reference document 2005 - Luxembourg Stock Exchange

Transcription

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REFERENCE DOCUMENT
2005
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REFERENCE DOCUMENT
Message from the Chairmen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2005 key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Profile and history of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Corporate structure of Groupe Caisse d’Epargne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Business lines and activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Financial report of the CNCE Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Financial report of Groupe Caisse d’Epargne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Chairman’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Statutory Auditors’ special report on regulated agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Information on the issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
The original version of the document de référence in French was registered with the Autorité des marchés financiers on May 12, 2006,
in compliance with articles 211-1 to 211-42 of the general regulations of the AMF. It may only be used in connection
with a financial transaction if an additional notice, approved by the Autorité des marchés financiers, is appended.
A copy of this document de référence is available upon request from: CNCE – 50, avenue Pierre-Mendès-France – 75201 Paris Cedex 13, France
It can also be accessed on the Group’s website at www.groupe.caisse-epargne.com as well as on the website of the Autorité des marchés financiers at www.amf-france.org
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MESSAGE FROM THE CHAIRMEN
Over the last two years, the nature and stature of our Group have been transformed by the incorporation
of an investment bank with dealings on all of the world’s major financial markets – a development that has paved
the way for new and greater horizons. For while 2004 was dedicated to the absorption of IXIS, 2005 has ushered
Groupe Caisse d’Epargne into a new era as a full-service, universal bank. This achievement is a reward for
maintaining the momentum generated by our previous strategic plan, in terms of creating linkups with various
entities, launching new Commercial Banking brands and growing our international activities. In short, we have
continued to build on the Group’s solid foundations.
The Group’s restructuring program has allowed us to cater to the needs of the entire customer spectrum,
while boosting profitability at the same time. The success of these efforts is reflected in our results, with earning
capacity rising by 22% to €2.2 billion in 2005.
Within this context, the Commercial Banking division remains, more than ever, at the heart of our business.
It is one of Groupe Caisse d’Epargne’s traditional areas of excellence, and we fully intend to capitalize upon this
significant advantage on the way to strengthening our position as a local, full-service, universal bank.
The Investment Banking division – comprising IXIS Corporate & Investment Bank, IXIS Asset Management Group,
CIFG and CACEIS – accounted for 26% of total net banking income in 2005, a testimony to its new standing within
the Group. In 2005, we also continued to expand our corporate offering, notably via Banque Palatine, making
Groupe Caisse d’Epargne a preferred partner for French business customers, ranging from SMEs to major corporates.
Groupe Caisse d’Epargne has bolstered its front-ranking position on key individual customer markets by pushing
growth in the private asset management business with the creation of La Compagnie 1818 – Banquiers Privés –,
and by setting up a strong and vibrant real estate business line. In its role as the specialist regional development
bank – traditionally the Group’s growth driver – Groupe Caisse d’Epargne has been able to fully exploit the synergies
generated among the various entities, and thereby reinforce its position in this market.
Groupe Caisse d’Epargne has also sought opportunities with new partners. We have continued the strategic
partnership policy launched in 2004, aimed at expanding the Group’s scope while optimizing the use of resources.
Our agreements with Maif and Macif as well as with Lazard have already proven their efficiency, and the linkup
of our institutional custody and investor services with Crédit Agricole IS under the CACEIS banner has turned
the Group into a new world leader in this domain.
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Fast, efficient and coordinated: all of the Group’s developments have been carried through with our customers’
interests uppermost in our minds. In this respect, 2005 has been a year of decisive innovations: the payment of
interest on current accounts marked a step change in French banking practices, while our achievements within the
sphere of public-private partnerships have proven our ability to manage complex financial products.
Our goals going forwards to 2007 are ambitious: combining sustained growth with a high level of profitability;
leveraging our new potential as a multi-business, multi-channel, and multi-brand Group; attaining high levels
of operational efficiency as well as distinguishing the Group through a strong commitment to society, notably
via the Caisses d’Epargne Foundation for Social Solidarity and Local and Social Economy Projects (PELS).
The principles of growth, efficiency and commitment have driven Groupe Caisse d’Epargne’s strategy throughout
2005 and will continue to power its development over the coming years.
We are now perfectly placed to enter the next stage of our development. Groupe Caisse d’Epargne intends to become
a strong European banking player and take a lead role in the consolidation of the financial services sector. In view
of this goal, we wish to provide the Group with a listed vehicle – an essential tool for any major modern business
organization. The negotiations launched on March 31, 2006 with the Banque Populaire group, whose capital markets,
corporate and investment banking businesses are already assembled within a listed entity, therefore present
an outstanding opportunity for the Group.
Although it is ultimately the prerogative of the CNCE’s shareholders to decide on the outcome of this large-scale
project, we are confident that they share our longstanding ambition to push ahead with expansion through
the Group’s traditional business lines, and to cement its position as a front-ranking player in investment banking,
asset management and specialized financial services. Such a vision is now within our reach.
Charles Milhaud
Jacques Mouton
Chairman of the Management Board
of the Caisse Nationale des Caisses d’Epargne
Chairman of the Supervisory Board
of the Caisse Nationale des Caisses d’Epargne
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2005 KEY FIGURES
Groupe Caisse d’Epargne
Earnings trends
in billions of euros
Net banking income
Gross operating income
Ordinary income before tax
Earning capacity
Consolidated capital funds and reserves*
Pro forma
2003
Pro forma
2004
2005
Pro forma
2005/2004
9.3
2.6
2.5
1.7
16.6
9.7
2.6
2.4
1.8
18.0
10.3
2.8
2.9
2.2
19.4
6%
8%
17%
22%
8%
* Including Reserve for General Banking Risks.
Return on equity
Capital adequacy ratio
(%)
(%)
11.9
2005
Pro forma
2004
10.0
2005
153
Pro forma
156
2004
CNCE Group
Earnings trends
Net banking income
Earning capacity
Consolidated capital funds and reserves*
Pro forma
2003
Pro forma
2004
2005
Pro forma
2005/2004
3.7
0.8
1.2
1.0
10.9
4.0
0.8
1.2
0.9
11.5
4.6
1.0
1.6
1.1
12.5
15%
25%
37%
22%
9%
* Including Reserve for General Banking Risks.
Return on equity
(%)
(%)
9.3
2005
Pro forma
2004
4
8.3
2005
Pro forma
2004
178
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Outstandings of Groupe Caisse d’Epargne
Loans outstanding
Investment and liquid savings
207
2005
2004
192
338
2005
2004
322
A record year for loans:
Group outstandings jumped 8% year-on-year
to €207 billion, driven by strong demand for real
estate loans and revolving credit.
A sharp rise in savings:
Group outstandings advanced 5% year-on-year
thanks mainly to an excellent performance
by the life insurance business.
Assets under management
Assets under custody
433
2005
2004
368
2005
2004
IXIS AM Group delivered a sparkling performance:
assets under management rose by 18% (at current
euro rates) reflecting a positive net funds inflow, a
positive market effect and a favorable currency impact.
1,547
1,334
A front-ranking position for CACEIS (1) :
assets under custody at December 31, 2005 totaled
€1,547 billion, propelling CACEIS into the top
10 custodians worldwide.
(1) IXIS Investor Services and Crédit Agricole Investor Services combined.
4,700 branches
Headcount
Cooperative shareholders
in millions
2005
2004
54,400
52,800
2005
3.1
2004
3.1
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PROFILE AND HISTORY OF THE GROUP
One of the largest retail banks in France, comprising the Caisses d’Epargne and Crédit Foncier networks
as well as its specialized subsidiaries, Groupe Caisse d’Epargne is among the leading full-service,
universal banks.
Following the absorption of the investment bank IXIS, Caisse d’Epargne now offers a comprehensive range
of investment and corporate finance solutions, as well as asset management and various investor services.
Groupe Caisse d’Epargne has 55,000 employees based in the world’s main financial markets. Its broad
spectrum of capabilities cater to a wide range of customers.
1818: First Caisse d’Epargne created in Paris.
1950: The Minjoz law authorizes the Caisses d’Epargne to finance local authorities.
1978: Authorized to grant consumer loans and to open deposit accounts.
1983: The July 1 reform bill grants the individual Caisses d’Epargne the status of not-for-profit financial institutions.
Establishment of the Centre National des Caisses d’Epargne.
1991: The 180 Caisses d’Epargne are merged into 35 regional banks.
1999: The individual Caisses d’Epargne adopt the status of cooperative, universal banks. Creation of the Caisse
Nationale des Caisses d’Epargne and acquisition of Crédit Foncier.
2004: Acquisition of Banque Sanpaolo (renamed Banque Palatine in June 2005), Entenial (merged with Crédit
Foncier in June 2005) and IXIS.
2005: Creation of CACEIS and La Compagnie 1818 – Banquiers Privés.
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CORPORATE STRUCTURE
of Groupe Caisse d’Epargne at December 31, 2005
Fédération Nationale
des Caisses d’Epargne
440 local savings
companies
80%
(shares)
Caisses
d’Epargne
20% (CICs) 1
Caisse des Dépôts
35%
65%
Caisse Nationale
■
■
■
Commercial Banking
Investment banking
Banking networks*
Capital markets, financing
and financial guaranty
Banque Palatine
Financière OCÉOR 2
La Compagnie 1818
■
■
Asset management, custody
and investor services
Insurance
■
■
■
■
Ecureuil Vie
Ecureuil Assurances IARD
GCE Garanties
CNP 3
Specialized financial
institutions
■
■
■
■
■
Crédit Foncier
Gestrim - Lamy
Perexia
CEFi 4
Gestitres
IXIS Corporate & Investment Bank
CIFG - IXIS Financial Guaranty
■
IXIS Asset Management Group
■
CACEIS 5
* Excluding the individual Caisses d’Epargne.
1 – Cooperative Investment Certificates (CICs) representing
20% of the capital of the individual Caisses d’Epargne and
entitling the holder to dividends but no voting rights.
2 – Financière OCÉOR holds the Group’s interests
in overseas banks.
3 – 18% holding via Sopassure, in which the CNCE owns
a 49.98% stake.
4 – Joint subsidiary of the Caisses d’Epargne (62% holding)
and the CNCE (5% holding).
5 – Equally and jointly owned by Groupe Caisse d’Epargne
and Crédit Agricole SA. Created from the linkup of IXIS Investor
Services and Crédit Agricole IS in the summer of 2005.
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Business lines and activities
CORE BUSINESS LINES
CAISSES D’EPARGNE
A local bank for individual and professional customers,
a specialist bank for regional development, and a
bank founded on solidarity and social commitment.
The Caisses d’Epargne offer a range of products and
services covering all the needs of individual and
professional customers, from current accounts to
structured financing. Savings products are central to
the bank’s relationship with its customers and include
state-regulated savings products, life insurance and
mutual fund distribution.
As a specialist bank for regional development, Caisse
d’Epargne works particularly closely with local
authorities, companies in the real estate industry
and regional companies and has an active presence
in the health and social sector and all areas of social
housing. It also aims to play a leading role in publicprivate partnerships (PPP).
As a bank founded on solidarity and social commitment,
the Caisses d’Epargne contribute to social cohesion
by developing local and social economy projects
(PELS) and the Caisses d’Epargne Foundation for
Social Solidarity fights all forms of dependency and
social exclusion.
26 million customers
■ Third largest banking network in France
■ 4,337 branches
■ 5,920 ATMs
■ 3.1 million cooperative shareholders
■ Leading credit institution for local authorities
and public health institutions
■ First in its field for social housing
■ Leading private player in regional venture capital
and private equity
■ 2,556 PELS
■
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COMMERCIAL BANKING
INVESTMENT BANKING
The Group is developing a multi-brand strategy with
Banque Palatine, specialized in medium-sized
companies, OCÉOR, the leading banking network in
French overseas territories, La Compagnie 1818 –
Banquiers Privés –, a wealth management subsidiary,
an insurance division comprising Ecureuil Vie,
Ecureuil Assurances IARD and GCE Garanties, and a
real estate division organized around Groupe Crédit
Foncier and Perexia.
Four subsidiaries are dedicated to the development
of investment banking activities: IXIS Corporate &
Investment Bank (IXIS CIB) for financing and capital
market operations, CIFG for financial guaranties,
CACEIS for custody services, fund administration
and issuer services, and IXIS Asset Management.
Banque Palatine plays a pivotal role in the Group’s
activity with medium-sized companies, factoring
and equipment leasing.
The OCÉOR network offers a complete range of
services from everyday banking management to
complex financial solutions that it makes available
through its retail banking network of 80 branches
located in 10 territories.
La Compagnie 1818 – Banquiers Privés – is developing
an innovative and comprehensive range including
open architecture-based multi-management in order
to offer the best products and asset managers.
Ecureuil Vie designs products tailored to each of
its customer segments, including private asset
management. Ecureuil Assurances IARD’s range is
made up of four products: automobile insurance,
comprehensive home insurance, medical and health
insurance and legal protection. GCE Garanties is
specialized in statutory warranties and guarantees.
The real estate division, built around Crédit Foncier,
is structured around four business lines: property
loans for individuals; real estate financing for
companies and investors; secure refinancing and
the real estate services of Perexia (renamed GCE
Immobilier in 2006), which is responsible for
competitive real estate activities and semi-private
real estate companies; and GCE Habitat, dedicated
to social housing.
Leading banking network in French overseas
territories
■ Second largest bancassurance provider of life
insurance solutions, third largest bancassurance
provider of fire, accident and miscellaneous risk
insurance and second largest provider of
financial securities and guarantees in France
■ Second largest real estate banker for private
individuals
■ Foremost French private issuer of covered bonds
■ Second largest player in real estate management
■
IXIS CIB’s growth vector is focused on the high valueadded business with banks, institutional investors,
local authorities and major corporations that it is
developing in France and abroad, with a strong
presence in the United States. The bank is organized
around five core business lines: the fixed-income
market, and equity market and proprietary trading,
structured financing, financing solutions and credit
business, and corporate finance. Its strategy targets
complex products, equity derivatives, and tax and
real estate financial engineering.
CIFG, the subsidiary specialized in financial guaranties,
is active is all segments of the credit enhancement
market in Europe and the United States.
IXIS Asset Management Group, with solid, broadbased expertise in financial and real estate asset
management is particularly active in Europe and the
United States.
CACEIS, a 50/50 joint venture with Crédit Agricole S.A.
aimed at institutional investors, fund managers
and major corporations, provides custody services,
fund administration and issuer services, with
products covering all asset classes and domestic
and international portfolios.
IXIS CIB: second largest primary dealer in French
government securities, IXIS CIB is among the
five largest operators worldwide in the covered
bonds market and is leader in France and tenth
worldwide in CDO (Collateralized Debt Obligation)
products.
■ IXIS AM Group: number one in France for
institutional asset management, with
€432.6 billion in assets under management,
as well as being the fifth largest worldwide
in real estate asset management.
■ CACEIS: leading domestic bank for custody
services and one of the top ten custodians
worldwide with €1,547 billion in assets under
custody; the largest fund administrator in France
and fourth largest in Luxembourg.
■
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ACTIVITIES
of Groupe Caisse d’Epargne
1
CAISSES D’EPARGNE
1.1 Local bank for individual and professional customers
The Caisses d’Epargne are the cooperative banks that form the base of the Group. With 4,337 branches, 5,920 ATMs and all the
services of an online bank, they represent the third largest banking network in France. Nearly one out of every two French
people is a customer of Caisse d’Epargne and more than three million are cooperative shareholders.
Deeply rooted in their different regions and faithful to the commitment to social progress that led to their creation, the Caisses
d’Epargne have developed a product range that extends from current accounts to structured financing in synergy with the Group’s
other entities so as to cover the complete range of customer needs, with savings solutions remaining at the heart of the relationship.
Investments, loans, payment methods, real estate financing, insurance, provident insurance, personal care services, wealth
management: the Caisses d’Epargne offer an extensive range of products to support their customers in their projects.
1.1.1 Individual customers
Fréquence Client
2005 saw the operational roll-out of Fréquence Client, the Caisses d’Epargne’s new distribution program, which breaks the
Group’s 26 million individual customers down into seven specific segments. Through Fréquence Client, the form of contact and
the products and services offered can be adapted to each customer and evolve with the customer’s needs over time.
At the same time, a new branch concept was defined, offering better customer service, greater security, more time for sales
activity thanks to increased automation for simple transactions, and more personalized advice. The Caisses d’Epargne
supported the transformation of the network through an unprecedented commitment to training for its sales teams.
The role played by the branches is backed up by the online banking services – the Group’s website being the second most
visited banking site in France, allowing Internet access to the customer relations centers.
Savings and insurance
Although new deposits on state-regulated savings products were adversely affected by the reduction in regulated rates on
August 1, 2005 and the taxation of regulated home purchase savings plans (plan d’épargne logement), life insurance
confirmed its position as the most popular financial investment. It attracted more than 75% of private individuals’ financial
savings with a renewed interest in unit-linked policies amid a favorable market environment which also benefited net new
inflows into mutual funds.
Groupe Caisse d’Epargne is the top-ranked distributor of mutual funds in France with a range of approximately one hundred
products designed by Ecureuil Gestion FCP, the subsidiary responsible for managing guaranteed return funds and multimanager funds of funds. The management of other products has been turned over to IXIS Asset Management, a subsidiary of
the Group and the leader in institutional asset management in France.
In life insurance, the Caisses d’Epargne offer a complete, fully-integrated range of products in which all customers, regardless
of age, can find one or more solutions in line with their projects and budgets. In 2005, while euro-denominated and private
management contracts remained popular, the Group’s life insurance offering was enhanced by new euro-denominated
contracts aimed at young workers or adapted to a high net worth clientele. In addition, a new version of the popular retirement
savings plan (PERP Caisse d’Epargne) offered broad access to the financial markets.
The range of mutual funds was entirely restructured around an offering adapted to each customer profile. The Sélectionnés line
is geared towards knowledgeable customers who already own mutual funds; Garantis products give customers risk-free
access to the financial markets; and Bourse “Esprit Ecureuil”, is a unique offering exclusive to Caisse d’Epargne which helps
customers take their first steps in the financial markets.
The Group is also the leader in guaranteed return funds.
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Private asset management
Groupe Caisse d’Epargne is the third largest player in the highly competitive private asset management market.
Offered throughout the Caisses d’Epargne network to its wealthier clientele, private asset management covers all types
of assets and management styles and is enhanced by high value-added personalized assessments. La Compagnie 1818 –
Banquiers Privés –, the Group’s private asset management subsidiary serving very wealthy customers, acts as a support for
the networks and provides tailored services upon request.
Wealthy customers can choose from more than 80 funds selected from within the Group as well as from the best outside asset
management firms. Customers may also entrust the management of their capital to specialists through discretionary
management agreements.
The marketing of proprietary real estate assets is being developed through specialized advisors who work particularly
with owner-investor mixed-use assets, which have growth potential, and management agreements or commercial leases with
well-known national firms.
Banking services
Caisse d’Epargne is the everyday bank for one out of every five members of the French public. It is one of the three largest
banks in France with 11 million individual customers holding current accounts.
In 2005, Caisse d’Epargne was the first major French bank to pay interest on current accounts as from the first euro.
This interest payment is offered without a surcharge for customers subscribing to a service package and is also available
without a service package, but with payment of an annual fee.
Interest-bearing current accounts sharply boosted sales of service packages. More than 411,000 new service packages were
subscribed to in one year, of which more than 30% were with new customers; new bank cards were also issued, reinforcing the
Caisses d’Epargne’s position as a front-ranking issuer of Visa cards in France and the second largest issuer of bank cards
irrespective of brand.
In keeping with its leading position among young people, Caisse d’Epargne launched a service package with security features
specifically designed for teenagers aged 16 and older. The range of services offered to young people covers both their banking
needs and the financing of their projects.
At the same time, the Caisses d’Epargne began preparing to issue CESUs (multi-purpose employment services checks), right
from their launch date, and developed the first line of personal care services, drawing on the Group’s strategic alliance with
the Macif and Maif mutual insurance companies. A holding company was set up at the end of the year to provide a framework
for the three partners’ shared holdings in their joint activities. The line of personal care services has already taken concrete
form through the creation of a shared services platform, Séréna, in which MGEN is also involved. The aim of the alliance 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 care services.
Loans and general insurance products
Property loans account for nearly 80% of lending to individual customers. In a fast-growing, highly competitive market,
new lending continued to rise. In 2005, the launch of a new interest-free loan (Nouveau Prêt à 0 %) allowed a growing number
of first-time homebuyers among Caisse d’Epargne customers to acquire their main residence in a building twenty years
or older.
Nearly one quarter of new loans are generated through partnerships forged with real estate professionals, notably ORPI
and the networks of FNAIM-affiliated real estate agencies, with which national cooperation agreements have been signed.
New partnerships were also established with real estate promoters in 2005.
Consumer credit is offered through the Caisses d’Epargne’s network in cooperation with the Group’s specialized subsidiary CEFi,
particularly by means of the Teoz card, which is the cornerstone of the consumer credit offerings, particularly revolving credit.
The consumer credit line was coupled with loan insurance offered in partnership with CNP and rolled out over the Caisses
d’Epargne’s entire network.
Fire, accident and miscellaneous risk policies were marketed in close synergy with the above offerings, and the attendant
increase in the sales of these policies made the Group the third largest French bancassurance provider of general insurance
coverage. The bank-insurance alliance made it possible to offer individualized policies adapted to all the clients’ needs thanks
to optional guarantees and services.
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1.1.2 Professional customers
Buoyed by the offer of interest-bearing current accounts, the Caisses d’Epargne also consolidated their positions with
professional customers, two thirds of whom are also customers in a private capacity. The products and services offered to
professional customers include electronic cash transfers, remote transmissions, account management and overdraft facilities,
insurance products, legal and tax assistance, online collaborative accounting tools and private asset management.
In the area of electronic banking services and online commerce, customers are offered services such as the TPE employment
check which simplifies hiring in small companies, as well as highly efficient anti-fraud and secure online payment systems.
The Caisses d’Epargne offer a complete range of loans to professional customers, covering all their needs from the business
creation, through capital goods loans to business transfer or buyout.
The creators of companies are offered traditional financing as well as financing subsidized by assistance networks that
receive the Caisses d’Epargne’s support as part of local and social economy projects (PELS). The Caisses d’Epargne also
facilitates the business creator’s access to banking services through the financing of micro-entrepreneurs.
In the area of equipment leasing, synergies are being developed with Banque Palantine which serves as the Group’s platform
while Crédit Foncier provides the real estate leasing platform.
Professional customers are also offered a broad range of savings, insurance, provident insurance and individual retirement
products as well as advice concerning asset management and capital transfer solutions.
1.2 Specialist Bank for Regional Development
With its decentralized banking structure, Groupe Caisse d’Epargne is in a position to offer local authorities, hospitals, social
housing organizations, real estate professionals and local businesses a complete range of products and services to finance
their projects, simplify their management and maximize their investments.
1.2.1 Local authorities and institutions
As joint leader in the local authority and public health institution sector, Groupe Caisse d’Epargne finances more than a third
of regional needs. Thanks to synergies with several of the Group’s entities, financing, dynamic debt management and publicprivate partnerships are growing rapidly.
The Caisses d’Epargne have strengthened their positions among all local authorities and institutions, irrespective of the size
of the projects and their owners, which range from towns, inter-municipal organizations, departments and regions, to semiprivate companies.
Financial capacity has also been increased through the refinancing of outstanding loans to the regional public sector under
excellent conditions thanks to the sale of outstandings to Compagnie de Financement Foncier for a total amount of €2 billion.
The Caisses d’Epargne now provide an enhanced dynamic debt management offering, which includes structured loans,
the optimization of the budgetary and financial impact of debt, and active management of structured loans.
A new approach to asset management has also been put in place to meet the growing financing needs of the regional public sector.
The year was marked by the launch of public-private partnerships (PPP), an area in which Groupe Caisse d’Epargne aims to
achieve a leading position. In addition to Fideppp, the first French investment fund created in PPPs, the Group is also active in
medium-sized PPPs through highly effective property leasing solutions with the help of Crédit Foncier.
Caisses d’Epargne’s network, which is France’s third largest banking network for non-profit-making associations, entered into
several major partnerships in 2005 and offers local authorities a series of reduced-rate funding envelopes within the
framework of partnerships with a number of associations.
The Group is moreover actively involved with public health institutions through loans to institutions specialized in healthcare
and social welfare but also through the “Hospitals of France” initiative undertaken with the European Investment Bank and
the partnership between the Caisses d’Epargne Foundation for Social Solidarity and the French Hospital Federation with a view
to carrying out innovative projects of benefit to society as a whole.
1.2.2 Social housing and the social economy
Group Caisse d’Epargne is the leading bank for social housing and third largest bank with respect to the social economy
in France. It is committed to providing access to banking services and supports several local initiatives in favor of social
solidarity and job creation.
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Social housing
Groupe Caisse d’Epargne is the historical partner of the HLM social housing movement and the only player to boast an active role
in all areas of the social housing sector. The Caisses d’Epargne manages more than one third of the private debt of
the Social Housing Enterprises and HLM agencies, whose construction programs are financed by the collection and distribution
of funds on Livret A passbook accounts. In its capacity as a shareholder and operator of social housing organizations, the Group
is a shareholder and director of about 100 of the 300 Social Housing Enterprises.
With the Caisses d’Epargne and Crédit Foncier, the Group is also the largest distributor of state-sponsored rental accommodation
and construction loans (prêts locatifs sociaux – PLS, and prêts locatifs intermédiaires – PLI), with respect to which it obtained
41.5% of the related-envelope allocated 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
loan offering includes a wide range of fixed and adjustable rate loans and structured loans.
In addition to being directors on the boards of most Public Agencies for Development and Construction (OPAC), the Caisses
d’Epargne are also the largest private shareholders in semi-private real estate companies, whose majority shareholders are
local authorities.
In addition, dynamic debt management solutions were implemented with HLM organizations.
The social economy
The Group is developing its activities in this rapidly growing sector comprised of associations and foundations, mutual health
insurance companies, private education establishments, cooperatives, works councils, and non-profit-making leisure organizations.
The outstanding loans to finance social economy projects are chiefly concentrated in the health and social sectors, private
education and company benefit schemes organized by mutual insurance companies. A significant portion of these loans
is guaranteed by the subsidiary GCE Garanties or by the various 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.
The Group is also the largest financial institution providing services for adults in state protection programs. Thanks to their
historical commitment to the vulnerable members of society and the quality of their specialized personnel, the Caisses d’Epargne
have a special importance for persons under supervision or guardianship.
1.2.3 Corporate customers
Groupe Caisse d’Epargne is the banking partner of regional business organizations, which it supports from the company’s creation
to its transfer or buyout thanks to a complete range of highly effective financing solutions and services and by equity
contributions made through local and regional investment funds. Already the largest private operator in regional venture capital
and private equity funds, the Group intends to become a leading player for small- and medium-sized enterprises.
Groupe Caisse d’Epargne is also the key partner for companies in the real estate industry.
In 2005, the payment of interest on current accounts favored the uptake of dynamic cash management solutions. Groupe Caisse
d’Epargne also entered into a partnership agreement with OSEO bdpme, the SME development bank, to finance receivables
on state-owned and partly state-owned companies held by SMEs. The specialized technical platform makes it possible to process
a cash demand very rapidly.
The objective of the Caisse d’Epargne is to increase its financing of companies’ operating cycles through new offerings, particularly
in the area of export financing and employee savings and by broadening its product range in relation to signature commitments
(with CEGI), inventories financing, factoring and international trade.
During the year several specialized business lines and areas of expertise were grouped into powerful shared plateforms.
Each Caisse d’Epargne now has the support of:
■
Banque Palantine for long-term financing of medium-sized companies and its two subsidiaries for equipment leasing
and factoring;
■
Crédit Foncier for real estate leasing;
■
CEGI for signature commitments;
■
CNCE and IXIS CIB for financing arrangements requiring specific expertise or syndication.
Moreover, as the largest regional private investor and one which is mobilized to deploy local investment funds, the Group also
wants to make greater use of its regional and local funds in connection with business transfers and buyouts.
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2
COMMERCIAL BANKING
Some 20% of the capital of the Caisses d’Epargne is held by CNCE in the form of CICs (Cooperative Investment Certificates entitling
the holder to dividends but not to vote). In addition to this, CNCE is developing a multibrand strategy aimed at winning new clients,
encouraging them to use banking services and ensuring their loyalty through a wide-ranging and well-structured offering
developed by the various complementary businesses, namely:
■
retail banking through Banque Palatine, the specialist in medium-sized companies, OCÉOR, the leading banking network
in French overseas territories, and La Compagnie 1818 – Banquiers Privés, specialized in wealth management;
■
the insurance business;
■
a powerful real estate and housing business, organized around Crédit Foncier and Perexia;
■
the other specialized subsidiaries serving individual customers.
2.1 Retail banking
2.1.1 Banque Palatine, spearheading the Group’s growth in the SME segment
Banque Palatine, formerly Banque Sanpaolo SA and renamed in June 2005, is a subsidiary owned 60% by CNCE and 40%
by Sanpaolo IMI with 61 branches in France. It is the spearhead for the Group’s growth among medium-sized companies in the
€15 million – €150 million per annum sales range.
Banque Palatine makes its expertise in the financing of foreign trade and related services and long-term financing available to
all the Group’s entities. It also provides know-how via the specialized services of its two platform subsidiaries, GCE Affacturage
and GCE Bail (created through the link-up of Ecureuil and Sanpaolo Bail).
2.1.2 La Compagnie 1818 – Banquiers Privés – serving major private clients
Specialized in wealth management, La Compagnie 1818 was created when the private banking activities of Véga Finance,
IXIS Capital Management, Crédit Foncier, Banque Palatine and CNCE joined forces. At December 31, 2005, it was owned 44.38%
by CNCE, 20% by Banque Palatine, 18.4% by IXIS PCM and 17.22% by Crédit Foncier.
La Compagnie 1818 is developing an innovative and comprehensive offering based on open architecture-based multimanagement, through which it is able to offer the best products and best managers.
In addition to its expertise in financing professional and personal projects, real estate and wealth and tax optimization,
La Compagnie 1818 has the backing of two subsidiaries to round out its portfolio management services: La Compagnie 1818 –
Gestion for management services and La Compagnie 1818 – Immobilier dedicated to finding real estate solutions for its clients.
Finally, La Compagnie 1818 – Banquiers Privés has 100% ownership of the Centre Français du Patrimoine, one of the leading
players providing of wealth management services through independent advisors.
2.1.3 OCÉOR: LARGEST BANKING NETWORK IN FRENCH OVERSEAS TERRITORIES
OCÉOR is positioned as a major overseas player thanks to its high quality retail banking network of 80 branches in 10 territories.
The banks in the OCÉOR network serve a varied clientele and, thanks to the pooling of the Caisses d’Epargne’s expertise and
specialized skills, offer a complete range of services from everyday account management to complex financial solutions.
Centered around the retail banking business, OCÉOR’s activities extend to private asset management, specialized markets
(corporates, local authorities, institutions, and real estate professionals) and international activities.
Two important developments in 2005 were the purchase of ORANE, a company specialized in tax efficient transactions within
the framework of the so-called “Girardin” law and the deployment of the OCÉOR Lease network which groups together overseas
leasing activities.
2.2 Insurance
Groupe Caisse d’Epargne is one of the largest bancassurance providers in France.
As an operator and distributor in the life insurance, fire, accident and miscellaneous risk, and guarantees and warranties
markets and a key shareholder of CNP, CNCE’s insurance division makes a significant contribution to the Group’s organic growth.
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As life insurance consolidates its position as the main financial investment of households, Groupe Caisse d’Epargne
strengthened its position as the second largest bancassurance provider of life insurance in France. In this area, the networks
rely on Ecureuil Vie, a 50/50 joint venture of CNP and CNCE and on CNP, which is France’s largest provider of personal insurance
and in which CNCE holds a 36% stake with La Poste.
The surplus for the life insurance business as a whole reached a record level of €5.3 billion and the total outstanding amounts
€71.5 billion at December 31, 2005. The Caisses d’Epargne’s life insurance range offers a product for each customer segment,
including private management.
CNP is also the key partner to the Caisses d’Epargne as regards loan insurance, a product that has been successfully
distributed throughout the network.
General insurance products are designed by Ecureuil Assurances IARD, the third largest French bancassurance provider
of general insurance coverage and a subsidiary of CNCE. The range comprises four types of policies – automobile insurance,
comprehensive home insurance, medical and health insurance and legal protection.
The risks of the Group’s establishments are covered by Muracef, a wholly-owned subsidiary, which also offers associated
banking insurance products.
As France’s second largest insurer in the area of financial and other types of guarantees, GCE Garanties, a wholly-owned
subsidiary of CNCE fulfils two main roles:
■
providing guarantees in the credit market to players in the social economy and social housing;
■
serving as the holding company for three insurance companies, namely:
■
Saccef, a specialist in loan guarantees for private individuals and self-employed professionals;
■
CEGI, the leader in statutory warranties for builders of single-family homes, a major provider of individual guarantees on
sales of units under completion and of customs and excise tax guarantees;
■
SOCAMAB Assurances, a key player in the provision of statutory warranties to real estate management companies.
2.3 Real Estate
As the second largest real estate banker for private individuals, the number one partner to real estate professionals, a major
player in social housing, a service provider, institutional investor and asset manager, Groupe Caisse d’Epargne is the largest
and most comprehensive participant in the French market.
The real estate division of Groupe Caisse d’Epargne comprises Groupe Crédit Foncier, the largest specialized real estate group
in France and CNCE’s subsidiary Perexia, which is one of the two leading private groups in social housing and the management
of real estate for private individuals.
2.3.1 The Crédit Foncier group
Crédit Foncier, Entenial and A3C merged on June 1, 2005.
With the aim of “constructing a “benchmark mortgage bank in Europe”, the Crédit Foncier group is structured around four business
lines: property loans to private individuals, real estate financing for companies and investors, secured refinancing through
Compagnie de Crédit Foncier and real estate services.
Crédit Foncier provides a solution that is both comprehensive and tailored to individual financing needs in terms of new and preexisting construction and rental property investments. It also offers a diversified choice of products and services based around:
■
private individual financing: fixed-rate, adjustable-rate, interest-only or amortizing and specific loans; state-regulated credit
in the form of interest-free loans, loans to facilitate home ownership by low-income households (prêts à l’accession sociale),
rental accommodation and construction loans, insurance related to the loan or the property financed; and financial products;
■
the financing needs of companies and investors in professional real estate: financing of real estate promotion, structured or
non-structured financing of real estate assets of companies, investors and operators of social organizations, project finance,
banking services to real estate management companies and real estate agents;
■
real estate services: expert property appraisals and analysis of real estate markets, marketing of residential property,
valuation of assets, and institutional rental management;
■
secured refinancing through Compagnie de Financement Foncier, the largest French issuer of covered bonds after the French
state with a volume of €13.15 billion at December 31, 2005. Its AAA rating allows particularly favorable terms and conditions
for accessing funds, which it then makes available to the entire Group, particularly the Caisses d’Epargne which sold it
€2 billion in outstanding loans in 2005.
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Crédit Foncier has also designed a range of financing products specifically adapted to public-private partnerships and offers its
expertise in this area to the Caisses d’Epargne and IXIS CIB, especially in relation to FIDEPPP, the first French investment fund
created dedicated to financing infrastructures through public-private partnerships which, in certain cases, have a major real
estate component.
2.3.2 The Perexia group
A restructuring project begun in 2005 has now been completed, bringing together all of the competitive real estate activities
developed by Gestrim-Lamy and the semi-private companies under the new name of Perexia, GCE Immobilier. Meanwhile the
companies in the HLM sector have been reorganized under the new holding company GCE Habitat, dedicated to social housing.
The two entities are subsidiaries of CNCE.
As the leading private group in the domain, it is active in all areas of social housing: family housing, residences for students,
the elderly, or dependent or handicapped persons, and social accommodation.
Moreover, as part of the partnership with the Caisses d’Epargne Foundation for Social Solidarity, the group is active in
the taking over, construction and property management of nursing homes for dependent elderly persons.
In real estate management, Gestrim, the sector’s second largest player, has prepared its merger with fourth-ranking Lamy,
which should result in the creation of a new leader in France and generate significant synergies.
Gestrim is also developing its activities in Germany, Belgium, Switzerland and Poland.
2.4 Other specialized subsidiaries serving private individuals
CNCE has two specialized subsidiaries which round out the range of retail banking services: CEFi, specialized in consumer
credit and Gestitres, which provides custody services for private individuals’ securities.
2.4.1 CEFi
Consumer credit distributed by the Caisses d’Epargne is managed by CEFi, a 67%-owned subsidiary of Groupe Caisse d’Epargne
alongside Cetelem, the European leader in consumer credit.
After three years of growth focused on revolving credit, CEFi is extending its activities by offering a complete range of personal
loans that run the gamut of financing needs, covering new or used vehicles, the costs involved in setting up a new home, home
appliances, repairs and improvements, and other cash needs. This range will be rolled out throughout the Caisses d’Epargne
network in 2006.
2.4.2 Gestitres
Gestitres, a 66%-owned subsidiary of Groupe Caisse d’Epargne, is specialized in securities custody, the subcontracting of
account holding and transactions related to domestic and international financial instruments for retail customers. Gestitres’s
services are based on the centralized and integrated processing of transactions, from the initial data entry to the conclusion of
the transaction, irrespective of the sphere of operations: the French stock exchange, foreign stock exchanges, internal and
external mutual funds, the primary market, etc. The mass processing required by the high volumes of activity have enabled
Gestitres to position itself as an industrial-scale service provider in this field, and offer its services at a very attractive cost.
These services can moreover be adapted to the specific needs of banks, financial institutions, investment companies and
E-Brokers, which entrust it with managing the securities accounts of their retail customers.
3 INVESTMENT BANKING
The investment activities of Groupe Caisse d’Epargne are broken down into two main businesses:
■ capital market and financing activities are developed by IXIS Corporate & Investment Bank (IXIS CIB), a 97.5%-owned
subsidiary of CNCE, and financial guaranty activities are the responsibility of CIFG (IXIS Financial Guaranty), a wholly-owned
subsidiary of CNCE;
asset management is the responsibility of IXIS Asset Management Group (IXIS AMG), a 68%-owned subsidiary of CNCE,
whilst securities custody, fund administration and services to issuers are provided by CACEIS, a 50%-owned subsidiary of CNCE.
■
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3.1 Capital Markets, Financing and Financial Guaranties
3.1.1 IXIS Corporate & Investment Bank, a specialist in high value-added complex products
Boasting proven expertise in innovative products, IXIS CIB is focusing its development on providing high value-added services
to banks, institutional investors, local authorities and large corporates.
IXIS CIB is particularly active in fixed-income, foreign exchange and equities markets and is also developing financing and
financial engineering services. Its strategy specifically targets complex products, equity derivatives, and tax and real estate
engineering.
In 2005 IXIS CIB reorganized its activities around five major business lines:
■
the fixed income market;
■
the equity market and proprietary trading;
■
structured financing;
■
financing solutions and credit business;
■
corporate finance.
Other important advances were the deployment of a cross-functional back office, the development of a range of products for
major corporates and the creation of a senior banking advisory business responsible for selling the products of IXIS CIB and the
group’s other entities.
IXIS CIB has a strong international presence through its branches in Frankfurt, London, Tokyo, and its subsidiaries in New York
and Hong Kong, as well as through Nexgen, which it recently took over.
In its capacity as a bank recognized by the French Credit Institutions and Investment Companies Committee (CECEI), IXIS CIB
enjoys excellent ratings and was ranked the world’s tenth most secure bank by Global Finance in 2005.
Increased Synergies with the Caisses d’Epargne
The synergies between IXIS CIB and the Caisses d’Epargne increased in 2005 particularly in intermediation and sales, asset
allocation advice and product offerings to local authorities.
IXIS CIB provides local institutions with support with complex services such as debt restructuring advisory services, structured
financing, bond issues, currency hedging.
Acquisition of equity interests and international development
The partnership agreement entered into in 2004 with Lazard with respect to primary equity markets was strengthened
and extended to include real estate advisory services, the sale of complex products developed by IXIS CIB to Lazard clients,
and the implementation of partnership agreements between Nexgen and Lazard. In parallel, IXIS CIB acquired a 6.7% stake
in Lazard Inc. at the time of its IPO on the New York stock exchange.
IXIS CIB also decided to take control of Nexgen, an Irish company of which it is the main shareholder, which specializes in
structured financing for major corporations and has offices in Dublin, Paris and Singapore. This arrangement, effective as from
March 24, 2006, will provide IXIS CIB with a platform for corporate customers and will cover the entire Asian continent.
In market activities, IXIS CIB strengthened its international presence through the creation of a branch in Milan and a subsidiary
in Luxembourg while the opening of a branch in Madrid and a subsidiary in Dubai are scheduled for the first half of 2006.
IXIS CIB also signed an agreement with a view to acquiring a 45.25% stake in TX Investment Consulting Co., a Chinese company
specialized in financial information, investment research and advice, mergers and acquisitions and fund distribution.
This agreement is still subject to approval by the Chinese authorities.
Capital markets and financing
IXIS Corporate & Investment Bank offers a wide range of services related to the fixed-income, foreign exchange and equities
markets including origination, market making, intermediation and structuring as well as economic and financial research.
In 2005 IXIS Corporate and Investment Bank strengthened its leading position in mature markets such as the euro money
market or the trading of euro-denominated bonds, particularly government and covered bonds as well as bonds issued
by partly state-owned enterprises. Internationally, IXIS CIB intensified its development in the covered bonds market in Spain,
the United Kingdom, the Netherlands and Germany as well as in the local government market in Italy and in private
investments in Asia and Switzerland.
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IXIS Corporate & Investment Bank continued to focus on high value-added products and services: simple and complex
derivatives, innovative risk transfer products, structured products, loan repackaging, arbitrage, securitization, structuring
of real estate financing, long-term financing (in partnership with Banque Lazard), guarantees on public funds or alternative
management funds.
In the area of securitization, in addition to the CDOs designed for the Caisses d’Epargne and the securitization activity
in France, IXIS Capital Markets, IXIS CIB’s American subsidiary and an expert in securitization, is particularly active in mortgagebacked securities (MBSs), asset-backed securities (ABSs), structured products (CDOs), the structuring and placement
of collateralized loan obligations (CLOs) and the commercial real estate sector in the United States.
In credit markets, IXIS CIB performed particularly well in the asset-backed securities (ABS) sector.
IXIS Securities, the European equities brokerage subsidiary, is one of the five largest brokers in the Paris financial market.
With IXIS Midcaps, its wholly-owned subsidiary, it covers 350 European securities.
The Corporate Finance division, set up in 2005, is organized around primary equity activities: capital increases, convertible
bond issues, IPOs and advice on mergers & acquisitions and balance sheet optimization.
Financing activities are focused on companies, LBO funds and real estate investment funds for which IXIS CIB originates,
arranges, syndicates or takes part in the syndication of large scale financing. They are characterized by high production
in liaison with and in support of the Caisses d’Epargne. IXIS CIB intends to increase the share of structured loans through
financing of infrastructures, acquisitions, LBOs, securitization, and real estate.
Lastly, IXIS CIB’s experience in providing financial advice in the infrastructure, environment and energy sector enables
it to best meet the needs of local authorities and set its sights on becoming a key player in public-private partnerships as the
lead bank in project debt syndication.
3.1.2 CIFG (IXIS Financial Guaranty)
CIFG is the only player in financial guaranties present in both Europe and the United States and is active in all segments of
the credit enhancement market: local government, public-private partnerships, project finance and structured finance.
Through its subsidiaries CIFG Europe and CIFG North America, it allows issuers to raise financing at a lower cost and offers
investors new risk profiles in the form of enhanced products.
Thanks to an unconditional guarantee of payment of all principal and interest given by CIFG, which scores optimum
AAA/Aaa/AAA credit ratings, Groupe Caisse d’Epargne facilitates the placement of structured products and the financing
of products and public-private partnerships.
3.2 Asset management, Custody Services, Fund Administration and Issuer Services
3.2.1 IXIS Asset Management Group
IXIS AM Group is the leading institutional asset management company in France, the ninth largest in Europe and 18th largest
worldwide, with €432.6 billion in assets under management at December 31, 2005. It is the holding company for 17 companies,
including 12 companies in the United States, two subsidiaries dedicated to real estate assets and three distribution companies –
Ecureuil Gestion for the Caisses d’Epargne network, IXIS AM Advisors Group in North America and IXIS AM Global Associates for
cross-border sales. These companies pool their management and distribution expertise in Europe, the United States and Asia for
an institutional and private clientele and together comprise Groupe Caisse d’Epargne’s asset management division, making it a
global player in its field.
The management companies in Europe and Asia Pacific
IXIS Asset Management (France) offers a wide range of expertise in all asset classes denominated in euros or Pan-European in
nature. This includes management of money markets, bonds, equities and diversified assets. The company also draws on its
expertise in the more specialized areas of alternative management (mono- and multi-strategy), management of collateral debt
obligations (CDOs) and socially responsible investment. It markets mandates and mutual funds to institutional investors and
distribution networks including private banks, multimanagers, insurance companies, and wealth management advisory services.
A sales team dedicated to relations with the Caisses d’Epargne was set up and links and synergies were developed specifically
with a view to managing the equity of Caisses d’Epargne’s shareholders and that of the shareholders of the specialized entities
such as the Caisse Générale des Retraites des Caisses d’Epargne company retirement fund.
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IXIS Private Capital Management provides open architecture-based active multi-management services. It initially focused on
major private investors, and is now extending its services to institutions and internal and external distributors. The investment
process is based on a core satellite approach combining index management and multi-manager, multi-style management.
In Asia, IXIS Asset Management Asia offers its know-how in small, mid and large caps as well as in emerging Asian equities while
IXIS Asset Management Japan concentrates on Japanese equities.
The North American market forges ahead
In the United States, the IXIS Asset Management Group is expanding thanks to ten management companies specialized in hedge
funds, American and international equities and international high-yield bonds and bond portfolios for major corporations, central
banks, supranational organizations, financial and other institutions and wealthy private individuals.
Real estate assets in Europe and the United States
Real estate assets are managed through a real estate management platform consisting of IXIS AEW Europe in Paris and
AEW Capital Management in Boston, the fifth-ranked company of its kind worldwide.
IXIS AEW Europe now has operations in ten European countries. Its growth has been based around three activities –
discretionary management, which accounts for half of its overall revenues, the creation and management of closed-end funds,
and advice on investing in open-ended funds distributed by the major banking networks in Europe.
In the United States, the expertise of AEW Capital Management extends to direct investments in housing, real estate funds,
real estate company shares and international investments. Management services are offered through tailor-made mandates
and a diversified range of funds.
Distribution companies
A management company’s success depends largely on its distribution companies.
IXIS Asset Management Advisors Group brings together the major American financial investment institutions and the management
companies of the IXIS AM Group.
IXIS Asset Management Global Associates offers its institutional customers and its distribution networks based outside
of France and the United States the expertise of the management companies of the Asset Management Group. Thanks to this
expertise and these highly diversified skills, the company can offer its various investors and international distributors
investment vehicles adapted to their needs.
Ecureuil Gestion is specialized in the creation of innovative products and services adapted to the requirements of clients
and networks; it is responsible for the architecture, administration and distribution of financial products distributed by the
Caisses d’Epargne network.
3.2.2 CACEIS: Custody Services, Fund Administration and Issuer Services
CACEIS was set up in 2005 following the merger of the securities activities of Groupe Caisse d’Epargne (IXIS Investor Services)
and Crédit Agricole SA, with a view to creating a leader in custody services, fund administration and services to issuers.
Dedicated to institutional investors, management companies and large corporates, CACEIS is now the most significant player
in France in domestic custody and fund administration and one of the ten largest securities custodians worldwide, with
€1,547 billion in assets under custody at December 31, 2005. It is jointly owned by CNCE and Crédit Agricole SA.
CACEIS has operations in six European countries: France, Luxembourg, Spain, Belgium, Ireland and the Netherlands.
Its services are aimed at the entire range of securities investors including retirement funds, mutual benefit societies, private
pension funds, insurance companies, central banks, management companies, and non-resident banks. The products offered
cover all asset classes, and all domestic and international portfolios as well as the cash flows related to those securities. The range
is rounded out by value-added services, in particular proxy management and voting, information on the markets and regulations.
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4 HUMAN RESOURCES
A Group-wide Human Resources Department was put in place in 2005, a year which also saw increased internal mobility and
a considerable number of new hires. Training, career management and communications also made strides.
4.1 A new approach to employee welfare
Discussions between management and labor resulted in the signing of 11 national collective agreements, mainly relating
to welfare and training.
In-depth discussions between management and workers led to the Group developing a new welfare program with respect to
healthcare, a personal risk plan and a supplementary pension scheme. The program makes Groupe Caisse d’Epargne more
attractive to both current and potential employees and encourages staff loyalty, as well as boosting career development and
professional mobility. It will be rolled out to the individual Caisses d’Epargne, IT communities and entities providing shared
services in 2006 and 2007, before being gradually extended to all Group companies.
4.2 Mobility and recruitment
The Human Resources Department was responsible for the successful integration of employees from IXIS and other
subsidiaries such as Odacia and Gérer. It also handled the reorganization of several CNCE departments and the transfer of
1,000 employees to the Group’s new headquarters.
The Paris teams of the new Crédit Foncier, formed as a result of the merger into this company of Entential and A3C, were
brought together at two neighboring sites. Relocations also occurred on the back of the creation of La Compagnie 1818 –
Banquiers Privés –, and other specialized platforms.
In total, over 2,000 employees changed their place of work and 400 intra-Group transfers occurred.
Groupe Caisse d’Epargne continued to recruit actively, with more than 4,000 new hires, including 1,500 managerial staff,
representing an increase of 9% on 2004. The overall number of Group employees increased from 52,800 to 54,400, of which
5% are based outside France. The average number of active CNCE employees during the period was 1,292, broken down into
976 managerial and 316 non-managerial staff.
4.3 Skills enhancement and training
The Group allocates more than 5% of total payroll to training. The training sessions help integrate employees and build loyalty,
as well as providing support for personnel as they progress through the company.
A national training agreement signed in 2005 provided the framework for the Group to give real direction to various policies
such as the work/study program. It also gave management the opportunity to structure the newly introduced “right to
individual training” (droit individual à la formation – DIF) and to update training offerings countrywide. DIF-based personal
development training is offered in areas such as communication and languages. The first vocational training programs were
also launched and an apprenticeship scheme is currently being put in place. New arrivals take part in a specially-tailored
induction course.
Over 15,000 retail bank employees received training in the context of the Fréquence Client program: 9,000 customer relations
managers were trained in the management of customer portfolios; 1,300 branch managers improved their management
techniques; 3,000 account managers and 600 customer advisers underwent training to improve their telephone sales skills;
and 2,000 employees were introduced to the theme of the new branch concept.
A personalized training path was developed and tested in four pilot companies. This training related to changes in back office
roles and was aimed at enhancing the versatility of banking production employees. This training will be extended to all Caisses
d’Epargne in 2006.
A global risk management training initiative was also created, with all risk managers receiving nine days of training.
The training will be developed into specialized modules in 2006 and provided to all risk department employees.
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4.4 Career management
The Group employs various means to ensure that skill sets are adequate to meet future and current needs:
■
forward-looking indicators regarding professions and qualifications, drawn up in 2005;
■
a skills and professions benchmark that gives employees an overview of their role in the Company and helps them plan their
career paths;
■
a skills assessment meeting with a manager, at least every two years;
■
an individual career management tool – Cap 25 – for employees with more than twenty-five years of service. The system
involves an appraisal and career review with a human resources manager, and a one-week residential seminar in which
employees find out more about the opportunities offered by the Group’s enhanced scale. After the seminar, career objectives
are discussed and an action plan is drawn up.
Executive training has been reorganized with a view to training up employees that show the potential to lead the Group within
the next ten to fifteen years. Two procedures have been put in place in this respect:
■
succession plans for Directors’ roles, aimed at preparing for the changes due to take place in the 2006/2008 period;
■
a “Directors’ career path” has been created in conjunction with the Group university promoting dynamic career management
for Directors and those with the potential to succeed them.
4.5 Internal communication tools
In 2005, in light of recent changes, the Group strived to promote a clear strategy and consistent image with its employees.
Internal communication was completely rethought and is now focused on the Culture Groupe magazine, which is distributed
every two months to all Group employees, and the Culture Manager information letter, which is e-mailed directly to
5,500 managerial staff.
The Intranet portal also continued to play an important role in disseminating the Group’s overall image and providing
information to the various business lines.
5 GENERAL PUBLIC INTEREST INITIATIVES AND SUSTAINABLE DEVELOPMENT
Groupe Caisse d’Epargne remained faithful to its social progress and general public interest initiatives, notably through
the promotion of general savings accounts – the founding notion behind the first Caisse d’Epargne in 1818. The Group
continues to work towards a more mutually supportive society through the financing of local and social economy projects
(PELS) and the work of the Caisses d’Epargne Foundation for Social Solidarity. It is also committed to making sustainable
development a company-wide concern.
Job creation, easier access to banking services and the fight against dependency and exclusion related to old age, handicaps,
illness or illiteracy are examples of some of the Group’s key projects in this domain.
5.1 General interest initiatives
Pursuant to the general interest initiatives provided for by the French law of 1999, the Caisses d’Epargne finance local and
social economy projects as a means of supporting social cohesion.
Each bank determines priorities on the basis of the particular requirements of its specific region. When a project is complete,
the bank reviews it to ensure it has been properly implemented, analyze the impact for the beneficiaries and find out more
about where the most pressing needs lie.
A funding envelope is voted by each of the 30 Caisses d’Epargne, based on the previous year’s financial results. The final
amount represents at least half the amount paid to the cooperative shareholders.
In 2005, 2,556 projects received funding on this basis, amounting to a total envelope of €51.5 million.
21
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Page 22
The three main areas covered by PELS are:
■
employment: preferential loans are available to micro-entrepreneurs through support networks such as ADIE and France
Active, as well as local initiative platforms. Direct assistance is also provided to organizations such as Boutiques de Gestion
and other local associations working for social integration;
■
self-reliance: services to vulnerable citizens, the sick or disabled, through the financing of either equipment or training;
■
social cohesion: social insertion is promoted through sport, culture and the protection of the environment.
PELS are designed to accompany social change. In this light, the Caisses d’Epargne explored a new theme in 2005, namely
access to finance for vulnerable citizens. This program is designed for individuals in financial difficulty and the customized
support and follow-up provides not only financial but also social and educational assistance.
5.2 The Caisses d’Epargne Foundation for Social Solidarity
Set up and recognized as an entity in the public interest in 2001, the Caisses d’Epargne Foundation for Social Solidarity helps
fight against all forms of dependence and social isolation. As a non-profit organization it plays a role in the healthcare
and social services sector, as well as being directly involved in the fight against illiteracy. It finances innovative projects
that encourage individual autonomy and work to combat social isolation.
5.3 Sustainable development
In 2005, the Group’s sustainable development strategic plan was gradually extended to all Group companies. A sustainable
development manager has been appointed in each company to drive the plan in conjunction with the Group sustainable
development steering committee.
The Group is working towards obtaining a rating from Vigeo, the corporate responsibility rating agency, and has drawn up three
priorities in this respect:
Measuring the impact of the Group’s environmental activities
Groupe Caisse d’Epargne’s environmental policy is based around the following objectives:
■
factoring HEQ (High Environmental Quality) considerations into its building or renovation work;
■
reducing paper consumption;
■
recycling waste;
■
curbing air travel by employees;
■
continuing to move ahead with its partnership with WWF, which is aimed at promoting sustainable lifestyles both within
and outside the Group.
A trial Carbon Audit scheme was implemented by three Group entities in 2005 – Caisse Nationale des Caisses d’Epargne,
Caisse d’Epargne des Alpes and Caisse d’Epargne Provence-Alpes-Corse. This program will be put in place in each Caisse
d’Epargne and Group subsidiary within the next three years.
The Purchasing division’s sustainable development initiative has been launched, with the main focus being:
22
■
the inclusion of sustainable development criteria in supplier relations (selection, listing and follow-up);
■
the inclusion of HEQ criteria in building specifications;
■
the defining of appropriate criteria for the selection of environmentally-friendly products.
12/07/06
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Page 23
The fight against discrimination
In September 2005, nearly 40 employees were designated disability project managers, as part of a “Disability & Diversity” task
force within Group HR.
The Group’s joined forces with ADAPT (the French association for the social and professional insertion of handicapped persons)
for its 9th “Employing Handicapped Persons Week” in November 2005. This represented a first step towards its goal of increasing
the number of handicapped employees.
Helping disabled persons remain employed is another priority: measures have been put in place or are in the pipeline to adapt
premises, working hours and work stations to meet the needs of persons who have become handicapped due to accidents,
illness or degenerative disabilities.
Including sustainable development in the Group’s commercial banking activities
Cordé – a self-diagnosis tool
Fine-tuned with the help of Vigeo, the Group provides access to Cordé, the sustainable development self-diagnosis tool,
to customers in the small- to medium-sized companies sector.
The sustainable urban transport program
In order to promote the development of urban public transport, the Groupe Caisse d’Epargne and the European Investment
Bank (EIB) have set up the sustainable urban transport program for local authorities, with the support of the French Ministry
of Transport and Maritime affairs. A total of €500 million has been set aside for the program, which aims to provide optimal
financing conditions to local authorities submitting projects meeting the program’s criteria.
23
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Page 24
CAPITAL EXPENDITURE
2003
Retail banking – France
Acquisition by CNCE of 60% of Banque Palatine (formerly Banque Sanpaolo).
2004
Real estate services/Real estate
Acquisition by Crédit Foncier de France of a 99.99% stake in Entenial.
2005
No major single investments (> €150 million net) were made at Group level in 2005.
Any investments made did not require a contribution of additional shareholders’ equity, as the Group relied on usual financing methods.
New sites outside France (Italy and Luxembourg).
International development
Institutional investor services
Creation of CACEIS, a joint venture between Caisse d’Epargne and Crédit Agricole,
the leading custodian bank in France.
Acquisition by CFF of a 35% stake in Secundis Finance, a company specializing
in mortgage restructuring in Portugal, renamed Banco Primus on 16 February 2006.
Acquisition by Compagnie 1818 – Banquiers Privés – of 34% of the capital of
Iselection, a company specialized in the sale of real estate products for the rental
market to individual investors.
Personal assistance
Creation of a joint venture holding company with Macif and Maif, half-owned
by Groupe Caisse d’Epargne, and acquisition of a 25% stake in Séréna, a company
specialized in personal care services.
Foreign banks
Acquisition of ordinary shares in Banca Carige, increasing CNCE’s shareholding
to 10.22%.
2006 – Transactions covered by agreements.
Retail Banking –
France and French Overseas Territories
Acquisition by Océor of Orane, a company specialized in the financing of capital
goods in overseas territories, in the context of tax efficient transactions.
Acquisition of 80.1% of BCP France, of which 50.1% by Caisse d’Epargne Ile-de-France
Paris and 30% by CNCE.
