PDF - 3.50 MB

Transcription

PDF - 3.50 MB

BANQUE POPULAIRE GROUP
2004 annual report
Published by Banque Fédérale des Banques Populaires/Département Communication fédérale - Direction Communication financière Groupe Design-production avant•garde - Tel: +33 (0) 1 45 74 61 61 Printing Comelli Photo credits M. Labelle/BFBP
- F. Delauney/BFBP - L. Le Fur/BFBP - A. Dovifat/BFBP - F.Vallon/Natexis Banques Populaires -Y. Zedda/BFBP - Bananastock - Brand x pictures - Digitalvision - Getty Images - GraphicObsession - Image Bank - Imageshop - Photodisc - Photonica - Stockbyte - Stone
- Stone + - Taxi - Zefa
Cooperation
and enterprise
2004 annual report
Profile
Interview with Philippe Dupont
2004 key figures
n
Corporate governance
– The Board of Directors of Banque
Fédérale des Banques Populaires
– Chairman’s report on the conditions
in which the work of the Board of
Directors is prepared and organized
– Corporate Governance rules
for the Banque Populaire banks
– Statutory Auditors
– Internal financing mechanisms
1
2
4
n
Group structure
– Introduction
– Simplified financial organization chart
– The Group’s history
– Key events in 2004
– Member-stakeholders
– Banque Populaire banks
– Banque Fédérale des Banques
Populaires
– Natexis Banques Populaires
– The Group’s international offices
6
6
22
24
25
26
27
28
30
40
44
48
10
16
20
21
Contacts
Banque Populaire Group
Le Ponant de Paris
5, rue Leblanc, 75511 Paris Cedex 15
Tel: +33 (0) 1 40 39 60 00 – Fax: +33 (0) 1 40 39 60 01
Group Financial Communications
Pierre Jacob
Investor Relations
Cécilia Matissart
Press Relations
Véronique Davet-Fournier
Banque Fédérale des Banques
Populaires Communications
Maryvonne Monique Pollet
Fanny Kerecki
www.banquepopulaire.fr
n
n
n
Group business review
50
– Personal banking clients
– Small business clients
– Corporate clients
– Institutional clients
– Banks and financial institutions
52
56
60
66
68
2004 Financial information
84
– Management report
– Financial information
85
107
Chairman’s report on internal
control procedures
– General organization
– Risk monitoring and control
procedures
– Internal control procedures
covering financial and accounting
information
174
175
177
181
n
Sustainable development
– Banque Populaire Group’s
commitment
– Human resources
– Environment and social responsability
– Patronage
– Sponsoring
n
Additional information
– Person responsible for the AMF
shelf-registration document
– Statement by the person responsible
for the AMF shelf-registration document
– Financial communications
– Dependence
– Exceptional events, claims and litigation
– Statement by the Statutory Auditors
on the AMF shelf-registration document
– Autorité des marchés financiers (AMF)
checklist
70
72
75
80
82
83
Annual reports for Banque Populaire Group, Banque Fédérale des Banques
Populaires and Natexis Banques Populaires can be downloaded under the
heading: “LE GROUPE”
185
186
186
186
186
186
187
188
Printed by Comelli on printers carrying the Imprim’vert sustainable development label.
Printed on paper produced in a ISO 9001 and ISO 14001 certified paper mill using vegetable inks with high biodegradability properties.
Profile
The Banque Populaire Group provides banking, financial and insurance services to a
broad client base of individuals, craftsmen, shopkeepers, farmers, businesses and
banking and financial services groups. It is set apart from other banking groups by its
unique structure, its origins in the cooperative movement and a corporate governance
structure that reflects its values. These three features have helped drive business
development based on strong organic growth, targeted acquisitions and long-term
partnerships.
A three-dimensional organization
n The 20 Banque Populaire regional banks,
CASDEN Banque Populaire and Crédit Coopératif
The Banque Populaire banks are cooperative organizations.
They are the Group’s parent companies and shareholders
of Banque Fédérale des Banques Populaires. They are
autonomous banks, providing their customers with a local
service and the full range of banking and insurance
products and services.
é COOPERATIVE DIMENSION
n
Banque Fédérale des Banques Populaires
As the Banque Populaire Group’s central body and the
holding company of Natexis Banques Populaires, Banque
Fédérale des Banques Populaires is responsible for
overseeing, coordinating and leading all Group activities.
é FEDERAL DIMENSION
n
A corporate governance structure
that reflects the Group’s values
The Banque Populaire banks are the Group’s parent
companies.Their Directors are responsible for control and
supervision and setting the overall direction of their bank
in accordance with the national strategy.
Corporate governance in the Banque Populaire Group is
based on cooperative principles.The Board of Directors of
Banque Fédérale des Banques Populaires is the Group’s
governing body, and its decisions are applied throughout
the Group and its various entities.
The Chairman represents the Group nationally and
internationally and ensures the Group’s cohesion and
identity.
This governance structure benefits from an ever more
involved stakeholder base. It is a key contributor to the
success of the Banque Populaire Group and each of its
member banks. It helps reinforce the founding values of the
Group of proximity, long-term relationships and strong
regional links.
Natexis Banques Populaires
Listed on the Paris Eurolist, Natexis Banques Populaires is
the Group’s financing, investment banking and services
bank. The 2002 acquisition of Coface has expanded the
bank’s service offering for corporate clients, as well as
extending its international reach.
é LISTED COMPANY DIMENSION
Cooperative and regional roots
The Banque Populaire Group operates in the cooperative
banking sector, which in Europe represents more than
100 million members and clients.The cooperative status of
each Banque Populaire puts it in a unique relationship with
its clients that is ideally suited to modern banking service
needs.The 2,770,000 member-stakeholders guarantee the
independence of their banks and provide the capital
needed for their growth.
The Group’s presence throughout France is provided both
by the 20 Banque Populaire regional banks and by branches
of other Group entities. The Directors of the Banque
Populaire banks play an active part in the economic and
community life of their regions, helping to improve
understanding of the local economic fabric and the men
and women who are playing a key role in its development.
A strategy of winning new business
and forming new alliances
The Banque Populaire Group has a strong presence
throughout France and plans to become a major player in
the European bancassurance sector. This goal will be
attained by winning new clients in each of its markets and
by developing effective partnerships.
The Group has regularly increased its presence in the
personal customer segment, where its penetration rate is
now over 8%.
With one in three SMEs being clients of the Group, and a
penetration rate of over 80% amongst major companies,
the Banque Populaire Group has a leading position
amongst business clients both small and large. The 2002
acquisition of Coface, now a wholly-owned subsidiary of
Natexis Banques Populaires, has further strengthened this
position.
Similarly, Crédit Coopératif in the social economy sector
and Crédit Maritime Mutuel in the fishing industry and
coastal economies joined the Group in 2003, helping
strengthen its position in markets where it was keen to
expand.
1
Interview with
Philippe Dupont
Chairman of the Banque Populaire Group
2
In 2004, the Banque Populaire
Group saw another sharp rise
in earnings. To what would
you attribute the quality and
regularity of the Group’s
performance?
The financial year we are reporting
on here did indeed bring another
strong improvement in our financial
performance. Net banking income
rose 8% to €7.6 billion, and gross
operating income was 12% higher
at €2.5 billion. Our earnings
capacity, which measures profits
after tax generated during
the year, was at a new record high,
rising 15% to €1.2 billion.
I would stress at this point that
these figures came against an
economic background which,
whilst improving, was far from
satisfactory.
To my mind, there are three
main factors behind our success.
First, the commitment and
involvement of all our staff
in all parts of the Group, and in
particular those who, day in,
day out, are responsible directly
for ensuring the satisfaction
of our many customers. Next,
the balance of our business
portfolio also makes a vital
contribution. Lastly, the continuity
of our strategy and its embodiment
of the fundamental values
which shape our business have
also been a key to our success.
I would not want the fact that
we have managed to generate
growth year after year to lead us
to take success for granted.
These figures represent the fruits
of the work of our 44,000 staff
in France and abroad in a
challenging environment.They
also represent the consequences
of many decisions taken, at
all levels and in all areas by our
managers. Collectively we
can be proud of what we have
achieved, and we can be confident
in the quality of our fundamentals.
But at the same time we must
remain vigilant in a fast-moving
world, question our ways of doing
business when necessary and
be prepared to adopt new ways of
thinking. In short, we can’t afford
to rest on our laurels, and must
ensure that we remain responsive
and flexible.
Looking back at 2004, what
points really stand out for you?
I would answer that in very
broad terms. For me what most
stood out during 2004 was the
ability of the Banque Populaire
Group once again to combine
very strong financial performance
with a continued concern for
the common good in all its forms.
I would like to illustrate this point
through three examples, each
of which touches on an important
economic and social theme,
namely employment, new business
creation and exports.
Group recruited 3,000 staff.
Setting aside natural turnover,
we created nearly 700 net
new jobs.This takes the total
new jobs we have created over
the past five years to nearly
6,000, making the Group one of
France’s major job creators
in the private sector. Many of
our new recruits are young
people, and the age profile of our
staff is well balanced. One in
three of our employees is under
35.The second key area is in
new business creation and support
for SMEs. In 2004 our Group
was once again the leading issuer
of business start-up loans; we
were the leading venture capital
investor in SMEs and the leading
bank in the area of micro-loans.
These performances, coupled
with the very strong positions
we have built amongst small
and medium-sized businesses,
make us a leading player in the
strengthening and renewal of our
economic fabric and in regional
employment. Here too, in helping
create new businesses, we are
helping create the new jobs of
tomorrow.
Turning to the question of exports,
we can see the crucial role these
now play in modern economies.
In this field too we have leading
positions. From the export support
services offered by Natexis Pramex
International to the complex credit
guarantee structures created by
Coface, we can offer exporters
the widest range of services
available on the market. No other
banking group can offer such
powerful and varied services
in this field. By boosting exports
we serve not only our clients,
but also the common good.
Our Group’s ability and desire
to combine strong financial
performances with social benefits
is a source of collective pride.
It is the fruit of our long history,
our shared culture, beliefs and
values. And it is also one of
our key strengths for the future.
How do you see the future
of the Group in 2005?
We are going into 2005 in
a frame of mind that combines
considerable confidence in
the future with an awareness
of the need to remain vigilant.
Confidence based on our
financial performances, our
growth model and our financial
ratios, but also on our
fundamental business culture.
But vigilance too. Our business
environment changes quickly:
new customer expectations,
new requirements, changing
technologies, the shifting balances
between economic actors or
changes in the regulatory
framework in its broadest sense.
As in the past, we know that
to adapt to and thrive on these
changes we will need to anticipate
and innovate.We also know
that we can not rely too much
on an economic climate which,
in the euro zone at least, remains
uncertain.
The Banque Populaire Group
will pursue its policy of profitable
growth throughout 2005.
The main source of growth will
be organic growth, which we
always hope will be strong.We
still have scope to expand in
our national market. Our branch
network is one of the most
efficient in the market and we
will strengthen it in certain
areas where our market share
has increased.We will continue
to build on our success in
attracting new personal customers.
In the personal customer segment
there is still considerable
demand for financial services,
and particularly, underlying
it all, the issues of pensions
and very long-term savings.
That part of our business
devolved to Natexis Banques
Populaires will also continue
to grow.The reorganization we
have carried out began to bear
fruit in 2004. Here too we are
well placed, with leading positions
in employee benefit plans and
management of trade receivables.
Growth will also be driven by
targeted initiatives in our
international expansion, which
will remain a measured and
gradual process, as demonstrated
by developments in Eastern
Europe with our German partner,
DZ Bank and Austria’s Volksbanken
cooperative banks, or in Algeria
through our Natexis Alamana
subsidiary.
Naturally we are also ready
to seize any acquisition opportunity
that arises, where it offers clear
industrial benefits and the creation
of value and will be in keeping
with the fundamental values on
which our Group has been built.
Our Group has already changed
considerably over the past five
years, but has always remained
true to the cooperative values
on which it was built. New and
significant challenges lie ahead.
The confidence of our memberstakeholders, the strength of
our earnings and our balance
sheet and the commitment
and energy of our staff are the
factors that will enable us to
overcome them, and to build,
together, one of France’s best
banking groups.
3
2004 key figures
at December 31, 2004
Profile
22
94
2,770,000
6,600,000
44,509
2,692
116
Banque Populaire banks(1)
Mutual guarantee companies
Member-stakeholders
Clients
Employees(2)
Branches in France
International offices
(Natexis Banques Populaires and Coface)
4
Results
in millions of euros
7,640
2,545
1,174
net banking income
gross operating income
earnings capacity(3)
in billions of euros
17.2
9.1%
121.3
94.8
97.4
398
total regulatory capital
Tier One ratio
outstanding loans(4)
customer deposits(4)
customer savings(5)
assets in custody
(1) 20 Banque Populaire regional banks, CASDEN Banque Populaire and Crédit Coopératif
(2) Active employees
(3) Net income + charge to fund for general banking risk
(4) Excluding repurchase agreements
(5) Net assets of management funds, employee savings plans, life insurance and other investment products
Continued growth in business, profitability
and financial structure
+8%
+15%
é
7,066
+10%
é
é
1,174
7,640
1,022
5,748
17.2
15.7
13.6
650
2002
2003
2004
2002
2003
2004
2002
2003
2004
NET BANKING INCOME
EARNINGS CAPACITY
TOTAL REGULATORY CAPITAL
IN MILLIONS OF EUROS
IN MILLIONS OF EUROS
IN BILLIONS OF EUROS
at December 31
+6%
+8%
é
8.2%
2002
8.9%
2003
9.1%
2004
83.1
2002
89.5
é
94.8
97.4
90.1
77.1
2003
2004
2002
2003
2004
TIER ONE RATIO
CUSTOMER DEPOSITS
CUSTOMER SAVINGS
at December 31
at December 31
at December 31
5
+9%
é
+7%
é
101.8
113.0
121.3
364
398
317
RATINGS
Senior long-term debt
2002
2003
2004
2002
2003
2004
OUTSTANDING LOANS
ASSETS IN CUSTODY
at December 31
at December 31
MOODY’S
STANDARD & POOR’S
FITCH RATINGS
Aa3
-
A+
NATEXIS BANQUES POPULAIRES
MOODY’S
STANDARD & POOR’S
FITCH RATINGS
Aa3
A+
A+
Corporate
6
MEMBERS AT DECEMBER 31, 2004
PRINCIPAL FUNCTION IN THE COMPANY (1)
FIRST APPOINTED/TERM END (2)
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Philippe Dupont
Chairman of Banque Populaire Group
July 8, 1999/May 2005
VICE CHAIRMEN
René Clavaud
Claude Cordel
Richard Nalpas
Chairman of Banque Populaire Centre Atlantique
Chairman of Banque Populaire du Midi
Chief Executive Officer of Banque Populaire Toulouse-Pyrénées
July 5, 2000/May 2006
September 23, 1999/May 2005
July 5, 2000/May 2006
BOARD SECRETARY
Francis Thibaud
Chief Executive Officer of Banque Populaire du Sud-Ouest
July 5, 2000/May 2006
DIRECTORS
Christian Brevard
Michel Castagné
Jean Clochet
Jean-François Comas
Pierre Desvergnes
Daniel Duquesne
Stève Gentili
Yvan de La Porte du Theil
François Moutte(4)
Pierre Noblet
Jean-Louis Tourret
Deputy Vice Chairman of Banque Populaire d’Alsace
Deputy Vice Chairman of Banque Populaire Occitane
Deputy Vice Chairman of Banque Populaire des Alpes(3)
Chief Executive Officer of Banque Populaire Côte d’Azur
Chairman of CASDEN Banque Populaire
Chief Executive Officer of Banque Populaire Loire et Lyonnais
Chairman of BRED Banque Populaire
Chief Executive Officer of Banque Populaire Val de France
Chief Executive Officer of Banque Populaire des
Pyrénées-Orientales, de l’Aude et de l’Ariège(5)
Vice Chairman of Banque Populaire Rives de Paris
Chairman of Banque Populaire Provençale et Corse
December 20, 2000/May 2006
May 27, 2004/May 2007
May 27, 2004/May 2007
May 31, 2001/May 2007
May 27, 2004/May 2007
May 31, 2001/May 2007
October 20, 1999/May 2005
May 22, 2002/May 2005
November 21, 2001/May 2005
May 27, 2004/May 2007
July 8, 1999/May 2006
Claude Cordel
Philippe Dupont
René Clavaud
Richard Nalpas
Jean-Louis Tourret
Jean Clochet
Christian Brevard
François Moutte
Michel Goudard
Bruno Mettling
The Board of Directors of Banque Fédérale
des Banques Populaires
François Ladam
Jean-Claude Detilleux
Pierre Noblet
Michel Castagné
Stève Gentili
Pierre Desvergnes
Daniel Duquesne
François Thibaud
governance
7
NON-VOTING DIRECTORS
François Ladam
Chief Executive Officer of Natexis Banques Populaires
Chairman and Chief Executive Officer of Crédit Coopératif
MEMBERS IN A CONSULTATIVE CAPACITY
Michel Goudard
Bruno Mettling
Deputy Chief Executive Officer of Banque Fédérale des Banques Populaires
Deputy Chief Operating Officer of Banque Fédérale des Banques Populaires
ALSO ATTENDING MEETINGS
Olivier Haertig
Patrick Delaval
Pierre Ribuot
General Secretary of Banque Fédérale des Banques Populaires
Representative of Banque Fédérale des Banques Populaires Works Council
Representative of Banque Fédérale des Banques Populaires Works Council
(1) Company: Banque Fédérale des Banques Populaires
(2) Date of the Shareholders’ Meeting held to approve accounts
(3) On January 1, 2005, Jean Clochet was appointed Chairman of Banque Populaire des Alpes
(4) Bernard Jeannin was co-opted as a Director to replace François Moutte at the meeting of the Board of Directors held on January 19, 2005.
His appointment will be put before the Shareholders’ Meeting held to approve 2004 accounts for ratification
(5) On January 1, 2005 François Moutte was also appointed Chief Executive Officer of Banque Populaire du Midi
Other Directorships held by Directors
PRINCIPAL FUNCTION EXERCISED OUTSIDE BANQUE FÉDÉRALE DES BANQUES POPULAIRES
OTHER DIRECTORSHIPS
Philippe Dupont
CHAIRMAN, BANQUE POPULAIRE GROUP
CHAIRMAN:
Natexis Assurances (to June 2004)
Christian Brevard
REPRESENTATIVE OF BANQUE
FÉDÉRALE DES BANQUES POPULAIRES
ON THE BOARD OF DIRECTORS:
Claude Cordel
Banque Populaire du Midi
CHAIRMAN:
Jean Clochet
Natexis Factorem
CHAIRMAN
CHAIRMAN:
Banque Populaire des Alpes
DEPUTY VICE CHAIRMAN
Banque Populaire d’Alsace
DIRECTOR:
DIRECTOR:
Banque Privée St Dominique
CHAIRMAN AND CHIEF EXECUTIVE:
CHAIRMAN:
Routin SA
Brasseries des Cimes
Natexis Bleichroeder SA
DIRECTOR:
Natexis Bleichroeder Inc
CHAIRMAN OF THE MANAGEMENT
BOARD:
Bruker Biospin SA
Michel Castagné
CHAIRMAN OF THE BOARD:
CHAIRMAN
Routin America Inc
CASDEN Banque Populaire
JOINT LEGAL MANAGER:
CHAIRMAN:
Montania
Maine Gestion
LineBourse SA
SCI C3 et Houille Blanche
DIRECTOR:
CHAIRMAN OF THE SUPERVISORY
BOARD:
CHIEF EXECUTIVE OFFICER
DIRECTOR:
Maaf Assurances
PERMANENT REPRESENTATIVE
OF MAAF SA ON THE SUPERVISORY
BOARD OF:
Maaf Vie
ON THE BOARD OF DIRECTORS OF:
Covea
René Clavaud
CHAIRMAN
Banque Populaire Centre Atlantique
CHAIRMAN:
Natexis Lease
DIRECTOR:
Coface
Limousin Participation SA
SAS Dupleix
SNC Hydromons
Pierre Desvergnes
Banque Populaire Occitane
Castagné SA
DIRECTOR:
Routin Nord Europe
Banque Populaire Côte d’Azur
Assurances BP IARD
8
SAS Holding Clobia
SAS CPSL
CHAIRMAN:
CHAIRMAN:
CHAIRMAN
Natexis Asset Management
Parnasse Finance S.A.
Parnasse MAIF S.A.
DIRECTOR:
Natexis Assurances
Natexis Coficiné
OF CASDEN BANQUE POPULAIRE
OF BANQUE POPULAIRE CÔTE D’AZUR,
AND CHAIRMAN:
Foncière Victor Hugo
Société Méditerranéenne
d’investissement
OF BANQUE POPULAIRE
CÔTE D’AZUR ON THE BOARD OF:
ON THE BOARD OF:
Natexis Altaïr
Parnasse Services
Sicav Valorg
Sicav Fructidor
SCPI Parnasse Immo
OF PARNASSE FINANCE
ON THE BOARD OF:
Parnassienne de Crédit
i-BP
OF BANQUE POPULAIRE
CÔTE D’AZUR, DIRECTOR:
OF CASDEN BANQUE POPULAIRE
TO THE CHAIRMAN OF:
SCI Domaine de l’Arenas
SAS Finance
SAS Parnasse Espace 1
SAS LFI2
OF NATEXIS PRIVATE BANKING
LUXEMBOURG:
LEGAL MANAGER
Fructilux
SARL Inter-promo
SARL Cour des roches
Daniel Duquesne
DIRECTOR:
Pierre Noblet
Coface
Banque Populaire Loire et Lyonnais
DIRECTOR:
SEPEL
OF BANQUE POPULAIRE
VAL DE FRANCE ON
i-BP (Vice-Chairman)
ON THE BOARD OF:
i-BP
CHAIRMAN:
Garibaldi Capital Développement
MEMBER OF THE SUPERVISORY BOARD
OF:
Volksbank CZ
Stève Gentili
DIRECTOR:
Natexis Paiements
Delattre Patoux
Banque Populaire des
Pyrénées-Orientales,
de l’Aude et de l’Ariège ;
(since January 1, 2005)
Banque Internationale de Commerce
(BIC-BRED)
Natexis Paiements
DES PYRÉNÉES-ORIENTALES,
Natexis Pramex International
Socama du Roussillon
Socami des Pyrénées-Or.
BICEC
Banque Populaire Val de France
CHAIRMAN OF THE SUPERVISORY
BOARD:
SBE
DIRECTOR:
Socami Bordeaux Région
Socama Sud-Ouest
PERMANENT REPRESENTATIVE OF
BANQUE POPULAIRE DU SUD-OUEST
Richard Nalpas
ON THE BOARD OF:
i-BP
Soprolib Sud-Ouest
Banque Populaire
Toulouse-Pyrénées
Jean-Louis Tourret
DIRECTOR:
CHAIRMAN
Natexis Assurances
Banque Populaire Provençale
et Corse
VICE CHAIRMAN:
Natexis Interépargne
Natexis Epargne Entreprise
Tourret SAS
Proclair SAS
Natexis Bleichroeder SA
PERMANENT REPRESENTATIVE OF BRED
BANQUE POPULAIRE ON THE BOARD OF:
Banque Populaire du Sud-Ouest
OF BANQUE POPULAIRE
DIRECTOR:
Coface
BRED Cofilease
COFIBRED
LFI
Bercy Gestion Finances +
VICE CHAIRMAN:
THE BOARD OF:
BOARD:
Francis Thibaud
BRED Banque Populaire
VICE CHAIRMAN OF THE SUPERVISORY
VICE CHAIRMAN:
François Moutte
DE L’AUDE ET DE L’ARIÈGE ON
BRED Gestion
Natexis Pramex International
Natexis Intertitres
Sonodas SAS
Natexis Lease
CHAIRMAN
CHAIRMAN:
CHAIRMAN:
THE BOARD OF:
PERMANENT REPRESENTATIVE OF
BANQUE POPULAIRE LOIRE ET LYONNAIS
Banque Populaire Rives de Paris
CHAIRMAN:
OF BANQUE POPULAIRE
TOULOUSE-PYRÉNÉES:
DIRECTOR:
Immobilier
i-BP
Maison du Commerçant SA
Multi-croissance SAS
Socama 31
Irdi S.A.
Ciments Lafarge
LEGAL MANAGER:
Tourret Entreprises
Tourret Electronique
Proclair Provence
Proclair Rhône Alpes
9
Chairman’s report
on the conditions in which the work of the
Board of Directors is prepared and organized
This report forms an integral part of the Chairman’s full report
on the conditions in which the work of the Board of Directors is
prepared and organized and the internal control procedures
in place within the company. It has been prepared in accordance
with Art. L. 225-37 of the French Commercial Code (code de
commerce) as modified by the French Financial Security Act of
August 1, 2003.
Role and organization of the Board of Directors
anque Fédérale des Banques
Populaires has been
a joint stock company
(société anonyme) under
French law since May 31, 2001.
Its Board of Directors exercises
a certain number of legal
functions, which include the
responsibilities of Banque
as the central body of the
Banques Populaires network.
More generally the Board is
responsible for supervision and
definition of strategy for the
Banque Populaire Group, in all
its aspects such as expansion,
profitability, security, internal
structures, information systems
and other matters. Each Director
is considered as representing
all shareholders and is expected
in all circumstances to act in
the shareholders’ best interests.
individuals, and the majority of
Directors must be either
Chairman, Director or Chief
Executive Officer of a Banque
Populaire bank.
Membership of the
Board of Directors
Election of the
Chairman of the
Board
B
10
The Board of Directors of Banque
has sixteen members, all elected
by the shareholders in General
Meeting. All the Directors are
Directors exercising one of
these roles are selected from
two lists of candidates put
forward by the Chairmen and
Chief Executive Officers of
the Banque Populaire banks
according to a selection process
defined by the Board of Directors.
Directors are elected for a
three-year term and may stand
for re-election.Their term
expires at the close of the Annual
Shareholders’ Meeting held to
approve accounts for the previous
year. Each Director is required
to hold one Banque Fédérale
des Banques Populaires share.
Article 11 of the bylaws of Banque
states that the Chairman of the
Board is elected by a simple
majority for the duration
of his or her term as Director.
He or she may be re-elected.
The bylaws also determine that
a quorum of at least half the
members of the Board is required
to be present for the election
to take place, with the chairman
then elected by a majority of
the votes cast by the Directors
present (Article 12).
The Chairman of the Board of
Directors of Banque Fédérale
des Banques Populaires has the
title of Chairman of the Banque
Populaire Group.
Chief Executive
Officer
The Chairman of the Board of
des Banques Populaires is also
its Chief Executive Officer
(Directeur Général). As such he
has the fullest powers to act
in the Company’s name, subject to
compliance with the corporate
purpose and except as regards
those matters which, by law, are
required to be submitted to
the shareholders in General
Meeting or to the Board of
Directors, or which concern the
Company’s role as central
body of the Banques Populaires
network and as such are required
to be submitted to the Board
of Directors under the Company’s
internal rules.
The Chief Executive Officer
represents the Banque Fédérale
des Banques Populaires in
its dealings with third parties.
If recommended by the Chairman,
the Board of Directors may
appoint up to five Deputy Chief
Executive Officers to assist
the Chairman in his role as Chief
Executive Officer.
Organization of the
work of the Board
of Directors
The Board of Directors meets
at least five times a year, on
the dates decided at the beginning
of the year.The Chairman
may call additional meetings
if circumstances so require.
The Board of Directors met
11 times in 2004, with an
average attendance rate of 98%.
This is in keeping with internal
rules which stipulate that
Directors should make every
effort to attend meetings
of the Board and of any
Committees of the Board
of which they are members.
Meetings last an average of 4 hours,
allowing detailed consideration of
the subjects on the agenda.
In addition to the meetings
held to approve financial
statements for the first half
of the year and the full year,
and the meeting that follows
the Annual Shareholders’
Meeting in May, whose agenda
is exclusively devoted to renewing
the Office of the Board, Board
meetings are held to review
operations of Banque Fédérale
des Banques Populaires and
the Banque Populaire Group
and to discuss the main topical
issues affecting the Banque
Populaire Group.
As well as approving the
financial statements of
Populaires and the Banque
Populaire Group, the Board
takes all decisions relating
to the Group’s strategy.
Any major strategic investments
undertaken by other Group
entities, such as Natexis Banques
Populaires, are first submitted
to the Board for approval.
Four times a year the Board
hears a detailed report on
the work of the Group Risk
Management Committee.Acting
on the recommendations
of the Committee the Board
then takes any decisions it
deems appropriate.
Directors receive an agenda
and full set of notes and additional
information around eight days
before each meeting.The Board
places great importance on
explaining clearly the decisions
it takes.
A summary of the decisions
taken is distributed in the days
following the Board meeting
to all Directors and all Directors
of the Banque Populaire Group
(Chairmen and Chief Executive
Officers of the Banque Populaire
banks).
Detailed minutes of Board
Meetings are produced recording
the discussions that took place
for each agenda item.After
approval by the Board of Directors
a copy of these minutes is supplied
to all Directors and all Directors
of the Banque Populaire Group.
It should be noted that eleven
Directors sit on the Boards
of Directors of both Banque
and Natexis Banques Populaires.
Decisions of the
Board of Directors
The internal rules of Banque
stipulate that a formal ballot
of Directors must be held for
all decisions concerning the
approval of financial statements,
the budget, the resolutions
to be tabled at Shareholders’
Meetings and all key strategic
and policy issues submitted
to the Board by the Chairman.
Office of the Board
The Office of the Board
comprises the Chairman,
three Vice-Chairmen – including
two Chairmen of Banque
Populaire banks and one Chief
Populaire bank – and a Secretary,
who must also be a Chief
Populaire bank.The Office
of the Board does not have
decision-making powers but the
Chairman may call meetings
of its members to inform or
consult them on matters falling
within his authority.
Independent
Directors
The concept of an Independent
Director, as defined by the
Bouton report, is not particularly
well suited to Banque Fédérale
des Banques Populaires. As the
central body of a cooperative
group, it is natural that the Board
of Banque Fédérale des Banques
Populaires should be composed
of representatives of the Banque
Populaire banks.These banks
hold over 99% of the Company’s
capital (as at December 31, 2004)
in their capacity as lending
establishments affiliated to Banque
by law.
However, under internal rules,
the seats on the Board are
not held by the Banque Populaire
banks, but by individuals. Despite
being the Chairmen or Chief
Executive Officers of Banque
Populaire banks, Directors do not
sit on the board as representatives
of their respective banks, but as
part of the corporate governance
structure of the Banque Populaire
Group, exercising the powers
devolved to Banque Fédérale des
Banques Populaires by law.
11
>>>
Code of ethics
Article 11 of the Company’s
internal rules draws the
Directors’ attention to legislation
banning the use of insider
information about the Group’s
listed subsidiaries that the
Directors may have access to
in their capacity as Directors
Populaires.
Independent internal
audit function
The Board of Directors is
responsible for guaranteeing the
independence of the internal
audit function.The internal auditors
have full authority to require
the audited entities to provide
them with all necessary documents
and information to enable them
to carry out their audit.They also
have unrestricted access to all
of the computer applications used
by the Group.
Assessment of the
Board’s performance
12
The performance of the Board
of Directors of Banque Fédérale
des Banques Populaires is
measured primarily by the frequency
of its meetings, the wealth of
information made available to
Directors – who also sit on
the Boards of Banque Populaire
banks – and the openness
of discussions on the various
matters submitted to the Board.
The representative nature of
the Board and the manner in
which its meetings are conducted
ensure that the Board fulfils
its stewardship role as the central
governing body of the Banque
Populaire Group, assuming
full responsibility for determining
group strategy and policies.
Directors’ fees
The fees awarded to the Board
of Directors by shareholders
in General Meetings are shared
equally among the Directors(1),
except that members of the
Office of the Board and
the Committees of the Board
receive an additional share
for each additional post held.
Members of more than one
Committee of the Board receive
a separate share for each
Committee of which they are
a member.
Main subjects adressed by the Board
of Directors during 2004
During 2004 the Board of Directors approved a number of important
transactions for the Banque Populaire Group and heard reports
on operations within the Banque Populaire Group, with all items being
fully discussed.
It approved the acquisition of a 25% stake in Volksbank International,
the holding company for stakes in banking subsidiaries of ÖVAG
(the central body of Austria’s Volksbanken cooperative banks) in Central
and Danubian Europe.
It approved the creation of a retail banking activity in Algeria.
It made decisions regarding significant aspects of the organization
of the Banque Populaire Group, or relating to enhancement of its federal
and cooperative structures.
It approved closer regional links between Caisses de Crédit Maritime
Mutuel and the appropriate local Banque Populaire bank.
It approved the creation of Banque Populaire Rives de Paris through the
merger of Banque Populaire BICS and Banque Populaire Nord de Paris.
It launched an action plan to develop the member-stakeholder base
of all the Banque Populaire banks and encourage stakeholder initiatives
from its member clients. It also launched a sustainable development
program, seeking to encourage the widespread use throughout the Banque
Populaire Group of the successful initiatives of the Banque Populaire
banks that have been most active in this field.
In the area of technology, the Board carried out an in-depth review of
progress and plans at i-BP (informatique-Banque Populaire), following
the merger during 2004 of the regional processing centre into this single
platform.
It approved the electronic payment services agreement offered by
Natexis Banques Populaires to the Banque Populaire banks and voted
for the adoption by all Banque Populaire banks of additional systems
for the internet.
It heard detailed reviews of business activity and growth at Banque
Populaire Group, which it debated.
On two occasions (May 26 and November 17) it heard minutes of meetings
of the Risk Management Committee of Banque Fédérale des Banques
Populaires.
The management report on internal control procedures at Banque Populaire
Group was presented to the meeting of April 21, 2004.
(1) Details of the amounts received by individual Directors are given in the section “Directors’ Fees”.
Committees of the Board
s part of the modernization
of its organization
inspired by the Viénot
report of 1999, the Board of
des Banques Populaires reviewed
its corporate governance
structures and decided to create
two new specialist committees
– The Audit Committee and
the Remuneration Committee –
alongside the Group Risk
Management Committee.
A
Each of these Committees has
four members (two Chairmen
and two Chief Executive Officers
of a Banque Populaire bank)
nominated by the Chairman and
elected by the Board of Directors
Populaires. Minutes of meetings
of the Committees are drawn up
and the Chairman of each
Committee reports to the Board
on the work of his Committee.
As with the Group Risk Management
Committee, these Committees
serve to advise and assist the Board
des Banques Populaires.
Group Risk
Management
Committee
The Group Risk Management
Committee took over from
the Central Lending Committee
which had been set up under
the law of 1929.The Board
of Directors’ meeting of
June 20, 2001 decided that
the composition of the new
committee and its terms of
reference would be unchanged
compared with its predecessor,
in accordance with the powers
vested in Banque Fédérale
des Banques Populaires as central
body of the Group under
Art. L. 511-31 of the Monetary
and Financial Code.
In November 2002, the Board
des Banques Populaires changed
the terms of reference of the
Group Risk Management
Committee by creating a separate
Risk Management Committee for
Populaires
Experts or line managers
from any of the Group’s banks
may be invited to attend
to provide additional insight into
the matters under review.
Committee meets four times each
year in plenary session to review
reports dealing with the Banque
Populaire Group’s risk assessment
and monitoring system and internal
control procedures, as required by
French banking regulations.
It independently monitors overall
risk on an ex-ante and ex-post
basis. Monitoring is based on
regular standardized counterparty
risk reports providing analyses
of industry and country risks and
a breakdown between interbank,
sovereign and client risks,
as well as on interest-rate and
liquidity risk reports.The
Committee is also charged with
examining overall risk strategies,
exposure limits and internal
control systems. Following this
review, the Committee makes
recommendations to the Board
of Directors regarding any risk
management decision applicable
to all Banque Populaire Group
entities.
Decisions in the plenary sessions
are taken by a two-thirds
majority. Minutes of the plenary
sessions are presented to the
Board of Directors of Banque
for consideration.
Committee meets twice each year
in plenary session to hear reports
regarding risk assessment and
monitoring and an appraisal of
internal control systems of Banque
Fédérale des Banques Populaires.
Plenary sessions of this
Committee are chaired by
the Group Chairman.The
Committee is made up of
six Directors including the
four members of the Office
of the Board.They are also
attended by the Chief Operating
Officers and Deputy Chief
Executive Officer of Banque
Fédérale des Banques Populaires,
the Chief Executive Officer
of Natexis Banques Populaires
and the head of Internal Audit.
No Executive Directors attend
meetings to review reports
concerning Banque Fédérale
Committee holds a monthly
meeting, with restricted attendance,
to review the main counterparty
risks at each Group bank on a
consolidated basis or at the Banque
Populaire Group as a whole, as well
as any loans made to Directors of
the Banque Populaire banks, thus
helping prevent any conflicts
of interest.
The monthly meeting of Group
Risk Management Committee
is attended by three standing
members and three substitute
members appointed for one year
by the Board of Directors of
Populaires on the recommendation
of the Chairman after the
Annual Shareholders’ Meeting.
The Chairman of the monthly
Committee meeting is chosen from
among the Chairmen of the Banque
Populaire banks who are members
of the Office of the Board. His
or her substitute does not have to
be a member of the Office of the
Board.The two Chief Executive
Officers sitting on the monthly
committee are selected from those
Directors who are not members
of the Office of the Board.Their
substitutes may be members
of the Office.
Decisions are adopted by at least
two votes to one.
The Audit Committee
The Audit Committee,
independently of the Executive
Directors of the Group
13
>>> entities, reviews the company
and consolidated financial
statements of Banque Fédérale
prior to their submission to
the Board of Directors
and the consolidated financial
statements of the Banque
Populaire Group.The Committee
is responsible for ensuring
that accounting policies are
appropriate and are applied
consistently from one year
to the next, and for assessing the
reasonableness of the main
assumptions used to prepare
the financial statements.
It also makes recommendations
to the Board concerning
the choice of Statutory Auditors,
their audit program and the fee
budget. It meets at least twice
a year. Meetings are attended
by the Statutory Auditors.
The Committee may also
request the presence of
other individuals who in one
way or another are involved
in the production or supervision
of financial statements,
including members of the
Finance and Internal Audit
Departments.
14
Remuneration
Committee
The Remuneration Committee
makes recommendations
to the Board concerning
the compensation, pension
benefits and other benefits
awarded to Executive
Directors.The Directors
concerned are not present
at meetings at which their
compensation and benefits
are discussed.
The Chairman of the Board
may also ask the Committee
to examine any issues
relating to the overall
compensation and benefits
policy for Executive Directors
of Banque Populaire Group
entities, prior to bringing these
matters before the full
Board for consideration.
During 2004 the Remuneration
Committee of the Banque
Populaire Group, chaired by
Philippe Dupont, met to review
the compensation of Group
Executives, in accordance with
its remit. All Committee
members were present.
After examining the effective
compensation paid in 2003
to Executive Directors of the
Banque Populaire regional banks
and Banque Fédérale des Banques
Populaires, the Committee
put forward recommendations
for 2004.These were relayed
to the Executives of the regional
banks in order to be approved
by the regional Remuneration
Committees.
Two work sessions took place
before these meetings, in which
the Committee examined the
criteria used to determine the
fixed and variable components
of compensation.
The fixed component is determined
according to three criteria:
n
net banking income,
n
career mobility,
n
seniority in the position.
For 2004 as for 2003, the variable
element is determined based
on performance in three areas:
n
net banking income,
n
cost/income ratio,
n
return on equity.
COMMITTEE
CHAIRMAN
MEMBERS
ATTENDANCE NUMBER OF MEETINGS
IN 2004
RATE
Group Risk Management Committee
Group Risk Management Committee Plenary Session
1st half 2004(1)
2nd half 2004(1)
Philippe Dupont
R. Clavaud, C. Hébrard,
F. Thibaud, Y. de la Porte du Theil,
F. Moutte, R. Nalpas
(2)
Philippe Dupont (1a)
98%
4 concerning the Group
2 concerning Banque
Fédérale des Banques
Populaires
89%
9
100%
2
100 %
2
R. Clavaud, C. Cordel, F. Moutte,
Y. de la Porte du Theil, R. Nalpas, F. Thibaud
(3)
Group Risk Management Committee Monthly Session
1st half 2004
René Clavaud (2)
Members(2)
Y. de La Porte du Theil, F. Moutte
Substitutes(2)
J-F. Comas, R. Nalpas, J-L. Tourret
2nd half 2004
René Clavaud (3)
Members(3)
Y. de La Porte du Theil, F. Moutte
Substitutes(3)
J-F. Comas, R. Nalpas, J-L. Tourret
Audit Committee
1st half 2004
Richard Nalpas (4)
(4)
C. Cordel, M. Devianne, F. Thibaud
2nd half 2004
Richard Nalpas (4)
(4)
P. Desvergnes, F. Thibaud, J-L. Tourret,
Remuneration Committee
1st half 2004
Philippe Dupont (5a)
(5)
R. Clavaud, C. Hébrard, R. Nalpas, F. Thibaud,
2 half 2004
Philippe Dupont
(5)
R. Clavaud, C. Cordel, R. Nalpas, F. Thibaud,
nd
(1)
(1a)
(2)
(3)
(4)
(5)
(5a)
(5a)
1st half 2004: appointed by the Board of Directors of Banque Fédérale des Banques Populaires meeting on June 18, 2003
2nd half 2004: appointed by the Board of Directors of Banque Fédérale des Banques Populaires meeting on May 27, 2004
When the Group Risk Management Committee considers issues relating to Banque Fédérale des Banques Populaires, it is
chaired by René Clavaud
Appointed until the Annual Shareholders’ Meeting held to approve financial statements for 2003
Appointed until the Annual Shareholders’ Meeting held to approve financial statements for 2004
Appointed for the term of their appointment as Directors of Banque Fédérale des Banques Populaires
Appointed for the term of their appointment as members of the Office of the Board of Banque Fédérale des Banques Populaires
When the Remuneration Committee considers issues relating to Banque Fédérale des Banques Populaires, it is chaired by
René Clavaud
15
Corporate Governance rules
On November 20, 2002 the Board of Directors of Banque Fédérale
des Banques Populaires approved a Corporate Governance
Charter for the Banque Populaire banks and Framework Internal
rules for their Boards of Directors.
he charter establishes the
corporate governance rules
for the Banque Populaire
banks as well as governing standards
of behavior for their Directors.
It sets out the responsibilities of
the Board of Directors, Chairman,
Chief Executive Officer and
Consultative Committees of the
Banque Populaire banks.
T
The Banque Populaire banks are
cooperative banks, and their
member-stakeholders play a central
role in their organization. Boards
of Directors are made up of
member-stakeholders, who are
clients like any others.The Group
Risk Management Committee
oversees lending decisions regarding
these Directors, to avoid conflicts
of interest.
16
Well before the new French
corporate governance law came
into effect on May 15, 2001, the
Banque Populaire banks had already
taken action to improve the
effectiveness of their management
structures by separating
responsibility for overall strategy
and control from that for the
implementation of strategy and
day-to-day running of the business,
through the allocation of these
responsibilities to the Chairman and
Chief Executive Officer respectively.
Populaire bank in question.
The Directors derive their
authority from the memberstakeholders, whether individuals
or organizations, from amongst
whom they are elected.The Annual
General Meetings of memberstakeholders represent a high
point in the life of a cooperative
bank, allowing broad-based
participation in its affairs, the free
flow of information, transparency
and an informed exchange of views.
The Board of Directors collectively
represent all member-stakeholders
and are bound to act in all
circumstances in the best interests
of the member-stakeholders of the
Banque Populaire cooperative bank.
Directors have no individual
powers of management, exercising
their powers only collectively
through the Board of Directors.
Directors’ code of
conduct
Each Director must understand
that he or she represents all
member-stakeholders and behave
accordingly in the fulfillment
of his or her duties.
Responsibilities
of the Board of
Directors
Directors must allocate to
their duties the time and care
necessary.They must make
all reasonable efforts to attend
meetings of the Board of
Directors and the General
Meeting.Training events
are offered to Directors as
required.
Members of Boards of Directors
are drawn from key players in
the local economy of the Banque
Where Directors, in exercising
their duties, gain access
to information not yet in the
public domain, they are
bound by a duty of confidentiality
and professional secrecy.
Directors who sit on Consultative
Committees are expected
to meet the same standards as
apply to all Directors, namely
loyalty, diligence, competence,
confidentiality and professional
secrecy.
Directors are expected to make
a more general contribution
to promoting the image of their
Banque Populaire bank in the
regional community and economy.
They play an active part in
encouraging and introducing
new business.
The organization of
the Board of Directors
The Directors elect from their
number a Chairman for a
renewable term of three years,
providing that this does not
exceed the term of his or her
mandate as a Director or go
beyond the date of his or her
sixty-fifth birthday. Beyond
this date, the Chairman’s mandate
is for a term of one year, and
may not exceed the statutory age
limit set by the General Meeting
held to approve accounts in
the year of his or her sixty-eighth
birthday.
On the recommendation of the
Chairman, the Board of Directors
appoints a Chief Executive Officer,
who may not be a member of
the Board, for a renewable term
of five years or until his or her
sixtieth birthday. Beyond the date
of his or her sixtieth birthday,
the Chief Executive Officer’s
mandate is for one year and may
not exceed the statutory age
limit set at the date of his or
her sixty-fifth birthday.
The Board of Directors adopts
internal rules governing the
organization and work of meetings
of the Board and of its Consultative
Committees.
On the recommendation of the
Chairman, the Board of Directors
may set up and determine
the membership of the following
Consultative Committees:
n
A Risk Management Committee
n
An Audit Committee
The Board of Directors may
elect to combine the roles of
these two committees in a
single body to be known as Audit
and Risk Management Committee.
The purpose of these committees
is to:
1/ review, on a company and
consolidated basis, the main
indicators from risk monitoring
systems, findings of the internal
control processes and the main
conclusions of the Internal
Auditors, in accordance with
banking regulations;
2/ analyze financial statements
and other financial documents
produced by the bank following
approval of accounts and to
conduct further enquiries into
particular areas before such
documents are brought before
the Board of Directors.
In addition, the Board of Directors
may elect to create two other
committees:
n A Remuneration Committee
responsible for drawing up, in
the absence of those concerned,
any proposal concerning the
employment terms of Executive
Officers.The Committee’s
proposals must be in accordance
with Group policy regarding
Executive remuneration.
n A Member-Stakeholder Policy
Committee, which, if set up, is
responsible for bringing forward
proposals to develop and
promote the cooperative aspects
of the company, through steady
increases in the number of
member-stakeholders, a balanced
distribution of capital, publicity
policy and involvement in local
cooperative ventures amongst
other things.
The powers of the Board
of Directors
Strategy and operational
structure
The Board of Directors is
responsible for setting the
bank’s overall strategy and
policy, in accordance with
the strategy and policy of the
Banque Populaire Group.
It determines key strategic
policies based on joint
recommendations of the
Chairman and Chief Executive
Officer and makes periodic
checks on their implementation
in terms of the fundamental
issues of growth, profitability,
security and the adequacy
of the resources employed.
Risk control
The board of directors is
responsible for controlling
the major risk exposures
of the bank and ensuring the
quality and reliability of
internal control systems in
accordance with banking
regulations (CRBF97-02).
It sets the overall direction
of lending policy and sets
exposure limits regarding the
division and distribution of
risk and its relationship with the
bank’s capital. It determines
the exposure thresholds above
which it must be consulted,
ensures compliance with the
procedures relative to the powers
of the Group Risk Management
Committee of Banque Fédérale
des Banques Populaires, and
monitors exposure using
overall information on the cases
considered by the Group Risk
Management Committee and
on the portfolio as a whole.
n
It sets overall limits for other
major areas of financial risk,
with regard to the bank’s ability
to bear potential losses, and
n
monitors the compliance with
these limits and the level of risk
using the regular information
with which it is provided to
this end.
The Board of Directors
also reviews the procedures
for controlling operational
risk, relating to information
systems, accounting, fraud and
embezzlement, procedures,
and legal risks.
n
It sets targets regarding internal
control and risk control having
reviewed the reports submitted
to it, and in particular following
review of those reports required
by law or regulation.
n
The results of any external
checking carried out on the
bank by Banque Fédérale
des Banques Populaires or by
the Banking Commission or other
regulators are submitted to the
Board of Directors for discussion.
The Board is responsible for
monitoring the implementation
of any recommendations
made as a result of such checks.
The Board is required to take
without delay, any measures
or corrective steps necessary
to protect the financial and
economic balance of the bank and
thus preserve its competitiveness.
In more general terms, the Board
of Directors is responsible
for ensuring that the controls and
checks in place are adequate
for their purpose and for making
such further controls and
checks as it considers necessary.
Capital remuneration policy
The Board of Directors sets
the rate of capital remuneration.
This rate must be compatible
with the creation of such provisions
and reserves as may be required
to ensure adequate cover of
risk exposure, and with ensuring
that the bank has sufficient
resources to allow its growth.
The rate is set within the legal
maximum level for interest
paid on shares in its capital.
The Board of Direction sets the
level of the transfer of reserves
to capital funds, ensuring that
the requirement that these be
exceptional in nature is met.
17
>>>
The Responsibilities
of the Chairman
of Directors and thus has
the power to raise subjects for
discussion.
The Chairman is one of the
two Directors with responsibility
under the terms of the Monetary
and Financial Code. As a result
he or she is one of the two
key contacts for the banking
authorities and must, therefore,
have a clear overall view of
the bank’s operations in order
to fulfill his or her duties.
The Chairman ensures that
the minutes of meetings of the
Board of Directors give a full
summary of the work of the
Board. A copy of these minutes
is supplied to Banque Fédérale
des Banques Populaires following
their approval by the Board
of Directors.
Due to the separation of
functions the Chairman does
not have responsibility for the
Executive Management of the
bank. He or she is not the legal
representative of the bank
and can not make undertakings
on its behalf to third parties.
Management of the
Board of Directors
The Chairman is responsible for
managing the Board of Directors
and is also the natural point of
contact for the bank’s executives,
member-stakeholders and third
parties in their dealings with the
Board.
18
The Chairman is responsible
for the proper running of
the management structure of
the bank in the form of the
Board of Directors, Executive
Management and General Meetings,
and for ensuring compliance
with the legal requirements on
the responsibilities of the Board:
setting the remuneration of
Executives, setting and distributing
Directors’ fees, the maximum
level of which is determined by
the General Meeting, and
informing the Board of regulated
and non-regulated agreements.
The Chairman organizes and
directs the work of the Board and
reports on this work to the
General Meeting.To this end the
management report to the General
Meeting provides information
regarding the work of the Board
such as the number of meetings
held during the year, the main
topics discussed and the work
of the Consultative Committees.
The Chairman determines the
agenda for meetings of the Board
The Chairman will use the
decisions of the Board of
des Banques Populaires to guide
the Board of Directors in the
overall direction to follow and
requirements that must be met.
Relationships with the
Chief Executive Officer
and the Group
The Chairman works with the
Chief Executive Officer in
preparing the strategic decisions
to be submitted to the Board
and for the implementation
of which the Chief Executive
Officer is responsible.
As one of the two key points
of contact for the Group,
alongside the Chief Executive
Officer, the Chairman ensures
that the policies adopted by the
Board of Directors are in keeping
with those determined by
the Group.The Chairman plays
an active part in the federal life
of the Group, participating in
federal conferences and commissions,
meetings of Chairmen of the
Banque Populaire banks and so on.
The Chairman represents his
or her Banque Populaire bank
at the General Meetings of Banque
Should the Chairman be unable
to attend, the bank will be
represented either by a Director
chosen by the Chairman or
by the Chief Executive Officer.
Through permanent contact
with Executive Management,
the Chairman ensures that
the strategies and policies
approved by the board are being
implemented, and also remains
informed about the overall
conduct of the bank’s operations.
The Chairman appends his or
her signature to documents
relating to the Group Risk
Management Committee alongside
that of the Chief Executive
Officer and ensures that the
decisions of this body are
respected. Both the Chairman
and Chief Executive Officer
are systematically informed of
the Group Risk Management
Committee’s findings by Banque
The Chairman receives Internal
Audit reports from Banque
and reports from Banking
Commission inspections and
ensures that Board is fully informed
of the findings of inspections
carried out by the Banking
Commission or other regulatory
bodies.The Chairman also ensures
that the minutes of the Board
meeting at which the Banking
Commission’s letter was discussed
are provided to the Banking
Commission.
The responsibilities
of the Chief
Executive Officer
Executive responsibility
The Chief Executive Officer, as
a responsible Director under
the Monetary and Financial
Code, works with the Chairman
to propose choices of strategy
to the Board of Directors and
ensures that these are in keeping
with the strategy and policies
defined by the Group.
Thus alongside the Chairman,
the Chief Executive Officer
is the bank’s representative and
point of contact for Group
bodies and supervisory and
regulatory organizations.The Chief
Executive Officer also participates
in the federal life of the Group.
The Chief Executive Officer is
responsible for the implementation
of strategies and policies approved
by the Board of Directors.
appointed by the Board of Directors
and answers to the Board on
the proper execution of his or
her functions. Periodically, on
the request of the Chairman,
the Chief Executive Officer reports
to the Board of Directors on
the implementation of policies
adopted by the Board.
The head of the bank and
manager of its staff
the legal representative of
the bank with regard to third
parties and in law. He or she
is vested with exhaustive powers
and is the head of the Banque
Populaire bank, responsible for
the good operational management
and day-to-day operations of
the bank.
is also responsible for the
management of the bank’s staff.
In agreement with the Chairman
and in accordance with banking
regulations, he or she informs
the Board of Directors of the
choice of the head of the
Internal Audit function, whose
independence is then protected
by the Board.
Risk control
is jointly responsible with the
Chairman for the implementation
of an internal risk control
system that guarantees the
protection of the bank against
the risks to which it is exposed,
including credit and margin
risks, interest rate risks, market
risks, foreign currency risks,
liquidity risks, operational risks
and risks relating to subsidiaries.
makes regular checks on the
correct operation of these systems,
ensures that adequate resources
are provided to internal control
given the nature of these risks, and
supervises the process of reporting
to the Board of Directors.
is also responsible for the
system of delegating decisions
on commitments. He or she
ensures that the staff authorized
to make such commitments have
the skills and training required.
constant control over risk and for
promoting a strong risk-aware
culture within the bank’s staff.
the existence of a policy for
controlling legal risk with
regard to operational risks and
particularly legal risks which
could threaten the bank’s image.
19
Statutory Auditors
Names, addresses
and dates of
appointment
The Statutory Auditors and
Substitute Auditors are
appointed in accordance
with Art. 27 to 33 of Decree
no. 84-709 of July 24, 1984
dealing with the activities
and supervisions of credit
institutions.
The Statutory Auditors were
appointed by the Conseil
Syndical of the former Chambre
Syndicale des Banques Populaires
on September 20, 2000 for
a six year term.
The meeting of the Board
on June 23, 2004 noted
the resignation of Cabinet
PricewaterhouseCoopers
as Statutory Auditors for the
consolidated financial statements
of the Banque Populaire
Group, and appointed Salustro
Reydel to replace them for
the remainderof their mandate.
SALUSTRO REYDEL
8, avenue Delcassé
75378 Paris Cedex 08
Represented by Michel Savioz
Substitute Auditors
Pascal Macioce
Barbier Frinault & Autres
Member of the Ernst & Young
41, rue Ybry
92576 Neuilly-sur-seine Cedex 4
Statutory Auditors
Louis-Pierre Schneider
BARBIER FRINAULT ET AUTRES
Coopers & Lybrand Audit
Member of
PricewaterhouseCoopers
32, rue Guersant
75017 Paris
Member of the Ernst & Young
41, rue Ybry
92576 Neuilly-sur-seine Cedex 4
Represented by Richard Olivier
and Olivier Durand
Fees paid to the Banque Populaire Group’s Statutory Auditors
The following table shows fees paid in 2003 and 2004 by the Banque Populaire Group and its fully consolidated subsidiaries
to the college of Statutory Auditors and members of their respective groups.
DECEMBER 31, 2004
in € thousands
Ernst & Young
20
Audit
1,121
- Independent audit,
certification, review of parent
company and consolidated
financial statements(1)
4,170
- Ancillary assignments and
other audit assignments(2)
Sub-total
5,291
Other services
- Legal, fiscal,
employment-related
- Information technology
- Internal audit
- Other
Sub-total
Total fees
DECEMBER 31, 2003
Salustro Reydel
(3)
Ernst & Young
%
Pricewaterhouse
Coopers(3)
group
%
2,006
41.3%
922
1,546
39.3%
32
55.5%
3,007
389
54.0%
2,038
96.8%
3,929
1,935
93.3%
0
0
0.0%
6
277
4.5%
0
48
191
239
0
0
0
0
0.6%
2.5%
3.2%
46
52
94
371
0.7%
1.5%
6.7%
5,530
2,038
100.0%
3,981
2,306
100.0%
(1) Including audit fees in respect of fully consolidated companies:
- Ernst & Young group: €971,000 in 2004 and €764,000 in 2003
- Salustro Reydel group: €1,472,000 in 2004
- PricewaterhouseCoopers group: €1,237,000 in 2003
(2) For the Ernst & Young group, this item includes fees for the Basel II reform project implemented at both Banque Fédérale des Banques Populaires and Natexis Banques Populaires.
(3) At its meeting of June 23, 2004, the Board of Directors of Banque Fédérale des Banques Populaires was advised of the resignation of PricewaterhouseCoopers and appointed Salustro Reydel
in its place.
Internal financing mechanisms
A number of group entities benefit from the guarantee system
of the Banque Populaire network: on the one hand the Banque
Populaire banks, the exclusive Mutual Guarantee Companies,
and Banque Fédérale des Banques Populaires; on the other hand
Crédit Maritime Mutuel by virtue of its legal affiliation to Banque
Fédérale des Banques Populaires, under the terms of the
Monetary and Financial Code.
he system to guarantee
the liquidity and capital
adequacy of the Banque
Populaire network has been
organized under a framework
decision by Banque Fédérale
des Banques Populaires, in its
capacity as central body in
accordance with Art. L. 511-30,
L. 511-31, L. 511-32 and L. 512-12
of the Monetary and Financial
Code to which the bylaws
of the Banque Populaire banks
make explicit reference (Article 1).
T
The system works by pooling
the capital of all banks in the
network.
Populaires is able to put
the system into effect by calling
upon the Banque Populaire
banks to contribute capital,
within the limits of their own
resources.As a last resort
Populaires will provide
capital from its own resources
to ensure the continued
liquidity and capital adequacy of
the Banque Populaire banks.
The mechanism works in
two stages.The first consists
of the “federal solidarity fund”
included in the fund for
general banking risks created
by Banque Fédérale des
Banques Populaires.The second
takes the form of the “regional
solidarity funds” created by
and included in their own
funds for general banking risks.
Each year, 10% of each Banque
Populaire bank’s net income
before transfers to the fund
for general banking risks and
tax is transferred to this fund,
net of tax.Withdrawals from
these funds by the Banque
Populaire banks require the
prior approval of Banque
In addition, under a collective
agreement, each Banque
Populaire bank guarantees
the liquidity and capital
adequacy of the mutual
guarantee companies whose
corporate purpose is limited
to guaranteeing the lending
activities of the banks.
The guarantee system of
the Banque Populaire network
also guarantees the liquidity
and capital adequacy of Crédit
Maritime Mutuel, for which
Populaires is the central body
under Art. L. 512-69 of the
Monetary and Financial Code.
This guarantee system comes
into effect only after Crédit
Maritime Mutuel’s own system.
Lastly, the members of the
network contribute, along with
all French credit institutions,
to the Fonds de Garantie des
Dépôts (deposit guarantee fund)
established by law.
21
22
Group structure
22 Banque Populaire banks
n Banque Fédérale des Banques Populaires
n Natexis Banques Populaires
n
Group structure
23
A successful model combining
strong financial performance with a
concern for the common good that
remains faithful to cooperative values
on which the Group has been built.
Introduction
The Banque Populaire Group is one of France’s largest retail banking
networks, with 6,600,000 clients and nearly 2,700 branches. Rapid
business development, driven by a combination of steady organic
growth and targeted acquisitions, has given the Group leading
positions in all its client segments: personal, small business, corporate
and institutional clients.
he Banque Populaire Group
is a cooperative group
whose parent companies
are the 20 Banque Populaire
regional banks, CASDEN Banque
Populaire and Crédit Coopératif.
The capital of these companies
is wholly owned by their memberstakeholders.The Banque Populaire
banks control Banque Fédérale
des Banques Populaires, which acts
as the central body of the Banque
Populaire Group and the holding
company for the group’s stake in
Natexis Banques Populaires, which
is listed on section A of Eurolist
Paris.
T
24
The other entities of the Banque
Populaire Group are direct or
indirect subsidiaries of Banque
Fédérale des Banques Populaires;
the largest such subsidiary is
Natexis Banques Populaires.
The term “Banque
Populaire banks”
In this AMF shelf-registration
document all references to
the “Banque Populaire banks”
correspond to:
the 20 Banque Populaire regional
banks (as at December 31, 2004);
n
n CASDEN Banque Populaire, a
national bank dedicated to serving
the employees and employer
institutions of the French national
systems of education, research
and culture;
n Crédit Coopératif Banque
Populaire or “Crédit Coopératif”,
a major player in the social
economy sector. It joined
the other Banque Populaire
banks on January 30, 2003
when it took on the status of
société coopérative anonyme de
banque populaire à capital variable.
The term “network”
Within the meaning of Art.
L. 512-11 of the Monetary and
Financial Code, the Banque
Populaire network includes:
n The Banque Populaire banks, all
of which are cooperative banks.
n The mutual guarantee companies
whose sole corporate purpose
is guaranteeing loans issued by
n Banque Fédérale des Banques
Populaires, a joint stock company
