2004 Review of Operations Groupe Caisse d`Epargne

Transcription

2004 Groupe Caisse d’Epargne
A limited Company governed by a Management Board and
a Supervisory Board (Société anonyme à directoire et conseil de surveillance)
with share capital of: 6,905,865,632 euros
registered in Paris under RC registration number: 383 680 220
Annual Report
Caisse Nationale des Caisses d’Epargne
77, boulevard Saint-Jacques – 75673 Paris Cedex 14 – France
Tel.: (33) 1 58 40 41 42 - Fax: (33) 1 58 40 48 00
Website: http://www.groupe.caisse-epargne.com
Annual
Report
Isabelle Monin, Céline Lanoux,
Franck Girel and Guiraude Lame
Contents
2004
02
04
08
CNCE, Paris
Message from the Chairmen
Senior management
■ A new dimension
A new organization
10 ■ Groupe Caisse d’Epargne core business lines
14 ■ Key figures
16 ■ Ambitions for 2007
■
■
Commercial Banking
22
23
23
26
27
28
30
32
33
36
38
39
41
■
■
■
■
■
■
■
■
■
■
■
■
■
Investment Banking
The reference bank for the whole family
A new commercial approach
Savings and insurance
Private asset management
Banking services
Loans
Professional customers
The specialist bank
for regional development
Local authorities and institutions
Social housing
Social economy
Business customers
Real-estate professionals
44
50
54
56
■
■
■
■
Capital markets and financing solutions
Asset management
Asset custody and services
for institutional investors
Financial guaranty
A Bank Founded on Solidarity
and Social Commitment
60
65
67
68
■
■
■
■
Local and social economy projects
The Caisses d’Epargne Foundation
for social solidarity
Sustainable development
Corporate philanthropy and sponsoring
Simplified corporate structure of Groupe Caisse d’Epargne
The Group’s principal brands
Annual Report
Tel.: (33) 1 58 40 41 42 - Fax: (33) 1 58 40 48 00
Annual
Report
Contents
2004
02
04
08
CNCE, Paris
Senior management
■ A new dimension
A new organization
14 ■ Key figures
■
■
Commercial Banking
22
23
23
26
27
28
30
32
33
36
38
39
41
■
■
■
■
■
■
■
■
■
■
■
■
■
Investment Banking
Banking services
Loans
The specialist bank
Social housing
Social economy
Business customers
44
50
54
56
■
■
■
■
Asset management
Financial guaranty
60
65
67
68
■
■
■
■
Simplified Corporate Structure of Groupe Caisse d’Epargne
January 1, 2005
450 local savings
companies (LSC)
The Group’s Principal Brands
80%
(shares in LSC)
3.1 million
cooperative shareholders
Caisses
d’Epargne
Fédération Nationale
des Caisses
d’Epargne
20% (CCI)(1)
65%
Caisse Nationale
des Caisses
d’Epargne
Commercial Banking
Crédit Foncier
Banque Sanpaolo
Financière OCEOR(2)
Subsidiaries
and investments
Specialized in local
banking operations
■ CEFI
(3)
■ CNP
■ Ecureuil Vie
■ Ecureuil
Assurances IARD
(4)
■ GCE Garanties
■ Gestitres, etc.
35%
Caisse des Dépôts
Investment banking
100%
97.55%
IXIS Corporate &
Investment Bank
60%
73.9%(5)
IXIS Asset
Management Group
100%(5)
100%
IXIS
Investor Services
100%
IXIS Financial
Guaranty – CIFG
1 - Cooperative investment certificates representing 20%
of the capital of the Caisses d’Epargne entitling holders
to receive dividends but including no voting rights.
2 - The Financière OCEOR holding company owns the Group’s
investments in its overseas banks.
3 - 17.74% held by Sopassure, a 49.98% subsidiary
of the CNCE
4 - Formerly Eulia Caution
5 - Direct and indirect interests
Design and production
W PRINTEL - 33 (0) 1 72 27 01 00
Photos: Grégoire Korganow/ Agence Rapho, Jean-Louis Courtinat, William Parra, Xavier Zimbardo.
Cover: Aurélie Fouilleron, IXIS AM Paris
January 1, 2005
450 local savings
companies (LSC)
80%
(shares in LSC)
3.1 million
Caisses
d’Epargne
des Caisses
d’Epargne
20% (CCI)(1)
65%
Caisse Nationale
des Caisses
d’Epargne
Commercial Banking
Crédit Foncier
Banque Sanpaolo
Subsidiaries
and investments
banking operations
■ CEFI
(3)
■ CNP
■ Ecureuil Vie
■ Ecureuil
Assurances IARD
(4)
■ GCE Garanties
■ Gestitres, etc.
35%
Caisse des Dépôts
Investment banking
100%
97.55%
IXIS Corporate &
Investment Bank
60%
73.9%(5)
IXIS Asset
Management Group
100%(5)
100%
IXIS
Investor Services
100%
IXIS Financial
Guaranty – CIFG
of the CNCE
W PRINTEL - 33 (0) 1 72 27 01 00
Groupe Caisse d’Epargne
A major universal bank
offering a complete range of services
to all types of customers
As one of the front-ranking major French banks,
Groupe Caisse d’Epargne offers a full range
of business activities and services associated
with commercial and investment banking.
This enables the Group to satisfy the needs
of all types of clientele: individual, professional
and corporate customers, financial institutions,
local authorities, entities active in the social
economy, and real-estate professionals.
Leading positions in both commercial
and investment banking activities
With a total of 26 million customers in France,
Groupe Caisse d’Epargne is one of the top three banking
institutions in several market segments: savings, life
insurance and loans to individual customers, real-estate,
the financing of local authorities, regional venture
capital, asset management, and custody services.
Present in the major financial centres worldwide,
the Group is no.1 in French institutional asset
management, no.1 as dealer for euro-denominated
structured private placements, no.1 in Europe (and no.4
worldwide) in real-estate asset management services.
An extremely sound financial profile
Groupe Caisse d’Epargne’s financial profile—with capital
funds of ¤18 billion for total assets of almost ¤544 billion,
net banking income of ¤9 billion and a net earning
capacity of ¤1.9 billion, with retail banking activities
accounting for more than 70% of the earning capacity—
enables the Group to benefit from one of the highest
credit ratings enjoyed by any French banking institution:
AA / Aa2 / AA.
■
1
Message from the
Chairmen
Jacques Mouton
Chairman of the Supervisory Board
of the Caisse Nationale des Caisses d’Epargne
(left)
Charles Milhaud
Chairman of the Management Board
(right)
Last year, we announced that 2003 was an historic year for
Groupe Caisse d’Epargne… So what words can we use to qualify
2004? Looking back on every year since 1999, we could easily
describe each one as “historic” and we are indeed extremely
proud of the progress achieved over the past five years.
Following the acquisition of IXIS investment bank, Groupe
Caisse d’Epargne became a major universal bank in 2004,
one of the front-ranking all-purpose banks in France. That same
year, Banque Sanpaolo (a bank specialized in the SME market
segment) and Entenial (acquired by Crédit Foncier) came to join
the Group structure to reinforce the commercial banking division.
2
■
“
“
A Group
focused
on growth
The successful completion of these steps confirms the Group’s
vocation as a multi-brand, multi-business financial institution
active in all market segments with an extensive range of products
and services. The bank benefits from front-ranking positions in all
its core business activities and, through its investment banking
division, is present in all the major international financial markets.
At the same time, we have pursued a policy of strategic
partnerships with major institutions: Macif and Maif
in areas related to insurance, personal assistance and support
services, or the investment bank Lazard in the primary equities
market. The partnership with Lazard was further reinforced
in March 2005 with the signature of a financial and industrial
agreement.
After the successful completion of our previous strategic plan,
the Group has again set itself an extremely ambitious
programme for the next three years. Presented in November
2004 at an extraordinary convention in Paris attended by
nearly 5,000 employees, this new strategic plan translates a
determined focus on continued growth. It aims at combining
sustained growth with high levels of profitability, promoting
synergies and the potential of a Group as a resolutely multibrand, multi-business and multi-channel financial institution,
achieving a high level of quality and operational efficiency and
to make its commitment to society a factor that sets it apart
from other financial institutions.
In its commercial banking activities, the main thrust of future
growth will be driven by a transparent, competitive
(and even revolutionary!) range of products and services,
investments in our distribution channels, the intensive training
of our sales teams, the personalized management
of customer relations, the development of private asset
management activities, etc.
In the area of regional development, the Group fully intends
to reassert its vocation as a partner of all regional economic
entities by consolidating the strong positions it already enjoys
with local authorities and institutions, players active in the
social economy and subsidized housing sector. It also intends
to reinforce its market share throughout France as a financial
partner of small- to medium-sized enterprises.
The investment banking division will also enjoy strong growth
thanks to the broader range of products and services available
to the Group’s distribution networks and to the dynamism
of its own commercial banking activities. IXIS Corporate &
Investment Bank will expand its clientele of major institutional
accounts while simultaneously pursuing the strategy it adopted
in 2003 as a specialized financial institution. IXIS Asset
Management Group will consolidate its position as a global
player present in all asset classes and offering a variety of
management types. It will pursue the expansion of its range of
alternative management and multi-management solutions.
Lastly, the Group intends to become a key player in institutional
custody services and services tailored for investors both in France
and in Europe by forging closer links between IXIS Investor
Services and its counterpart in the Crédit Agricole Group.
Risk management and the supervision of the Group in its new
dimension are two essential aspects of the strategic plan.
In order to base its growth on secure foundations, the drive
to adapt to changes in the regulatory environment will be
pursued, internal control mechanisms will be reinforced, and
the tools used to monitor the Group and its core business
activities will be updated.
The human resources and IT policies have a major role to play
in this strategic plan. The Group’s new dimension gives a new,
broader scope to human resources leading to the creation
of a true community, with reinforced management/employee
relations and career management paths designed to forge
closer ties between individuals and business organizations.
The drive to enhance the efficiency of our information systems
will be actively pursued to offer all our customers even greater
quality: shared architecture, rationalization of our industrial
resources, development of production facilities, etc.
While actively pursuing these developments and reasserting its
ambition, the Group has increased the range and depth of its
commitments to society. The Caisses d’Epargne Foundation for
Social Solidarity has again intensified its fight to reduce all
forms of dependency related to old age or disability, and
stepped up its combat against illiteracy. The Caisses d’Epargne
has financed more than 2,350 local and social economy
projects representing a total investment of ¤50 million, and
the Group is resolutely committed to the values of sustainable
development.
These fine results are the fruit of the dedication and
investment of 55,000 men and women, who have worked,
and who continue to work every day, to make Groupe
Caisse d’Epargne the major banking institution it has now
become. By giving them pride of place in this annual report,
we wanted to pay tribute to their efforts and personal
commitment.
Jacques Mouton
Charles Milhaud
■
3
The Senior Management
of Groupe Caisse d’Epargne
The organizational structure
and corporate governance
■
Mutual benefit structures
The individual Caisses d’Epargne, which represent the very
foundations upon which the Group is built, are cooperative savings
banks; 80% of their share capital is owned by local savings
companies, which also hold 100% of all voting rights.
Every customer of an individual Caisse d’Epargne—whether a
private individual or legal entity—may acquire shares in a local
savings company and thereby become a “cooperative
shareholder”. At December 31, 2004, Groupe Caisse d’Epargne
gathered 3.1 million cooperative shareholders grouped within
450 local savings companies.
Each Caisse d’Epargne is administered by a Management Board
of between two and five members, which is itself supervised
by an 18-member Steering & Supervisory Board (COS).
The regional Caisses d’Epargne own 65% of the Caisse Nationale
des Caisses d’Epargne (CNCE) with the remaining 35% held
by the Caisse des Dépôts. The CNCE holds 20% of the capital
of the individual Caisses d’Epargne in the form of cooperative
investment certificates (CIC), which entitle the bearer to receive
dividends but confer no voting rights.
■
The Caisse Nationale
des Caisses d’Epargne
The CNCE is a French société anonyme governed
by a Management Board and a Supervisory Board.
It has four main roles:
■ As the central institution of the Group (as defined by French
banking law), it is responsible for taking all measures related
to the organization and administration of the individual Caisses
d’Epargne and other affiliated entities with a view to ensuring
the cohesion, and guaranteeing the liquidity and solvency,
of the network as a whole,
4
■
As the network head, it is responsible, in particular, for deciding
the strategy pursued by the Group, approving the appointment of
senior management staff, defining the products and services
distributed by the Caisses d’Epargne, protecting customer
deposits and guaranteeing the financial solidarity mechanisms
within the Group,
■
As the holding company of the Group, it owns equity interests
in the national subsidiaries, and defines the development policy
of the different core business lines,
■
As the banker to the Group, it is responsible, in particular,
for the centralized management of any surplus funds held by the
Caisses d’Epargne and for proceeding with any financial transactions
useful for the development and refinancing of the network.
■
■
Corporate governance
The CNCE is administered by a five-member Management Board
and by a Supervisory Board with a total of 20 members:
■ Twelve representing the Caisses d’Epargne,
■ Six representing the Caisse des Dépôts,
■ Two representatives elected by the retail network personnel.
The Supervisory Board of the CNCE also includes four non-voting
directors (censeurs): one senior executive from the Group and
three independent directors from major corporations. Although
they do not vote on motions, they give their independent advice,
their knowledge of the economic and financial environment,
and their expertise as managers.
Three specialized committees—whose existence and composition
are provided for by the articles of association adopted by the
CNCE—also assist the Supervisory Board in its deliberations.
They are composed of seven members (including the Chairman):
four representing the Caisses d’Epargne and three representing
the Caisse des Dépôts.
From left to right:
Guy Cotret
Nicolas Mérindol
Charles Milhaud
Anthony Orsatelli
Pierre Servant
The Audit Committee, chaired by a representative
of the Caisse des Dépôts, is responsible for ensuring the accuracy
of information provided to the shareholders. It expresses an
opinion on the Group’s annual accounts and monitors the
application of the recommendations resulting from the work
of the Internal Audit department and the French Banking
Commission concerning the Group’s different entities. One of its
members is a censeur from the Supervisory Board.
The Remuneration & Selection Committee is chaired by
the Chairman of the Supervisory Board of the CNCE. It is
responsible for submitting recommendations to the Supervisory
Board regarding the forms of compensation granted to the
members of the CNCE Management Board. It verifies the nature
and implementation of the criteria drawn up by the CNCE
Management Board governing the appointment and renewal
of senior management personnel within CNCE affiliated
companies, and submits these managers to the Supervisory Board
for approval. One of its members is also a censeur from
Supervisory Board.
The Strategy & Development Committee was set up
on December 16, 2004 and is chaired by a representative
of Groupe Caisse d’Epargne. This committee is responsible for
preparing the decisions of the CNCE Supervisory Board concerning
the adoption of the Group’s strategic objectives and growth
priorities, the definition and revision of the strategic plan, and
projects related to operations or partnerships. It is kept informed
twice a year about the achievement of targets included
in the strategic plan. It is also kept informed at regular intervals
of progress in completing operations and partnerships.
■
The Management Board
of the Caisse Nationale
Appointed on December 15, 2003
for a period of six years
■
Charles Milhaud
Chairman
■
Guy Cotret
in charge of human resources, information systems
and banking operations
■
Nicolas Mérindol
in charge of the commercial banking division
and corporate strategy
■
Anthony Orsatelli
in charge of the investment banking division
■
Pierre Servant
in charge of finance and Group risk management
■
5
The Senior Management of Groupe Caisse d’Epargne
The Supervisory Board
Appointed by the Annual General Meeting on December 15, 2003
for a period of six years.
■
Jacques Mouton (1) (2), Chairman,
Chairman of the Steering & Supervisory Board of the Caisse d’Epargne Aquitaine-Nord
■
Bernard Comolet (3), Vice-Chairman,
■
Francis Mayer (1) (2), Vice-Chairman,
Chairman of the Management Board of the Caisse d’Epargne Ile-de-France Paris
Caisse des Dépôts Chief Executive Officer
■
Caisses d’Epargne
Representatives
■
Representatives
of the
Caisse des Dépôts
Yves Hubert (1) (2)
Etienne Bertier (1)
Joël Bourdin,
Chairman
of the Management Board
of the Caisse d’Epargne
de Lorraine
Chairman of the Steering
& Supervisory Board of the
Caisse d’Epargne de Picardie
Chairman & CEO,
Icade
Senator,
& Supervisory Board of the Caisse
d’Epargne de Haute-Normandie
& Supervisory Board of the
Caisse d’Epargne de Bretagne
Chairman
Provence-Alpes-Corse
Jean-Claude Créquit
Jean Levallois
(3)
Dominique Marcel (2) (3)
Alain Lemaire (3)
Financial Director,
Caisse des Dépôts Group
(1)
Chairman
de Côte d’Azur
& Supervisory Board
de Basse-Normandie
Michel Dosière
Bernard Sirol (1)
Chairman of the Management
Board
Poitou-Charentes
& Supervisory Board
de Midi-Pyrénées
Marcel Duvant (3)
Hervé Vogel (2)
& Supervisory Board
des Pays du Hainaut
Board
Rhône-Alpes Lyon
(1) Member of the Remuneration & Selection Committee,
chaired by Jacques Mouton, of which Henri Proglio
is an independent member.
(2) Member of the Strategy & Development Committee,
chaired by Yves Hubert.
(3) Member of the Audit Committee, chaired by Dominique Marcel,
of which Jean-Charles Naouri is an independent member.
(4) Alain Maire, Chairman of the Management Board
of the Caisse d’Epargne de Bourgogne, held this position
until October 21, 2004.
Jean-Marc Espalioux
Chairman of the Management Board,
Accor Group
Albert Ollivier
Chairman
of CDC PME
Jean-Charles Naouri
Jean Sebeyran (1) (2) (3)
Henri Proglio
General Secretary
of Caisse des Dépôts Group
Chairman of the Management Board,
Véolia Environnement
Chairman and CEO, Casino Group
Franck Silvent (3)
Deputy Director,
Finance and Strategy
■
Government
Commissioner
Antoine Mérieux
■
Representatives
of the bank
network employees
Serge Huber
■
Non-voting
Directors
(Censeurs)
Jean-Charles Cochet
Dominique Courtin (2) (4)
6
■
Jacques Moreau
■
Representatives of
the Works Council
Françoise Amilhat
Samuel André
Jean-Luc Debarre
Patrick Mellul
The Fédération Nationale
The Fédération Nationale des Caisses d’Epargne (FNCE)
is a non-profit-making association dedicated to the expression
and representation of the Caisses d’Epargne and their
cooperative shareholders.
The FNCE has five main responsibilities: it coordinates relations
between the Caisses d’Epargne and their cooperative
shareholders and defends their common interests, notably in
dealings with the public authorities; it helps to define the
overall strategic objectives of the network; it provides national
guidelines for financing local and social economy projects
(also known as “PELS”) and actions taken by the Group
in the general public interest; it contributes to the definition
of the national focus adopted by the Caisse Nationale
in the field of social relations in the retail network; and,
working closely with the Caisse Nationale, it organizes training
sessions for the representatives of cooperative shareholders
and for the Group’s senior management team.
■
The Board of Directors
of the Fédération Nationale
The Office of the Chairman:
Nicole Moreau, Chairwoman
Chairwoman of the Steering & Supervisory Board
of the Caisse d’Epargne Ile-de-France Paris
Jean-Paul Ducept, General Secretary
Chairman of the Management Board
of the Caisse d’Epargne de Picardie
Pierre-Jean Blard, Vice-Chairman
Chairman of the Steering & Supervisory Board
of the Caisse d’Epargne Ile-de-France Ouest
Robert Romilly, Vice-Chairman
Chairman of the Steering & Supervisory Board
of the Caisse d’Epargne Val de France-Orléanais
Each Caisse d’Epargne is represented at the annual general
meeting of the FNCE by its Chairman and one member of its
Steering & Supervisory Board in addition to the Chairman of its
Management Board. In December 2003, the annual general
meeting of the FNCE renewed the mandates of one half of its
Board of Directors for a period of six years.
The Board of Directors, composed of twelve Steering & Supervisory
Board Chairmen and six Management Board Chairmen, appoints
the FNCE Chairman from among the Steering & Supervisory
Board Chairmen, and the General Secretary from among the
Management Board Chairmen both for a period of three years.
Created in May 2003, the Office of the Chairman (Bureau)
is a collegiate body responsible for assisting the Chairman in
his various responsibilities. It is composed of four members:
the Chairwoman, the General Secretary, and two Vice-Chairmen
appointed from the Steering & Supervisory Board Chairmen
holding seats on the Board of Directors.
Jean-Paul Diacre
Victor Hamon
& Supervisory Board
Centre-Val de Loire
& Supervisory Board
des Pays de la Loire
Pierre Dutrieu
Francis Henry
Board of the Caisse d’Epargne
des Pays de l’Adour
& Supervisory Board
Champagne-Ardenne
Jean-Paul Ferry
Acting Chairman of the Steering
& Supervisory Board
of the Caisse d’Epargne de Lorraine
Bernard Fougère
& Supervisory Board
Poitou-Charentes
Joël Gelas
des Alpes
Jean-Luc Grandjean
de Bretagne
Eric Grimonprez
& Supervisory Board
of the Caisse d’Epargne de Flandre
Marie-Louise Lota
Chairwoman of the Steering
& Supervisory Board
Provence-Alpes-Corse
Gérard Lunel
d’Alsace
Jean-Claude Passier
& Supervisory Board
de Franche-Comté
Michel Sorbier
Chairman of the Steering &
Supervisory Board
d’Auvergne et du Limousin
Bernard Toublanc
Ile-de-France Nord
■
7
A new
Dimension
The CNCE headquarters in Paris
Through its acquisitions:
■ In December 2003,
of Banque Sanpaolo, a financial institution
extremely active among medium-sized
enterprises,
■
■
In January 2004,
via Crédit Foncier of Entenial, a bank
specializing in property financing,
And, in June 2004,
of the IXIS investment bank,
Groupe Caisse d’Epargne confirms its status
as a multi-brand, multi-business universal
bank pursuing activities with multiple types
of clientele.
Net banking income
Gross operating income
Earning capacity
Capital funds*
Employees
2003
■
A new Dimension
It is also enjoying enhanced prospects for further growth and
greater profitability: the Group is in a strong position to launch the
international expansion of its core business activities from its
strong domestic base, and rise to the challenge of the future
consolidation of the European banking industry.
2004
pro forma
7.2
2.2
1.4
12.7
9.7
2.6
1.8
18
44,700
52,800
* Excluding minority interests.
8
In 2004, Groupe Caisse d’Epargne considerably increased its size
with significant changes in the structure and weighting of its
different activities. Commercial banking activities now generate
more than 70% of the Group’s income, including 62% contributed
by the Caisses d’Epargne alone.
■ 2004 earning capacity
(pro forma)
■ Financial figures
(in billions of euros)
Boasting a powerful commercial banking business and one of the
top-ranking property financing & real-estate services divisions in
France, the Group is now present via its IXIS division in the
principal international financial markets: London, Frankfurt,
New York, Tokyo and Hong Kong.
25%
Investment
banking
2%
Holding
company
73%
Commercial
banking
A new
Organization for the CNCE
To keep pace with changes in the Group, to mobilize synergies between
the Group’s different activities, to take advantage of their full potential,
the Caisse Nationale des Caisses d’Epargne—which plays a triple role as
network head, banker to the Group and holding company—has reorganized
its structures into two core business divisions and two functional divisions.
Core business divisions
Commercial Banking
Investment Banking
Retail banking: individual and professional customers
SMEs
■ Local authorities and institutions
■ Social economy and subsidized housing
■ Insurance
■ Real-estate
■
■
■
■
■
■
Financing and capital markets
Asset management
Custody and services for institutional investors
Financial guaranty
Functional divisions
Finance
and Risk Management
Human Resources
and Banking Operations
Risk management
Group finance
■ Group financial control
and management processes
■ Consolidation, regulations, taxation
■ Basel II reform
■
■
■
■
■
■
■
■
■
As banker to the Group, the CNCE centralizes cash transactions
and refinancing operations between the different companies
in the Group. It supervises and coordinates the market refinancing
policy through four issuers:
■
The CNCE, for the optimization of the Group’s capital funds
and financing operations required by commercial banking
activities (excluding Crédit Foncier),
■
■
Human resources, social affairs
Group information systems
Group banking production
Procurement
Major initiatives
Internal communications
Security
Compagnie de Financement Foncier and Vauban Mobilisation
Garanties for Crédit Foncier and, more generally, for property loans
financing local authorities, notably through the issue of covered
bonds (obligations foncières),
IXIS Corporate & Investment Bank for the refinancing of its own
capital market activities and major corporation financing operations.
Groupe Caisse d’Epargne is the largest private bond issuer after
the French State, and the largest issuer of covered bonds
(obligations foncières).
A new Organization for the CNCE
■
9
core business lines
Commercial Banking
The local bank for individual
and professional customers
Historically dedicated to receiving deposits on Livret A passbook
accounts, the Caisses d’Epargne have significantly expanded their
range of savings and investment products. The French savings banks
have become the no.1 distributor of guaranteed return funds
with a market share of 23%, and the largest distributor of popular
retirement savings plans (PERP), the new retirement product
launched in 2004.
■
The Group has also been successful in its drive to develop strong
positions in the insurance market. Already the 2nd largest
bancassurance specialist distributing life insurance products with
a market share of 18%, it has also become the 3rd largest French
bancassurance specialist providing general insurance cover with more
than one million contracts under management.
The Group forged a strategic alliance at the end of 2004 with two
major mutual insurance companies, Macif and Maif. This partnership
will be concretized in 2005 by a broader range of insurance products
covering fire, accidents and miscellaneous risks and, ultimately,
by a range of new services.
With the 31 individual Caisses d’Epargne, Crédit Foncier/Entenial,
the OCEOR network in French overseas territories and Banque
Sanpaolo, the Group has also launched plans to set up a private
banking institution serving the domestic French market, operating as
an ordinary bank. Based on the existing IXIS subsidiary Vega Finance,
with which the Group had already entered into an alliance,
this new structure was presented to the press in May 2005. Named
La Compagnie 1818, it will be completely operational at the end
of the first half of 2005.
In the area of banking services, the Group’s networks are the
everyday banks for 6.6 million individual and professional customers.
Indeed, the Caisses d’Epargne are the largest issuer of banker’s cards
in France.
■
Groupe Caisse d’Epargne provides
banking services to 26 million individual
and professional customers, and a total
of 60,000 local communities, companies
and institutions.
Caisse d’Epargne, Crédit Foncier, Entenial
and Banque Sanpaolo in metropolitan
France, OCEOR in French overseas
departments and territories—with
4,700 branches and nearly 5,300 cash
dispensers and ATMs, the Group is the
third largest banking network in France.
As far as loans to private individuals are concerned, the Group
boasts strong positions in the property market: one out of every five
real-estate projects is financed by one of its networks. The Group is
also making rapid progress in the consumer credit market, particularly
in the revolving loan segment where the Group’s subsidiary,
Caisse d’Epargne Financement (CEFI), created in partnership
with Cetelem, offers considerable scope for further growth.
■
1st bank for young people
nd
■ 2 largest distributor of savings products
nd
■ 2 largest bancassurance specialist offering
life insurance solutions
nd
■ 2 largest real-estate banker
rd
■ 3 largest bancassurance specialist offering
general insurance products
rd
■ 3 largest distributor of personal loans
■
(excluding specialized institutions)
10
■
Eric Delannoy
Caisse d’Epargne Ile-de-France Ouest,
Saint-Quentin-en-Yvelines
The Specialist Bank
for Regional Development
The Bank
for Real-estate Transactions
Deeply rooted in its different regions, Groupe Caisse d’Epargne
is one of the principal financial partners of social housing
organizations, local government, local authorities and public
health institutions, associations and all players active in the social
economy. It offers this clientele an extremely wide range of
investment and financing solutions along with cash management
services and secure online payment systems.
The Group’s enterprises have taken full advantage of their
specialized know-how and resourcefulness to develop financing
solutions based on public-private partnerships, an area offering
considerable promise for future development.
Groupe Caisse d’Epargne is the largest and most comprehensive
player in the real-estate market in France. The 2nd largest banker
for private individuals’ real-estate transactions, it is also the
principal banking partner, and one of the leading insurers,
of real-estate professionals, both as a major provider of specialized
services and an investor.
■
■ The largest French private banking investor in regional venture
capital, the Group is increasingly active among local and regional
enterprises, working through the Caisses d’Epargne for firms
enjoying a regional dimension, and Banque Sanpaolo, among
medium-sized companies.
1st private bank for subsidized housing
nd
■ 2 largest credit institution for local authorities
rd
■ 3 largest bank for non-profit-making associations
st
■ 1 private banking investor in regional venture
capital companies
■
Together, the Caisses d’Epargne, Socfim, Crédit Foncier, and
Entenial finance one out of every five real-estate development
operations in France. The CEGI subsidiary is the no.1 issuer of
guaranties for the builders of single-family houses with a market
share of almost 25%. The Group is also the no.1 provider of longterm financing to professional real-estate investors in the form of
conventional capital repayment loans or leasing solutions.
■
Thanks to Entenial and Banque Sanpaolo, the Group is also the
no.1 bank for real-estate management companies and property
managing agents with a market share of 30%, and the 2nd largest
guarantor of real-estate professionals with Socamab Assurances
and CEGI.
The Caisses d’Epargne, associated with Banque Sanpaolo and
Entenial, are the 3rd ranking financial institution as far as realestate leasing operations for corporate customers are concerned.
■
Groupe Caisse d’Epargne is no.1 in property valuation with
Foncier Expertise and the 2nd largest financial institution in France
in the area of transactions, administration and property managing
agents with, in particular, Gestrim, a subsidiary of Perexia.
■
The Group also provides selection services related to real-estate
schemes for investors.
Apart from the subsidized housing segment, where the Caisses
d’Epargne are the front-ranking private shareholder, the Group
is a major institutional investor through its subsidiaries Foncière
Ecureuil and Ecureuil Vie.
1st banker and 1st guarantor for property developers
st
nd
■ 1 banker and 2 largest guarantor for real-estate
management companies
nd
■ 2 largest bank for property investors
rd
■ 3 largest operator in real-estate leasing
■ Outstanding loans for a total of €7.3 billion at the end of 2004
and a total of €4.1billion in building completion guarantees
■ no.1 in property valuation
nd
■ 2 largest real-estate management company
st
■ 1 private administrator of student accommodation
rd
■ 3 largest private administrator of subsidized accommodation
■
Groupe Caisse d’Epargne core business lines
■
11
core business lines
Investment Banking
The CNCE and its subsidiaries IXIS Corporate & Investment Bank, IXIS Asset Management
Group, IXIS Investor Services and IXIS Financial Guaranty (CIFG) offer financial institutions,
major corporations and local authorities a range of high value-added services related to
financing and capital market operations, asset management, asset custody and investor
services, and financial guaranties.
Financing Operations
and Capital Markets
In capital markets, the Group offers a wide range of services in
the fixed-income, foreign exchange and equities markets, including
origination, market-making, brokerage, structuring, financing
as well as financial engineering and economic research.
IXIS CIB has built a partnership with Lazard investment bank
in the primary equity market, a relationship that has reached
a new dimension with the signing of a financial and industrial
agreement in March 2005. Within the Group, IXIS CIB and Banque
Sanpaolo have signed a cooperation agreement for transactions
related to mid-cap stock.
IXIS Securities, a subsidiary of IXIS CIB, is one of the top 5 equity
brokers in the Paris financial market.
■
The financing division handles arranging, co-arranging,
underwriting and syndication operations.
The Group is also a front-ranking specialist arranging shipping
and aircraft asset financing solutions via its subsidiary Ingepar.
In the area of advisory services and project financing, the Goup
boasts leading positions and is extremely active in financial
engineering related to infrastructures, the environment and energy.
■
Credit ratings: With the CDC guarantee: AAA/Aaa/AAA
Without the CDC guarantee: AA/Aa2/AA
■ Personnel: 1,675 employees, approximately one third overseas
st
■ 1 dealer for euro-denominated structured private placements
(1)
st
■ 1 arranger of cedulas hipotecarias
(2)
■ no.6 in the CDO
market in the USA
■ One of the top five institutions worldwide for structuring
operations
th
■ 4 largest French financial analysis firm with IXIS Securities
(Agefi ranking); 2nd largest for sector-based research
■ 85 contracts as arranger or co-arranger in 2004
th
■ 5 largest institution for project financing consultancy services
for the Europe, Africa, Middle-East region (3)
Asset Management
IXIS AM Group is a holding company that controls a number
of specialized asset management companies offering a range
of expertise covering all asset classes and all types of
management in Europe, the USA, and the Asia/Pacific region
including Japan. Reorganized in 2004, this core business line
specialized in financial and real-estate asset management works
on behalf of all types of clientele: institutional, corporate,
distribution networks and private individuals.
In the financial assets sector, its operates through a dozen
management companies (IXIS AM France, Loomis Sayles,
Harris Alternatives, Harris Associates, etc.) and three distribution
companies: IXIS Advisors in the Unites States, IXIS Global
Associates for cross-border activities and Ecureuil Gestion for
business in France.
Boasting a total of 28 marketing offices in Europe,
the USA and the Asia/Pacific region, IXIS AM Group works
closely with several partners and selected networks.
With AEW Capital Management in Boston and IXIS AEW Europe,
investors are provided a comprehensive range of real-estate
investment management services: direct or indirect investment
advice, management of assets or real-estate portfolios, financial
engineering and the arrangement of complex operations.
■
(1) Spanish covered bonds (obligations foncières)
(2) Collateralized Debt Obligations.
(3) Project Finance International magazine.
12
■
One of the top 10 European asset managers,
and one of the top 25 worldwide
■ no.1 in Europe, and no.4 worldwide, for investment advisory
services and real-estate asset management
■ 2,160 employees including 1,300 in the USA
■ €371 billion of assets under management,
including €23.3 billion in real-estate assets
■
Alaina Giampapa
IXIS AM Advisors Group, Boston
Investor Services
Financial Guaranty
Since January 1, 2005, IXIS Investor Services has been
Groupe Caisse d’Epargne’s new bank specialized in institutional
custody and investor services, and the parent company of three
subsidiaries: IXIS Administration de fonds, Euro Emetteurs Finance
(EEF) and IXIS Urquijo in Madrid. IXIS Investor Services is one
of the leading French players in this market with total outstandings
of ¤685 billion for institutional custodian services.
A custodian bank with more than 800 mutual funds and
80 management companies, IXIS IS is also responsible for managing
some 700 funds. It pursues its institutional custodian activities
in Spain through a joint venture set up with Banco Urquijo.
IXIS IS and its subsidiaries provide asset management companies,
institutional investors and non-resident banks with account
management/custody services, institutional custodian services,
fund administration and services for issuers in addition to all related
banking services covering the full range of financial instruments.
An agreement was signed in December 2004 with a view
to combine IXIS Investor Securities Services business lines with
Crédit Agricole Investor Services into a joint venture at the end
of the first half of 2005. With an aggregate custody business
of ¤1,600 billion, the new entity will be the largest player
in the French market, and one of the front-ranking European
institutional custodians.
Created in 2003, CIFG is a company specialized in financial
guaranties. By enhancing the quality of securities issued
(thanks to an unconditional and irrevocable commitment to pay
all principal and interest when first requested), CIFG enables its
customers to benefit from its own credit rating (AAA).
CIFG pursues this activity through two insurance companies
specifically dedicated to financial guaranties:
CIFG Europe, based in Paris with offices in London,
is authorized to provide guaranties in most of the countries
in the European Union,
■
CIFG NA, based in New York has obtained licences enabling
it to operate in 45 states of the union.
■
The only European financial guarantor present in both Europe and
the United States, CIFG is pursuing its activities in every market
segment: structured finance, local government, public-private
partnerships, and project financing.
CIFG reached the breakeven point only 18 months after the
company was created.
Credit rating: AAA/Aaa/AAA
54 employees, including 42 in the United States
■ Over $25 billion in par insured (nominal)
■ More than 340 transactions completed since the company
started business, including 20 infrastructure transactions or
public-private partnership operations in five European countries
■
■
Credit rating: AA- (S&P), Aa3 (Moody’s)
Best short-term ratings: A-1+ (S&P), P1 (Moody’s), F1+ (Fitch)
■ Technical rating for IXIS IS raised to AA by Thomas Murray
■ 650 employees
■ €685 billion in custody at the end of 2004 including
more than €121 billion on behalf of mutual funds
■ IXIS IS twice “Top Rated” by Global Custodian (for both
domestic and non-resident customers)
■ IXIS Urquijo “Top Rated” for domestic customers
■ IXIS Administration de fonds has obtained SAS 70 certification,
a standard drawn up by the American Institute of Certified
Public Accountants (AICPA), attesting the quality of the
operational control system
■
■
Groupe Caisse d’Epargne core business lines
■
13
Key
Figures
140
2003
■
278
296
2003
2004
152
2004
Loans outstanding
■
Total savings deposits
(commercial banking)
(including demand deposits)
in billions of euros
608
644
371
337
2003
■
14
■
2004
Total assets
under management
2003
■
2004
Total assets
under custody
(IXIS AM Group)
(IXIS IS)
Duncan Wilkinson
Mylène Viaud
Caisse d’Epargne Ile-de-France Ouest, Elancourt
■
Key financial figures
Net banking income
Earning capacity
Capital funds*
2003
7.2
2.2
1.4
12.7
2003
2004
pro forma
pro forma
9.3
2.6
1.7
16.6
9.7
2.6
1.8
18
2004/2003
pro forma
+ 4%
0%
+ 1%
+ 8%
* Excluding minority interests.
Key ratios (as a %)
Key ratios (as a %)
Operating efficiency ratio
Return on equity
Capital adequacy ratio
Number of Group employees
Number of branches
Number of cooperative
shareholders (in millions)
2003
2004
pro forma
pro forma
72.2
10.9
149
73.4
10
156
2003
2004
44,700
4,700
52,800
4,700
3
3.1
Key Figures
■
15
Ambitions
for
2007
Tom Laxton
With its action resolutely focused
on continued growth, Groupe Caisse d’Epargne
has set itself new ambitious targets
for the period running from 2004 to 2007:
16
■
■
Combine sustained growth
with a high rate of return,
■
Draw on the synergies and potential
of a multi-business, multi-channel,
multi-brand Group,
■
Reach a high degree of quality
and operational efficiency,
■
Distinguish itself through a determined
commitment to society.
With its new three-year strategic plan presented in November
2004, Groupe Caisse d’Epargne is making an unprecedented
investment of 1 billion euros chiefly focused on reinforcing the
distribution channels, defining its range of products and services,
and enhancing its commercial data processing facilities.
Its targets for 2007 include:
■ Additional net banking income of ¤2.5 billion, to reach a total
of ¤11.8 billion,
■ A 7-point improvement in the Group’s operating efficiency ratio,
bringing it down to 65%,
■ A 60% increase in earning capacity,
■ ¤150 million in additional income generated from revenue
synergies between the core business activities,
■ A return on equity of 12%,
■ A Tier-1 capital ratio in excess of 9%.
Growth and Profitability
■
€7 billion in net annual deposits
This is the target that Groupe Caisse d’Epargne
has set itself to reinforce its front-ranking
position in savings by taking full advantage of
its corporate and investment banking division
to develop innovative structured products
that are both sophisticated in their modelling
yet simple for customers to use.
Consolidate the positions of the
commercial banking business
The principal growth opportunities for the commercial banking arm
depend on its ability to offer a comprehensive range of
competitive and transparent products and services (particularly
in the area of savings and retirement solutions), to complete
investments in the distribution network, and organize the intensive
training of our sales personnel.
The sales force will be further enhanced with 3,500 additional
sales personnel, the opening of 150 new branches and the
renovation of a further 1,800 (almost one quarter
of the existing network) between now and 2007.
The customized management of relations with individual
customers will be significantly developed with a view to having a
portfolio of 10 million customers from the beginning of 2005. The
Group wants in particular to promote home-ownership and related
services, pursue sustained growth in private asset management,
and establish a presence in the health and personal care market.
At the same time, Groupe Caisse d’Epargne fully intends to
consolidate the extremely strong positions it already enjoys with
local government and institutions, subsidized housing bodies and
players active in the social economy. It also aims to expand its
activities with corporate customers everywhere in France by
working through the individual Caisses d’Epargne to serve
companies doing business at a regional level, Banque Sanpaolo
for medium-sized companies and IXIS CIB in dealings with major
corporations.
Personal care services:
strategic partnership
with Macif and Maif
In October 2004, Groupe Caisse d’Epargne
entered into a strategic partnership with
two mutual insurance companies: Macif,
the leading family insurer in France, and
Maif, the largest insurer of associations.
The aim of this pact is to offer the
cooperative shareholders and customers
of all three partners a global solution
for their various needs related
to insurance, banking, assistance
and personal support services.
Starting in 2005, Groupe Caisse d’Epargne
will be offering new general insurance
products while Macif and Maif will start
distributing a range of property
loans developed by Crédit Foncier.
All in all, the aim is to increase the net banking income of the
commercial banking division by approximately ¤1.1 billion to
reach a total of ¤8 billion by the end of 2007, while improving its
earning capacity from ¤1.3 billion in 2004 to ¤1.7 billion in 2007.
Ambitions for 2007
■
17
Maryse Beauparlant
Véronique Suberbielle
CNCE, Paris
Quality
and Efficiency
■
Developing the investment
banking division
Growth in investment banking activities will be driven
simultaneously by a wider range of products and services available
to the Group’s distribution networks and by the dynamism of its
own commercial activities.
Within the framework of its new organization, a team of some
twenty senior bankers report directly to the member of the CNCE’s
Management Board responsible for investment banking activities.
Organized into business sectors, with an additional geographical
unit for financial institutions, they focus on promoting among large
and extremely large corporations all the different activities of the
Group, ranging from investment banking or transaction flow
management to real-estate operations or employee savings
solutions.
IXIS Corporate & Investment Bank intends to expand its clientele
of major institutional and corporate accounts while simultaneously
pursuing its strategy as a specialist in the trading of complex
products, convertible bond market marking, equity market
operations, fiscal engineering, and real-estate transactions.
It will lead the Group’s expansion into Europe and Asia.
IXIS Asset Management Group will consolidate its position as a
global, multi-management player and develop its niche business
activities by building on the expertise it has acquired in the United
States.
IXIS Investor Services is determined to be a major player in the
area of institutional asset custody and investor services in both
France and Europe.
In this respect, an agreement was signed in December 2004
with Crédit Agricole with a view to pooling the activities
of both groups in this area in 2005. The new entity would be
the largest player in the French market and one of the leading
custodian and investor services companies in Europe.
The net banking income generated by the investment banking
division should grow by approximately ¤800 million to reach
a total of ¤2.9 billion in 2007. The division’s earning capacity
should double over the same period, rising to a total of almost
¤640 million.
18
■
Groupe Caisse d’Epargne will achieve its ambitious objectives by
making its tools and methods comply with the most demanding
European standards.
■
New risk management tools
The management of risks and supervision of the Group in the light
of its new dimension are two essential aspects of the 2004-2007
strategic plan.
To base its development on secure foundations, the Group has
stepped up its drive to adapt to changes in the regulations (Basel
II, IFRS, etc.), reinforced all aspects of its internal control
organization (risk, compliance, audit, etc.) and modernized the
tools used to supervise the Group and its different business
activities. The staff of the Group Risk Department has been
doubled to achieve these objectives.
In 2004, the Group finalized the settlement of a system whereby
it routinely assigns a risk rating to its credit counterparty exposure.
This major initiative concerned the Group’s 80 credit institutions
and 24,000 sales people received training in the new procedures.
■
Sustained focus on recruitment and training
The Group’s human resources and IT policies are also designed
to contribute fully to the success of the strategic plan.
The intensification of customer relations calls for an additional
3,500 people to boost the strength of the sales teams until
they represent 70% of the Group’s entire workforce, more than
38,500 sales people, in 2007. Training programmes have been
set up to support these changes with priority action focused,
in particular, on the sales force, branch managers, employees
over the age of 50, and IT technicians.
In 2004, national agreements were signed regarding career
management and professional mobility within the Group with a
view to building bridges and creating common areas shared by the
commercial banking and investment banking activities. The
“Trajectory” system designed to identify and select future senior
executives was completely reviewed in the light of the Group’s
new ambitions. Customized e-learning training programmes based
on the Ingenium dedicated platform continued their development,
providing training to a total of 10,000 people.
Our target for 2007:
one million
new cooperative shareholders
Romain Dehaye
Patrice Desgardin
Anne-Cécile Masson
Primary equity market:
Lazard-IXIS CIB partnership
In April 2004, IXIS CIB and Lazard signed
an agreement to cooperate in their
respective origination, syndication and
placement operations in the French primary
equities market for companies with a
market capitalization of more than €500
million. This arrangement enables both
firms to benefit from Lazard’s close
relationship with major French companies
and IXIS CIB’s placement capability with
institutional investors. This understanding
was further reinforced in March 2005
when both partners signed an industrial
and financial agreement.