Foreign banks
Acquisition of 80.1% of BCP Luxembourg by Groupe Caisse d’Epargne
Indirect acquisition of approximately 30% of Banque Marocaine CIH.
Acquisition by IXIS CIB of 100% of NEXGEN, a company specialized in financial
engineering for corporates.
Acquisition of a considerable stake in the Chinese company TX Investment Consulting
(business advisory services), subject to approval by the Chinese authorities.
International development
24
Acquisition of Lamy, which joined forces with Gestrim, placing Groupe Caisse
d’Epargne as second largest player in France in the property management sector.
15:12
Page 25
FINANCIAL REPORT
of the CNCE Group
MANAGEMENT REPORT
Corporate structure of the Caisse Nationale des Caisses d’Epargne Group . . . . . . . . . . . . . . . . . . . . . . . . . 26
Significant events of 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
GROUPE CAISSE D’EPARGNE
Results of the individual Caisses d’Epargne on an upward trend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Commercial Banking: a steady increase in results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
A good year for Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
RISK
MANAGEMENT
Vigorous growth in consolidated results, reflecting the CNCE Group’s new dimension . . . . . . . . . . . . . . . 27
Comments on the activities and results of the CNCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Outlook for 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
CHAIRMAN'S REPORT
REGULATED AGREEMENTS
Analysis of the consolidated balance sheet and capital funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Statutory Auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
RESOLUTIONS
Consolidated profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY
INFORMATION
ON THE ISSUER
Notes to the financial statements of the parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
25
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MANAGEMENT REPORT
of the CNCE Group
1
CORPORATE STRUCTURE OF THE CAISSE NATIONALE
DES CAISSES D’EPARGNE GROUP AT DECEMBER 31, 2005
The individual Caisses d’Epargne – the foundations on which the CNCE Group is built – are cooperative savings banks; 80% of
their share capital is owned by local savings companies, bringing together more than three million cooperative shareholders.
The individual 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 is the Group’s central institution, and holds most of the national subsidiaries and investments.
The CNCE also holds Cooperative Investment Certificates (CICs) representing 20% of the capital of the individual Caisses
d’Epargne and entitling it to receive dividends but not including voting rights.
The simplified ownership structure of the Caisse Nationale des Caisses d’Epargne Group at December 31, 2005 is as follows:
Fédération Nationale
440 local savings
companies
80%
(shares)
Caisses
d’Epargne
20% (CICs) 1
Caisse des Dépôts
35%
65%
Caisse Nationale
■
■
■
Commercial Banking
Investment banking
Banking networks*
Capital markets, financing
and financial guaranty
Banque Palatine
Financière OCÉOR 2
La Compagnie 1818
■
■
Asset management, custody
and investor services
Insurance
■
■
■
■
Ecureuil Vie
GCE Garanties
CNP 3
Specialized financial
institutions
■
■
■
■
■
26
Crédit Foncier
Gestrim - Lamy
Perexia
CEFi 4
Gestitres
CIFG - IXIS Financial Guaranty
■
IXIS Asset Management Group
■
CACEIS 5
* Excluding the individual Caisses d’Epargne.
1 – Cooperative Investment Certificates (CICs) representing
20% of the capital of the individual Caisses d’Epargne and
entitling the holder to dividends but no voting rights.
2 – Financière OCÉOR holds the Group’s interests
in overseas banks.
3 – 18% holding via Sopassure, in which the CNCE owns
a 49.98% stake.
4 – Joint subsidiary of the Caisses d’Epargne (62% holding)
and the CNCE (5% holding).
5 – Equally and jointly owned by Groupe Caisse d’Epargne
and Crédit Agricole SA. Created from the linkup of IXIS Investor
Services and Crédit Agricole IS in the summer of 2005.
SIGNIFICANT EVENTS OF 2005
The significant events of 2005, including the macroeconomic environment, the Group’s continued restructuring around its core
business lines, and progress on regulatory developments (Basel II, IAS/IFRS), have a similar impact on the scopes of
consolidation of both the CNCE Group and Groupe Caisse d’Epargne.
A description of the significant events of 2005 is included in Section 1 of Groupe Caisse d’Epargne’s Management Report.
Changes in accounting method relating to the CNCE Group are described hereafter.
Several changes of accounting method were implemented at January 1, 2005:
■
Under Comité de la réglementation comptable (French Accounting Regulatory Committee, CRC) rule 2002-03 on accounting
for credit risks, provisions covering expected losses on non-performing and doubtful loans must be carried at present value.
As at January 1, 2005, this regulatory change led to a €64 million decrease in opening capital funds and reserves, net of
deferred taxes.
■
CRC rule 2002-10 has established new regulations regarding the depreciation, amortization and impairment of assets.
In particular, major fixed asset components are now accounted for separately and depreciated over their respective useful
lives. As at January 1, 2005, this change of accounting method led to a decrease of €40 million in opening capital funds and
reserves, net of deferred taxes.
■
CRC rule 2004-06 concerning the definition, recognition and measurement of assets introduced a change, effective January 1,
2005, in the accounting treatment of acquisition costs, which are now included in the amount at which the item is initially
recognized on the balance sheet. The new regulations nevertheless allow entities to continue expensing such acquisition
costs in their individual financial statements. However, in keeping with International Financial Reporting Standards where no
such option exists, the Group has decided to apply the new accounting treatment. This new rule led to a €3 million increase in
opening capital funds and reserves, net of deferred taxes.
■
Conseil national de la comptabilité (French National Accounting Board, CNC) recommendation 2003-R-01 setting out new
rules for identifying, measuring and accounting for pension commitments and other employee benefits, has been applied
as from January 1, 2005. At the application date, this change led to a reduction in opening capital funds and reserves of
€146 million, net of deferred taxes, comprising, in particular, unrecognized actuarial gains and losses, in accordance with
the first-time application rules laid out by the recommendation.
3
VIGOROUS GROWTH IN CONSOLIDATED RESULTS,
REFLECTING THE CNCE GROUP’S NEW DIMENSION
FINANCIAL REPORT
OF THE CNCE GROUP
Page 27
FINANCIAL REPORT OF
17:01
RISK
MANAGEMENT
2
12/07/06
CHAIRMAN'S REPORT
INFORMATION
ON THE ISSUER
Year-on-year comparisons of the Group’s results are complicated by the restructuring operations that took place in mid-2004 as
a result of the New Foundations agreements, and the Group’s external growth operations, most notably those relating to Entenial.
In order to facilitate meaningful comparisons between the Group’s results for 2004 and 2005, pro forma financial statements
have been prepared for 2004 using the same accounting methods and principles as those used by the CNCE Group to prepare its
consolidated financial statements in 2005. The assumptions used to prepare the pro forma accounts are described in note 34 to
the consolidated financial statements.
RESOLUTIONS
3.1 Earning capacity of more than €1 billion
27
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Page 28
Management Report of the CNCE Group
2004
in millions of euros
Net banking income
General operating expenses
Cost/income ratio
Pro forma
2004
2005
3,194
(2,512)
682
78.6%
3,980
(3,150)
830
79.1%
4,598
(3,560)
1,038
77.4%
Change
618
(410)
208
1.7 pt
16%
13%
25%
–
Net allocations to provisions
Share in net income of companies accounted
for by the equity method
Net gains/(losses) on fixed assets
(44)
(145)
(74)
71
(49%)
337
(8)
522
(40)
512
117
(10)
157
(2%)
ns
967
426
37%
Exceptional items
Corporate income tax
Amortization of goodwill
(Allocations to)/releases from the Reserve
for General Banking Risks
Minority interests
80
(81)
(67)
(20)
(93)
(89)
(15)
(294)
(104)
5
(201)
(15)
ns
ns
ns
40
(54)
0
(47)
(2)
(75)
(2)
(28)
ns
ns
Consolidated net income
885
918
1,103
185
20%
Earning capacity (1)
Return on equity (2)
845
7.7%
918
8.3%
1,105
9.3%
187
1.0 pt
20%
–
1,167
1,593
(1) Earning capacity = consolidated net income (excluding minority interests) + allocations to the Reserve for General Banking Risks (excluding minority interests).
(2) Calculated based on average equity.
The Caisse Nationale des Caisses d’Epargne Group’s results for 2005 advanced significantly, reflecting its enlarged scope of
consolidation as well as excellent operational performances across the business lines.
Compared with the pro forma data for the year ended December 31, 2004, the CNCE Group’s earning capacity soared 20% to
€1.1 billion in 2005.
■
■
■
■
28
Net banking income for 2005 leapt 16% to €4.6 billion, buoyed by the good performances of the commercial and retail
banking networks, as well as a strong showing by the capital markets and financing businesses.
■
The Commercial Banking division comprises the individual Caisses d’Epargne, accounted for by the equity method based
on a 20% stake; the Group’s other banking networks (Banque Palatine, OCÉOR, La Compagnie 1818); specialized financial
institutions (Crédit Foncier Group, Caisse d’Epargne Financement, Gestitres, etc.) and insurance companies (Ecureuil Vie,
CNP, GCE Garanties, Ecureuil IARD, etc.). The Commercial Banking division’s net banking income for the year ended
December 31, 2005 came in at €1,828 million, accounting for 40% of the CNCE Group’s total net banking income;
■
The Investment Banking division posted very strong results in 2005. Net banking income for 2005 advanced by nearly
16%, coming in just short of €2.7 billion, and representing nearly 59% of the CNCE Group’s total net banking income.
General operating expenses amounted to more than €3.5 billion for 2005, up 13% on 2004.
Personnel costs accounted for 56% of general operating expenses, rising to nearly €2 billion, an increase of 14% on the pro
forma 2004 figure. This increase was mainly attributable to an increase in variable compensation paid, consistent with the
rise in the Investment Banking division’s net banking income, as well as the extension of variable compensation agreements
within the Commercial Banking division, notably for the Crédit Foncier Group as part of the Entenial merger.
The CNCE Group’s headcount grew by around 6% to nearly 14,800 FTEs (full-time equivalents), which also contributed to the
increase in personnel costs.
Other operating expenses rose significantly by 11% on 2004, due to a combination of several factors:
■
a greater number of leadership and monitoring roles and 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 the migration of IT systems across the Commercial Banking entities.
Consequently, gross operating income came in at €1,038 million, up 25% on the previous year.
The 1.7 percentage point improvement in the cost/income ratio compared to 2004 essentially reflects the fact that growth in
net banking income outpaced that of general operating expenses.
■
The share in net income of companies accounted for by the equity method amounted to €512 million, down slightly on 2004,
and mainly comprised the share in net income of the individual Caisses d’Epargne and their local subsidiaries (€258 million),
as well as the insurance subsidiaries, with CNP and Ecureuil Vie bringing in €119 million and €103 million, respectively.
Ordinary income before tax came to nearly €1.6 billion at end-2005 – a spectacular 37% rise on the previous year.
This performance reflects the considerable increase in gross operating income as well as lower net allocations to provisions
and significant gains on fixed assets, most notably arising from the sale of IXIS IS by the CNCE, and the disposal of Capri by
Crédit Foncier.
Earning capacity for 2005 reached €1.1 billion, a jump of 20% compared to the year-earlier figure.
As a result, the CNCE Group’s capital funds and reserves (1) amounted to €11.9 billion at December 31, 2005. Despite its
expansion drive and restructuring operations, the Group managed to maintain high capital adequacy ratios, with return on
equity of 9.3% and the Tier-1 ratio coming out at 9.7% (excluding all CICs from Tier-1 capital).
3.2 Sharp increases in results across the businesses
During 2004 the CNCE Group implemented a matrix structure organized around two divisions (Commercial Banking and
Investment Banking) and cross-functional departments.
The Commercial Banking division does not include the same entities as Groupe Caisse d’Epargne’s scope of consolidation,
and comprises:
■
the individual Caisses d’Epargne accounted for by the equity method based on a 20% stake;
■
Caisse d’Epargne Financement (CEFi) and Surassur (consolidated for the first time in 2005) were also included within the
CNCE Group’s scope of consolidation under the equity method; however, Muracef was excluded from the CNCE Group’s scope
of consolidation;
■
the specialized subsidiaries offering lending, savings and banking services, such as Banque Palatine, OCÉOR and
La Compagnie 1818;
■
the Group’s insurance subsidiaries, including CNP, Ecureuil Vie, GCE Garanties and Ecureuil IARD;
■
the specialized banking and financial institutions, in particular Crédit Foncier.
The Investment Banking division operates through four business lines:
■
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 Financial Guaranty (CIFG), which spearheads the Group’s financial guaranty operations, mainly in the United States;
■
IXIS Asset Management Group, responsible for financial and real-estate asset management in Europe, Asia and North
America;
■
IXIS Investor Services (became CACEIS in second-half 2005) providing custody, fund management and institutional investor
services in Europe.
FINANCIAL REPORT
OF THE CNCE GROUP
Net allocations to provisions for 2005 came in at just €74 million, down sharply from 2004, when the Group set aside large
additional provisions for general risks.
FINANCIAL REPORT OF
■
Page 29
RISK
MANAGEMENT
■
15:12
CHAIRMAN'S REPORT
■
12/07/06
RESOLUTIONS
The breakdown by division is aimed at providing a clearer picture of the results and profitability of the Group’s different
activities.
Some of the allocation rules were altered slightly in 2005, with a view to refining the presentation of results by division.
In order to enable meaningful year-on-year comparisons, these changes were also applied retrospectively to the 2004 results.
Notably, in accordance with IFRS, which does not permit the amortization of goodwill, the amortization of goodwill and fair
value adjustments have been allocated to the holding structure.
Net banking income
INFORMATION
ON THE ISSUER
A holding structure completes the lineup, encompassing: proprietary trading operations; central financing operations
conducted by the CNCE; support functions, excluding those directly relating to the management of the Group’s business lines;
and the management of both investments in unconsolidated undertakings and exceptional income and expense items.
Net banking income by division includes revenues generated by the business concerned, excluding exceptional items.
(1) Including the Reserve for General Banking Risks.
29
12/07/06
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Page 30
General operating expenses of the divisions 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 (essentially impacting the Commercial
Banking division).
General operating expenses included under the holding structure comprise costs related to managing proprietary portfolio
transactions, as well as to exceptional expenditure and committed costs that cannot be directly allocated to the operating divisions.
Provisions for contingencies and impairment in value
Provisions are booked to cover the risks inherent to each division.
This item concerns capital gains or losses generated by the businesses on the sale of equities and investments. For example,
the gain posted following the sale of Crédit Foncier’s headquarters building in 2003 was recorded under the holding structure.
Exceptional items
This line concerns transactions that are non-recurring in nature. The related income or expense is recorded in full under the
holding structure.
Goodwill and fair value adjustments
Amortization of goodwill and fair value adjustments are allocated to the holding structure.
Tax charge
The tax charge of the divisions represents the charge recorded at the level of the legal entities, adjusted if necessary to take
into account any activities or other items included under the holding structure.
Reserve for General Banking Risks
Movements in the Reserve for General Banking Risks are recorded in full under the holding structure.
Net income by division
CNCE Group
Net banking income
Cost/income ratio
(Allocations to)/releases from provisions
Share in net income of companies
accounted for by the equity method
Pro forma 2004
Including
Commercial Banking
2005
3,980
4,598
(3,150) (3,560)
830
79.1%
1,038
77.4%
Pro forma 2004
2005
1,634
(1,248)
1,828
(1,352)
386
76.4%
476
74.0%
(145)
(74)
(7)
2
522
(40)
512
117
512
(4)
1,167
1,593
Exceptional items
Net allocations to the Reserve
Minority interests
(20)
(93)
(89)
(15)
(294)
(104)
0
(47)
(2)
(75)
918
Earning capacity
918
887
Including
Investment Banking
Pro forma 2004
2005
2,324 2,695
(1,599) (1,877)
725
68.8%
818
69.6%
(52)
(17)
503
20
8
13
10
50
1,001
694
861
(112)
(187)
(184)
(257)
(23)
(32)
(41)
(56)
1,103
752
782
469
548
1,105
752
782
469
548
Both the Commercial Banking and Investment Banking divisions turned in positive performances in 2005, and their respective
earning capacities expanded by 4% and 17%. Exceptional items were allocated to the holding structure, and this accounts for
most of the year-on-year changes shown after ordinary income before tax.
As a result of the diversification of the business base carried out in connection with the New Foundations project, in 2005
the Investment Banking division represents 59% of the CNCE Group’s net banking income and 50% of its earning capacity.
The Commercial Banking division represents 71% of the CNCE Group’s earning capacity.
30
15:12
Page 31
RESULTS OF THE INDIVIDUAL CAISSES D’EPARGNE ON AN UPWARD TREND
The network of individual Caisses d’Epargne forms the Group’s historic foundation. However, the CNCE Group’s consolidated
results include just 20% of the results of the 30 equity-accounted Caisses d’Epargne, which is allocated in full to the
Commercial Banking division.
Net banking income
Pro forma 2004
2005
Change
5,873
(3,949)
5,961
(3,972)
88
(23)
2%
1%
Cost/income ratio
1,924
67.2%
1,989
66.6%
65
3%
– 0.6 pt
Net income
1,224
1,467
243
20%
Earning capacity*
1,337
1,556
219
16%
FINANCIAL REPORT
OF THE CNCE GROUP
4
12/07/06
FINANCIAL REPORT OF
Outstanding loans jumped 7.6% compared to the year-earlier figure. The 2005 financial year saw both a 19% advance in new
property loans, reflecting the vibrant real estate market, and an increase in new consumer lending on the back of strong
demand for revolving credit.
Outstanding deposits posted a solid overall performance in 2005, rising by 4.6%. However, the momentum of the life insurance
and deposit accounts markets tailed off owing to lower levels of deposits on regulated savings accounts (Livret A, Codevi),
in the wake of the cut in the interest rate paid on such accounts.
General operating expenses were contained, posting only a small 1% increase in 2005, leading to a 0.6 percentage point
improvement in cost/income ratio for the year.
Net allocations to provisions fell back sharply, reflecting the Group’s effective risk management policy.
The individual Caisses d’Epargne are accounted for under the equity method on the basis of their net income, including income
from subsidiaries, and consolidation adjustments (notably the elimination of dividends). Their contribution to the CNCE Group’s
consolidated net income came in at €258 million for 2005.
5
COMMERCIAL BANKING: A STEADY INCREASE IN RESULTS
CHAIRMAN'S REPORT
Net banking income of the individual Caisses d’Epargne edged forward 2% compared to 2004, despite the decline in the
remuneration of regulated savings accounts.
RISK
MANAGEMENT
* Earning capacity = net income – amounts allocated to the Reserve for General Banking Risks.
Commercial Banking
Cost/income ratio
2005
Change
1,634
(1,248)
1,828
(1,352)
386
76.4%
476
74.0%
90
– 2.4 pts
23%
9
ns
(7)
2
512
(4)
503
20
887
Minority interests
(112)
(23)
Return on allocated equity
752
–
1,001
194
(104)
(9)
24
12%
8%
– 2%
ns
114
13%
(187)
(32)
(75)
(9)
67%
38%
782
12%
30
–
4%
The Commercial Banking subsidiaries enjoyed strong forward momentum, registering 13% growth in ordinary income before tax.
■
■
■
RESOLUTIONS
Net banking income
Pro forma 2004
INFORMATION
ON THE ISSUER
Net banking income climbed 12% to €1,828 million, with all the banners contributing to this sparkling performance.
Gross operating income jumped 23% to €476 million. The cost/income ratio of the Commercial Banking division improved
2.4 percentage points to 74%.
Net releases from provisions totaling €2 million showcase the Commercial Banking division’s controlled growth strategy.
31
12/07/06
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Page 32
■
■
Ordinary income before tax climbed 13% to reach €1 billion on the back of an upsurge in net gains on fixed assets, especially
the gain of €31.4 million in 2005 recorded on the sale of Capri by Crédit Foncier.
Net income (excluding minority interests) amounted to €782 million in 2005, a 4% increase on the 2004 figure.
Finally, at December 31, 2005, the CNCE Group’s Commercial Banking division had capital funds of €5.9 billion. Return on
allocated equity, determined based on regulatory capital requirements equivalent to 6% of risk-weighted assets for banking
activities and 100% of the solvency margin for insurance business, was 12% in 2005.
5.1 Net banking income up 12%, driven by sustained sales
In 2005, the Commercial Banking division continued to enjoy very high volumes and succeeded in expanding its customer
base despite fierce market competition. The division’s net banking income jumped 12% to more than €1.8 billion.
Net interest margin
Commercial Banking net banking income
+ 12%
1,828
1,634
1,059
■ Other income
■ Commissions and fees
■ Net interest margin
1,003
523
481
150
Pro forma 2004
246
2005
Net interest margin climbed 6% to €1,059 million, reflecting the combination of a sharp 13% jump in outstanding loans,
a 10% increase in outstanding deposits and a tighter overall intermediation margin. In line with the broad market trend,
the intermediation margin was, however, boosted by lower borrowing costs, which partly offset the erosion of margins
on customer items.
Net commissions and fee income
Total commissions and fee income advanced by 9% to €523 million during the year.
■
■
Commissions and fees from savings products came in at €61 million for the year ended December 31, 2005, reflecting a 6%
year-on-year rise. These commissions and fees are mainly derived from mutual fund products, which surged 14% during the year.
Commissions and fees from loans leapt 13% to €142 million in 2005.
Payment protection insurance accounted for €37 million of this total, up 20% for the year – primarily driven by a buoyant real
estate loan market and the renegotiation of the partnership with the CNP. Early loan repayment penalties rose to €50 million
by the end of 2005 amid falling interest rates. Incidental commissions on loans, including handling fees and guarantees, edged up
to €55 million in 2005.
■
32
Commissions and fees from banking services continued to rise, increasing 7% to €320 million, including more than
€100 million from electronic banking services.
15:12
Page 33
Other income
Other income, which totaled €246 million in 2005, mainly corresponds to gross margin on insurance business which
advanced 27% to €165 million, boosted by growth in guarantees and non-life insurance.
Another record year for loans
Total outstanding loans (including finance leases and excluding the outstandings of the individual Caisses d’Epargne) jumped
13% in 2005, notably due to the vibrant property loans market against a backdrop of stiff competition requiring skilful
calibration of volumes and margins.
Customer loans
+ 13%
60.7
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
53.9
20.2
■ Private individuals
■ Other markets
2005
The CNCE Group continued to expand in Commercial Banking markets and pursued its drive to diversify into specialized
markets, particularly small- and medium-sized enterprises, through Banque Palatine. Outstanding loans to private individuals
accounted for more than 60% of total outstanding loans in 2005, up 9.2% on the year-earlier figure.
Customer savings surge 10%
CHAIRMAN'S REPORT
36.8
33.7
Pro forma 2004
RISK
MANAGEMENT
23.9
■
■
Liquid savings (including demand deposits) stood at €8.3 billion at December 31, 2005, a rise of 4% compared to end-2004,
essentially reflecting an increase in demand deposits.
Investment savings totaled €114.3 billion, an 11% year-on-year rise. This increase was mainly driven by life insurance,
which again reported a record level of inflows in 2005 and total outstandings of €73.5 billion at the year-end, representing a
14% jump compared with end-2004. Savings invested in mutual funds advanced 7% to nearly €41 billion, reflecting good
overall market conditions during the year.
INFORMATION
ON THE ISSUER
Total customer savings – including demand deposits – reached €123 billion at end-2005. Banque Palatine and La Compagnie
1818 reported significant increases in new deposits, especially in life insurance. Altogether, customer savings climbed by
more than €11 billion.
RESOLUTIONS
Customer savings (excluding demand deposits) at December 31, 2005 amounted to nearly €117 billion, a year-on-year jump of 10%.
33
12/07/06
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Page 34
Customer savings
+ 10.4%
122.6
110.9
114.3
102.9
8.0
■ Liquid savings
■ Investment savings
8.3
Pro forma 2004
2005
5.2 An 8% rise in general operating expenses
Personnel costs
Other general operating expenses
Pro forma 2004
2005
Change
(649)
(600)
(701)
(651)
(53)
(51)
8%
8%
(1,248)
(1,352)
(104)
8%
Personnel costs – which accounted for almost 52% of general operating expenses – rose by 8% during the year to €701 million,
reflecting the dual impact of higher staffing levels and salary costs:
■
a 4% increase in headcount accounted for half of the rise in personnel costs. Headcount grew across all the Group’s banners,
as well as within the CNCE itself owing to the restructuring of the management and monitoring functions of the business
lines;
■
the relatively significant increase in salary costs includes:
■
pay increases and the adoption of a new bonus system (prime Villepin);
■
headcount reduction measures implemented by the Crédit Foncier Group, including retirement incentives and the
standardization of employee benefits in the wake of the Entenial merger.
Other general operating expenses came in 8% higher than in 2004, at €651 million. This notable increase was primarily
attributable to:
■
■
■
a €1 million rise in taxes other than on income to €35 million;
an increase of €44 million in external services to €542 million (up 9%). This increase primarily reflects investments
relating to regulatory commitments (implementation of Basel II and IFRS), as well as risk monitoring and management
projects. In addition, the combined impact of the upgrading of Crédit Foncier’s IT systems (Copernic project) and Banque
Palatine’s strategic plan accounted for €14 million of the total figure;
net depreciation and amortization expense amounted to €74 million, which was 9% higher than the figure for 2004.
5.3 A 23% leap in gross operating income
Gross operating income came in at €476 million, a massive 23% upsurge compared with 2004, while the Commercial Banking
division’s cost/income ratio also improved by 2.4 percentage points, to 74%.
34
Page 35
5.4 Effective control of provisions for loan losses
The €2 million net release from provisions from the profit and loss account for the year ended December 31, 2005, compares
favorably with net allocations to provisions totaling €7 million in 2004. Provisions for loan losses remained modest in view of
aggregate customer loans outstanding of €60.7 billion.
The proportion of non-performing loans in the Commercial Banking division’s total customer outstandings fell back slightly by
0.4 percentage point in 2005, coming in at 3.1%. General and sector-based provisions provided additional cover of €114 million
at December 31, 2005.
Nevertheless, the first-time adoption of CRC rule 2002.03 led to an additional provision being set aside for the discounting
of repayments on non-performing loans, totaling €64 million net of the deferred tax effect, and which was recognized directly
in opening capital funds and reserves.
5.5 Ordinary income before tax jumps 13%
Ordinary income before tax rose 13% in 2005 to €1 billion. This smaller increase in comparison to gross operating income can
be attributed to a slight decline in the share in income of companies accounted for by the equity method, which offset the net
release from provisions and the rise in net gains on fixed assets. The slight decline in income from companies accounted for by
the equity method can be explained by a smaller contribution to consolidated income from the individual Caisses d’Epargne
(via the CICs) when compared to the 2004 pro forma figure.
5.6 Net income for the year just shy of €800 million
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Regulatory return on equity for the Commercial Banking division stood at 12% after tax, based on regulatory capital
requirements equivalent to 6% of risk-weighted assets for banking activities, and 100% of the solvency margin for insurance
business.
6 A GOOD YEAR FOR INVESTMENT BANKING
The contribution of the Investment Banking division’s subsidiaries is identical for both Groupe Caisse d’Epargne and the CNCE
Group. Comments on the division’s operations and results are therefore provided in section 4 of Groupe Caisse d’Epargne’s
Management Report.
CHAIRMAN'S REPORT
Net income totaled €782 million in 2005, representing a 4% rise on the 2004 figure.
■
CNC recommendation 2003-R-01 setting out new rules for identifying, measuring and accounting for pension commitments
and other employee benefits, has been applied as from January 1, 2005. At the application date, this change led to a reduction
in opening capital funds and reserves of €15 million, net of deferred taxes, comprising, in particular, unrecognized actuarial
gains and losses, in accordance with the first-time application rules set out by the recommendation;
■
Furthermore, CRC rule 2002-10 has established new regulations regarding the depreciation, amortization and impairment of
assets. In particular, major fixed asset components are now accounted for separately and depreciated over their respective
useful lives. This new rule led to a €1.4 million increase in opening capital funds and reserves, net of deferred taxes.
7.2 Changes in the balance sheet of the CNCE parent company
At December 31, 2005 total assets amounted to €133 billion, up 7% on the previous year. This €8.3 billion increase
is essentially attributable to merger operations carried out with Martignac Finance (the individual Caisses d’Epargne’s
refinancing arm) and the creation of several new entities (CACEIS, La Compagnie 1818, the joint holding company with
Macif-Maif, etc.).
INFORMATION
ON THE ISSUER
7.1 Changes in accounting methods
RESOLUTIONS
7 COMMENTS ON THE ACTIVITIES AND RESULTS OF THE CNCE
35
12/07/06
15:12
Page 36
Following these operations, the gross value of the CNCE’s investments stood at €14.3 billion. The sharp €5.2 billion decline
in customer loans reflects the sale of the institutional and corporate loan portfolio to the Group’s specialized subsidiaries
(IXIS CIB, Banque Palatine and Compagnie de Financement Foncier).
7.3 Changes in income posted by the CNCE parent company
2004
2005
Net banking income
1,501
(563)
714
(415)
Cost/income ratio
938
37.5%
Net gains on fixed assets
(145)
25
(35)
194
110
169
– 76%
ns
818
458
(360)
– 44%
Exceptional items
Net allocations to the Reserve for General Banking Risks
100
(141)
0
(3)
153
0
(103)
294
0
ns
ns
ns
Net income
777
608
(169)
– 22%
299
58.1%
Change
(787)
148
– 52%
– 26%
(639)
20.6 pts
– 68%
–
The dip in 2005 consolidated net income should be set against the impact of the New Foundations agreements and non-recurring
items included in 2004 income (Alliance indemnity clause and Eulia merger premium), as well as the effect of the retroactive
merger with IXIS (businesses contributed and non-recurring capital gains on portfolios transferred to the Caisse des Dépôts).
Consequently, gross operating income came in at €299 million versus €938 million in 2004, while net income totaled
€608 million compared with €777 million in 2004.
7.3.1 Net banking income
The CNCE’s net banking income for 2005 amounted to €714 million.
2004
2005
Capital funds and investments
565
480
(85)
– 15%
Lending
Proprietary activities and intermediation
14
32
10
97
(3)
66
– 24%
x3
Net banking income from Group proprietary
and banking activities
45
108
62
x 2.4
Electronic banking
International payment and exchange systems
Banking services
56
32
17
61
43
22
5
11
5
9%
34%
29%
Net banking income from total banking services
105
126
21
20%
Other sources (former IXIS and Eulia, Odacia)
786
0
(785)
–
1,501
714
(787)
– 52%
Total net banking income
Change
Two thirds of net banking income is composed of dividends net of leveraging (1) owing to the refinancing of these investments
(amounting to €4 billion).
Income from the financial management of the proprietary credit and equity portfolio increased spectacularly in 2005, reflecting
the contribution in 2004 of the IXIS portfolios.
The total banking services line, comprising interbank transfers, electronic money systems (bank cards) and custody services,
leapt 20%, consistent with the improvement in technical equipment available to customers of the individual Caisses d’Epargne,
as well as the management of new subsidiaries.
(1) Leveraging: cost of refinancing equity interests.
36
Page 37
FINANCIAL REPORT
OF THE CNCE GROUP
17:01
7.3.2 General operating expenses
2004
2005
Personnel costs
Research
Advertising
Property costs and joint expensess
General operating expenses and other operations
Other operating expenses (former IXIS and Eulia)
(109)
(117)
(33)
(48)
(106)
(336)
(177)
(173)
(34)
(70)
(133)
0
(67)
(56)
(1)
(22)
(27)
336
Total, gross
(749)
(587)
163
– 22%
187
172
(15)
– 8%
(563)
(414)
148
– 27%
(1)
Cross-charged expenses
(2)
Total, net
Change
61%
48%
3%
46%
26%
ns
(1) Including cross charging for permanent and temporary personnel.
(2) Excluding cross charging for permanent personnel.
Excluding exceptional items recognized in 2004 (impact of the Eulia and CDC IXIS mergers), total operating expense posted
a sharp increase that reflects the change in the CNCE’s scope of consolidation, its new structure and the move to the new
Avant-Seine headquarters building.
In addition, work on certain major regulatory projects was stepped up during the year (Basel II, IFRS, etc.), which accounted for
a large portion of the year-on-year increase in research expenses. The strengthening of headcount mainly impacted the new
regulatory functions and the expansion into specialized markets.
Finally, gross operating income for 2005 of €299 million was one third of the 2004 figure, while the cost/income ratio stood
at 58.1%.
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Net allocations to provisions for the year stood at €35 million.
Net gains on fixed assets increased sharply on account of non-recurring items falling outside the scope of the CNCE’s ordinary
activities. This rise was essentially attributable to:
■
capital gains generated on intra-group operations arising from the IXIS IS/CACEIS linkup;
■
merger premiums generated during the Martignac-IXIS Italia Holding operations, and netted off in the Group’s consolidated
financial statements.
As with the other Group entities, the amounted recorded under exceptional items reflects the portion attributable to the CNCE
in creating the requisite solvency margin for the CGR pension fund.
CHAIRMAN'S REPORT
7.3.3 Other income and expense items
Net income therefore amounted to €608 million, slipping back 22% compared to the exceptionally high figure recorded in
the previous and untypical year.
At the Annual General Meeting, shareholders will be asked to approve a dividend payout of €551.6 million (after allocating
€30.4 million to the legal reserve and €95.3 million to retained earnings), representing a net per share dividend of €1.16.
RESOLUTIONS
Coporate income tax takes into account gains linked to the tax consolidation group, generating a tax saving of €153 million at
end-2005.
2002
2003
2004
(1) For natural persons or legal entities with parent company tax status.
(2) For other legal entities.
(3) Including an interim dividend of €0.46 paid in 2004.
Net dividend
Avoir fiscal
tax credit
Gross dividend
0.42
0.21 (1)
0.04 (2)
0.63 (1)
0.46 (2)
0.44
0.22 (1)
0.04 (2)
0.66 (1)
0.48 (2)
1.46
NA
1.46 (3)
INFORMATION
ON THE ISSUER
The net per share dividends paid over the last three years were as follows:
37
12/07/06
15:12
Page 38
7.4 Five-year financial summary
Financial position
Capital funds
Number of shares
Overall results
Revenues
Profit before income tax, depreciation,
amortization and provisions
Profit net of income tax, depreciation
Dividend per share (1)
2001 CNCE
2002 CNCE
2003 CNCE
2004 CNCE
2005 CNCE
2,905,079,235
190,496,999
2,905,079,235
190,496,999
2,905,079,235
190,496,999
6,905,865,632
452,843,648
7,251,677,774
475,519,854
4,972,542,841
2,172,301,666
2,387,471,347
5,874,994,587 3,810,280,765
82,462,665
583,253
89,118,725
159,016
84,495,747
0
825,520,624
149,483,133
374,893,131
(152,781,257)
136,913,494
76,198,800
86,105,054
80,008,740
86,530,714
83,818,680
776,800,149
656,513,688
608,445,223
551,603,031
26
11
13
13
8
0.43
0
0.47
0
0.44
0
1.82
0.33
0.79
(0.32)
0.72
0.40
0.45
0.42
0.45
0.44
1.72
1.45
1.28
1.16
754
437
317
45,684,101
694
413
281
43,683,337
789
520
269
49,990,322
1,712
1,203
509
119,402,998
1,292
976
316
90,674,236
Per share data
Revenues
Profit before income tax, depreciation,
Profit net of income tax, depreciation,
Dividend per share
Employee data
Average headcount
Managerial staff
Non-managerial staff
Total payroll
(1) Subject to approval by the Annual General Meeting.
8 ANALYSIS OF THE CONSOLIDATED BALANCE SHEET AND CAPITAL FUNDS
8.1 Comments on the consolidated balance sheet
Pro forma 2003
2004
2005
Amount
%
Due from banks
Customer loans (including finance leases)
Securities transactions
Fixed assets
Other assets
123,896
78,132
100,222
1,932
30,743
160,520
91,761
100,779
2,274
32,424
167,530
98,579
126,663
2,390
42,475
7,010
6,818
25,884
116
10,051
4%
7%
26%
5%
31%
Change
Total assets
334,925
387,758
437,637
49,879
13%
Due to banks
Customer deposits
Securities and subordinated debt
Other liabilities
Capital funds and reserves
95,098
35,130
132,481
61,364
10,852
118,721
42,290
150,237
65,025
11,485
132,085
43,701
160,222
89,083
12,546
13,364
1,411
9,985
24,058
1,061
11%
3%
7%
37%
9%
Total liabilities, capital funds and reserves
334,925
387,758
437,637
49,879
13%
At December 31, 2005, total consolidated assets of the CNCE Group stood at €437.6 billion, representing a 13% increase on
the figure at December 31, 2004. For information, the main adjustments to the pro forma 2003 balance sheet concerned
the consolidation of Entenial for an amount of €14 billion, and the full consolidation of IXIS, which was proportionally
consolidated based on a 26.45% stake at December 31, 2003.
Outstanding customer loans at December 31, 2005 surged by more than €6.8 billion, a rise of 7.4% on the year-earlier figure,
and now account for 23% of total consolidated assets.
The Group ended the year with consolidated capital funds and reserves (including the Reserve for General Banking Risks)
of €12.5 billion, versus €11.5 billion at December 31, 2004.
38
Page 39
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
8.2 Regulatory capital and capital adequacy ratio
2003
2004
2005
Change
Total capital funds
of which Tier-1 capital
4,664
4,461
12,282
12,047
13,688
12,809
11%
6%
Capital funds requirements
Loan loss risks
Market risks
3,060
2,747
313
7,173
5,931
1,242
7,705
6,358
1,347
7%
7%
8%
152%
171%
178%
7 pts
At December 31, 2005, the CNCE Group’s capital funds requirements totaled €7.7 billion. As a result of the inclusion of IXIS
within the scope of consolidation for 2004, the 2005 financial year witnessed a 7% increase in capital funds requirements,
essentially due to its capital markets and financing businesses.
Total capital funds corresponds to the sum of Tier-1 capital (including non-cumulative, undated deeply subordinated notes),
Tier-2 capital and regulatory deductions (holdings in unconsolidated credit institutions and those accounted for by the equity
method).
At December 31, 2005, the Group’s consolidated capital adequacy ratio stood at 178% (compared to 171% one year earlier),
remaining comfortably above the statutory ratio of 100%.
The Group’s Tier-1 ratio was however impacted by CNC rule 2003-R.01 concerning the measurement and accounting treatment
of pension commitments and employee benefits, which must now be deducted from capital funds and reserves if no
corresponding provision is carried.
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
RESOLUTIONS
The CNCE will also pursue ongoing projects connected to vital regulatory issues including Basel II and IFRS, with the publication
of financial statements under IFRS for the first time in 2006.
INFORMATION
ON THE ISSUER
In 2006, the CNCE Group will continue the reorganization program launched at the end of 2004, in keeping with the targets set
out in the strategic plan relating to the management and monitoring functions of its business lines and subsidiaries.
CHAIRMAN'S REPORT
9 OUTLOOK FOR 2006
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Page 40
Consolidated financial statements of the CNCE Group
CONSOLIDATED BALANCE SHEET
of the Caisse Nationale des Caisses d’Epargne Group at December 31, 2005, 2004 and 2003
ASSETS
Notes
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2003
6
7
8
167,530
95,478
3,101
160,520
88,933
2,828
76,123
36,813
1,593
9
31
116,708
2,045
91,913
1,581
31,873
602
10
12
16
14
7,910
2,390
1,084
41,391
7,285
2,274
947
31,477
2,445
899
436
11,887
437,637
387,758
162,671
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2003
45,251
48,069
2,017
64,806
52,829
31,991
728
41,457
17,107
23,608
479
1,012
Cash, money market and interbank items
Customer items
Lease financing
Bonds, equities and other fixedand variable-income securities
Investments by insurance companies
Investments in unconsolidated subsidiaries,
affiliates accounted for by the equity method
and other long-term investments
Tangible and intangible assets
Goodwill
Accruals, other accounts receivable and other assets
Total assets
OFF-BALANCE SHEET COMMITMENTS
Notes
Commitments given
Financing commitments
Guarantee commitments
Commitments made on securities
Commitments given by the insurance business
40
18, 19
12/07/06
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Page 41
Dec. 31, 2003
Money market and interbank items
Customer items
Debt securities
Insurance technical provisions
Accruals, other accounts payable and other liabilities
Negative goodwill
Provisions for liabilities and charges
Subordinated debt
Minority interests
Consolidated capital funds and reserves
(excluding Reserve for General Banking Risks)
Capital
Additional paid-in capital
Consolidated reserves and retained earnings
Net income for the year (+/–)
6
7
13
32
14
16
15
17, 3
17, 2
132,085
43,701
151,397
1,410
85,802
0
1,157
8,825
259
714
118,721
42,290
142,324
1,052
62,219
0
1,133
7,913
256
621
43,792
13,488
74,191
437
21,237
4
518
4,135
286
381
17, 1
12,287
7,252
2,046
1,886
1,103
437,637
11,229
6,906
1,939
1,499
885
387,758
4,202
2,905
435
535
327
162,671
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2003
5,715
13,767
2,110
741
7,154
13,288
3,707
495
3,209
7,054
1,349
73
Notes
Commitments received
Commitments received on securities
Commitments received by the insurance business
18, 19
RISK
MANAGEMENT
Dec. 31, 2004
CHAIRMAN'S REPORT
Dec. 31, 2005
RESOLUTIONS
Notes
INFORMATION
ON THE ISSUER
LIABILITIES, CAPITAL FUNDS AND RESERVES
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
41
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Page 42
CONSOLIDATED PROFIT AND LOSS ACCOUNT
of the Caisse Nationale des Caisses d’Epargne Group
for the years ended December 31, 2005, 2004 and 2003
Notes
2005
2004
2003
Interest and similar income
Interest and similar expense
Income from equities 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 and expense
Gross margin on insurance business
Net banking income
20
20
21
22
23
14,783
(13,780)
263
1,902
1,402
24
25
33
Depreciation, amortization and impairment
of tangible and intangible assets
26
Operating income
27
Exceptional items
(Allocations to)/releases from the Reserve for
General Banking Risks and regulatory provisions
Minority interests
42
28
29
30
10,710
(10,568)
111
1,246
1,313
6,643
(6,402)
53
491
456
(340)
157
211
4,598
196
37
149
3,194
120
120
64
1,545
(3,382)
(2,362)
(1,089)
(178)
1,038
(150)
682
(66)
390
(74)
964
(44)
638
(71)
319
337
(8)
967
144
107
570
(15)
(294)
(104)
80
(81)
(67)
(1)
(54)
(22)
(2)
(75)
1,103
40
(54)
885
(155)
(11)
327
512
117
1,593
12/07/06
15:12
Page 43
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
FINANCIAL REPORT
OF THE CNCE GROUP
As a holding company, the CNCE performs the role of Group head, owning and managing the interests in Group subsidiaries,
and setting out its development strategy.
In respect of the Group’s financial functions, the CNCE is notably responsible for the centralized management of any surplus
funds held by the individual Caisses d’Epargne et de Prévoyance, for carrying out any financial transactions required to
develop and refinance the Group, and for choosing the most efficient counterparty for these transactions in the broader
interests of the Group. The CNCE also provides banking services to the other Group entities.
Specialized IT subsidiaries
Customer transaction processing is carried out by a banking information system organized around three software publishers
set up to develop and deploy IT application platforms, and a central IT organization (CNETI).
1.2 Guarantee system
Pursuant to the act of June 25, 1999, the CNCE, acting as the central institution, organized a network mutual guarantee and
solidarity mechanism within Groupe Caisse d’Epargne to ensure 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 affiliates of the Group, in accordance with article L. 511-31 of the Code monétaire et financier
(French Monetary and Financial Code).
The individual Caisses d’Epargne participate in the guarantee system through a Fonds de garantie et de solidarité du réseau
(Network Mutual Guarantee and Solidarity Fund, FGSR), carried in the books of the CNCE. The FGSR has €250 million worth of
funds that can be used immediately if the need arises. This amount is invested in a dedicated mutual fund. Should this prove
insufficient to prevent the default of a member, the Management Board of the CNCE can obtain the necessary additional
resources via a rapid decision-making process ensuring 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 that
entity’s financial capabilities. In such a case, the intervention of the individual Caisses d’Epargne, organized via the FGSR, would
also be supported by the Caisse des Dépôts et Consignations in its capacity as a shareholder and acting as an informed market
investor.
The guarantee system’s objective of averting default complements the chiefly curative market guarantee systems to which
Groupe Caisse d’Epargne also subscribes.
RISK
MANAGEMENT
Specifically, the CNCE represents its various affiliates, defines the range of products and services offered by them, organizes
depositor protection and approves Senior Management appointments. It also supervises the coherence of the network as
a whole, and oversees the proper management of its affiliated entities.
CHAIRMAN’S REPORT
The CNCE is the central institution of Groupe Caisse d’Epargne as defined by French banking law, and a financial institution
authorized to operate as a bank. It is 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.
RESOLUTIONS
1.1 Terms of Reference of the Caisse Nationale des Caisses d’Epargne et de Prévoyance (CNCE)
INFORMATION
ON THE ISSUER
1 LEGAL AND FINANCIAL FRAMEWORK
FINANCIAL REPORT OF
for the year ended December 31, 2005
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2 PRINCIPLES AND METHODS OF CONSOLIDATION OF THE CNCE GROUP
2.1 Principles
The consolidated financial statements are drawn up in accordance with the principles laid down by rules 99-07 and 2000-04 of
the Comité de la réglementation comptable (French Accounting Regulatory Committee, CRC).
2.2 Methods and scope of consolidation
The consolidated financial statements include the accounts of the CNCE and all subsidiaries and affiliates over which the Group
exercises a controlling or significant influence. Note 5 specifies the Group’s scope of consolidation.
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.
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 special purpose entities
When the Group, or a company within the Group, controls an entity by virtue of a contract or clause in the company’s articles
of association, this entity is consolidated, even in the absence of any capital links.
The criteria for determining control of special purpose entities, defined as structures created specifically to manage one
or more 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 associated with the entity.
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 with
effect from the acquisition date when the shares of this company are held exclusively with a view to their subsequent sale,
when the Group’s ability to control or influence a company is restricted 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 prepare 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 qualifying for consolidation,
it is not material to the Group as a whole.
Investments in such companies appear under the heading “Investments in unconsolidated subsidiaries, affiliates accounted
for by the equity method and other long-term investments”.
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2.3 Changes in the scope of consolidation
FINANCIAL REPORT
OF THE CNCE GROUP
First-time consolidation of Surassur
Surassur, a Luxembourg based re-insurance subsidiary controlled by the Group, qualified for consolidation with effect from
January 1, 2005.
Restructuring of the Group’s Private Banking division
During 2005, the Group restructured its Private Banking division around Véga Finance, which was renamed La Compagnie
1818. The most significant operations concerned partial asset transfers from Crédit Foncier de France, Crédit Foncier Banque
and Banque Palatine to La Compagnie 1818.
FINANCIAL REPORT OF
The main changes in the scope of consolidation during the 2005 financial year do not have a material impact upon the Group’s
capital funds and reserves and consolidated net income.
Formed from the linkup between IXIS Investor Services and Crédit Agricole Investor Services, CACEIS is a jointly-owned
subsidiary of Groupe Caisse d’Epargne and Crédit Agricole SA, with each party holding a 50% interest. CACEIS provides fund
management and issuer services for the corporate and institutional investment market.
The accounts of IXIS Investor Services were fully consolidated up until July 1, 2005. As from this date, CACEIS is proportionally
consolidated within the consolidated accounts of Groupe Caisse d’Epargne.
The creation of CACEIS led to the recognition of goodwill in an amount of €150 million.
RISK
MANAGEMENT
Creation of CACEIS
The consolidated financial statements of the CNCE Group are drawn up in conformity with CRC rule 99-07.
Under rule 99-07:
■ accounting methods used by the various companies included in the consolidation should be consistent. The principal
consolidation methods are described in note 3;
■ certain valuation methods should be used when drawing up the consolidated financial statements that do not have to be
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 Group is the lessee;
■ certain accounting entries resulting from tax regulations;
■ deferred tax.
CHAIRMAN'S REPORT
2.4 Consolidation adjustments and eliminations
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 and leases with purchase options where the Group
is the lessor are recorded in the balance sheet, with the rental considered as a repayment of principal plus interest.
RESOLUTIONS
Finance lease transactions including leases with purchase options where the Group is the lessor
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.
Fixed assets acquired under finance or similar leases are restated on consolidation as if the assets had been acquired
on credit.
Accounting entries resulting from tax regulations
On consolidation, accounting entries resulting solely from tax regulations are eliminated.
As regards the presentation of the financial statements, the main items concerned are investment grants and regulatory
provisions when not included in the Reserve for General Banking Risks.
INFORMATION
ON THE ISSUER
Assets leased under finance or similar leases where the Group is the lessee
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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 tax rate and fiscal rules adopted for the computation of deferred tax are based on tax legislation currently in force and
applicable when the tax becomes due or the tax saving is realized.
Deferred tax liabilities and assets are netted off for each consolidated company. This netting process applies only to items taxed
at the same rate and items that are expected to reverse in a reasonably short period. The methods used for recognizing deferred
tax assets are reviewed at the balance sheet date, particularly as regards the period in which they are expected to be realized.
2.5 Elimination of intra-group transactions
The effect on the consolidated balance sheet and profit and loss account of intra-group transactions is eliminated on
consolidation. Gains or losses on intra-group 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.
2.6 Goodwill
“Goodwill” reflects the outstanding balance of differences not attributed elsewhere on the balance sheet between the cost of
the investment and the Group’s equity in the underlying net assets at the date of acquisition of shares in consolidated
subsidiaries and affiliates.
Positive and negative goodwill is taken to income over a period that takes into account underlying assumptions and the
objectives of the acquisition.
2.7 Translation of financial statements expressed in foreign currencies
Balance sheet and off-balance sheet items of foreign companies are translated at year-end exchange rates (with the exception
of capital funds and reserves which are translated at historical rates) and profit and loss items are translated using an average
rate for the accounting period concerned. Any gains or losses arising on translation are included in consolidated reserves
under the heading “Translation adjustments”.
2.8 Consolidation method adopted for insurance companies
The CNCE Group comprises seven insurance companies: Cegi, Ecureuil Assurances IARD, Foncier Assurance, Saccef, Socamab
Assurances, Surassur and the CIFG group.
The investments 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 CNCE Group are drawn up in accordance with the provisions of the Code
des assurances (French Insurance Code) and, where applicable, CRC rule 2000-05 governing consolidation policies for
companies subject to the French Insurance Code.
Pursuant to CRC rule 99-07, items listed in the financial statements of insurance companies included in consolidation
are presented in similar-type accounts in the CNCE Group’s balance sheet and profit and loss account, with the exception
of a number of specific items:
■ in the consolidated balance sheet, “Investments by insurance companies” and “Insurance technical provisions” 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 provisions, and net income from investments.
Moreover, the amounts of commitments given and received by insurance companies included within the scope of consolidation
are carried on separate lines of the Group’s statement of off-balance sheet commitments.
46
Balance sheet items are presented, where applicable, net of the related depreciation, amortization and any provisions or other
value adjustments.
3.1 Fixed assets
Fixed assets are recorded at historical cost.
Depreciation and amortization are recorded on a straight-line or accelerated basis over the estimated useful lives of the assets,
as follows:
■ buildings:
20 to 50 years
■ fixtures and fittings:
5 to 20 years
■ specialized furniture and equipment:
4 to 10 years
■ computer equipment:
3 to 5 years
■ computer software: up to a maximum of 5 years
Major fixed asset components are separated out and depreciated over their useful lives. In some circumstances, additional
write-downs may be made.
3.2 Investments in unconsolidated subsidiaries, affiliates accounted for by the equity method,
Investments in unconsolidated subsidiaries and affiliates accounted for by the equity method 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 the historical 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
durable 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” as regards both listed and 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 recorded for unrealized capital losses. Unrealized capital gains are not recognized.
3.3 Securities
Securities transactions are accounted for in accordance with CRBF rule 90-01 (as amended).
Trading account securities are securities that are acquired or sold with a view from the outset to being resold or repurchased
within a short period not exceeding six months. Only securities negotiable on a liquid market, with market prices permanently
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 “Held-for-sale securities” or “Investment
securities” depending on their definition and the conditions required for inclusion in each of these target portfolios. Such
trading account securities are transferred at their market value on the day of transfer.
FINANCIAL REPORT OF
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 CRC and the Comité de la réglementation bancaire et financière (Banking and Financial
Services Regulatory Committee, CRBF), notably CRC rule 99-07 governing consolidation policies and CRBF rule 2000-04
governing the consolidated financial statements of companies.
RISK
MANAGEMENT
3 ACCOUNTING POLICIES
FINANCIAL REPORT
OF THE CNCE GROUP
Page 47
CHAIRMAN'S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
47
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Page 48
Held-for-sale securities are 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.
At their date of acquisition, held-for-sale securities 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 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 matching entry
to “Interest and similar income” in the profit and loss account.
Held-for-sale securities 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. The provision for unrealized capital losses takes account of any gains
generated by hedging instruments that may have been set up.
Capital gains or losses on the disposal of held-for-sale securities, 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 fixed-income securities, a provision is carried for non-performing loans
with a matching entry in the profit and loss account under “Net allocations 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 these criteria may be classified as investment securities
when, in compliance with the provisions of the CRBF, 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 relating 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 acquisition in the same manner as held-for-sale securities. 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 fixed-income held-for-sale securities.
A provision for impairment in value may be recorded if it is highly probable that the entity will not hold the securities
to maturity owing to changes in circumstances. If a default risk exists regarding the issuer, a provision is carried for
non-performing loans with a matching entry in the profit and loss account under “Net allocations to provisions”.
Provisions for impairment in the value of held-for-sale securities and investment securities are supplemented by a provision
for certain counterparty risks (see note 15).
Portfolio equity investments are accounted for in accordance with CRBF rule 90-01 as amended by CRC rule 2000-02.
Portfolio activities consist in regularly investing a portion 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 transactions carried out on an ongoing basis within a structured framework,
generating regular yields chiefly derived from capital gains on disposals. At the balance sheet date, portfolio equity
investments are recorded at the lower of historical cost or fair value to the Group. “Fair value to the Group” is based
on 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.
Provisions are systematically recorded for unrealized capital losses. Unrealized capital gains are not recognized.
Repurchase agreements are presented in accordance with CRBF rule 89-07 and instruction 94-06 issued by the Commission
bancaire (French Banking Commission).
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 its 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.
48
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Page 49
3.4 Customer loans
Customer loans are recorded at their nominal value net of any provisions for non-performing items.
Guarantees received are recognized in the balance sheet, and are presented in note 18. 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 part 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 loans 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 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.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
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 allocations to
provisions in the profit and loss account and offset 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 at present value in terms of the difference
between the outstanding principal 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. The net impact of discounting these provisions over time is recognized
in “Net allocations to provisions”.
Specific provisions for recognized risks are supplemented by general provisions for certain counterparties (see note 15).
Interest on non-performing loans continues to be accrued in operating income, with the exception of loans classified
as doubtful, for which interest is not recognized in accordance with CRC rule 2002-03.
In note 7 to the financial statements, the breakdown of outstandings adopted is that used within the CNCE Group for internal
management purposes, notably in areas related to sales, finance and risks.
CHAIRMAN'S REPORT
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.
RISK
MANAGEMENT
Irrecoverable loans are written off as losses in the profit and loss account and the corresponding provisions are released.
3.6 Bonds
Bonds issued by the CNCE Group 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.
INFORMATION
ON THE ISSUER
The Reserve for General Banking Risks (RGBR) constitutes a fund for the risks inherent in the Group’s banking activities
as required by article 3 of CRBF rule 90-02 and instruction 86-05 (as amended) of the French Banking Commission.
RESOLUTIONS
3.5 Reserve for General Banking Risks
49
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3.7 Employee benefits
Employee benefit obligations are generally covered by contributions charged to the profit and loss account and paid to
retirement funds or insurance companies. A provision is set aside for the full amount of any obligations not covered by these
funds, in particular the Group’s pension fund (see note 15).
Post-employment benefits (lump-sum retirement bonuses, pensions and other post-employment benefits) and long-term
employee benefits (long-service benefits) are calculated and recognized in accordance with Conseil national de la comptabilité
(French National Accounting Board, CNC) recommendation 2003-R-01 with effect from January 1, 2005.
Under the CNC’s recommendation, obligations are valued using an actuarial method that takes account of the age, length
of service and the likelihood of personnel being employed by the Group until retirement. This method also takes into
consideration the value of plan assets, and uses the projected unit credit method to allocate the costs over the working lives
of employees. Accumulated actuarial gains and losses on post-employment benefits are recognized to the extent that they fall
outside a corridor of 10% of the higher of the benefit obligation or plan assets (corridor method).
3.8 Financial futures and other forward agreements
The CNCE Group conducts transactions on different over-the-counter and 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 CRBF rules 88-02 and 90-15. Commitments on such instruments are recorded in off-balance
sheet accounts at their nominal value. The amount of commitments represents the volume of unsettled transactions at the
balance sheet date.
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 the Group’s 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 market value
at the balance sheet date, 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 unwound.
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. A provision is recorded for potential unrealized losses
determined by reference to market values. Market values are calculated based on the nature of the markets concerned:
organized exchanges (and 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.
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.
50
15:12
Page 51
3.9 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 expense,
are translated at year-end market 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 variances resulting from the consolidation of foreign branches, are recorded under accruals in the balance sheet.
Differences 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 accounting period.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
This item covers provisions booked in respect of liabilities and charges not directly related to banking operations as defined in
article L. 311-1 of the French Monetary and Financial Code and associated transactions as defined in article L. 311-2 of said
Code. 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 for liabilities and charges related to banking operations and associated transactions
as defined in the aforementioned articles L. 311-1 and L. 311-2, rendered probable by past or current events and whose
purpose is clearly defined, but whose effective occurrence remains uncertain.
RISK
MANAGEMENT
3.10 Provisions for liabilities and charges
3.11 Accounting policies and valuation rules specific to insurance companies
The accounting principles and valuation rules specific to insurance companies are adhered to in the CNCE Group’s consolidated
accounts.
Investments
Investments are stated at cost, excluding acquisition expenses, except for investments corresponding to unit-linked policies,
which are marked-to-market at each balance sheet date, as are the corresponding technical provisions.
CHAIRMAN'S REPORT
This item includes, in particular, a provision for the Group’s potential pension liabilities and a provision in respect of
counterparty risks.
Provision is made for any permanent impairment in value of a property or equity investment. The calculation methods are
governed by recommendation 2002-F of the CNC’s emerging issues taskforce (Comité d’urgence), dated December 18, 2002.
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 for any counterparty risk.
RESOLUTIONS
The liquidity risk reserve provided for by the French Insurance Code is eliminated in the consolidated accounts in accordance
with CRC rule 2004-10 of November 23, 2004.
Income from insurance premiums on outstanding policies is accrued in the profit and loss account including an adjustment
for accrued income on premiums not notified to policyholders at year-end (Group policies that include mortality risk cover).