(société anonyme) governed
by company law.
The Banque Populaire guarantee
system has been extended to
include Crédit Maritime Mutuel
since its affiliation to Banque
in accordance with Art. 93 of
the French Financial Security Act
of August 1, 2003.
Populaires thus became the
central body for the establishments
making up Crédit Maritime Mutuel.
The French Financial Security
Act of August 1, 2003 also resulted
in the removal of the Caisse
Centrale de Crédit Coopératif’s
role as central body of Crédit
Coopératif.This body was merged
into Crédit Coopératif on June 30,
2003 and was wound up on
October 17, 2003. In exchange
for enjoying coverage from
the Banque Populaire guarantee
system, Crédit Maritime Mutuel
will contribute to any financial
measures in favor of other banks
in the Banque Populaire network
that may be decided by the Board
Both Banque Fédérale des Banques
Populaires and Natexis Banques
Populaires registered an AMF shelfregistration document with the
Autorité des Marchés Financiers
in March 2005.
Group structure
Simplified financial organization chart(1) as of January 1, 2005
2,770,000 member-stakeholders
100%
t
SBE
Bank
99,8%
BICEC
Bank in Cameroon
52,5%
informatiqueBanque Populaire (i-BP)
Group IT platform
20 Banque Populaire regional banks,
Crédit Coopératif, CASDEN Banque Populaire
99.3%
Crédit
Maritime Mutuel
t
100%
Affiliate
75.6%(2)
t
CORPORATE AND INSTITUTIONAL
BANKING AND MARKETS
100%
Natexis Lease
PRIVATE EQUITY AND
WEALTH MANAGEMENT
100%
Lease financing
100%
100%
Asset Management and Insurance
100%
87.8%
Natexis Bleichroeder Inc.
Investment company
(New York)
Natexis
Private Banking
Luxembourg S.A.
International wealth
management
100%
100%
Natexis Assurances
100%
Life, personal risk and non-life
insurance
100%
Banque Privée
Saint Dominique
Wealth management
in France
100%
Natexis
Asset Management
100%
100%
94%
100%
Coface Ort
Business information
Slib
100%
Banking software
IT facilities management
Banking software
OKV Coface
Credit insurance
Credit management
(Austria)
Natexis Paiements
Samic
Viscontea Coface
Credit insurance
Guarantees
Credit management
(Italy)
Electronic banking
75.6%
AK Coface
Natexis Interépargne
Banking, Financial
and Technology Services
100%
25
Credit insurance
Credit management
(Germany)
Employee savings
Accounts keeping and
marketing
100%
Coface Scrl
Business information
Debt collection
Fund management
International
network(3)
(1) This organization chart only shows subsidiaries with over 100 full-time
equivalent employees (FTEs) as of December 31, 2004
(2) Including 2.2% held by the Alizé Levier corporate mutual fund
(3) See map of international network on pages 48 and 49
Coface S.A.
Credit insurance
Credit management
Private Equity
Natexis Bleichroeder S.A.
Investment company (Paris)
Natexis
Private Equity
RECEIVABLES
MANAGEMENT
SERVICES
Coface North America
Credit insurance
Credit management
99.7%
Natexis Factorem
Factoring
Credit insurance
The Group’s history
1917 to 1929
March 13, 1917
July 27, 1999
Creation of the Banque
Populaire banks
Creation of Natexis Banques
Populaires
established to help boost lending to
small and medium-sized businesses.
They are organized as cooperative
companies entirely owned by
their member-stakeholders.
June 20, 1921
Creation of Caisse Centrale des
Banques Populaires
The 74 Banque Populaire banks,
united by a common identity,
decide to set up a central structure
to organize a system of mutual
financial support by centralizing,
managing and investing their cash
surpluses.
May 23, 1929
Creation of Chambre Syndicale
26
A second central body is created
to strengthen the system of
mutual support. Its three roles
are the exercise of control,
the power to represent the banks
and the establishment of a forum
for dialogue and consultation.
More recent
milestones
June 2, 1998
Friendly takeover bid for
Natexis S.A.
was 71.4%. Its interest was increased
to 74.36% at the end of 1998.
At the time, Natexis S.A. was
the holding company of the
Natexis group which had been
formed through the 1996 merger
of Crédit National and Banque
Française du Commerce Extérieur.
At the close of the offer period,
Caisse Centrale des Banques
Populaires owned 53.2% of Natexis
S.A. and the Group’s total interest
The businesses conducted by
Populaires are transferred to
Natexis S.A, which is renamed
December 23, 1999
Populaires becomes Banque
Fédérale des Banques
Populaires
The headquarters is moved to
the Ponant de Paris building. By
end-1999, the Group owns 88.06%
of Natexis Banques Populaires.
By year-end 2000 the figure has
been reduced to 79.23% following
the first public issue of new
capital by Natexis Banques
Populaires in its new configuration.
May 31, 2001
Populaires adopts joint stock
(société anonyme) status
Under Art. 27 of the “NRE” Act
(Act no. 2001-420 of May 15, 2001
concerning corporate governance)
Chambre Syndicale des Banques
Populaires is wound up and its
assets, rights and obligations are
transferred to Banque Fédérale des
Banques Populaires together with
the collective guarantee fund.
August 2, 2002 and
April 2004
acquires Coface
Following a simplified public
tender offer in July 2002 and a
squeeze-out bid followed by a
mandatory delisting in April 2004,
becomes the sole owner of
Coface, a credit insurance and
credit management specialist.
November 18, 2002
Memorandum of understanding
between the Banque Populaire
Group and Crédit Coopératif
Crédit Coopératif is a leading
player in the French social
economy sector.
January 10, 2003
Memorandum of understanding
between the Banque Populaire
Group and Crédit Maritime
Mutuel
Crédit Maritime Mutuel, a wellknown player in the economies
of coastal regions, agrees the
terms under which it will become
affiliated to Banque Fédérale
January 30, 2003
Crédit Coopératif adopts
“société anonyme coopérative
de banque populaire" status
Following approval by its
Extraordinary General Meeting,
Crédit Coopératif becomes a
Banque Populaire bank and joins
internal guarantee system.
August 1, 2003
Populaires becomes the central
body of the Crédit Maritime
Mutuel banks
Following changes in the law
in the summer of 2003 (Art. 93
of the French Financial Security Act
No. 2003-706) and in accordance
with the agreement signed in
January 2003 between the Banque
Populaire Group and Crédit
Maritime Mutuel, Banque Fédérale
des Banques Populaires replaced
Caisse Centrale du Crédit
Coopératif as the central body of
the Crédit Maritime Mutuel banks.
Group structure
Key events in 2004
i-BP convention
Held on September 23, 2004,
the i-BP 2004 Meeting marked
the pinnacle of three years of work
on major projects. In addition
to the ten IT systems migrations
completed, there were also
three mergers and four migrationmergers, given the changes in
the number of Banque Populaire
banks over the period.
The convention also marked
the move into the second phase
of the project, in the form of
the Equinoxe project which will
renew the suite of tools used
to support multi-channel sales.
Each account manager, in every
branch in the Banque Populaire
network will have on his or her
workstation access to all client
information.This will help boost
the Group’s provision of local
banking services.This major
project involves not only members
of the i-BP team, but also staff
from the Banque Populaire regional
banks and from Natexis Banques
Populaires. It is one of the biggest
industrial projects ever undertaken
by the Group.
Support for the Crédit
Maritime Mutuel banks
from the Banque
Populaire banks
On October 19, 2004, the Board of
Directors of Société Centrale de
Crédit Maritime Mutuel unanimously
approved the provision of technical
and operational support to the
Crédit Maritime Mutuel banks
by the Banque Populaire regional
banks in coastal regions.
The current legislative and regulatory
structure of Crédit Maritime
Mutuel will be maintained, and this
decision will preserve the identity
of the Crédit Maritime Mutuel
regional banks whilst giving them
access to the logistics resources
of the Banque Populaire banks in
their regions and thus developing
synergy between the two networks.
In order to strengthen the financial
position of the Crédit Maritime
Mutuel regional banks, the Banque
Populaire regional banks involved
will acquire stakes of at least 20%
in each Crédit Maritime Mutuel
regional bank.
Creation of Banque
Populaire Rives de Paris
The member-stakeholders of
Banque Populaire Nord de Paris
and Banque Populaire BICS
attended Extraordinary General
Meetings respectively on November
9 and 10, 2004.These meetings
approved the proposal to merge
into Banque Populaire BICS.
This agreement gave rise to the
creation of Banque Populaire
Rives de Paris, with retroactive
effect to January 1, 2004.
During 2004, Banque Populaire
Rives de Paris continued the
renovation and expansion of its
branch network. Nine new
branches were opened: two
in Paris (the 15th and 18th
arrondissements), and seven
in its suburbs (Gennevilliers,
Saint-Denis, Goussainville,
Chevilly-la-Rue, Issy-les-Moulineaux,
Orly and Mandres-les-Roses).
Thirteen branches were
modernized or moved: three
in Paris and ten in its suburbs.
Reorganization of core
businesses at Natexis
Banques Populaires
At the presentation of first half
figures in September 2004, and
as part of the review process
launched in 2003, François Ladam,
Chief Executive Officer of Natexis
Banques Populaires, set out the
future direction of the company
and its new organization.
The new, more tightly structured
organization aims to increase
revenues from the existing client
base and maximize the value
created by Natexis Banques
Populaires’ professional expertise
in growing markets. It also includes
a strengthening of the management
control and risk control functions.
Thus Natexis Banques Populaires
is now divided into four core
businesses:
n Corporate and Institutional
Banking and Markets,
n Private Equity and Wealth
Management,
n Services, including asset
management and insurance, and
banking, financial and technology
services,
n
Receivables Management.
Creation of a joint
banking platform to step
up the Banque Populaire
Group’s activities in
Eastern Europe
In December 2004, Banque
and the two central bodies
of the German cooperative banking
segment, DZ Bank and WGZ
Bank, joined forces with ÖVAG
in Volksbank International AG (VBI)
to create a shared retail banking
platform for Central and Eastern
Europe.With 145 branches,
the VBI network currently has
over 400,000 clients, including
50,000 companies, most of which
are local SMEs.
VBI, which was previously a
wholly-owned subsidiary of
ÖVAG, will now be 51%-owned
by ÖVAG, with Banque Fédérale
des Banques Populaires holding
24.5% and the two German
central bodies 24.5% jointly.
It will be allocated the capital
resources necessary to fulfill
its function of control and
management of its banking
subsidiaries.
27
Member-stakeholders:
moving forward together
In today’s Europe, the Group’s cooperative status is a valuable
strategic asset giving a real competitive advantage. The Banque
Populaire Group draws on these strengths and energetically
builds on the strong and lasting relationships it has built with its
member-stakeholders.
n 2001, the Banque Populaire
Group adopted a vigorous
policy to reinvigorate its
member-stakeholder base. In 2002,
the Board of Directors of Banque
reconfirmed the target of seeing
half of all personal clients become
member-stakeholders by the end
of 2005. Over the past two years
every Banque Populaire bank has
enthusiastically backed this program.
I
This shared undertaking is now
producing results.The 2,500,000
member-stakeholder milestone
was reached in March 2004,
with 1,500,000 of these memberstakeholders for the Banque
Populaire regional banks alone.
By the end of 2004, the 20 Banque
28
Populaire regional banks, CASDEN
Banque Populaire, Crédit Coopératif
and Crédit Maritime Mutuel had
2,770,000 member-stakeholders, a
14.5% increase on the end of 2003.
As well as growing numbers,
there has been an increasing
number of varied and original
initiatives that give concrete form
to the cooperative spirit and
encourage enterprise in the regions.
These include Déclic Clubs, regional
initiative awards, summer schools,
business start-up meetings, memberstakeholder councils, and voluntary
work awards. All these initiatives
seek to harness creative energy to
help serve local communities. At the
end of 2004, four Banque Populaire
banks had launched 160 Déclic
Clubs, which will fund nearly 300
projects. Six Banque Populaire banks
have organized regional initiative
awards, whilst another has staged
voluntary work awards for three
years running.Welcome sessions
are also held in branches, bringing
together hundreds of new clients.
This ability to act, to become
involved, and to share is founded
on a positive view of human
nature and is an excellent illustration
of the spirit of the Banque Populaire
Group. It creates local and regional
links between member-stakeholders
and the staff in the Banque Populaire
banks. By the end of 2004, all
Banque Populaire banks had put
forward action plans to strengthen
action in this area or had had
resolutions adopted by their Boards
of Directors.
In addition a working party
consisting of nine Group Directors
has been appointed by Group
Chairman, Philippe Dupont, to
produce a White Paper on memberstakeholders, to outline a new
framework for the group’s
cooperative dimension for the
next decade.This working party
has drawn heavily on the work
carried out by the 34 Group
Directors who took part in the
seminar held in the first half
of 2004 on the theme of “Banque
Populaire Values and MemberStakeholders: a strategic challenge
for the development of the Banque
Populaire Group” (see inset).
Populaires has produced tools
and operating manuals, that have
Group structure
been warmly welcomed by the
banks, to support the flow of
information.These include an
intranet service called Societatis,
an enhanced dashboard, regular
meetings of the working parties
responsible for memberstakeholders, and an annual
decentralized meeting of memberstakeholders, the minutes of
which take the form of a DVD
which is widely distributed to all
those concerned with the memberstakeholder base whether
on a policy or operational level.
A cartoon version of high points in
the life of the Banque Populaire
Group will be distributed in 2005.
A special issue of the France 2’s
“On vous dit pourquoi” (We’ll tell
you Why) TV program, presented
by Jérôme Bonaldi et Eglantine
Emeye, was recorded called “Banque
et Populaire à la fois: On vous dit
pourquoi” (“A Bank AND Popular:
We’ll tell you Why). For the first
time a bank – Banque Populaire –
took the initiative of appearing
in a TV studio to explain in easily
accessible terms how the Banque
Populaire Group differs from
other banks. In the studio, memberstakeholders related their roles
in the life of their local and regional
communities. Innovative reports
showed the scope of the Group’s
action.The DVD version of this
program will be widely distributed,
throughout 2005 and 2006, to
clients, member-stakeholders
and staff.
banks will further expand
their activities in this area and
devote greater resources to it.
They will strengthen the role
of Directors as ambassadors for
the Banque Populaire Group and
key players in the renewal of its
cooperative mission, at the National
Directors’ Convention, christened
“The heart of cooperation”,
on June 22, 2005 in Paris.
Entrepreneurship, Cooperation,
Humanity: the Group’s values
For decades the Banque Populaire Group has played an active role in the
French economy at both regional and national level. Every day the Group
demonstrates that it has retained its own distinctive style, that it has forged
a strong personality. In the future, just as in the past, the Group will continue
to be guided by three fundamental principles: Vision, Cooperation and
Humanity.
Entrepreneurship. Founded by entrepreneurs for entrepreneurs, the Banque
Populaire Group encourages entrepreneurship. It seeks to liberate the
creative energy of its clients and its staff. It respects bravery, tenacity and
enthusiasm amongst people developing their professional or personal
projects. The vision of the entrepreneur requires optimism. It is a source
of constant progress.
Cooperation. The Banque Populaire Group’s history, its way of doing
business and its day-to-day experience shows its dedication to the
cooperative spirit. Cooperation means working together for the common
good, accepting one’s full responsibility to one’s partners and society.
It implies mutual trust. It is meaningless unless it is for the long term.
It withstands the pressures of short-termism.
Humanity. The Banque Populaire Group is built on respect for the lifestyles,
sensitivities, expectations and individuality of its clients and partners.
Every person and every project is unique. To succeed they need to be
listened to and informed in a clear and transparent way, to be understood.
Putting the individual at the heart of the process gives shape and strength
to the banking relationship.
29
Initiatives
Déclic Clubs are groups of member-stakeholders involved in voluntary
work – men or women from the same town or region – who draw
on their initiative, skill and contacts to promote citizenship projects.
Regional initiative awards provide annual recognition for voluntary
projects that improve the facilities of a region. Whether on the initiative
of an individual or an organization these projects cover the natural,
architectural, cultural, professional and economic heritage of the regions
of France.
Welcome sessions provide new clients and new member-stakeholders
of a branch with an opportunity to meet branch staff and members of the
bank’s executive management. A presentation of the relationship of the
Banque Populaire bank to the Banque Populaire Group is followed by a
chance to meet and discuss and for clients to express their expectations
of the bank.
30
Banque Populaire banks
True to their cooperative values, the Banque Populaire banks
foster close, lasting relationships with their member-stakeholders
and clients. They are key players in their regional economy.
€4,967
million
Net banking income
€838
million
Earnings capacity
65.8%
Cost/income ratio
Group structure
Banks with the
cooperative spirit
at their core
Member-stakeholder
clients at the heart
of the organization
The Banque Populaire banks draw
their strength from the spirit that
inspired their creation by a group
of men and women aiming to take
control of their own destiny.This
is reflected in their cooperative
status and the way in which they
conduct their day-to-day business.
The status of member-stakeholder
clients is unlike any other.Their
capital investment can not be
speculative in nature and is not
made with a view to generating a
profit through large dividends.
But if member-stakeholders are
not traditional investors, nor
are they traditional clients.They
subscribe to the key cooperative
value of loyalty.They are committed
to a long-term relationship
and have a natural tendency to
introduce new clients, thus
enlarging the mutual base.
They are firmly rooted in the
cooperative movement which
places the individual – whether a
client, member-stakeholder or
employee – firmly at the center
of their concerns.
incorporated as sociétés anonymes
coopératives de banque populaire à
capital variable(1).The banks represent
the cooperative dimension of the
Banque Populaire Group.At the end
of 2004 there were 22 Banque
Populaire banks: the 20 regional
banks, CASDEN Banque Populaire
and Crédit Coopératif.
Under their cooperative status,
clients of all of these banks
can become member-stakeholders,
providing that they meet the criteria
set out in the bank’s membership
policy.The remuneration of the
capital invested may not exceed the
average return on bonds issued
by private sector companies.
At end-2004 the Banque Populaire
banks were owned by more than
2,770,000 member-stakeholders,
embodying the cooperative spirit
on a daily basis.
The cooperative spirit ensures an
emphasis on long-term growth at
the Banque Populaire banks. Part of
the very essence of a cooperative
company is that it represents
the freely elected association of
individuals seeking to provide a
long-term solution to their
shared economic requirements.
The importance of these shared
cooperative values has allowed
the Group to expand in recent
years. In 2003, Crédit Coopératif
decided to become a new Banque
Populaire bank, whilst Crédit
Maritime Mutuel has become a
bank affiliated to Banque Fédérale
Cooperative status gives priority
to collective investment
over individual investment.The
optimization of profits, a way
of assessing the efficiency of any
company, becomes an essential
step towards fulfilling the
cooperative company’s service
to the common interest. Such
a project is long-term in nature
and requires the absence of
conflicts of interest between
member-stakeholders and clients.
Reserves do not contribute
to the value of the stakes in the
company but are simply a
collective asset of current and
future member-stakeholders.
Member-stakeholder clients
contribute to the life of the bank:
they understand its constraints,
they support its ambitions and help
drive them forward on a daily basis.
Strong regional roots
During 2004 the Banque Populaire
banks proudly restated the features
that set them apart. As cooperative
regional banks, they demonstrate
every day their closeness to clients
in all the different senses of the
term.This cooperative, human
dimension has been adopted as a
major pillar of future expansion.
The Banque Populaire banks have
retained and developed the
regional focus which led to their
creation. For them, being a
regional bank goes much deeper
than simply providing services
in a particular geographical area.
It means being fully involved in
and committed to developing the
regional economy and dedicated
to serving the local community.
Their 331 Directors, including
18 non-voting Directors (but
not including Crédit Coopératif
whose Directors are legal persons)
include 176 business owners or
senior executives, 28 tradespeople
and independent retailers, 9 farmers
and 27 self-employed professionals.
All of them maintain close ties
with local community and business
organizations as well as local
chambers of commerce, in many
cases serving on their boards.
This involvement of Directors in
all areas of regional life gives the
Banque Populaire banks an in-depth
understanding and knowledge
of their local economy.They thus
cement particularly strong links
with their regions and are key
Closeness: a major factor in choosing,
and staying with a bank
Closeness in banking relationships has long been a feature of the Banque
Populaire Group and is one of the main pillars of its growth plans. Closeness
takes many forms:
n geographical closeness achieved through a dense coverage of the
country and a presence in other centers of influence (to provide continuity
of service to French people moving house);
n closeness to the situation so that we are there when a client has a
project in mind;
n local decision making;
n and technical closeness through ever greater use of tools like the internet.
(1) With the exception of BRED Banque Populaire, which is a société anonyme coopérative de banque populaire à capital fixe
31
A powerful
distribution
structure
>>> players in regional development.
They serve to reconcile the
interests of their memberstakeholders, clients, staff, and local
socio-economic environment.
First-class
regional players
32
With the European Union
increasingly becoming a community
of regions, several Banque
Populaire banks have merged to
create major regional players.
By joining forces they not only
strengthen their capital base,
but also enhance their ability
to support clients, sharpen their
regional focus and pave the way
for gains in market share.
At the same time employees
benefit from a wider range
of career opportunities.Today’s
new communications technologies
provide an opportunity to redraw
the maps and allocate resources
more effectively, without ever losing
sight of the overriding need to
maintain close relations between the
bank and its member-stakeholders,
its clients and the many other
players in the regional economy.
The creation in 2004 of Banque
Populaire Rives de Paris, from the
merger of Banque Populaire Nord
de Paris and Banque Populaire
BICS, marks the latest step in
what has been a growing trend
for a number of years.
is located in the heart of one
of Europe’s most important
economic regions, and covers
seven departments in the Ile
de France and Oise regions.
The ambitions of the new bank,
which had 400,000 customers
and a penetration rate of 6.3%
when it was created, will be
backed by the expertise and
dedication of its 2,700 staff.
Close relationships
with clients
A local personalized service
forms the cornerstone of the
Banque Populaire Group’s client
relationships.This closeness is
made possible by highly skilled and
motivated teams, and enables the
identification of the best solutions
for each client based on a global
approach to their needs.
Every member of staff at the
is aware that the aim is not
to get clients to sign up
immediately for this savings
product or that loan, but
to gain first an in-depth
understanding of each client’s
needs and expectations.This focus
on client requirements, and on
the way they change from one
moment to the next, has helped
shape a common approach
throughout the Banque Populaire
n
Steady growth in the branch network
- 106 new branches in 2004
(net increase of 86)
n
Successful multi-channel integration:
- 61 million internet connections
- The first bank to offer SMS account
access
- Consolidation of LineBourse
as the Group’s on-line brokerage
facility
network. It is this same approach
that allows client relationships
to be built and developed
over the long term.
Each year the Banque Populaire
Group expands its branch
network. In 2004 a net 86 new
branches were added, bringing
the total to 2,692 by the year
end (including Crédit Coopératif
and Crédit Maritime Mutuel).
This long-term program to improve
coverage has led to an additional
640 outlets being opened over the
last four years.
For the Banque Populaire banks,
local banking remains the main
vector of growth thanks to
the size, quality and stability of
the client base and the long-term
deposits they bring. In practice
this local presence is backed up
by close relations in all their
other forms.
Technological advances in remote
banking channels have enabled
subscribers to enjoy on-line
access to all banking services,
with 61 million connections in
2004.The same is true of the 80%
of business clients for whom the
Banque Populaire Group provides
electronic transfer services.
In order to meet client
expectations the Banque Populaire
banks have strengthened their
resources in all areas, and
particularly in asset management,
project financing and insurance.
Group structure
Having set itself the target of
becoming a major European
name in the banking and insurance
sectors, the Banque Populaire
Group has also developed the
strategic alliances necessary,
drawing on networks such as the
Socama mutual guarantee companies,
Acef and CASDEN Banque
Populaire (cooperative mutual bank
serving the employees of the
French national education, research
and cultural systems) and their
million member-stakeholders.
Bylaws of the
Banque Populaire
banks
“sociétés anonymes coopératives
de banque populaire” governed
by Art. L. 512-2 et seq of the
Monetary and Financial Code
and the various legislative texts
concerning the “Banques Populaires”,
the Cooperative Movement
Act of September 10, 1947,Art. I
to IV of book II of the Commercial
Code (Code de commerce), the first
chapter of section I of book V
and section III of the Monetary
and Financial Code, the related
enabling legislation and by
their individual bylaws.
Their bylaws were extensively
amended to comply with the
provisions of the Corporate
Governance Act of May 15, 2001.
To enable the production of
consolidated financial statements
for the Banque Populaire Group
under the new IFRS accounting
standards, including IAS 32 regarding
debt and equity instruments,
the Board of Directors of Banque
Fédérale des Banques Populaires,
meeting on December 15, 2004,
requested the Banque Populaire
banks with variable capital to make
the changes to their bylaws
needed in order to allow the
shares in these banks to be
recognized as capital instruments
for accounting purposes.
These changes to the bylaws
will be submitted to memberstakeholders at the Combined
General Meeting held to approve
financial statements for 2004.
licensed to operate as credit
institutions and are thus authorized
to conduct the following
transactions:
n all banking transactions
with trading and manufacturing
companies, small businesses,
agricultural ventures, selfemployed professionals, whether
incorporated or unincorporated,
as well as with any other
grouping or legal entity, which
may or may not be memberstakeholders.They may also
provide services to personal
banking clients, participate
in any and all transactions
guaranteed by the mutual
guarantee companies, make
loans to holders of CEL (Compte
Epargne Logement) or PEL (Plan
Epargne Logement) home-savings
accounts for the acquisition
of a residential property, and
collect deposits from private
individuals and companies;
n all related transactions as
defined in Art. L. 311-2 of the
Monetary and Financial Code
and all investment services
governed by Art. L. 321-1 and
L. 321-2 of the Monetary and
Financial Code and all brokerage
and insurance transactions;
all real estate and securities
investment transactions.They
may purchase any and all
marketable securities, for
their own account, and acquire
equity interests in any and all
companies, associations and
other unincorporated entities
and more generally, carry out any
transaction of any type related
directly or indirectly to their
corporate purpose and likely
to facilitate the development or
achievement of this purpose.
n
Any individual or company is
eligible to become a memberstakeholder of a Banque Populaire
bank, regardless of whether
they are clients of the bank.
To become a member-stakeholder
they must be approved by the
bank’s Board of Directors and be
recognized as creditworthy.
The bylaws of the Banque
Populaire banks state that their
Boards of Directors are not
required to explain the reasons
for rejecting any application
to become a member-stakeholder.
Member-stakeholders’ liability for
any losses of a Banque Populaire
bank is limited to the value of their
shares in the bank.
All member-stakeholders are
entitled to attend General Meetings
and vote on resolutions personally
or by proxy, in accordance with
the applicable law and regulations,
irrespective of the number of
shares they own.
All member-stakeholders may
vote by correspondence using
a postal voting form addressed
to the Banque Populaire bank in
accordance with applicable law
and regulations.
As stipulated in Art. L. 512-5 of
the Monetary and Financial Code,
at General Shareholders’ Meetings
no member-stakeholder may
exercise a number of voting rights
– including proxy votes and
votes in respect of shares held
indirectly – representing more than
0.25% of the total voting rights
attached to shares of the Banque
Populaire bank concerned.
All shares of the Banque Populaire
banks are issued in registered
form.They may not be sold
or transferred without the prior
authorization of the Board of
Directors.The capital stock
of all of the Banque Populaire
banks (except for BRED Banque
Populaire) is variable.The capital
is increased on issuance of shares
to new member-stakeholders or
to existing member-stakeholders,
in both cases with the prior
approval of the Board of Directors.
The Board of Directors may
set a ceiling on the number of
shares that may be held by a single
member-stakeholder. Different
ceilings may be set for different
categories of member-stakeholders.
The capital may be reduced by
buying back member-stakeholders’
shares. If the buybacks would have
the effect of reducing the capital
to less than three-quarters of the
highest amount reached since the
Banque Populaire bank was set up,
the prior authorization of Banque
33
>>> must be obtained before the
capital may be reduced. In addition,
under no circumstances may
the capital be reduced to below
the minimum capital required
under banking regulations.
The bylaws also stipulate that
the dividends paid on shares, as
decided each year by the Annual
Shareholders’ Meeting, may not
exceed the average corporate
bond yield as published by the
Ministry of the Economy (Art. 14
of the Cooperative Movement Act
of 1947 and Art. L. 512-3 of the
Monetary and Financial Code).
Dividends on shares acquired or
surrendered during the year are
paid pro rata to the number of full
months for which the shares were
held.The price at which shares are
bought back by a Banque Populaire
bank may not exceed their par
value. Buybacks are effected no
later than the thirtieth day following
the Annual Shareholders’ Meeting
held to approve the accounts for
the year in which the withdrawal
of the member-stakeholder and the
surrender of his or her shares was
approved by the Board of
Directors. In accordance with
Art. 39 of the bylaws, dividends
are paid no later than nine months
after the end of the fiscal year.
The details of dividend payments
are determined by the General
Meeting of Shareholders or, failing
that, by the Board of Directors.
Populaires may authorize the
Banque Populaire banks to
capitalize a portion of their
reserves. In this case the related
capital increase must be for
double the amount concerned,
with half being paid up by capitalizing
reserves and half in cash.
In addition, no more than half
of the bank’s reserves may be
so capitalized.
In cases where reserves are
capitalized on several occasions, the
portion that may be capitalized
on each occasion may not exceed
one half of the amount by which
reserves have increased since the
previous capitalization (Art. I of
the Cooperative Banking Act
of August 18, 1942 (amended)).
A trend towards the pooling of expertise
34
End-1999: 30 Banque Populaire regional banks
End-2004: 20 Banque Populaire regional banks
Mergers completed
Merger feasibility studies
Group structure
Banque Populaire banks at January 1, 2005
12
5
17
5
2
9
17
14
20
3
4
10
8
6
1
18
13
19
5
Martinique
11
15
5
5
Guadeloupe
7
French
Guyana
5
5
Mayotte
Reunion
16
15
>>>
1 BANQUE POPULAIRE DES ALPES - 2 BANQUE POPULAIRE D’ALSACE - 3 BANQUE POPULAIRE ATLANTIQUE - 4 BANQUE
POPULAIRE BOURGOGNE FRANCHE-COMTÉ - 5 BRED BANQUE POPULAIRE - 6 BANQUE POPULAIRE CENTRE
ATLANTIQUE - 7 BANQUE POPULAIRE CÔTE D’AZUR - 8 BANQUE POPULAIRE LOIRE ET LYONNAIS - 9 BANQUE POPULAIRE
LORRAINE CHAMPAGNE - 10 BANQUE POPULAIRE DU MASSIF CENTRAL - 11 BANQUE POPULAIRE DU MIDI - 12 BANQUE
POPULAIRE DU NORD - 13 BANQUE POPULAIRE OCCITANE - 14 BANQUE POPULAIRE DE L’OUEST - 15 BANQUE POPULAIRE
PROVENÇALE ET CORSE - 16 BANQUE POPULAIRE DES PYRÉNÉES-ORIENTALES, DE L’AUDE ET DE L’ARIÈGE - 17 BANQUE
POPULAIRE RIVES DE PARIS - 18 BANQUE POPULAIRE DU SUD-OUEST - 19 BANQUE POPULAIRE TOULOUSE-PYRÉNÉES 20 BANQUE POPULAIRE VAL DE FRANCE - CASDEN BANQUE POPULAIRE* - CRÉDIT COOPÉRATIF*
*Banque Populaire banks with national coverage
End-2004 figures
1
BANQUE POPULAIRE DES ALPES
35
www.alpes.banquepopulaire.fr
Jean Clochet
Number of member-stakeholders
CHAIRMAN
Number of employees
Alain Rogès
Number of branches
(1)
84,842
1,300
144
Regulatory capital
€467 m
Net banking income
€220 m
Net income
€36 m
CHIEF EXECUTIVE
OFFICER
2
BANQUE POPULAIRE D’ALSACE
www.alsace.banquepopulaire.fr
Thierry Cahn
CHAIRMAN
Number of employees
Dominique Didon
Number of branches
CHIEF EXECUTIVE
OFFICER
(1)
59,603
1,414
97
Regulatory capital
€389 m
Net banking income
€182 m
Net income
€18 m
3
BANQUE POPULAIRE ATLANTIQUE
www.atlantique.banquepopulaire.fr
François Ferdinand
CHAIRMAN
Number of employees
Yves Gevin
Number of branches
(1)
63,557
1,475
142
CHIEF EXECUTIVE
OFFICER
Regulatory capital(2)
€494 m
Net banking income(2) €225 m
Net income(2)
€31 m
4
BANQUE POPULAIRE BOURGOGNE FRANCHE-COMTÉ
www.bpbfc.banquepopulaire.fr
Jean-Philippe Girard
Number of member-stakeholders 127,025
Regulatory capital
€580 m
CHAIRMAN
Number of employees(1)
Net banking income
€297 m
Bernard Jeannin
Number of branches
1,668
170
CHIEF EXECUTIVE
OFFICER
Net income
€48 m
5
BRED BANQUE POPULAIRE
www.bred.banquepopulaire.fr
Stève Gentili
CHAIRMAN
Number of employees
Net banking income
€610 m
Jean-Michel Laty
Number of branches
Net income(2)
€117 m
Regulatory capital
€257 m
Net banking income
€139 m
(1)
3,121
288
€1,002 m
(2)
CHIEF EXECUTIVE
OFFICER
6
BANQUE POPULAIRE CENTRE ATLANTIQUE
36
www.centreatlantique.banquepopulaire.fr
64,562
René Clavaud
CHAIRMAN
Number of employees
944
Gérard Guignat
Number of branches
98
(1)
Net income
CHIEF EXECUTIVE
OFFICER
€14 m
7
BANQUE POPULAIRE CÔTE D’AZUR
www.cotedazur.banquepopulaire.fr
Bernard Fleury
CHAIRMAN
Number of employees
949
Number of branches
86
CHIEF EXECUTIVE
OFFICER
(1)
34,096
Regulatory capital
€198 m
Net banking income
€145 m
Net income
€16 m
Group structure
8
BANQUE POPULAIRE LOIRE ET LYONNAIS
www.loirelyonnais.banquepopulaire.fr
Hervé Genty
CHAIRMAN
Daniel Duquesne
Number of branches
51,947
1,157
88
Regulatory capital
€360 m
Net banking income
€188 m
Net income
€33 m
CHIEF EXECUTIVE
OFFICER
9
BANQUE POPULAIRE LORRAINE CHAMPAGNE
www.lorrainechampagne.banquepopulaire.fr
Michel Hellenbrand
Regulatory capital
€592 m
CHAIRMAN
Net banking income
€272 m
Jacques Hausler
Number of branches
1,420
135
Net income
€31 m
CHIEF EXECUTIVE
OFFICER
10
BANQUE POPULAIRE DU MASSIF CENTRAL
www.massifcentral.banquepopulaire.fr
Philippe Hospital
CHAIRMAN
Number of employees
843
Christian du Payrat
Number of branches
84
(1)
50,036
Regulatory capital
€252 m
Net banking income
€119 m
Net income
€15 m
CHIEF EXECUTIVE
OFFICER
11
BANQUE POPULAIRE DU MIDI
37
www.midi.banquepopulaire.fr
41,198
Claude Cordel
CHAIRMAN
Number of employees
601
François Moutte
Number of branches
60
(1)
Regulatory capital
€254 m
Net banking income
€123 m
Net income
€27 m
CHIEF EXECUTIVE
OFFICER
12
BANQUE POPULAIRE DU NORD
www.nord.banquepopulaire.fr
Jacques Beauguerlange
CHAIRMAN
Number of employees
Yves Breu
Number of branches
CHIEF EXECUTIVE
OFFICER
(1)
54,353
1,039
81
Regulatory capital
€249 m
Net banking income
€141 m
Net income
€15 m
13
BANQUE POPULAIRE OCCITANE
www.occitane.banquepopulaire.fr
Jean-Paul Malrieu
CHAIRMAN
Alain Condaminas
Number of branches
58,176
1,062
100
Regulatory capital
€305 m
Net banking income
€163 m
Net income
€28 m
CHIEF EXECUTIVE
OFFICER
14
BANQUE POPULAIRE DE L’OUEST
www.ouest.banquepopulaire.fr
Pierre Delourmel
CHAIRMAN
Philippe Queuille
Number of branches
56,477
1,374
122
Regulatory capital
€401 m
Net banking income
€201 m
Net income
€24 m
CHIEF EXECUTIVE
OFFICER
15
BANQUE POPULAIRE PROVENÇALE ET CORSE
www.provencecorse.banquepopulaire.fr
Jean-Louis Tourret
CHAIRMAN
Number of employees
700
François-Xavier de Fornel
Number of branches
76
(1)
33,668
Regulatory capital
€204 m
Net banking income
€108 m
Net income
€16 m
CHIEF EXECUTIVE
OFFICER
16
BANQUE POPULAIRE DES PYRÉNÉES-ORIENTALES,DE L’AUDE ET DE L’ARIÈGE
38
www.pyreneesaudeariege.banquepopulaire.fr
96,390
Bernard Vergès
CHAIRMAN
Number of employees
948
François Moutte
Number of branches
65
(1)
Regulatory capital
€259 m
Net banking income
€148 m
Net income
€27 m
CHIEF EXECUTIVE
OFFICER
17
BANQUE POPULAIRE RIVES DE PARIS
www.rivesparis.banquepopulaire.fr
Marc Jardin
Regulatory capital
€731 m
CHAIRMAN
Number of employees
Net banking income
€425 m
Jean Criton
Number of branches
CHIEF EXECUTIVE
OFFICER
(1)
2,612
186
Net income
€53 m
Group structure
18
BANQUE POPULAIRE DU SUD-OUEST
www.sudouest.banquepopulaire.fr
Jean-Louis d’Anglade
CHAIRMAN
Francis Thibaud
Number of branches
52,367
831
94
Regulatory capital
€216 m
Net banking income
€134 m
Net income
€21 m
CHIEF EXECUTIVE
OFFICER
19
BANQUE POPULAIRE TOULOUSE-PYRÉNÉES
www.toulousepyrenees.banquepopulaire.fr
Michel Doligé
CHAIRMAN
Richard Nalpas
Number of branches
68,546
1,062
103
Regulatory capital
€359 m
Net banking income
€179 m
Net income
€29 m
CHIEF EXECUTIVE
OFFICER
20
BANQUE POPULAIRE VAL DE FRANCE
www.bpvf.banquepopulaire.fr
Jean-Pierre Tremblay
CHAIRMAN
Number of employees
Net banking income
Number of branches
(1)
2,111
193
€804 m
(2)
Net income(2)
€334 m
€54 m
CHIEF EXECUTIVE
OFFICER
39
CASDEN BANQUE POPULAIRE
www.casden.banquepopulaire.fr
Pierre Desvergnes
Number of member-stakeholders 1,015,669
CHAIRMAN
Number of employees
Net banking income
(1)
Number of branches
423
1
€906 m
(2)
Net income(2)
€204 m
€46 m
CRÉDIT COOPÉRATIF
www.credit-cooperatif.coop
(1) Active employees
(2) Consolidated data
CHAIRMAN AND
CHIEF EXECUTIVE
OFFICER
Number of employees
(1)
Number of branches
35,389
1,509
Net banking income
98
€558 m
(2)
Net income(2)
€265 m
€31 m
40
Banque Fédérale
A bank with major responsibilities: promoting the Group’s
development, developing strategy, and supervising, coordinating
and managing the Group.
Central body and guarantor
Holding company of
of the Group’s liquidity and capital adequacy
Group structure
In 2004, Banque Fédérale des Banques Populaires
strengthened its position in the performance of
its tasks of federating the Group’s growth and acting
as its central body and holding company.
Representing
the Group
It combines the functions of
the former Chambre Syndicale
des Banques Populaires, namely
internal supervision and control
functions and the role of the
central body within the meaning
of French banking law, and of
the former Caisse Centrale des
Banques Populaires, which in
1999 refocused on the management
of cash surpluses at the Banque
Populaire banks and the role as
holding company of Natexis
Banques Populaires.
A bank in its own right, subject
to French banking law, Banque
plays a role that sets the Banque
Populaire Group apart from
other banking institutions. Banque
does not head the Banque
Populaire Group, but rather
operates at the heart of the
organization. It is responsible for
determining Group strategy,
coordinating the network, managing
the mutual guarantee mechanism
and supervising subsidiaries, notably
Natexis Banques Populaires, for
which it is the holding company.
Populaires’ decision-making body,
the Board of Directors, consists
of nine Chairmen and six Chief
Executive Officers of Banque
Populaire banks.The Board of
Directors is the Group’s main
corporate governance structure
and its decisions apply to
the Group as a whole, as well as
to all of its component parts.
In keeping with the Group’s
cooperative values and its federal
structure, the members of the
Board are elected by their peers
for a three year term. One third
of Directors retire by rotation
each year.The Board of Directors
plays an essential role in the Group’s
development and Directors
devote one third of their time
to Board matters, attending
meetings of the Banque Fédérale
des Banques Populaires Board,
the Boards of subsidiaries and the
Committee.
A cooperative
organization
The active involvement of all
Group banks results in Banque
organizing regular working
parties and discussions: the Federal
Committee, which brings together
members of the Boards of
Directors, Commission Chairmen
and senior managers; the Federal
Conference, open to all Chairmen,
Chief Executive Officers and
other senior managers; and Federal
Commissions, which consider
various topics at the request
of the Board of Directors
and on the recommendation
of the Chairman of the Group.
The cross-Group Commissions
contribute their views and their
expert opinions in areas such
as development, communication,
technology and information
systems, risk management and
finance, human resources
and development in Europe
and internationally.
Federating strategic
projects
Positioned at the heart of the
Banque Populaire Group, Banque
continued in 2004 to initiate
strategic decisions affecting the
Group and support their
implementation. Banque Fédérale
des Banques Populaires takes
the role of driving the Group’s
thought processes, and is thus
fully involved in identifying and
preparing key decisions for the
future of the Group.
It acquires direct interests in
other groups, such as the
majority holdings in BICEC in
Cameroon or in SBE, the Group’s
direct banking arm, the minority
2% stake in DZ Bank, the central
body of a network of nearly
1,400 German cooperative banks,
and the stake in ÖVAG’s Central
European subsidiaries.
At the end of 2004, Banque
and two central banks of German
cooperative bank networks,
DZ Bank and WGZ Bank, joined
forces with ÖVAG in Volksbank
International AG (VBI), to create
a joint retail banking platform
in Central and Eastern Europe.
Populaires had previously initiated
the strategic decision to acquire
Coface, a world-recognized and
global specialist in credit insurance
and credit management (via
Natexis Banques Populaires, which
now owns 100% of Coface’s capital).
Populaires also prepared the entry
of Crédit Coopératif as one of
the Banque Populaire banks, as well
as the affiliation of Crédit Maritime
Mutuel.
41
At December 31, 2004, the Executive Committee of Banque Fédérale des Banques Populaires was as follows:
42
Philippe Dupont
Michel Goudard
Bruno Mettling
Françoise Bourgeois
Francis Crédot
Tanguy du Chéné
Chantal Fournel
Bernard Gouraud
Olivier Haertig
Pierre Jacob
Martine Lefebvre
Patrick Maheut
Chairman and Chief Executive Officer
Deputy Chief Executive Officer
Deputy Chief lainer Officer
Senior Executive Vice President, Finance
Senior Executive Vice President, Legal Affairs
Senior Executive Vice President, Human Resources
Senior Executive Vice President, Logistics and Organization
Senior Executive Vice President, Technologies
General Secretary
Senior Executive Vice President, Group Financial Communication
Senior Executive Vice President, Internal Audit and Risk Management
Senior Executive Vice President, Development
Olivier Haertig
Chantal Fournel
Francis Crédot
Françoise Bourgeois
Tanguy du Chéné
Bruno Mettling
Philippe Dupont
Michel Goudard
Martine Lefebvre
Bernard Gouraud
Patrick Maheut
Pierre Jacob
The Executive Committee
Group structure
Guaranteeing the
liquidity and capital
adequacy of the
Banque Populaire
Group
Populaires meets the requirement
of French banking law that
mutual banks should have a
central body responsible for
guaranteeing their liquidity and
capital adequacy and for
supervising and controlling
the activities of the Group.
Populaires is thus also in a
position to offer other banks
and financial institutions
seeking such a central body
the opportunity to join the
The guarantee system is backed
by the capital of all the banks
covered, through a mechanism of
mutual support (see Internal
Financing Mechanisms, page 21).
All Banque Populaire banks,
together with the mutual guarantee
companies guaranteeing the
loans of these banks, are covered
by this mechanism.
Through this system, Banque
can trigger the mutual support
mechanism should any Banque
Populaire bank be faced with
a lack of liquidity or become
undercapitalized, by calling on
the other Banque Populaire banks
to contribute capital within the
limit of their own resources.
As a last resort Banque Fédérale
des Banques Populaires will
also provide capital from its own
resources.Thus the liquidity
and capital adequacy of the Banque
Populaire banks is guaranteed
by two complementary systems
of protection.
The first is the “federal solidarity
fund” included in the fund for
general banking risks set aside by
Populaires, which can call upon
to help top up this fund should
the need arise.
The second is the “regional
solidarity fund” set up by the
Banque Populaire banks and
included in their own funds for
general banking risks. In addition,
and in common with all French
credit institutions, all members
of the network contribute to
the Fonds de Garantie des Dépôts
(deposit guarantee fund) set up
in application of the Depositors’
Protection Act.
The holding company
of Natexis Banques
Populaires
Listed in section A of Paris Eurolist,
is the Banque Populaire Group’s
financing, investment banking
and services bank. It is under the
direct control of Banque Fédérale
At December 31, 2004, Banque
Fédérale owned 75.6% of Natexis
Banques Populaires, including
2.18% held by the Alizé Levier
mutual fund.
Strategic decisions concerning
the Group’s investment in
are taken by the Board of
A credit institution
in its own right
As a credit institution licensed
to conduct banking transactions,
Populaires manages a cash pool
and also meets their refinancing
needs. Banque Fédérale des Banques
Populaires devolves the bulk of
responsibility for these functions
to Natexis Banques Populaires
under a specific agreement.
More generally, as the Banque
Populaire Group’s central
treasurer, Banque Fédérale
des Banques Populaires is
authorized to conduct all types
of banking transactions
and to provide any investment
services designed to facilitate
its performance of this function.
Coordinating major
Group projects
The Directors of Banque
are also responsible for devising
projects and checking their
overall feasibility before handing
them over to other Group
structures for implementation.
This responsibility concerns
both new products and projects
to structure Group operations
more efficiently.
In this field, 2004 saw continued
work on a number of major
projects such as preparations for
the Mac Donough ratio and
IFRS accounting standards and
the migration to the i-BP
IT platform.
The i-BP project saw considerable
progress, with six regional banks
migrating to the shared platform.
These successful migrations were
completed with no interruption
to normal business, ensuring that
the same high level of service
quality was maintained throughout.
Populaires also oversaw the
completion of the first phase
of the “Informationnel” project.
This project brings together
Natexis Assurances, Natexis
Asset Management, Natexis
Paiements and i-BP, in a project
designed to create a Group
data warehouse based on a
common architecture and
pooled IT tools and resources.
The data stored is available
to facilitate decision-support
requests requiring large
volumes of detailed data.
All production data, organized,
audit-trailed, and collated, has
now been made available to the
Banque Populaire regional banks,
in the form of a data warehouse
and themed “data stores”.
Thus the Banque Populaire banks
can generate “dashboard”
displays of key business indicators,
which can be made available
over intranets.
43
44
Natexis Banques Populaires builds long-term partnerships,
on both the national and international level, with a client base
of large and medium-sized companies, institutional clients
and the Banque Populaire network.
More than
12,000 staff
150 offices including 116 outside France
Group structure
A major player in financing, investment banking and
services, Natexis Banques Populaires, the Banque Populaire
Group’s listed vehicle, works with nearly all major French
companies. Through its subsidiary Coface, it is one of the world’s
leading providers of credit insurance and credit management
services.
A stronger identity
In 2004, Natexis Banques
Populaires sought to strengthen
its identity as a unique company,
by highlighting its activities
and its values.
Reorganization into four
core businesses
To make itself even more customercentric, Natexis Banques Populaires
reorganized its activities in 2004.
It identified four core businesses:
Corporate and Institutional Banking
and Markets; Private Equity and
Wealth Management; Services; and
Receivables Management.
This new organization will enhance
the services offered to Natexis
Banques Populaires’ own client base
of large companies and institutions,
as well as to the Banque Populaire
regional banks for whom it
develops products and marketing
and advertising campaigns.
management tools that are
consistent and suited to its size,
including financial accounting,
cost accounting, internal control
and risk management.
Accounting control is now more
fluid throughout the Natexis
Banques Populaires group, because
new structures and procedures
have been adopted and new IT
systems have been implemented.
Transverse functions
strengthened
The Operational Risks
department has implemented
a common framework for managing
operational risks throughout
the group. It is based on a list
of good operational risk
practices, developed by the
regulatory authorities ahead
of implementation of the
Basel II ratios.
2004 also saw the launch of
a procurement optimization
program.The procurement
function will be enhanced in 2005
and ultimately become a crossfunctional department reporting
to Executive Management, with
authority to step in on any type
of purchase.
Better integration
of subsidiaries
Coface has been delisted.
On several occasions,
regulatory reform has moved
its corporate governance
rules closer to those of an
ordinary company, with
the French government
maintaining the right to
verify the quality of Coface’s
public service obligations.
The Chairman and Chief
Executive Officer are now
45
Cross-functional strategic
management
While it was implementing this
new organization, Natexis Banques
Populaires was also defining
a three-year plan, covering the
2005-07 period.The plan will
emphasize business development
and enable the bank to achieve
a higher rate of growth. It provides
a multi-year view of the bank’s
future and includes three-year
business plans for each activity.
These served as the foundation
for the 2005 budget.
Concerning strategic management,
continued to study the enterprise
systems development plan,
which aims to give the bank
a set of cross-functional strategic
Natexis Banques Populaires chooses
The Bank of New York as Global
Custodian
Natexis Banques Populaires has selected The Bank of New York,
a world leader in securities services, as the Global Custodian
for the Banque Populaire Group. The agreement will see The Bank
of New York providing a full range of services relating to the
custody of 8¤ 0 billion international securities held in 48 different
countries. At the same time, Natexis Banques Populaires will
become the local custodian for a large share of The Bank of New York’s
French assets.
This agreement will enable Natexis Banques Populaires to continue
to develop its offering of high-quality custody services, whilst meeting
the increasingly stringent requirements of clients.
Natexis Banques Populaires and The Bank of New York are
also discussing closer cooperation in the fields of off-shore fund
administration, custody and transfer agent services.
2004 results mark another step forwards
+10%
2,455
é2,708
+19%
+54%
é851
é
407
716
1,793
265
347
108
2002
2003
2004
2002
2003
2004
2002
2003
NET BANKING INCOME
GROSS OPERATING INCOME
NET INCOME
€ MILLIONS
€ MILLIONS
€ MILLIONS
2004
+8%
69.9
70.9
70.7
72.5
2002
2003
2004
2002
80.8
2003
é87.0
7.2%
2004
2002
8.1%
8.2%
2003
2004
AVERAGE OUTSTANDING LOANS
ASSETS UNDER MANAGEMENT(1)
TIER ONE RATIO
€ BILLIONS
€ BILLIONS
at December 31
at December 31
(1) Including private banking
46
>>> named according to the
rules of ordinary company law.
Government representatives
no longer sit on the Board of
Directors and have veto power
only over activities related to
public procedures.These changes,
together with the creation of
the Receivables Management
core business, will lead to greater
integration of Coface within
the bank, even while it maintains
its public service role.
At the end of 2004, Natexis
Banques Populaires acquired
all the shares of LineBourse held
by the Banques Populaires
regional banks. Natexis Banques
Populaires will continue to
maintain a high level of service
and customer satisfaction
by offering a high-quality, on-line
brokerage product.
Continued expansion
abroad
An International department
has been created within
the Corporate and Institutional
Banking and Markets core
business.This department
supervises all business
transacted outside France
and all international sales
and marketing activities.
Naturally, Natexis Pramex
International reports to
this department.The objective
is to accompany and
encourage the bank’s business
development, particularly
in Europe, where a broader,
transverse product range
should boost the bank’s
momentum.
Improved strategic
management of our
information systems
overhauled its IT system governance
in 2004, to improve management
of these systems better and turn
them into powerful tools in executing
the bank’s strategy.The new rules
will help improve the balance in
the relationship between the three
main forces within Natexis
Banques Populaires – Executive
Management, the core businesses
and Information Systems &
Logistics. Executive Management
will be able to play a more active
role, with more visibility on IT.
The publication at the end of 2004
of an IT system governance charter,
for implementation in 2005, marks
a first step in this direction.
Group structure
Four core businesses
to enhance
commercial
effectiveness
Corporate and
Institutional Banking
and Markets
Corporate and Institutional
Banking and Markets is the
new core business dedicated to
corporate and institutional
clients. In line with the bank’s
guiding strategic principles,
it has a customer-oriented
organization structure.
Two Sales departments, dedicated
respectively to Corporate
clients and Financial Institutions,
have been created to coordinate
and assist these sales forces.
To provide solutions tailored to
client needs, Global Relationship
Managers and Senior Bankers
work in close association
with all other Natexis Banques
Populaires’ business departments
and notably Corporate France,
International, Commodities,
Global Debt and Derivatives
Markets, Equity Group
and Mergers & Acquisitions.
Private Equity and
Wealth Management
Private Equity and Wealth
Management comprises
Natexis Private Equity, Banque
Privée Saint Dominique
and Natexis Private Banking
Luxembourg S.A.
Natexis Private Equity provides
financing at each stage of a
company’s development, from
seed capital to mezzanine finance,
finally bringing it to the point
where it is ready to launch an IPO.
It acquires minority or majority
interests, generally in unlisted
companies, which it holds for
an average of five years.
Banque Privée Saint Dominique,
which specializes in private asset
management, takes a customized
approach to wealth management,
combining diversified investment
services with legal and tax advice.
Natexis Private Banking Luxembourg
S.A. specializes in international
wealth management services.
Services: Asset
Management and
Insurance, and Banking
Financial and Technology
Services
Asset Management and
Insurance
Asset Management and Insurance
comprises three main areas:
insurance, fund management
and employee savings plans.
It provides Banque Populaire
Group clients with a full range
of savings, investment and
insurance products and services.
A total of 1,000 employees are
divided between eight subsidiaries:
Natexis Assurances, Natexis
Asset Management, Natexis Asset
Square, Natexis Axeltis Ltd, Natexis
Asset Management Immobilier,
Natexis Interépargne, Natexis
Epargne Entreprise and Natexis
Intertitres.
The growing importance
of Natexis Altaïr
In 2004 Natexis Altaïr continued to play an increasingly important
role within the Group, with major IT migrations such as that
of Banque Populaire du Midi. By 2005, nearly all of the Banque
Populaire regional banks will have joined the Group’s shared
i-BP IT platform. All of the group’s major IT resources will then
be hosted and operated by Natexis Altaïr.
Banking, Financial
and Technology Services
The Banking, Financial and
Technology Services Department
manages the back office processing
operations carried out by Natexis
Banques Populaires and the Banque
Populaire regional banks related
to payments and stock market
transactions.
It also provides services to a wide
range of clients outside the Banque
Populaire Group, including retail
banking networks, specialized banks
with or without a branch network
and financial institutions.
Securities custody and transaction
processing services are provided by
the Financial Services Department.
Electronic and standard payments
are handled by the Banking
Services Department.The Personal
Banking Services Department is
developing a multi-channel banking
offer.
Receivables
Management
Receivables Management comprises
four business lines: credit insurance,
factoring, business information
and trade receivables management.
Leveraging the resources and
expertise provided by Coface
and Natexis Factorem, it provides
solutions to a need shared
by all companies and financial
institutions, namely managing,
financing and protecting their
business relationships with
customers and suppliers. Natexis
Banques Populaires is at the
forefront of these four businesses
in France and worldwide.
Coface offers companies a broad
spectrum of trade receivables
management solutions through
its own network, spanning 58
countries, and through its partners
in the CreditAlliance network of
banks and insurance companies.
Natexis Factorem specializes
in providing trade receivables
management services through
the Banque Populaire Group’s
networks.
47
The Group’s international offices
48
ALICANTE
AMSTERDAM
BARCELONA
BERLIN
BIELEFELD
BIELLA
BIRMINGHAM
BONN
BRATISLAVA
BREDA
BRUSSELS
BUCHAREST
BUDAPEST
COLOGNE
DUBLIN
DÜSSELDORF
ESCHBORN
FRANKFURT
FREDERIKSBERG
HAMBURG
HANOVER
ISTANBUL
KARLSRUHE
KIEV
LA CORUÑA
LAMPERTHEIM
LAUSANNE
LINZ
LISBON
LJUBLJANA
LONDON
LOUVAIN-LA-NEUVE
LUXEMBOURG
MADRID
MAYENCE
MILAN
MONACO
MOSCOW
MUNICH
NUREMBERG
OSLO
PRAGUE
RIGA
ROME
SAINT-PETERSBURG
SAN SEBASTIAN
SEVILLE
SOFIA
STOCKHOLM
STUTTGART
TALLINN
VALENCIA
VIENNA
VILNIUS
WARSAW(1)
WATFORD
ZAGREB
ZURICH
BALTIMORE
BOGOTA
BUENOS-AIRES
CARACAS
CHICAGO
EAST WINDSOR
FAIRFIELD
GLENDALE
GREENWICH
GUAYAQUIL
HOUSTON
LIMA
LOS ANGELES
MEXICO CITY
MIAMI
NEW HAVEN
NEW YORK
PANAMA
PIERREFONDS
QUITO
SAN JOSE
SANTIAGO
SÃO PAULO
Group structure
ABIDJAN
ALGIERS
BAMAKO
COTONOU
DAKAR
DOUALA(2)
DUBAI
JOHANNESBURG
CAIRO
LOME
ORAN
OUAGADOUGOU
SETIF
TEHRAN
Coface
Joint network
ALMATY
BANGALORE
BANGKOK
BEIJING
HANOI
HO CHI MINH CITY
HONG KONG
JAKARTA
KUALA LUMPUR
LABUAN
MUMBAI
NEW DELHI
OSAKA
SECUNDERABAD
SEOUL
SHANGHAI
SINGAPORE
SYDNEY
TAIPEI
TOKYO
YANGON
To find out more, visit :
(1) BISE: subsidiary of Crédit Coopératif - (2) BICEC: subsidiary of Banque Fédérale des Banques Populaires
49
50
€7,640
million
of net banking income
€1,174
million
of earnings capacity*
* Net income + net charge to fund for general banking risks
during the period
9.1% Tier One ratio
51
The Banque Populaire Group has
built up leading positions in a number
of areas by providing its clients with
a local personalized service, drawing
on its extensive branch network and
ability to stay attuned to market needs.
52
Personal banking clients
5.9
million personal
banking clients
+8%
é
€39
billion
of customer deposits
9%
penetration rate
+13%
é
€46
billion
of customer loans
+9%
é
€24.5
billion
of life insurance in force
Strong market
share gains
he Banque Populaire
Group’s personal
customer base continued
to expand strongly in 2004,
growing to 5.9 million people.
This growth helped the Group
to improve its position in
the personal banking market
with a 9% penetration rate
(source: IPSOS 2004).This
performance was achieved
in a flat market where clients
are tending to reduce the
number of banks they deal
with.There was also notable
growth in long-term savings,
both pension products (PEP
savings plans and traditional
life insurance plans) and
equity (PEA) savings plans.
T
commands strong customer
loyalty.The Group is ranked
second among French banks
by the ratio of new accounts
opened to accounts closed,
with a figure of 2.5 (source:
SOFRES survey of accounts
opened and closed, March 2004).
A very close
relationship
The closeness of the
relationship between the
and its customers has
intensified through a constant
focus on the value of trust,
which is one of the bases of
the Group’s very existence.
Each year, the net number
of new branch openings rises.
In 2004 the balance of
branches opened and closed
led to a net 86 branches
being added.
An expansion plan entitled
Distribution 2010 aims both
to strengthen the branch
network and coordinate more
closely the growth of the
various channels of distribution,
particularly distance selling.
At the same time as enhancing
geographic coverage by
increasing the number of points
of sale, the Banque Populaire
Group has continued to invest
heavily in new channels of
distribution to offer its clients
a real multi-channel service.
The number of subscribers
to the bank’s online services
has increased by nearly 20%.
There are now 862,000 personal
customers who regularly use
the Banque Populaire banks’
internet services, 27% of the
customer base.
Growing position
in the savings
and insurance
markets
The Group’s share of the savings
market (deposits and savings)
rose from 4.5% at the end
of 2003 to 4.8% in November
2004, the fastest growth rate
of the last few years.
In the fast-growing life insurance
market, the Banque Populaire
Group has moved closer to its
penetration rate in the personal
customer market over the
last few years.
In pension savings, the Group
has sold 53,226 PERPS
(retirement savings plan) with
the aim of playing an active
role in the “commitment
to distribution” suggested by
the Fédération Bancaire
Française, in keeping with
the values cultivated in its
customers’ minds.
In non-life insurance, efforts
to raise the penetration
rate helped to increase new
business by 11.38%, with
108,629 policies sold in 2004.
The Group has successfully
expanded accounts subject
to tax, both by volume and
market share, thanks to
the launch of the Fidélis-Banque
Populaire account at the
beginning of 2004. Similarly,
the launch of the Odéis fund
(see inset on page 54), has
increased the Group’s market
share in guaranteed products
from 4.15% at the end of 2003
to 4.29% at the end of 2004
(source: Europerformance).
The Banque Populaire Group’s
share of the long-term
mutual funds market also
increased over the same period.
The lending
business was
strong
Lending to personal customers
was strong in 2004, with
home loans growing 15%
to €38.3 billion and
consumer loans growing
7% by volume to €7.6 billion.
In both segments of what
are fast-growing markets,
the Group gained market
share. Revolving credit
continued to expand, with
sales of Aurore cards (see Focus
on page 55), offered by
Novacrédit, growing 27%.
Improved sales
coordination
marketing network is one
of the most extensive in the
business. It involves all the
Banque Populaire banks, which
are expert in distributing
products and advising clients,
the expertise of Natexis
Banques Populaires in its
specialist business of designing
and creating banking products
and services, and the Banque
In 2004 this network was
given new tools, including
in particular a new client
database aimed at understanding
customer expectations better.
A statistical tool for measuring
the sales performance of
(called DIADEM) has been
introduced.
