dexia Group against the background of a still
tepid economic recovery
4
Evolution of the Dexia Group in 2013
Finalisation of all the entity sales as per the orderly resolution plan
"DSA"
Dexia
Belgium
"BIL"
"DAM"
Dexia Banque
Internationale à
Luxembourg
Dexia Asset
Management
Luxembourg
Luxembourg
Luxembourg
"DBB"
Dexia Banque
Belgique
Belgium
DenizBank
Turkey
"DTS"
Associated Dexia
Technology Services
Luxembourg
Dexia Asset
Management
Belgium
Belgium
Dexia Asset
Management
France
France
Ausbil Dexia
Limited
Australia
Other entities
- Parfipar
- Dexia
Participation
Belgique
- Dexia
Participation
Luxembourg
100%
100% except * 40%
Other entities
- Dexia
Nederland
(Netherlands)
- Dexiarail
(France)
- DCL
Investissements
(France)
- Popular Banca
Privada*
(Spain)
"DCL"
Dexia Crédit Local
France
Sofaxis
France
"DKB"
Dexia
Kommunalkredit
Bank
Austria
"DMA"
Dexia Municipal
Agency
France
Branches
- Switzerland
- Netherlands
- Italy
- Spain
- UK
- German
Rep. offices
- Middle East
Bahrain)
- MENA
(Dubai)
Entities closed or sold
French
subsidiaries
- Dexia CLF
Banque
- Public
Location
Longue Durée
- Dexia Bail
- Exterimmo
- Domiserve
- Dexia Flobail
US subsidiaries
(resolution TBC)
- Dexia Real
Estate Capital
Markets
- Artesia
Mortgage
CMBS
- Dexia CAD
Funding LLC
- Dexia
Delaware
100%
"DKD"
79%
"Sabadell"
DCL, Dublin
branch
Dexia
Kommunalbank
Deutschland
Dexia Sabadell &
Portuguese branch
Germany
Spain
Ireland
"DMS"
DCL, New York
branch
70%
"Crediop"
Dexia Crediop
& Dexia Crediop
Ireland
100%
Dexia Management
Services
Italy
65%
UK
US
100%
Dexia Israel
Bank Ltd
Israel
100%
Dexia Holdings
US
100%
US Branches
- Dexia FP
Holdings
- Dexia Financial
Products
Services
FSA Asset
Management
- FSA Capital
Management
Services
Other internal
subsidiaries.
-Dexia Credito
Local Mexico
(Mexico)
- Dexia LdG
Banque (Lux)
100%
SPV
- Sumitomo
Mitsui SPV
- Wise 2006 – 1
PLC
100%
French subs.
- Dexia CLF
Régions-Bail
- CLF
Immobilier
5
Finalisation of all the entity sales as per the orderly resolution plan
Finalisation of the
entity sales as per
the orderly
resolution plan
A rather unfavourable context for asset sellers
Entity sales to be handled simultaneously
–
6 in 2012
–
8 in 2013
Early 2014: finalisation of the sales as requested by the
European Commission
Dexia has gone beyond the initial plan by selling ADTS,
Domiserve and Exterimmo
6
Landing on the target perimeter of the wind down management
Balance sheet reduction of
EUR 134 billion in 2013
Portfolio 85% ‘investment grade’
(EUR 174 billion, MCRE*, end of 2013)
A 28%
AA 22%
AAA 14%
End 2012
BBB 21%
NIG (Non Investment
Grade) 12%
D & unrated 2%
End 2013
Our task
To manage our balance sheet wind down so as to protect the interests of the shareholders and
guarantors, the States
* The maximum credit risk exposure (MCRE) as at 31 December 2013 represents the net book value of the exposure, this being the nominal amount after deduction of specific
impairments and the amount of available reserves, taking account of accrued interest and the impact of booking the hedge at fair value.