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 provisions 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.
INFORMATION
ON THE ISSUER
Life insurance transactions
51
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Page 52
Technical provisions 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 provision for management expense is set aside when future management expense is not covered by the loading
included in accrued policy premiums 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 provisions for claims payable or technical provisions, it is recorded under
provisions for amounts payable on with-profit policies.
The provision for claims payable represents mainly insured losses that have occurred and capital amounts payable but not
paid at the year-end.
Technical provisions 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 markto-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 provisions.
Non-life insurance transactions
Premium income is recorded net of tax and cancellations.
A provision 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 between the balance sheet date and the next maturity date,
or (failing that) the term of the policy.
The provision 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 provisions.
Provisions are set up as required to cover variations in claims experience in compliance with legislation regarding such
provisions. This applies notably to cyclical risks with varying impacts on successive years, such as occasioned by natural
phenomena.
Provisions for claims payable represent the estimated amount of foreseeable expenses, net of any recoveries receivable.
Provisions for expenses related to the future management of claims are determined with reference to a rate calculated based
on historical costs.
Provisions are recorded in liabilities gross of any re-insurance. The projected share of re-insurers in relation to provisions 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 are recorded as follows:
52
■
life: acquisition costs are deferred to the extent of the policy’s net future margins, including the duly substantiated financial
margin, particularly when there is a difference between the discount rate used and the estimated return on the conservatively
valued assets. The costs are amortized as these future margins are recognized, these margins being revalued at each
balance sheet date. If these future margins are deemed to be insufficient in relation to the amortization schedule, the asset
values are written down;
■
non-life: business acquisition costs are deferred in a manner consistent with the method used to defer unearned premium
provisions, and are amortized over the remaining life of the contracts in question.
12/07/06
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4 CHANGES IN ACCOUNTING METHOD AND PERIOD-ON-PERIOD COMPARISONS
FINANCIAL REPORT
OF THE CNCE GROUP
■
furthermore, CRC rule 2002-10 has established new regulations regarding the depreciation, amortization and impairment of
useful lives. As at January 1, 2005, this change of accounting method led to a decrease of €40 million in opening capital
funds and reserves, net of deferred taxes;
■
CRC rule 2004-06 concerning the definition, recognition and measurement of assets introduced a change in the accounting
treatment of acquisition costs, which are now included in the amount at which the item is initially recognized on the balance
sheet. The new regulations nevertheless allow entities to continue expensing such acquisition costs in their individual
financial statements. However, in keeping with International Financial Reporting Standards where no such option exists, the
Group has decided to apply the new accounting treatment. This new rule led to a €3 million increase in opening capital funds
and reserves, net of deferred taxes;
■
CNC recommendation 2003-R-01 setting out new rules for identifying, measuring and accounting for pension obligations and
other employee benefits, has been applied as from January 1, 2005. At the application date, this change led to a reduction in
opening capital funds and reserves of €146 million, net of deferred taxes, comprising, in particular, unrecognized actuarial
gains and losses, in accordance with the first-time application rules laid down by the recommendation.
The CNCE Group has elected against the early application of the regulations adopted by the French National Accounting Board
(CNC) in November 2005, which concern, in particular, the accounting treatment of credit risks and securities transactions.
The Group has also decided against the early application of the CNC’s draft proposal concerning the recognition of regulated
home purchase savings plans.
4.2 Period-on-period comparisons
Restructuring operations in 2004
On May 27, 2004, Groupe Caisse d’Epargne and the Caisse des Dépôts et Consignations signed an agreement aimed at
redefining the nature of their partnership.
The major operations of the agreement were that the Caisse des Dépôts et Consignations transferred its 50.10% holding
in Compagnie Financière Eulia and its 43.55% stake in its investment banking and asset management subsidiary, CDC IXIS,
to the CNCE. 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 it a 20% stake in their capital.
Prior to the restructuring operations which took effect on June 30, 2004, CDC IXIS transferred its portfolio of listed equities and
certain investments to the Caisse des Dépôts et Consignations or to direct subsidiaries thereof.
Impact on the financial statements
RISK
MANAGEMENT
under CRC rule 2002-03 on accounting for credit risks, provisions covering expected losses on non-performing and doubtful
loans must be carried at present value. As at January 1, 2005, this regulatory change led to a €64 million decrease
in opening capital funds and reserves, net of deferred taxes;
CHAIRMAN'S REPORT
■
RESOLUTIONS
Several changes of accounting methods were implemented at January 1, 2005:
FINANCIAL REPORT OF
4.1 Changes in accounting method
Since June 30, 2004, the subsidiaries of Compagnie Financière Eulia previously controlled jointly with the Caisse des Dépôts
et Consignations have been controlled exclusively by Groupe Caisse d’Epargne via the CNCE. These subsidiaries – chiefly those
belonging to the Investment Banking division – have been fully consolidated within the CNCE Group from that date.
To enhance comparability, a pro forma profit and loss account is presented in note 34 for the year ended December 31, 2004.
INFORMATION
ON THE ISSUER
In terms of the consolidated profit and loss account, the results of these subsidiaries for first-half 2004 were accounted for
by the proportional consolidation method based on the situation of joint control applicable through June 30, 2004.
53
12/07/06
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Page 54
5 SCOPE OF CONSOLIDATION AT DECEMBER 31, 2005
Consolidated entities
Consolidation
method (1)
%
consolidation
%
interest
Parent
company
Parent
company
Parent
company
Caisses d’Epargne
Caisse d’Epargne des Alpes
Caisse d’Epargne d’Alsace
Caisse d’Epargne Aquitaine-Nord (group)
Caisse d’Epargne d’Auvergne et du Limousin
Caisse d’Epargne de Basse-Normandie
Caisse d’Epargne de Bourgogne
Caisse d’Epargne de Bretagne
Caisse d’Epargne Centre-Val de Loire
Caisse d’Epargne Champagne-Ardenne
Caisse d’Epargne Côte d’Azur
Caisse d’Epargne de Flandre
Caisse d’Epargne de Franche-Comté
Caisse d’Epargne de Haute-Normandie
Caisse d’Epargne Ile-de-France Nord
Caisse d’Epargne Ile-de-France Ouest
Caisse d’Epargne Ile-de-France Paris
Caisse d’Epargne Languedoc-Roussillon (group)
Caisse d’Epargne Loire Drôme Ardèche
Caisse d’Epargne de Lorraine
Caisse d’Epargne de Midi-Pyrénées (group)
Caisse d’Epargne du Pas-de-Calais
Caisse d’Epargne des Pays de l’Adour (group)
Caisse d’Epargne des Pays de la Loire (group)
Caisse d’Epargne des Pays du Hainaut
Caisse d’Epargne de Picardie (group)
Caisse d’Epargne Poitou-Charentes
Caisse d’Epargne Provence-Alpes-Corse (group)
Caisse d’Epargne Rhône-Alpes Lyon
Caisse d’Epargne du Val de France-Orléanais
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
Holassure group
Holassure
Sopassure
Caisse Nationale de Prévoyance (group)
Full
Prop.
Equity
100.00%
49.98%
17.74%
100.00%
49.98%
17.74%
OCÉOR group
Financière OCÉOR
Alyséor
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
GIE OCÉOR Informatique
Mascareigne Investors Services Ltd
OCÉOR Lease
Slibail Réunion
Société Havraise Calédonienne
Full
Full
Full
Full
Full
Full
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%
47.08%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
81.97%
95.89%
95.63%
98.13%
97.15%
–
100.00%
96.09%
90.68%
47.08%
84.50%
94.50%
96.94%
87.18%
85.44%
Caisse Nationale des Caisses d’Epargne et de Prévoyance
54
2005
(1) Consolidation method: Full = full consolidation; Prop. = proportional consolidation; Equity = equity method.
(2) Share in income prior to the “New Foundations” agreement.
12/07/06
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Page 55
FINANCIAL REPORT
OF THE CNCE GROUP
%
consolidation
%
interest
Parent
company
Parent
company
Parent
company
Parent
company
Parent
company
Parent
company
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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%
47.08%
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%
47.08%
84.39%
100.00%
–
81.87%
86.56%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
RISK
MANAGEMENT
Consolidation
method (1)
CHAIRMAN'S REPORT
%
interest
RESOLUTIONS
%
consolidation
INFORMATION
ON THE ISSUER
Consolidation
method (1)
FINANCIAL REPORT OF
First-half 2004 (2)
2004
55
12/07/06
15:12
Page 56
2005
Consolidation
method (1)
%
consolidation
%
interest
Banque Palatine group (formerly Banque Sanpaolo group)
Banque Palatine (formerly Banque Sanpaolo)
Banque Michel Inchauspé
Conservateur Finance
Eurosic Sicomi SA
GCE Affacturage
GCE Bail (formerly Bail Ecureuil)
Société Foncière Joseph Vallot
Sanpaolo Asset Management
Sanpaolo Bail SA
Sanpaolo Fonds Gestion SNC
Sanpaolo Mur SNC
Société Foncière d’Investissement
Société Immobilière d’Investissement
Socavie SNC
Thiriet Gestion
Uni-Invest SAS
Full
Equity
Equity
Full
Full
Full
Full
–
–
Full
Full
Full
Full
Full
Equity
–
100.00%
20.00%
20.00%
100.00%
100.00%
100.00%
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
100.00%
33.40%
–
60.00%
12.00%
12.00%
53.28%
60.00%
60.00%
60.00%
–
–
60.00%
60.00%
60.00%
60.00%
60.00%
20.04%
–
IXIS Corporate & Investment Bank group
BGL
CLEA2
IXIS Innov
IXIS Luxembourg Investissements
IXIS Securities
IXIS Structured Products Ltd
Nexgen (group)
SNC Tolbiac Finance
IXIS North America
IXIS Investment Management Corp.
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.
IXIS Securitization Corp.
IXIS Financial Instruments Ltd
IXIS ASIA Ltd
CDC Holding Trust
Full
Full
Full
Full
Full
Full
Full
Equity
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%
37.75%
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%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
37.75%
97.55%
97.55%
97.16%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
56
12/07/06
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Page 57
FINANCIAL REPORT
OF THE CNCE GROUP
%
consolidation
%
interest
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%
–
–
–
–
–
Prop.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
Full
Full
Full
–
–
Full
–
Equity
–
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
–
–
Full
100.00%
100.00%
100.00%
–
–
100.00%
–
37.75%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
100.00%
97.55%
97.55%
97.55%
–
–
97.55%
–
37.75%
–
97.55%
97.23%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
–
–
97.55%
Prop.
Prop.
Prop.
–
–
Prop.
–
Equity
–
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
–
Prop.
26.45%
26.45%
26.45%
–
–
26.45%
–
10.24%
–
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%
–
10.24%
–
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
–
–
26.45%
RISK
MANAGEMENT
Consolidation
method (1)
CHAIRMAN'S REPORT
%
interest
RESOLUTIONS
%
consolidation
INFORMATION
ON THE ISSUER
Consolidation
method (1)
FINANCIAL REPORT OF
First-half 2004 (2)
2004
57
12/07/06
15:12
Page 58
Other entities
Anatol Invest (group)
Caisse d’Epargne Financement
CDC Entreprises Capital Investissement
CDC Entreprises 1
CDC Entreprises 2
CDC Innovation 96
CDC Ixis Italia Holding
Cnéti
Compagnie Financière Eulia
Ecureuil Gestion*
Ecureuil Gestion FCP*
Ecureuil Participations
Ecureuil Proximité
Ecureuil Vie
Electropar France
Foncière des Pimonts (group)
GCE Newtech
Gestitres
Holgest
IXIS (formerly CDC IXIS)
IXIS AEW Europe (formerly CDC IXIS immo)*
IXIS Asset Management (group)
IXIS Financial Guaranty (group)
La Compagnie 1818 (formerly Véga Finance) (group)
Logistis (group)
Martignac Finance
Mifcos (formerly Socfim Participations)
PART’COM
Quai de Seine Gestion et Location
SAS Foncière Ecureuil
SCI Avant Seine 1
SCI Avant Seine 2
SNC Participations Ecureuil
SNC SEI Logement
SNC SEI Tertiaire
Société Européenne d’Investissement
Surassur
CACEIS group
CACEIS Holding
IXIS Investor Services
IXIS Administration de Fonds
IXIS Urquijo
CA-IS Bank Luxembourg
CA-IS Bank Paris
CACEIS Corporate Trust
Euro Émetteurs Finance
Fastnet France
Fastnet Luxembourg
2005
Consolidation
method (1)
%
consolidation
%
interest
–
Equity
Equity
–
–
–
–
Full
–
Full
Full
Full
Full
Full
Equity
–
–
Full
Full
Full
–
–
Full
Full
Full
–
–
Full
–
Full
Equity
Full
Full
Full
Full
Full
Full
Equity
–
17.40%
35.00%
–
–
–
–
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
49.78%
–
–
100.00%
100.00%
100.00%
–
–
100.00%
100.00%
100.00%
–
–
100.00%
–
100.00%
23.86%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
36.99%
–
17.40%
35.00%
–
–
–
–
73.42%
–
65.00%
68.00%
68.00%
100.00%
99.84%
49.78%
–
–
100.00%
66.00%
100.00%
–
–
68.00%
100.00%
85.78%
–
–
100.00%
–
100.00%
23.86%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
36.99%
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
25.50%
50.00%
50.00%
50.00%
50.00%
25.00%
22.50%
* Entities consolidated by the IXIS Asset Management Group.
58
12/07/06
15:12
Page 59
FINANCIAL REPORT
OF THE CNCE GROUP
%
consolidation
%
interest
–
–
Equity
–
–
–
Full
Full
–
Full
Full
Full
Full
–
Equity
–
–
–
Full
Full
–
–
Full
Full
Full
–
Full
Full
–
Full
–
Full
Full
Full
Full
Full
Full
–
–
–
35.00%
–
–
–
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
–
49.78%
–
–
–
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%
73.42%
–
65.00%
73.90%
73.90%
100.00%
–
49.78%
–
–
–
66.00%
100.00%
–
–
73.90%
100.00%
100.00%
–
100.00%
100.00%
–
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
Prop.
–
Prop.
Prop.
Prop.
Prop.
Prop.
–
Prop.
Prop.
Prop.
Prop.
Prop.
–
Equity
Prop.
Prop.
–
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Equity
Prop.
Prop.
Prop.
–
–
–
–
–
Prop.
Prop.
Prop.
–
26.45%
–
26.45%
26.45%
26.45%
26.45%
33.40%
–
49.90%
49.90%
49.90%
49.90%
49.90%
–
49.78%
26.45%
26.45%
–
49.90%
49.90%
26.45%
26.45%
26.45%
26.45%
26.45%
8.81%
26.45%
49.90%
26.45%
–
–
–
–
–
49.90%
49.90%
49.90%
–
26.45%
–
26.45%
25.26%
10.02%
25.56%
33.40%
–
49.90%
32.43%
45.21%
45.21%
49.90%
–
24.84%
13.22%
19.44%
–
28.29%
42.86%
26.45%
26.45%
21.16%
26.45%
22.48%
8.81%
26.45%
49.85%
26.45%
–
–
–
–
–
49.85%
49.85%
49.85%
–
–
Full
Full
Prop.
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
–
–
–
–
–
–
–
100.00%
100.00%
51.00%
–
–
–
–
–
–
–
–
Prop.
Prop.
–
–
–
–
–
–
–
–
26.45%
26.45%
–
–
–
–
–
–
–
–
26.45%
13.49%
–
–
–
–
–
–
RISK
MANAGEMENT
Consolidation
method (1)
CHAIRMAN'S REPORT
%
interest
RESOLUTIONS
%
consolidation
INFORMATION
ON THE ISSUER
Consolidation
method (1)
FINANCIAL REPORT OF
First-half 2004 (2)
2004
59
12/07/06
15:12
Page 60
2005
Consolidation
method (1)
%
consolidation
%
interest
Full
–
Full
Full
Full
Full
–
Full
–
Full
Full
Full
Full
Equity
Equity
Full
Full
Full
Full
Equity
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%
35.00%
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
27.64%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
–
99.88%
–
100.00%
99.99%
100.00%
100.00%
100.00%
100.00%
100.00%
65.79%
65.79%
100.00%
35.00%
100.00%
–
–
100.00%
79.88%
100.00%
100.00%
27.64%
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%
99.76%
99.75%
99.75%
Socfim group
Socfim
Socfim Transaction
Socfim Participations Immobilières
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
GCE Garanties group (formerly Eulia Caution group)
GCE Garanties (formerly Eulia Caution)
Cegi
Financière Cegi
Saccef
Socamab
SCI Saccef La Boétie
SCI Saccef Champs-Élysées
SCI Saccef Immobilier
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%
60.00%
100.00%
100.00%
100.00%
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
FCC Teddy
Financière Desvieux
Foncier Assurance
Foncier Bail
Foncier Participations
SICP (group)
Soclim
CFCAL Banque
CFCAL SCF
Ecufoncier
Secundis Finance
Foncier Services Immobiliers
Entenial
Capri Résidences
CFG Cie Financière de Garantie
Gramat Balard
Investimur
Quatrinvest
RIVP
Titrisation
VMG
Vendôme Investissements
Environnement Titrisation Entenial
Entenial Conseil
60
12/07/06
15:12
Page 61
FINANCIAL REPORT
OF THE CNCE GROUP
%
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%
66.39%
66.39%
–
–
–
100.00%
35.00%
100.00%
79.88%
100.00%
100.00%
27.63%
100.00%
100.00%
100.00%
100.00%
100.00%
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%
Full
Full
Full
100.00%
100.00%
100.00%
99.75%
99.75%
99.75%
Prop.
Prop.
Prop.
75.05%
75.05%
75.05%
64.87%
64.87%
64.87%
Full
Full
Full
100.00%
100.00%
100.00%
99.91%
99.91%
99.91%
Prop.
Prop.
Prop.
49.90%
49.90%
49.90%
49.85%
49.85%
49.85%
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%
–
–
–
Prop.
Prop.
Prop.
Prop.
Prop.
–
–
–
49.90%
49.90%
49.90%
49.90%
49.90%
–
–
–
49.90%
49.90%
34.93%
49.90%
19.96%
RISK
MANAGEMENT
Consolidation
method (1)
CHAIRMAN'S REPORT
%
interest
RESOLUTIONS
%
consolidation
INFORMATION
ON THE ISSUER
Consolidation
method (1)
FINANCIAL REPORT OF
First-half 2004 (2)
2004
–
–
61
12/07/06
15:12
Page 62
6 CASH, MONEY MARKET AND INTERBANK ITEMS
Assets
Dec. 31, 2005
Assets
Dec. 31, 2004
Liabilities
Dec. 31, 2005
Liabilities
Dec. 31, 2004
7,422
160,108
32,476
127,632
167,530
6,107
154,413
37,888
116,525
160,520
1
132,084
36,371
95,713
132,085
2
118,719
39,653
79,066
118,721
Cash, central banks and post office banks
Financial institutions
demand accounts
term accounts
Total
Deposits with financial institutions and related accrued interest amounted respectively to €652 million and €827 million at
December 31, 2005. Provisions relating to amounts due from financial institutions amounted to €2 million at December 31, 2005.
7 CUSTOMER ITEMS
Commercial loans
Other customer loans
Short-term credit facilities
Equipment loans
Regulated home purchase loans
Other mortgage lending
Other
Current accounts in debit
Accrued interest
Non-performing loans
Provisions on non-performing loans
Total
Assets
Dec. 31, 2005
401
89,665
7,716
13,336
26
42,581
26,006
3,205
732
2,120
(645)
95,478
Assets
Dec. 31, 2004
806
83,950
6,250
11,746
31
39,887
26,036
2,408
381
2,135
(747)
88,933
Liabilities
Liabilities
Dec. 31, 2005 Dec. 31, 2004
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
2,142
61
1,036
839
6
34
166
41,395
8,685
32,710
164
43,701
2,271
63
1,215
874
6
50
63
39,914
5,564
34,350
105
42,290
Breakdown of loans outstanding at December 31, 2005:
Performing
loans
Non-performing
loans
Doubtful
loans
Sub-total
non-performing
loans
167,528
97,059
29,565
7,961
4,127
3,341
4,593
47,472
3
1,195
451
87
91
77
0
489
1
1,020
432
40
87
66
0
395
4
2,215
883
127
178
143
0
884
Loans and advances to financial institutions
Loans and advances to customers (1)
Individual customers: property loans
Individual customers: other loans
Self-employed professionals
Companies
Local and regional authorities
Other
Provision
(2)
(695)
(253)
(51)
(72)
(98)
0
(221)
(1) Including finance lease transactions comprising leases with purchase options where the Group is the lessor.
8 FINANCE LEASE TRANSACTIONS INCLUDING LEASES
WITH PURCHASE OPTIONS (WHERE THE GROUP IS THE LESSOR)
Equipment
Real estate
Other finance leases
Accrued interest
Provisions
Total
62
Dec. 31, 2005
731
2,134
183
103
(50)
3,101
Dec. 31, 2004
594
2,023
177
77
(43)
2,828
9 BONDS, EQUITIES AND OTHER FIXED- AND VARIABLE-INCOME SECURITIES
Treasury bills and similar securities
Bonds and other fixed-income
securities (2)
Equities and other
variable-income securities (3)
Total 2005
Total 2004
Trading
account
securities
Held-forsale
securities
Investment
securities
23,136
466
24,586
18,197
24,488
72,210
2,804
21,467
54,504
21,522
Portfolio
equity
investments
Accrued
interest (1)
Total
Dec. 31,
2005
Total
Dec. 31,
2004
476
10
24,088
11,232
22,058
441
65,282
59,374
0
451
27,338
116,708
21,307
22,534
46
46
15,490
38
359
91,913
(1) Including €179 million of accrued interest on investment securities, €176 million on held-for-sale securities and €96 million on trading account securities.
(2) Including listed securities amounting to €21,286 million at December 31, 2005, versus €21,137 million at December 31, 2004.
The aggregate difference between the acquisition price and the redemption price of held-for-sale securities amounted to
€58 million at December 31, 2005, against €77 million at end-2004. For investment securities, at December 31, 2005 the
aggregate difference was €18 million, versus €3 million December 31, 2004.
The portion of bonds and other fixed-income securities issued by public bodies stood at €3,019 million.
Over the past two accounting periods, the following transfers have been made between the different portfolio categories:
Amount transferred during the year
From
To
2005
2004
Trading account securities
Held-for-sale securities
Investment securities
500
99
300
0
614
0
0
0
Investment securities sold before maturity during the current financial year totaled €271 million, compared with €204 million
in 2004.
Unrealized capital gains and losses on held-for-sale securities and portfolio equity investments can be analyzed as follows:
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Page 63
RISK
MANAGEMENT
15:12
Dec. 31, 2005
Net book value
Market value
Net unrealized capital gains (1)
Unrealized losses covered by provisions
21,643
22,050
407
75
Dec. 31, 2004
Portfolio equity investments
Dec. 31, 2005
Dec. 31, 2004
46
53
7
4
38
39
1
3
21,708
22,077 (2)
369 (2)
84
(1) This item includes, for held-for-sale securities, a €22 million loss on treasury bills and similar securities, a €227 million gain on bonds and other fixed-income securities and a €174 million
gain on shares and other variable-income securities. These amounts do not include unrealized gains or losses relating to any financial instruments used to hedge held-for-sale securities.
(2) Amount adjusted in relation to the figure reported in the 2004 Annual Report, in which the market value of held-for-sale securities at December 31, 2004 stood at €23,419 million.
Unrealized capital losses on investment securities for which provisions have been raised amount to less than €1 million.
CHAIRMAN'S REPORT
12/07/06
RESOLUTIONS
Investments and shares in unconsolidated subsidiaries
Investments in affiliates accounted for by the equity method
Other long-term investments
Total
Of which listed securities
Dec. 31, 2005
Dec. 31, 2004
1,637
6,018
255
7,910
1,256
5,786
243
7,285
499
345
INFORMATION
ON THE ISSUER
10 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES, AFFILIATES ACCOUNTED
FOR BY THE EQUITY METHOD AND OTHER LONG-TERM INVESTMENTS
63
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Page 64
10.1 Investments in unconsolidated subsidiaries and other long-term investments
Net book value
% capital held by
Group companies
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
323
305
198
178
150
127
42
41
31
15
14
13
12
–
1,449
323
–
198
178
140
–
–
41
31
–
14
13
12
11
961
1.50%
10.20%
15.49%
9.50%
1.49%
34.00%
2.00%
100.00%
12.23%
3.43%
100.00%
100.00%
100.00%
–
2.00%
–
15.49%
9.50%
1.42%
–
–
100.00%
12.23%
–
100.00%
100.00%
100.00%
0.89%
Sanpaolo IMI
SNC Calixis Finance
Crédit Logement
Banca Carige
Veolia Environnement
ESU Lazard Ltd
Lazard Ltd (1)
Foncier Vignobles
Air Calin
Compagnie des Alpes
Socrelog
Immobilière CE Denfert
Gerer Participations
Euronext
Total
Other securities
Accrued interest and current accounts
Total
248
195
1,892
302
236
1,499
(1) Each ESU (Equity Security Unit) will be converted into Lazard Ltd shares on May 15, 2008 in accordance with a mandatory conversion procedure.
10.2 Affiliates accounted for by the equity method
en millions d’euros
Net book
value at
Dec. 31, 2005
Share in
affiliates’ 2005
net income
Net book
value at
Dec. 31, 2004
Share in
affiliates’ 2004
net income
3,435
1,185
888
191
115
85
119
6,018
246
119
103
3
6
1
34
512
3,345
1,121
841
207
111
73
88
5,786
132
101
67
15
5
3
14
337
29 Caisses d’Epargne et
de Prévoyance in metropolitan France
Ecureuil Vie
SICP (group)
Nexgen Financial Holding
Other companies
Total
11 LOANS AND ADVANCES OUTSTANDING AND SOURCES OF FUNDS
BY MATURITY DATE
From 0 to
3 months
From 3 months
to 1 year
From 1 to
5 years
Over
5 years
Total
Dec. 31, 2005
Loans and advances
134,808
23,017
59,329
87,502
304,656
Customer loans
Bonds and other fixed-income securities
Sources of funds
106,629
24,369
3,810
165,239
11,305
8,734
2,978
34,752
26,955
21,911
10,463
66,690
22,641
40,464
24,397
60,502
167,530
95,478
41,648
327,183
87,700
33,256
44,283
24
39,344
4,914
1
14,350
4,261
16,141
30
9,752
6,359
0
14,994
4,949
46,747
13
11,454
35,280
0
15,041
1,235
44,226
0
12,292
31,509
425
132,085
43,701
151,397
67
72,842
78,062
426
Amounts due to financial institutions
Customer deposits
Debt securities:
Retail certificates of deposit and savings certificates
Interbank and other money market securities
Bonds
Other debt securities
64
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Page 65
FINANCIAL REPORT
OF THE CNCE GROUP
12 TANGIBLE AND INTANGIBLE ASSETS
Acquisitions
1,422
1,735
3,157
88
177
265
Disposals/
retirements
Other
movements
Gross value
at Dec. 31,
2005
Depreciation,
amortization
and provisions
Dec. 31, 2005
Intangible assets
Tangible assets
Total
(44)
(54)
(98)
118
(28)
90
1,584
1,830
3,414
(366)
(658)
(1,024)
Net value
at Dec. 31,
2005
1,218
1,172
2,390
12.2 Intangible assets
At December 31, 2005, the main intangible asset items were as follows (net values in millions of euros):
■ market share (contribution of the IXIS Asset Management Group)
■ business goodwill
■ net goodwill generated by the consolidation of the individual Caisses d’Epargne under the equity method
■ computer software
■ certificates of association of deposit guarantee funds
850
54
108
97
3
RISK
MANAGEMENT
Gross value
at Dec. 31,
2004
FINANCIAL REPORT OF
12.1 Changes in fixed assets
12.3 Tangible assets
Bonds
Total
Dec. 31, 2005
Dec. 31, 2004
67
72,843
78,062
425
151,397
86
70,124
71,910
204
142,324
Unpaid accrued interest carried in “Debt securities” stands at €2,260 million. Unamortized issue and redemption premiums
amounted to €411 million.
14 ACCRUALS AND OTHER ASSETS AND LIABILITIES
Assets
Liabilities
Foreign currency commitments
Unrealized hedging losses and gains on futures
Deferred expenses and income
Prepaid expense and unearned income
Accrued expense and accrued income
Items in course of collection
Deferred tax
Settlement accounts for securities transactions/debt securities
Other assets/liabilities
Other insurance assets/liabilities
Total at December 31, 2005
4,480
12,429
949
751
237
3,421
1,923
803
1,663
14,407
328
41,391
3,695
13,753
1,129
0
672
1,370
3,008
102
45,312
16,732
29
85,802
31,477
62,219
Off-balance sheet transactions on securities (1)
RESOLUTIONS
INFORMATION
ON THE ISSUER
13 DEBT SECURITIES
CHAIRMAN'S REPORT
At December 31, 2005, the net book value of land and buildings amounted to €788 million, including €676 million relating to
premises for the Group’s own use and €112 million in respect of investment properties.
(1) This item mainly includes options purchased and sold, amounts due for securities and settlement accounts relating to securities transactions.
65
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Page 66
15 PROVISIONS
Dec. 31,
2004
Allocations
Releases
270
472
108
132
123
12
(133)
(54)
(32)
283
1,133
92
359
(127)
(346)
Dec. 31,
2004
Allocations
Provisions deducted from assets
Customer loan losses
Other
Provisions carried in liabilities
Provision for signature commitments
General provision
Other risks
Total
892
747
145
472
22
107
80
263
1,364
300
284
16
123
15
36
22
50
423
Provision for claims, fines and penalties
Counterparty risks (see note 15.2)
Employee benefits (see note 15.3)
Other provisions for banking
and non-banking operations
Total
Changes in
the scope of
consolidation
Other
movements
Dec. 31,
2005
(1)
(2)
4
13
11
4
281
550
96
(7)
(6)
(11)
17
230
1,157
15.2 Provisions for counterparty risks
Utilizations
(284)
(185)
(99)
(23)
(3)
(8)
(2)
(10)
(307)
Releases
(193)
(187)
(6)
(31)
(3)
(2)
(10)
(16)
(224)
Other
movements
(6)
(14)
8
9
(7)
(22)
1
37
3
Dec. 31,
2005
709
645
64
550
24
111
91
324
1,259
To reflect counterparty risks more accurately, and in advance of the forthcoming change in CRC rules governing the accounting
treatment of credit risk which will affect provisions booked on a portfolio basis, a general 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. Provision rates are determined by reference to the counterparty’s credit rating and the remaining life
of the loan, and are weighted based on assumptions concerning recoverability in the event of default. At December 31, 2005,
the provision recorded for all the portfolios concerned – social housing associations, real-estate professionals, local and
regional authorities, businesses, consumer loans and financial markets – amounted to €91 million.
15.3 Provisions for employee benefits
Dec. 31,
2004
Allocations
Releases
67
7
(4)
4
(11)
63
30
11
108
4
1
12
(28)
–
(32)
–
–
4
16
(1)
4
22
11
96
Pension and other post-employment benefits
Provision for the Group’s estimated
potential pension liabilities (CGR)
Other employee benefits
Total employee benefits
Changes in
the scope of
consolidation
Other
movements
Dec. 31,
2005
Defined benefit pension plans and other long-term employee benefits
Group entities’ employee benefit obligations can be broken down as follows:
■ CGRCE: a private supplementary pension plan that has been transferred to a dedicated external retirement fund, considered
as a long-term employee benefit fund;
■ pensions and other post-employment benefits: retirement indemnities and other benefits granted to retirees;
■ other: long service awards and other long-term employee benefits.
66
Page 67
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
16 GOODWILL
“Goodwill” reflects the outstanding balance of differences not attributed elsewhere on the balance sheet between the cost
of the investment and the Group’s equity in the underlying net assets at the date of acquisition of shares in consolidated
Net amount at January
Movements during the year
Goodwill on Banque Palatine securities
Negative goodwill on Entenial securities
Net goodwill relating to the New Foundations agreements
Goodwill on Crédit Foncier de France securities
Additional acquisition following public tender offer
and compulsory buyout procedure
Goodwill on OCÉOR securities
Additional acquisition by the CNCE
Change in consolidation method
Goodwill on CACEIS
Translation adjustments
Other movements
Amortization for the year
Net amount at December 31
Assets
2005
Assets
2004
Liabilities
2005
Liabilities
2004
947
241
436
602
(45)
0
4
11
7
258
FINANCIAL REPORT OF
12/07/06
37
27
325
150
56
35
(104)
1 084
4
(30)
30
(91)
947
0
0
(15)
0
RISK
MANAGEMENT
Capital
Additional
paid-in
capital
Consolidated
reserves
and retained
earnings
Net
income
Capital funds
and reserves
excluding
RGBR
At December 31, 2003
2,905
435
535
327
4,202
Movements in 2004
4,001
6,906
1,504
1,939
964
1,499
558
885
7,027
11,229
885
(394)
(885)
0
(394)
Appropriation of 2004 net income
Dividends paid
Application of CRC rules:
2002.03
2002.10
2004.06
CNC recommendation 2003-R1
Capital increase (1)
Other movements
Net income for the year ended December 31, 2005
(64)
(40)
3
(146)
1,886
1,103
1,103
(64)
(40)
3
(146)
453
157
(14)
1,103
12,287
Dec. 31, 2004
Allocations
Releases
Dec. 31, 2005
256
9
(6)
259
346
107
157
(14)
7,252
2,046
(1) This line relates to the CNCE’s capital increase in the amount of €346 million and a corresponding €107 million issue premium.
RESOLUTIONS
17.1 Changes in consolidated capital funds and reserves
(excluding minority interests and the Reserve for General Banking Risks)
INFORMATION
ON THE ISSUER
17 CONSOLIDATED CAPITAL FUNDS, RESERVE FOR GENERAL BANKING RISKS
AND SUBORDINATED DEBT
CHAIRMAN'S REPORT
Goodwill recorded in respect of CACEIS will be taken to income over ten years.
17.2 Changes in the Reserve for General Banking Risks
67
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13:22
Page 68
17.3 Subordinated debt
Dated subordinated notes
Dated subordinated debt
Undated subordinated debt
Non-cumulative, undated deeply subordinated notes
Accrued interest
Total
Dec. 31, 2005
Dec. 31, 2004
6,249
35
214
2,129
198
8,825
5,423
–
237
2,105
148
7,913
Dated subordinated notes:
(1) Deeply subordinated notes.
68
Amount
Currency
Interest rate
Maturity
1
250
92
748
5
11
4
1
859
421
77
454
150
311
485
506
257
509
206
215
10
500
20
20
10
21
46
53
7
6,249
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
2.750%
3-month Euribor
5.000%
5.600%
3-month Euribor
6.250%
6.250%
6.250%
5.200%
4.500%
3-month Euribor
4.100%
4.800%
4.600%
4.800%
4.500%
4.200%
4.000%
3.500%
3.600%
6-month Euribor
3-month Euribor
6.500%
6-month Euribor
CMS20
3-month Euribor
3-month Euribor
3-month Euribor
3-month Euribor
12/2006
08/2010
12/2010
11/2011
06/2012
06/2012
06/2012
06/2012
07/2014
02/2015
04/2015
07/2015
12/2015
02/2016
07/2016
10/2016
12/2016
02/2017
05/2017
07/2017
03/2018
07/2018
07/2022
09/2022
03/2023
04/2023
11/2027
01/2033
01/2033
10
25
35
EUR
EUR
6-month Euribor
4.210%
05/2006
04/2015
8
5
5
196
214
EUR
EUR
EUR
EUR
3-month Euribor
5.170%
4.300%
3-month Euribor
–
–
–
–
796
168
695
80
390
2,129
EUR
USD
EUR
EUR
EUR
5.430%
3-month Euribor/USD
4.625%
10-year CMS
3-month CMS Euribor + 0.71%
– (1)
– (1)
– (1)
– (1)
– (1)
FINANCIAL REPORT
OF THE CNCE GROUP
Page 69
18 COMMITMENTS GIVEN AND RECEIVED
To reflect the transactions carried out more accurately, the Group has decided to classify a portion of commitments given and
received within financing commitments and guarantee commitments.
In order to facilitate year-on-year comparisons, the Group has adjusted the data presented under financing commitments and
guarantee commitments at December 31, 2004. Accordingly, other commitments given amounting to €22,516 million have
been transferred to financing commitments and guarantee commitments given to customers, for €5,859 million and
€16,657 million, respectively. In addition, other commitments received have been transferred to commitments received from
financial institutions and other securities receivable for €1,283 million and €153 million, respectively. Furthermore,
commitments worth €8,089 million that at December 31, 2004 were included in guarantee commitments given to financial
institutions were transferred to guarantee commitments given to customers. Lastly, during 2005, the effective dates of the
commitments within the Group were harmonized. This led IXIS CIB to increase the amount recorded at December 31, 2004, in
respect of financing commitments given to customers by €2,545 million.
Given
Received
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
Given to/received from financial institutions
Given to customers
Total
13,337
31,914
45,251
18,462
34,367
52,829
5,715
–
5,715
7,154
–
7,154
Given to customers
Total
7,365
40,704
48,069
1,564
30,427
31,991
13,767
–
13,767
13,288
–
13,288
FINANCIAL REPORT OF
15:12
Other guarantee commitments given and received were respectively €7,182 million and €37,879 million at December 31,
2005, versus €4,606 million and €19,402 million at December 31, 2004.
Since these are commitments given by the insurance business, the Group will henceforth include the principal amount of
guarantees issued by the CIFG group in its published off-balance sheet commitments. At December 31, 2005, this figure
amounted to €36,019 million, versus €18,319 million at December 31, 2004 (adjusted figures).
19 TRANSACTIONS IN FINANCIAL FUTURES
RISK
MANAGEMENT
12/07/06
CHAIRMAN'S REPORT
Transactions on organized markets
Futures
Options
Over-the-counter transactions
Futures
Options
Total (nominal values)
Interest-rate
instruments
Foreign exchange
instruments
Other
instruments
Total at
Dec. 31, 2005
Total
Dec. 31, 2004
395,018
462,208
0
0
7,388
40,184
402,406
502,392
257,667
334,759
3,226,687
612,349
4,696,262
10,846
12,462
23,308
3,990
42,594
94,156
3,241,523
667,405
4,813,726
2,252,784
368,204
3,213,414
The nominal values of contracts listed above give only a general idea of the volume of the CNCE Group’s activities on derivatives
markets at the year-end and do not reflect 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 interest-rate guarantee contracts for options.
INFORMATION
ON THE ISSUER
Derivatives transactions mainly relate to interest-rate futures traded on over-the-counter markets.
RESOLUTIONS
19.1 Commitments on derivatives outstanding
Commitments on currency instruments traded on over-the-counter markets chiefly concern foreign currency swaps.
69
12/07/06
15:12
Page 70
Interest-rate futures on over-the-counter markets can be broken down by portfolio type, as follows:
Specific
hedging
Macro
hedging
Isolated
open position
Specialized
transactions
Total
Futures
Options
Bought
Sold
81,657
4,907
3,551
1,356
86,564
17,045
1,056
1,019
37
18,101
668
255
255
0
923
3,127,317
606,131
247,491
358,640
3,733,448
3,226,687
612,349
252,316
360,033
3,839,036
77,004
20,515
1,044
2,467,116
2,565,679
As regards transactions on organized markets, the market values of futures and options are €0 million and €327 million,
respectively.
For over-the-counter transactions, the market values of futures and options are €2,558 million and – €164 million,
respectively.
19.2 Commitments on futures by residual maturity
Futures
Options
Futures
Options
Up to
1 year
1 to
5 years
Over
5 years
Total at
Dec. 31, 2005
315,371
468,747
81,268
32,712
5,767
933
402,406
502,392
1,872,848
190,136
713,213
291,986
655,462
185,283
3,241,523
667,405
19.3 Counterparty risk in respect of derivatives
Counterparty risks are measured as the probable loss that the CNCE Group would suffer as a result of a counterparty failing
to meet its obligations. The CNCE 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 CRBF;
■ the potential credit risk resulting from the application of “add-ons” defined by the rule cited above, computed on the nominal
value of the contracts according to their type and residual term.
The CNCE Group 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.
70
Governments and
OECD central banks
and equivalent
OECD financial
institutions and
equivalent
Other
counterparties
Total at
Dec. 31, 2005
Unweighted equivalent credit risk,
before netting and collateral agreements
Effect of netting agreements
Effect of collateral agreements
8,688
(1,619)
(74)
64,434
(44,567)
(4,243)
5,901
(760)
(61)
79,023
(46,946)
(4,378)
after netting and collateral agreements
6,995
15,624
5,080
27,699
Weighted equivalent credit risk,
0
3,125
2,540
5,665
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 counterparty risk is deemed to be non-existent as it is considered to be covered by the Group’s mutual guarantee and
solidarity mechanisms.
At December 31, 2005, the weighted equivalent credit risk set out in the above table represented 0.1% of the notional values
of these outstanding positions, against 0.2% at December 31, 2004.
20 INTEREST AND SIMILAR INCOME AND EXPENSE
Income
Transactions with financial institutions
Customer items
Subordinated debt
Lease financing transactions
Other interest and similar income/expense
Total
FINANCIAL REPORT
OF THE CNCE GROUP
Page 71
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
Expense
2005
2004
7,007
4,139
3,091
4,594
3,137
2,418
182
364
14,783
166
395
10,710
2005
(5,732)
(1,559)
(5,548)
(273)
(47)
(621)
(13,780)
2004
(3,438)
(694)
(5,024)
(235)
(38)
(1,139)
(10,568)
CHAIRMAN'S REPORT
Equities and other variable-income securities
Investments in unconsolidated subsidiaries, and other long-term investments
Affiliates accounted for by the equity method
Total
2005
2004
180
75
8
263
79
32
0
111
INFORMATION
ON THE ISSUER
RESOLUTIONS
21 INCOME FROM EQUITIES AND VARIABLE-INCOME SECURITIES
71
12/07/06
15:12
Page 72
22 NET COMMISSION AND FEE INCOME
Expense
0
(5)
(66)
(26)
Income
Customer items
Payment media processing
Sales of life-insurance products
Other commissions
Total 2005
(546)
(643)
3
175
1,843
99
47
378
2,545
Total 2004
(418)
1,664
23 NET GAINS/(LOSSES) ON TRADING TRANSACTIONS
Foreign exchange
Financial instruments
Total
2005
2004
1,003
(293)
692
1,402
1,043
(9)
279
1,313
24 NET GAINS/(LOSSES) ON HELD-FOR-SALE PORTFOLIO TRANSACTIONS
AND SIMILAR ITEMS
Net gains/(losses) on disposals
Total
Held-for-sale
securities
Portfolio equity
investments
(367)
28
(339)
0
(1)
(1)
Total
2005
Total
2004
(367)
27
(340)
85
111
196
25 OTHER OPERATING INCOME AND EXPENSE
Income
Expense
Net
Share in joint venture income and expense
Transfer of expense
Other income and expense
Total 2005
1
70
359
430
0
(273)
(273)
1
70
86
157
Total 2004
384
(347)
37
72
15:12
Page 73
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
26 GENERAL OPERATING EXPENSES
2005
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
(1,990)
(1,359)
(103)
(456)
(72)
(65)
(1,327)
(3,382)
2004
(1,327)
(935)
(54)
(293)
(45)
(60)
(975)
(2,362)
The average number of active employees during the period, broken down by professional category, was as follows:
FINANCIAL REPORT OF
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 loans written off as irrecoverable
Total 2005
Total 2004
Customer
items
Other
transactions
Total
(221)
280
(81)
(10)
22
(10)
(99)
43
(18)
(2)
12
(64)
(320)
323
(99)
(12)
34
(74)
(17)
(27)
(44)
28 NET GAINS/(LOSSES) ON FIXED ASSETS
Tangible assets
Intangible assets
Restructuring operations – mergers/asset transfers
Investments in unconsolidated subsidiaries, affiliates accounted for by the equity method
Total
2005
2004
(5)
(12)
(1)
1
(12)
0
141
(6)
117
30
(27)
(8)
RESOLUTIONS
CHAIRMAN'S REPORT
27 NET ALLOCATIONS TO PROVISIONS
RISK
MANAGEMENT
– managerial staff:
8,357
– non-managerial staff: 6,428
29 EXCEPTIONAL ITEMS
Exceptional income and expense are non-recurring and do not fall within the scope of the Group’s usual business activities.
INFORMATION
ON THE ISSUER
Gains and losses on investments in unconsolidated subsidiaries, affiliates accounted for by the equity method and other
long-term investments include an €88 million gain arising from the creation of CACEIS.
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30 CORPORATE INCOME TAX
2005
2004
Current tax
Deferred tax
Tax credits and other taxes
Total
(177)
(96)
(21)
(294)
(44)
88
(125)
(81)
The difference between the theoretical tax rate and the effective tax rate can be analyzed as follows:
Theoretical tax rate
Permanent differences
Change in unrecognized deferred tax assets
Tax-exempt operations
Other impacts
Effective tax rate
34.93%
2.07%
– 4.79%
– 4.04%
– 0.53%
27.63%
31 INVESTMENTS BY INSURANCE COMPANIES
Net book value
Property
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
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
8
1,408
29
787
8
1,423
40
816
32
109
331
18
139
2,045
36
54
582
29
64
1,581
50
112
345
18
139
2,095
40
56
592
65
64
1,673
32 INSURANCE TECHNICAL PROVISIONS
Dec. 31, 2004
Allocations
325
659
4
64
1,052
85
202
Releases
Life insurance
Non-life insurance
Equalization reserves
Unit-linked policies
Total
Other
movements
(3)
(1)
75
362
(4)
0
Dec. 31, 2005
410
858
3
139
1,410
33 GROSS MARGIN ON INSURANCE BUSINESS
Net premium income
Underwriting and financial income
Net claims and provisions for claims payable
Expense net of technical provisions
Underwriting and financial expense
Underwriting income
Acquisition, administration and other claims
management expenses
Consolidation adjustments and elimination
of intra-group transactions
74
Life
Non-life
2005
2004
135
34
(25)
(118)
(18)
8
265
37
(122)
13
(109)
84
400
71
(147)
(105)
(127)
92
302
45
(104)
(72)
(82)
89
114
114
64
5
203
5
211
(4)
149
8
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FINANCIAL REPORT
OF THE CNCE GROUP
34 PRO FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT
Goodwill relating to backdated restructuring operations was calculated on a notional basis at January 1, 2002, bringing it into
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 operations
(€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:
■ indemnities paid to the CNCE;
■ charges relating to the early unwinding of certain hedging instruments within the scope of the restructuring of the IAM division;
■ general operating expenses incurred specifically for the purpose of carrying out the operations or specifically relating to the
agreements between the parties.
34.3 Pro forma consolidated profit and loss account
2005
Net losses on held-for-sale portfolio transactions and similar items
Net banking income
Depreciation, amortization and impairment of tangible and intangible assets
Operating income
Share in net income of companies accounted for by the equity method
Exceptional items
Net allocations to the Reserve for General Banking Risks and regulatory provisions
Minority interests
14,783
(13,780)
263
1,902
1,402
(340)
157
211
4,598
(3,382)
(178)
1,038
(74)
964
512
117
1,593
(15)
(294)
(104)
(2)
(75)
1,103
Pro forma
2004
12,443
(12,581)
129
1,579
2,457
(263)
56
160
3,980
(2,978)
(172)
830
(145)
685
522
(40)
1,167
(20)
(93)
(89)
0
(47)
918
RISK
MANAGEMENT
The yield applied to liquid assets (€3.2 billion) generated from transfers of assets by CDC IXIS to the Caisse des Dépôts et
Consignations 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).
CHAIRMAN'S REPORT
The following assumptions were used in drawing up the pro forma consolidated financial statements.
RESOLUTIONS
34.2 Consolidation adjustments
INFORMATION
ON THE ISSUER
The pro forma consolidated profit and loss account of the CNCE Group for the year ended December 31, 2004 was prepared
to enhance comparability and to reflect the Group’s income and expense as if the restructuring operations described in
Note 4.2 had taken place at January 1, 2004.
FINANCIAL REPORT OF
34.1 Principles
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35 SEGMENT INFORMATION
The methodology used to prepare segment information is set out in the CNCE Group’s Management Report.
CNCE
Group
Net banking income
Cost/income ratio
Pro forma
2004
2005
Pro forma
2004
Investment
Banking
2005
Pro forma
2004
CNCE
Holding
2005
Pro forma
2004
2005
3,980
(3,150)
4,598
(3,560)
1,634
(1,248)
1,828
(1,352)
2,324
(1,599)
2,695
(1,877)
22
(303)
75
(331)
830
79.1%
1,038
77.4%
386
76.4%
476
74.0%
725
68.8%
818
69.6%
(281)
ns
(256)
ns
(Allocations to)/releases from provisions (145)
522
(40)
Commercial
Banking
1,167
(74)
(7)
2
512
117
512
(4)
1,593
Exceptional items
Minority interests
(20)
(93)
(89)
(15)
(294)
(104)
(47)
(2)
(75)
918
Earning capacity
918
887
(52)
(17)
(86)
(59)
503
20
8
13
10
50
2
(49)
(1)
47
1,001
694
861
(414)
(269)
(15)
150
(104)
(112)
(187)
(184)
(257)
(20)
203
(89)
(23)
(32)
(41)
(56)
17
1,103
752
782
469
548
(303)
(227)
1,105
752
782
469
548
(303)
(225)
(2)
13
36 CONSOLIDATED CASH FLOW STATEMENT
In the absence of standards governing the presentation of cash flow statements by credit institutions reporting under French
GAAP, a consolidated cash flow statement has been prepared based on the principles set out below.
Quantitative reference data
Data included in the consolidated cash flow statement have been taken from the consolidated financial statements presented
in note 35 to the 2004 consolidated financial statements of the CNCE Group.
Basis of preparation
The cash flow statement sets out the sources and uses of funds of the CNCE Group, based on changes in the balances
of balance sheet items:
■ long-term sources of funds;
■ other sources of funds; and
■ uses of funds.
As regards sources of funds provided by operations, Group income has been restated to include:
■ net allocations to provisions;
■ depreciation and amortization of assets and goodwill; and
■ the share in income of affiliates accounted for by the equity method;
but excludes any other non-cash item included in net consolidated income.
Therefore, as depreciation and amortization expense is restated, the following items are not included:
■ write-downs of equalization payments;
■ write-downs of issuance expenses; and
■ expense transfers.
Consequently, the impact of these items is reflected in the change in other sources and uses of funds.
76
1,178
281
119
(513)
1,065
(394)
965
257
194
(522)
894
0
349
18
3
912
1,953
(244)
(165)
(41)
2,603
3,047
Other sources:
Increase (decrease) in interbank items
Increase (decrease) in customer deposits
Increase (decrease) in debt securities
Increase (decrease) in other financial items
Increase (decrease) in other sources of funds
13,365
1,411
9,073
13,497
37,346
23,623
7,160
15,153
1,582
47,518
Total increase (decrease) in sources of funds
39,299
50,565
Uses of funds:
Increase (decrease) in interbank items (assets)
Increase (decrease) in customer loans and lease financing
Increase (decrease) in insurance company securities and investments
Increase (decrease) in long-term investments
Increase in tangible and intangible assets
Total increase (decrease) in uses of funds
7,010
6,727
25,153
109
300
39,299
36,624
13,580
303
(460)
518
50,565
FINANCIAL REPORT OF
Long-term sources of funds
Consolidated capital funds
Funds provided by operations:
Consolidated net income (Group share and minority interests)
Total funds provided by operations
Dividends paid
Net change in consolidated capital funds and reserves:
Group share
Minority interests
Increase (decrease) in the Reserve for General Banking Risks
Increase (decrease) in subordinated debt
Increase in long-term sources of funds
Pro forma
2004
RISK
MANAGEMENT
2005
FINANCIAL REPORT
OF THE CNCE GROUP
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INFORMATION
ON THE ISSUER
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STATUTORY AUDITORS’ REPORT ON
THE CONSOLIDATED FINANCIAL STATEMENTS
of the Caisse Nationale des Caisses d’Epargne et de Prévoyance
Year ended December 31, 2005
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.
To the shareholders,
In compliance with the assignment entrusted to us by the Annual General Meeting, we have audited the accompanying
consolidated financial statements of the Caisse Nationale des Caisses d’Epargne et de Prévoyance, for the year ended
December 31, 2005.
The consolidated financial statements have been approved by the Management Board. Our role is to express an opinion on
these financial statements based on our audit.
1 OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the 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 note 4.1 to the consolidated financial statements, which
sets out the conditions for implementing, from January 1, 2005, changes in accounting methods relating to the application of:
78
■
CRC rule 2002-03 on accounting for credit risk, which requires provisions to be set aside to cover expected losses on
non-performing and doubtful loans based on their discounted recoverable amount;
■
CRC rule 2002-10 on depreciation, amortization and impairment of assets;
■
CRC rule 2004-06 on the definition, recognition and measurement of assets;
■
CNC recommendation 2003-R-01 on identifying, measuring and accounting for pension obligations and other employee benefits.
In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to
the justification of our assessments, we bring to your attention the following matters:
Changes in accounting methods
As part of our assessment of the accounting rules and principles applied by the Group, we ensured that the above-mentioned
changes in accounting methods and the presentation thereof in the notes were appropriate.
Accounting estimates
As indicated in note 3.4 of the notes to the consolidated financial statements relating to 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 the calculation of the related specific and general provisions.
As indicated in notes 3.8 and 19 of the notes to the consolidated financial statements relating to valuation rules, the Group
uses internal models to value positions on financial instruments which are not listed on organized markets. We examined
the control procedures put in place to validate the models used and define the parameters applied.
For the purposes of preparing consolidated financial statements, the Group also makes accounting estimates in order
to determine and record deferred tax assets (note 2.4), intangible assets (notes 2.6, 3.1, 12 and 16), insurance technical
reserves (notes 3.11 and 32), investments in unconsolidated subsidiaries (note 3.2), and pension obligations (notes 3.7 and
15.3). We reviewed the assumptions used and verified that these accounting estimates are based on documented methods
that conform to the principles set forth in the above-mentioned notes to the consolidated financial statements.
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.
3 SPECIFIC VERIFICATION
In accordance with professional standards applicable in France, we have also verified the information given in the Group
management report. We have no matters to report regarding its fair presentation and conformity with the consolidated
Paris and Neuilly-sur-Seine, April 28, 2006
The Statutory Auditors
PricewaterhouseCoopers Audit
Anik Chaumartin
Yves Nicolas
RISK
MANAGEMENT
2 JUSTIFICATION OF OUR ASSESSMENTS
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
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CHAIRMAN'S REPORT
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RESOLUTIONS
12/07/06
Mazars & Guérard
Charles de Boisriou
Michel Barbet-Massin
INFORMATION
ON THE ISSUER
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Notes to the financial statements of the parent company
NOTES TO THE FINANCIAL STATEMENTS
of the parent company
Extracts from the annual financial statements of the Caisse Nationale des Caisses d’Epargne et de Prévoyance for the year
ended December 31, 2005 are presented below. The annual financial statements have been examined by the Statutory Auditors.
Their report is free of qualifications but contains observations relating to the changes in accounting method outlined hereafter.
Both the annual financial statements and the corresponding Statutory Auditors’ report may be consulted at the CNCE’s
headquarters.
BALANCE SHEET AT DECEMBER 31, 2005 AND DECEMBER 31, 2004
ASSETS
Demand accounts
Term accounts
Customer items
Equity interests and other long-term investments
Intangible assets
Tangible assets
Other assets
Accruals and other accounts receivable
Total assets
Dec. 31, 2005
Dec. 31, 2004
7,090
51
94,825
30,358
64,467
2,306
1,403
903
4,461
1,781
866
13,417
26
59
1,620
6,453
5,899
0
87,562
30,450
57,112
7,464
7,134
330
4,226
1,649
557
12,802
24
32
1,369
3,039
132,954
124,623
Dec. 31, 2005
Dec. 31, 2004
19,207
18,061
1,146
7,116
816
6,300
91
91
19,452
17,015
2,437
5,154
4,033
1,121
14
14
Commitments given
Commitments to financial institutions
Commitments to customers
Guarantees given
Commitments to financial institutions
Commitments to customers
Other commitments given
80
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Demand accounts
Term accounts
Customer items
Other accounts:
Demand accounts
Term accounts
Debt securities issued
Bonds
Other liabilities
Accruals and other accounts payable
Subordinated debt
Capital funds and reserves (excluding Reserve for General Banking Risks)
Capital
Reserves
Retained earnings
Interim dividends
Dec. 31, 2005
66,895
30,545
36,350
2,294
2,294
1,930
364
36,414
12,851
23,563
3,653
5,750
247
7,482
106
10,113
7,252
2,064
120
69
608
132,954
Dec. 31, 2004
64,122
31,233
32,889
1,140
1,140
1,109
31
38,154
12,876
25,278
2,281
2,572
256
6,502
98
9,498
6,906
1,938
81
0
(204)
777
124,623
CHAIRMAN'S REPORT
RESOLUTIONS
RISK
MANAGEMENT
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Commitments from financial institutions
Guarantees received
Commitments from financial institutions
Other commitments received
Dec. 31, 2005
Dec. 31, 2004
2,344
2,344
3,736
3,736
343
343
512
512
7,986
7,986
3
3
INFORMATION
ON THE ISSUER
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PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED
DECEMBER 31, 2005 AND 2004
2005
2004
3,049
(3,112)
602
124
(23)
(45)
101
69
(50)
714
4,633
(4,603)
602
253
(55)
(23)
686
52
(44)
1,501
(397)
(18)
299
(530)
(33)
938
Operating income
(35)
264
(145)
793
194
458
25
818
Exceptional items
(3)
153
100
(141)
Net income
608
777
Commissions (income)
Commissions (expense)
Net losses on trading transactions
Net gains on held-for-sale portfolio transactions and similar items
Other operating income
Other operating expense
Net banking income
CHANGES IN ACCOUNTING METHOD
■ Comité de la réglementation comptable (French Accounting Regulatory Committee, CRC) Rule 2002-10 has established new
regulations regarding the depreciation, amortization and impairment of assets. In particular, major fixed asset components
are now accounted for separately and depreciated over their respective useful lives. As at January 1, 2005, this new rule led
to a €1.4 million increase in opening capital funds and reserves;
■ Conseil national de la comptabilité (French National Accounting Board, CNC) Recommendation 2003-R-01 setting out new
rules for identifying, measuring and accounting for pension commitments and other post-employment benefits, has been
applied as from January 1, 2005. At the application date, this change led to a reduction in opening capital funds and reserves
of €14 million, comprising, in particular, unrecognized actuarial gains and losses, in accordance with the first-time
application rules laid down by the Recommendation;
■ The CNCE has applied article 13 of CRC rule 2002-03 on accounting for credit risks, effective January 1, 2005. Provisions
covering expected losses on non-performing and doubtful loans must now be carried at present value.
This change did not have a material impact on the CNCE’s financial statements.