A powerful system for direct
marketing operations has
also been developed and
reorganized under the aegis
of the Banque Fédérale
des Banques Populaires and
53
>>> in close collaboration with
The purpose of this system
is to offer a fuller range
of services at lower cost to the
Growth in specific
client segments
Both the Group’s overall
development and its growth
in specific client segments
has been made possible
by its product range to meet
client needs, relationship
of trust with all its personal
banking clients and more
effective sales organization.
Structured approach
to mass affluent clients
Mass affluent clients(1) are
particularly coveted by banks
and specialist institutions
(private banks, stock brokers,
insurance companies, independent
asset managers) and present
a major commercial challenge
for the Banque Populaire
Group.
At the end of 2004, clients
with €50,000 or more in
financial assets accounted
for nearly 9% of the Group’s
client base. Outstandings in
this client segment accounted
for more than 60% of all deposits.
This position has been
achieved by restructuring
the range of money market,
financial and insurancebased savings products.This
work has been supported by
targeted business development
focused on professionals
and business owners who
are already Group clients
through their businesses.
A particularly effort was also
made to take advantage
of company buy-ins or buyouts to offer this specific
group of clients a new
“business succession deal”.
Within the Banque Populaire
Group, this client base is
particularly responsive,
especially to privatisations.
In 2004, these clients helped
the Group to perform
excellently in placing shares
in Snecma (9.4% of buy
orders were given by its
clients), Pages Jaunes (8.6%)
and Société des Autoroutes
Paris Rhin-Rhône (7.9%).
The Group similarly has a very
good position among mass
affluent clients – particularly
households with income of €3,000
to €6,000 per month, executives
and independent professions –
(source: OPERBAC, September 2004).
54
Odéis: guaranteed funds are a
success
Despite signs of recovery, uncertainties still weigh on the stock market, so
investors want to take advantage of potential upside in financial markets
while preserving their capital. To meet this need, the Banque Populaire
Group has intensified its efforts to produce guaranteed funds, particularly
with the Odéis 2005 range.
The Odéis 2005 range, designed by teams at Natexis Asset Management
and Natexis Asset Square, offers the best fund management strategy at the
best time. Banque Populaire specialists decide on three baskets of funds
reflecting three fund management strategies. At maturity, only the best of
them is used to calculate the final performance.
The Odéis 2005 range of funds is based on a total investment period of eight
years and may be bought as part of an equity savings plan (PEA) or a life
insurance policy.
(1) Consisting of all those with more than €45,000 in financial assets, which currently account for 26% of French
households or 6 million families (source: DAFSA research, May 2004).
An attractive
banking service for
civil servants
For this client base, the
Banque Populaire banks have
developed an original approach
based on referrals with the
assistance of ACEF (Associations
pour le Crédit et l’Epargne des
Fonctionnaires – civil servants’
savings and loan association).
In 2004, Banque Populaire banks
acquired more than 28,000
clients in this way, taking their
number to nearly 350,000.
With more than a million
member-stakeholders,
now acts for nearly 50%
of the civil servants in the
Ministry of Education,
Research and Culture.
In 2004, nearly 40,000 new
member-stakeholders joined
as a result of the many actions
undertaken with Banque
Populaire regional banks,
particularly among young
trainee teachers at IUFM
universities.
The bank also continued
to develop in close partnership
with the Banque Populaire
regional banks in 2004.
This took a concrete form
in improved opportunities
to take out CASDEN Banque
Populaire loans at the
Banque Populaire banks’
branches, and a sharp
increase in internet requests
in particular. CASDEN Banque
Populaire also reported
particularly strong inflows into
savings accounts in 2004.
A younger client base
Investment has been
made since 2001 in
marketing to attract young
clients, and it continues
to produce results. At the end
of 2004, under 25 year olds
accounted for 20% of the
Banque Populaire Group’s
personal customers.This
substantial rejuvenation is the
result of an active attempt
to win customers: one third
From the Aurore card
to the Réserve Plus
card
2004 was an energetic year in the
distribution of the Aurore card,
Banque Populaire’s revolving
credit card. 29,0000 cards were
distributed, taking the total
to 180,000, with total loans of
€96 million.
This success led the Banque
Populaire Group to design
a card called Réserve Plus
in 2004, for marketing in 2005,
which will extend the
revolving credit range.
of new clients are currently
under 25.
Simple and attractive
products, such as PassPop
for 12 to 16 year olds
and Equipage Horizon for
18 to 25 year olds, have
been developed over the
last few years and are useful
tools for attracting this
client group.
These offers are built
around basic banking
services.They allow young
clients to experience
their bank on a daily basis
on the same terms as
other personal customers,
with the advantage of
prices suited to their
circumstances.
The CinéPop service,
for customers aged 16 to 18,
took off in 2004.This service
includes the ability to order
cinema seats at the best
available price directly by
telephone and pay for
them remotely using a bank
card.
Crédit Coopératif
and Crédit Maritime
Mutuel help to diversify
the client base
These two new players
have also helped expand
and diversify the Group’s
overall client base.
55
Like the Banque Populaire
regional banks, through
its 65 regional branches
Crédit Coopératif offers its
personal customers banking,
investment and financing
services. Its role as banking
partner to social organizations
means that the bank is
also a market leader in social
products.
Crédit Maritime Mutuel’s
client base of personal
customers served by
more than 140 branches
represented about
100,000 accounts in 2004.
56
Small business clients
N
o.
1
in franchise
financing
N
o. 1 bank
in factoring for small
businesses
N
o.
1
in small
N
o.
1
in loans to new
business electronic
business owners
banking
Number one
in customer
satisfaction
mall businesses form a
strategic client base
because of the potential
they represent.The Banque
Populaire Group took a
growing share of this market
in 2004.
S
At a time when the trend
to dealing with only one
bank is becoming more
pronounced each year, the
client’s view of the quality
of services provided by the
bank is a particularly important
indicator, both in personal
relationships (72%) and in
business relationships (84%).
In this respect, the CSA
Pépites 2003-2004 survey
showed that Banque Populaire
was given the best rating
by its clients among all bank
networks, both for business
and personal relationships.
This testimonial bears witness
to the professionalism of
the Banque Populaire regional
banks’ sales teams.
In practice, the Group’s search
for new business in this
strategic client base is based
on approaching each type
of market differently and
developing the product range.
Commerce: number
one in franchise
financing
Efforts continued to penetrate
all forms of the commerce
market.The Group has developed
a number of initiatives over
many years to improve its
performance in the particularly
fast-growing franchise segment,
with a view to adapting to
changes in local trading patterns.
In 2004, with its partner, the
Fédération Française de
la Franchise, the Group asked
CSA to carry out the first annual
franchise survey. Its conclusions
confirmed the Group’s position
as leader in this important retail
sector.The Banque Populaire
banks are the leading bank
among franchisees and franchisors.
Among franchisees, the Group
has a penetration rate of 26%
while among franchisors the rate
is 35%.This makes the Banque
Populaire Group the leading bank
recommended by franchisors
to candidates setting up in their
chains.
Special apprenticeship and
business start-up offers have
also been a real success in
commerce.The Socama
guarantee companies are
progressively extending their
scope of action to this sector,
which continues to be a key
element in promoting
partnerships with Chambers of
Commerce and Industry.
Farming and fishing:
strong roots
With the advent of Crédit
Maritime Mutuel, the Banque
Populaire Group has further
strengthened its position in
the farming and fishing worlds.
The Banque Populaire banks
and Crédit Maritime Mutuel
member-stakeholders share the
values of mutual assistance
and cooperation which have
always been displayed by
fishermen and farmers.
In the farm sector, the Group
now has more than 53,000
farmers in its client base
(a 5.2% increase in clients
in 2004) and has a penetration
rate of 12% among farming
businesses.The target penetration
rate of 20% before 2010 is now
within the Banque Populaire
Group’s reach.
To achieve this target, the
Group continues to work on
making sales and new business
teams more professional by
developing and expanding its
range of specific products
and services for this market.
In particular, the Group has
developed its range of
agricultural insurance products
and introduced a special
policy for farmers. Over the last
few years, agriculture has
been a major growth area for
rural branches of the Group,
and even a reason for opening
new branches.
The trades:
an effective policy
of partnership
Traditionally, the Banque
Populaire Group has worked
in partnership with small
business organizations and
has created joint product
ranges with them. Local networks
including chambers of commerce
and chambers of trade have
historically formed the first
circle of partners to the Banque
Populaire Group.
This strategy was pursued
in 2004, to accelerate the
distribution of asset management
and investment products to
this client base. Special
apprenticeship and business
start-up products were developed
in partnership with chambers
of trade. Prêts Express Socama
(express Socama loans), which
require no personal guarantee
thanks to support from the
European Investment Fund, were
also used to a great extent.
The professions:
focus on health
In 2004, the Group decided
to restructure its approach
to the medical and accounting
professions in order to build
up its penetration rate quickly
to levels more in line with its
usual performance in the
small business market.
With this aim in mind, the
Banque Populaire Group has
created a range of products
for the professions called Atout
libéral and has carried out
an initial advertising campaign
in the healthcare trade press.
This campaign was assisted
by a partnership with UNAPL
(national liberal professions
union). In 2004, particular
57
>>> emphasis was placed on
the Group’s electronic banking
products for the healthcare
industry, remote transmission
for accountants and the
Fructi SPL employee savings
product to help win new clients.
Products and
marketing: reward
for effort
Major restructuring and
promotion of products for
small businesses have generated
rewards in most product
lines. Even more than other
retail banking markets, the
small business market has
benefited from the increase
in average size of Banque
Populaire regional banks which
has led to stronger teams of
experts to support sales teams.
Number one in
loans for starting
or acquiring
a business
58
The Group’s commitment to
those starting out in business
or acquiring an existing business
becomes stronger year by year.
In this way, the Banque Populaire
Group is confirming its civic role
and continues actively to support
entrepreneurs. Market share has
been maintained in this very
dynamic sector of the economy,
with the bank acting for
60,000 companies in 2004.
have improved their share
of the business start-up loans
market by 4 points, from 28%
to 32% (source: BDPME).
This performance has been
achieved by the Banque
Populaire regional banks
building a tight network of
relationships with all local
business organizations
supporting employment in
mainland France and overseas
departments. In particular,
the regional banks have actively
cooperated with a number
of well-known networks
including local enterprise groups,
ADIE (economic enterprise
association), France Active,
Entreprendre, Boutiques de
Gestion and all enterprise bodies
created by local authorities.
This marriage of skills, with
the best professionals in
screening and working with
business creators, has helped
to select the best opportunities.
Working together in this way
is a key guarantee that the
companies will remain in
business and therefore ensures
good risk control.
Loans without personal guarantees:
commitment
Eighteen months after signing an agreement with the European Investment
Fund creating Prêts Express Socama (loans without personal guarantees),
the Group has distributed more than 10,000 loans of this kind worth nearly
€154 million and leading to an increase in total Socama activity in 2004. The
Banque Populaire Group is now the only bank in France marketing these
loans without personal guarantees in a serious manner.
In doing this, the Banque Populaire Group is demonstrating its ability
to meet the fundamental expectations of new business creators
and their rightful concern to protect their personal assets. This is further
proof of the Group’s commitment to sustainable development.
have also developed real
expertise in analysing risks
related to this kind of business.
This specific skill is constantly
a key success factor in this
market, which explains why
the risk profile on these loans
has been kept at satisfactory
levels. Using public procedures
such as business start-up
loans or guarantee systems
for such business loans also
helps to manage Group
exposure actively.
Leading banking
partner to ADIE
By cooperating with all groups
involved in assisting new
business creation, the Banque
Populaire Group has become
the leading banking partner
to ADIE.
The professionalism
demonstrated by ADIE
in its relationships with both
potential start-ups and credit
risk managers has prompted
legislators and the banking
industry regulator to extend
the body’s sphere of operation.
ADIE now has authorisation
to extend loans directly to
unemployed people and
those on benefits who start
up new businesses.
The association has turned
to its banking partners for
refinancing to help it cope
with this decisive stage in its
development. It is against
this background that the Banque
Populaire Group has become
the leading lender to ADIE,
with a total credit line of more
than €5 million. In doing this,
the bank has demonstrated its
awareness of the need to have
access to the best professionals
to support the most economically
fragile entrepreneurs.
The Group is also the leading
provider of projects for France
Active, confirming its commitment
to the local social economy across
the country. Crédit Cooperatif
has preserved and is developing its
established expertise in this area.
A comprehensive
offering for franchisees
Group and the Fédération
Française de la Franchise (FFF,
French franchise federation)
jointly created a range of products
for franchisees. This range is not
limited to the franchisee setting up.
It also offers a package of services
meeting the franchisee’s needs: starting
a business, financing investment,
service vouchers, daily account
management, employee savings plans,
products for apprentices, key man
insurance and equipment insurance,
personal risk insurance and pensions,
and buy-in/buy-out capital.
This package has been offered to
some 35,000 operators and has been
received favourably in the franchise
world.
In two years, the Group has
become market leader among
issuers of payment cards for
small businesses, mainly Visa
Business and Gold Business,
but also Eurocard Business Card.
new contracts. 2004 brought
the creation of a full-service
product offering receivables
management for small businesses,
Paxelance Pro, which includes
customer intelligence, credit
insurance and factoring.
A factoring product for newlycreated businesses has also
been marketed under the name
Créance Primo.
The Group has 218,000 cards
in circulation, a 27% increase
from 2003.At the same time, the
Group has increased its market
share in the use of electronic
banking with 182,000 merchant
contracts, a 6% increase on 2003.
Strong positions
in insurance
and savings
Leader in electronic
banking for small
businesses
Leading bank in
factoring for small
businesses
The Group remains the market
leader in factoring for small
businesses, consolidating its
growth with a 15% increase in
The Group is now the leading
distributor of company
savings plans for small
businesses, with 12,945 Fructi
Epargne contracts (Plan
Epargne Entreprise or company
savings plan) and 1,100 Fructi
Epargne + contracts (PERCO
or group pension savings plan).
The Group is therefore
in the best position to take
advantage of growing French
interest in capital-building
pension savings products.
After five years in business
and having built up a portfolio
of 17,600 policies, the joint
Banque Populaire and MAAF
Assurances subsidiary, Assurances
Banque Populaire IARD,
has exceeded its initial targets.
The two partners now wish
to build on this success and
accelerate the pace of sales to
small business client base.
59
60
Corporate clients
No. 3 in world credit insurance
No. 2 in French real estate lease
financing
4th largest lender to corporates
80%
penetration rate among major
corporate clients(1)
n
n
34% penetration rate among SMEs
(1) Sales of more than €3 billion
(2) 10 to 1,000 employees
(2)
A leading player
All-round expertise
he Banque Populaire
Group is a key player
in this market with a
34% penetration rate among
companies employing 10 to
1,000 people, and nearly
60,000 clients.The Group
is the second-largest lender
to corporations with sales
of less than €15 million,
and has nearly 11% market
share.The Group works with
one in three SMEs in France
(source: SOFRES, July 2003)
and virtually all of the largest
French groups.
The Group can call on the
133 Banque Populaire regional
bank teams and branches
(up nearly 100% in the four
years since 2000, when there
were 75), and the Natexis
Banques Populaires business
centres throughout the country
to respond to client requests.
The two networks act
in complete synergy.
T
has leading positions in each
of its businesses.The Group is
market leader in employee
savings plans and is one
of the leading providers of
development and investment
capital.Through its subsidiary
Coface, the Group is one
of the world leaders in credit
insurance and is French
market leader in business
information.
The Group continued to expand
throughout 2004, both in France
and internationally, realizing the
value of its roots in the corporate
market by deploying the expertise
developed by Natexis Banques
Populaires and the Banque
Populaire regional banks as
well as Coface’s complementary
expertise.
The new structure for
organizing businesses within
Natexis Banques Populaires and
mergers between the Banque
Populaire banks have increased
the Group’s overall efficiency and
enabled it to offer a fuller and
better-structured range of products
to meet companies’ needs,
whatever their profile, size or
business sector.
had 10.9% total market share
by loans outstanding (including
leasing and factoring) at June 30,
2004 (source: Bank of France
central risk database), making
it the fourth-largest lender to
all French corporations.
The Group is a major player
in corporate financing.
The relationship manager,
who is the real pivotal point
in the commercial relationship,
can mobilize a network
of expertise on behalf of his
clients at these centres and
at the Banque Populaire
banks in areas as diverse as
standard and specialised
financing, cash flow and capital
management, savings plans,
international assistance
or financial engineering in
support of buy-ins or buy-outs.
The Group aims to establish
a close relationship with its
clients, based on the concept
of a comprehensive approach
represented by a multi-business
product offering.
In the corporate market,
Crédit Coopératif is developing
a special presence among
cooperative associations and
businesses. Mutual guarantee
companies lie at the heart
of a partnership with
organizations which represent
these companies and which
are member-stakeholders in
the bank.The bank is
represented among SMEs
which have formed financial
cooperatives, SCOPs
(production cooperatives)
with two mutual guarantee
companies, and transport,
trades and retailer
cooperatives.
Within Crédit Coopératif,
Banque du Bâtiment et
des Travaux Publics is
developing acknowledged
expertise in the construction
industry in partnership
with such federations.
Lease financing:
a full-service
provider
Through Natexis Lease, the Group
has a central position as the
second-largest operator
in real estate lease financing
(source:ASF – French association
of finance companies) thanks
to its position in the whole
corporate sector, from SMEs
to major corporations.
In 2004, new real estate lease
financing business increased
15% to €534 million.
Natexis Lease managed to
increase its business significantly
in a growing real estate lease
financing market, reporting
€972 million of new business
(a 7% increase on 2003).
This performance was achieved
by maintaining a good level
of business with the Banque
Populaire regional banks, a
promising start to collaboration
with Crédit Maritime Mutuel,
wider distribution through
the Natexis Banques Populaires
network, and the development
of commercial partnerships
with suppliers.
In Sofergie lease financing (financing
for energy efficient investments)
lease financing, Energéco confirmed
its expertise in financing for
renewable energy, particularly
wind power, reporting €54 million
of new lending.
Finally, in its first year of lease
financing, the Madrid subsidiary
reported €50 million of new
lending. Natexis Lease
expects to set up in Italy
and Algeria in 2005, and will
strengthen its commercial
ties with VR Leasing and ÖVAG
(the central bank for Austrian
Banque Populaire banks) in
Germany and central European
markets.
Expertise in
payments
is the fourth-largest French
bank in payments processing
61
>>> by number of clients, through
its Mission Plus range.
back office teams are constantly
looking to meet customers’
needs by improving efficiency
and adapting processing tools
to changing regulatory
requirements while taking
advantage of new technology.
The corollary to the development
of corporate information
systems is an acceleration in the
use of new communication
technology, and virtual and highly
secure services.
The Vircom service (transfers at
due date) is offered with Natexis
Banques Populaires’s expertise.
Synergy among teams at the
Banque Populaire banks, Natexis
Banques Populaires and its
subsidiaries, makes it possible to
offer a high-performance and
innovative range of services.
A large number of experts in
specific areas work in partnership
on client projects to offer clients
the speed, support, reliability
and security which they expect.
Areas of operation include
payment media (payments
in and out), payment systems
(remote transmission and
electronic signatures)
and centralised treasury
management.
62
Natexis Banques Populaires has
also set up a separate business
offering payment processing and
systems solutions to meet the
needs of its corporate clients more
effectively.This business has a
strong sales force and encourages
improved synergy among the
business teams and infrastructure.
International
development
The Group is building up its
contribution to its clients’
international trade and expansion
in foreign markets with a
structured and constantly
enhanced product offering.
has confirmed its role as a
major player in trade finance,
through its position as world
number seven in the arrangement
of syndicated loans outside
Europe and North America
(source: Dealogic Loanware).
In 2004, against a background
of improved international
liquidity and falling margins,
maintained its position
among banking clients in
emerging markets, particularly
Latin America (Brazil).
The Miami sales team has been
strengthened and the São Paulo
team has expanded its area
of operation to include local
companies.
In Asia, the Banque Populaire
Group has taken full advantage
of the increase in south-south
international trade resulting
from strong growth in the
Chinese and Indian economies.
In particular, the bank has
developed trade flows between
China and Iran, and Korea
and the United Arab Emirates.
Relationships with Chinese
banks are mainly based on
correspondent banking. Natexis
Banques Populaires has arranged
13 syndicates for Turkish banks
and 15 for Indian banks.
In Africa and the Near East, the
increased market share through
a strategy of partnerships
between Natexis Banques
Populaires and local networks.
The Group was awarded a
mandate by the Reserve Bank
of South Africa for a one billion
dollar loan. In Algeria, business
is currently focused on corporations
but will be extended in 2005
to include retail banking, under
a determined expansion
plan based on the Banque
Populaire Group’s strengths.
Particularly strong efforts have
been made to work with
companies in foreign markets.
In 2004, more than 400 companies,
mainly Group clients, decided
to trust Natexis Pramex
International’s expertise.This is a
Group subsidiary specialising
in international development
advice and offering companies
assistance with all their projects
in foreign markets (exports,
imports, start-ups or search for
partners).
Continuing growth
in commodities
Over the last few years,
the Group has confirmed its
position as an arranger of
structured deals.This strategy
Export support charter
The government decided to use the Banque Populaire Group’s
expertise and networks to help in its policy of promoting
French SMEs abroad.
On March 24, 2004, François Loos, Vice-minister for foreign trade,
and Philippe Dupont, Chairman of the Banque Populaire Group,
signed an export support charter. This is the first partnership
agreement between the Ministry of Foreign Trade and a banking group
and is aimed at encouraging SMEs to expand in export markets.
The first application of this charter came in the signing on the same
day of a commercial partnership agreement between Ubifrance,
the Banque Populaire Group and its export support subsidiary, Natexis
Pramex International. This agreement covers the distribution by Banque
Populaire regional banks of two services developed by French public
bodies: the Volontariat International en Enterprise (VIE – international
voluntary action agency) and international business development
agencies at economic missions.
was reconfirmed in 2004
against a background of
increased competition,
particularly because of high
prices both for oil and all
other commodities. Natexis
Banques Populaires is now
one of the world’s ten leading
arrangers of structured finance
in emerging markets (source:
Dealogic Loanware).The bank
structured and distributed
more than thirty syndicated
deals in 2004.Three deals in
particular stood out during
the year because of their size:
syndicated pre-financing for
Sonangol in Angola, Rusal in
Russia and Cocobod in Ghana.
The Group has decided to
expand its client base among
medium-sized specialist traders
and in the North American
market through the Commodities
division of Natexis Banques
Populaires.The product range
has been expanded to include
derivative products helping to
structure financing deals, export
credits and mining finance.
Strong position
in structured
financing
The Group’s structured finance
business, which has been
brought together in a specific
division, exceeded its targets
in 2004. Some sectors were
particularly strong, including
aerospace finance (14 arranger
mandates) and acquisition
finance (joint-lead arranger and
bookrunner for the Vivarte
deal, the largest LBO delisting).
Other businesses, including
marine and land transport
finance, real estate financing,
Natexis Immo Développement
and project financing, reported
significant growth, strengthening
their positions in their respective
markets.
The syndicated loan businesses
continued to grow in a still
competitive market.The number
of mandates was up substantially
and the process of expanding
to include foreign clients has
intensified. Natexis Banques
Populaires is ranked fourth by
number of mandates in France
and fifteenth by number of
mandates in the EMEA region
of Europe, the Middle East
and Africa (source: Dealogic
Loanware). Bond origination
confirms the bank’s position
as a major operator among
French corporate clients and
consumer credit companies.
Several companies used the
bank for their first bond issue,
including Cofidis, Socram,
Banque Accord,TF1 and Imérys
for its share swap offer.
Finally, Natexis Banques Populaires
was the fourth-largest arranger
of French securitizations with
€2.36 billion arranged in 2004
(source: Opérations Financières
magazine).
is also continuing to expand
in Europe, particularly Italy
(where it is one of the leading
non-resident banks, with
mandates which include
Findomestic, Cassa di Risparmio
di Ferrara and Veneto Banca).
The bank has also won mandates
in Greece (EFG Hellas), Iceland
(Landsbanki, Islandsbanki and
Kauphting Bunardarbanki)
and Germany (HSH Nordbank
and IKB).
In the capital markets, the
trading and sales businesses
have international coverage,
with Natexis Banques Populaires
branches in London, Milan,
Madrid, New York and Singapore.
2004 brought a significant
increase in credit dealing
volume, with the launch of a
new credit derivative trading
business in particular.The foreign
exchange division made up
for ever fiercer competition in
simple products by expanding
its range of options.Treasury
continued to diversify sources
of financing, both by market
(American and British) and by
type of investor.
Trading and investment portfolios
have been brought together
in a single business.The role of
this business is to improve
the yield on portfolios and
develop such solutions for Natexis
Banques Populaires’ Corporate &
Institutional Banking and Markets
core business, and other
bank entities.The securitized
products asset class performed
particularly well in 2004
thanks to a favourable market
and effective asset allocation.
Employee
savings plans:
market leader
restructured its sales and
marketing structure in 2004
to promote products aimed
at small companies and
corporate clients, including
employee savings plans,
group life insurance, personal
risk insurance and service
vouchers.This new organization
structure gives priority to a
comprehensive approach,
emphasising complementary
solutions from the Banque
Populaire Group.The
development of commercial
synergy between Natexis
Interépargne, Natexis Assurances
and Natexis Intertitres should
help promote the Banque
Populaire Group from the level
of market leader in employee
63
>>> savings to market leader in
employee benefit planning.
Natexis Interépargne, which
is the leading administrator
of employee savings plans
in France, managed more than
2 million employee accounts
at December 31, 2004 on behalf
of about 23,500 companies
of all sizes.
Natexis Épargne Entreprise
had €11.5 billion of assets
under management at
December 31, 2004, making
it the leading manager of
employee savings in France,
with 20.19% market share
(source: Association Française de
Gestion).
Following the success of Fructi
Epargne, a company savings
plan (PEE) for small companies
in particular, in September 2004
Natexis Interépargne created
Fructi Epargne +, a combined PEE
and PERCO (group pension
savings plan), and Fructi Optimum
for larger companies.These
products include investment
options suitable for pension
savings and extend the range of
products marketed by Natexis
Assurances including “Madelin”
tax-deductible plans and defined
contribution pension savings.
Good results in terms of net
new money combined with a
turn in the trend of long-term
assets helped Natexis Asset
Management to take 6.35% of
the market, putting it in fourth
position among French fund
managers (source: Europerformance
dated December 31, 2004 for
mutual funds on the market).
At the same time, Natexis
Asset Management confirmed its
position as market leader in the
management of money market
products, with more than 9%
market share.
Through Natexis Assurances, the
Banque Populaire Group has a full
product range meeting clients’ needs
for guarantees and services. Natexis
Assurances has renewed its property
and casualty insurance range by
launching two new products
(Assur-BP Auto and Assur-BP Habitat).
The company has also added a
home product for young people
(Assur-BP Horizon) and school
insurance (Assur-BP Enfant).
Meanwhile, Natexis Asset
Management Immobilier is the
fourth-largest REIT management
company in France (source:
Institut de l’Epargne Immobilière et
Foncière – real estate savings institute)
with 6% market share (source:
ASPIM at December 31, 2004).
A comprehensive
approach to
receivables
management
Finally, having launched the gift
check in 2004, Natexis Intertitres
makes Banque Populaire Group
the only banking network to market
service vouchers exempt from
tax and social charges. Natexis
Intertitres issued 38 million vouchers
in 2004 (a 24% increase on 2003)
and had 7.02% market share
(source: Centre de Règlement des Titres
– voucher settlement centre).
64
Comprehensive solution
for managing receivables
Paxelance was launched in 2004 to enhance the range of products offering
comprehensive assistance with receivables management developed by the
Banque Populaire Group. This is central to the work of corporate
client advisers in identifying needs relating to receivables management.
It is also innovative in offering corporate clients a diagnostic tool for their
trade receivables.
Full range of
property and
casualty insurance
The Paxelance approach has enabled Banque Populaire regional banks
to offer their clients a solution geared to their needs, whatever the need
expressed or identified:
n release of receivables (financing),
n improvement of receivables processing (cash flow),
n business information (commercial information),
n unpaid receivables management (recovery),
n unpaid receivables risk prevention (credit insurance),
n full range of receivables management (factoring).
Through Coface, the Banque
Populaire Group offers a full range
of solutions for managing receivables
in its own networks and those
of its partners in the international
CreditAlliance network (insurance
companies and banks).
In 2004, the Banque Populaire Group
launched a new range of credit
insurance. Accrédia has grown out of
collaboration between the Group’s
Natexis Factorem and Coface
subsidiaries, and meets the specific
needs of small and very small
companies in a simple and
innovative manner. Paxélance offers
a comprehensive approach to
managing trade receivables.These
two new products have been added
to the Créodis range which offers
business information and recovery,
and was launched in 2003 through
the network of Banque Populaire
regional banks.
Number 3 in factoring(1)
Through Natexis Factorem, the
renewed its range of factoring
solutions, particularly with
Créancexport for exports, with
a view to meeting its clients’
needs better while differentiating
itself more clearly from
competitors.
(1) Source : Association française des sociétés
financières (French association of finance
companies).
Natexis Factorem has improved
its internal organization to
bring it closer to the Banque
Populaire regional banks which
form its main distribution
network. Each Banque Populaire
now has a dedicated operating
team to manage and monitor
contracts, as was already
the case for sales.
Natexis Factorem has also
enhanced its sales presence at
The integration of factoring in
the Group’s range of products
for its large corporate client
base represents a strategic
growth area. Finally, Natexis
Factorem has signed distribution
agreements with the main
brokers specialising in trade
receivables management.
This new network is expected
to develop into one of the
most active new sources of
growth over the next few years.
In Germany the successful
start-up of VR Factorem in a
joint venture with VR Leasing,
a subsidiary of DZ Bank,
also offers growth prospects
in a fast-growing market.
VR Factorem started business
at the beginning of the year.
Its objective is to reproduce
in Germany the business model
which has been so successful
in France.The target client base
is therefore primarily small and
very small companies from the
Volksbank network, Germany’s
second-largest bank network.
Synergy has been sought across
the Group in this case, with
credit risk being outsourced
to Coface in Germany.
Number 1 in business
information
In 2004, Coface bought Reuters’
business information company,
Ort.This is now called Coface
Ort and, with the other business
information subsidiary, Coface Scrl,
is now market leader in France
for business information with 45%
market share (source: KPMG).
In the company rating business,
Coface also continued to invest
in credit risk measurement
and rating techniques, one of
the areas of excellence as
reflected in its @rating brand.
Coface intends to be
recognised as an approved
rating agency (External Credit
Assessment Institution)
under the new Basel Committee
regulations.The process has
been started for the @rating
scoring system to be approved in
France by the French banking
commission. Discussions are
under way in several other
countries about local national
versions of the @rating
scoring system.
New buy-in/buy-out
products
Coface also continued to
strengthen its international
network in 2004.
In particular, the company
reached agreement with
Nexi, the Japanese public export
credit insurance company,
under which the latter will
adopt the @rating system
worldwide to manage short-term
risks. In Russia, the company
has established an @rating
rating system with the Russian
banking association (ABR)
to give Russian small companies
easier access to bank loans.
In terms of investment in
companies, the Banque Populaire
Group was the first in 1997
to develop an innovation mutual
fund (Fonds Commun de Placement
dans l’Innovation) then, in 2003,
to offer a local investment
fund (Fonds d’Investissement de
Proximité). In 2004, marketing of
these products, intended to finance
companies by raising funds from
individuals paying high tax rates,
continued with the launch of the
ninth issue of Banque Populaire
Innovation and five new local
investment funds.
Market leader
in Private Equity
for SMEs
Finally, the nationwide BP
Transmission network means
that corporate clients of Banque
Populaire regional banks have
access to both regional and
national broking services when
looking for counterparties
(buyers or sellers).
(by number of deals)
In 2004, the Group’s efforts led
to more effective merging of capital
monitoring for client companies
and asset management for ownermanagers.This strategy, intended
in particular to meet requests
for financing and buy-ins/buy-outs,
is based on Natexis Banques
Populaires’ Private Equity and
Wealth Management core business.
Natexis Private Equity’s investment
business grew strongly in 2004,
and the company now has
€2.1 billion of capital under
management, 11 subsidiaries
and 123 professionals. At the end
of the year, this subsidiary had
invested €228 million in
new companies, out of total
investment of €312 million,
and €132 million of gains.
The growth of small and mediumsized business transfer deals
involving an LBO (leveraged buy out)
and the growth of OBO (owners
buy out) deals gave the Banque
Populaire Group an opportunity
to reconfirm the depth of its
roots in the business world and
its mission to support that world as
it develops. OBOs enable managers
to capitalize on and secure their
industrial assets while remaining
involved in managing their company.
65
66
Institutional clients
he institutional client market
in which the Banque
Populaire Group operates
includes both institutions in
the strictest sense, meaning
insurance companies, mutuals
and associations, and the local
public sector including municipal,
departmental, regional and
intermunicipal authorities, their
public or private law satellite
organizations, and independent
public bodies such as chambers
of commerce.
T
has strong but quite different
positions in this market by
Group entity – Banque Populaire
regional banks, Natexis Banques
Populaires and Crédit Coopératif.
Developments currently under
way in the regulatory environment
present an opportunity for the
Group – reform of decentralisation,
opening of local public services
to the banking sector, reform and
acceleration of mergers of mutuals
and particularly mutual health
funds.
Crédit Coopératif
has reinforced the
Group’s position
This is a huge market and
the Banque Populaire Group has
traditionally occupied a strong
position in it through Natexis
Banques Populaires and BRED
Banque Populaire in particular.
This position has been further
strengthened by the addition
in the Group of Crédit Coopératif.
in 2004, the Group identified
as priorities the local public sector,
complementary mutual health
funds and major public-interest
associations.
In the local public sector market,
several of the Banque Populaire
banks developed services in 2004
and sometimes have significant
market share.
Crédit Coopératif is also a
benchmark provider of banking
services for players in the social
economy, including cooperatives,
business consortia and their
members, mutual organizations,
and other major public-interest
associations.The bank works
in close partnership with the
various movements that bring
them together and make up its
Board of Directors.
The bank operates in a wide
range of sectors, from retailing
to health and social care,
low-cost housing, sport, culture
and helping long-term unemployed
into work.
In 2004, Crédit Coopératif
strengthened its involvement
in the low-cost housing sector,
notably in partnership with
the Fédération Nationale des
Coopératives HLM, the French
national federation of low-cost
housing cooperatives.The bank
is very active in the health and
social care sector with publicinterest associations running
hospitals, homes, retirement homes,
centres for the handicapped and
home help services. For more
than 15 years, Crédit Coopératif
has also been offering a full range
of electronic data transmission
and remote transmission services
to help professional guardians
fulfill their obligation to control
and monitor the accounts of
the people under their protection.
The Banque
Populaire Group is
expanding its range
of products
banks stepped up their drive for
growth in the institutional market,
drawing on a very broad product
range.This offering includes a full
range of banking products and
services, asset management and
insurance products, and employee
savings products.
For the local public sector
market, the Group is continuing
to develop banking services to
meet the needs of the sector,
including medium and long-term
loans, bridging loans, specialist
finance, electronic banking (Monéo
and purchasing card), as well as
products from Natexis Intertitres
(restaurant vouchers and gift
checks).
67
68
Banks and financial institutions
he Banque Populaire Group
is the industry benchmark
in payments because of its
expertise and the size of its
business. It is the leading French
issuer in the interbank clearing
system (source: G-SIT),
and is representative on the SIT
interbank clearing system for
some fifty banks.
Populaires continued actions
started in 2003: Cap 2005
restructuring plan for the vouchers
business, migration to the new
EMV (Europay, MasterCard,Visa)
standard in electronic banking,
and development of a multi-channel
platform for personal customers.
The results are in line with
targets and confirm how well
under control all businesses are.
In 2004, the banking, financial
and technology services
department of Natexis Banques
From 2005, a number of strategic
actions launched in the second
half of 2004 will also contribute
Controlled growth
€398
billion of assets
in custody
13.5%
of the French
electronic banking market
(source : GIE Cartes Bancaires)
N
o.
1
issuer in the SIT
interbank clearing system
(source : G-SIT)
T
to a significant reduction in
operational risks, the modernization
of processing and more efficient
support for institutional clients.
Banking services
2004 was mainly given over
to final preparations for migration
to EMV technology, the new
international chip card standard in
operation from January 2005.
The volume of nearly 1.3 billion
transactions equates to 13.5%
of the French electronic banking
market (source: GIE CB statistics
at December 31, 2004).
Natexis Banques Populaires is
the only bank in France to
process operations for several
leading players in the electronic
banking market, demonstrating
the maturity of its systems.
In 2004, the bank also completed
the migration of a major leading
player.
The development of new
architecture for national and
international payment systems
continued to integrate
Natexis Banques Populaires’s
applications into the Banque
Populaire Group’s computing
system, i-BP (informatique-BP).
Through its subsidiary Natexis
Paiements, Natexis Banques
Populaires supported the
growth of Banque Populaire
regional banks in personal cards.
had 7.02% market share in 2004.
A 24% increase in the number
of cards for small businesses
and corporations has pushed
the bank into first place by
number of cards issued (source:
SAS Carte Bleue).
In 2004, Natexis Paiements
also launched the e-bank card
service which extends the
range of methods of payment
offered by the Banque Populaire
Group to its personal
customers.This service makes
it possible to make purchases
on the internet without revealing
the card number. It benefited
from the growth in e-commerce
in France, posting a good
performance.
Since end October 2004,
12,000 clients of the Banque
Populaire banks have opted
to use the e-bank card service
(source: electronic banking report).
Financial services
Natexis Banques Populaires’s
financial services businesses
continued to refocus on their
core businesses – custody services
for retail banks and institutional
clients. Significant investment
was initiated from the beginning
of the year to modernize
the securities business and will
continue until 2007.
Cap 2005, the restructuring
and reorganization programme
launched in 2003, continued.
Refocusing on the custody business
led to the dropping of businesses
that were unprofitable or
which brought risks that were
not related to the back office.
Redundant businesses were
also reorganized in the most
appropriate Natexis Banques
Populaires departments in order
to generate the greatest synergy
and productivity.The issuers
department also launched
a business development plan
based on Natexis Banques
Populaires’s strong presence
among French companies in
terms of financing and
employee savings plan services.
The first results should
become clear by end 2005.
A number of major actions(1)
that were initiated at the end
of the year will have a significant
impact in 2005.
These form the basis of growth
for the securities business
over the next few years and
are preparation for the
creation of the Natexis Investor
Servicing subsidiary in the first
half of 2005.The purpose
of this company is to provide
fund management companies
and external fund management
clients (totalling around
1,100 mutual funds) a range
of services covering fund
administration, performance
reporting and middle office
functions.
Personal banking
services
In 2004, the personal customer
services team continued
to develop LineBanque,
a multi-channel bank for personal
customers of Natexis Banques
Populaires. New models were
introduced and the central
branch reorganized to improve
use of this product by customers.
This software platform will
be rolled out at the beginning
of 2005 by Société de Banque et
d’Expansion (SBE), a Banque
Populaire Group bank. Banking
products will be distributed
during the year by this channel
to clients of mutuals, including
MMA and MAAF, as part
of the partnership strategy.
A new online tool for stock market
investing
During the year, the various internet products for clients were brought
together on a single technological platform. Clients now have access
to a two-level online stock market product: the LineDefi channel for clients
who are not very active and often own mutual funds, and the LineBourse
channel for more experienced investors who are interested in using more
sophisticated tools. A total of more than 60,000 clients are now on the
new platform which processes nearly 80% of the Banque Populaire Group’s
stock market orders.
(1) Global custodian agreement with the Bank of New York as part of the rationalisation process linked to custody of foreign stocks and migration of custody for offshore funds to the
Euroclear-Fundsettle platform.
69
70
No. 1 in micro-loans savings
No. 1 in solidarity-based 9bestthin100thecompanies
list of France’s
(source: Finansol barometer)
to work for
(source : Journal du Management)
71
The Banque Populaire Group’s commitment
to sustainable development stems
from the values on which it was founded.
It finds its expression both in the way
the Group conducts its internal affairs
and its external actions.
commitment
The Banque Populaire Group’s cooperative values,
particularly its corporate spirit, close relationships,
respect for clients, member-stakeholders and staff
and long-term approach form the foundations of its
response to the challenges of sustainable development.
or the Banque Populaire
Group, social responsibility
is founded on close
relationships between the Banque
Populaire regional banks and
member-stakeholders, clients,
staff, suppliers and key figures
in their local communities.
This sense of responsibility is
reflected in the day-to-day
dealings with all these different
groups. For member-stakeholders
it means transparent and easily
accessible information about the
performance of the bank. It also
means support for memberstakeholders’ community and
voluntary projects. For staff it
means an employment policy
based on respect for the individual,
training and career development
and an emphasis on job
creation. In all areas, the Banque
Populaire Group has increased
its commitment to sustainable
development over recent years.
F
72
Improving human dignity
through combating poverty and
corruption and the protection
of the environment are urgent
issues in today’s world, and
are the responsibility of all
members of society, individuals
and companies alike.Whilst
sustainable development is the
responsibility of all, it is also
important that each individual is
aware of the issues and also
considers himself or herself as an
independent agent in tackling them.
This is what the Banque Populaire
Group sought to emphasize
when it signed the United Nations
Global Compact on April 16, 2003.
This voluntary agreement
guarantees respect for ten guiding
principles (see inset on page 74),
contributing to sustainable
development through the creation
of a network of partnerships and
the promotion of good practice
to allow globalization for the
benefit of all based on a market
economy. Other Group entities,
including Coface, BRED Banque
Populaire and Banque Populaire
Rives de Paris, are also signatories
to the Global Compact.
In 2004, the conclusions and
recommendations of the
Banque Populaire Group Federal
Commission on Sustainable
Development have begun to
mark out the way for a global
and structured commitment
to sustainable development on
the part of the entire Group.
The Commission brought
together a large number of
Banque Populaire regional bank
Chairmen and Chief Executive
Officers who, over a period of
nearly a year, carefully assessed the
challenges, identified the current
state of play and then set out the
opportunities and the structures
that would allow them to be taken.
An organization
dedicated to sustainable
development
The organizational framework
proposed is based on four
principles designed to facilitate
a structured approach:
n recognition at the highest levels
of Group management of the
concerns and challenges of
sustainable development;
n the creation and promotion
of a network of sustainable
development contacts in the
and other Group entities;
n a regular supply of information
to the Boards of Directors of
the Banque Populaire regional
banks on the actions carried out;
n a proactive approach to
sustainable development by bringing
to market new products that
reflect the social and environmental
hopes and concerns of clients.
As part of this commitment, the
created a sustainable development
steering committee of Directors
from the Banque Populaire regional
banks, Banque Fédérale des
Banques Populaires and Natexis
Banques Populaires.This committee
will examine proposed initiatives
and opportunities to ensure that
the best ideas are implemented
throughout the group. It will
produce a report on the actions
undertaken over the year. It will
bring forward recommendations
to the Board of Directors of
Populaires, the Group’s central
decision-making body, for new
strategies, based on its observations
of the existing situation.
This commitment underpins
the day-to-day actions of
the Banque Populaire Group.
It guarantees close links
with the regions served and
direct involvement in the
development of regional
economies.Thus Crédit Maritime
Mutuel, the Group’s latest
affiliate, has for a long time
supported the independent
fishing industry and the protection
and enhancement of coastal
environments through cooperative
action.This approach preserves
involvement in family businesses
and maintains the economic
fabric and balance in fishing ports.
This type of action combats
delocalization by helping root
economies in their environment.
In 2004, Crédit Maritime Mutuel
created Sofipêche, a financial
tool designed to encourage the
financing of cooperatives that
help young entrepreneurs starting
up as independent fishermen.
Support for development
initiatives also has an international
dimension in the form of
Agence des Banques Populaires
pour la Coopération et
le Développement (ABPCD).
This structure, in which all
are involved, aims to provide
technical assistance and advice
in all aspects of cooperative
banking in emerging economies.
Its work fits naturally with
the aims of the United Nations
Development Program.
In December 2004, ABPCD
signed an agreement with
the Centre de Développement
de l'Entreprise (CDE) to encourage
partnerships between European
companies and those in Africa,
the Caribbean and the Pacific.
A commitment driven by
the Group’s values
commitment to sustainable
development fits well with the
long-standing actions involving
member-stakeholders, the Group’s
active policy of career development
and recruitment, environmental
management and the Banque
Populaire Group Foundation
(see page 82).The Foundation is
active in three different areas:
it provides vital support to young
musicians at the beginning of
their careers; it assists in the
creation and on-going operation
of companies run by the
disabled; and it supports projects
carried out by groups seeking
to protect and enhance marine
and freshwater environments.
In 2004, the Foundation funded
38 new projects in these three
areas and renewed funding to
34 existing projects, which it
backs over a period of three years.
Natexis Banques
Populaires fully involved
These commitments are shared
by Natexis Banques Populaires,
the listed subsidiary of the
Banque Populaire Group. In 2004,
introduced a structure which
allowed it to organize and
rationalize the large number
of sustainable development
initiatives planned or already under
way. The project team created
during 2004 brought together
staff from Natexis Banques
Populaires and its subsidiaries
who specialize in social
and environmental issues and in
socially responsible investment
management.The aim was
to coordinate existing initiatives
and to launch new ones.
defines sustainable development
as strong and controlled
economic growth that respects
the environment, encourages
social progress and contributes
to civil society.
The unifying strength and
incentive to action inherent in
values has inspired a major
collective program at Natexis
Banques Populaires and its
subsidiaries. Driven by working
groups involving over 100 employees,
it has identified three corporate
values: a sense of commitment,
team spirit and an exacting
approach.These values find their
concrete expression in the
group’s actions and management.
Thus each manager’s job
description precisely identifies
in operational terms the role
of the line manager in managing
his or her work, running
staff teams, communicating
and developing skills.
Commitment to all
areas of sustainable
development
Through its commitment to
sustainable development the
Banque Populaire Group remains
faithful to its roots and shapes
its current and future practices.
Group underlined its desire
to strengthen relationships with its
member-stakeholders through
increasing their number and their
involvement, alongside the Banque
Populaire regional banks, in the
shared values of closeness and
solidarity. Member-stakeholder
numbers rose from 2,450,000 at
December 31, 2003 to 2,770,000
at December 31, 2004. Memberstakeholders are both the vector
and the target of the Banque
Populaire Group’s commitment
to its sustainable development
program.
Concrete action by the
have carried out a large
number of projects focused
particularly on assisting clients
and member-stakeholders
in working to the benefit of
their local communities or
their environment. For example,
they ran 160 Déclic Clubs,
with more than 300 projects
in local areas. Déclic Clubs consist
of men and women active
in voluntary work in the same
town or region who pool
their ability to take the initiative,
their skills and their contacts
in local citizenship projects.
Many Banque Populaire banks
also ran Regional Initiative
Awards. Each year these prizes
recognize voluntary initiatives
to protect and improve the
natural, architectural, cultural,
professional and economic
heritage of the regions of France
In its first Regional Initiative
Awards, in 2004, Banque Populaire
Loire et Lyonnais focused on
three categories of eligible project.
Awards for solidarity recognize
projects contributing to improving
73
>>> the quality of life of the
disadvantaged; regional heritage
awards recognize projects that
protect and enhance the heritage
of the region (monuments, culture,
arts and traditions); and youth
awards recognize collective actions
by young people in both areas.
Candidate projects are reviewed
by a committee of memberstakeholders, who draw up a
shortlist that is then presented
to all member-stakeholders.
They vote for the winners using
a distance voting system.
a donation for every new
Banque Populaire bank client
introduced by an existing
client. In 2004 the partnership
saw the establishment of
even closer links. In addition
to the new customer scheme,
several other projects took
place, including mini-exhibitions
on MSF’s work in some branches
and a campaign appealing
for donations in the summary
financial statements.These
activities helped increase client
awareness of this unique
charity’s commitment to support
and solidarity.
In all, ten Banque Populaire
banks – Loire et Lyonnais,
Massif Central, Midi, Occitane,
Provençale et Corse, PyrénéesOrientales, Aude et Ariège,
Sud-Ouest,Val de France,
Centre Atlantique and Nord –
run Regional Initiative Awards.
Involvement in the
international battle
against corruption
The partnership with Médecins
Sans Frontières (MSF) launched
in 2002 is another reflection
of the Group’s values. Under
the partnership, MSF receives
ensures that all its entities conform
to all legal requirements regarding
the detection and prevention of
money laundering and corruption,
The ten principles of the United
Nations Global Compact
Human rights
n
74
n
Companies must support and respect the protection of international
human rights.
Companies must refuse to participate in or condone human rights abuses.
Labor rights
n
n
n
n
Companies must support the freedom of association and must recognize
the right to collective bargaining.
Companies must support the abolition of all forms of forced or
compulsory labor.
Companies must support the real and effective abolition of child labor.
Companies must support the elimination of discrimination in employment
and occupation.
Environmental protection
n
n
n
Companies must implement a precautionary and effective program
regarding environmental issues.
Companies must take initiatives to promote greater environmental
responsibility.
Companies must encourage the development and distribution
of environmentally friendly technologies.
Anti-corruption (principle added on June 24, 2004)
n
Companies must promote and adopt initiatives to counter all forms
of corruption including extortion and bribery.
in accordance with the tenth
principle of the Global Compact
signed by the Group.
Launched in 1999 at the Davos
Economic Forum, this Global
Compact is based on a partnership
between the United Nations,
Non-Governmental Organizations
and the world of business.
It aims to couple the power of
the markets with the moral
authority of universally held beliefs
in an awareness of the social
and environmental impact of
globalization.
In the areas of human rights,
labor and the environment, it sets
out the major principles enshrined
in the Universal Declaration of
Human Rights, in the International
Labor Organization’s charter
and in the resolutions of the Rio
summit on the environment
(1992) and the Copenhagen
summit on social issues (1995).
Group’s commitment to the Global
Compact was reflected in Natexis
Banques Populaires’ decision to
strengthen its team combating
corruption and money-laundering
and its central compliance team.
The central compliance team is
now supported by compliance
officers in all Natexis Banques
Populaires departments. More
than 70% of the parent company’s
staff have received moneylaundering awareness training.
A software tool for managing lists
of wanted persons has been
introduced into the transactional
platforms to help in the fight
against terrorism.
Human resources
The Group’s Human Resources policy is based
on an active approach to recruitment and
valuing talent, on building skills, on training
and on attractive remuneration packages.
An attractive
employer with an
active recruitment
policy
espite depressed economic
conditions, the Banque
Populaire Group continued
its active recruitment policy in
France during 2004, with around
3,000 new staff joining the group
on permanent contracts.
D
The Group is already preparing
for the retirement of the
baby-boom generation. It has
taken advantage of this
demographic trend to recruit
more highly qualified staff,
with new staff generally having
two or three years’ higher
education after their baccalaureate
(51% of staff). Young people
make up a substantial share of
new recruits, with 68% of
staff joining the company aged
under 30. As in 2003, the
bulk of new recruits already had
some professional experience
(56%, compared to 44% beginning
their careers). Although 65%
of new recruits were offered
posts in the branch network
(the markets and distribution
business line), there was also
strong demand for particular
areas of expertise.
This more aggressive policy
of recruiting younger people
resulted in a modification
in the profile of the men and
women who are in day-to-day
contact with clients. More
than half (51.8%) of employees
have a degree requiring at least
two years’ post-baccalaureate
study (28% in 1993).The trend
towards a more “youthful”
workforce that has been
in place since 1998 continued,
with a growing number
of employees aged under 25
and with fewer than 5 years’
service. At present one
employee in three is aged
under 35.
In seeking out talented young
people the Group has a
year-round policy of ensuring
its presence with students
and recent graduates, whether
through specialist exhibitions
or forums involving the grandes
écoles and universities.
This resulted in the group taking
part in around 450 events
during the 2003/2004 academic
year. On average the group’s
recruitment website carries around
80 to 100 job advertisements.
The Group continues to favor
welcoming young people into
the world of work through
various part-time structures.
Nearly 640 employees are
employed on this basis, including
380 apprentices.
Valuing talent
The Group encourages the
recruitment of men and
women from a wide range of
backgrounds and seeks
to value and nurture the talents
of all employees. Its approach
forms part of a policy of
professional mobility within
the Group and all its entities.
Emphasis is also placed on
developing potential, identifying
potential high-flyers and
producing the managers of
tomorrow to ensure seamless
management succession.
Career management
with mobility at its heart
In 2004, the Group continued
to pursue its policy in this area
through a number of programs
designed to increase awareness
amongst employees, of their
responsibilities and opportunities
to manage their own career,
and in human resource teams,
who are at the heart of
the process of adapting and
developing the group’s staff.
Increased emphasis has been
placed on mobility, with a
“Mobility Guide” being distributed
to employees. In order to
meet demand from the Banque
Populaire banks for particular
skills, a “Group Skills Pool” has
been created for use by human
resources teams. Lastly, the first
Professional Prospects gathering
on July 2, 2004 gave 180 human
resources staff a better picture of
the professional tasks within the
Group and the skills they require.
In general terms staff mobility
has continued to keep step with
changes in the shape of the group.
Producing exceptional
managers
Populaires sets great store
in the training of future top
level managers within the
Group.The Group’s management
training institute (Centre de
Perfectionnement au Management)
continued its work, with its
15th set of graduates completing
their training in October 2004,
taking the total number to 380.
Bespoke training programs
for managers seeking to expand
their professional development
75
>>> also continued in 2004, with
the “Executive’s” program.
There are also major programs
for Group Directors. In 2003,
ten training sessions were held
on topical themes.A total of
133 Chairmen, Chief Executive
Officers and Directors took
part. Of these, 25 also attended
the itinerant seminar, which
this year took place in China
in October 2004. Banque
held its second Group Director
summer school in Nantes
this year, with 350 participants.
It also relaunched the “Skills
List” training for future Directors.
Training to extend
the skills base
is constantly aware of the need
to implement a policy allowing