Groupe Caisse d’Epargne,
the no.1 recruiter in France
in 2004
According to the two lists of top recruiters
published by the magazine L’Express,
Groupe Caisse d’Epargne is the top-ranking
French company for recruitment
with 2,000 new hires in 2004,
85% of whom were sales personnel,
a pace that the Group fully intends
to maintain throughout the course
of its 2004-2007 strategic plan.
This same dynamism is reflected in the
results of the market monitor devoted
to companies recruiting young graduates;
Groupe Caisse d’Epargne boasts second
rank on this scale with a total
of 600 new recruits.
CNCE, Paris
■
IT Services, Purchasing: enhanced
Performance and Cost Control
A common architecture, interoperability between the information
systems, customer-oriented commercial IT resources, the
development of production facilities at the service of the Group
in areas related to loans, securities, insurance, financing operations
and securitization: the drive for greater efficiency and tight cost
control will be continued with a constant concern to develop the
very best practices.
The deployment of the single workstation continued in 2004;
45,000 Group employees have now received this new equipment.
Shared supervisory tools making it possible to monitor and analyze
the sales, financial, marketing and risk management functions per
core business line have been developed for delivery throughout
the Caisses d’Epargne network at the beginning of 2005. Working
structures and operating modes with the three IT communities
have been updated, and the security of information systems has
been reinforced.
With regard to purchasing, the Group is aiming to achieve
aggregate savings of ¤300 million over a period of 4 years.
It exceeded its target for this year with savings of about
¤47 million in 2004.
Commitment
and Social Solidarity
The entire strategic plan reflects the determination
of Groupe Caisse d’Epargne to continue its active commitment
to the needs of society.
More than ¤100 million has been invested over four years
in customer care, pursuing the commitment to sustainable
development, expanding the cooperative shareholder base,
and the financing of local and social economy projects.
The actions taken by the Caisses d’Epargne Foundation
for Social Solidarity are long-term priorities that clearly
distinguish Groupe Caisse d’Epargne from its competitors.
Ambitions for 2007
■
19
Commercial
Banking
Audrey Donoro, Eric Delannoy, Philippe Couraudon
Caisse d’Epargne Ile-de-France Ouest, Saint-Quentin-en-Yvelines
20
■
Commercial Banking
■
21
The Reference Bank
for the Whole
Family
Valérie Gaston
Anne Lehonsec
Maurepas
Local presence, expert advice, innovation:
by sharing the aspirations of its individual and professional
customers, Groupe Caisse d’Epargne supports its projects
at every stage in their development, and innovates to satisfy
new expectations that arise from changes in our society.
By developing a competitive, practical and highly efficient
range of savings solutions, loans, payment methods,
insurance, asset management and retirement products, etc.,
the Group helps to make its customers’ lives simpler, safer
and more enjoyable.
22
■
A New Commercial Approach
for the Caisses d’Epargne
Reaching out to more customers, more often: this is the principal
goal of the new distribution policy of the Caisses d’Epargne
launched in 2004 under the name Fréquence Client. It is based
on three key ideas: a new segmentation of the bank’s clientele,
a customer-oriented distribution method (enabling sales personnel
to answer the question: what product, for what customer, and
through which channel?) and enhanced complementarity between
the different sales channels.
In this context, the branch office remains the principal vector for
customer relations. Thus, the branch renovation programme first
launched in 2003 and leading to the creation of a new branch
concept, made substantial progress in 2004. Each Caisse d’Epargne
has now defined its own development plan in this area: a total of
150 new branches will be opened between now and 2007, and
1,800 will be renovated (120 were refurbished in 2004). In this
new working environment, extra customer services have been
developed on automatic teller machines (ATM), also of central
importance to the new system: provision of temporary cash cards
for customers not already subscribing to them, cash deposits
through the ATM immediately credited to customers’ accounts,
self-service terminals for day-to-day operations, etc.
The new customer segmentation is now available on the
workstations of all the bank’s sales personnel. By allowing greater
personalization, this new system helps to improve customer
relations.
The second distribution channel, of vital importance in the
Fréquence Client programme, is comprised of 17 Customer
Relations Centres (CRC) responsible for providing the branches with
three key services: telephone reception, fixing of appointments,
and the direct sale of products. A detailed analysis was carried out
in 2004 on the technical aspects of this distribution channel
(improvement of the information systems, automation of services,
greater pooling of the centres’ resources, etc.) and on the human
aspects (expansion of the range of activities, better organization
and specialization of employees) in order to optimize the role
played by the CRCs in commercial relations.
All in all, a total of 8.5 million contacts were handled in 2004
(8.2 million incoming calls and 300,000 emails).
The third channel is comprised of remote selling and direct
marketing activities. With 1.7 million individual visits* and
82 million page views every month, the www.caisse-epargne.fr
website is the 3rd most frequently visited French banking website.
After a period of direct marketing chiefly distributed using
conventional mail (mail shots, advertising inserts, etc.),
2004 saw extremely encouraging tests on alternative channels
such as telemarketing and emailing.
In French overseas territories, Financière OCEOR continued to
modernize the various distribution channels used by the banks in
its network during 2004: the modernization of the remote banking
channels for Banque des Antilles Françaises, Banque de la Réunion
and Banque de Tahiti; modelling of the financial institutions’
commercial websites under a common OCEOR identity and graphic
guidelines; pursuit of the Cap client project, and switchover to the
new “counter-less” branch concept. The networks of the two
financial institutions—Banque de la Réunion and Banque des
Mascareignes—have already adopted the new format.
* Source: Médiamétrie, January 2005.
Savings
and Insurance
Individual customers maintained a high savings rate in 2004,
estimated at 15.4%. With 13% market growth, life insurance
confirmed its privileged status in the public’s investment strategy
by attracting almost 70% of private individuals’ financial savings,
with a distinct preference for euro-denominated funds.
The year was marked by the successful launch of the new Caisse
d’Epargne popular retirement savings plan (PERP), the first scheme
of its type available in France, and by renewed interest in mutual
funds.
As far as new deposit taking is concerned, the Caisses d’Epargne
ranked 3rd in the Top 10 Europerformance, the hit parade of
banking networks drawn up by the Europerformance investment
fund rating specialist. In total, net aggregate deposits taken by the
Group’s retail banking network increased by ¤3 billion to reach
a total of ¤241 billion.
Commercial Banking
■
23
1st
distributor
of guaranteed return funds
2nd largest distributor
of life insurance products
Céline Perdu
Thierry Béziau
Financière OCEOR, Paris
■
Nine awards
for Caisse d’Epargne
Life Insurance
After winning eight prizes in 2003, the life
insurance products distributed by the
Caisse d’Epargne repeated their excellent
performance by winning nine new awards
in the 2004 list of prizewinners drawn up
by the specialized press, including a prize
for innovation for the 3rd consecutive year.
Le Journal des Finances
■ Nuance Plus: Gold Prize for Innovation
■ Initiatives Plus: Gold Prize for
Performance and Quality
Le Revenu
■ Initiatives Plus: Golden Trophy
■ Nuances 3D: Silver Trophy
■ Initiatives Transmission: Bronze Trophy
Les Dossiers de l’épargne
■ Garantie Urgence: Gold Medal
■ Garantie Famille: Gold Medal
■ Nuances 3D: Positive opinion
Agefi Actif
■ PERP: Grand Prix
24
■
Savings spearhead the campaign
At the end of 2004, funds deposited by individual customers
on Livret A passbook accounts stood at ¤60.2 million (excluding
the capitalization of interest) for a total of 23.6 million accounts.
The Caisses d’Epargne organized a major promotional campaign
at the end of the year where customers drew lots with the
winners seeing the interest on their accounts multiplied by two.
Deposits on home savings products rose by 3.6% to reach
a total of ¤45.7 billion.
The Caisses d’Epargne organized an aggressive Epargne Ecureuil
Privilège campaign during the summer offering an interest rate of
4.50% paid on new fixed-term deposits. During the three months
of this campaign, new deposits worth ¤478 million were made
on a total of 28,000 contracts.
Capciel, a new fixed-term deposit account of up to a maximum
of 10 years with an annually appreciating rate of interest, was
launched in 2004 and had attracted a total of ¤350 million in
deposits by the end of the year.
The Caisse d’Epargne also issued four new Ecureuil bond loans
for a total of ¤1.5 billion.
■
Collective Investment Vehicles:
strong growth in new deposits
The Caisses d’Epargne are the front-ranking distributors
of collective investment vehicles in France with a range of
94 products designed by Ecureuil Gestion, the Group’s subsidiary
responsible for managing guaranteed return funds and
multi-manager fund of funds. The management of the other
products is delegated to IXIS Asset Management.
Net new deposits on Ecureuil Gestion products rose 57% to reach
a total of ¤3.3 billion, boosting aggregate balances by almost 18%
to a total of ¤31.8 billion. Three new ranges of guaranteed return
funds were launched: Cappuccino, Boléro and Organdi. The Group
is the leader in this market segment with a market share of 23%.
Moreover, in order to keep its customers better informed,
a dedicated website has been set up devoted to monitoring
and simulating the performance of each guaranteed return fund
launched since 2002. This new site recorded more than
10,000 individual visits per month in 2004.
3rd
largest bancassurance
specialist providing general
insurance cover
Compensation: 96%
of policyholders satisfied
Olivier Riquier
Céline Barreyre
Jacques Brizard
Crédit Foncier, Paris
■
Another excellent year for Life Insurance
In 2004, Groupe Caisse d’Epargne consolidated its position as the
2nd largest bancassurance specialist controlling 8% of the market.
The retail networks base their activities in this area on the Group
subsidiary Ecureuil Vie and on CNP Assurances, the no.1 personal
insurer in France, in which the Group owns an 18% share.
New life insurance business generated with Ecureuil Vie products
reached the record amount of ¤8.1 billion, up 9.1% over the
previous year with almost 762,000 new contracts signed, and
growth in available funds of almost 20% during the year to a total
of ¤4 billion. At the end of 2004, the value of life funds increased
by 10.4% compared with 2003, rising to ¤64.6 billion for a total
portfolio of 4.2 million contracts held by 2.8 million customers.
The two flagship products in life insurance, Nuances 3D
and Initiatives Transmission, have exceeded 826,000 and
1,150,000 subscribers respectively. Nuances Plus and Initiatives
Plus, two solutions dedicated to private management, confirmed
their success among the bank’s customers by attracting
16% of new life business.
■
Gestitres: no.1 in securities
Custody Services for private individuals
Gestitres has consolidated its front-ranking position in custody
services with a total of more than 6 million private customer
accounts under management: 4.2 million securities accounts
and 1.85 million cooperative share accounts, up by 6% and 5%
respectively over their 2003 figures. During the year, Gestitres
assumed responsibility for the custody activities of three banks
in the OCEOR network.
A total of 2.2 million stock market orders were processed during
the year, representing a market share of 13.5% on the Euronext SBI
segment. The number of orders related to mutual funds rose 4%
to more than 13 million operations.
At the end of 2004, the clientele of private individuals managed
by Gestitres represented 30% of the domestic market with a total
of ¤85 billion in custody assets.
■
General Insurance Products:
target of one million contracts exceeded
2004 was also marked by the successful launch at the end of April
of PERP Caisse d’Epargne, the first popular retirement savings plan
to be commercially available in the French market. This flexible
multi-fund contract enables subscribers to generate additional
income that is paid, and guaranteed, for life from the moment
the contract holder ceases active employment.
This new retirement product was the focus of a major awarenessbuilding campaign awarded a prize for transparency by Agefi
thanks to its comprehensive approach: TV campaign, collaboration
with Guide France Info “Getting well-prepared for retirement”, the
drafting of a practical handbook “Making a success of retirement”
published in Finances Magazine, the creation of a mini-website
with a simulator enabling visitors to calculate the size of their
pension and the tax relief generated by the PERP.
The Caisses d’Epargne and Crédit Foncier have confirmed their
efficiency in the distribution of insurance products covering fire,
accidents and miscellaneous risks. In the space of three years,
the Group has quadrupled the number of contracts in its portfolio
to exceed the one million mark in 2004.
The range is based on four different contracts. Origine Habitation,
a contract providing home insurance cover that enjoyed 45%
growth in 2004 with 96,000 new contracts, and Origine Auto, a
comprehensive motor insurance policy, are sold as stand-alone
products or combined with a loan via a Pack Immo
or Pack Iziauto package. The range is rounded off with Origine
Accident de la Vie (a contract providing comprehensive medical
and healthcare insurance) and Protection Juridique, a product
offering legal protection.
The extremely high degree of mobilization of all the teams
in the retail network enabled the Caisse d’Epargne to assert itself
as the French public’s natural partner for the preparation of their
retirement and to capture 28% of the PERP market with a total
of 277,250 contracts sold. 68% of subscribers preferred to choose
Dimension Sécurité, a euro-denominated mutual fund offering
a guaranteed rate of interest, rather than seek the possibility
of higher performance offered by Dimension Horizon.
OCEOR and Banque Sanpaolo networks also launched a popular
retirement savings plan designed by Ecureuil Vie and named
PERP Assylio.
These different products are designed by Ecureuil Assurance IARD,
the 3rd largest French bancassurance specialist providing general
insurance cover, and the 2nd largest player (all insurers combined)
in the market for medical and health insurance. With 33% growth
in its active portfolio, the volume of premiums generated
by the general insurance business rose 28% to reach a total of
¤177 million in 2004.
The Group entered into a strategic partnership with the Macif and
Maif mutual insurance companies with a view, in particular, to
speeding up the development of the general insurance business.
Commercial Banking
■
25
Crédit Foncier branch, Paris
Private Asset Management
Deployed throughout the entire Caisse d’Epargne network, private
asset management continued to enjoy buoyant growth in 2004,
especially among self-employed professionals. This activity is
based, at a commercial level, on a team of account managers
specialized in private asset management (whose numbers rose to
390 at the end of the year) and, at a technical level, on the
professional expertise of the Group’s estate planning and wealth
management specialists whose know-how covers all asset types
and all management styles.
■
Dynamism and ambition
In 2004, the Caisses d’Epargne network chiefly focused its efforts
on discretionary management services in liaison with Véga
Finance, the Group’s bank specializing in private asset
management, and on a selection of multi-manager, multi-profile
mutual funds chosen by Ecureuil Gestion and held within the
framework of the Nuance Plus life insurance contract.
Net deposits received by the Caisse d’Epargne exceeded the
¤1.5 billion mark, and loans granted within the framework of
wealth management services reached a total of ¤685 million.
OCEOR and Banque Sanpaolo are developing their own parallel
range of private asset management products and services.
In its capacity as one of the most active advisory banks working
with medium-sized enterprises, Banque Sanpaolo boasts close ties
with its principal shareholders. The OCEOR network enjoys a similar
position in French overseas départements and territories,
encouraging it to develop particular expertise in tax-efficient
products dedicated to investments in these regions.
Lastly, Entenial is extremely active among private individuals
investing in rental property.
26
■
■
Véga Finance strengthens its positions
Véga Finance, the bank specializing in private asset management,
offers a full range of services dedicated to wealth management.
Its subsidiary Véga Multimanager specializes in the administration
of funds of funds.
In 2004, commercial links with the Caisses d’Epargne were
strengthened while partnerships with independent wealth
management firms made substantial progress.
Véga Finance has adapted its services to a larger and more affluent
clientele of private individuals.
The number of its customers has increased by 17%; deposits
have grown by 16% to exceed a total of ¤7.1 billion, including
¤4.4 billion managed in the form of collective investment vehicles.
Multi-management solutions, collective management
and discretionary management of assets invested in equities
and equity-based mutual funds all performed extremely well.
Two new life insurance contracts were launched: Véga Avantage
and Véga Signature. Six existing contracts were awarded prizes by
the economic and financial press. Prize-winning products included
Véga Liberté and Véga Maxi, which received the Gold Prize awarded
by Journal des Finances in the category “Multi-fund investment
contracts (excluding profiles)”.
■
A new private banking arm
With the creation in 2005 of La Compagnie 1818 – Banquiers Privés,
a new private banking subsidiary, Groupe Caisse d’Epargne brings
together under the same banner the expertise hitherto developed
by Véga Finance, Banque Sanpaolo and Crédit Foncier Banque.
This new subsidiary, due to start operating on June 1, 2005, will
draw on a body of high-level legal and fiscal expertise to offer its
customers a comprehensive offering of wealth management services
ranging from investment products to loans and real-estate solutions,
all based on an open architecture designed to include third-party
investment products.
Claire Boutou
CNCE, Paris
Banking Services
■ The everyday banking partner
With 170,000 new account holders, the Group’s market share
rose to 8.5% of individual customer deposits at the end of 2004.
Aggregate demand deposits stood at ¤23.7 billion at
December 31, 2004, representing average growth of 8% in the
space of one year. The Caisses d’Epargne confirmed their position
as the no.1 issuer of Visa cards in France, and the 2nd largest
issuer of debit cards, irrespective of brand. The number
of cards in circulation (both banker’s and debit cards) stood
at 6.5 million at the end of 2004.
■ The 1st bank for young people devotes three
new offerings to greater independence
The Caisses d’Epargne boast more than 7 million customers under
the age of 26. To satisfy their aspirations for greater independence,
the Caisse d’Epargne launched series of products and services
in 2004 designed to help them finance three major stages
in their lives.
In association with the Ecole Française de Conduite (ECF) driving
school, the Pack Conduite Caisse d’Epargne offers young people
from the age of 16 a cheque for ¤77 payable to ECF for early
driving lessons.
Young people aged 26 or less (students, in particular) can enjoy
the Caisse d’Epargne’s offer for cut-rate comprehensive housing
insurance available on a monthly basis for studio flats. Lastly,
young people employed on the basis of unlimited-term contracts, or
fixed-term contracts for a minimum period of six months, can take
out a Crédit Première installation from their local branch, a
financing solution offering a personal loan for initial accommodation
expenses combined with a Teoz revolving credit card. These three
packages were the subject of a major three-month national
advertising campaign broadcast on French TV and radio.
Sustained, highly appreciated,
prize-winning advertising
campaigns
In France’s extremely dense advertising
environment, the Caisse d’Epargne’s series
of animal fables enjoys the enviable position
of most popular banking advertising
campaign as well as the most effective*.
Eighty-eight percent of the French public
approve it, and 33% are encouraged to find
out more compared with 65% and 18%
respectively for the banking industry’s
average. This outstanding performance won
official recognition in the 2004 Top Com
awards with the attribution of the
Grand Prix for Communications Strategy,
all industrial sectors combined.
With the organization of direct marketing
campaigns, the sponsoring of large-scale
general public and professional events, the
publication of newsletters, magazines,
advisory guidebooks tailored to its different
types of customer, competitions held in the
branches and on the Internet, etc., the
Caisses d’Epargne circulated more than
60 million communications media, giving
their customers a clear demonstration
of their commercial dynamism.
* Sofres/BVA.
Commercial Banking
■
27
No.
1 issuer
of Visa cards
No.
1 online banking
services
François Battman, Diane de Magalihaes,
Valerie Galane and Yvan Chantegrel
Rambouillet
The Caisse d’Epargne also developed a number of animations on its
website in 2004. These include The Challenges of the Gods, a game
published at the same time as the Olympic Games in Athens to
capitalize on the sponsorship of athletes in the French team and, in
September, a quiz offering laptop computers as prizes organized to
support the new financing solution under the aegis of the
government-backed campaign to enable students to acquire the
computer equipment they need.
Loans
■ Consumer Credit: Teoz becomes
the 3rd most popular credit card in France
With new lending in the form of consumer credit worth a total
of ¤3.8 billion, the Group’s market share stood at 6.2% in 2004.
A large-scale promotional campaign entitled Les devis gagnants
(or “winning quotes”) was developed over a two-month period
in September and October in favour of consumer credit and car
insurance: a competition for all quotations with a chance of
winning one of thirty cars, a 25% reduction on car insurance
contracts, and a Teoz revolving credit card offered free of charge
during the first year. This operation resulted in the distribution
of new consumer credit worth a total of ¤1 billion,
29,000 comprehensive car insurance contracts, and subscriptions
for 43,000 Teoz cards.
Commercially available throughout the entire Caisse d’Epargne
network, the Teoz card lies at the heart of several consumer credit
solutions. Teoz2Cartes combines the traditional Visa card for
everyday expenses with the Visa Teoz card for credit purshases;
Teoz Doublé offers a Teoz card associated with a personal loan.
The Crédit Première Installation solution marks the arrival in the
personal loan market of Caisse d’Epargne Financement (CEFI), the
Group’s specialized subsidiary already responsible for managing the
Teoz card.
28
■
CEFI is a 67%-owned joint venture with Cetelem, the leading
consumer credit specialist in Europe. The subsidiary also manages
the portfolio of Satellis Aurore cards, which already boasts more
than one million cardholders, as well as 3 fois CB, a convenient
solution allowing retailers to offer their customers the option
of paying in three separate instalments. CEFI’s activities and
profitability made extremely satisfactory progress in 2004: the
number of cards issued rose 20% to 189,000, taking the total
number of cards in circulation to more than 454,00 Teoz accounts;
new revolving credit business grew 9% to reach a total of
¤491 million while outstanding loans rose 16% to ¤676 million.
■ Property Loans: 14% growth
Thanks to the mortgage lending activities of the Caisses d’Epargne,
Crédit Foncier-Entenial, Banque Sanpaolo and OCEOR, the Group is
the 2nd largest financial institution in France distributing property
loans to private individuals, boasting an overall market share
in the region of 20% that exceeds 30% in the first-time buyers
segment.
Intense activity of the Caisses d’Epargne
The property market accounts for 78.7% of all Caisse d’Epargne
lending business to private individuals. The network arranged new
loans for a total of ¤14.3 billion, representing an 11.3%
year-on-year increase. Almost one quarter of this new business
was generated through the numerous partnerships forged with
real-estate professionals, notably with ORPI and the networks of
real-estate agencies affiliated to FNAIM with which national
cooperation agreements have been signed.
The proportion of new property loans based on variable rates rose
significantly in 2004 to exceed 20% of new mortgage lending.
3rd largest distributor
of personal loans*
*excluding specialized establishments
Mediation: more than 2,000
complaints handled over the
past 2 years
Based on the provisions of the so-called
Murcef law, the bank mediation system
is enjoying real success among customers
of the Caisses d’Epargne.
Above and beyond the regulatory duties
associated with deposit accounts, the
Group has decided to broaden the scope of
the mediator’s responsibilities to virtually all
the banking products and services offered
to individual customers. In accordance with
the provisions of the French law, the
mediator appointed by the Group receives
from the CNCE all the resources he needs
to carry out his assignment as a fully
independent arbitrator of last resort,
referred to when all other complaints
procedures proper to each establishment
have been exhausted.
Since he was first appointed in 2003,
the mediator has received 7,000 requests
and given 2,238 rulings, 45% of which in
favour of the bank’s customers. Beyond the
individual examination of disputes where the
financial stakes are rarely more than a few
hundred euros, the mediation system has
more generally helped to improve the
complaints handling process itself. It has
also made it possible to modify certain
internal procedures in favour of our
clientele, such as compensation related to
banker’s cards, the terms governing early
redemption of property loans or the
settlement of payment incidents on deposit
accounts.
Marc Aziz
Jean-Marie Cheriez
Banque Sanpaolo, Paris
The Tactimo range of adjustable-rate loans allows the bank to offer
customers secure, flexible financial solutions.
Similarly, the Pack Immobilier formula provides a customized
property loan in a single package along with a range of services
designed to simplify and secure the completion of the customers’
real-estate project.
The guaranty provided in the Pack Immobilier solution is typically
underwritten by SACCEF, the Group’s specialized guaranty
subsidiary, which guarantees more than 60% of the property loans
granted by the Caisses d’Epargne. In the French domestic market,
it is the second largest guaranty specialist. In 2004, the company
achieved the very best year in its corporate history, enjoying 34%
growth in its underwriting activities, guaranteeing loans for a total
of ¤7.6 billion representing more than 107,000 individual
mortgages. Premium income grew 30% to reach a total of
¤116 million while total individual customer outstandings
underwritten by SAFFEF stood at ¤20.4 billion at the end
of the year.
Crédit Foncier consolidates its positions among
individual customers
New lending to individual customers of Crédit Foncier-Entenial
amounted to ¤7.6 billion in 2004, equal to an overall market
share of almost 7%. The bank’s total loans outstanding position
in the private individual segment stood at ¤32.2 billion
at the end of the year.
Crédit Foncier has successfully expanded its appeal to a wider
customer base ranging from first-time homebuyers to private
property investors, a customer segment where Entenial enjoys
extremely strong positions.
The merger between Crédit Foncier and Entenial is planned
for the end of the first half of 2005.
Commercial Banking
■
29
finances one out of every
five real-estate projects
Patrick Lorim, Jean-François Koziel
Caisse d’Epargne Ile-de-France Ouest, Rambouillet
Professional Customers
Crédit Foncier is the largest distributor of both state-sponsored
loans designed to facilitate new home ownership (22.2% market
share) and interest-free loans (23.6%). It also commands frontranking positions in the investment property-financing segment
with a 23% market share.
Its predominant activity in new construction, a sector accounting
for 60% of its loans, is complemented by the activities pursued by
Entenial, a specialized bank more active in the existing properties
segment, which now account for almost one half of its new loan
production.
Launched in June 2004 by Crédit Foncier, Foncier Génération “i”,
a loan charging a fixed rate of interest during the first three years
followed by a rate adjusted every year, has met with outstanding
success. Available for periods ranging from 6 to 30 years,
it is an extremely flexible solution, enabling borrowers to manage
their loan commitment over time (varying monthly repayments,
switching to a fixed rate free of charge, etc.).
In the first-time buyers segment, Crédit Foncier has stepped up its
policy of forging partnerships with the major domestic networks—
such as EDF, AGF, Creserfi, Groupama, etc.—as well as all the
players in the professional real-estate market: property developers,
builders of single-family houses, estate agents, etc.
Thus, the capture of new business providers has triggered
growth in business brought in by real-estate intermediaries,
which now accounts for 80.9% of new loan production,
up from 76.8% in 2003.
Lastly, this policy has been expanded with services related
to the third-party management of property loans.
30
■
■ E-business solutions, private asset
management: key advantages
for professional customers
Groupe Caisse d’Epargne is continuing to expand its presence
among professional customers: tradespeople, retailers,
and self-employed professionals. With Banque Sanpaolo and the
OCEOR overseas banking network, the Group boasts more than
200,000 professional customers, 120,000 of whom also bank
with the Caisses d’Epargne in a private capacity.
The Group is also building on the competitiveness of its e-business
offering and on the quality of its solutions related to retirement
savings and private asset management in order to boost its
market share from 7% to 10% in 2007.
The number of professionals whose main banking partner is the
Caisse d’Epargne has grown by 70% in the space of just three
years. In 2004, this market accounted for 15% of the retail bank’s
lending activities, and 12% of new deposits. 1,200 specially
trained branch managers and 850 specialized account managers
focus specifically on this category of clientele while newly
designed branches are being deployed, tailored to customers’
expectations for local presence and efficient service. With the
development of radio-broadcast communications on the theme
of “Focus on the essentials”, numerous regional partnerships set
up with professional associations, etc., promotional activities
resulted in professional customers opening 36,000 new accounts in
2004 and an increase in average daily outstandings of 11%.
More than
200,000 professional customers
850 specialized account managers
36,000 new accounts opened
in 2004
Antoine Dumesnil, Nicolas Brunet
This growth is driven by the deployment of Libre Convergence, a
service pack designed for tradespeople and retailers, and Labelis, a
package targeted at self-employed professionals, whose combined
sales rose 50% to exceed the 200,000 mark in 2004. These packs
include an electronic cash transfer service, remote transmissions
such as the Datalys solution specially designed for chartered
accountants, account management and overdraft facilities,
insurance products and legal and tax assistance services.
Remote banking services were enriched in the course of the year
with an innovative offer: Comptanoo, a bookkeeping software
program available from the Internet Pros web portal.
The Group is also strengthening its electronic cash transfer
services, an area where active contracts enjoyed 15% growth in
2004 with offerings more specifically tailored to health
professionals. The Paiement trois fois service, a solution allowing
retailers to offer their customers the option of paying in three
separate instalments, enjoyed 10% growth during the year.
On the Internet, the number of transactions handled by SP Plus,
the Group’s secure online payment system, grew at an even faster
rate: 36% for online transactions, which now exceed a total
of 2.9 million operations, and 45% for the amounts processed,
which reached almost ¤247 million.
In this area, Groupe Caisse d’Epargne offers a range of highly
efficient services such as ID-Tronic, an anti-fraud solution that
identifies shoppers in real time whenever they settle purchases
online, and 3D Secure, a system that guarantees retailers’ peace
of mind when they sell to customers outside France by providing
them with a secure payment system via Visa or Mastercard
accounts.
■ Significant rise in loans
Lending activities enjoyed strong growth in 2004, rising to more
than ¤2.2 billion. New loans for professional customers remained
stable at approximately ¤1.36 billion, with a sharp decline in
short-term facilities. Groupe Caisse d’Epargne is keeping a tight
rein on the expansion of its activities thanks to the professional
loan guaranty services provided by SACCEF. This specialized
subsidiary guaranteed 1,350 medium- and long-term financing
agreements in 2004 for a total of ¤164 million (+ 35%)
representing more than 12% of this type of loan granted by the
individual Caisses d’Epargne. Synergies were developed with
Banque Sanpaolo with respect to leasing activities in 2004. Loans
granted to professionals in a private capacity rose 25% to reach a
total of ¤760 million.
At the same time, net deposits rose 30% to ¤329 million, half of
which in the form of long-term investments. The Caisses d’Epargne
offer their professional customers a range of solutions that include
annuities, individual retirement schemes and advice in asset
management and capital transfer solutions tailored to the variety
of their individual needs. These activities performed well in 2004
with the growth in advisory services related to the transfer of
business assets and the launch of a collective retirement savings
plan (PERCO).
In the area of insurance designed to cover risks of income lost in
the event of an accident or prolonged business interruption, a total
of 5,500 Protection Activité Professionnelle contracts were taken
out, representing 100% growth in the space of two years.
Commercial Banking
■
31
The Specialist Bank
for Regional
Development
Chantal Fondeur
Deputy Mayor of Bezannes
An active partner in promoting the social and economic
development of the regions, Groupe Caisse d’Epargne
provides local authorities and institutions, and all players
active in the social economy, with a comprehensive range
of services and solutions enabling them to finance
their projects, simplify their management, and optimize
their investments.
The no.1 bank for real-estate professionals, the everyday
banking partner of business organizations, the Group both
supports their growth and helps them to further enhance
their performance.
32
■
Delphine Guy
Caisse d’Epargne Champagne-Ardenne
on the construction site
of the Paris-Strasbourg TGV
high-speed train link
Local Authorities
and Institutions
The no.1 bank for the French regions, the second largest for local
authorities as a whole, Groupe Caisse d’Epargne has increased its
market share among major accounts while maintaining its strong
positions among small and medium-sized towns and in the rapidly
growing area of inter-municipal operations.
In all, the Group finances one third of the needs of the local
government market.
■
New, innovative loans
In 2004, local government spending grew at a rapid pace
(+ 8.8%). This strong growth in spending is driven, in particular,
by the need for local communities to comply with European
environmental standards: water, waste, etc., and the increase in
building costs. These same factors have triggered growth in direct
investment of approximately 10% for local communities and,
in particular, for groups with specific tax systems (+ 16.5%).
New loans granted by the Group to local government amounted
to ¤5.8 billion, boosting medium- and long-term outstandings to
¤24.9 billion at the end of 2004.
Taux Fixe 25-50 ans, an extremely innovative long-term fixed-rate
financing solution developed with Crédit Foncier, was launched in
2004. This new product allows local communities to enjoy
exceptionally advantageous financing conditions by matching the
financial redemption of the loan to the technical amortization of
the investment.
In the area of structured loans, the Bonifix range developed
with IXIS CIB has been further expanded. Now boasting more than
20 different products, it satisfies all the strategies used for the
active management of local community debt and cash flow.
New solutions have been devised for major accounts; one
example is Overlix, a product offering a variable rate of interest
reduced in line with changes in inflation in France.
At the same time, all the Caisses d’Epargne now offer G2D, a
dynamic debt management solution that makes it possible to
diversify a customer’s debt and give it a new, customized profile
by taking advantage of the Bonifix range. The success enjoyed by
G2D reveals strong demand among local communities for easily
accessible, high value-added services capable of providing them
with additional budgetary leeway.
■
Financial solutions for public-private
partnerships (PPP)
Without waiting for the official publication of the texts governing
public-private partnership agreements, the Group has already put
its know-how in such matters at the service of local development.
A forerunner as far as partnerships of this type are concerned
(it was involved in the very first PPP operation in France: the
financing of the Strasbourg police headquarters), the Group has
positioned itself as an investor and financier in all the projects
launched in 2004 (the Caen and 15/20 hospitals, construction
of police barracks, etc.).
■
Success of cash management
and payment processing services
In response to the fact that local authorities are now allowed to
invest in new products, the Group has expanded its range of cash
management and short-term financing solutions.
Launched in 2004 throughout the entire Caisses d’Epargne
network, the Ligne de Trésorerie Interactive (or interactive facility)
provides local authorities with an effective solution for obtaining
short-term funds and managing their use by automatically
standardizing the debit and credit procedures. This range offers
four major advantages: automation of transaction flows,
information available in real time over the Internet, e-mail
confirmation sent to all parties requesting it, and an automatic call
for interest and commissions. From its very first year in existence,
this line of credit enjoyed immense success with managed funds
in excess of ¤1.2 billion.
The Group also offers local government a range of services
designed to simplify the lives of their citizens. Examples include
Service Public PLUS, a secure payment solution allowing local
residents to use the Internet to pay for services provided by the
local council, or the installation of Moneo payment terminals in
public buildings. Almost 1,680 websites run by local authorities,
government corporations, associations, retailers and companies
have already adopted Service Public PLUS.
Commercial Banking
■
33
Local authorities:
30,000 are customers
4,308
are cooperative shareholders
of the Caisses d’Epargne
Olivier Rico
Hervé de Waziers
Philippe Delchet
CNCE, Paris
Financing sustainable
development: a new
partnership with the EIB
■
Forging tighter links with associations
and local authorities
In 2004, Groupe Caisse d’Epargne offered local authorities a series
of reduced-rate funding envelopes set up within the framework
of partnerships with a number of associations: the National
Association of Listed Sites and Tourist Towns, the Association of
Small French Towns, the Federation of Mayors of Medium-Sized
Towns, and the Association of Mayors of Large French Towns.
The CNCE has also renewed its partnership with the National
Federation of Public Works to promote investments capable
of helping to improve the quality of the environment. In 2004,
priority was given to construction work designed to prevent
the risk of flooding.
The Group has also launched ECODEFI, a new financial indicator
for local and regional authorities designed to measure
their expectations related to financing solutions, and to gauge
their degree of trust. This indicator is based on a monthly survey
of a panel of 120 local authority finance directors. The first
ECODEFI annual forum gave them an opportunity to exchange
their points of view about the reform of the local business tax
(taxe professionnelle).
34
■
Every year, Groupe Caisse d’Epargne
pursues an extremely active partnership
with the European Investment Bank (EIB)
with a view to financing capital spending
projects for local communities and health
institutions.
In 2004, the EIB granted the Group a new
€500 m funding envelope allocated to the
sustainable urban transport programme
supported by the French Ministry of
Transport and Maritime Affairs. The aim
of this facility is to finance public transport
projects in all French regions (with the
exception of the greater Paris area).
Twenty-seven tramways, metro and electric
bus initiatives have already been identified.
The EIB funding, combined with a long-term
facility from Groupe Caisse d’Epargne
tailored to the operating cycles of the
transport systems in question, makes it
possible to optimize the financing conditions
of these different projects.
One example is the Clermont-Ferrand
tramway financed directly by the Caisse
d’Epargne d’Auvergne et du Limousin within
the framework of the funding envelope
granted by the EIB, and by the Caisse des
Dépôts. This tramway system, with trains
running on pneumatic tyres, will be brought
into service in 2006; it will boast
14 kilometres of track, 31 stations and
serve a total of 75,000 local residents.
Christophe Block de Friberg
Aurélie Tristant,
Sabine Graizely
■
Active involvement with public health
institutions
The capital spending requirements of public health institutions
over the period 2003 to 2007 have been estimated at more than
¤21 billion, including more than ¤10 billion related to the
“Hospital 2007” reform programme.
Le Havre chooses SP PLUS
The Caisse d’Epargne de Haute-Normandie
was chosen by the city of Le Havre
following its call for tenders for the
installation of a secure online payment
system for services offered via its website.
This city in the north of France will now be
adopting Groupe Caisse d’Epargne’s
solution: Service Public PLUS (SP PLUS).
This 3-year contract will enable the
200,000 inhabitants of the urban area to
pay for cultural and sporting events online
and gradually to enjoy access to all the
services provided by the city on a
permanent basis: day-care centres, school
canteens, public transport, etc.
More than 20 local authorities have
already adopted the SP PLUS secure online
payment solution, including La Rochelle
in 2004.
In its capacity as the second largest lender and favoured partner
of public health institutions in France, Groupe Caisse d’Epargne
has set up a dedicated organization with a “Health” correspondent
in each individual savings bank in order fully to meet the needs
of public institutions specializing in health care and social welfare.
Loans granted to public health institutions represented a total
of ¤700 million in 2004.
Almost ¤175 million of this amount enjoyed favourable rates
related to the “Hospitals of France” initiative agreed with the
European Investment Bank to finance the Hospital 2007
programme under the best possible conditions. The teaching
hospital in Lille (north-east France) was one of the first institutions
to benefit from this programme, enabling it to obtain especially
advantageous financing conditions thanks, in particular, to the
European Investment Bank’s signature.
The Ligne de Trésorerie Interactive has already received a warm
welcome from public health institutions whose needs for ready
cash will grow following the adoption of the “activity pricing”
reform. Under the terms of this new measure, the allocation of
resources based on the real level of the institutions’ activities will
replace all lump-sum operating subsidies.
Testifying to its active involvement in the health care sector,
Groupe Caisse d’Epargne took part in the Hôpital Expo exhibition
for the very first time in 2004. The Caisses d’Epargne Foundation
for Social Solidarity and the French Hospital Federation took
advantage of this event to sign a 3-year partnership set up with
a view to jointly organizing innovative projects of benefit
to society as a whole.
Commercial Banking
■
35
No.
1
private bank
for social housing
organizations
Antoine Savic
Margerie Moriancourt
and a tenant
Efidis (subsidiary of Perexia),
Saint-Germain-en-Laye
Subsidized Housing
Groupe Caisse d’Epargne is the historic partner of the HLM
subsidized housing movement and the only player to boast an
active role in all areas of the social housing sector. In its capacity
as the no.1 private bank for social housing organizations, the
Group manages 50% of the private debt of the Social Housing
Enterprises and HLM agencies, whose construction programmes
are financed by deposits on Livret A passbook accounts.
In its capacity as a shareholder and operator of social housing
organizations, the Group is involved in shareholders’ pacts
concerning about one hundred of the three hundred HLM bodies.
With Crédit Foncier, it is also the largest distributor of statesponsored “rental accommodation loans” (prêts locatifs sociaux)
and tax-efficient prêts locatifs intermediaries (PLI), and is the
leading bank offering employee savings solutions to the HLM
organizations via its subsidiary, Gérer.
■
The Caisses d’Epargne, the no.1 private
shareholder of social housing organizations
The Social Housing Enterprises—which are privately-owned social
housing organizations—manage more than 1.8 million housing
units. They also play a key role in the French government’s
housing policy in its drive to eliminate 200,000 run-down social
housing units and to renovate or build an equivalent number. As a
result, the so-called Borloo law of August 1, 2003 has reformed
the corporate governance of these entities, which are now
required to identify a reference shareholder, or a reference group
of shareholders.
Holding shares in one half of the 311 Social Housing Enterprises,
and represented on the boards of one third of the total, the
Caisses d’Epargne have become one of the principal administrators
of these enterprises. In this respect, the CNCE recently signed an
agreement with the UESL, the union representing organizations
collecting statutory company contributions offering employees
preferential rate loans for home ownership, with a view to setting
up shareholders’ pacts with these bodies.
Directors on the boards of Public Agencies for Development and
Construction (OPAC) alongside politicians and qualified individuals
appointed by the Prefect, the Caisses d’Epargne are also the
largest private shareholders in semi-public real-estate companies
(whose majority shareholders are local authorities) that own a
total of 550,000 housing units. The Caisses d’Epargne reinforced
their presence on the boards of these entities in 2004.
36
■
Cible: a five-star investment
fund created by Gérer
Created by the Gérer subsidiary in 2001,
this dynamic monetary investment fund is
specifically designed for organizations active
in subsidized housing and the social
economy, as well as local authorities.
The “five stars” attributed to Cible by the
Standard & Poor’s rating agency recognize
the quality and regularity of its
performance. Only 13 funds out of the
193 dynamic monetary investment funds
obtained the maximum 5-star rating,
and Cible is the only fund in its category
to have received this distinction.
This recognition illustrates the expertise
developed by Gérer, which, since its very
creation, has specialized in managing
assets on behalf of social housing
organizations.
One half of these entities—i.e. 300 out
of a total of 600—directly benefit from the
services of this subsidiary.
Gérer offers dedicated funds managed on
an assets/liabilities basis, customized
management services, and an order
transmission service enabling the customer
organizations to trade at the best possible
price in the bond market.
Since 2004, the HLM organizations have
been free to invest in all euro-denominated
securities issued or guaranteed by
European states. Accordingly, Gérer
initiated two issues of structured Euro
Medium Term Notes (EMTN) boasting
two of the best European signatures:
KFW and the European Investment Bank.
300 employees specializing
in the “social economy”
300 subsidized housing organizations
are cooperative shareholders
of the Caisses d’Epargne
No.1 distributor of state-sponsored
PLS property loans
Pierre Marintin
and a student tenant
Gestrim, Courbevoie
PEREXIA: a different approach
to subsidized housing
With more than 103,000 housing units
under management, a staff of 1,600 and a
turnover of €530 million, the Social
Housing Enterprises division of PEREXIA, a
subsidiary of Crédit Foncier, is one of the
principal landlords in the subsidized housing
sector in France.
Its territorial strategy based on three target
regions (Nord-Pas-de-Calais, the greater
Paris region, and the Provence-Alpes-Côte
d’Azur region in southern France), enables
it to satisfy the expectations of local
councillors in a pragmatic and inventive
manner, and to find housing solutions
irrespective of the demand: accommodation
for families or students, home ownership,
etc.
This wide range of solutions designed to
promote a greater social mix goes hand-inhand with a particular concern for the
quality of its services and whether its
operations blend smoothly in with their
environment.
The 11 subsidiaries of the Social Housing
Enterprises division emphasize their local
presence, quality and sustainability. In
2003, for example, they signed a service
quality charter offering their tenants
the guarantee of round-the-clock telephone
presence, rapid processing of their
demands, high quality intervention, and
the organization of regular satisfaction
surveys.
Furthermore, the Perexia (a Crédit Foncier subsidiary comprising
Efidis, Logirem and SIA) and Erilia (in which the CNCE acquired a
controlling interest in 2004) groups respectively own and/or
manage 146,300 and 39,000 subsidized housing units.
■
Buoyant business activities
The Group’s offering includes managed loans for the construction
of subsidized accommodation, loans for the construction of
intermediate housing units, for financing residential
accommodation designed for the elderly and students, as well as
a range of structured loans. Business was good as far as lending
is concerned for the Caisses d’Epargne with new loans granted
for a total of ¤588 million, taking outstandings in this area
to an aggregate ¤2.2 billion.
As the largest distributor of prêts locatifs sociaux (PLS) and prêts
locatifs intermédiaires (PLI), a range of state-sponsored or tax
efficient loans, the Group was granted a resource envelope
of ¤1.2 billion in 2004, compared with ¤494 million in 2003, or
61% of the national allowance fixed by the French government.
The social housing organizations focused their financing requests
primarily on these loans, which also attracted local authorities,
mutual insurance companies and associations. The entire PLS
and PLI resource envelopes were committed.
A new prêt social location-accession (PSLA) was launched at the
end of 2004. This new subsidized homeownership loan enables
households on modest incomes to buy their accommodation after
a rental period under secure financing conditions.