7
On the assets’ side: a “frozen” residual portfolio, wind down over a period
matching the maturity of the assets
No sale possible
within the portfolio
Limited revenue
generation
Margins relatively low on assets in the portfolio
Only one way: to manage the assets through maturity
Very sharp reduction of production
Assets hedged against interest rate risk amongst others
Under current market conditions, any asset sale would
generate losses
No possibilities to offset any increase in funding cost or other
shock which might, for instance, adversely affect the cost of
risk
8
Macro-economic situation 2013
Growth has strengthened
Sources : FMI
9
Sovereign debt crisis averted
Sovereign risk premiums (CDS 5 yearns, basis points)
Economic turnaround for sovereigns, ratings up
10
On the liabilities’ side: favourable context for Dexia to return to the markets
Improvement of the funding structure
Implementation of the guaranteed funding programme
Funding more diversified and longer term
Development of access to the repo market
Reduction of central bank funding
11
Shareholders' Meeting
Agenda
economic recovery
V. Compensation policy
12
Implementation of the orderly resolution plan
A very long resolution period, combined with limited flexiblity on assets
Balance sheet as at 31 December 2013
223
Projection to 2020
223
(EUR billion)
46
54
Autres
Other passifs
liabilities
27
34
Eurosystème
Eurosystem
56
Government guaranteed
Financements
garantis par
les
États
funding
Autres
Other actifs
assets
Cash
Cashcollatéral
collateral
Prêts
et and
obligations
Loans
bonds
Non-guaranteed
securednon
Financements
sécurisés
garantis
funding
150
54
Dépôts
et financements
non
Deposits
and non-guaranteed
sécurisés
non
garantis
unsecured
funding
26
Actif
Assets
Passif
Liabilities
Limited flexibility on assets, inherited from Dexia’s former activities
−
Natural amortisation of assets of EUR 10 billion per annum over the period 2013-2020
−
Margin of 40 bp, with interest rate risk hedged by derivatives
−
No accelerated deleveraging but targeted disposals of assets
−
Amount of cash collateral dependent on the level of interest rates, a factor beyond the Group’s
control
Dynamic funding strategy, aiming to reduce the weight of Dexia on State guarantors
13
Significant evolution of the funding structure until 2017
(EUR billion)
Different funding sources reaching
maturity in 2014 and 2015, resulting in
a sharp decrease in guaranteed
amounts to EUR 45 billion at the
beginning of 2015
169
25
9
55
-
Guaranteed debt placed with Belfius
to be repaid in 2014
-
Significant amounts of guaranteed
debt reaching maturity
~94
54
Priority repayment of central bank
funding
26
Guaranteed oustanding in the range
EUR 45 billion to EUR 50 billion in the
coming years
ELA
Eurosystem
Own use
Government guaranteed funding
Non-guaranteed secured funding
Deposits and non-guaranteed unsecured funding
14
Expected return to break-even in 2020
(EUR million)
Reduction of funding cost enabled by
gradual replacement of costly funding
sources
Portfolio margins covering cost of
funding from 2014
Limited cost of risk in absence of default
of a major counterpart; concentration
risk of the portfolio
Potential significant negative impact in
relation to volatility of market parameters
(not corresponding to any cash loss, by
increasing the volatility of quarterly
results)
Return to break-even expected in 2020
-1 083
Cost of risk and other items
Operational expenses
Net banking income (margin on assets – cost of funding)
Net result group share
15
Preserving the interests of the State guarantors over the long term
Application of the Basel III regulatory
framework (CRD IV directive) in 2014,
resulting in a fall of solvency ratios
Progressive deduction of 20% per annum of
non-sovereign AFS reserve
From 2018, non-recognition of preference
shares in Tier 1 Common Equity
Mechanism for conversion of those shares
into Tier 1 Core Capital guaranteeing
compliance with regulatory requirements;
based on current financial projections,
compliance with regulatory minima without
making use of the conversion mechanism
22,4 %
21,4 %
16,5 %
16,2 %
8,0 %
Common Equity Tier 1 (excluding preference shares)
Preference shares (EUR 5.5 bn)
Total Capital Ratio
Common Equity Tier 1 Ratio
Total Capital Ratio (Basel III pro forma)
Total Com Equity Tier 1 Ratio (Basel III pro forma)
Solvency primarily impacted by the evolution of the regulatory framework and the
level of AFS reserve; limited impact of financial results on the resolution period
16
Group sensitivity to several external factors
Financial projections sensitive to an evolution of external factors or the non-realisation of assumptions