82
Share
capital
Additional
paid-in
capital
Consolidated
reserves
Movements in 2004
2,905
4,001
435
1,503
77
4
Dividends paid
Other movements
6,906
0
346
1,938
0
106
20
81
491
(452)
Interim
dividends
Retained
earnings
Net
income
Total
consolidated
capital funds
and reserves
excluding RGBR
87
690
3,504
5,994
777
(777)
0
0
9,498
0
0
7
2005 net income
(204)
(204)
204
0
82
(13
0
0
0
7,252
2,064
120
0
69
608
608
608
10,113
At December 31, 2005, the CNCE’s share capital amounted to €7,252 million, divided into 475,519,854 shares with a par value
of €15.25 each.
RISK
MANAGEMENT
STATEMENT OF CHANGES IN CAPITAL FUNDS AND RESERVES
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
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INFORMATION
ON THE ISSUER
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EQUITY INTERESTS, AFFILIATES AND OTHER LONG-TERM INVESTMENTS
a) Table of subsidiaries and affiliates
Financial information
Share
capital
I. Detailed information concerning the individual Caisses d’Epargne, subsidiaries
and affiliates whose gross value exceeds 1% of the parent company’s capital
1. Subsidiaries (over 50%-held)
Holassure – 5, rue Masseran – 75007 Paris
811
Crédit Foncier de France – 19, rue des Capucines – 75001 Paris
441
Financière OCÉOR – 27, rue de la Tombe-Issoire – 75014 Paris
186
Banque Palatine – 52, avenue Hoche – 75008 Paris
373
IXIS Corporate & Investment Bank – 47, quai d’Austerlitz – 75013 Paris
1,909
CDC IXIS Financial Guaranty – 31, rue de Mogador – 75009 Paris
450
IXIS Asset Management Group – 5, place des Cinq-Martyrs-du-Lycée-Buffon – 75015 Paris
52
Caceis – 91-93, boulevard Pasteur – 75015 Paris
300
Ecureuil Participations – 5, rue Masseran – 75007 Paris
76
SCIP – 64, rue de Lisbonne – 75008 Paris
144
2. Caisses d’Epargne and affiliates (between 10% and 50%-held)
Caisse d’Epargne des Alpes – 10, rue Hébert – 38000 Grenoble
80
Caisse d’Epargne d’Alsace – 2, quai Kléber – 67000 Strasbourg
71
Caisse d’Epargne d’Aquitaine Nord – 61, rue du Château-d’Eau – 33000 Bordeaux
71
Caisse d’Epargne d’Auvergne et du Limousin – 63, rue Montlosier – 63000 Clermont-Ferrand
96
Caisse d’Epargne de Basse-Normandie – 7, rue Colonel-Rémy – 14000 Caen
41
Caisse d’Epargne de Bourgogne – 1, rond-point de la Nation – 21000 Dijon
90
Caisse d’Epargne de Bretagne – 4, rue du Chêne-Germain – 35100 Cesson-Sévigné
85
Caisse d’Epargne Centre - Val de Loire – 267, rue Giraudeau – 37100 Tours
52
Caisse d’Epargne Champagne-Ardenne – 12-14, rue Carnot – 51100 Reims
60
Caisse d’Epargne Côte d’Azur – 455, promenade des Anglais – 06000 Nice
95
Caisse d’Epargne de Flandre – 24, avenue Gustave-Delory – 59100 Roubaix
76
Caisse d’Epargne de Franche-Comté – 2, rue Gabriel-Plançon – 25000 Besançon
42
Caisse d’Epargne Haute-Normandie – 151, rue d’Uelzen – 76230 Bois-Guillaume
88
Caisse d’Epargne Ile-de-France Nord – 35, boulevard du Port – 95000 Cergy
51
Caisse d’Epargne Ile-de-France Ouest – 14, avenue du Centre – 78180 Saint-Quentin-en-Yvelines
59
Caisse d’Epargne Ile-de-France Paris – 19, rue du Louvre – 75001 Paris
267
Caisse d’Epargne Languedoc-Roussillon – 254, rue Michel-Teule – 34000 Montpellier
110
Caisse d’Epargne Loire Drôme Ardèche – 17, rue Pierre-et-Dominique-Pontchardier – 42000 Saint-Etienne 92
Caisse d’Epargne de Lorraine Nord – 2, rue Royale – 57000 Metz
113
Caisse d’Epargne Midi-Pyrénées – 10, avenue Maxwell – 31000 Toulouse
116
Caisse d’Epargne du Pas-de-Calais – 1, place de la République – 62300 Lens
68
Caisse d’Epargne des Pays de l’Adour – Avenue de la Gare – 40100 Dax
46
Caisse d’Epargne des Pays de la Loire – 15, avenue de la Jeunesse – 44700 Orvault
91
Caisse d’Epargne des Pays du Hainaut – 31, avenue Georges-Clemenceau – 59300 Valenciennes
46
Caisse d’Epargne de Picardie – 2, boulevard Jules-Verne – 80000 Amiens
85
Caisse d’Epargne Poitou-Charentes – 18, rue Gay-Lussac – 86000 Poitiers
83
Caisse d’Epargne Provence-Alpes-Corse – Place Estangin-Pastré – 13006 Marseille
212
Caisse d’Epargne Rhône-Alpes Lyon – 42, boulevard Eugène-Deruelle – 69003 Lyon
137
Caisse d’Epargne Val de France-Orléanais – 2, rue Lavoisier – 45000 Orléans
68
CDC Entreprise Capital Investissement – 33, avenue du Maine – 75015 Paris
305
Ecureuil Vie – Tour Montparnasse – 5, rue Masseran – 75007 Paris
527
II. General information about other subsidiaries and affiliates
1. Subsidiaries not included in I.1
a. French subsidiaries
b. Other subsidiaries
2. Affiliates not included in I.2
a. French companies
b. Other companies
84
Reserves and
retained earnings
before income
appropriation
106
276
122
17
1,254
20
1
209
35
46
355
307
320
468
197
512
257
211
248
460
389
200
359
216
285
1,093
443
270
589
580
354
225
396
295
457
316
830
540
316
5
1,028
12/07/06
15:12
Page 85
Net
100.00%
100.00%
95.00%
60.00%
97.55%
100.00%
65.13%
50.00%
100.00%
100.00%
928
1,016
408
517
2,985
500
1,814
422
162
302
928
1,016
408
517
2,985
500
1,814
422
162
302
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
35.00%
41.87%
99
87
107
125
60
129
93
70
70
136
100
51
116
64
88
323
134
87
144
162
86
56
120
72
140
86
262
163
98
107
550
99
87
107
125
60
129
93
70
70
136
100
51
116
64
88
323
134
87
144
162
86
56
120
72
140
86
262
163
98
107
550
332
1
328
1
862
400
524
389
519
1,173
1,313
1,010
1,999
83
432
Net sales for the
last financial year
(before tax)
3,085
113
367
4,948
81
73
7
1,528
2,649
2,338
771
1,946
1,787
709
859
1,922
1,060
890
1,032
1,213
1,885
6,908
1,744
939
1,369
2,376
1,217
735
2,330
1,213
2,388
2,017
7,133
1,558
1,004
17
7
13
3
1
10
4
7
3
13
5
4
16
5
2
7
4
1
4
20
74
243
171
215
287
119
212
231
134
132
270
185
98
195
165
197
677
255
219
241
311
159
119
262
112
227
215
541
317
163
11
495
Net income/ Dividends received
(loss)
by the parent
for the last company during the
financial year last financial year
187
23
32
331
16
58
(7)
14
6
151
7
16
151
25
21
19
37
16
32
24
21
14
39
24
14
29
19
33
74
41
11
34
35
22
14
42
22
35
14
65
24
27
16
104
2
2
2
2
1
2
2
1
1
2
2
1
2
1
2
6
2
1
3
3
2
1
2
1
2
2
5
3
2
2
75
45
18
23
RISK
MANAGEMENT
Gross
Guarantees
and endorsements
given by the
parent company
CHAIRMAN'S REPORT
Outstanding loans
and advances
granted by the
parent company
RESOLUTIONS
Book value
of securities held
INFORMATION
ON THE ISSUER
% interest
held
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
1
85
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Page 86
b) Entities for which the CNCE has unlimited liability
Company name
Anticipa
Ecureuil Crédit
Arpège
Girce Ingénierie
Girce Stratégie
Informatique CDC
Schiphol
Sedi-RSI
Sirce 2
SCI 14, rue de la Tombe-Issoire
Avant Seine 1
Avant Seine 2
Société Civile Immobilière Vision
Haute Claire
Participation Ecureuil
Headquarters
Legal status
4, place Raoul-Dautry – 75015 Paris
29, rue de la Tombe-Issoire – 75014 Paris
430, rue Pierre-Simon-Laplace – 13100 Aix-en-Provence
rue du Fort-de-Noyelles – 59113 Seclin
76, boulevard Pasteur – 75015 Paris
56, rue de Lille – 75007 Paris
260, boulevard Saint-Germain – 75007 Paris
76, boulevard Pasteur – 75015 Paris
5, rue Masseran – 75007 Paris
14, rue de la Tombe-Issoire – 75014 Paris
6, place Abel-Gance – 92100 Boulogne-Billancourt
EIG
EIG
EIG
EIG
EIG
EIG
EIG
EIG
EIG
Non-trading real estate company
Limited partnership
Limited partnership
OTHER COMMITMENTS NOT RECORDED OFF-BALANCE SHEET (EXTRACTS)
CNCE’s guarantee in respect of the business activities of IXIS Corporate & Investment Bank (IXIS CIB)
Certain transactions carried out by IXIS CIB are covered by the Caisse des Dépôts (CDC) in the form of a joint guarantee.
These include:
■ cash and interbank transactions;
■ trading in financial instruments, including transactions relating to the issuance of such instruments, except for those
concerning the issuance of subordinated debt;
■ signature commitments such as guarantees and pledges.
According to the terms of the guarantee, IXIS CIB may provide the guarantee to some of its own subsidiaries.
In accordance with the agreement signed with the European Commission on March 27, 2003, this guarantee shall be closed
to additional transactions from January 24, 2007. In addition, new transactions maturing after January 23, 2017 are no longer
guaranteed by the CDC.
As part of the New Foundations project, on May 27, 2004 the CNCE agreed to counter-guarantee IXIS CIB transactions guaranteed
by the CDC, with effect from June 30, 2004.
In addition, from October 1, 2004 the CNCE has agreed to directly guarantee IXIS CIB transactions that are not guaranteed
by the CDC, with the exception of issues of subordinated debt.
86
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FINANCIAL REPORT
MANAGEMENT REPORT
Significant events of 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Financial results that reflect the Group’s new dimension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Analysis of the consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Regulatory capital and capital adequacy ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Recent developments and outlook for 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Consolidated profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
CHAIRMAN’S REPORT
A good year for Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
RISK
MANAGEMENT
Commercial Banking: a steady increase in results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
INFORMATION
ON THE ISSUER
RESOLUTIONS
Statutory Auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
87
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MANAGEMENT REPORT
1 SIGNIFICANT EVENTS OF 2005
1.1 Macroeconomic environment
International economic situation
Despite the emergence of a “third oil price shock”, 2005 was marked by solid international growth (4.2%) and low inflation
(worldwide inflation continued to hover around the 3.2% mark), on the heels of a period of exceptional activity that has lasted
since 1980 and growth of 4.8% in 2004. The US (GDP up 3.5%, compared with 4.2% in 2004) and China (growth of 9.4%) were
once again the main engines of economic growth. Japan (growth of 2.8%) began to turn its economy around on the basis of
healthier finances in its banking sector, enhanced corporate profitability and a reduction in the national debt. Europe continued
to lag behind (1.3% growth, compared with 2.1% in 2004), particularly in the first six months of the year, although the
economic picture varied considerably from one country to another. However, the steady fall in value of the euro from January
onwards (from US$1.36 to US$1.18 at the end of December 2005) provided a lift in the summer after the slump experienced in
the second quarter.
Paradoxically, the strong worldwide economic performance did not trigger widespread inflation in spite of all-time high oil
prices (a 43.3% increase over the year, peaking at US$67 a barrel for Brent crude) and soaring commodities prices. Neither was
the strong underlying performance dented by various factors such as the prolongation of the US Federal reserve’s tight
monetary policy (which could potentially have dampened demand in the US and spread to the Chinese and South American
economies), a number of major natural disasters (the Asian tsunami disaster as well as hurricanes Katrina and Rita) or the EU
constitutional crisis culminating in the rejection of the proposed European Constitution by both France and the Netherlands.
Similarly, worldwide economic disparities continued to increase. The US trade deficit continued to grow. Household debt
increased sharply and public finances deteriorated. Worries also persist in relation to Chinese overinvestment, internal
disparities in national economies within the euro zone, as well as asset, bond and, especially, housing market bubbles.
Interest rates and equity markets
In the words of Alan Greenspan, 2005 will be remembered for the “conundrum” of long rates that reached historically low
levels: 3.31% for ten-year fungible government bonds at the end of 2005, against 3.67% at end-2004. Buoyant economic
growth, the resumption of industrial investment, the increase in national debt and the raising of base rates by most central
banks (the US federal reserve gradually increased these from 2.25% to 4.25%) all contributed to a general rise in interest rates.
This phenomenon can largely be accounted for by bulk buying of US treasury bonds on the part of Asian central banks, which
tended to increase worldwide demand in relation to the supply of bonds. It even resulted in flatter interest rate curves at the
end of the year, particularly in the US (a variance of less than 15 basis points, against 200 basis points at the end of 2004).
Moreover, the ECB only increased its main base rate by 25 basis points to 2.25% in December, reflecting economic uncertainty
in Europe and the absence of any knock-on effects from the oil price shocks (inflation pegged at 2.2%). Against a backdrop of
particularly attractive interest rates and enhanced corporate profits, stock markets, which were less volatile than in the past,
performed quite spectacularly, with the exception of those in the US: the Nikkei soared 40.2%, while the CAC40 and S&P500
gained 23.4% and 3%, respectively. Mergers, acquisitions and stock market listings increased in both value and volume terms.
For the fourth year in a row, the number of corporate insolvencies was down and reached an especially low level.
Situation in France
For the eighth year in a row, the French economy grew faster than the euro zone as a whole, even though its performance was
disappointing when placed in a context of robust global economic growth. The French economy grew by 1.4% in 2005, against
2.1% in 2004. After the slump experienced in the second quarter, there were signs of a turnaround during the summer.
88
The home loan market was once again boosted by very low interest rates, the option of longer-term loans and the continued
rise in house prices. The number of personal loans increased faster than in 2004, but by much less than home loans. Increased
household debt coupled with enhanced consumer spending power also helped to boost financial investments. Life insurance
remained the preferred form of investment in France, attracting over two thirds of all available funds. However, the preference
for liquidity witnessed over the past four years was less in evidence due to low lending rates, a fall in the interest rates paid on
regulated savings (the rate on Livret A passbook accounts was cut from 2.25% to 2% on August 1) and healthier stock markets.
While net customer deposits in passbook accounts and demand deposit accounts remained at high levels, those in home
purchase savings plans and regulated savings decreased. In the same vein, current privatization programs (EDF, GDF
and SANEF) and renewed interest in stocks and shares boosted stock market activity (shares, employee savings schemes
and unit-linked life insurance policies).
1.2 Continued reorganization of the business portfolio
Overview of the main impacts of the New Foundations project
The redefinition of the partnership between Groupe Caisse d’Epargne (GCE) and the Caisse des Dépôts has impacted
the Group’s income as well as the way in which this is presented. The Group has therefore restated its accounts for 2004
in order to present annual pro forma income and facilitate a meaningful analysis of changes in the principal income and
expense items for 2004 and 2005.
As part of the 2004 New Foundations project, the Caisse des Dépôts transferred its holding in investment banking and
asset management subsidiary, CDC IXIS, to the Caisse Nationale des Caisses d’Epargne (CNCE). Moreover, the individual
Caisses d’Epargne in metropolitan France issued Cooperative Investment Certificates (CICs) to the CNCE, giving it a 20% stake
in their capital.
Reorganizational measures taken in 2005
The recasting of the Group’s internal architecture continued in 2005 and involved a number of restructuring operations,
described below.
Commercial Banking division:
■
La Compagnie 1818 – Banquiers Privés –, the Group’s Private Banking subsidiary, was created on June 1, 2005. This bank
and its subsidiaries offer private client and estate planning services to major private customers. Its name evokes the year in
which the Caisses d’Epargne was founded and is a tribute to the pioneering spirit of its founders, entrepreneurs and private
bankers. La Compagnie 1818 – Banquiers Privés – was created by transferring the Group’s private asset management activities
(within CFF, CFB, Banque Palatine and IXIS Asset Management Group) to Véga Finance, which was subsequently renamed.
■
On June 1, 2005, the Entenial, Crédit Foncier Banque and A3C subsidiaries were merged into the parent, Crédit Foncier
with retroactive effect from January 1. The enlarged company is now the leading specialist provider of real estate financing
solutions.
■
Banque Sanpaolo has been renamed Banque Palatine.
FINANCIAL REPORT OF
Growth in France continued to feel the pinch of sluggish domestic demand in Germany and the continuing external current
account deficit. In particular, the trade deficit (€26.5 billion) trebled in 2005, due more to weak export activity than to high
energy prices. However, consumer spending (2.1%, versus 2.3% in 2004) once again helped to buoy the economy, thanks to
enhanced purchasing power, a slightly lower savings rate (15.2%, against 15.4% in 2004), increased household debt levels
(60% of household incomes) and, to a lesser extent, the fall in unemployment from 10.2% in March to 9.6% in December.
In addition, industrial investment resumed, albeit at a relatively low level (3.7%, against 1.4% in 2004).
FINANCIAL REPORT
OF THE CNCE GROUP
Page 89
RISK
MANAGEMENT
15:12
CHAIRMAN’S REPORT
12/07/06
RESOLUTIONS
■
The merger of IXIS into the CNCE led to the creation of IXIS Investor Services, a custody services and fund administrator.
This new structure paved the way for the creation of CACEIS (Crédit Agricole Caisse d’Epargne Investor Services), following
the decision by Crédit Agricole and Groupe Caisse d’Epargne to merge their investor services subsidiaries. CACEIS is a 50-50
joint venture specializing in services for institutional investors and large corporations, and has three core businesses:
custody services, fund administration and institutional investor services. It currently has operations in six European
countries (France, Luxembourg, Spain, Belgium, Ireland and the Netherlands).
INFORMATION
ON THE ISSUER
Investment Banking division:
89
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Management Report of Groupe Caisse d’Epargne
■
IXIS CIB’s European financing and lending activities were restructured to boost their development. Activities have been
mapped into business lines that provide value-added structured products for corporations, local government and European
investors in selected areas – acquisition and LBO financing, asset financing, infrastructure and project financing,
public-private partnerships, real estate financing and public sector financing.
■
IXIS Asset Management transferred its US asset management operations to the IXIS AM Group holding company.
1.3 An evolving Group
Alongside the internal reorganization process, Groupe Caisse d’Epargne was involved in a number of external growth ventures
and reinforced or entered into a number of strategic cooperation agreements over the period. The Investment Banking division
remained committed to targeted international expansion while Groupe Caisse d’Epargne has adopted a forward-looking
product policy for all Commercial Banking operations.
Operations in the Commercial Banking sphere included:
90
■
On April 14, 2005, the Group became the first French banking institution to pay interest on current accounts. Checking
accounts provided within a service package now bear interest, with no minimum limit. This new feature has been introduced
without increasing the cost of existing services or charging for checks.
■
Groupe Caisse d’Epargne, Macif and Maif have set up a jointly-owned holding company for the purpose of creating a common
platform for the delivery of personal care services. This project, which has won the approval of the French Ministry
of Employment and Social Cohesion, covers four main service areas – day-to-day services for vulnerable persons, help
with day-to-day household tasks, child care and tutoring, and general residential support services. This platform, known
as Serena, was launched in October 2004 when the parties concerned entered into a strategic partnership. At the end of
2005 a number of individual Caisses d’Epargne began offering personal care services to their customers.
■
The formation of a partnership with ABN Amro in trade finance.
■
GCE Newtec, a subsidiary specialized in NICTs (new information and communications technologies), was created to help
enhance Groupe Caisse d’Epargne’s customer relations services and to develop products and services using NICTs.
Consolidating technology oversight, product development and marketing within the same entity provides greater scope for
reducing time-to-market on newly-launched products.
■
The Group carried out a number of noteworthy transactions in the real estate sector:
■ the acquisition of a 34% stake in I-Sélection via La Compagnie 1818. I-Sélection’s business involves selecting suitable real
estate investments in France for private customers;
■ Gestrim, a subsidiary of Groupe Caisse d’Epargne, was involved in a strategic linkup with Lamy through the creation of a joint
venture in which GCE holds a 67.5% stake. The operation aims to create the number one real estate services business
in France. This linkup will be completed via a contribution of equity interests prior to March 31, 2006;
■ Perexia was sold by Crédit Foncier and is now wholly-owned by the CNCE, thus paving the way for a new Social Housing
Enterprises business;
■ Banque Palatine launched a successful takeover bid for Eurosic, a real estate leasing company with its own pool of real
estate assets;
■ the first significant operations aimed at refinancing Groupe Caisse d’Epargne’s outstanding public debt were launched
by Crédit Foncier. More than €2 billion was contributed to Compagnie de Financement Foncier by the CNCE and ten of
the individual Caisses d’Epargne.
■
The following operations took place in the insurance sector:
■ payment protection insurance: the CNCE now holds a 60% majority stake in Foncier Assurance. Crédit Foncier now controls
40% of the entity;
■ non-life: the GCE Garanties Group (multi-specialist provider of guarantees) was reorganized in 2005 (Eulia Caution became
GCE Garanties and GCE Garanties increased its stake in Socamab SA from 40% to 60%).
Operations in the Investment Banking sphere included:
■
strengthening the industrial and financial cooperation agreement with Lazard through the acquisition of a stake in Lazard by
IXIS CIB for US$50 million at the time of its listing on the stock market in addition to US$150 million worth of three-year
equity notes;
■
boosting IXIS CIB’s presence outside France with the establishment of a branch in Italy, a subsidiary in Luxembourg and an
office in Hong Kong (by mid-2006 IXIS CIB will have twelve offices throughout the world, compared with only four at end 2004);
■
acquiring 100% of the share capital of Nexgen, a company specialized in financial engineering solutions for large corporations.
IXIS CIB previously held a 38% stake in Nexgen. The company has operations in Dublin, Paris, Singapore and Milan.
Several changes in accounting method came into effect at January 1, 2005:
■
under Comité de la réglementation comptable (French Accounting Regulatory Committee, CRC) rule 2002-03 on accounting
for credit risks, provisions covering expected losses on doubtful and irrecoverable loans must be carried at present value.
At January 1, 2005, this regulatory change led to a €123 million decrease in opening capital funds and reserves, net of
deferred taxes;
■
CRC rule 2002-10 has established new regulations regarding the depreciation, amortization and impairment of assets.
In particular, major fixed asset components are now accounted for separately and depreciated over their respective useful
lives. As at January 1, 2005, this change of accounting method led to a decrease of €70 million in opening capital funds
■
CRC rule 2004-06 concerning the definition, recognition and measurement of assets introduced a change, effective January 1,
2005, in the accounting treatment of acquisition costs, which are now included in the amount at which the item is initially
recognized on the balance sheet. The new regulations nevertheless allow entities to continue expensing such acquisition
costs in their individual financial statements. However, in keeping with International Financial Reporting Standards, where
no such option exists, the Group has decided to apply the new accounting treatment. This new rule led to a €7 million
increase in opening capital funds and reserves, net of deferred taxes;
■
Conseil national de la comptabilité (French National Accounting Board, CNC) recommendation 2003-R-01 setting out new
rules for identifying, measuring and accounting for pension commitments and other employee benefits, has been applied
as from January 1, 2005. At the application date, this change led to a reduction in opening capital funds and reserves of
€633 million, net of deferred taxes, comprising, in particular, unrecognized actuarial gains and losses, in accordance with
the first-time application rules laid out by the recommendation.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 91
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
The second half of 2005 witnessed the roll-out of the third version of the rating tools for risk segments in the Commercial
Banking division and the continued development of advanced rating tools for risk segments in the Investment Banking
division. The inputs used in preparing these ratings are subsequently archived, analyzed and benchmarked.
Within the scope of an ongoing review of the banking sector (“QIS 5”) launched by the regulatory authorities and covering
all major banks, the Group has also recalculated its regulatory capital requirements in accordance with Basel II. This work
was based on specific procedures and tools in place for the June 30, 2005 closing and provided an insight into the quality
of the data collated, as well as identifying any necessary adjustments required and ways in which the Group’s monitoring
and oversight procedures could be improved.
Preparation for Basel II compliance by both the Group and its entities continued apace. The Internal Audit department
conducted a number of missions within the scope of Basel II steering assignments focusing on the quality of both rating
procedures and information systems.
INFORMATION
ON THE ISSUER
The aim of the revised Basel II capital framework 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 Group’s Basel II initiative
is a cross-functional project placed under the responsibility of the CNCE and involving a wealth of participants both from
the CNCE and the individual Caisses d’Epargne, subsidiaries and IT communities.
RESOLUTIONS
1.5 Basel II
91
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1.6 Transition to International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS)
1.6.1 Group IAS/IFRS transition project
With a view to improving the operation of the internal market, on July 19, 2002 the European Parliament adopted a regulation
(EC No. 1606/2002) requiring companies that are not listed in the European Union but whose debt securities are traded 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) as adopted for use by the European Union, by
2007 at the latest.
Groupe Caisse d’Epargne has elected for early application and will prepare its consolidated financial statements under IAS/IFRS
as adopted for use by the European Union from January 1, 2006. The 2005 financial statements will be restated under IFRS
in order to permit meaningful comparisons.
Project steering
In spring 2003, Groupe Caisse d’Epargne launched an IFRS transition project.
A program was launched at Group level under the aegis of the Group Finance and Risks division of the CNCE to coordinate
and monitor the various different projects at senior management level.
This program is based around a dedicated project team within the Group Accounting Standards division and various working
groups from the individual Caisses d’Epargne and its subsidiaries, as well as the Group’s different core business lines.
This structure, which draws on a wide range of cross-functional competencies throughout the Group at operational level,
facilitates rapid assimilation of implementation issues, especially those relating to information systems.
The project comprises three main phases:
■
preliminary work carried out in the first half of 2003, in order to assess the impact of IFRS in terms of both changes
in accounting policies and information systems;
■
a detailed analysis performed between October 2003 and April 2004 of the main differences relative to IFRS identified during
the first phase. 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 led to the implementation of the systems and organizational structures
to achieve compliance with IFRS.
Three supervisory bodies coordinate and validate the options chosen by the Group:
■
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.
The accounting options chosen on the basis of the preliminary work carried out were validated by the Group’s Statutory Auditors.
The decisions taken within the scope of the national IFRS transition project are relayed throughout the Group’s different entities
by a network of IFRS correspondents tasked with coordinating the implementation of IFRS at local level.
Update on progress of the IFRS project roll-out phase
The roll-out phase was launched following completion of the detailed analysis phase. This was based on three inter-linked,
mutually beneficial projects:
92
■
the individual Caisses d’Epargne and the entities carried out financial simulations. These facilitated IFRS take-up by Caisses
d’Epargne teams and subsidiaries, and helped to identify potential sticking points, thus generating analyses and solutions
in the upstream project phase;
■
a project Organization unit was set up. It was mainly tasked with drafting operating and implementation guidelines
containing analyses of IFRS and their functional and operational application within the Group;
15:12
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specifications were drawn up for the major systems impacts which were subsequently developed and phased in.
Modifications were made to upstream systems as well as to the entities’ accounting systems and Group consolidation
systems.
Information workshops are regularly organized for all of the players involved in the IFRS transition project in order to share
information in respect of both project roll-out and elections made with regard to accounting treatment under the standards.
The IFRS training programs launched in 2003 carried on through 2004 and 2005. This training was originally conceived for
the IFRS transition project managers of each entity during the detailed analysis phase; however, it was subsequently tailored
to provide training on more operational aspects to all of the staff in a specific business line.
1.6.2 Principles used and bases of application
1.6.2.1 2005: accelerated convergence between IFRS and French GAAP
Over the past few years, under the guidance of the CNC, French generally accepted accounting principles have gradually been
brought into line with IFRS.
FINANCIAL REPORT
OF THE CNCE GROUP
■
12/07/06
FINANCIAL REPORT OF
■
under CRC rule 2002-03 on accounting for credit risks (section applicable in 2005) impairment relating to expected losses on
doubtful and irrecoverable loans must now be discounted to present value;
■
commitments in respect of post-employment benefits and long-term employee benefits are measured in accordance
with CNC recommendation 2003.R.01 relating to the recognition and measurement of pension commitments and other
post-employment benefits. Commitments are measured using an actuarial method that takes account of the age, length of
service and the likelihood of personnel being employed by the Group until retirement, and of the value of plan assets.
Cumulative actuarial gains and losses are amortized in accordance with the corridor method;
■
lastly, there have been two changes regarding the accounting treatment of fixed assets: (i) acquisition costs are now
included in the amount at which the item is initially recognized on the balance sheet (CRC rule 2004-06 concerning the
definition, recognition and measurement of assets); and (ii) in accordance with CRC rule 2002-10, amended by CRC rule
2003-07, which has established new rules for charging depreciation, amortization and impairment, major fixed asset
components are now accounted for separately and depreciated over their respective useful lives.
The detail and impacts of these changes are set out in the notes to the consolidated financial statements prepared under
French GAAP.
1.6.2.2 Main differences between IAS/IFRS and French GAAP
CHAIRMAN’S REPORT
Several changes in accounting method came into effect at January 1, 2005:
RISK
MANAGEMENT
Consequently, certain accounting principles applied to the Group’s consolidated financial statements for 2005 are very
similar to IFRS.
First-time adoption (IFRS 1)
IFRS 1 provides optional or mandatory exceptions concerning retrospective application for certain items. The Group has elected
the following optional exemptions:
■
business combinations: the Group has elected not to restate business combinations that occurred before January 1, 2005,
in accordance with IFRS 3;
■
measurement of property, plant, and equipment at fair value: the Group has elected to continue to carry property, plant,
and equipment at cost;
■
employee benefits: given the rules already applied within the Group, the impact of the exception authorized in relation to this
item is not material;
INFORMATION
ON THE ISSUER
IFRS 1 provides for retrospective application of IFRS and for the recognition in opening capital funds and reserves at January 1,
2005 of the impact of the transition from French GAAP, applied by the Group up to December 31, 2004.
RESOLUTIONS
International Financial Reporting Standards (IFRS) were applied for the first time to the consolidated financial statements
of Groupe Caisse d’Epargne at January 1, 2005 in accordance with IFRS 1.
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■
cumulative translation adjustments: the Group transferred all cumulative translation adjustments arising on the translation
of the accounts of foreign subsidiaries at January 1, 2005, to consolidated reserves. This adjustment had no impact on
opening capital funds and reserves at January 1, 2005;
■
share-based payment: the Group has elected to apply IFRS 2 for equity-settled share-based payments granted after
November 7, 2002, that had not yet vested at January 1, 2005;
■
day one profit: the margin generated on structured instruments trading was restated on a prospective basis for transactions
entered into after October 25, 2002.
Consolidation principles and methods (IAS 27, 28, 31 and SIC 12)
The main differences impacting the scope and methods of consolidation are (i) the new criteria for determining control over
a subsidiary; (ii) the criteria used to determine whether special purpose entities should be consolidated; and (iii) the
accounting treatment of commitments to buy back minority interests and goodwill.
The decisions taken concerning the adoption of IFRS have not resulted in any material changes to the Group’s scope of
consolidation.
Assessment of control
IFRS extends the scope of the voting rights that must be taken into consideration in order to assess whether effective control
exists. Potential voting rights that give entitlement to additional voting rights must be considered when they may be exercised
or converted at any time. These potential voting rights may result, for example, from purchase options on ordinary shares
traded on the market or from the conversion of bonds redeemable in ordinary shares.
Consolidation of special purpose entities
The separate legal structures (special purpose entities), which the Group controls in substance, must be consolidated even
when no capital link exists. The exceptions that existed under French GAAP in respect of the consolidation of special purpose
entities are no longer applicable. For example, mutual funds held within the scope of insurance activities do not have to be
consolidated under French GAAP pursuant to a regulatory exception.
Commitments to buy back minority interests
Based on the principle that minority interests are represented by shares and thereby constitute de facto financial instruments,
IFRS require that a liability be recognized in respect of commitments to buy back minority interests, i.e., stakes held by
minority shareholders in consolidated companies. However, the accounting treatment of the offsetting entry for this obligation
is not dealt with under IFRS. This issue is currently being addressed by the IASB’s International Financial Reporting
Interpretations Committee (IFRIC).
The Group has recorded the difference between the amount of the commitment and the minority interests, representing
the offsetting entry, in capital funds and reserves.
Goodwill
Goodwill is no longer amortized but tested for impairment at least once a year, or whenever there is an indication that it may
be impaired.
Loans and receivables (IAS 18 and IAS 39)
Loans and receivables are initially recognized at fair value, including acquisition costs.
They are subsequently measured at amortized cost using the effective interest method that reflects the contractual cash
flows over the full contractual term of the financial instrument.
Portfolio provisions for credit risks (IAS 39)
Under IAS 39, a provision must be set aside on portfolios of similar receivables that are not individually impaired, as soon as
there is objective evidence of impairment.
In this regard, the general provisions previously recorded by Groupe Caisse d’Epargne are no longer compatible with IFRS.
However, hedges of credit risks on performing loans should not be materially affected by the adoption of IFRS.
94
Page 95
Portfolio equity investments (IAS 39)
The classification of portfolio equity investments has been modified by IAS 39. Reclassifications have mostly adhered
to the following principles:
■
the portfolio of “financial assets at fair value through profit or loss” includes financial assets held for trading, as well as the
non-derivative financial assets that the Group has elected to measure at fair value in accordance with the option available
under IAS 39. Details of the application of the fair value option were provided in the amendment to the standard issued
in June 2005;
■
“held-to-maturity investments” include certain securities previously classified as investment securities. However, unlike
under French GAAP, these securities may not be hedged against interest rate risk;
■
“available-for-sale financial assets” is the default category that includes held-for-sale securities and certain investment
securities as well as portfolio equity investments, other long-term investments and investments in unconsolidated
subsidiaries.
Changes in the fair value of “available-for-sale financial assets” are recorded by means of an offsetting entry in a specific
equity account, known as “revaluation reserve”. These amounts are only taken to profit and loss account under net banking
income in the event of their disposal or a lasting impairment in the value of the assets. Impairment recorded against an equity
instrument may not be reversed.
Derivatives designated as hedging instruments (IAS 39)
Under IAS 39, all derivative financial instruments must be carried in the balance sheet at fair value.
In order to qualify as a derivative hedging instrument, the hedging relationship must be documented; the effectiveness
of the hedge must be proven from the outset and verified retrospectively.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Specific hedging
The Group has opted to maintain the existing qualification of specific hedging relationships as defined under French GAAP
in order to reflect the initial purpose of the hedge as well as general banking practices with regard to IFRS.
However, under the rules set out in IFRS 1 concerning the treatment of hedging operations at the date of first-time application
of IFRS, certain specific hedging derivatives should be reclassified as at fair value through profit or loss, particularly those used
to hedge investment securities, since IAS 39 prohibits hedging of held-to-maturity investments.
In a fair value hedging relationship, the portion relating to the hedged risk will be remeasured at fair value through profit or loss,
symmetrically to the remeasurement of the hedging instrument. At January 1, 2005, these adjustments will be recognized
in capital funds and reserves, while the ineffective portion of the hedge will be taken to profit.
Day one profit (IAS 39)
The initial margin generated when a financial instrument is set up cannot be taken to profit unless the valuation parameters
are observable.
RESOLUTIONS
European Commission regulation No. 2086/2004 endorsed the use of IAS 39, with the exception of certain provisions that
facilitate the eligibility for fair value hedging of macro-hedging operations carried out by Asset/Liability Management in order
to manage its fixed-rate exposures (including in particular customer demand deposits). The Group has decided to make use
of these provisions.
CHAIRMAN’S REPORT
Macro-hedging
In the case of certain structured products, the valuation model is sometimes fed by non-observable market parameters.
The margin generated when these complex financial instruments are traded (day one profit) is deferred and taken to the profit
and loss account over the period during which the valuation parameters are expected to remain non-observable.
INFORMATION
ON THE ISSUER
Margins previously recorded under French GAAP when certain instruments were traded will be recognized in capital funds
and reserves at January 1, 2005 and released to income over the remaining life of the financial instruments concerned.
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Provisions for regulated home purchase loans (IAS 39 and IAS 37)
A provision must be set aside under liabilities when specific commitments arising on regulated savings products (whether
in the savings phase or the related loan phase) will have an unfavorable impact on the Group.
At January 1, 2005, a provision will be charged against capital funds and reserves for the difference between the regulated
terms and conditions applicable to each of these phases and market conditions.
Given the Group’s share of the regulated home purchase loans market, this provision is likely to be for a material amount.
However, the provisioning policy adopted for home purchase loans must be considered in light of the treatment of the Reserve
for General Banking Risks.
Reserve for General Banking Risks (IAS 37)
Under IAS 37, dealing with provisions and contingent liabilities, the Reserve for General Banking Risks does not meet the criteria
for recognition as a liability. Therefore, the balance of the Reserve for General Banking Risks will be added to capital funds and
reserves at January 1, 2005.
Share-based payments (IFRS 2)
Share purchase or subscription options granted by certain entities are measured at fair value. The impact of share-based
payment transactions must be taken to profit or loss at the grant date, without waiting for the vesting conditions to be satisfied
or for the beneficiaries to exercise their options.
Distinction between debt and equity (IAS 32)
Financial instruments are classified as either debt or equity instruments according to whether or not the issuer has
a contractual obligation to deliver cash or another financial asset to the holder.
Members’ shares
Based on an IFRIC interpretation, members’ shares are classified as equity if the entity has an unconditional right to refuse
redemption of the members’ shares or if local laws, regulations or the entity’s governing charter unconditionally prohibits
the redemption of members’ shares.
Based on the existing provisions of the Group’s articles of association relating to minimum capital funds, members’ shares
issued by Groupe Caisse d’Epargne are classified as equity.
Undated deeply subordinated notes
Based on the conditions laid down in IAS 32 for analyzing the substance of these instruments and in light of their intrinsic
characteristics, the undated deeply subordinated notes issued by the Group qualify as equity.
Insurance (IFRS 4)
The financial assets of insurance companies fall within the scope of IAS 39: they are classified within the categories provided
for in IAS 39 and they adhere to the rules concerning measurement and accounting treatment.
In accordance with phase one of IFRS 4, contracts classified as insurance contracts under French GAAP fall into two categories:
■
contracts that generate significant insurance risk within the meaning of IFRS 4 will continue to be accounted for under
French GAAP, pending phase II of IFRS 4. The Group will therefore continue to use the rules for measuring technical provisions
provided under French GAAP;
■
investment contracts that do not generate significant insurance risk, such as savings schemes, are recognized under IFRS 4
if they contain a discretionary participation feature; otherwise they are accounted for under IAS 39.
Most investment contracts issued by Group entities contain with-profit discretionary participation features; as such,
the provision for amounts payable on with-profit policies is adjusted to include the policyholders’ share in the unrealized
profits or losses on financial instruments measured at fair value under IAS 39.
Finally, in accordance with IAS 12, deferred taxation has been recognized in the capitalization reserve.
96
FINANCIAL REPORT
OF THE CNCE GROUP
Page 97
2 FINANCIAL RESULTS THAT REFLECT THE GROUP’S NEW DIMENSION
2.1 Changes in income posted by the Group
Year-on-year comparisons of the Group’s results are complicated by the restructuring operations that took place in mid-2004
as a result of the New Foundations agreements, the inclusion of the CNCE in the consolidating entity and the Group’s external
growth operations, including the Entenial merger in January 2004. In order to facilitate meaningful comparisons between the
Group’s results for 2004 and 2005, pro forma financial statements have been prepared for 2004 using the same accounting
methods and principles as those used by the Group to prepare its consolidated financial statements in 2005. The assumptions
used to prepare the pro forma accounts are described in note 34 to the consolidated financial statements.
2004
Pro forma
2004
2005
Net banking income
8,972
9,742
10,301
(6,510)
(7,147)
(7,543)
Cost/income ratio
2,462
72.6%
2,595
73.4%
2,758
73.2%
Exceptional items
Net allocations to the Reserve for General Banking Risks
Minority interests
Change
Amount
%
559
6%
(396)
6%
163
–0.2 pt
6%
–
(246)
(347)
(192)
155
–45%
216
(20)
243
(52)
261
37
18
89
7%
ns
2,864
425
17%
(154)
154
(9)
31
(32)
ns
–28%
ns
–27%
66%
2,412
75
(538)
(30)
(74)
(60)
2,439
(24)
(544)
(53)
(114)
(48)
(178)
(390)
(62)
(83)
(80)
1,785
1,656
2,071
415
25%
Earning capacity (1)
Return on equity (2)
1,859
10.8%
1,770
10.0%
2,154
11.9%
384
1.9 pt
22%
–
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
The results achieved by Groupe Caisse d’Epargne in 2005 were up considerably on the prior year, reflecting its enlarged scope
of consolidation as well as excellent operational performances across the business lines. Net banking income rose 6% to more
than €10 billion, gross operating income climbed 6% to reach almost €2.8 billion and earning capacity expanded 22% to come
in at considerably more than €2 billion.
At December 31, 2005, consolidated capital funds (1) totaled €19.4 billion, against €18 billion at the previous year-end.
Despite its expansion drive, the Group maintained its capital adequacy ratios well above regulatory requirements, with the
Tier-1 ratio coming out at 9.6%. Post-tax return on equity stood at 11.9%.
RESOLUTIONS
(1) Earning capacity = consolidated net income (excluding minority interests) + allocations to the Reserve for General Banking Risks (excluding minority interests).
(2) Calculated based on average equity.
INFORMATION
ON THE ISSUER
(1)) Including the Reserve for General Banking Risks.
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2.2 Reporting by division
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 networks operating within the Group, including Banque Palatine, OCÉOR and La Compagnie 1818;
■
activities concerning the management of customer deposits and capital funds, as well as any related refinancing;
■
the Group’s insurance subsidiaries, including CNP, Ecureuil Vie, Ecureuil IARD and GCE Garanties, particularly;
■
the specialized banking and financial institutions, in particular Crédit Foncier and CEFi.
The Investment Banking division is structured around four business lines:
■
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, Hong Kong and Luxembourg subsidiaries, as well as through branch offices in
Frankfurt, London, Tokyo and Milan;
■
IXIS Asset Management Group, responsible for financial and real-estate asset management in Europe, Asia and North America;
■
IXIS Investor Services (became CACEIS in second-half 2005) providing custody, fund management and institutional investor
services in Europe;
■
IXIS Financial Guaranty (CIFG), which spearheads the Group’s financial guaranty operations, mainly in the US.
A holding structure completes the lineup, encompassing: proprietary trading operations (including medium- and long-term
commitments) 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 businesses; management of investments in unconsolidated
undertakings; overseeing investments made in connection with any surplus capital funds of the individual Caisses d’Epargne;
and managing exceptional income and expense items, such as provisions for general credit risks. These include the
amortization of goodwill and provisions set aside in relation to the CGR (the Group’s private pension fund).
The breakdown by division is aimed at providing a clearer picture of the results and profitability of the Group’s different activities.
Some of the allocation rules were altered slightly in 2005, with a view to refining the presentation of results by division.
In order to enable meaningful year-on-year comparisons, these changes were also applied retrospectively to the 2004 results.
Notably, in accordance with IFRS, which does not permit the amortization of goodwill, the amortization of goodwill and fair
value adjustments have been allocated to the holding structure.
Reporting by division is based on the following rules and methods:
Net banking income
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 of the divisions 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 (essentially impacting the Commercial
Banking division).
General operating expenses included under 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 committed
costs that cannot be directly allocated to the operating divisions.
Provisions for contingencies and impairment in value
Provisions are booked to cover the risks inherent to each division.
■
This item concerns capital gains or losses generated by the businesses on the sale of equities and investments.
■
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Page 99
Exceptional items
This line concerns transactions that are non-recurring in nature. The related income or expense is recorded in full under the
holding structure.
■
Goodwill and fair value adjustments
Amortization of goodwill and fair value adjustments are allocated to the holding structure.
FINANCIAL REPORT
OF THE CNCE GROUP
Tax charge
The tax charge of the divisions represents the charge recorded at the level of the legal entities, adjusted if necessary to take
account of the income or expense relating to exceptional items included under the holding structure. Tax savings arising from
group relief generated under the tax group headed by the CNCE and from the operations relating to the CGR are recorded under
the holding structure.
■
Movements in the Reserve for General Banking Risks are recorded in full under the holding structure.
■
FINANCIAL REPORT OF
■
Net income by division:
Share in net income of
companies accounted for
by the equity method
Net gains/(losses) on fixed
assets
Exceptional items
Minority interests
2005
6,960 7,191
(5,182) (5,372)
1,778 1,819
74.5% 74.7%
Pro forma
2004
2005
2,324 2,695
(1,599) (1,877)
725
818
68.8% 69.6%
Pro forma
2004
Groupe
Caisse d’Epargne
2005
Pro forma
2004
2005
Change
Amount
559
(396)
163
–0.2 pt
%
458
(366)
92
ns
415
(294)
121
ns
9,742
(7,147)
2,595
73.4%
10,301
(7,543)
2,758
73.2%
6%
6%
6%
–
(123)
(69)
(347)
(192)
155
–45%
(172)
(106)
(52)
(17)
232
251
8
10
3
0
243
261
18
7%
13
50
(70)
(13)
(52)
37
89
ns
694
861
(98)
39
2,864
425
17%
(24)
187
(53)
(178)
484
(62)
(24)
(544)
(53)
(178)
(390)
(62)
(154)
ns
154 –28%
(9)
ns
(114)
(48)
(83)
(80)
31 –27%
(32) 66%
5
1,843
1,964
(547)
(617)
(184)
(257)
(24)
(37)
(41)
(56)
(114)
17
(83)
13
2,439
1,272
1,310
469
548
(85)
213
1,656
2,071
415
25%
Earning capacity
1,272
1,310
469
548
29
296
1,770
2,154
384
22%
Both the Commercial Banking and Investment Banking divisions turned in positive performances in 2005 and their respective
earning capacities expanded by 3% and 17%.
Exceptional items were allocated to the holding structure, and this accounts for most of the changes shown after ordinary
income before tax. These items include:
■
the setting up of a provision of €149 million regarding the pension obligations of the CGRCE. The purpose of this provision
is to provide the institution with the regulatory capital funds to meet solvency margin requirements by end-2008, in view
of its decision to become an employee benefit fund (institution de prévoyance) pursuant to the “Fillon” law;
the tax saving resulting from the transfer of assets to the CGR (€1,391 million in 2005).
As a result of the diversification of the business base carried out in connection with the New Foundations project, in 2005
the Investment Banking division represents 26% of the Group’s net banking income and 25% of its earning capacity.
The Commercial Banking division, the Group’s core business, represents 61% of earning capacity.
INFORMATION
ON THE ISSUER
■
RISK
MANAGEMENT
Net banking income
Cost/income ratio
Pro forma
2004
Holding
structure
CHAIRMAN’S REPORT
Investment
Banking
RESOLUTIONS
Commercial
Banking
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Page 100
3 COMMERCIAL BANKING: A STEADY INCREASE IN RESULTS
Commercial Banking
Pro forma 2004
2005
Net banking income
6,960
(5,182)
7,191
(5,372)
Cost/income ratio
1,778
74.5%
1,819
74.7%
Minority interests
Change
Amount
231
(190)
2%
–
–38%
(106)
66
232
5
251
18
(5)
1,843
1,964
(617)
(37)
3%
4%
41
0.2 pt
(172)
(547)
(24)
%
8%
ns
120
7%
(70)
(13)
13%
54%
1,272
1,310
38
3%
Earning capacity
1,272
1,310
38
3%
Return on equity
–
16%
–
–
The Commercial Banking division enjoyed strong forward momentum in the first half of the year and slightly slower growth
in the last six months. Nevertheless, net income for the year as a whole was up 3%.
■
■
■
■
■
Net banking income advanced 3% to €7.2 billion. All the Group’s banners (the individual Caisses d’Epargne, Banque Palatine,
the OCÉOR Group and La Compagnie 1818), its specialized subsidiaries (Crédit Foncier, Caisses d’Epargne Financement,
Gestitres, etc.) and insurance subsidiaries (Ecureuil IARD, GCE Garanties, etc.) contributed to this positive performance.
Gross operating income edged up 2% to €1.8 billion. This modest rise should be seen in light of the Group’s investment
strategy. The cost/income ratio remained virtually flat on a year-to-year basis, creeping up just 0.2 percentage point.
Net allocations to provisions for loan losses fell sharply by 38% to €0.1 billion, reflecting lower individual risks. The reduction
also bears out the Group’s low risk profile.
Ordinary income before tax climbed 7% to almost €2 billion on the back of the 8% rise in income generated by entities
accounted for by the equity method (mainly insurance companies).
Consolidated net income (excluding minority interests) totaled €1.3 billion in 2005, up 3% on the 2004 figure.
Finally, at December 31, 2005, the Group’s Commercial Banking division had capital funds and reserves of €10.4 billion.
Return on allocated equity, determined based on regulatory capital requirements equivalent to 6% of risk-weighted assets for
banking activities and 100% of the solvency margin for insurance business, was 16% in 2005.
3.1 Net banking income up 3%
In 2005, the Commercial Banking division continued to enjoy very high volumes and succeeded in expanding its customer
base despite fierce market competition. The division’s net banking income rose 3% to almost €7.2 billion. If the impact of a cut
in the interest rate paid on regulated savings accounts is netted out (i.e., eliminating the effect of the fall in the amount of
commissions paid to the individual Caisses d’Epargne as distributors of Livret A passbook and Codevi accounts), net banking
income would have risen 5%.
Continued success in winning new clients
Between 2004 and 2005, the individual Caisses d’Epargne sold 411,000 new service packages; 180,000 were sold to newlyacquired customers and customers upgrading their existing service. This reflects the success of the decision to introduce
interest-bearing current accounts, effective since April 14, 2005.
Average outstanding demand deposits leapt 11.4% in 2005, reaching €26.4 billion at year-end.
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Another record year for loans
FINANCIAL REPORT OF
Total outstandings (including finance leases) jumped 10% year-on-year, driven in particular by surging demand for real estate
loans and revolving credit. The Group granted €40 billion in new loans over the year (€31 billion by the retail banking network,
a rise of 13% on 2004) amid intense competition requiring skilful calibration between volumes and margins.
Customer loans
+10%
151.8
FINANCIAL REPORT
OF THE CNCE GROUP
166.4
54.0
49.6
102.2
2005
The Group has continued to grow its retail banking franchise across the board, while also building a presence in regional
development banking.
Lending to private individuals and self-employed professionals remained the principal engine of loan growth throughout the
year, with an increase of 9.7% for the individual Caisses d’Epargne and 10.3% for the other distribution networks.
Loans granted in the regional development banking segment accounted for nearly a third of all loans granted in the
Commercial Banking division. This segment posted growth of 9%, mainly in loans to local and regional authorities and social
housing organizations.
CHAIRMAN’S REPORT
Pro forma 2004
112.4
RISK
MANAGEMENT
■ Retail banking
■ Regional development
banking
Total customer savings – including demand deposits – reached €309 billion at end-2005, up 5% on the year-earlier figure.
This €14 billion rise over the year was driven by growth in investment savings.
INFORMATION
ON THE ISSUER
Customer savings (excluding demand deposits) at December 31, 2005 amounted to nearly €283 billion, a year-on-year rise
of 4.4%.
RESOLUTIONS
Considerable rise in customer savings
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12/07/06
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Customer savings
+5.0%
294.4
309.1
114.3
103.3
■ Liquid savings
■ Investment savings
191.1
Pro forma 2004
194.8
2005
Liquid savings registered 2% growth and totaled €194.8 billion at end-2005:
■
■
■
■
savings held in Livret passbook accounts grew by €1.1 billion and totaled €17.4 billion. This 7% rise was fuelled by
the increase in the amounts held in Livret B passbook accounts;
deposits in home purchase savings plans and accounts edged up 0.6% to stand at €46 billion. Time deposits registered
16% growth against a backdrop of steeply downward market interest rates;
savings in demand deposit accounts leapt 11% to stand at €26.4 billion at December 31, 2005;
deposits held in other savings products, PEP savings plans and regulated savings funds deposited with the Caisse des
Dépôts declined over the period. In particular, regulated savings funds deposited with the Caisse des Dépôts, which suffered
from the downturn in new deposits in Livret A passbook accounts, fell by €0.9 billion to stand at €83 billion.
Investment savings totaled €114.3 billion, an 11% year-on-year rise. This increase was mainly driven by life insurance, which
reported a record level of inflows in 2005 and total outstandings of €73.5 billion at the year-end. Savings invested in mutual
funds advanced 5.4% to nearly €41 billion, reflecting good overall market conditions during the year. The Group has turned
these activities into formidable growth avenues designed to cushion the impact of the fall in interest paid on regulated savings
accounts.
Net inflows to the Commercial Banking division, which totaled €3.5 billion, were down on 2004 due mainly to two factors:
■
the cut in the interest rates on regulated savings accounts which triggered a fall in new deposits in liquid savings accounts of
€1.7 billion over the period. Nevertheless, the Group’s multi-brand strategy helped to cushion the impact of these rate
reductions;
■
the tax reform concerning PEL home savings plans with terms of over twelve years which resulted in a year-on-year fall in new
deposits to these accounts of €1 billion.
Going against the trend among other savings products, life insurance confirmed its potential to attract savings with net inflows
of €5 billion solely within the individual Caisses d’Epargne network, boosted by the recycling of a portion of liquid savings into
life insurance savings plans.
In addition, the Group continued to sell shares in the individual Caisses d’Epargne to its local customers. By the end of 2005,
cooperative shareholders had purchased shares for a total of €3 billion since subscriptions began.
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FINANCIAL REPORT
OF THE CNCE GROUP
Net banking income up 3%
+3%
FINANCIAL REPORT OF
7,191
3,548
3,674
■ Gross insurance margin
■ Commissions and other income
■ Net interest margin
3,446
3,154
132
197
Pro forma 2004
2005
Net interest margin
At €3.5 billion, the net interest margin was 3% below the end-2004 level. This is due to both shrinking margins amid lower
interest rates, and a fall in income from the investment of customer deposits.
RISK
MANAGEMENT
6,960
Net commission and fee income (1)
Pro forma 2004
2005
Change
Amount
%
From savings products
From loans
From banking services and other products
1,568
504
1,082
1,558
579
1,309
(10)
75
226
–1%
15%
21%
Commissions and other income
3,154
3,446
292
9%
CHAIRMAN’S REPORT
The net interest margin for the other entities remained flat with the exception of Groupe Crédit Foncier, which experienced
improved margins thanks to its acquisition of a majority interest in CFCAL.
Commissions and other income jumped 9% to almost €3.5 billion, representing 48% of net banking income in 2005 against
45% one year earlier.
Commissions and fees from savings products dropped slightly by 1% over the period.
Commissions and fees from life insurance products came to €495 million. The 13% year-on-year increase was achieved
primarily thanks to the 11% growth in inflows during the year, driven notably by flagship products Nuances and Initiative
Transmission.
Commissions and fees from mutual funds leapt 9% to €240 million over the period, with more than three-quarters of this
amount generated by the individual Caisses d’Epargne where growth was especially marked (up €13 million), mainly the result
of the higher fees charged by them on guaranteed funds (an 82-euro cent increase) and higher investment quotas than
in 2004.
RESOLUTIONS
■
Consequently, Livret A passbook accounts contributed only €715 million (down 8.5%) due to two consecutive 10-euro cent
reductions in the commission rate on the provision of Livret A passbook accounts. The contribution of Livret A passbook
accounts to the Commercial Banking division’s net banking income was 10%, down from 11.2% at end-2004 (1).
■
Commissions and fees from loans leapt 15% to €579 million for the year.
Payment protection insurance contributed €202 million (i.e., 35% of the total), representing a year-on-year increase of 10%
– primarily driven by a buoyant real estate loan market and the renegotiation of the partnership with the CNP. Early loan
repayment penalties rose to €170 million by the end of 2005 amid falling interest rates. Incidental commissions on loans,
including handling fees and guarantees, grew 18% in 2005.
INFORMATION
ON THE ISSUER
Commissions and fees from regulated savings products dropped back 9% to €823 million along with the fall in income
received by the Group as distributors of Livret A passbook and Codevi accounts.
(1) Income generated by the distribution of Livret A passbook accounts is included in commission and fee income for the purposes of the Management Report.
103
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■
Commission and fees from banking services and other products again showed strong growth, surging 21% to €1.3 billion
at end-2005.This advance primarily reflects the increase in service charges and fee income from expanding customer
relationships (more and more customers are being provided with electronic banking equipment) and from commissions on
stock market orders within the scope of privatizations. Charges for account incidents remained stable over the period.
Gross margin on insurance business leapt 44% to €197 million over the period on the back of strong growth in guarantees and
non-life insurance.
The insurance business had a great all-round year in 2005:
■
life insurance reported gross inflows of €9.5 billion for the period, 15% up on 2004. This growth was fuelled by the success
of Nuance 3D multi-life insurance products and Ecureuil Vie private life insurance plans; Ecureuil Vie had total managed funds
of €70 billion in 2005, up 12%. Unit-linked policies totaled €8.8 billion;
■
non-life insurance also performed strongly over the year, particularly general insurance cover which saw its revenues jump
26% to €223 million. Ecureuil IARD consolidated its position as third largest French bancassurance specialist providing
general insurance cover with a portfolio of 1.3 million contracts under management;
■
the guarantees insurance business also grew on the back of a resilient real estate market, with GCE Garanties’ income
increasing by 12%.
3.2 Growth in general operating expenses restricted to 4%
Pro forma 2004
2005
Change
Amount
%
Personnel costs
External services
Depreciation, amortization and provisions
(3,062)
(157)
(1,648)
(315)
(3,195)
(150)
(1,709)
(318)
(133)
7
(61)
(3)
4%
–4%
4%
1%
(5,182)
(5,372)
(190)
4%
Personnel costs – which accounted for almost 60% of total general operating expenses – rose by 4% during the year to
€3.2 billion, reflecting the dual impact of higher staffing levels and salary costs:
■
■
€48 million of this rise is due to the increase in headcount across all the Group’s banners (headcount grew 1% in the
individual Caisses d’Epargne, based on an equivalent Group structure) and in most subsidiaries. In addition, the Group set up
a call center and moved external IT service providers in house;
the relatively significant increase in salary costs includes:
■
■
pay increases and the adoption of a new bonus system (prime Villepin) – total cost to the Group of approximately €25 million;
headcount reduction measures implemented by the Crédit Foncier Group, including retirement incentives and the
standardization of employee benefits in the wake of the Entenial merger – total cost of €18 million.