Business was also buoyant regarding deposits, with new business
reaching ¤661 million, taking total savings deposits to an
aggregate ¤4.6 billion at the end of 2004. This money was chiefly
channelled towards Livret A passbook accounts and the range of
Gérer’s investments products distributed through the retail
network. New cash management and investment products have
also been developed, including a range of structured time deposit
products that represent, in the management of assets, the
equivalent of the Bonifix range in the management of liabilities.
The Crystalis automatic treasury management service continued
to enjoy satisfactory growth in 2004, as did the use of interbank
payment slips and electronic data exchange systems for rent
collection, the payment of salaries and suppliers of social
housing bodies.
Commercial Banking
■
37
No.1 bank
for adults enjoying
legal protection
Isabelle Fagnon
Caisse d’Epargne Champagne-Ardenne, Reims
The Social Economy
The 3rd largest banker to the social economy in France, the
Caisse d’Epargne pursued its development in this rapidly growing
sector comprised of associations and foundations, mutual health
insurance companies, private education establishments,
cooperatives, works councils, and non-profit-making sports and
leisure organizations. More than 300 Caisse d’Epargne employees
specialize in services specifically designed for the social economy,
including 150 full-time account managers.
■
A major financing activity
The Group is extremely active in the financing of social economy
projects with a total of ¤9 billion in loans outstanding chiefly
concentrated in the health and social sectors, private education
and company benefit schemes organized by mutual insurance
companies.
PLS property loans granted to players active in the social economy
represented a total of ¤105 million in 2004, while non-PLS loans
accounted for a total of ¤309 million, a large part of which is
guaranteed by SACCEF or by the different social economy
investment funds run by the Institute for the Development of the
Social Economy (IDES), enabling association managers to avoid
having to grant personal guarantees.
New services have been introduced such as the Chèque Emploi
Associatif, a means of payment designed to simplify recruitment
formalities and salary management procedures for small
associations, and SP Plus the online payment system that makes
it easier for association members to pay their subscription fees.
In this respect, the Group reached an agreement with the Bayard
Presse publishing group to promote SP Plus in bishoprics
and parishes, and among Catholic associations.
Net deposits rose by ¤386 million. A new product designed by
Gérer, consisting of an allowance made to long-serving employees
upon retirement, was distributed by the retail network. As a result,
total investment deposits (excluding funds from guardianship
structures) rose to ¤3.7 billion.
The Caisse d’Epargne is also the largest financial institution
providing services for protected adults, serving a total
of 210,000 customers in this area. The Group’s historical
commitment to the vulnerable members of society, and the
quality of its specialized personnel, are the underlying reasons
for this predominant position. The Group offers a particularly
comprehensive range of services with products tailored to the
everyday lives of the vulnerable such as the Satellis Autonomie
service package and a secure cash card. Managed funds
represent a total of ¤3.1 billion.
38
■
Insertion Emploi:
more than 11,000 jobs created
over the past ten years
The result of a partnership between the
Caisses d’Epargne and the Caisse des
Dépôts, the Insertion Emploi mutual fund
celebrated ten years of socially supportive
investments in 2004. The fund can
justifiably be proud of helping to create jobs
for more than 11,300 individuals in
situations of great distress.
A short-term loan worth €500
million for the National Pension
Fund for Local Government
Employees (CNRACL)
The CNRACL provides old age and invalidity
cover for local government employees
and the staff of public hospitals.
After a round of discussions with nine
different financial institutions,
Groupe Caisse d’Epargne was chosen to
provide this entity with a bank credit worth
a total of €500 million in 2005. The
combined mobilization of the Group’s
national and local intervention capacity
proved to be a key factor in this success.
The CNCE is providing assets along with the
Caisse d’Epargne Aquitaine-Nord, which
assumed responsibility for the commercial
side of the operation; IXIS Corporate &
Investment Bank is responsible for
arranging the financial package.
28,000 corporate customers
chose Groupe Caisse d’Epargne
as their bank in 2004
90% of all business customers
say they are satisfied with
the Caisses d’Epargne
Eric Gimonet
Caisse d’Epargne Champagne-Ardenne
Guy Laluc
Lanson International, Epernay
■
Partnerships: making progress together
In order to satisfy more fully the expectations of organizations
active in the social economy, Groupe Caisse d’Epargne forged a
number of partnerships during the year, in particular, with SNAPEI
(the National Union of Associations of Parents and Friends of
Mentally Handicapped Individuals), an umbrella organization
representing the managers of associations running centres
designed for the mentally handicapped, and with GAP Uneta,
an organization representing 300 protected workshops.
Communications in this area were further intensified in 2004 with
the publication of two new advisory booklets: “The Essential
Addresses of an Association Chairman” and “Internet and
Associations”. The Group also publishes two quarterly newsletters:
Alinea, and A comme Associations (A for Association). All these
documents are available from the web portal associatis.com.
Still on the subject of voluntary service, the 11th Ecureuil
Association competition rewarded the exemplary achievements
of innovative associations deeply involved in the life of society.
Corporate Customers
The local banking partners of business organizations in the regions,
the Caisses d’Epargne are expanding their presence in this market
through a hundred or so dedicated business centres and
270 specialized account managers.
Banque Sanpaolo is extremely active among larger companies
and in the leveraged buy-out (LBO) segment.
All in all, the Group’s investments in the different forms of private
equity funds amount to approximately ¤1 billion, including its
customers’ investments in innovation mutual funds (FCPI) and local
investment funds (FIP).
At the same time, a syndication mechanism within the Group
makes it possible to develop financing solutions for companies
operating at a national level.
New methods for analyzing risks have also been adopted within
the framework of the Basel 2 initiative.
■
Stronger growth in the SME segment
2004 marked the arrival in the Group of Banque Sanpaolo. Building
on its expertise in long-term financing operations and boasting an
extensive clientele of high-quality medium-sized companies,
Banque Sanpaolo will play a pivotal role in the Group’s continued
growth among medium-sized enterprises. For this reason, Bail
Ecureuil has been transferred to this subsidiary and will be the
Group’s reference for factoring services.
At the same time, Banque Sanpaolo will reinforce its positions
among “high net worth” individuals, and consolidate its role in
asset management among institutional customers operating at a
regional and national level.
Banque Sanpaolo enjoyed extremely buoyant growth in 2004 with
nearly 500 new relationships with small- to medium-sized
enterprises and industrial firms and 4,000 new private customers.
Net banking income amounted to ¤186 million, down 4.5% with
net income of ¤28 million.
The Group enjoys front-ranking positions in several segments of
the enterprise market, services for companies in French overseas
territories via the OCEOR network, and regional venture capital
with five specialized subsidiaries and commitments of almost
¤500 million at the end of 2004.
Commercial Banking
■
39
Six new funds for the benefit
of regional economies
■
Strong growth in banking services, leasing
activities and investment products
The Caisses d’Epargne continued to develop their activities
among regional SMEs, creating more than 2,000 new commercial
relationships. At present, the market share of transaction
flows controlled by the savings banks and Banque Sanpaolo
is almost 5%, and one company out of 10 banks with
Groupe Caisse d’Epargne. In addition, more than one company out
of two possesses a computerized link in the form of a remote
transmission system, and a strong increase in online payments
concerning Caisse d’Epargne accounts has been observed
(45% increase in amounts transferred).
In a rather sluggish economic environment, loans outstanding
with corporate customers rose 7% to reach a total of ¤4.3 billion
for the Caisses d’Epargne (18% of which are short-term facilities)
and ¤2.4 billion for Banque Sanpaolo, 24% of which in the form
of short-term loans. A partnership agreement with the BDPME
regarding the financing of public receivables was prepared
in 2004 and concluded in 2005.
The Group recorded new business worth ¤220 million in
equipment leasing and ¤490 million in the real-estate leasing
segment, up from ¤118 and ¤413 million respectively in 2003.
The CNCE was granted a new ¤100 million loan from the EIB
to finance SME leasing projects.
New deposits received by the Caisses d’Epargne from corporate
customers stood at more than ¤164 million, increasing aggregate
balances to more than ¤1.9 billion, while Banque Sanpaolo
received new deposits worth ¤2 billion, raising balances 9% to a
total of ¤3.9 billion. The Group’s banking networks now boast a
particularly competitive range of employee savings products
designed for SMEs and micro-enterprises, and actively market their
asset management services to company heads.
Among the investment products, Morin Pons Objectif + distributed
by Banque Sanpaolo won 1st prize for mutual funds awarded by
the Figaro and Journal des Finances newspapers in the “dynamic
euro-denominated monetary” category.
The overseas OCEOR banking network has set up shop in Mauritius
with the creation of Banque des Mascareignes. Apart from new
investment and employee savings products, OCEOR launched
Bonylis, a financing package for small capital goods using the taxefficient leasing solutions afforded by the so-called “Girardin” law.
The bank’s leasing activities have also been grouped together
under a single banner, Océor Lease, operating in Reunion Island,
Nouméa, Tahiti, Mauritius, and in the French West Indies/Guyana.
40
■
The Caisses d’Epargne des Pays de la
Loire, de Bretagne and du Centre-Val de
Loire have launched a local investment fund
for a total of €6 million, specifically
dedicated to western France.
The purpose of this new fund is to carry
out joint investments with the Group’s other
vehicles in this part of France, Sodero
Participations and Pays de la Loire
Développement, in order to be able to
carry out operations of a unit value of up to
€1.5 million, thereby exerting real leverage
for the chosen companies.
Beneficial for the regional economy, these
local investment funds also offer wealth
management advantages for their
customers who can invest up to 10% of
their income in them, and enjoy tax breaks
on up to 25% of their outlay.
The Group launched five other Local
Investment Funds in 2004.
The consultant banker to smallto medium-sized enterprises
and industrial firms
Consolidating its positions as a consultant
banker working with expanding, mediumsized companies, Banque Sanpaolo played
a part in a large number of long-term
financing operations in 2004.
The front-ranking player in the market
for bonds with redeemable share warrants,
the bank was lead manager for the bonds
issued by Open Group (€12.6 million)
and by Belvédère (€35 million). It acted
as joint introducer for the launch of Oxbaw
on the unlisted securities market of the
Euronext Paris stock exchange. It
successfully completed Prosodie’s share
buy-back operation and the public offer
of withdrawal launched by Champex.
It also provided consultancy services to
ABN AMRO Capital France in the
organization of the management buy-out
operation at Score Services.
Margerie Moriancourt
and a tenant
Efidis (subsidiary of Perexia),
Le Pecq
Real-estate Professionals
■
Consolidated front-ranking position
The Group has further consolidated its position as market leader
with the absorption of Entenial by Crédit Foncier and the
integration of Banque Sanpaolo, a financial institution active with
both real-estate professionals looking for project financing
solutions and customers interested in real-estate management
and transaction services.
This new dimension now makes the Group the no.1 bank for realestate management companies and property managing agents,
and the 2nd largest player in the project financing market.
■
■
Banking services for professionals
specializing in real-estate management
and property transactions
In the area of banking services designed for professionals
specializing in real-estate management and property transactions,
the Group is strengthening its uncontested front-ranking position
and expertise through its Crédit Foncier/Entenial and Banque
Sanpaolo subsidiaries.
The Group intends to further consolidate its positions in this market
by developing a dedicated range of products and services
distributed via the Caisses d’Epargne network.
Project financing market
For the eighth consecutive financial period, the residential property
market enjoyed an excellent year while the performance of
commercial real-estate remained flat as far as rental business is
concerned, but proved to be extremely buoyant with respect
to transactions.
In this positive business environment, new lending increased
by 19% to a total of almost ¤3.1 billion; new signed loan
commitments reached a total of ¤3.2 billion.
Socfim, the Group’s specialized subsidiary, achieved a recordbreaking year in the financing of housing developments. New loan
production amounted to ¤1.1 billion, more than half of which was
syndicated within Groupe Caisse d’Epargne.
The real-estate lease financing activities have been
reorganized around Cicobail. Now forming part of Crédit Foncier,
Cicobail operates on behalf of all the different entities
in Groupe Caisse d’Epargne.
Crédit Foncier also acquired a majority interest in Crédit Foncier
et Communal d’Alsace et de Lorraine (CFCAL) in order to offer new
financing solutions such as debt restructuring and loans with
mortgage guarantees, an area where CFCAL is the principal
specialist in France.
With respect to new products, the Group launched PLS Investisseur
in 2004. This product, chiefly distributed by property developers,
is aimed at both individuals and businesses, and combines the
advantages of the traditional PLS state-sponsored loan with the
amortization allowed by the so-called Robien law.
■
Guaranties for real-estate professionals
CEGI, a GCE Garanties subsidiary, specializing in issuing guaranties
to builders of single-family houses, estate agents, real-estate
management companies and property developers, saw its
revenues increase by 13% with ¤35 million in gross premium
income.
Socamab Assurances, also a GCE Garanties subsidiary,
the front-ranking company in the market for guaranties
to real-estate management companies, only enjoyed
2% growth in revenues, receiving gross premiums
for a total of ¤7.2 million in 2004.
■
Real-estate services
In the real-estate management sector, the Perexia Group
continued to enjoy strong growth. Its subsidiary Gestrim became
the leading player in the Paris region following its acquisition of
the Patrimonia Group, and reinforced its positions in Germany
where it enjoys the status of a key market player.
The real-estate engineering activities pursued by Foncier
Consultants and Entenial Conseil also enjoyed growth.
At the same time, Crédit Foncier reinforced its real-estate services
division, notably with the transaction activities of Gemco and
Keops Enterprises.
Foncier Expertise, for its part, has further consolidated its leading
position with 34,500 valuation assignments carried out in 2004,
equal to growth of 30%.
Commercial Banking
■
41
Investment
Banking
Crystal Lawrence
IXISSM Capital Markets,
New York
42
■
Investment Banking
■
43
Capital Markets
and Financing
Solutions
Jonathan Feuilhade de Chauvin
Jean Le Tanneur
IXIS CIB, Paris
The financing and capital market activities
of Groupe Caisse d’Epargne were given a new structure
in November 2004.
IXIS Corporate & Investment Bank now brings together
all the Group’s capital market operations along with its
corporate and structured finance, financial engineering
and debt refinancing activities.
44
■
IXIS Corporate & Investment Bank is Groupe Caisse d’Epargne’s
corporate and investment banking arm and a leading player
in the capital markets. It is licensed as a bank under French law
and offers a framework of optimal security as illustrated by its
outstanding credit ratings. The Bank delivers an extensive array
of high value-added brokerage, structured finance, financing,
engineering and research services. To ensure its active presence in
the principal markets worldwide, IXIS Corporate & Investment Bank
works through its Paris headquarters, branches in Frankfurt, London
and Tokyo, in addition to subsidiaries in New York and Hong Kong.
Financing
and Financial Engineering
■
Corporate and structured finance
In 2004, the bank’s financing activities, its activities as an arranger
and co-arranger in underwriting and syndication operations were
carried out by IXIS and CNCE specialized teams until they were
merged into one at the end of the year.
The financing activities pursued by the CNCE generated high levels
of production in liaison with, and in support of, the Caisses
d’Epargne and other Group companies: Socfim, Banque Sanpaolo,
Entenial and IXIS. At December 31, 2004, aggregate loans
outstanding (drawn and undrawn confirmed customer lines of
credit) and the volumes of guaranties granted by the CNCE came
to a total of almost ¤9.8 billion, including ¤6.4 billion for the local
and regional government sector.
For IXIS Corporate & Investment Bank, the 2004 financial year was
characterized by substantial growth in new loan production worth
a total of ¤5.51 billion, 66% of which was in the form of
corporate financing solutions.
A total of 105 financing operations were finalized in 2004 and the
company obtained 85 arranger or co-arranger mandates during the
year, including 23 as a Mandated Lead Arranger.
Among the operations carried out during the year, IXIS Corporate
& Investment Bank acted as co-arranger for the bank refinancing
operation relating to France Télécom’s real-estate portfolio of
technical facilities for a total of ¤1.2 billion. Other operations
carried out by the bank’s teams in 2004 included the acquisition of
Aventis by Sanofi Synthélabo and Wendel Investissement’s buyout
of minority interests in Bureau Veritas.
■
Aeronautics and marine structured finance:
synergies and selectivity
A number of major contracts were signed during the year
involving container ships, double hull bulk carriers, car ferries, gas
and petrochemical tankers. The shipping finance operations
created commercial opportunities with ship-owner customers and
led to lucrative banking operations for several Caisses d’Epargne.
In the aircraft finance segment, Ingépar was mandated during
the year to arrange two selling operations with reservation of title.
The subsidiary also financed the acquisition of a Boeing airliner
for Air France and a turboprop aircraft for Air Tahiti.
For the first time, the company also took part in an export credit
operation to finance four aircraft for Bangkok Airways, the second
largest Thai airline company.
■
Financial engineering and project financing
consultancy services
The Group is extremely active as a consultant for the arrangement
and financing of projects in the infrastructure, environmental
protection and energy sectors and, more generally, in all areas
related to public-private partnerships (PPP), affording significant
potential for further development.
In 2004, the Group took part in the syndication of a ¤1.4 billion
private financing initiative for the Skynet project, the new secure
satellite communications system managed by EADS on behalf of
the British Ministry of Defence. This PPP is similar to a corporate
financing operation with a sharing of operational and financial risks
between the private contractor (EADS), the public licensor, and the
insurance companies. Several similar projects were examined in
France—and a number were finalized at the beginning of 2005—
in the area of penal establishments, regional hospitals and
transport systems.
IXIS Corporate & Investment Bank expanded its corporate-finance
advisory offering in 2004 and thereby complemented its traditional
project-financing advisory activities.
The bank acted as financial advisor on three sizeable transactions,
namely a securitization deal involving the transfer of a pension
scheme on behalf of the Casablanca water and electricity
concession in Morocco (Suez Group), a concession for the FrancoSpanish high-speed train link between Perpignan and Figueras
(Eiffage and ACS-Dragados) and a container terminal concession
for the new port of Tangiers in Morocco in association with the
Maersk Group.
Project Finance International magazine ranked IXIS Corporate
& Investment Bank fifth in its 2004 league table of projectfinancing advisors (in the Europe/ Africa/Middle East zone),
the highest ranking among European banks.
The Group is also active in the market for structured solutions for
shipping and aircraft finance via its specialized subsidiary Ingépar.
In an extremely buoyant market for sea freight, Ingépar confirmed
its expertise as an arranger of structured operations, while the
Group demonstrated its ability to successfully underwrite shipping
finance contracts.
Investment Banking
■
45
Talel Hammami
IXIS CIB, Paris
Capital Markets
IXIS CIB launches the first
private carbon fund
The Caisse des Dépôts has entrusted IXIS CIB
with the launch of the first non-governmental
investment fund dedicated to financial
market instruments helping to combat the
greenhouse effect.
The European Carbon Fund, a Luxembourgbased SICAV (mutual fund), will buy
CO2 emission rights, create the liquidity
necessary for this new market, and satisfy
the coverage requirements of the 12,000
installations subject to regulations governing
greenhouse gas emissions.
The subscription target is €100 million.
The Caisse des Dépôts, Caisses d’Epargne
and institutional investors such as AGF
have all expressed interest in this innovative
product that offers an alternative
to the financial markets. The financial
management of the European Carbon Fund
has been entrusted to IXIS Environnement
& Infrastructures, a subsidiary of IXIS CIB
and already responsible for managing
the Fonds pour l’environnement et la maîtrise
d’énergie (Fund for the Environment
and Energy Control).
46
■
In Europe, financial market activities boast improved results
thanks to the excellent performance achieved in the fixed-income
segment, growth in structuring and fund arrangement activities
and good results in the equity intermediation segment. The
intermediation business benefited from a favourable market
environment and reinforced its position among a clientele
of institutional investors.
Interest-rate
and Forex markets
Building on its innovative know-how, IXIS Corporate & Investment
Bank delivers a broad array of fixed-income products, from the
simplest to the most complex.
■
Interest-rate and credit markets
Over-the-counter interest-rate
and Forex derivatives trading
The year featured an improvement in both volumes and
profitability on interest-rate derivates. A number of complex
and innovative transactions were executed from Paris, London,
Frankfurt, New York, Tokyo and Hong Kong. Business on yen and
dollar-denominated complex derivatives was expanded in Asia.
The bank has also developed a major position in inflation-linked
products and securitization swaps.
Government debt
IXIS Corporate & Investment Bank confirmed its positions in the
French government debt market and ranked 5th among primary
dealers in French government securities (Spécialiste en Valeurs
du Trésor, SVT). It also played an active role in developing
the Euro MTS range of bond trackers.
Primary bond market
The Bank consolidated its position in the euro primary market
through 105 public issues totalling ¤23 billion. It has strengthened
its positions worldwide, ranking as the no. 1 dealer of structured
private placements in euros, the leading arranger of cedulas
hipotecarias* and the 2nd largest issuer of covered bonds
(obligations foncières).
Secondary credit market
IXIS Corporate & Investment Bank capitalized on the attractive
interest-rate and credit spread environment to achieve a fine
performance in corporate bonds and Asset-Backed Securities (ABS).
Thanks to market-share gains on short-term credit securities and
repo business, it became the leading dealer of Asset-Backed
Commercial Paper (ABCP) in France.
■
Structuring
Strong growth was achieved in alternative fund-management
structuring in Europe and Asia. The team handled some innovative
structured operations for asset management clients and won six
public offering mandates in Japan. The credit structuring unit
contributed to growth in the Collateralized Debt Obligation (CDO)
segment by arranging a ¤220 million synthetic CDO comprising
ABS and CDO underlyings. The Alternative Risk Transfer team
arranged the biggest-ever climate derivative indexed to snow
depth. The real-estate structuring unit undertook one of Italy’s
biggest-ever real-estate transactions on behalf of Enel in
a ¤1.4 billion deal comprising close to 900 real-estate assets.
■
Securitization
IXIS Corporate & Investment Bank took advantage of growth in the
Italian and UK Residential Mortgage Backed Securities (RMBS) and
Commercial Mortgage Backed Securities (CMBS) markets to carry
out two substantial transactions, one to finance office property in
London and the other to finance technical facilities for a major
Italian telecoms operator. The securitization team expanded its
commercial receivables expertise by applying its existing knowhow to the issue of deconsolidation introduced by the International
Accounting Standards (IAS).
■
Complex credit
Standardization and innovation were the prime features in the
credit derivatives and structured credit markets in 2004.
Standardization enhanced market transparency and thereby stoked
investor interest, while innovation helped satisfy increasing
demands from clients.
IXIS Corporate & Investment Bank responded to this backdrop
by launching the first public synthetic CDO comprising both
credit instruments (credit default swaps) and equity instruments
(equity default swaps).
Equity Markets
IXIS Corporate & Investment Bank serves the needs of major
European players with personalized advice and high value-added
products on both primary and derivatives markets.
■
Primary market
Primary market activities picked up markedly in 2004, especially
in the IPO field (12 transactions in France totalling ¤5.7 billion).
IXIS Corporate & Investment Bank strengthened its presence
in the primary market for equities through its partnership with
fellow bankers, Lazard. The partnership operates under the
Lazard-IXIS banner and focuses on French companies capitalizing
at over ¤500 million. Lazard-IXIS took part in France’s main IPOs
in 2004, as co-lead for Snecma, co-lead for Autoroutes Paris
Rhin-Rhône, and associated lead for Pages Jaunes and bioMérieux.
Lazard-IXIS also acted as co-lead for Alstom’s recapitalization
and lead manager/global coordinator for Club Méditerranée’s
¤150 million Océane issue (bonds convertible into new or existing
shares) and Vivendi Universal’s sale of a ¤1 billion block of shares
in Véolia Environnement.
IXIS Corporate & Investment Bank was also lead manager on two
transactions on its own: Sword’s ¤18.7 million capital increase and
Accor’s ¤278.6 million redeemable bond issue (ORANE Accor).
■
Equity structured products
In conditions hardly favourable to equity derivatives, IXIS Corporate
& Investment Bank strengthened its positions in equity structured
products by diversifying its offering and pursuing pro-active
commercial measures. The bank notably undertook an aggressive
recruitment drive geared to broadening the product offering and
expanding its presence in world markets. It also positioned itself
as a major player in complex derivatives and developed a global
offering of equity structured products.
■
Arbitrage
IXIS Corporate & Investment Bank extended its presence in the
convertible bond field by setting up a new sales team to service
asset managers. Arbitrage business resisted well despite a
reduction in corporate actions. The bank’s financing activities were
expanded, especially in the loans/borrowing segment, while
interest-rate arbitrage enjoyed an exceptional year. The
consolidation of the various arbitrage activities enabled
the Bank to develop more diversified strategies to better capitalize
on all market situations.
* In Spain, fixed-income bonds issued by a financial institution and guaranteed
by a portfolio of mortgage loans granted by the issuer.
Investment Banking
■
47
Fabrice Bouquet
Cristel Kuczko
Pierre Barral
IXIS AM, Paris
■
IXIS Securities
IXIS Securities, the European equity brokerage subsidiary
of IXIS Corporate & Investment Bank, benefits from a strong
reputation for delivering quality research in all sectors.
IXIS Securities climbed to second place among French equityresearch operations ranked in the Agefi financial newspaper’s
Grands Prix 2004 de l’Analyse Financière, and obtained
15 nominations, including 5 first prizes. It was also classed third
for sector research among French equity-research operations
assessed in the Extel Focus France survey.
Significant efforts were made to reinforce and internationalize
the various teams in all the major European financial markets in
2004. To accompany this development, IXIS Securities stepped up
its marketing drive and organized 430 presentations, over half
of which in conjunction with issuing companies.
IXIS Securities gained market share both in France and abroad,
making particularly strong headway in Anglo-Saxon markets.
IXIS Midcaps, IXIS Securities’ subsidiary specializing in companies
with a middle level of market capitalization, continued to expand
and increased revenues substantially.
In 2004, IXIS Securities leveraged its recognized research,
marketing and placement expertise to the benefit of Lazard-IXIS.
IXIS CIB Subsidiaries
IXISSM Capital Markets had an excellent year in 2004 and achieved
its best-ever financial performance, with revenues growing 14% to
$476 million and income before taxes rising 9% to $194 million.
The securitization business continued to enjoy substantial growth,
both in terms of volume and revenues. Within the commercial
real-estate arena, the expansion of the company’s lending
programme reasserted its position as a global player in the
market.
48
■
A record-breaking issue
indexed to inflation
In July 2004, the European leaders in
inflation-linked bonds, IXIS and Barclays
Capital, launched the largest bond issue
of this type ever carried out by a local
community in Europe. This €200 million
issue was launched by the Lazio region,
the first Italian region to use this instrument
to optimize the management of its debt.
High ratings for IXIS Securities’
research
The results of the Agefi financial
newspaper’s Grands Prix 2004 de l’Analyse
Financière reflect the significant progress
achieved by IXIS Securities, which continued
to gain market share in France, the UK,
and the United States.
IXIS Securities was rated the 2nd best
broker in France for equity-research
operations, and number 4 in the new
“Top Ten Brokers” ranking based on a
summary of all votes cast.
The company confirmed its front-ranking
positions in most of the industries where
French companies command excellent
positions: luxury goods (2nd), the food
industry (2nd), automobiles (3rd), and retail
distribution (3rd). What is more, it also
ranks among the front-runners in new
sectors such as insurance, real estate,
and telecom equipment manufacturers.
Equity-linked bonds:
an innovative transaction
for the Casino Group
Aurélie Fouilleron
Nicolas Demoro
IXIS AM, Paris
IXISSM Capital Markets structured and placed $6 billion
of collateralized debt obligations (CDOs), moving up from
9th to 6th position in the US market for CDO issues. IXIS Capital
Markets also grew its structured fund business by 45%
and positioned itself as a prominent provider in this market.
IXISSM Capital Markets also provides its customers with its equities
know-how. European equity sales business, which offers French
and pan-European equity research and stock order execution to the
US market, had an excellent year, boosting its trading volume 27%
over the previous year’s results and improving its ranking among
institutional investors. The equity derivatives business, which
provides high-net-worth retail and institutional clients with
customized OTC derivatives, also continued to build momentum.
It has now become a key activity for IXISSM Capital Markets in the
US equity markets, approximately doubling its level of business
from the previous year.
IXIS Asia Limited is a wholly-owned Hong Kong-based subsidiary
of IXIS Corporate & Investment Bank founded in September 2004.
It works in conjunction with IXIS Corporate & Investment Bank’s
Tokyo branch to expand sales in Asia excluding Japan, and
especially in Hong Kong, continental China and Taiwan, with
a particular focus on fixed-income, equity and structured products.
The market for these asset classes was robust in Asia in 2004
and looks set to remain so in 2005.
The Casino Group launched a private
placement of bonds indexed to the price
of Casino ordinary shares for a total
of €235.7 million, entirely underwritten
by IXIS CIB, Nexgen (a financial holdings
company in which IXIS CIB owns a 38.7%
stake) and ABN Amro.
IXIS CIB and Nexgen joined in this operation
as bookrunner-subscribers. Nexgen teamed
up with ABN Amro to provide a hedge for
the equity derivatives part of the
transaction. They acquired two million
treasury shares held by the Casino Group in
a transaction completed off-market via IXIS
Securities.
This original operation is innovative in
several respects:
It provides a solution compliant with the
new IFRS standards, which specify that
treasury shares must be deducted from
shareholders’ equity. By reducing its
treasury shares by one third, the Casino
Group benefits from two positive effects on
its debt-to-equity ratio: an increase
in its shareholders equity and a total of
€114 million from the sale of its securities.
■
The redemption value of the bonds will be
inversely proportional to the value of the
Casino share at each maturity date. This
enables the Casino Group to benefit directly
from any future increase in the value
of the share.
■
Investment Banking
■
49
Asset
Management
IXIS Asset Management Group, Groupe Caisse d’Epargne’s
new holding company offering global money management
services, boasts the combined expertise of an international
network of specialized management and distribution
companies active on all four continents and serving a full
spectrum of clientele: institutional investors, business
customers, private individuals, etc.
50
■
Nicolas Miller
Olivier Morel
Jean-Paul Fernandes
IXIS AM, Paris
IXIS Asset Management Group: €371 billion assets under management
19.9%
38.5%
Equities
Life insurance
16%
Bonds
9.2%
11.1%
Money market
Others
5.2%
Real estate
■ PER
ASSET
CLASS
IXIS Asset Management Group, the bank’s core business
specializing in global asset management with a decentralized
“multilocal” network of affiliates and subsidiaries, enjoyed
sustained growth in 2004, with net inflows of ¤19.5 billion,
including ¤13.5 billion in the United States. The bank expanded its
cross-border cross-selling activities to reach a total of ¤3.7 billion.
Total assets under management in 2004 stood at ¤371 billion,
representing 13% growth at constant exchange rates, operating
income rose 17% while net ordinary income before tax (constant
exchange rates and banking format) enjoyed growth of 16%.
This buoyant development of new activities is the result of a
concerted distribution drive pursued by all the different entities
belonging to IXIS AM Group, notably in the United States.
In 2004, IXIS AM Group successfully incorporated two European
subsidiaries: Ecureuil Gestion, which makes a range of investments
in mutual funds and guaranteed return funds available to the
individual Caisses d’Epargne and tailored to their clientele, and IXIS
AEW Europe, a leading real-estate investment manager offering
a wide array of expertise in real-estate assets. Assets managed
by IXIS AEW Europe and AEW Capital Management in the United
States represented a total of ¤23 billion, making IXIS AM Group
the 4th largest real-estate investment manager worldwide.
■
Buoyant business activities
in the United States and Europe
Activities in the United States resulted in net asset inflows of
¤13.5 billion. IXIS AM Advisors, the distribution arm of IXIS Asset
Management Group in the United States, raised ¤7.2 billion,
chiefly in the form of special-purpose vehicles thanks to the
concerted efforts of distributors of individual retirement schemes.
IXIS AM Group came 4th in Barron’s annual rankings of the
performance of collective investment vehicles. The Group is
mentioned by Cerulli Associates as the market player
that enjoyed the strongest growth in special-purpose vehicles
in the United States.
American funds continued to perform strongly. At the end of 2004,
89% of the collective investment vehicles (excluding money
market funds) boasted 4 or 5 stars in the Morningstar ratings, and
94% of the funds were above average for their returns over 3 and
5 years. The fine performance achieved by high yield equity funds,
notably the products distributed by the Harris Associate subsidiary,
which manages the Oakmark family of funds, resulted in 23%
growth in the assets of funds under management.
28%
Mutual funds
6%
Private
management
and alternative
investment
66%
Discretionary
management
■ PER INVESTMENT VEHICLE
In Europe as in the United States, IXIS AM Group pursued the
diversification of its range of multi-manager funds and increased
its profitability thanks to enhanced margins generated on
“equities” and “alternative investment” expertise.
IXIS AM Group also consolidated its active presence in the key
global markets by setting up IXIS AM Global Associates in 2004,
a company dedicated to cross-border cross-selling activities.
In its first year in business, this new entity gathered assets
worth a total of ¤3.7 billion worldwide, especially in Japan,
Australia and the Middle East.
In France, the combine entities within the IXIS Asset Management
Group—IXIS AM (France), IXIS Private Capital Management,
Ecureuil Gestion and IXIS AEW Europe—contributed to growth in
new net inflows from institutional investors
and individuals.
Institutional investors called on the full spectrum of the Group’s
expertise available in Paris and in the United States, and showed a
distinct interest for the active management of euro fixed-income
portfolios, insurance-backed management and niche expertise
such as inflation-linked bond management, credit bonds,
CDO and emerging market equity funds.
Major corporations have stepped up their demand for short-term
cash investments resulting in strong demand for money market
mutual funds (+ 12%).
Funds of funds managers have chiefly focused on bonds,
international and American equities.
Customized products have also been created for the retail
distribution networks and insurance companies.
As a result more than ¤200 million was invested in the IXIS
Inflation fund, the first inflation-linked bond fund, whose success
drove the creation of other funds of this type. Among the success
stories of the year, IXIS AM (France) consolidated its front-ranking
position in France for the management of fixed-income products
thanks to two major management mandates entrusted to
it by the French Retirement Reserve Fund (FRR): ¤960 million in
aggregate euro bonds and ¤480 million in international bonds.
This latest mandate was delegated to the Group’s American
subsidiary, Loomis Sayles & Co., L.P.
This IXIS Euro Convergence mutual fund was awarded 1st prize by
Agefi Actifs in the “European Bonds” category while CNP-AssurAmérique came 2nd in the “North American Equities” segment.
Investment Banking
■
51
All 3-year+ funds managed
by IXIS PCM rated 5 stars
by Standard & Poor’s
Jim Orfanos
IXIS AM North America, Boston
IXIS AM (France),
no.1 in CDOs in France
For the past three years, IXIS Asset
Management (France) has been offering
innovative management expertise that
capitalizes on its extensive experience
in risk and management insurance:
CDO management.
“Collateralized Debt Obligations” are
structured products making it possible
to pool credit risk in a synthetic portfolio.
The CDO issues debt with different yield and
risk profiles in order to satisfy the needs of
a large number of institutional investors.
First launched in 2004, Saphir is the first
4th-generation CDO with an on-demand
“jumbo” style issue. It attracted subscription
of more than €400 million in three
currencies (euro, dollar and Swiss franc),
on three different ratings (AAA-AA-A)
and with three maturity horizons
(5, 7 and 10 years) among a broad-based
clientele in seven countries. Thanks
to this operation, IXIS AM (France) was
able to consolidate its front-ranking position
in the French CDO market.
52
■
■
Strong growth in management services
dedicated to major private investors
IXIS PCM, the Group subsidiary specializing in wealth
management, provides its customers with made-to-measure asset
engineering and financial solutions, generating more than 60%
of its revenues with its direct private asset management clientele.
IXIS PCM boasts acknowledged financial management expertise in
asset allocation. Its licence was extended in 2004 to include
alternative investments management.
IXIS PCM reported extremely satisfying commercial and financial
results in 2004. Asset gathering activities achieved 64% growth,
rising to ¤235 million, taking total assets under management to
¤753 million. Its teams were involved in handling major company
divestment operations. Synergies have been developed with the
network of regional savings banks and a large number of partners
from within and outside the Group have adopted its multimanager services.
Two products launched in 2003 enjoyed outstanding success.
Réactis Sérénité, the dynamic money-market fund and the largest
fund managed by the company with total assets of ¤240 million,
was placed 2nd out of a total of 188 in its category over one year.
The alternative “absolute return” investment fund IPCM Alpha Jet,
with assets of almost ¤80 million, came no. 1 out of 67 over one
year in Standard & Poor’s Alternative Management-Multistrategy
category. A new product was created during the year whose key
performance driver will be the harnessing of positive alpha
(focus on outperforming the indices): IXIS Elite Absolute Return.
Nicolas d’Halluin
IXISSM Capital Markets, New York
■
Real-estate assets:
strong growth in Europe
The platform created by IXIS AEW Europe and US-based AEW
Capital Management is the 4th largest third-party real-estate
investment specialist worldwide with aggregate gross assets
under management of ¤23.3 billion.
European Property Investment
(EPI ): investment capacity
in excess of €2 billion
EPI, a pan-European fund specializing
in the acquisition of outsourced real-estate
assets, ranks among the largest, and most
active, new investment funds in the
European market.
It has already raised capital worth a total
of €739 million from first-class American
and European institutionals, giving it an
investment capacity of €2.1 billion over a
period of three years. In 2004,
€500 million was invested in the acquisition
of three portfolios in Germany, Holland and
Scandinavia.
2004 was an excellent year for IXIS AEW Europe and enabled
the company to expand its clientele to include new major
American and European pension funds. Aggregate assets under
management stand at ¤11.1 billion and the gathering
of new assets exceeded the ¤1 billion mark.
Despite extremely tight market conditions, IXIS AEW Europe
again demonstrated its ability to find promising, reasonably-priced
assets, to manage them in such a way as to create new value,
and to dispose of them at the right time and price. Since 1999,
it has regularly outperformed the IPD index*, the benchmark index
used by the entire industry.
2004 saw the launch of several new investment products:
Logistis 2, a fund dedicated to logistics investment in France,
Spain and Italy; European Property Investment (EPI),
a pan-European fund specializing in real-estate assets outsourced
by major companies or banking networks in Europe; a PREF
fund devoted to investors in the Middle East wanting to invest
in France; and an open-ended real-estate fund managed
by the Austrian bank Raiffeisen for customers in its domestic
banking network.
* The IPD index is a benchmark compiled by a French company that measures
the performance of directly owned real-estate investments throughout
the year, exclusive of debt.
Investment Banking
■
53
Investor
Services
Andrew Sanford
IXISSM Capital Markets, New York
IXIS Investor Services is Groupe Caisse d’Epargne’s
new bank specializing in asset custody
and related services.
54
■
Chiefly geared to the needs of institutional investors, custody and
fund administration services are provided by IXIS Investor Services*
and its subsidiaries: IXIS Urquijo in Spain, specializing in global
custody and fund depository services, IXIS Administration de Fonds,
a company dedicated to the administration of funds governed by
French law, and Euro Emetteur Finance, a 50-50 joint venture with
Crédit Lyonnais providing services to issuers.
Thus, for the first time, investor services in France enjoyed the
most prestigious rating awarded by Global Custodian: a double
“Top Rated” for its domestic and non-resident clientele. IXIS IS is
the only company in the investor services market to have obtained
this label for its domestic clients.
IXIS Urquijo also won extremely high ratings in Spain.
The activities deployed by this core business enable it to provide
services for all investors in the securities market: pension funds,
mutual insurance companies, welfare organizations and insurance
companies, central banks, asset management companies, nonresident banks, and collective investment vehicles. The products
concerned by these activities include a full spectrum of asset
classes, all domestic and international portfolios, and cash flows
related to securities.
The range is completed by a number of value-added services:
management of proxy voting, information about the markets
and regulations, etc.
IXIS IS consequently ranks among the largest French custodians
and fund administrators with assets in custody totalling ¤685 billion,
of which more than ¤110 billion is held on behalf of collective
investment vehicles.
■
■
New services
In addition to the implementation of market initiatives, IXIS
Investor Services expanded its range of services in 2004, offering
new facilities in the area of proxy voting and customized reporting
for institutional customers, assistance given to its principal clients
in the adoption of Swift protocols, and the greater use of its
Antares Internet platform by its customers.
The efforts deployed over the past three years to optimize
the range and quality of the services provided by IXIS IS to its
institutional customers were recognized in 2004 through the
attribution of outstanding ratings in both France and Spain.
Major corporate merger
on the horizon
The extremely competitive investor services market is currently
going through a phase of rapid consolidation. Threshold effects
play a decisive role in the ability to go ahead with the extremely
onerous IT investments required by constant changes in customers’
expectations.
Discussions are consequently underway with Crédit Agricole
with a view to merging IXIS Investor Services and Crédit Agricole
Investor Services in 2005. With assets held in custody in excess
of ¤1,600 billion, the new entity would be the largest global
custodian in France and one of the industry’s top-ranking players
in Europe.
The ratings earned by IXIS IS reflect the quality
of its financial profile and the strength of its technical
expertise.
At January 4, 2005
Standard & Poor’s
Moody’s
Fitch Ratings
Short term
A-1+
P1
F1+
Long term
AAAa3
* This subsidiary reporting directly to the CNCE became operational
on January 1st, 2005. Although it operated in 2004 under the name
of CDC IXIS France, in this annual report it is simply referred to as “IXIS IS”
in order to simplify matters.
Investment Banking
■
55
Financial
Guaranty
Yoann Ignatiew
IXIS AM, Paris
Thanks to the unconditional payment guaranty provided
by IXIS Financial Guaranty (CIFG), Groupe Caisse d’Epargne
facilitates the placement of structured products
and the financing of infrastructure projects
or public-private partnerships.
56
■
Working through the CIFG Europe and CIFG North America (NA)
subsidiaries of the IXIS Financial Guaranty Group (CIFG),
the Caisse Nationale des Caisses d’Epargne (CNCE) enables issuers
to obtain financing at lower rates, and offers investors new risk
profiles in the form of guaranteed structured products and
infrastructure projects or credit enhanced public-private
partnerships (PPP).
CIFG is the only financial guaranty specialist to have developed
its activities simultaneously in both Europe and the United States.
It is active in all the segments of the credit enhancement market:
local authorities, PPP, infrastructure project financing and structured
finance.
To facilitate its development, the CNCE granted the company
a $200 million debt facility, partly drawn to boost the capital
of its operating units to more than ¤564 million. The resources
available to IXIS Financial Guaranty (CIFG) to cover possible claims
on guarantees given now exceed one billion dollars.
■
Geographical expansion
and innovation
In an environment marked by a tightening of credit margins and
downward pressure on the premium income received by financial
guarantors, IXIS Financial Guaranty (CIFG) pursued its development
by expanding its geographical presence and the type of asset
classes subject to credit enhancement. CIFG now holds licences
in the 15 original member states of the European Union and,
in 2005, will cover the entire United States where it is already
authorized to write business in 45 jurisdictions. It has also
developed its activities in new asset classes, such as home
equity conversion mortgages for which it issued the first guaranty
for this type of product in Europe.
In 2004, the most significant transactions in Europe were guaranty
transactions for an Italian region (¤190 million) and for a portfolio
of residential mortgage loans (£100 million) and, in the United
States, guaranty transactions provided for the Atlanta airport
($199 million), the New York subway ($250 million), the Chicago
school system ($300 million) and portfolios of real-estate loans.
Having completed more than 340 operations since its creation
(including 31 risk underwriting operations in Europe and Australia
related to infrastructure projects, PPP and local authorities, regions
or States), the insured portfolio (net par outstanding) of IXIS
Financial Guaranty stood in excess of $25 billion at the end
of 2004. Adjusted gross premiums (premium income plus
the present value of estimated instalment premiums) written
by CIFG on credit enhancement products since its creation stands
at more than $285 million.
The insured portfolio of IXIS Financial Guaranty is exclusively
comprised of transactions rated BBB- or higher. The average
quality is equivalent to a double-A rating awarded by the three
principal rating agencies.
IXIS Financial Guaranty (CIFG) boasts the highest ratings awarded
by the agencies: AAA/Aaa/AAA.
IXIS Financial Guaranty
underwrites the first portfolio
of home equity conversion
mortgages in Europe
Home equity conversion mortgages (or
“reverse mortgages”) enable homeowners
aged 60 or more to release a part of the
capital locked up in their property to boost
their regular income. The loan (capital
and interest) is reimbursed on the basis of
the market value of the underlying property
when the owners (or surviving spouse)
leave their home for good. This type of
product, specifically designed to enhance
retirement income, has experienced
considerable growth in the United Kingdom
in recent years.
The transaction underwritten by IXIS
Financial Guaranty (CIFG) is particularly
innovative for the European market and
calls for a detailed analysis of complex risks
including mortality tables, real-estate price
curves, obsolescence or inflation. But it
also corresponds to a general trend
observed in Europe, namely: the general
adoption of financial engineering techniques
to develop products offered to senior
citizens to help them finance their
retirement.