its staff to develop new skills
in a way that meets both their
needs and the requirements
of the Group.
76
training, with 79% of employees
involved in at least one training
program.
The Group continues to develop
the skills of its sales teams
in various markets in combination
with its Annual Marketing
Action Plan.
In 2004, training focused on
three key areas for the expansion
of the Group’s client base:
n “Selling to personal customers”;
220 employees received
training in wealth management.
In addition the distribution
to banks of the “Reference Taking
Kit for everyday use” was a
considerable success.This updated
and developed expert wealth
management modules (wealth
management approaches for
SME Directors, self-employed
professionals and Sociétés
Civiles Immobilières property
companies).
“Selling to businesses”; some
1,200 employees have received
training since the launch of
“CIBLEntreprise”. Here too, new
documentation to increase
business account managers’
awareness of wealth management
issues proved useful to both
sales staff and their clients.
n
In 2004, following finalization
of the federal classification
of posts, Banque Fédérale des
Banques Populaires and the
Banque Populaire banks turned
their attention to putting
into practice the skills and
training accord (“Emploi Formation: vers une Gestion
Prospective des Compétences (GPC)”)
signed in December 2003.
A key development for the year
was the distribution to all
entities of a “joint skills base”,
providing the foundations for a
shared Group-wide understanding
of cross-professional skills.
At the same time Banque
provided active practical
support to banks seeking to
progress the implementation of
GPC.
Other programs sought to
support Group marketing
campaigns: training in “alternative
multi-manager” products
(357 employees from 15 Group
banks had received training
by the end of December 2004);
and training in “Inheritance
Solutions”, an important theme
for the “key customers” group
(kit being updated and distributed).
A “Core Savings” training program
is being prepared for 2005.
The development of the
professional skills of employees
has continued.The Group
devotes a substantial budget
to staff training, exceeding
the legal minimum requirements.
In 2003 the Group devoted
5.8% of its total staff costs to
With 141 new graduates
from the Institut Technique de
Banque banking institute in 2004,
the Group was responsible for
training 19.4% of those attaining
this professional qualification.
The Group continues to
encourage employees to follow
n “Selling to small businesses”;
937 employees have received
training since the launch
of the “CIBLE Professionnels”
program.
such vocational training
courses as a means of extending
their career opportunities.
Motivating
compensation
policies
The Group is committed to
ensuring the motivation of its
employees through attractive
compensation packages, devised
jointly by Human Resources
executives and local managers.
Salaries
For the Group as a whole, average
salary levels are comparable
with market rates in the banking
industry. As a general rule 92%
of an employee’s compensation is
fixed, the remainder is variable.
Salary increases depend largely
on the policy of the individual
banks, which have full responsibility
for determining how they reward
individual and collective performance.
Across-the-board pay settlements
are negotiated at industry or
Group level taking into account
the economic situation, overall
pay levels and the competitive
environment. In June 2004 a new
Group-level salary agreement
was signed with four trade unions
(CFDT, CFTC, FO and CGT),
granting all employees at levels
A to K of the banking industry
collective employment agreement
a permanent 1.6% pay rise,
capped at €420, for salaries up
to just over €26,000.
As in the previous year, variable
remuneration (profit sharing,
profit-related bonuses, incentives
and company top-up payments)
represented a significant share
of total employee compensation.
This steady pattern is gradually
strengthening the link between
an element of total compensation
and the attainment of individual
or collective performance targets.
In 2003, variable compensation
elements accounted for an
estimated average of 27.5 % of
total pay (see table 4).
Profit-related bonuses
Nearly all of the Banque Populaire
banks, Natexis Banques Populaires
and most of its subsidiaries,
and Banque Fédérale des Banques
Populaires have profit-related
bonus, profit sharing and company
savings schemes agreements.
All the profit-related bonus
schemes allow for bonus
payments based on the results
of the entities concerned.
In the vast majority of cases
the calculation formula also
takes into account gains in
market share and growth
in return on equity. Productivity,
as measured by the improvement
in the cost/income ratio,
and the quality of new business,
measured by the decrease
in loan loss provisions and
the number of client defaults,
are also used in some cases.
More than half of the schemes’
bonuses are paid only if a
certain profitability target is
reached.This trigger point may be
expressed in terms of growth
in gross operating income,
growth in reserves, improvements
in the return on equity and so on.
The distribution of bonuses is
generally in proportion to basic pay.
Some Group companies offer
flat-rate bonuses and many banks
combine the two approaches in
varying proportions (see table 5).
Profit sharing
Some Group companies apply
profit sharing calculation formulae
that are more generous than
those prescribed by law. Some
waive the 1/2 coefficient, whilst
others reduce the amount
deducted from the calculation
base in respect of return on
equity. Some Group companies
use an altogether different
formula, basing profit-shares
directly on a percentage
of taxable or book income.
Company savings
schemes
Half of the Group’s employees
are members of their company’s
company savings scheme.
The majority of these schemes have
been set up by Group companies
under agreements with employee
representatives. For all the Banque
Populaire banks, with the exception
of Banque Populaire Loire et
Lyonnais and Banque Populaire
Centre Atlantique, the company’s
top-up payments are limited to
coverage of scheme management
costs.Where companies make
additional voluntary top-up
payments these are generally made
by matching a percentage of the
employee’s contribution that varies
according to the amount of this
contribution. In some cases the
entity fully matches contributions
of less than €150 or €300.
Employeremployee relations:
a productive
dialogue
Employee relations are at
the heart of the Group’s
corporate life.They are managed
at industry level, Group level
and the level of each Group entity.
n As an associate member of
the French Banking Association
(Association des Banques
Françaises – AFB) the Banque
Populaire Group takes part
in all industry-level technical
meetings and negotiations.
It is actively involved in negotiations
on employment conditions in
the industry. It also contributes to
national debates and discussions on
legislative changes and in industrywide or inter-professional projects.
During 2004 several significant
industry-wide agreements
were signed.These included an
agreement on pay that allowed
the revision of minimum pay levels,
and an agreement on training.
Negotiations in other areas, notably
retirement benefits and training,
are ongoing.
n At Group level, employee relations
take place against a background of
a common purpose and a healthy,
friendly and constructive dialogue.
Changes in the shape of the Group
represent a recurring and significant
topic of discussion. Beyond
this area, numerous meetings
were held with employee
representatives, resulting, in 2004,
in the signature of several
agreements on wages, measures
to support employee mobility
within the Group and on childcare.
The Fillon pension reform
Act required the creation of a
training program for Human
Resources Directors and
members of their teams.
The Group also provides on-site
Human Resources advice at
the request of Group entities.
This support structure allows
Group entities to carry out
an audit of their employment
and employee relations practices
and then to set up high-quality
tools and procedures.
Those Banque Populaire
Group companies operating
outside the banking sector have
adopted the same approach,
of a rich dialogue with employee
representatives.This has produced
regular successful negotiations
of local agreements, and helped
maintain an amicable and healthy
climate in employee relations.
n
The continued program of
mergers between Banque
Populaire regional banks has
been achieved without job
losses.The Group provides
support to the entities involved,
to help manage employee
relations in this particular set
of circumstances and thus
allay any fears amongst the
banks’ employees.
The May 4, 2004 Modernization
of Labor Relations Act introduced
a new factor into negotiations,
namely the requirement for majority
agreements.This change is likely
to lead to greater involvement of
union bodies in negotiations,
as any minority agreement will
be exposed to a challenge
from non-signatories, rendering
the minority agreement invalid.
At the industry level, where
agreements have traditionally
been signed by only one or two
unions, the introduction of
this rule has had the effect of
blocking agreements.The minority
agreements signed by the AFB
n
77
>>> since the Act became law have
seen the exercise of the right
of challenge, thus annulling the
agreement.This was the case
for the July 13, 2004 agreement
on retirement and the collective
agreements for French Guyana
and Martinique, which were
signed in December 2004 after
three years of negotiation.
The same law also overturned
the so-called “more favorable
terms” principle, under which the
parties to a collective agreement
could not elect to opt out of
more favorable terms available in
law or under an agreement at
higher level. Other than in areas
where such opt-outs are
specifically forbidden, the parties
to collective agreements may
now agree to less favorable terms.
This change will increase the
importance of local negotiations
and could, over time, affect
other levels of negotiation such
as Group level, industry level
or inter-company agreements.
Employment: more
jobs, better jobs
In general terms the Banque
Populaire Group places
considerable importance on
protecting employment.
It seeks to guarantee and expand
the number of jobs it offers
and this is a central plank of the
Group’s Human Resources
policy. Recent examples such as
mergers between Banque
Populaire regional banks, or of
data processing centers in
the i-BP and the Cap 2005 action
plan introduced at Natexis
Banques Populaires two years ago,
bear witness to the Group’s
commitment to protecting jobs.
In return every member
of staff is under the full moral
obligation to maintain their
employability at the highest level
possible (see table 1).
continued to increase job
numbers in 2004.The Group
had 44,509 full-time equivalent
active employees at December 31,
2004, a 3% increase from
43,224 a year earlier. In terms of
employee numbers the most
significant recent expansions of the
group have been the affiliation of
Crédit Maritime Mutuel in January
2003 (918 active employees at
December 31, 2004) and Coface’s
acquisition of Ort (428 employees).
At December 31, 2004 there were
28,563 full-time equivalent active
employees at the Banque Populaire
regional banks, CASDEN Banque
Populaire and Crédit Coopératif,
an increase of 2% over the year.
The significant increases came at
BRED Banque Populaire, which
78
The Banque Populaire Group:
good to work for
2004 saw the first publication of the “100 best employers”
(“100 entreprises où il fait bon vivre” (1)), for which nearly
5,000 employees replied to an on-line survey run between
May and July 2004, ranking their employers on 33 different
criteria including working conditions, remuneration, working
hours and human resources. In all, 485 companies were
included in the rankings.
The Banque Populaire Group was ranked ninth in the list of the
top 100 employers. It received an overall rating of 3.02 out of 5,
compared to the survey average of 2.58. The survey showed
that “working atmosphere” was the Group’s strongest point.
The survey put the Banque Populaire at the top of all French
banks included.
(1) Source : Journal du Management
incorporated the subsidiaries
of Association Française pour le
Développement in the French
overseas territories (Réunion,
Guadeloupe, Martinique), adding
nearly 185 active employees.
In the retail banking sector,
2004 also brought another
merger of Banque Populaire
regional banks (BICS Banque
Populaire and Banque Populaire
Nord de Paris in November),
taking the number of mergers
to ten over the last five years,
with the new banks having
an average of 1,400 employees.
In financing, investment banking
and services, the number of
employees at Natexis Banques
Populaires and its subsidiaries
reached 12,930 in 2004, a 5.7%
increase on 2003 (see table 2).
This rise came mainly at
subsidiaries of Natexis Banques
Populaires and from Coface’s
acquisition of Ort during the year,
which added 428 active employees,
of whom 70 were employed
outside France (see table 3).
The number of employees
outside France continued to grow.
is represented in some fifty
countries in all continents. In 2004
the continued expansion of
its international representation
came notably through growth at
Coface. Of the 4,081 international
employees, 58.9% work within
the Coface network, 27.9% for
and the remaining 13.2% for
BICEC. International employees
now account for 9.2% of the
total, compared to 1.7% in 1998.
Table 1: Active employees(1) at the Banque Populaire Group
12/31/1998
12/31/1999
12/31/2000
12/31/2001
12/31/2002
12/31/2003
12/31/2004
22,760
22,760
400
23,167
23,167
390
24,079
24,079
404
25,218
25,218
430
25,725
1,425
27,150
443
26,528
1,486
28,014
959
453
27,504
1,509
28,563
918
463
5,780
-
6,140
-
6,935
-
7,589
-
7,681
3,765
8,151
4,076
8,311
4,619
5,780
790
612
6,140
803
691
6,935
810
781
7,589
807
767
11,446
759
780
12,227
761
810
12,930
770
865
30,342
31,191
33,009
34,811
40,578
43,224
44,509
+ CASDEN Banque Populaire
Crédit Coopératif
Total Banque Populaire banks
Crédit Maritime Mutuel
and subsidiaries (excl. Coface)
Coface
Total Natexis Banques Populaires
and subsidiaries
IT platform(2)
Other structures(3)
Total Group
(1) Active employee numbers show, in full-time equivalent terms, those employees on the register of employees at the end of each month on permanent or fixed-term contracts (including
permanent retraining contracts and return-to-work contracts). Employees working part-time and those under fixed-term contracts are included pro rata to their hours worked during the month.
(2) December 31, 2002: inclusion of employee figures for CTR Metz-Troyes in those for Banque Populaire Lorraine Champagne.
(3) SBE, BICEC, CAR-IPBP, Guidéo, Click & Trust, seconded banking staff in subsidiaries: BRED, Cofilease, Sopromec, M+X subsidiary of Banque Fédérale des Banques Populaires.
Table 2: Active employees at Natexis Banques Populaires
12/31/1998
12/31/1999
12/31/2000
12/31/2001
12/31/2002
12/31/2003
12/31/2004
Parent company
French subsidiaries
International
Coface France
Coface international
3,860
1,387
532
-
3,938
1,605
597
-
4,061
2,253
621
-
4,349
2,612
628
-
4,375
2,616
690
1,921
1,844
4,391
2,698
1,062
1,872
2,205
4,434
2,739
1,138
2,217
2,402
Total Natexis Banques Populaires
5,780
6,140
6,935
7,589
11,446
12,227
12,930
Table 3: Group employees outside France
12/31/2002
12/31/2003
12/31/2004
Africa
Europe
Asia
North America
South America
540
1,895
258
199
155
17.7%
62.2%
8.3%
6.5%
5.1%
668
2,105
371
552
110
17.5%
55.3%
9.7%
14.5%
3.0%
716
2,301
406
480
178
17.5%
56.4%
9.9%
11.8%
4.4%
Total
3,047
100%
3,807
100%
4,081
100%
Table 4: Additional pay elements in 2003
Amount (in € thousands)
% of total pay
Profit-related bonuses
Profit sharing
Bonuses
Company top-up payments
98,595
72,849
116,097
15,536
8.9%
6.6%
10.5%
1.4%
Total
303,077
27.5%
Table 5: Profit-related bonus payments over the last five years
In € thousands
1999
2000
2001
2002
2003
65,342
87,740
96,128
85,960
98,595
79
Environment and social
responsibility
In areas such as financing and support for projects to protect
the environment and in the social economy, the Banque
Populaire Group puts both its values and its expertise into action.
y creating new banking
solutions specifically
designed to help protect
the environment, the Banque
Populaire Group has established
itself as a major force in
implementing public policies
on sustainable development.
B
New banking tools for
renewable energy
80
During 2004, the creativity
and expertise of various group
entities was harnessed to create
new banking tools designed to
encourage the use of renewable
energy. Banque Populaire des
Pyrénées-Orientales, de l’Aude et
de l’Ariège and Banque Populaire
d'Alsace signed a public/private
partnership agreement with
ADEME (Agence de l’environnement
et de la maîtrise de l’énergie –
agency for the environment and
energy conservation) and regional
authorities.This partnership
supports the “Plan Soleil” program
to promote the use of solar
water heating.
The aim of the plan is to provide
individuals with all the information
needed to fit solar water heating
systems, and to provide subsidies
to encourage uptake. In Alsace,
the regional subsidy of €450
allowed the Banque Populaire bank
to offer an interest-free loan,
cover set-up costs and in some
instances waive the first monthly
repayments.This gave clients
rapid access to the money needed
to complete the solar heating
project, whilst spreading its cost
and benefiting from the new
40% tax credit on this type of
equipment.The creation of these
PREVair CESI 0% loans was
a first in France for the financing
of renewable energy equipment.
Another new partnership
created in 2004 was that between
Crédit Coopératif and Fondation
Energies pour le Monde. Under
this agreement, the Agir Card gives
clients all the usual services of a
typical Carte Bleue Visa but allows
Crédit Coopératif to donate
€3 to Fondation Energies pour le
Monde for each card issued, plus
€0.06 for every ATM withdrawal,
with no impact on the account.
Fondation Energies pour le Monde
promotes the use of renewable
energy and develops access
to electricity for the world’s most
disadvantaged communities.
continued to demonstrate its
status as a significant player
in this area in 2004. Since its
creation it has committed nearly
€260 million to the renewable
energy sector (hydro, biomass
and wind).Within this sector,
wind generation is seeing rapid
growth. In 2004, Energeco, a
subsidiary of Natexis Lease,
financed 18 projects with a total
capacity of 130MW. This gave
Energeco a share of this market
of around 30%, making it one
of France’s leading companies
in the arranging and financing
of this type of transaction.
One example of its work was
the recent financing of the Haute
Lys wind farm in the Pas-de-Calais
region, which came on stream
in October 2004 and is France’s
largest wind power project
to date. Internationally, Natexis
Banques Populaires’ Project
Financing Department was
involved in the financing of 10
wind farms with total capacity
of over 1,000MW, in Europe
(mainly in Spain), the USA and
Finansol approved
n
The Finansol stamp of approval helps identify solidarity-based savings
and investment products. Launched in 1997, it guarantees that the
products to which it is awarded are transparent, ethical and socially
responsible.
n
Finansol approval is the responsibility of the Finansol Approval Committee
(Comité du label Finansol) made up of independent members drawn from
throughout society. They define the criteria for approval and make annual
checks on the savings products they have approved.
n
These criteria cover the use of the funds invested and of the income on
these funds and the transparency of their management. A share of the
funds invested must be used to support social projects and savers must
be kept informed of the projects supported by their savings.
Morocco, confirming the
strategic importance of this
sector to the bank.
Marketing and use of
environmentally friendly
technologies require a broad
range of financial instruments,
including traditional loans
and guarantee structures such
as FOGIME but also venture
capital, which remains an
underdeveloped segment in
France.Within the framework
of its European Agenda for
Entrepreneurship and Innovation
action plans, the European
Commission is seeking to expand
the European venture capital
market.The Banque Populaire
Group has established two
initiatives which serve these goals.
The first is the involvement
of the Banque Populaire banks
in FIDEME, a project created
by ADEME to support the
development of renewable
energy and of companies active
in this area. FIDEME made
a number of new investments
during 2004.The second involves
Natexis Private Equity, a subsidiary
of Natexis Banques Populaires,
which has invested €3 million
in the 3E – Emertec Energie
Environnement venture capital
fund, alongside Caisse des
Dépôts et Consignations PME
(€5m), CEA (€2.52m) and
Institut Français du Pétrole (€1m).
This is a seed capital fund
seeking to invest in innovative
companies with a strong
technology content in the areas
of energy and the environment.
Protecting the
environment
Every day the average French
person’s domestic energy
consumption releases 1kg of
carbon(1), equivalent to the
average amount disposed of in
household waste. In all, housing
and tertiary sector buildings
are responsible for around 19%
of France’s total CO2 emissions.
To encourage consumers
to pay more attention to their
environment and increase
use of renewable energy and
of environmentally friendly
materials in building and
renovation projects, the Banque
Populaire Group, through
Banque Populaire d'Alsace, has
created a partnership with
ADEME (Agence de l'environnement
et de maîtrise de l'énergie)
to launch the first jointlysubsidized eco-loans, christened
PREVair ADEME.The idea
is to offer a mortgage loan for
projects that meet certain
ecological criteria at the
exceptionally low interest rate
of 2%, fixed for 15 years.
Experience gained in this
project will enable the Banque
Populaire Group to tender
for the subsidized loan program
included in the 2004 Climate
Plan(2). ADEME is due to invite
banks to tender to distribute
lines of subsidized credit to
individuals and companies
to finance highly energy efficient
building works.
The leading French
player in solidaritybased savings
Group was France’s leading
player in the solidarity-based
savings, with 53% of the market
(source: Finansol barometer 2004).
Some 54% of socially-responsible
savers subscribe to a solidaritybased savings product through
their employer.The remaining
46% do so through their bank or
directly with a financial institution.
performance in this area has come
through three types of product:
n Solidarity-based products
from Crédit Coopératif, the leader
in this field, with €108 million.
n The Fructi ISR range of
solidarity-based and sociallyresponsible investments from
Natexis Interépargne as part
of its Plan Epargne Retraite Collectif
(PERCO) collective retirement
plans.
n The CODEVAIR deposit
account from Banque Populaire
d'Alsace, which held a total
of €25 million in 2004.
A unique product in the French
banking market, this account helps
finance loans to environmentally
friendly sustainable development
projects.
In addition, the Banque Populaire
Group is the leading lender
to ADIE with a total credit line
of over €5 million.
ADIE (Association pour le droit à
l’initiative économique) is a
voluntary network providing
support and assistance to
projects developed by the
economically excluded.The goal
is to help disadvantaged people
create their own small businesses.
Such is the professional approach
demonstrated by ADIE, both in
its relationship with the projects
it funds and in its management
of lending, that the legal authorities
and the banking supervision
body have authorized it to make
direct business start-up loans
to the unemployed and recipients
of social security payments.
To help it make this major step
forward,ADIE turned to
its banking partners, including
the Banque Populaire Group,
to provide refinancing of its loans.
(1) 1 kilo of carbon = 3.67 kilos of CO2 (source: MIES report).
(2) A far-reaching action plan concerning all economic sectors and day-to-day life in France that aims to reduce CO2 emissions by the equivalent of 54 million tones by 2010.
81
Patronage
The Banque Populaire Group Foundation aims to help young
classical musicians at the beginning of their careers and young
people with physical disabilities to achieve their professional
goals. It also supports projects to protect France’s maritime
and acquatic heritage.
reated in 1992, the
Foundation has helped nearly
130 musicians and 140 young
people with disabilities. In 2004
the Foundation extended its terms
of reference to include support
for marine and aquatic stewardship
projects run by associations
or individuals.
C
The Foundation has an annual
budget of €1.3 million and sees
its role as providing long-term
support, with grants given for
up to three years.
82
Among past recipients a large
number, including violinists
Laurent Korcia and Renaud
Capuçon, and pianists Nicholas
Angelich and Cédric Tiberghien,
are now establishing national
and international reputations.
Others, including cellist
Emmanuelle Bertrand, oboist
Alexei Ogrintchouk and guitarist
Emmanuel Rossfelder, have won
Révélation awards at the classical
Victoires de la Musique ceremony,
whilst pianist David Fray and
violinist Amanda Favier both won
Révélation awards from ADAMI.
The Foundation has also helped
many people with physical
disabilities achieve major goals,
helping them into the world of
work and to lead ordinary lives:
n New businesses; production
of television reports, acquisition
of an ambulance company, creation
of a cyber café;
n Support for further education
or training to enable recipients to
achieve professional goals.
The work of the Foundation
illustrates the Banque Populaire
Group’s commitment to people
with an entrepreneurial spirit
and a driving enthusiasm for
community or personal projects.
exhibition of submarine archaeology,
visiting seven museums in the
west of France.
A network of contacts provides
very close links between the
Banque Populaire banks and the
foundation. More and more
projects are being presented to it
through the banks or by memberstakeholder clubs who work
to encourage local initiatives.
n A study by the Cistude Nature
group in Haillan (Gironde),
represented by Gabrielle Sauret, with
a view to protecting the European
freshwater turtle in the Aquitaine
region and to preserving its habitat.
In 2004 the new jury was presented
for the first time with maritime
and aquatic stewardship projects.
A total of 14 projects were
submitted, 7 coming from Banque
Populaire banks, of which the
jury selected 5:
Restoration of four fountains
in Silifiac (Morbihan) by the
Ar Vinojenn Sklaër group, run by
the local mayor Serge Moelo;
n
n Restoration of the Ilot des
Poulains lighthouse at Belle-Ile-enMer.This project, run by Denis
Bredin, local head of the
Conservatoire du Littoral et
des Rivages Lacustres, will
allow the lighthouse to host a
permanent exhibition on
the preservation of coastal sites;
n Construction of an exact replica
of the Suzanne, an historically
important steam-powered pleasure
boat, originally built in 1882
by Schindler Frères.This project
based at Chatou on the Ile
des Impressionnistes, is run by
the Sequana group, chaired
by François Casalis.
n The organization by the Buhez
group, directed by Eric Morin,
deputy curator of the Museum of
Brittany in Renne, of a traveling
The Music jury selected 15 young
musicians.These instrumentalists
will be able to continue to nurture
their art through lessons and
masterclasses with celebrated
musicians, take part in major
international competitions and
record their first albums.
In 2004, the ways in which young
talent is developed were expanded
through a partnership with the
Rostropovich Foundation in Moscow,
creating an exchange program for
young French and Russian musicians
allowing them to attend the
Moscow Conservatory and lessons
with some of Paris’ leading teachers
respectively. Laureates from the
two foundations gave a concert at
the Salle Gaveau in Paris, which
attracted a large number of
personalities from the music world
who were warm in their praise
for the young performers’ talent .
Sixteen young people with physical
disabilities received grants to support
a range of high-quality projects.
Thanks to the vital support of
the Foundation, they can now
enter higher education, prepare
for international disabled sports
competitions, receive professional
training or start new companies
(examples included a website
for young myopathy sufferers and
a mobile art gallery).
Sponsoring
The Banque Populaire Group has been an enthusiastic supporter
of sailing for more than fifteen years. It is now a major sponsor
of this sport, which represents the Group’s values of performance,
closeness and a human scale. The Group is proud to be one
of the most active supporters of sailing, and to be known as “the
Sailing Bank”.
he Banque Populaire Group’s
association with sailing began
in 1989, with a multihull which
took part in all the major ocean
races for its class. In 2000 the
Banque Populaire Group became
an Official Partner of the French
National Sailing Federation.The
Group has continued to increase
its involvement in the world of
sailing ever since.This involvement
now takes five main forms:
T
The Group Banque Populaire
sponsors Banque Populaire,
a trimaran skippered by Pascal
Bidégorry, which competes
in all the World Multihull
Championship series races.
n
In 2004, the Group became
involved in the Figaro Class
circuit sponsoring the Banque
Populaire Bénéteau Figaro,
which will be skippered
this season by Jeanne Grégoire.
Through its support of these
two ocean racing boats,
the Group demonstrates its
commitment to those who
push their projects to their limits.
n
As an Official Partner
of the French Sailing Federation
supports sailing throughout France
in a range of practical ways,
from introductions to racing
to the Athens Olympic Games.
n
As an Official Partner of
Association Eric Tabarly since
last year, the Banque Populaire
Group has added a new page
to its log-book, by becoming more
involved in the history of sailing.
It supports the maintenance of
the legendary fleet of one of the
world’s most famous sailors
and is thus helping to prolong
the history of ocean racing
and protect France’s nautical
heritage.
n
are also actively involved
in supporting the sport in their
regions and are represented
on regional leagues, committees
and clubs to help support
their development.
n
can thus justly lay claim to its
soubriquet,“the Sailing Bank”,
as it builds on these lasting
partnerships to offer its banking
and insurance expertise to
keen sailors of whatever level.
involvement in sailing reflects
the drive and team spirit of
its 44,509 employees.The next
few years will no doubt see
new chapters being written in
this remarkable human adventure.
83
2004 Financial
information
84
Management report
Group overview in 2004
85
Risk management
95
Directors’compensation
103
Recent developments and outlook
106
Financial information
85
107
Consolidated financial statements
110
Scope of consolidation and consolidation methods
114
Notes to the consolidated financial statements
140
Statutory Auditors’ report on the consolidated financial statements
173
Management report
Management report
Group overview in 2004
All parts of the Banque Populaire Group delivered an
excellent performance amid an improved climate compared
with 2003. Earnings reached a record high of €1,059 million,
topping the one billion euro mark for the first time.
Comparability of results
Changes in Group structure
The main changes in Group structure compared with 2003
were as follows:
n Crédit Maritime Mutuel, which became an affiliate of
Banque Fédérale des Banques Populaires on August 1, 2003
pursuant to article 93 of the French Financial Security Act
(law no. 2003-706), was fully consolidated in 2004 compared
with the second half only in 2003;
n four credit institutions in the French overseas departments,
acquired from Agence Française de Développement (AFD) in
December 2003,were consolidated for the first time in 2004;
the credit institutions that have signed an association
agreement with Crédit Coopératif were consolidated for
the first time in 2004;
n
n
Ort was acquired by Coface in April 2004.
In 2004, BICS and Banque Populaire Nord de Paris merged
to form Banque Populaire Rives de Paris.The merger took
place at book values and therefore had no impact on
comparability of results for the period.
As the impact of the newly-consolidated entities is not
material, year-on-year comparisons in this management
report are based on reported data for both periods, unless
otherwise stated. Where year-on-year comparisons are
given on a comparable structure basis, they have been
calculated by restating 2003 figures to include the newlyconsolidated entities.
Accounting standards
The accounting standards used to prepare the financial
statements for the year ended December 31, 2004 are
identical to those used in 2003.
Work on transition to international financial reporting
standards (IFRS) is described on page 93.
Business and results overview
12/31/2004
12/31/2003
% change
% change
on comparable
structure
8
6
12
9
21
18
21
18
Net banking income
Operating expenses, depreciation and amortization
Gross operating income
Provisions for loan losses
Operating income
Income from companies accounted for by the equity method
Gains and losses on disposals of fixed assets
Income before exceptional items and tax
Exceptional items
Corporate income tax
Amortization of goodwill
Net charge to fund for general banking risks (b)
Minority interests
7,640
(5,095)
2,545
(480)
2,065
7
26
2,098
(30)
(700)
(33)
(115)
(161)
7,066
(4,796)
2,270
(565)
1,705
11
19
1,735
(23)
(544)
(17)
(169)
(129)
Net income (a)
1,059
853
24
21
Earnings capacity (a) + (b)
1,174
1,022
15
12
85
Consolidated net banking income totaled €7,640 million
in 2004, an increase of 8% over 2003. On a comparable
structure basis, the increase was 6%. All Group businesses
contributed to this growth. Local retail banking accounted
for 65% of the consolidated total.
Outstanding customer loans rose by 7% during the year to
€121.3 billion.Total managed savings stood at €192.2 billion
at December 31, 2004.
The Group maintained its cost discipline. Operating costs
increased by 3.9% on a comparable structure basis, to
€5,095 million. This reflects tighter control by both
Natexis Banques Populaires and local retail banking. The
cost/income ratio improved by a further 1.2 points to
66.7%.
Gross operating income rose by a strong 12% to €2,545
million.
Provisions for loan losses totaled €480 million, a decrease
of 15% compared with 2003 despite the expanded scope of
consolidation.The charge for the year represented 34bp of
risk-weighted loans 41bp for Banques Populaires local
retail banking and 21bp for Natexis Banques Populaires)
compared with 43bp in 2003.Total specific and general provisions carried in the balance sheet represented 69.1% of
non-performing loans at December 31, 2004.
Operating income rose by 21% to €2,065 million.
The net charge to the fund for general banking risks was
€115 million compared with ¤168 million in 2003.
These improved results led to a sharp rise in the tax charge,
to €700 million compared with €544 million in 2003.
After deducting minority interests of €161 million, net
income came to €1,059 million compared with €853 million
in 2003, an increase of 24%.
The Group’s after-tax earnings capacity – measured as net
income plus the year’s net charge to the fund for general
banking risks – amounted to €1,174 million, an increase of
15% or 12% on a comparable structure basis.
Return on equity (ROE), calculated on the basis of earnings
capacity, stood at 14.1%.
The Group’s capital base expanded during the year. Total
regulatory capital rose by 10% to €17.2 billion. Tier One
capital also increased by 10% to €13.4 billion, giving a Tier
One ratio of 9.1%.
Analysis of income statements
Contribution of business lines to net banking income
12/31/2004
12/31/2003
% change
% change
on comparable
structure
4,967
2,668
5
7,640
4,625
2,408
33
7,066
7
11
4
9
8
6
Local retail banking
Federal activities
Total
86
Local retail banking is principally conducted by the 20 Banque
Populaire regional banks, Crédit Coopératif, CASDEN
Banque Populaire, Crédit Maritime Mutuel, SBE and BICEC
in Cameroon.
n Services, which comprises Banking, Financial & Technology
Services, together with Asset Management and Insurance;
The contribution of Natexis Banques Populaires is analyzed
according to its new organization structure,with the following
four core businesses:
The breakdown of net banking income within the Group
remained relatively stable in 2004, with almost two thirds
coming from local retail banking (65%) and one third from
Corporate and Institutional Banking and Markets, which
comprises Corporate France, International, Global Debt &
Derivatives Markets, Equity Group, Commodities, and
Mergers & Acquisitions;
n
Private Equity and Wealth Management, which comprises
private equity, private banking and international estate
planning;
n
n Receivables Management, which comprises Coface and
Natexis Factorem.
The contribution from federal activities, chiefly conducted
by Banque Fédérale des Banques Populaires in its role as
central body for the network and holding company of
Natexis Banques Populaires, is not material.
Management report
Local retail banking – net banking income
In the local retail banking business, 96% of net banking
income is derived from retail banking activities on behalf of
clients.The remaining 4% comes from interbank and money
market operations, chiefly conducted by BRED Banque
Populaire.
Net interest income
Net interest income grew by almost 10%, driven by a
strong increase in volumes, despite a drop in the interest
rate spread to 3.31 basis points.
In a climate of falling interest rates and tough competition,
the average margin on customer loans fell by 39 basis points
to 5.2%, while the average margin on customer deposits
fell by only 21 basis points to 1.9%, after refinancing the
net borrowing position at T4M (average monthly money
market rate).
Overall, outstanding customer loans rose by 11% and
deposits by 9%.
Outstanding customer loans
Outstanding customer loans rose by 11%, all segments combined, to €89 billion.The biggest increases were in equipment
financing (up 10% to €31 billion) and home loans (up 14.5% to €38 billion).
12/31/2004
12/31/2003
% change
45,906
40,544
13.2
7,639
7,129
7.2
Home loans
38,267
33,415
14.5
Business loans
40,399
37,304
8.3
9,212
8,959
2.8
31,187
28,344
10.0
2,711
2,647
2.4
89,016
80,495
10.6
Personal loans
Short-term loans
Short-term loans
Equipment financing (1)
Other loans
Total customer loans (2)
(1) Including lease financing
(2) Excluding resale agreements
Loans to corporate and small business clients increased by 8.3%. In line with Group strategy, activity in the personal banking
market was strong, with loans to personal clients rising by 13.2%.
Customer deposits
Personal deposits
87
12/31/2004
12/31/2003
% change
49,260
45,585
8.1
Demand deposits
10,321
9,612
7.4
Special savings accounts
36,984
34,205
8.1
Time deposits
Business deposits
Demand deposits
Time deposits
Retail certificates of deposit and savings bonds
Total customer deposits (1)
1,956
1,768
10.6
23,858
22,438
6.3
19,758
19,068
3.6
4,100
3,370
21.7
7,260
5,449
33.2
80,379
73,472
9.4
(1) Excluding repurchase agreements
Customer deposits for local retail banking rose by 9%, to €80 billion.
Among this total, demand deposits amounted to €30 billion, unchanged at 37% of the total.
Fee and commissions
Net fee and commissions from client transactions rose by
8.2% and accounted for 35.3% of net banking income from
client transactions, slightly lower than the previous year.
Accounts and services
% total
Loan management
% total
Electronic payments
% total
Financial activities
% total
Total
However, on a comparable structure basis, this percentage
would have remained unchanged from 2003, at 35.8%.
12/31/2004
12/31/2003
% change
742
680
9
44%
44%
275
267
16%
17%
242
242
14%
16%
429
371
26%
23%
1,688
1,561
3
0
16
8.2
Fees and commissions on accounts and banking services
(account operation, payment incidents, etc.) rose by 9%,
accounting for 44% of the total, unchanged from the
previous year.
Fees and commissions on financial activities (securities
trading, sales of life and non-life insurance) rose by a sharp
16% after two years of continuous decline, representing
more than one quarter of the total.
Fees and commissions on loan management rose by 3% to
€275 million, representing 16% of the total.
Other net banking income
Fees and commissions on electronic payments remained
steady at €242 million despite a €10 million adjustment
relating to harmonization of accounting treatment for bank
cards on a deferral basis. Excluding this adjustment, the
increase would have been 5%.
Other net banking income remained stable compared with
the previous year, at €191 million. It essentially comprised
capital markets and insurance revenues generated by BRED
Banque Populaire.
Natexis Banques Populaires – net banking income
Contribution of core businesses to net banking income
88
12/31/2004
12/31/2003
% change
1,157.4
1,092.2
6
Private Equity and Wealth Management
188.6
124.5
51
Services
608.7
561.7
8
Receivables Management
633.6
616.8
3
79.9
12.5
2,668.2
2,407.7
Corporate and Institutional Banking and Markets
Other (1)
Total
11
(1) Net banking income from non-core businesses and elimination of intragroup transactions between Natexis Banques Populaires and Banque
Populaire banks.
Corporate and Institutional Banking and Markets
Corporate and Institutional Banking and Markets (CIBM)
accounted for 45% of total net banking income generated
by the core businesses. Its net banking income was up 6%
over 2003, with contrasting performances according to
business line. Equity Group was up €88 million compared
with 2003, while Global Debt & Derivatives Markets remained flat in a particularly tough climate for fixed-income
activities.This was offset by an erosion in Corporate France
(down €9 million) due to a squeeze on margins, and a drop
in International (also down €9 million) due to the dollar’s
depreciation against the euro.
Management report
12/31/2004
12/31/2003
% change
Corporate France
402.3
411.4
-2
International
123.0
131.9
-7
Global Debt and Derivatives Markets
413.0
417.0
-1
Commodities
88.9
89.0
0
Equity Group
124.5
36.6
n.m.
5.8
6.4
-9
1,157.4
1,092.2
6
Mergers & Acquisitions
Total CIBM
Private Equity and Wealth Management contributed 7% of
total net banking income generated by the core businesses.
It delivered an excellent performance in 2004, with 51%
growth in net banking income. Private Equity was the main
Private Equity
Wealth Management
Total Private Equity and Wealth Management
Services
The Services core business comprises two business lines:
Banking, Financial and Technology Services on the one hand
and Asset Management and Insurance on the other. Total
net banking income from the core business rose by 8% to
€608.7 million. Within Banking, Financial and Technology
contributor with an increase of €61.4 million compared
with 2003. Despite significant profit-taking in 2004, the
stock of unrealized capital gains remained high at the year
end, totaling €148 million, down just €55 million compared
with end-2003.
12/31/2004
12/31/2003
% change
145.4
84.0
73
43.2
40.5
7
188.6
124.5
51
Services, Banking Services delivered 16% growth compared
with 2003, to €86.9 million, while net banking income
from Financial Services was down 14%, chiefly due to
discontinuation of Xeod Services’ “order flow” activities.
Asset Management and Insurance delivered 17% growth
in net banking income, while assets under management
were up 7%.
89
12/31/2004
12/31/2003
% change
Banking, Financial & Technology Services
237.7
245.6
-3
Asset Management & Insurance
371.0
316.1
17
Total Services
608.7
561.7
8
Net banking income was up 3% compared with 2003, to €633.6 million, accounting for 24% of total net banking income
generated by the core businesses.
12/31/2004
12/31/2003
% change
Coface
531.4
518.9
2
Factoring
102.2
98.0
4
Total Receivables Management
633.6
616.8
3
Operating expenses and cost/income
ratio
Provisions for loan losses and operating
income
Operating expenses totaled €5,095 million, an increase of
6.2% or 3.9% on a comparable structure basis.
Provisions for loan losses amounted to €480 million in 2004,
a decrease of 15% on a reported basis and 15.6% on a
comparable structure basis.This change reflects contrasting
positions among the Group’s components, with a rise of
6.4% in local retail banking (5.3% on comparable structure)
and a 51% decrease for Natexis Banques Populaires.
The total breaks down into €2,999 million in payroll costs
(59%) and €2,096 million in other operating expenses
(41%).
Employees
The total number of full time equivalent employees (FTEs)
rose by 3% in 2004, to 44,509 compared with 43,224 at
December 31, 2003.The increase of 1,285 FTEs included 212
within the scope of Natexis Banques Populaires.
Trends in operating expenses
The local retail banking business saw controlled growth in
operating expenses, in line with the Group’s policy of
sustained development in this business. Operating
expenses totaled €3,268 million, an increase of 6% or 3.3%
on a comparable structure basis. This increase was driven
by:
ongoing investment in strengthening the network’s
commercial capability, which included opening 106 new
Banque Populaire branches (86 net) in 2004, bringing the
total to 2,692 at the year end;
n
n continued efforts to rationalize information systems,
through the informatique-Banque Populaire (i-BP) platform
and information systems sharing between Banque Populaire
banks.
90
At Natexis Banques Populaires, payroll costs rose by 6% in
2004, following an increase in the number of employees
(average number of permanent and contract FTEs up
by 179), together with a rise in salary costs due to
improvement measures taken in 2004. Excluding bonuses,
these measures cost about €30 million, representing a rise
of 5.2% based on the number of employees at end
December 2003.
Consolidated payroll costs also incorporate the impact of
pay rises agreed in June 2004 at Group level, as well as a
significant increase in costs related to the incentive and
profit-sharing plans and certain variable compensation
components following the strong growth in earnings
delivered by the consolidated entities.
Lastly, some major regulatory projects such as the adoption
of IFRS and the Basel II capital accord, together with further
progress in information systems development projects,
required additional recourse to outside consultancy and
support.
Cost/income ratio
The Group’s cost/income ratio stood at 66.7% for 2004, an
improvement of 1.2 percentage points over the previous
year. Excluding Coface, the ratio was 65.4%.
Local retail banking posted a cost/income ratio of 65.8%, an
improvement of 0.9 percentage points, and one of the best
in the French retail banking sector.
In local retail banking, the change in loan loss provisions
reflects a continued highly conservative provisioning policy,
with provision coverage of non-performing loans rising to
70.2% at the year end, compared with 69% at end-2003.
Loan loss provisions totaled €376 million, representing
0.41% of risk-weighted loans compared with 0.43% in 2003.
For Natexis Banques Populaires, loan loss provisions were
down 51% to ¤104 million, compared with €211 million in
2003.This figure comprises a net charge of €115.6 million
in specific provisions (representing 62.8% coverage of nonperforming loans), offset by a net reversal of €11.4 million
of general provisions.The stock of general provisions stood
at €371 million compared with €392 million at end-2003.
As a percentage of risk-weighted loans, loan loss provisions
fell sharply to 34bp compared with 43bp at end-2003.Total
risk-weighted asset coverage (fund for general banking risks
plus provisions to total risk-weighted loans) came to 4.4%
at December 31, 2004.
Operating income totaled €2,065 million, an increase of
21% on a reported basis and 18% on comparable structure.
Income before exceptional items and tax totaled €2,098
million versus €1,735 million in 2003, an increase of 21%
(18% on comparable structure). It includes:
n €7 million in contribution from companies accounted
for by the equity method;
€26 million in net gains on disposals of fixed assets,
versus €19 million in 2003.
n
Management report
Breakdown of income before exceptional items and tax
All Group businesses contributed strong growth to income before exceptional items and tax in 2004.
12/31/2004
12/31/2003
% change
1,343
1,189
13
768
522
47
Corporate & Institutional Banking and Markets
398
277
44
85
24
251
Services
185
155
20
126
123
2
Other (1)
(25)
(57)
Federal activities
(12)
24
2,098
1,735
Local retail banking
Total
21
(1) Net banking income from Natexis Banques Populaires’ non-core businesses and elimination of intragroup transactions between Natexis
Banques Populaires and Banque Populaire banks
Net income
The tax charge increased by 28% to €700 million from
€544 million in 2003. The increase, which included an
exceptional charge of €25 million in respect of exit tax due
on long-term capital gains reserves, reflects a rise in the
taxable base as a result of earnings growth.
Exceptional items amounted to €30 million versus
€23 million in 2003, principally relating to mergers
between Banque Populaire regional banks.
The sum of €115 million was transferred to the fund for
general banking risks, including €83 million in transfers to
the regional and federal mutual guarantee funds set up
under the Group's internal guarantee mechanism.
Shareholders’ equity and capital
adequacy
Capital stock
In 2004, the consolidating entity increased its capital stock
by €147 million by issuing new members’ shares in
the Banque Populaire banks and the mutual guarantee
companies to member-stakeholders.
Regulatory capital and international capital
adequacy ratio
At December 31, 2004, the Group’s total regulatory capital
rose to €17.25 billion from €15.67 billion one year earlier.
Amortization of goodwill amounted to €33 million,including
an impairment charge of €37 million arising on the
re-estimation of goodwill based on discounted cash flow
for the Group’s subsidiaries Natexis Bleichroeder Inc
(€34 million) and Samic (€3 million).
Tier One capital totaled €13.42 billion,up from €12.22 billion
the previous year. The increase was mainly due to the
earnings capacity generated during the period, after taking
account of dividends and interest payable on members’
shares.
Minority interests came to €161 million compared with
€129 million in 2003, corresponding mainly to minority
interests in Natexis Banques Populaires, which is 75.59%owned by the Group.
Tier Two, Tier Three and other regulatory capital rose to
€3.83 billion from €3.45 billion at December 31, 2003,
mainly due to the net positive balance between new
redeemable subordinated notes issued and redeemed
during the period.
Net income came to €1,059 million, an increase of 24%
over 2003 and 21% on a comparable structure basis.
Earnings capacity – measured as net income plus the
year’s net charge to the fund for general banking risks –
amounted to €1,174 million, an increase of 15% or 12% on
a comparable structure basis.
Risk-weighted assets amounted to €140 billion, an increase
of 7%, in line with growth in customer loans. Market risks
were up 18% to €6.8 billion,representing 4.6% of total risks,
which came to €146.9 billion.
The international capital adequacy ratio stood at 11.7%,
including a Tier One ratio of 9.1%, versus 11.5% and 8.9%
respectively at December 31, 2003, reflecting a continued
strengthening of the Group’s financial structure.
91
12/31/2004
12/31/2003
% change
Regulatory capital
Tier One capital
Total regulatory capital
13,421
17,248
12,217
15,666
10
10
Risk-weighted assets
Credit risks
Market risks
Total consolidated risks
140,149
6,760
146,909
130,949
5,708
136,658
7
18
7.5
9.1%
11.7%
8.9%
11.5%
0.2
0.2
International capital adequacy ratio
Tier One ratio
Total ratio
European capital adequacy ratio
Since 1996, French financial institutions have been required
to measure and comply with an overall capital adequacy
ratio covering not only counterparty risks but also market
risks such as interest rate and currency risks.
It is defined as the ratio of available capital to the capital
requirement for counterparty and market risks. It must be
higher than 100%. At December 31, 2004, the Group’s ratio
stood at 152% against 149% one year earlier.
Trends in the consolidated
balance sheet
Total consolidated assets amounted to €250.4 billion at
December 31, 2004 versus €237.2 billion one year earlier,
an increase of 6%.
Overall, the balance sheet structure changes very little
from year to year, the main changes coming from growth
in customer loans and deposits in the local retail banking
business (see page 87).
Assets
Assets
92
12/31/2004
12/31/2003
Interbank and money-market assets
(1)
27.8
24.5
Customer loans and lease financing
(1)
121.4
113.0
Securities held under resale agreements
35.8
35.7
Securities
26.3
22.4
Insurance company investments
26.0
23.5
Accrued income, prepaid expenses and other assets
11.9
15.7
1.2
2.4
250.4
237.2
Investments in affiliates and other securities held for investment
Total assets
(1) Excluding resale agreements, which are identified separately
n Interbank and money market assets rose by 13%
to €27.8 billion, driven by a €3.3 billion increase in the
portfolio of government securities held for trading by
Natexis Banques Populaires (up €1.7 billion) and BRED
Banque Populaire (up €1.2 billion).
Customer loans and lease financing amounted to
€121.4 billion, an increase of 7%. This growth was mainly
attributable to local retail banking. Customer loans at
Natexis Banques Populaires remained stable as the weaker
dollar offset growth in the loan book.
n
Securities held under resale agreements – chiefly
government securities – remained stable during the year,
after growth in this business during the previous three
n
years at Natexis Banques Populaires. These assets are
financed by securities delivered under repurchase
agreements, recorded as liabilities.
The securities portfolio increased by a significant 17% to
€26.3 billion, mainly due to growth in fixed-income trading
in the capital markets business.
n
n Insurance company investments, held mostly for the life
insurance business, rose to €26.0 billion.This was matched
by a corresponding increase on the liabilities side in
insurance company technical reserves held to meet future
obligations to policyholders, which rose to €25.7 billion.
Management report
n Other assets fell to €11.9 billion in connection with
the non-renewal of reinsurance contracts, which led to a
significant decrease in the reinsurers' share of technical
reserves.
n The €1.1 billion decrease in other securities held for
investment reflects the unwinding of the Editis (formerly
Vivendi Universal Publishing) carrying operation carried
out by Natexis Banques Populaires for the Lagardère
Group.
Liabilities
Liabilities
12/31/2004
12/31/2003
Interbank and money market liabilities (1)
17.0
17.8
Customer deposits (1)
94.8
89.3
Securities delivered under repo agreements
47.4
42.6
Debt securities and subordinated debt (2)
32.7
31.0
Insurance company technical reserves
25.7
23.7
Other liabilities and provisions
18.9
20.3
Shareholders’ equity and fund for general banking risks
13.9
12.5
250.4
237.2
Total liabilities
(1) Including retail certificates of deposit, but excluding repurchase agreements, which are identified separately
(2) Excluding retail certificates of deposit
The increase in customer deposits came almost entirely
from the local retail banking business.
n
n Refinancing of growth in assets was also reflected in a significant increase in debt securities, which rose to €32.7 billion
from €31.0 billion the previous year, the issuance of money
market securities and an increase in securities delivered
under repurchase agreements, which rose to €47.4 billion.
Off-balance sheet savings products
Off-balance sheet savings managed by the Group rose by 8% to €97.5 billion.
Off-balance sheet
93
12/31/2004
12/31/2003
% change
Life insurance
24.5
22.5
9
Employee savings plans
11.5
11.7
-2
Mutual funds
54.8
50.0
10
Other
6.7
5.9
14
Total
97.5
90.1
8
Life insurance portfolios increased by 9% to €24.5 billion
and mutual funds by 10% to €54.8 billion.The decrease in
employee savings plans arising from the “Sarkozy law”
allowing early withdrawal is estimated at €1.2 billion over
the year.
Transition to International
Financial Reporting Standards
(IFRS)
Total managed savings
A Group project
Total savings managed by the Banque Populaire Group rose
by 7% to €192.3 billion at December 31, 2004, comprising
€94.8 billion in customer deposits and €97.5 billion in
off-balance sheet savings.
At its meeting on October 22, 2003, the Board of Directors
of Banque Fédérale des Banques Populaires decided that
the consolidated financial statements of the Banque
Populaire Group would be presented in accordance with
IFRS from January 1, 2005. As the Group is not listed on the
stock exchange, it is under no obligation to adopt the new
standards.This entirely voluntary decision was made in the
interests of transparency and providing financial statements
that are comparable with those of other European financial
institutions.
It represents a major departure for the Group and for
everyone directly concerned by the Group’s financial
reporting. Acutely aware of its importance, the Group
launched its IFRS project in September 2002. Work
continues in 2005, including preparing information
systems specifications and parameter setting, drawing up
procedures and training all those involved in the Group’s
financial reporting functions.
Following this work, the Group will be in a position to
calculate the impact of first-time adoption of IFRS as of
January 1, 2004. In addition, the project group has also been
working on drawing up 2004 financial statements based on
IFRS except for IAS 32 and IAS 39, as the Group has not
elected for early adoption of these two standards.
To comply with its usual year-end reporting schedule,
the Group will publish its 2004 French GAAP financial
statements before completing the work on first-time
adoption of IFRS. The 2004 IFRS financial statements will
therefore be published on April 21, 2005, after presentation
to the Board of Directors of Banque Fédérale des Banques
Populaires on April 20, 2005.
Based on work completed to date, the main identified
impacts on opening shareholders’ equity are:
Fund for general banking risks: this type of general
provision is not allowed under IFRS and the FGBR will
therefore be reclassified in opening shareholders’ equity,
with no impact on regulatory capital.
n
94
n Loss equalization reserve: this provision relates to
Coface’s insurance credit business. It is not allowed under
IFRS as it is designed to cover a general risk (catastrophe
risk). It will therefore be reclassified in opening shareholders’
equity.
n Employee benefits: under IFRS, the Group is required
to provide for all post-employment benefits in full. This
involves measuring post-employment obligations at their
fair value, by discounting future cash flows at the market
rate, and supplementing the provisions made in this respect
with a sum corresponding to the estimated liabilities arising
in respect of taking over payment of future retirees’ mutual
contributions. All resulting actuarial differences will be
charged to opening shareholders’ equity.
Impact of component accounting: this method
applies mainly to buildings owned by the Group and the
impact arises from identifying components with useful
lives that are shorter than the depreciation periods
currently used under French GAAP. As this method will
be used in the French GAAP financial statements with
effect from 2005, this difference in accounting treatment
will become irrelevant.
n
Capitalization of development costs: IFRS requires
software development costs to be capitalized whereas
under French GAAP they are currently expensed during
n
the year of occurrence. Similar accounting treatment will
be used in the French GAAP financial statements as of
January 1, 2005.
Goodwill: under IFRS, as is the case for French GAAP,
goodwill will no longer be amortized but will be tested for
impairment at least once a year, and an impairment loss
recognized where necessary. Previously recognized negative
goodwill will be derecognized by adjusting opening shareholders’ equity and negative goodwill arising in subsequent
years will be taken immediately to income. Furthermore,
intangible assets previously recognized under French
GAAP upon business combinations and which do not
satisfy the recognition criteria required by IFRS, will be
reclassified as goodwill.
n
The impacts of adopting IAS 32 and IAS 39 will be reported
upon publication of the 2005 half-yearly financial statements,
after presentation to the Board of Directors on September
7, 2005.
At this stage, and after taking account of prudential filters
introduced by the supervisory authorities, the main
impacts of IAS 32 and IAS 39 on regulatory capital are as
follows:
n The “amortised cost” method requires remuneration
of loans and borrowings to be accounted for at the effective
interest rate, that is including the impact of directly related
revenues and expenses (principally fees and commissions)
received or paid at inception of the transaction.This standard
will decrease shareholders’ equity by the amount of fee and
commission income recognized in the income statement
prior to 2005, which will have to be deferred over the
effective term of the transactions concerned.
Recognition of provisions for home loans savings
plans, designed to cover part of the risk of granting home
loans at regulated rates that are lower than market rates,
as well as the risk of having to extend the savings phase at
interest rates higher than those paid on an equivalent
savings product.
n
n Recognition of collective provisions for impairment
of performing loans.This will have a material impact in the
retail banking business, which does not recognize general
provisions for credit risk under French GAAP.
Macro-hedging operations will principally be accounted for
as cash flow hedges, which should not have an impact on
the Group’s Tier One ratio given the various prudential
filters proposed by the supervisory authorities.
Management report
Risk management
Risk management organization
The Group is exposed to four main categories of risk:
n
credit risks arising from customer transactions;
n
market risks arising from capital markets transactions;
n interest rate, currency and liquidity risks, arising from
retail banking transactions;
n
operational risks.
In accordance with standard CRBF 97-02, each bank has set
up risk management and monitoring structures that are
independent from operating units. All Group banks have
also set up their own systems of exposure limits and
decision-making procedures, complying with the rules
established at Group level, as set out in the credit risk
manual updated in June 2004 and the interest rate and
liquidity risk manual updated in April 2004.
Each bank's risk policy is determined by the bank's executive management and approved by its Board of Directors.
The banks are also responsible for exercising continuous
control over risks, in accordance with the rules laid down
by the Board of Directors of Banque Fédérale des Banques
Populaires – dealing in particular with the role of the
Group Risk Management Committee – and by the banking
regulator.
The organization of risk monitoring and control procedures
is described in the “Chairman's Report on Internal Control
Procedures” included in this annual report.
Portfolio analysis
Listed companies, including banks, clearly benefited from
economic recovery in the first half of 2004. Growth in the
eurozone reached 2% on an annualized basis, led by a
recovery in exports to non-eurozone countries, which
partially explains the differences in growth rates from one
country to another. Germany, for example, drew the
benefit despite its persistently difficult domestic position,
with further business failures expected in 2004.
In the first half, France produced 3% annualized growth,
well above the eurozone average, led by strong consumer
spending.
The second half saw a sharp spiral in oil prices, which is
now the main uncertainty hanging over growth prospects
today. A stable dollar helped contained the problem, but
oil-dependent industries (chemicals, processing, transport,
fishing, etc.) could suffer a significant deterioration in
financial position and consumers might be encouraged to
stop spending.
The Banque Populaire Group is well-placed to avoid any
serious repercussions of these uncertainties, thanks to its
strong risk management culture and diversification in terms
of both geographic and industry exposure.
At the end of 2003, the Banque Populaire Group established
comprehensive rating systems that comply with future
prudential requirements. These systems are based on the
use of homogeneous methods throughout the Group and
centralized rating applications dedicated to the principal
client segments.
The Group's central body is responsible for assessing risk
policies and management procedures according to standard
principles and criteria. Risks are monitored at Group level,
as follows:
n
Banque Populaire banks, on a consolidated basis;
Banque Fédérale des Banques Populaires subsidiaries on
a consolidated basis;
n
n
Crédit Maritime Mutuel on a consolidated basis.
In addition to this consolidated risk monitoring system, the
Group Risk Management Committee performs monthly
assessments of material individual exposures at Group level
or at the level of individual banks. Responsibility for performing credit reviews and the credit rating process may be
delegated to the Banque Fédérale des Banques Populaires
Risk Management Department.
All Group entities are informed of the decisions made by
the Group Risk Management Committee.
Risk diversification represents a fundamental risk management
rule and is governed by external and internal guidelines. As
required by the Group’s risk management manuals, each
bank sets internal risk concentration limits based on its
own specific characteristics, which are lower than the limits
authorized under banking regulations.
95
Total risks
12/31/2004
12/31/2003
55.4