Other general operating expenses came in at €2.2 billion and were relatively unchanged on a year-on-year basis. They included:
■
■
■
taxes other than on income which fell 4% to €150 million;
an increase of €61 million in external services to €1.7 billion (up 4%). This increase primarily reflects investments relating
to regulatory commitments (implementation of Basel II and IFRS), as well as risk monitoring and management projects.
In addition, the combined impact of the upgrading of Crédit Foncier’s IT systems (Copernic project) and Banque Palatine’s
strategic plan accounted for €14 million of the total figure;
net depreciation and amortization expense, which edged up 1% over the period to stand at €318 million.
A 2% increase in gross operating income
Gross operating income came in at €1.8 billion, a 2.3% rise compared with 2004, while the Commercial Banking division’s
cost/income ratio remained stable at 74.7%. However, these trends must be seen in light of the fall in income received by the
Group as distributors of Livret A passbook accounts as well as the division’s investment policy. The average cost/income ratio
for the individual Caisses d’Epargne actually improved by 0.6 percentage point on a year-on-year basis to stand at 66.6%
(source: CNCE parent company financial statements). More than three quarters of the individual Caisses d’Epargne now have
an Cost/income ratio below 70%.
104
FINANCIAL REPORT
OF THE CNCE GROUP
Page 105
Cost/income ratio
74.7%
74.5%
1,819
1,778
Pro forma 2004
RISK
MANAGEMENT
■ Gross operating income (in millions of euros)
FINANCIAL REPORT OF
15:12
2005
3.3 Effective control of provisions for loan losses
Pro forma 2004
2005
Change
Net allocations to provisions (in millions of euros)
(172)
(106)
66
–38%
Performing loans (in billions of euros)
Non-performing loans (in billions of euros)
149.5
4.2
164.2
4.1
14.7
(0.1)
10%
– 2%
Non-performing loans/performing loans
Net allocations to provisions/total outstanding loans
2.80%
0.11%
2.50%
0.06%
–
–
–0.30 pt
–0.05 pt
Net allocations to provisions fell sharply to €106 million from €172 million at end-2004, representing a €66 million decrease.
This decrease relates to recognized risks, which were down by €89 million, but is partly offset by a €23 million increase in
recognized probable losses (adjustment to the cumulative provisions in the individual Caisses d’Epargne and the impact of net
releases from provisions in 2004).
Nevertheless, the first-time adoption of CRC rule 2002-03 led to a reduction in opening capital funds and reserves totaling
€188 million (€123 million net of deferred taxes).
The proportion of non-performing loans in total customer outstandings fell back slightly by 0.3 percentage point in 2005, coming
in at 2.5%. Net allocations to provisions relative to aggregate outstanding customer loans fell by 0.05 percentage point to 0.06% at
end-2005. Doubtful loans are provided for specifically at 47.6% of their value. General and sector-based provisions provided
additional cover of €444 million at December 31, 2005.
3.4 Ordinary income before tax jumps 7%
CHAIRMAN’S REPORT
12/07/06
RESOLUTIONS
3.5 Consolidated net income and return on equity
Corporate income tax rose 13% year-on-year to €617 million.
The €13 million increase in minority interests is attributable to earnings growth and also to the new minority interests
in Crédit Foncier (Cicobail group and CFCAL).
The Commercial Banking division’s consolidated net income rose 3% to €1,310 million in 2005 from €1,272 million at end-2004.
INFORMATION
ON THE ISSUER
Ordinary income before tax rose by more than 6.5% in 2005 to €1,964 million, reflecting the fall in net allocations to provisions.
In addition, companies accounted for by the equity method contributed €251 million to income, an increase of €19 million,
which was mostly attributable to the results of the life insurance companies CNP and Ecureuil Vie.
Regulatory return on equity for the Commercial Banking division stood at 16% after tax, based on regulatory capital
requirements equivalent to 6% of risk-weighted assets for banking activities, and 100% of the solvency margin for insurance
business.
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4 A GOOD YEAR FOR INVESTMENT BANKING
During the first half of 2005, the Investment Banking division operated through four subsidiaries: IXIS Corporate & Investment
Bank, IXIS Asset Management Group, IXIS Investor Services and CIFG.
Following the decision by Crédit Agricole and Groupe Caisse d’Epargne to merge their investor services subsidiaries and the
creation of CACEIS, the 2005 second-half results of the Investment Banking division comprise the results of IXIS Corporate &
Investment Bank, IXIS Asset Management Group, CACEIS (accounted for by the proportional consolidation method) and CIFG.
The division turned in a solid performance in 2005 based on the positive contributions made by all of the business lines, and
net banking income jumped 16%. The rise in total general operating expenses reflects the increase in the variable portion of
employee compensation paid, resulting from the high level of business and continued investments. The above factors,
combined with tight control over provision expense, drove a 17% surge in net income.
The capital markets and financing business operated by IXIS CIB remained the largest contributor, generating more than 50%
of divisional net banking income and 62% of net income. However, the other business also gained ground during the period.
Asset management made the second-largest contribution to divisional net income, generating 30% of the total. Custody and
investor services and financial guaranty contributed 5% and 3% respectively.
Consolidated net income up 17% to €548 million
4.9%
Investor services
(3.2%)
3.3%
Financial guaranty
(2.6%)
61.8%
30%
Capital markets
and financing
(67.8%)
Asset
management
(26.4%)
(% in italics
relate to 2004)
4.1 Capital markets, financing and financial guaranty
4.1.1 Capital markets and financing
Pro forma 2004
2005
Change
Amount
Net banking income
1,259
(730)
1,335
(837)
76
(107)
6%
15%
Cost/income ratio
529
58.0%
498 *
62.7%
(31)
4.7 pt
–6%
ns
(45)
(18)
27
–60%
1
12
1
22
10
ns
ns
Minority interests
497
(171)
(8)
503
(156)
(8)
6
15
0
1%
–9%
Return on allocated equity
318
–
339
15%
21
–
7%
–
* This presentation does not provide an accurate indication of IXIS CIB’s operating profitability as part of its income was recognized under gross operating income (tax income).
If an economic income approach is adopted, gross operating income would have increased by 5% and the cost/income ratio by 2.1 percentage points.
106
%
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Page 107
The integration of the businesses and subsidiaries contributed by CDC IXIS in early November 2004 (financing, spread book,
mutual fund guarantees, IXISSM Capital Markets North America, Nexgen, etc.) continued in 2005. IXIS CIB acquired 100% of the
share capital of Nexgen, in which it had previously held a 38% stake. The operation is slated for finalization during first-half 2006.
FINANCIAL REPORT
OF THE CNCE GROUP
■
international development: with the establishment of a subsidiary in Luxembourg and a branch in Italy;
■
consolidation of partnerships: IXIS CIB acquired a stake in the Lazard Group when Lazard was listed on the stock market;
■
the development of new activities: contribution of the financing activity of the local and regional government sector by the
Caisse Nationale des Caisses d’Epargne in November 2005 (total outstanding loans of €3 billion).
Lastly, IXIS CIB’s financing and credit operations in Europe were restructured.
Economic net banking income (1) jumped €1,371 million in 2005, up 11% on the year-earlier figure (pro forma amount).
FINANCIAL REPORT OF
This period was also marked by:
Economic net banking income
+10.7%
1,371
RISK
MANAGEMENT
1,239
423
380
948
859
Pro forma 2004
2005
Economic income in Europe and Asia amounted to €948 million in 2005, a year-on-year increase of 10%, similar to the growth
achieved in North America.
CHAIRMAN’S REPORT
■ Europe and Asia
■ North America
the fixed income business posted economic net banking income up 24% on 2004, buoyed by sales of complex derivatives.
Cash-based activities, which did not perform as well as in 2004, suffered from difficult market conditions due to concerns
over spreads in mid-year. Nevertheless, IXIS CIB ranked fifth in the covered bonds league table (up one place with almost
€11 billion in euro-denominated issues). This performance was showcased by the IFR prize for the best covered bond
operation of the year, awarded for its role as lead manager in the ABN Amro issue. IXIS CIB was also ranked second in the AFT’s
league table of Primary Dealers;
■
equity and arbitrage revenues climbed 21%, likewise propelled by derivatives (correlation and volatility trading). The IXIS
Securities subsidiary benefited from a surge in the number of primary operations carried out in partnership with Lazard IXIS
as well as the enhanced reputation of its research department, which won 14 top five places in the Agefi sector rankings,
compared with 10 in 2004;
■
structured financing also turned in an impressive performance, with 28% income growth relative to 2004 on the back
of a marked increase in the volume of business conducted with the local and regional government sector. Further
diversification was achieved via the deployment of the insurance business.
■
the credit business contracted slightly over the year (down 2%). The complex credit and securitization activities bore
the brunt of the difficult market conditions in the wake of downgraded debt ratings for Ford, General Motors and Delphi.
INFORMATION
ON THE ISSUER
■
RESOLUTIONS
The main businesses in Europe and Asia generally performed very well:
(1) Economic income represents net banking income for the business line, adjusted for operating revenues that are recorded in other income accounts.
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Financing activities posted healthy growth from the beginning of 2005. The increase in volumes counterbalanced margin
erosion, notably in the sphere of syndicated loans.
Economic income in North America grew 11% to €423 million in 2005. IXIS CIB NA continued its impressive performance driven
by the buoyant US securitization and credit market which now accounts for three quarters of all US income. Twelve
securitization operations took place in 2005 totaling US$6 billion. Moreover, the CDO activity launched in 2004 has been a big
success, helping to boost growth and cushion the impact of the withdrawal from MBS/ABS activities.
General operating expenses for IXIS CIB rose 15% over the year, essentially reflecting higher personnel costs, notably:
■
the increased headcount;
■
the higher variable portion of employee compensation paid resulting from the high level of business and the large-scale
investments carried out in 2005, notably for the benefit of complex structured finance and credit operations.
Other general operating expenses have also risen due to monitoring and regulatory compliance (IFRS, Basel II, operational
risks) and internal reorganization projects.
Gross operating income dropped 6% to €498 million. However, on an economic-income basis (i.e., including recurring tax
benefits), gross operating income rose 5%.
Net allocations to provisions declined along with the number of defaults in 2005.
Ordinary income before tax stood at €503 million.
Net income rose 7% year-on-year to €339 million. Regulatory return on equity for the capital markets and financing business
stood at 15% after tax (based on equity allocation equal to at least 6% of risk-weighted assets).
4.1.2 Financial guaranty
Financial guaranty
Pro forma 2004
2005
Net banking income
Cost/income ratio
Change
Amount
31
(18)
48
(24)
17
(6)
%
55%
33%
13
59.8%
24
50.5%
11
–9.3 pt
85%
–
12
18
6
50%
The financial guaranty business enables customers to obtain irrevocable guarantees for payments of principal and interest
due by borrowers that are rated at least “BBB-” (investment grade). Guarantees are provided by monoline insurance
specialists operated by the Group’s CIFG Europe and CIFG NA subsidiaries.
Thanks to this service, issuers can obtain lower-cost refinancing on the market and investors are provided with new
opportunities in terms of structured products and secured public-private partnership projects.
The business grew strongly over the year as a whole: the nominal amount of financial guarantees issued in 2005 jumped 67%
to US$21.3 billion in relation to the year-earlier figure, resulting in a spectacular 73% leap in outstanding guarantees net of
portfolio commitments to US$42.7 billion at year-end.
The Adjusted Gross Premium rose by 35% over the period to US$163.4 million.
At December 31, 2005, portfolio commitments totaled US$42.7 billion : 27% concerned US local government borrowing, 41% US
structured products, 9% European local government and infrastructure funding, and 23% European structured products. Nearly
two thirds of the securities comprising the portfolio had an “AAA” rating.
Net banking income surged by more than 50% year-on-year to €48 million on the back of the growth in guarantees issued,
particularly to US local government authorities. Net income also leapt 50% to €18 million.
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FINANCIAL REPORT
OF THE CNCE GROUP
4.2 Asset management, custody and investment services
The IAM Group holding company was created in 2004 to house the asset management operations conducted through the IXIS
AM SA, IXIS AEW Europe and Ecureuil Gestion subsidiaries.
Asset management
2005
Change
Amount
883
(731)
Cost/income ratio
1,120
(862)
152
82.8%
258
77.0%
237
(131)
106
–5.8 pt
27%
18%
70%
–
(2)
(2)
ns
7
1
8
29
1
28
14%
ns
158
293
135
86%
Minority interests
(34)
(82)
(47)
(82)
(13)
ns
38%
124
164
40
32%
The asset management business turned in a strong overall performance in 2005. Assets under management rose by
€64.8 billion (up 18% at current euro rates) over the period to €432.6 billion. This performance was shaped by a net funds
inflow of €17.4 billion, a positive market effect of €27 billion and a favorable currency impact of €20.4 billion resulting from
the appreciation of the US dollar over the period (up 15.2%).
Currency
effect
20.4 432.6
US
10.6
Europe
6.8
Market
effect
27.0
RESOLUTIONS
367.8
RISK
MANAGEMENT
Net banking income
%
CHAIRMAN’S REPORT
Pro forma 2004
FINANCIAL REPORT OF
4.2.1 Asset management
Dec. 31,
2004*
Net funds
inflow
Market and
currency effect
Dec. 31,
2005
Net new assets under management for IXIS AM Group amounted to €17.4 billion at end-2005, representing 27% of overall
growth in managed assets during the period.
Total assets under management in Europe and Asia rose by €27.1 billion (12%) over the year to €261.4 billion. Contributory
factors were a positive market effect representing €20.4 billion and a net funds inflow of €6.8 billion (including €2.8 billion
from money market products and €3.8 billion from unit-linked assets). Life insurance remains the main business growth vector.
Total assets under management in the US increased by US$20.5 billion (11.2%) over the year to US$202.7 billion. This growth
resulted mainly from a net funds inflow of US$12.6 billion. The market effect was relatively weak (US$7.9 billion, including
US$6 billion on securities) in light of the relative stability of US stock markets, while growth in assets under management was
fuelled by bonds.
INFORMATION
ON THE ISSUER
* Reflects the revaluation of CDO funds included in assets under management at end-2004.
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Net banking income for the asset management business totaled €1,120 million, although Europe and the US presented two
different pictures.
On a constant exchange-rate basis, Group revenues rose 15%. This growth reflects an 11% increase in average funds under
management on a constant exchange-rate basis and the slight improvement in commission rates, as well as the impact of
performance and transaction commissions in the US and Europe.
The 18% rise in general operating expenses to €862 million in 2005 should be viewed in relation to growth in assets under
management and net banking income. The increase reflects higher investments in Europe in addition to the healthy business
growth rate resulting in a higher variable portion of employee compensation.
Gross operating income totaled €258 million. A happy combination of robust growth in net banking income and expense
discipline delivered a 5.8-point year-on-year improvement in the cost/income ratio which stood at 77%.
Net income soared 32% to €164 million on the back of the sector’s strong operating performance.
4.2.2 Custody and investor services
Custody and investor services
Pro forma 2004
2005
Net banking income
Cost/income ratio
Change
Amount
151
(119)
32
78.8%
192
(153)
41
(34)
%
27%
29%
39
79.9%
7
1.1 pt
21%
ns
(5)
4
9
ns
27
42
15
55%
15
27
12
81%
Custody and investor services were reorganized at the end of 2004 within the newly created IXIS Investor Services, wholly
owned by the CNCE. IXIS Investor Services operates through three subsidiaries:
■
IXIS Urquijo, a Spanish bank specializing in custody and depository services, which is 51%-owned by IXIS Investor Services
and 49%-owned by Banco Urquijo;
■
IXIS Administration de Fonds, a wholly-owned subsidiary specializing in the administrative and accounting management
of French funds;
■
Euro Emetteur Finance, equally owned with Crédit Lyonnais and specializing in issuer services.
Pursuant to the partnership arrangement announced on December 17, 2004 and finalized on July 4, 2005, Groupe Caisse
d’Epargne and Crédit Agricole merged their respective investor services subsidiaries, IXIS Investor Services and Crédit
Agricole Investor Services, into the newly-created joint venture CACEIS (Crédit Agricole Caisse d’Epargne Investor Services).
Crédit Agricole contributed the following subsidiaries within the scope of the joint venture: CA-IS Bank and CACEIS BL (custody
services); Fastnet France and Fastnet Luxembourg (fund administration) and CA-IS Corporate Trust (issuer services).
Consequently, the financial data reported for the custody and investor services business break down as follows:
110
■
100% of the income of IXIS IS for the first half of 2005;
■
50% of the income of CACEIS for the second half of 2005 (accounted for by the proportional consolidation method).
Administered funds amounted to €747 billion at end-2005, up 28% on the year earlier figure.
85% of administrated funds and assets held in custody are located in France, with most of the balance located in Luxembourg.
Net banking income for custody and investor services came to €192 million in 2005. The substantial growth in custody fees,
which contribute to the core revenue base, mirrored the rise in assets in custody. This positive trend is the result of a concerted
marketing drive to win new business (e.g. ING, AGIRC-ARRCO, Mutuelle d’Ivry) and to sustain market growth.
Gross operating income leapt 21% to €39 million, thanks to growth in net banking income and effective control over general
operating expenses in spite of restructuring costs generated by the internal reorganization of CACEIS amounting to
€10.5 million. The cost/income ratio edged up 1.1 percentage point to 79.9%.
Net income, which came out at €27 million for the year, benefited from the increase in gross operating income and tight
control over operational risks.
5 ANALYSIS OF THE CONSOLIDATED BALANCE SHEET
Pro forma 2004
2005
Change
Amount
%
Cash and due from banks
Deposits with the CDC
Customer loans
of which, finance leases
Securities portfolio
Other receivables
Fixed assets
102,496
84,021
192,368
3,866
114,008
42,292
8,726
103,548
83,120
206,533
4,112
137,883
53,876
9,172
1,052
(901)
14,165
246
23,875
11,584
446
1%
–1%
7%
6%
21%
27%
5%
Total assets
543,911
594,132
50,221
9%
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
Capital funds and reserves
Excluding minority interests
91,364
84,021
66,351
130,082
142,579
69,463
7,714
18,688
18,022
101,692
83,120
65,406
135,296
151,463
93,935
8,445
20,181
19,416
10,328
(901)
(945)
5,214
8,884
24,472
731
1,493
1,394
11%
–1%
–1%
4%
6%
35%
9%
8%
8%
543,911
594,132
50,221
9%
At December 31, 2005, total consolidated assets of Groupe Caisse d’Epargne stood at €594.1 billion, representing a 9.2%
increase on the figure at December 31, 2004 and a 21.8% increase on the December 31, 2003 (pro forma) figure.
FINANCIAL REPORT OF
Assets in custody amounted to €1,547 billion (including €780 million for IXIS IS and IXIS Urquijo), up 16% on the end-2004
level (based on CACEIS pro forma financial statements). These partly comprise assets held on behalf of companies from within
the two Groups: 15% are held on behalf of Groupe Caisse d’Epargne and 29% for Groupe Crédit Agricole.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 111
RISK
MANAGEMENT
15:12
CHAIRMAN’S REPORT
12/07/06
RESOLUTIONS
The value of the securities portfolio stood at €137.9 billion at December 31, 2005, with trading account securities accounting
for €72.5 billion or 52.5% of the total. The primary components were bonds and other fixed-income securities, which amounted
to €79.3 billion or 57.5% of the portfolio at end-2005.
Regulated savings funds deposited with the CDC were down slightly to €83.1 billion at December 31, 2005. This decline
reflects a €0.9 billion slippage (1.4%) in Livret A passbook deposits.
Excluding funds deposited with the CDC, customer deposits increased by €5.2 billion, or 4%.
Consolidated capital funds and reserves (including the Reserve for General Banking Risks) rose by €1.4 billion (up 7.7%)
between end-2004 and end-2005.
INFORMATION
ON THE ISSUER
Outstanding customer loans at December 31, 2005 surged by €14.2 billion, a rise of 7.4% on the year-earlier figure, and now
account for 34.8% of total consolidated assets.
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6 REGULATORY CAPITAL AND CAPITAL ADEQUACY RATIO
2003
2004
2005
Change
Total capital funds
of which Tier-1 capital
Including non-cumulative,
undated deeply subordinated notes
15,332
14,527
22,669
18,396
24,031
18,994
6%
3%
800
1,727
1,739
1%
Capital funds requirements
Loan loss risks
Market risks
10,269
9,447
822
14,566
12,853
1,713
15,756
13,948
1,808
8%
9%
6%
149%
156%
153%
–3 pt
In compliance with the provisions of the Comité de réglementation bancaire et financière (French Banking Regulations
Committee, CRBF) rule 2000-03, as amended, and following approval by the Commission bancaire (French Banking
Commission), networks of entities with a central institution may establish a consolidating entity as provided for by CRC rule
99-07. In the case of 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 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 €15.7 billion at December 31, 2005. The year-on-year increase was restricted
to 8%, whereas the large rise witnessed between 2003 and 2004 was largely due to the effects of the New Foundations project.
The Group did not issue any undated deeply subordinated notes during the year.
Total capital funds corresponds to the sum of Tier-1 capital (including non-cumulative, undated deeply subordinated notes),
Tier-2 capital and regulatory deductions (holdings in unconsolidated credit institutions and those accounted for by the
equity method).
The consolidated capital adequacy ratio of Groupe Caisse d’Epargne stood at 153% at year-end 2005, versus 156% one year
earlier, comfortably above the statutory ratio of 100%.
The Group’s Tier-1 ratio was however impacted by CNC rule 2003-R.01 concerning the measurement and accounting
treatment of pension commitments and employee benefits, which must now be deducted from capital funds and reserves
if no corresponding provision is carried.
7 RECENT DEVELOPMENTS AND OUTLOOK FOR 2006
In line with its new Strategic Plan, Groupe Caisse d’Epargne intends to further strengthen its areas of excellence in 2006,
in both Commercial Banking and Investment Banking. This objective is underpinned by the twin policy of pursuing the expansion
drive and bolstering profitability levels within both divisions.
The Commercial Banking division will continue its restructuring operations, including:
112
■
a joint venture involving Groupe Caisse de Dépôt et de Gestion (CDG) and Crédit Immobilier et Hôtelier (CIH), one of the
market leaders in providing home loans in Morocco. The protocol agreement, signed at the end of January 2006, provides for
the creation of a jointly-owned holding company: CDG will have a 65% stake while Groupe Caisse d’Epargne will own the
remaining 35%. This project aims to turn CIH into a family-oriented retail bank that will play a major role in the transformation
of the Kingdom of Morocco into a functional banking economy;
■
the acquisition of 80.1% of the French and Luxembourg subsidiaries of Millenniumbcp, a banking group based in Portugal.
This acquisition, which was detailed in a protocol agreement signed in mid-February 2006, will strengthen the Group’s
position in France, mainly in the retail banking sector, and help it gain a foothold in Luxembourg;
The Investment Banking division will pursue and consolidate its investment program outside France, particularly in Asia,
through actions including:
■
the completion of the takeover of Nexgen;
■
the acquisition of a significant stake (between 40% and 49%) in the private Chinese company, TX Investment Consulting,
which is specialized in investment solutions, mergers and acquisitions, fund distribution and financial analysis;
■
the development of activities in Tokyo and Hong Kong.
The Investment Banking division will continue the reorganization of its business portfolio, notably through the consolidation
of activities within CACEIS (e.g. the creation of CACEIS Fastnet on March 31, 2006).
Lastly, Groupe Caisse d’Epargne and Groupe Banque Populaire entered into exclusive negotiations, which should be completed
at the latest by June 1, 2006, with a view to linking up some of their businesses (corporate and investment banking, specialized
investor services and private banking) under the banner of NATIXIS.
This operation will turn Groupe Caisse d’Epargne into a front-ranking player in the consolidation of international banking.
FINANCIAL REPORT OF
The Group also joined the S’Miles multi-brand loyalty program as a means of rewarding its best customers and boosting the
Caisse d’Epargne brand. The program will be rolled out through the individual Caisses d’Epargne in the second half of 2006.
RISK
MANAGEMENT
the acquisition of the Orane group by Financière OCÉOR in January 2006: the new entity will be renamed Océorane. This will
bolster Financière OCÉOR’s position as a reference overseas regional development bank and help it to expand its offering by
becoming the first bank to offer overseas SMEs an integrated package that includes financing and tax planning.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 113
CHAIRMAN’S REPORT
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RESOLUTIONS
■
12/07/06
INFORMATION
ON THE ISSUER
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Consolidated financial statements of Groupe Caisse d’Epargne
CONSOLIDATED BALANCE SHEET
of Groupe Caisse d’Epargne at December 31, 2005, 2004 and 2003
ASSETS
Notes
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2003
6
7
8
186,668
202,421
4,112
186,517
188,501
3,867
161,665
129,919
2,647
9
31
137,883
2,171
114,008
1,644
56,584
672
10
12
16
14
4,919
4,253
1,023
50,682
4,603
4,123
879
39,769
3,165
2,835
372
22,816
594,132
543,911
380,675
Dec. 31, 2005
31/12/2004
31/12/2003
60,604
49,398
2,023
40,714
64,472
33,691
719
21,880
30,428
18,424
510
1,012
Cash, money market and interbank items
Customer items
Lease financing
Bonds, equities and other fixed- and variable-income
securities
Investments by insurance companies
Investments in unconsolidated subsidiaries,
affiliates accounted for by the equity method
Tangible and intangible assets
Goodwill
Accruals, other accounts receivable and other assets
Total assets
Notes
Commitments given
Commitments given by the insurance business
114
18, 19
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Dec. 31, 2003
Money market and interbank items
Customer items
Debt securities
Insurance technical provisions
Accruals, other accounts payable and other liabilities
Negative goodwill
Subordinated debt
Minority interests
Consolidated capital funds and reserves
(excluding Reserve for General Banking Risks)
Capital
Consolidated reserves and retained earnings
6
7
13
32
14
16
15
17, 3
17, 2
101,692
218,416
151,463
1,484
89,293
0
3,158
8,445
2,572
765
91,364
214,103
142,579
1,106
64,948
35
3,375
7,714
2,488
665
76,878
181,202
75,061
482
25,202
52
3,036
4,153
2,400
1,921
17, 1
16,844
5,154
915
8,704
2,071
594,132
15,534
5,018
878
7,853
1,785
543,911
10,288
2,601
199
6,372
1,116
380,675
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2003
3,457
14,070
2,150
748
6,197
14,434
3,727
501
5,837
8,950
1,404
77
Notes
Commitments received by the insurance business
18, 19
RISK
MANAGEMENT
Dec. 31, 2004
CHAIRMAN’S REPORT
Dec. 31, 2005
RESOLUTIONS
Notes
INFORMATION
ON THE ISSUER
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
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CONSOLIDATED PROFIT AND LOSS ACCOUNT
of Groupe Caisse d’Epargne for the years ended December 31, 2005, 2004 and 2003
Notes
2005
2004
2003
Net gains/(losses) on held-for-sale portfolio
transactions and similar items
Net banking income
20
20
21
22
23
20,948
(16,498)
295
3,845
1,422
17,637
(13,805)
183
2,995
1,332
16,648
(12,726)
150
2,136
487
24
25
33
(167)
181
275
10,301
417
36
177
8,972
400
83
69
7,247
of tangible and intangible assets
26
(7,115)
(6,113)
(4,749)
(428)
2,758
(397)
2,462
(314)
2,184
Operating income
27
(192)
2,566
(246)
2,216
(306)
1,878
261
37
2,864
216
(20)
2,412
155
75
2,108
Exceptional items
Allocations to the Reserve for General Banking Risks
and regulatory provisions
Minority interests
116
28
29
30
(178)
(390)
(62)
75
(538)
(30)
(54)
(503)
(15)
(83)
(80)
2,071
(74)
(60)
1,785
(294)
(126)
1,116
Page 117
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1 LEGAL AND FINANCIAL FRAMEWORK
1.1 Legal 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 (CNCE). Groupe Caisse d’Epargne consists of a varied body of subsidiaries
contributing to the proper management and enhanced sales performance of the network of individual Caisses d’Epargne, as
well as that of the universal, full-service bank. A further body, the 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. This national federation’s terms of
reference are outlined in article L. 512-99 of the Code monétaire et financier (French Monetary and Financial Code).
Caisses d’Epargne et de Prévoyance
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
The regionally-based local savings companies are cooperative structures with an open-ended capital stock owned
by cooperative shareholders. The local savings companies are tasked, within the framework of the general objectives defined
by the individual Caisses d’Epargne et de Prévoyance to which they are affiliated, with coordinating the cooperative
shareholder base. They are not entitled to carry out banking business.
Caisse Nationale des Caisses d’Epargne et de Prévoyance (CNCE)
The CNCE is the central institution of Groupe Caisse d’Epargne as defined by French banking law, and a financial institution
authorized to operate as a bank. It is 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.
Specifically, the CNCE represents its various affiliates with regard to the supervisory authorities, defines the range of products and
services offered by them, organizes depositor protection and approves Senior Management appointments. It also supervises
the coherence of the network as a whole, and oversees the proper management of the various entities within the Group.
As a holding company, the CNCE performs the role of Group head, owning and managing the interests in Group subsidiaries,
and setting out its development strategy.
RESOLUTIONS
Local savings companies
CHAIRMAN’S REPORT
The Caisses d’Epargne et de Prévoyance are approved 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) with the status
of financial institutions authorized to operate as banks. Their capital is divided into shares of capital stock.
Subsidiaries
French subsidiaries
The French subsidiaries are split into two major divisions, as follows:
■ Commercial Banking: Banque Palatine, Financière OCÉOR and La Compagnie 1818, along with insurance, real estate
and specialized services (including Crédit Foncier);
■ Investment Banking: IXIS Corporate & Investment Bank and CIFG-IXIS Financial Guaranty for financing, capital markets
and guarantees; and IXIS Asset Management and CACEIS for investor services, institutional custodian services and asset
management.
INFORMATION
ON THE ISSUER
In respect of the Group’s financial functions, the CNCE is notably responsible for the centralized management of any surplus
funds held by the individual Caisses d’Epargne et de Prévoyance, for carrying out any financial transactions required to
develop and refinance the Group, and for choosing the most efficient counterparty for these transactions in the broader
interests of the Group. The CNCE also provides banking services to the other Group entities.
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Specialized IT subsidiaries
Customer transaction processing is carried out by a banking information system organized around three software publishers
set up to develop and deploy IT application platforms, and a central IT organization (CNETI).
Direct subsidiaries of the Caisses d’Epargne
The individual Caisses d’Epargne et de Prévoyance are authorized to hold their own investments in direct 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, organized a network mutual guarantee and
solidarity mechanism within Groupe Caisse d’Epargne to ensure 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 affiliates 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 Fonds de garantie et de solidarité du réseau
(Network Mutual Guarantee and Solidarity Fund, FGSR), carried in the books of the CNCE. The FGSR has €250 million worth of
funds that can be used immediately if the need arises. This amount is invested in a dedicated mutual fund. Should this prove
insufficient to prevent the default of a member, the Management Board of the CNCE can obtain the necessary additional
resources via a rapid decision-making process ensuring 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
that entity’s financial capabilities. In such a case, the intervention of the individual Caisses d’Epargne, organized via the FGSR,
would also be supported by the Caisse des Dépôts et Consignations in its capacity as a shareholder and acting as an informed
market investor.
The guarantee system’s objective of averting default complements the chiefly curative market guarantee systems to which
Groupe Caisse d’Epargne also subscribes.
2 PRINCIPLES AND METHODS OF CONSOLIDATION
OF GROUPE CAISSE D’EPARGNE
2.1 Principles
The consolidated financial statements are drawn up in accordance with the principles laid down by rules 99-07 and 2000-04
(as amended) of the Comité de la réglementation comptable (French Accounting Regulatory Committee, CRC).
2.2 Methods and scope of consolidation
The consolidated financial statements include the accounts of the individual Caisses d’Epargne, the Caisse Nationale
des Caisses d’Epargne, and all subsidiaries and affiliates over which the Group exercises a controlling or significant influence.
Note 5 specifies the Group’s scope of consolidation.
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.
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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.
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 special purpose entities
When the Group, or a company within the Group, controls an entity by virtue of a contract or clause in the company’s articles
of association, this entity is consolidated, even in the absence of any capital links.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
A company controlled by, or subject to significant influence from the Group, is excluded from the scope of consolidation with
effect from the acquisition date when the shares of this company are held exclusively with a view to their subsequent sale,
when the Group’s ability to control or influence a company is restricted 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 prepare 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 qualifying for consolidation,
it is not material to the Group as a whole.
Investments in such companies appear under the heading “Investments in unconsolidated subsidiaries, affiliates accounted
for by the equity method and other long-term investments”.
2.3 Changes in the scope of consolidation
CHAIRMAN’S REPORT
Exclusions from the scope of consolidation
RISK
MANAGEMENT
The criteria for determining control of special purpose entities, defined as structures created specifically to manage one or
more 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 associated with the entity.
Changes within the consolidating entity
The Caisse d’Epargne et de Prévoyance de Guadeloupe has been merged into the Caisse d’Epargne et de Prévoyance ProvenceAlpes-Corse.
The Caisse d’Epargne et de Prévoyance Champagne-Ardenne has merged with SDR Champex. Furthermore, the Caisse d’Epargne
et de Prévoyance Languedoc-Roussillon has merged with SDR Sodler, while Banque Tofinso has been merged into its parent,
the Caisse d’Epargne et de Prévoyance Midi-Pyrénées.
RESOLUTIONS
The main changes in the scope of consolidation during the 2005 financial year do not have a material impact upon the Group’s
capital funds and reserves and consolidated net income.
Surassur, a Luxembourg based re-insurance subsidiary controlled by the Group, qualified for consolidation with effect from
January 1, 2005.
INFORMATION
ON THE ISSUER
First-time consolidation of Surassur
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Restructuring of the Group’s Private Banking division
During 2005, the Group restructured its Private Banking division around Véga Finance, which was renamed La Compagnie
1818. The most significant operations concerned partial asset transfers from Crédit Foncier de France, Crédit Foncier Banque
and Banque Palatine to La Compagnie 1818.
Creation of CACEIS
Formed from the linkup between IXIS Investor Services and Crédit Agricole Investor Services, CACEIS is a jointly-owned
subsidiary of Groupe Caisse d’Epargne and Crédit Agricole SA, with each party holding a 50% interest. CACEIS provides fund
management and issuer services for the corporate and institutional investment market.
The accounts of IXIS Investor Services were fully consolidated up until July 1, 2005. As from this date, CACEIS is proportionally
consolidated within the consolidated accounts of Groupe Caisse d’Epargne.
The creation of CACEIS led to the recognition of goodwill in an amount of €150 million.
2.4 Consolidation adjustments and eliminations
The consolidated financial statements of Groupe Caisse d’Epargne are drawn up in conformity with CRC rule 99-07.
Under rule 99-07:
■ accounting methods used by the various companies included in the consolidation should be consistent. The principal
consolidation methods are described in note 3;
■ certain valuation methods should be used, when drawing up the consolidated financial statements, that do not have to be
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 Group is the lessee;
■ certain accounting entries resulting 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 and leases with purchase options where the Group
is the lessor are recorded in the balance sheet, 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 Group 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 resulting from tax regulations
On consolidation, accounting entries resulting solely from tax regulations are eliminated.
As regards the presentation of the financial statements, the main items concerned are investment grants and regulatory
provisions when not included in the Reserve for General Banking Risks.
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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 tax rate and fiscal rules adopted for the computation of deferred tax are based on tax legislation currently in force and
applicable when the tax becomes due or the tax saving is realized.
Deferred tax liabilities and assets are netted off for each consolidated company. This netting process applies only to items
taxed at the same rate and items that are expected to reverse in a reasonably short period. The methods used for recognizing
deferred tax assets are reviewed at the balance sheet date, particularly as regards the period in which they are expected to be
realized.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
2.6 Goodwill
“Goodwill” reflects the outstanding balance of differences not attributed elsewhere on the balance sheet between the cost of
the investment and the Group’s equity in the underlying net assets at the date of acquisition of shares in consolidated
Positive and negative goodwill is taken to income over a period that takes into account underlying assumptions and the
objectives of the acquisition.
2.7 Translation of financial statements expressed in foreign currencies
Balance sheet and off-balance sheet items of foreign companies are translated at year-end exchange rates (with the exception
of capital funds and reserves which are translated at historical rates) and profit and loss items are translated using an average
rate for the accounting period concerned. Any gains or losses arising on translation are included in consolidated reserves
under the heading “Translation adjustments”.
CHAIRMAN’S REPORT
The effect on the consolidated balance sheet and profit and loss account of intra-group transactions is eliminated on
consolidation. Gains or losses on intra-group 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.
RISK
MANAGEMENT
2.5 Elimination of intra-group transactions
The investments 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 within Groupe Caisse d’Epargne are drawn up in accordance with the
provisions of the Code des assurances (French Insurance Code) and, where applicable, CRC rule 2000-05 governing
consolidation policies for companies subject to the French Insurance Code.
Pursuant to CRC rule 99-07, items listed in the financial statements of insurance companies included in consolidation are
presented in similar-type accounts in Groupe Caisse d’Epargne’s balance sheet and profit and loss account, with the exception
of a number of specific items:
■ in the consolidated balance sheet, “Investments by insurance companies” and “Insurance technical provisions” 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 provisions, and net income from investments.
Moreover, the amounts of commitments given and received by insurance companies included within the scope of consolidation
are carried on separate lines of the Group’s statement of off-balance sheet commitments.
INFORMATION
ON THE ISSUER
Groupe Caisse d’Epargne comprises eight insurance companies: Cegi, Ecureuil Assurances IARD, Foncier Assurance, Muracef,
Saccef, Socamab Assurances, Surassur and the CIFG group.
RESOLUTIONS
2.8 Consolidation method adopted for insurance companies
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3 ACCOUNTING POLICIES
The consolidated financial statements of Groupe Caisse d’Epargne for the year ended December 31, 2005 have been prepared
and presented in accordance with the policies defined by the CNCE, which comply with French generally accepted accounting
principles and the valuation methods prescribed by the CRC and the Comité de la réglementation bancaire et financière
(French Banking and Financial Services Regulatory Committee, CRBF), notably CRC rule 99-07 governing consolidation policies
and CRBF rule 2000-04 governing the consolidated financial statements.
Balance sheet items are presented, where applicable, net of the related depreciation, amortization and any provisions or other
value adjustments.
3.1 Fixed assets
Fixed assets are recorded at historical cost.
Depreciation and amortization are recorded on a straight-line or accelerated basis over the estimated useful lives of the assets,
as follows:
■ buildings:
20 to 50 years
■ fixtures and fittings:
5 to 20 years
■ specialized furniture and equipment: 4 to 10 years
■ computer equipment:
3 to 5 years
■ computer software:
up to a maximum of 5 years
Major fixed asset components are separated out and depreciated over their useful lives. In some circumstances, additional
write-downs may be made.
3.2 Investments in unconsolidated subsidiaries, affiliates accounted for by the equity method
Investments in unconsolidated subsidiaries and affiliates accounted for by the equity method 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 the historical 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 durable 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” as regards both listed and 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 recorded for unrealized capital losses. Unrealized capital gains are not recognized.
3.3 Securities
Securities transactions are accounted for in accordance with CRBF rule 90-01 (as amended).
Trading account securities are securities that are acquired or sold with a view from the outset to being resold or repurchased
within a short period not exceeding six months. Only securities negotiable on a liquid market, with market prices permanently
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 “Held-for-sale securities” or “Investment
securities” depending on their definition and the conditions required for inclusion in each of these target portfolios.
Such trading account securities are transferred at their market value on the day of transfer.
Held-for-sale securities are 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.
122
At their date of acquisition, held-for-sale securities 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 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 matching entry
to “Interest and similar income” in the profit and loss account.
Held-for-sale securities 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. The provision for unrealized capital losses takes account of any gains
generated by hedging instruments that may have been set up.
Capital gains or losses on the disposal of held-for-sale securities, 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 fixed-income securities, a provision is carried for non-performing loans
with a matching entry in the profit and loss account under “Net allocations 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 these criteria may be classified as investment securities
when, in compliance with the provisions of the CRBF, 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 relating 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 acquisition in the same manner as held-for-sale securities. 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 fixed-income held-for-sale securities.
A provision for impairment in value may be recorded if it is highly probable that the entity will not hold the securities
to maturity owing to changes in circumstances. If a default risk exists regarding the issuer, a provision is carried for
non-performing loans with a matching entry in the profit and loss account under “Net allocations to provisions”.
Provisions for impairment in the value of held-for-sale securities and investment securities are supplemented by a provision
for certain counterparty risks (see note 15).
FINANCIAL REPORT
OF THE CNCE GROUP
Page 123
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
Portfolio activities consist in regularly investing a portion 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 transactions carried out on an ongoing basis within a structured framework,
generating regular yields chiefly derived from capital gains on disposals. At the balance sheet date, portfolio equity
investments are recorded at the lower of historical cost or fair value to the Group. “Fair value to the Group” is based
on 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.
RESOLUTIONS
Portfolio equity investments are accounted for in accordance with CRBF rule 90-01 as amended by CRC rule 2000-02.
Repurchase agreements are presented in accordance with CRBF rule 89-07 and instruction 94-06 issued by the Commission
bancaire (French Banking Commission).
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 its balance sheet.
INFORMATION
ON THE ISSUER
Provisions are systematically recorded for unrealized capital losses. Unrealized capital gains are not recognized.
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.
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3.4 Customer loans
Customer loans are recorded at their nominal value net of any provisions for non-performing items.
Guarantees received are recognized in the balance sheet, and are presented in note 18. 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 part 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 loans 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 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 in the profit and loss account 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 allocations
to provisions in the profit and loss account and offset 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 at present value in terms of the difference
between the outstanding principal 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. The net impact of discounting these provisions over time is recognized in
“Net allocations to provisions”.
Specific provisions for recognized risks are supplemented by general provisions for certain counterparties (see note 15).
Interest on non-performing loans continues to be accrued in operating income, with the exception of loans classified
as doubtful, for which interest is not recognized in accordance with CRC rule 2002-03.
In note 7 to the financial statements, the breakdown of outstandings adopted is that used within Groupe Caisse d’Epargne
for internal management purposes, notably in areas related to sales, finance and risks.
3.5 Reserve for General Banking Risks
The Reserve for General Banking Risks (RGBR) constitutes a fund for the risks inherent in the Group’s banking activities
as required by article 3 of CRBF rule 90-02 and instruction 86-05 (as amended) of the French Banking Commission.
3.6 Bonds
Bonds issued by 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.
124
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3.7 Employee benefits
Employee benefit obligations are generally covered by contributions charged to the profit and loss account and paid to
retirement funds or insurance companies. A provision is set aside for the full amount of any obligations not covered by these
funds, in particular the Group’s pension fund (see note 15).
Post-employment benefits (lump-sum retirement bonuses, pensions and other post-employment benefits) and long-term
employee benefits (long-service benefits) are calculated and recognized in accordance with Conseil national de la comptabilité
(French National Accounting Board, CNC) recommendation 2003-R-01 with effect from January 1, 2005.
Under the CNC’s recommendation, obligations are valued using an actuarial method that takes account of the age, length
of service and the likelihood of personnel being employed by the Group until retirement. This method also takes into
consideration the value of plan assets and uses the projected unit credit method to allocate the costs over the working lives
of employees. Accumulated actuarial gains and losses on post-employment benefits are recognized to the extent that they fall
outside a corridor of 10% of the higher of the benefit obligation or plan assets (corridor method).
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Groupe Caisse d’Epargne conducts transactions on different over-the-counter and 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 CRBF rules 88-02 and 90-15. Commitments on such instruments are recorded in off-balance
sheet accounts at their nominal value. The amount of commitments represents the volume of unsettled transactions at the
balance sheet date.
RISK
MANAGEMENT
3.8 Financial futures and other forward agreements
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. A provision is recorded for potential unrealized losses
determined by reference to market values. Market values are calculated based on the nature of the markets concerned:
organized exchanges (and 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.
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.
RESOLUTIONS
Transactions corresponding to the specialized management of trading portfolios are valued on the basis of their market value
at the balance sheet date, 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 unwound.
INFORMATION
ON THE ISSUER
Gains and losses on financial futures designed to hedge and manage the Group’s 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.
CHAIRMAN’S REPORT
Methods for evaluating income generated on financial instruments depend on the operators’ original intent.
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3.9 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 expense,
are translated at year-end market 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 variances resulting from the consolidation of foreign branches, are recorded under accruals in
the balance sheet.
Differences 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 accounting period.
This item covers provisions booked in respect of liabilities and charges not directly related to banking operations as defined in
article L. 311-1 of the French Monetary and Financial Code and associated transactions as defined in article L. 311-2 of the said
code. 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 for liabilities and charges related to banking operations and associated transactions
as defined in the aforementioned articles L. 311-1 and L. 311-2, 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.
3.11 Accounting policies and valuation rules specific to insurance companies
The accounting principles and valuation rules specific to insurance companies are adhered to in Groupe Caisse d’Epargne’s
consolidated accounts.
Investments
Investments are stated at cost, excluding acquisition expenses, except for investments corresponding to unit-linked policies,
which are marked-to-market at each balance sheet date, as are the corresponding technical provisions.
The liquidity risk reserve provided for by the French Insurance Code is eliminated in the consolidated accounts in accordance
with CRC rule 2004-10 of November 23, 2004.
Provision is made for any permanent impairment in value of a property or equity investment. The calculation methods are
governed by recommendation 2002-F of the CNC’s emerging issues taskforce (comité d’urgence), dated December 18, 2002.
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 for any counterparty risk.
Life insurance transactions
Income from insurance premiums on outstanding policies is accrued in the profit and loss account including an adjustment
for accrued income on premiums not notified to policyholders at year-end (Group policies that include mortality risk cover).
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 provisions 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.
126
Page 127
Technical provisions 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 provision for management expense is set aside when future management expense is not covered by the loading
included in accrued policy premiums 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 provisions for claims payable or technical provisions, it is recorded under
provisions for amounts payable on with-profit policies.
The provision for claims payable represents mainly insured losses that have occurred and capital amounts payable but not
paid at the year-end.
Technical provisions 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 provisions.
Non-life insurance transactions
Premium income is recorded net of tax and cancellations.
A provision for increasing risks is set up to cover timing differences between the introduction of the guarantee and its funding
by insurance premiums.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
The provision 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 provisions.
Provisions are set up as required to cover variations in claims experience in compliance with legislation regarding such
provisions. This applies notably to cyclical risks with varying impacts on successive years, such as occasioned by natural
phenomena.
Provisions for claims payable represent the estimated amount of foreseeable expenses, net of any recoveries receivable.
Provisions for expenses related to the future management of claims are determined with reference to a rate calculated based
on historical costs.
CHAIRMAN’S REPORT
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 between the balance sheet date and the next maturity date,
or (failing that) the term, of the policy.
Deferred acquisition costs are recorded as follows:
■
life: acquisition costs are deferred to the extent of the policy’s net future margins, including the duly substantiated financial
margin, particularly when there is a difference between the discount rate used and the estimated return on the
conservatively valued assets. The costs are amortized as these future margins are recognized, these margins being
revalued at each balance sheet date. If these future margins are deemed to be insufficient in relation to the amortization
schedule, the asset values are written down;
■
non-life: business acquisition costs are deferred in a manner consistent with the method used to defer unearned premium
provisions, and are amortized over the remaining life of the contracts in question.
INFORMATION
ON THE ISSUER
Deferred acquisition costs
RESOLUTIONS
Provisions are recorded in liabilities gross of any re-insurance. The projected share of re-insurers in relation to provisions made
is calculated according to re-insurance treaties in force and appears on the assets side of the balance sheet.
127
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4 CHANGES IN ACCOUNTING METHOD AND PERIOD-ON-PERIOD COMPARISONS
Several changes of accounting methods were implemented at January 1, 2005:
■
under CRC rule 2002-03 on accounting for credit risks, provisions covering expected losses on non-performing and doubtful
loans must be carried at present value. As at January 1, 2005, this regulatory change led to a €123 million decrease
in opening capital funds and reserves, net of deferred taxes;
■
furthermore, CRC rule 2002-10 has established new regulations regarding the depreciation, amortization and impairment of
useful lives. As at January 1, 2005, this change of accounting method led to a decrease of €70 million in opening capital
funds and reserves, net of deferred taxes;
■
CRC rule 2004-06 concerning the definition, recognition and measurement of assets introduced a change in the accounting
treatment of acquisition costs, which are now included in the amount at which the item is initially recognized on the balance
sheet. The new regulations nevertheless allow entities to continue expensing such acquisition costs in their individual
financial statements. However, in keeping with International Financial Reporting Standards where no such option exists, the
Group has decided to apply the new accounting treatment. This new rule led to a €7 million increase in opening capital funds
■
CNC recommendation 2003-R-01, setting out new rules for identifying, measuring and accounting for pension obligations and
other employee benefits, has been applied as from January 1, 2005. At the application date, this change led to a reduction in
opening capital funds and reserves of €633 million, net of deferred taxes, comprising, in particular, unrecognized actuarial
gains and losses, in accordance with the first-time application rules laid down by the recommendation.
Groupe Caisse d’Epargne has elected against the early application of the regulations adopted by the CNC in November 2005,
which concern, in particular, the accounting treatment of credit risks and securities transactions. The Group has also decided
against the early application of the CNC’s draft proposal concerning the recognition of regulated home purchase savings plans.
4.2 Period-on-period comparisons
Restructuring operations in 2004
On May 27, 2004, Groupe Caisse d’Epargne and the Caisse des Dépôts et Consignations signed an agreement aimed
at redefining the nature of their partnership.
The major operations of the agreement were that the Caisse des Dépôts et Consignations transferred its 50.10% holding
in Compagnie Financière Eulia and its 43.55% stake in its investment banking and asset management subsidiary, CDC IXIS,
to the CNCE. 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 it a 20% stake in their capital.
Prior to the restructuring operations which took effect on June 30, 2004, CDC IXIS transferred its portfolio of listed equities and
certain investments to the Caisse des Dépôts et Consignations or to direct subsidiaries thereof.
Impact on the financial statements
Since June 30, 2004, the subsidiaries of Compagnie Financière Eulia, previously controlled jointly with the Caisse des Dépôts
et Consignations, have been controlled exclusively by Groupe Caisse d’Epargne via the CNCE. These subsidiaries – chiefly those
belonging to the Investment Banking division – have been fully consolidated within Groupe Caisse d’Epargne from that date.
In terms of the consolidated profit and loss account, the results of these subsidiaries for first-half 2004 were accounted for
by the proportional consolidation method based on the situation of joint control applicable through June 30, 2004.
To enhance comparability, a pro forma profit and loss account is presented in note 34 for the year ended December 31, 2004.
128
Caisse d’Epargne des Alpes
Caisse d’Epargne Languedoc-Roussillon
Caisse d’Epargne d’Alsace
Caisse d’Epargne Loire Drôme Ardèche
Caisse d’Epargne Aquitaine-Nord
Caisse d’Epargne d’Auvergne et du Limousin
Caisse d’Epargne de Martinique
Caisse d’Epargne de Basse-Normandie
Caisse d’Epargne de Midi-Pyrénées
Caisse d’Epargne de Bourgogne
Caisse d’Epargne du Pas-de-Calais
Caisse d’Epargne de Bretagne
Caisse d’Epargne des Pays de l’Adour
Caisse d’Epargne Centre-Val de Loire
Caisse d’Epargne des Pays de la Loire
Caisse d’Epargne Champagne-Ardenne
Caisse d’Epargne des Pays du Hainaut
Caisse d’Epargne Côte d’Azur
Caisse d’Epargne de Picardie
Caisse d’Epargne de Flandre
Caisse d’Epargne Poitou-Charentes
Caisse d’Epargne de Franche-Comté
Caisse d’Epargne Provence-Alpes-Corse
Caisse d’Epargne de Haute-Normandie
Caisse d’Epargne Rhône-Alpes Lyon
Caisse d’Epargne Ile-de-France Nord
Caisse d’Epargne du Val de France-Orléanais
Caisse d’Epargne Ile-de-France Ouest
Caisse Nationale des Caisses d’Epargne
et de Prévoyance
Caisse d’Epargne Ile-de-France Paris
FINANCIAL REPORT OF
Consolidating entity
RISK
MANAGEMENT
5 SCOPE OF CONSOLIDATION AT DECEMBER 31, 2005
FINANCIAL REPORT
OF THE CNCE GROUP
Page 129
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
129
12/07/06
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Page 130
Direct subsidiaries
Banking and financial institutions
Banque Inchauspé
Batimap
Batimur
Batiroc Pays de Loire
Caisse d’Epargne Financement
Capitole Finance
Expanso
Picardie Bail
SDR Champex
SDR Sodler
Sebadour
Sodero
Sud Ouest Bail
Tofinso
Tofinso Investissements
Holassure group
Holassure
Sopassure
OCÉOR group
Financière OCÉOR
Alyseor
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
GIE OCÉOR Informatique
Mascareigne Investors Services Ltd
OCÉOR Lease
Slibail Réunion
Société Havraise Calédonienne
Banque Palatine group (formerly Banque Sanpaolo group)
Banque Palatine (formerly Banque Sanpaolo)
Banque Michel Inchauspé
Conservateur Finance
Eurosic Sicomi SA
GCE Affacturage
GCE Bail (formerly Bail Ecureuil)
Sanpaolo Asset Management
Sanpaolo Asset Management (formerly Sanpaolo Fonds Gestion SNC)
Sanpaolo Bail SA
Sanpaolo Mur SNC
Socavie SNC
Société Foncière Joseph Vallot
Société Foncière d’Investissement
Société immobilière d’Investissement
Thiriet Gestion
Uni-Invest SAS
2005
Consolidation
method (1)
%
consolidation
%
interest
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%
92.63%
97.05%
99.87%
67.00%
100.00%
91.16%
100.00%
–
–
80.40%
100.00%
91.16%
–
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
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%
100.00%
100.00%
81.97%
95.89%
95.63%
98.15%
97.15%
–
100.00%
90.30%
90.68%
47.12%
84.50%
94.50%
96.94%
87.18%
85.44%
Full
Equity
Equity
Full
Full
Full
–
Full
–
Full
Full
Full
Full
Full
Equity
–
100.00%
20.00%
20.00%
100.00%
100.00%
100.00%
–
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
33.40%
–
60.00%
12.00%
12.00%
53.28%
60.00%
60.00%
–
60.00%
–
60.00%
60.00%
60.00%
60.00%
60.00%
20.04%
–
130
(2)
Consolidation
method (1)
%
consolidation
%
interest
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%
100.00%
100.00%
79.83%
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%
84.39%
100.00%
–
81.87%
86.56%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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%
–
–
–
–
–
Prop.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49.90%
–
–
–
–
–
–
–
–
–
–
FINANCIAL REPORT OF
First-half 2004
RISK
MANAGEMENT
2004
FINANCIAL REPORT
OF THE CNCE GROUP
Page 131
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
131
12/07/06
15:12
Page 132
Other entities
Anatol Invest (group)
Auto Location Toulouse
CDC Entreprises 1
CDC Entreprises 2
CDC Innovation 96
CDC Ixis Italia Holding
Compagnie 1818 (formerly Véga Finance) (group)
Compagnie Financière Eulia
Ecureuil Gestion *
Ecureuil Gestion FCP *
Ecureuil Lease
Ecureuil Négoce (formerly Capitole Négoce)
Ecureuil Proximité
Ecureuil Services
Ecureuil Vie
Electropar France
EURL Beaulieu Immo
Expanso Investissements
Foncière des Pimonts (group)
GCE Newtech
Gestitres
GIE Direct Ecureuil
Groupe Ellul
Holgest
IXIS (formerly CDC IXIS)
IXIS AEW Europe (formerly CDC IXIS immo) *
IXIS Asset Management (group)
IXIS Financial Guaranty (group)
Logistis (group)
Martignac Finance
Mifcos (formerly Socfim Participations)
Muracef
PART’COM
Primaveris
Proencia
Proxipaca
Quai de Seine Gestion et Location
Samenar
SARL Méditerranée
SAS Foncière Ecureuil
SCI Avant Seine 1
SCI Avant Seine 2
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
SCR Bretagne Participations
SNC Participations Ecureuil
2005
Consolidation
method (1)
%
consolidation
%
interest
–
Full
–
–
Equity
–
–
Full
–
Full
Full
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
Full
Full
Full
Full
Full
Full
–
100.00%
–
–
35.00%
–
–
100.00%
–
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50.00%
–
100.00%
100.00%
–
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%
100.00%
100.00%
100.00%
–
100.00%
–
–
35.00%
–
–
85.78%
–
65.00%
68.00%
68.00%
99.95%
100.00%
100.00%
99.84%
100.00%
50.00%
–
100.00%
99.55%
–
100.00%
66.00%
100.00%
–
100.00%
–
–
68.00%
100.00%
–
–
100.00%
100.00%
–
37.62%
52.61%
40.19%
100.00%
38.38%
100.00%
93.52%
100.00%
100.00%
99.00%
99.99%
100.00%
93.52%
93.52%
100.00%
100.00%
99.00%
99.00%
100.00%
100.00%
49.96%
100.00%
* Entities consolidated by the IXIS Asset Management Group.
132
Consolidation
method (1)
%
consolidation
%
interest
Consolidation
method (1)
%
consolidation
%
interest
–
–
–
–
Equity
–
Full
Full
–
Full
Full
Full
–
Full
Full
Full
Full
Equity
–
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
–
Full
–
–
–
–
35.00%
–
100.00%
100.00%
–
100.00%
100.00%
100.00%
–
100.00%
100.00%
100.00%
100.00%
50.00%
–
100.00%
100.00%
–
–
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%
–
–
–
–
35.00%
–
100.00%
100.00%
–
65.00%
73.90%
73.90%
–
100.00%
100.00%
99.84%
100.00%
50.00%
–
100.00%
99.55%
–
–
66.00%
–
48.90%
100.00%
–
–
73.90%
100.00%
–
100.00%
100.00%
100.00%
–
37.62%
52.61%
40.19%
100.00%
38.38%
100.00%
93.52%
100.00%
100.00%
99.00%
99.99%
100.00%
93.52%
93.52%
100.00%
100.00%
99.00%
99.00%
100.00%
100.00%
–
100.00%
Prop.
–
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
–
Prop.
–
–
Equity
Prop.
–
–
Prop.
–
Prop.
–
–
Prop.
Prop.
Prop.
Prop.
Prop.
Equity
Prop.
Prop.