Investment Banking
■
57
A Bank Founded
on Solidarity and Social
Commitment
Marie-Claire Pelé with a resident
Résidence “Les trois roses”, Epernay
Caisses d’Epargne Foundation for Social Solidarity
58
■
A Bank Founded on Solidarity and Social Commitment
■
59
Association Forepabe
La Châtre, PELS funded by the Caisse d’Epargne Centre-Val de Loire
Local and Social
Economy Projects
“Social progress” was the inspiration that led
to the creation of the first French savings
bank in 1818… and Groupe Caisse d’Epargne
has always remained faithful to the pursuit
of this original ideal.
With the financing of local and social
economy projects (PELS) by the individual
Caisses d’Epargne and the work of
the Caisses d’Epargne Foundation for
Social Solidarity, the Group strives every day
to create a more mutually supportive society
through new job creation, social reintegration,
and the drive to combat illiteracy and the
dependency of the elderly and more vulnerable
members of our community. Committed
from the very outset to the principles
of sustainable development, the Group is also
extremely active in corporate philanthropy
and the sponsoring of sports events.
60
■
The Caisses d’Epargne are entrusted by French law with the
mission of pursuing actions beneficial to society in general and,
more specifically, providing financial support for local and social
economy projects (PELS). A part of the profits of each
Caisse d’Epargne is devoted to the financing of these initiatives
in the form of loans, injection of capital or grants.
The three principal areas for PELS action, as defined
by the Fédération Nationale des Caisses d’Epargne (FNCE), are:
■
■
■
Employment, by helping individuals who find it difficult
to enter, or remain in, the mainstream labor market,
Autonomy, by improving the environment of people who are
both socially, physically and intellectually dependent,
Preservation of social cohesion, by weaving (or by mending)
the bonds between the community and individuals living
on the fringes of society.
In 2004, the Caisses d’Epargne lent their support to 2,352 projects
for a total of ¤50.6 million, a level of support 22.4% higher
than in 2003.
Promoting autonomy was the largest area of socially beneficial
action, attracting 48% of the aggregate funding envelope. This
focus resulted from the determination of the Caisses d’Epargne to
be active in this sector by supporting a large number of initiatives
pursed by associations, and by financing the public-interest
activities of the Caisses d’Epargne Foundation for Social Solidarity.
The funds destined to promote employment—used to finance new
business creators and provide them with banking services, to help
professionals who provide support services, and to promote social
integration through employment—amounted to ¤21.5 million,
up 7% compared with last year.
6,600
projects supported
over the past 4 years
€130 million invested
Association Egalité sur l’eau (Equality on the water)
Rodez, a PELS funded by the Caisse d’Epargne de Midi-Pyrénées
Calls for projects for an even
stronger local presence
To keep all eligible organizations (irrespective
of their size) informed about the existence
of the PELS, the Caisses d’Epargne launched
calls for candidate projects in 2004 through
their branches, the local press and by mail.
■
How the PELS are examined,
selected and appraised
The annual resource envelope allocated to the funding of local
and social economy projects is approved each year at the annual
general meeting convened by each savings bank. It depends
on the financial results of each Caisse d’Epargne and the amount
of interest paid to the cooperative shareholders.
Each bank determines the priority focus it intends to give to its
action in the light of the particular situation and needs of its
region. The directors of the local savings companies are
encouraged to submit application files, to help in their selection
and to give their opinion concerning their relevance, thereby
offering the benefit of their knowledge of the economic
and social fabric of their regions.
These calls, typically focused on specific
topics such as services enabling the elderly
to stay in their own homes or action to
promote environmental protection, made it
possible to strengthen the ties between
the Caisses d’Epargne and the large number
of players in the social economy.
A PELS appraisal process has been set up by the FNCE.
Operational since 2004, and adopted by 80% of the Caisses
d’Epargne, it makes it possible to obtain a clearer idea of the
contribution made by the funded projects to greater social
cohesion. Certain local savings company directors—all volunteers
and trained in this analysis—meet the people who have
developed ideas for new initiatives, and gather information about
their successful implementation and the economic and social
impact of the actions taken.
■
61
Association Campanule
Gérardemer, a PELS funded
by the Caisse d’Epargne de Lorraine
■ PELS
IN
2004:
Total commitments of
€50.6 million
1.4%
Local authorities, cooperatives, social housing organizations
7.1%
5.3%
Companies
Others
10.1%
Foundations
46.3%
29.8%
Associations
Micro-enterprises
Status of end beneficiaries
9%
7%
Social cohesion
Injection of capital
48%
43%
Autonomy
Employment
Focus of the commitment
62
■
1%
Contributions in kind
27%
65%
Loans
Grants
Type of financing
in 2004
Association for gifted children in Val d’Oise,
Ermont Eaubonne, a PELS funded by the Caisse d’Epargne Ile-de-France Nord
■ Growth in the number of PELS
2,352
1,977
50.6
41.3
1,316
952
20.3
2001
23.0
2002
2003
2004
■ Number of PELS
■ Amount of funding in € million
■ Financial details of PELS commitments
Amount
(in € million)
21.5
EMPLOYMENT
Promoting financial support for new business
creators and providing them with banking services
■ Financing professionals providing support
to new business creators
■ Favouring social integration through employment
■
AUTONOMY
Promoting the independence of the elderly,
infirm or disabled
■ Satisfying basic needs
■ Reinforcing the acquisition of basic knowledge
and skills
6.2
9.2
6.1
24.5
■
SOCIAL COHESION
Fostering social integration through cultural
or sports activities
■ Promoting social integration through the protection
of natural and cultural heritage
16.0
4.6
3.9
4.6
■
TOTAL
2.9
1.7
50.6
■
63
In
4 years, €28 million in loans
granted to micro-enterprises
5,000 new jobs created
Association Les Compagnons bâtisseurs du Centre
(Association of Journeymen Builders of Central France)
Tours, a PELS funded by the Caisse d’Epargne Centre-Val de Loire
■ PELS ALLOCATED IN 2004
PER CAISSE D’EPARGNE
(in euros)
Alpes
Alsace
■ Aquitaine-Nord
■ Auvergne et Limousin
■ Basse-Normandie
■ Bourgogne
■ Bretagne
■ Centre-Val de Loire
■ Champagne-Ardenne
■ Côte d’Azur
■ Flandre
■ Franche-Comté
■ Guadeloupe
■ Haute-Normandie
■ Ile-de-France Nord
■ Ile-de-France Ouest
■ Ile-de-France Paris
■ Languedoc-Roussillon
■ Loire Drome Ardèche
■ Lorraine
■ Martinique
■ Midi-Pyrénées
■ Pas-de-Calais
■ Pays de l’Adour
■ Pays de la Loire
■ Pays du Hainaut
■ Picardie
■ Poitou-Charentes
■ Provence-Alpes-Corse
■ Rhône-Alpes Lyon
■ Val de France-Orléanais
Total
■
■
64
■
Commitment
1,501,000
1,391,443
1,489,165
1,858,111
766,080
1,701,905
1,587,575
928,605
1,140,155
1,832,555
1,098,651
954,430
118,996
1,701,160
939,150
1,124,043
5,000,000
1,901,707
1,650,245
2,057,632
102,935
2,118,665
1,284,617
887,022
2,119,190
850,001
2,279,133
1,605,402
4,185,865
2,977,348
1,438,960
50,591,746
Number
of PELS
83
45
56
84
49
88
71
51
41
81
44
50
18
106
42
39
94
79
67
77
12
164
47
66
156
62
147
111
137
113
72
2,352
Helping to provide the
creators of micro-enterprises
with banking services
The role of the Caisses d’Epargne is not
only to grant loans for the creation of new
business but also to help provide new
business creators with banking services.
22 Caisses d’Epargne open business
accounts for these new ventures; more
than one half of the savings banks offer
special rates, while a number even offer
total charge exemption during the life
of the loan.
Réjane Braizaz with a resident at La Ramée
Allevard (Isère), Caisses d’Epargne Foundation for Social Solidarity
The Caisses d’Epargne
Foundation
for Social Solidarity
The Caisses d’Epargne Foundation for Social Solidarity, an institution
granted the official seal of state approval in April 2001, focuses
its efforts on the fight against all forms of dependency and social
exclusion related to old age, illness, disability or illiteracy.
The Foundation is distinguished by the diversity of the channels
it uses to pursue it activities:
■ A non-profit-making private operator, the Foundation represents,
in the health care and social welfare sector, a network
of 61 establishments and services throughout France, enabling
vulnerable adults to stay in their own homes,
■ An actor directly involved in the fight against social exclusion.
It designs and implements grass-roots operations, such
as the Savoirs pour réussir (Knowledge for Success) initiative,
in the campaign against illiteracy,
■ A financier of innovative projects that it selects and appraises
itself.
It is also authorized to act as an umbrella organization
for other foundations. As a result, seven regional Foundations have
been created under the aegis of the parent Foundation by the
Caisses d’Epargne Aquitaine-Nord, Loire Drôme Ardèche,
Provence-Alpes-Corse, Pays de l’Adour, Languedoc-Roussillon,
Haute-Normandie and Basse-Normandie.
■ An extensive network of care centres
The Foundation assumed responsibility, in January 2005, for the
management of 13 new residences and a home-help service in
the Douai region.
In 2004, two new centres were opened in Gruissan and Salle
d’Aude, and four major restructuring operations were completed.
A centre was entirely renovated in Charente-Maritime and now
specializes in providing care for people suffering from Alzheimer’s
disease.
At the request of associations or congregations wanting to ensure
the future of their establishments, the Foundation has also taken
charge of managing three other care centres.
The Caisses d’Epargne Foundation for Social Solidarity is now
at the head of a network embracing all of France:
■ 55 residences providing health care and social welfare services
to 3,800 elderly, infirm or disabled permanent residents,
■ Three health care units, physiotherapy and rehabilitation centres
looking after nearly 4,000 people every year,
■ A remote-monitoring service boasting 3,600 subscribers,
■ A service providing support services designed to allow vulnerable
adults to return to and live in their own homes, working directly
with the André Lalande physiotherapy and rehabilitation centre in
Noth, in the Creuse region, and a home-help service serving more
than 850 elderly people living in their own homes.
The Foundation’s 2,000 employees offer their support to the
people in their care with a personal, local presence and a
particular focus on the quality of the care services provided.
Vigilance and the ability to provide emergency assistance are two
of the Foundation’s priorities. A prevention system has been set up
to monitor the state of health of vulnerable individuals, enabling
the Foundation to provide a rapid and safe response when
necessary. Substantial investments in air-conditioning systems
have also been made.
■ Stepping up the fight against illiteracy
2004 was marked by the extension in several regions of Savoirs
pour réussir, an initiative designed to help young people having
little or no formal education to re-establish contact with reading
and writing with a view, ultimately, to following a training course,
obtaining a qualification, and beginning their professional lives.
This initiative is based on a national agreement signed with three
government ministries, including the Ministry of Defence, local
missions, and the National Agency for the Promotion of Literacy
(ANLCI).
■
65
Combining our strengths
The Foundation signed new partnership
agreements in 2004:
A national agreement with the France
Hospital Federation that will lead to the
creation of new centres providing health care
and social welfare services situated near
hospital complexes,
■
The identification of young people encountering problems
with the basic skills of reading and writing uses the screening
system set up during the day of national service organized for all
young French citizens, and the local literacy campaign missions run
by the Ministry of Employment and Social Cohesion. After testing
the system in Marseilles, a pilot site that has already welcomed
more than 80 young people accompanied by 40 or so volunteers
trained by the Foundation, a total of fifteen Caisses d’Epargne
have now joined in this operation.
At the end of 2004, the Ministry of Defence agreed to the opening
of four new sites in Haute-Normandie, the Alps, ChampagneArdenne and Avignon. The extension of the system throughout
France over the next few years is one of the Foundation’s major
objectives.
■ Supporting innovative initiatives
Thanks to the increasing amount of donations from
the Caisses d’Epargne and Group subsidiaries, the Foundation has
stepped up its support for innovative projects, thereby fulfilling its
role as the Group’s “research centre” for issues of a social nature.
A total of almost ¤3.5 million was devoted to these public-interest
actions in 2004.
Within the campaign to combat illiteracy, this has helped to
finance the Savoirs pour réussir initiative.
Within the campaign to promote the independence of the elderly,
infirm or disabled, pilot schemes have been developed and tested:
the creation of prototype apartments to inform and instruct
families when one of their members returns home after an
accident or spell in hospital; a wristwatch designed to detect falls
and abnormal fluctuations in vital parameters.
With a view to minimizing the impact of summer heat waves
(and with a concern for sustainable development), the Foundation
also financed an air-conditioning system in association with
ADEME, the French government agency for environmental
protection and energy control. The Foundation also contributed
to the development of the clinical ethics centre in the Cochin
hospital complex in Paris.
66
■
A nationwide agreement with the National
Federation of Pact-Arim Associations
dedicated to the improvement of housing
conditions, with a view to supporting the
launch of 12 projects designed to promote
home-based services and the adaptation of
accommodation in several French regions,
■
An agreement with the Confederation of
Artisans and Small Construction Companies
in 2005 with a view to heightening
the awareness of its members about
the alterations to be made to the homes
of disabled or dependent individuals and,
in the process, facilitating their return home
after a period in hospital.
■
The Foundation, a forum
for meetings and exchanges
The Foundation adopted an active policy
to promote professional meetings in 2004.
With the Diagonales seminars, it now
provides an opportunity, twice every year,
for professionals, academics, associations,
and its various partners to exchange their
different points of view, pool their
experience, and discuss challenges
in the area of health care and social welfare
in December, and in the area of social
exclusion in June.
The Diagonales seminars will be reinforced
every two months in 2005 by the Focales, a
series of meetings with authors, directors,
and artists whose work is closely related to
one of the Foundation’s two key action areas.
Association Les potagers du Garon
(The Garon vegetable gardens)
a PELS of the Caisse d’Epargne Rhône-Alpes Lyon
Sustainable Development
■ The first “social” rating
Given formal expression in March 2002, sustainable development
forms an integral part of the bank’s 2004-2007 strategic plan,
and is gradually being extended to all Group companies.
Its deployment is guided by a national steering committee,
a dedicated team and a network of “sustainable development”
officers in each of the Group’s different companies.
The sustainable development policy was subject to a “social”
rating by the specialized rating agency, Vigeo, in 2004. The
conclusions of the study were circulated throughout the Group
and led to the definition of a plan of action.
A set of development management indicators entitled 3D
(for Données Développement Durable or Sustainable Development
Data) was brought online in the Caisses d’Epargne, the CNCE
and the FNCE in order to monitor the different actions taken.
In order to include sustainable development in the very heart of
the banking profession, a range of financial products and services
are gradually being offered to each target clientele: Priorité
environnement loans and preferred rate financing solutions
designed for local communities developing urban public transport
projects; the analysis of funding for “pilot” schemes in the
subsidized housing sector; Cordé, a social and environmental
diagnosis tool available for small- to medium-sized enterprises;
a “sustainable work” loan for individual customers, etc.
The partnership concluded in 2003 between the Group and the
WWF France led to the organization of a large number of joint
operations designed to heighten the awareness of the general
public, of the Group’s cooperative shareholders, directors and
employees about the challenges raised by the environmental
dimension of sustainable development.
For further details, please consult Groupe Caisse d’Epargne’s
2004 Sustainable Development Report, which can be obtained
from www.groupe.caisse-epargne.com or simply upon
request from the Sustainable Development Department
of the CNCE.
The Cap 25 programme:
capitalizing on 25 years
of professional experience
The Cap 25 initiative concerns employees
older than 45, enjoying more than 25 years
of experience in the Group. It has been
developed to counteract the reflexive “early
retirement” reaction felt by large numbers
of employees after the age of 50, at a time
when the retirement age has been pushed
back. The programme prepares management
for a rather unusual situation: keeping
employees aged 55 to 65 in work and as
highly motivated as possible.
The system is divided into three parts: an
individual career interview, a 5-day residential
seminar, and a final phase in which formal
expression is given to career objectives
and an individual plan of action.
A total of 10,000 employees are concerned.
Cap 25 will be offered to 1,000 employees in
2005, plus 1,500 in both 2006 and 2007.
Launch of Cordé, the first
sustainable development selfdiagnosis tool tailored for smallto medium-sized companies
The Caisse d’Epargne des Alpes is offering a
free self-appraisal questionnaire to companies
in its region.
The questionnaire focuses on:
■ The respect of human rights,
■ The protection of the environment,
■ The quality of human resources
and management/employee relations,
■ The quality of relations with customers,
suppliers and subcontractors,
■ The quality of relations with directors,
shareholders and third-party stakeholders,
■ The company’s social commitment.
This tool will gradually be offered to companies
throughout the entire Caisses d’Epargne
network.
■
67
The crew of the Belem
Corporate Philanthropy
and Sponsoring
■ An ambitious sponsoring policy
In recent years, the Group has chosen a more forceful expression
of its growth and brand enhancement objectives through the
pursuit of an increasingly active sponsoring policy. This policy
includes the sponsoring of extremely high-profile events combined
with more socially aware support for certain sports
and their federations. This enables the Group to achieve a high
degree of public visibility from its sponsoring investments, along
with an immersion in a set of values that enhance the life of its
subsidiaries and the image they project to the outside world.
Since 2003, the Group has been the official partner of the France
Football Cup, the most highly symbolic event in the world of
popular sport in France. This partnership has given the Caisse
d’Epargne brand a great deal of visibility and enabled Group
companies to launch a large number of public relations operations
at a local level during the qualifying rounds and, subsequently,
at the Stade de France® national stadium for the final.
The Group has also pursued its commitment to the French Athletics
Federation and the French Team. Despite the mixed results
obtained in 2004, athletics has continued to attract large audiences
thanks to the impetus given by the World Championships in Paris.
The world of athletics is more than ever aware of the need
to renew its recruitment and professionalize the management
of its elite.
At the same time, jogging, a widely accessible form of athletics,
has continued to grow in popularity. The Caisse d’Epargne is
currently a partner to more than 300 races in France.
68
■
■ Corporate philanthropy faithful
to its commitments
The corporate philanthropy and cultural sponsorship policy pursued
nationwide by the Caisse d’Epargne is characterized, first of all,
by its faithful expression of the Group’s commitments. It sets out
to share the values of the Group, its determination to open out
to the largest possible number, and to support creativity and the
transmission of knowledge.
For the past 25 years, the Groupe Caisse d’Epargne has been the
patron of the Belem, the sole survivor of the erstwhile fleet of
large French merchant sailing vessels. In its capacity as the patron
of this fine vessel, the Group set up a Foundation in 1980
responsible for operating the ship, which was granted the status
of an historical monument in 1984.
In 2004, nearly 1,300 trainees were welcomed aboard to discover
the rules and traditions of sailing a large square-sailed vessel.
More than 25,000 people have already visited the ship, notably
during its fall stopover this year in the port of Caen. The Belem
also set sail in the Baltic for the very first time, a voyage that
enjoyed immense success among the trainee mariners.
Another faithful, long-lasting commitment is the support given by
the Group to the International Comic Book Festival in Angoulême,
the largest event exclusively devoted to comic books in Europe.
Through its support of the Educational Comic Book Competition,
the Caisse d’Epargne fosters the creative awakening of young
talent; it has also decided to contribute to the Festival’s new
initiatives to create exhibitions and events organized outside
Angoulême. As a result, the Caisse d’Epargne was a partner
of the Blake & Mortimer exhibition in Paris (which enjoyed an
outstanding success) and the event organized alongside the 2004
International Car Show: the Cars and Comic Books exhibition.
Financial
Report
Management report
70 Significant events of 2004
74 Strong growth in consolidated results,
reflecting the Group’s new scale
75 Robust pro forma results, driven by strong
operating performance
78 Commercial Banking: a steady increase in results
85 An excellent year for Investment Banking
91 Comments on the consolidated balance sheet
92 Regulatory capital and capital adequacy ratio
93 Recent developments and outlook for 2005
2004
Risk management
94 Management of credit risks, market risks
and operational risks
95 Liquidity risk
96 Overall interest rate risk
98 Credit risk management
101 Market risks
104 Operational risk
106 Ongoing controls
108
110
111
155
Consolidated balance sheet
Consolidated profit and loss account
Notes to the consolidated financial statements
Statutory Auditors’ report on the consolidated
financial statements
■
69
Management report
for the 2004 financial year
■
1 – Significant events of 2004
1.1 Macroeconomic environment
In 2004, world economic growth reached the highest levels since 1988, buoyed by strong U.S. domestic demand and an exceptional
number of investment projects in China. Taking Europe on its own, however, the picture was slightly different, with many countries
losing a substantial amount of steam – due notably to flat consumer spending in Germany and Italy. This performance contrasted
with that of the United States, where GDP growth came in at 4.4% compared with 3% the previous year.
Global economic trends were mixed throughout the year. The first half was characterized by a significant upturn in business levels,
following on from the course set in the summer of 2003, while the latter six months saw a slower international momentum –
particularly in Europe – due to two consecutive events. First, a hike in oil and commodities prices, with oil topping US$50 a barrel in
October, before subsequently easing off. This spike stemmed from the combination of a rise in demand from China, a contraction in
OPEC’s margin of spare pumping capacity, and geopolitical tensions. The second factor was the sharp slide of the dollar against the
euro and all of the world’s other major currencies – except the Chinese yuan – which came on the heels of the November 2 election
in the United States. At the year-end, the euro/dollar exchange rate stood at 1.36, compared with an average of 1.22 between March
and September, reflecting a lack of measures taken by the U.S. to control the country’s huge trade and budget deficits.
The year 2004 was also marked by a dramatic contraction in long-term interest rates, even though these should have been pushed
up by the global recovery, the upswing in manufacturing spending and the series of five rate increases carried out by the U.S. Federal
Reserve, which saw the base rate climbing from 1% prior to June 30 to 2.25% on December 14. Meanwhile, the strong rise of the
euro, which fueled increased pessimism about the European business climate, resulted in Eurozone and French 10-year treasury yields
declining to around 3.7% in December (with the annual average coming out at 4.1%), after a year of high volatility. This was some
50 basis points lower than U.S. treasury yields. Meanwhile, the ECB left its base rate unchanged, at 2%, in view of the fragile
European economy. Stock markets hovered uncertainly over the first ten months of 2004 before finally rallying at the year-end. The
CAC 40 index closed the year 7.4% up on 2003, at 3,821 points.
French economic growth outstripped that of the Eurozone for the seventh year in a row, climbing to 2.1% from 0.6% in 2003. The
economy performed extremely well in the first half of the year, but this was dampened by the post-summer turbulence mentioned
above. The trade balance deteriorated, and once again weighed heavily on GDP. On the other hand, manufacturing spending showed
very encouraging signs of recovery, powered by healthy consumer spending (2% growth), despite only a moderate increase in
purchasing power, which rose 1.4% versus 0.5% in 2003, and a slight increase in the unemployment rate to 9.9% from 9.7%. The
rise in spending stemmed from a number of factors, including a tempered household savings rate (15.4%, compared with 15.8% in
2003), a surge in property loans and home equipment purchases, and the impact of supermarket price-cutting measures
implemented under the “Sarkozy” agreements.
It was another banner year for property loans, with new loans soaring to around €98 billion, representing more than a 15% yearon-year increase. Residential construction starts totaled some 362,900 in 2004, up from 313,600 in 2003, reaching a 20-year record
high. House prices continued to boom, advancing 15.5% versus 14.2% for old properties, according to data provided by the Fnaim
(French national real estate federation). Short-term credit facilities rose approximately 4% during the year, accounting for €76 billion
of new loans. This somewhat modest growth was due to a lackluster automobile market and the lower savings rate.
70
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Management report of Groupe Caisse d’Epargne
At the same time, the brisk pace of consumer spending resulted in a more subdued financial investment rate – especially in the first
half – which came in at an estimated 8.6% of gross available income, compared with 9.4% in 2003. Households continued to adopt
a prudent approach to investment vehicles, opting for products such as life insurance and time deposits instead of PEL home savings
plans, PEP savings accounts and mutual funds.
1.2 Redefining the partnership between the Caisse d’Epargne and the Caisse des dépôts et consignations
Groups
On May 27, 2004, the Groupe Caisse d’Epargne and Groupe Caisse des dépôts et consignations signed an agreement aimed at
redefining the nature of their partnership.
Under this agreement, the Caisse des dépôts et consignations transferred its 50.1% holding in Compagnie Financière Eulia and its
43.55% stake in its investment banking and asset management subsidiary, CDC IXIS, to the Caisse Nationale des Caisses d’Epargne
(CNCE), the central institution of the Groupe Caisse d’Epargne. The contribution of these assets transformed the Groupe Caisse
d’Epargne into a full-service bank in which the Caisse des dépôts et consignations has the status of a strategic shareholder through
its 35% interest in the CNCE alongside the individual Caisses d’Epargne, which own the remaining 65%. The agreement provides a
long-term foundation to the partnership between the two groups, which have undertaken to maintain their respective shareholdings
in the CNCE until the time of any potential IPO.
The financial structuring of the operation led the 29 individual Caisses d’Epargne in metropolitan France to issue €3.3 billion worth
of Cooperative Investment Certificates (CICs) to the CNCE, giving the CNCE a 20% stake in their capital. As a result, both the CNCE
and the Caisse des dépôts et consignations have an interest in the operations of the individual Caisses d’Epargne, the former directly,
and the latter indirectly through its stake in the CNCE.
The above-mentioned agreement provided – prior to any restructuring operations – for CDC IXIS to transfer to the Caisse des dépôts
et consignations its portfolio of listed equities, its portfolio of securities relating to its real-estate and private equity business, and
certain holdings in associated companies. The list of deconsolidated companies, as well as details concerning the restructuring
operations and their impact on the consolidated accounts are provided in Note 2 to the consolidated financial statements.
The main impacts on 2004 consolidated net income were as follows:
– as of the second half of 2004, the CDC IXIS group and other subsidiaries that were previously jointly controlled with Compagnie
Financière Eulia and which the Groupe Caisse d’Epargne now exclusively controls, are fully consolidated, whereas they were
previously proportionally consolidated;
– the Group recorded a pre-tax capital gain of €216 million, arising on the sale by CDC IXIS of its portfolio securities, as well as
securities relating to its real-estate and private equity business, and certain holdings in associated companies;
– indemnity payments in the amount of €131 million were made to the CNCE (including €100 million recorded under exceptional
items), following activation of the reciprocal indemnity clauses granted in 2001 between the CNCE and Caisse des dépôts et
consignations at the time of the “Alliance” transactions;
– a €93 million pre-tax charge was booked as a result of expenses incurred by the unwinding in advance of certain hedging
instruments and operating expenses directly related to the Group’s restructuring operations.
1.3 Change in accounting method
Since January 1, 2004, the Group’s consolidating entity has been made up of the individual Caisses d’Epargne and the CNCE.
Consequently, the CNCE is no longer considered as a subsidiary, and the Caisse des dépôts et consignations, which is now a strategic
partner of the Group, is a shareholder of the parent company, compared with its previous status as a minority interest (see Note 5
to the consolidated financial statements). The impact on opening reserves and retained earnings of the reclassification of minority
interests was €1.5 billion.
■
71
1.4 External growth operations in Commercial Banking
• Banque Sanpaolo
In December 2003, the CNCE acquired 60% of Banque Sanpaolo SA, which is dedicated to a clientele of small and medium-sized
enterprises, thereby reinforcing the local presence of the individual Caisses d’Epargne. This new subsidiary has been fully consolidated
by the Group since December 31, 2003 and therefore impacted the Group’s consolidated income statement for the first time in 2004.
• Entenial
Early 2004 saw Crédit Foncier de France complete its purchase of Entenial, a property loan subsidiary formerly owned by AGF. The
acquisition gave rise to a new major player in the market for home and other property loans. The Entenial group is 99.9%-owned
by Crédit Foncier de France and has been fully consolidated within the Groupe Caisse d’Epargne since January 1, 2004. The total cost
of the shares acquired was €587 million and initial badwill of €7 million was recorded in the 2004 income statement.
1.5 A new strategic plan for 2004-2007
Buoyed by the success of the “Double!” strategic plan, in the second half of 2004 the Group completed its action plan for the new
restructured business portfolio. The related strategic objectives are ambitious and were presented to all of the Group's employees on
November 4, 2004. They are as follows:
Continue to expand while consolidating profitability levels by:
– winning and retaining clients, based on an objective of a 10-million strong client base;
– making effective investments of €1 billion, mainly allocated to strengthening the network, redefining the Group's offering, and
updating IT equipment for the sales and marketing teams;
– containing costs, notably by sharing business platforms;
– controlling risks and tightening monitoring procedures within the new Group structure.
Leverage our new potential as a multibusiness, multichannel, and multibrand provider, and ensure that all players are
successfully integrated, by
– consolidating the positioning of Commercial Banking, with a view to becoming the benchmark bank for personal banking clients
and a leading specialist player for regional development;
– enlarging the Investment Banking client base through partnerships and targeted international development;
– rallying the Group’s 52,800 people in order to fully leverage synergies between business lines and ensure that everyone is
successfully integrated.
By 2007 deliver superior offerings and achieve a high level of operating efficiency in each area of business, from clientfacing sales operations through to support functions.
Stand out for our social responsibility policy, by translating our corporate values into pragmatic actions, and focusing on
sustainable development.
Our goal for 2007 is to become a major player in the European banking arena, by drawing on an overall strategy that is rooted in
combining growth with operating and financial excellence. These measures will place us in a favorable position to become a listed
bank, if our shareholders decide on such a path.
1.6 Basel II
The aim of the Basel II program is to define a better risk monitoring system and to bring capital funds into line with exposure to risks.
The Basel II rating system appraises credit risk by calculating two elements: the probability of the borrower defaulting on the loan
and the rate of loss should the borrower actually default. The Basel II initiative is a cross-functional project involving an extremely
large number of participants both from the CNCE and the individual Caisses d’Epargne, subsidiaries and IT communities.
72
■
2004 was a key year for the Groupe Caisse d’Epargne in terms of its work on Basel II. The foundations that had already been laid in
2003 were built on and set up in the individual Caisses d’Epargne and main subsidiaries, in line with objectives. This process, which
has paved the way for Basel II compliance by end-2005, comprised the following steps:
– launch of the V1 model in the second quarter, which entailed i) assigning risk ratings prior to loan-granting decisions taken by the
individual Caisses d’Epargne and the Group's main subsidiaries; and ii) enriching risk-related information, and making historical data
available Group-wide;
– ensuring the effective use of ratings for lending decisions;
– launch of the V2 model in the fourth quarter, focused on assigning ratings to commitments automatically for individuals and selfemployed professionals, and through data feeds for companies and institutional investors;
– definition by the Group Risk Department of risk management procedures applicable within the individual entities;
– preparing and planning a third model, geared to enhancing the system;
– launch of projects concerning the Fermat integrated suite of software tools, monitoring tools, and Base Tiers Groupe (a third-party
database), all of which are due to be rolled out in the first half of 2006.
The Group therefore met its objectives for 2004, while keeping within budget. No material issues were raised by the Internal Audit
in its project review.
The Basel II project has represented an enormous workload, and the Group’s successful results could not have been achieved without
the dedicated commitment of all the teams involved, including from the individual Caisses d’Epargne, the Group’s subsidiaries,
members of the IT community, CNCE staff, and in particular, the Group Risk Department and DPB2 – the unit specifically assigned to
the Basel II program.
1.7 Transition to International Accounting Standards (IAS) International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS)
With a view to improving the practical running of the internal market, in July 2002 the European Parliament adopted a rule requiring
companies that are not officially quoted in the European Union but whose debt securities are listed on a regulated market to prepare
their consolidated financial statements in compliance with the international accounting standards drawn up by the International
Accounting Standards Board (IASB), by 2007 at the latest.
Fully aware of the work involved in meeting this deadline, in spring 2003 the Groupe Caisse d’Epargne launched an IFRS transition
project, divided into the following three phases:
– preliminary work carried out in the first half of 2003, dedicated to assessing the impact of IFRS both in terms of accounting policies
and information systems;
– a detailed analysis performed between October 2003 and April 2004 of the main differences identified during the first phase
between IFRS and the accounting principles applied by the Group. As a result of the dedicated input of the numerous participants
involved, various transition options were pinpointed that were best suited to the Group;
– a roll-out phase, begun in May 2004, which will lead to implementation of the systems and organization structures required in
order to apply IFRS.
The IFRS project is organized around three supervisory bodies:
– a Strategic Committee, comprising two members of the CNCE Management Board and senior managers from the individual Caisses
d’Epargne, which approves the various accounting options;
– a Steering Committee, chaired by the member of the CNCE Management Board responsible for financial management. This
Committee is responsible for tactical decisions, approves project developments, and ensures that objectives are met;
– an Operational Committee, which coordinates the overall project, ensures that work proceeds smoothly, and appraises any
operational risks and corrective action that may be required.
■
73
Thanks to this structure, and by drawing significantly on the expertise of the Group as a whole, the project is proceeding as planned.
Consequently, the Group will shortly be able to identify any problematic issues related to applying the new standards, notably
regarding information systems.
The Groupe Caisse d’Epargne will be in a position to produce IFRS consolidated financial statements for the first half of 2007 at the
latest, as required for institutions issuing debt securities that are listed on a regulated market in the European Union.
Main differences between the Group’s current accounting principles and IAS-IFRS
The key differences between IAS-IFRS and the accounting principles applied by the Groupe Caisse d’Epargne for the preparation of
its consolidated financial statements concern the following items:
– Leases (IAS 17)
– Revenue (IAS 18)
– Employee benefits (IAS 19)
– Goodwill (IAS 36, IFRS 3)
– Property, plant and equipment and investment property (IAS 36 and IAS 40)
– Provisions, contingent liabilities and contingent assets (IAS 37)
– Financial instruments (IAS 39)
– Insurance contracts (IFRS 4).
■
2 – Strong growth in consolidated results, reflecting the Group’s
new scale
(in millions of euros)
2002
2003
2004
Net banking income
General operating expenses
6,583
(4,774)
7,247
(5,063)
8,972
(6,510)
1,725
– 1,447
24%
29%
Net additions to provisions
Share in net income of companies accounted
for by the equity method
Gains/(losses) on fixed assets
1,809
72.5%
(357)
2,184
69.9%
(306)
2,462
72.6%
(246)
278
2.7 pts
60
13%
– 20%
216
(20)
61
– 95
39%
– 127%
Net ordinary income before tax
Exceptional items
Income tax
Amortization of goodwill
Allocations to the reserve for general banking risks
Minority interests
Net income (excluding minority interests)
1,648
(9)
(435)
(38)
(156)
(58)
952
2,108
(54)
(503)
(15)
(294)
(126)
1,116
2,412
75
(538)
(30)
(74)
(60)
1,785
304
129
– 35
– 15
220
66
669
14%
– 239%
7%
100%
– 75%
– 52%
60%
Earning capacity*
Return on equity**
1,102
10.1%
1,356
11.3%
1,859
10.8%
503
– 0.5 pts
37%
–
151
45
155
75
Change
** Earning capacity = net income (excluding minority interests) + amounts allocated to the reserve for general banking risks (excluding minority interests).
** Calculation based on average capital funds for full-years 2002 and 2003, and six months for 2004.
The results achieved by Groupe Caisse d’Epargne in 2004 were up sharply on the prior year, reflecting the Group’s enlarged scope of
consolidation and strong momentum across all business lines. Net banking income advanced 24% to almost €9 billion, gross
operating income climbed 13% to €2.5 billion, and earning capacity expanded 37%, reaching €1.9 billion.
74
■
At December 31, 2004, consolidated capital funds (including the reserve for general banking risks) surged 42% to €18 billion from
€12.7 billion at the previous year-end. Despite its expansion drive, the Group maintained its capital adequacy ratios well above
regulatory requirements, with its equivalent Tier One ratio coming out at 10.1%. Post-tax return on equity stood at 10.8%.
Meaningful year-on-year comparisons of results are extremely difficult due to the impact in 2004 of the restructuring operations
carried out mid-year under the New Foundations project, the respective December 2003 and January 2004 acquisitions of Banque
Sanpaolo and Entenial, and changes to the consolidating entity, which now also encompasses CNCE.(1) Pro forma accounts have
therefore been prepared that exclude the impact of changes in Group structure, based on the same accounting principles and
methods as those used by the Group for its consolidated financial statements. The assumptions used in the pro forma accounts
are described in Note 35 to the consolidated financial statements.
■
3 – Robust pro forma results, driven by strong operating performance
3.1 Pro forma results of the Groupe Caisse d’Epargne
2002
2003
2004
Net banking income
8,521
(6,400)
9,335
(6,736)
2,121
75.1%
(414)
2,599
72.2%
(459)
Exceptional items
Income tax
Allocations to the reserve for general banking risks
Minority interests
2,008
(9)
(487)
(262)
(135)
58
1,173
Earning capacity
Return on equity
1,308
9.1%
191
110
Change
Change*
9,742
(7,147)
4%
6%
7%
7%
2,595
73.4%
(347)
0%
1.2 pt
– 24%
6%
0.1 pt
– 39%
243
(52)
15%
– 138%
15%
nm
2,489
(62)
(568)
(79)
(375)
(30)
1,375
2,439
(24)
(544)
(53)
(114)
(48)
1,656
– 2%
– 61%
– 4%
– 33%
– 70%
60%
20%
16%
nm
12%
– 33%
– 70%
60%
47%
1,750
10.9%
1,770
10.0%
1%
– 0.9 pt
19%
0.6 pt
211
138
* On a constant exchange-rate basis and excluding exceptional items (like-for-like).
The pro forma results for 2002, 2003 and 2004 show steady growth and increasing profitability. Exceptional income was high in 2003,
due to a significant €224 million capital gain recorded on the sale of office buildings housing the headquarters of Crédit Foncier. Based
on adjusted figures that exclude exceptional items, and at constant exchange rates, the Groupe Caisse d’Epargne posted a steady rise
in earning capacity over the three years (€1.3 billion in 2002, €1.5 billion in 2003, and €1.8 billion in 2004), and a year-on-year
increase of 19% between 2003 and 2004.
(1) For further details please refer to sections 1.2, 1.3 and 1.4 above and the notes to the consolidated financial statements.
■
75
Pro forma net banking income for 2004 climbed 4% to €9.7 billion, fueled by higher outstanding loans recorded by Commercial
Banking, strong asset management activities, and a healthy performance by the Capital Markets and Financing business. U.S.
operations accounted for 12% of net banking income, up on the prior year.
■ Excluding the currency effect, and after adjustment of 2003 exceptional items, the Group's showing was even stronger. Net banking
income grew by 7%, net interest margin increased by 5% to €5.3 billion, and commissions and fee income advanced 11% to €4.2
billion, representing 43.5% of total pro forma net banking income.
■
Pro forma general operating expenses rose 6% to €7.1 billion in 2004. Personnel costs accounted for 60% of these expenses (€4.3
billion), up 5% on 2003. This increase primarily stemmed from a rise in the variable portion of employee compensation, reflecting
the higher contribution of Investment Banking to net banking income, and the extension of variable pay agreements signed within
the Commercial Banking division. The number of staff employed by the Group was more or less unchanged from 2003, totaling
some 52,800 full-time equivalent employees.
■ Other operating expenses were 8% higher than in 2003. This sharp increase was due to the combination of several factors: a greater
number of leadership and monitoring roles and definition of a new risk management structure within the Group’s divisions; heavy
investment in the Basel II and IFRS projects, as well as in measures to enhance internal control and risk management functions;
restructuring costs; and migration of IT systems within the Commercial Banking entities.
■
In view of this outlay, pro forma gross operating income remained on a par with the year-earlier figure, coming in at €2.6 billion.
Based on a constant exchange rate and excluding 2003 exceptional items, however, it grew 6%.
■ The higher pro forma operating efficiency ratio for 2003 compared with the published ratio is mainly due to the full consolidation
of subsidiaries with higher operating efficiency ratios, such as the Crédit Foncier Group, Banque Sanpaolo, and IXIS AM). Like-forlike, this ratio remained stable between 2003 and 2004, coming in at 73.4% at December 31, 2004.
■
■
■
■
■
Pro forma net additions to provisions amounted to €347 million, down 24% on the prior year, reflecting an overall decrease in
defaults recorded by Commercial Banking and Investment Banking. The Group nevertheless maintained its prudent provisioning
policy and continued to add to provisions for general credit and sector-based risks, in an amount of €135 million in 2004 versus
€110 million in 2003.
Pro forma net ordinary income before tax totaled €2.4 billion in 2004, representing a slight year-on-year decrease despite a 15%
rise in the share in net income of companies accounted for by the equity method. The decline is mostly attributable to a high basis
of comparison, as 2003 saw a significant capital gain on the sale of the Crédit Foncier office building. Excluding this exceptional
item, net ordinary income before tax rose by 16%.
2004 pro forma earning capacity inched up to €1.8 billion. The average annual increase since 1999 comes out at 21%, reflecting
strong performances by Commercial Banking – particularly retail banking operations conducted by the individual Caisses d’Epargne
– and the wider business base of Investment Banking, whose results were excellent in 2004.
Lastly, pro forma return on equity was 10% in 2004, representing a 0.6 point increase based on 2003 figures adjusted for the capital
gain on the Crédit Foncier building.
3.2 Sharp rise in results posted by the Group’s divisions
Following its acquisition of the subsidiaries of Compagnie Financière Eulia, the Group implemented a matrix structure in 2004,
organized around two divisions (Commercial Banking and Investment Banking) and cross-functional departments.
Commercial Banking encompasses:
– all operations related to lending, savings, and other banking services carried out by the individual Caisses d’Epargne, and other
companies operating under the Group’s banner, including Crédit Foncier, Banque Sanpaolo, OCEOR, and Végafinance;
– activities concerning the management of customer deposits and capital funds, as well as any related refinancing;
– subsidiaries that provide support functions to the retail banking networks;
– the Group’s insurance subsidiaries, including CNP Assurances, Ecureuil Vie, and GCE Garanties (formerly Eulia Caution).
76
■
The Investment Banking division is structured around four business units:
– IXIS Corporate & Investment Bank, the Group’s capital markets and financing arm. Based in Paris, this division operates on an
international scale, through its New York and Hong Kong subsidiaries, as well as through branch offices in Frankfurt, London and
Tokyo.
– IXIS Asset Management Group, responsible for financial and real-estate asset management in Europe, Asia and North America.
– IXIS Investor Services, specialized in asset custody and fund administration, as well as European institutional investor services.
– IXIS Financial Guaranty (CIFG), which spearheads operations related to financial guarantees, mainly located in the United States.
A holding structure completes the Group’s line-up, encompassing: proprietary securities transactions carried out on behalf of the
individual Caisses d’Epargne and the CNCE; central financing operations conducted by the CNCE and Martignac Finance for the entire
network of the individual Caisses d’Epargne; CNCE support functions, excluding those directly relating to management of the Group’s
divisions; management of investments in non-consolidated undertakings; overseeing investments made in connection with any
surplus capital funds of the individual Caisses d’Epargne; and managing exceptional income-statement items, such as the capital gain
generated on the Crédit Foncier building and provisions for general credit risks.
The breakdown by division is aimed at providing a clear picture of the results and profitability of the areas of business in which the
Group operates. This breakdown is based on the following rules and methods:
• Net banking income
The breakdown of net banking income by division includes revenues generated by the business concerned, excluding exceptional
items. Net banking income for the Commercial Banking division also includes the return on the equity allocated to the network of
the individual Caisses d’Epargne.
• General operating expenses
General operating expenses of the divisions primarily correspond to total expenditure of the legal entities concerned, combined with
the retail banking expenses of the individual Caisses d’Epargne allocated to the Commercial Banking division, and direct costs borne
by the CNCE in relation to managing and monitoring each business segment.
General operating expenses of the holding structure comprise costs related to managing proprietary portfolio transactions on behalf
of the individual Caisses d’Epargne and the CNCE, as well as to exceptional expenditure and structural costs that are not directly
charged to the operating divisions.
• Provisions for contingencies and impairment in value
Provisions are booked to cover the risks inherent to each division. Provisions for general risks recorded by the Group’s various legal
entities are classified under the holding structure.
• Gains/(losses) on fixed assets
This items concerns capital gains or losses generated by the divisions on the sale of investments. The gain posted following the sale
of the Crédit Foncier headquarters building was recorded under the holding structure.
• Exceptional items
This caption relates to transactions that are non-recurring in nature. The related income or expense is recorded in full under the
holding structure.
• Goodwill
Goodwill and the corresponding amortization is allocated to each of the divisions.
• Tax charge
The tax charge of the divisions represents the charge recorded at the level of the legal entities. Tax savings arising from group relief
generated under the tax group headed by the CNCE are recorded under the holding structure, as are exceptional tax items.
• Reserve for general banking risks
Movements in the reserve for general banking risks are recorded in full under the holding structure.