53.4
120.6
111.8
o/w customer overdrafts
7.5
9.4
o/w commercial loans
3.5
3.4
o/w factoring receivables
3.0
1.9
104.0
1.1
20.1
30.2
38.4
14.2
1.0
94.1
1.2
18.2
28.4
33.5
12.7
1.2
1.6
1.7
Interbank and money market assets
Customer loans
o/w other customer loans
Export loans
Short-term loans and consumer loans
Equipment loans
Home loans
Other loans
o/w accrued interest and suspense accounts
o/w non-performing loans, net of provisions
Total outstanding loans increased in 2004. Interbank loans grew at a slower rate than customer loans, particularly in the
Group’s core strategic segments such as retail banking.
12/31/2004
12/31/2003
22.9
18.0
2.0
2.1
Guarantees given on behalf of customers
20.9
15.8
Financing commitments given
34.7
31.7
2.6
2.7
32.1
29.0
Guarantees given
Guarantees given to credit institutions
Financing commitments given to credit institutions
Financing commitments given to customers
Financing commitments given to customers increased slightly, while other commitments and guarantees declined, reflecting
the overall drive to contain risks.
96
Interbank risks
Change in outstanding loans and utilized commitments to credit institutions (in € billions)*
30
25.2
25
22.9
22.2
20.6
20
Dec. 01
Dec. 02
Dec. 03
Dec. 04
* Management data
Growth in outstanding loans and utilized commitments to credit institutions accelerated in 2004 to 10% from 3.1% in 2003.
Management report
Interbank counterparties by country (in %)*
In %
60
n December 2002
50
n December 2003
40
n December 2004
30
20
10
0
France
Western
Europe
North
America
Asia (excl.
Japan and
Oceania
North Africa
&
Middle-East
Latin
America &
Caribbean
Japan
SubSaharan
Africa
Supranational
borrowers
Central &
Eastern
Europe
* Management data
Counterparties include a large number of banking
institutions in OECD countries.The weighting of Western
European counterparties rose slightly from 31% to 35%.
Loans and commitments to foreign banks involve the
leading banks in each country, 84% of which are investment
grade.The concentration of risks remains stable.
Change in interbank commitments by credit rating (in %)*
In %
n December 2002
40
n December 2003
35
30
n December 2004
25
20
15
10
5
0
97
1
2-4
5-7
8 - 10
11 - 16
> 16
Not rated
* Management data
The global banking industry continued to improve in 2004. Banking counterparties rated AA or equivalent continued to
represent the largest category.
Sovereign risks
Sovereign risk is the risk of a government (and/or central bank) being unable to honor its debts. Sovereign borrowers almost
never default on their loans; instead, they initiate negotiations with lenders, frequently leading to the waiver of interest and/or
of part of the outstanding principal.
Sovereign risks by geographic area (in %)
In %
100
83.8
80
n December 2002
89.2
76.2
n December 2003
n December 2004
60
40
14.5
20
3.6
3.4
2.8
2.2
1.9
2.4
6.2
3.0
0.9
0.9
0.9
3.3
1.6
3.2
0
Western Europe
Africa
Latin America
& Caribbean
Asia
Central & Eastern
Europe
North America
Nearly 77% of the Group's sovereign loans concern Western Europe. Exposure to Japan and North America has increased
in line with the improved international climate. Africa now represents only 2.8% of the total, while Latin America – the most
risky area – accounts for 2.4%, up slightly on the previous year due to its less troubled outlook.
Change in sovereign loans by Coface credit rating
A4: 2%
C: 1%
B: 2%
98
A2: 27%
A1: 67%
The quality of the Group’s sovereign exposures is measured by the Coface short-term @rating, which allows virtually all
risks to be rated (less than 1% are not rated - NR). 96% of sovereign exposures are investment grade ranging from A1 to
A4, including 67% which are A1 rated. Only 4% of sovereign borrowers are non-investment grade with a rating from B to D,
including 1% which are D rated, reflecting the Group's marginal exposure to foreign sovereign risks.
Management report
Customer risks
Breakdown by industry
Industry
Exposure 12/31/04
€m
%
Real estate
Exposure 12/31/03
€m
%
% change
2004/2003
14,374
16.5
14,419
17.2
- 0.3
Finance & insurance
7,486
8.6
6,510
7.8
15.0
Retailing
7,215
8.3
6,647
7.9
8.6
Construction & public works
6,478
7.5
5,930
7.1
9.2
Services
6,140
7.1
5,641
6.7
8.9
Consumer goods
5,670
6.5
4,503
5.4
25.9
Food
4,885
5.6
4,879
5.8
0.1
Basic industries
4,324
5.0
5,188
6.2
- 16.7
Transport
4,279
4.9
3,595
4.3
19.0
Mechanical & electrical engineering
4,244
4.9
4,797
5.7
- 11.5
Pharmaceuticals & healthcare
3,520
4.1
2,867
3.4
22.8
Holding companies & diversified
3,420
3.9
3,462
4.1
- 1.2
Tourism, hotels & restaurants
3,307
3.8
2,774
3.3
19.2
Unallocated
2,740
3.2
3,066
3.7
- 10.6
Technology
2,401
2.8
2,621
3.1
- 8.4
Media
2,336
2.7
2,675
3.2
- 12.7
Government
1,741
2.0
2,106
2.5
- 17.3
Utilities
1,320
1.5
1,394
1.7
- 5.3
Energy
969
1.1
788
0.9
22.9
Source: Banque de France risk reports (reported exposure > €76,000)
The real estate sector still comes top of the list. Exposure to this sector remains stable and half the loans concerned are to
“SCI” non-trading real estate companies.The main changes are an increase in exposure to the retailing and consumer goods
sectors, and a significant decrease in exposure to basic industries and mechanical & electrical engineering.
99
Concentration by borrower
2004 breakdown
%
Risk-weighted loans
as a % of capital
2003 breakdown
%
% change
2004/2003
Largest borrower
1.7
8.3
1.7
8.5
Top 10 borrowers
11.5
54.3
10.9
9.3
Top 50 borrowers
25.7
121.9
25.3
5.3
Top 100 borrowers
30.6
144.9
31.3
1.2
Source: Banque de France risk reports (reported commitments > €76,000)
Significant concentrations of credit risk have stabilized after a significant reduction in 2003.Their weighting relative to the
Group’s capital has fallen compared with 2003.The Group’s top 100 largest exposures represented only 144.9% of capital
versus 167.6% at December 31, 2003.
High-risk industries
12/31/2004
12/31/2003
Telecommunications services
445
860
Aviation (airlines and structured financing)
826
933
Aerospace (manufacturers and equipment suppliers)
1,430
1,258
Tourism, hotels & restaurants
2,942
2,315
Luxury goods
1,272
1,435
Insurance
1,376
1,359
Source: Banque de France risk reports (reported commitments > €76,000)
Total exposure to these sectors remained stable compared with 2003. However, within that total, there was a continued
reduction in exposure to telecommunications and aviation, while exposure to tourism and, to a lesser extent, aerospace,
rose significantly.
Non-performing loans
Provisions for loan losses totaled €480 million, a decrease
of 15% on a comparable structure basis. The total breaks
down into €376 million for local retail banking and €104
million for Natexis Banques Populaires.The relatively small
Specific provision coverage of non-performing loans
amounted to 68% at December 31, 2004, bearing witness
to this conservative policy.
2004
Gross Provisions
100
decrease reflects an improvement in the economic climate
coupled with a continued highly conservative provisioning
policy.
2003
Net
Provision
coverage
%
Gross Provisions
Net
Provision
coverage
%
Non-performing loans
Interbank loans
Customer loans
Lease financing
Securities portfolio and other
109
5,180
417
202
(59)
(3,577)
(242)
(154)
50
1,602
175
47
54
69
58
76
117
5,293
415
207
(74)
(3,556)
(249)
(129)
44
1,737
166
79
63
67
60
62
Total
5,907
(4,032)
1,875
68
6,033
(4,008)
2,025
66
Breakdown by client category
At December 31, 2004
in %
Customer loans and lease financing
Sound loans
Irrecoverable loans
Other non-performing loans
Provisions for irrecoverable loans
Provisions for other non-performing loans
Corporate borrowers account for the majority of nonperforming loans. In the local retail banking business, 99.7%
of defaults concerned clients in France.
For Natexis Banques Populaires, a breakdown of exposure
and provisions by country shows little change in either
Non-financial
corporates
Small
businesses
Personal
clients
Other
54.1
65.1
72.4
68.0
71.0
8.1
16.1
12.3
15.6
14.2
33.7
16.7
14.4
14.7
13.9
4.1
2.0
0.8
1.7
0.9
total exposure or total provisions compared with the
previous year. However, within that total, there was an
increase in exposure to Eastern Europe and a decrease in
both exposure and provisions in Asia.
Management report
Geographic area
France
Specific Country risks
credit risks
(net basis)
Total
credit
risks
% change
over 2003
Specific
provisions
Provisions Provisions
for country for industry
risks
risks
Total % change
provisions over 2003
1,003
-
1,003
- 5.4
639
-
123
762
- 5.8
209
292
501
- 2.1
145
-
36
181
16.0
Eastern Europe
37
256
293
14.0
23
0
7
31
0.0
North America
131
-
131
- 16.6
65
-
58
123
5.1
Central & Latin
America
133
600
733
5.5
76
43
12
130
- 7.8
Africa and
Middle-East
106
661
767
5.1
59
73
5
138
7.0
0
-
-
-
0
-
0
0
-
57
1,061
1,119
- 8.4
33
10
4
47
- 35.6
7
-
7
- 46.2
7
-
0
7
- 46.2
1,683
2,871
4,554
- 2.0
1,047
126
245
1,418
- 3.5
Rest of western
Europe
Japan
Asia and Oceania
Unallocated
Credit risks and
provisions
Breakdown of Natexis Banques Populaires exposure and provisions at December 31, 2004
Market risks
Market risks primarily concern Natexis Banques Populaires,
a subsidiary of Banque Fédérale des Banques Populaires.
The market risk management system is described below.
The improvement program launched by Natexis Banques
Populaires in 2002 continued during 2004. Improvements
concerned organization, procedures and risk measurement.
Counterparty risk
Counterparties in the capital markets business are mostly
banks and financial institutions. Counterparty exposure is
governed by limits which are set by an ad hoc committee
and monitored by the bank’s risk management systems.Any
violations of these limits are handled at specific monthly
committee meetings.
Market risk policy
Natexis Banques Populaires trades in the capital markets
through its Global Debt & Derivatives Markets and Equity
Group departments.They trade both on behalf of clients of
Natexis Banques Populaires (intermediation, brokerage,
asset management) and on their own behalf.
Proprietary trading activities can take different forms:
n facilitation for Natexis Banques Populaires clients;
n trading activities;
n arbitrage activities;
n structural interest rate risk management and maturity
mismatch management through Natexis Banques Populaires’
treasury department.
a three-tier control system comprising the middle office
of each entity, internal control, and the risk management
department, the latter two providing independent control
over risks;
n
n a market risk measurement model designed to quantify
the bank’s risk;
n a system of limits set in accordance with the risk indicators
set out in the internal risk measurement model. Limits
apply to Natexis Banques Populaires and its subsidiaries.
The market risk management system is based on a risk
metrics model that measures the risk run by each Natexis
Banques Populaires entity.
The main standard metrics used are sensitivities to specific
risks inherent in the various business activities (interest
rate, exchange rate, equities, commodities, volatilities,
counterparty, etc.).
In addition to these standard metrics, Natexis Banques
Populaires also uses the Value at Risk (VaR) method. It uses
Riskmanager software developed by Riskmetrics to
perform historical VaR calculations designed to quantify
the risk of losses from capital markets activities. VaR
calculations are based on one year's historical data, a
one-day potential loss horizon and a 99% confidence level.
At December 31, 2004,VaR amounted to €7.04 million,
broken down as follows:
VaR at December 31, 2004
Interest rate risk
4.98
Proprietary trading is conducted by the Global Debt &
Derivatives Markets and Equity Group departments.
Currency risk
0.25
Equities risk
5.94
Market risk management system
Commodities risk
0.38
Natexis Banques Populaires’ market risk management
system is based on three pillars:
Diversification
(4.51)
Total
7.04
101
For the US subsidiary ABM Corp., which operates in
the mortgage-backed securities market, stress tests are
performed based on a uniform 100 bp distortion of the
yield curve and its impact on the market (in the shape of
early repayments, increased volatility, etc.). At December
31, 2004, the impact of the worst-case scenario would be a
$16.9 million fall in the value of the portfolio.
Interest rate risk
Interest rate risk is measured primarily in terms of the
impact of a 200 bp across-the-board rate shift. However,
the Group also measures the impact of a non-parallel shift
in the yield curve, in the form of a 100 bp increase in shortterm rates accompanied by a 1% decrease in long-term
rates.
Interest margin sensitivity
The sensitivity of interest margins at the Banque Populaire
regional banks and Crédit Maritime Mutuel banks remained
largely unchanged in 2004 compared with the previous
year. On a static balance sheet basis, sensitivity to a 200 bp
across-the-board decline in market interest rates was -9%
in 2004. Sensitivity to a 200 bp increase in market rates fell
from -6% to -4%.
On a dynamic balance sheet basis, risk increased slightly,
with sensitivity to a 200 bp across-the-board decline in
market interest rates rising to -13% from -11%. This is
principally due to expected higher growth in loans than in
deposits.
Liquidity management
Liquidity gap limits are set on a dynamic balance sheet
basis, assuming both a normal growth and a liquidity crisis
scenario measured over a horizon of four years and one
year respectively.
102
Each bank is also required to monitor its maturity gap on a
static balance sheet basis over a ten-year horizon, as well as
the impact on its earnings capacity of a 50 bp increase in
spread applied to the cost of the gap on a dynamic balance
sheet basis.
Liquidity needs have risen slightly in view of the Group’s
ongoing active business development policy. All banks
comply with the regulatory ratios.
Operational risks
The Group continued its work on operational risk
management, first by strengthening the risk mapping
process introduced in 2002 and secondly, by standardizing
and upgrading its business recovery plans.
The operational risk mapping system is based on a qualitative
and quantitative approach that meets future developments
in prudential requirements.
These projects, which are overseen by the Banque Fédérale
des Banques Populaires, involve all Group entities and aim
to provide them with standardized manuals and business
recovery plans that meet the highest market standards.
Insurance and risk coverage
Like other banking groups, the Banque Populaire Group
insures its major risks through specific insurance coverage
with insurers and reinsurers. The 2005 insurance program
completes the system covering the Group’s material risks. It
includes insurance for professional liability, directors’ and
officers’ liability, liability for losses resulting from fraud and
embezzlement, as well as the vast majority of Group
information systems infrastructures and premises or major
sites such as head offices and information systems centers.
These policies also include business interruption and
consequential loss cover for each Group entity.
As in 2004, the entire program has been renewed for 2005
on generally better terms than the previous year. All cover
has been taken out with leading international insurers that
are recognized for their claims-paying ability.
Legal risks
The Group is currently involved in a limited number of
liability claims. After review and based on the current
status of claims pending, the Group does not believe these
claims will have a material adverse impact on its results or
financial position. Provisions have been booked in the
financial statements at December 31, 2004 for all legal and
tax risks that can be reasonably estimated.
Management report
Directors’ compensation
The information below concerns the compensation paid to the executive directors of Banque Fédérale des Banques
Populaires, the central body of the Banque Populaire Group.
Compensation and benefits paid to executive directors in 2004 by Banque Fédérale des
Banques Populaires and companies controlled by it
n Total gross compensation paid to executive directors of
Banque Fédérale des Banques Populaires includes both a
fixed and a variable component, determined as follows:
– the fixed component is based on:
– the variable component is based on:
- growth in net banking income,
- the level of and improvement in the cost/income ratio,
- the level of and increase in ROE.
- the level of net banking income,
The table below shows the compensation paid to executive
directors and officers for 2003 and 2004.
- the executive’s mobility,
- the number of years in the position.
in euros
2004
2003
B.F.B.P.
Companies
controlled by
B.F.B.P.
Fixed Variable
Fixed Variable
Total
compensation
B.F.B.P.
Companies
Total
controlled by compensation
B.F.B.P.
Fixed Variable
Fixed
Variable
Philippe
Dupont
228,386
75,000
263,000
75,000
641,386 227,899
75,000
263,000
75,000
640,899
Michel
Goudard
296,943
90,000
-
-
386,943 294,380
90,000
-
-
384,380
Jean-Paul
Dubus*
250,598
60,000
-
-
310,598 247,200
60,000
-
-
307,200
* Jean-Paul Dubus has an employment contract
n Allowances and benefits in kind awarded to executive
directors of Banque Fédérale des Banques Populaires (2004
tax base).
Philippe Dupont, Michel Goudard and Jean-Paul Dubus
each have a car and an apartment paid for by the bank.
in euros
In addition, Philippe Dupont receives a standard allowance
in his capacity as Chairman and Chief Executive Officer.
The table below shows allowances and benefits in kind
awarded to executive directors and officers for 2003
and 2004:
2004
B.F.B.P.
2003
Companies
controlled by
B.F.B.P.
Total
B.F.B.P.
Companies
controlled by
B.F.B.P.
Total
Philippe Dupont
61,853
-
61,853
56,658
-
56,658
Michel Goudard
15,921
-
15,921
13,182
-
13,182
Jean-Paul Dubus
14,656
-
14,656
16,393
-
16,393
103
Directors’ fees
Directors' fees paid to members of the Board of Directors
of Banque Fédérale des Banques Populaires are determined
on the basis of each member's attendance rate at Board
meetings and Board Committee meetings, and are therefore entirely variable:
n
the fee per director and per Board Meeting was €994;
Total directors' fees paid in 2004 in respect of 2003 amounted
to €210,328. Amounts received per director are shown in the
table below.
The directors of Banque Fédérale des Banques Populaires are
also paid fees in their capacity as directors of companies
controlled by Banque Fédérale des Banques Populaires.Total
fees paid in respect of 2004 amounted to €205,310. Amounts
received per director are shown in the table below.
n the fee per member and per Board Committee meeting
was as follows:
– Group Risk Management Committee: €1,524;
– Audit Committee: €1,524;
– Remuneration Committee: €762.
in euros
Directors
104
Philippe Dupont, Chairman
Christian Hébrard
Christian Brevard
René Clavaud
Claude Cordel
Michel Devianne
Daniel Duquesne
Stève Gentili
Alain Jacquier
Marc Jardin
Yvan de la Porte du Theil
François Moutte
Richard Nalpas
Francis Thibaud
Jean-Louis Tourret
Total
Directors’ fees paid
in 2004* by B.F.B.P.
Directors’ fees paid
in 2004* by companies
controlled by B.F.B.P.
10,934
12,458
10,934
15,506
10,934
13,982
9,940
13,982
12,458
10,934
10,934
10,934
12,458
13,982
15,506
14,512
9,940
210,328
10,065
5,897
14,185
25,668
17,325
13,725
13,725
22,665
8,205
17,435
18,195
13,695
24,525
205,310
* In accordance with the French corporate governance act of May 15, 2001 ("NRE" Act), this table only shows directors' fees paid during 2004.
For Banque Fédérale des Banques Populaires, they correspond to fees for attending meetings of the Board of Directors and the Board
Committees held during 2003. For the companies controlled by Banque Fédérale des Banques Populaires, they correspond to fees for attending
Board meetings held during 2004.
During 2004, Michel Goudard also received fees of €10,065 in his capacity as non-voting director of Natexis Banques
Populaires.
Management report
Stock options granted to and exercised by executive directors
No options have been granted on Banque Fédérale des Banques Populaires shares. However, executive directors of Banque
Fédérale des Banques Populaires have been awarded options on Natexis Banques Populaires shares, as follows:
Number of options granted
options granted to executive
directors of B.F.B.P.
Philippe Dupont
Michel Goudard
Jean-Paul Dubus
Exercice price
Exercise period
As director
of B.F.B.P.
As director of
companies
controlled by
B.F.B.P (1)
in euros
From
To
10,000
5,500
6,000
6,000
6,000
4,200
4,200
5,000
4,000
2,800
2,800
3,000
10,000
5,500
6,000
6,500
-
94.30
72.47
83.25
89.10
94.30
72.47
83.25
89.10
94.30
72.47
83.25
89.10
09/19/05
09/11/06
09/10/07
11/17/08
09/19/05
09/11/06
09/10/07
11/17/08
09/19/05
09/11/06
09/10/07
11/17/08
09/19/08
09/11/09
09/10/10
11/17/11
09/19/08
09/11/09
09/10/10
11/17/11
09/19/08
09/11/09
09/10/10
11/17/11
Plan number
No 9–BD 09/19/01
No 10–BD 11/20/02
No 11–BD 09/10/03
No 12–BD 11/17/04
No 9–BD 09/19/01
No 10–BD 11/20/02
No 11–BD 09/10/03
No 12–BD 11/17/04
No 9–BD 09/19/01
No 10–BD 11/20/02
No 11–BD 09/10/03
No 12–BD 11/17/04
No options were exercised by the executive directors from 2001 to 2004.
BD: Board of Directors
Loans and guarantees given to directors or officers
None
105
Recent developments
and outlook
n Merger of Banque Populaire Nord de Paris into Banque
Populaire BICS
The member-stakeholders of the two banks approved the
merger of Banque Populaire Nord de Paris into Banque
Populaire BICS at their extraordinary general meetings
held respectively on November 9 and 10, 2004.The merger
resulted in the creation of Banque Populaire Rives de Paris
retrospectively as of January 1, 2004. The Board of
Directors appointed Marc Jardin as Chairman of the new
bank. Pierre Noblet was appointed Deputy Vice-Chairman
and Jean Criton Chief Executive Officer.
n Plan to merge Banque Populaire du Midi with Banque
Populaire des Pyrénées-Orientales, de l’Aude et de l’Ariège
On October 26, 2004, the Boards of the two banks
unanimously decided to conduct a feasibility study with
a view to merging their businesses. Their work councils
were informed of the plan on October 27 and 28, 2004
respectively.
The merger will create a financially stronger bank with
improved capability and resources to capture its target
market across the entire region of Languedoc Roussillon,
Ariège and southern Ardèche in south east France.
2007 Plan
On February 25, 2005, upon publication of its 2004 results,
Natexis Banques Populaires unveiled the broad outlines and
projections(1) of its 2007 strategic plan. This medium-term
business plan is designed to leverage earnings through
sustained growth.
The key goals of the plan are:
n
fully exploit business line growth potential,
– strengthen positions with French corporate and institutional
clients through greater cross- and up-selling;
– develop synergies with Banque Populaire banks’ retail
customers;
– enhance the value of strong centers of business expertise
such as employee benefit planning, commodities financing,
structured financing, and receivables management;
– step up expansion in the most buoyant continental
European countries.
n continue the drive for efficiency by investing in people
and technology. However, expenses will not grow nearly as
fast as revenues,
n
strengthen management and control functions.
The plan is a middle-case scenario based on certain business
assumptions, notably including loan loss provisions equal to
0.34% of risk-weighted assets in 2007 (against 0.21% in
2004).The key projections are:
– core business net banking income: 9.4% compound
annual growth over the plan period;
International expansion in retail
banking
106
On February 24, 2005, the Board of Directors of Banque
Fédérale des Banques Populaires was advised of the
successful outcome of negotiations with ÖVAG, DZ Bank
and WGZ Bank to create a joint retail banking business in
Central and Eastern Europe within Volksbank International
AG (VBI), in accordance with its decisions of January 21 and
June 22, 2004. VBI is an Austrian credit institution that
controls a network of retail banks with a combined total of
145 branches to date.
The Board of Directors has therefore authorized Banque
Fédérale des Banques Populaires to subscribe to a new
share issue to be made by VBI, which will give it a holding of
about 25%.
– core business gross operating income: 16% compound
annual growth over the plan period;
– ROE: 14% by 2007.
Global custody agreement
with Bank of New York
On January 11, 2005, Natexis Banques Populaires unveiled
the terms of its partnership with The Bank of New York,
which has become the Banque Populaire Group’s global
custodian.The Bank of New York will provide a comprehensive
range of custody services for the Group’s €80 billion of
international securities held in 48 countries. Natexis
Banques Populaires will become local custodian for a large
part of The Bank of New York’s French assets.
(1) Disclaimer: these forward-looking statements are of necessity based on a number of general and specific assumptions, and are subject to risks and uncertainties that could cause
the future results of Natexis Banques Populaires to differ materially from those expressed in such statements. Potential investors are advised to have due regard for these risks and
uncertainties.
Consolidated balance sheet – Assets
Consolidated balance sheet – Liabilities and shareholders’ equity
Off-balance sheet items
Consolidated statement of income
Notes
Scope of consolidation and consolidation methods
Note
1
Consolidation methods and principles
Note
2
Accounting policies and valuation methods
Note
3
Changes in scope of consolidation
Note
4
Other information
Note
5
Companies included in the scope of consolidation
Notes to the consolidated balance sheet – Assets
Note
1
Note
2
Government securities and equivalent
Note
3
Interbank assets
Note
4
Customer loans
Note
5
Analysis of other customer loans
Note
6
Lease financing
Note
7
Securities portfolio
Note
8
Bonds and other fixed income securities
Note
9
Equities and other variable income securities
Note
10
Investment securities
Note
11
Transfers between portfolios
Note
12
Insurance company investment portfolios
Note
13
Investments in affiliates and other securities held for investment
Note
14
Movements in investments in affiliates and other securities held for investment
Note
15
Book and market values of investments in affiliates and other securities held for investment
107
Note
16
Property and equipment and intangible assets
Note
17
Movements in operating and non-operating assets
Note
18
Assets leased to third parties under operating leases
Note
19
Goodwill
Note
20
Note
21
Other assets
Note
22
Accrued income and prepaid expenses
Note
23
Accrued income, prepaid expenses and other assets – insurance companies
Notes to the consolidated balance sheet – Liabilities
and shareholders’ equity
108
Note
24
Interbank and money-market liabilities
Note
25
Analysis of interbank liabilities
Note
26
Customer deposits
Note
27
Analysis of customer deposits
Note
28
Debt securities
Note
29
Note
30
Deferred income, accrued charges and other liabilities
Note
31
Other liabilities
Note
32
Deferred income and accrued charges
Note
33
Deferred income, accrued charges and other liabilities – insurance companies
Note
34
Negative goodwill
Note
35
Provisions
Note
36
Provisions for contingencies and charges
Note
37
Provisions for non-performing loans and other doubtful accounts
Note
38
Long-term subordinated debt
Note
39
Changes in subordinated debt
Note
40
Shareholders’ equity
Note
41
Fund for general banking risks
Notes to consolidated off-balance sheet items
Note
42
Financing commitments
Note
43
Guarantees
Note
44
Commitments on off-balance sheet financial instruments
Note
45
Analysis by portfolio
Note
46
Analysis of credit derivatives
Note
47
Analysis of risk-weighted equivalents
Notes to the consolidated statement of income
Note
48
Interest income and expense
Note
49
Income from variable income securities
Note
50
Fees and commissions
Note
51
Net gains on trading account securities
Note
52
Net gains on securities held for sale
Note
53
Other banking revenues and expenses
Note
54
Gross margin on insurance operations
Note
55
Other net income
Note
56
General operating expenses
Note
57
Number of employees
Note
58
Note
59
Net gains on disposals of fixed assets
Note
60
Exceptional items
Note
61
Tax proof
Note
62
Deferred taxes
Other information
Note
63
Analysis of assets and liabilities by maturity
Note
64
Analysis of outstanding loans and receivables by geographic area
Note
65
Analysis of outstanding loans and receivables by client sector
Note
66
Segment information
Note
67
Companies accounted for by the equity method
Note
68
Insurance results
Note
69
Management accounts on a constant Group structure basis
109
Consolidated balance sheet – Assets
notes
12/31/2004
12/31/2003
12/31/2002
1 to 3
55,463
53,438
49,442
Customer loans
4 to 5
120,584
111,800
98,880
Lease financing
6
8,890
8,072
7,384
7 to 11
26,256
22,397
24,834
12
26,044
23,451
20,927
Investments in affiliates and other securities held for investment 13 to 15
989
2,096
2,120
16 to 18
2,389
2,237
2,040
19
228
261
330
20 to 23
9,561
13,411
14,787
250,404
237,163
220,744
Bonds, equities and other fixed and variable income securities
Property and equipment and intangible assets
Goodwill
Total assets
110
Consolidated balance sheet – Liabilities and shareholders’equity
notes
12/31/2004
12/31/2003
12/31/2002
Interbank and money-market liabilities
24 to 25
46,972
39,682
48,935
Customer deposits
26 to 27
98,253
98,945
84,209
Debt securities
28
42,001
37,527
31,403
29
25,725
23,660
21,312
30 to 33
16,861
18,212
18,068
34
142
290
229
Provisions for contingencies and charges
35 to 37
1,939
1,873
1,853
Long-term subordinated debt
38 to 39
4,675
4,431
3,927
40 to 41
2,192
2,077
1,891
Minority interests
40
2,068
1,962
1,706
Shareholders’ equity (excluding fund for general banking risks)
40
9,576
8,504
7,211
3,033
741
4,743
1,059
2,886
635
4,130
853
2,431
455
3,793
532
250,404
237,163
220,744
Deferred income, accrued charges and other liabilities
Negative goodwill
- Capital stock
- Additional paid-in capital
- Retained earnings
- Net income for the year
111
Total liabilities and shareholders’ equity
Off-balance sheet items
notes
12/31/2004
12/31/2003
12/31/2002
58,012
50,144
48,556
34,760
22,933
319
31,673
17,955
516
29,031
19,004
521
-
-
-
13,713
10,199
5,861
5,514
7,900
299
3,955
5,378
866
853
4,536
472
85
36
14
Commitments given
Banking operations
- Financing commitments
- Guarantees
- Commitments on securities
42
43
Insurance operations
Commitments received
Banking operations
- Financing commitments
- Guarantees
- Commitments on securities
Insurance operations
112
42
43
Consolidated statement of income
notes
12/31/2004
12/31/2003
12/31/2002
Interest income
48
9,620
9,283
10,806
Interest expense
48
(6,100)
(5,933)
(7,699)
Income from variable income securities
49
65
65
68
Net fee and commission income
50
2,321
2,172
1,866
Net gains on trading account securities
51
414
361
159
Net gains on securities held for sale
52
240
183
(21)
53
74
32
78
Gross margin on insurance operations
54
810
722
383
Other net income
55
196
181
108
Net banking income
56
7,640
(4,788)
7,066
(4,491)
5,748
(3,896)
(307)
(305)
(241)
Depreciation, amortization and provisions for impairment
of property and equipment and intangible assets
58
2,545
(480)
2,270
(565)
1,611
(513)
Operating income
67
2,065
7
1,705
11
1,098
3
59
26
19
42
Exceptional items
60
2,098
(30)
1,735
(23)
1,143
(45)
61
(700)
(544)
(405)
(33)
(17)
47
Net charge to fund for general banking risks
(115)
(169)
(118)
Minority interests
(161)
(129)
(90)
1,059
853
532
Goodwill amortization and negative
goodwill written back to income
Net income
113
Scope of consolidation and
consolidation methods
Note 1 – Consolidation methods
and principles
1.1 – Structure of the Banque Populaire
Group
The Banque Populaire Group is a group of cooperative
banks with an ownership structure in the form of an inverted
pyramid. The capital of the Group’s central body, Banque
Fédérale des Banques Populaires, is owned by the Banque
Populaire regional banks, which are wholly-owned by their
member-stakeholders. Banque Fédérale des Banques
Populaires is also the holding company for Natexis Banques
Populaires, which is the Group’s listed entity.
As a cooperative banking group, the Banque Populaire
Group is not required to publish consolidated financial
statements, but has elected to do so in order to provide
clear and transparent information about its operations.
These consolidated financial statements are directly
comparable with those of other banking groups and are
audited. Due to its unusual ownership structure, the
consolidated financial statements of the Banque Populaire
Group have been prepared on the basis provided for in
article 1001 of Comité de la Réglementation Comptable standard CRC 99-07, which allows banking networks with a
central body to define a consolidating entity made up of a
group of institutions directly or indirectly affiliated with the
central body.
The Banque Populaire Group’s consolidating entity is made
up of:
n the Banque Populaire banks, i.e. the 20 Banque Populaire
regional banks, CASDEN Banque Populaire and Crédit
Coopératif;
n the mutual guarantee companies which are licensed
jointly with the Banque Populaire banks;
the Group’s central body – within the meaning of the
law – Banque Fédérale des Banques Populaires.
n
Member-stakeholders
Member-stakeholders
Mutual guarantee
companies
Banque Populaire regional banks,
and Crédit Coopératif
Local subsidiaries
99%
Banque Fédérale des
Banques Populaires
associates**
Consolidating entity
Affiliates* and
76%
Natexis Banques
Populaires
114
* Pursuant to the French Financial Security Act of August 1, 2003 (law no. 2003-706), Crédit Maritime Mutuel became an ‘affiliate’ of Banque
Fédérale des Banques Populaires in the second half of 2003;
** Credit institutions ‘associated’ with Crédit Coopératif via an association agreement have been consolidated as of the first half of 2004 (see
Note 3.2 – Changes in scope of consolidation).
The Banque Populaire Group includes the Crédit Maritime
Mutuel group as a structure affiliated to the Group’s
central body, Banque Fédérale des Banques Populaires, and,
since the first half of 2004, those credit institutions that
have signed an association agreement with Crédit
Coopératif (see Note 3.2).
The other Group companies, including Natexis Banques
Populaires, are treated as subsidiaries of the consolidating
entity.
This definition of the consolidating entity means that the
capital stock of the Banque Populaire Group corresponds
to the sum of the capital stock of the 20 Banque Populaire
regional banks, CASDEN Banque Populaire, Crédit
Coopératif and the mutual guarantee companies, and is
owned exclusively by the member-stakeholders.
1.2 – Liquidity and capital adequacy –
Internal guarantee mechanisms
The system to guarantee the liquidity and capital adequacy of
the Banque Populaire network has been organized by Banque
Fédérale des Banques Populaires in its capacity as central body,
in accordance with articles L. 511-30, L. 511-31, L. 511-32 and
L. 512-12 of the French Monetary and Financial Code.
The system functions by pooling the capital of all the banks in
the network.
If any one bank is faced with a lack of liquidity or is undercapitalized, all the other banks will be called on to contribute
capital, within the limit of their own resources. As a last
resort, the Banque Fédérale des Banques Populaires will also
provide capital from its own resources.
The capital pool is organized in two tiers. The first tier
consists of the “federal solidarity fund” included in the fund
for general banking risks set aside by Banque Fédérale des
Banques Populaires. The second tier pool is the “regional
solidarity fund” set up by each Banque Populaire bank and
included in their own funds for general banking risks. Each
year, the Banque Populaire banks transfer an amount to this
fund equal to 10% of their net income before transfers to
the fund for general banking risks and tax, after deduction
of tax on the amount of the transfer. Withdrawals
from these funds by the Banque Populaire banks must be
authorized by Banque Fédérale des Banques Populaires.
A collective agreement has also been signed, whereby each
Banque Populaire bank guarantees the liquidity and capital
adequacy of the mutual guarantee companies whose
corporate purpose is limited to guaranteeing the activities
of the Banque Populaire banks.
The guarantee system of the Banque Populaire network
also guarantees the liquidity and capital adequacy of Crédit
Maritime Mutuel, for which the Banque Fédérale des
Banques Populaires is the central body, in accordance with
Article L. 512-69 of the French Monetary and Financial
Code.This guarantee system kicks in after Crédit Maritime
Mutuel's own system.
Jointly controlled subsidiaries are consolidated by the
proportional method. Joint control is deemed to be
exercised when the financial and operating policies of
the subsidiary are decided jointly by a limited number of
shareholders.
Affiliates over which the consolidating entity exercises
significant influence are accounted for by the equity
method. Significant influence is deemed to be exercised
when the consolidating entity holds at least 20% of the
voting rights.
1.5 – Scope of consolidation
The consolidated financial statements include the
consolidating entity, as defined above, and the direct and
indirect subsidiaries of Banque Fédérale des Banques
Populaires.The majority of indirect subsidiaries are owned
by Natexis Banques Populaires, which was 75.6%-owned by
the Group at December 31, 2004.
Subsidiaries that are not material in relation to the Group
as a whole are not consolidated. Materiality is determined
on the basis of the subsidiary’s qualitative contribution to
the Group accounts without applying any threshold in
terms of net assets or revenues.
Lastly, the members of the network contribute, along with
all French credit institutions, to the Fonds de Garantie des
Dépôts (deposit guarantee fund) set up in application of the
Depositors’ Protection Act.
To maintain consistency between the consolidated financial
statements of sub-groups and those of the Banque
Populaire Group, all entities consolidated at the level of a
sub-group are also consolidated at the next level, even if
they are not considered material at Group level.
1.3 – Accounting principles
The list of companies included in the scope of consolidation
and the changes in scope that occurred during 2004 are
presented in Notes 3 and 5.
The consolidated financial statements of the Banque
Populaire Group have been prepared in accordance with
French generally accepted accounting principles and the
standards formulated by the Comité de la Réglementation
Comptable, including standard CRC 99-07 on consolidation
methods and principles and standard CRC 2000-04 on the
presentation of consolidated financial statements.
There were no changes of accounting method during the
period.
1.4 – Consolidation methods
Companies controlled exclusively by the consolidating
entity whose business represents an extension of the
consolidating entity’s banking or financial services businesses
are fully consolidated. This method is also applied to
exclusively controlled companies engaged in related lines
of business, such as insurance, as well as to real estate
investment and development companies and IT services
companies.
Exclusive control is deemed to be exercised when the
consolidating entity is in a position to manage the financial
and operating policies of the subsidiary in order to benefit
from the subsidiary’s business. This is the case where the
consolidating entity holds the majority of the voting rights
(and not just the majority of the shares) or exercises
dominant influence by virtue of contractual rights or due to
the dilution of the subsidiary’s capital, without holding the
majority of voting rights.
1.6 – Presentation of the consolidated
financial statements
The consolidated financial statements are presented in
millions of euros, with prior year comparatives covering
two years.
The consolidated financial statements have been prepared
based on the financial statements of Group companies at
December 31. Entities that do not have a December 31
year-end are consolidated based on audited interim
financial statements prepared at that date.
1.7 – Business combinations
Business combinations are accounted for by the purchase
method, in accordance with standard CRC 99.07. Under
this method, the net assets of newly-acquired subsidiaries
are taken to the consolidated balance sheet at the date of
acquisition after fair value adjustments to identifiable
assets, liabilities and off-balance sheet items.
The difference between the cost of shares in a newlyacquired subsidiary and the consolidating entity’s equity in
the underlying net assets after fair value adjustments is
recorded as goodwill.
Goodwill is amortized and negative goodwill written back
to the income statement by the straight-line method over
115
a period determined based on the objectives and nature
of the acquisition, not to exceed 10 years. Goodwill
representing less than €1 million is amortized over one year.
The Banque Populaire Group, assisted by a firm of independent valuers, tests the value of any goodwill in excess of
€4 million on an annual basis, using the discounted cash
flow method, to determine whether the amortization schedule should be revised. In 2004, based on the results of this
valuation, the Group recorded an additional amortization
charge of €37.6 million on top of the standard charge for
the year (see Note19).
In the case of sale of part of the consolidating entity’s
interest in the company concerned, a corresponding
fraction of the unamortized goodwill or negative goodwill
is written off or written back to the income statement.
Real estate and equipment leased to clients under operating
leases are included in “Property and equipment” and valued
accordingly.
1.10 – Leasing transactions as lessee
Operating assets leased under finance leases where the
Group is lessee are recorded in the consolidated balance
sheet under “Property and equipment”, except for assets
whose unit cost is not material.
1.8 – Foreign currency translation
Depreciation is calculated over the estimated useful lives of
the assets. The annual depreciation charge is recorded in
the consolidated income statement under “Depreciation,
amortization and provisions for impairment of property
and equipment and intangible assets”.
The income statements of foreign subsidiaries and
branches are translated at the average rate for the year.The
difference between net income translated at the average
rate and the year-end rate is also taken to consolidated
shareholders’ equity.
The exchange rates applied are the rates published by the
Banque de France.
1.9 – Leasing transactions as lessor
Finance leases where the Group is lessor – i.e. lease financing
granted by the Group’s specialist leasing companies – are
recorded in the consolidated balance sheet in an amount
corresponding to the net investment in the lease and not
the net book value in the individual company accounts.
Lease payments are analyzed between amortization of the
net investment and interest income. Deferred taxes are
recorded on the total difference between accumulated
book depreciation of the leased assets and the accumulated
amortization of the net investment in the lease. The
difference is recorded under shareholders’ equity net of
deferred taxes.
Lease financing on which any installments are more than
three months past due (equipment leases) or six months
past due (real estate leases) are classified as non-performing.
Where a finance lease is classified as non-performing, all
other amounts receivable from the client concerned are
also classified as non-performing.
In the case of finance leases concerning real estate, a
provision for impairment in value is recorded where the
book value of the property is higher than its estimated market value and there is a probable or certain risk of it remaining
the property of the lessor when the lease expires.
The Banque Populaire Group does not use the pooling of
interests method – provided for in paragraph 215 of standard
CRC 99-07 – to account for business combinations.
The balance sheets and off-balance sheet items of foreign
subsidiaries and branches are translated into euros at the
year-end exchange rate with the exception of their capital
stock or capital allocation and reserves, which are translated at the historical rate. Differences arising on translation
are taken directly to consolidated shareholders’ equity.
116
interest income. Charges to provisions for losses on lease
financing recorded under “Provisions for loan losses”
correspond solely to the fraction of the provision covering
the past due principal.
Gains and losses on disposal of leased assets and movements
in provisions for impairment in value of leased assets and
temporarily unleased assets are included in net banking
income. Lease termination penalties are recorded under
1.11 – Regulated reserves and provisions
Regulated reserves and provisions recorded solely for tax
purposes, including excess tax depreciation recorded in the
accounts of subsidiaries, are eliminated in consolidation.
1.12 – Employee-related liabilities and
retirement benefit obligations
For the purpose of comparability between 2004 and
previous years, the Group elected not to apply CNC
recommendation 2003-R.01 of April 1, 2003 on accounting
for employee benefits.
The provisions of this recommendation will be applied in
full when the Group adopts international financial reporting
standards in 2005. After taking account of deferred taxes,
application of IAS 19 would have had the effect of decreasing
opening shareholders’ equity by ¤ 2 20 million, with no
material impact on the income statement due to use of the
‘corridor’ method.
n
Provisions for employee-related benefits
The employee-related liabilities of all Group entities are
provided for in the consolidated balance sheet using consistent methods throughout.
The main provisions for employee-related liabilities
concern:
- pension benefits payable by the Caisse Autonome de
Retraites (CAR) pension scheme;
- pension benefits payable by the Caisses de Natexis
Banques Populaires pension plan;
- long-service awards payable to employees on retirement
and early-retirement benefits;
- long-service awards payable to active employees.
– The Banque Populaire Group “CAR” pension scheme was
closed to new entrants as of December 31, 1993, pursuant
to the banking industry agreement of September 13, 1993,
the terms of which were applied to the Banque Populaire
banks through an internal agreement dated January 7, 1994.
This scheme also covered Natexis Banques Populaires
employees previously employed by the former Caisse
Centrale des Banques Populaires.
The Group’s obligations towards active and retired
employees concern supplementary pension benefits
payable under the Banque Populaire Group plan and the
fraction of benefits due under the banking industry scheme
closed to new entrants on December 31, 1993 that is not
covered by the Social Security system.
Commitments are calculated each year based on updated
individual employee data. The projected obligation is
determined using appropriate mortality tables and a
discount rate of 3.5% net of inflation.
– Concerning the specific Natexis Banques Populaires
pension plans, the assets of the former BFCE pension fund
exceed the projected benefit obligation and those of the
former Crédit National fund are equal to the projected
benefit obligation. Consequently, no provision has been
booked in the consolidated financial statements for these
plans.
– Long-service awards payable to employees on retirement
are funded in part or in full under insured plans set up with
Prospérité, a fully consolidated insurance subsidiary of the
Group. In accordance with opinion no. 2001-G of the CNC
Urgent Issues Task Force, the related mathematical
reserves carried in the accounts of Prospérité are eliminated
from the consolidated balance sheet and a provision for
charges is recorded in the same amount.
Unfunded obligations are provided for in full in the
consolidated balance sheet by the projected unit credit
method, based on employees’ vested rights on the
reporting date and projected end-of-career salaries. The
obligation is calculated by applying a discount rate of 3.5%
and a staff turnover rate ranging from 0% to 7.5%
– Obligations for the payment of long-service awards to
active employees are also calculated by the projected unit
credit method, in the same way as for long-service awards
payable to employees on retirement.
n
Early retirement plan:
On February 18, 2002, the Banque Populaire Group signed
an agreement with employee representatives, providing for
the implementation of a “CATS” early retirement plan in
application of the A.F.B. industry-wide agreement dated
January 15, 2001. On August 30, 2002, the Banque Populaire
Group signed a “CATS” convention with the Ministry of
Social Affairs, Employment and Solidarity, exempting early
retirement payments from social security taxes.
A provision of ¤18 million was r ecorded in the consolidated
financial statements at December 31, 2004, covering the
Group’s obligation towards employees eligible for early
retirement under the plan.The estimated cost of the plan,
determined on an actuarial basis, is being recognized over
the remaining service lives of the employees concerned, up
to the expiry date of the agreement on March 31, 2006.
Obligations towards employees who had applied for early
retirement as of December 31, 2004, are included in
accrued expenses in the amount of 1¤ 9 million, corresponding
to the benefits payable to these employees in the period
until they reach the normal retirement age.
1.13 – Fund for general banking risks
Funds for general banking risks are recorded by Group entities
to cover general risks. Charges to these funds are not tax
deductible and do not give rise to any deferred tax asset.
Funds for general banking risks, which form an integral part
of consolidated shareholders’ equity, include the Banque
Fédérale des Banques Populaires guarantee fund, as well as
the guarantee funds set aside by the Banque Populaire
banks that are available to the Group under the internal
guarantee mechanism (see Note 1.2), and the funds for
general banking risks recorded in the accounts of individual
Group banks.
As allowed under article 300 of standard CRC 99.07, the
funds for general banking risks recorded in the accounts of
individual Group banks or the consolidated accounts of
sub-groups are adjusted as required in the Banque
Populaire Group’s consolidated financial statements, to a
level in keeping with Group risks.
In 2002, an adjustment was made for a portion of the
gains realized on the sale of Natexis Asset Management
(formerly BPAM) and Natexis Interépargne shares
to Natexis Banques Populaires in the amount of
€69 million.
No adjustments were made in 2003 or 2004.
1.14 – Intercompany transactions
Material intercompany receivables, payables and off-balance
sheet commitments and intercompany income and expenses
between fully consolidated companies are eliminated in full
in consolidation. In the case of intercompany transactions
with proportionally consolidated companies, eliminations
are prorated to the Group’s interest in the company
concerned.
Intercompany dividends, provisions for impairment in value
of investments in consolidated companies and gains on
intercompany sales of assets are eliminated in full.
1.15 – Corporate income tax
The corporate income tax charge recorded in the
consolidated statement of income includes:
n current taxes payable by the French entities, at the rate
of 35.43%, and by foreign subsidiaries and branches at the
local corporate tax rate;
n deferred taxes arising from temporary differences between
the book value of assets and liabilities and their tax basis.
Deferred tax assets and liabilities are netted off at the level
of each taxable entity. In the case of companies that have
elected for group relief, deferred tax assets and liabilities
117
are netted off at the level of the tax group. Net deferred tax
assets are recognized only where their future recovery is
deemed probable. In accordance with this principle, net
deferred tax assets are recognized at the level of each
entity only when they do not correspond to tax loss
carryforwards or when the taxable entity has not reported
a tax loss in either of the preceding two years.
Deferred taxes are determined by the liability method for
all temporary differences.They are not discounted, whatever
the year in which the temporary differences are expected
to reverse.
Pursuant to the 2005 Finance Act providing for the reduction and then abolition of the 3% surtax, deferred taxes are
calculated at the rate of 34.94% for temporary differences
reversing in 2005 and 34.44% for those reversing in 2006
and subsequent years.
Deferred taxes of foreign subsidiaries are calculated using
local tax rates.
1.16 – Insurance companies
The accounts of Group insurance companies, prepared
in accordance with the accounting standards described
in Note 2.12, are not restated in consolidation based
on Group policies. However, income and expenses are
reclassified by nature, in accordance with bank accounting
standards, rather than by destination.
Balance sheet and off-balance sheet items are included in
the corresponding captions of the financial statements
presented in the banking format, with items that are
specific to the insurance business reported separately.
These items are “Insurance company investment portfolios”
and “Insurance company technical reserves” in the balance
sheet, and “Gross margin on insurance operations” in the
income statement (see Note 54).
118
Insurance company investments in securities issued by
other consolidated entities are qualified as intercompany
receivables and are therefore eliminated in consolidation.
Consequently, in the consolidated balance sheet, insurance
company technical reserves are represented by assets
recorded under either “insurance company investment
portfolios” or under banking assets.
In accordance with standard CRC 2000-05 on the consolidated financial statements of insurance companies,
insurance company loss equalization reserves have been
eliminated in consolidation. In addition, a portion of the
capitalization reserve, net of deferred taxes, has been
credited to policyholder surplus reserves, corresponding
to the amount that is expected to be written back from
the capitalization reserve in the case of a fall in value
of qualifying investments, to cover distributions to
policyholders.
The loss equalization reserves recorded by the Coface
group are included in technical reserves because they
cover a macro-economic risk of a change in claims
experience over several years (see Note 29).
Note 2 – Accounting policies and
valuation methods
The consolidated financial statements have been prepared
from the financial statements of Group companies presented
according to the following accounting policies and valuation
methods:
2.1 – Interbank and money market assets
and customer transactions
Interbank and money market assets include all receivables,
including subordinated loans, due from credit institutions as
part of the Group’s interbank activity,save for those evidenced
by a certificate. They also include assets purchased under
resale agreements, regardless of the underlying, and
receivables relating to securities sold under repurchase
agreements.
Customer loans are analyzed between commercial loans,
customer overdrafts and other customer loans.
Loans are recorded in the balance sheet at face value,including
low interest loans and restructured loans but excluding
purchased customer loan portfolios which are stated at
acquisition cost.
Non-performing loans are identified and accounted for
using the methods set out in standard CRC 2002-03 on
credit risk, applied for the first time on January 1, 2003.This
standard includes rules regarding the method of classifying
non-performing loans, identifying irrecoverable loans and
the accounting treatment of loans restructured at below
market rates. In 2003, following work on identifying
restructured loans affected by this standard, a discount of
€11.4 million was recorded to take account of the
difference between the new interest rate and the market
rate at the time of restructuring. As these loans were
restructured in prior years, the discount, totaling €7.4 million
after tax, was set off against 2003 opening shareholders’
equity in the amount of €5.6 million, with the balance set
off against minority interests. The deferred discount
amounted to €8.5 million at December 31, 2004, after a
release to income of €1.7 million recorded under interest
income.
Loans are classified as non-performing when one installment
is more than three, six or nine months overdue, depending
on the type of loan.
All other loans to the same customer are also classified as
non-performing, even in cases where no provision is booked
for the outstanding principal based on an analysis of the
recovery risk.
In the case of non-performing loans where the debtor has
resumed making regular payments in accordance with the
original repayment schedule, the loan may be reclassified as
sound. Non-performing loans that have been restructured
are also reclassified as sound provided the restructuring
terms are met.
If a restructured loan reclassified as sound is at below market
rates, it is recorded in a separate account at nominal value
less a discount corresponding to the difference between
the expected future cash flows calculated at a) the new
interest rate and b) the lower of the original rate of
interest and the market rate prevailing at the time of the
restructuring. Discounts on restructured loans calculated
as described above are deducted from the carrying value of
the loan and amortized over the remaining life of the loan
by the yield-to-maturity method.
If any installments on a restructured loan are not paid,
whatever the terms of the restructuring, the loan is
permanently reclassified as irrecoverable.
Irrecoverable loans include loans where an event of default
has occurred, restructured loans where the borrower has
once again defaulted and loans classified as non-performing
for more than one year once a write-off has been envisaged,
in accordance with the opinion issued by the CNC Urgent
Issues Task Force on December 18, 2003.
Provisions for non-performing loans are deducted from the
value of the asset concerned to cover the estimated risk of
non-recovery, after taking account of any collateral or
other guarantees. Provisions are determined on a caseby-case basis and adjusted at quarterly intervals or more
frequently where necessary, based on an analysis of the
related risk and available collateral.
Accrued interest on non-performing loans is recorded
separately in the balance sheet and credited to the income
statement. A provision is booked for the total amount
accrued, together with all overdue interest. Charges to
provisions for accrued interest are set off against the
related revenue in the income statement.Accrued interest
on irrecoverable loans is not booked to the income
statement unless it is actually received.
Provision movements, loan write-offs, recoveries on loans
written off in prior years, and discounts calculated on
restructured loans are reported in the consolidated
income statement under “Provisions for loan losses”,
except for movements in provisions relating to accrued
interest on non-performing loans, which are recorded
under “net banking income”.Amortization of discounts on
restructured loans calculated in accordance with the yieldto-maturity method as well as interest thereon are also
included in net banking income.
Loans to real estate professionals are classified as nonperforming on a case-by-case basis taking account of the
exit potential, the ability of the company’s shareholders to
contribute fresh capital and their credit rating.A provision
is booked for the total amount of accrued interest. A
provision is booked for the outstanding principal based on
guarantees received, future rental revenues, the projected
exit price compared with market values and the credit
rating of the parties concerned.
2.2 – Conversion of assets and liabilities
in foreign currencies
Assets, liabilities and off-balance sheet commitments
denominated in foreign currencies are converted into
euros at the year-end exchange rate.
Realized and unrealized exchange gains and losses are
taken to the income statement.
Revenues and expenses denominated in foreign currencies
are converted at the exchange rate ruling on the transaction
date.
Fixed assets and investments in affiliates denominated in
foreign currencies but financed in euros are converted at
the historical exchange rate.
Hedged and unhedged forward purchases and sales of
foreign currencies are converted at the exchange rate
quoted for the remaining term.
Exchange differences arising on conversion of borrowings
for which the currency risk is guaranteed by the State or
which relate to Natexis Banques Populaires’ institutional
activities are recorded in an accruals account.
2.3 – Securities transactions
Trading account securities, securities held for sale,
investment securities and equity securities held for
investment are valued in accordance with Comité de la
Réglementation Bancaire et Financière standard CRBF
90-01 (revised).
They are carried in the consolidated balance sheet under
“government securities and equivalent” where the issuer
is the State, or under “bonds and other fixed income
securities” or “equities and other variable income
securities” in other cases.
Trading account securities
Trading account securities are carried in the balance sheet
at cost, including transaction expenses and accrued
interest at the date of acquisition. At the period-end, they
are marked to market and the resulting unrealized gain or
loss is booked to the income statement under “Net gains
on trading account securities”, together with realized gains
and losses on trading account securities sold during the
period. Trading account securities that are still in the
portfolio six months from the date of acquisition are
transferred to “Securities held for sale” at their market
price on the transfer date.
Securities held for sale
Securities held for sale are stated at the lower of cost and
market, determined on a case-by-case basis. The market
price of listed securities is the price quoted on the market
at the year-end and that of unlisted securities is their
probable realizable value.
Premiums and discounts, corresponding to the difference
between the cost of fixed-income securities and their
redemption price, are amortized to the income statement
over the remaining life of the securities, by either the yieldto-maturity method or the straight-line method depending
on the type of securities concerned.
Where securities are hedged, the hedging gain or loss is
taken into account to determine provisions for impairment
in value.
Dividend income from equities carried in the “held for sale”
portfolio is recorded in the income statement under
“Income from variable income securities”.
119
Movements in provisions for impairment in value and
disposal gains and losses are recorded in the income
statement under “Net gains on securities held for sale”.
Investment securities
Investment securities are fixed-income securities acquired
with the intention of being held to maturity that are either
match-funded (generally via refinancing agreements,
subordinated debt and time deposits) or on which the
interest rate risk has been hedged (mainly by means of
swaps in which there is a liquid market). If the matchfunding or hedging relationship is broken, the securities are
transferred to the “held for sale” portfolio.
Premiums and discounts are amortized to the income
statement over the remaining life of the securities.
Interest income on bonds and other fixed-income
securities is recognized on an accruals basis.
In the case of sale of investment securities before maturity,
the resulting gain or loss is recorded in the income
statement under “Net gains on disposals of fixed assets”.
In accordance with the disclosures required under article 1
of standard CRC 2004-16 dated November 23, 2004, the
total unrealized loss on the investment securities portfolio
amounted to €147 million at December 31, 2004.
Equity securities held for investment
These securities are acquired with the intention of being
held in the medium to long-term in order to sell them at a
profit. They are stated at the lower of cost, excluding
transaction expenses, and fair value to the Group.
Unrealized losses are not netted off against unrealized gains
on the same line of securities.
Movements in provisions for impairment in value and
disposal gains and losses are taken to the income statement
under “Net gains on securities held for sale”.
120
The bulk of the portfolio consists of investments made by
the private equity subsidiaries of Natexis Banques
Populaires.
2.4 – Investments in affiliates and other
equity interests
Investments in affiliates and other equity interests are
stated at the lower of cost, excluding transaction expenses,
and fair value to the Group.
The criteria used to determine fair value include the
average stock market price for listed companies, and
adjusted net assets for unlisted companies.
An impairment provision is taken for any unrealized losses.
Unrealized gains are not recognized.Transaction expenses
incurred at the time of purchase or sale are included in
operating expense.
Disposal gains and losses and movements in provisions for
impairment in value are recorded in the income statement
under “Net gains on disposals of fixed assets”.
Dividends are recorded under “Income from variable
income securities” when their payment has been approved
at a Shareholders’ Meeting.
2.5 – Plant and equipment and intangible
assets
Standard CRC 2002-10 on asset depreciation, amortization
and impairment is applicable from January 1, 2005. The
Banque Populaire Group has not elected for early adoption
of this standard. Article 15 of the standard contains
transitional provisions applicable from January 1, 2003,
supplemented by the provisions of opinion 2003-F issued
by the CNC Urgent Issues Task Force, relating to expenses
incurred under multi-year programs for major repairs or
refits.
At December 31, 2003 a provision of €2.7 million
(€1.5 million after tax) was taken following the application
of these transitional provisions, with €1.4 million set
off against shareholders’ equity and the balance against
minority interests.
At December 31, 2004, a further provision of €0.5 million
was taken.
Assets used in the business
Fixed assets of the former Crédit National purchased prior