–
Prop.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26.45%
–
26.45%
26.45%
26.45%
26.45%
33.40%
26.45%
49.90%
49.90%
49.90%
49.90%
–
–
49.90%
–
–
50.00%
26.45%
–
–
26.45%
–
49.90%
–
–
49.90%
26.45%
26.45%
26.45%
26.45%
8.81%
26.45%
49.90%
–
26.45%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26.45%
–
23.49%
9.76%
26.45%
25.58%
33.40%
22.48%
49.90%
32.44%
45.21%
45.21%
–
–
49.90%
–
–
25.06%
13.23%
–
–
19.45%
–
28.29%
–
–
42.86%
26.45%
26.45%
21.16%
26.45%
8.82%
26.45%
49.85%
–
26.45%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
RISK
MANAGEMENT
First-half 2004 (2)
2004
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Page 133
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
133
12/07/06
15:12
Page 134
Other entities (cont.)
SNC SEI Logement
SNC SEI Tertiaire
Société Européenne d’Investissement
Sodero Gestion
Sodero Participations
Sorepar
Surassur
Viveris (formerly Cofismed)
Walter Spanghero
IT technical centres and software houses
Arpège Investissement
Cnéti
GEMO RSI
GIE Arpège
Girce Ingénierie
Girce Stratégie
IRICE
SED Arpège 2000
SED RSI
SNC Sersim
Vivalis Investissements
IXIS Corporate & Investment Bank group
BGL
CLEA2
IXIS Innov
IXIS Luxembourg Investissements
IXIS Securities
IXIS Structured Products Ltd
SNC Tolbiac Finance
Nexgen (group)
IXIS North America
IXIS Investment Management Corp.
IXIS Capital Market North America
IXIS Funding Corp.
IXIS Securities North America Inc.
IXIS Financial Instruments Ltd
IXIS Asia Limited
CDC Holding Trust
IXIS Securitization Corp.
CACEIS group
CACEIS Holding
IXIS Administration de Fonds
IXIS Urquijo
CA-IS Bank Luxembourg
CA-IS Bank Paris
CACEIS Corporate Trust
Euro Émetteurs Finance
Fastnet France
Fastnet Luxembourg
2005
Consolidation
method (1)
%
consolidation
%
interest
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%
48.12%
100.00%
86.13%
66.69%
100.00%
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%
96.01%
100.00%
100.00%
99.74%
99.51%
100.00%
100.00%
100.00%
100.00%
100.00%
Full
Full
Full
Full
Full
Full
Full
Full
Equity
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%
37.75%
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%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
37.75%
97.55%
97.20%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
25.50%
50.00%
50.00%
50.00%
50.00%
25.00%
22.50%
134
Consolidation
method (1)
%
consolidation
%
interest
Consolidation
method (1)
%
consolidation
%
interest
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%
48.12%
100.00%
–
66.69%
100.00%
Prop.
Prop.
Prop.
–
–
–
–
–
–
49.90%
49.90%
49.90%
–
–
–
–
–
–
49.85%
49.85%
49.85%
–
–
–
–
–
–
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%
96.01%
100.00%
100.00%
99.73%
99.51%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Full
Full
Full
–
–
Full
–
–
Equity
Full
Full
Full
Full
Full
Full
Full
Full
–
–
Full
Full
Full
Full
100.00%
100.00%
100.00%
–
–
100.00%
–
–
37.75%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
–
–
100.00%
100.00%
100.00%
100.00%
97.55%
97.55%
97.55%
–
–
97.55%
–
–
37.75%
97.55%
97.23%
97.55%
97.55%
97.55%
97.55%
97.55%
97.55%
–
–
97.55%
97.55%
97.55%
97.55%
Prop.
Prop.
Prop.
–
–
Prop.
–
–
Equity
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
Prop.
–
–
Prop.
Prop.
Prop.
Prop.
26.45%
26.45%
26.45%
–
–
26.45%
–
–
10.24%
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%
–
–
10.24%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
26.45%
–
–
26.45%
26.45%
26.45%
26.45%
–
Full
Full
Prop.
–
–
–
–
–
–
–
100.00%
100.00%
100.00%
–
–
–
–
–
–
–
100.00%
100.00%
51.00%
–
–
–
–
–
–
–
–
Prop.
Prop.
–
–
–
–
–
–
–
–
26.45%
26.45%
–
–
–
–
–
–
–
–
26.45%
13.49%
–
–
–
–
–
–
RISK
MANAGEMENT
First-half 2004 (2)
2004
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Page 135
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
135
12/07/06
15:12
Page 136
Crédit Foncier group
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
FCC Teddy
Financière Desvieux
Foncier Assurance
Foncier Bail
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
Ecufoncier
Secundis Finance
Foncier Services Immobiliers
Cicobail group
Cicobail
Cinergie
Mur Ecureuil
Socfim group
Socfim
Socfim Transaction
Socfim Participations Immobilières
GCE Garanties group (formerly Eulia Caution group)
GCE Garanties (formerly Eulia Caution)
Cegi
Financière Cegi
Saccef
Socamab
SCI Saccef La Boétie
SCI Saccef Champs-Élysées
SCI Saccef Immobilier
2005
Consolidation
method (1)
%
consolidation
%
interest
Full
–
Full
Full
Full
Full
–
Full
–
Full
Full
Full
Full
Equity
Equity
Full
Full
Full
–
–
Full
Full
Full
Full
Equity
Full
Full
Full
Full
Full
Full
Equity
Equity
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%
27.64%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
100.00%
–
99.99%
99.99%
99.99%
99.98%
–
99.88%
–
100.00%
99.99%
99.99%
99.98%
100.00%
100.00%
99.99%
67.33%
67.33%
–
–
99.99%
79.88%
100.00%
100.00%
27.64%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
35.00%
100.00%
Full
Full
Full
100.00%
100.00%
100.00%
99.76%
99.75%
99.75%
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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%
60.00%
100.00%
100.00%
100.00%
136
Consolidation
method (1)
%
consolidation
%
interest
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%
–
–
–
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%
–
–
–
Full
Full
Full
100.00%
100.00%
100.00%
99.75%
99.75%
99.75%
Prop.
Prop.
Prop.
75.05%
75.05%
75.05%
64.87%
64.87%
64.87%
Full
Full
Full
100.00%
100.00%
100.00%
99.91%
99.91%
99.91%
Prop.
Prop.
Prop.
49.90%
49.90%
49.90%
49.85%
49.85%
49.85%
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%
–
–
–
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%
–
–
–
RISK
MANAGEMENT
First-half 2004 (2)
2004
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Page 137
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
137
12/07/06
15:12
Page 138
6 CASH, MONEY MARKET AND INTERBANK ITEMS
Assets
Dec. 31, 2005
Assets
Dec. 31, 2004
Assets
Dec. 31, 2005
Assets
Dec. 31, 2004
8,288
178,380
108,872
69,508
186,668
6,961
179,556
118,294
61,262
186,517
35
101,657
35,148
66,509
101,692
12
91,352
38,386
52,966
91,364
Financial institutions
demand accounts
term accounts
Total
Daily Livret A passbook deposits with the Caisse des Dépôts et Consignations represented €64,034 million at December 31,
2005. Deposits with financial institutions and related accrued interest amounted respectively to €2,104 million and €330 million
at December 31, 2005. Provisions for impairment in value relating to amounts due from financial institutions amounted
to €25 million at December 31, 2005.
7 CUSTOMER ITEMS
Commercial loans
Short-term credit facilities
Equipment loans
Regulated home purchase loans
Other mortgage lending
Other
Accrued interest
Non-performing loans
Provisions on non-performing loans
Total
Assets
Dec. 31, 2005
640
193,818
18,488
44,923
1,980
101,260
27,167
4,234
1,323
4,358
(1,952)
202,421
Assets
Dec. 31, 2004
1,135
180,578
16,495
42,987
2,466
91,215
27,415
3,398
973
4,431
(2,014)
188,501
Liabilities
Liabilities
Dec. 31, 2005 Dec. 31, 2004
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
150,634
65,406
17,998
46,009
17,161
3,589
471
67,045
31,024
36,021
737
218,416
150,583
66,351
16,739
45,738
17,244
4,144
367
62,871
25,724
37,147
649
214,103
Breakdown of loans outstanding at December 31, 2005:
Performing
loans
Nonperforming
loans
Doubtful
loans
Sub-total nonperforming
loans
186,665
204,038
16
2,155
12
2,425
28
4,580
(25)
(2,085)
84,314
12,771
12,300
9,198
4,593
80,862
681
191
278
324
0
681
767
252
370
359
0
677
1,448
443
648
683
0
1,358
(499)
(297)
(373)
(419)
0
(497)
Loans and advances to customers (1)
Individual customers: property loans
Individual customers: other loans
Self-employed professionals
Companies
Local and regional authorities
Other
(1) Including finance lease transactions comprising leases with purchase options where the Group is the lessor.
138
Provision
FINANCIAL REPORT
OF THE CNCE GROUP
Page 139
8 FINANCE LEASE TRANSACTIONS INCLUDING LEASES
WITH PURCHASE OPTIONS (WHERE THE GROUP IS THE LESSOR)
Dec. 31, 2005
Equipment
Real estate
Other finance leases
Accrued interest
Provisions
Total
Dec. 31, 2004
875
2,898
343
129
(133)
4,112
729
2,869
319
100
(150)
3,867
The provision 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 provisions
net of deferred tax for an amount of €50 million at December 31, 2005, compared with €46 million at December 31, 2004.
9 BONDS, EQUITIES AND OTHER FIXED- AND VARIABLE-INCOME SECURITIES
Trading account
securities
Bonds and other
fixed-income securities (2)
Equities and other
variable-income securities (3)
Total at Dec. 31, 2005
Total at Dec. 31, 2004
Held-for-sale
securities
Investment Portfolio equity
securities investments
Accrued
interest (1)
Total
Total
Dec. 31, 2005 Dec. 31, 2004
23,135
822
476
15
24,448
11,400
24,586
23,895
30,111
757
79,349
75,064
24,735
72,456
9,121
33,838
229
229
1
773
34,086
137,883
27,544
30,587
54,890
32,980
25,225
225
688
114,008
(1) Including €373 million of accrued interest on investment securities, €303 million on held-for-sale securities, €96 million on trading account securities and €1 million on portfolio equity
investments.
The aggregate difference between the acquisition price and the redemption price of held-for-sale securities amounted
to €96 million at December 31, 2005, against €68 million at end-2004. For investment securities, at December 31, 2005
the aggregate difference remained unchanged from December 31, 2004 at €32 million.
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
The portion of bonds and other fixed-income securities issued by public bodies stood at €7,035 million. Amounts receivable
with respect to securities lent increased to €3,144 million at December 31, 2005 from €1,072 million at December 31, 2004.
Amount transferred during the year
From
To
2005
2004
500
99
303
0
639
0
0
40
RESOLUTIONS
Over the past two accounting periods, the following transfers have been made between the different portfolio categories
INFORMATION
ON THE ISSUER
Investment securities sold before maturity during the current financial year totaled €297 million compared with €879 million
in 2004.
139
12/07/06
15:12
Page 140
Unrealized capital gains and losses on held-for-sale securities and portfolio equity investments can be analyzed as follows:
Dec. 31, 2005
Net book value
Market value
Net unrealized capital gains (1)
Unrealized losses covered by provisions
34,141
35,111
970
165
Dec. 31, 2004
Portfolio equity investments
Dec. 31, 2005
Dec. 31, 2004
230
272
42
39
226
238
12
31
33,296
34,359 (2)
1,063 (2)
185
(1) This item includes, for held-for-sale securities, a €22 million loss on treasury bills and similar securities, a €468 million gain on bonds and other fixed-income securities
and a €496 million gain on shares and other variable-income securities.
These amounts do not include unrealized gains or losses relating to any financial instruments used to hedge held-for-sale securities.
(2) Amount adjusted in relation to the figure reported in the 2004 Annual Report, in which the market value of held-for-sale securities at December 31, 2004 stood at €35,611 million.
Unrealized capital losses on investment securities for which provisions have been raised amount to €11 million.
10 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
Other long-term investments
Total
Dec. 31, 2005
Dec. 31, 2004
2,080
2,466
373
4,919
1,899
2,336
368
4,603
511
360
Of which listed securities
10.1 Investments in unconsolidated subsidiaries and other long-term investments
Net book value
% capital held
by Group companies
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
Sanpaolo IMI
SNC Calixis Finance
Crédit Logement
Air Calin
Banca Carige
ESU Lazard Ltd (1)
Société des Eaux de Tontouta
Lazard Ltd
Foncier Vignobles
Total
323
305
198
185
178
150
127
49
42
41
1,598
323
–
198
185
178
140
–
49
–
41
1,114
1.50%
10.20%
15.49%
72.25%
9.50%
1.49%
34.00%
75.22%
2.00%
99.91%
2.00%
–
15.49%
72.25%
9.50%
1.42%
–
75.22%
–
99.91%
Other securities
Accrued interest and current accounts
Total
614
241
2,453
880
273
2,267
(1) Each ESU (Equity Security Unit) will be converted into Lazard Ltd shares on May 15, 2008, in accordance with a mandatory conversion procedure.
140
FINANCIAL REPORT
OF THE CNCE GROUP
Page 141
10.2 Affiliates accounted for by the equity method
Caisse Nationale de Prévoyance (Group)
Ecureuil Vie
SICP (Group)
Nexgen Financial Holding
Other companies
Total
Net book value
at Dec. 31, 2005
Share in affiliates’
2005 net income
Net book value
at Dec. 31, 2004
Share in affiliates’
2004 net income
1,048
933
191
115
85
94
2,466
129
104
3
6
1
18
261
974
880
207
111
73
91
2,336
111
69
15
5
3
13
216
11 LOANS AND ADVANCES OUTSTANDING AND SOURCES OF FUNDS
BY MATURITY DATE
From 0 to
3 months
From 3 months
to 1 year
From 1 to
5 years
Over
5 years
Total
Dec. 31, 2005
Loans and advances
205,260
29,138
84,437
126,330
445,165
Customer loans
Bonds and other fixed-income securities (1)
168,730
31,933
4,597
5,047
18,801
5,290
7,684
59,062
17,691
5,207
92,625
28,498
186,668
202,421
56,076
Sources of funds
301,475
45,698
66,287
58,111
471,571
Customer deposits
Debt securities:
Retail certificates of deposit
and savings certificates
Bonds
80,693
176,208
44,574
11,621
17,895
16,182
4,349
15,230
46,708
5,029
9,083
43,999
101,692
218,416
151,463
380
39,296
4,897
1
134
9,710
6,338
0
208
11,348
35,152
0
0
12,184
31,390
425
722
72,538
77,777
426
(1) Excluding trading account.
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
12.1 Changes in fixed assets
Gross
value at
Dec. 31, 2004
Acquisitions
Disposals/
retirements
Other
movements
Gross
value at
Dec. 31, 2005
Depreciation,
amortization
and provisions
Dec. 31, 2005
Net
value at
Dec. 31, 2005
1,785
5,908
7,693
120
561
681
(58)
(278)
(336)
119
(7)
112
1,966
6,184
8,150
(660)
(3,237)
(3,897)
1,306
2,947
4,253
Intangible assets
Tangible assets
Total
RESOLUTIONS
12 TANGIBLE AND INTANGIBLE ASSETS
12.2 Intangible assets
At December 31, 2005 the main intangible asset items were as follows (net values in millions of euros):
■ market share
■ business goodwill
■ computer software
■ certificates of association of deposit guarantee funds
850
142
118
73
INFORMATION
ON THE ISSUER
Other movements mainly comprise translation adjustments.
141
12/07/06
15:12
Page 142
12.3 Tangible assets
At December 31, 2005, the net book value of land and buildings amounted to €2,038 million, including €1,822 million relating
to premises for the Group’s own use, and €216 million in respect of investment properties.
13 DEBT SECURITIES
Bonds
Total
Dec. 31, 2005
Dec. 31, 2004
722
72,538
77,777
426
151,463
888
70,059
71,428
204
142,579
Unpaid accrued interest carried in “Debt securities” stands at €2,343 million. Unamortized issue and redemption premiums
amounted to €291 million.
14 ACCRUALS AND OTHER ASSETS AND LIABILITIES
Assets
Liabilities
Off-balance sheet transactions on securities
Foreign currency commitments
Unrealized hedging losses and gains on futures
Deferred expenses and income
Prepaid expense and unearned income
Accrued expense and accrued income
Items in course of collection
Deferred tax
Settlement accounts for securities transactions/debt securities
Other assets/liabilities
Other insurance assets/liabilities
4,521
12,330
952
751
268
3,810
4,221
1,146
1,678
20,647
358
50,682
3,699
13,707
1,132
1,301
1,983
4,073
106
44,908
18,359
25
89,293
39,769
64,948
15 PROVISIONS
Dec. 31,
2004
Allocations
Releases
454
927
1,682
180
197
205
(220)
(121)
(1,440)
(1)
(2)
5
(40)
11
1,007
373
1,012
1,459
312
3,375
165
747
(189)
(1,970)
(7)
(5)
33
1,011
314
3,158
Provision for claims, fines and penalties
Counterparty risks (see note 15.2)
Employee benefits (see note 15.3)
Other provisions for banking and
non-banking operations
Total
142
Changes
in scope of
consolidation
Other
movements
Dec. 31,
2005
Page 143
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
15.2 Provisions for counterparty risks
Dec. 31,
2004
Allocations
Releases
Provisions deducted from assets
Other
Provisions carried in liabilities
General provision
Provision for signature commitments
Country risks
Other risks
Total
2,330
2,014
316
927
384
183
47
24
289
3,257
709
669
40
197
50
43
25
2
77
906
(974)
(818)
(156)
(121)
(37)
(24)
(20)
(7)
(33)
(1,095)
Other
movements
104
87
17
9
0
(17)
(6)
1
31
113
Dec. 31,
2005
2,169
1,952
217
1,012
397
185
46
20
364
3,181
To reflect counterparty risks more accurately, and in advance of the forthcoming change in CRC rules governing the accounting
treatment of credit risk which will affect provisions booked on a portfolio basis, a general 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. Provision rates are determined by reference to the counterparty’s credit rating and the remaining life
of the loan, and are weighted based on assumptions concerning recoverability in the event of default. At December 31, 2005,
the provision recorded for all the portfolios concerned – social housing associations, real-estate professionals, local
and regional authorities, businesses, consumer loans and financial markets – amounted to €397 million.
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Allocations
Releases
130
28
(21)
1,522
30
1,682
163
14
205
(1,413)
(6)
(1,440)
Pension and other post-employment benefits
Provision for the Group’s estimated potential
pension liabilities (CGR)
Other employee benefits
Total employee benefits
Changes
in scope of
consolidation
Other
movements
Dec. 31,
2005
5
102
244
5
829
76
1,007
1,101
114
1,459
Defined benefit pension plans and other long-term employee benefits
■
CGRCE: a private supplementary pension plan that has been transferred to a dedicated external retirement fund, considered
as a long-term employee benefit fund.
■
Pensions and other post-employment benefits: retirement indemnities and other benefits granted to retirees.
■
Other: long-service awards and other long-term employee benefits.
Caisse Générale de Retraite du personnel des Caisses d’Epargne (CGRCE)
The CGRCE is a supplementary pension scheme that manages a private pension fund on behalf of Group personnel.
The commitment to finance the CGRCE’s future deficits is provided for on the balance sheet, and is remeasured annually.
RESOLUTIONS
Dec. 31,
2004
CHAIRMAN’S REPORT
15.3 Provisions for employee benefits
In addition, CNC recommendation 2003.R.01 of January 1, 2005, changed the accounting treatment of post-employment
benefits, as described in note 4. In particular, this rule means that the assets transferred to the CGRCE are now measured
at fair value.
INFORMATION
ON THE ISSUER
Pursuant to the “Fillon” law relating to pension schemes in France, this supplementary pension fund will become an employee
benefits savings institution (institution de prévoyance). This development has led the Group to raise a further provision
of €149 million, as well as to carry out two transfers of assets to the CGRCE representing a total value of €1,391 million.
143
12/07/06
15:12
Page 144
Breakdown of balance sheet assets and liabilities relating to the CGRCE
GROUP’S ESTIMATED POTENTIAL PENSION OBLIGATIONS (CGR)
Dec. 31,
2005
Present value of obligations funded
Fair value of plan assets
Fair value of reimbursement rights
Other assets and liabilities
4,823
(3,732)
(1,101)
10
Net balance sheet provision
BREAKDOWN OF BALANCE SHEET MOVEMENTS
0
Dec. 31,
2005
Change in the projected benefit obligation
Projected benefit obligation at start of year
Interest expense
Benefits paid
Net actuarial gains and losses for the period and past service cost
Other translation differences
4,558
168
(163)
111
149
Projected benefit obligation at end of year
4,823
Change in fair value of plan assets
Fair value of plan assets at start of year
Expected return on plan assets
Plan participant contributions
Benefits paid
Net actuarial gains and losses for the period
(2,240)
(154)
(1,391)
163
(110)
Fair value of plan assets at end of year
(3,732)
Change in fair value of reimbursement rights
Fair value of reimbursement rights at start of year
Expected return on reimbursement rights
Plan participant contributions
Benefits paid
Net actuarial gains and losses for the period
Fair value of reimbursement rights at end of year
Net obligations
(2,319)
(26)
1,392
(148)
(1,101)
(10)
Unrecognized actuarial gains and losses and past service cost at end of year
Net
(10)
Breakdown of net expense for the period in respect of the CGRCE
BREAKDOWN OF THE NET EXPENSE FOR THE PERIOD
2005
Interest expense
Expected return on reimbursement rights
Non-recurring items: impact of “Fillon” law
Total
167
(154)
(26)
149
136
Main actuarial assumptions relating to the CGRCE
CGRCE
Gross discount rate
Expected return on reimbursement rights (1)
(1) Relating to the FCP Masseran special purpose entities.
144
2005
4.20%
5.08%
5.73%
Page 145
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
16 GOODWILL
“Goodwill” reflects the outstanding balance of differences not attributed elsewhere on the balance sheet between the cost
of the investment and the Group’s equity in the underlying net assets at the date of acquisition of shares in consolidated
Assets
2005
Net amount at January 1
Movements during the year
Goodwill on Banque Palatine securities
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
and compulsory buyout procedure
Change in consolidation method (former CDC IXIS Group)
Goodwill on CACEIS
Translation adjustments (1)
Other movements (2)
Amortization for the year
Net amount at December 31
Assets
2004
879
241
372
562
(45)
Liabilities
2005
Liabilities
2004
35
52
8
7
263
FINANCIAL REPORT OF
12/07/06
37
303
150
56
35
(97)
1,023
(30)
34
(55)
879
(35)
0
1
(25)
35
RISK
MANAGEMENT
(1) Impact of the translation adjustment on the goodwill relating to IXIS Asset Management North America Group.
(2) Other changes primarily reflect internal acquisitions by La Compagnie 1818 for an amount of €12 million.
Share
capital
Additional
paid-in
capital
Consolidated
reserves and
retained
earnings
2,601
199
6,372
1,116
10,288
Movements in 2004
2,417
679
1,481
669
5,246
5,018
878
7,853
1,785
15,534
1,785
(255)
(1,785)
Dividends paid
Application of CRC rules:
2002.03
2002.10
2004.06
CNC recommendation 2003-R1
Capital increase (1)
Other movements
Net income for the year ended December 31, 2005
Net Total consolidated
income
capital funds
and reserves,
excluding RGBR
(123)
(70)
7
(633)
136
37
157
(17)
5,154
915
8,704
2,071
2,071
0
(255)
(123)
(70)
7
(633)
173
157
(17)
2,071
16,844
RESOLUTIONS
17.1 Changes in consolidated capital funds and reserves
(excluding minority interests and the Reserve for General Banking Risks)
INFORMATION
ON THE ISSUER
17 CONSOLIDATED CAPITAL FUNDS, RESERVE FOR GENERAL BANKING RISKS
AND SUBORDINATED DEBT
CHAIRMAN’S REPORT
Goodwill recorded in respect of CACEIS will be taken to income over ten years.
(1) This line relates to the CNCE’s capital increase in the amount of €121 million and a corresponding €37 million issue premium, as well as an increase in the capital
of the Caisse d’Epargne et de Prévoyance Loire Drôme Ardèche for an amount of €15 million.
145
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Page 146
17.2 Changes in the Reserve for General Banking Risks
Dec. 31, 2004
Allocations
Releases
Dec. 31, 2005
2,488
138
(54)
2,572
17.3 Subordinated debt
Dated subordinated notes
Dated subordinated debt
Undated subordinated debt
Non-cumulative, undated deeply subordinated notes
Accrued interest
Total
Dec. 31, 2005
Dec. 31, 2004
6,249
35
225
1,739
197
8,445
5,422
–
260
1,715
317
7,714
Dated subordinated notes:
(1) Deeply subordinated notes.
146
Amount
Currency
Interest rate
Maturity
1
250
92
748
5
11
4
1
859
421
77
454
150
311
485
506
257
509
206
215
10
500
20
20
10
21
46
53
7
6,249
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
2.750%
3-month Euribor
5.000%
5.600%
3-month Euribor
6.250%
6.250%
6.250%
5.200%
4.500%
3-month Euribor
4.100%
4.800%
4.600%
4.800%
4.500%
4.200%
4.000%
3.500%
3.600%
6-month Euribor
3-month Euribor
6.500%
6-month Euribor
CMS20
3-month Euribor
3-month Euribor
3-month Euribor
3-month Euribor
12/2006
08/2010
12/2010
11/2011
06/2012
06/2012
06/2012
06/2012
07/2014
02/2015
04/2015
07/2015
12/2015
02/2016
07/2016
10/2016
12/2016
02/2017
05/2017
07/2017
03/2018
07/2018
07/2022
09/2022
03/2023
04/2023
01/2033
01/2033
01/2033
10
25
35
EUR
EUR
6-month Euribor
4.210%
05/2006
04/2015
19
5
5
196
225
EUR
EUR
EUR
EUR
0.000%
5.170%
4.300%
3-month Euribor
–
–
–
–
796
168
695
80
1,739
EUR
USD
EUR
EUR
5.430%
3-month Euribor/USD
4.625%
10-year CMS
– (1)
– (1)
– (1)
– (1)
FINANCIAL REPORT
OF THE CNCE GROUP
Page 147
18 COMMITMENTS GIVEN AND RECEIVED
To reflect the transactions carried out more accurately, the Group has decided to classify a portion of other commitments given
and received within financing commitments and guarantee commitments.
In order to facilitate year-on-year comparisons, the Group has adjusted the data presented under financing commitments and
guarantee commitments at December 31, 2004. Accordingly, other commitments given amounting to €22,516 million have
been transferred to financing commitments and guarantee commitments given to customers, for €5,859 million and
€16,657 million, respectively. In addition, other commitments received amounting to €1,436 million have been transferred to
commitments received from financial institutions and other securities receivable for €1,283 million and €153 million,
respectively. Furthermore, commitments worth €8,089 million, that at December 31, 2004 were included in guarantee
commitments given to financial institutions, were transferred to guarantee commitments given to customers. Lastly, during
first-half 2005, the effective dates of the commitments within the Group were harmonized. This led IXIS CIB to increase
the amount recorded at December 31, 2004 in respect of financing commitments given to customers by €2,545 million.
Given
Received
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
Given to customers
Total
10,008
50,056
60,064
14,663
49,809
64,472
3,457
6,197
3,457
6,197
Given to customers
Total
7,073
42,325
49,398
1,811
31,880
33,691
14,070
14,434
14,070
14,434
FINANCIAL REPORT OF
15:12
Other guarantee commitments given and received were respectively €7,637 million and €46,519 million at December 31,
2005, versus €5,068 million and €26,773 million at December 31, 2004.
Since these are commitments given by the insurance business, the Group will henceforth include the principal amount of
guarantees issued by the CIFG group in its published off-balance sheet commitments. At December 31, 2005, this figure
amounted to €36,019 million, versus €18,319 million at December 31, 2004 (adjusted figures).
19 TRANSACTIONS IN FINANCIAL FUTURES
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
Futures
Options
Futures
Options
Total (nominal values)
Interest-rate
instruments
Foreign exchange
instruments
Other
instruments
Total at
Dec. 31, 2005
Total at
Dec. 31, 2004
395,128
462,208
0
0
7,437
40,203
402,565
502,411
257,669
334,759
3,213,390
607,245
4,677,971
10,846
12,463
23,309
3,990
42,267
93,897
3,228,226
661,975
4,795,177
2,235,863
363,497
3,191,788
The nominal values of contracts listed above give only a general idea of the volume of Groupe Caisse d’Epargne’s activities on
derivatives markets at the year-end and do not reflect 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 options.
INFORMATION
ON THE ISSUER
Derivatives transactions mainly relate to interest-rate futures traded on over-the-counter markets.
RESOLUTIONS
19.1 Commitments on derivatives outstanding
Commitments on currency instruments traded on over-the-counter markets chiefly concern foreign currency swaps.
147
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Page 148
Interest-rate futures on over-the-counter markets can be broken down by portfolio type, as follows:
Specific
hedging
Macrohedging
Isolated
open position
Specialized
transactions
Total
Futures
Options
Bought
Sold
81,804
5,205
3,774
1,431
87,009
17,448
1,620
1,521
99
19,068
676
322
298
24
998
3,113,462
600,098
246,572
353,526
3,713,560
3,213,390
607,245
252,165
355,080
3,820,635
77,372
21,194
1,169
2,444,205
2,543,940
As regards transactions on organized markets, the market values of futures and options are €11 million and €328 million,
respectively.
For over-the-counter transactions, the market values of futures and options are €2,552 million and –€165 million, respectively.
19.2 Commitments on futures by residual maturity
Up to
1 year
From 1 to
5 years
Over
5 years
Total at
Dec. 31, 2005
315,530
468,752
81,268
32,726
5,767
933
402,565
502,411
1,872,237
189,403
705,507
289,065
650,482
183,507
3,228,226
661,975
Futures
Options
Futures
Options
19.3 Counterparty risk in respect of derivatives
Counterparty risks are measured as the probable loss that 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 CRBF;
■ the potential credit risk resulting from the application of “add-ons” defined by the rule cited above, computed on the nominal
value of the contracts according to their type and residual term.
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.
148
Other
contreparties
Total at
Dec. 31, 2005
8,688
(1,619)
(74)
64,591
(44,571)
(4,243)
5,902
(760)
(61)
79,181
(46,950)
(4,378)
6,995
15,777
5,081
27,853
0
3,155
2,541
5,696
Weighted equivalent credit risk,
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 counterparty risk is deemed to be non-existent as it is considered to be covered by the Group’s mutual guarantee and
solidarity mechanisms.
At December 31, 2005, the weighted equivalent credit risk set out in the above table represented 0.1% of the notional values
of these outstanding positions, against 0.2% at December 31, 2004.
20 INTEREST AND SIMILAR INCOME AND EXPENSE
Income
Customer items
Subordinated debt
Lease financing transactions
Other interest and similar income/expense
Total
FINANCIAL REPORT OF
before netting and collateral agreements
Effect of netting agreements
Effect of collateral agreements
Unweighted equivalent credit risk, after netting
and collateral agreements
OECD financial
institutions
and equivalent
RISK
MANAGEMENT
Governments and
OECD central banks
and equivalent
FINANCIAL REPORT
OF THE CNCE GROUP
Page 149
Expense
2005
2004
7,402
8,836
4,021
5,918
7,788
3,262
307
382
20,948
285
384
17,637
2005
(4,188)
(5,657)
(5,584)
(31)
(130)
(908)
(16,498)
2004
(2,761)
(4,922)
(5,043)
(20)
(110)
(949)
(13,805)
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 “Customer items”
for an amount of –€1,395 million in 2005;
■ 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 €715 million in 2005.
21 INCOME FROM EQUITIES AND VARIABLE-INCOME SECURITIES
2005
2004
Investments in unconsolidated subsidiaries and other long-term investments
Total
194
100
1
295
132
50
1
183
CHAIRMAN’S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
149
12/07/06
15:12
Page 150
22 NET COMMISSION AND FEE INCOME
Expense
(33)
(8)
(69)
(225)
Income
Customer items
Payment media processing
Sales of life-insurance products
Other commissions
Total 2005
(426)
(761)
6
896
1,993
473
675
563
4,606
Total 2004
(680)
3,675
2005
2004
1,024
(292)
690
1,422
1,056
(1)
277
1,332
23 NET GAINS/(LOSSES) ON TRADING TRANSACTIONS
Foreign exchange
Financial instruments
Total
24 NET GAINS/(LOSSES) ON HELD-FOR-SALE PORTFOLIO TRANSACTIONS
AND SIMILAR ITEMS
Net gains/(losses) on disposals
Total
Held-for-sale
securities
Portfolio equity
investments
(203)
33
(170)
6
(3)
3
Total
2005
Total
2004
(197)
30
(167)
261
156
417
25 OTHER OPERATING INCOME AND EXPENSE
150
Income
Expense
(46)
Net
Share in joint venture income and expense
Transfer of expense
Other income and expense
Total 2005
37
73
519
629
(402)
(448)
(9)
73
117
181
Total 2004
546
(510)
36
15:12
Page 151
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
26 GENERAL OPERATING EXPENSES
2005
Personnel costs
Wages and salaries
Pension and retirement costs
Other social security costs and payroll-based taxes
Profit-sharing and incentive schemes
External services and other administrative expense
Total
(4,481)
(2,832)
(346)
(1,130)
(173)
(181)
(2,453)
(7,115)
2004
(3,840)
(2,319)
(449)
(925)
(147)
(184)
(2,089)
(6,113)
The average number of active employees during the period, broken down by professional category, was as follows:
FINANCIAL REPORT OF
Managerial staff: 17,262
Customer
items
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 loans written off as irrecoverable
Total 2005
(625)
726
(221)
(40)
42
(118)
(148)
104
(39)
(4)
13
(74)
(773)
830
(260)
(44)
55
(192)
Total 2004
(202)
(44)
(246)
28 NET GAINS/(LOSSES) ON FIXED ASSETS
Tangible assets
Intangible assets
Restructuring operations – mergers/asset transfers
Investments in unconsolidated subsidiaries, affiliates accounted for by the equity method
Total
2005
2004
(42)
(13)
(1)
9
(13)
0
115
(22)
37
32
(48)
(20)
RESOLUTIONS
CHAIRMAN’S REPORT
27 NET ALLOCATIONS TO PROVISIONS
RISK
MANAGEMENT
Non-managerial staff: 37,029
29 EXCEPTIONAL ITEMS
Exceptional income and expense are non-recurring and do not fall within the scope of the Group’s usual business activities.
In first-half 2005, this mainly concerned the setting up of a provision of €149 million regarding the pension obligations of
the CGRCE. The purpose of this provision is to provide the institution with the regulatory capital funds to meet solvency margin
requirements by end-2008, in view of its decision to become an employee benefit fund (institution de prévoyance) pursuant
to the "Fillon" law.
INFORMATION
ON THE ISSUER
Gains and losses on investments in unconsolidated subsidiaries, affiliates accounted for by the equity method and other
long-term investments include an €88 million gain arising from the creation of CACEIS.
151
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Page 152
30 CORPORATE INCOME TAX
2005
2004
Current tax
Deferred tax
Tax credits and other taxes
Total
(307)
(61)
(22)
(390)
(456)
94
(176)
(538)
The difference between the theoretical tax rate and the effective tax rate can be analyzed as follows:
Theoretical tax rate
34.93%
Impact of decisions relating to the management of pension obligations
Permanent differences
Other impacts
Effective tax rate
–20.75%
4.17%
–1.69%
16.65%
31 INVESTMENTS BY INSURANCE COMPANIES
Net book value
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
Dec. 31, 2005
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2004
9
1,418
31
793
9
1,434
41
822
47
135
368
55
139
2,171
47
96
584
29
64
1,644
68
140
381
59
139
2,230
52
97
595
88
64
1,759
Other
movements
Dec. 31,
2005
0
9
0
0
9
410
926
8
140
1,484
(1) The net book value and realizable value of bonds and other fixed-income securities are estimated ex-coupon.
32 INSURANCE TECHNICAL PROVISIONS
Life insurance
Non-life insurance
Equalization reserves
Unit-linked policies
Total
152
Dec. 31,
2004
Allocations
325
708
8
65
1,106
85
273
19
75
452
Releases
0
(64)
(19)
0
(83)
Page 153
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
33 GROSS MARGIN ON INSURANCE BUSINESS
Net premium income
Underwriting and financial income
Net claims and provisions for claims payable
Expense net of technical provisions
Underwriting and financial expense
Underwriting income
Acquisition, administration and other claims
management expenses
Consolidation adjustments and elimination
of intra-group transactions
Life
135
34
(25)
(118)
(18)
8
8
Non-life
2005
2004
322
38
(149)
5
(127)
89
457
72
(174)
(113)
(145)
97
341
46
(129)
(73)
(92)
93
121
121
68
57
267
57
275
16
177
34 PRO FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT
34.1 Principles
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
The yield applied to liquid assets (€3.2 billion) generated from transfers of assets by CDC IXIS to the Caisse des Dépôts et
Consignations 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 into
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 operations
(€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:
■ indemnities paid to the CNCE;
■ charges relating to the early unwinding of certain hedging instruments within the scope of the restructuring of the IAM division;
■ general operating expenses incurred specifically for the purpose of carrying out the operations or specifically relating
to the agreements between the parties.
RESOLUTIONS
The following assumptions were used in drawing up the pro forma consolidated financial statements.
INFORMATION
ON THE ISSUER
34.2 Consolidation adjustments
CHAIRMAN’S REPORT
The pro forma consolidated profit and loss account of Groupe Caisse d’Epargne for the year ended December 31, 2004 was
prepared to enhance comparability and to reflect the Group’s income and expense as if the restructuring operations described
in note 4.2 had taken place at January 1, 2004.
153
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Page 154
34.3 Pro forma consolidated profit and loss account
2005
Pro forma
2004
Net losses on held-for-sale portfolio transactions and similar items
Net banking income
Operating income
Exceptional items
Allocations to the Reserve for General Banking Risks
Minority interests
20,948
(16,498)
295
3,845
1,422
(167)
181
275
10,301
(7,115)
(428)
2,758
(192)
2,566
261
37
2,864
(178)
(390)
(62)
(83)
(80)
2,071
19,069
(15,531)
201
3,328
2,476
(43)
54
188
9,742
(6,728)
(419)
2,595
(347)
2,248
243
(52)
2,439
(24)
(544)
(53)
(114)
(48)
1,656
35 SEGMENT INFORMATION
The methodology used to prepare segment information is set out in Groupe Caisse d’Epargne’s Management Report.
Commercial
banking
Pro forma
2004
Pro forma
2004
2005
Net banking income
6,960
7,191
2,324 2,695
(5,182) (5,372) (1,599) (1,877)
1,778
1,819
725
Cost/income ratio
74.5%
74.7%
68.8%
Exceptional items
Allocations to the Reserve
Minority interests
154
2005
Investment
banking
Holding
company
Pro forma
2004
Groupe
Caisse d’Epargne
2005
Pro forma
2004
2005
9,742 10,301
(7,147) (7,543)
Change
(€
millions)
%
559
(396)
6%
6%
458
(366)
415
(294)
818
92
121
2,595
2,758
163
6%
69.6%
ns
ns
73.4%
73.2% –0.2 pt
–
(172)
(106)
(52)
(17)
(123)
(69)
(347)
(192)
232
5
251
8
13
10
50
3
(70)
(13)
243
(52)
261
37
1,843
1,964
694
861
(98)
39
(24)
187
(53)
(178)
484
(62)
(24)
(544)
(53)
(178)
(390)
(62)
(154)
ns
154 –28%
(9) 17%
(114)
(48)
(83)
(80)
31 –27%
(32) 67%
(547)
(617)
(184)
(257)
(24)
(37)
(41)
(56)
(114)
17
(83)
13
2,439
2,864
155
–45%
18
7%
89 –171%
425
17%
1,272
1,310
469
548
(85)
213
1,656
2,071
415
25%
Earning capacity
1,272
1,310
469
548
29
296
1,770
2,154
384
22%
12/07/06
15:12
Page 155
FINANCIAL REPORT
OF THE CNCE GROUP
36 CONSOLIDATED CASH FLOW STATEMENT
Quantitative reference data
Data included in the consolidated cash flow statement have been taken from the consolidated financial statements presented
in note 35 to the 2004 consolidated financial statements of Groupe Caisse d’Epargne
Basis of preparation
The cash flow statement sets out the sources and uses of funds of Groupe Caisse d’Epargne, based on changes in the balances
of balance sheet items:
■ long-term sources of funds;
■ other sources of funds; and
■ uses of funds.
2005
Long-term sources of funds
Consolidated capital funds
Funds provided by operations:
Consolidated net income (Group share and minority interests)
Total funds provided by operations
Dividends paid
Net change in consolidated capital funds and reserves:
Group share
Minority interests
Increase/(decrease) in the Reserve for General Banking Risks
Increase/(decrease) in subordinated debt
Increase in long-term sources of funds
Pro forma
2004
2,151
525
(1,174)
(261)
1,241
1,704
474
(64)
(243)
1,871
(255)
(98)
(507)
21
83
732
1,315
(222)
(90)
74
2,384
3,919
Other sources:
Increase/(decrease) in interbank items
Increase/(decrease) in customer deposits
Increase/(decrease) in debt securities
Increase/(decrease) in other financial items
Increase/(decrease) in other sources of funds
10,329
4,313
8,883
14,262
37,787
23,492
11,268
14,784
3,454
52,998
Total increase/(decrease) in sources of funds
39,102
56,917
Uses of funds:
Increase/(decrease) in interbank items (assets)
Increase/(decrease) in customer loans and lease financing
Increase/(decrease) in insurance company securities and investments
Increase/(decrease) in long-term investments
Increase in tangible and intangible assets
Total increase/(decrease) in uses of funds
160
14,011
24,281
75
575
39,102
38,542
20,104
(2,099)
(426)
796
56,917
RESOLUTIONS
Consequently, the impact of these items is reflected in the change in other sources and uses of funds.
INFORMATION
ON THE ISSUER
Therefore, as depreciation and amortization expense is restated, the following items are not included:
■ write-downs of equalization payments;
■ write-downs of issuance expenses; and
■ expense transfers.
CHAIRMAN’S REPORT
RISK
MANAGEMENT
As regards sources of funds provided by operations, Group income has been restated to include:
■ net allocations to provisions;
■ depreciation and amortization of assets and goodwill; and
■ the share in income of affiliates accounted for by the equity method;
but excludes any other non-cash item included in net consolidated income.
FINANCIAL REPORT OF
In the absence of standards governing the presentation of cash flow statements by credit institutions reporting under French GAAP,
a consolidated cash flow statement has been prepared based on the principles set out below.
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STATUTORY AUDITORS’ REPORT ON
THE CONSOLIDATED FINANCIAL STATEMENTS
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely
for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifically required
by French law in all audit reports, whether qualified or not, and this is presented below 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, we have audited the accompanying
consolidated financial statements of Groupe Caisse d’Epargne for the year ended December 31, 2005.
The consolidated financial statements have been approved by the Management Board. Our role is to express an opinion
on these financial statements based on our audit.
1
OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the 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 note 4.1 to the consolidated financial statements,
which sets out the conditions for implementing, from January 1, 2005, the changes in accounting methods relating to the
application of:
156
■
CRC rule 2002-03 on accounting for credit risk, which requires provisions to be set aside to cover expected losses on
non-performing and doubtful loans based on their discounted recoverable amount;
■
CRC rule 2002-10 on depreciation, amortization and impairment of assets;
■
CRC rule 2004-06 on the definition, recognition and measurement of assets;
■
CNC recommendation 2003-R.01 on identifying, measuring and accounting for pension obligations and other employee benefits.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 157
2 JUSTIFICATION OF OUR ASSESSMENTS
In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the
justification of our assessments, we bring to your attention the following matters:
Changes in accounting methods
As part of our assessment of the accounting rules and principles applied by the Group, we ensured that the above-mentioned
changes in accounting methods and the presentation thereof in the notes were appropriate.
Accounting estimates
As indicated in note 3.4 of the notes to the consolidated financial statements relating to 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 calculation of the related specific and general provisions.
The Group records provisions for employee benefit commitments. We assessed the valuation methodology for these
commitments and the assumptions and parameters applied. We reviewed, where necessary, the external actuaries report and
we verified the appropriateness of the information disclosed in notes 3.7 and 15.3 to the consolidated financial statements.
As indicated in notes 3.8 and 19 of the notes to the consolidated financial statements relating to valuation rules, the Group
uses internal models to value positions on financial instruments which are not listed on organized markets. We examined
the control procedures put in place to validate the models used and define the parameters applied.
For the purposes of preparing consolidated financial statements, the Group also makes accounting estimates in order to
determine and record deferred tax assets (note 2.4), intangible assets (notes 2.6, 3.1, 12 and 16), insurance technical
reserves (notes 3.11 and 32) and investments in unconsolidated subsidiaries (note 3.2). We reviewed the assumptions used
and verified that these accounting estimates are based on documented methods that conform to the principles set forth in the
above-mentioned notes to the consolidated financial statements.
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.
FINANCIAL REPORT OF
15:12
RISK
MANAGEMENT
12/07/06
CHAIRMAN'S REPORT
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
RESOLUTIONS
3 SPECIFIC VERIFICATION
Mazars & Guérard
Charles de Boisriou
INFORMATION
ON THE ISSUER
Anik Chaumartin
Yves Nicolas
157
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RISK MANAGEMENT
Organization of risk management: overview of the main risk exposures . . . . . . . . . . . . . . . . . . . . . . . . . 160
Credit or counterparty risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Asset/Liability Management risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Market risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
CHAIRMAN'S REPORT
Ongoing controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
RESOLUTIONS
Other risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
INFORMATION
ON THE ISSUER
Settlement-delivery risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
RISK
MANAGEMENT
Intermediation risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
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RISK MANAGEMENT
1
ORGANIZATION OF RISK MANAGEMENT: OVERVIEW
OF THE MAIN RISK EXPOSURES
1.1 General financial risks
Groupe Caisse d’Epargne’s business involves the following main risks:
■ credit or counterparty risks,
■ liquidity, interest rate and currency risks, arising primarily from retail banking operations,
■ market risks,
■ operational risks,
■ legal risks,
■ compliance risks.
As the network’s central institution, the CNCE is responsible for establishing and maintaining consistent risk management
processes across the entire organization, by:
■ setting exposure limits for each Group entity and for all significant counterparties representing exposures in excess
of the entity-level limit. These limits are decided by a number of decision-making committees and are evidenced in writing,
■ monitoring entities’ compliance with these limits and tracking any overruns,
■ approving the methods used to rate and compute risks throughout the Group,
■ defining risk control, processing and monitoring structures and procedures to be applied by all entities, and overseeing their
implementation.
Most of these functions are performed by the Group Risk Management Department.
1.2 Role and responsibilities of Risk Management
Within Groupe Caisse d’Epargne’s finance and risk management division, the Group Risk Management Department is responsible
for defining coordinated risk policies, leading their implementation and overseeing their application within fixed limits.
The Group Risk Management Department reports to the CNCE Management Board in compliance with regulatory principles.
The department has set up a Risk Management function spanning all Group entities and based on a common organization
structure, as well as common risk analysis, tracking and control procedures.
The Risk Management Department’s responsibilities cover two main areas:
■ defining and implementing risk control, monitoring and management processes across the Risk Management function,
as defined in CRBF regulation 97-02 (as amended),
■ developing procedures to comply with the new Basel II requirements, as incorporated in the European directive and French
enabling legislation, and integrating them in the risk monitoring and management process.
1.3 Organization of the Risk Management function
The Risk Management function comprises the Group Risk Management Department and the Risk Management units of
the Group (Caisses d’Epargne and subsidiaries).
1.3.1 Group Risk Management Department
The Group Risk Management Department is responsible for monitoring and managing credit, market and operational risks,
as well as the Group’s overall interest rate and liquidity risk exposure. It is organized around the following units:
■ the Standards & Procedures unit distributes and maintains the body of Risk Management standards and procedures, checks
their compliance with regulatory requirements and their application by the entities;
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the Methods Development and Approval unit approves the models used by Group Risk Management to manage risks
associated with investment and commercial banking operations, develops specific methods and monitors new banking
industry modeling technologies;
■ the Commercial Banking Rating Systems unit develops and leads the implementation of Commercial Banking rating systems
and risk policies;
■ the Major Counterparties Credit Analysis unit analyses and rates major counterparties, including sovereign, bank, corporate and
asset-backed securities issuers, in line with the system of exposure limits and with the allocation of responsibilities with IXIS CIB;
■ the SME Credit Analysis unit analyses small- and medium-sized business counterparties in line with the system of exposure limits;
■ the Market Risks unit measures, monitors and controls market risks;
■ the Fund Risks unit measures, monitors and controls fund risks;
■ the Project Management unit manages development and acceptance processes for cross-functional projects with a systems
component;
■ the Risk Information Systems unit is responsible for structuring information system upgrades by incorporating risk
management needs;
■ the Credit Risk System Implementation and Maintenance unit develops, maintains and configures the Fermat credit risk
consolidation and control system;
■ the Credit Risk Control and Reporting unit leads the credit risk control process for the commercial and investment banking
businesses;
■ the Operational Risks unit is responsible for deploying operational risk measurement, monitoring and control processes,
as well as for monitoring and controlling operational risks on a consolidated basis.
■
The Risk Management Department ensures that assumed risks are compatible with the entities’ financial, human and
IT resources, as well as with the Group’s profitability and rating targets. It also recommends overall limits on credit, market
and other risk exposures, to be assigned to the individual entities and business lines, as well as the levels of authority to be
assigned to subsidiaries, in line with the Group’s risk policies.
Risks are managed, monitored and controlled by several committees reporting to Group Risk Management:
the Group Risk Committee, which meets at monthly intervals to set the overall framework for dealing with risk issues, as well
as for the development and upgrading of risk management processes;
■ the Group Credit committees (Major Counterparties and SMEs), which meet at least twice a month to review commitments
in excess of the entities’ exposure limits and to set maximum exposures;
■ the Group Watchlist & Provisions committees, which meet at quarterly intervals;
■ the Group Market Risks and Investment Funds committees, which meet on a monthly basis;
■ the Group Operational Risk Committee, which meets twice a year.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
The head of the Risk Management Department is a voting member of the Group ALM Committee, the Commercial Banking ALM
Committee and the CNCE Investment & Finance committees.
CHAIRMAN'S REPORT
■
The department is also responsible for consolidated credit, market and operational risk reporting to Groupe Caisse d’Epargne’s
corporate governance structures and the banking regulator.
Each entity’s Risk Management unit covers all risk exposures, including credit and counterparty risks, interest rate and currency
risks, and liquidity and settlement-delivery risks. The units perform ex-ante risk analyses based in the exposure limits assigned
to the entity, as well as ex-post analyses and controls. They lead the activities of their entity’s Risk Committee, Commitments
Committee, Financial Management Committee and Operational Risk Committee, and also participate in meetings of the entity’s
ALM Committee. They represent the Group Risk Management’s local contact and are responsible for rolling out to their entity
the national procedures and projects developed or initiated by the Group Risk Management Department.
1.4 Main developments in 2005
During 2005, the Risk Management function strengthened its risk management system, committees, tools and procedures
with the aim of having a fully compliant risk monitoring and management process by 2006. As of the 2005 year-end,
all entities had fully operational Risk Management units, led by managers approved by the Group Risk Management Director.
The function comprises over 600 risk professionals. A Group Risk Procedure Manual containing details of standards and
procedures covering all types of risk has been prepared and posted on the Group Intranet.
INFORMATION
ON THE ISSUER
The organization of risk monitoring and control processes at the Caisses d’Epargne and subsidiaries is based on guidelines
issued by the Group Risk Management Department.
RESOLUTIONS
1.3.2 Entity-level Risk Management units
The Risk Management Department has taken back responsibility for the Basel II project from the dedicated Basel II Project
Department, and has adapted its organization structure in preparation for French Banking Commission approval of the internal
rating system in 2006.
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Risk Management
The main achievements of the past year were as follows:
1.4.1 Standards and procedures
The Group Risk Procedure Manual posted on the Group Intranet describes:
■ the rules of procedure of the CNCE risks committee,
■ permanent risk control points and entity-level risk policy control points,
■ organizational and process standards.
The approval process for the Group’s risk management system was launched, led by a dedicated committee.
Ongoing monitoring of entity-level risk management processes was structured, including the development of a reporting
process to the Group Risk Committee.
1.4.2 Rating and Commercial Banking
Considerable progress was made during the year in documenting the Commercial Banking rating systems. In addition, their
architecture was streamlined and rating scales for SMEs, local authorities and associations were calibrated.
Monitoring and backtesting projects were launched to enhance data quality and standardize processes for the production of
schedules to monitor models and Probability of Default, Loss Given Default and Exposure At Default parameters.
Lastly, improved segmentation and rating tools were introduced and the 2006 Information Systems Plan was finalized.
1.4.3 Credit risk controls and reporting
Preparation of the 2006 Information Systems Plan included formal credit risk management needs analyses, covering in
particular Fermat Gem (exposure and exposure limits monitoring) and Fermat Cad (calculation of credit risk capital requirement
for Basel II purposes).
At the same time, existing databases and reporting systems, such as the National Major Counterparty Risk Database, the
Commercial Banking National Risk Indicators and the Major Risks Report, were enhanced and their reliability improved.
Lastly, the client databases, made up of the Group Client Database and the Group Risk Database, were brought on stream during
the year.
1.4.4 Credit risk management tools implementation and maintenance
Initial parameters were set for the Fermat Basel II module used to calculate the capital requirement to cover credit risks, as well
as for the Fermat Gem analyses used to track exposure limit overruns. Reports were also developed to monitor compliance
with exposure limits in the Investment Banking division.
A dedicated Major Counterparties architecture was set up for the transfer of data to Fermat. Acceptance processes for the
interfaces, reporting systems integration, monitoring reports and functional developments were organized and implemented.
Fermat Gem was put in pre-production in the Investment Banking Division at the end of the year.
The Group Risk Department participated in data traceability projects, produced risk maps and performed quality audits.
1.4.5 Major counterparty credit analyses
The Major Counterparties Credit committees have been operational since the beginning of 2005 and the Group Watchlist &
Provisions committees have been meeting at quarterly intervals.
The external ratings-based Major Counterparties rating system has been enhanced and the data entered in the National Risk
Database. A system of country risk exposure limits has been set up and the Group-wide country risk measurement methodology
has been developed, along with a dedicated reporting system. A formal Private Equity credit analysis methodology has also been
developed, and improvements have been made to the reporting system.
1.5 2006 Risk Management objectives
Continuing the work carried out in 2005, the Risk Management function has set two broad objectives for 2006:
■ complete the action plans launched in 2005 to develop a risk management and monitoring system that complies with French
Banking Commission guidelines,
■ finalize the implementation and documentation of the Group’s Basel II rating system, and obtain French Banking Commission
approval of the system.
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2 CREDIT OR COUNTERPARTY RISK MANAGEMENT
During the second half of 2005, Group Risk Management changed its organization structure (see 2.1) to bring the Basel II
program in-house and develop compliant credit risk measurement, management and monitoring systems (see 2.2 and 2.3),
particularly for SME credit risks (see 2.4).
2.1 Organization
The new credit risk management organization is designed to:
■ establish a consolidated risk measurement, management and monitoring structure that complies with French banking
regulations (CRBF 97-02 revised),
■ implement and document the Basel II rating system developed by the Group and obtain regulatory approval in 2006, with full
deployment scheduled for 2008.
These two major strategic projects have been broken down into sixteen sub-projects covering:
■ Commercial Banking: rating system, data quality, processing tools, management reports;
■ Investment Banking: external ratings-based rating system, processing tools, management reports;
■ standards and procedures, change management, regulatory watch and ongoing entity-level monitoring;
■ Fermat system to manage and calculate Basel II capital requirements and monitor limit overruns; the Group Third-Party
Database and other upstream reporting systems;
■ internal rating methodology development and validation.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
In 2005, Group Risk Management fine-tuned its rating systems for both Commercial Banking and Investment Banking
customers. In addition, the system of exposure limits for Major Counterparties, country risks and investment funds was
reviewed, and formal standards and procedures were issued in this area.
The department also continued to test the rating systems and to document the underlying methods, by conducting a QIS5
(Quantitative Impact Study) data collection exercise to assess the capital requirement under Basel II, in preparation for obtaining
regulatory approval of the systems in 2006.
2.3 Risk monitoring
Group Risk Management leads the committees and produces the management reports used to monitor credit risks on
a consolidated basis.
RESOLUTIONS
Group Risk Management organizes consolidated credit risk measurement and management processes by:
■ setting exposure limits for all significant counterparties representing exposures in excess of entity-level limits. These limits
are defined by a certain number of committees, such as the Group Major Counterparty Credit committees and Groupe SME
Credit committees, and are evidenced in writing;
■ developing and maintaining the Group’s rating systems;
■ validating rating methodologies;
■ defining standards and procedures to be applied by all entities.
CHAIRMAN'S REPORT
2.2 Credit risk measurement and management
The SME Credit Analysis unit reviews the ratings attributed to SMEs by the internal rating system and presents its own
comparative assessment of the credit risk to the Group SME Credit Committee in line with the allocations of authority described
in paragraph 2.4.4.
The Credit Risk Controls & Reporting Department is responsible for developing and enhancing credit risk control procedures,
as well as for producing risk monitoring reports submitted to the committees and the Management Board.
INFORMATION
ON THE ISSUER
The Major Counterparties Credit Analysis unit performs or oversees expert analyses of credit risks associated with sovereign,
bank, corporate and securitisation issuers for the entire Group. These analyses are presented and discussed during meetings
of the Major Counterparties Committee or the Risks Committee, as appropriate, providing a basis for the attribution of a rating
and Group-level exposure limit to each counterparty. These exposure limits are communicated to the entities and incorporated
in the system used to monitor exposures and exposure limits.
The Commercial Banking Rating Systems unit oversees the quality and reasonableness of qualitative and score-based ratings.
The Credit Risk Applications Development and Maintenance unit is tasked with developing and implementing the Fermat
exposure and exposure limits monitoring system, which is scheduled to be deployed in 2006.
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Risk Management
2.4 Dedicated SME risk management system
A dedicated system has been developed to manage risks associated with SMEs. It is organized around:
■ risk analysis and selection processes,
■ a system of exposure limits and thresholds for referral to the CNCE,
■ entity-level risk selection, acceptance and monitoring procedures,
■ a risk management structure at the level of the CNCE.
2.4.1 Risk analysis and selection system
This system, which is used by all entities, comprises:
■ a financial analysis tool (Anadefi) configured at Group level and used by all entities operating in the SME market,
■ programmed risk segmentation, applied consistently to all SMEs, which determines the choice of rating algorithms,
■ a common rating system, calibrated based on counterparty revenue, which is integrated in Anadefi and is managed by Group
Risk Management,
■ a system of delegations of authority defined at Group level, which takes into account Basel II ratings at entity and Group
levels,
■ a shared customer file in a standard format, ensuring the use of consistently high quality information for the analysis
and selection of SME risks; this file is also integrated in Anadefi,
■ as from 2006, a standard SME risk-pricing system integrated in the risk selection process.