■
77
• Net income by division
Commercial
Banking
Investment
Banking
Holding
structure
Groupe Caisse
d’Epargne
Change
2003
2004
In €m
In %
411
(385)
9,335
(6,736)
9,742
(7,147)
407
– 411
4%
6%
346
47.7%
(181)
26
93.7%
(145)
2,599
72.2%
(459)
2,595
73.4%
(347)
–4
1.2pts
112
0%
– 24%
8
12
(2)
76
3
(69)
211
138
243
(52)
32
– 190
15%
– 138%
530
762
(156)
(60)
(203)
(52)
239
(62)
85
3
(185)
(24)
209
14
2,489
(62)
(568)
(79)
2,439
(24)
(544)
(53)
– 50
38
24
26
– 2%
– 61%
– 4%
– 33%
(12)
(45)
(375)
(2)
(114)
15
(375)
(30)
(114)
(48)
261
– 18
– 70%
60%
1,279
302
462
(112)
(85)
1,375
1,656
281
20%
1,279
302
462
263
29
1,750
1,770
20
1%
Pro forma
2003
2004
2003
2004
2003
Net banking income
6,618
(4,962)
6,960
(5,163)
2,055
(1,458)
2,371
(1,599)
662
(316)
Share in net income of companies
accounted for by the equity method
1,656
75.0%
(195)
1,797
74.2%
(172)
597
70.9%
(83)
772
67.4%
(30)
206
53
232
5
7
9
Exceptional items
Income tax
Allocations to the reserve for general
banking risks
Minority interests
Net income
(excluding minority interests)
1,720
1,862
(497)
(22)
(550)
(15)
(16)
(18)
1,185
Earning capacity
1,185
2004
Commercial Banking and Investment Banking both turned in a very good performance in 2004, posting respective 8% and 53% rises
in earning capacity. The year-on-year decrease in earning capacity reported by the holding structure was primarily due to movements
in exceptional items, which are all reported under this segment.
Following diversification of the business base carried out in connection with the New Foundations project, Investment Banking
accounted for 24% of the Group’s pro forma net banking income and 25% of earning capacity in 2004. Commercial Banking, which
is the Group’s core business, represented 73% of pro forma earning capacity.
■
4 – Commercial Banking: a steady increase in results
Pro forma
78
■
2003
Commercial Banking
2004
Change
Net banking income
6,618
(4,962)
6,960
(5,163)
342
– 201
5%
4%
Net additions to provisions for loan losses
1,656
75.0%
(195)
1,797
74.2%
(172)
141
– 0.8 pt
23
9%
– 12%
26
– 48
13%
nm
Income tax
Minority interests
1,720
(497)
(22)
(16)
1,185
142
– 53
7
–2
94
8%
11%
– 32%
13%
8%
206
53
232
5
1,862
(550)
(15)
(18)
1,279
Commercial Banking operations enjoyed a solid growth momentum, posting an 8% rise in net income and a 0.8 point improvement
in the operating efficiency ratio.
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■
■
■
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Net banking income climbed 5% to €6,960 million. All the Group's banners (the individual Caisses d’Epargne, Crédit Foncier,
Banque Sanpaolo, the OCEOR group, and Véga Finance), as well as its specialized subsidiaries – including Caisses d’Epargne
Financement and Ecureuil Assurances IARD – contributed to this positive performance.
Gross operating income expanded 9% to €1,797 million. The €141 million year-on-year growth was largely achieved on the
strength of the rise in net banking income and the contained 4% increase in expenses – despite 2004 being a year of considerable
marketing outlay. The operating efficiency ratio saw a 0.8-point improvement.
Net additions to provisions for loan losses decreased by 12% to €172 million, reflecting lower individual risks. The reduction
also bears witness to the selective expansion approach adopted by the Commercial Banking division.
Net ordinary income before tax advanced 8% to €1,862 million, fueled by a 13% rise in share in net income of companies
accounted for by the equity method (mainly comprising insurance companies). This item was, however, adversely impacted by the
contraction in gains on fixed assets as Entenial recorded €37.5 million worth of gains on the sale of investments in 2003.
Net income (excluding minority interests) totaled €1,279 million, up 8% on the 2003 figure.
Lastly, return on allocated equity (excluding insurance operations), determined based on regulatory capital requirements
equivalent to 6% of risk-weighted assets, came to 15% in 2004.
4.1 Net banking income up 5%, propelled by solid business levels
In 2004, Commercial Banking operations continued to enjoy very high business volumes and expanded its client base, despite fierce
competition. The division’s net banking income climbed 5% to almost €7 billion.
Continued success in winning new clients
The Commercial Banking client base has grown significantly, with over 500,000 new clients won in the space of three years, including
almost 155,000 in 2004 alone. Average outstanding demand deposits increased 8%, reaching €23.7 billion at December 31, 2004.
A record year for loans
Total outstandings (including finance leases) rose 9%, spurred by the buoyant property loan market. The Group experienced another
bumper year of lending, with new loans totaling some €34 billion, and consolidated its market share, against a backdrop of stiff
competition and difficult negotiating conditions.
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79
The Group continued to expand in all retail banking markets, and pursued its drive to diversify into specialized markets, including
local and regional authorities and small- and medium-sized enterprises. Specialized markets account for almost one third of the
Commercial Banking division’s outstanding loans. Private individuals and self-employed professionals once again proved to be
the growth driver, with outstanding loans for these segments rising 11% for the individual Caisses d’Epargne alone.
Customer savings up 6%, powered by excellent results from the life insurance business
Customer savings climbed by €16 billion, or 6% in 2004. Life insurance drove this growth, with net inflows amounting to more than
€4.2 billion. In addition, the Group continued to sell shares in the individual Caisses d'Epargne to its local customers. By the end of
2004, cooperative shareholders had purchased shares for a total of €2.8 billion since subscriptions began.
Banque Sanpaolo and Véga Finance reported a sharp rise in inflows of new money. Nevertheless, the individual Caisses d’Epargne
represent over three quarters of total new inflows posted by the Commercial Banking division.
80
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Intermediated savings advanced 2.4% to €83.8 billion at December 31, 2004. Passbook savings accounts soared to €16.7 billion,
propelled by a €1.2 billion increase in deposits in “Livret B” passbook accounts. Deposits in home purchase savings plans and
accounts advanced to €45.7 billion, fueled primarily by a €1.2 billion rise in PEL home savings plans deposits. PEP savings plans
continued to decline, amounting to €4.1 billion at the end of 2004. Customer time deposit accounts remained stable against a
backdrop of a sharp fall in market interest rates.
Customer deposits and funds under management from the Group’s commission-earning activities expanded 7.9% to €188.4 million.
This rise was mainly driven by life insurance, which reported a record level of inflows in 2004 and total outstandings of €66.1 billion
at the year-end. Savings invested in mutual funds advanced 13% to over €38 billion, reflecting good market conditions. Regulated
savings funds deposited with the Caisse des dépôts et consignations edged up 1.3% to €84 billion, and total deposits on “Livret A”
passbook accounts grew by €679 million to €66.3 billion, with the positive impact of capitalized interest offsetting the slight
downturn in new deposits during the year.
Net banking income up 5%
Net interest margin
Against a backdrop of high business volumes, the net interest margin climbed 5% to €3.6 billion, primarily fuelled by a strong 9%
rise in outstanding loans and 8% increases in both managed funds related to commission-earning activities and demand deposits.
In line with the overall market trend, the intermediation margin was boosted by lower borrowing costs, but this positive effect was
offset by the erosion of margins on customer items.
Commissions and fee income (1)
From savings products
From loans
From banking services
Total
2003
2004
1,533
454
998
2,985
1,568
504
1,082
3,154
Change
35
50
84
169
2%
11%
8%
6%
Total commission and fee income grew 6% in 2004 coming in at €3.2 billion and representing 45.3% of net banking income, versus
45.1% in 2003.
(1) Income generated from the distribution of Livret A passbook accounts is included in commission and fee income for the purposes of the Management Report.
■
81
Commissions and fees received on savings products edged up 2% in 2004.
■
Commissions and fees on regulated savings products were on a par with 2003, at €907 million, with Livret A passbook
commissions amounting to €782 million. The contribution of these passbook accounts to net banking income for the Commercial
Banking division came to 11.2% in 2004 versus 11.9% one year earlier as the Group continued to shift its focus away from this
traditional product.
●
●
Commissions and fees on life insurance products came to €440 million. The 9% year-on-year increase was achieved primarily
thanks to strong inflows during the year, particularly from the flagship products, Nuances and Initiative Transmission.
Commissions and fees on mutual funds held firm in 2004, totaling €221 million, of which almost 80% was generated by the
individual Caisses d’Epargne. Commissions on transaction flows lost ground, hit by a decrease in commission rates on investments,
particularly for guaranteed funds.
Commissions and fees from loans surged 11% to €504 million. Loan insurance accounted for 36% of this total, up 11% to
€182 million, primarily driven by a buoyant property loan market. Early loan repayment penalties rose 9% to €146 million, in line
with growth in outstanding loans. Incidental commissions on loans increased by €18 million, or 11%.
Commissions and fee income from banking services rose 8% to €1,082 million, mainly due to an increase in the volume of
banking services and products distributed to customers, as pricing levels had little impact during the year.
Other income
Other income, which totaled €175 million in 2004, encompasses (i) gross margin on insurance business which advanced 10% to
€136 million, fueled by growth in guarantees and non-life insurance and (ii) other operating income and expense, which declined
51% during the year to €39 million.
4.2 General operating expenses up 4%
Personnel costs
Taxes other than on income
External services
Depreciation, amortization and provisions
Total
2003
2004
(2,945)
(148)
(1,527)
(342)
(4,962)
(3,062)
(157)
(1,603)
(341)
(5,163)
Change
– 117
–9
– 76
1
– 201
4%
6%
5%
0%
4%
Personnel costs – which accounted for almost 60% of pro forma general operating expenses – stood at €3.1 billion in 2004. The
4% year-on-year increase in these costs was essentially due to changes in salary costs, particularly as a result of the following:
82
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the Group’s continued efforts to modernize its remuneration policy – the variable pay system was extended within the Caisses
d’Epargne network and Crédit Foncier signed a new profit-sharing and incentive bonus agreement. These factors represented an
additional cost of almost €60 million in the 2004 accounts;
■
the ramp-up of commercial banking subsidiaries such as CEFI and the overseas banks, as well as the restructuring of business and
risk monitoring procedures within the CNCE.
Other general operating expenses totaled €2.1 billion. The 4% increase in these costs was primarily attributable to:
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■
a 6% (€9 million) rise in taxes other than on income to €157 million, reflecting the combined impact of increases in “organic” tax
and local business tax and the abolition of the tax on general operating expenses payable by financial institutions.
an approximately €20 million increase in IT costs due to the modernization of systems at Crédit Foncier (Copernic project) and
Banque Sanpaolo, and of the IT platform shared by the Group's overseas subsidiaries.
a €13 million expansion in rental and facilities management charges and a €6 million rise in advertising costs due to pro-active
marketing measures implemented during the year, including a corporate communications campaign. Professional fees also came
in higher than the previous year as a result of internal restructuring (such as the creation of the commercial real-estate division
within Crédit Foncier), external growth operations (Banque Sanpaolo and Entenial) and regulatory compliance projects including
Basel II and IFRS.
Net depreciation and amortization expense amounted to €341 million, on a par with the 2003 figure.
Gross operating income up 9%
Gross operating income came to €1,797 million in 2004, up 9% year-on-year. The Commercial Banking operating efficiency ratio
improved by 0.8 point to 74.2%. None of the individual Caisses d’Epargne now have an operating efficiency ratio of over 80% (versus
12 in 1999).
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83
4.3 Contained net additions to provisions for loan losses
Net additions to provisions for loan losses decreased 12% during the year, falling to €172 million from €195 million. Net additions
to “dynamic” and sector-based provisions were on a par with 2003 and reflected adjustments to provisions based on changes in the
probabilities of counterparty default. Additions to provisions for loan losses remained modest compared to the aggregate amount of
customer loans outstanding, representing some 0.11% of the total in 2004.
The proportion of non-performing loans in total customer outstandings was on a par with the previous year, coming in at 2.8% in
2004. 47% of the value of these loans was covered by specific provisions at December 31, 2004. “Dynamic” and sector-based
provisions provided additional cover of €427 million at the year-end.
4.4 Net ordinary income before tax up 8%
Net ordinary income before tax rose 8% in 2004 to €1,862 million. This increase reflected the rise in gross operating income
combined with measures to contain the level of provisions for loan losses, as well as the following factors:
– a €26 million increase in net income from companies accounted for by the equity method – which contributed a total of €232
million during the year – exclusively attributable to the life insurers CNP Assurances and Ecureuil Vie.
– a reduction in net gains on disposals of fixed assets after the €37 million gain recorded in 2003 by Entenial relating to the sale of
shares.
4.5 Consolidated net income and return on equity
Corporate income tax came to €550 million in 2004, up 11% compared with 2003, primarily reflecting growth in net income.
Commercial Banking recorded net goodwill amortization of €15 million, representing a year-on-year decrease of €7 million.
Minority interests increased in line with earnings growth.
The Group ended the year with consolidated net income of €1,279 million compared with €1,185 million in 2003, representing
an increase of 8%.
Return on equity for the Commercial Banking division (excluding the insurance business) came to 15% in 2004 after tax (determined
based on regulatory capital requirements equivalent to 6% of risk-weighted assets).
84
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5 – An excellent year for Investment Banking
In 2004, IXIS transferred certain assets to IXIS Capital Market which was subsequently renamed IXIS Corporate & Investment Bank.
Also during the year, IXIS transferred its assets under custody to the newly created IXIS Investor Services. At the same time, the capital
structure of the asset management business was reorganized through the creation of IXIS Asset Management Group.
This division’s operations are now carried out by four subsidiaries: IXIS Capital & Investment Bank, IXIS Asset Management Group, IXIS
Investor Services and CIFG. 2004 was an excellent year across the board for Investment Banking. The division’s pro forma net banking
income advanced 15%, gross operating income was up 29% and net income surged by over 50%.
The Group has investment banking operations in Europe, Asia and the United States. The contribution from the United States grew in
2004, amounting to over 44% of the division’s pro forma net banking income at the year end. However, the fall in the value of the
US dollar during the year had a significant negative impact – at constant exchange rates net banking income and gross operating
income rose by 20% and 36% respectively.
The Capital Markets and Financing business operated by IXIS CIB was Investment Banking’s strongest contributor in 2004, representing
almost 70% of the division’s pro forma net banking income and 67% of pro forma net income. Asset management took second place
in terms of contribution to net income, accounting for 28%, with the investor services and financial guarantees businesses
contributing 3% and 2% respectively.
5.1 Capital markets and financing
Capital markets and financing
Pro forma
2003
2004
Net banking income
1,126
(701)
1,259
(730)
133
– 29
12%
4%
Gains on fixed assets
425
62.3%
(83)
529
58.0%
(23)
104
– 4.3 pts
60
24%
– 72%
1
12
–2
6
– 67%
nm
Corporate income tax
Minority interests
351
(130)
(28)
(3)
190
519
(179)
(28)
(9)
303
168
– 49
0
–6
113
48%
38%
0%
200%
59%
3
6
Change
■
85
Capital markets started 2004 positively but hovered up and down throughout the year as the favorable credit risk environment
increased pressure on margins. Against this backdrop, IXIS CIB improved its operating performance thanks to profitable growth in each
of its business lines and measures taken to diversify customer revenue streams.
The robust performance reported in 2004 confirms a long-term growth trend for the Group’s Capital markets and Financing business.
Over the last three years the average annual growth rate came in at 17%. This strong momentum was achieved in tandem with
controlling the Group's risk profile, with Value at Risk (VaR 99%, 1 day) remaining below €15 million on average in 2004.
Pro forma net banking income for Capital Markets and Financing came to €1,259 million, up 14.5% like-for-like compared with the
previous year (based on constant exchange rates and Group structure). This showing was particularly impressive as the 2003 figure
was already a strong basis for comparison.
Net banking income for Capital Markets and Financing operations in Europe and Asia totaled €845 million, representing a 14% yearon-year increase.
■
The Fixed Income business turned in a strong performance in 2004 although it did not equal the record performance reported in
2003. Market conditions were more difficult, as increases in commodities prices fueled fears of a return to high inflation and the
US Federal Reserve began to tighten its monetary policy, gradually raising Fed Funds interest rates.
■
2004 was a benchmark year for Equity & Arbitrage with income surging 21%.
The derivatives (correlation and volatility trading) and arbitrage businesses turned in a much stronger performance than in 2003,
thanks to effective risk management and moves to bolster the sales teams. Convertible bonds was the only business to be less
profitable than in previous years as the market lacked volume due to low volatility levels and extremely narrow spreads.
Income for IXIS Securities was 21% higher than in 2003. This growth was achieved against a sustained challenging backdrop for
the brokerage business with low volatility levels, limited sectorial movements and a fall in the number of transactions on the
Euronext market. The main growth drivers were sales to French and foreign institutional investors (up 24.6% and 42.2%
respectively) as well as the first revenue streams generated from the agreement between Lazard and IXIS CIB in the Equity Capital
Market business. Other contributing factors were the continued implementation of the company's marketing policy and the growing
reputation of the research department which won 15 top five places in the Agefi sector rankings, compared with 9 in 2003.
86
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The Credit business also posted growth in 2004, reporting a 7% increase in income to €141 million.
■
Structured financing had a record year, with more than 80 new financing arrangements, versus 47 in 2003 and a 73% surge in
income to €85 million. Equity-based guaranteed capital products provided an alternative solution for investors looking to achieve
more favorable yields than those offered on the market, whilst minimizing risk levels. Earnings were also boosted by the business’s
international diversification into Luxembourg and Switzerland.
■
The Financing business has a full range of products and services comprising lending to major companies, leveraged asset financing,
real-estate financing and asset and project financing. Total loans granted in 2004 represented €5.5 billion, 66% of which related
to corporate financing. Altogether, 105 financing transactions were completed in 2004, versus 100 in 2003 and 91 in 2002. At
December 31, 2004, outstandings in the lending portfolio amounted to €13.8 billion (excluding local and regional authorities), on
a par with the prior year figure. Also at year-end 2004, 99.1% of the transactions were rated and 82.5% of the rated transactions
were investment grade (BBB- and above).
■
2004 saw the launch of IXIS Asia Limited, a new subsidiary in Hong Kong, to carry out sales operations in liaison with IXIS CIB in
Tokyo, throughout Asia (excluding Japan). IXIS Asia Limited primarily focuses on fixed-income business, equities and structured
financing. In 2004, the Asian markets in these categories of assets were buoyant, a trend which is expected to continue in 2005.
Net banking income from North American operations came to €414 million in 2004, up 15.7% at constant exchange rates.
■
2004 was another impressive year for the securitization business, which accounted for 46% of the division’s economic revenue
during the year and reported 11% year-on-year growth. The property lending program met with particular success, propelling the
company into the position of a global market player. Total fixed and floating rate mortgages reached the record level of
US$2.6 billion. In connection with five securitization operations totaling US$5.6 billion, the company also sold and securitized over
US$1.3 billion worth of assets, boosting its ranking in the industry's league tables. IXIS CIB now holds a top-ten position in the CMBS
(Commercial Mortgage Backed Securities) market in the United States (1). It also plays an active role in the residential mortgage
securitization market, purchasing over US$2.9 billion worth of loans and securitizing and selling loans on the sub-prime market in
an amount of US$3 billion.
■
The Group is now reaping the benefits of its investments in the lending business, as 2004 income outstripped the 2003 figure by
36%. The Group structured and placed US$6 billion worth of Collaterized Debt Obligations, moving from ninth to sixth place in the
rankings for this market (2).
■
The structured funds business reported 45% growth in 2004, placing IXIS CIB among the major market players. At December 31,
2004, this business line’s assets portfolio represented €21 billion, making IXIS CIB one of the largest suppliers of financing and
protection.
General operating expenses for Capital Markets and Financing came to €730 million, up 4% on 2003. In line with the significant
increase in economic revenue, this rise in general operating expenses reflects an increase in variable remuneration paid to
employees, and higher numbers of front office and support staff required to back up the business line’s growth. At December 31,
2004, the business line had 2,020 full time equivalent employees, 10% more than the previous year. Adjusted for variable employee
remuneration, general operating expenses were slightly lower than in 2003, reflecting a reduction in research expenses and
professional fees as well as lower property expenses compared to the previous year when a new building was put into use.
Thanks to the combination of a significant rise in net banking income and tight control over general operating costs, the Capital
Markets and Financing business improved its operating efficiency ratio by over 4 points to 58%.
Gross operating income came to €529 million, representing a 24% year-on-year increase.
Net additions to provisions fell a substantial 72% in 2004 to €23 million.
Lastly, the business line reported a rise in pro forma net income of over 59%, thanks to the combined impact of a 12% increase in
net banking income, a controlled 4% rise in general operating expenses and a substantial decline in net additions to provisions.
(1) Source: Commercial Mortgage Alert, January 14, 2005.
(2) Source: MCM Structured Finance Watch (Bloomberg screen MCM9955).
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87
5.2 Asset Management
Asset Management
Pro forma
Net banking income
Corporate income tax
Minority interests
2003
758
(610)
148
80.5%
0
4
3
155
(17)
(32)
(9)
97
2004
Change
930
(732)
172
– 122
23%
20%
198
78.7%
(2)
50
– 1.8 pts
–2
34%
3
–3
75%
nm
48
6
8
– 27
35
31%
– 35%
– 25%
nm
36%
7
0
203
(11)
(24)
(36)
132
nm
2004 saw the reorganization of the Asset Management business, with the creation of IAM Group (a new holding company for the
Group’s asset management subsidiaries) comprising IXIS AM, IXIS AEW Europe and Ecureuil Gestion.
The Asset Management business line turned in a very strong performance in 2004, with managed assets up significantly from €336.1
billion to €371 billion. This €34.9 billion growth was achieved despite a negative €9 billion exchange-rate impact. Based on constant
exchange rates, managed assets grew by 13% or €43.8 billion.
88
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Net new assets under management totaled €19.4 billion in 2004, representing 45% of the total growth in outstandings during the
year and a €12.4 billion year-on-year increase (excluding currency effects). At the same time, positive market developments also
had a €24.4 billion impact on total assets under management.
Assets under management in the United States grew once again in 2004 (in constant euro terms), up by 23% (€34 billion) to
US$182.3 billion. This growth figure, which represented the Group's best showing ever in the country, makes IXIS AM North America
one of the leading US asset managers. US assets under management accounted for 36% of the business line’s total at December 31,
2004, compared with 33% in 2003 based on a constant Group structure. New assets under management were focused on equitybased products whose weighting as a proportion of the overall average increased by 6 points, to the detriment of money-market
products and bonds whose popularity peaked between 2001 and 2003. This change in the asset mix had a direct positive impact on
commission rates.
In Europe and Asia, total assets under management stood at €237.4 billion. The 8.4% increase was led by positive market effects
(€13.1 billion) and €5.8 billion in net new assets under management, primarily driven by life insurance products. Property assets
managed by IXIS AEW rose 14% to €11.1 billion and total assets managed by Ecureuil Gestion (excluding those sub-delegated to
IAM Paris) climbed 17%. The integration of Ecureuil Gestion within IXIS AM is expected to facilitate the expansion of cross-selling in
the long-term.
Pro forma banking income for the Asset Management business advanced 23% to €930 million. At constant exchange rates, growth
was 30%, primarily powered by the 13% increase in average assets under management (at constant exchange rates) combined with
higher commission rates.
North America slightly increased its contribution to total IAM Group revenues, accounting for 72% in 2004, versus 71% at year-end
2003 (at constant exchange rates).
General operating expenses expanded 20% to €732 million, primarily as a result of fee sharing and variable employee remuneration.
Adjusted for these variable items, general operating expenses were tightly controlled.
Gross operating income jumped 34% to €198 million and the operating efficiency ratio came to 78.7%, a 1.8 point improvement on
2003.
The business line ended the year with net income of €132 million, representing a year-on-year increase of 36%.
5.3 Custody and Investor Services
Custody and Investor Services
Pro forma
Net banking income
2003
2004
Change
151
(131)
151
(119)
0
12
0%
– 9%
20
32
12
60%
20
12
27
15
7
3
35%
25%
The Group’s Custody and Investor Services business line was restructured at the end of 2004 with the creation of IXIS Investor Services,
which oversees the following three subsidiaries:
– IXIS Urquijo – a Spanish bank specializing in custody and depository services – which is 51%-owned by IXIS Investor Services and
49% held by Banco Urquijo.
– IXIS Administration de Fonds, a wholly-owned company specializing in the administrative and accounting management of French
funds.
– Euro Emetteur Finance, held 50% - 50% with Crédit Lyonnais, specializing in issuer services.
■
89
IXIS IS did not perform any banking operations or provide any investment services for the Groupe Caisse d’Epargne in 2004. However,
pro forma figures have been prepared based on the data presented in IXIS's accounts.
Assets in custody amounted to €644 billion at December 31, 2004, including over €110 billion in assets held on behalf of mutual
funds, up 6% compared with year-end 2003.
2004 was a year of further developments with new products, projects and IT systems all launched during the year. As well as
implementing market-related projects, such as the ISIN code project, the business line launched its Proxy Voting service, created a
specific reporting solution for institutional customers, assisted its major customers (including asset management companies) with
implementing Swift protocols, and extended the use of the Group's web platform, Antares.
For the first time in its history, IXIS IS was granted two “Top Rated” rankings by the Global Custodian magazine in France for its investor
services activities both for domestic and non-resident customers. IXIS Urquijo also scored very well in Spain. These awards testify to
the success of the Group's efforts over the past three years to provide the very best offering and service levels to institutional
customers.
Pro forma net banking income was on a par with 2003 at €151 million. Gross operating income advanced to €32 million thanks to
tight control over general operating expenses. Net income came to €15 million, up 25% on the 2003 figure.
5.4 Financial guarantees
Financial guarantees
Pro forma
Net banking income
2003
2004
20
(16)
31
(18)
4
3
13
12
Change
11
–2
55%
13%
9
9
x3
x4
The Group’s Financial Guarantees business enables customers to obtain irrevocable guarantees for payments of capital and interest
due by borrowers that are rated at least BBB - (Investment Grade). The guarantees are provided by highly specialized insurance
companies and the business is operated by CIFG Europe and CIFG NA. Thanks to this service, issuers can obtain lower cost refinancing
on the market and investors are given new opportunities in terms of structured products and Public-Private Partnership projects.
CIFG has expanded in all of its market segments – sovereign risks, local authorities, water treatment and distribution, transport, publicprivate partnerships, project financing and structured financing – buoyed by growth opportunities in the United States and Europe.
In 2004, CIFG continued on the growth track despite less favorable market conditions. CIFG started 2005 with 45 licenses in the United
States, compared with 33 at year-end 2003 and is authorized to operate in the 15 countries making up the EU prior to enlargement.
New business reported in 2004 was particularly impressive – gross guarantees issued rose 26% overall and the United States
accounted for over two thirds of new business. A narrowing of spreads in the market led to a reduction in premiums received in all
segments but this negative impact was partially offset by a two-fold increase in total outstanding guarantees from US$ 12.5 billion
at year-end 2003 to US$ 25 billion at year-end 2004.
The portfolio is of very high quality; all securities are investment grade and the average rating is AA.
Against this backdrop, after reaching break-even in 2003, net banking income surged 55% in 2004 to €31 million, gross operating
income tripled and net income increased four-fold.
90
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6 – Comments on the consolidated balance sheet
2002
2003
2003
2004
pro forma
Cash and due from banks
Deposits with the CDC
Customer loans
Securities portfolio
Other receivables
Fixed assets
Total assets
Cash and due to banks
Regulated savings funds
deposited with the CDC
Of which Livret A passbook accounts
Other customer deposits
Debt securities issued
Other liabilities
Subordinated debt
Consolidated capital
funds and reserves
Excluding minority interests
Total liabilities
Change
amount
in %
74,764
81,154
118,658
54,891
21,957
5,710
78,769
82,895
132,566
56,584
23,861
6,000
65,075
82,897
172,245
116,306
42,837
8,420
102,496
84,021
192,368
114,008
42,292
8,726
37,421
1,124
20,123
– 2,298
– 545
306
57.5%
1.4%
11.7%
– 2.0%
– 1.3%
3.6%
357,133
380,675
487,780
543,911
56,131
11.5%
76,762
76,878
67,872
91,364
23,492
34.6%
81,154
64,958
88,935
67,571
27,435
2,179
82,895
65,672
98,306
75,061
28,773
4,153
82,897
65,672
119,938
127,795
66,630
5,330
84,021
66,351
130,082
142,579
69,463
7,714
1,124
679
10,144
14,784
2,833
2,384
1.4%
1.0%
8.5%
11.6%
4.3%
44.7%
13,097
11,405
14,609
12,688
17,318
16,611
18,688
18,022
1,370
1,411
7.9%
8.5%
357,133
380,675
487,780
543,911
56,131
11.5%
At December 31, 2004, total consolidated assets of the Groupe Caisse d’Epargne amounted to €543.9 billion, up 43% compared with
December 31, 2003 and 12% compared with the 2003 pro forma figure. The main adjustments to the 2003 pro forma balance sheet
concerned the consolidation of Entenial (€14 billion positive impact) and the full consolidation of IXIS which was proportionally
consolidated based on 26.45% at December 31, 2003.
Outstanding customer loans advanced by over €20 billion, up 12% on the 2003 pro forma figure. Home loans were one of the
main growth drivers, rising 9% to a total of €95 billion. Outstanding loans currently represent 35% of total consolidated assets.
Further to the consolidation of IXIS, the securities portfolio in the pro forma 2003 balance sheet was double that in the published
balance sheet. At December 31, 2004, the total securities portfolio stood at €114 billion. Out of this total, trading securities accounted
for 48%, amounting to €54.9 billion, and bonds and other fixed-income securities represented 66%, totaling €75 billion.
Funds deposited with the CDC edged up to €84 billion at year-end 2004, spurred by a €0.7 billion (1.0%) increase in outstanding
Livret A passbook deposits.
Excluding funds deposited with the CDC, customer deposits were up 8%.
Consolidated capital funds (excluding minority interests but including the reserve for general banking risks) rose by a significant
€5.3 billion in 2004 based on published figures and were €1.4 billion higher than the 2003 pro forma figure. This growth included
the positive impacts of the expansion of the consolidating company (€1.5 billion) and of CNCE's capital increase as part of the New
Foundations project (€2.1 billion).
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91
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7 – Regulatory capital and capital adequacy ratio
Total capital
of which Tier-1 capital
including non-cumulative, undated deeply
subordinated notes
Capital funds requirements
Loan loss risks
Market risks
International capital adequacy ratio
2002
2003
2004
Change
13,340
12,477
15,332
14,527
22,669
18,396
48%
27%
800
1,727
116%
9,342
8,539
803
143%
10,269
9,447
822
149%
14,566
12,853
1,713
156%
42%
36%
108%
7 pts
In compliance with the provisions of French Banking Regulations Committee (CRBF) Rule 2000-03, as amended, and following
approval by the French Banking Commission, networks of entities with a central institution may establish a consolidating entity as
provided for by Rule 99-07 of the French Accounting Regulatory Committee. In the case of the Groupe Caisse d’Epargne, this
consolidating entity is the parent company which has been required to respect management ratios on a consolidated basis since
July 1, 2002. The first calculation of the Group’s capital adequacy ratio was made on December 31, 2002.
As agreed by the French Banking Commission, the consolidating entity and scope of the Group for capital adequacy purposes are
identical to those adopted for the consolidated accounts of the Groupe Caisse d’Epargne.
For the application of capital adequacy monitoring, the Group’s insurance companies are accounted for by the equity method.
The Group’s capital funds requirements stood at €14.6 billion at December 31, 2004. The 42% year-on-year increase was largely due
to the effects of the New Foundations project.
During 2004, the Group issued further undated deeply subordinated notes in the amounts of €780 million and USD 200 million.
Total capital corresponds to the sum of Tier-1 capital (including the non-cumulative, undated deeply subordinated notes), Tier-2 capital
and regulatory deductions (holdings in unconsolidated credit institutions or those accounted for by the equity method).
The consolidated capital adequacy ratio of the Groupe Caisse d’Epargne stood at 156% at year-end 2004 versus 149% one year
earlier, well in excess of the statutory ratio of 100%.
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8 – Recent developments and outlook for 2005
In line with its new Strategic Plan the Groupe Caisse d’Epargne intends to further strengthen its areas of excellence in 2005, in both
Commercial Banking and Investment Banking. This objective is underpinned by the twin aims of pursuing the expansion drive and
bolstering profitability levels within both divisions.
Business remained buoyant for the Commercial Banking division in the first quarter of 2005 with new lending reaching some €7.4
billion (of which almost 75% for property loans). New deposits and other inflows amounted to approximately €2.3 billion, driven by
the life insurance business.
The Commercial Banking division has marked a first in France by paying interest on current accounts as from April 14, 2005. In
response to demand from customers, current account balances will now bear interest of between 0.5% and 1% with no minimum
limit. The Group introduced this new service without increasing the cost of existing services or requiring customers to pay for checks.
As part of its efforts to constantly improve its offering and enhance service quality, in May 2005 the Group set up a private banking
arm, La Compagnie 1818. This new subsidiary – which will begin operations in early June 2005 – will be a stand-alone bank offering
customers high-end legal and tax advice as part of a broad-ranging wealth management offer. The Group is now reaping the benefits
of its new extended structure and has brought together under the same banner the full scope of specialist services previously
provided by different outfits such as Véga Finance, Banque Sanpaolo and Crédit Foncier Banque.
The Investment Banking division turned in strong performances across the board for first-quarter 2005. Capital markets reported a
particularly robust rise in economic revenue, fueled by interest rate derivatives in Europe and the credit business in the United States.
As part of the commercial expansion of the Group’s Capital Markets and Financing business, particularly in international markets, IXIS
Corporate & Investment Bank (IXIS CIB) intends to extend its geographic footprint in 2005 – a new branch is currently being set up
in Milan and one or more representative offices are at the planning stage in Asia and the Middle East.
Another strategic focus for 2005 will be developing corporate financing and financial engineering for corporate customers. The Group
will seek to enter into partnerships to achieve its objectives in these areas. To this end IXIS CIB has already signed an agreement
with Lazard Frères, the first section of which provides for industrial cooperation between the two companies for an initial period of
three years. The arrangement will be principally focused on the French market and will build on the alliance already begun between
IXIS and Lazard in primary equities markets. A similar agreement is also planned for real estate advisory services. Lastly, IXIS CIB will
make its complex products such as structured financing and securitizations available to Lazard which in turn will be able to offer these
to its own customers.
The second section of the agreement provides for the Groupe Caisse d’Epargne to acquire an equity interest in Lazard – not exceeding
10% of the total issue – at the time of its IPO on the New York stock market. US$50 million of the total US$200 million investment
will be in the form of shares, and the remaining US$150 million in the form of three-year equity notes, all based on market prices.
In addition, the Caisse Nationale des Caisses d’Epargne (CNCE) and Crédit Agricole SA have confirmed that they intend to combine
their respective business lines dedicated to depository and custodial services, clearing, fund administration and issuer services for
institutional and major corporate customers, both in France and internationally. This rapprochement would give rise to a major player
in the securities market. It would be the leader in France and a top league European player, as well as being:
– the leading depository bank for mutual funds in France, the number one player for assets deposited with Euroclear France and a
leading provider of custodian services, with total assets under custody of €1,200 billion for institutional customers.
– the top ranking administrative and accounting management company in France and one of the leaders in Europe with €570 billion
in assets under this form of management, including the Fastnet network.
– one of the top three issuer service providers in France, and a European leader in transfer agent services with almost €600 billion
in outstandings.
In 2005, the Group will continue with its projects relating to the implementation of the Basel II regulations and IAS/IFRS. It also
intends to pursue its strategic initiatives concerning human resources. One of the milestones in this area will be the CAP 25 project
which aims to fully leverage the talents of employees with over 25 years’ of service within the Group, as their contribution is essential
to the success of the Strategic Plan.
■
93
Risk management
within the Groupe Caisse d’Epargne
For the 2004 financial year
■
1 – Management of credit risks, market risks and operational risks
As the central institution of the network, the CNCE is responsible for guaranteeing the consistency of the policies adopted by the
Group’s risk management departments, by:
– setting exposure limits for each Group entity or for certain major counterparties when transactions involve amounts that fall outside
the remit of such entities. These limits are fixed by a number of decision-making committees;
– monitoring entities’ compliance with these exposure limits and tracking any cases where the limits are exceeded;
– validating the methods used to rate and compute risks throughout the entire Group;
– defining the policies regarding risk management and control and ensuring that these policies are duly applied by Group entities.
The majority of these functions are covered by the system overseen by the Group Risk Management department. In 2004, Group
Risk Management reorganized and enhanced the overall risk management system by:
– structuring its internal organization around six departments: “Credit analysis and committee coordination”, “Credit and counterparty
risks”, “Methodology and validation”, “Market and fund-related risks”, “Operational risks” and “Policies and procedures”. The
department has also embarked on a recruitment drive to keep pace with the extended Group structure and its newly-defined remit;
– developing, testing and validating specific market-based ratings. The Group’s Basel II project team is tasked with overseeing the
implementation of internal rating models within the Group on behalf of Risk Management. This project is set to continue in 2005;
– launching a consolidation and credit risk exposure system (Fermat Crédit) as part of the Group’s Basel II project – to be rolled out
in 2005 – and developing new tools for risk mapping and managing operational risks, as well as a VaR approach to market risks;
– drawing up risk reporting procedures in a bid to provide an overview of Group exposure (aggregate or individual exposures);
– issuing certain groupwide risk management standards and policies.
As well as devising tools, methodologies and policies, Group Risk Management is in the process of setting up an overall risk
management function encompassing the entire Group, by:
– holding workshops as part of the “Dialogues” project between the individual Caisses d’Epargne and the CNCE, at which members
of the Group Risk Management team outline the underlying principles and remit of a Risk Management department;
– visiting the individual Caisses d’Epargne and their subsidiaries with members of the Basel II project team, to ensure the appropriate
tools have been duly rolled out and to track the progress made;
– creating a special unit known as the “Risk oversight group”, whose work in 2004 was primarily focused on helping to put in place
the necessary Basel II reforms;
– from the last quarter of 2004, setting up an ongoing monitoring system to ensure that Group entities have put in place the risk
management policies prescribed by the Group, based on the collation, identification and analysis of the main risk documentation
compiled including operating charters for committees, organizational charts, definitions of roles and responsibilities, remit and
scope, and minutes of the risk management committees.
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Risk management within the Groupe Caisse d’Epargne
■
2 – Liquidity risk
The Groupe Caisse d’Epargne is not exposed to any major liquidity risk owing to its ability to collect savings deposits from private
individuals, the quality and liquidity of the securities held in the portfolios of its different entities, and the quality and stability of its
credit rating which allows the Group to raise the additional funds it needs to develop its activities. The major rating agencies
unanimously confirmed the issuer ratings of the Groupe Caisse d’Epargne and the CNCE following the launch of the New Foundations
project and the acquisition of Compagnie Financière Eulia and CDC IXIS. They also hailed the sustained improvement in the Group’s
financial performance as reflected in its financial strength ratings. On May 17, 2004 Moody’s announced that it was to upgrade the
CNCE’s financial strength rating from B- to B. The Group’s long-term issuer ratings – AA Fitchratings/Aa2 Moody’s/AA Standard &
Poor’s with a stable outlook in each case – continue to be amongst the highest of all French banks. Taking advantage of these
excellent ratings, in September 2004 the CNCE carried out a €780 million issue of deeply subordinated notes and received
subscription requests worth almost €1.5 billion in one day alone – three times more than the expected €500 million. With these
notes, the CNCE also secured the lowest spread ever achieved in the institutional euro market.
Continuing the trend observed in previous years, and against a background of record low interest rates the economic environment
that emerged in 2004 fuelled a move in customer deposits and savings towards life insurance policies and mutual funds for the
Groupe Caisse d’Epargne and other major retail banks. At the same time, new lending levels remained extremely buoyant,
particularly for property loans, which led the Group to place even greater emphasis on liquidity management within its future
development objectives.
In the new-look structure resulting from the agreement to give a new foundation to its partnership with the CDC, the Group’s
refinancing operations have been organized into three separate segments as part of efforts to step up management and coordination
at the level of the CNCE:
– commercial Banking (excluding Crédit Foncier): the CNCE is responsible for obtaining the financing required to develop the
operations of the individual Caisses d’Epargne and the Commercial Banking subsidiaries. As head of the Group, the CNCE is also
tasked with covering any residual funding requirements that may arise in the other segments. Group issues of subordinated or
deeply subordinated notes are also carried out through the CNCE, allowing the Group’s capital funds to be optimized;
– the Crédit Foncier de France sub-group: the two specialist issuers within this segment are Compagnie de Financement Foncier and
Vauban Mobilisations Garanties (VMG), whose activities are primarily tailored to refinancing property loans and loans to local
authorities through the issuance of covered bonds (obligations foncières). The scope of these entities’ operations will be gradually
extended beyond the Crédit Foncier sub-group to the Group’s Commercial Banking activities as a whole, through a series of
intercompany asset transfers. A number of successful test transfers were performed at the end of 2004.
– Investment Banking: IXIS CIB is responsible for refinancing its own capital markets and corporate financing operations.
■
95
In 2004 the Group was the largest private French issuer of bonds or similar securities thanks to issues carried out by the CNCE,
Compagnie de Financement Foncier, VMG and IXIS CIB.
In the Commercial Banking segment (excluding Crédit Foncier), the CNCE continued to pursue a measured policy of raising the funds
needed to develop its operations at optimum cost while ensuring a suitable diversity of instruments, investors and geographic areas:
– the CNCE further expanded its alliance with the European Investment Bank (EIB) to encompass very long-term projects. As well as
funding small- and medium-sized investments by local authorities (€400 million) and investments by SMEs through the Group’s
lease financing subsidiaries (€100 million), a €250 million contract was signed in connection with the Sustainable Urban Transport
Program aimed at financing regional public transport projects. An amount of €100 million has already been paid out in accordance
with this contract under a thirty-year loan.
– individual customers of the Caisses d’Epargne subscribed to more than €1.5 billion worth of long-term (12-year) subordinated notes.
– shorter-dated notes issues were largely taken up by international institutional investors in Europe, the United States and Asia.
Investors in the US had greater access to short-term commercial paper issued by the CNCE (with an average maturity of less than
three months in 2004) thanks to the increase in the ceiling of the US commercial paper program from US$2 billion to USD$5 billion.
At the same time, the EMTN program was a resounding success with institutional investors in Europe and Asia.
The Group’s overall liquidity position and the positions of each individual entity are monitored by the CNCE. Annual financing plans
cover the long-term requirements of Group entities based on their projected needs. The use of short-term financing is subject to
quotas per entity depending on the Group’s ability to raise short-term funds in the capital markets.
■
3 – Overall interest rate risk
The Assets & Liabilities Management department factors in the consequences – in terms of volumes and net banking income – of
shifts in savings between deposits and life insurance and securities-based products, and uses the modeling applied for implicit options
whose methodological principles are based on the socio-economic characteristics specific to the customer catchment area in which
each Group entity operates.
The management of overall interest rate risk takes advantage of the Group’s decentralized commercial banking structures: entities
are responsible for managing their own risk exposures, while ALM for the Group as a whole is coordinated at the level of the CNCE.
The close-knit organization of these two levels of management helps to optimize financial management throughout the Groupe
Caisse d’Epargne.
96
■
The approach adopted by the Groupe Caisse d’Epargne’s Commercial Banking subsidiaries to measure interest-rate risk varies
according to the timeframe involved:
– for a medium-term analysis, the Group uses a so-called “dynamic” approach to measure the sensitivity of earnings to fluctuations
in interest rates and activity, notably using simulations;
– for a long-term analysis, where the use of forecasts is no longer appropriate, a so-called “static” approach is used based on a gap
analysis using outflow assumptions for outstandings.
The specific organization of the Commercial Banking division also means that knowledge about foreseeable customer behavior
specific to each individual Caisse d’Epargne bank can be better factored into the analysis. The Group applies a proprietary
methodological approach developed by the CNCE and shared by all entities, backed by a shared financial planning software package
in use at all the individual Caisses d’Epargne since 2001. This unique tool also feeds data into a regular reporting system, affording
the CNCE a consolidated view of its overall interest rate exposure and enabling it to simulate outcomes at Group level. This
information is particularly useful for the Group’s ALM Committee. This multi-disciplinary committee includes representatives from all
Group entities (the CNCE, individual Caisses d’Epargne and French subsidiaries) and meets every quarter to analyze the Group’s overall
sensitivity to interest rate risk and changes in liquidity positions. It also recommends hedging policies taking into account commercial
strategy and any additional financial market transactions that may be required.