to December 31, 1976 are stated at fair value as determined
at the time of the 1976 legal revaluation.Assets purchased
since 1976 are stated at cost.
Fixed assets of the former BFCE are carried in the Group’s
consolidated balance sheet at their fair value as determined
at the time of acquisition of BFCE by Crédit National.
For all other Group entities, land and buildings are stated
at cost or at fair value as determined at the time of legal
revaluations.
Property and equipment are depreciated over their
estimated useful lives by the straight-line method or by the
reducing balance method where the related depreciation
charge is tax deductible.
Non-operating assets
Investment properties are stated at the lower of cost
and estimated market value determined by capitalizing
normalized rental income. In accordance with the terms of
the letter dated October 21, 1997 from the Secretary
General of the French Banking Commission (Commission
Bancaire Française), provisions for impairment in value have
been recorded for individual investment properties and
other properties not used in the business, whose market
value is less than their net book value. Unrealized losses are
not netted off against unrealized gains on other properties
for the purpose of determining the amount of the provisions.
The cost of large-scale multi-year maintenance programs,
which are intended solely to keep the assets concerned in
good working order without extending their initial estimated
useful life, is accrued on a straight-line basis over the
period between each successive maintenance operation
and booked under provisions for contingencies and charges.
Intangible assets
Leasehold rights and purchased goodwill are stated at cost.
A provision is recorded in the consolidated financial
statements if their fair value to the Group is lower than
their net book value,after taking account of the amortization
or provisions recorded in the individual accounts of the
entity that owns the asset.
Purchased software is amortized over a maximum of five
years.
Intangible assets include the value attributed to the
networks of Coface. The Coface insurance network has
been valued on the basis of 40% of premium income. The
credit information and credit management network has
been valued using a range of criteria, including discounted
cash flows, P/E multiples and revenue multiples. The
networks are not amortized but are tested for impairment
at each year end.
In 2004 the Banque Populaire Group, assisted by a firm of
independent valuers, measured the residual value of these
networks using the discounted cash flow method. The
results of this operation led to no change in the valuation
of the Coface group networks as recorded in the consolidated
financial statements of the Banque Populaire Group.
At December 31, 2004 the carrying value of the Coface
networks was the same as the two previous years, i.e.
€341.6 million, including €284.3 million for the insurance
network and €57.3 million for the business information
and credit management network.
2.6 – Subordinated debt
The majority of the Group’s subordinated debt is raised by
Banque Fédérale des Banques Populaires and Natexis
Banques Populaires.
Should the issuer go into liquidation,fixed-term and perpetual
subordinated debt is repaid only once all other creditors
have been paid.
Where perpetual subordinated loan notes are treated as
equivalent to debt repayable in installments, each periodic
payment is broken down between the repayment of principal,
which is deducted from the outstanding debt, and interest,
which is recorded in the income statement under banking
expenses.
In 1991 and 1992, a defeasance transaction was carried out
and a put option was purchased on BFCE sovereign risks.
The defeasance structure, Edval Investment Ltd, and the
structure set up to hold the put option, Worledge
Investment Ltd, were consolidated for the first time at
December 31, 2002 (see Note 3.6 on special purpose
entities). This accounting treatment is in accordance with
paragraph 10052 of standard CRC 99-07, as amended by
standard CRC 2004-04, on special purpose entities. It also
complies with the joint Commission des Opérations de
Bourse/Commission Bancaire guidelines published on
November 6, 2002, providing an interpretation of the
regulatory provisions governing special purpose entities
and defeasance structures. Consolidation of these two
entities led to an adjustment of provisions covering at-risk
loans covered by the put option.
On the assets side of the consolidated balance sheet, the
net outstanding balance of the loans concerned by the put
option is covered by zero-coupon bonds held by the two
entities. The results of the two entities consist solely of
annual accruals to recognize the value appreciation of the
zero-coupon bonds up to their redemption value in 2014,
when the bonds mature and the defeasance structure will
be wound up. Over this period, the value appreciation
exactly matches the provisions required to write down
the full amount of the loans covered by the put option.
Consequently, the operation has no impact on the
income statement and the cash required to refinance the
transactions is offset by a cash inflow.
Accordingly, the €5.3 million profit arising in 2004 relating
to these subsidiaries was offset in full by a charge to
provisions for country risks. This accounting treatment is
consistent with the principle of matching provision charges
to the entities’ revenues.
At December 31, 2004, the loans covered by the put option
had a net book value of €62 million (€142 million gross
less provisions of €80 million).The entire portfolio of loans
covered by the defeasance operation has been sold on the
secondary market.
2.7 – Provisions for contingencies
and charges
Provisions for country risks: Group loans exposed to
country risks other than the sovereign risks referred to
above are analyzed and provided for according to the
method recommended by the regulatory authorities, based
on the estimated value of the loans on the secondary country risk market. Country risks mainly concern loans
granted by Natexis Banques Populaires.
Provisions for contingencies and charges are intended to
cover several types of risk:
2.8 – Financial futures and options
Provisions for domestic counterparty risks: these
include general provisions for loan losses and losses on
irrevocable off-balance sheet commitments, recorded as
liabilities.
The Group’s exposure to risks on financial futures and
options is constantly monitored by closely tracking results
and positions and performing regular controls to check
compliance with the exposure limits set by management.
Provisions for industry and country risks: these
provisions cover certain businesses of Natexis Banques
Populaires and BRED Banque Populaire that carry potential
future risks. These businesses and the level of the related
provisions are affected by cyclical developments in each
industry and country, and are expected to change over time.
Interest rate instruments
In the consolidated financial statements, subordinated debt
issuance costs are expensed in the income statement in the
year of issue.
n
n
n
These instruments are recorded off-balance sheet at their
nominal value.
In accordance with standards CRBF 90-15 and 92-04,
interest rate swaps, FRAs, caps and floors are classified
121
based on the purpose for which they are acquired, as
follows:
n
micro-hedging (hedging of specific transactions or
positions);
n
macro-hedging (structural balance sheet management);
n
speculative position-taking;
n
specialized management of a trading portfolio.
The first two categories are treated for income statement
purposes as equivalent to lending/borrowing transactions
and the amounts received or paid are taken to the income
statement on an accruals basis.
Income and expenses on instruments acquired as hedges of
specific items or groups of items with similar characteristics
are recorded on a symmetrical basis with the income
and expenses arising on the hedged items.The income or
expense arising on the hedging instrument is recorded
under the same caption as the income or expense on
the hedged item, under “Interest income” or “Interest
expense”, except for income and expenses on hedges of
trading securities which are included in “Net gains on
trading account securities”.
Income and expenses on financial futures acquired to
hedge structural interest rate exposure are recorded in the
income statement under “Interest income” or “Interest
expense” on an accruals basis.
Financial futures acquired for speculative position-taking
purposes are stated at the lower of cost and market.
Unrealized gains are not recognized.
Instruments held in connection with the specialized
management of trading portfolios are valued at replacement
cost or by the yield-to-maturity method, net of a discount
for counterparty risks and the discounted present value of
future management costs. Changes in value during the
period are taken to the income statement under “Net gains
on trading account securities”.
122
Equalization payments made when interest rate swaps are
terminated or assigned are recognized immediately in the
income statement. Where the amounts involved are
material they are recognized on an accruals basis over the
residual term of the new contract where the swap is
replaced or over the residual term of the old contract
where the swap is not replaced.
Internal contracts are accounted for in compliance with
formal regulatory guarantees, without recognizing any
material intercompany profits.
Income and expenses on options acquired for hedging
purposes are recognized on a symmetrical basis with the
income and expenses on the hedged items.
Currency instruments
Spot currency transactions outstanding at the year end are
valued at the year-end rate.
Contangos and backwardations on currency futures
acquired as hedges are recognized in the income statement
on an accruals basis. Other forward foreign exchange
contracts and currency futures are marked to market.
Forward currency swaps are treated as a forward purchase
of foreign currency combined with a forward sale of the
same currency.
Currency swaps are accounted for in accordance with
standard CRBF 90-15 (revised).
2.9 – Natexis Banques Populaires
institutional activities
Commitments given to banks that grant export credits
financed in foreign currencies in order to fix the exchange
rate of their foreign currency borrowings are not included in
published off-balance sheet commitments.
Income and expenses arising on institutional activities (swaps
and exchange rate guarantees) are charged to or paid to
the French Treasury in accordance with agreed terms and
conditions.
2.10 – Interest income and expense, fees
and commissions
Interest and fees treated as interest are recorded in the
income statement on an accruals basis.
Fees and commissions not treated as interest are accounted
for as follows:
Positive or negative margin changes on exchange-traded
futures are recorded in the income statement.
fees for non-recurring services are recorded in the
income statement when the service is performed;
Provision is made for unrealized losses on over-thecounter contracts, by way of a charge to the income statement, but unrealized gains are not recognized.
n fees for ongoing services and services performed in
several successive stages are recognized by the percentage
of completion method.
Options
Premiums paid and received on interest rate, currency and
equity options are recorded in a suspense account. At the
year-end, exchange-traded options are marked to market
and the unrealized gain or loss recorded in the income
statement. In the case of over-the-counter options, a
provision is booked for any unrealized losses but unrealized
gains are not recognized. When the option is resold,
repurchased, exercised or allowed to lapse, the premium is
taken to the income statement immediately.
Options or forward contracts acquired as hedges are
accounted for separately from contracts acquired in
connection with trading activities, based on the notional
amount of the underlying instrument.
n
2.11 – Exceptional items
Exceptional income and expenses are items of income and
expense that are unusual in terms of their amount and
frequency.
2.12 – Summary of accounting principles
applied by insurance companies
Premiums collected by insurance companies are invested in
three categories of assets – marketable securities, including
fixed and floating rate bonds, equities, real estate, loans and
deposits.
Bonds and other fixed-income securities are stated at cost.
Premiums and discounts, corresponding to the difference
between cost and redemption price, are amortized over the
remaining life of the securities. A liquidity risk reserve is
booked for other securities whose aggregate cost is greater
than their aggregate realizable value at the year-end.
Unlisted real estate investments are stated at cost, net of
transaction expenses. The realizable value shown in the
statement of investments is determined on the basis of
five-yearly independent valuations which are updated
annually.
Investments in related companies are stated at cost.
Assets held to cover linked liabilities are marked to market.
Technical reserves
Insurance companies are required to hold investments with
a value at least equal to their commitments to policyholders.
These commitments are evidenced by technical reserves,
recorded as liabilities. The amount of technical reserves
required is determined by statistical calculations of
commitments towards policyholders.
Unearned premium reserves correspond to the portion of
premiums written during the year that corresponds to
insurance cover to be provided the following year.
Life reserves correspond to total premium income plus
investment income attributable to policyholders less paid
losses and benefits. A separate reserve is recorded to
cover future management costs of life insurance policies.
Loss reserves correspond to the capital sum payable
following a claim.
For credit insurance, loss reserves also include an amount
to cover the estimated total cost of reported claims not
settled at the period end. A reserve is also recorded for
claims incurred but not reported, determined by reference
to claims experience in prior underwriting years.
In 2003, Coface harmonized the methods used by certain
of its subsidiaries to calculate their loss reserves.This had
no impact on net income after taking account of loss
equalization reserves.
Policyholder surplus reserves represent the portion of
investment income attributable to policyholders but not
yet distributed.The policyholders’ surplus must be paid out
in dividends within eight years.
Liquidity risk reserves are recorded where the total
realizable value of non-amortizable securities held for sale is
less than their carrying value. The amount charged to the
reserve is the lower of a) one-third of the total unrealized
loss at the year-end and b) the difference between the
opening provision and the total unrealized loss at the year-
end. Following the change in French insurance regulations on
liquidity risk reserves (decree no. 2003-1236 of December
22, 2003 amending Article R 331-5-1 of the Insurance
Code), the Banque Populaire Group reviewed these risks and
decided that they were not covered by other provisions. A
liquidity risk reserve was therefore booked in the consolidated balance sheet at December 31, 2003 covering the total
risk, whereas in 2002 – with the approval of the insurance
regulator (Commission de Contrôle des Assurances) – only part
of the risk was provided for, reflecting the method applied in
the accounts of the insurance subsidiaries.The switch from
partial reserving to full reserving constituted a change of
accounting method, the effects of which were charged
against opening shareholders' equity at January 1, 2003 in the
amount of €148.5 million before tax and €95.9 million after
tax (of which €72.3 million attributable to the Group).This
accounting treatment was in accordance with opinion 2004B issued by the CNC Urgent Issues Task Force on January
21, 2004. Following the improvement in stock market prices
in 2003, no charge to the liquidity risk reserve was necessary
at the year end and the additional reserve booked in the
opening balance sheet (difference between full and partialreserving method) was written back to closing shareholders'
equity.
Standard CRC 2004-10, which has amended the provisions
of standard 2000-05 on the treatment of liquidity risk
reserves, no longer allows such reserves to be carried in
the consolidated balance sheet. This change of accounting
treatment had no impact on the 2004 consolidated financial
statements as the risk of depreciation in insurance company
investments is covered by the long-term impairment
provision and no charge was made to liquidity risk reserves
carried in the insurance companies’ individual accounts at
the year end.
Other technical reserves include loss equalization
reserves, financial contingency reserves and reserves for
deferred acquisition costs.
123
n
The main changes in scope of consolidation in 2004
concerned:
n Sofigard, financial cooperative for the French union of
employers’ associations in the Gard department of south
east France (Union des Syndicats Patronaux du Gard),
which facilitates access to financing for its memberstakeholders by providing them with guarantees;
3.1 – Mergers of Banque Populaire banks
In 2004, Banque Populaire Nord de Paris (Saint-Denis) and
Banque Populaire BICS (Montrouge) merged to form Banque
Populaire Rives de Paris, as approved by their memberstakeholders on November 9 and 10, 2004 respectively.
As the merged banks were already part of the consolidating
entity and the mergers were accounted for at net book values,
they had no impact on the consolidated financial statements.
3.2 – Extension of scope of consolidation
of Crédit Coopératif
“Associated” credit institutions
124
Crédit Coopératif joined the Banque Populaire Group in
2003 and merged with Caisse Centrale du Crédit
Coopératif (C.C.C.C.) on October 17, 2003, at which point
C.C.C.C. ceased to be Crédit Coopératif’s central body
within the meaning of the French Banking Act of January 24,
1984.The banking regulator accordingly required the credit
institutions formerly affiliated to the C.C.C.C. to be
“sponsored” by Crédit Coopératif with effect from the
merger. By decision of the Comité des Etablissements de
Crédits et des Entreprises d’Investissement (CECEI) on
July 25, 2003, and following the October 17, 2003 merger,
Crédit Coopératif continues to exercise first-line responsibility
over its former “affiliates”, the terms of which are set out
in association agreements between each of the credit
institutions previously affiliated to the C.C.C.C and Crédit
Coopératif, which now guarantees their liquidity and
capital adequacy.These autonomous credit institutions have
now become “associates” of Crédit Coopératif.
These “associates” are involved in granting mutual guarantees,
solidarity-based financing or loans to SMEs, with a specific
industry or geographic focus.They comprise:
Caisse Solidaire Nord Pas-de-Calais, a cooperative
society that takes local deposits designed to finance
citizenship projects;
n
CMGM, a cooperative mutual guarantee company that
serves the French federation of mechanical engineering
industries (Fédération des Industries Mécaniques);
n
Gedex Distribution SA, which grants loans to memberstakeholders of its parent company, Gedex, a cooperative
comprising retailers of building materials and home improvement products;
n
n Nord Financement, a financial cooperative serving
SMEs in the Nord Pas-de-Calais region of northern France;
Socorec, guarantee company for the French federation
of retailing cooperatives (Fédération des Coopératives des
Commerçants);
Note 3 – Changes in scope
of consolidation
Société financière de la NEF,an organization belonging
to the NEF association (Nouvelle Économie Fraternelle),
which provides financing for citizenship, environmental and
cultural projects;
n
Sofindi, a financial cooperative that guarantees loans
granted by Crédit Coopératif to SMEs in the PoitouCharentes and Gironde regions of western France, and to
companies in the ‘image’ sector;
n
Sofirif, finance company of the Groupement Coopératif
Régional Interentreprises du Val-d'Oise and GIE-SACV de
Cergy-Pontoise;
n
Sofiscop, a finance company for production cooperatives,
providing guarantees for its member-stakeholders to
facilitate their access to financing, covering the whole of
France except the south east;
n
n Sofiscop-Sud Est, a finance company for production
cooperatives, providing guarantees for member-stakeholders
in the Provence-Alpes-Côte d'Azur, Rhône-Alpes and
Auvergne regions of France;
n Somudimec, finance company of the departmental
union of metallurgy, electrical engineering and similar
industries (Union Départementale des Industries
Métallurgiques, Électriques et Connexes) of the Isère
department of central eastern France;
n Somupaca, finance company that provides guarantees for
industrial SMEs in the Provence-Alpes-Côte d'Azur region of
south east France to facilitate their access to financing;
La Banque EDEL (and its electronic payments subsidiary
Moninfo), which provides a full range of banking services
with “le mouvement Leclerc”. It is 34%-owned and at
December 31, 2003 was accounted for by the equity
method. Banque EDEL has since signed an association
agreement with Crédit Coopératif and accordingly, along
with its subsidiary Moninfo, was fully consolidated in the
2004 consolidated financial statements.
n
Other changes in the scope of consolidation
of Crédit Coopératif
In June 2004, SDR du Nord Pas-de-Calais, which is 29%owned by Crédit Coopératif Banque Populaire, sold 80% of
its shares in Batinorest, a company that provides Crédit
Coopératif with real estate lease financing for industrial
and office buildings, to Crédit Coopératif. Both companies
have been accounted for by the equity method since the
second half of 2003 (Batinorest by SDR du Nord Pasde-Calais Group). As this transaction corresponds to a
reclassification of investments, the capital gain on the
transfer has been eliminated in consolidation.
Concomitantly with the transfer, SDR du Nord Pas-deCalais transferred its lease financing outstandings to its
former subsidiary Batinorest. This partial asset transfer
was made at net book value and the merger gain was eliminated in consolidation.
Following these transactions, SDR du Nord Pas-deCalais is still accounted for by the equity method while
Batinorest is now fully consolidated.
Impact on the consolidated financial statements
The extension in scope of consolidation of Crédit
Coopératif had the effect of increasing consolidated net
banking income of the Banque Populaire Group by €41.4
million and net income by €2.8 million.
3.4 – Companies deconsolidated in 2004
The following companies were removed from the scope of
consolidation in 2004:
n C2C sold by CASDEN Banque Populaire to CAMIF
during the first half;
CODINF Services, a subsidiary of the Coface subgroup (accounted for by the equity method), sold during
the first half of 2004;
n
n Crédit Coopératif Trésorerie Plus, a subsidiary of
Crédit Coopératif, following derecognition of its assets and
liabilities;
3.3 – Other companies consolidated
for the first time in 2004
LFI2 a subsidiary of CASDEN Banque Populaire and
BRED Banque Populaire, following derecognition of its
assets and liabilities;
n
n
Coface sub-group:
– Coface Ort and its subsidiaries following the endMarch 2004 acquisition of the Ort sub-group, a
specialist in online business and credit information;
– Coface Collection North America, Coface
Holding Latin America, Coface Holding do
Brasil and Coface Servicios Argentine, specialists
in business and credit information;
– Coface Services Nederland and Coface
Servicios Panama, specialists in credit information
and management;
Natexis Actions Avenir et Natexis Nouveaux
Marchés,subsidiaries of the Natexis Banques Populaires,
sub-group, following their liquidation;
n
Nine subsidiaries were deconsolidated as their contribution
no longer met the materiality threshold:
– Foncière Victor Hugo, SNC Azur Immo and
SMI, three subsidiaries of Banque Populaire Côte
d’Azur ;
n
– Amedis, a subsidiary of BRED Banque Populaire ;
– London Bridge Finance Limited, a factoring
company.
– Cyberplus Market and Guidéo, subsidiaries of
Banque Fédérale des Banques Populaires ;
Immobilière Natexis, a subsidiary specializing in real
estate investment, and Investima 6, a real estate holding
company;
– Sofinnova and Proxigma, subsidiaries of the Natexis
Banques Populaires sub-group;
n
Natexis US Finance Corporation, a refinancing
subsidiary for the New York branch;
n
Natexis Private Equity Opportunities, a private
equity subsidiary;
n
n Paris Office Fund, a real estate trading company jointly
and equally owned with the Axa Group;
VR Factorem, a German factoring subsidiary, created in
partnership with German group GENO.
– Crédit Maritime Investissement, a subsidiary of
Crédit Maritime Mutuel Group.
At December 31, 2003, the respective contribution of
these companies to consolidated net banking income and
consolidated net income was as follows (in € millions):
December 31, 2003
Net banking income
Net income
Amedis
1
0
C2C
0
0
Codinf Services
-
0
Crédit Coopératif Trésorerie Plus
0
0
Company
n
The impact of these companies on 2004 consolidated net
banking income and net income was as follows (in €millions):
December 31, 2004
Company
Crédit Maritime Investissement
0
0
Cyberplus Market
0
0
Net banking income
Net income
Foncière Victor Hugo
0
0
36
1
Guidéo
0
0
35
2
Coface sub-group
of which Ort sub-group
LFI2
8
5
Immobilière Natexis (formerly Villcomm)
0
(1)
Natexis Actions Avenir
0
0
Investima 6
0
0
Natexis Nouveaux Marchés
0
0
Natexis Private Equity Opportunities
0
(1)
Proxigma
1
0
Natexis US Finance Corporation
0
0
SMI
0
0
Paris Office Fund
1
1
SNC Azur Immo
0
0
VR Factorem
1
0
Sofinnova
-
0
125
3.5 – Other transactions
Other transactions carried out during the year were:
n
Merger of E-Market into Slib ;
n Increase in Natexis Banques Populaires’ percentage
holding in Coface SA (from 98% to 100%) following the
squeeze-out in May 2004;
Increase in Coface SA’s percentage holding in Unistrat
Assurance (from 50% to 100%) following its buyout of the
minority interests;
n
Merger into Banque Fédérale des Banques
Populaires of SCI BP and SCI Javel, which own the head
office of Banque Fédérale des Banques Populaires;
n
n Merger of Sodega (Guadeloupe), Sodema (Martinique)
and Sofideg (French Guyana) into their holding company,
SAS Antilles Guyane Participation, now renamed Sofiag
(subsidiary of BRED Banque Populaire).
3.6 – Special purpose entities
Special purpose entities over which the Group exercises
control, in substance, without controlling their capital are
consolidated.
Paragraph 10052 of standard CRC 99-07, as amended by
standard CRC 2004-04, sets out the three criteria to be
applied to determine whether control is exercised. If only
one of the three criteria is met, this is not sufficient
evidence of control.The criteria are as follows:
n the consolidating entity has the power to make decisions,
with or without management powers,concerning the activities
of the special purpose entity;
n the consolidating entity has the right to all or the majority
of the economic benefits of the special purpose entity;
n the consolidating entity retains the majority of the
ownership risks related to the special purpose entity.
126
Following the publication, on November 6, 2002, of joint guidelines issued by the Commission des Opérations de Bourse
(predecessor of the Autorité des Marchés Financiers) and
the Commission Bancaire providing an interpretation of the
CRC standards, two subsidiaries of Natexis Banques
Populaires set up in 1991 and 1992 – Edval C Investment
Ltd and Worledge Investment Ltd – in connection with
a defeasance transaction involving ex-BFCE sovereign loans
(see Note 2.7) were consolidated for the first time at
December 31, 2002.
Based on a review of entities set up before December 31,
2002, none of the other special purpose entities set up
by the Group fulfilled the criteria requiring them to be
consolidated.These special purpose entities can be broken
down into the following categories:
3.6.1 – Securitizations
n Since 2000, Natexis Banques Populaires has carried out
five synthetic asset securitizations on its own behalf for a
total of €4,109 million. These transactions, implemented
through the PARIS1, PARIS2, NATIX, IGLOO and
IGLOO2 special purpose entities, have the effect of transferring a significant portion of counterparty risk relating to
certain loan portfolios (collateralized loan obligations) or
to bonds (collateralized bond obligations), using credit
default swaps and credit linked notes.They consist of synthetic securitizations based on credit derivatives carried
out jointly with third party banks and special purpose entities. In substance, the credit derivatives are equivalent to
credit insurance protecting Natexis Banques Populaires
against the risk of borrower default or debt rescheduling.
As part of its active portfolio management policy and in
agreement with the supervisory authorities, in the first half
of 2004 Natexis Banques Populaires decided to wind up
PARIS1 and PARIS2 prematurely.
NATIX and IGLOO are not consolidated because their
accounts only reflect the protection obtained by Natexis
Banques Populaires and its coverage on the market. The
remaining risk is assumed by the investors that acquire the
securities issued by the special purpose entity.
However, based on an analysis of the securitization
transaction carried out through IGLOO2 in 2003, the
Group decided to consolidate this special purpose entity as
the Banque Populaire banks which acquired the securities
issued by that entity are exposed to the majority of the
risks.
The details of these transactions are as follows:
December 31, 2004
Entity
IGLOO
NATIX
Currency
Inception
Maturity
Gross amount
securitized
Weighted
securitized risks
Weighted
retained risks
Initial losses
retained by the
Group
EUR
2000
2005
997
778
368
33
USD
2000
2008
190
190
34
3
2003
2008
1,678
1,377
444
110
2,865
2,345
846
146
(initial losses
in EUR)
IGLOO2
EUR
n In 2002, Natexis Banques Populaires carried out a
securitization on behalf of clients. The purpose of the
transaction was to refinance these clients’ receivables
portfolios on the commercial paper market. Natexis
Banques Populaires acts as arranger, custodian, placing
agent and liquidity provider and also guarantees the letter
of credit. The transaction involves a multi-seller conduit
named Elixir Funding.
Of the three criteria applied to determine whether a
special purpose entity should be consolidated, the criterion
concerning the retention of the majority of ownership risks
is the determining factor: during the period when the
conduit’s asset pool is being built up, Natexis Banques
Populaires aims to transfer the majority of risks to a
banking syndicate within one year. Once the conduit is
fully operational, over 50% of the liquidity lines and the
letter of credit will be financed by a banking syndicate at all
times. The special purpose entity has therefore not been
consolidated.
Liquidity lines have been opened on the commercial paper
issued by this conduit, as well as a letter of credit:
Amount authorized
Amount drawn
NBP liquidity line
NBP letter of credit
December 31, 2004
614.6
38.2
248.4
5.0
In March 2001, BRED Banque Populaire carried out a
securitization through the Crystalys special purpose entity.
Asset-backed securities issued by the SPE amounted to
€681 million at December 31, 2004, included in securities
held for sale.The SPE holds a portfolio of home loans with
a roughly equivalent value. €238 million of these loans are
guaranteed by CASDEN Banque Populaire. In the case
of any sales or other transactions, detailed information
about the related risks will be disclosed. Crystalys is not
consolidated because it is an independent management
company and BRED Banque Populaire does not have
any decision-making or management powers.
n
In December 2004, CASDEN Banque Populaire and
BRED Banque Populaire carried out a securitization
through the Amaren II special purpose entity. The
transaction benefited from the regulatory changes introduced
in November 2004, and accordingly notes rather than
shares in the SPE were issued in the sum of €1,750 million.
The SPE’s assets comprise €1,026 million of real estate
loans granted by CASDEN Banque Populaire and €769
million of real estate loans granted by BRED. €555 million
of these loans are guaranteed by CASDEN Banque
Populaire and BRED Banque Populaire’s mutual guarantee companies. CASDEN Banque Populaire and
BRED Banque Populaire have retained the majority of
the notes issued by the SPE and Amaren II is therefore
consolidated by the Banque Populaire Group.
n
3.6.2 – Tax structures
Asset financing (aircraft, ships, hotels, technocenters, etc.) is
provided to certain clients via look-through entities (GIEs,
SCIs, SAs organized as a tax group), mostly set up by Natexis
Banques Populaires either alone or in partnership with other
banks. In these structures, Natexis Banques Populaires acts
both as a lender and as a seller of tax positions. Natexis
Banques Populaires has the power to make decisions
concerning the activities of these look-through entities, in a
fiduciary capacity on behalf of clients. As the activities
represent in substance asset management activities and
Natexis Banques Populaires does not control the lookthrough entities within the meaning of paragraph 10052 of
standard CRC 99-07,as amended by standard CRC 2004-04,
these structures are not consolidated.
3.6.3 – Real estate structures
SCI non-trading real estate companies are set up to hold
finance leases granted by the Group’s leasing subsidiaries to
finance real estate acquisitions (car parks, offices, headquarters buildings, etc.). As in the case of tax structures,
these subsidiaries act in a fiduciary capacity at the request
of clients and do not exercise control over the real estate
structures according to the criteria set out in paragraph
127
10052, standard CRC 99-07, as amended by standard CRC
2004-04.
Note 4 – Other information
3.6.4 – Group employee stock ownership plan
(“Alizé” operation)
In 2002, Banque Fédérale des Banques Populaires issued a
guarantee relating to the shares issued by Natexis Banques
Populaires on the acquisition of Natexis Bleichroeder Inc.
in December 2002.
On May 31, 2001, Natexis Banques Populaires launched
an employee share issue open to employees of the Banque
Populaire Group. The issue was carried out in connection
with the Group’s employee stock ownership plan governed
by the Act of February 19, 2001. A corporate mutual fund –
FCPE Alizé Levier – was set up to hold the shares acquired by the employees participating in the issue.
Banque Fédérale des Banques Populaires entered into
an agreement with the fund’s custodian, guaranteeing the
net asset value of any units in the fund surrendered by
employees.
Based on the characteristics of the operation, the Group
has consolidated the FCPE Alizé Levier mutual fund.
3.7 – Pro forma consolidated financial
statements
The impact of changes in the scope of consolidation on the
income statement are presented in note 69 via the presentation of 2003 pro forma data. The pro forma financial
statements are designed to provide comparable data by
retrospectively including the main changes in scope of
consolidation during 2004 or the second half of 2003:
n first-time consolidation of Crédit Maritime Mutuel,
which became affiliated to BFBP on August 1, 2003 and
therefore only contributed to consolidated results in the
second half of 2003;
first-time consolidation of the Agence Française de
Développement subsidiaries, which were acquired by
BRED Banque Populaire at end 2003 and therefore made
no contribution to 2003 consolidated results;
n
128
n first-time consolidation of credit institutions that have
signed an association agreement with Crédit Coopératif
(not subsidiaries), which were fully consolidated as of
January 1, 2004;
n first-time consolidation of the Ort sub-group, which was
acquired by Coface in April 2004.
In order to eliminate the impact of changes in scope of
consolidation on 2004 comparables, the 2003 figures have
been adjusted to calculate changes on a constant Group
structure using data that has not been audited by the
Statutory Auditors.
The acquisition of Natexis Bleichroeder Inc. (formerly
Arnhold & Bleichroeder Inc) was paid for through the
issuance of 1,401,082 new shares.The share issue, carried
out on December 6, 2002, represented a capital increase
of 3%.
Arnhold & Bleichroeder Holdings, the former owner of
Natexis Bleichroeder Inc., is committed to retaining at least
45% of these shares for a minimum of five years.The remaining 55% of the shares may be sold over a period of seven
years, as follows: no more than 10% between six months
and one year after the transaction date, a cumulative
maximum of 35% in the period to the end of the second
year, a cumulative maximum of 45% in the period to the end
of the third year and a cumulative maximum of 55% in the
period to the end of the seventh year.
Arnhold & Bleichroeder Holdings and Banque Fédérale des
Banques Populaires have also signed a value protection
agreement stating that if the 55% of the shares referred to
above are sold at a price below their value at the date of
issue – i.e. €75.56 – Banque Fédérale des Banques
Populaires will transfer additional Natexis Banques
Populaires shares to Arnold & Bleichroeder Holdings
without consideration.
This value protection agreement will only apply if the
shareholders of Arnold & Bleichroeder Holdings have
refused an offer to purchase the Natexis Banques
Populaires shares at a price previously proposed by Banque
Fédérale des Banques Populaires. In that case the Natexis
Banques Populaires shares may not be sold to a third party
at a price lower than that offered by Banque Fédérale des
Banques Populaires.
Note 5 – Companies included in the scope of consolidation
Companies
Company / Business line
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
% voting Consolidation
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
I) Consolidating entity
Banque Populaire Occitane
Banque Populaire Bourgogne
Franche-Comté
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire du Sud-Ouest
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire du Massif Central
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire des Alpes
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire du Nord
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire du Centre
-
FR
Merged
N
Merged
N
100.00% 100.00%
Full
Banque Populaire Centre Atlantique
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire Loire et Lyonnais
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire Provençale et Corse -
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire Lorraine Champagne -
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100,00% 100,00%
Full
BICS - Banque Populaire
-
FR
Merged
N
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire du Haut-Rhin
-
FR
Merged
N
Merged
N
100.00% 100.00%
Full
Banque Populaire Atlantique
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire de la Côte d’azur
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire Centre-Atlantique
-
FR
Merged
N
Merged
N
100.00% 100.00%
Full
Banque Populaire des Pyrénéesorientales, de l’Aude et de l’Ariège
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Banque Populaire de l’Ouest
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
-
FR
Merged
N
Banque Populaire de la Région
Economique de Strasbourg
-
FR
Merged
N
Banque Populaire d’Alsace
-
FR
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
///
///
100.00% 100.00%
N
///
///
///
///
N
N
Full
100.00% 100.00%
Full
Merged
N
100.00% 100.00%
Full
100.00% 100.00%
Full
///
///
100.00% 100.00%
N
Full
Banque Populaire Toulouse-Pyrénées
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BRED - Banque Populaire
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Crédit Coopératif
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
Consolidated from 2003
N
ACEF QUERCY AGENAIS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BICS HABITAT
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BRED HABITAT
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Mutual guarantee companies
FOREST. LORRAINE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
FOREST. MASSIF CENTRAL
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
FOREST. PYRENEES-ORIENTALES
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
FOREST. SEINE-ET-MARNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
PROCOMI COTE-D’AZUR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF BAS-RHIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF BRETAGNE-ATLANTIQUE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF CENTRE-ATLANTIQUE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF MASSIF CENTRAL
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
129
Companies
Country
(a)
130
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
SOCACEF NORD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF QUERCY-AGENAIS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCACEF TARN ET AVEYRON
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Full
SOCAMA ALPES-MARITIMES
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
SOCAMA ANJOU-VENDEE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA ARIEGE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA AUDE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA AVEYRON
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA BAS-RHIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA BICS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA BOUCHES-DU-RHONE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA BOURGOGNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA BRED-IDF
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA CHAMPAGNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA CHARENTE-MARITIME
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA CORSE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA DAUPHINE-ALPES DU SUD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA DEUX-SEVRES
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA DOUBS-HTE-SAONE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA HAUTE-GARONNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA HAUTE-SAVOIE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA HAUT-RHIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA JURA-AIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LOIRE-ATLANTIQUE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LOIRE-Ht-VIVARAIS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LORRAINE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LOT
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LOT-ET-GARONNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA LYON-ET-REGION
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA MASSIF CENTRAL
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA MIDI
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA MIDI-PYRENEES OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA MORBIHAN-FINISTERE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA NORD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA Nord de Paris
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA R.O.P.
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA REGIONALE L-C-D
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA REUNION
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA ROUSSILLON
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA SAVOIE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA SUD-OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA TARN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA VAL-DE-FRANCE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA VAR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMA VAUCLUSE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI ANJOU-VENDEE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI ATLANTIQUE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI AUDE-ARIEGE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
SOCAMI BAS-RHIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI BASSIN-ADOUR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI BORDEAUX-ET-REGION
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI BOURGOGNE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI BRETAGNE-ATLANTIQUE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI CENTRE-OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI CHAMPAGNE
-
FR
Merged
N
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI COTE D’AZUR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI DAUPHINE-ALPES DU SUD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI FRANCHE-COMTE-M-A
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI HAUTE-SAVOIE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI HAUT-RHIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI HTE-GARONNE-HABITAT
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI LIMOUSIN
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI LOIRE ET LYONNAIS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI LORRAINE
-
FR
Merged
N
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI LORRAINE CHAMPAGNE
-
FR
100.00% 100.00%
Full
SOCAMI MASSIF CENTRAL
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI MIDI
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
///
///
N
///
///
N
SOCAMI NORD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI Nord de Paris
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI PROVENCE ET CORSE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI PYRENEES-ORIENTALES
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI QUERCY-AGENAIS
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI R.O.P.
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI SAVOIE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI SUD OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI TARN ET AVEYRON
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMI VAL-DE-FRANCE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMMES
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAMUPROLOR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOCAUPROMI
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOFRONTA
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB COTE D’AZUR
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB FRANCHE-COMTE-M-A
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB LORRAINE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB NORD
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB SAVOIE-HTE-SAVOIE
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SOPROLIB SUD-OUEST
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
-
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Central bodies
BANQUE FÉDÉRALE
DES BANQUES POPULAIRES
131
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
II – Affiliates and Associates (c)
Affiliates
CAISSE REGIONALE DE GUADELOUPE (12)
FR
0.00%
100.00%
Full
1.95%
100.00%
Full
N
CAISSE REGIONALE DE MARTINIQUE (12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE DE MEDITERRANEE (12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE DE REUNION
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE DE VENDEE
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE DU FINISTERE
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE LITTORAL MANCHE (12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE MORBIHAN / L.A (12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE REGION NORD
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CAISSE REGIONALE SUD OUEST
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
SOCIETE CENTRALE DU CREDIT
MARITIME MUTUEL
(12)
FR
7.64%
100.00%
Full
7.68%
10.00%
Full
N
UNION DES CAISSES REGIONALES
(12)
FR
0.00%
100.00%
Full
0.00%
100.00%
Full
N
CMGM
(10)
FR
6.03%
100.00%
Full
EDEL
(10)
FR
33.94%
100.00%
Full
GEDEX DISTRIBUTION
(10)
FR
0.00%
100.00%
Full
MONINFO
(10)
FR
33.91%
100.00%
Full
NORD FINANCEMENT
(10)
FR
0.96%
100.00%
SOCIETE FINANCIERE DE LA NEF
(10)
FR
6.95%
SOCOREC
(10)
FR
0.00%
SOFIGARD
(10)
FR
0.29%
SOFINDI
(10)
FR
5.06%
100.00%
Full
N
N
SOFIRIF
(10)
FR
4.29%
100.00%
Full
N
N
SOFISCOP
(10)
FR
1.68%
100.00%
Full
N
N
Associates
132
N
N
Equity
N
N
N
N
N
Full
N
N
100.00%
Full
N
N
100.00%
Full
N
N
100.00%
Full
N
N
33.94%
33.94%
SOFISCOP SUD EST
(10)
FR
3.92%
100.00%
Full
N
N
SOMUDIMEC
(10)
FR
0.35%
100.00%
Full
N
N
SOMUPACA
(10)
FR
1.74%
100.00%
Full
N
N
ACHATPRO
(9)
FR
91.37%
91.37%
Equity
39.58%
AGRO AUDACES
(4)
FR
88.39%
91.82%
Full
80.02%
AMEDIS
(9)
GB
Deconsolidated
N
0.00%
III – SUBSIDIARIES
III.1 – Retail banking
39.58%
Equity
37.44%
37.44%
Equity
82.94%
Full
79.72%
71.54%
Full
96.00%
Full
0.00%
96.00%
Full
Full
ATLANTIQUE PLUS
(6)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
BANKEO
(2)
FR
60.00%
60.00%
Full
60.00%
60.00%
Full
N
BANQUE MONETAIRE ET FINANCIERE (3)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BATINOREST
(10)
FR
85.13%
80.00%
Full
N
N
BDG SCI
(5)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BERCY GESTION FINANCE
(9)
FR
99.96%
Full
99.96%
Full
99.96%
99.96%
Full
Full
99.96%
99.96%
BFBP ACTIONS EUROPE
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
BGF+
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
BIC BRED
(9)
FR
99.95%
99.95%
Full
99.94%
99.94%
Full
BICEC
(2)
CM
51.99%
52.48%
Full
51.99%
52.48%
Full
BISE
(10)
PL
37.92%
37.91%
Equity
28.55%
26.80%
Equity
B-PROCESS
(9)
FR
34.89%
34.89%
Equity
26.56%
26.56%
Equity
N
99.94%
99.94%
Full
51.95%
52.48%
Full
25.39%
25.39%
N
Equity
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
BRED COFILEASE
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BRED GESTION
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
BTP BANQUE
(10)
FR
99.95%
99.95%
Full
100.00% 100.00%
Full
N
BTP CAPITAL INVESTISSEMENT
(10)
FR
79.42%
79.42%
Full
79.41%
79.41%
Full
C.2.C
(3)
FR
Deconsolidated
N
48.99%
48.99%
Equity
CAISSE CENTRALE
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
CAISSE DE GARANTIE IMMOBILIERE
DU BATIMENT
(10)
FR
33.40%
33.40%
Equity
CAISSE SOLIDAIRE
(10)
FR
11.40%
100.00%
Full
CAPI COURT TERME N°1
(3)
FR
100.00% 100.00%
Full
CERIUS INVESTISSEMENTS
(4)
FR
99.85%
Full
CLICK AND TRUST
(9)
FR
100.00% 100.00%
CLIVEO SNC
(2)
FR
100.00% 100.00%
COFEG
(9)
FR
99.67%
COFIBRED
(9)
FR
COFICOR
(9)
FR
COOPAMAT
(10)
CREDIT COOPERATIF
TRESORERIE PLUS
48.99%
48.99%
N
Equity
Full
N
Equity
N
N
N
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Full
99.67%
Full
99.67%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
99.76%
99.76%
Full
99.76%
99.76%
Full
99.80%
Full
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
(10)
FR
Deconsolidated
N
100.00% 100.00%
Full
N
CREDIT MARITIME INVESTISSEMENT (12)
FR
N
CREDIT MARITIME VIE
(12)
FR
CYBERPLUS MARKET
(4)
FR
DE PORTZAMPARC
(6)
FR
72.16%
ECOFI INVESTISSEMENT
(10)
FR
99.98%
EFITEL
(10)
FR
ESFIN
(10)
FCC AMAREN II
(4)
FINANCIERE VECTEUR
(8)
FR
99.85%
99.67%
Deconsolidated
33.40%
33.40%
99.67%
99.67%
99.80%
N
2.61%
100.00%
Full
Full
3.07%
100.00%
Full
N
100.00% 100.00%
Full
74.53%
Full
67.02%
67.02%
Full
99.99%
Full
99.98%
99.98%
Full
N
99.99%
100.00%
Full
100.00% 100.00%
Full
N
FR
37.58%
37.58%
Equity
Equity
N
FR
100.00% 100.00%
Full
N
N
100.00% 100.00%
Full
100.00% 100,00%
Full
100.00% 100,00%
Full
75.59%
100.00%
Deconsolidated
37.58%
37.58%
N
91.77%
99.68%
Full
65.97%
65.98%
Full
FONCIERE VICTOR HUGO
(7)
FR
Deconsolidated
N
100.00% 100.00%
Full
100.00% 100.00%
Full
GC2I INVESTISSEMENT
(4)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
GIE CARSO MATERIEL
(4)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
GIE LIVE ACHATS
(4)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
GIE PARNASSE INVEST.
(3)
FR
Deconsolidated
N
Deconsolidated
N
100.00% 100.00%
Full
GIE USC
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
GROUPEMENT DE FAIT
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
GUIDEO
(2)
FR
Deconsolidated
N
100.00% 100.00%
Full
100.00% 100.00%
Full
IMMOBICS SA
Merged
N
Merged
N
100.00% 100.00%
Full
(5)
FR
INFORMATIQUE BANQUES
POPULAIRES
(4)
FR
Full
99.75%
100.00%
Full
INTER PROMO
(3)
FR
Deconsolidated
N
Deconsolidated
N
100.00% 100.00%
Full
INTERCOOP
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
99.76%
99.76%
Full
99.75%
99.75%
LFI
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
LFI2
(4)
FR
Deconsolidated
N
99.01%
99.01%
Full
99.01%
99.01%
Full
LFI4
(9)
FR
98.04%
98.04%
Full
98.04%
98.04%
Full
90.00%
100.00%
Full
98.04%
98.04%
Full
LUX EQUIP BAIL
(9)
LU
90.00%
90.00%
Full
90.00%
90.00%
Full
MONE+CC2
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
NOVACREDIT
(4)
FR
65.77%
65.77%
Full
66.00%
66.00%
Full
OUEST CROISSANCE SCR
(4)
FR
97.58%
99.22%
Full
96.62%
99.23%
PARNASSE FINANCES
(3)
FR
100.00% 100.00%
Full
100.00% 100.00%
PARNASSIENNE DE CREDIT
(3)
FR
91.95%
92.44%
Full
91.95%
92.44%
N
66.00%
66.00%
Full
Full
96.35%
99.23%
Full
Full
100.00% 100.00%
Full
Full
91.90%
Full
92.44%
133
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
PREPAR COURTAGE
(9)
FR
99.20%
99.20%
Full
99.30%
99.30%
Full
99.20%
99.20%
Full
PREPAR-IARD
(9)
FR
99.99%
99.99%
Full
99.98%
99.98%
Full
99.98%
99.98%
Full
PREPAR-VIE
(9)
FR
99.78%
99.78%
Full
99.77%
99.77%
Full
99.77%
99.77%
Full
PROMEPAR
(9)
FR
99.96%
99.97%
Full
99.96%
99.91%
Full
99.91%
99.91%
Full
SBE
(2)
FR
99.78%
99.78%
Full
99.77%
99.77%
Full
99.71%
99.71%
Full
SCI du CREDIT COOPERATIF
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
SCI L’ARENAS
(7)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SCI SAINT-DENIS
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
SDR Nord Pas de Calais
(10)
FR
28.92%
Equity
SGTI
(3)
FR
100.00% 100.00%
Full
SICOMI COOP
(10)
FR
50.35%
Full
49.96%
49.96%
Full
N
SMI
(7)
FR
Deconsolidated
N
100.00% 100.00%
Full
100.00% 100.00%
Full
SNC AZUR IMMO
(7)
FR
Deconsolidated
N
100.00% 100.00%
Full
100.00% 100.00%
Full
SNC M+X
(4)
FR
99.67%
100.00%
Full
99.65%
100.00%
Full
99.62%
100.00%
Full
SOCIEP
(8)
FR
99.99%
99.99%
Full
99.99%
100.00%
Full
99.99%
100.00%
Full
SODEGA
(9)
FR
Merged
N
100.00% 100.00%
Full
37.44%
37.44%
Equity
SODEMA
(9)
FR
Merged
N
100.00% 100.00%
Full
37.44%
37.44%
Equity
28.92%
50.35%
Equity
28.92%
28.92%
100.00% 100.00%
Full
37.44%
37.44%
N
Equity
SOFIAG (ex Antilles
Guyane Participations)
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
SOFIDEG
(9)
FR
Merged
N
100.00% 100.00%
Full
37.44%
37.44%
Equity
SOFIDER
(9)
FR
Full
100.00% 100.00%
Full
37.44%
37.44%
Equity
100.00%
99.49%
N
SOFINCIL
(3)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SPIG
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
TRANSIMAT
(10)
FR
Deconsolidated
N
100.00% 100.00%
Full
N
TRANSIMMO
(10)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
TRUST AND PAY
(9)
FR
59.35%
44.00%
Prop.
55.69%
44.00%
Full
62.70%
50.00%
Full
VECTEUR GESTION
(8)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
VIALINK
(9)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
Full
75.34%
75.34%
Full
72.85%
N
III.2 – Natexis Banques Populaires and its subsidiaries (d)
NATEXIS BANQUES POPULAIRES
-
FR
75.59%
75.59%
72.85%
Full
134
Corporate & Institutional Banking and Markets
BAIL EXPANSION
(1)
FR
75.50%
99.88%
Full
75.25%
99.88%
Full
72.76%
99.88%
Full
DOMIMUR
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
DUPONT DENANT CONTREPARTIE
(1)
FR
37.79%
50.00%
Full
37.67%
50.00%
Full
36.42%
50.00%
Full
ECRINVEST 6
(1)
FR
75.54%
99.94%
Full
75.29%
99.93%
Full
72.79%
99.93%
Full
ENERGECO
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
FINANCIERE CLADEL
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
FRUCTIBAIL
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
FRUCTICOMI
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
INVESTIMA 6
(1)
FR
75.59%
100.00%
Full
NATEXIS ALGERIE
(1)
DZ
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS ABM CORP
(1)
US
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS ARBITRAGE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS BAIL
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS BLEICHROEDER Inc
(1)
US
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS BLEICHROEDER SA
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS BLEICHROEDER UK
(1)
GB
75.59%
100.00%
Full
75.34%
100.00%
Full
NATEXIS COFICINE
(1)
FR
69.92%
92.50%
Full
69.68%
92.50%
Full
67.38%
92.50%
Full
NATEXIS FINANCE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
N
N
N
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
NATEXIS FUNDING
(1)
FR
75.59%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
NATEXIS IMMO DEVELOPPEMENT
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.85%
99.99%
Full
NATEXIS INVESTMENT CORP.
(1)
US
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS LEASE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS LUXEMBOURG
(1)
LU
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS METALS
(1)
GB
75.59%
100.00%
Full
75.34%
80.00%
Full
58.28%
80.00%
Full
NATEXIS MOSCOW
(1)
RU
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS PRAMEX INTERNATIONAL
(1)
FR
74.90%
99.08%
Full
74.65%
99.08%
Full
72.19%
99.10%
Full
NATEXIS PRIVATE EQUITY ASIA
(1)
HK
N
72.85%
100.00%
Full
NATEXIS US FINANCE CORPORATION (1)
US
75.59%
100.00%
Full
N
N
PARIS OFFICE FUND
(1)
FR
37.79%
50.00%
Prop.
N
N
SBFI
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
VAL A (SAS)
(1)
FR
74.14%
98.09%
Full
73.90%
98.09%
Full
71.46%
98.09%
Full
Deconsolidated
N
Deconsolidated
BANQUE PRIVÉE ST DOMINIQUE
(1)
FR
75.59%
100.00%
Full
75.34%
100,00%
Full
72.85%
100,00%
Full
BP DEVELOPPEMENT GLOBALE
(4)
FR
85.26%
93.91%
Full
90.84%
97.73%
Full
84.43%
93.43%
Full
BPSD GESTION
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
FCPR NATEXIS INDUSTRIE
(1)
FR
67.88%
89.80%
Full
75.34%
100.00%
Full
N
FIN. NATEXIS SINGAPOUR
(1)
SG
75.59%
100.00%
Full
75.34%
100.00%
Full
N
FINATEM
(1)
DE
68.03%
100.00%
Full
67.80%
90.00%
Full
N
FNS2
(1)
SG
75.59%
100.00%
Full
N
IDF NORD CROISSANCE
(1)
FR
N
Merged
N
Merged
INITIATIVE ET FINANCE
INVESTISSEMENT
(1)
FR
69.78%
91.81%
Full
57.68%
92.36%
Full
MERCOSUL
(1)
GB
75.59%
100.00%
Full
75.34%
100.00%
Full
N
90.96%
100.00%
Full
54.85%
92.33%
Full
NATEXIS INVESTISSEMENT
(1)
FR
75.17%
99.45%
Full
69.62%
99.27%
Full
NATEXIS INVEST ASIA
(1)
HK
75.59%
100.00%
Full
75.34%
100.00%
Full
NATEXIS ACTIONS AVENIR
(1)
FR
N
61.90%
81.25%
Full
NATEXIS CAPE
(1)
LU
75.59%
100.00%
Full
75.34%
98.71%
Full
NATEXIS CAPITAL STRUCTURANT
(1)
FR
50.80%
50.80%
Full
61.12%
73.71%
Full
NATEXIS INDUSTRIE
(1)
FR
75.46%
99.83%
Full
75.34%
99.85%
Full
NATEXIS INVERSIONES
(1)
SP
75.59%
100.00%
Full
75.34%
100.00%
Full
NATEXIS NOUVEAUX MARCHES
(1)
FR
N
68.90%
91.53%
Full
66.95%
NATEXIS PRIVATE BANKING
Luxembourg
(1)
LU
66.37%
87.80%
Full
66.15%
87.80%
Full
NATEXIS PRIVATE EQUITY
(1)
FR
75.59%
100.00%
Full
75.34%
100,00%
Full
INTERNATIONAL
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
OPPORTUNITIES
(1)
FR
75.59%
100.00%
Full
NATEXIS VENTURE SELECTION
(1)
FR
75.58%
100.00%
Full
NEM2
(1)
FR
75.46%
99.82%
Full
NPEIS
(1)
SG
75.59%
100.00%
Full
SOFINNOVA
(1)
FR
SOPRANE ASSURANCES
(1)
FR
75.41%
99.76%
Full
75.16%
SOPROMEC
(1)
FR
85.26%
100.00%
Full
78.95%
SPEF DEVELOPPEMENT
(1)
FR
75.59%
99.99%
Full
75.33%
99.98%
SPEF LBO
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.85%
99.99%
Full
SPEF VENTURE
(1)
FR
75.57%
99.98%
Full
75.32%
99.97%
Full
72.83%
99.97%
Full
SUD EST CROISSANCE
(1)
FR
N
93.34%
100.00%
Full
Liquidated
Liquidated
Deconsolidated
Merged
N
N
67.88%
99.23%
N
62.24%
65.61%
84.73%
99.85%
Full
N
Full
N
N
Full
N
91.61%
Full
63.96%
87.80%
Full
72.85%
100,00%
Full
72.85%
100.00%
Full
N
N
75.16%
99.76%
Full
N
75.34%
88.07%
Full
18.37%
24.38%
N
64.00%
88.03%
Full
N
Equity
17.48%
24.38%
Equity
99.76%
Full
72.67%
99.76%
Full
97.13%
Full
76.58%
76.58%
Full
Full
72.84%
99.98%
Full
Merged
135
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
Services
ABP PREVOYANCE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
ABP VIE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
ADIR
(1)
LB
25.70%
33.99%
Equity
25.61%
33.99%
Equity
ASSURANCES BP IARD
(1)
FR
37.74%
49.99%
Equity
37.68%
49.99%
Equity
36.43%
49.99%
Equity
AXELTIS Ltd
(1)
GB
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
BANCASSURANCE POPOLARI
(1)
IT
38.55%
51.00%
Prop.
38.42%
51.00%
Full
37.15%
51.00%
Full
E-MARKET
(1)
FR
N
75.34%
100.00%
Full
LA PROSPERITE
(1)
FR
LINEBOURSE
(1)
FR
Merged
Merged
75.59%
100.00%
N
Full
Merged
84.46%
96.94%
N
N
N
77.70%
100.00%
Full
Full
72.85%
100.00%
Full
NATEXIS ASSET MANAGEMENT
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS ASSET SQUARE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS ASSURANCES
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
72.85%
100.00%
Full
NATEXIS EPARGNE ENTREPRISE
(1)
FR
75.59%
100.00%
Full
75.33%
100.00%
Full
NATEXIS INTEREPARGNE
(1)
FR
75.59%
100.00%
Full
75.34%
99.99%
Full
Deconsolidated
N
NATEXIS INTERTITRES
(1)
FR
75.55%
99.93%
Full
75.28%
99.92%
Full
NATEXIS LIFE
(1)
LU
72.45%
100.00%
Full
72.21%
100.00%
Full
69.83%
100.00%
Full
N
NATEXIS PAIEMENTS
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS ASSET MANAGEMENT
IMMOBILIER
(1)
FR
75.32%
99.67%
Full
75.10%
99.68%
Full
72.62%
99.68%
Full
NXBP1
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
OFIVM
(1)
FR
25.70%
34.00%
Equity
25.62%
34.00%
Equity
24.77%
34.00%
Equity
PROXIGMA
(1)
FR
N
75.34%
99.99%
Full
72.84%
99.99%
Full
SAMIC
(1)
MC
Full
56.96%
75.60%
Full
50.70%
69.60%
Full
SLIB
(1)
SOCECA
(1)
VITALIA VIE
(1)
COFACE
ADG COFACE ALLGEMEINE
DEBITOREN
AK COFACE FINANZ
ALLGEMEINE KREDIT COFACE
Deconsolidated
57.15%
75.60%
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
FR
18.87%
24.97%
Equity
18.81%
24.97%
Equity
18.19%
24.97%
Equity
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
(1)
FR
75.59%
100.00%
Full
73.84%
98.01%
Full
71.40%
98.01%
Full
(11)
DE
56.69%
75.00%
Full
55.38%
75.00%
Full
71.40%
98.01%
Full
(11)
DE
75.59%
100.00%
Full
73.84%
100.00%
Full
53.55%
100.00%
Full
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
71.40%
100.00%
Full
136
(11)
DE
ALLGEMEINE KREDIT COFACE
INFORMATIONS
(11)
DE
75.59%
100.00%
Full
73.84%
100.00%
Full
ASSURCREDIT
(11)
FR
30.24%
40.00%
Prop.
29.54%
40.00%
Prop.
N
CENTRE D’ETUDES FINANCIERES
(11)
FR
75.59%
100.00%
Full
CIMCO SYSTEMS LIMITED
(11)
GB
75.59%
100.00%
Full
73.84%
N
100.00%
Full
71.40%
100.00%
Full
CODINF Services
(11)
FR
N
22.15%
30.00%
Equity
71.40%
100.00%
Full
COFACE AK HOLDING
(11)
DE
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE COLLECTION NORTH
AMERICA
(11)
US
75.59%
100.00%
Full
COFACE CREDIT MANAGEMENT
NORTH AMERICA
(11)
US
75.59%
100.00%
Full
COFACE DEBT PURCHASE
(11)
GB
75.59%
100.00%
COFACE EXPERT
(11)
FR
75.59%
100.00%
COFACE HOLDING AMERICA LATINA (11)
MX
75.59%
100.00%
Full
COFACE HOLDING NORTH AMERICA (11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE INTERCREDIT BULGARIA
BU
56.68%
100.00%
Full
55.37%
100.00%
Full
34.80%
65.00%
Full
(11)
Divested
N
73.84%
100.00%
Full
73.84%
100.00%
Full
73.84%
100.00%
N
Full
N
21.42%
30.00%
Equity
Full
71.40%
100.00%
Full
Full
71.40%
100.00%
Full
N
N
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
COFACE INTERCREDIT CZECH
REPUBLIC
(11)
CZ
56.68%
100.00%
Full
53.71%
97.00%
Full
51.94%
97.00%
Full
COFACE INTERCREDIT HRATSKA
(CROATIA)
(11)
HR
56.68%
100.00%
Full
55.37%
100.00%
Full
53.54%
100.00%
Full
COFACE INTERCREDIT HUNGARY
(11)
HU
56.68%
100.00%
Full
55.37%
100.00%
Full
51.94%
97.00%
Full
COFACE INTERCREDIT POLAND
(11)
PL
54.98%
97.00%
Full
53.71%
97.00%
Full
32.12%
60.00%
Full
COFACE INTERCREDIT ROMANIA
(11)
RO
56.68%
100.00%
Full
33.22%
60.00%
Full
53.54%
100.00%
Full
COFACE INTERCREDIT SLOVAKIA
(11)
SK
56.68%
100.00%
Full
55.37%
100.00%
Full
32.12%
60.00%
Full
COFACE INTERCREDIT SLOVENIA
(11)
SI
56.68%
100.00%
Full
33.22%
60.00%
Full
53.54%
100.00%
Full
COFACE ITALIA
(11)
IT
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE MOPE
(11)
PT
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE NORTH AMERICA
(11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE NORTH AMERICA
INSURANCE
(11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE ORT
75.59%
100.00%
Full
N
N
Merged
N
71.40%
100.00%
Full
(11)
FR
COFACE RECEIVABLE MANAGEMENT (11)
BR
COFACE SCRL
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICE
(11)
IT
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICE ECUADOR
(11)
EC
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICES COLOMBIA
(11)
CO
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICES NETHERLANDS
(11)
NL
75.59%
100.00%
Full
COFACE SERVICES NORTH AMERICA
GROUP
(11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICES PERU
(11)
PE
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICES VENEZUELA
(11)
VE
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICIOS
(11)
CL
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE SERVICIOS ARGENTINA
(11)
AR
75.59%
100.00%
Full
Merged
N
N
N
N
N
COFACE SERVICIOS DO BRAZIL
(11)
BR
75.59%
100.00%
Full
N
N
COFACE SERVICIOS ESPANA,SL
(11)
ES
75.59%
100.00%
Full
73.84%
100.00%
Full
N
COFACE SERVICIOS MEXICO SA
DE CV
(11)
MX
75.59%
100.00%
Full
73.84%
100.00%
Full
COFACE SERVICIOS PANAMA
(11)
PA
75.59%
100.00%
Full
N
71.40%
100.00%
Full
N
COFACE UK HOLDING (ex LBF Group) (11)
GB
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACE UK SERVICES LIMITED
(11)
GB
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACERATING HOLDING
(11)
DE
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACERATING.AT
(11)
AT
N
67.12%
100.00%
Full
COFACERATING.COM
(11)
FR
Full
71.40%
100.00%
Full
COFACERATING.DE
(11)
DE
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACERATING.FR
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACERATING.IT
(11)
IT
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COFACERATING.US
(11)
US
N
71.40%
100.00%
Full
COFACREDIT
(11)
FR
Equity
71.40%
100.00%
Full
Deconsolidated
75.59%
100.00%
Deconsolidated
27.21%
36.00%
N
Full
N
Equity
Deconsolidated
73.84%
100.00%
Deconsolidated
26.58%
36.00%
COFINPAR
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COGERI
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
COGESTIMO
(11)
FR
N
71.40%
100.00%
Full
CREDICO LIMITED
(11)
GB
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
CREDITORS GROUP HOLDINGS LTD
(11)
GB
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
EIOS
(11)
FR
22.50%
29.76%
Equity
FIMIPAR
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
GRAYDON HOLDING
(11)
NL
20.79%
27.50%
Equity
20.31%
27.50%
Equity
19.64%
27.50%
Equity
Deconsolidated
N
Deconsolidated
N
N
137
Companies
Country
(a)
138
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
56.68%
55.37%
GROUPE COFACE INTERCREDIT
HOLDING AG
(11)
AT
JI INTERNATIONAL
(11)
US
KOMPASS BILGI
(11)
TK
52.84%