Impact
Sensitivity elements
Higher
Interest rates lower than assumed
Capacity to absorb guaranteed or secured
funding issued by the Group
level of cash collateral, resulting in additional
funding needs; impact on result
Recourse to other more costly funding sources
(including ELA); impact on result
Increase of AFS reserve linked to the widening of credit
spreads, impacting Group solvency
Impact on cost of risk
Deterioration of the credit environment
17
Agenda
economic recovery
VI. Company project: what futute profile for the Group?
18
Annual results 2013 and Q1 2014
Annual results 2013 – income statement
Net result Group share
EUR -1,083 million
Recurring elements
EUR -669 million
Accounting volatility elements
EUR -393 million
Non-recurring elements
EUR -21 million
Income slightly higher than assumed in the orderly resolution plan, despite the
impact of accounting volatility elements; significant decrease in funding cost
19
Annual results 2013 – income statement
Recurring elements
Considerable decrease of funding cost over the year
Cost of risk up in Q4 in view of the provisions on Detroit and
Porto Rico but remaining limited to 9 bp over the year
Significant weighting of accounting volatility elements
(EUR million)
Implementation of IFRS 13 and change of method for
valuing collateralised derivatives: impact of EUR -393
million in 2013
Impact not corresponding to a cash loss and gradually
offset over the life of the underlying assets
-3
-12
Q2 2013
Q3 2013
-5
-68
Q1 2013
Q4 2013
Income from portfolios
Other income
Funding cost
Net banking income
Impact of EUR -21 billion in 2013 associated with entity disposals as well as a general provision for
litigations
20
Annual results 2013 – balance sheet and solvency
Balance sheet total at EUR 223 billion at the end of 2013, down EUR -134 billion over the year
Decrease of EUR 84 billion associated with the sale of Société de Financement Local (SFIL) in
January 2013
Natural asset amortisation, combined with targeted disposals, of almost EUR 20 billion
Favourable interest rate evolution, resulting in a reduction of cash collateral by EUR 10 billion
(EUR billion)
Disposal
of entities
Balance sheet as
at 31/12/2012
Asset
amortisation
and disposals
Decrease in
cash
collateral
Change and
interest
rates effects
Balance sheet as
at 31/12/2013
Strengthening of solvency over the year
Decrease of weighted risks by EUR -8 billion in 2013, principally due to the sale of SFIL
Increase of solvency ratios, despite the loss posted over the year: CAD ratio at 22.4% and Tier
1 ratio at 21.4% at the end of 2013 (Basel II)
21
Q1 results 2014 – income statement
Net result Group share
EUR -184 million
Recurring elements
EUR -88 million
Accounting volatility elements
EUR -148 million
EUR 53 million
Improved result from recurring activities
Net “recurring” income for Q1 at EUR -88 million, up EUR 72 million on the previous quarter
Reduction of funding cost by EUR 38 million
Improved cost of risk for Q1 at EUR -22 million
Significant
impact of accounting volatility elements
21,2% 21,4%
EUR -148 million associated with accounting volatility elements, including in particular EUR -175
million on the valuation of collateralised derivatives (unfavourable evolution of credit spreads)
Non-recurring quarterly result at EUR 53 million including gains on disposals (EUR 90 million) and a
general provision for litigations (EUR -34 million)
22
Q1 results 2014 – balance sheet and solvency
Balance sheet up EUR 13.8 billion, at EUR 237 billion
Building up of a positive liquidity position, anticipating significant funding maturities over coming
quarters, leading to an increase of central bank deposits by EUR 10.9 billion
Balance sheet variation of EUR +6.5 billion with the effect of exchange and interest rate variations
Amortisation of EUR -2.6 billion in assets and reduction of the Group’s scope by EUR -0.5 billion
resulting from entity disposals
Impact of implementation of the Basel III regulatory framework on solvency ratios
Impact of application of Basel III
regulatory framework
First application of the Basel III regulatory framework on
1 January 2014
Within that framework, EUR 9 billion increase of
weighted risks and partial deduction of the AFS reserve
from regulatory capital
Considering these elements, solvency ratios under Basel
III at 16.9% (Total Capital) and 16.2% (Tier 1 Common
Equity)
21.2% 22.4%
16.2% 16.9%
16.3% 16.8%
Basel II
Basel III (pro forma*)
Common Equity Tier 1
Ratio
*based on RWA as at 31/03/2014
Basel III
Total Capital Ratio
23
Agenda
economic recovery
24
Activity of the board of directors and the specialised
committees
Number of meetings
Board of Directors
Topics regularly dealt with by the
2009 2010 2011 2012 2013 board of directors and the specialised
committees
11
11
20
25
13
■ the guaranteed issues agreement
■ the revised orderly resolution plan
Audit Committee
9
8
12
11
5
Strategic
Committee
1
2
8
3
1
Appointments and
Compensation
Committee
7
TOTAL Dexia SA
28
and undertakings vis-à-vis the
European Commission
■ the Group’s liquidity situation
■ evolution of Group’s governance
5
9
7
5
■ the sale of operational entities
■ the company project
26
49
46
24
25
Agenda
economic recovery
26
Compensation policy 2013
■ Strict observance of legislative developments regarding compensation at a national,
European and international level
■ Application of compensation principles established within the framework of the
European Directive CRD IV
■ Application of the CEBS guidelines implemented in Belgium by the CBFA Circular
and the Law of 7 February 2011
■ Respect of the behavioural undertakings made by the French and Belgian States to
the European Commission, within the context of its orderly resolution plan
27
Compensation policy 2013
■ Simplification of the governance of Dexia SA and Dexia Crédit Local since 2012
- The composition of the Board of directors and the Management Board of Dexia SA and
Dexia Crédit Local has been unified as much as possible
- The number of Management Board members participating in the Dexia SA and Dexia Crédit
Local committees down from 20 to 3
- Cost savings of 51% between 2012 and 2014 for the management
- The compensation of newly appointed executives is 20% to 35% lower than their
predecessors.