Group overall interest rate exposure
In the Group’s configuration in 2004, significantly influenced by the weighting of its Commercial Banking operations, particular
attention is paid to mismatch risks and the sensitivity of earnings to changes in interest rates. For the individual Caisses d’Epargne,
a uniform 1% fall in interest rates at December 31, 2004 (based on short- and long-term rates and inflation) would lead to a reduction
in net banking income over a three-year period of close to €145 million, or 2.2% of current levels of net banking income. Such a fall
would only increase the operating efficiency ratio by 1.4 points. Excluding inflation, the impact on net banking income in 2007 would
be a reduction of €248.5 million, or 3.8% of current net banking income and a rise of 2.4 points in the operating efficiency ratio.
Q
■
97
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4 – Credit risk management
During the last quarter of 2004, the Group reorganized and retooled its credit analysis and credit/counterparty risk departments. The
credit analysis department is tasked with the upstream analysis of counterparties and transactions which go beyond the remit of the
decision-making powers of the individual Caisses d’Epargne or their subsidiaries’. The credit/counterparty party risk department is
responsible for setting up a mechanism for tracking credit risk and ensuring that internal rating systems are used correctly throughout
the Group. These two departments cover all entities within the Groupe Caisse d’Epargne, including the Investment Banking division
(IXIS CIB) and the various entities making up the Commercial Banking division (the individual Caisses d’Epargne, CFF, Banque
Sanpaolo, OCEOR, etc.).
4.1 Credit analysis department
The credit analysis department is built around three core teams, dealing with major counterparties, private equity and country risk
analysis. The department is tasked with:
– supporting the Group in its development by improving its control of credit risk;
– ensuring that regulatory requirements are built into any credit analysis and managing these requirements;
– assisting the Group Risk Management department and providing assurance to senior management that existing credit risk exposures
properly reflect the interests of the Groupe Caisse d’Epargne.
To this effect, the department is primarily responsible for:
– analyzing and rating eligible counterparties, private equity investments and country risks for the Group Risk Management
department;
– setting up and coordinating Group Committees dealing with credit risk;
– informing Group entities of decisions taken by these Committees regarding credit risk exposure limits, and ensuring their
implementation.
4.2 Credit risk department
The credit risk department was created in the last quarter of 2004 and is structured around three key units:
– A unit tasked with implementing and managing the Fermat system, with a view to rolling out credit risk management software to
the entire Groupe Caisse d’Epargne during 2005, by
• defining counterparty risks on a case-by-case basis;
• managing credit exposure limits;
• taking account of new requirements under Basel II regarding probability of default, loss given default and capital adequacy.
– A second unit responsible for credit risk reporting and monitoring. This unit was set up in 2004 using the existing self-assessment
tools, but in 2005 will be able to base its work on data obtained from Fermat, Priskor and the centralized automated risk
management database.
– A third unit responsible for ratings, which develops and maintains credit scoring systems. This unit was reorganized in the last
quarter of 2004.
4.3 Credit risk assessment and management
In 2004 the Group developed application scores and scorecards aimed at gauging risks as and when exposure arises, as well as
behavioral scores for anticipating and tracking their development. In parallel, credit risk assessment mechanisms will draw on these
new data inputs to fine-tune and guide monitoring measures and strengthen risk control.
Effective credit scoring systems were developed and rolled out to the Group’s various entities during the year. These ratings will
enhance and reinforce risk management and control from 2005 within the Group as a whole and its component entities. The
integration of these data is reflected in the 2005 user needs report drawn up for the Fermat software.
Risk exposure limits are set for major counterparties (banking, insurance, corporates, securitizations, etc.). The limits inherent to
commercial banking operations are managed by each entity. In 2005, steps will be taken to fix exposure limits at Group level for
commercial banking operations on the basis of new data inputs such as ratings, probability of default, loss given default and capital
adequacy. The system for setting exposure limits for major counterparties will also be harmonized across the Group.
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■
4.4 Analysis of the Group’s lending portfolio at December 31, 2004
4.4.1 – Major counterparties
Based on the scope of analysis, banks and financial institutions account for 39% of loans outstanding, owing to the substantial portion
of off-balance sheet dealings with these counterparties. Corporates account for 33% of outstandings and securitizations 19%, relating
mainly to CFF and IXIS-ICIB (see Table 1 below).
France represents 40% of loan commitments, other European Economic Area countries 42% and North America 10%. Within the
European Economic Area, Germany represents 11%, the UK and Italy 7% each, and Spain 5% (see table 2).
28% of the portfolio analyzed is rated AAA, reflecting the large portion of sovereign lending and securitizations, and 80% is rated Aor above due to the relatively large proportion of banks and financial institutions (see table 3).
Analysis of Group outstandings by type of counterparty (table 1)
Sovereign borrowers
Banks and financial institutions
Securitizations
Corporates
Total
Balance
sheet
Off-balance
sheet
Total
%
9,787
30,243
22,307
44,823
2,250
25,379
4,692
2,522
12,037
55,622
26,999
47,345
8.5%
39.2%
19.0%
33.3%
107,160
34,843
142,003
100.0%
1) Scope: Groupe Caisse d’Epargne (29 individual Caisses d’Epargne)/IXIS/CFF/Banque Sanpaolo/DABF/Muracef/Eulia
Caution/Saccef/Ecureuil Assurances IARD/Socfim excluding OCEOR based on standardized data.
2) Balance sheet: securities, loans, authorizations, equities.
3) Off-balance sheet: method for calculating exposures:
– IXIS: economic method,
– other Group: fixed-percentage method.
Analysis of outstandings by geographic area (table 2)
France
Other European Economic Area countries
North America (US and Canada)
Other European countries
Central and South America (including Mexico)
Supranational
Asia (excluding Japan)
Pacific
Japan
Africa/Middle East
Total
Balance
sheet
Off-balance
sheet
Total
%
47,619
43,870
9,746
1,408
1,803
377
1,231
582
390
134
9,481
16,187
4,819
1,966
630
1,478
54
77
147
4
57,100
60,057
14,565
3,374
2,433
1,855
1,285
659
537
138
40.2%
42.3%
10.3%
2.4%
1.7%
1.3%
0.9%
0.5%
0.4%
0.1%
107,160
34,843
142,003
100.0%
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99
Analysis of Group outstandings by rating (table 3)
Rating
Balance
sheet
Off-balance
sheet
Total
% Group
rating
Cumulative
% Group
rating
AAA
AA
A
BBB
BB
B
C
D
Sub-total
Other ratings (1)
26,629
18,310
20,804
17,118
2,258
1,102
186
85
86,492
20,668
6,846
13,310
8,765
1,357
215
1
0
0
30,494
4,349
33,475
31,620
29,569
18,475
2,473
1,013
186
85
116,986
25,017
28.6%
27.0%
25.3%
15.8%
2.1%
0.9%
0.2%
0.1%
100.0%
28.6%
55.6%
80.9%
96.7%
98.8%
99.8%
99.9%
100.0%
107,160
34,843
142,003
Total
(1) Includes counterparties rated by Basel II scoring systems or exclusively by specialist IXIS scorecards.
Analysis of Group “corporate” outstandings by sector
100
■
Balance
sheet
Off-balance
sheet
Total
%
Real estate
Automotive/auto equipment manufacturers
Telecom operators
Utilities
Insurance
Agri-foodstuffs
Materials
Retail
Business services
Pharmaceutical industry
Media (press, TV, cinema)
Construction/public works
Chemical industry
Airline companies
Heavy goods equipment
Tourism
Specialized retailing
Luxury goods
Aeronautical industry
Oil companies/equipment manufacturers
Sub-total
5,642
4,656
3,079
2,935
2,257
1,983
1,872
1,808
1,463
1,238
1,147
1,016
990
939
928
881
868
826
695
607
35,830
77
237
36
166
822
2
14
59
9
9
45
1
13
15
4
6
13
16
26
83
1,653
5,719
4,893
3,115
3,101
3,079
1,985
1,886
1,867
1,472
1,247
1,192
1,017
1,003
954
932
887
881
842
721
690
37,483
12.1%
10.3%
6.6%
6.5%
6.5%
4.2%
4.0%
3.9%
3.1%
2.6%
2.5%
2.1%
2.1%
2.0%
2.0%
1.9%
1.9%
1.8%
1.5%
1.5%
79.2%
Total
44,823
2,522
47,345
100.0%
Analysis of loans and provisions by segment
The proportion of non-performing loans in total customer outstandings remained relatively stable in 2004, representing only 2.8%.
47% of loans classified as non-performing were covered by specific provisions. “Dynamic” and industry-based provisions also
provided further coverage of €427 million at end-2004.
Retail banking
Specialized markets
Major accounts and other
Customer loans
■
2003
Net loans
outstanding
Performing
loans
Non-performing
loans
92.9
47.4
31.7
100.8
48.9
40.3
2.3
1.9
0.8
172.0
190.0
5.0
2004
Provisions
Net loans
outstanding
Provisioning
rate
(1.0)
(0.9)
(0.1)
102.1
49.9
41.0
43.5%
47.4%
12.5%
(2.0)
193.0
40.0%
5 – Market risks
All the entities of the Groupe Caisse d’Epargne are included in the scope of analysis of market and fund-related risks (mutual funds
and non-regulated funds, excluding private equity funds). These entities are divided into two main divisions: Investment Banking and
Commercial Banking, comprising the regional Caisses d’Epargne, the Group’s specialized subsidiaries (Crédit Foncier de France, Banque
Sanpaolo, Financière OCEOR), and the CNCE.
As of the summer of 2004, the market and fund-related risks department – which reports to Groupe Caisse d’Epargne Risk
Management – took a series of measures to restructure and strengthen its teams. A target risk management process was established
in a bid to set up a secure mechanism for monitoring market risks, and resulted in the launch of a number of projects. These measures
should be finalized by the end of 2005.
The section below provides an overview of the target system’s general structure and a description of the progress made during the
past year.
5.1 General structure of the target process for managing market risks
Upstream operations: providing a risk management framework for new products
The target process is essentially rooted in a detailed upstream definition of authorized instruments and in the creation of a specific
committee dedicated to approving new products. The purpose of these two complementary procedures is to ensure that any new
financial products used or new financial operations launched benefit from an appropriate level of operational security and comply
with applicable groupwide risk policies and procedures.
Monitoring and control operations: setting up global, standardized tools for measuring market and fundrelated risks
This aspect of the process is aimed at creating a mechanism for analyzing exposures at both Group and local level, based on uniform
indicators calculated using standardized methods applied by all Group entities. Steps are being taken to monitor risk exposure on a
daily basis using the VaR (Value at Risk) measurement tool for proprietary transactions carried out by Group entities, backed by regular
stress tests and rolled down in the form of operational risk indicators for each entity.
Management operations: setting risk exposure limits
This phase involves defining and assessing a series of risk exposure limits based on risk indicators used by the Group and local
entities. Global exposure limits must be consistent with the limits specific to each entity and each risk factor, and should be rolled
down right to the level of the member of staff performing the transaction.
Reporting operations: ensuring complaince with the principles set
The procedure of reporting on market risks is designed to enable the Group to compare the nature of the positions taken and the
related risk exposure with the pre-defined exposure limits and operating principles, and thereby determine whether the risks incurred
are consistent with the Group’s risk management policy.
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101
5.2 Review of procedures
Operational guidelines of the New Products and Financial Operations Committee were drafted in late 2004, together with a list of
authorized products, and are currently in the process of being validated by the relevant Group bodies. Pending their approval, an
exceptional validation procedure involving both Group Risk Management and Group Financial Management came into operation as
from mid-2004 for transactions carried out by the individual Caisses d’Epargne involving new products.
For the mutual fund segment, a review was carried out of the authorization criteria applicable to Group entities when purchasing
units in funds. Guidelines containing seven newly revised criteria were relayed to the entities in mid-December 2004.
Funds that do not meet the eligibility criteria are subject to an exceptional procedure which is also described in the guidelines
published in December 2004.
5.3 System for assessing market risks and managing exposure limits
Individual Caisses d’Epargne and Group subsidiaries (excluding IXIS CIB)
Structure of the project relating to risk exposure limits
The project concerning exposure limits for market risks is primarily based on gross operating income and VaR indicators in order to
take into account the following two main types of risks to which the Group is exposed:
– the potential variability of earnings and net interest margin for all activities;
– the sensitivity of the market value of securities and the related hedging transactions, particularly securities held in the trading
portfolio.
The definition of the segments to which an exposure limit mechanism such as VaR should be applied is based on the distinction
between short-term proprietary activities and securities transactions carried out with the aim of managing mismatch for the
individual Caisses d’Epargne. A global VaR for proprietary activities and securities transactions is nevertheless computed on a daily
basis for management and control purposes. These overall limits will be reflected in a VaR assigned to each entity, and then rolled
down in the form of operational guidelines to support traders in their work.
Exposure limits applicable at end-2004 for the Groupe Caisse d’Epargne (excluding IXIS CIB)
The previous exposure limit framework established by the CNCE still applies. It is essentially geared to fixing a celiling for equities
based on the level of excess funds generated by commercial banking activities and the available capital of each entity, and defining
a stop loss limit regarding portfolio diversification.
Each entity has set up its own risk monitoring system. At end-2004, Group Risk Management identified the different indicators used,
based on an analysis of current market risk reporting by local entities.
Specific funds-based exposure limits exist for fund managers, and VaR is capped at €5 million for the isolated open positions and
trading portfolio, based on a 1-day holding period and a 99% confidence level.
Review of tools and methods
The Scénarisk project was launched in 2004, aimed at providing the Groupe Caisse d’Epargne with a tool for assessing, monitoring
and controlling market risks at Group and local levels. This project plays a lynchpin role within the Group’s target market risk
management process. With a view to capitalizing on the experience acquired by IXIS CIB and on existing risk infrastructure, the Group
endorsed the use of the Scénarisk calculator, which had been in operation for ten years at IXIS CIB and was validated as an internal
model by the French Banking Commission (Commission Bancaire) in 1997.
Scénarisk makes it possible to move from a self-assement of VaR to a daily calculation drawing on proven, standardized
methodologies based on econometric models common to both of the Group’s divisions (Investment Banking and Commercial
Banking). As from 2005, the project will reduce the number of self-assessments by overhauling the way in which data is input into
the risk management software.
During 2004, the Scénarisk software came into operation at the CNCE and the market and fund-related risk team was given training
on how to use the tool and on the underlying methodologies. Functional specifications were drawn up for systems used to report to
the Group (financial platform and other systems used by the subsidiaries) so that the software could be fed with inputs on Group
positions. At the end of 2004, the first VaR estimations were generated for the isolated open positions and trading account portfolio
based on inputs of raw data, pending the finalization of a secure data inputting process scheduled for the first half of 2005.
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As an example, the estimated VaR for a one day holding period and a 99% confidence level using Scénarisk (excluding IXIS CIB) for
the isolated open positions and trading account portfolio at December 31, 2004, based on currently available data, is approximately
€1.3 million, and therefore within the limit of €5 million set by the Groupe Caisse d’Epargne for this particular segment.
Daily VaR calculations were performed for mutual funds and similar instruments. At December 31, 2004, the Group’s mututal fund
positions (excluding IXIS CIB), in the held-for-sale portfolio reflect a VaR of approximately €14 million based on a one-day holding
period and a 99% confidence level.
A mechanism for tracking fund movements on a daily basis makes it easier to identify any exposure overruns by fund managers and
any positions not commensurate with the Group’s new investment criteria.
Corporate and Investment Banking (IXIS CIB)
Since April 1, 2004 , 1-day 99% VaR for IXIS Corporate & Investment Bank’s trading portfolios have averaged €15.9 million and hit a
maximum of €20.3 million – in line with exposure limits set by the Group of €20 million (average consumption) and €25 million
(immediate consumption).
The main stress tests performed on positions held at December 31, 2004, yielded the following data concerning the impact on the
income statement in absolute value terms:
Variation in interest rates
(EUR + 40 bps, GBP + 80 bps, USD + 60 bps, other currencies + 60 bps):
€78.5 million
Variation in volatility of rates
(homothety of + 50%):
€10.9 million
Variation in paper/swap spreads
(+ 35 bps on AA and above; + 90 bps elsewhere):
Variation in indices/equities
(+25 %):
Variation in index/equity volatility
(homothety of + 20% for ST, + 10% for LT):
€470.2 million
€95.6 million
€100.7 million
Credit derivatives
At December 31, 2004, the credit derivatives portfolio represented an overall notional amount of €51.7 billion, comprising credit
default swaps, credit linked notes and credit-linked loans. The portfolio broke down into a credit risk call position of €28.2 billion and
a credit risk put position of €23.5 billion. The market risk generated by these instruments (underlying spread risk) is captured in the
customary Value-at-Risk measures.
Issuer credit risk (default risk) is measured using Amerisc, an internal credit risk management tool, which authorizes netting between
credit derivatives and securities with similar characteristics (i.e. similar management intention, maturity, seniority etc.), where
necessary. Amerisc also assesses counterparty risk resulting from the Group’s relations with its subcontractors (off-balance sheet risk).
Credit derivative positions are subject to specific adjustments designed to reflect uncertainties affecting certain illiquid or not-easilyhedgeable parameters – mainly the recovery rate. Customary adjustments are also applied to counterparty risk (statistical risk where
anticipated losses are subject to adjustments).
(1) Month in which the aggregate VaR limit applicable to IXIS Corporate & Investment Bank was set.
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Notional amounts of the credit derivatives portfolio at December 31, 2004
(excluding intercompany transactions)
Position/type of regulatory portfolio
Banking
Trading
Total
Credit risk call
– up to 1 year
– from 1 to 5 years
– more than 5 years
2,014
10
44
1,960
26,136
2,455
13,306
10,375
28,150
2,465
13,350
12,335
Credit risk put
– up to 1 year
195
23,346
2,584
13,502
7,260
23,541
2,584
13,697
7,260
Overall position
– up to 1 year
2,209
10
239
1,960
49,482
5,039
26,808
17,635
51,691
5,049
27,047
19,595
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195
6 – Operational risk
As an extension of the preliminary work carried out during 2003, in 2004 the Groupe Caisse d’Epargne launched a project
encompassing all Group entities, chiefly aimed at:
– developing operational risk management and monitoring tools for Group entities;
– enhancing risk control mechanisms;
– optimizing the long-term allocation of capital funds;
– ensuring compliance with the new capital adequacy directive (Basel II) which will come into force in 2006-2007.
To this end, during the first six months of 2004 the Groupe Caisse d’Epargne:
– set the methodology to be used groupwide for identifying and assessing operational risks. By the end of June 2005, entities will
be expected to have assessed the (potential) financial harm or reputational damage associated with risk events, and to have
evaluated the effectiveness of the controls currently in place;
– developed CartRisK, a tool designed to help identify and assess operational risk. This tool is adapted to the risk and business profile
of each Group entity, while remaining compatible with the risk classifications prescribed by the Basel Committee;
– set up an operational risk management unit within the Group. The 68 structures, entities and independent business lines as defined
by Basel II have been asked to appoint an operational risk officer to head their operational risk management efforts. The first task
of these operational risk officers is to draw up and develop risk mapping procedures within their entity in line with the program
implemented at national level;
– carried out an initial assessment of existing controls by using a Group questionnaire based on a questionnaire sent to all banks by
the French Banking Commission. The questionnaire was adapted prior to being used in order to reflect the specific context of the
Groupe Caisse d’Epargne. A similar study was launched at the end of 2004 for the Corporate and Investment Banking business;
– strengthened the operational risk management department – which reports to Group Risk Management – following the merger
between the CNCE and IXIS. This department is responsible for monitoring operational risk management projects and assisting Group
entities in their work. The operational risk management department is fronted by a senior manager, who is in charge of four risk
managers and an IT team of three people tasked with the development, adaptation and maintenance of operational risk
management tools (CartRisK for risk assessments and ORiS for managing incidents and risk indicators);
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– organized the first phase in the risk mapping project, based on information provided by Group entities indicating the timeframe for
identifying and assessing operational risk (either during the second half of 2004 or the first half of 2005).
The project moved into its operational phase in September 2004, when eleven Group entities began to organize procedures for
performing risk assessment work. The preliminary tests have been completed and are being presented to the management boards
of the entities concerned. Prior to this, a range of action points was undertaken in conjunction with the entities in order to verify the
quality of the ratings and the consistency of the results (for comparable entities). Discussions were also held to exchange opinions
and information on internal risk management tools and action plans. At the same time, these steps enabled the Group to hone the
operational risk management framework, to finetune methodologies and to affirm the guidelines set by Group Risk Management.
Since November, eight other entities have begun similar projects and are presently finalizing their assessments and consolidating the
preliminary results.
This program is scheduled to run throughout the first half of 2005 for the other entities, based on tools that are:
●
identical for the individual Caisses d’Epargne and their IT groups;
●
specific for other entities, based on their particular businesses. This concerns mainly:
– entities which have already embarked on similar projects, in which case the available relevant information should be entered
into the system and updated where appropriate, and controls already in place should be leveraged (e.g. Capital Markets, Asset
Management and Banking and Securities Services businesses carried out by ICIB, IAM and IIS, respectively);
– entities from the Insurance business, for which a specific taskforce has set up an operational risk management framework for
all or some of these entities;
– smaller subsidiaries, requiring a specifically tailored approach.
Various other large-scale projects will also be launched in the forthcoming year in close collaboration with Group entities. They
include:
●
preparing and assisting with the roll-out of ORiS, an incidents and warning indicator management tool used by Corporate and
Investment Banking since June 2003. The initial work aimed at defining the methods for rolling out this tool began in the fourth
quarter of 2004. The underpinning functions of ORiS are to report incidents, trigger specific prevention mechanisms or limitation
plans, monitor warning indicators and obtain risk management reports;
●
strengthening the structures in place used to monitor, analyze and manage risks and action plans through existing or newly-formed
Committees. In particular, a Group Operational Risk Management Committee is to be set up in the first half of 2005, responsible for
the following main cross-functional tasks:
– recommending a groupwide operational risk management policy, for adoption by the Group’s Risk Management Committee;
– validating the relevant operational risk management methodologies and tools;
– ensuring the effectiveness of the controls put in place by Group entities and the extent to which they comply with Group policies,
applicable regulations and market practices;
– monitoring operational risks at Group level in conjunction with the risk management departments of each business line and other
risk management specialists.
– carrying out the preliminary simulations for allocating capital in connection with operational risk, using the standard approach.
Group Risk Management and Group Management Control are currently working to prepare these initial calculations. When the tools
subsequently become operational, the enhanced Group model featuring data inputs relating to risks, incidents, indicators, and
standardized major risk scenarios will serve to strengthen the Group’s overall risk control mechanism and will help it to implement
best risk management practices.
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105
Risk coverage through insurance
IXIS Corporate & Investment Bank used its global insurance program to maintain exhaustive risk coverage in 2004 via policies with
leading insurers. During the year it was able to renew all necessary insurance cover acquired on the market.
Following an analysis of risk exposures and prevention measures, the Group took out a number of insurance policies designed to
cover the significant impacts of fraud, embezzlement, property damage and liability issues regarding the Company and its
employees.
These policies concern the following risks:
– damage to premises and their contents, including IT and telephone equipment. These assets are insured for their replacement value;
– professional liability and fraud. These risks are covered based on the best offers available on the market. Compensation covers
financial losses sustained as a result of fraud or corporate liability for damage caused to third parties as a consequence of
professional misconduct;
– loss of business, providing compensation for financial consequences suffered as a result of material loss or damage.
Forms of third-party liability other than professional liability are also covered by insurance policies as appropriate. Examples of such
types of liability concern operational risks (personal injury, property damage or consequential loss caused to a third party), Company
officers (the financial consequences of claims made against officers resulting from personal misconduct for which they may be held
civilly, personally or jointly and severally liable) and motor vehicles. The insured amount per claim for operating third-party liability
risks exceeds €7.5 million.
At the end of 2004, the Group took over certain insurance policies relating to the businesses transferred by CDC IXIS. In the light of
these transfers, and the impact of events which occurred during the year relating to certain insurance brokers, the Group intends to
carry out an analysis to ensure that it has a consistent and fully-optimized insurance program in place. To this end, existing coverage
levels and guarantees are set to be reviewed during 2005 in light of new insurance solutions available on the market.
■
7 – Ongoing controls
On December 1, 2004, the CNCE set up an “Ongoing Control” unit, which takes in the following two departments:
● Group Ethics and Compliance (created on April 1, 2004);
● Economic Security and Money Laundering Prevention (created on February 1, 2004).
This new “Ongoing Control” unit is primarily responsible for promoting the set up of a groupwide compliance function as defined by
Rule 97-02 (currently being revised), anchored around four recommendations:
● audit, compliance and risk functions should be clearly separated;
● a full-time manager should be appointed to front each of these functions;
● the head of compliance should report to the Chairman of the Management Board or the CEO;
● the function should group together four core competencies: compliance, ethics, economic security, and money laundering
prevention.
This new unit will also be involved in:
● drafting groupwide and business-specific policies and standards;
● rolling out a “second-level” audit based on risk mapping and identified control points, and compiling a procedures manual.
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7.1 Ethics and compliance
Looking ahead to new requirements expected to be issued by the Basel II Committee and the French Banking Commission and to
the planned amendment to Rule 97-02, the Group created an Ethics and Compliance department in March 2004. A Group policy dated
December 2, 2004, set out the general principles regarding the organization and remit of compliance units within Group entities and
stated that all such units report to the CNCE’s Ethics and Compliance department.
The compliance function is responsible for:
● identifying, protecting and safeguarding customers’ interests, as well as for ensuring the due and proper nature of transactions;
● overseeing that transactions carried out comply with the relevant regulations;
● performing an upstream validation of procedures regarding their compliance with applicable laws, regulations and professional
standards;
● approving new commercial products before their launch;
● setting up control imperatives (second-level compliance audits on controls and procedures).
In terms of Group organization, this involves:
● appointing a CNCE-approved person to head the compliance function within each Group entity. This had already been
accomplished at end-2004. In the Group’s main banking subsidiaries, this person must be dedicated full-time to compliance
issues;
● designating business representatives for compliance issues at all levels of the Group, including the CNCE;
● persons in charge of compliance reporting to the Management Board (or Senior Management) and to the Chairman of the
Supervisory Board (or Board of Directors). For the CNCE, this reporting process is carried out by the head of the Ongoing Control
unit, which oversees the Ethics and Compliance department.
7.2 Anti-money laundering efforts
The prevention of money laundering and terrorist financing is at the heart of the Group’s corporate ethos. Over the past few years,
branch staff, managers and senior executives have received training and attended workshops on these issues, to help transform the
abstract notions set out in legislation and banking regulations into concrete realitites.
Confirming the fully-fledged status of the “Anti-money laundering” unit within the Group, in 2004 the number of suspicious activity
reports submitted by Group entities to Tracfin increased 21% to 1,092. The unit brings together experts with both an extensive
knowledge of the banking environment and a commitment to safeguarding the interests of the general public and the Group’s
reputation.
Some 100 employees coordinate anti-money laundering efforts, including around 60 at the 29 Caisses d’Epargne in Metropolitan
France. During the year, these banks saw their anti-money laundering capabilities advance and come to fruition.
First, the Group fine-tuned its system for tracking cross-border movements of funds. Since the completion of its filtering system
project, the Group is able to ensure that incoming and outgoing funds are screened in order to prevent anyone appearing on a list
of terrorist suspects entering into the network’s funds circuit. These efforts are deployed on a daily basis in real time by anti-money
laundering officers in conjunction with the CNCE. This tracking has been extended to monitoring new customer relationships,
testifying to the Group’s unflinching commitment to combat terrorist financing. Thanks to these procedures, a secure network has
become the prerogative of all account managers.
Second, the Group is developing a system designed to monitor customer funds and operations and trigger warnings of suspicious
activity. Thanks to this project – spanning 2005 and 2006 – the Group will have excellent monitoring and control procedures in place
in this domain.
The shared structures already in place within the Groupe Caisse d’Epargne have proved ideally suited to the pooled information
procedures required to deal with these sensitive areas. The Economic Security and Money Laundering Prevention Department at CNCE
has drawn up a series of procedures to ensure that it has real-time access to information, and providing for a joint decision-making
procedure in the most serious cases. The Department intends to develop these rules further in 2005 and to draft the related formal
procedures.
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107
of Groupe Caisse d’Epargne at December 31, 2004, 2003 and 2002
ASSETS
Notes
2004
2003
2002
Cash, money market and interbank items
7
186,517
161,665
155,917
Customer items
8
188,501
129,919
116,572
Lease financing
9
3,867
2,647
2,085
Bonds, shares and other fixed- and variable-income securities
10
114,008
56,584
54,891
Investments by insurance companies
32
1,644
672
482
Investments in unconsolidated subsidiaries,
affiliates accounted for by the equity method
and other long-term investments
11
4,603
3,165
2,994
Tangible and intangible assets
13
4,123
2,835
2,716
Goodwill
17
879
372
173
Accruals, other accounts receivable and other assets
15
39,769
22,816
21,303
543,911
380,675
357,133
Total assets
OFF-BALANCE
SHEET COMMITMENTS
Notes
2004
2003
2002
Financing commitments
19
56,068
30,428
27,639
Guarantee commitments
19
17,034
18,424
15,924
719
510
256
3,561
1,012
1,184
Commitments given
Commitments made on securities
Commitments given by the insurance business
The attached Notes form an integral part of the consolidated financial statements.
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Consolidated financial statements of Groupe Caisse d’Epargne
LIABILITIES,
CAPITAL FUNDS AND RESERVES
Notes
2004
2003
2002
7
91,364
76,878
76,763
Customer items
8
214,103
181,202
170,089
Debts represented by a security
14
142,579
75,061
67,571
Technical reserves of insurance companies
33
1,106
482
366
Accruals, other accounts payable and other liabilities
15
64,948
25,202
23,880
Negative goodwill
17
35
52
60
Provisions for liabilities and charges
16
3,375
3,036
3,128
Subordinated debt
18.3
7,714
4,153
2,179
Reserve for General Banking Risks
18.2
2,488
2,400
2,107
Minority interests
18.4
665
1,921
1,692
Consolidated capital funds and reserves
(excluding Reserve for General Banking Risks)
18.1
15,534
10,288
9,298
5,018
2,601
2,873
878
199
0
7,853
6,372
5,473
Capital
Additional paid-in capital
Consolidated reserves and retained earnings
Net income for the year
Total liabilities, capital funds and reserves
OFF-BALANCE
1,785
1,116
952
543,911
380,675
357,133
SHEET COMMITMENTS
Notes
2004
2003
2002
19
6,197
5,837
4,703
19
13,151
8,950
7,812
3,574
1,404
482
501
77
23
Commitments received
Commitments made on securities
Commitments received by the insurance business
The attached Notes form an integral part of the consolidated financial statements.
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109
Consolidated profit and loss account
of Groupe Caisse d’Epargne for 2004, 2003 and 2002
Notes
Interest and similar income
Interest and similar expense
Income from shares and other variable-income securities
Net commission and fee income
Net gains on trading transactions
Net gains on held-for-sale portfolio transactions and similar items
Other net operating income
Gross margin on insurance business
21
21
22
23
24
25
26
34
Net banking income
2002
17,637
(13,805)
183
2,995
1,332
417
36
177
16,648
(12,726)
150
2,136
487
400
83
69
16,913
(13,507)
179
1,975
583
260
135
45
8,972
7,247
6,583
27
(6,113)
(397)
2,462
(4,749)
(314)
2,184
(4,462)
(312)
1,809
28
(246)
(306)
(357)
Net gains/(losses) on fixed assets
2,216
11
29
Exceptional items
Tax on profits
Allocations to the Reserve for General Banking Risks
Minority interests
31
17
18
The attached Notes form an integral part of the consolidated financial statements
216
(20)
2,412
30
Consolidated net income (excluding minority interests)
■
2003
Depreciation and amortization of tangible and intangible assets
Operating income
110
2004
75
(538)
(30)
(74)
(60)
1,785
1,878
1,452
155
75
151
45
2,108
1,648
(54)
(503)
(15)
(294)
(126)
1,116
(9)
(435)
(38)
(156)
(58)
952
Notes to the consolidated
financial statements of Groupe Caisse d’Epargne
for the year ended December 31, 2004
NOTE 1 – LEGAL
AND FINANCIAL FRAMEWORK
1.1 Legal and financial framework
The individual Caisses d'Epargne et de Prévoyance together form a financial network around a central institution, the Caisse Nationale
des Caisses d'Epargne et de Prévoyance. The Groupe Caisse d’Epargne consists of a varied body of subsidiaries contributing to the
proper management and enhanced sales performance of the network of mutual savings banks, as well as that of the full-service
bank. A national federation (Fédération Nationale des Caisses d'Epargne et de Prévoyance) was set up pursuant to the Act of July 1,
1901, governing non-profit-making associations. The missions of the Federation are specified in article L.512-99 of the French
Monetary and Financial Code.
• Caisses d’Epargne et de Prévoyance
The Caisses d'Epargne et de Prévoyance are structures approved as cooperative banks governed by ordinary law whose capital is held
by local savings companies. The Caisses d’Epargne et de Prévoyance are limited liability companies (sociétés anonymes) having the
status of credit institutions operating as ordinary banks. Their capital is divided into shares of capital stock.
• Local savings companies
The regionally based local savings companies are cooperative structures having an open-ended capital stock owned by cooperative
shareholders. The mission of the local savings companies – within the framework of the general objectives defined by the individual
Caisses d’Epargne to which they are affiliated – is to coordinate the cooperative shareholder base. They are not entitled to carry out
banking business.
• The Caisse Nationale des Caisses d'Epargne et de Prévoyance (CNCE)
The central institution of the Groupe Caisse d’Epargne as defined by French banking law and a financial institution approved as a bank
is the CNCE, a limited liability company (société anonyme) with a two-tier management structure (Management Board and
Supervisory Board) whose capital is held by the individual Caisses d'Epargne and the Caisse des dépôts et consignations.
More particularly, the CNCE represents the different Caisses d'Epargne et de Prévoyance, defines the range of products and services
offered by them, organizes the adequacy of depositors' protection, approves the appointment of the senior managers of the Caisses
d'Epargne, and generally supervises and controls the proper management of the various entities within the Group.
In respect of the Group's financial functions, the CNCE is responsible, in particular, for the centralized management of any surplus
funds held by the individual Caisses d’Epargne and for proceeding with any financial transactions useful for the development and
refinancing of the network; it is responsible for choosing the most efficient operator for these assignments in the greater interest of
the network whose financial stability is guaranteed by the CNCE.
• Subsidiaries
French subsidiaries
Following the acquisition of CDC IXIS, the CNCE directly controls the subsidiaries resulting from the merger with Compagnie Financière
Eulia and the reorganization of the IXIS division. The French subsidiaries belong to two major divisions:
– Commercial banking activities: Crédit Foncier, Financière Océor, Banque Sanpaolo and the subsidiaries specialized in retail banking
and insurance;
– Investment banking activities: IXIS CIB, IXIS Asset Management Group, IXIS Investor Services and CIFG.
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111
Specialized IT subsidiaries
The processing of customer transactions is carried out by a banking system organized around three IT application platforms which
supervise and manage the target information system and a central IT organization (CNETI).
Local subsidiaries of individual Caisses d’Epargne
The individual Caisses d'Epargne et de Prévoyance may have their own investments in local subsidiaries (Regional Development
Corporations, finance companies, etc.).
1.2 Guarantee system
Pursuant to the Act of June 25, 1999, the CNCE, acting as the central institution of the Groupe Caisse d’Epargne, has organized a
mutual guarantee and solidarity mechanism within the Group to guarantee the liquidity and solvency of the affiliated entities. The
scope of this guarantee system includes not only the entities belonging to the Caisses d’Epargne network as provided for by the 1999
Act but more generally all members of the Group, in accordance with article L.511-31 of the French Monetary and Financial Code.
The individual Caisses d’Epargne participate in the guarantee system through a Network Mutual Guarantee and Solidarity Fund (Fonds
de garantie et de solidarité du Réseau, FGSR), carried in the books of the CNCE and provided with an immediate intervention capacity
of €250 million. This amount is invested in a dedicated mutual fund. Should it prove insufficient, the Management Board of the CNCE
may call on appropriate additional resources further to a rapid decision-making process, which ensures timely action.
The purpose of this fund is to promote solidarity between the individual Caisses d'Epargne. It may be used by the CNCE, particularly
where it has to intervene on behalf of one of its affiliated entities and where the amount in question exceeds its financial capabilities.
In such a case, the intervention of the individual Caisses d'Epargne, organized via the FGSR, would also be accompanied by the
intervention of the Caisse des dépôts et consignations in its capacity as a shareholder and acting as an informed market investor.
The guarantee systems’ objective of averting default is complementary to the chiefly curative objective of the market guarantee
systems to which the Groupe Caisse d’Epargne also subscribes.
NOTE 2 – 2004 SIGNIFICANT EVENTS: REDEFINING THE PARTNERSHIP BETWEEN
THE GROUPE CAISSE D’EPARGNE AND THE CAISSE DES DÉPÔTS ET CONSIGNATIONS
2.1 Overview
On May 27 2004, the Groupe Caisse d’Epargne and the Caisse des dépôts et consignations signed the final agreement aimed at
redefining the nature of their partnership.
Under this agreement, the Caisse des dépôts et consignations transferred its 50.1% holding in Compagnie Financière Eulia and its
43.55% stake in its investment banking and asset management subsidiary, CDC IXIS, to the CNCE. The contribution of these assets
transforms the Groupe Caisse d’Epargne into a full-service bank in which the Caisse des dépôts et consignations has the status of a
strategic shareholder through its 35% interest in the CNCE alongside the individual Caisses d’Epargne.
The agreement provides a long-term foundation to the partnership between the two Groups, which have undertaken to maintain
their respective shareholdings in the CNCE until the time of any potential IPO. It also defines their respective roles within the new
entity:
– the CNCE, 65%-owned by the Caisses d’Epargne, has a strengthened threefold role: 1) its traditional role as the central institution
of the network for all of the companies within the extended Groupe Caisse d’Epargne; 2) that of central banker to the Group with
proprietary activities; and 3) that of holding company for the subsidiaries it owns directly. It will therefore directly manage the
Group’s retail banking operations as well as the investment banking business.
– the Caisse des dépôts et consignations has confirmed its role as a strategic shareholder of the CNCE and a long-term investor by
taking over the proprietary portfolios of CDC IXIS (listed equities, private equity and real estate).
The financial structuring of the operation led the 29 individual Caisses d’Epargne in metropolitan France to issue €3.3 billion worth
of Cooperative Investment Certificates (CICs) to the CNCE, giving the CNCE a 20% stake in their capital. As a result, both the CNCE
and the Caisse des dépôts et consignations have an interest in the banking operations of the individual Caisses d’Epargne, the former
directly and the latter indirectly through its stake in the CNCE.
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2.2 Operations carried out
Prior to any restructuring operations, the New Foundations agreement provided for the transfer to the Caisse des dépôts et
consignations or its directly-controlled subsidiaries, of CDC IXIS’ portfolio of listed equities, its securities, property and private equity
portfolios, and certain investments. The following entities were therefore removed from the Groupe Caisse d’Epargne’s scope of
consolidation: CDC Entreprises 1 and 2, CDC Innovation 96, Electropar France, Fondinvest, Part’Com, 65 % of CDC IXIS Private Equity,
now known as CDC Entreprises Capital Investissement, Société Foncière des Pimonts, Logistis, Sogeposte and AIH BV.
The true restructuring transactions were carried out either successively or simultaneously at June 30, 2004, as set out below:
– the CNCE carried out a €64 million capital increase which was taken up by the Caisse des dépôts et consignations, as payment for
the latter’s transfer of a 23.66% interest in CDC IXIS Italia Holding, which in turn holds a 2% stake in Sanpaolo IMI;
– the Caisse des dépôts et consignations sold to the Caisses d’Epargne, its entire direct interest in CDC IXIS – representing 43.55% of
the latter’s capital – for a price of €3,209 million;
– the Caisses d’Epargne transferred to Compagnie Financière Eulia the IXIS shares acquired from the Caisse des dépôts et consignations.
The transfer was funded by a €3,209 million capital increase;
– Compagnie Financière Eulia was merged into the CNCE, in return for a €5,065 million capital increase taken up by the Caisses
d’Epargne and the Caisse des dépôts et consignations;
– the Caisses d’Epargne acquired CNCE shares from the Caisse des dépôts et consignations for an amount of €982 million in order to
maintain the previous capital ownership structure within the CNCE (65% for the individual Caisses d’Epargne and 35% for the Caisse
des dépôts et consignations);
– each of the 29 individual Caisses d’Epargne in Metropolitan France issued Cooperative Investment Certificates (CICs) to the CNCE
representing 20% of their capital after the issue. The Cooperative Investment Certificates granted to the CNCE represented a total
amount of €3,323 million.
After carrying out these operations, in the second half of the year the CNCE proceeded to reorganize the activities of the CDC IXIS
Group into three core divisions:
– Corporate and investment banking activities consisting of capital market and corporate finance activities carried out by CDC IXIS
Capital Markets (now IXIS CIB). On November 1, 2004, the corresponding assets, liabilities and off-balance sheet commitments
carried on the books of CDC IXIS were transferred to IXIS CIB;
– Asset management activities grouped together in the holding company IXIS Asset Management Group;
– Custody, fund management and investor services are carried out by IXIS Investor Services which was set up on December 31, 2004,
via a contribution of equity interests and the spin-off of the business previously carried out directly by CDC IXIS.
At the end of the year, Sanpaolo IMI reallocated its 3.45% minority holding in CDC IXIS across the new core business activities.
Sanpaolo IMI now has a 2.45% holding in IXIS CIB and a 12% stake in IXIS Asset Management Group.
Following completion of this operation, CDC IXIS was merged into the CNCE.
2.3 Impact on the consolidated financial statements
Following completion of the operations relating to the New Foundations agreement, the subsidiaries of Compagnie Financière Eulia
previously controlled jointly with the Caisse des dépôts et consignations are now controlled exclusively by the Groupe Caisse
d’Epargne via the CNCE. These subsidiaries, fronted by the CDC IXIS Group, are now fully consolidated within the Groupe Caisse
d’Epargne.
In terms of the consolidated profit and loss account, the results of these subsidiaries for the first half of the year are accounted for
by the proportional consolidation method based on the situation of joint control applicable up to June 30, 2004. Their second-half
results are fully consolidated, as exclusive control was exercised as from said date.
The cost of the 43.55% interest in IXIS acquired directly from the Caisse des dépôts et consignations was €3,209 million. The shares
acquired indirectly by the CNCE through its merger with Compagnie Financière Eulia were valued in the merger balance sheet at net
book value. In the consolidated financial statements, however, they have been valued at the fair value specified in the merger
agreement. In consequence, a consolidation adjustment was booked for their acquisition cost for an amount of €846 million.
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Provisional net goodwill on the additional interests acquired by the Group amounted to €263 million. This amount may be adjusted
based on the results of detailed valuations of all the assets and liabilities acquired. Any such adjustments will be made on the basis
and within the maximum period prescribed by standard CRC 99-07.
Based on preliminary analyses, the majority of goodwill is expected to be allocated to the corporate and investment banking division.
To enhance comparability, pro forma consolidated financial statements are presented in Note 35 in order to reflect the Group’s assets and
liabilities, financial position and results had the operations relating to the New Foundations agreement taken place on January 1, 2002.
2.4 Termination of indemnity clauses granted in connection with the “Alliance” transactions
Pursuant to their agreement to merge a number of their activities within the “Alliance”, signed towards the end of 2001, the Groupe
Caisse d’Epargne and the Caisse des dépôts et consignations decided to grant each other reciprocal indemnity clauses to cover certain
possible future developments. The most significant particular clauses concern the occurrence of certain events, namely:
– a substantial change in the value of the listed securities portfolio contributed to the Alliance via CDC IXIS;
– a significant change in the performance of the intermediation activity of the Finance Division contributed to the Alliance by the
CNCE;
– the realization of potential capital gains by the Crédit Foncier Group.
The New Foundations agreement signed in May 2004 provided for the early termination of these clauses by June 30, 2004 in return
for the payment to the CNCE of:
– an indemnity of €32 million recognized in net banking income as part of the mechanism for hedging the value of the portfolio of
CDC IXIS listed securities;
– a global indemnity for an amount of €100 million in respect of the last two clauses, recorded under exceptional items.
NOTE 3 – PRINCIPLES
AND METHODS OF CONSOLIDATION OF THE
GROUPE CAISSE D’EPARGNE
3.1 Principles
The consolidated financial statements of the Groupe Caisse d’Epargne are drawn up in accordance with the principles laid down by
Rules 99-07 and 2000-04 of the French Accounting Regulatory Committee.