69.91%
Full
51.62%
69.91%
Full
N
KOMPASS CZECH REPUBLIC
(11)
CZ
70.30%
93.00%
Full
68.67%
93.00%
Full
N
KOMPASS HOLDING
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
N
KOMPASS INTERNATIONAL
NEUENSCHWANDER
(11)
FR
75.59%
100.00%
Full
73.84%
100.00%
Full
N
KOMPASS JAPAN
(11)
JP
75.55%
99.95%
Full
73.80%
99.95%
Full
N
KOMPASS POLAND
(11)
PL
75.59%
100.00%
Full
73.84%
100.00%
Full
N
KOMPASS SOUTH EAST ASIA
(11)
SG
75.59%
100.00%
Full
73.84%
100.00%
Full
N
KOMPASS UNITED STATES
(11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
N
LIBRAIRIE ELECTRONIQUE
(11)
FR
75.59%
100.00%
Full
N
N
LONGDON BRIDGE FINANCE LIMITED (11)
FR
75.59%
100.00%
Full
N
N
N.V. COFACE EURO DB
(11)
FR
75.59%
100.00%
Full
N
N
ÕESTERREICHISCHE
KREDITVERSICHERUNGS COFACE
(11)
AT
71.05%
94.00%
Full
73.84%
94.00%
Full
71.40%
100.00%
Full
ÖKV KREDITINFORMATIONS
(11)
AT
75.59%
100.00%
Full
73.84%
100.00%
Full
67.12%
94.00%
Full
OR INFORMATIQUE
(11)
FR
75.59%
100.00%
Full
N
N
ORCHID TELEMATICS LIMITED
(11)
FR
75.59%
100.00%
Full
N
N
REACOMEX
(11)
LU
THE CREDITORS GROUP LIMITED
(11)
GB
75.59%
100.00%
Full
THE CREDITORS INFORMATION CO LTD (11)
IT
75.59%
100.00%
Full
UNISTRAT ASSURANCES
(11)
FR
75.59%
100.00%
Full
UNISTRAT COFACE
(11)
FR
75.59%
100.00%
Full
N
VERITAS BUSINESS INFORMATION
(11)
US
Merged
N
Merged
N
71.40%
100.00%
Full
VERITAS CARIBBEAN CORPORATION (11)
US
Merged
N
Merged
N
71.40%
100.00%
Full
VERITAS CREDIT CORPORATION
(11)
US
Merged
N
Merged
N
71.40%
100.00%
Full
VERITAS DE CENTRO AMERICA
(11)
CR
75.59%
100.00%
Full
73.84%
Full
71.40%
100.00%
Full
VERITAS PUERTO RICO CORP.
(11)
US
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
VERITAS SA ARGENTINA
(11)
AR
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
VISCONTEA COFACE
(11)
IT
75.59%
100.00%
Full
73.84%
100.00%
Full
71.40%
100.00%
Full
N
95.48%
95.48%
Full
Full
72.85%
100.00%
Full
74.99%
Merged
Deconsolidated
Merged
Full
N
N
CREDIFRANCE-FACTOR
(2)
FR
NATEXIS FACTOREM
(1)
FR
75.33%
99.66%
Full
N
VR FACTOREM
(1)
DE
38.42%
51.00%
Prop.
(1)
FR
75.59%
100.00%
Full
74.99%
Merged
Deconsolidated
73.84%
100.00%
50.00%
50.00%
100.00%
Merged
75.08%
99.66%
Full
53.54%
74.99%
Full
N
71.40%
100.00%
Full
N
71.40%
100.00%
Full
Full
35.70%
100.00%
Full
N
Full
N
71.40%
100.00%
N
Full
N
N
Other activities
AUXILIAIRE ANTIN
75.34%
100.00%
Full
72.85%
100.00%
Full
CIE FONCIERE NATEXIS
(1)
FR
75.58%
100.00%
Full
75.33%
100.00%
Full
72.84%
100.00%
Full
CO ASSUR
(1)
FR
75.44%
99.80%
Full
75.17%
99.80%
Full
72.67%
99,76%
Full
CRISTAL NÉGOCIATIONS
(1)
FR
75.55%
99.96%
Full
75.31%
96.96%
Full
72.82%
96.96%
Full
EDVAL C INVESTMENTS Ltd
(1)
GB
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
FONCIERE KUPKA
(1)
FR
75.58%
100.00%
Full
75.33%
99.99%
Full
IFCIC
(1)
FR
15.43%
20.42%
Equity
15.38%
20.42%
Equity
IMMOBILIERE NATEXIS
(1)
FR
75.59%
100.00%
Full
INTERFINANCE NATEXIS NV
(1)
NL
75.58%
99.99%
Full
N
Merged
14.87%
20.42%
75.33%
99.99%
Full
72.84%
99.99%
N
Equity
N
Full
NATEXIS ALTAIR
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS AMBS
(1)
US
0.00%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NATEXIS IMMO EXPLOITATION
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NBP INVEST
(1)
FR
75.59%
75.59%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
NBP PREFERRED CAPITAL I, LLC
(1)
US
0.00%
100.00%
Full
0.00%
100.00%
Full
0.00%
100.00%
Full
Companies
Country
(a)
December 31, 2004
December 31, 2003
December 31, 2002
%
interest rights
method
(b)
%
interest rights
method
(b)
%
interest rights
method
(b)
100.00% 100.00%
NBP PREFERRED CAPITAL II, LLC
(1)
US
Full
100.00%
75.34%
Full
NBP PREFERRED CAPITAL III, LLC
(1)
US
0.00%
100.00%
Full
0.00%
100.00%
Full
SAGP
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
100.00%
72.85%
Full
N
72.85%
100.00%
Full
SAS MONTMARTRE 1
(1)
FR
Deconsolidated
N
Deconsolidated
N
72.85%
100.00%
Full
SAS SBE
(2)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
SCI ALTAIR 1
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
80.99%
100.00%
Full
SCI ALTAIR 2
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
80.99%
100.00%
Full
SCI VALMY COUPOLE
(1)
FR
75.46%
100.00%
Full
75.21%
100.00%
Full
72.85%
100.00%
Full
SEGEX
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
SEPIA
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
SIBP
(2)
FR
99.06%
100.00%
Full
99.05%
100.00%
Full
98.99%
100.00%
Full
SODETO
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
SOGAFI
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
SPAFICA
(1)
FR
75.58%
99.99%
Full
75.33%
99.99%
Full
72.84%
99.99%
Full
SPV IGLOO2
(2)
IE
100.00% 100.00%
Full
100.00%
99.99%
Full
STÉ FINANCIÈRE BFCE
(1)
FR
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
WORLEDGE A INVESTMENTS Ltd EUR (1)
GB
75.59%
100.00%
Full
75.34%
100.00%
Full
72.85%
100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
100.00% 100.00%
Full
Full
III.3 – Other subsidiaries
MAINE SERVICES
(2)
FR
SAS VALMY
(2)
FR
Deconsolidated
N
Deconsolidated
N
100.00% 100.00%
Full
FCP ALIZE
(4)
FR
100.00% 100.00%
Full
100.00% 100.00%
Full
N
SCI BP
(2)
FR
Merged
N
99.00%
99.00%
Full
99.00%
99.00%
SCI JAVEL
(2)
FR
Merged
N
99.00%
99.00%
Full
99.00%
99.00%
Full
Full
SCI PONANT+
(2)
FR
100.00% 100.00%
Full
99.90%
100.00%
Full
99.00%
99.00%
Full
Comments:
(a) Subsidiaries of:
1
2
3
4
Joint subsidiaries of Banque Populaire banks
5
6
Banque Populaire Bretagne Atlantique
Banque Populaire de la Côte d’Azur
7
8
BRED Banque Populaire
9
10
Crédit Coopératif
11
Coface
12
Crédit Maritime Mutuel
(b) Consolidation method
Full consolidation
Full
Equity Accounted for by the equity method
Prop. Consolidated by the proportional method
N.
Not consolidated
(c) - In compliance with article 93 of the French Financial Security Act of August 1, 2003 (Law no. 2003-706), Banque Fédérale des Banques Populaires
has become the central body of the Crédit Maritime Mutuel network.
- Crédit Coopératif joined the Banque Populaire Group in 2003 and merged with Caisse Centrale du Crédit Coopératif (C.C.C.C.) on October
17, 2003, at which point C.C.C.C. ceased to be Crédit Coopératif’s central body within the meaning of the French Banking Act of January 24, 1984.
By decision of the Comité des Etablissements de Crédits et des Entreprises d’Investissement (CECEI) on July 25, 2003, and following the October
17, 2003 merger, Crédit Coopératif continues to exercise first-line responsibility over its former “affiliates”, the terms of which are set out in
association agreements between each of the credit institutions previously affiliated to the C.C.C.C and Crédit Coopératif, which now guarantees
their liquidity and solvency.These credit institutions are now known as “associates” (rather than "affiliates") of Crédit Coopératif.
(d) Subsidiaries of Natexis Banques Populaires are broken down according to the new structure comprising four core businesses (see note 66).
139
Note 1 – Interbank and money-market assets
Notes
2004
2003
2002
3,354
1,767
2,034
12,483
9,396
11,231
39,626
42,275
36,177
2,863
36,339
50
115
259
3,123
38,577
44
234
297
3,851
31,603
36
134
553
55,463
53,438
49,442
-
-
-
– loans restructured at below market rates
32
35
37
– net discount
(7)
(9)
(10)
Cash, central banks and post office banks
Government securities and equivalent
2
Interbank assets
– demand deposits
– time deposits
– doubtful accounts, net of provisions
– provisions for country risks
– suspense accounts
– accrued interest
3
3
Total
Including :
– loans restructured at market rates
Note 2 – Government securities and equivalent
2004
2003
2002
Trading
securities
Securities
held for
sale
Investment
securities
(Note 10)
Total
Trading
securities
Securities
held for
sale
Investment
securities
Total
Total
6,806
2,857
2,655
12,318
3,851
2,863
2,500
9,214
11,005
Provisions
(5)
-
(5)
-
(8)
(1)
(9)
(10)
Accrued interest
95
75
170
-
117
74
191
235
2,947
2,730
12,483
3,851
2,971
2,574
9,396
11,231
At cost
140
Total
6,806
Note 3 – Interbank assets
Deposits and advances
2004
2002
Demand
Time
Total
Demand
Time
Total
Total
2,863
7,759
10,622
3,123
8,748
11,872
11,462
Loans
640
640
-
756
756
853
Assets purchased under resale agreements
174
174
-
212
212
155
27,473
27,473
-
28,716
28,716
22,879
287
287
-
139
139
39
5
5
-
5
5
67
36,339
39,202
3,123
38,577
41,700
35,454
Securities purchased under resale agreements
Subordinated loans with fixed maturities
Perpetual subordinated loans
2003
Total
2,863
Note 4 – Customer loans
Note
2004
2003
2002
Customer overdrafts
7,513
9,417
7,885
Commercial loans
3,513
3,424
3,118
Factoring receivables
2,974
1,936
1,858
103,978
94,079
83,539
Accrued interest and suspense accounts
1,003
1,206
1,029
Non-performing loans, net of provisions
1,604
1,739
1,451
(1)
(2)
(2)
120,584
111,800
98,880
380
23
(2)
349
17
(1)
332
14
(1)
2004
2003
2002
Other customer loans
5
Provisions for country risks
Total
Including:
– loans restructured at market rates
– loans restructured at below market rates
– net discount
Note 5 – Analysis of other customer loans
Export loans
1,147
1,267
1,497
Short-term loans and consumer loans
20,125
18,247
18,559
Equipment loans
30,199
28,385
23,931
Home loans
38,367
33,519
28,223
5,741
5,583
6,607
48
21
30
8,095
6,821
4,428
256
235
263
103,978
94,079
83,539
Other customer loans
Assets purchased under resale agreements
Securities purchased under resale agreements
Subordinated loans
Total
141
Note 6 – Lease financing
Leasing receivables
2004
2003
2002
Real
estate
Equipment
Leases with
purchase
option
Total
Real
estate
Equipment
Leases with
purchase
option
Total
Total
4,284
3,254
1,097
8,635
3,797
2,956
1,080
7,833
7,174
Unleased assets
30
18
-
48
28
17
-
46
23
Provisions
(14)
(34)
(4)
(52)
(13)
(19)
(4)
(36)
(34)
Non-performing lease financing,
net of provisions
102
69
8
179
92
55
9
156
121
Accrued interest
Total
70
9
1
80
67
5
1
74
99
4,472
3,316
1,102
8,890
3,971
3,014
1,087
8,072
7,384
Note 7 – Securities portfolio
2004
2003
Trading
securities
Securities
held for
sale
Investment
securities
(Note 10)
9,043
6,087
-
Equity (1)
securities
held for
investment
2002
Securities Investment
held for securities
sale
Total
Trading
securities
7,199
22,329
4,399
5,974
8,572
(53)
(104)
(157)
-
(57)
(82)
9,043
6,034
7,095
22 ,172
4,399
5,917
8,489
827
2,269
-
1,342
4,438
632
2,026
-
-
(87)
-
(267)
(354)
-
(148)
-
827
2,182
-
1,075
4,084
632
1,877
-
9,870
8,216
7,095
1,075 26,256
5,031
7,794
8,489
Equity (1)
securities
held for
investment
Total
Total
Bonds and other fixed
income securities
At cost
Provisions
Net book value
(Note 8)
- 18,945 21,599
-
(139)
(155)
- 18,805 21,444
Equities and other variable
income securities
At cost
Provisions
Net book value
(Note 9)
Total
1,321 3,979
(239)
3,813
(387)
(423)
1,082 3,592
3,390
1,082 22,397 24,834
(1) Equity securities held for investment correspond primarily to the Group’s private equity portfolios.
Note 8 – Bonds and other fixed income securities
2004
Trading
securities
142
At cost
Listed securities
– public sector issuers
– other issuers
Unlisted securities
– public sector issuers
– other issuers
Loaned securities
Borrowed securities
Doubtful accounts
Accrued interest
Total, at cost
including subordinated notes
Total provisions
Provisions for doubtful accounts
Provisions for impairment in value
Total provisions
Total net book value
2003
Securities Investment
held for securities
sale
(Note 10)
2002
Total
Trading
securities
Securities
held for
sale
Investment
securities
Total
Total
711
4,026
164
1,421
57
3,840
932
9,288
260
2,480
177
2,202
83
4,679
600
520
9,361 12,647
1,965
217
2,124
-
14
4,415
36
37
3,064
143
104
14
9,443
217
2,124
179
140
1,128
89
443
-
3,530
39
27
25
3,536
148
100
25
8,194
89
443
187
128
9,043
-
6,087
35
7,199
22
22,329
57
4,399
-
5,974
77
8,572 18,945 21,599
11
88
139
-
(33)
(20)
-
(104)
-
(137)
(20)
-
-
(29)
(28)
-
(82)
-
(112)
(28)
-
(126)
(29)
-
-
(53)
(104)
(157)
-
(57)
(82)
(139)
(155)
9,043
6,034
7,095
22,172
4,399
5,917
585
6,037
281
1,121
174
154
8,489 18,805 21,444
Note 9 – Equities and other variable income securities
2004
2003
2002
Trading
securities
Securities
held
for sale
Equity
securities
held for
investment
Total
Trading
securities
Securities
held
for sale
Equity
securities
held for
investment
Total
Total
1
40
245
755
139
227
33
755
179
505
17
53
245
410
219
281
40
426
272
566
337
307
897
26
150
365
-
176
771
195
0
1,309
-
202
921
1,869
0
10
144
164
-
192
637
279
0
1,281
-
202
781
1,725
0
202
443
1,620
0
At cost
Listed securities
– Capital accumulation funds
– Other mutual funds
– Other variable income securities
Unlisted securities
– Capital accumulation funds
– Other mutual funds
– Other variable income securities
Treasury stock
Accrued interest
-
6
-
6
-
7
-
7
6
827
2,269
1,342
4,438
632
2,026
1,321
3,979
3,813
Listed securities
-
(78)
(8)
(86)
-
(83)
(9)
(92)
(151)
Unlisted securities
-
(9)
(259)
(268)
-
(66)
(229)
(295)
(272)
Treasury stock
-
-
-
-
-
-
-
-
-
(87)
(267)
(354)
-
(149)
(238)
(387)
(423)
827
2,182
1,075
4,084
632
1,877
1,082
3,592
3,390
Unrealized gains and losses
Unrealized losses
– based on stock market prices
– values determined by other methods
(87)
/
/
(267)
(8)
(259)
(149)
/
/
(238)
(9)
(229)
Unrealized gains
– based on stock market prices
– values determined by other methods
163
/
/
414
25
389
133
/
/
507
24
483
Total, at cost
Total provisions
Total
-
143
Note 10 – Investment securities
2002
2003
Purchases
3,139
2,500
368
(14)
(170)
(1)
(9)
9,647
8,572
6,156
(1,559)
(5,665)
(184)
(7)
Sales
Redemp- Translation Premium /
tions adjustments discount
Transfers
Changes in
Other
2004
scope of movements (1)
consolidation
Government securities
and equivalent
At cost
1
(21) 2,655
43
(83) 7,199
Gains and losses on sales
income securities
At cost
Gains and losses on sales
(1) Arising on changes in intercompany eliminations.
(1)
(73)
Note 11 – Transfers between portfolios
2004
2003
Trading Securities
securities held for
sale
Investment
securities
2002
Trading Securities
securities
held for
sale
Investment
securities
Trading Securities
securities
held for
sale
Investment
securities
Government securities
and equivalent
At cost
-
-
-
-
-
-
-
-
-
Provisions for impairment
in value
-
-
-
-
-
-
-
-
-
At cost
-
83
(83)
(8)
(125)
134
-
(215)
215
in value
-
(1)
1
-
-
-
-
-
-
(56)
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
income securities
Equities and other variable
income securities
At cost
in value
Transfers between portfolios in 2004 were not material.
Note 12 – Insurance company investment portfolios
2004
2003
2002
Land and buildings
585
581
678
Other investments
21,166
18,850
16,801
4,292
4,020
3,448
26,044
23,451
20,927
Insurance company assets
Assets held to cover linked liabilities
Total
144
Insurance company investments corresponding to securities issued by other consolidated entities are qualified as intercompany receivables and
are therefore eliminated in consolidation.
Note 13 – Investments in affiliates and other securities held for investment
Notes
2004
2003
2002
Investments in affiliates and other securities held
for investment, at cost
14/15
14/15
1,049
(161)
965
(162)
965
(150)
888
90 (1)
5
6
804
101
6
1,186
815
44
(9)
1,270
989
2,096
2,120
Investments in affiliates and other securities held
for investment, net
Investments accounted for by the equity method
Translation adjustments
Accrued revenues and other (2)
Total
67
(1) The decrease in the value of investments accounted for by the equity method in 2004 was principally due to the change of consolidation
method for Banque Edel, which was fully consolidated in 2004.
(2) Including a shareholders’ loan of ¤1,165 million and ¤1,250 million in 2003 and 2002, respectively, to Ecrinvest4, made in connection with
the acquisition of Vivendi Universal Publishing by Natexis Banques Populaires on behalf of the Lagardère Group.This deal was closed out in the
first half of 2004.
Note 14 – Movements in investments in affiliates and other securities held for investment
2002
2003
Increases
Investments in affiliates and other securities
held for investment
773
802
76
(55)
(1)
30
(35)
817
Investments in related companies
126
128
32
(18)
4
16
31
193
66
34
-
-
-
-
4
39
965
965
108
(73)
3
46
(135)
(142)
(12)
20
1
-
4
(128)
(11)
(16)
(1)
4
-
(6)
(8)
(27)
(4)
(4)
-
2
-
-
(4)
(6)
(150)
(162)
(14)
26
1
(6)
(8)
(161)
815
804
94
(47)
4
41
(8)
888
Decreases
Translation
adjustments
Changes in
Other
scope of movements
consolidation
2004
At cost
Investments in non-trading real estate companies
Sub-total
- 1,049
held for investment
Investments in related companies
Investments in non-trading real estate companies
Sub-total
held for investment, net
Note 15 – Book and market values of investments in affiliates and other securities
held for investment
Listed companies
At cost
Provisions
Unlisted companies
At cost
Provisions
Total
net book
value
Estimated value
Stock
Other
market
methods
value
2004
held for investment
Credit institutions
34
-
151
(3)
181
45
321
8
(1)
43
(9)
47
8
42
Other companies
43
-
403
(62)
384
78
348
Other securities held for investment
66
(38)
64
(15)
77
33
64
150
(39)
661
(89)
689
164
775
Other finance companies
Total
Net book value
111
572
2003
held for investment
Credit institutions
33
-
141
(4)
170
45
130
3
(1)
87
(5)
85
3
115
Other companies
41
(1)
374
(71)
342
78
419
Other securities held for investment
60
(41)
63
(19)
63
11
65
136
(43)
666
(98)
661
138
728
Other finance companies
Total
Net book value
93
567
145
Note 16 – Property and equipment and intangible assets
Notes
At cost
Assets used in the business
2003
2004
Depr./
Amort.
Provisions
Net book
value
At cost
Depr./
Amort.
2002
Pro- Net book Net book
visions
value
value
17
Intangible assets
1,005
(380)
(51)
574
930
(320)
(53)
558
525
Property and equipment
3,369
(1,733)
(3)
1,632
3,144
(1,596)
(24)
1,524
1,337
4,374
(2,113)
(54)
2,206
4,074
(1,916)
(76)
2,081
1,862
Total
Investment properties
17
148
(34)
(17)
97
78
(24)
(1)
53
55
Assets leased to third parties
under operating leases
18
219
(125)
(9)
86
230
(118)
(10)
102
122
4,741
(2,272)
(80)
2,389
4,383
(2,059)
(87)
2,237
2,040
Other
2004
TotaI
Note 17 – Movements in operating and non-operating assets
146
2002
2003
Increases
At cost
Intangible assets used in the business
Leasehold rights and purchased goodwill (1)
Software
Other
481
299
36
492
363
76
12
73
35
(2)
(30)
(21)
(1)
-
4
10
2
6
15
(28)
512
430
63
816
Property and equipment used in the business
Land
188
Buildings
919
Shares in non-trading real estate companies
46
Other
1,607
930
121
(53)
(1)
16
(7)
1,005
199
1,041
62
1,842
2
31
19
348
(4)
(119)
(2)
(1)
(3)
(2)
(57)
9
4
198
1,011
91
2,070
2,760
77
3,144
78
401
11
(123)
(5)
(2)
-
(4)
(1)
(46)
64
3,369
148
(46)
(229)
(17)
(59)
(295)
(18)
(13)
(65)
(3)
26
5
1
-
(6)
-
(4)
(1)
2
(76)
(341)
(13)
(291)
(373)
(81)
31
1
(6)
(3)
(431)
(10)
(10)
(420)
(480)
(993) (1,130)
(44)
(184)
2
78
1
2
(1)
7
15
6
(3)
(504)
(1,229)
(1,423) (1,620)
(22)
(25)
(228)
(4)
81
2
1
1
28
(23)
(1,737)
(51)
Depreciation, amortization and provisions
Intangible assets used in the business
Leasehold rights and purchased goodwill
Software
Other
Decreases
Translation
adjustments
Changes in
scope of
consolidation
Property and equipment used in the business
Land
Buildings
Other
(1) In 2003 and 2004, the Group measured its material intangible assets, assisted by a firm of independent valuers. See Note 2 – Accounting
policies and valuation methods, paragraph 2.5.
Note 18 – Assets leased to third parties under operating leases
2004
2003
2002
At cost
198
204
203
Depreciation
(125)
(118)
(98)
(6)
(8)
(7)
Net book value
Doubtful accounts, net of provisions
67
78
98
19
24
24
-
1
1
86
102
122
Accrued interest
Total assets leased to third parties under operating leases
Note 19 – Goodwill
2002
2003
Gross
377
366
(9)
24
(6)
375
107
90
-
-
(6)
84
Coface group
69
67
-
36
-
103
Natexis Assurances
60
60
-
-
-
60
51
51
-
3
-
54
Natexis Bail
18
18
-
-
-
18
Samic
16
17
-
(17)
-
0
Coficiné
15
15
-
-
-
15
9
13
-
-
-
13
Natexis Factorem
Amortized
goodwill
Movements
for the year
Translation
adjustments
Banque du Dôme (taken over in 2003 by Natexis Factorem)
4
-
-
-
-
Banque Privée Saint Dominique
6
6
(6)
-
-
Natexis Intertitres
-
6
-
-
-
2004
6
Other
23
23
(3)
3
-
23
Amortization (1)
(48)
(105)
9
(56)
5
(148)
Goodwill, net
330
261
(33)
(1)
228
(1) In accordance with the recommendations of the Autorité des Marchés Financiers and the Commission Bancaire, the Group measured all its
material goodwill, which led to an exceptional write-down of €37.6 million (€34.4 million for Natexis Bleichroeder Inc and €3.2 million for
Samic). See Note 1 – Consolidation methods and principles, paragraph 1.7.
Note 20 – Accrued income, prepaid expenses and other assets
Notes
2004
2003
2002
Other assets
21
4,791
4,911
7,204
Accrued income and prepaid expenses
22
3,910
5,506
4,566
Accrued income, prepaid expenses and
other assets – insurance companies
23
860
2,994
3,017
9,561
13,411
14,787
Total
147
Note 21 – Other assets
Purchased options
2004
2003
2002
1,625
1,067
2,187
Securities settlement accounts
335
575
1,131
Deferred tax assets
573
471
437
Real estate development transactions
Other assets
Other receivables
Doubtful accounts, net of provisions
Accrued interest
Total
74
39
35
146
540
27
2,023
2,206
3,372
5
3
3
10
9
11
4,791
4,911
7,204
Note 22 – Accrued income and prepaid expenses
2004
2003
2002
Collection accounts
597
1,055
1,125
Adjustment accounts
406
360
371
Suspense accounts
5
7
4
Unrealized losses on outstanding hedging positions
1
3
1
Unrealized losses on settled hedging positions
5
7
4
109
130
155
1,037
1,184
936
41
42
54
9
3
4
Other accruals and adjustment accounts
1,699
2,715
1,913
Total
3,910
5,506
4,566
Prepaid expenses
Accrued income
Deferred issue premiums
Other deferred charges
148
Note 23 – Accrued income, prepaid expenses and other assets – insurance companies
2004
2003
2002
Reinsurers’ share of technical reserves (1)
263
2,584
2,643
Insurance receivables
393
233
231
Reinsurance receivables
49
52
39
Accrued premium income
129
105
90
Deferred acquisition costs
19
12
7
6
8
7
860
2,994
3,017
Other receivables
Total
(1) The significant decrease in reinsurers' share of technical reserves is due to the expiration on December 31, 2003 of the proportional reinsurance treaty entered into in 1998 for an initial term of five years.
Note 24 – Interbank and money-market liabilities
2004
2003
2002
29
32
3
5,446
40,823
6,104
32,712
12,091
36,064
Other
396
645
382
Accrued interest
277
189
395
46,971
39,682
48,935
Notes
Central banks and post office banks
Interbank liabilities
- demand deposits
- time deposits
25
25
Total
Note 25 – Analysis of interbank liabilities
2004
Demand
Time
2003
Total
Demand
Time
2002
Total
Total
Interbank deposits
2,561
-
2,561
3,268
-
3,268
7,034
Interbank borrowings
2,633
9,724
12,357
2,631
10,095
12,726
16,422
17
1,546
1,563
205
777
982
1,520
234
29,553
29,788
-
21,840
21,840
23,178
5,446
40,823
46,269
6,104
32,712
38,816
48,155
Assets sold under repurchase
agreements
Securities sold under repurchase
agreements
Total
Note 26 – Customer deposits
Notes
2004
2003
2002
27
27
57,817
38,788
53,616
43,768
41,827
40,949
Security deposits
224
200
135
Other
425
380
364
Accrued interest
999
979
934
98,253
98,945
84,209
Deposits
- demand deposits
- time deposits
Total
149
Note 27 – Analysis of customer deposits
2004
2003
2002
Demand
Time
Total
Demand
Time
Special savings accounts
17,836
18,415
36,251
15,591
17,897
33,488
28,673
Other customer deposits
33,752
7,890
41,643
34,578
6,118
40,696
34,662
116
513
629
105
1,909
2,014
2,484
67
-
67
5
13
18
12
5,731
11,654
17,385
3,030
17,541
20,570
16,411
314
315
630
306
292
598
534
57,817
38,788
96,605
53,616
43,768
97,384
82,776
Borrowings from financial sector customers
Assets sold under repurchase agreements
Securities sold under repurchase
agreements
Factoring liabilities
Total
Total
Total
Note 28 – Debt securities
2004
2003
2002
Retail certificates of deposit and savings bonds
177
187
192
Interbank market instruments
-
-
2
35,650
21,705
3,985
9,960
29,424
18,403
2,702
8,319
24,300
9,051
1,558
13,691
4,962
6,797
5,813
Other debt securities
921
782
699
Accrued interest
291
337
399
42,001
37,527
31,403
Money market instruments
Including: - Instruments issued to credit institutions
- Instruments issued to financial sector customers
- Instruments issued to other customers
Bonds
Total
150
Note 29 – Insurance company technical reserves
2004
2003
2002
24,399
19,860
176
4,363
22,493
18,265
162
4,065
20,150
16,517
131
3,502
Loss reserves
934
830
861
Loss equalization reserves (1)
187
135
83
Mathematical reserves
Including: - Life business
- Non-life business
- Unit-linked business
Other technical reserves
Policyholders’ surplus reserves
Capitalization reserves
Total
33
34
115
172
168
103
-
-
-
25,725
23,660
21,312
(1) The loss equalization reserves of the Coface group are included in technical reserves because they cover a macro-economic risk of a change in
claims experience over several years. See Note 1 – Consolidation methods and principles, paragraph 1.16.
Note 30 – Deferred income, accrued charges and other liabilities
Other liabilities
Deferred income and accrued charges
Deferred income, accrued charges and
other liabilities – insurance companies
Total
Notes
2004
2003
2002
31
32
10,855
5,809
8,646
7,066
9,367
6,253
33
196
2,500
2,448
16,861
18,212
18,068
Note 31 – Other liabilities
2004
2003
2002
1,446
1,045
2,450
Securities settlement accounts
344
462
573
Deferred tax liabilities
421
399
388
4,541
3,140
2,859
166
164
160
3,588
3,101
2,644
Sold options
Amounts due on securities
Amounts outstanding on unpaid up securities
Sundry payables
Investment grants
160
98
73
Allocated public funds
114
129
105
75
110
116
10,855
8,646
9,367
Accrued interest
Total
151
Note 32 – Deferred income and accrued charges
Collection accounts
Adjustment accounts
Suspense accounts
Unrealized gains on outstanding hedging positions
2004
2003
2002
747
791
623
1,058
697
569
6
6
8
-
1
-
14
5
2
Deferred income
873
2,004 (1)
2,043
Accrued charges
1,372
1,490
1,206
Other accruals and adjustment accounts
1,738
2,072
1,801
Total
5,809
7,066
6,253
Unrealized gains on settled hedging positions
(1) Including deferred income in connection with the acquisition of Vivendi Universal Publishing by Natexis Banques Populaires on behalf of the
Lagardère Group (€1,165 million in 2003 and €1,250 million in 2002).The deal was closed out in the first half of 2004.
Note 33 – Deferred income, accrued charges and other liabilities – insurance companies
2004
2003
2002
Insurance payables
101
96
71
Reinsurance payables
76
97
57
Cash deposits received from reinsurers (1)
14
2,304
2,319
4
2
1
196
2,500
2,448
Other liabilities
Total
(1) The significant decrease in cash deposits is due to the expiration on December 31, 2003 of the proportional reinsurance treaty entered into
in 1998 for an initial term of five years.
Note 34 – Negative goodwill
152
2002
2003
Gross
433
510
388
388
-
388
46
123
(107) (1)
16
Amortization
(204)
(220)
(40)
(260)
Negative goodwill, net
229
290
(147)
142
Others
Movements
for the year
(107)
2004
403
(1) Including €117 million in negative goodwill (after tax) arising on the acquisition of Agence Française de Développement subsidiaries at end
2003, which was allocated to loan loss provisions - see notes 35 and 62.
Note 35 – Provisions
Notes
2002
2003
3,388
3,967
1,255
(1,364)
(21)
187 (2)
(44)
3,980
718
714
221
(285)
(2)
2
26
675
2
2
-
-
-
-
-
2
4,108
4,683
1,475
(1,649)
(24)
189
(19)
4,657
Increases Decreases Translation
adjustments
Changes in
scope of
consolidation
Other
2004
Provisions deducted from assets
Provisions for non-performing loans
and other doubtful accounts
Total provisions deducted from assets
Provisions recorded under liabilities
Provisions for counterparty risks
36
770
859
164
(178)
(10)
4
15
854
Provisions for losses
36
72
62
16
(40)
-
9
-
47
Provisions for operating expenses
36
995
944
187
(109)
(1)
3
7
1,031
Exceptional provisions
36
16
9
9
(10)
-
-
(1)
7
1,853
1,873
376
(337)
(10)
16
21
1,939
5,961
6,557
1,851
(1,986)
Net charge for the year: 135
(34)
205
(2)
6,597
Total provisions recorded under liabilities
Total provisions
Impact on the income statement (1)
Charges
Reversals
Net impact
Net banking income
(304)
553
249
(112)
56
(56)
(416)
609
193
(1,345)
1,304
(41)
(21)
43
22
(1,782)
1,955
174
(9)
10
1
(60)
20
(40)
(1,851)
1,986
135
Net gains (losses) on disposals of fixed assets
Exceptional items
Net income before minority interests
(1) Provision movements are included on several different lines of the income statement, based on their substance.The above note shows the
impact of provision movements on the main income statement captions.
(2) Including €180 million (€117 million after tax) in loan loss provisions after reallocation of the negative goodwill arising on the acquisition
of Agence Française de Développement subsidiaries at end 2003 - see notes 34 and 62.
153
Note 36 – Provisions for contingencies and charges
2002
2003
Provisions for off-balance sheet commitments
103
129
67
Provisions for country risks (1)
290
263
28
Provisions for industry risks (1)
139
269
8
Provisions for customer claims
52
89
45
187
108
770
On portfolio securities and forward financial
instruments
On long-term investments
Changes in
scope of
consolidation
Other
2004
-
4
5
138
(29)
(7)
-
-
255
(22)
(2)
-
-
252
(26)
-
-
18
126
17
(34)
-
-
(8)
82
859
164
(178)
(10)
4
15
854
29
17
9
(15)
-
-
4
15
16
19
2
(10)
-
-
-
11
6
5
1
(1)
-
-
(4)
1
21
22
4
(14)
-
9
-
21
72
62
16
(40)
-
9
-
47
Retirement benefit obligations – active employees
204
232
45
(7)
-
(1)
3
270
Retirement benefit obligations – retired employees
545
553
17
(15)
-
-
(1)
554
Provisions for taxes
177
100
60
(33)
-
-
4
130
Increases Decreases Translation
adjustments
Provisions for counterparty risks
Other customer-related provisions
(66)
Provisions for losses
On real estate development transactions
On other assets
Provisions for future operating expenses
Other
69
59
65
(53)
-
4
1
77
995
944
187
(109)
(1)
3
7
1,031
Provisions for information systems
restructuring costs
-
-
-
-
-
-
-
Provisions for restructuring costs
12
9
5
(6)
-
(3)
5
Exceptional provisions
Other exceptional provisions
5
-
4
(4)
-
2
2
16
9
9
(10)
-
(1)
7
1,853
1,873
377
(337)
16
21
1,939
154
Total
(10)
(1) Provisions for country risks and industry risks mainly relate to the business of Natexis Banques Populaires.These risks and the level of the
related provisions are affected by cyclical developments in each industry and country, and are expected to change over time.
Note 37 – Provisions for non-performing loans and other doubtful accounts
2004
Gross
Interbank loans
– Non-performing
– Irrecoverable
Customer loans and lease
financing
– Non-performing
– Irrecoverable
Securities portfolio and
other receivables
– Non-performing
– Irrecoverable
Total non-performing loans and
other doubtful accounts (1)
– Non-performing
– Irrecoverable
109
79
30
2003
Pro- Net book
visions
value
Provision
coverage
Net book
value
Provision
coverage
(74)
(1)
(73)
44
4
40
62.9 %
36
23
13
65.2%
5,708 (3,805)
1,539 (805)
4,169 (3,000)
1,903
734
1,169
66.7 %
1,562
849
712
67.3%
(129)
(42)
(87)
79
40
39
62.0 %
74
40
34
65.0%
6,033 (4,008)
1,626 (848)
4,407 (3,160)
2,025
778
1,247
66.4%
52.2 %
71.7 %
1,672
912
759
67.2%
57.1%
74.4%
Gross
117
4
113
(59)
(33)
(26)
50
46
4
54.2%
5,596 (3,819)
2,442 (1,252)
3,154 (2,567)
1,778
1,191
587
68.2%
(154)
(65)
(89)
47
23
25
76.5%
5,907 (4,032)
2,610 (1,350)
3,298 (2,682)
1,875
1,259
616
68.3%
51.7%
81.3%
202
88
114
Net book
value
Provision
coverage
207
82
126
Provisions
2002
(1) The above provision coverage rates are based solely on provisions for identified risks (non-performing loans and doubtful accounts).They
do not take into account general provisions for industry and country risks recorded under liabilities and presented in note 36.
Note 38 – Long-term subordinated debt
Subordinated debt with fixed maturities
Perpetual subordinated debt
Mutual guarantee deposits
Accrued interest
Notes
2004
2003
2002
39
39
4,398
163
19
95
4,049
266
23
92
3,705
136
8
77
4,675
4,431
3,927
Total
Note 39 – Changes in subordinated debt
155
2002
2003
Issues
3,580
125
4,043
6
671
30
(309)
(30)
(18)
-
-
-
10 4,397
(5)
1
3,705
4,049
701
(339)
(18)
-
-
4 4,398
82
55
211
55
-
(27)
-
(87)
1
-
9
1
133
30
136
266
-
(28)
-
(85)
-
9
163
3,842
4,316
702
(367)
(18)
(85)
Redemp- Translation
Changes in
tions
adjustscope of
(1)
ments consolidation
ReclasOther
sification movements
(2)
2004
Subordinated debt with fixed maturities
Subordinated notes
Other subordinated debt
Perpetual subordinated debt
Subordinated notes
Total
14 4,561
(1) In 2004, Banque Fédérale des Banques Populaires issued subordinated notes in June (€81 million, maturing in 2014), October (€77 million,
maturing in 2010), and December (€45 million, maturing in 2015). Crédit Coopératif issued subordinated notes in December 2004
(€30 million, maturing in 2014). Natexis Banques Populaires issued subordinated notes in November 2004 (€450 million, maturing in 2016).
(2) Other movements correspond primarily to changes in eliminations of subordinated debt issued to other Group entities, representing intercompany transactions.
Note 40 – Shareholders' equity
Consolidated shareholders’ equity at
December 31, 2002 before income
appropriation
2002 net income
Dividends
December 31, 2002 after income
appropriation
Capital
stock
Additional
paid-in
capital
Reserves
and retained
earnings
(1)
Shareholders’ equity
excl.
FGBR
Fund for
general
banking
risks
Shareholders'
equity
2,431
455
3,793
6,679
1,891
8,570
1,616
-
-
532
(81)
532
(81)
-
532
(81)
90
(76)
2,431
455
4,244
7,130
1,891
9,021
1,630
114 (2)
-
(148)
(74)
(7)
253
(74)
(7)
-
253
(74)
(7)
(93)
(2)
66
113
348
9
357
6
-
1
1
8
169
-
8
169
1
204
87
-
2,886
635
4,129
7,651
2,077
9,727
1,833
-
-
853
(86)
853
(86)
-
853
(86)
129
(86)
2,886
635
4,896
8,418
2,077
10,494
1,876 (7)
(106)
(37)
-
147
(37)
-
-
147
(37)
-
(42)
62 (8)
10
Issuance of shares
286
Changes of method (3)
First-time consolidation of
Crédit Coopératif (4)
169
First-time consolidation
of Crédit Maritime Mutuel (5)
Other changes in scope of consolidation (6)
Other movements
appropriation
2003 net income
Dividends
appropriation
Issuance of shares
147
Changes of method
Other changes in scope of consolidation
Other movements (9)
156
appropriation
2004 net income
appropriation
106 (2)
-
-
-
-
-
Minority
interests
-
(10)
(10)
115
-
115
(10)
3,033
741
4,743
8,517
2,192
10,709
1,906
-
-
1,059
1,059
-
1,059
162
3,033
741
5,802
9,576
2,192
11,768
2,068 (10)
(1) Reserves,consolidation adjustments,revaluation reserves,cumulative translation adjustment and consolidated net income attributable to the Group.
(2) In connection with the mergers of Banque Populaire regional banks, the retained earnings of the merged bank are transferred to additional paid-in
capital in the accounts of the surviving Banque Populaire bank.
2003:
(3) Changes of accounting method: See Note 1 – Consolidation methods and principles paragraph 1.3
– Standard CRC 2002-03 relating to the classification of non-performing loans and the accounting treatment of restructured loans at below
market rates was adopted on January 1, 2003. For the restructured loans identified as concerned by this standard, the future interest differential between the rate charged and the market rate at the time of the restructuring gave rise to a discount. As these loans were
restructured in prior years, the discount, totaling €7.4 million after tax, has been set off against shareholders’ equity in the amount of
€5.6 million, with the balance set off against minority interests.
– Standard CRC 2002-10 relating to depreciation, amortization and impairment of assets, is applicable from January 1, 2005. The Banque
Populaire Group has not opted for early application of this standard.The standard contains transitional provisions applicable from January 1,
2003 relating to expense incurred under multi-year programs for major repairs or refits. At December 31, 2003 a provision of €1.5 million
after tax was recorded due to the application of this new standard, with €1.4 million deducted from shareholders’ equity and the balance
deducted from minority interests.
– Following the change in French insurance regulations concerning liquidity risk reserves (decree no. 2003-1236 of December 22, 2003
amending Article R331-5-1 of the Insurance Code), the Banque Populaire Group reviewed these risks and decided that they were not
covered by other reserves.A liquidity risk reserve was therefore booked in the consolidated balance sheet at December 31, 2003 covering
the total risk, whereas in 2002 – with the approval of the insurance regulator (Commission de Contrôle des Assurances) – only part of
the risk was reserved for, reflecting the method applied in the accounts of the insurance subsidiaries. This accounting treatment was in
accordance with recommendation no. 2004-B dated January 21, 2004 issued by the CNC Urgent Issues Task Force.
• The switch from partial reserving to full reserving constituted a change of accounting method, the effects of which were charged
against opening shareholders' equity at January 1, 2003 in the amount of €148.5 million before tax and €95.9 million after tax (of which
€72.3 million attributable to the Group).
• Following the improvement in stock market prices in 2003, no charge to the liquidity risk reserve was necessary at December 31, 2003
and the additional reserve booked in the opening balance sheet (difference between full and partial-reserving method) was released by
crediting shareholders' equity.
• Consequently, the change of method had no impact on either consolidated net income or shareholders' equity.
(4) On January 30, 2003 Crédit Coopératif joined the Banque Populaire Group and took on the status of société coopérative de Banque Populaire
à capital variable, by decision of its member-stakeholders at the Extraordinary Meeting held on January 30, 2003. Following this change of status,
Crédit Coopératif became a Banque Populaire bank and joined the ranks of the parent companies.The subsidiaries that it held directly or indirectly were consolidated for the first time in 2003 in the Banque Populaire Group’s financial statements. See Note 3 – Changes in scope of
consolidation, paragraph 3.2.
(5) On August 1, 2003, in application of article 93 of the French Financial Security Act (Law no. 2003-706), Banque Fédérale des Banques
Populaires became the central body of the Crédit Maritime Mutuel network. In view of its “affiliated” status, its reserves are recorded under
“Minority interests”. See Note 3 – Changes in scope of consolidation, paragraph 3.3.
(6) This item primarily includes:
– €178 million following the first-time consolidation of Natexis Banques Populaires Capital III, a subsidiary of Natexis Banques Populaires,
set up for the issue of a fourth tranche of preference shares.
– €(90) million gross impact arising on consolidation of the Alizé Levier corporate mutual fund, which holds 2.25% of Natexis Banques
Populaires' capital.This fund was set up in connection with the Banque Populaire Group employee savings plan.
– €(1) million arising on other changes in scope of consolidation.
(7) Minority interests relating to the issuance of preference shares total €597 million.
2004:
(8) This item primarily includes:
– €80 million arising on first-time consolidation of credit establishments (not subsidiaries) that have signed an association agreement with
Crédit Coopératif. In view of their “associated” status, their reserves are recorded under “Minority interests”;
– €(15) million arising on the squeeze-out made by Natexis Banques Populaires for the remaining Coface shares;
– €(13) million arising on Coface's buyout of the minority interests in Unistrat;
– €7 million in dilution arising on Natexis Banques Populaires' acquisition of BP Développement shares from the Banque Populaire banks,
– €1 million arising on other changes in scope of consolidation.
(9) On December 23, 2004, Natexis Assurances acquired the 435,000 Crédit Maritime Vie shares previously held by the Crédit Maritime Group.
As this is an internal restructuring operation, the capital gains have been eliminated. The change in minority interests resulting from the
reclassification of these shares is mirrored in a change in consolidated reserves, with no impact on the income statement.
(10) Minority interests relating to the issuance of preference shares total €571 million at December 31, 2004.
Note 41 – Fund for general banking risks
2002
Federal Guarantee Fund (1)
Regional Guarantee Funds (1)
157
Changes in
Other
scope of
consolidation(2)
2003
-
-
-
431
-
-
1
343
-
17
(1)
1,302
-
17
Decreases
Translation
adjustments
Changes in
scope of
consolidation
Other
2004
7
-
-
-
-
438
343
78
-
-
-
5
427
1,302
89
(59)
-
-
(5)
1,327
Total
2,077
174
(59)
-
-
-
2,192
Increases
Decreases
426
5
-
269
73
-
1,196
98
(8)
Total
1,891
177
(8)
2003
Increases
Federal Guarantee Fund (1)
431
Regional Guarantee Funds (1)
Translation
adjustments
2,077
(1) The Federal Guarantee Fund and Regional Guarantee Funds have been set up in connection with the mutual guarantee mechanism
operating within the Banque Populaire banks network. See Note 1 – Consolidation methods and principles, paragraphs 1.1 and 1.13.
(2) Impact in 2003 of first-time consolidation of Crédit Coopératif and the Crédit Maritime Mutuel network.
Note 42 – Financing commitments
2004
2003
2002
Financing commitments given
To credit institutions
2,681
2,681
3,709
To customers
– Documentary credits
– Other confirmed lines of credit
– Other commitments
32,079
1,157
28,581
2,341
28,992
947
25,726
2,320
25,322
853
21,055
3,414
Total financing commitments given
34,760
31,673
29,031
From credit institutions
5,514
3,955
853
Total financing commitments received
5,514
3,955
853
2004
2003
2002
2,042
981
1,061
2,080
656
1,424
2,028
908
1,120
To customers
– Real estate guarantees
– Tax and other bonds
– Other endorsements
– Other guarantees
20,891
1,127
1,831
6,929
11,004
15,875
1,057
1,912
2,528
10,378
16,976
1,067
1,714
1,912
12,282
Total guarantees given
22,933
17,955
19,004
7,900
5,378
4,536
Financing commitments received
Note 43 – Guarantees
Guarantees given
To credit institutions
– Confirmed documentary credits
– Other guarantees
Guarantees received from credit institutions
158
Note 44 – Commitments on off-balance sheet financial instruments
2004
2003
2002
Hedging
instruments
Other
Total
Hedging
instruments
Other
Total
Total
12
7
43,145
28,209
43,157
28,216
46
10
75,664
28,560
75,710
28,570
45,946
21,385
19
71,354
71,373
56
104,225
104,280
67,331
4,353
190,363
31
70,836
332,475
793
75,189
522,838
824
17,269
198,577
24
260,038
122,042
168
277,307
320,619
192
214,453
333,542
171
194,747
404,104
598,851
215,870
382,248
598,118
548,166
49 358
55,405
1,560
1,519
50,918
56,924
55,154
54,562
2,791
7,916
57,944
62,479
51,589
43,643
Currency swaps
– to be received
– to be delivered
2,273
3,971
4,666
4,458
6,939
8,429
1,517
1,507
408
474
1,926
1,980
2,789
2,822
Other forward foreign exchange contracts
– to be received
– to be delivered
4,254
517
835
2,026
5,088
2,543
1,763
776
859
1,912
2,622
2,688
3,238
2,598
115,778
15,064
130,842
115,278
14,360
129,639
106,679
310,544
490,522
801,066
331,204
500,833
832,037
722,176
Interest rate options
– Purchased options
– Sold options
-
7,468
1,470
7,468
1,470
-
4,343
4,424
4,343
4,424
4,461
4,181
Currency options
– Sold options
-
-
-
-
1
1
1
1
-
Other options
– Sold options
1
1
6,575
5,874
6,576
5,875
1
1
9,329
9,091
9,329
9,093
6,556
6,870
2
21,387
21,389
2
27,188
27,191
22,067
Interest rate options
– Sold options
9,362
1,798
22,693
32,449
32,055
34,247
3,080
1,819
15,950
25,871
19,030
27,689
19,005
22,877
Currency options
– Sold options
58,942
58,170
12
9
58,954
58,179
35,285
40,005
4
-
35,290
40,005
39,772
43,660
Other options
– Sold options
58
1
9,295
7,741
9,354
7,742
3,954
18
9,569
8,281
13,523
8,299
12,843
10,998
128,331
72,200
200,531
84,161
59,674
143,836
149,156
128,334
93,586
221,920
84,164
86,863
171,026
171,223
584,108 1,022,985
415,367
587,696
1,003,063
893,399
Futures and forward contracts
Transactions on organized markets
Interest rate instruments
Currency instruments
Financial assets
Over-the-counter transactions
FRAs
Interest rate swaps
Other
Forward foreign exchange contracts
Forward currency swaps
– to be received
– to be delivered
Total futures and forward contracts
Options
Transactions on organized markets
159
Over-the-counter transactions
Total options
Total commitments on off-balance
sheet financial instruments
438,877
The notional amounts presented above represent only an indication of the volume of transactions in financial futures and options carried out
by the Banque Populaire Group. Risk-weighted equivalent values are presented in Note 47.
Pursuant to article 2 of standard CRC 2004-16 on disclosing the fair value of financial instruments, the aggregate market value of futures and
forwards is estimated at €1,124 million and the aggregate market value of options is estimated at €(37) million.
Note 45 – Analysis by portfolio
2004
2003
2002
Micro
hedges
Macro
hedges
Speculative
position
taking
Trading
portfolio
management
Total
Micro
hedges
Macro
hedges
Spec- Trading
ulative portfolio
position managetaking
ment
Total
Total
4,188
166
-
70,836
75,189
17,031
238
177 259,860 277,307
214,453
160,324
30,038
6,208
37
859
8,265
15,369
141,783 56,794
3,014
9
10,268 111,775 320,619
882
-
3,906
333,542
5,611
83
195
546
-
824
156
18
17
-
192
171
170,803
30,436
11,345 371,635 602,024
553,777
6,710
2,652
Futures and forward
contracts
FRAs
Interest rate swaps
Cross-currency swaps
Other
1,285 331,190 522,838
2,689 410,291 614,220
161,985 57,059
Options
Purchased interest
rate options
Written interest rate options
Total
1
22,692
32,055
1,108
1,973
- 15,950
19,030
19,005
485
1,313
1
32,448
34,247
678
1,141
2 25,869
27,689
22,877
7,195
3,965
2
55,140
66,302
1,785
3,114
2 41,819
46,720
41,883
177,998
34,401
11,346 413,454 648,743
595,660
2,691 465,432 680,522
163,770 60,173
Note 46 – Analysis of credit derivatives
2004
Helding transactions
2003
Other
Helding transactions
Other
Credit Default swap
Sales of hedging instruments
14
268
26
22
4,902
280
5,169
135
Sales of hedging instruments
-
4
2
18
Purchases of hedging instruments
-
0
79
133
Purchases of hedging instruments
Other credit derivatives
160
Note 47 – Analysis of risk-weighted equivalents
2004
2003
2002
Total
Total
Government
securities
and equivalent
OECD
credit
institutions
Other
counterparties
Total
Government
securities
and equivalent
OECD
credit
institutions
Other
counterparties
Unweighted credit risks
before netting
198
10,206
754
11,159
84
10,094
593
10,770 13,161
Effect of netting
and collateralization
(72)
(7,365)
(100)
(7,537)
(17)
(7,238)
(5)
(7,259) (5,267)
Unweighted credit risks
after netting
126
2,841
655
3,622
67
2,856
588
Weighting
0%
20%
50%
/
0%
20%
50%
/
/
0
568
327
896
0
571
294
865
1,687
Risk-weighted equivalents
3,511
7,894
Risk-weighted equivalents express derivative instruments as credit equivalents, in accordance with the rules applied to calculate international
capital adequacy ratios (Cooke ratio). Netting agreements and collateralization techniques are used to reduce counterparty risk.
Note 48 – Interest income and expense
2004
Expense
2003
Income
Net
Expense
2002
Income
Net
Net
Interbank assets and liabilities
(1,571)
1,410
(161)
(1,398)
1,323
(75)
(268)
Customer loans and deposits
(1,729)
5,535
3,806
(1,715)
5,172 3,458
3,280
(24)
456
432
(21)
463
442
438
(2,272)
1,716
(556)
(2,189)
1,638
(551)
(421)
(504)
503
(1)
(610)
687
77
77
(6,100)
9,620
3,520
(5,933)
9,283 3,350
3,107
Lease financing
Macro-hedging transactions
Total (1)
(1) In 2002 and 2003, interest income and expense on macro-hedging transactions was booked under interest income and expense on interbank assets and liabilities.The 2002 and 2003 figures have therefore been restated accordingly.
Note 49 – Income from variable income securities
2004
2003
2002
Dividends on securities held for sale
14
12
16
Dividends on equity securities held for investment
27
21
21
Dividends on investments in affiliates
24
32
31
Total
65
65
68
Note 50 – Fees and commissions
2004
Expenses
Treasury and interbank transactions
Income
2003
Net
Expenses
2002
Income
Net
Net
(59)
38
(22)
(45)
28
(17)
(14)
Payment media processing
(340)
690
350
(297)
634
337
293
Customer transactions
(117)
1,352
1,235
(100)
1,329 1,229
1,022
Securities transactions
(33)
280
246
(45)
269
224
438
Currency transactions
(2)
10
8
(1)
11
10
10
Off-balance sheet commitments
(17)
131
115
(14)
111
97
238
Financial services
(121)
493
372
(123)
399
276
(138)
Advisory services
-
16
16
-
16
16
17
(688)
3,009
2,321
(625)
2,797 2,172
1,866
Total
Note 51 – Net gains on trading account securities
2004
2003
2002
Net gains (losses) on trading securities
537
241
127
Net gains on currency instruments
Net gains (losses) on forward financial instruments
Movements in provisions for contingencies and charges
Total
76
15
59
(204)
91
(8)
5
14
(20)
414
361
159
161
Note 52 – Net gains on securities held for sale
2004
Securities
held
for sale
2003
Equity
securities
held for
investment
Total
Securities
held
for sale
Equity
securities
held for
investment
2002
Total
Total
Charges to provisions
(108)
(85)
(193)
(143)
(98)
(241)
(326)
Reversals of provisions
172
60
232
209
84
293
157
Realized losses
(60)
(25)
(85)
(64)
(25)
(89)
(108)
Realized gains
117
173
290
119
103
222
259
Other
(1)
(3)
(4)
(1)
(1)
(2)
(4)
Total
120
120
240
120
63
183
(21)
Note 53 – Other banking revenues and expenses
2004
Expenses
Income
2003
Total
Expenses
Income
2002
Total
Total
Lease financing transactions – finance leases
Gains and losses on sales of leased assets
of leased assets
Other income and expenses
(21)
4
(17)
(25)
4
(21)
(7)
(36)
(275)
37
285
1
10
(31)
(224)
28
242
(3)
18
(14)
7
(332)
326
(6)
(280)
274
(6)
(14)
(4)
(16)
4
6
22
4
2
6
(1)
(4)
(15)
1
5
21
1
6
1
9
3
(20)
32
12
(20)
27
7
14
(20)
(18)
(67)
11
9
152
(9)
(9)
85
(15)
(28)
(79)
4
10
139
(11)
(18)
60
(4)
(7)
91
(105)
172
67
(122)
153
31
79
(457)
531
74
(422)
454
32
78
Lease financing transactions – operating leases
Gains and losses on sales of leased assets
Provisions for impairment in value of leased assets
162
Joint-venture income and losses
Recharged banking revenues and expenses
Total
Note 54 – Gross margin on insurance operations
2004
2003
2002
2,844
2,641
2,396
Personal risk insurance premium income
107
90
75
Credit insurance premium income
698
621
267
Life insurance premium income
Net investment income
1,159
1,102
145
Paid benefits and claims
(2,769)
(2,519)
(2,278)
Change in technical reserves (1)
(1,305)
(1,298)
(267)
Other non-underwriting income
76
85
44
810
722
383
Total
(1) Including net charges to the Coface group's loss equalization reserves (€48 million in 2003 and €52 million in 2004).
Note 55 – Other net income
2004
2003
2002
9
5
14
2
1
6
6
6
14
17
18
IT development and other services
Credit management services (1)
Other activities
43
120
19
68
85
11
46
41
3
Total
196
181
108
Real estate management
Real estate development
Real estate dealing
Total income from real estate activities
(1) Corresponding to sales of credit information services, marketing information services and receivables collection services provided by Coface
subsidiaries.
Note 56 – General operating expenses
2004
2003
2002
(1,779)
(283)
(566)
(135)
(82)
(154)
(1,660)
(272)
(524)
(116)
(76)
(146)
(1,412)
(243)
(437)
(92)
(71)
(125)
(2,999)
(2,794)
(2,379)
(148)
(1,641)
(165)
(1,532)
(164)
(1,353)
(1,789)
(1,697)
(1,517)
(4,788)
(4,491)
(3,896)
Payroll costs
Wages and salaries
Pension costs
Other payroll taxes
Incentive bonuses
Employee profit-sharing
Payroll-based taxes
Total payroll costs
Other general operating expenses
Taxes other than on income
Other general operating expenses
Total other general operating expenses
Total
163
Note 57 – Number of employees
Number (1)
2004
2003
2002
(2)
Employees
44,509
43,224
39,223
Domestic network
40,428
39,417
36,176
4,081
3,807
3,047
International network
(1) Number of full-time equivalent employees (FTEs) at year-end.
(2) The increase in 2003 was mainly related to local retail banking activities consolidated for the first time during the year:
– Crédit Coopératif group (1,486 FTEs)
– Crédit Maritime Mutuel group (959 FTEs)
Note 58 – Provisions for loan losses
2004
Charges
Net
reversals
2003
WriteRecooffs not
veries
of bad
covered
debts
by provisions written off
Net
Charges
Net
reversals
2002
WriteRecooffs not
veries
covered
of bad
by prodebts
visions written off
Net
Net
Specific provisions
Interbank loans
(4)
11
(1)
Customer loans
(1,129)
695
(49)
(47)
(10)
(3)
(1,180)
696
(54)
(66)
66
-
-
Securities and other
receivables
6
(11)
8
(1)
(4)
(16)
34 (449)
-
(1,036)
588
(35)
28 (455)
(455)
(51)
(49)
5
(22)
26
(40)
(71)
44 (494)
(1,096)
601
(58)
54 (499)
(542)
-
(51)
38
-
9
-
Provisions for
contingencies and charges
Off-balance sheet
commitments
(7)
(70)
83
-
-
13
(211)
154
-
-
(57)
7
(29)
30
-
-
1
(18)
22
-
-
4
29
(165)
179
-
-
14
(279)
213
-
-
(66)
29
(1,345)
875
(54)
44 (480)
(1,375)
814
(58)
54 (565)
(513)
including:
– Reversals of surplus
provisions
– Utilizations
875
429
814
320
Total reversals
1,304
1,134
– Losses covered by
provisions
Net reversals
(429)
(320)
875
814
Note 59 – Net gains on disposals of fixed assets
2004
Investments in
affiliates
and
equivalents
(13)
General provisions
Total provisions for loan
losses and country risks
164
-
Investment
securities
2003
Property &
equipment
and
intangible
assets
Total
Investments in
affiliates
and
equivalents
Investment
securities
2002
Property &
equipment
and
intangible
assets
Total
Total
(18)
(3)
-
(21)
(30)
(1)
-
(31)
(44)
Reversals of provisions
36
7
-
43
36
12
-
48
34
Realized losses
(26)
(10)
(11)
(47)
(27)
(18)
(5) (50)
(67)
Realized gains
31
9
11
51
39
4
9
52
119
Total
23
3
-
26
19
(4)
4
19
42
Note 60 – Exceptional items
2004
Exceptional income and expenses (net of provisions)
Including:
Merger costs (1)
Other restructuring costs
Contribution to Deposit Guarantee Fund
Impact of changes in scope of consolidation during the period
Other
Including:
Information systems convergence
Provisions for merger costs (1)
Other restructuring provisions
Other
Total
2003
2002
(31)
(17)
(27)
(17)
(4)
(11) (2)
(22)
(5)
10 (3)
(21)
(20)
(4)
1
(6)
(18)
1
-
(5)
(1)
(30)
(23)
18 (4)
(4)
(8) (4)
(6)
(45)
(1) Costs related to the mergers of Banque Populaire regional banks.
(2) Including expenses relating to Coface Group stock option plans: €(7.8) million.
(3) Including €(10) million relating to the consolidation of the E-market special purpose entities and the new Coface subsidiaries (Kompass and
Cofacerating), and €24 million relating to reductions in VAT and payroll taxes.
(4) Including €6 million in income recognized on first-time consolidation of the Edval C Investment Ltd and Worledge Investment Ltd special
purpose entities by Natexis Banques Populaires, offset by a €6 million provision for country risks on loans covered by the put option.
Note 61 – Tax proof
2004
2003
2002
+
+
+
+/-
Net income for the year (before minority interests)
Allocation to fund for general banking risks
Other permanent differences (1)
1,221
700
115
(235)
(7)
982
544
168
(284)
(12)
621
405
118
(107)
(3)
=
Consolidated taxable income
1,794
1,397
1,034
x
Standard tax rate
33.33%
33.33%
33.33%
=
+
+
+
+
+
+
+
+
+
Tax at standard rate
Avoir fiscal tax credits
Group relief
Surtaxes
Items taxed at reduced rates
Tax reassessments
Differences in foreign tax rates
Change in recognized deferred tax assets
Exit tax on long-term capital gains reserves (2)
Other
(598)
8
13
(30)
(7)
(44)
(7)
(12)
(25)
2
466
8
11
(29)
(33)
(42)
(5)
6
6
(345)
12
13
(28)
(37)
(3)
1
(24)
5
=
Corporate income tax for the year
(700)
(544)
(405)
including:
(721)
21
(567)
23
(457)
52
- Current taxes
- Deferred taxes
(1) Including tax base for items taxed at reduced rates and income of subsidiaries that have issued preferred stock, for which dividends are
qualified as interest for tax purposes.
(2) Tax recognized pursuant to opinion 2005-A issued by the CNC's Urgent Issues Task Force on February 2, 2005 on the accounting treatment
of the 2.5% exceptional tax on special long-term capital gains reserves, following the new tax provisions introduced under article 39 of the final
2004 Finance Act.
165
Note 62 – Deferred taxes
2004
2003
2002
Flow-through entities
Leasing reserve
Provisions for employee-related liabilities
Other non-deductible provisions
Unrealized gains on mutual fund units
Ordinary and evergreen tax loss carryforwards
Other temporary differences
(450)
(618)
624
900
70
310
(47)
(524)
(593)
615
720
52
329
(2)
(548)
(495)
638
700
30
365
(122)
Total sources of deferred taxes, gross
789
597
568
Unrecognized sources of deferred tax assets
(414)
(451)
(508)
Total sources of deferred taxes, net
375
146
60
Recognized deferred taxes
Deferred taxes at standard rate
Deferred taxes – surtaxes
Deferred taxes at reduced rate
150
8
(6)
84
5
(17)
67
4
(21)
Total recognized deferred taxes
152
72
49
including: - Deferred tax assets (2)
dont
- Deferred tax liabilities
573
(421)
471
(399)
437
(388)
Main sources of deferred taxes (1)
(1) Positive amounts correspond to sources of deferred tax assets and negative amounts to sources of deferred tax liabilities.
(2) Including €63 million in deferred tax assets recognized following the reallocation to loan loss provisions of the negative goodwill arising on
acquisition of Agence Française de Développement subsidiaries at end 2003 - see notes 34 and 35.
166
Note 63 – Analysis of assets and liabilities by maturity
2004
Less than
3 months
1 to 5
More than
No fixed
3 months
to 1 year
years
5 years
maturity
Total
Interbank loans (1)
11,132
11,934
18,965
6,539
87
48,657
Customer loans
17,937
12,782
38,298
35,395
5
104,417
Lease financing
561
1,502
4,749
1,666
157
8,635
10,890
2,118
5,471
3,320
211
22,009
Total assets
40,520
28,336
67,482
46,921
460
183,719
12,051
14,297
12,494
1,980
0
40,823
Customer deposits
22,701
3,890
8,317
3,837
43
38,788
Debt securities
20,945
7,858
10,988
1,828
91
41,710
11
325
1,366
2,696
163
4,561
55,708
26,370
33,166
10,341
298
125,883
Less than
3 months
1 to 5
More than
No fixed
Total
3 months
to 1 year
years
5 years
maturity
7,717
24,223
10,001
5,796
54
47,791
18,657
11,643
35,530
30,214
18
96,062
Assets
Liabilities
Total liabilities
(1) Including government securities and equivalent.
2003
Assets
Interbank loans (1)
Customer loans
Lease financing
Total assets
482
1,371
4,240
1,628
112
7,833
5,016
2,392
6,683
4,522
17
18,630
31,872
39,629
56,454
42,160
201
170,316
167
Liabilities
5,870
20,445
4,716
1,681
0
32,712
Customer deposits
27,815
4,316
7,941
3,544
152
43,768
Debt securities
17,311
8,540
9,101
2,142
96
37,190
128
272
1,197
2,456
263
4,316
51,124
33,573
22,955
9,823
511
117,986
Total liabilities
(1) Including government securities and equivalent.
Note 64 – Analysis of outstanding loans and receivables by geographic area
Interbank transactions
Customer and lease financing
transactions
Securities transactions (1)
2004
France
Western
Europe
Eastern
Europe
North
America
Latin and Africa and
Central
Middle
America
East
Asia
Not
Pacific analyzed
26,824
8,635
284
310
376
713
2,420
64
39,626
67%
22%
1%
1%
1%
2%
6%
0%
100%
109,840
12,110
791
2,733
868
1,572
871
688
129,474
84%
9%
1%
2%
1%
1%
1%
1%
100%
10,020
3,944
6
5,141
73
43
453
67
19,747
52%
20%
0%
26%
0%
0%
2%
0%
100%
Asia
Not
Pacific analyzed
Total
Total
(1) Excluding lending and borrowing of securities.
transactions
2003
France
Western
Europe
Eastern
Europe
North
America
29,189
8,941
201
403
431
699
1,986
425
42,275
69%
21%
0%
1%
1%
2%
5%
1%
100%
103,088
4,328
664
7,986
934
1,424
899
549
119,872
86%
4%
1%
7%
1%
1%
1%
0%
100%
8,351
2,971
9
5,516
182
43
573
628
18,273
46%
16%
0%
30%
1%
0%
3%
3%
100%
168
Latin and Africa and
Central
Middle
East
America
Note 65 – Analysis of outstanding loans and receivables by client sector
2004
Credit
Institutions
Non
financial
companies
Individual
business
owners
Individuals
Private
administrations
Public
administrations
and social security
organizations
Other
Total
39,626
/
/
/
/
/
/
39,626
/
/
/
/
73,783
72,677
2,058
1,757
10,073
9,801
506
303
40,295
39,932
524
354
1,580
1,548
56
17
1,922
1,921
3
1
/
(1,811)
(368)
(347)
(34)
(2)
(5)
(2,567)
/
(898)
(169)
(167)
(8)
(1)
(7)
(1,250)
6,155
- Receivables related to fixedincome securities
6,153
- Irrecoverable receivables
related to securities
2
- Doubtful receivables related
to securities
- Provisions for irrecoverable
receivables related to securities
(1)
- Provisions for doubtful receivables
4,944
8
3,075
5,567
19,747
4,926
8
3,071
5,550
19,708
20
41
73
3
77
(25)
(54)
(2)
(57)
transactions
- Sound receivables
- Doubtful receivables
receivables
- Provisions for doubtful
receivables
10
74
(12)
(16)
(55)
1,821 129,473
1,817 127,695
7
3,154
8
2,441
2003
Credit
institutions
Non
financial
companies
Individual
business
owners
Individuals
Private
administrations
Public
administrations
and social
security
organizations
Other
Total
42,275
/
/
/
/
/
/
42,275
/
/
/
/
67,252
65,933
3,011
1,051
9,230
8,988
528
210
36,204
35,894
576
259
1,502
1,479
36
9
2,661
2,661
1
1
/
/
(2,198)
(545)
(376)
(120)
(395)
(130)
(19)
(3)
(1)
(1)
(11)
(6)
(3,000)
(805)
4,823
- Receivables related to fixedincome securities
4,828
2
- Doubtful receivables related
to securities
(2)
receivables related to securities
(5)
3,733
17
3,312
6,388
18,273
3,696
17
3,311
6,347
18,199
55
2
54
113
45
2
27
74
(40)
(2)
(34)
(78)
(23)
(1)
(6)
(35)
transactions
- Sound receivables
- Doubtful receivables
receivables
3,023 119,872
3,016 117,971
16
4,168
8
1,538
169
Note 66 – Segment information
Year ended December 31, 2004
Financing, investment
and services bank
Local
retail
banking
(1)
Private
Corporate &
Equity
Institutional
& Wealth
Banking &
ManageMarkets
ment
(3)
Services
(5)
Receivables
Management
Other
Total
(7)
Banque
Fédérale
and other
Group
Total
(2)
(6)
(4)
4,967
4%
1,157
6%
189
51%
609
8%
634
3%
80
ns
2,668
9%
5
ns
7,640
8%
(3,269)
3%
(656)
6%
(89)
9%
(408)
2%
(503)
2%
(155)
ns
(1,811)
5%
(15)
ns
(5,095)
6%
Change 2004 / 2003
1,698
7%
501
6%
100
127%
201
24%
131
4%
(76)
ns
857
19%
(10)
ns
2,545
12%
Income / (loss) before
exceptional items and tax
Change 2004 / 2003
1,343
9%
398
44%
84
251%
185
20%
126
2%
(25)
ns
768
48%
(12)
ns
2,098
21%
Net banking income
Change 2004 / 2003
Change 2004 / 2003
Gross operating income /(loss)
170
The above table analyzes the Banque Populaire Group’s results based on a three-tier organization structure, reflecting the wide range of businesses conducted by the Group.
The retail banking business (1) is conducted by the Banque Populaire regional banks, CASDEN Banque Populaire, Crédit Coopératif, Crédit
Maritime Mutuel, the mutual guarantee companies and their direct subsidiaries, as well as the direct subsidiaries of Banque Fédérale des Banques
Populaires (excluding Natexis Banques Populaires).
Banque Fédérale des Banques Populaires (2) is the Group’s central body and the holding company for Natexis Banques Populaires. It is responsible for guaranteeing the liquidity and capital adequacy of the Banque Populaire banks.
Natexis Banques Populaires is the Group’s financing, investment and services bank. Its business activities were restructured into four core
businesses during the first half of 2004:
n Corporate and Institutional Banking & Markets (3) comprises Corporate France (including lease financing), International, Global Debt &
Derivatives Markets, Commodities, Equity Group, and Mergers & Acquisitions. These activities are principally conducted by Natexis Banques
Populaires, Natexis Lease and Natexis Bleichroeder.
n Private Equity and Wealth Management (4) comprises the private equity business of Natexis Private Equity and the wealth management business conducted by Banque Privée Saint Dominique and Natexis Private Banking Luxembourg.
n Services (5) includes Banking, Financial and Technology Services together with Asset Management and Insurance (excluding Wealth Management).
The Banking, Financial and Technology Services business line develops and markets a wide range of banking and financial services for banks and
other institutions, including outsourcing services.Asset Management and Insurance is principally conducted by Natexis Asset Management (fund
management), Natexis Assurances (insurance) and Natexis Interépargne (employee benefit plans).
n Receivables Management (6) comprises the credit insurance and credit management services activities conducted by Coface together with
Natexis Factorem's factoring business.
n Other businesses (7) correspond to activities conducted by Natexis Banques Populaires which are not businesses in the true sense of the
term, including its activities as holding company of direct subsidiaries. Net banking income from this segment includes income from treasury
transactions, real estate revenues and revenues from institutional activities conducted on behalf of the State. General operating expenses
correspond to headquarters expenses not allocated to the core businesses.“Other businesses” also includes certain consolidation adjustments
that cannot be allocated to the core businesses.
Changes are stated on a constant Group structure basis. 2003 figures have therefore been restated on the basis of the Group's structure as of
December 31, 2004:
– in local retail banking, adjusted for the first-time consolidation of Agence Française de Développpement subsidiaries consolidated at end 2003,
the impact of the Crédit Maritime Mutuel group, consolidated since July 1, 2003, and the impact of the credit institutions associated with the
Crédit Coopératif Group, consolidated since January 1, 2004;
– in Natexis Banques Populaires, to reflect the new organization structure and adjusted for the consolidation of Ort (Coface subsidiary
consolidated since April 1, 2004.
Note 67 – Companies accounted for by the equity method
2004
Equity in
net assets
2003
Equity in
net income
2002
Equity in
net assets
Equity in
net income
Equity in
net assets
Equity in
net income
Financial sector companies (1)
Other companies
42
47
(1)
8
58
43
3
8
13
31
1
2
Total
90
7
101
11
44
3
(1) The increase concerning financial sector companies in 2003 was primarily due to Crédit Coopératif subsidiaries, which joined the Group in
2003.The decrease in the value of investments accounted for by the equity method in 2004 is primarily due to a change of consolidation method
for Banque Edel, which was fully consolidated in 2004.
Note 68 – Insurance results
2004
Banking format
General
operating
expenses
Gross
operating
income
Exceptional Corporate
income
items
tax
Subconsolidation
adjustments
Insurance
format
Net
banking
income
Net
income
Premium income
3,650
3,650
3,650
3,650
Investment income
1,232
1,232
1,232
1,232
228
228
228
228
6
6
6
6
Loss expenses
(2,010)
(2,005)
(2,010)
(2,010)
Change in technical reserves
INDIVIDUAL COMPANY ACCOUNTS
OR SUB-GROUP ACCOUNTS
Mark-to-market gains on assets
held to cover linked liabilities
Other underwriting income
(5)
(1,324)
(1,324)
(1,324)
(1,324)
Policyholder dividends
(764)
(764)
(764)
(764)
Acquisition and administration costs
(636)
(287)
(349)
(636)
(636)
Investment expenses