2.4.2 SME exposure limits
Exposure limits for the SME market are determined as follows:
■ an overall limit is set for each category of SME, based on the companies’ Basel II rating and annual revenue;
■ internal exposure limits are set by each individual entity, taking into account the overall exposure limit by counterparty set
at Group level and the entity’s internal risk management policy.
2.4.3 Entity-level risk selection, acceptance and monitoring procedures
Each entity’s Risk Management Department is required to set up a control system to monitor compliance with established
exposure limits.
These departments’ responsibilities in the risk selection processes are as follows:
■ promote and oversee the effective use of risk rating systems to support the review of loan applications by account managers
and by the managers authorized to approve commitments; promote and oversee the effective use of the entity’s risk
analysis model,
■ ensure that internal rating systems are used consistently by account managers and by the managers authorized to approve
commitment,
■ organize or conduct the concurring review required before any decision is made to accept an SME risk,
■ issue a formal recommendation concerning commitments that exceed the discretionary commitment authority of managers
at lower levels in the entity’s organization.
Their responsibilities with regard to risk monitoring processes are to:
■ organize annual SME rating reviews,
■ document proposed credit risk exposure limits submitted to the entity’s Risk Committee and annual adjustments to these
limits,
■ produce reports analyzing exposures by market, level of risk, business segment and geographical region, together with risk
concentration reports, and monitor compliance with the corresponding limits,
■ check the quality and reliability of data reported in major risk monitoring reports, jointly with the Accounting Department,
■ set up a system to track, at least quarterly, non-performing or distressed loans, as well as very large or high risk loans,
update the necessary information and, where applicable, the risk rating,
■ review the ratings at least once a year, to assess the system’s reliability in predicting the entity’s observed default rates,
and report the results of the assessment to the entity’s Risk Committee and Group Risk Management.
2.4.4 Organization of SME risk management at the level of the CNCE
In July 2005, an SME Credit Analysis unit was set up to:
■ organize meetings of the Group SME Credit committees and Guarantee Fund Commitment committees, and to provide them
with secretarial support,
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perform concurring reviews of loan applications submitted to the Group SME Credit Committee (loans in excess of the entitylevel SME Credit committees’ discretionary lending authority),
■ perform concurring reviews of files submitted to the SME Guarantee Fund,
■ make proposals to the Group SME Credit Committee concerning exposure limits for SMEs with revenue in excess of
€100 million, for which the requested limits are in excess of defined levels,
■ present SME files to the Group Watchlist & Provisions committees,
■ check compliance with procedures related to SME exposures,
■ propose updates to the savings banks’ classifications, based on established quantitative and qualitative criteria,
■ monitor and produce reporting schedules for exposures covered by the Guarantee Fund, in cooperation with the other Group
Risk Management units.
■
2.5 Breakdown of commitments at December 31, 2005
2.5.1 Major counterparties
Banks and other financial institutions represent 35% of total loans and commitments to the Group entities that do business
with major counterparties, due to the high volume of off-balance sheet transactions with these counterparties. Corporates
represent 33% and asset-backed securities issuers 23%. Asset-backed securities are held primarily by IXIS CIB and Crédit
Foncier de France (table 1).
By region, France accounts for 40% of the total, compared with 43% for other European Economic Area countries and 9%
for North America (table 2). Among European Economic Area countries, Germany represents 9%, Italy and Spain 8% each
and the United Kingdom 7%.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Over 96% of the portfolio is rated investment grade, with over 30% rated AAA and AA+ (table 3).
Sovereigns
Banks and financial institutions
Corporates
Asset-backed securities issuers
Balance
sheet (1)
Market risks(2)
On- and off-balance sheet
Total
%
9,113
23,584
40,286
23,921
2,795
22,102
2,166
5,851
11,908
45,686
42,452
29,772
9%
35%
33%
23%
96,905
32,913
129,818
100%
Companies concerned: Groupe Caisse d’Epargne (29 individual Caisses d’Epargne)/IXIS CIB/CFF+Entenial+Cicobail/Palatine/CNCE Banque/OCÉOR/Muracef/Eulia Caution/Saccef/Eiard/Socfim/
La Compagnie 1818 (based on integrable, standardized files).
(1) Balance sheet: debt securities, loans, authorizations, equities.
(2) Exposure calculation method for off-balance sheet commitments:
– IXIS CIB: economic method,
– Other entities: fixed percentage method.
Analysis of loans and commitments by geographic area (table 2)
France
Other European Economic Area
North America (USA & Canada)
Other European countries
Central and South America (including Mexico)
Supranational
Asia (excluding Japan)
Pacific
Japan
Africa/Middle East
Other
Balance sheet
Off-balance sheet
Total
%
43,823
40,358
6,215
3,306
2,030
491
140
243
151
108
38
7,805
15,674
5,180
1,574
608
1,861
19
87
105
1
51,628
56,031
11,395
4,880
2,638
2,352
159
331
256
109
38
39.77%
43.16%
8.78%
3.76%
2.03%
1.81%
0.12%
0.25%
0.20%
0.08%
0.03%
96,905
32,913
129,818
100.00%
RESOLUTIONS
INFORMATION
ON THE ISSUER
Analysis of loans and commitments by type of counterparty (table 1)
CHAIRMAN'S REPORT
In the corporates segment, 16% of loans and commitments are to the real estate sector, 7% to insurance companies and 6%
to telecoms companies (table 4).
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Risk Management
Analysis of loans and commitments by rating (table 3)
Balance sheet
Off-balance sheet
Total
%
Cumulative rating
(%)
AAA
AA
A
BBB
BB
B
C/D
16,796
19,853
20,178
17,321
3,406
556
196
8,905
11,212
9,545
2,235
64
0
0
25,701
31,065
29,723
19,556
3,470
556
196
23.31
28.18
26.95
17.73
3.14
0.51
0.18
23.31
51.48
78.44
96.17
99.32
99.82
100.00
Sub-total
78,306
31,963
110,270
100.00
Other ratings (1)
18,598
950
19,548
Total
96,905
32,913
129,818
(1) Includes counterparties rated by the Basel II scoring systems or not rated.
Analysis of corporate loans and commitments by sector (table 4)
Sector
Real estate
Insurance
Telecoms
Utilities, other
Automotive/automotive equipment
Materials
Retail
B2B services
Consumer durables retailing
Pharmaceuticals
Utilities, electricity
Construction and public works
Agri-foodstuffs
Media (TV, cinema)
Capital goods
Aerospace, defense
Other
Leisure and entertainment
Chemicals
Rail freight, shipping and passenger transport
Oil refining
Infrastructure management
Airlines
Metalworking
Road freight
Other financial services
Utilities, gas
Exposures of between €100 and 300 million (14 sectors)
Exposures of less than €100 million (21 sectors)
Total Corporates
Total
%
6,906
3,194
2,776
2,511
2,378
1,753
1,714
1,511
1,446
1,443
1,356
1,346
1,294
893
885
856
853
848
827
808
797
679
659
584
453
417
355
2,281
630
16.27
7.52
6.54
5.91
5.60
4.13
4.04
3.56
3.41
3.40
3.20
3.17
3.05
2.10
2.08
2.02
2.01
2.00
1.95
1.90
1.88
1.60
1.55
1.38
1.07
0.98
0.84
5.37
1.48
42,452
100.00
2.5.2 Analysis of loans and provisions by segment
Non-performing loans represented a low 2.2% of total customer loans at December 31, 2005; moreover, the rate reflects
a 0.2-point improvement compared with 2004. Specific provisions represented 46% of non-performing loans at end-2005,
and further cover was provided by “dynamic” and industry-based provisions totaling €444 million. Provision expense for the
year represented 0.06% of outstanding loans at December 31, 2005, an improvement of 0.05 point.
166
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2004
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
2005
Net
loans
Performing
loans
Non-performing
loans
Provisions
Net
loans
Provision
rate
Retail banking
Specialized markets
Major accounts and other
102.2
49.6
40.5
111.0
53.3
39.8
2.5
1.6
0.4
(1.1)
(0.9)
(0.1)
112.4
54.0
40.1
43.7%
53.6%
26.6%
Customer loans *
192.3
204.0
4.5
(2.1)
206.5
45.8%
* Including lease financing.
3 ASSET/LIABILITY MANAGEMENT RISKS
FINANCIAL REPORT OF
3.1.1 Group-level organization
Since the end of 2004, Groupe Caisse d’Epargne has been a one-stop supplier of financial services, with operations in
commercial banking, corporate and investment banking and insurance. Each business line manages ALM (liquidity, interest
rate and currency) risks at various different levels.
RISK
MANAGEMENT
3.1 Liquidity, interest rate and currency risks
Its activities are overseen by the Group ALM Committee set up in May 2005. Chaired by the CNCE Management Board member
responsible for the finance and risks division, the committee comprises several other Management Board members,
the Finance Directors of the main subsidiaries and the officers of the Caisses d’Epargne. It meets at quarterly intervals.
Designing and implementing a structure to manage ALM risks on a consolidated basis is a very challenging task in an
organization the size of Groupe Caisse d’Epargne, and it has had a profound impact on ALM systems and processes throughout
the organization.
To monitor consolidated risks in compliance with the applicable regulations, the Group ALM unit uses ALM simulation
and consolidation software to process data transferred by the various Group entities.
CHAIRMAN'S REPORT
To reflect this change, in March 2005 the CNCE set up a Group ALM unit tasked with measuring and managing ALM risks on
a consolidated basis. This extends the work carried out previously – and pursued in 2005 – to monitor ALM risks at the level of
the Caisses d’Epargne and the Commercial Banking subsidiaries. The role of the Group ALM unit is to ensure regulatory
compliance, optimize Group-level ALM monitoring and management, and provide required information.
■
drafting and approval of the Group ALM Committee’s rules of procedure;
■
integration into the ALM system of:
■
Group accounting data,
■
management accounting data for the CFF sub-group, ICIB, Martignac Finance and Ecureuil-Vie, as well as aggregate Commercial
Banking division data,
■
documentation of target consolidated ALM technical and functional processes,
■
presentation of reporting system templates for approval by the Group ALM Committee.
RESOLUTIONS
The main tasks undertaken by the Group ALM unit in 2005 were as follows:
■
issue written Group-level ALM standards and exposure limits;
■
continue integrating Group entities in the consolidated ALM system;
■
eliminate intra-group transactions for the ALM system in order to generate consolidated ALM indicators.
INFORMATION
ON THE ISSUER
The unit’s objectives for 2006 are to:
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Risk Management
3.1.2 Commercial Banking division ALM organization
The Commercial Banking division – comprising the 30 Caisses d’Epargne and the commercial banking subsidiaries of the CNCE
or the Caisses d’Epargne (Banque Palatine, Caisse d’Epargne Financement, La Compagnie 1818 and Financière OCÉOR – has its
own ALM Committee. This committee is chaired by the CNCE Management Board member responsible for the finance and risks
division, and its members include the Finance Directors or Business Development Directors of the Caisses d’Epargne and
subsidiaries. It also meets at quarterly intervals to review Commercial Banking interest rate and liquidity exposures.
The main tasks undertaken by the Commercial Banking ALM unit in 2005 were as follows:
■
issue of a new charter describing the role and organization of the Commercial Banking supervision and control function;
■
development and analysis of worst-case scenarios;
■
integration of new subsidiaries and launch of an ALM information system upgrade.
3.2 Liquidity risk management
3.2.1 Group financing organization and liquidity risk management
Refinancing for Groupe Caisse d’Epargne is organized by division, with increased oversight and coordination by the CNCE
which, as the central institution, is responsible for the Group’s overall liquidity position. The CNCE is also the Group’s sole issuer
of subordinated and deeply subordinated notes, which serve to optimize regulatory capital.
■
Commercial Banking division: the lending activities of the Caisses d’Epargne are partially financed by the significant
customer deposits generated by the retail banking business. Their remaining financing needs, along with those of the
Commercial Banking subsidiaries, are met by the CNCE. As well as maintaining adequate liquid funds for the Group as a whole,
the CNCE has specific responsibility for meeting the liquidity needs of the Commercial Banking division and for raising
additional funds on the market to finance the development of the Caisses d’Epargne and Commercial Banking subsidiaries.
■
Crédit Foncier de France sub-group: short-term financing for the sub-group is raised by Crédit Foncier de France, while two
specialist issuers – Compagnie de Financement Foncier and Vauban Mobilisations Garanties (VMG) – are responsible
for medium- and long-term financing. These two entities’ AAA-rated covered bond issues represent an important new source
of financing for the Group as a whole. Compagnie de Financement Foncier also refinances a growing proportion of the Group’s
local authority loans through an internal securitization program representing some €2 billion in 2005.
■
Investment Banking division: IXIS Corporate & Investment Bank is responsible for refinancing its own capital markets
and corporate financing operations.
The Group’s overall liquidity position and the liquidity position of each individual entity are monitored at the level of the CNCE.
Annual financing plans are drawn up covering the entities’ long-term financing needs based on business projections.
Short-term financing is allocated to each entity based on the Group’s ability to raise short-term funds on the market.
The Group is sheltered from major liquidity risks by:
168
■
its strong presence in the savings market;
■
the quality and liquidity of its securities portfolios;
■
its diversified sources of financing;
■
the quality of its signature, allowing it to raise funds on the financial markets to meet its development needs in excess
of the refinancing provided by customer deposits.
Page 169
In 2005, the rating agencies affirmed the issuer ratings of the expanded Groupe Caisse d’Epargne and of the CNCE,
emphasizing the steady improvement in the Group’s financial performance reflected in its financial strength rating.
On June 24, 2005, FitchRatings announced its decision to raise Groupe Caisse d’Epargne’s individual rating from B/C to B.
The Group continued to boast the highest long-term ratings in the French banking industry (AA FitchRatings/Aa2 Moody’s/AA
Standard & Poor’s with a stable outlook in all three cases). This credit quality allowed the CNCE to raise €1 billion in January
2005 through a four-year floating rate bond issue that attracted considerable investor interest.
The CNCE continued to implement its balanced policy of raising the funds needed to support business growth at the lowest
possible cost, while at the same time diversifying its sources of financing in terms of instruments, investors and geographical
regions:
■
■
■
the partnership with the European Investment Bank (EIB) was further extended in the area of very long-term financing, with
€905 million worth of facilities signed during the year, up 6.5% over 2004. The total included €400 million for small- and
medium-sized local authority projects, €250 million obtained in February 2005 for the Sustainable Urban Transport Program,
€125 million for the second hospitals program (Hôpitaux de France 2), €100 million for the very-small-business and microenterprise sector and €30 million for the Grenoble tramway project (lines C and D);
more than €1 billion worth of 12-year notes issued by the CNCE were sold to retail banking customers, including
€910 million in subordinated notes. This was nevertheless 33% below the amount raised from this source in 2004, primarily
because low interest rates have made this type of investment less attractive;
the take-up rate of the Group’s short-dated notes among European, US and Asian institutional investors was high. Investors in
the United States were able to invest more heavily in CNCE short-term commercial paper (with average maturities of less than
three months) through the US Commercial Paper program, while the EMTN program continued to attract considerable investor
interest, with €4.3 billion placed with European and Asian institutions. This was roughly the same amount as in 2004,
excluding that year’s non-recurring issues to finance the New Foundations operation.
FINANCIAL REPORT
OF THE CNCE GROUP
15:12
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
June 30, 2005
CNCE
ICIB
CFF
CE
CEFi
OCÉOR
PALATINE
CIE 1818
(1) Minimum = 109; maximum = 236.
(2) Minimum = 107; maximum = 264.
161
292
121
181 (1)
119
133
164
349
September 30, 2005
140
303
111
176 (2)
117
113
137
238
RESOLUTIONS
Limit: 100%
INFORMATION
ON THE ISSUER
3.2.2.1 Liquidity ratio
CHAIRMAN'S REPORT
3.2.2 Liquidity position of the main Group entities
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Risk Management
3.2.2.2 Liquidity gap
Liquidity gaps (at June 30, 2005)
10,000
7,500
5,000
2,500
0
– 2,500
– 5,000
– 7,500
– 10,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
■ Caisses d’Epargne and Commercial Banking subsidiaries ■ IXIS CIB parent company (outstanding loans at period-end)
■ CFF group (outstanding loans at period-end)
Convention: positive gap = financing shortfall; negative gap = financing surplus.
The Caisses d’Epargne’s liquidity gaps are very reasonable in volume and limited in duration (twenty-four months), thanks
largely to the short-term financing provided by the CNCE. Beyond twenty-four months, their overall position is a financing
surplus.
The static liquidity gap of the Crédit Foncier de France sub-group (including Entenial) shows an overall financing surplus
across all maturities, ranging from €4.4 billion to €1.2 billion, except in mid-2010 when the sub-group has a financing shortfall.
As shown in the above table, IXIS CIB (excluding subsidiaries) has a financing surplus across all maturities, ranging from
€2 billion to €7 billion.
At Group level, liquidity gaps are satisfactory, with a financing surplus as from 2007.
3.3 Interest rate risk management
Interest rate risks arise from changes in interest rates affecting fixed or variable rate loans or borrowings. Interest rate
positions are measured in terms of gaps, taking into account both on- and off-balance sheet positions. Options are aggregated
with the underlyings based on their delta equivalent. Gap calculations serve to determine a position’s sensitivity to interest
rate changes.
As explained above, one of the Group’s priorities for 2006 is to formally document Group-level gap limits. In line with Groupe
Caisse d’Epargne’s decentralized organization structure, the savings banks and subsidiaries have set their own gap limits
which automatically restrict the Group’s overall interest rate risk.
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FINANCIAL REPORT
OF THE CNCE GROUP
Fixed rate gaps (at June 30, 2005)
10,000
FINANCIAL REPORT OF
7,500
5,000
2,500
0
—2,500
—7,500
—10,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
RISK
MANAGEMENT
—5,000
■ Caisses d’Epargne and Commercial Banking subsidiaries
■ CFF group (outstanding loans at period-end)
The Caisses d’Epargne are exposed to the risk of an increase in interest rates over a fairly short period of around twenty-four
months. Beyond twenty-four months, they are generally exposed to the risk of a fall in rates; however, the amounts of the
exposures are limited.
The static fixed rate gap of the Crédit Foncier de France sub-group (including Entenial) shows an overall fixed rate financing
shortfall until 2008, followed by a structural fixed rate financing surplus as from 2009. The gap is fairly small and fluctuates
across all maturities from a shortfall of €0.9 billion to a surplus of €1.3 billion.
IXIS CIB’s positions are managed directly by the business lines, based on VaR limits assigned to each business. Interest rate
risks are systematically hedged using micro-hedging techniques, with the result that IXIS CIB does not have a structural
interest rate position.
CHAIRMAN'S REPORT
Convention: positive gap = financing shortfall; negative gap = financing surplus.
3.4 Currency risk management
The Group’s foreign currency positions are very small, because substantially all foreign currency assets are match funded
in the same currency.
RESOLUTIONS
The Group’s fixed rate financing surplus as from 2007 exposes it to the risk of a fall in interest rates. In view of the amounts
involved, this position is limited.
4 MARKET RISKS
All Group entities are exposed to market risks and fund-related risks (Mutual funds and unregulated funds other than private
equity funds). Risks are analyzed at the level of the Investment and Commercial Banking divisions – comprising the Caisses
d’Epargne, the specialist subsidiaries (IXIS CIB, Crédit Foncier de France, Banque Palatine, Financière OCÉOR, GCE Garantie and
La Compagnie 1818) – and also at that of the CNCE.
INFORMATION
ON THE ISSUER
At Group level, the capital required to cover currency risks consistently represents less than €10 million, amounting
to €4.1 million at December 31, 2005 and €9.4 million at the 2004 year-end.
During 2005, the Market Risks Department continued to roll out Group-level market risk monitoring tools, starting with
the entities’ proprietary trading activities. The market risk exposure management process and the improvements made in this
area in 2005 are described below.
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Risk Management
Investing in regulated and unregulated funds accounts for a significant portion of the entities’ financial operations,
and the risks associated with these investments are not limited to market risks. As a result, they are included in the market
risk management process but are also subject to special treatment.
4.1 Commercial Banking
4.1.1 Structure of the Commercial Banking market risk management process
Upstream operations: providing a risk management framework for new products
In early 2005, the list of approved financial products and the procedure for approving new products came into effect in the
Commercial Banking division. The two procedures are designed to ensure that the use of financial products is covered by
appropriate operational safeguards, in compliance with the applicable regulations and Group risk management standards.
Some 80 structured products were analyzed in 2005, in response to requests received from all the Commercial Banking
entities.
Financial transaction monitoring and control: using standard market risk management tools throughout the Group
A process has been developed to analyze consolidated and entity-level exposures using standard indicators that are calculated
by the same methods throughout the Group. In the first half of the year, the daily VaR calculations performed by IXIS CIB were
rolled out to the entire Commercial Banking division. The project, which was launched in 2004, is based on Scénarisk software.
Based on the same principle of standardization, Investment Banking stress scenarios will be deployed across the Group. These
Group-wide risk measurement tools are backed by entity-level operational risk indicators.
Exposure management: setting exposure limits
The system of exposure limits reflects the segmentation of Commercial Banking financial operations between proprietary
trading on the one hand and ALM and the management of medium and long-term positions on the other. A Financial Charter
describing risk management and monitoring principles applied to these activities was approved at the end of 2005. An overall
VaR limit has been set for all proprietary trading activities, while gross operating income sensitivity limits and volume limits
have been set for ALM and the management of medium and long-term positions. These limits are determined at national level
and then allocated among the Group entities.
Compliance control: reporting
The reporting system is designed to track and control exposures to ensure that they comply with the operational principles
defined by the Group and are consistent with allocated exposure limits. It is organized around:
■
daily reporting of proprietary trading VaR by the Group entities. These reports are used to monitor changes in Commercial
Banking and Investment Banking (IXIS CIB) VaR compared with their respective exposure limits. The calculation is performed
for each entity and also on a consolidated basis excluding IXIS CIB, taking into account correlations between the entities’
portfolios;
■
weekly reporting of changes in VaR over one week, including detailed analyses and historical data;
■
detailed monthly reporting of investments in Mutual funds and other funds and the related VaR, by entity;
■
monthly reports submitted to the Management Board and also to the Market Risks committees and Fund Risks committees.
4.1.2 Commercial Banking procedures
As mentioned above, the list of authorized products and operational guidelines for the New Products & Financial Operations
Committee were approved, along with the criteria for authorizing purchases of fund units and the related fast-track procedure.
The first half of the year saw the first monthly meetings of the Market Risks Committees and Fund Risks committees, which
are responsible for overseeing financial transactions and validating exposure limits prior to their submission to the Group Risk
Committee.
172
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FINANCIAL REPORT
OF THE CNCE GROUP
15:12
4.1.3 Market risk measurement and exposure limits
Structure of the exposure limits system
The proposed structure of the exposure limits system, which was validated in July 2005, is based on the joint use of gross
operating income and VaR indicators in order to take into account the following two main types of market risk exposures:
■
the potential variability of cash flows and net interest margins,
■
the sensitivity of the fair value of the securities portfolio, the related hedges and isolated open positions.
Based on the definition of proprietary trading, consolidated 1-day VaR based on a 99% confidence level may not exceed
€7 million for the Caisses d’Epargne and €0.5 million for the banking subsidiaries excluding IXIS CIB. The limits are rolled down
to the eligible entities based on capital and earnings criteria. The allocation of exposure limits by entity was completed at the
end of July and will be reviewed each year. The new exposure limit for all Commercial Banking proprietary trading activities
replaces the previous VaR limit which applied to the trading portfolio and isolated open positions.
Since the limit came into effect at the end of July 2005, the Caisses d’Epargne’s average actual consolidated VaR has amounted
to €5.85 million, with a high of €6.66 million in August and a low of €5.39 million in November.
None of the banking subsidiaries (excluding IXIS CIB) have exceeded the 1-day VaR limit based on a 99% confidence level at any
time during the period.
Tools and methods
VaR calculations are performed on Scénarisk software, which was already being used by IXIS CIB. Starting in the first half of
2005, the positions of the Commercial Banking entities have been entered in Scénarisk. These data are used to perform daily
VaR calculations for proprietary trading activities, taking into account the effect of portfolio diversification across the Caisses
d’Epargne and specialist subsidiaries.
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
At December 31, 2005, the fund units held by the CNCE, the Caisses d’Epargne and subsidiaries represented over €8 billion,
spread across more than 500 funds.
Fund units by asset class
Asset class
€ millions
Hedge funds
Dynamic money market funds
Money market funds
Bond funds
Equity funds
Dedicated funds
Convertible bond funds
Diversified funds
Guaranteed funds
2,058
1,725
1,520
1,237
918
223
214
124
69
Total
8,087
RESOLUTIONS
Specific treatment of Mutual funds and unregulated funds
CHAIRMAN'S REPORT
Scénarisk was rolled out to the entities in the second half of the year and was supported by user training. The proprietary
trading teams can now check actual VaR in real time and simulate the VaR impact of transactions.
A specific methodology for the inclusion of these funds in overall VaR calculations was implemented in 2005.
In addition, an internally-developed method for analyzing requests for fund investments made by Group entities has been
applied since the first quarter of 2005.
Procedures & Fund Risks Committee
A procedure establishing the rules to be followed by Group entities for investments in funds was introduced in 2005.
The Fund Risks Committee set up in June 2005 meets at monthly intervals.
INFORMATION
ON THE ISSUER
Since the end of December 2005, these requests are managed via a dedicated intranet site (ABIS).
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Risk Management
Specific exposure limits and controls
Specific exposure limits have been set for investments in Mutual funds and unregulated funds (other than private equity
funds), covering the combination of market and operational risks incurred when the Group delegates responsibility for
managing part of its assets to fund managers. Management companies must be approved by the Fund Risks committees and
comply with exposure limits applicable to the assets managed on the Group’s behalf. These exposure limits are reviewed each
year by the Fund Risks Committee based on analyses produced by IXIS CIB’s credit analysts.
The above procedure also includes exposure limits covering liquidity, country and current risks.
In 2005, monthly controls over movements on the Group’s portfolios were implemented.
Specific reporting systems
A system has been set up for the detailed monthly reporting of investments in Mutual funds and unregulated funds, together
with the related VaR, to the management of each entity and to the Fund Risks Committee. The reports include:
■
an analysis of investments by asset class;
■
the list of funds and the 1-day VaR with a 99% confidence level for each fund;
■
the list of approved fund managers and details of their actual and maximum VaR;
■
details of significant movements and the largest asset classes;
Specific monthly reports are also sent to IXIS AM.
4.2 Investment Banking
The IXIS Corporate & Investment Bank Market Risks Department defines the principles to be applied to measure market risks,
independently from the operating units and in line with Group standards. It also sets the corresponding exposure limits and
monitors actual exposures in relation to these limits. The department reports directly to the Risk Director.
Changes in market indicators, such as interest and exchange rates, share prices and issuer spreads, and the implicit volatility
of each of these indicators (and, potentially, any other market indicator) may have a direct positive or negative impact on the
value of outstanding transactions recorded in the Bank’s accounts. The potential loss generated by these changes constitutes
the market risk incurred by IXIS Corporate & Investment Bank and also by all of the Group’s capital markets units, including
those in New York, Tokyo, Frankfurt, Milan and London.
Management of market risks is based on a sophisticated measurement system, detailed procedures and close monitoring.
The entire system is overseen by the Market Risk Committee chaired by the Chairman of the Management Board. The Committee
is responsible for:
■
examining risk exposures;
■
defining exposure limits and assigning responsibility for authorizing exposures;
■
validating measurement methods and monitoring procedures;
■
overseeing compliance with market risk procedures.
The Market Risk Committee meets at monthly intervals.
Market risk assessment
Market risks are assessed by three methods:
■
174
synthetic Value at Risk (VaR) calculations that determine potential losses from each activity at a given confidence level
(for example 99%) and a given holding period (for example 1 day). The calculation is performed and monitored daily for all of
the Group’s trading activities.
12/07/06
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For calculation purposes, the joint behavior of market parameters that determine portfolio values is modeled using statistical
data covering 365 calendar days. Around 1,980 market risk factors are currently modeled and used by the Scénarisk software.
FINANCIAL REPORT
OF THE CNCE GROUP
■
stress-testing, which consists of measuring potential losses on portfolios based on extreme market configurations. These
configurations are developed from scenarios based on historical data (economic scenarios) and hypothetical scenarios
which are specific to each portfolio. The scenarios were recalibrated in 2005;
■
analyses of operating indicators that set limits for all capital markets activities and/or for groups of comparable activities,
based on directly observable figures such as nominal amounts, sensitivities, stop-loss limits, diversification indicators and
market share indicators. The exposure limits determined from these operational indicators are applied alongside the VaR and
stress test limits. All three limits are determined on a consistent basis, particularly when they correspond to front office
exposures. This is the case in particular for stop-loss limits, which trigger warnings about loss-making strategies and are set
for each individual trader. Stop-loss limits are constantly monitored and if any overrun is detected, management is required
to make a decision as to whether to close, hedge or maintain the position.
FINANCIAL REPORT OF
Since the end of November 2004, IXIS Corporate & Investment Bank has been calculating VaR based on digital simulations, using
a Monte Carlo methodology which takes into account possible non-linear portfolio returns based on the different risk factors:
Ex-post controls consist of comparing these risk assessments with the corresponding exposure limits, which must be
complied with at all times. The exposure limits are set annually by the Management Board and may be revised during the year
on request. The VaR limits represent the economic capital allocated to the activity and are defined based on observed or
expected yield/risk pairings. Economic capital allocations are determined based on 10-day VAR with a 99% confidence level and
a variance ratio of 2.71 (corresponding to 20 standard deviations).
RISK
MANAGEMENT
Ex-post controls
In line with French banking regulations (CRBF regulation 95-02), IXIS Corporate & Investment Bank is required to report its
overall risk coverage ratio to the French Banking Commission. Since 1997, it has been authorized to use its Scénarisk internal
risk monitoring model to track general interest rate, equity and currency risks and specific equity risks.
Other responsibilities
The Market Risks Department is also responsible for:
■
second-level validation of results produced by the Results unit;
■
validating pricing models;
■
determining provision policies and deductions for liquidity risks, statistical risks, model risks, parameters that cannot be
covered by the system and other items.
CHAIRMAN'S REPORT
The controls are evidenced in daily and weekly management reports examined by the Management Board and the Executive
Committee. In addition, reports are submitted to the Chairman of the Management Board on a weekly basis and to the Market
Risk Committee on a monthly basis analyzing actual market risks and changes since the last report.
In 2005, the 1-day VaR at a 99% confidence level for IXIS Corporate & Investment Bank’s trading portfolios averaged
€13.9 million, with a high of €22.2 million. This was below the average limit of €20 million and the absolute limit
of €25 million set by the Group.
The robustness of the VaR indicator is regularly assessed by comparing the potential daily loss represented by the VaR with
actual daily losses (ex-ante/ex-post comparisons).
RESOLUTIONS
Quantitative market risk information
At December 31, 2005, the 1-day VaR at a 99% confidence level by risk category was as follows (in millions of euros):
Interest rate risk
Equity risk
Specific equity risk
Specific interest rate risk
Currency risk
Effect of netting
Consolidated VaR
December 31, 2005
5.4
6.0
2.7
8.3
0.3
(11.2)
11.5
2005 average
8.2
5.2
2.9
8.2
0.4
(11.0)
13.9
INFORMATION
ON THE ISSUER
1-day VaR, 99% confidence level (in millions of euros)
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Risk Management
The results of the stress tests performed on positions at December 31, 2005 were as follows (earnings impact, in absolute
value):
Change in interest rates:
€77.1 million
(EUR +40 bps, GBP +80 bps, USD +60 bps, other currencies +60 bps)
Change in rate volatility:
(homothety +50%)
€36.6 million
Change in paper/swap spreads:
(+35 bps on paper rated AA and above; + 90 bps for other paper)
€410.4 million
Change in stock indices and stock index volatility:
€284.8 million
(25% decline in indices, homothety +20% short-term and +10% long-term)
Credit derivatives
The credit derivatives portfolio at December 31, 2005 represented a total notional amount of €118.7 billion. It comprises credit
default swaps, credit-linked notes and credit-linked loans. The total breaks down as a €54.2 billion credit risk call position and
a €64.5 billion put position.
These instruments give rise to a market risk – corresponding to the spread risk on the underlying – which is taken into account
in routine VaR calculations.
Issuer credit risk (default risk) is measured using AMeRisC, an internally-developed credit risk measurement system which
nets positions on credit derivatives and on securities with similar characteristics, in terms of the intended and actual holding
period, maturity, and other parameters, where appropriate.
AMeRisC also measures credit derivative counterparty risk (off-balance sheet risk).
Specific deductions are made from credit derivative positions to adjust the effects of uncertainties concerning the level
of certain parameters which are not liquid or cannot easily be covered, particularly recovery rates. The standard deductions
for counterparty risk are also applied (deductions for the expected loss determined based on statistical risk data).
The notional amounts of credit derivatives at December 31, 2005 (excluding intra-group transactions) were as follows:
Position/type of regulatory portfolio
Banking book
Trading book
Total
Credit risk calls
– up to 1 year
– 1 to 5 years
– more than 5 years
231
21
211
0
53,932
3,889
40,603
9,441
54,164
3,909
40,814
9,441
Credit risk puts
– up to 1 year
– 1 to 5 years
1,081
112
146
824
63,458
4,734
42,116
16,608
64,539
4,846
42,261
17,432
Overall position
– up to 1 year
– 1 to 5 years
1,313
132
357
824
117,391
8,623
82,719
26,049
118,703
8,755
83,075
26,873
5 INTERMEDIATION RISK
IXIS CIB systematically acts as counterparty on over-the-counter markets. It does not carry out any intermediation
transactions on regulated markets.
As a result, intermediation risks are taken into account in the measurement of market, credit and operational risks.
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6 SETTLEMENT-DELIVERY RISK
Since the beginning of 2005, IXIS CIB’s cash settlements are processed by the CNCE via its platform linked to the ABE, PNS
and TBF/TARGET settlement systems (euro payments) and the correspondent networks (payments in other currencies).
■
Delivery of securities
Since the beginning of 2005, securities are delivered by IXIS Investor Services.
At the end of last year, the Credit Risks Department set up a settlement-delivery risk measurement process. The risk system
upgrade required to implement the new process was conducted as part of the Fermat project.
The limits architecture will be implemented once the generic framework has been finalized and approved.
Two significant developments took place in 2005:
■
the Group joined the CLS clearing and settlement system for cross-border foreign exchange transactions which came on
stream in April 2005;
■
to improve payments security, collection and administration of information systems security data were centralized at the level
of a cross-functional back-office.
7 OTHER RISKS
FINANCIAL REPORT OF
Cash settlements
RISK
MANAGEMENT
■
FINANCIAL REPORT
OF THE CNCE GROUP
equip entities with operational risk management and monitoring systems and/or strengthen their existing systems,
■
optimize the allocation of economic capital,
■
comply with Basel II as of 2006-2007.
In the first half of 2005, the operational risk mapping exercise conducted by Group banks and business lines was completed.
Performed using the internally-developed CartRisk software, the exercise served to identify potential financial losses and
reputation risks associated with certain possible risk events, and assess the effectiveness of existing risk management
processes. For all material risks, each bank or business line was required to draw up initial action plans to strengthen these
processes, backed by an implementation time-line. The detailed analysis of potential Group-level risks initiated in 2005 will be
pursued in 2006.
The initial assessment of existing processes was launched in June 2004, using an internal questionnaire based on the
template issued by the French Banking Commission to banks operating in France, which has subsequently been expanded.
The exercise was repeated in June 2005 (and at the end of 2004 in the Investment Banking division) and will be carried out
twice a year by all Group entities starting at December 31, 2005, using ORiS software.
ORiS is an internally-developed operational risk management and monitoring system. It was deployed at the end of the first
half of 2005 and was supported by user training for the roughly 80 operational risk managers in the Group. A rollout plan was
drawn up in connection with the launch. After defining and validating deployment plans for each bank or business line,
a second round of training sessions was organized for the operational risk correspondents in the various departments.
There are between 10 and 250 correspondents at each unit, depending on the size of the business, representing a total of
4,200 people. Rolling down the process to operations staff is designed to ensure that incidents are identified without delay and
immediate action is taken to limit their impact, as well as avoiding incidents being repeated.
Deployment of ORiS continued in the second half of the year. At the same time, the Caisses d’Epargne defined risk indicators –
based on a standard set of around twenty predictive indicators – that will be monitored as from 2006, while the IXIS
subsidiaries consolidated the processes in use since 2003.
RESOLUTIONS
■
INFORMATION
ON THE ISSUER
Following on from the initial work undertaken in 2003 and 2004, last year a Group-wide project was launched to:
CHAIRMAN'S REPORT
7.1 Operational risks
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Risk Management
The second half of 2005 was also devoted to strengthening the overall management process, with:
■
the creation of the Group Operational Risks Committee, which held its first meeting during the period,
■
the validation and distribution of “Operational Risk Management Governance Guidelines” (operational risk policy), describing:
■
■
each individual’s roles and responsibilities at national level and at the level of each bank or business line,
■
the operating principles and rules applicable to the various pillars of the Group’s operational risk management process;
the validation of a quarterly operational risk management reporting system, implemented by each bank or business line as
from December 31, 2005. The purpose of these reports is to provide the management of the entities and Group management
with a consolidated overview of operational risks.
The second half also saw increased activity by the Operational Risk Management function. The first full meeting of operational
risk managers, held in September, led to the creation of working groups to examine such matters as the rolldown of the Group’s
operational risk policy to the individual entities or the Group’s insurance policy.
7.2 Legal risks
The CNCE’s Legal Department reports to the Corporate Secretary, whose role consists of managing the corporate departments
responsible for legal affairs, human resources management, budgets, CNCE efficiency improvements, real estate and general
services, as well as the various support functions.
The Legal Department, which comprises four units, assisted and advised the CNCE corporate departments on all matters
related to banking and financial law, contract law (investor relations, purchasing, real estate and other departments), company
law and intellectual property law (with over 50 registered trademarks). It also provided secretarial support to the CNCE’s
management bodies.
The department also participated in discussions of matters affecting the French banking industry and defended the Group’s
interests in Brussels, particularly with regard to the Single European Payments Area (SEPA) project.
In addition, it partnered and advised the Group on its development and partnership projects, including with regard
to competition issues.
The main CNCE subsidiaries also have their own Legal Department. The IXIS CIB Legal Department is responsible for upstream
legal validation and documentation of operations and transactions for the trading rooms and the Bank’s operating units.
This responsibility extends to the London, Tokyo, Milan and Frankfurt branches and the subsidiaries that do not have their own
legal teams. When necessary, the Legal Department uses the services of external legal advisors.
The department helps to meet the legal needs of the back offices and other support functions, alongside the human resources
department (for labor law issues) and the company law unit. It is responsible for ensuring that transactions are legally watertight and determining any legal consequences for IXIS CIB. It participates in the various internal committees (New Products
Committees, Credit Committees for financing transactions, Framework Agreement & Collateralization Committees) to assess
legal risks associated with the matters submitted for their review.
It sets up templates and internal procedures and also monitors legal developments.
The department maintains and enhances the legal skills base, by arranging for its employees to participate in training
seminars on new laws and in working groups set up by banking industry associations. 2005 was an eventful year, with the
implementation of the Prospectus Directive which has led to far-reaching changes in procedures and disclosure requirements
for offers and listings in the European Union.
Lastly, the department submits periodic reports on legal risks to the IXIS CIB Accounts and Internal Control Committee.
Exceptional events, claims and litigation
Other than as described in the notes to the consolidated financial statements, there are currently no exceptional events
or claims or litigation that could have a material adverse effect on Groupe Caisse d’Epargne’s business, results of operations
or financial position.
178
7.3 Insurance and risk coverage
In 2005, IXIS Corporate & Investment Bank used its global insurance program to cover all insurable risks with leading insurers.
The program was adjusted to take into account the transfer of certain policies covering the businesses contributed at the end
of 2004 by CDC IXIS.
All of the cover purchased on the market was renewed during the year.
After analyzing risks and related preventive measures, insurance was taken out covering significant losses arising from fraud,
embezzlement, property damage and corporate and employee liability risks.
The insured risks are as follows:
■
damage to real estate and contents, including computer hardware and telephone equipment, which are insured for their
replacement cost;
■
liability and fraud risks, which are covered based on the best offers available in the market. The policies cover losses from
fraud and professional liability claims resulting from third party losses due to misconduct by a Group employee;
■
business interruption, covering the financial losses resulting from the loss of or damage to equipment.
Other liability risks such as operating risks (personal injury, property damage or third party consequential losses),
management liability (pecuniary losses arising from civil, personal or several liability claims against members of management,
due to personal misconduct) and auto insurance risks are also adequately covered.
During 2005, IXIS CIB conducted a full audit of its insurance policy with the assistance of brokers.
The aims of the audit were to:
■
explore the new opportunities available in the insurance market to secure improved levels of cover;
■
align coverage among the IXIS CIB entities by setting up a worldwide insurance program.
The results of the audit were reviewed by the Bank’s Management Board and were used to draw up a new insurance policy that
came into effect on January 1, 2006.
8 ONGOING CONTROLS
At the end of 2004, the CNCE combined within a new Ongoing Controls unit:
■
the Group Ethics & Compliance unit;
■
the Economic Security & Anti-Money Laundering unit.
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CHAIRMAN'S REPORT
■
audit, compliance and risk management functions should be segregated;
■
a full-time manager should be appointed for each of these functions;
■
the Compliance Officer should report to the Chairman of the Management Board or the Chief Executive Officer;
■
an Ongoing Controls unit should be set up, combining the compliance, ethics, economic security and anti-money laundering
functions.
RESOLUTIONS
The initial aim of this unit was to promote the creation of compliance functions in all Group entities, based on the following
guidelines:
■
in drawing up standards for the Group and for the individual business lines, as well as;
■
for deploying a second-tier audit process based on risk maps and the identification of control points, supported by a new
procedure manual.
INFORMATION
ON THE ISSUER
The new unit is also involved:
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Risk Management
8.1 Ethics and compliance
A Group Compliance function has been created, to comply with the March 31, 2005 amendment to CRBF regulation 97-02 and
the April 2005 recommendation of the Basel Committee. The unit’s responsibilities include controls over investment services
and internal control over asset management companies, in line with the new requirements of the French securities regulator,
AMF, which did not become compulsory until March 9, 2006. The function’s organization and responsibilities are described
in a Group standard issued on December 2, 2004 following its approval by the CNCE Management Board. This standard was
also adopted in advance of the related regulatory requirement, contained in the March 13, 2006 decree on internal control
in insurance companies.
Under this standard:
■
all new products and services must be reviewed by the Compliance unit as part of the approval process;
■
each Group entity must appoint a Compliance Officer approved by the CNCE, who must be given adequate resources for the job;
■
the Compliance Officers and the CNCE Compliance Director must issue quarterly reports to the Management Board or Chief
Executive Officer of their unit or of the CNCE, as applicable;
■
all Group employees must have on-line access to operational compliance and compliance control procedures based on
risk maps.
8.2 Anti-money laundering processes
Groupe Caisse d’Epargne is committed to fighting against money laundering and the financing of terrorism. Branch employees
and managers at all levels in the organization have received training and attended workshops to learn the reflexes required
to convert the abstract standards contained in banking regulations into effective practices.
In 2005, the number of suspicious transactions reported by Group entities to Tracfin increased by 25% to around 1,400,
attesting to the effectiveness of the Group’s anti-money laundering processes. This is attributable to the efforts of well-trained
employees who successfully combine high-level knowledge of banking products and services and a commitment to customer
service with a keen awareness of the need to protect the Group’s reputation and the integrity of the banking system as a whole.
The anti-money laundering function comprises around one hundred employees, including some seventy people at the Caisses
d’Epargne.
With the introduction of a system to filter international fund transfers, the Group already has the assurance that incoming and
outgoing payments are screened and that no known terrorists can use the network for money laundering purposes. These fund
flows are constantly monitored in real time by anti-money laundering officers working jointly with the CNCE. New client
relationships are also monitored, attesting to the Group’s unflagging commitment to preventing its network being used for
money laundering and the financing of terrorism. The procedures implemented by the Group ensure that all account managers
play an active role in making the network secure.
A standard monitoring and warning system covering client transactions and fund flows is currently being developed.
With the new system, the Group will achieve standards of excellence in this area by the end of 2006.
The Group’s shared structures provide an excellent basis for the necessary pooling of information on these sensitive issues.
The CNCE Economic Security & Anti-Money Laundering Department has drawn up procedures giving it real time access
to information and establishing joint decision-making processes to deal with the most serious cases. These rules were
strengthened and formalized in 2005.
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CHAIRMAN’S REPORT
on the work of the Supervisory Board and on internal control procedures
CHAIRMAN’S REPORT
Conditions governing the preparation and organization of the work of the Supervisory Board . . . . . . 182
Internal control procedures adopted by the CNCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
FINANCIAL REPORT
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FINANCIAL REPORT OF
Statutory Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED AGREEMENTS
RISK
MANAGEMENT
Internal control procedures relating to the preparation and processing
of accounting and financial information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
RESOLUTIONS
INFORMATION
ON THE ISSUER
Agreements approved in prior years which remained in force during the year . . . . . . . . . . . . . . . . . . . . . 201
CHAIRMAN'S REPORT
Agreements approved during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
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Chairman’s report
To the Shareholders,
As required under article L. 225-68 of the French Commercial Code (Code de commerce), I hereby present my report on:
■
the conditions governing the preparation and organization of the work of the Supervisory Board during the year ended
December 31, 2005 (section 1);
■
internal control procedures adopted by the Caisse Nationale des Caisses d’Epargne (section 2);
■
internal control procedures relating to the preparation and processing of accounting and financial information (section 3).
The Auditors will issue a specific report, appended to their report on the financial statements, containing their observations on
internal control procedures relating to the preparation and processing of accounting and financial information, as required
under article L. 225-235 of the French Commercial Code.
1
CONDITIONS GOVERNING THE PREPARATION AND ORGANIZATION
OF THE WORK OF THE SUPERVISORY BOARD
A – Composition of the Supervisory Board
The tenure of the members of the CNCE’s Supervisory Board began on January 1, 2004 for a period of six years. As required by
article L. 512-94 of the Code monétaire et financier (French Monetary and Financial Code) and by article 23 of the Company’s
bylaws, the Supervisory Board of the CNCE consists of 20 members, comprising 12 representatives of Groupe Caisse
d’Epargne, six representatives of the Caisse des Dépôts Group and two representatives of the employees of the Caisses
d’Epargne network.
A total of four censeurs (non-voting members), including three from outside the Group, also sit on the Supervisory Board.
Detailed information about the members of the Supervisory Board is provided in a table appended to this report.
A representative of the French government and four representatives of the Worker’s Committee (one of which was appointed
in 2005) also attend meetings of the Supervisory Board.
B – Role and functioning of the Supervisory Board
a) Responsibilities and powers
In accordance with French legal provisions concerning sociétés anonymes (joint-stock corporations) governed by a
Management Board and a Supervisory Board, and with article 30 of the CNCE bylaws, the Supervisory Board oversees the
management activities of the Management Board on an ongoing basis. It carries out checks and controls as it sees fit,
and may call for any documents it judges necessary for the fulfillment of its responsibilities.
It proposes the appointment of the Statutory Auditors to the Shareholders’ Meeting, in accordance with article L. 225-228
of the French Commercial Code.
The Supervisory Board appoints the members of the Management Board and has the power to recommend their removal from
office; it sets their remuneration, appoints the Chairman of the Management Board and has the power to remove him from
office. The Supervisory Board receives a quarterly report from the Management Board on the Company’s business. It is also
responsible for checking and reviewing the parent company and consolidated annual and interim financial statements, which
the Management Board prepares and submits to the Supervisory Board, along with a written report on the situation and
business activities of the Company and its subsidiaries during that reporting period. The Supervisory Board then presents its
observations on the Management Board’s report and on the financial statements to the Ordinary Shareholders’ Meeting. Other
powers of the Supervisory Board include the power to transfer the registered office within the same département
(administrative district) or a neighboring département, subject to ratification by the next Ordinary Shareholders’ Meeting.
The Supervisory Board also has the power to decide, based on proposals put forward by the Management Board, on a number
of issues specified in the CNCE’s bylaws. The scope of these powers was extended at the Combined Shareholders’ Meeting
of June 30, 2004.
182
These issues are as follows:
■
approving the Company’s strategic plan and revisions thereof, and the strategic objectives of the individual Caisses
d’Epargne and major subsidiaries;
■
approving any investment, divestment, asset-for-share exchange, merger, demerger, joint venture or alliance carried out by
the Company and/or its subsidiaries of a total amount in excess of €250 million, or of a total amount of between €100 million
and €250 million if the main features of the transaction are not provided for in the annual budget or strategic plan;
■
authorizing any decision relating to the admission to listing on a stock exchange of the shares of the Company or the shares
of major subsidiaries (IXIS Corporate & Investment Bank, IXIS Asset Management Group and IXIS Investor Services, or any
other CNCE subsidiary that may be substituted for them in full or in part or which has control over them as defined in article
L. 233-3 of the French Commercial Code and has a determining influence over their strategy and governance);
■
drawing up and approving the annual budget (both parent company and consolidated);
■
reviewing the consolidated financial statements of Groupe Caisse d’Epargne;
■
deciding whether to establish a mutual guarantee and solidarity fund (fonds commun de garantie et de solidarité),
and drawing up general rules for the operation thereof;
■
appointing and dismissing the Director of the Internal Audit Department;
■
deciding to set up or discontinue a Caisse d’Epargne et de Prévoyance and approving restrictions on the activities of a Caisse
d’Epargne et de Prévoyance or of an affiliated entity;
■
approving or withdrawing approval of members of the Management Boards of the Caisses d’Epargne et de Prévoyance
and of executive directors of affiliated entities;
■
collectively dismissing all members of the Steering and Supervisory Board of a Caisse d’Epargne et de Prévoyance and
appointing a provisional committee pending the appointment of a new Steering and Supervisory Board;
■
formulating an injunction with regard to the Steering and Supervisory Board of a Caisse d’Epargne et de Prévoyance or to the
management body of a network entity, affiliated entity, or any other entity falling within the scope of the regulations
governing Groupe Caisse d’Epargne;
■
dismissing all the members of the Management Board of a Caisse d’Epargne et de Prévoyance;
■
authorizing any proposal relating to the issuance of financial instruments (bonds, other debt securities and composite
securities) by the Company (directly or via a subsidiary) other than those approved in the budget or issuance program
of the Company or its subsidiaries.
b) Functioning of the Supervisory Board
Under article 28 of the bylaws, Supervisory Board meetings are called by the Chairman. They are held as often as the interests
of the Company require, and at least four times a year to hear the report of the Management Board.
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The CNCE Supervisory Board met nine times between January 1 and December 31, 2005.
In addition to issues routinely discussed (business activities, approval of executive directors of affiliated entities, quarterly
Management Board reports), the main issues dealt with at Supervisory Board meetings were as follows:
■
presentation of the parent company and consolidated financial statements for the year ended December 31, 2004;
■
presentation of the interim financial statements of the CNCE and the Group for 2005;
RESOLUTIONS
In accordance with article L. 225-38 of the French Commercial Code, the Auditors were invited to the Supervisory Board
meetings which discussed the annual and interim parent company and consolidated financial statements.
■
approval of the 2006 budget;
■
review and adaptation of the strategic plan;
■
various transactions involving alliances or acquisitions;
■
Commercial Banking action plan 2005.
Depending on the nature of the files submitted, the Supervisory Board discussed matters and made decisions in the light
of the report or reports of the Chairman of the relevant Supervisory Board Committee.
INFORMATION
ON THE ISSUER
■ project regarding potential listing: review of the conditions for admission of the CNCE shares to listing on a stock exchange
and of the creation of a holding company for the CNCE shares held by the Caisses d’Epargne;
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Chairman‘s report
c) Functioning of committees set up by the Supervisory Board
The membership and rules of functioning of the Audit Committee, the Remuneration & Selection Committee and the Strategy
& Development Committee are specified in the bylaws.
These committees all consist of seven members (including a chairman), comprising four representatives of Groupe Caisse
d’Epargne and three representatives of the Caisse des Dépôts.
The Supervisory Board may also appoint a non-voting member from outside the Group to any of these committees, subject
to prior consent from a majority of the Board representatives of the shareholders of each class of shares. Under this provision,
two non-voting members serve on committees, one attending meetings of the Audit Committee and the other attending
meetings of the Remuneration & Selection Committee.
At the end of the past fiscal year, the non-voting member sitting on the Audit Committee resigned in this capacity in the light
of the number of other activities he performs, but he continued to remain a member of the Supervisory Board.
A committee may only deliberate validly if at least half of its members are present.
Each committee issues an opinion at a majority of the members present.
The Audit Committee met nine times in 2005.
The Audit Committee assists the Supervisory Board in its role of checking and reviewing the financial statements and
the Management Board’s report on the Company’s business.
In this respect, it monitors the quality of the information provided to shareholders, and more generally fulfils the responsibilities
stipulated in regulation 2001-01 issued by the Comité de la réglementation bancaire et financière (French Banking
and Financial Services Regulatory Committee – CRBF) on June 26, 2001 relating to internal control within credit institutions
and investment companies. This regulation amended CRBF regulation 97-02 issued on February 21, 1997.
Other powers granted to the Audit Committee are:
■
reviewing the annual and interim parent company and consolidated financial statements, the Company’s draft budgets
(at both parent company and consolidated level), and corporate financial documents distributed at accounting period-end.
The preparatory files for the review of the financial statements are provided to it at least eight days prior to meetings;
■
issuing an opinion on measures proposed by the Management Board in the event of a deterioration in the financial position
of the Company, its subsidiaries, or the Caisses d’Epargne, or of the triggering of financial guarantee clauses;
■
issuing an opinion on the appointment or reappointment of the Company’s Statutory Auditors and reviewing their work
programs, audit conclusions and recommendations, and any follow-up action in response to their recommendations;
■
issuing an opinion on the procedures adopted by the Company in the areas of regulatory compliance and the measurement
and control of risk;
■
issuing an opinion on the appointment and dismissal of the Director of the Internal Audit Department;
■
monitoring follow-up action in response to engagements conducted by the Internal Audit Department and the French Banking
Commission;
■
signing off the Company’s annual internal audit work program, including internal audits conducted within subsidiaries;
■
ensuring that all new agreements between the Company’s subsidiaries on the one hand, and the Caisses d’Epargne et
de Prévoyance or the Caisse des Dépôts Group on the other, are concluded on an arm’s length basis;
■
examining, at the request of any Audit Committee member, any issue within its sphere of competence that it sees fit,
and reporting thereon to the Supervisory Board.
The Audit Committee may, at the request of the Supervisory Board, examine all questions of a financial or accounting nature
submitted to its attention.
The main issues addressed by the Audit Committee in 2005 were as follows:
184
■
at the initiative of the Chairman of the Supervisory Board, the Chairman’s report to the shareholders on the work of
the Supervisory Board and on internal control procedures for 2004;
■
the 2005 budget adjusted to take into account the reorganization of the CNCE;
■
the parent company and consolidation financial statements for the year ended December 31, 2004;
■
review of the impact of IFRS on the parent company financial statements and the Group's consolidated financial statements;
review of the findings of audits carried out by the Internal Audit Department and the follow-up reports and letters from
the supervisory authorities regarding the report by the Director of the Group’s Internal Audit Department;
■
annual report by the Internal Audit Department on the functioning of the audit mechanism and on risk management in 2004;
■
organization of the Group’s Risk Management function;
■
organization of the Group’s ongoing controls;
■
equity investments and acquisitions.
The Remuneration & Selection Committee met ten times in 2005.
The Remuneration & Selection Committee prepares decisions of the CNCE Supervisory Board on the following topics:
■
Remuneration
The committee is tasked with making proposals to the Supervisory Board on:
■
■
the level and methods of remuneration of the members of the Management Board of the Company and major subsidiaries;
■
the allocation of attendance fees among members of the Supervisory Board, and the total amount of attendance fees
submitted for approval by the Company’s Shareholders’ Meeting.
Selection
The committee makes proposals and recommendations to the Supervisory Board on:
■
the appointment, removal from office and replacement of the members of the Management Board of the Company and
major subsidiaries;
■
the approval and withdrawal of approval of members of the Management Boards of the Caisses d’Epargne et de Prévoyance
(in particular their chairmen), combined with oversight of the nature and application of the criteria laid down by the CNCE
Management Board;
■
the appointment or removal from office of the members of other committees of the Supervisory Board and their chairmen.
The main issues dealt with by the Remuneration & Selection Committee in 2005 were as follows:
■
approvals;
■
corporate officers of the CNCE: updating of civil liability insurance for CNCE corporate officers;
■
allocation and method of payment of attendance fees to Supervisory Board members;
■
the variable portion of remuneration allocated to the members of the Management Board for 2004;
■
the criteria for the variable remuneration to be allocated to the members of the CNCE Management Board for 2005;
■
remuneration of the corporate officers of Caisses d’Epargne et de Prévoyance: allocation of the variable and fixed remuneration
of the members of the Management Board;
■
additional pension plan for the members of the CNCE Management Board and the chairmen of the Management Boards of
the Caisses d’Epargne et de Prévoyance.
The Strategy & Development Committee met nine times in 2005.
The Strategy & Development Committee prepares decisions taken by the CNCE Supervisory Board in the following areas:
■
setting of strategic objectives and growth priorities for the CNCE, the Caisses d’Epargne et de Prévoyance, and their
subsidiaries;
■
preparation and revision of the strategic plan and of proposals relating to acquisitions or alliances.
FINANCIAL REPORT OF
■
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RESOLUTIONS
At its meetings, the Strategy & Development Committee primarily reviewed the acquisitions and alliances implemented
by the Group.
INFORMATION
ON THE ISSUER
The Strategy & Development Committee must be kept regularly informed of progress on acquisitions and alliances. Moreover,
twice a year it is briefed on the extent to which the targets set in the strategic plan have been achieved.
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2 INTERNAL CONTROL PROCEDURES ADOPTED BY THE CNCE
For this part of the report, the Chairman carried out the following procedures, either directly or through his departmental staff:
■
meetings and exchanges of information with the Chairman and members of the Management Board responsible for the
following departments: Group Risk, Group Regulation & Consolidation, Group Finance, Group Management Control, Banking
Production and the Company Secretary’s office;
■
meetings and exchanges of information with the heads of the Internal Audit Department, the Group Risk Department, the
Legal Department, the Security Department (including information systems security) and the Ongoing Controls Department;
■
review of summaries of Audit Committee findings;
■
submission of the Chairman’s report to the Statutory Auditors and discussions with the Statutory Auditors;
■
presentation of the Chairman’s report to the CNCE Audit Committee and Supervisory Board.
A – Regulatory framework for internal control
As a credit institution, the CNCE is subject to an extremely comprehensive legal and regulatory framework governing the
exercise and oversight of its activities. This framework mainly comprises the French Monetary and Financial Code and
regulations issued by the CRBF – specifically (as regards internal control) regulation 97-02 (as amended).