3.2 Methods and scope of consolidation
The consolidated financial statements include the accounts of the Caisses d'Epargne and all subsidiaries and associated companies
over which the Group exercises a controlling or significant influence. Note 6 specifies the scope of consolidation of the Groupe Caisse
d’Epargne.
• Full consolidation
The accounts of companies under exclusive control – including companies having a different account structure whose principal
activities represent an extension of banking or finance or which are involved in related activities – are carried in the accounts as fully
consolidated subsidiaries. “Exclusive control” is the power to determine the financial and operating policies of a company, and is
based either on the direct or indirect ownership of the majority of voting rights or on the power to appoint a majority of the members
of the Board of Directors or, alternatively, derives from the right to exercise a dominant influence by virtue of a management contract
or clause in the company’s articles of association.
• Proportional consolidation
Companies that the Group jointly controls with other partners are consolidated on a proportional basis. “Joint control” means shared
control over a company involving a limited number of associates or shareholders, such that the company’s financial and operating
policies are determined by agreement between those partners.
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• Equity method
Companies over which the Group exercises significant influence are accounted for by the equity method. “Significant influence” is
defined as the power to participate in determining the financial and operating policies of a company without necessarily having
control.
• Specific case of ad hoc entities
When the Group, or a company within the Group, by virtue of a contract or clause in the company’s articles of association, controls
an entity, this entity is consolidated, even in the absence of any capital links.
The criteria for determining control of ad hoc entities, defined as structures created specifically to manage one or a number of
operations on a company’s behalf, are based on the power to manage the entity’s day-to-day activities or assets, the capacity to
benefit from all or most of its income and on exposure to substantially all of the risks to which the entity is exposed.
• Exclusions from the scope of consolidation
A company controlled by, or subject to significant influence from the Group is excluded from the scope of consolidation when the
shares of this company, from the moment they were first acquired, are held exclusively with a view to their subsequent sale, when
the Group's ability to control or influence a company is impaired in a substantial and durable manner, or when it is faced with limited
possibilities for transferring assets between such companies and the other entities included in the consolidated Group.
A subsidiary or investment may be excluded from consolidation when it is impossible to obtain the information required to establish
the consolidated accounts without excessive expense or within a timeframe compatible with the publication of the consolidated
financial statements.
A company may also be excluded from consolidation when, taken alone or with other companies capable of being consolidated, it
is not material in relation to the Group as a whole.
Investments in such companies appear under the heading "Investments in unconsolidated subsidiaries".
3.3 Changes in the scope of consolidation
Besides the operations carried out in connection with the New Foundations agreement described in Note 2, the main changes to the
scope of consolidation result from the revised definition of the Group consolidating entity and the new structure of the Crédit Foncier
Group.
• Changes in the consolidating entity
Since January 1, 2004, the Group consolidating entity has been made up of 31 individual Caisses d’Epargne which now also include
the CNCE. Further details concerning this revised definition of the consolidating entity are set out in Note 5. The impact of this change
was taken into account for the purpose of preparing the pro forma consolidated financial statements of the Groupe Caisse d’Epargne
presented in Note 35.
• Consolidation of the Entenial Group
Effective January 1, 2004, the Entenial Group, which is 99.9%-owned by the Crédit Foncier Group, is fully consolidated within
consolidated Groupe Caisse d’Epargne. The total cost of the shares was €587 million, generating a provisional amount of negative
goodwill of €7 million, which was immediately taken to income for the period. In order to enhance comparability, the pro forma
consolidated financial statements prepared by the Groupe Caisse d’Epargne have backdated the inclusion of the Entenial Group within
the scope of consolidation to January 1, 2002.
• Public tender offer followed by a compulsory buy-out procedure (“OPR-RO”) launched by the CNCE
for Crédit Foncier shares
This operation, which took place in the fourth quarter of 2004, generated goodwill of €37 million in the Group’s consolidated financial
statements.
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• Acquisition of the Cicobail Group by the Crédit Foncier Group
In the first half of the year, Auxiliaire du Crédit Foncier de France acquired a 60% stake in Cicobail from Compagnie Financière Eulia,
thus acquiring complete control of this company and its wholly-owned subsidiaries, Cinergie and Mur Ecureuil. This internal
restructuring operation had no material impact on the consolidated financial statements of the Groupe Caisse d’Epargne.
3.4 Consolidation adjustments and eliminations
The consolidated financial statements of the Groupe Caisse d’Epargne are drawn up in conformity with Rule 99-07 of the French
Accounting Regulatory Committee.
These regulations require that:
– accounting methods used by the various companies included in the consolidation should be consistent. The principal consolidation
methods are described in section 4 of these Notes to the consolidated financial statements;
– certain valuation methods shall be used when drawing up the consolidated financial statements that are not used in the individual
financial statements of each company. These accounting methods chiefly relate to:
– finance lease transactions including leases with purchase options where the Group is the lessor;
– assets leased under finance or similar leases where the company is the lessee;
– certain accounting entries that result from tax regulations;
– deferred tax.
• Finance lease transactions including leases with purchase options where the Group is the lessor
Finance lease transactions including leases with purchase options are accounted for in the individual financial statements of Group
companies according to strict legal definitions. French banking regulations recognize that such transactions are, in substance, a
method of financing and, accordingly, require that they be restated in the consolidated financial statements to reflect their true
underlying economic significance.
Consequently, in the consolidated financial statements, finance leases where the Group is the lessor are accounted for as financing
transactions, with the rental considered as a repayment of principal plus interest.
The excess of the outstanding principal over the net book value of the leased assets is included in consolidated reserves, net of the
related deferred tax effect.
• Assets leased under finance or similar leases where the company is the lessee
Fixed assets acquired under finance or similar leases are restated on consolidation as if the assets had been acquired on credit.
• Accounting entries that result from tax regulations
On consolidation, accounting entries that result solely from tax regulations are eliminated.
The main items concerned are investment grants and regulated provisions when not included in the Reserve for General Banking
Risks for the presentation of the financial statements.
• Deferred tax
Deferred tax is accounted for in respect of all temporary differences between the book value of assets and liabilities and their tax
basis, as well as for timing differences arising from consolidation adjustments.
Items to be included in the computation of deferred tax are determined by the comprehensive method, i.e. all temporary differences
are considered, whatever the future period in which the tax will become due or in which the tax saving will be realized.
The rate of tax and fiscal rules adopted for the computation of deferred tax are based on current tax legislation and are applicable
when the tax becomes due or the tax saving is realized.
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Deferred tax liabilities and assets are netted off for each consolidated company (including the impact of any ordinary and evergreen
tax loss carryforwards). This netting process applies only to items taxed at the same rate and items that are expected to reverse in
a reasonably short period.
3.5 Elimination of intercompany transactions
The effect on the consolidated balance sheet and profit and loss account of inter-company transactions is eliminated on consolidation.
Gains or losses on intercompany sales of fixed assets are also eliminated except for sales where the lower selling price reflects the
economic value, in which case the lower price is retained.
However, gains arising on Caisses d'Epargne mergers completed at the time of the restructuring of the network between 1990 and
1993 have not been eliminated.
3.6 Goodwill
The “Goodwill” item represents the outstanding differences not attributed elsewhere on the balance sheet between the cost of the
investment and the book value of the underlying net assets at the date of acquisition of the related shares in consolidated subsidiaries
and associated companies.
Positive and negative goodwill is amortized over a pre-determined period, giving consideration to underlying assumptions and the
objectives of the acquisition.
3.7 Translation of financial statements expressed in foreign currencies
Balance sheets and off-balance sheet items of foreign companies are translated at year-end exchange rates (with the exception of
capital funds translated at historical rates) and profit and loss items are translated using an average annual rate. Any gains or losses
arising on translation are included in consolidated reserves under the heading “Translation adjustments.”
3.8 Consolidation method adopted for insurance companies
The Groupe Caisse d’Epargne includes seven insurance companies: Cegi, Ecureuil Assurances IARD, Foncier Assurance, Muracef, Saccef,
Socamab Assurances and the CIFG Group.
The interests held by the Group in Ecureuil Vie and the CNP Group are accounted for under the equity method.
The annual accounts of the insurance companies in the Groupe Caisse d’Epargne are drawn up in accordance with the provisions of
French insurance law and, where relevant, Rule 2000-05 of the French Accounting Regulatory Committee governing consolidation
policies for companies subject to French insurance law.
Pursuant to Rule 99-07 of the French Accounting Regulatory Committee, items listed in the financial statements of insurance
companies included in consolidation are presented in similar-type accounts of the Groupe Caisse d’Epargne balance sheet and profit
and loss account, with the exception of a number of specific items:
– in the balance sheet, “Investments by insurance companies” and “Technical reserves of insurance companies” are presented
separately;
– in the consolidated profit and loss account, “Gross margin on insurance business” is comprised of policy premiums received, claims
expenses that include changes in technical reserves and net income from investments.
Moreover, the amount of commitments given and received by the insurance companies included within the scope of consolidation
is carried on separate lines of the Group’s statement of off-balance sheet commitments.
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NOTE 4 – ACCOUNTING
POLICIES
The consolidated financial statements are prepared and presented according to policies defined by the CNCE and in conformity with
the rules laid down by the French Accounting Regulatory Committee (CRC) and the Banking and Financial Services Regulatory
Committee (CRBF), notably CRC Rule 99-07 governing consolidation policies and Rule 2000-04 governing the consolidated financial
statements of companies overseen by the Banking and Financial Services Regulatory Committee.
Balance sheet items are presented, where applicable, net of the related depreciation and any provisions or other value adjustments.
4.1 Fixed assets
Fixed assets are recorded at historical cost except for real-estate assets that have been revalued following the network mergers
between 1990 and 1993.
Depreciation is recorded on a straight-line or accelerated basis over the estimated useful lives of the assets, as follows:
–
–
–
–
–
Buildings: 20 to 50 years
Improvements: 5 to 20 years
Furniture and specialized equipment: 4 to 10 years
Computer equipment: 3 to 5 years
Computer software: up to a maximum of 5 years
In some circumstances, additional write-downs may be made.
4.2 Investments in unconsolidated subsidiaries and associated companies,
Investments in unconsolidated subsidiaries and associated companies are recorded at historical cost. At year-end, a provision for
impairment in value is made where necessary on a case-by-case basis if the fair value to the Group is below cost. The fair value of
equity interests is calculated, in particular, on the basis of their fair value to the Group (according to their strategic nature and the
Group’s intention to provide ongoing support to the investee and to hold the shares over the long term) and objective criteria (market
price, net assets, revalued net assets, projected items).
Other long-term investments are stocks and similar variable-income securities acquired to promote the development of lasting
professional relationships by creating close links with the issuing companies without, however, exercising an influence on the
management of these companies owing to the small percentage of voting rights represented by these holdings. Other long-term
investments are recorded at the lower of historical cost or fair value to the Group. “Fair value to the Group”, for listed or unlisted
securities, corresponds to what the company would be prepared to disburse in order to obtain these securities should it be necessary
to acquire them in pursuit of its investment objectives.
Provisions are systematically booked for unrealized capital losses, while unrealized capital gains are not recognized.
4.3 Securities transactions
Securities transactions are accounted for in conformity with Rule 90-01 (as amended) issued by the French Banking and Financial
Services Regulatory Committee.
Trading account securities are securities that, from the outset, are acquired or sold with a view to being resold or repurchased
within a short period not exceeding six months. Only securities negotiable on a liquid market, with market prices constantly accessible
to third parties, are deemed to be trading account securities. They may include fixed-income or variable-income securities.
Trading account securities are recorded at their purchase cost, including ancillary costs and accrued interest. At the balance sheet
date, they are marked-to-market and the net gain or loss is taken to the profit and loss account.
After they have been held for a period of six months, trading account securities are reclassified as "securities held for sale" or
"investment securities" depending on their definition and the conditions required for inclusion in each of the target portfolios. These
trading account securities are transferred at their market value on the day of transfer.
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Securities acquired with a view to being held for a period in excess of six months – without the institution being committed to holding
them until maturity in the case of fixed-income securities – are classified as securities held for sale.
At their date of acquisition, securities held for sale are carried in the balance sheet at original purchase cost, excluding ancillary costs.
In the case of money market instruments, the accrued interest at the date of their acquisition is included in their purchase cost.
Any differences between purchase price and redemption value (premiums or discounts) of fixed-income securities are taken to the
profit and loss account over the remaining life of the security. In the balance sheet, the book value of the security is gradually adjusted
in line with its redemption value, on a straight-line basis for fixed-income securities or using the yield-to-maturity method for money
market instruments.
Accrued interest on fixed-income securities is recognized in “Accrued interest” in the balance sheet, with a contra-entry to “Interest
and similar income” in the profit and loss account.
Securities held for sale are valued at the lower of their cost or probable market price. A provision is made for unrealized capital losses,
while unrealized capital gains are not recognized. Unrealized capital losses take account of any gains generated by hedging
instruments that may have been set up.
Capital gains or losses on the disposal of securities held for sale, as well as impairment charges and write-backs are recorded in “Net
gains/(losses) on held-for-sale portfolio transactions and similar items”. However, in the case of a recognized risk in relation to fixedincome securities, a provision is carried for non-performing loans in the profit and loss account under “Net additions to provisions”.
Investment securities are fixed-income instruments with a pre-determined redemption value, acquired with a view to long-term
investment, in principle until maturity. Securities satisfying this criterion may be classified as investment securities when, in
compliance with the provisions of the French Banking and Financial Services Regulatory Committee, they are subject to a specific
hedging transaction in terms of duration or rates.
Securities meeting the necessary criteria but originally included in the “held-for-sale” portfolio because the specific hedging
conditions related to duration and rates were not satisfied when the instruments were first acquired, are also included in the
"investment" portfolio.
Investment securities are recorded at the date of their acquisition in the same manner as securities held for sale. Securities that were
previously included in the "held-for-sale" portfolio are carried at their acquisition cost and any provisions previously set aside are
written back over the remaining life of the security. Any differences between the purchase price and redemption value of the
securities, as well as any related accrued interest, are recognized in accordance with the same rules as those applicable to fixedincome securities held for sale.
A provision for impairment in value may be recorded if it is highly probable that the entity will not hold securities until maturity
owing to changes in circumstances. If a default risks exists regarding the issuer, a provision is carried for non-performing loans in the
profit and loss account under “Net additions to provisions”.
Provisions for impairment in the value of securities held for sale and investment securities are supplemented by a provision for certain
counterparty risks (Note 16).
Portfolio equity investments are accounted for in conformity with Rule 90-01 issued by the French Banking and Financial Services
Regulatory Committee as amended by Rule 2000-02 of the French Accounting Regulatory Committee.
Portfolio activities consist in regularly investing a part of assets in an investment portfolio for the exclusive purpose of obtaining, over
a certain period of time, a satisfactory medium-term yield without the intention of making a long-term investment in developing the
business activities of the issuing companies or participating in their operational management.
In principle, portfolio investments are only made in stocks and similar variable-income securities.
Investments of this type must involve significant and permanent transactions carried out within a structured framework, generating
recurrent yields chiefly derived from capital gains on disposals.
At year-end, portfolio investments are recorded at the lower of historical cost or fair value to the Group.
“Fair value to the Group” is based on a consideration of the issuing company’s prospects and the remaining investment period. For
listed securities, the fair value is determined by the average market price over the past two years or the market value at year-end,
if greater. In the case of unlisted securities, valuation may be based on recent transaction prices.
Unrealized capital losses are systematically provided for. Unrealized capital gains are not recognized.
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Rule 89-07 of the French Banking and Financial Services Regulatory Committee, completed by Instruction 94-06 of the French
Banking Commission, defines the accounting rules applicable to repurchase agreements.
Assets sold under repurchase agreements are retained on the borrower's balance sheet while the proceeds, representing the debt
due to the lender, are carried as a liability.
The lender (who is the beneficiary of the collateral) shows the amount expended – i.e. the loan granted to the borrower – on the
assets side of their balance sheet.
When the financial statements are prepared, the assets sold and the debt due to the lender or the loan granted to the borrower, are
valued in accordance with the rules governing each of these transactions.
4.4 Customer loans
Customer loans are recorded at their nominal value net of any provisions for non-performing items.
Guarantees received are accounted for and described in Note 19. They are subject to periodic revaluations. The book value of all
guarantees received for a given loan is limited to the amount outstanding.
Loans are classified as non-performing – irrespective of whether or not they have matured or are guaranteed – where at least one
of the debtor’s commitments represents a recognized credit risk. A risk is “recognized” when it is probable that the bank will not
receive all or some of the sums due with respect to commitments made by the counterparty, notwithstanding the existence of a
guarantee or security. Loans are systematically classified as non-performing at the latest within three months of the first default (nine
months in the case of loans to local authorities).
Within the non-performing loan category, loans are classified as doubtful when no reclassification as performing loans is foreseeable.
Doubtful loans include loans where the outstanding balance becomes immediately repayable in application of an acceleration clause
and those which have been classified as non-performing for over one year, with the exception of loans whose contractual clauses
have either been complied with or which provide for guarantees in respect of their collection.
Irrecoverable loans are written off as losses and the corresponding provisions are released.
Non-performing loans are reinstated as performing loans when repayments resume on a regular basis in amounts corresponding to
the original contractual installments, and when the counterparty no longer presents a risk of default.
Loans restructured at below market rates are itemized in a specific sub-category until maturity. A provision is recorded for the discount
corresponding to the present value of the interest differential. This provision is recorded under net additions to provisions in the profit
and loss account and as a charge against the corresponding loan in the balance sheet. It is taken to the profit and loss account
(included in the lending margin) using the yield-to-maturity method over the life of the related loan.
Provisions for recognized probable losses cover all anticipated losses, calculated in terms of the difference between the principal still
outstanding and expected future cash flows. Exposure is computed on a case-by-case basis with regard to the present value of
guarantees received. For smaller loans with similar characteristics, a statistical method is used when this approach is deemed more
appropriate.
Specific provisions for recognized risks are supplemented by general provisions for certain counterparties (see Note 16).
Interest on non-performing loans continues to be accrued, with the exception of loans classified as doubtful, for which interest is not
recognized in accordance with French Accounting Regulatory Committee (CRC) Rule 2002-03.
For the presentation of the accounts in the Notes to the financial statements (Note 8.2), the breakdown of outstandings adopted is
that used within the Groupe Caisse d’Epargne for internal management purposes, notably in areas related to sales, finance and risks.
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4.5 Reserve for General Banking Risks
The Reserve for General Banking Risks constitutes a fund for the risks inherent in the Group’s banking activities as required by article 3
of Rule 90-02 of the French Banking and Financial Services Regulatory Committee and Instruction 86-05 (as amended) of the French
Banking Commission.
4.6 Bonds issued
Bonds issued by the Groupe Caisse d’Epargne are recorded on the liabilities side of the consolidated balance sheet at their redemption
value. Redemption premiums are amortized on a straight-line basis over the life of the bonds.
4.7 Employee benefits
Commitments in respect of employees are generally covered by contributions charged to the profit and loss account and paid to
retirement or insurance funds. Commitments which are not covered by these funds, in particular the Group’s potential pension
liabilities (Note 16) are fully provided for in liabilities. Lump-sum indemnities paid to employees upon retirement and bonuses related
to long-service awards are appraised in accordance with an actuarial calculation that takes account of the age, length of service and
probability of staff being employed by the Group at retirement age and of receiving long-service awards.
Pursuant to French National Accounting Board Recommendation CNC 2003-R-01, when preparing the opening IFRS balance sheet for
the Groupe Caisse d’Epargne, residual pension commitments and similar benefits should be recorded as a deduction from
consolidated capital funds and reserves, in accordance with the benchmark treatment.
The residual commitments in question were analyzed during the year and mainly relate to accrued paid leave based on length of
service, benefits granted to retired employees and the pension commitments of CGR (general retirement fund) with regard to the
provisions of the so-called “Fillon Law”.
4.8 Financial futures and other forward agreements
The Groupe Caisse d’Epargne conducts transactions on different over-the-counter or organized markets, with financial instruments
(futures and options) relating to interest rates, foreign exchange and equities.
Hedging and trading transactions in forward financial instruments relating to interest rates, foreign exchange or equities are
accounted for in accordance with French Banking and Financial Services Regulatory Committee Rules 88-02 and 90-15. Commitments
on such instruments are recorded in off-balance sheet accounts at their nominal value. At December 31, the amount of commitments
represents the transactions outstanding at the end of the financial year.
Methods for evaluating income generated on financial instruments depend on the operators' original intent.
Gains and losses on financial futures designed to hedge and manage Groupe Caisse d’Epargne entities' overall interest rate positions
are reflected in the profit and loss account over the life of the related instruments. Unrealized gains and losses are not recorded.
Gains and losses on hedging transactions are accounted for on a symmetrical basis and under the same heading as the loss or gain
on the hedged item.
Transactions corresponding to the specialized management of trading portfolios are valued on the basis of their year-end market
value taking account, if necessary, of counterparty risks and related future expense. The corresponding gains and losses are recorded
directly in the profit and loss account irrespective of whether or not they have been realized. Equalization payments are recognized
in income when the contracts are set up.
Gains and losses on certain contracts representing isolated open positions are recognized either when the position is unwound or
over the life of the instrument according to its type. Potential, unrealized losses determined by reference to market values are
provided for. Market values are calculated based on the nature of the markets concerned: organized exchanges (or equivalent) or
over-the-counter. Instruments traded on organized exchanges are quoted continuously and enjoy a sufficient degree of liquidity to
justify the use of quoted prices as market value.
■
121
Over-the-counter markets may be assimilated to organized exchanges when the institutions acting as market makers guarantee
continuous quotations within a realistic trading range or when the price of the underlying financial instrument is itself quoted on an
organized exchange. Market values of interest rate and currency swaps are determined as the present value of future cash flows
allowing for counterparty risks and the present value of related future expense. Changes in the value of non-traded futures are
determined according to a mathematical formula.
4.9 Transactions in foreign currencies
Spot foreign exchange transactions, forward exchange contracts and loans or borrowings denominated in foreign currencies are
reported as off-balance sheet commitments at the transaction date. These transactions are recorded on the balance sheet as soon
as the foreign currencies are delivered.
Assets, liabilities and off-balance sheet items denominated in foreign currencies, including accrued income and expenses, are
translated at year-end rates. Forward contracts are valued at market forward rates for the currency concerned.
Variances resulting, in particular, from the translation of investment securities, equity interests and investments in subsidiaries, as
well as the variances resulting from the consolidation of foreign offices are recorded under the heading “Accruals”.
Differences noted between the valuation of foreign exchange positions and that of the converted amounts, fluctuations in the value
of financial futures and other forward agreements and premiums relating to currency options are reported in the profit and loss
account of each financial year.
4.10 Provisions for liabilities and charges
This item covers provisions booked in respect of liabilities and charges not directly related to banking operations as provided for in
article L.311-1 of the French Monetary and Financial Code and associated transactions defined in article L.311-2 of that same law. The
nature of these liabilities and charges is clearly defined but their amount and date of payment cannot be determined precisely.
This item also covers provisions recorded to provide for liabilities and charges related to banking operations and associated
transactions as defined in articles L.311-1 and L.311-2 of the above-mentioned law, rendered probable by past or current events and
whose purpose is clearly defined, but whose effective occurrence remains uncertain.
This item includes, in particular, a provision for the Group’s potential pension liabilities and a provision in respect of counterparty risks.
4.11 Accounting policies and valuation rules specific to insurance companies
The accounting principles and valuation rules specific to insurance companies are adhered to in the consolidated accounts of the
Groupe Caisse d’Epargne.
• Investments
Investments are stated at cost, excluding acquisition expenses, except for investments corresponding to unit-linked policies, which
are marked to market at each closing. Technical reserves corresponding to such policies are similarly revalued.
A liquidity risk reserve, included on the liabilities side of insurance companies’ balance sheets, is set up when the realizable value of
equities, property and similar assets falls below their book value. The reserve created is equal to the difference observed between
these two valuations.
The realizable value of these investments is determined in accordance with article R.332-20-1 of the French Insurance Code, namely:
– equities listed on a stock exchange are valued at the last price on the closing day;
– values of equities not listed on a stock exchange are estimated according to the price at which they could be sold under normal
market conditions or their fair value to the company;
– shares in collective investment vehicles are valued at the last published bid price on the closing day;
– the realizable value of property and shares in unlisted property development companies is determined on the basis of appraisals
made by outside experts.
Provision is made for any permanent impairment in value of a property or equity investment.
122
■
The value of an asset is considered to be permanently impaired when at least one of the following criteria is met:
– the market value reflects a long period of generally depressed prices;
– the realizable value is so significantly below book value that the impairment in value can only be recovered in the long term;
– the type of asset is no longer adapted to market needs so that the yield from the asset is permanently impaired.
The difference between the acquisition cost of bonds and other fixed-income securities (excluding accrued interest) and their
redemption price is taken to the profit and loss account over the remaining life of the security. The yield-to-maturity method is used
for this calculation for fixed-rate securities and the straight-line method for variable-rate securities.
A provision is set up at each closing for any counterparty risk.
• Life insurance transactions
Income from insurance premiums on outstanding policies is recognized in the profit and loss account on an accrual basis including
an adjustment for accrued income on premiums not notified to policyholders at year-end (Group policies that include the cover for
mortality risks). In addition, premiums notified to the policyholder or to be notified are adjusted to account for the risk of termination
not yet notified to the company.
Technical reserves in respect of policies including a payment clause in the event of death correspond to the portion of premiums
written but not earned during the period.
Technical reserves for non-unit-linked policies represent the difference between the present values of the respective commitments
of the insurer and the policyholder. The insurer's commitment corresponds to the present value of the capital sum insured, adjusted
for the probability of payment, increased by the present value of the related management expense. The policyholder's commitment
is the present value of future premiums, adjusted for the probability of payment thereof.
A general reserve for management expense is made when future management expense is not covered by the loading included in
policy premiums payable or deducted from future income from assets.
When a remuneration is attributed to a policyholder in excess of a guaranteed minimum, due to income earned on assets, and such
amount is not yet payable nor included in reserves for claims payable or technical reserves, it is recorded under reserves for amounts
payable on with-profit policies.
The reserve for claims payable represents mainly insured losses that have occurred and capital amounts payable but not paid at the
year-end.
Technical reserves for unit-linked policies are determined according to the value of the underlying assets (known as “ACAV” or
"variable capital" policies, and "ACAVI" when expressed in terms of property units). Gains or losses resulting from the mark to market
of the underlying assets are netted off and recorded in the profit and loss account in order to neutralize the impact of variations in
the technical reserves.
• Non-life insurance transactions
Premium income is recorded net of tax and cancellations.
A reserve for increasing risks is set up to cover timing differences between the introduction of the guarantee and its funding by
insurance premiums.
The provision for unearned premiums includes for all policies outstanding at year-end, that part of the premium (notified to the
policyholder, or to be notified) corresponding to the period from the end of the current year to the next maturity date, or failing that,
the term of the policy.
The reserve for unexpired risks is calculated for each type of insurance activity when the level of claims and related expenses
experienced appears high in relation to unearned premium reserves.
Reserves are set up as required by the variations in claims experience in compliance with legislation regarding such reserves. This
applies notably to cyclical risks with varying impacts on successive years, such as occasioned by natural phenomena.
■
123
Reserves for claims represent the estimated amount of foreseeable expenses, net of any recoveries receivable.
Reserves for expenses related to the future management of claims are determined with reference to a rate calculated based on
historical actual costs.
Reserves are recorded among liabilities gross of any re-insurance. The projected share of re-insurers in relation to reserves made is
calculated according to re-insurance treaties in force and appears on the assets side of the balance sheet.
• Deferred acquisition costs
Deferred acquisition costs correspond to the fraction of policy acquisition expenses related to deferred premiums (provision for
unearned premiums).
In respect of the CNP Group, studies carried out on the capitalization of acquisition costs resulted in amounts whose impact on the
capital funds and reserves and consolidated net income is not material. Consequently, acquisition costs are not deferred.
NOTE 5 – CHANGE
IN ACCOUNTING METHOD
The New Foundations agreements clearly positions the Caisse des dépôts et consignations as a strategic partner of the Group through
the CNCE and the Cooperative Investment Certificates. The issue of the CICs was a determining factor in finalizing the agreements.
Accordingly, and in compliance with section 1001 of the French Accounting Regulatory Committee Rule CRC 99-07, the Group has
decided to include the central CNCE institution in its consolidating entity.
Effective January 1, 2004, the CNCE is included as part of the consolidating entity and is no longer considered a consolidated entity.
The Group’s stake in the CNCE has thus increased to 100% from 65% previously.
This increase in the Group’s percentage holding of the CNCE, and by extension of all of the CNCE subsidiaries, means that investments
previously classified as minority interests are now consolidated within the Group.
In order to enhance comparability, the pro forma consolidated financial statements prepared by the Groupe Caisse d’Epargne take
account of this change in accounting method (Note 35).
124
■
NOTE 6 – SCOPE
OF CONSOLIDATION AT
DECEMBER 31, 2004
Consolidating entity
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
Caisse
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
d’Epargne
des Alpes
d’Alsace
Aquitaine-Nord
d’Auvergne et du Limousin
de Basse-Normandie
de Bourgogne
de Bretagne
Centre-Val de Loire
Champagne-Ardenne
Côte d’Azur
de Flandre
de Franche-Comté
de Guadeloupe
de Haute-Normandie
Ile-de-France Nord
Ile-de-France Ouest
Caisse d’Epargne Ile-de-France Paris
Caisse d’Epargne Languedoc-Roussillon
Caisse d’Epargne Loire-Drôme-Ardèche
Caisse d’Epargne de Lorraine
Caisse d’Epargne de Martinique
Caisse d’Epargne de Midi-Pyrénées
Caisse d’Epargne du Pas-de-Calais
Caisse d’Epargne des Pays de l’Adour
Caisse d’Epargne des Pays de la Loire
Caisse d’Epargne des Pays du Hainaut
Caisse d’Epargne de Picardie
Caisse d’Epargne Poitou-Charentes
Caisse d’Epargne Provence-Alpes-Corse
Caisse d’Epargne Rhône-Alpes-Lyon
Caisse d’Epargne du Val de France Orléanais
Caisse Nationale des Caisses d’Epargne et de Prévoyance
■
125
Consolidated entities
2004
Consolidation
method (1)
%
consolidation
%
interest
Full
Full
Full
Full
Full
–
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
92.18%
96.59%
99.87%
67.00%
–
100.00%
89.77%
100.00%
79.83%
100.00%
100.00%
100.00%
89.76%
100.00%
100.00%
Full
Prop.
Equity
100.00%
49.98%
17.74%
100.00%
49.98%
17.74%
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Equity
Full
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
47.12%
100.00%
100.00%
100.00%
100.00%
100.00%
81.90%
95.80%
95.46%
97.50%
97.15%
88.24%
100.00%
95.43%
89.43%
47.12%
100.00%
81.87%
86.56%
84.39%
Direct subsidiaries
Banking and financial institutions
Banque Inchauspé
Batimap
Batimur
Batiroc Pays de Loire
Caisse d’Epargne Financement
Caisse Nationale des Caisses d’Epargne et de Prévoyance
Capitole Finance
Expanso
Picardie Bail
Sebadour
SDR Champex
SDR Sodler
Sodero
Sud-Ouest Bail
Tofinso
Tofinso Investissements
Holassure Group
Holassure
Sopassure
Caisse Nationale de Prévoyance
OCEOR Group
Financière OCEOR
Banque de la Réunion
Banque de Nouvelle-Calédonie
Banque de Tahiti
Banque des Antilles Françaises
Banque des Iles Saint-Pierre-et-Miquelon
Banque Internationale des Mascareignes
Caisse d’Epargne de Nouvelle-Calédonie
Credipac Polynésie
Crédit Commercial de Nouméa
Crédit Saint-Pierrais
Mascareigne Investors Services Ltd
Slibail Réunion
Société Havraise Calédonienne
GIE OCEOR Informatique
(1) Consolidation method, Full: Full consolidation; Prop.: Proportional consolidation; Equity: Accounted for by the equity method.
(2) Share in income prior to the “New Foundations agreement”.
126
■
First half
of 2004
Consolidation
method (1)
2003
2002
(2)
%
consolidation
%
interest
%
consolidation
%
interest
%
consolidation
%
interest
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.34%
91.81%
96.19%
93.14%
65.25%
65.00%
99.99%
89.77%
100.00%
–
99.19%
100.00%
100.00%
89.76%
98.82%
98.88%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.34%
91.81%
96.19%
93.14%
65.25%
65.00%
99.99%
89.77%
100.00%
–
99.19%
100.00%
100.00%
89.76%
98.82%
98.88%
–
–
–
–
–
–
–
–
–
100.00%
49.98%
17.85%
65.00%
32.49%
11.61%
100.00%
49.98%
17.85%
65.00%
32.49%
11.61%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
47.12%
100.00%
100.00%
100.00%
–
71.34%
58.22%
68.35%
68.10%
69.57%
69.17%
62.82%
71.34%
68.08%
63.80%
33.62%
70.63%
58.20%
61.75%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
47.12%
–
100.00%
100.00%
–
78.40%
62.73%
75.08%
74.78%
76.29%
75.88%
31.68%
78.40%
74.76%
70.09%
36.94%
–
62.71%
67.84%
–
■
127
2004
Consolidation
method (1)
%
consolidation
%
interest
Banque Sanpaolo Group
Banque Sanpaolo
Banque Michel Inchauspé
Conservateur Finance
Eurosic Sicomi SA
Uni – Invest SAS
Société Foncière Joseph Vallot
Sanpaolo Asset Management
Société Foncière d’investissement
Société immobilière d’investissement
Socavie SNC
Sanpaolo Bail SA
Sanpaolo Fonds Gestion SNC
Sanpaolo Mur SNC
Bail Ecureuil
Full
Equity
Equity
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
100.00%
20.00%
20.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
60.00%
12.00%
12.00%
19.66%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
Other entities
Auto Location Pau
Capitole Négoce
Cofismed
Ecureuil Proximité
Ecureuil Services
EURL Beaulieu Immo
Expanso Investissements
Groupe Ellul
Muracef
Primaveris
Proencia
Proxipaca
Samenar
SARL Méditerranée
SAS Foncière Ecureuil
SCI du Conservatoire
SCI Ecureuil Exploitation
SCI Ecureuil Réunion
SCI Foncière 1
SCI Foncière 2
SCI GPE
SCI GPE2
SCI Midaix
SCI Midi Patrimoine
SCI Midoccitane
SCI Tournon
SCI Avant Seine 1
SCI Avant Seine 2
Quai de Seine Gestion et Location
SNC Participations Ecureuil
Sodero Participations
Sodero Gestion
Sorepar
Walter Spanghero
–
Full
Full
Full
Full
Full
Full
Equity
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
48.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
66.69%
99.84%
100.00%
100.00%
99.55%
48.90%
100.00%
37.62%
52.61%
40.19%
38.38%
100.00%
93.52%
99.00%
99.99%
100.00%
93.52%
93.52%
100.00%
100.00%
99.00%
99.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
48.12%
100.00%
100.00%
100.00%
128
■
First half
of 2004
Consolidation
method (1)
–
–
–
–
–
–
–
–
–
–
–
–
–
Prop.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2003
2002
(2)
%
consolidation
%
interest
%
consolidation
%
interest
%
consolidation
%
interest
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
100.00%
20.00%
20.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
49.90%
39.00%
7.80%
7.80%
12.78%
39.00%
39.00%
39.00%
39.00%
39.00%
39.00%
39.00%
39.00%
39.00%
32.43%
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
–
–
–
32.43%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
49.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
–
–
100.00%
–
100.00%
100.00%
100.00%
100.00%
66.69%
99.83%
99.99%
100.00%
100.00%
49.00%
100.00%
40.19%
47.33%
40.19%
32.66%
100.00%
89.15%
99.00%
99.99%
100.00%
89.15%
89.15%
100.00%
100.00%
99.00%
99.00%
100.00%
100.00%
–
–
–
–
46.36%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
100.00%
49.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
–
–
100.00%
–
100.00%
100.00%
99.90%
100.00%
66.69%
99.83%
–
–
100.00%
49.00%
100.00%
40.19%
47.33%
40.19%
32.66%
100.00%
89.13%
99.00%
99.99%
100.00%
89.13%
89.13%
100.00%
100.00%
99.00%
99.00%
100.00%
100.00%
–
–
–
–
46.36%
–
100.00%
99.90%
■
129
2004
Consolidation
method (1)
IT technical centers and software houses
Arpège Investissement
Cnéti
CTCENO
CTICEP
CTIRCEAL
CTR Est
CTR Midi 1
CTR Midi 2
CTRCEAPC
CTRCEB
GEMO RSI
GIE Arpège
Girce Ingénierie
Girce Stratégie
Giretice
GT3I
IRICE
SED Arpège 2000
SED RSI
SNC Sersim
Vivalis
Vivalis Investissements
%
consolidation
%
interest
100.00%
100.00%
–
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
96.01%
–
–
–
–
–
–
–
–
100.00%
100.00%
99.73%
99.51%
–
–
100.00%
100.00%
100.00%
100.00%
–
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
100.00%
100.00%
65.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
66.00%
100.00%
Full
Full
–
–
–
–
–
–
–
–
Full
Full
Full
Full
–
–
Full
Full
Full
Full
–
Full
Formerly Compagnie Financière Eulia Group
Compagnie Financière Eulia
Direct subsidiaries
Ecureuil Assurance IARD
Ecureuil Participations
SNC SEI Logement
SNC SEI Tertiaire
Mifcos (formerly Socfim Participations)
Société Européenne d’Investissement
Ecureuil Vie
Gestitres
Holgest
–
Full
Full
Full
Full
Full
Full
Equity
Full
Full
130
■
First half
of 2004
Consolidation
method (1)
2003
2002
(2)
%
consolidation
%
interest
%
consolidation
%
interest
%
consolidation
%
interest
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
–
–
–
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
67.77%
–
–
98.31%
100.00%
100.00%
100.00%
–
–
–
100.00%
87.08%
87.38%
99.99%
–
99.87%
88.10%
88.10%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
59.00%
100.00%
100.00%
98.30%
99.98%
100.00%
99.97%
100.00%
100.00%
–
99.79%
87.08%
87.38%
100.00%
100.00%
99.87%
88.06%
88.10%
100.00%
99.99%
100.00%
Prop.
49.90%
49.90%
49.90%
32.43%
49.90%
32.43%
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Equity
Prop.
Prop.
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
50.00%
49.90%
49.90%
32.44%
49.90%
49.85%
49.85%
49.85%
49.85%
25.06%
28.29%
42.86%
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
25.06%
49.90%
49.90%
21.08%
32.43%
32.40%
32.40%
32.40%
32.40%
16.36%
18.39%
27.86%
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
25.06%
49.90%
49.90%
21.08%
32.43%
32.40%
32.40%
32.40%
32.40%
16.36%
18.39%
27.86%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
■
131
2004
Consolidation
method (1)
Formerly IXIS Group
IXIS (formerly CDC IXIS)
Anatol Invest (group)
CDC Entreprises 1
CDC Entreprises 2
CDC Innovation 96
IXIS Asset Management (group)
Ecureuil Gestion*
Ecureuil Gestion FCP*
IXIS AEW Europe (formerly CDC IXIS immo)*
IXIS Corporate and Investment Bank
CLEA2
IXIS Securities
IXIS Investor Services
IXIS North America
IXIS Capital Market North America
IXIS Funding Corp.
IXIS Commercial Paper Corp.
IXIS Securities North America Inc.
IXIS Financial Products Inc.
IXIS Municipal Products Inc.
IXIS Derivatives Inc.
IXIS Real Estate Capital Inc.
CDC Holding Trust
IXIS Securitization Corp.
BGL
IXIS Investment Management Corp.
IXIS Financial Guaranty (group)
CDC Entreprises Capital Investissement
IXIS Urquijo
Electropar France
Euromontaigne (group)
Foncière des Pimonts (group)
Fondinvest
IXIS Administration de Fonds
Logistis (group)
Magnant (group)
Martignac Finance
Nexgen (group)
PART’COM
Sogeposte
Véga Finance (group)
CDC IXIS Italia Holding
%
consolidation
%
interest
–
–
–
–
–
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
–
–
–
–
100.00%
–
–
100.00%
37.75%
–
–
100.00%
100.00%
–
–
–
–
–
73.90%
73.90%
73.90%
–
97.55%
97.55%
97.55%
100.00%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.23%
100.00%
35.00%
51.00%
–
–
–
–
100.00%
–
–
100.00%
37.75%
–
–
100.00%
100.00%
–
–
–
–
–
Full
Full
Full
–
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Equity
Prop.
–
–
–
–
Full
–
–
Full
Equity
–
–
Full
Full
* Entities consolidated on a proportional basis by the IXIS Asset Management Group.
132
■
First half
of 2004
Consolidation
method (1)
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
–
Prop.
–
Prop.
Equity
–
Prop.
Equity
Prop.
–
Prop.
Prop.
2003
2002
(2)
%
consolidation
%
interest
%
consolidation
%
interest
%
consolidation
%
interest
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
49.90%
49.90%
26.45%
26.45%
26.45%
26.45%
–
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
–
26.45%
–
26.45%
8.81%
–
26.45%
10.24%
26.45%
–
26.45%
33.40%
26.45%
26.45%
23.49%
9.76%
25.58%
21.16%
45.21%
45.21%
26.45%
26.45%
26.45%
26.45%
–
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
13.49%
13.23%
–
19.45%
–
26.45%
8.82%
–
26.45%
10.24%
26.45%
–
22.48%
33.40%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
49.90%
–
26.45%
26.45%
26.45%
26.45%
–
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
8.81%
–
26.45%
10.24%
26.45%
12.96%
26.45%
33.40%
17.19%
17.19%
16.47%
6.51%
16.62%
13.75%
29.39%
–
17.19%
17.19%
17.19%
17.19%
–
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
8.77%
8.60%
17.19%
12.64%
17.19%
17.19%
5.73%
–
17.19%
6.65%
17.19%
8.42%
14.61%
21.71%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
49.90%
–
26.45%
26.45%
26.45%
26.45%
–
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
8.81%
26.45%
26.45%
–
26.45%
12.96%
26.45%
33.40%
17.19%
17.19%
16.47%
6.51%
16.62%
13.75%
29.39%
–
17.19%
17.19%
17.19%
17.19%
–
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
17.19%
8.77%
8.60%
17.19%
12.64%
17.19%
17.19%
5.73%
17.19%
17.19%
–
17.19%
8.42%
14.61%
21.71%
■
133
2004
Consolidation
method (1)
%
consolidation
%
interest
Full
Full
Full
Full
Full
Full
Full
Full
Full
–
Full
Full
Full
Full
Equity
Equity
Full
Full
Full
Full
Equity
Full
Full
Full
Full
Equity
Full
Full
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
100.00%
100.00%
100.00%
27.63%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.98%
99.98%
99.88%
99.99%
–
100.00%
99.99%
99.99%
99.98%
100.00%
100.00%
99.99%
67.35%
67.35%
100.00%
35.00%
100.00%
79.88%
100.00%
100.00%
27.63%
100.00%
100.00%
100.00%
100.00%
100.00%
Cicobail Group
Cicobail
Cinergie
Mur Ecureuil
Full
Full
Full
100.00%
100.00%
100.00%
99.75%
99.75%
99.75%
Socfim Group
Socfim
Socfim Transaction
Socfim Participations Immobilières
Full
Full
Full
100.00%
100.00%
100.00%
99.91%
99.91%
99.91%
GCE Garanties Group (formerly Eulia Caution Group)
GCE Garanties (formerly Eulia Caution)
Cegi
Financière Cegi
Saccef
Socamab
Full
Full
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
40.00%
Crédit Foncier Group
Crédit Foncier de France
A3C
Auxiliaire du Crédit Foncier de France
Cofimab
Compagnie de Financement Foncier
Compagnie Foncière de Crédit
Crédit de l’Arche
Crédit Foncier Assurance Courtage
Crédit Foncier Banque
Dom2
FCC Teddy
Financière Desvieux
Foncier Assurance
Foncier Bail
Foncier Participations
SICP (group)
Soclim
CFCAL Banque
CFCAL SCF
Entenial
Capri Résidences
CFG Cie Financière de Garantie
Gramat Balard
Investimur
Quatrinvest
RIVP
Titrisation
VMG
Vendôme Investissements
Environnement Titrisation Entenial
Entenial conseil
134
■
First half
of 2004
Consolidation
method (1)
2003
2002
(2)
%
consolidation
%
interest
%
consolidation
%
interest
%
consolidation
%
interest
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
Prop.
Prop.
Prop.
Prop.
Equity
Equity
Prop.