(4)
(287)
(287)
(16)
(16)
53
53
(2)
(2)
131
131
(6)
(6)
(287)
(283)
Mark-to-market losses on assets
held to cover linked liabilities
(16)
(16)
Other underwriting expenses
53
70
Investment income transferred out
of the technical account
(2)
(2)
131
506
(6)
(6)
Other non-underwriting income
275
275
Other non-underwriting expenses
(192)
(50)
Underwriting result
Investment income transferred from
the technical account
Income from companies accounted
for by the equity method
4
Exceptional items
(7)
Employee profit-sharing
(1)
Income tax
(17)
(375)
(142)
275
275
(192)
(192)
4
(7)
(7)
(1)
4
(1)
(1)
(75)
(75)
(75)
Amortization of goodwill
(7)
(7)
(7)
Minority interests
(1)
(1)
(1)
(4)
121
121
Net income
including :
- interest margin
- fees and commissions
- insurance margin
- credit management
- other net operating income
725
(518)
207
(7)
(75)
(18)
(187)
810
120
1
This table reconciles the amounts recorded in the individual accounts of the insurance companies or the consolidated
accounts of sub-groups and the amounts reported in the Banque Populaire Group consolidated financial statements
presented in the banking format.
The main reclassifications concern general operating expenses which are analyzed by destination in the insurance format financial statements
and by nature in the banking format. At the level of net banking income, insurance income and expenses that are similar to banking income and
expenses (mainly interest, fees and commissions) are reclassified under the related captions in the banking format, in the interests of
consistency. Movements on technical reserves and loss expenses are deducted from net banking income and not recorded under provisions for
loan losses.
Reclassifications made in the balance sheet are not material.The main insurance-specific balance sheet captions are reported under “Insurance company investment portfolios” on the assets side and “Insurance company technical reserves” on the liabilities side. Accrued interest, which is reported
on a separate line in the insurance format, is included on the same line as the item to which it relates in the banking format.
171
Note 69 – Management accounts on a constant Group structure basis
For the purposes of comparison, the following table sets out the main income statement captions, fully including the following for 2003 and
2004:
n Crédit Maritime Mutuel, which became an affiliate of BFBP on August 1, 2003 and therefore only contributed to results in the second half of
2003;
n the Agence Française de Développement subsidiaries, which were acquired by BRED Banque Populaire at end 2003 and accordingly did not
contribute to consolidated results in 2003;
n the credit institutions that have an association agreement with Crédit Coopératif (not subsidiaries), which are fully consolidated as of January
1, 2004;
n Ort, which was acquired by Coface in April 2004.
For comparability purposes, the 2003 figures have been restated on a pro forma basis using management data that has not been audited by the
Group's Auditors.
12/31/2004
12/31/2003
reported
172
Impact of changes in
scope of consolidation
12/31/2003
pro forma
Net banking income
7,640
(5,095)
7,066
(4,796)
162
(107)
7,228
(4,903)
2,545
(480)
2,270
(565)
55
(4)
2,325
(569)
Operating income
Income from companies accounted for
by the equity method
2,065
1,705
51
1,756
7
26
11
19
(1)
0
10
19
Exceptional items
Goodwill amortization and negative goodwill
written back to income
Minority interests
2,098
(30)
(700)
1,735
(23)
(544)
50
1
(19)
1,785
(22)
(563)
(33)
(115)
(161)
(17)
(169)
(129)
(3)
(9)
(17)
(172)
(138)
Net income
1,059
853
20
873
Statutory Auditors’ report on the consolidated financial
statements
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for
the convenience of English speaking readers.The Statutory Auditors’ report includes information specifically required by French
law in all audit reports, whether qualified or not, and this is presented below in the opinion on the consolidated financial
statements.This information includes an explanatory paragraph discussing the Auditors’ assessments of certain significant
accounting and auditing matters.These assessments were considered for the purpose of issuing an audit opinion on the
consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or
on information taken outside of the consolidated financial statements.
This report, together with the Statutory Auditors’ report addressing financial and accounting information in the Chairman’s
report on internal control, should be read in conjunction with, and construed in accordance with, French law and professional
auditing standards applicable in France.
In compliance with the assignment entrusted to us by the Conseil Syndical de la Chambre Syndicale des Banques
Populaires on September 20, 2000 and by the Board of Directors of Banque Fédérale des Banques Populaires on
June 23, 2004, we have audited the accompanying consolidated financial statements of the Banque Populaire Group
for the year ended December 31, 2004.
The consolidated financial statements have been approved by the Board of Directors of Banque Fédérale des
Banques Populaires. Our role is to express an opinion on these financial statements based on our audit.
1 – Opinion on the consolidated financial statements
We conducted our audit in accordance with the professional standards applicable in France.Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used
and significant estimates made by management,as well as evaluating the overall financial statements presentation.We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, assets and
liabilities of the Banque Populaire Group at December 31, 2004 and of its results of operations for the year then
ended in accordance with French accounting principles and regulations.
2 – Justification of our assessments
In accordance with the requirements of Art. L. 225-235 of the French Commercial Code (Code de commerce)
relating to the justification of our assessments,introduced by the French Financial Security Act of August 1,2003 and
which came into effect for the first time this year, we draw your attention to the following matters:
- The Banque Populaire Group records provisions to cover the credit risks inherent in its business. As part of our
assessment of the significant estimates used to prepare the consolidated financial statements, we examined the
control procedures applicable for monitoring credit risks, assessing the risks of non-recovery and determining the
related specific as well as general provisions for industry and country risks.
- As described in note 19 to the consolidated financial statements, the Banque Populaire Group measured its material intangible assets and goodwill recorded in the consolidated balance sheet, assisted by a firm of independent
valuers. As part of our assessment of the significant estimates used for preparing the consolidated financial
statements, we obtained an understanding of the conclusions provided by the firm of independent valuers and verified
that they had been taken into consideration in preparing the consolidated balance sheet at December 31, 2004.
The assessments were made in the context of our audit of the consolidated financial statements, taken as a whole,
and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report.
3 – Specific verification
In accordance with professional standards applicable in France, we have also verified the information given in the
Group management report.We have no matters to report regarding its fair presentation and consistency with the
consolidated financial statements.
Neuilly-sur-Seine and Paris, March 23, 2005
The Statutory Auditors
BARBIER FRINAULT & AUTRES
ERNST & YOUNG
SALUSTRO REYDEL
Richard Olivier – Olivier Durand
Michel Savioz
173
Chairman’s report
on internal control
procedures
174
This report forms an integral part of the full Chairman’s report on the conditions in which the work of the Board of Directors is prepared and organized
and the internal control procedures within the Company. It is prepared in
accordance with article L. 225-37 of the French Commercial Code (code de
commerce) as amended by the French Financial Security Act of 1 August 2003.
Internal control procedures
175
General organization
175
Risk monitoring and control procedures
177
Internal control procedures covering financial
and accounting information
181
Chairman’s report on internal control procedures
control procedures
General Organization
The Banque Populaire Group internal control system complies
with French banking and financial services regulations.
These require, in addition to general organizational
systems, a system of external monitoring by the
Banking Commission and the Financial Markets Authority
(Commission Bancaire and Autorité des Marchés
Financiers). It also complies with the corporate governance
principles of the Banque Populaire Group.
These principles were defined by the Board of Directors of
Banque Fédérale des Banques Populaires, the Group’s
central body, and are set out in a corporate governance
charter and an internal control charter for the Banque
Populaire Group.
They are supplemented by procedures designed to ensure
that for each family of risk – financial and operational – the
level of control is appropriate and consistent across the
entire Group.
A review process is already under way concerning changes
to these systems to meet changes in internal control
regulations, which are expected to be announced in the
first half of 2005. In addition, the process of implementing
new capital adequacy standards under the Basel II
framework, being coordinated at the Group level, presents
an opportunity to update and enhance existing procedures.
Risk monitoring and management systems within the
Banque Populaire Group and the organization of internal
control information systems reflect the decentralized
organization structure and are organized on two levels: at
the level of each bank, on a consolidated basis where
applicable, and at that of the Banque Fédérale des Banques
Populaires.
Organization of internal control
at the level of the consolidated
entities
On November 20, 2002, the Board of Directors of Banque
Fédérale des Banques Populaires approved the corporate
governance charter and internal rules framework
applicable to the Boards of Directors of the individual
This charter establishes the rules of corporate governance
and codes of conduct to be followed by all the Banque
Populaire banks. It sets out the responsibilities of each
bank’s Board of Directors, Chairman, Chief Executive
Officer and Consultative Committees. All Group banks
are required to have a Risk Management Committee (with
the option of also creating an Audit Committee) and a
Remuneration Committee. They may also choose to set
up other committees, such as a Member-Stakeholder
Committee.
Well before the May 15, 2001 Corporate Governance Act
entered the statute books, the Banque Populaire banks had
already decided to optimize the effectiveness of its executive
and management structures by separating the roles of
Chairman and Chief Executive Officer, thus separating
responsibility for strategic decisions and control from the
implementation of these decisions and the management of
the business.
In addition, on January 21, 2004 the Board of Directors of
Banque Fédérale des Banques Populaires approved the
internal control charter for the Banque Populaire Group.
This establishes the central principle that each and every
member of an organization has responsibility for its internal
control system.
In each material Group entity, internal controls are organized
from the lowest to the highest level. The organizational
structure is defined by the Chief Executive Officer with the
approval of the Chairman.
Responsibilities and resources are allocated as efficiently as
possible, in line with the guidance issued by the Board of
Directors, to ensure the coverage, exhaustive identification
and management of risks.
Internal involvement in control
Three levels of control are used:
First tier:each member of staff is responsible for performing
preliminary or simultaneous checks of each operation that
they carry out in performing their professional duties and
functions and supervisors are responsible for checking the
transactions performed by those reporting to them.These
first-tier controls provide the foundations of the internal
control system. They are described in written procedures
and must be formally evidenced.
n
Second tier: continuous checks are undertaken to ensure
compliance with internal and external rules and regulations
as well as to verify the existence, implementation and
effectiveness of first-tier controls. Second-tier controls
cover functional areas such as accounting, commitments and
risks. Regulatory controls apply to this second tier. Control
at this level is performed by the Compliance Officer, the
Investment Services Department Control Officer, the
Information Systems Security Officer, the TRACFIN correspondent and any other officers with responsibility for
specific controls required by the applicable regulations.
n
n Third tier: consisting of periodic audits and investigations
carried out by the Internal Audit department.The internal
auditors have free access to all information they require to
175
conduct their audit, including confidential and privileged
information. A manager oversees all such audit work.
The Internal Control Officer is responsible for ensuring the
consistency and effectiveness of this three-tier system,
reporting to senior management – who have ultimate
responsibility for internal control, the Risk Management
Committee and the Board of Directors.
The role of the Board of Directors
The Board of Directors oversees control of the main risks
incurred by the bank, as well as the quality and reliability of
the internal control system in accordance with banking
regulations.
The Risk Management Committee – one of the Committees
of the Board – is responsible for organizing reporting
systems covering company-level and consolidated risk data,
the results of internal control procedures and the main
findings of internal auditors, in accordance with banking
regulations.The Committee assesses the quality of internal
control, including risk measurement, monitoring and
management systems.It is also responsible for recommending
additional measures where appropriate.
Organization of internal control
at the level of Banque Fédérale
176
In its role as the Banque Populaire Group’s central body, as
defined in the Monetary and Financial Code, Banque Fédérale
des Banques Populaires oversees the cohesiveness of the
Banque Populaire network and takes all necessary measures
to guarantee the liquidity and solvency of each Banque
Populaire bank as well as of the network as a whole, through
the Group Risk Management Committee. More generally it
supervises and controls all establishments making up the
Banque Populaire Group, particularly its subsidiaries.
Internal control structures
The Group Risk Management Committee exercises its
oversight role by drawing on the resources of the Banque
Fédérale des Banques Populaires Risk Control and Audit
Department.
The work of the Internal Audit and Risk Management
Department is organized around three sub-departments:
The Risk Management Department – which has no involvement in commercial decisions – is responsible for
ensuring that the same rules are applied throughout the
group, deploying appropriate risk control and continuously
monitoring the risks governed by standard CRBF 97-02
(credit/counterparty risk, interest rate risk, liquidity risk
and operational risk) across the entire Group.
n
The Internal Control Procedures Department is responsible
for providing methodological and technical support to the
Group entities and promoting the adoption by all entities
of best practices identified within the Group. In 2004 the
Department’s work concentrated mainly on the
n
production of Group-wide audit methodologies and the
creation of manuals for control systems in investment
services. Annual internal control assessments are
performed and the results presented to the Group Risk
Management Committee, for the purpose of preparing the
Group’s CRBF 97-02 report.
n The Internal Audit Department, and its information
systems audit unit, perform periodical audits of Banque
Populaire Group entities in accordance with the internal
audit charter approved by the Board of Directors of
Banque Fédérale des Banques Populaires. These tasks are
carried out in accordance with an annual plan based on
priorities established by the Risk Management and Internal
Control Departments, with recurring audits of all Group
departments and entities carried out on a rolling program
spanning several years. Each audit includes quantitative and
qualitative risk analyses and assessments of the quality of
information systems and internal control systems. The
internal auditors also assess the overall efficiency of the
audited entities.The head of Internal Audit reports to the
Group Chairman and Chief Executive Officer and these
reports are submitted to the Board of Directors. In
addition, reports are submitted to the Group Risk
Management Committee describing the action taken to
implement the internal auditors’ recommendations.
Role of the Board of Directors of Banque
The Board of Directors of Banque Fédérale des Banques
Populaires ensures that the Group’s main risk exposures are
properly managed and monitors the quality and reliability of
the system of internal control.
In 2004, the Board of Directors of Banque Fédérale des
Banques Populaires, assisted by the Group Risk Management
Committee, continued to keep a close watch over the
system of internal control employed within Banque Fédérale
des Banques Populaires and the Banque Populaire Group as
a whole in order to manage all risks arising in the course of
the Group’s business, whatever their origin.
Decisions of the Board concerning internal control
During 2003, the Board of Directors of Banque Fédérale
des Banques Populaires made a number of decisions
concerning internal control in addition to those made by
the Group Risk Management Committee. The matters
addressed were:
n
January:
– Approval and introduction throughout the Banque
Populaire Group of an internal control system charter;
– Analysis of the first results of the introduction of
corporate and retail rating systems and approval of the
Group Risk Management Committee recommendations.
n April:
– Review of Group balance sheet risks and approval of
updates to Group procedural manuals;
– Approval of Chairman’s report on internal control
procedures in the Banque Populaire Group during
2003.
n
n
May:
– Consideration of annual internal control reports
regarding Banque Fédérale des Banques Populaires and
the Banque Populaire Group;
– Approval of the updates to Group credit risk procedure
manuals;
– Introduction of a Group action plan designed to
improve the system for control of operational risks.
November:
– Review of Group counterparty risks;
– Approval of Group action plan for controlling credit
risk in 2005;
– Review of changes in internal control regulations and
the resulting adjustments needed in the internal
control system;
– Approval of an action plan for conformity with AMF
rules and concerning prevention of money laundering.
Issues dealt with in meetings of the Group Risk
Management Committee
During 2004, there were six full meetings of the Group Risk
Management Committee:
n four to deal with matters concerning Banque Populaire
Group:
– in January, to:
n
n
n
review progress on the Basel II project concerning
credit risk;
consider draft charters for internal control systems
at Banque Populaire Group and for the safety of
people and property;
review the impact that changes in rule CRBF 97-02
governing internal control for Banque Populaire
Group entities will have on projects, with a particular
focus on the demands of Basel II regarding
compliance risk;
– in March, to examine balance sheet risks for Banque
Populaire Group, update the procedure manuals for
these risks (overall interest rate and liquidity risk) and
consider a draft of the Chairman’s report on internal
control procedures;
– in May, to review the annual report on Group internal
control procedures, to approve changes to the procedures for credit risk and to consider the report on the
audit of a new network affiliated to Banque Fédérale
des Banques Populaires;
– in October, to analyze the annual report on Group
counterparty risk and to review the situation regarding
non-compliance risk at Banque Populaire Group and
changes in the internal control system.
n two meetings to deal with issues concerning Banque
Fédérale des Banques Populaires:
– in May, to analyse the annual report on internal control
and an audit report;
– in October, to review the risk assessment at June 30 at
Banque Fédérale des Banques Populaires and to
consider further data on an audit report.
Risk monitoring
and control procedures
Risk management organization
In the course of its business, the Group is exposed to four
main categories of risks:
n
credit risks arising from customer transactions,
n
market risks arising from capital market transactions,
n interest rate, currency and liquidity risks, arising from
retail banking transactions,
n
operational risks.
In accordance with standard CRBF 97-02, each bank has set
up risk management and monitoring systems that are
independent from operating units.
All Group banks have also set up their own systems of
exposure limits and decision-making procedures, complying
with the rules established at Group level, as set out in the
credit risk manual, updated in June 2004, and the interest
rate and liquidity risk manual, updated in April 2004.
Credit risks
Credit risk management in the banks based on
Banque Populaire Group standards
Each bank’s risk policy is determined by executive management with the approval of the bank’s Board of Directors.
Executive management is responsible for continuously
monitoring risk exposures in compliance with the rules set
by the Board of Directors of Banque Fédérale des Banques
Populaires – which relate in particular to the role of the
Group Risk Management Committee – and by the regulator.
The risk policy defines:
business development strategies and objectives,
particularly regarding the type, quality and monetary value
of risk exposures;
n
n the rules governing the organization and control of risk
exposure;
internal exposure limits, which are lower than regulatory
limits.
n
During 2004, a review process began to examine risk
control in lending activities in the individual banks and the
Banque Popular Group as a whole, to ensure that it takes
full advantage of the upgraded risk measurement and
management tools developed as part of the Basel II
project. This review will be expanded to take account of
changes in the CRBF 97-02 standard.
Decisions and delegations
Lending decisions are based on formal procedures and
approval circuits and are made by reference to an assessment of the related cost and the potential benefits for the
bank. Clear limits are set on discretionary lending authority
177
at each level, based on credit ratings and monetary amounts.
In accordance with CRBF 97-02 (Art. 21), lending decisions
are either counter-signed or made in exercise of formal
delegations of authority. Where appropriate, decisionmakers take advice from the Group’s specialized entities or
other experts on legal, financial, international or other
matters.
Credit risk measurement and monitoring – commitments
surveillance
All business portfolios are monitored according to risk
criteria and by client category.
A preventative risk detection system, tailored for the
specific features of each client category, allows clients to be
contacted and problems to be addressed before an incident
occurs. In addition, several independent structures perform
non-overlapping supervisory controls.
Risk monitoring systems are designed to provide each
senior management and the Board of Directors of each
bank and of the Banque Populaire Group with quantitative
and qualitative risk data, covering both outstanding
commitments and transaction flows.These systems include
regular reviews of at-risk commitments covering both
exposures and related commitments.
Information systems include applications to generate
management information schedules analyzing the level of
activity and qualitative and quantitative changes in risk, for
both individual and aggregate exposures.
Managing non-performing and irrecoverable loans
n For loans to companies,the system is based on quantitative
and qualitative assessments of the counterparty’s solvency
and draws on the expertise of the commercial team and
risk managers, with the latter having the last word. The
counterparty rating scale has sixteen levels, excluding
default.
n For small business and personal clients, the systems use
statistical techniques and take account of two main
parameters: the rating of the counterparty and the loss rate
on the transaction.The rating scale has ten levels excluding
default.
n Interbank transactions are conducted exclusively with
counterparties on the Banque Fédérale des Banques
Populaires’ “approved” list, which are selected based on the
credit ratings awarded by external credit agencies.
Risk diversification
Risk diversification represents a fundamental risk management
rule and is governed by internal and external guidelines.
Under the Group’s procedural manual each bank sets,
according to its specific requirements, internal risk concentration limits which are lower than the limits authorized
under banking regulations.
Credit risk reporting and control structures at
The Group’s central body is responsible for assessing risk
policies and management procedures according to
standard principles and criteria. Risks are monitored at
Group level as follows:
n
178
In addition to this consolidated risk monitoring system, the
Group Risk Management Committee makes monthly
assessments of material individual exposures of the Banque
Populaire Group or for individual banks. Responsibility for
file reviews and the credit rating process may be delegated
to the Banque Fédérale des Banques Populaires’ Risk
Management Department.
Centralization of risks with a single counterparty or group
All Group entities are informed of the decisions made by the
Group Risk Management Committee.
Data on exposures with banking counterparties are
automatically aggregated. The banks have access to the
Banque Fédérale des Banques Populaires risk database
containing information about the largest exposures as well
as to the analyses produced by Natexis Banques Populaires
and the Group Risk Management Committee, which are
regularly updated.
Client credit ratings
Banques Populaires banks, on a consolidated basis;
Non-performing and irrecoverable loans are monitored
separately in the banks, notably to ensure that the Banque
Populaire Group’s conservative provisioning policy is
followed in all cases. Each bank has a committee which
meets regularly in order to review the most significant
troubled loans and commitments and determine
appropriate levels of related provisions. In addition to these
provisions against specific loans the banks may also record
general provisions or reserves, to protect themselves
against a probable escalation of risks in a given industry or
country.
At the end of 2003, the Banque Populaire Group introduced
an internal credit rating system to comply with future
regulatory requirements. This is based on uniform
methodologies throughout the Banque Populaire Group
and centralized credit rating programs for the main client
categories.
subsidiaries of Banque Fédérale des Banques Populaires
on a consolidated basis;
n
n
Crédit Maritime Mutuel on a consolidated basis.
For interbank risks, Banque Fédérale des Banques Populaires
collates details of the limits set by each bank and outstanding
commitments by counterparty. Its Risk Management
Department monitors aggregate exposures by counterparty,
based on limits that take into account the counterparty’s
financial characteristics and the weighting of the Group’s
commitments in relation to the counterparty’s total financing facilities.Any difference in assessment of the level of the
Group’s exposure or that of a Group bank are referred to
the monthly meeting of the Group Risk Management
Committee for consideration.
As part of the Basel II project the Risk Management
Department of Banque Fédérale des Banques Populaires is
developing an information system covering the Group’s
exposures in their entirety.
Market risks
The Group’s exposure to market risks primarily concerns
Natexis Banques Populaires, a subsidiary of Banque Fédérale
des Banques Populaires. Natexis Banques Populaires’ market
risk monitoring system is described below.
Counterparty risk
Exposure limits have been set for commitments to capital
market counterparties,most of which are banking institutions.
These limits are set by an ad hoc committee and are
monitored by the bank’s risk monitoring system. Any limit
overruns are reviewed at special monthly committee
meetings.
Market risk policy
Natexis Banques Populaires is active in capital markets
through the Global Debt & Derivatives Markets and Equity
Group Departments. Activities include intermediation,
brokerage and asset management for clients and proprietary transactions.
Proprietary transactions fall into several categories:
n
transactions to facilitate client transactions,
n
trading transactions,
n
arbitrage transactions,
n treasury transactions to manage overall interest rate and
mismatch risks.
The entities carrying proprietary risks are the Global Debt
& Derivatives Markets and Equity Group Departments.
Market risk management system
The permanent system for control of market risk at
Natexis Banques Populaires comprises 3 pillars:
n a three-tier control architecture in the form of each entity’s
middle office, the Internal Control Department and the
Risk Deparment, these last two providing independent
monitoring of risks;
a market risk measurement methodology to quantify the
bank’s risk exposure;
n
a system of exposure limits based on the risk indicators
defined using the internal risk measurement methodology
and applied to both Natexis Banques Populaires and its
subsidiaries.
n
Control over market risks is based on a risk measurement methodology that assesses market risk faced by all
entities of the Banque Populaire Group. The current
methodology uses standard indicators and Natexis
Banques Populaires is developing an internal Value-atRisk (VaR) model.
The main standard indicators used include sensitivity to the
various market risks including interest rate, currency,
equity, commodity, volatility and issuer risks.
Alongside these standard indicators, Natexis Banques
Populaires performs VaR calculations.The Natexis Banques
Populaires Group uses a historic VaR approach.This serves
to quantify the potential losses on capital market activities
using capital adequacy assumptions.
The heads of all capital markets businesses are assigned
exposure limits defined by reference to risk management
indicators.
Delegations of authority are decided at monthly meetings
of the Market Risks Committee.
Market risk exposures are measured on a daily basis by
middle offices using data from front office systems or
specially developed tools.
Compliance with exposure limits is also checked on a daily
basis by middle offices, which report any overrun to the
relevant operational management team, the Internal
Control Department and the Risks Department. For each
overrun, a decision on whether to temporarily allow the
overrun or to bring exposure back within limits immediately,
is taken jointly by the business line, the middle office and
the Risks Department.
Aggregate interest rate and
liquidity risks
Interest rate risk corresponds to the risk of losses or an
erosion of interest margins due to an unfavourable change
in interest rates, and is analyzed as a margin risk.
Liquidity risk is the immediate risk of being unable to honor
the bank’s debts or to finance assets.
A specific policy for each bank
Each bank is responsible for managing its own interest rate
and liquidity risks in compliance with the methods and
rules set out in the Group procedure manual as updated in
April 2004. The executive management of each bank
determines the bank’s financial risk policy, subject to
approval from the Board of Directors, with the aim of
defining the best strategy to increase interest margins while
also reducing the related risks: striking an appropriate
balance between business growth and interest rate and
liquidity risk, reducing exposure to interest rate risk
through appropriate hedging programs, validating the rules
governing the organization and control of balance sheet
risk lines and defining and periodically monitoring internal
exposure limits.
Working with the Banque Populaire Group finance
executives, Banque Fédérale des Banques Populaires has
produced an interest rate and liquidity risk procedure
manual comprising management rules, measurement
standards (methodologies and scenarios) and procedures
dealing with exposure limits.
Interest rate risks: exposure limits are expressed as a
percentage of expected interest margin, on a ‘rolling’ basis
that takes account of predicted increases in commitments
and of earnings capacity on a ‘fixed basis’ using the balance
sheet at the previous year end, over a four-year time frame
and according to pre-defined scenarios.
Liquidity risks:mismatch limits are expressed as a percentage
of assets, taking account of forecast increases in commitments, based on normal and crisis scenarios over
timeframes of up to four years.
179
As part of the Basel II project, work will continue to ensure
an overview of risk exposure in the Group as a whole.
Interest rate and liquidity reporting structures for the
Banque Fédérale des Banques Populaires sets the assumptions to be used for the various scenarios and ensures that
the sensitivity of profits at the Banque Populaire banks to
changes in interest rates is compatible with the earnings
capacity at each bank.
Banque Fédérale des Banques Populaires’ Risk Management
Department has set up an information system to report
details of interest rate and liquidity risk exposures of all
Banque Populaire banks on a standard basis. This reporting
data provides the Group Risk Management Committee with
a comprehensive overview of risks on which to base recommendations to the Board of Directors concerning capital
adequacy decisions.
Operational risks
Managing operational risks
The management of operational risks is based primarily on
internal control systems organized at the level of each
individual bank in accordance with the requirements of
CRBF 97-02. The Group’s approach is based on a risk
management manual, currently being revised, a detailed
inventory of the activities covered and a reporting system.
The definition of operational risk used is that provided by
the regulator: the risk of loss resulting from inadequate or
failed internal processes, people and systems, or from
external events. A mapping of such risks, based on this
definition, has been undertaken by the Banque Populaire
Group, classifying risks into four main categories: systems
and processes, fraud and external risks, legal and
compliance risks and strategic risks.
180
The work undertaken in the risk mapping exercise of the
Basel II project will ultimately provide the Group Audit
and Risks Committee with a centralized overview of the
magnitude of operational risks.
In addition work was carried out in the third quarter of
2004, under the supervision of Banque Fédérale des
Banques Populaires, with a view to establishing a common
methodology throughout all entities in the Banque
Populaire Group, based on harmonized manuals for the
review of activities and information systems and a guide for
the creation of business continuity plans. Based on best
practice within the group, this will allow the entities to
build on existing practice to develop, during 2005, updated
business continuity plans that meet the requirements of the
regulator.Tests of the two major crisis scenarios (unavailability of IT systems and inaccessibility of premises) will be
organized during the first half of 2005.
Insurance and risk coverage
In common with other banking groups, Banque Populaire
Group insures its major risks through policies with
insurance and re-insurance companies. The policies taken
out for 2005 complete the creation of a structure covering
substantial and significant risks for the Banque Populaire
Group. Policies cover corporate and management liability,
fraud and embezzlement risks, the bulk of the Group’s IT
infrastructure and buildings and significant sites such as the
central offices and data centres.The policies cover business
interruption and consequential loss at each entity.
As in 2004, the entire program has been renewed for 2005
on generally better terms than previously available.
All cover is provided by leading international insurers of
recognized and unquestionable standing.
Future developments
Preparations for a new international banking solvency ratio,
the so-called Basel II ratio, is a major strategic project for the
Banque Populaire Group. Launched in 2000, and overseen by
the Group’s most senior management, this major project
covers all business lines, involves all banks and data centers
and has mobilized teams throughout the Group.
The project has been based on standardized methodologies
and systems selected by the Board of Directors of Banque
Fédérale des Banques Populaires. It had been widely and
successfully implemented for major asset classes by the end
of 2003. This has been followed by the introduction of
standardized management tools and, for operational risks,
the updating and group-wide introduction of risk mapping
and measurement tools.
Combating money laundering
and promoting the highest ethical
standards
Combating money laundering
Programs to prevent the laundering of the proceeds of
crime have been in place since the beginning of the 1990s
and, following the events of September 11, 2001, they were
extended to include measures to combat the financing of
terrorism.
In these two complementary areas, Banque Fédérale des
Banques Populaires has been committed to defining
preventative procedures and providing training tools for
employees of Banque Populaire Group banks.
Increased detection resources
Banque Fédérale des Banques Populaires has issued a
framework set of anti-money-laundering guidelines and
distributed an updated version in 2004.This system applies
to all financial establishments in the Banque Populaire
Group. This framework will be incorporated in the
operating procedures of each bank. It includes a catalogue
of data query procedures designed to comply with the legal
and regulatory standards of vigilance.
To increase the automation of the system, Banque Fédérale
des Banques Populaires has selected a software system for
the management of lists of terrorists published by the
authorities for all Banque Populaire Group establishments
(decision of the Board of Directors on January 22, 2003).
Linked with a system for updating lists, the structure adopted
is based on centralized monitoring of transactions carried
out by Natexis Banques Populaires and decentralized
supervision of local client accounts.
Internal control procedures
covering financial and
accounting information
A group-wide training program
Preparation of the consolidated
financial statements
Throughout 2004, considerable attention continued to be
paid to increasing staff awareness and training in antimoney-laundering procedures.This process was supported
by the use of a system developed by the Fédération des
Banques Françaises.
Ethics and compliance
The Banque Populaire Group considers the application of
the highest ethical standards to be a critical factor in
sustainable development, and to this end increased the
resources devoted to the ethics program in 2004.
A single regulatory framework for the entire Banque
Populaire Group
Within the Banque Populaire Group, the Code of Ethics
produced by Chambre Syndicale des Banques Populaires
(now Banque Fédérale des Banques Populaires) has served
as the blueprint for the internal ethical rules drawn up for
each Group entity.
The central purpose of these rules is to protect clients’
interests at all times. Within the framework of applicable
laws, regulations and conventions, they require all
employees to adhere to the highest standards of diligence,
loyalty, neutrality and discretion.
A Compliance Officer in each bank
A Compliance Officer has been appointed at each Banque
Populaire bank. At Natexis Banques Populaires, to comply
with the spirit of the guidelines issued by the French securities
regulator (Conseil des Marchés Financiers, now renamed
AMF), this function, which was segregated from the internal
audit and control function in 2002, has benefited from a
steady increase in resources and structures during 2003
and 2004, with a significant increase in staff numbers and a
deployment of resources in all business lines.
The Central Compliance Team is responsible for coordinating
the ethical compliance structures at Natexis Banques Populaires
and its subsidiaries, for monitoring people in sensitive
positions at Natexis Banques Populaires, supervision lists,
monitoring and managing multi-department projects, supervising the Compliance Officers dedicated to each business
line and working with the Heads of these business lines.
Even though Banque Fédérale des Banques Populaires does
not provide investment services,it has appointed a Compliance
Officer. It plays a key role in guiding and promoting ethical
practice throughout the Banque Populaire Group. In particular it is responsible for distributing and commenting on all
documents published relating to the area of ethics.
The consolidated financial statements of Banque Fédérale
des Banques Populaires and the Banque Populaire Group
are prepared by Banque Fédérale des Banques Populaires in
its capacity as central body of the Banque Populaire banks
and holding company of the Natexis Banques Populaires
sub-group. The Banque Fédérale des Banques Populaires
Finance Department has drawn up and deployed a consolidation manual designed to guarantee the reliability of the
process. It is based on the following core principles:
definition and communication of accounting principles for
the Banque Populaire Group including the analysis and
interpretation of new texts issued during the period, both for
French and International (IFRS) accounting standards;
n
use of the direct consolidation method, to permit detailed
examination of the consolidation packages of consolidated
entities according to a formal review process;
n
use of a single consolidation system for all consolidations and
sub-consolidations conducted within the Banque Populaire
Group in order to guarantee the internal consistency of the
scope of consolidations, definitions, standards, charts of
accounts, processing sequences and analyses;
n
checking of data reported by consolidated entities through
the distribution of application interfaces and the use of more
than 5,800 accuracy and consistency tests which must be
completed for the data to be transmitted;
n
n item by item analysis of all entries that impact on consolidated shareholders’ equity and production of a tax proof
for each consolidated entity enabling, respectively, to
provide full evidence of consolidated shareholders’ equity
and individual justification of deferred taxes. During 2004,
this individualized checking was extended to all entities in
the Coface consolidation sub-group;
n an audit trail system to trace the accounting data published
in the financial statements and the notes back to the accounts
of each consolidated entity and the consolidation adjustments;
n archiving and security procedures including the twice-daily
back-up of the unified consolidation database and regular data
recovery testing;
n regular training of accounting teams at the consolidated
entities and action to promote the use of best practice
throughout the Banque Populaire Group.
During 2004 the Banque Populaire Group undertook a quarterly
consolidation process. Quarterly figures are not published but
represent a significant advance in internal control systems,
notably in improving anticipation of transactions for the year,
increasing reliability of forecasting consolidated figures and
more frequent reconciliation of intra-Group transactions.
181
Preparation for conversion of
Group consolidated financial
statements to IFRS
The program to convert Group consolidated financial
statements to International Financial Reporting Standards
(IFRS) was launched in June 2002. It is managed by Banque
Fédérale des Banques Populaires’ Finance Department.
The first stage, analysis of the relevant documents, was
followed by a second stage of defining operational
solutions. Deployment of the IT developments required
for the conversion began in 2004 and will continue into
2005 in keeping with the original timetable, which has been
met so far.
As part of this program, Banque Fédérale des Banques
Populaires’ Finance Department has designed and distributed
a new consolidation package, allowing the identification and
checking of all information additional to that required
under French accounting standards to enable a transition
to IFRS.This solution, with more than 3,250 tests, provides
a full audit trail between consolidated financial statements
prepared under French standards and those prepared
under IFRS. The deployment of this solution, which has
been operational since June 2004, was supported by a
massive training programme for accounting and financial
staff in each of the consolidated entities in the Banque
Populaire Group.
Consolidated financial statements for 2004, prepared
under IFRS (without application of IAS 32 or IAS 39) will
be presented to the Board of Directors of Banque
Fédérale des Banques Populaires on April 20, 2005.
Control process
182
Internal control processes at the level of
the consolidated entities
Reflecting the decentralized nature of the Banque
Populaire Group, internal control procedures are tailored
to the organization of each of the consolidated entities. In
all cases, the process includes several layers of controls:
basic permanent controls are included in processing
programs at the operational level;
n
n second-tier independent checks of processing operations
performed by Finance and Accounting Departments, to
ensure the accuracy and completeness of accounting data;
n third-tier controls by internal auditors, corresponding to
controls of controls;
n fourth-tier controls by the Audit or Risk Management
Committees set up by the main entities covered by the
scope of consolidation of the Banque Populaire Group.
Their purpose is to analyze individual and consolidated
accounts of the entities concerned and to ensure the
appropriateness and consistent application of accounting
methods and reviews of the main assumptions used to
prepare the financial statements.
These continuous and periodic controls, performed in the
different accounting system environments within the
Banque Populaire Group, include reviews of account
analyses produced by various departments, checks to
ensure that suspense items are cleared and errors corrected
on a timely basis and monitoring of indicators for ‘sensitive’
accounts.
Top level controls
In addition to the self-checking and external checking procedures performed at the level of the local entities responsible
for preparing individual or consolidated accounts, the quality
of accounting controls is verified by:
n Banque Fédérale des Banques Populaires, which reviews
the regulatory reporting schedules prepared by the Banque
Populaire banks (BAFI 4000 schedules and supplementary
schedules) in its capacity as the network’s central body. To
enhance the effectiveness of these controls the Banque
Fédérale des Banques Populaires Finance Department has
elected to review these schedules on a monthly basis, thus
going beyond the requirements of the French banking regulator
(Commission Bancaire) for quarterly reviews;
n the group’s external auditors, who work in collegiate
fashion and whose opinions are based in part on the conclusions of the external auditors of each of the consolidated
entities, particularly as regards compliance with the standards
of the Banque Populaire Group, as laid down by Banque
Fédérale des Banques Populaires, and the effectiveness of
local internal control procedures;
n periodic internal audits by the Banque Fédérale des
Banques Populaires Internal Audit Department at various
entities within the Banque Populaire Group and at the
Banque Fédérale des Banques Populaires.
Role of the Audit Committee
The Audit Committee of Banque Fédérale des Banques
Populaires, whose role is described on page 13, met twice
in the presence of the external auditors, on September 3,
2004 and February 21, 2005 to review consolidated
accounts for Banque Fédérale des Banques Populaires and
the Banque Populaire Group to June 30 and December 31,
2004 respectively, prior to their presentation to the full
Board of Directors.
n
n Under the framework established by the Commission
Bancaire (CRBF 97-02) for supervision of credit institutions,
the Internal Audit and Risk Management Department of
Banque Fédérale des Banques Populaires submits to the
Group Risk Management Committee and to the Board of
Directors an annual report on internal control in the
This report is based on a detailed questionnaire which
allows the assessment of internal control procedures,
particularly as they concern accounting and financial
information from consolidated entities, and includes
consolidated information where appropriate.
Outlook
In 2005, as in 2004, the Banque Populaire Group will
pursue strategies to optimize its data processing and
control systems and to adapt these systems to keep pace
with business development and with changes in the
regulatory framework, such as Basel II, IFRS standards and
banking regulations.
The efforts undertaken to rationalize the resources and
working methods of the teams responsible for producing,
checking and monitoring accounting and financial reporting
schedules will also be pursued.
Concerning financial and accounting internal control, the
Banque Populaire Group has launched a number of shortterm and medium-term projects. These concern, in
particular, the continued migration of the Banque Populaire
banks to the i-BP accounting system, the full integration of
the Coface sub-group in the Group’s direct consolidation
system, as part of a change of software due in mid-2006,
and a reduction in closing times for accounts within the
Group.
The emphasis will now shift to the gradual integration of
the IFRS manual in the accounting processing chain for all
entities, so as to produce dual-standard accounting for any
given single event.
183
Statutory auditors’ report on the Chairman’s report
on internal control procedures
Prepared in accordance with the final paragraph of Art. L. 225-235 of the French
Commercial Code (Code de Commerce) on the report prepared by the Chairman of
the Board of Directors of the Banque Populaire Group on the internal control
procedures relating to the preparation and processing of financial information.
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely
for the convenience of English speaking readers. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
In our capacity as Statutory Auditors of the Banque Populaire Group and in accordance with the final
paragraph of Art. L. 225-235 of the French Commercial Code (Code de commerce), we report to you on the
report prepared by the Chairman of the Board of Directors of the Banque Populaire Group in accordance
with Art. L. 225-37 of the French Commercial Code for the year ended December 31, 2004.
Under the responsibility of the Board of Directors, management must define and implement appropriate and
effective internal control procedures. In his report, the Chairman of the Board of Directors is required to give
an account of the conditions in which the work of the Board of Directors is prepared and organized and the
internal control procedures in place within the Group.
It is our responsibility to report to you our observations on the information set out in the Chairman’s report
on the internal control procedures relating to the preparation and processing of financial and accounting
information.
We performed our procedures in accordance with professional guidelines applicable in France.These require
us to perform procedures to assess the fairness of the information set out in the Chairman’s report on the
internal control procedures relating to the preparation and processing of financial and accounting information.
These procedures notably consisted of:
184
– obtaining an understanding of the objectives and general organization of internal control, as well as the internal
control procedures relating to the preparation and processing of financial and accounting information, as set
out in the Chairman’s report;
– obtaining an understanding of the work performed to support the information given in this report.
On the basis of these procedures, we have no matters to report in connection with the information given on
the internal control procedures relating to the preparation and processing of financial and accounting
information, contained in the Chairman of the Board’s report, prepared in accordance with the final paragraph
of Art. L. 225-37 of the French Commercial Code.
Paris and Neuilly-sur-Seine, March 23, 2005
ERNST & YOUNG
SALUSTRO REYDEL
Michel Savioz
Additional
information
185
Person responsible for the AMF
186
Statement by the person responsible for the AMF
186
Financial Communications
186
Dependence
186
Exceptional events, claims and litigation
186
Statement by the Statutory Auditors on the AMF
187
Autorité des marchés financiers (AMF) checklist
188
Person responsible for
the AMF shelf-registration
document
Philippe Dupont, Chairman of the Banque Populaire Group
and Chairman and Chief Executive of Banque Fédérale des
Banques Populaires.
Financial Communications
Financial calendar
n
Publication of 2004 results of the Banque Populaire Group
and Natexis Banques Populaires.
n
Statement by the person
responsible for the AMF
“To the best of my knowledge, the information in this
shelf-registration document is correct and includes all the
information required by investors to form an opinion about
the assets and liabilities, business, financial position, results
and outlook of the Group. No information has been
omitted that would be likely to alter an investor’s opinion.”
February 25, 2005
April 21, 2005
Press release (IFRS)
n
May 19, 2005
Annual shareholders’ meeting of Banque Fédérale des
Banques Populaires (morning) and Natexis Banques
Populaires (afternoon)
n
September 8, 2005
Publication of 2005 first-half results of the Banque
Populaire Group and of Natexis Banques Populaires under
IFRS
Information Officer
Pierre Jacob
Head of Investor Relations
Tel: +33 (0) 1 40 39 68 79 / Fax: +33 (0) 1 40 39 63 40
[email protected]
The Chairman
Philippe Dupont
Dependance
The Banque Populaire Group is not dependent on any
patents, licences, or industrial, sales or financial contracts
for the conduct of its business.
186
Exceptional events, claims
and litigation
No exceptional events have occurred or are in progress and
no claims or litigation are pending or in progress that would
be likely to have a material impact on the business, results or
financial position of the Banque Populaire Group.
Additonal information
Statement by the Statutory Auditors on the AMF
This is a free translation into English of the Statutory Auditors’statement issued in the French language and is provided solely for the convenience
of English speaking readers.This statement should be read in conjunction with, and construed in accordance with, French law and professional
auditing standards applicable in France.
In our capacity as Statutory Auditors of the Banque Populaire Group and as required by Art. 211-5-2 of the General Regulations of
the AMF, we have examined, in accordance with French professional standards, the information about the financial position and the
historical accounts included in the shelf-registration document.
The shelf-registration document is the responsibility of Philippe Dupont, Chairman of the Banque Populaire Group and Chairman
and Chief Executive of Banque Fédérale des Banques Populaires. Our responsibility is to express an opinion on the fairness of the
information about the financial position and accounts contained in the shelf-registration document.
Our procedures, which were performed in accordance with French professional standards, consisted of assessing the fairness of the
information about the financial position and the accounts and verifying that this information agrees with the audited financial
statements, reading the other information contained in the shelf-registration document in order to identify any material inconsistencies with the information about the financial position and the accounts, and reporting any manifestly incorrect information that
came to our attention, based on our knowledge of the Group as acquired during our audit.The shelf-registration document does
not contain any forward-looking information determined according to a structured process.
The consolidated financial statements for the year ended December 31, 2002, as approved by the Board of Directors of Banque
Fédérale des Banques Populaires, were audited by Barbier Frinault & Autres and PricewaterhouseCoopers Audit, according to
generally accepted French auditing standards.They expressed an unreserved opinion on these financial statements.Their report
included the following observation,“Note 40 to the consolidated financial statements describes a change of method arising from the
adoption effective from January 1, 2002, of standard CRC 2000-06 dealing with liabilities ".
The consolidated financial statements for the year ended December 31, 2003, as approved by the Board of Directors of Banque
Fédérale des Banques Populaires, were audited by Barbier Frinault & Autres and PricewaterhouseCoopers Audit, according to
generally accepted French auditing standards.They expressed an unreserved opinion on these financial statements.Their report
included the following observation,“Note 1.3 to the consolidated financial statements describes a change of accounting method
arising from the first-time adoption of standard CRC 2002-03 dealing with the accounting treatment of credit risks in companies
governed by the Comité de la réglementation bancaire et financière and of standard CRC 2002-10 relating to the depreciation,
amortization and impairment of assets ".
We audited the consolidated financial statements for the year ended December 31, 2004, as approved by the Board of Directors of
Banque Fédérale des Banques Populaires.Our audit was performed in accordance with generally accepted French auditing standards.
Our report on these statements did not include any qualification or observation.
Based on the procedures described above, we have nothing to report with respect to the fairness of the information about the
financial position and the historical accounts contained in this shelf-registration document.
Neuilly-sur-Seine and Paris, March 24, 2005
ERNST & YOUNG
SALUSTRO REYDEL
Michel Savioz
The shelf-registration document also includes:
n The Statutory Auditors’ report on the consolidated financial statements for the year ended December 31, 2004 (included in
the section “2004 Financial Information” of the shelf-registration document), including the justification of the Statutory Auditors’
assessments in accordance with Art. L. 225-235 of the French Commercial Code (Code de commerce);
The Statutory Auditors’ report (included in the section “Chairman’s report on internal control procedures” of this shelf-registration document), drawn up in accordance with the final paragraph of Art. L. 225-235 of the French Commercial Code (Code de
commerce), on the report of the Chairman of the Board of Directors of Banque Fédérale des Banques Populaires describing the
internal control procedures relating to the preparation and processing of financial and accounting information.
n
187
Autorité des marchés financiers checklist
The Annual report plus the sections listed below represent the shelf-registration
document registered with the Autorité des marchés financiers.
Statements by the persons responsible for the shelfregistration document and the Statutory Auditors
Pro forma financial information
Statement by the person responsible for
the shelf-registration document
p. 186
Financial statements of the bank
and notes
Not applicable
Statement by the Statutory Auditors
p. 187
Interim financial statements
Not applicable
Information policy
p. 186
Regulatory capital adequacy ratios
General information about the issuer
Not applicable
Capital and voting rights
Not applicable
Information about the Group and its business
Organization
Key figures
Segment information
Markets and competition
Investment policy
Performance indicators
p. 22
p. 4
p. 170
p. 52 to 69
p. 90
Not applicable
Analysis of Group risks
Risk factors
n
Market risks
p. 101
n
Specific risks
p. 96
n
Legal risks
n
Industrial and environmental risks
Insurance and hedging
188
p. 102
Not applicable
p. 102
Assets and liabilities, financial position
and results of operations
and notes
Off-balance sheet commitments
Fees paid to auditors and members
of their networks
p. 172
p. 110 and 140
p. 112
p. 20
p. 91
Membership and role of management
and supervisory bodies
p. 10
Membership and role of Board Committees
p. 13
Executive Directors’ compensation,
options granted and exercised and stock
option plans
p. 103
Ten highest paid employees other
than Executive Directors
Not applicable
Regulated agreements
Not applicable
Recent developments and prospects
p. 106
Report of the Chairman on the conditions
in which the work of the Board of Directors
is prepared and organized, and the internal
control procedures in place within
the Company, in accordance with
Art. L. 225-37 of the French Commercial
Code (Code de commerce)
p. 10 and 174
Statutory Auditors’ report, prepared
in accordance with the final paragraph
of Art. L. 225-235 of the French Commercial
Code (Code de commerce) on the report
prepared by the Chairman of the Board
of Directors of the Banque Populaire
Group on the internal control procedures
relating to the preparation and processing
of financial and accounting information
p. 184
The original French language version of this shelf-registration document was registered with the Autorité des marchés
financiers on March 25, 2005 in compliance with Article 211-6 of the General Regulations of the Autorité des marchés
financiers. It may be used in connection with a financial transaction only if completed by an Information Notice
duly registered with the Autorité des marchés financiers.
The shelf-registration document was drawn up by the Banque Populaire Group and is the responsibility of its signatories.
The English language version of this report is a free translation from the original French. All possible care has been taken
to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation, views or
opinion expressed therein the original language version of the document in French takes precedence over the translation.
Copies of this shelf-registration document are available on request, free of charge, from Banque Fédérale des
Banques Populaires, Le Ponant de Paris, 5 rue Leblanc, 75511 Paris Cedex 15
Profile
Interview with Philippe Dupont
2004 key figures
n
– The Board of Directors of Banque
– Chairman’s report on the conditions
in which the work of the Board of
Directors is prepared and organized
– Corporate Governance rules
– Statutory Auditors
– Internal financing mechanisms
1
2
4
n
Group structure
– Introduction
– Simplified financial organization chart
– The Group’s history
– Key events in 2004
– Member-stakeholders
– Banque Populaire banks
– Banque Fédérale des Banques
Populaires
– Natexis Banques Populaires
– The Group’s international offices
6
6
22
24
25
26
27
28
30
40
44
48
10
16
20
21
Contacts
Le Ponant de Paris
5, rue Leblanc, 75511 Paris Cedex 15
Tel: +33 (0) 1 40 39 60 00 – Fax: +33 (0) 1 40 39 60 01
Group Financial Communications
Pierre Jacob
Investor Relations
Cécilia Matissart
Press Relations
Véronique Davet-Fournier
Populaires Communications
Maryvonne Monique Pollet
Fanny Kerecki
n
n
n
50
– Personal banking clients
– Small business clients
– Corporate clients
– Institutional clients
– Banks and financial institutions
52
56
60
66
68
2004 Financial information
84
– Management report
– Financial information
85
107
control procedures
– General organization
– Risk monitoring and control
procedures
– Internal control procedures
covering financial and accounting
information
174
175
177
181
n
– Banque Populaire Group’s
commitment
– Human resources
– Environment and social responsability
– Patronage
– Sponsoring
n
Additional information
– Person responsible for the AMF
– Statement by the person responsible
for the AMF shelf-registration document
– Financial communications
– Dependence
– Exceptional events, claims and litigation
– Statement by the Statutory Auditors
on the AMF shelf-registration document
– Autorité des marchés financiers (AMF)
checklist
70
72
75
80
82
83
Annual reports for Banque Populaire Group, Banque Fédérale des Banques
Populaires and Natexis Banques Populaires can be downloaded under the
heading: “LE GROUPE”
185
186
186
186
186
186
187
188
Printed by Comelli on printers carrying the Imprim’vert sustainable development label.
Printed on paper produced in a ISO 9001 and ISO 14001 certified paper mill using vegetable inks with high biodegradability properties.
2004 annual report
Published by Banque Fédérale des Banques Populaires/Département Communication fédérale - Direction Communication financière Groupe Design-production avant•garde - Tel: +33 (0) 1 45 74 61 61 Printing Comelli Photo credits M. Labelle/BFBP
- F. Delauney/BFBP - L. Le Fur/BFBP - A. Dovifat/BFBP - F.Vallon/Natexis Banques Populaires -Y. Zedda/BFBP - Bananastock - Brand x pictures - Digitalvision - Getty Images - GraphicObsession - Image Bank - Imageshop - Photodisc - Photonica - Stockbyte - Stone
- Stone + - Taxi - Zefa
Cooperation
and enterprise
2004 annual report

PDF - 3.50 MB

Transcription

Similar documents

Overview 2005 - Banque Populaire Group

Speakers biographies

Groupe Banque Populaire Annual Report

Natexis Banques Populaires

banque populaire group

Banques Populaires

Spring Programming - Cornwall Public Library

Le Canard des Tropiques - Alliance Française de Townsville

News Letters - Collections

Activity Report 2014-2015

Untitled - Mount Lehman Credit Union

québec city - La Route accessible

EMC Annual Report 2015