■ Members of the Management Board, the Executive Committee and the Group
Committee are not entitled to variable remuneration.
■ Measures related to the leaving indemnities for Management Board members
aligned with the new Belgian Banking Law
■ Workers’ Council met 25 times in 2013.
28
Agenda
economic recovery
29
Company project: what future profile for the Group?
Three strategic objectives
After reaching the target perimeter, need to redefine the Group’s mandate and structure
Definition of a general mandate and three strategic objectives
Reflection on the Group’s tasks undertaken within the framework of the enterprise project
launched in 2013
Managing down Dexia Group’s balance sheet in run-off, while preserving the interests of its
guarantors and shareholders
Funding capacity
Operational continuity
Solvency level
Dexia will maintain its funding
capacity over the term of its
resolution
Dexia will seek to avoid any
operational interruption in
implementing its resolution
plan
Dexia will preserve its capital
in order to comply with
regulatory and legal minimum
solvency levels
30
Reshaping the operational model
Definition of a more centralised operational model offering the flexibility required to adapt to the
decrease of the resolution scope
Current situation
Target model
Structure
8 main establishments
2 main establishments
IT systems
Low mutualisation of IT
systems
Strong system integration
Operations
Operations often
decentralised, autonomy of
local entities
Centralisation of operations
Control activities
Decentralised control
Strong centralisation of risk
and finance functions
31
Towards simplification of the Group structure
Reorganisation of the Group structure, enabling introduction of the defined target model
Simplification and reorganisation of the structure
-
Creation of an “Assets” activity line, responsible for asset management, and a “Funding and
Markets” line responsible for optimising Group funding and monitoring the derivatives
portfolio
-
Creation of a “Product Control” department within Finance activity line
Realignment of the Risks activity line to its essential control functions
“Assets”
“Funding and Markets”
Management and valuation
of Group assets
Optimisation of Group
funding
Monitoring client relations
Regrouping teams initially
dispersed among different
activity lines
Execution of market
operations
Management of the
derivatives portfolio
Simplification of Group governance
Creation of a “Transformation” team, dedicated to monitoring the enterprise project
32
Implementation commenced from 2014
Announcement in early 2014 of the new structure, in respect of social rules and
obligations
Identification of key projects in connection with the new strategic goals defined for the
Group and launch of works such as:
–
Reshaping IT systems with the aim of operational continuity of applications and
infrastructure and improvement of the data architecture
–
Establishment of a platform for the execution of Repo transactions
–
Definition and presentation of a new human resources offer in order to train, attract and
retain the talents necessary for managing the Group’s resolution
33
Agenda
economic recovery
IV. Activity of the board of directors and the specialist committees
34
Appendices
35
Update of the revised business plan
Adjustment of external parameters in December 2013
Taking account of the economic and financial parameters as known at the end of 2013
Adjustment of hypotheses on the basis of developments foreseeable on that date
Elements updated
Economic and
financial
environment
Main impacts
Adjustment of interest rate levels (higher than
initially expected)
Favourable impact on the level of cash
collateral
Update of credit margins as at 31 December
2013
Reduction of the AFS reserve
Update of counterpart ratings as at 31
December 2013 and longer convergence
towards historic averages
Reduction of the cost of the guaranteed
debt over time
Increase of the cost of risk and
weighted risks
Hypothesis of gradual convergence of credit
margins on sovereigns towards their pre-crisis
level in 2018
Taking account of national discretions in
relation to the application of CRD IV known as
at 31 December 2013 (reviewed since that
date)
Negative impact on the regulatory
capital of Dexia Crédit Local,
associated with deduction of the AFS
reserve
Impact of IFRS 9 as from 2018
Disappearance of the AFS reserve from
2018
Regulatory
environment
36
Update of the revised business plan
Taking account of the Group situation at the end of 2013
Adjustment of the funding hypotheses on the basis of what has happened, and market
momentum at the end of 2013
Taking account of the expected effects of the enterprise project commenced in 2013
Elements updated
Funding
Operating costs
Funding capacity greater than
requirements from 2017
Reduction of liquidity risk associated with
the extension of funding sources
Reduction of costs in connection with
implementation of the enterprise project
from 2014
Main impacts
Establishment of a liquidity
buffer culminating in 2022
Reduction of costs slower than
initially planned until 2016, and
then acceleration
37
General Meeting of Shareholders
May 14th, 2014

20140519_General Meeting_ENG_Vdef2

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