–
–
Prop.
Equity
Prop.
Prop.
Prop.
Prop.
Equity
Prop.
Prop.
Prop.
Prop.
Prop.
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
–
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
–
–
75.05%
26.27%
75.05%
75.05%
75.05%
75.05%
20.74%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
74.96%
75.05%
–
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
75.05%
–
–
75.05%
26.27%
75.05%
75.05%
75.05%
75.05%
20.74%
75.05%
75.05%
75.05%
75.05%
75.05%
72.42%
–
72.42%
72.42%
72.42%
72.42%
72.42%
72.42%
72.42%
–
72.42%
72.42%
72.42%
72.42%
72.42%
72.42%
72.42%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
47.08%
–
47.08%
47.08%
47.08%
47.08%
47.08%
47.02%
47.07%
–
47.08%
47.07%
47.07%
47.07%
47.08%
47.08%
47.08%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
72.39%
–
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
72.39%
68.77%
72.39%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
47.06%
–
47.06%
47.06%
47.06%
47.06%
47.06%
47.00%
47.06%
47.06%
47.06%
47.05%
47.05%
47.05%
47.06%
44.70%
47.06%
–
–
–
–
–
–
–
–
–
–
–
–
–
Prop.
Prop.
Prop.
75.05%
75.05%
75.05%
64.87%
64.87%
64.87%
49.90%
49.90%
49.90%
32.36%
32.39%
32.39%
49.90%
49.90%
49.90%
32.36%
32.39%
32.39%
Prop.
Prop.
Prop.
49.90%
49.90%
49.90%
49.85%
49.85%
49.85%
49.90%
49.90%
49.90%
32.40%
32.40%
32.40%
49.90%
49.90%
49.90%
32.40%
32.40%
32.40%
Prop.
Prop.
Prop.
Prop.
Prop.
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
49.90%
19.96%
49.90%
49.90%
49.90%
49.90%
49.90%
32.44%
22.71%
22.71%
32.44%
12.98%
49.90%
49.90%
49.90%
49.90%
49.90%
32.44%
22.71%
22.71%
32.44%
12.97%
■
135
NOTE 7 – CASH,
MONEY MARKET AND INTERBANK ITEMS
2004
Assets
2003
2004
Liabilities
2003
Cash, central banks and post office banks
Financial institutions
Demand accounts
Term accounts
6,961
179,556
118,294
61,262
5,249
156,416
88,809
67,607
12
91,352
38,386
52,966
11
76,866
10,297
66,569
Total
186,517
161,665
91,364
76,878
The daily deposit with Caisse des dépôts et consignations of Livret A passbook deposits represented €64,876 million at December 31,
2004. Deposits with banks and related accrued interest amounted respectively to €2,255 million and €255 million at December 31, 2004.
Provisions for impairment in value relating to amounts due from financial institutions amounted to €26 million at December 31, 2004.
NOTE 8.1 – CUSTOMER
ITEMS
Assets
Commercial loans
Other customer loans
Short-term credit facilities
Equipment loans
Regulated home purchase loans
Other mortgage lending
Other loans
Current accounts in debit
Accrued interest
Non-performing loans
Provisions on
non-performing loans
Total
136
■
2004
2003
1,135
180,578
16,495
42,987
2,466
91,215
27,415
499
124,555
12,203
36,009
2,943
66,089
7,311
3,398
973
4,431
2,165
847
3,618
(2,014)
(1,765)
188,501
129,919
Liabilities
Regulated savings accounts
Livret A
Livret Jeune, Livret B and Codevi
Pel and Cel
Lep
Pep
Other
Other liabilities
Ordinary accounts (deposits)
Other
Accrued interest
Total
2004
2003
150,583
66,351
16,739
45,738
17,244
4,144
367
147,393
65,672
15,069
44,126
16,898
5,242
386
62,871
25,724
37,147
33,162
22,008
11,154
649
647
214,103
181,202
NOTE 8.2 – ANALYSIS
OF LOANS OUTSTANDING BY COUNTERPARTY AT DECEMBER
31, 2004
Loans and advances to financial institutions
Loans and advances to customers (1)
Individuals: property loans
Individuals: other
Self-employed professionals
SMEs
Local and regional authorities
Others
Performing
loans
Nonperforming
loans
Of which
doubtful
loans
186,505
189,953
72,078
15,810
10,858
8,718
27,386
55,103
19
2,099
603
343
241
347
30
535
14
2,480
521
293
380
446
8
832
Subtotal –
nonperforming
loans
Provision
33
4,579
1,124
636
621
793
38
1,367
(21)
(2,164)
(318)
(340)
(328)
(488)
(5)
(685)
(1) Including finance lease transactions comprising leases with purchase options where the Group is the lessor.
NOTE 9 – LEASE
FINANCING AND LEASES WITH PURCHASE OPTIONS (WHERE THE
GROUP
IS THE LESSOR)
Equipment
Property
Other finance leases
Accrued interest
Provisions
Total
2004
2003
729
2,869
319
100
(150)
3,867
537
1,898
252
67
(107)
2,647
The reserve not recorded in the individual books of the consolidated companies but which arises on consolidation, corresponding to
the excess of the outstanding principal over the net book value of the leased assets, is included in reserves net of deferred tax for
an amount of €46 million at December 31, 2004, compared with €26 million at December 31, 2003.
NOTE 10 – BONDS,
SHARES AND OTHER FIXED- AND VARIABLE-INCOME SECURITIES
Trading
account
Treasury bills and
similar securities
Bonds and other fixed
income securities (2)
Shares and other
variable income
securities (3)
Held Investment
for sale
Portfolio
activity
Accrued
interest (1)
Total
2004
Total
2003
10,492
456
435
–
17
11,400
4,496
27,326
22,279
24,790
–
669
75,064
41,291
17,072
10,245
–
225
2
27,544
10,797
Total 2004
54,890
32,980
25,225
225
688
114,008
–
Total 2003
15,033
19,418
20,736
772
625
–
56,584
(1) Including €371 million of accrued interest on investment securities, €316 million on securities held for sale, and €1 million on securities held in the
portfolio activity.
(2) Including listed securities: €36,392 million in 2004 against €38,072 million in 2003.
(3) Including listed securities: €13,328 million in 2004 against €3,517 million in 2003.
■
137
The aggregate difference between the acquisition price and the redemption price of fixed-income securities amounted to €68 million
in 2004, against €25 million in 2003 for securities held for sale, and €32 million in 2004, against €0.4 million in 2003, for investment
securities.
The amount of bonds and other fixed-income securities issued by public bodies stands at €8,543 million. Amounts receivable with
respect to securities lent increased to €1,072 million at December 31, 2004 from €912 million at December 31, 2003.
Over the past two years, the following transfers have been made between the different categories of portfolio:
Amount transferred
during the year
From
To
Trading account securities
Securities held for sale
Investment securities
2004
2003
639
–
–
40
470
–
20
1,023
Investment securities sold before maturity during the financial year totaled €879 million compared with €973 million in 2003.
Unrealized capital gains and losses on securities held for sale and securities in the portfolio activity can be analyzed as follows:
Net book value
Market value
Unrealized capital gains (1)
Unrealized losses provided for
Portfolio activity
2004
2003
2004
2003
33,296
35,611
2,315
185
19,629
20,384
755
158
226
238
12
31
783
973
190
161
(1) Including €138 million on Treasury bills and similar securities, €1,748 million on bonds and other fixed-income securities, and €429 million on shares
and other variable-income securities.
NOTE 11 – INVESTMENTS
IN UNCONSOLIDATED SUBSIDIARIES, AFFILIATES ACCOUNTED FOR BY THE EQUITY
METHOD AND OTHER LONG-TERM INVESTMENTS
Investments and shares in unconsolidated subsidiaries
Investments in affiliates accounted for by the equity method
Total
Of which listed securities
138
■
2004
2003
2,267
2,336
4,603
1,611
1,554
3,165
360
109
11.1 Investments in unconsolidated subsidiaries
Net book
value
in millions of euros
Sanpaolo IMI
Crédit Logement
Air Calin
Banca Carige
Veolia Environnement
Cepar 3 (1)
Cepar 2 (1)
Société des Eaux de Tontouta
Foncier Vignobles
Cepar 1 (1)
Subtotal
Other securities
Accrued interest and current accounts
Total
% interest held
by Group
companies
2004
2003
2004
2003
323
198
185
178
140
131
75
49
41
13
1,333
108
107
185
73
90
112
69
49
30
99
922
2.00%
15.49%
72.25%
9.50%
1.42%
100.00%
100.00%
75.22%
99.91%
100.00%
2.00%
15.49%
72.25%
9.82%
0.93%
100.00%
100.00%
75.22%
99.91%
100.00%
661
273
501
188
2,267
1,611
(1) The Cepar 1, Cepar 2 and Cepar 3 entities, entirely controlled by the Groupe Caisse d’Epargne, constitute intermediate structures created to hold securities
portfolios that cannot be consolidated and are covered by guarantees.
All of the credit institutions concerned exercised their option to exit the CEPAR structures: in 2004 from CEPAR1 and in January 2005 from CEPAR2
and CEPAR3.
11.2 Affiliates accounted for by the equity method
Caisse Nationale
de Prévoyance (group)
Ecureuil Vie
SICP (group)
CDC Entreprises Capital
Investissement
Nexgen Financial Holding
Other companies
Total
Net book value at
Dec. 31, 2004
Share in
affiliate’s
2004
net income
Net book value at
Dec. 31, 2003
Share in
affiliate’s
2003
net income
974
880
207
111
69
15
903
431
143
104
36
10
111
73
91
5
3
13
–
20
57
–
1
4
2,336
216
1,554
155
■
139
NOTE 12 – LOANS
AND ADVANCES OUTSTANDING AND SOURCES OF FUNDS BY MATURITY DATE
Up to
3 months
3 months
to 1 year
1 to
5 years
Over
5 years
Total
2004
Loans and advances
Loans and advances to financial institutions
Customer loans
Bonds and other fixed-income securities (1)
202,882
167,361
31,736
3,785
27,186
4,694
18,530
3,962
79,939
4,860
55,416
19,663
113,657
9,602
82,819
21,236
423,664
186,517
188,501
48,646
Sources of funds
Amounts due to financial institutions
Customer deposits
Debts represented by a security:
Retail certificates of deposit and savings certificates
Inter-bank and other negotiable debt instruments
Bonds issued
291,335
76,440
170,989
43,906
445
38,640
4,821
33,994
5,099
13,047
15,848
110
9,614
6,124
62,632
2,541
18,980
41,111
333
11,981
28,797
60,085
7,284
11,087
41,714
–
9,824
31,890
448,046
91,364
214,103
142,579
888
70,059
71,632
(1) Excluding trading portfolio.
NOTE 13 – TANGIBLE
AND INTANGIBLE ASSETS
13.1 Changes in fixed assets
Gross
value at
Dec. 31,
2003
Acquisitions
Sales or
retirements
Other
movements
Gross
value at
Dec. 31,
2004
Depreciation
and provisions
at Dec. 31,
2004
Net value
at Dec. 31,
2004
fixed assets
907
69
(35)
844 (1)
1,785
(591)
1,194
Tangible
fixed assets
5,019
894
(255)
250 (2)
5,908
(2,979)
2,929
Total
5,926
963
(290)
7,693
(3,570)
4,123
Intangible
1,094
(1) Including the allocation of €120 million arising on the first-time consolidation of Banque Sanpaolo; the impact of a change in consolidation method from
proportional consolidation to full consolidation for the former IXIS, Eulia and CFF Groups; and the negative €60 million impact of the translation adjustment
on the market share of the IXIS Asset Management Group.
(2) Consists mainly of the impacts of a change in consolidation method.
13.2 Intangible fixed assets
At December 31, 2004, the net values of the main intangible fixed asset items were as follows:
–
–
–
–
market share (contribution from the CDC IXIS Group)
goodwill
computer software
certificates of association of deposit guarantee funds
€739
€126
€101
€64
million
million
million
million
13.3 Tangible fixed assets
At December 31, 2004, the net book value of land and buildings amounted to €2,082 million, including €1,812 million relating to
premises for the Group's own use, and €122 million in respect of investment properties derived from the contribution of the Crédit
Foncier Group.
140
■
NOTE 14 – DEBTS
REPRESENTED BY A SECURITY
Retail certificates of deposit and savings certificates
Interbank and other negotiable debt instruments
Bonds
Other debts represented by a security
Total
2004
2003
888
70,059
71,428
204
142,579
1,088
24,300
49,673
0
75,061
Unpaid accrued interest carried under the item “Debts represented by a security” stands at €2,550 million.
Unamortized issue or redemption premiums amount to €330 million.
NOTE 15 – ACCRUALS
AND OTHER ASSETS AND LIABILITIES
Assets
Liabilities
3,014
8,108
1,142
809
476
1,949
3,865
801
606
18,699
300
2,861
8,463
1,240
0
1,298
1,833
2,597
183
29,295
17,148
30
Total 2004
39,769
64,948
Total 2003
22,816
25,202
Off-balance sheet transactions on securities
Foreign currency commitments
Unrealized hedging losses and gains
Deferred expenses and income
Prepaid expense and unearned income
Accrued expense and accrued income
Items in the course of collection
Deferred tax
Settlement accounts for securities transactions/debt securities
Other assets/liabilities
Other insurance assets/liabilities
■
141
NOTE 16 – PROVISIONS
16.1 Provisions booked in respect of counterparty risks
Jan. 1, 2004 Allocations Releases
Changes in
scope of
consolidation
Other
movements
Dec. 31, 2004
Provisions carried in assets
(as deductions)
Provision for customer loans
Other provisions
Provisions carried in liabilities
Provision for signature commitments
Provision for customer loans
Country risks
Other risks
“Dynamic” provisions
1,991
1,765
226
609
31
152
8
57
361
648
578
70
251
20
53
13
123
42
(657)
(596)
(61)
(146)
(14)
(65)
(3)
(27)
(37)
365
287
78
198
8
84
6
80
20
(17)
(20)
3
24
2
(8)
0
32
(2)
2,330
2,014
316
936
47
216
24
265
384
Total
2,600
899
(803)
563
7
3,266
To reflect counterparty risks more accurately, a provision is recorded covering the Group’s entire performing on- and off-balance sheet
commitments for which statistical data are available to assess the probability of default. This provision is calculated by applying
different rates to loans analyzed by credit rating and remaining term. The rates are weighted based on assumptions concerning the
probability of the amounts involved being recovered in the event of default.
At December 31, 2004, the provision recorded for all the portfolios concerned – HLM social housing associations and semi-public
companies, professional real estate, local and regional authorities, small- and medium-sized enterprises, consumer loans, financial
markets – amounted to €384 million.
16.2 Provisions for liabilities and charges (excluding counterparty risks)
Dec. 31, 2003 Allocations Releases
Provision for claims, fines and penalties
Provision for retirement indemnities
Provision for the Group's estimated
potential pension commitments (CGRCE) (1)
Provision for capital market activities
Provision for IT migration
Provision for Crédit Foncier Group
restructuring
Provision for modernization initiatives
Other provisions for banking
and non-banking operations
Total
Changes in
scope of
consolidation
Other
movements
Dec. 31, 2004
141
112
105
15
(83)
(11)
66
21
(6)
(7)
223
130
1,841
73
23
95
158
2
(415)
(103)
(9)
1
81
0
(9)
0
1,522
200
16
12
27
0
0
(8)
(1)
4
0
(1)
0
7
26
198
145
(61)
64
(31)
315
2,427
520
(691)
237
(54)
2,439
(1) As a precautionary measure, the commitment to finance future deficits of the retirement fund (Caisse Générale de Retraites du Personnel des Caisses
d’Epargne—CGRCE) was valued on an actuarial basis at the end of 2003 and has been estimated on an all-inclusive basis at the level of the Groupe Caisse
d’Epargne at December 31, 2004. For 2004, the provision for estimated potential pension commitments included in the consolidated accounts
of the Groupe Caisse d’Epargne was subject to a net reversal for a total of €320 million, reflecting the combined impact of:
– firstly, the updating of commitments and adjustment of retirement pensions decided during the year (allocation of €95 million);
– secondly, the transfer to the CGRCE of €415 million (reversal of provisions).
142
■
NOTE 17 – GOODWILL
The “Goodwill” heading represents the outstanding balance of differences not attributed elsewhere on the balance sheet between the
cost of the investment and the book value of the underlying net assets noted at the time of acquisition of shares in consolidated
subsidiaries and associated companies.
Assets
2004
Liabilities
2003
2004
2003
Net amount at January 1
Movements during the year
Goodwill on Banque Sanpaolo securities (1)
Negative goodwill on Entenial securities
Net goodwill relating to the “New Foundations” agreements
Goodwill on Crédit Foncier de France securities –
Additional acquisition following the public tender offer
followed by a compulsory buyout procedure
Change in consolidation method (former CDC IXIS Group)
Translation adjustments (2)
Other movements (3)
Amortization for the year
372
562
(45)
–
263
173
224
242
–
–
52
8
–
7
–
60
2
–
–
–
37
303
(30)
34
(55)
–
–
(20)
2
(25)
–
–
–
1
(25)
–
–
–
2
(10)
Net amount at December 31
879
35
52
372
(1) Following the additional analyses and expert appraisals carried out during the first half of the year, a fair value adjustment was recorded for an amount
of €120 million (€79 million net of deferred taxes) in relation to the intermediation activity of Banque Sanpaolo. This fair value adjustment is taken
to the profit and loss account according to an amortization schedule that reflects the recognition of the net interest margin on the underlying loan book.
The residual goodwill of €196.7 million will be amortized over 10 years.
(2) Impact of the translation adjustment on the goodwill relating to the IXIS Asset Management North America Group.
(3) Other changes primarily reflect internal acquisitions by the IXIS Asset Management Group for an amount of €20 million (Hansberger Group Inc.,
Curzon Global UK, etc.) and the goodwill booked by GCE Garantie (formerly Eulia Caution) on the acquisition of additional Financière CEGI securities
for an amount of €8.9 million.
NOTE 18 – CONSOLIDATED
CAPITAL FUNDS, RESERVE FOR
GENERAL BANKING RISKS
AND SUBORDINATED DEBT
18.1 Changes in consolidated capital funds and reserves
(excluding minority interests and the Reserve for General Banking Risks)
Capital
Additional
paid-in
capital
Consolidated
retained
earnings
Consolidated
net income
Consolidated capital
funds (excluding
minority interests
and the Reserve
for General
Banking Risks)
5,473
899
952
164
9,298
990
At December 31, 2002
Movements in 2003
2,873
(272)
199
Appropriation of 2003 net income
Distribution of dividends (1)
Changes to the consolidating entity
Impact of operations relating
to the “New Foundations” agreement
Translation adjustments
2004 consolidated net income
Interim dividend
2,601
199
79
1,017
22
152
1,321
505
6,372
1,116
(199)
380
1,116
(1,116)
310
(121)
1,785
5,018
878
(5)
7,853
1,785
10,288
0
(98)
1,549
2,136
(121)
1,785
(5)
15,534
(1) Including the payment of CNCE dividends in the form of shares.
■
143
18.2 Changes in the Reserve for General Banking Risks
Dec. 31, 2003
Allocations
Releases
Other
movements
Dec. 31, 2004
2,400
186
(112)
14
2,488
18.3 Subordinated debt
2004
2003
Dated subordinated notes
Undated subordinated debt
Non-cumulative, undated deeply subordinated notes (1)
Accrued interest
5,422
260
1,715
317
3,070
214
800
69
Total
7,714
4,153
(1) During the year, the Group issued non-cumulative, undated deeply subordinated notes for a total of €915 million.
This issue was arranged in application of the provisions of article L.228-97 of the French Commercial Code as amended by the Financial Security Act.
Following the approval of the General Secretary of the French Banking Commission, this issue may be assimilated to the Group’s consolidated tier-1
regulatory capital up to a maximum of 15% of the consolidated tier-1 regulatory capital as applicable to “innovative” financial instruments.
Dated subordinated notes:
Currency
Interest rate
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
Total
EURIC
6.60%
3-month Euribor
4.50%
5.60%
6.25%
3-month Euribor
5.20%
5.20%
4.50%
3-month Euribor
4.10%
4.80%
4.60%
4.80%
4.50%
4.20%
6-month Euribor
3-month Euribor
6.60%
6.50%
6-month Euribor
CMS20
3-month Euribor
3-month Euribor
3-month Euribor
3-month Euribor
4.625%
5.25%
CMT USD 10 year + 0.30
CMS EUR 10 year
3-month Euribor
0.00%
0.10%
5.17%
4.39%
(1) Deeply subordinated notes.
144
■
Maturity date
Total
05/2005
01/2010
08/2010
12/2010
02/2011
06/2012
06/2012
07/2014
07/2014
02/2015
04/2015
07/2015
12/2015
02/2016
07/2016
10/2016
12/2016
03/2018
07/2018
01/2022
07/2022
09/2022
03/2023
04/2023
11/2027
01/2033
01/2033
–
–
–
–
–
–
–
–
–
38
42
250
91
749
15
5
455
406
421
77
455
150
312
486
507
257
10
500
20
20
20
10
22
46
53
7
694 (1)
796 (1)
145 (1)
80 (1)
218
19
11
5
5
7,397
18.4 Minority interests
Minority interests decreased by €1,256 million over the year, €1,549 million of which reflects the change in accounting method
relating to the Group’s consolidating entity (see note 5).
NOTE 19 – COMMITMENTS
GIVEN AND RECEIVED
Given
Given to/received from banking institutions
Given to customers
Total
Given to/received from banking institutions
Given to customers
Total
Received
2004
2003
2004
2003
14,663
41,405
7,566
22,862
6,197
–
5,837
–
56,068
30,428
6,197
5,837
9,900
7,134
10,042
8,382
13,151
–
8,950
–
17,034
18,424
13,151
8,950
Other guarantee commitments given and received amount to €27,584 million and €28,209 million, respectively. They concern
guarantees given to US pension funds and securities received as collateral for arbitrage operations undertaken by the IXIS CIB Group.
NOTE 20 – TRANSACTIONS
IN FINANCIAL FUTURES OUTSTANDING
20.1 Commitments on derivatives outstanding
Derivatives transactions mainly related to trading in interest rate futures on over-the-counter markets.
Transactions on organized markets
Futures
Options
Over-the-counter transactions
Futures
Options
Total
Interest rate
instruments
Currency
instruments
Other
instruments
Total
2004
Total
2003
251,726
273,755
0
0
5,943
61,004
257,669
334,759
87,552
105,477
2,225,633
318,307
6,309
7,079
3,921
38,111
2,235,863
363,497
426,586
80,149
3,063,271
13,388
115,129
3,191,788
699,764
Movements for the year mainly relate to the change in the consolidation method applied to the IXIS CIB Group: from proportional
consolidation at a rate of 26.45 % to full consolidation.
The nominal values of contracts listed in this table give only a general idea of the volume of the Groupe Caisse d’Epargne's activities
on derivatives markets at the year-end and do not provide a valuation of the Group's market risks in respect of these instruments.
Commitments on interest rate instruments traded on over-the-counter markets chiefly concern swaps and forward rate agreements
(FRA) for dated transactions, and rate guarantee contracts for option-based transactions.
Commitments on currency instruments traded on over-the-counter markets chiefly concern foreign currency swaps.
■
145
Interest rate futures on over-the-counter markets can be broken down by type of portfolio as follows:
Specific
hedging
General
hedging
Isolated
open
positions
Specialized
futures
operations
Total
Futures
Options
Bought
Sold
71,005
6,367
5,941
426
19,247
1,947
1,917
30
874
295
268
27
2,134,507
309,698
130,282
179,416
2,225,633
318,307
138,408
179,899
Total at December 31, 2004
77,372
21,194
1,169
2,444,205
2,543,940
Total at December 31, 2003
47,349
14,306
4,590
425,436
491,681
As regards transactions on organized markets, the market values of futures and options are €60 million and €(257) million,
respectively.
For over-the-counter transactions, the market values of futures and options are €132 million and €344 million, respectively.
20.2 Commitments on futures by residual maturity
Transactions on organized markets
Futures
Options
Over-the-counter transactions
Futures
Options
Total
146
■
Up to
1 year
1 to
5 years
Over
5 years
Total
2004
185,306
310,880
67,279
23,242
5,084
637
257,669
334,759
1,221,784
109,787
529,670
154,802
484,409
98,908
2,235,863
363,497
1,827,757
774,993
589,038
3,191,788
20.3 Counterparty risk in respect of derivatives
Counterparty risks are measured as the probable loss that the Groupe Caisse d’Epargne would suffer as a result of a counterparty
failing to meet its obligations. The Group’s exposure to counterparty risk in respect of interest rate and currency futures and options
can be calculated as the equivalent credit risk as defined by French Banking Commission Instruction 96-06, i.e. by adding together:
– the positive replacement value of these instruments, on the basis of their market value, excluding the effect of netting agreements
in accordance with the conditions laid down in article 4 of Rule 91-05 issued by the French Banking and Financial Services
Regulatory Committee;
– the potential credit risk resulting from the application of “add-on” factors defined by the Instruction referred to above, computed
on the nominal value of the contracts according to their type and residual term.
The Groupe Caisse d’Epargne has been able to attenuate this counterparty risk by:
– signing financial market agreements (ISDA-AFB) whereby, if a counterparty defaults, unrealized gains and losses will be netted;
– signing collateral agreements where compensating balances are deposited in cash or securities.
Government
and OECD
central banks
and equivalent
Unweighted equivalent credit risk, without considering
netting and collateral agreements (1)
Effect of netting agreements
Effect of collateral agreements
Unweighted equivalent credit risk, after
considering netting and collateral agreements
Weighted equivalent credit risk, after
considering netting and collateral agreements
(1) Of which positive net replacement values.
OECD
financial
institutions
and
equivalent
Other
counter-parties
Total
2004
7,208
(4,045)
(560)
50,393
(34,782)
(3,401)
8,204
(1,777)
(122)
65,805
(40,604)
(4,083)
2,603
12,210
6,305
21,118
0
2,439
3,154
5,593
2,356
9,685
3,114
15,155
The above table shows only the transactions concerned by French Banking Commission Instruction 96-06, i.e. transactions executed
on over-the-counter markets and markets considered as organized exchanges. The table excludes transactions on organized markets
as well as those carried out with credit institutions belonging to the Caisses d’Epargne network, for which the corresponding
counterparty risk is deemed to be non-existent as it is considered to be covered by the Groups’ mutual guarantee and solidarity
mechanisms.
At December 31, 2004, the weighted equivalent credit risk set out in the above table represented 0.2% of the notional values of
these outstanding positions, against 0.4% at December 31, 2003.
■
147
NOTE 21 – INTEREST
AND SIMILAR INCOME AND EXPENSE
Income
Transactions with financial institutions
Customer transactions
Bonds and other fixed-income securities
Subordinated debt
Lease financing transactions
Other interest income and similar revenues and charges
Total
Expense
2004
2003
2004
2003
5,918
7,788
3,262
0
285
384
6,283
6,457
2,708
0
205
995
(2,761)
(4,922)
(5,043)
(20)
(110)
(949)
(2,831)
(4,963)
(3,682)
(134)
(83)
(1,033)
17,637
16,648
(13,805)
(12,726)
Interest income from financial institutions includes income on funds collected on the Livret A passbook accounts which are deposited
daily with the Caisse des dépôts et consignations. This income includes:
– compensation for interest paid by the Caisses d'Epargne to the public which is included in the item "Interest and similar expense –
Customer transactions" for an amount of €1,442 million in 2004;
– an additional remuneration based on amounts outstanding, fixed by government decree, which is intended to cover the costs of
managing depositors' accounts and which amounted to €782 million in 2004.
NOTE 22 – INCOME
FROM SHARES AND OTHER VARIABLE-INCOME SECURITIES
2004
2003
Shares and other variable-income securities
Investments in unconsolidated subsidiaries, and other long-term portfolio securities
Affiliates accounted for by the equity method
132
50
1
100
50
0
Total
183
150
NOTE 23 – NET
COMMISSION AND FEE INCOME
Expense
148
■
Income
Transactions with financial institutions
Customer transactions
Securities transactions
Payment processing
Sale of life-insurance products
Other commissions
(37)
(2)
(61)
(228)
0
(352)
27
842
1,355
502
603
346
Total 2004
(680)
3,675
Total 2003
(418)
2,554
NOTE 24 – NET
GAINS/(LOSSES) ON TRADING TRANSACTIONS
2004
2003
Foreign exchange
Financial instruments
1,056
(1)
277
549
(6)
(56)
Total
1,332
487
NOTE 25 – NET
GAINS ON HELD-FOR-SALE PORTFOLIO TRANSACTIONS AND SIMILAR ITEMS
Income from disposals
Net allocation to (release from) provisions
Total
NOTE 26 – OTHER
Securities
held for sale
Similar
securities
Total
2004
Total
2003
180
81
261
223
69
87
156
177
249
168
417
400
NET OPERATING INCOME
Expense
Income
Share generated on joint ventures
Transfer of expenses
Other income and expenses
15
52
479
(44)
0
(466)
Total 2004
546
(510)
Total 2003
473
(390)
NOTE 27 – GENERAL
OPERATING EXPENSES
Personnel costs
– Wages and salaries
– Pension and retirement costs
– Other social security costs and payroll-based taxes
– Profit-sharing and incentive schemes
Taxes other than on income
External services and other administrative expense
Total
2004
2003
(3,840)
(2,319)
(449)
(925)
(147)
(184)
(2,089)
(3,098)
(1,810)
(413)
(751)
(124)
(154)
(1,497)
(6,113)
(4,749)
The average number of employees working during the year, broken down by professional category, is as follows:
– managerial staff:
15,750
– non-managerial staff: 36,984
■
149
NOTE 28 – NET
ADDITIONS TO PROVISIONS
Customer
transactions
Other
transactions
Total
Provisions booked
Provisions released
Losses on irrecoverable debts written off – covered by provisions
Losses on irrecoverable debts written off – not covered by provisions
Recoveries of debts written off as irrecoverable
(527)
481
(168)
(24)
36
(132)
101
(23)
(1)
11
(659)
582
(191)
(25)
47
Total 2004
(202)
(44)
(246)
Total 2003
(245)
(61)
(306)
NOTE 29 – NET
GAINS/(LOSSES) ON FIXED ASSETS
2004
2003
Tangible fixed assets
Intangible fixed assets
Investments in unconsolidated subsidiaries, affiliates accounted
for by the equity method and other long-term investments
9
(13)
104
(2)
32
(48)
49
(76)
Total
(20)
75
NOTE 30 – EXCEPTIONAL
ITEMS
Exceptional income and expenses are non-recurring and do not fall within the scope of the Group’s usual activities. In 2004,
exceptional items include a €100 million indemnity payment received from the Caisse des dépôts et consignations (see Note 2.4).
NOTE 31 – TAX
ON PROFITS
2004
2003
Current tax
Deferred tax
Tax credits and other taxes
(456)
94
(176)
(596)
112
(19)
Total
(538)
(503)
Other taxes includes a total charge of €36 million booked by the Group in 2004 relating to the exit tax levied on the special longterm capital gains reserve.
The difference between the theoretical tax rate of 33.33% and the effective tax rate of 20.69% mainly reflects items impacting
current taxes for the period, particularly:
– the transfer to the CGRCE (see Note 16.2), representing tax savings of 5.66 points;
– the use of CNCE tax loss carryforwards, representing tax savings of 2.11 points.
150
■
NOTE 32 – INVESTMENTS
BY INSURANCE COMPANIES
Net book value
2
Property
Bonds and other fixed-income securities (1)
Equities and variable-income securities (excluding mutual funds)
Mutual funds holding exclusively fixed-income securities
Other mutual funds
Other investments and related accrued income
Assets representing unit-linked policies
Total
Realizable value
2004
2003
2004
2003
31
793
47
96
584
29
64
15
295
27
72
220
23
20
41
822
52
97
595
88
64
21
313
29
71
223
25
20
1,644
672
1,759
702
(1) The net book value and realizable value of bonds and other fixed-income securities are estimated with interest included.
NOTE 33 – TECHNICAL
RESERVES OF INSURANCE COMPANIES
2003
Allocations
Technical reserves, life insurance
Technical reserves, non-life insurance
Equalization reserves
Technical reserves for unit-linked policies
184
271
7
20
71
443
0
37
Total
482
551
NOTE 34 – GROSS
Releases
Other
movements
2004
0
(297)
(3)
0
70
291
4
8
325
708
8
65
(300)
373
1,106
MARGIN ON INSURANCE BUSINESS
Life
Non-life
2004
Net premium income
Underwriting and financial income
Net claims and reserves for claims payable
Expenses net of technical reserves
Underwriting and financial expense
102
21
(14)
(87)
(17)
Total
2004
2003
239
25
(115)
14
(75)
341
46
(129)
(73)
(92)
138
34
(66)
(23)
(61)
Underwriting result
5
88
93
22
Acquisition, administration and other claims management expenses
Consolidation adjustments and elimination of reciprocal transactions
0
1
68
15
68
16
37
10
6
171
177
69
■
151
NOTE 35 – PRO
FORMA CONSOLIDATED FINANCIAL STATEMENTS
35.1 Principles
The pro forma consolidated financial statements of the Groupe Caisse d’Epargne have been prepared to enhance comparability and
to reflect the Group’s assets, liabilities and results as if the following restructuring operations had taken place at January 1, 2002:
–
–
–
–
all of the operations relating to the New Foundations agreement as described in Note 2;
the acquisition of Banque Sanpaolo by the CNCE (effective from December 31, 2003);
the acquisition of Entenial by the Crédit Foncier Group (effective from January 1, 2004);
the tender offer followed by a compulsory buy-out procedure (“OPR-RO”) launched by the CNCE for Crédit Foncier shares.
Furthermore, the change in method relating to the inclusion of the CNCE in the consolidating entity, as described in Note 5, was
backdated to January 1, 2002.
35.2 Accounting methods
As a general rule, the accounting methods used in drawing up the pro forma financial statements are the same as those used by
the Group to prepare its consolidated financial statements at the same year-end dates.
With the exception of the change made to the consolidating entity (Note 5), any changes in accounting methods are also applied in
the pro forma financial statements at the same dates as in the published financial statements.
Except for the operations referred to in Note 35.1, the pro forma scopes of consolidation are based on the entities consolidated by
the Group at the year-end dates referred to.
35.3 Consolidation adjustments
The following assumptions were used in drawing up the pro forma consolidated financial statements.
The yield applied to liquid assets (€3.2 billion) generated from transfers of assets by the CDC IXIS to the Caisse des dépôts et
consignations (portfolio of listed equities and investments, see Note 2.2) was 2.5%. Correlatively, the contribution to consolidated
income of the portfolio of listed equities was neutralized (the other securities transferred related to changes in the scope of
consolidation backdated to January 1, 2002, as they consisted of investments in consolidated entities).
Goodwill relating to backdated restructuring operations was calculated on a notional basis at January 1, 2002, bringing it in line with
the goodwill actually generated at the effective date of the operations after deduction of the corresponding theoretical amortization.
An annual rate of 3.5% was used to calculate the cost of refinancing operations set up as part of the restructuring (€5.3 billion).
A number of items included in 2004 consolidated income that are specifically related to operations carried out within the scope of
the New Foundations agreement were neutralized for the purpose of calculating pro forma income. These include:
– the indemnities paid to the CNCE as described in Note 2.4;
– the charges relating to early anticipated unwinding of certain hedging instruments within the scope of the restructuring of the IXIS
Asset Management Division;
– general operating expenses incurred specifically for the purpose of carrying out the operations or specifically relating to the
agreements between the parties.
152
■
35.4 Pro forma consolidated balance sheet
ASSETS
2004
2003
2002
186,517
147,972
156,630
Customer items
188,501
168,565
152,694
Lease financing
3,867
3,680
3,457
114,008
116,306
112,200
Investments by insurance companies
1,644
1,358
910
Investments in unconsolidated subsidiaries,
affiliates accounted for by the equity method
4,603
4,660
4,497
Tangible and intangible assets
4,123
3,760
4,012
879
929
1,091
39,769
40,550
40,910
543,911
487,780
476,401
Bonds, shares and other fixedand variable-income securities
Goodwill
Accruals, other accounts receivable and other assets
Total assets
LIABILITIES
2004
2003
2002
91,364
67,872
88,414
Customer items
214,103
202,835
184,335
Debts represented by a security
142,579
127,795
120,859
1,106
822
596
64,948
62,283
59,341
35
62
74
Provisions for liabilities and charges
3,375
3,462
3,649
Subordinated debt
7,714
5,330
2,965
2,488
2,414
2,118
665
707
739
15,534
14,198
13,491
5,018
4,940
5,211
878
860
661
Consolidated reserves and retained earnings
7,982
7,023
6,446
Net income for the year (+/–)
1,656
1,375
1,173
543,911
487,780
476,401
Technical reserves of insurance companies
Accruals, other accounts payable and other liabilities
Negative goodwill
Minority interests
Consolidated capital funds and reserves
(excluding Reserve for General Banking Risks)
Capital
Additional paid-in capital
Total liabilities, capital funds and reserves
■
153
35.5 Pro forma consolidated profit and loss account
2004
Interest and similar income
Interest and similar expense
Income from shares and other variable-income securities
Net commission and fee income
Net gains on trading transactions
Net gains/(losses) on held-for-sale portfolio transactions and similar items
Other net operating income
2003
2002
19,069
(15,531)
201
3,328
2,476
(43)
54
188
20,490
(16,717)
188
2,946
1,756
354
179
139
21,140
(19,201)
236
2,826
2,223
963
246
88
Net banking income
9,742
9,335
8,521
Depreciation and amortization of tangible and intangible assets
(6,728)
(419)
(6,314)
(422)
(5,985)
(415)
2,595
2,599
2,121
(347)
Operating income
(459)
2,248
Share in net income of companies accounted for by the equity method
243
(52)
2,439
Exceptional items
Tax on profits
Allocations to the Reserve for General Banking Risks
Minority interests
(24)
(544)
(53)
(114)
(48)
Consolidated net income (excluding minority interests)
(414)
2,140
1,707
211
138
191
110
2,489
2,008
(62)
(568)
(79)
(375)
(30)
1,656
(9)
(487)
(262)
(135)
58
1,375
1,173
35.6 Segment information
Commercial banking
154
■
Investment
Banking
Holding
Total Groupe
Caisse d’Epargne
Change
2003
2004
In €M
In %
411
(385)
9,335
(6,736)
9,742
(7,147)
407
– 411
4%
6%
346
47.7%
(181)
26
93.7%
(145)
2,599
72.2%
(459)
2,595
73.4%
(347)
–4
1.2 pt
112
0%
– 24%
8
12
(2)
76
3
(69)
211
138
243
(52)
32
– 190
15%
– 138%
530
762
(550)
(15)
(156)
(60)
(203)
(52)
239
(62)
85
3
(185)
(24)
209
14
2,489
(62)
(568)
(79)
2,439
(24)
(544)
(53)
– 50
38
24
26
– 2%
-61%
– 4%
– 33%
(16)
(18)
(12)
(45)
(375)
(2)
(114)
15
(375)
(30)
(114)
(48)
261
– 18
– 70%
60%
1,185
1,279
302
462
(112)
(85)
1,375
1,656
281
20%
1,185
1,279
302
462
263
29
1,750
1,770
20
1%
Pro forma
2003
2004
2003
2004
Net banking income
6,618
(4,962)
6,960
(5,163)
2,055
(1,458)
2,371
(1,599)
662
(316)
Share in net income of companies
accounted for by the equity method
1,656
75%
(195)
1,797
74.2%
(172)
597
70.9%
(83)
772
67.4%
(30)
206
53
232
5
7
9
Exceptional items
Tax on profits
Allocations to the Reserve for
General banking Risks
Minority interests
Net income
(excluding minority interests)
1,720
1,862
(497)
(22)
Earning capacity
2003
2004
Statutory Auditors’ report
on the consolidated financial
statements
for the year ended December 31, 2004
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 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 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 Annual General Meeting and in our capacity as Statutory Auditor of the
Caisse Nationale des Caisses d’Epargne et de Prévoyance, we have audited the accompanying consolidated financial statements of
the Groupe Caisse d’Epargne, for the year ended December 31, 2004.
The consolidated financial statements have been approved by the Management Board of the Caisse Nationale des Caisses d’Epargne
et de Prévoyance. Our role is to express an opinion on these financial statements based on our audit.
I - Opinion on the consolidated financial statements
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit 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 the 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 assets, liabilities, financial position and results of
the consolidated group of companies in accordance with the accounting rules and principles applicable in France.
Without qualifying our opinion set out above, we draw your attention to:
– notes 2, 13, 17, 18.1 and 35 to the consolidated financial statements which present the impact of the New Foundations project in
terms of period-on-period comparisons in the financial statements;
– notes 5 and 18.1 which describe the purposes and effects of the changes in accounting methods that include the Caisse Nationale
des Caisses d’Epargne as part of the consolidating entity of the Groupe Caisse d’Epargne.
II - Justification of our assessments
In accordance with the requirements of article L. 225-235 of the Commercial Code relating to the justification of our assessments, we
bring to your attention the following matters:
Changes in accounting methods
As part of our assessment of the accounting rules and principles followed by the Company, we ensured that the above-mentioned
changes in accounting methods and the ensuing presentation were appropriate.
Accounting policies
Notes 2 and 35 to the consolidated financial statements describe the accounting rules and methods applied to the New Foundations
project. As part of our assessment of the accounting policies applied by the Group, we verified the appropriateness of the abovementioned accounting methods and the information disclosed in the notes to the consolidated financial statements, and we ensured
that they were applied correctly.
■
155
Accounting estimates
– As indicated in Note 4.4 of the notes to the consolidated financial statements relating to the valuation rules, the Group records
provisions to cover the credit risks inherent to its operations. As part of our assessment of the significant estimates used for the
preparation of the financial statements, we examined the control procedures relating to the monitoring of credit risks, the
assessment of the risks of non-recovery and determining the related specific and general provisions.
– As indicated in Notes 4.8 and 20 of the notes to the consolidated financial statements relating to the valuation rules, the Group
uses internal models to value positions on financial instruments which are not listed on the organized market. We examined the
control procedures put in place, to validate the models used and define the parameters applied.
– Note 4.2 of the notes to the consolidated financial statements describes the rules used by the Group to value investments in
unconsolidated subsidiaries. We reviewed the approaches and assumptions used and verified that these accounting estimates were
based on documented methods in accordance with the principles described in this note.
– For the purposes of preparing the consolidated financial statements, the Group also makes accounting estimates in order to
determine and record deferred tax assets (Note 3.4), intangible assets (Notes 3.6, 4.1, 13 and 17), insurance companies’ technical
reserves (Notes 4.11 and 33) and pension commitments (Notes 4.7 and 16.2). We reviewed the assumptions used and verified
that these accounting estimates were based on documented methods in accordance with the principles described in the abovementioned notes.
We assessed whether these estimates were reasonable.
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.
III – 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 conformity with the consolidated financial statements.
Paris and Paris La Défense, May 10, 2005
The Statutory Auditors
PricewaterhouseCoopers Audit
Anik Chaumartin
Yves Nicolas
156
■
Mazars & Guérard
Michel Barbet-Massin
Charles de Boisriou
January 1, 2005
450 local savings
companies (LSC)
80%
(shares in LSC)
3.1 million
Caisses
d’Epargne
des Caisses
d’Epargne
20% (CCI)(1)
65%
Caisse Nationale
des Caisses
d’Epargne
Commercial Banking
Crédit Foncier
Banque Sanpaolo
Subsidiaries
and investments
banking operations
■ CEFI
(3)
■ CNP
■ Ecureuil Vie
■ Ecureuil
Assurances IARD
(4)
■ GCE Garanties
■ Gestitres, etc.
35%
Caisse des Dépôts
Investment banking
100%
97.55%
IXIS Corporate &
Investment Bank
60%
73.9%(5)
IXIS Asset
Management Group
100%(5)
100%
IXIS
Investor Services
100%
IXIS Financial
Guaranty – CIFG
of the CNCE
W PRINTEL - 33 (0) 1 72 27 01 00
Annual Report
Tel.: (33) 1 58 40 41 42 - Fax: (33) 1 58 40 48 00
Annual
Report
Contents
2004
02
04
08
CNCE, Paris
Senior management
■ A new dimension
A new organization
14 ■ Key figures
■
■
Commercial Banking
22
23
23
26
27
28
30
32
33
36
38
39
41
■
■
■
■
■
■
■
■
■
■
■
■
■
Investment Banking
Banking services
Loans
The specialist bank
Social housing
Social economy
Business customers
44
50
54
56
■
■
■
■
Asset management
Financial guaranty
60
65
67
68
■
■
■
■

2004 Review of Operations Groupe Caisse d`Epargne

Transcription

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