As providers of investment services, the CNCE and Groupe Caisse d’Epargne are also bound by the rules and regulations issued
by the Autorité des marchés financiers (French Financial Markets Authority).
Particular importance is attached to anti-money laundering legislation, in the light of recent events and potential legal
and reputational risks.
The CNCE and Group entities are also bound by the codes of good conduct issued by professional bodies, in cases where
compliance with these rules is recommended or required by the regulators.
B – General principles of internal control
The internal control system refers to all the procedures, systems and controls adopted by each entity to ensure
the achievement of its objectives; to ensure compliance with the law, regulations, market rules, codes of good conduct, and
the Group’s internal rules; and to manage all types of risks to which the entity is exposed. Responsibility for implementing
internal control lies with the executive directors and management, at all levels of the organization.
The CNCE Management Board is responsible for devising and implementing the internal control system. The key principles
in the organization of the internal control system are:
■
the accountability of managers who play a key role in the internal control process;
■
clearly defined job descriptions and precise, written delegations of powers;
■
an organizational structure based on decision-making and management committees, governed by specific charters defining
their composition, role and powers;
■
a system of procedures for each business activity.
Ongoing controls over business activities are the responsibility of the entities themselves, under the supervision of the senior
managers to whom they report and of departments responsible for second-tier control (Group Risk, Ongoing Controls
and Security).
C – Organizational structure of internal control within the CNCE
Within the CNCE, there are three key areas of internal control:
186
■
the CNCE’s activities as the central institution and holding company of the Group;
■
the CNCE’s proprietary banking activities;
■
the CNCE’s activities as a provider of services to the Group, primarily in exchange systems, electronic money systems
and custody services.
The CNCE’s activities as central institution and holding company of the Group
The CNCE is the central institution of Groupe Caisse d’Epargne and is the holding company for the subsidiaries it controls.
As the central institution of Groupe Caisse d’Epargne, the CNCE defines common standards to be applied across all the
activities of the Group. The primary objective of these standards is to ensure awareness of and compliance with regulatory
developments. They are also designed to ensure consistency of organizational structures and practices in all Group entities,
working in consultation with the entities in order to respect their diversity. The executive directors of each entity are
responsible for implementing these standards, which are the cornerstone of the Group’s risk management and control system.
The CNCE departments responsible for drafting these standards represent the Group in dealings with the market authorities,
and monitor the regulatory environment in order to respond rapidly to new developments and expand the body of standards
used within the Group.
Various CNCE departments are involved in risk management, monitoring and control:
■
the Group Risk Department, Group Finance Department, Group Regulation & Consolidation Department, Security Department,
Ongoing Controls Department and the non-voting members all play a role in the ongoing controls required under French
banking regulations;
■
the Internal Audit Department carries out periodic controls over all the Group’s activities, including ongoing control functions,
and heads up audit activities across the Group as a whole.
1 – Ongoing controls
Credit, market and operational risks are managed by the Group Risk Department (GRD), which reports to the member of
the CNCE Management Board responsible for finance and risk management. The GRD defines risk policies and organizational
structures, manages their implementation and controls their application by the Group’s various entities in accordance with
CRBF regulation 97-02 (as amended). Consequently, the GRD has set up a Risk Management function applicable to all Group
entities, based on the principle of the consistent organization of risk monitoring and control. The GRD is also responsible
for integrating the requirements set out by the Basel II Committee within the Group’s risk monitoring system.
In 2005, the GRD reorganized and expanded by incorporating the Basel II Project Department, and by assigning supplementary
resources to bring the Group risk management system in line with regulatory requirements. This new organizational structure
is designed to serve two purposes:
■
completing the implementation of action plans launched during 2005 and aimed at ensuring compliance with the requirements
issued by the French Banking Commission;
■
finalizing the Basel II internal ratings system developed by Groupe Caisse d’Epargne, in preparation for approval by the
regulatory authorities.
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CHAIRMAN'S REPORT
the Group Risk Committee, which sets out the overall framework for managing and monitoring risk exposures;
■
the Group Major Counterparty and SME Credit Committees, which set the commitment ceilings in excess of the authorized
exposure limits attributed to the subsidiaries and the intervention thresholds allocated to the Caisses d'Epargne;
■
The Group Watchlist and Non-performing & Provisions Committees. The Watchlist Committee is tasked with the quarterly
monitoring of sensitive commitments relating to major counterparties (revenues of over €500 million) and for which
no provision has been set aside;
■
the Group Market Risks and Investment Fund committees;
■
the Group Operational Risk Committee;
■
the New Products & Financial Operations Committee;
■
the Group ALM and Commercial Banking ALM committees on which the GRD sits.
The GRD produces reports on credit, market and operational risks intended for Group corporate governance bodies and the
regulatory authorities.
Interest rate, liquidity and currency risks (ALM risks) are measured and managed at Group level by the Group Finance
Department. In addition to projects related to monitoring the Caisses d’Epargne and the subsidiaries, in March 2005 the Group
Finance Department set up a consolidated Group ALM unit with a view to fulfilling regulatory requirements and enhancing
Group-wide supervision of ALM.
INFORMATION
ON THE ISSUER
■
RESOLUTIONS
The GRD manages, monitors and controls risk through several committees:
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These projects are supervised by Groupe Caisse d’Epargne’s ALM Committee, which was set up in May 2005 and meets on
a quarterly basis under the chairmanship of the Management Board member responsible for finance and risk management.
In 2005, the committee’s work concerned the following issues:
■
drafting and approving an operating charter for the GCE ALM Committee;
■
incorporating GCE accounting data and management data from various Group entities within the ALM software package;
■
formally documenting technical and operational procedures;
■
presenting reporting templates for approval by the GCE ALM Committee.
Working in parallel with the GCE ALM Committee, the Commercial Banking ALM Committee monitors the positions of
the individual Caisses d’Epargne, OCÉOR, Banque Palatine and Caisse d’Epargne Financement. In 2005, this committee met
on a quarterly basis and monitored improvements in the measurement scope, reviewed the exposure to interest rate
and liquidity risks of the individual Caisses d’Epargne and, from June 30, 2005, of OCÉOR. The committee’s analysis was
performed using both dynamic and static models.
The Commercial Banking ALM Committee also set out an economic crisis scenario, and analyzed the results during its
July 2005 meeting.
Finally, the ALM policy framework for the Commercial Banking establishments was redefined and presented in a financial
management charter issued at the end of 2005.
The Group Regulation & Consolidation Department is responsible for standard-setting, co-ordination, advice, supervision,
forecasting, regulatory monitoring, and representing the Group in regulatory, accounting and tax matters.
Information systems security and business continuity plans are handled by the Security Department.
The department’s work in 2005 included:
■
analyzing IT system risks and security level assessments carried out by the individual Caisses d’Epargne and the
IT subsidiaries. These analyses provided an overview of security and highlighted the requisite improvements to service
availability, integrity and confidentiality;
■
issuing an IT system security procedural code comprising a set of essential operational security rules that must be adhered
to by each Group establishment in order to ensure a security level appropriate to the real risks presented by each
establishment and Groupe Caisse d’Epargne overall;
■
launching a business continuity program (EGIDE) involving each Caisse d’Epargne, in compliance with CRBF regulation 97-02
(as amended). The work carried out in 2005 resulted in the definition of business continuity requirements for the different
businesses, the implementation of the necessary organizational structure including the appointment of business continuity
officers and local contacts within each establishment, and a preliminary review of operational solutions. The program is due
to be tested during first-half 2006;
■
the extension of the Group’s technological security monitoring activities to numerous additional establishments and the
implementation of operational management procedures for risk incidents led to a reduction in risk exposure due to system or
network vulnerability and viruses.
In order to comply with banking and financial regulations (primarily CRBF regulation 97-02 as amended) and Basel Committee
standards on compliance risk, ethical controls, and risks related to money-laundering and the financing of terrorism), the CNCE
set up a Ongoing Controls Department in December 2004. This department brought together the Group Ethics & Compliance
and the Economic Security & Anti-Money Laundering Departments. The Director of Ongoing Controls reports directly to the
Chairman of the CNCE Management Board.
This new organizational structure led the Ongoing Controls Department to take direct charge of forming the compliance
function, in accordance with the recommendation issued to all affiliated Group establishments on March 9, 2005.
At December 31, 2005, this function had a total headcount of approximately 300 (25 within the central institution, 142 within
Group establishments linked to the Commercial Banking division and 125 within subsidiaries of the Investment Banking
division).
Within the scope of the creation of this new function, most of the powers of the Head of Investment Services Control were renewed.
188
The Ongoing Controls Department is responsible for drafting the annual report on risk assessment and monitoring provided
for in article 43 of CRBF regulation 97-02, working in close collaboration with the Group Risk Department.
■
The Group Ethics & Compliance Department, responsible for the ongoing control of Group ethics and compliance, operates
a compliance unit comprising dedicated teams embedded within each Group company, and whose compliance officer
is approved by the CNCE.
Ongoing compliance control was strengthened within the Group during 2005, ahead of the amendment to CRBF regulation
97-02 relating to the internal control of credit and investment companies (promulgated on March 31, 2005), which came into
force on January 1, 2006.
■
Approval procedures for new products and services, which had been applicable for several years, were remapped on
the recommendation of the Management Board. In particular, this included reinforcing the remit of the central institution.
The Commercial Product Approvals Committee met fifteen times in 2005 under the chairmanship of the Director of Ongoing
Controls, and approved 47 new products and services.
■
Specific procedures for transaction compliance control have been incorporated into the quality procedures of banking
and financial activities. In particular, these procedures concern the obligation regarding customer knowledge and protection,
and the regulatory requirements corresponding to each product or service offered.
■
There is centralized reporting of non-compliance incidents for each Group company; this data is consolidated within the CNCE
database using the operational risk monitoring system.
■
The investment services control function, working under the oversight of the French Financial Markets Authority, has been
absorbed into the compliance function. This function monitors adherence to the general regulations of the French Financial
Markets Authority. In this context, the CNCE’s internal rules have been adapted to include financial transaction control
procedures for employees considered “at risk” in connection with the IXIS merger.
■
The prevention of money-laundering and of the financing of terrorism is handled by the Economic Security & Anti-Money
Laundering Department, set up in February 2004. This department sets Group-wide anti-money laundering standards,
develops IT tools and procedures designed to fulfill legal requirements on preventive systems, and carries out ongoing
controls over the systems in place. It focuses on three target areas:
■
national projects, using tools developed for the Group to filter money flows and new account applications by reference to
French and European lists of individuals and corporations suspected of involvement in money-laundering or terrorism.
These tools are also used to build up a CNCE customer relationship database;
■
strengthening its role as correspondent for Group entities, providing them with expert assistance in handling sensitive cases;
■
exercising ongoing second-tier controls over the systems operated by Group entities.
In addition to these ongoing controls, and closely connected to the application of CRBF regulation 97-02 (as amended)
and the Second EU Anti-Money Laundering Directive, the department has issued:
■
a memorandum stating Group standards and formally setting out the reporting obligations of Group-affiliated entities
in terms of anti-money laundering measures;
■
technical specifications setting out the conditions for the first batch of case applications for the anti-money laundering
vigilance program.
FINANCIAL REPORT OF
In addition, several Group-wide standards aimed at stepping up vigilance within Group establishments were issued during the
year, notably relating to outsourcing essential services, transferring the deferred payment service, and achieving regulatory
compliance on customer knowledge.
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OF THE CNCE GROUP
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RESOLUTIONS
Furthermore, Group standards relating to identifying and monitoring risk-sensitive customer transactions have been prepared.
These standards will be finalized and implemented as soon as the second and third anti-money laundering directives have
been adopted in law.
Two meetings of the anti-money laundering unit were held in 2005. Control operations have been carried out within Group
establishments.
Awareness-raising campaigns for employees of affiliated entities on the prevention of money laundering were continued in line
with the methods used in previous years. Members of the Economic Security & Anti-Money Laundering Department carried out
targeted initiatives among anti-money laundering, commercial function and back office management units.
INFORMATION
ON THE ISSUER
An implementation procedure for the customer relationship referencing process has also been prepared.
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As required by law, the CNCE Management Board has appointed a non-voting member to each Caisse d’Epargne. Non-voting
members attend Steering and Supervisory Board meetings, but are unable to vote. Their role is to ensure compliance with the
law and regulations, and with the Group’s own internal rules. Each non-voting member also attends meetings of the Audit
Committee and Remuneration Committee of the Caisse d’Epargne to which he or she is appointed (these committees were set
up in each Caisse d’Epargne in 2000).
2 – Periodic controls
In accordance with regulatory requirements, all credit institutions within the Group must have an audit function independent
of the operating units, which assesses the quality and day-to-day running of their control systems. This function, which
is separate from that of ongoing controls, is governed by a very precise regulatory framework. It is the responsibility of
the Audit Department of each entity, which carries out periodic controls within the entity’s units. These assessments are
complemented by regular audits carried out by teams from the CNCE Internal Audit Department, and in some cases from
the Audit Department of intermediate holding companies such as OCÉOR or Crédit Foncier. These teams perform field tests,
and check for compliance with the law and regulations and with the Group’s own internal rules.
The CNCE Internal Audit Department must ensure that the scope of internal audit is properly identified and covered by one
or more audit departments, and that recommendations are implemented within a reasonable time-frame. It is also responsible
for auditing the CNCE as a credit institution in its own right, and for auditing any national subsidiaries without their own audit
department.
In order to fulfill these responsibilities, the Internal Audit Department:
■
carries out whatever engagements it sees fit in order to obtain a reasonably accurate assessment of the control systems of
each entity and to achieve the required audit scope;
■
draws upon audit reports issued by the French Banking Commission and other supervisory bodies;
■
draws upon recommendations made by the external auditors of each entity;
■
analyzes and draws upon work carried out by the audit departments of individual entities;
■
monitors the implementation of recommendations stemming from previous audits, using half-yearly progress reports which
it requires to be submitted by unit managers.
The CNCE Internal Audit Department, in conjunction with individual audit departments within the Group, has defined common
audit methods, and standard-form annual reports that meet regulatory requirements (article 42 of CRBF regulation 97-02). As
part of its role heading up the audit function within the Group as a whole, the Internal Audit Department updates these methods
and coordinates staff training.
Groupe Caisse d’Epargne has set a minimum staffing level for audit departments within credit institutions belonging to the
Group. This level is set at 1% of headcount for the first 1,000 employees and 0.5% of headcount thereafter. This rule is consistent
with the 1% average generally accepted within the banking industry and recognized by the French Banking Commission, and
relates to dedicated audit staff, excluding those responsible for ancillary tasks and tasks relating to control systems.
The CNCE Internal Audit Department conducted 105 assignments in 2005, compared with 72 in 2004, providing considerably
enhanced Group coverage.
The organization of Group audit activities is governed by an audit charter, which was submitted to the CNCE Internal Audit
Committee in 2004. This charter, designed to address the need for a strengthened audit function as outlined above, has been
distributed throughout the Group.
The CNCE’s proprietary banking activities
The New Foundations project led to the reorganization of the CNCE’s proprietary trading activities as well as its trading activities
as Group banker. Its capital markets activities now come under the responsibility of the Group Finance Department, while
lending activities have been transferred to various Group subsidiaries.
The CNCE’s financial activities now cover either proprietary operations or operations carried out to support its subsidiaries,
and are performed by the Group Finance Department.
The CNCE Management Board is responsible for defining and implementing internal controls for these activities carried out
by the CNCE in compliance with regulatory requirements and the Group’s own internal control system, as for the individual
Caisses d’Epargne and the subsidiaries. The internal control environment is based on ongoing controls defined at various levels,
and performed by units or individuals independent from the activities or transactions on which the controls are performed.
The CNCE’s banking activities are the responsibility of the Banking Activities Department. Heavily impacted by the
implementation of the New Foundations project, the Banking Activities Department is structured so as to ensure the
segregation of functions initiating and managing financial transactions from functions responsible for accounting and control.
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This reorganization is also aimed at improving the control and reporting system, and will be completed in 2006. The
information system has been mapped and the operational risks assessed, and a management and monitoring tool has been
implemented with a view to fine-tuning the risk management system. The initiatives undertaken in 2004 to create a business
continuity plan for the various activities have been completed. In order to improve the business continuity plan for “sensitive”
activities, notably payments and exchanges, additional initiatives aimed at further reducing the maximum period of business
disruption are in the process of validation. They are scheduled to be implemented during the first half of 2006.
The Branch Network front office, consisting of sales personnel, offers a comprehensive range of banking products and services
linked to current accounts for the Caisses d’Epargne and Group subsidiaries, as well as client banks and corporate and
institutional customers. These front office teams carry out a first-tier analysis before entering into a relationship with a customer
and a critical assessment is performed by the Group Risk Department (GRD) where appropriate.
The back office team records these operations in compliance with regulatory and conventional obligations, and carries out
a first-tier control.
The Banking Activities Department has a decentralized accounting function responsible for recording the department’s
transactions in an accounting system interfaced with the CNCE general ledger accounting system.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Independently of its proprietary activities and in addition to its role as central institution and holding company of the Group,
the CNCE also provides services to Group companies, especially in the areas of exchange systems, electronic money systems
and custody services.
In these areas, the CNCE is itself subject to the control requirements laid down by the supervisory authorities and the
corresponding regulations.
RISK
MANAGEMENT
The CNCE’s activities as service provider to the Group
exchange transactions and accounting for operations in euros;
■
exchange transactions and accounting for operations in foreign currencies;
■
monitoring and managing transaction flows with a view to ensuring day-to-day liquidity.
In addition, the Payment & Interbank Exchange Department represents the Group on interbank bodies at both domestic and
European levels.
The managers of these three units are responsible for supervision and control of these activities.
Banking production processes are checked using daily reports showing key system performance indicators. Anomalies are
flagged in real time via warning reports. The main daily controls cover exchange system runs, transaction flows,
synchronization with market systems, and completion of all transactions by the close of business. Controls are performed to
check that the previous day’s transactions have been correctly recorded. The control process also uses reports sent by the
Group’s IT processing center, which indicate the technical status of information systems, and reports issued by Experian, the
external service-provider handling digitally-scanned checks. The unit also distributes exchange system operating rules
throughout the Group, and monitors their application.
The accounting function operates first-tier controls, checking on a daily basis the quality and accuracy of entries and
adjustments made to the ledger accounts for which it is responsible. Daily controls are also performed to ensure that each
ledger account is substantiated. The accounting function also checks that standard-form accounting entries are appropriate,
and that an audit trail is preserved.
Each unit within the department has a procedures manual, describing their working practices and control issues. All these
controls contribute to the measurement, management and monitoring of risk.
Electronic money systems
As well as a standard-setting role, this department handles the operational management of electronic money systems
activities within the Group’s Banking Production Department. Its activities are bound by strict regulations. There are two main
units within the department:
■
RESOLUTIONS
■
INFORMATION
ON THE ISSUER
The Payment & Interbank Exchange Department handles interbank exchanges for the CNCE and the Group. Its obligations and
commitments are laid down in service agreements with third parties and Group entities. The department is split into three
units responsible for:
CHAIRMAN'S REPORT
Exchange systems
project management, which handles IT projects for the Group as a whole, from the feasibility study stage to the coordination
of rollouts within Group entities;
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■
the Banking Processing Center, which provides electronic money systems services to the Caisses d’Epargne, subsidiaries and
second-tier participants, including management of card production and security data.
Job descriptions are used to define the tasks and responsibilities of individual members of staff.
The Banking Processing Center’s internal procedures manual was completely overhauled following the introduction of the new
Image Monétique processing tool. This tool, which is unique to the Group, enhances the level of controls over electronic money
systems activities within the Group and shortens the response time to incidents. It also enables line managers to consult files
handled by their staff in real time and from their own workstations. These controls are an essential component of the risk monitoring
system in this area. Developments are also under way aimed at enhancing the existing management and control reports.
In response to growing levels of bank card fraud, the department has installed tools designed to identify high-risk transactions and
limit any resulting financial loss. These tools are being constantly upgraded in order to improve fraud prevention. In 2005 its
identification criteria and supervision modes were upgraded, and a 24/7 processing unit was set up. A detailed risk mapping
exercise, intended to ensure that identified risks are adequately addressed, has also reinforced controls in this area.
The department has its own accounting function, with its own procedures and controls. Supporting documentation is sent to the
CNCE General Accounting Department, which performs second-tier controls. An audit trail is provided by archiving the supporting
documentation and by allocating reference numbers to accounting entries in the information system.
The key arrangements required to guarantee continuity of service for critical processes are now up and running.
Custody services
Since January 2003, the CNCE has had an extended mandate to provide securities custody services as agent for the customers
of a number of other institutions providing such services (including the Caisses d’Epargne). The CNCE outsources this function
to Gestitres, within the regulatory framework of compliance with the custodian’s terms of reference.
The CNCE has appointed a Head of Investment Services Control with specific responsibility for custody services, who reports
to the Group Risk Management Department. The Retail Custody Services Committee meets quarterly and is chaired by a member
of the CNCE Management Board. Its main tasks are monitoring the legal structure, regulatory compliance, quality indicators
and adequacy of internal control within this activity.
Within Gestitres, monthly management reports are used to assist senior managers in the management, control and supervision
of these activities. There are formal procedures for the assessment of operational risks and of the associated controls under
the responsibility of the Head of Investment Services Control.
Accounting controls operate at two levels. Processing is handled by the operating units and is subject to detailed first-tier controls
performed by the accounting controllers, the sector controller and the unit manager. An independent entity carries out second-tier
controls over processing quality. An audit trail exists that enables each accounting entry (in both the financial accounting system
and the management accounting system) to be traced back to the original transactions.
In terms of information systems, vulnerability tests have been carried out on logic security systems, and information system
vulnerability indicators are in place. The business continuity plan for mission-critical back office activities (domestic and
international stock markets, mutual funds and primary markets) has been documented, and was tested in 2004 and early in 2005.
Additional work will be carried out during 2006. In future, the disaster recovery plan will be tested annually. The French Financial
Markets Authority, which is the supervisory body in this area, is being kept fully informed of all these developments.
3 INTERNAL CONTROL PROCEDURES RELATING TO THE PREPARATION
AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION
A – CNCE accounting function
The CNCE’s accounting function is decentralized down to operating department level. The General Accounting Department
therefore has a second-tier control unit which checks the compliance and accuracy of information produced in the process of
monitoring capital markets and lending activities, banking production and the retail custody services.
To do this, the second-tier control unit relies on accounting packages submitted at regular intervals in accordance with time
limits specified in reporting instructions. It also carries out detailed work programs setting out, by activity and account type,
controls to be performed to meet the required objectives.
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The unit issues conclusions and recommendations on the basis of these controls, the substance of which is reported to
operational management and senior management.
For capital expenditure and overhead accounting, risk control and quality of information rely mainly on information processing
and control procedures which establish the principle of segregation of duties between commitment and payment of
expenditure.
Commitments
Within each division, department and unit, a list is kept of individuals with authority to commit expenditure on behalf of the
CNCE, subject in some cases to upper limits. Commitments are recorded by the contracting unit in a dedicated purchase order
and acceptance system, which pre-allocates the expenditure to the appropriate accounting and budget captions.
Payments
Invoices and other requests for payment are matched by an accounting function with goods and services ordered and accepted.
Payment approval requests are checked by an authorized individual. With some exceptions, payments require two signatures.
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
The Group Regulation & Consolidation Department acts as the interface between the regulatory authorities (the Banque de
France and the French Banking Commission) and CNCE affiliates, in accordance with article L. 512-95 of the French Monetary
and Financial Code. It also ensures that CNCE affiliates comply with regulatory standards and management ratios.
In accordance with regulatory requirements, the department also ensures that Groupe Caisse d’Epargne complies with
management ratios on a consolidated basis. This involves calculating the Group’s capital adequacy ratio on a half-yearly basis.
The department assesses new tax legislation and determines tax planning strategies. It also investigates and manages tax
disputes at national level.
Finally, the department represents the Group and contributes to the work of the Conseil national de la comptabilité (French
National Accounting Board – Banking Section) and the Fédération bancaire française (French Banking Federation – Accounting
and Tax committees).
C – Management control
A key role of the Group Management Control Department is to deliver high-quality management reports and to produce forecast
data for strategic planning purposes. As such, it plays a role in the internal control of accounting and financial information,
in performance measurement and management, and in profitability analysis.
The department lays down standards for profitability and performance measurement, and issues management control rules that
apply to all Group entities.
CHAIRMAN'S REPORT
The Group Regulation & Consolidation Department is responsible for preparing the annual and interim financial statements
of Groupe Caisse d’Epargne and the CNCE Group. The consolidation is prepared using a system in place at all Group entities
that allows for the secure transfer of accounting data and consolidation adjustments. The department handles relations with
the Statutory Auditors, and is also overseeing the transition to international financial reporting standards (IFRS) as part
of a nationwide project.
RESOLUTIONS
B – The Groupe Caisse d’Epargne accounting function
RISK
MANAGEMENT
The second-tier control unit also checks the quality of information processing in this area, in particular by checking estimates of
accrued expenses prepared by the contracting units to ensure that they comply with the law relating to liabilities.
At each accounting period-end, the Group Management Control Department performs an analytical review of accounting results,
focusing mainly on net interest margin, commissions, general operating expenses and risk provisioning.
■
comparisons with the forecasts prepared by the Group Management Control Department;
■
an analysis of consolidated results by business line. This analysis, carried out for the first time in 2004, is a useful
performance measurement tool given the broadening of the scope of the Group’s activities.
The present report has been submitted to the external auditors and to the French Financial Markets Authority.
INFORMATION
ON THE ISSUER
This review involves:
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Supervisory Board
Total number of members: 20
Representatives of Groupe Caisse d’Epargne shareholders (class A): 12
Representatives of other shareholders (class B): 6
Employee representatives: 2
Average attendance rate: 94.55%
Number of Board meetings: 9
Expiry of terms of office of Board members: date of the Shareholders’ Meeting held to approve the financial statements
for the year ending December 31, 2008
Minimum number of shares to be held by Board members: 1
Non-voting members (censeurs): 4
Worker’s Committee representatives: 4
REPRESENTATIVES OF CLASS A SHAREHOLDERS
Member
Office held within
Date of birth
Jacques MOUTON (Chairman)
Chairman of Steering and Supervisory Board,
CEP Aquitaine Nord
September 9, 1937
Bernard COMOLET (Vice-Chairman)
Chairman of Management Board, CEP Ile-de-France Paris
March 9, 1947
Jean-Charles COCHET
Chairman of Management Board, CEP Lorraine
April 25, 1947
Dominique COURTIN
Chairman of Steering and Supervisory Board, CEP Bretagne
July 4, 1946
Jean-Claude CRÉQUIT
Chairman of Management Board, CEP Côte d’Azur
June 10, 1953
Michel DOSIÈRE
Chairman of Management Board, CEP Poitou-Charentes
August 2, 1949
Marcel DUVANT
CEP Pays du Hainaut
August 26, 1942
Yves HUBERT
Chairman of Steering and Supervisory Board, CEP Picardie
September 5, 1947
Alain LEMAIRE
Chairman of Management Board, CEP Provence-Alpes-Corse
March 5, 1950
Jean LEVALLOIS
CEP Basse-Normandie
March 4, 1944
Bernard SIROL
CEP Midi-Pyrénées
August 22, 1944
Hervé VOGEL
Chairman of Management Board, CEP Rhône-Alpes Lyon
March 7, 1944
(1) Excludes an indemnity received in his capacity as Chairman of the Supervisory Board, amounting to €80,000.
NA: not applicable.
N.B.: for Alain Maire who resigned on October 21, 2004, attendance fees amount to €545 for 2005.
194
Average attendance rate: 81%
Remuneration & Selection Committee
Number of members: 7
Number of meetings: 10
Average attendance rate: 73%
Strategy & Development Committee
Average attendance rate: 79.50%
Positions on Board committees
Date
appointed
or co-opted
Other
directorships and
positions held
Attendance
rate
at Board
meetings
in 2005
Attendance Comments
fees
received
in 2005
Chairman of Remuneration & Selection Committee January 1, 2004 12 directorships and positions
Member of Strategy & Development Committee
100% 49,000 (1)
Member of Audit Committee
January 1, 2004 4 directorships and positions
100% 36,000
–
89% 20,000
October 21, 2004 7 directorships and positions
89% 25,455
78% 36,000
–
100% 20,000
100% 36,000
Member of Remuneration & Selection Committee
Chairman of Strategy & Development Committee
100% 45,182
100% 34,182
100% 36,000
100% 36,000
100% 26,364
FINANCIAL REPORT OF
RISK
MANAGEMENT
Audit Committee
FINANCIAL REPORT
OF THE CNCE GROUP
Page 195
CHAIRMAN'S REPORT
15:12
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
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Chairman‘s report
REPRESENTATIVES OF CLASS B SHAREHOLDERS
Member
Office held within the
Caisse des Dépôts Group
Date of birth
Caisse des Dépôts
represented by Dominique Marcel
Chief Financial Officer, CDC Group
October 8, 1955
Étienne BERTIER
Chairman and Chief Executive Officer, Icade
February 25, 1960
Francis MAYER (Vice-Chairman)
Chief Executive Officer, Caisse des Dépôts
September 1, 1950
Albert OLLIVIER
Chairman, CDC Entreprises
July 12, 1954
Jean SEBEYRAN
General Counsel, Caisse des Dépôts Group
June 17, 1944
Franck SILVENT
Vice-Chairman of Management Board, Compagnie des Alpes
August 1, 1972
(2) The attendance fees received by CDC and representatives of the holders of class B shares amount to €202,556 and were paid over to CDC Holding Finance.
NA: not applicable.
EMPLOYEE REPRESENTATIVES
Member
Office held within
Date of birth
Serge HUBER
Employee
July 9, 1950
Jacques MOREAU
Employee
December 19, 1948
(3)The attendance fees received by Serge Huber amount to €20,000 and were paid over to the unified labor union.
NA: not applicable.
NON-VOTING MEMBERS (CENSEURS)
Member
Office held within
Date of birth
Joël BOURDIN
Non-voting member
January 25, 1938
Jean-Marc ESPALIOUX
Non-voting member
March 18, 1952
Jean-Charles NAOURI
Non-voting member
March 8, 1949
Henri PROGLIO
Non-voting member
June 29, 1949
NA : not applicable.
Attendance fees = €20,000/number of meetings.
Maximum €2,500 per meeting – with one absence authorized,
i.e. a total of €2,222.22 per meeting.
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100% NA (2)
89% NA
89% NA
100% NA
67% NA
89% NA
Date
appointed
or co-opted
–
January 1, 2004 –
100% NA (3)
–
January 1, 2004 –
100% 20,000
Date
appointed
or co-opted
–
January 1, 2004 Professor
Senator for the Eure region
89% 16,364
–
January 1, 2004
22% 9,394
Attends Audit Committee meetings
January 1, 2004 Chairman, Euris
33% 11,940
Attends Remuneration
& Selection Committee meetings
January 1, 2004 Chairman of Management Board,
56% 19,394
Other
directorships and
positions held
Attendance
rate
at Board
meetings
in 2005
Attendance
rate
at Board
meetings
in 2005
Attendance Comments
fees
received
in 2005
Attendance Comments
fees
received
in 2005
Attendance Comments
fees
received
in 2005
RISK
MANAGEMENT
Chairman of Audit Committee
Other
directorships and
positions held
Attendance
rate
at Board
meetings
in 2005
CHAIRMAN'S REPORT
Other
directorships and
positions held
RESOLUTIONS
Date
appointed
or co-opted
INFORMATION
ON THE ISSUER
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
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Chairman‘s report
STATUTORY AUDITORS’ REPORT
prepared in accordance with article L. 225-235 of the French Commercial Code (Code de commerce),
on the report prepared by the Chairman of the Supervisory Board of the Caisse Nationale
des Caisses d’Epargne et de Prévoyance, on the internal control procedures relating to the preparation
and processing of financial and accounting information
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided
solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed
in accordance with, French law and professional auditing standards applicable in France.
In our capacity as Statutory Auditors of the Caisse Nationale des Caisses d’Epargne et de Prévoyance, and in accordance with
article L. 225 235 of the French Commercial Code (Code de commerce), we report to you on the report prepared by the
Chairman of your Company’s Supervisory Board in accordance with article L. 225-68 of the French Commercial Code for the
year ended December 31, 2005.
In his report, the Chairman is required to comment on the conditions in which the duties of the Supervisory Board are prepared
and organized and the internal control procedures in place within the Company. Our responsibility is to report to you our
observations on the information set out in the Chairman’s report concerning the internal control procedures relating to the
preparation and processing of financial and accounting information.
We performed our procedures in accordance with professional guidelines applicable in France. These require us to perform
procedures to assess the fairness of the information set out in the Chairman’s report on the internal control procedures
relating to the preparation and processing of financial and accounting information. These procedures notably consisted of:
■
acquiring an understanding of the objectives and general organization of internal control, as well as the internal control
procedures relating to the preparation and processing of financial and accounting information, as set out in the Chairman’s
report;
■
acquiring an understanding of the work performed to support the information given in the report.
On the basis of these procedures, we have no matters to report in connection with the information given on the internal control
procedures relating to the preparation and processing of financial and accounting information, contained in the report
of the Chairman of the Supervisory Board, prepared in accordance with the final paragraph of article L. 225-68 of the French
Commercial Code.
Anik Chaumartin
Yves Nicolas
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STATUTORY AUDITORS’ SPECIAL REPORT
on regulated agreements
FINANCIAL REPORT
OF THE CNCE GROUP
FINANCIAL REPORT OF
RISK
MANAGEMENT
This is a free translation into English of the Statutory Auditors’ special report issued in the French language and is
provided solely for the convenience of English speaking readers. This report should be read in conjunction with,
and construed in accordance with, French law and professional auditing standards applicable in France.
AGREEMENTS APPROVED DURING THE YEAR
Under the provisions of article L. 225-88 of the French Commercial Code (Code de commerce), we have been informed
of the agreements that were subject to the prior approval of your Supervisory Board.
Our responsibility does not include identifying any undisclosed agreements. We are required to report to shareholders,
based on the information provided, about the main terms and conditions of agreements that have been disclosed to us,
without commenting on their relevance or substance. Under the provisions of article 117 of the decree of March 23, 1967,
it is the responsibility of shareholders to determine whether the agreements are appropriate and should be approved.
We conducted our review in accordance with the professional standards applicable in France. Those standards require that we
carry out the necessary procedures to verify the consistency of the information disclosed to us with the source documents.
1.1 Transfer of the CNCE’s loan portfolio
Directors concerned at the date of the agreement: Charles Milhaud, Alain Lemaire, Nicolas Mérindol and Pierre Servant.
RESOLUTIONS
1
CHAIRMAN'S REPORT
In our capacity as Statutory Auditors of your Company, we hereby present our report on regulated agreements.
It was decided that all customer-related commercial operations should be removed from the CNCE’s balance sheet and
allocated to the Group’s specialized subsidiaries (IXIS division, Crédit Foncier, Océor). Consequently, excluding guarantee
transactions, only financing transactions related to the Group’s subsidiaries will be reflected in the CNCE’s balance sheet.
This operation was submitted to the Supervisory Board for approval on July 7, 2005.
In accordance with this decision, the business goodwill was transferred to Financière Océor on October 3, 2005 for an amount
of €508,000.
INFORMATION
ON THE ISSUER
As part of the implementation of the target organizational structure for the CNCE, it was decided that the lending business
would no longer be directly carried on by the CNCE but by the specialized subsidiaries. Accordingly, the CNCE has transferred
its outstanding loans to the subsidiaries concerned.
Your Supervisory Board also approved the following transactions in connection with this agreement:
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Report on regulated agreements
1.2 Authorization of the signature of agreements providing for the sale of the lending business
(involving the sale of business goodwill) between the CNCE and Banque Palatine
Directors concerned at the date of the agreement: Nicolas Mérindol and Jean-Claude Créquit.
In the context of the reorganization of the Caisse Nationale des Caisses d’Epargne at the Supervisory Board’s meeting
of December 16, 2004, it was decided that the lending business would no longer be directly carried on by the CNCE but
by the specialized subsidiaries. Accordingly, the Caisse Nationale des Caisses d’Epargne transferred part of its loan book
to its subsidiary, Banque Palatine, for an amount of €1,046,000.
This operation was submitted to the Supervisory Board for approval on November 10, 2005.
1.3 Authorization of the signature of agreements providing for the sale of the lending business
(involving the sale of business goodwill) between the CNCE and Crédit Foncier de France
Directors concerned at the date of the agreement: Charles Milhaud, Nicolas Mérindol, Pierre Servant, Guy Cotret and Étienne Bertier.
This operation was submitted to the Supervisory Board for approval on November 10, 2005. The Supervisory Board authorized
the signature of agreements providing for the sale of the lending business (involving the sale of business goodwill) between
the CNCE and Crédit Foncier de France.
To date, these agreements have not been signed and have not therefore had any impact.
1.4 Transfer of the public sector loan portfolio to IXIS CIB
Directors concerned at the date of the agreement: Francis Mayer, Dominique Marcel, Bernard Comolet, Charles Milhaud,
Nicolas Mérindol, Anthony Orsatelli, Pierre Servant and the CNCE, represented by Guy Cotret.
In connection with the reorganization of the CNCE, outstanding loans granted by the Banking and Financial Activities
department in connection with public sector lending operations were transferred to IXIS CIB.
The business goodwill was sold for an amount of €500,000.
This operation was submitted to the Supervisory Board for approval on July 7, 2005.
1.5 Banque Inchauspé
Directors concerned at the date of the agreement: Anthony Orsatelli, Nicolas Mérindol and Jean-Claude Créquit.
The Supervisory Board of September 22, 2005.
The Supervisory Board authorized the signature of agreements relating to the sale of Banque Michel Inchauspé shares held
by Banque Palatine to Sanpaolo IMI.
The CNCE is involved in the agreement as it is entitled to a put option on Banque Michel Inchauspé shares and issues
a guarantee to San Paolo IMI in respect of carrying costs.
This transaction has not been carried out to date.
1.6 Lanson International
At the date of the agreement, the Caisse Nationale des Caisses d’Epargne held 44% of Lanson International.
The Caisse Nationale des Caisses d’Epargne decided to exercise its option to renew the short-term credit facility instead
and in place of the medium-term financing initially envisaged.
The regulated agreement involving the decision to renew the credit facility for a limited period of time was approved
by the Supervisory Board at its meeting of July 7, 2005.
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1.7 Authorization of the sale of the interest held in Lanson International
FINANCIAL REPORT
OF THE CNCE GROUP
The Supervisory Board of February 10, 2005 authorized the signature of a memorandum of understanding between the Caisse
Nationale des Caisses d’Epargne and CDC Entreprises. This set out the organization for the sale by the Caisse Nationale des
Caisses d’Epargne of its shares in Lanson International to Maine Participations, a subsidiary of CDC Entreprises. The sale was
for an amount of €37,809,466.
This transaction has not been carried out.
1.8 Amendment of the bylaws and adaptation of the Ecureuil Vie shareholders’ agreement
Directors concerned: Jean-Claude Crequit, Michel Dosière, Alain Lemaire, Nicolas Merindol, Charles Milhaud, Bernard Comolet,
Dominique Marcel, Étienne Bertier, Francis Mayer and Henri Proglio.
FINANCIAL REPORT OF
Directors concerned at the date of the transaction: Albert Ollivier, Franck Silvent and Nicolas Mérindol.
It was submitted to the Supervisory Board for approval on May 26, 2005
1.9 Acquisition of Odacia shares
Directors concerned at the date of the agreement: Étienne Bertier, Bernard Comolet, Dominique Marcel, Guy Cotret, Nicolas
Mérindol, Charles Milhaud and Pierre Servant.
RISK
MANAGEMENT
This involved an amendment to the shareholders’ agreement entered into between CNP and your Company in connection
with their jointly-owned subsidiary Ecureuil Vie.
The transfer of Odacia’s business to the CNCE was carried out by dissolving Odacia through the intermingling of assets on
July 1, 2005.
The transaction was submitted to the Supervisory Board for approval on May 26, 2005
1.10 Authorization of the signature of an agreement providing for the set-up of a supplementary
pension scheme for members of the CNCE’s Management Board and the Chairmen
of the Management Boards of the individual Caisses d’Epargne.
CHAIRMAN'S REPORT
This transaction involves the acquisition – from six Caisses d’Epargne and Crédit Foncier de France – of shares making up
the entire capital of Odacia, for an amount of €515,000.
At its meeting of December 16, 2004, the Supervisory Board authorized the signature of an agreement providing for the set-up
of a defined-benefit supplementary pension scheme. This top-up type scheme is designed to provide beneficiaries with
supplementary pension payments calculated on the basis of their salary.
This agreement was signed on July 18, 2005.
RESOLUTIONS
Directors concerned at the date the agreement was signed: Charles Milhaud, Guy Cotret, Nicolas Mérindol, Anthony Orsatelli
and Pierre Servant.
In application of the decree of March 23, 1967, we were also advised of the following agreements approved in prior years,
which remained in force during the year.
2.1 Joint and several guarantee agreement between the Caisse Nationale des Caisses d’Epargne
and CDC IXIS Capital Markets (now IXIS Corporate & Investment Bank)
On October 1, 2004, the Caisse Nationale des Caisses d’Epargne and CDC IXIS Capital Markets signed an agreement whereby
Caisse Nationale des Caisses d’Epargne grants a joint and several guarantee for an indefinite period in respect of amounts
owed by CDC IXIS Capital Markets to non-Group companies.
INFORMATION
ON THE ISSUER
2 AGREEMENTS APPROVED IN PRIOR YEARS WHICH REMAINED IN FORCE
DURING THE YEAR
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The Caisse Nationale des Caisses d’Epargne may unilaterally terminate this agreement provided that it announces its intention
six months before the termination becomes effective.
2.2 Letter of financial undertaking between the Caisse Nationale des Caisses d’Epargne
and IXIS Investor Services
On December 16, 2004, the Caisse Nationale des Caisses d’Epargne and IXIS Investor Services signed a series of agreements
whereby Caisse Nationale des Caisses d’Epargne undertakes:
■
(i) to take all necessary measures to guarantee, at all times and under any circumstances during the life of IXIS Investor
Services, a suitable level of liquidity and solvency to enable IXIS Investor Services to carry on its banking and investment
services operations; and
■
(ii) to directly assume the risk of non-collection relating to any commitments made by IXIS Investor Services as regards third
parties for an amount of more than €10 million per commitment (a) undertaken by CDC IXIS prior to the date of transfer and
transferred by the latter to IXIS Investor Services; and (b) undertaken by IXIS Investor Services as from December 31, 2004.
This agreement spans a period of five years starting December 31, 2004, and may be tacitly renewed for additional periods
of one year. The parties may terminate the agreement by registered letter with return receipt requested providing a minimum
of six months’ notice is given.
This financial undertaking will generate interest calculated on the basis of 1% of the capital requirement thus transferred
by IXIS Investor Services to the Caisse Nationale des Caisses d’Epargne. No revenues were recorded by your Company
in respect of this agreement in the financial statements for the year ended December 31, 2005.
An amount of €422,604.56 will be paid during the first six months of 2006.
2.3 Employment contracts with Guy Cotret, Anthony Orsatelli and Pierre Servant,
members of the Management Board
At its January 21, 2004 meeting, the Supervisory Board authorized the signature of an employment contract between the
Caisse Nationale des Caisses d’Epargne and Guy Cotret, under which Mr Cotret holds the position of Director of the Human
Resources and Banking Operations division, effective from January 1, 2004.
The basic salary paid to Guy Cotret in respect of 2005 amounted to €373,331.88.
At the same meeting, the Supervisory Board also authorized the signature of an employment contract between the Caisse
Nationale des Caisses d’Epargne and Anthony Orsatelli, under which Mr Orsatelli holds the position of Director of the
Investment Banking division, effective from January 1, 2004.
The basic salary paid to Anthony Orsatelli in respect of 2005 amounted to €369,384.56.
At the same meeting, the Supervisory Board also authorized the signature of an employment contract between the Caisse
Nationale des Caisses d’Epargne and Pierre Servant, under which Mr Servant holds the position of Director of the Group
Financial Management division, effective from January 1, 2004.
The basic salary paid to Pierre Servant in respect of 2005 amounted to €373,770.55.
2.4 Amendment to the employment contract of Nicolas Mérindol, member of the Management Board
At its meeting of January 21, 2004, the Supervisory Board authorized the signature of an employment contract between
the Caisse Nationale des Caisses d’Epargne and Nicolas Mérindol, under which Mr Mérindol became the head of the Retail
Banking and Local Client Services division.
The basic salary paid to Nicolas Mérindol in respect of 2005 amounted to €356,559.24.
2.5 Guarantee granted by the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS)
to CDC IXIS Asset Management (now IXIS Asset Management)
The Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) granted CDC IXIS Asset Management (now IXIS Asset
Management) a guarantee with respect to operational risk – excluding any performance guarantee – in the context of its
contract to manage the Fondation Julienne Dumeste.
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2.6 Guarantee granted by the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) to Loomis Sayles
FINANCIAL REPORT
OF THE CNCE GROUP
2.8 Two agreements entered into within the scope of the new guarantee granted by the Caisse Nationale
des Caisses d’Epargne (formerly CDC IXIS) to IXIS Structured Products regarding the creation
of a Special-Purpose Vehicle (SPV)
These agreements were entered into following the sale of the Labouchère bank to allow CDC IXIS Capital Markets (now
IXIS Corporate & Investment Bank) to carry out transactions on the secondary market and particularly Japan, as part
of a €10 billion EMTN program. The creation of this Jersey-based SPV requires a guarantee to be provided by means of:
■
an amendment to the letter of undertaking signed on May 28, 2003 by the Caisse Nationale des Caisses d’Epargne (formerly
CDC IXIS) and CDC IXIS Capital Markets (now IXIS Corporate & Investment Bank) in order to include the SPV within the scope
of this letter of undertaking;
■
setting up a joint and several guarantee between the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) and
IXIS Structured Products, which would allow the guarantee provided by CDC IXIS to be transferred to IXIS Structured Products.
2.9 Loan agreement between the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS)
and CDC Financial Products
The Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) granted a 5-year USD 500 million loan for the financing
of its subsidiary CDC Financial Products, in addition to the USD 1 billion loan granted at an earlier date.
2.10 Guarantee granted by IXIS AEW Europe to the Caisse Nationale des Caisses d’Epargne
(formerly CDC IXIS)
IXIS AEW Europe granted a guarantee regarding the €500 million EPI fund created by IXIS AEW Europe following the payment
of €50 million by the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) into the fund.
RISK
MANAGEMENT
This agreement was renewed for a term of three years, i.e., up to 2007.
CHAIRMAN'S REPORT
This agreement was drawn up taking into account the organization of the Group after completion of the New Foundations
project and concerns access to interbank markets, the opening of a short-term credit facility, the creation of mandatory
reserves at CDC through the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS), the provision of securities
as a guarantee for financial market systems and for the financing of the Caisse Nationale des Caisses d’Epargne (formerly
CDC IXIS), as well as the terms and conditions of operating the new account opened at Banque de France in the name of CDC.
RESOLUTIONS
2.7 Renewal of the financial agreement entered into in July 2001 by the Caisse Nationale
des Caisses d’Epargne (formerly CDC IXIS) and CDC
FINANCIAL REPORT OF
The Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) granted Loomis Sayles a guarantee with respect to operational
risk – excluding any performance guarantee – regarding the TKP Pensionen bond management contract.
IXIS Corporate & Investment Bank granted the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) a loan designed
to eliminate the global interest rate risk resulting from the agreement providing for the transfer to IXIS Corporate & Investment
Bank. The loan, which matures on January 31, 2021, was granted for an amount of €377,905,220.80 and is repayable
in quarterly installments at an interest rate of 5.4289%.
INFORMATION
ON THE ISSUER
2.11 Loan granted by IXIS Corporate & Investment Bank to the Caisse Nationale des Caisses d’Epargne
(formerly CDC IXIS)
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2.12 Agreement providing for the de facto pooling of activities between CDC, the Caisse Nationale
des Caisses d’Epargne (formerly CDC IXIS) and CDC IXIS Capital Markets (now IXIS Corporate
& Investment Bank)
This agreement was designed to facilitate the businesses carried out by the related parties through a system of resource pooling
and cost-sharing. The terms of the agreement were extended to Martignac Finance further to an amendment signed in 2002.
Your Company did not report any expenses or revenues in connection with this agreement in 2005.
2.13 Loan granted by the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS)
to IXIS Asset Management Group
In the context of the financial restructuring of the Asset Management division, the Caisse Nationale des Caisses d’Epargne
(formerly CDC IXIS) granted a €110 million loan to IXIS Asset Management Group at arm’s length conditions (3-month Euribor
+ 4 basis points). The loan matures on December 31, 2008.
At December 31, 2005, the face value of the loan was €95 million following the payment of an installment of €15 million
at December 30, 2005. Interest amounted to €2,425,549.21.
2.14 Memorandum of understanding, shareholders’ agreement and agreements relating
to Lanson International
These agreements were approved by your Supervisory Board at its meeting of October 21, 2004, after having reviewed
our special report dated October 6, 2004.
2.15 Senior and junior deeds of option on preferred shares entered into by the Caisse Nationale
des Caisses d’Epargne (formerly CDC IXIS) and Veolia Environnement
Two senior deeds of option on A1 and A2 preferred shares and a junior deed of option on B preferred shares were signed by
the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) and Veolia Environnement. This arrangement to carry preferred
shares covers a maximum term of five years.
2.16 Euro/multi-currency current account agreement between the Caisse Nationale
des Caisses d’Epargne (formerly CDC IXIS) and Martignac Finance
The Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS) and Martignac Finance entered into an agreement relating
to the operation of a euro/multi-currency account opened at the Caisse Nationale des Caisses d’Epargne (formerly CDC IXIS).
Although separate, this agreement is related to the account/liquidity agreement described above. The terms and conditions
of any interest accruing on the account(s) if it (they) should be in debit are set out in an appendix to the agreement.
Paris and La Défense, April 28, 2006
Yves Nicolas
Anik Chaumartin
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FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
RESOLUTIONS
FINANCIAL REPORT OF
submitted to the Ordinary Shareholders’ Meeting of May 17, 2006
FIRST RESOLUTION
Approval of statutory financial statements
After reviewing the terms of the Management Board’s report on the management of the Company, the Supervisory Board’s
observations, the report of the Chairman of the Board and the Statutory Auditors’ general report on the statutory financial
statements of Caisse Nationale des Caisses d’Epargne et de Prévoyance for the fiscal year ended December 31, 2005,
the Shareholders’ Meeting approves the statutory financial statements, which show a net profit of €608,445,223.43.
SECOND RESOLUTION
RISK
MANAGEMENT
After reviewing the terms of the Management Board’s report on the management of the CNCEP group, the Supervisory Board’s
observations and the Statutory Auditors’ general report on the consolidated financial statements of Caisse Nationale des
Caisses d’Epargne et de Prévoyance for the fiscal year ended December 31, 2005, the Shareholders’ Meeting approves
the consolidated financial statements, which show a net profit of €1,102,665,000.
THIRD RESOLUTION
Appropriation of net income
■
5% of the profit for the previous fiscal year, i.e. the sum of €30,422,261.17 to the statutory reserve;
■
a dividend of €551,603,030.64 for the 475,519,854 shares that make up the capital;
■
a sum of €26,419,931.62 to retained earnings.
RESOLUTIONS
The Shareholders’ Meeting notes the profit for the fiscal year ended December 31, 2005 amounting to €608,445,223.43
and the existence of retained earnings of €68,830,907.56 and approves the appropriation of these sums as suggested
by the Management Board:
CHAIRMAN’S REPORT
Approval of consolidated financial statements
The dividend paid to the shareholders amounts to €551,603,030.64, i.e. €1.16 per share.
In accordance with French law, shareholders are reminded that the dividends distributed for the last three fiscal years and
the corresponding tax credits (where applicable) were as follows:
Net dividend
Tax credit
Total dividend
December 31, 2002
0.42€
0.21€ for individuals or legal entities
that benefit from the tax treatment
applicable to parent companies
0.04€ for all other legal entities
0.63€
December 31, 2003
0.44€
0.22 € for individuals or legal entities
that benefit from the tax treatment
applicable to parent companies
0.04 € for all other legal entities
0.66€
December 31, 2004
1.46€
N/A
1.46€
0.46€
INFORMATION
ON THE ISSUER
Fiscal year ended
0.48€
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Since the dividends on CNCE shares in respect of fiscal year 2005 are only distributed to legal entities that are liable
for corporate income tax, they will not be eligible for the 40% tax rebate provided for in point 2° of article 158 (3) of the French
Tax Code.
FOURTH RESOLUTION
Payment of stock dividends
After hearing the Management Board’s report, the Shareholders’ Meeting decides to offer each shareholder the choice between
receiving payment of the dividend in cash or in shares created with dividend and voting rights as from January 1, 2006.
This option relates to the full amount of the dividend distributed.
After hearing the Statutory Auditors’ special report, the Shareholders’ Meeting sets the unit price of the shares created to pay
the dividend at €20.11, which includes the share premium of €4.86.
Shareholders wishing to receive the dividend in shares will have a period of thirty days as from May 17, 2006, the date on which
the dividend will be distributed, in which to submit their request to the Management Board. As a result, any shareholder that
has not exercised this option by June 17, 2006 may only receive the dividend payable to it in cash.
Subscription forms will be sent to shareholders.
Each shareholder may choose either method of payment of the dividend, but the choice will cover the full amount of
the dividend for which the option is exercised.
If the amount of the dividend to which a shareholder is entitled does not correspond to a whole number of shares,
the shareholder may:
■
receive the nearest higher whole number of shares by paying the difference in cash, or
■
receive the nearest lower whole number of shares, together with a balancing cash adjustment.
Full powers are given to the Management Board to carry out all operations relating to the exercise of the option and
the resulting capital increase, in particular to make the correlative amendments to the Company’s bylaws.
FIFTH RESOLUTION
Approval of the agreements referred to in article L. 225-86 of the French Commercial Code
After reviewing the Statutory Auditors’ special report on the agreements referred to in article L. 225-86 of the French
Commercial Code, the Shareholders’ Meeting successively approves each of the agreements referred to in this report.
LAST RESOLUTION
Powers
Full powers are given to the bearer of a copy of or an excerpt from the minutes of this meeting to carry out the publication
formalities required by law.
206
INFORMATION RELATING TO THE ISSUER
Presentation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Management and Supervisory Boards and Executive Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
ADDITIONAL INFORMATION
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Certificate of incorporation and bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
FINANCIAL REPORT OF
on the issuer
RISK
MANAGEMENT
INFORMATION
FINANCIAL REPORT
OF THE CNCE GROUP
Page 207
CHAIRMAN’S REPORT
15:13
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
207
12/07/06
15:13
Page 208
INFORMATION
relating to the issuer
1
PRESENTATION OF THE COMPANY
Company name: The issuer’s corporate name is Caisse Nationale des Caisses d’Epargne et de Prévoyance, abbreviated
to CNCEP. The Company’s trade name is Caisse Nationale des Caisses d’Epargne, abbreviated to CNCE.
Registration number: 383 680 220 with the Paris Trade and Companies Registry, APE (business activity) code 652 C.
Date of incorporation and term of the Company
The term of the Company is set at 99 years and shall consequently expire on November 26, 2090, except in the event of earlier
dissolution or extension.
Legal form of the issuer
The issuer is organized as a société anonyme (joint-stock corporation) governed by a Management Board and a Supervisory
Board and subject to the laws and regulations in force and in particular the provisions of the French Commercial Code with
respect to commercial companies and the provisions of the French Monetary and Financial Code with regard to credit
institutions, notably articles L. 512-85 to L. 512-104, and the implementing decrees taken in this respect as well as by
the Company’s bylaws. The Company is a credit institution and is officially approved as a bank. On this basis, it performs both
in France and other countries the prerogatives granted to banks by the French Monetary and Financial Code, and provides the
investment services provided for in articles L. 321-1 and L. 321-2 of the above-mentioned Code, to all French or non-French
clients, and in particular the Caisses d’Epargne.
The Caisse Nationale des Caisses d’Epargne et de Prévoyance was granted approval as a bank by the Comité des établissements
de crédit et des entreprises d’investissement (Committee of credit institutions and investment companies of the Banque de
France) on October 27, 1999 when it was still called the Caisse Centrale des Caisses d’Epargne et de Prévoyance.
Pursuant to article 29 of law no. 99-532 of June 25, 1999, during the Special Shareholders’ Meeting and the Management Board
meeting convened on September 29, 1999, the CNCE (previously known as the Caisse Centrale des Caisses d’Epargne et de
Prévoyance) took over from the Centre National des Caisses d’Epargne et de Prévoyance as the central company of Groupe
Caisse d’Epargne as provided for by articles L. 511-30, L. 511-31 and L. 511-32 of the French Monetary and Financial Code.
The issuer is governed by the laws of France.
Registered office: 5, rue Masseran – 75007 Paris, France
Head office for business purposes: 50, avenue Pierre-Mendès-France – 75201 Paris Cedex 13 – France
Telephone: 33 (0)1 58 40 41 42
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Page 209
2 MANAGEMENT AND SUPERVISORY BOARDS AND EXECUTIVE MANAGEMENT
1. Members of the Management Board
Charles MILHAUD
Guy COTRET
Member of the Management Board, responsible for human resources,
IT and banking operations
Nicolas MERINDOL
Member of the Management Board, responsible for commercial banking and strategy
Anthony ORSATELLI
Member of the Management Board, responsible for investment banking
Pierre SERVANT
Member of the Management Board responsible for finance and risk management
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
The members of the Management Board have tenure of six years. Their terms of office will expire on December 31, 2009.
2. Members of the Supervisory Board
As required by article L. 512-94 of the French Monetary and Financial Code and article 23 of the Company’s bylaws,
the Supervisory Board consists of 20 members, comprising 12 representatives of Groupe Caisse d’Epargne, 6 representatives
of the Caisse des Dépôts Group and 2 representatives of the employees of the Caisses d’Epargne network.
Four non-voting members, three of whom are not connected with the group, also serve on the Supervisory Board. A government
representative and four representatives of the Worker’s Committee, one of whom was appointed in 2005, attend Board meetings.
The terms of office of the members of the Supervisory Board, covering a period of six years, will expire on the date of the
Shareholders’ Meeting to be held in 2009 to approve the financial statements for fiscal year 2008.
Date of appointment
Main duties
December 15, 2003
Chairman of the Steering and Supervisory Board
of the Caisse d’Epargne Aquitaine Nord
Chairman of the Supervisory Board:
Business address: 61, rue du Château-d’Eau – 33076 Bordeaux Cedex
Vice-Chairmen of the Supervisory Board:
Bernard COMOLET
December 15, 2003
of the Caisse d’Epargne Ile-de-France Paris
Business address: 19, rue du Louvre – BP 94 – 75021 Paris Cedex 1
Francis MAYER
December 15, 2003
Business address: 56, rue de Lille – 75007 Paris
Members of the Supervisory Board representing holders of class “A” shares
Chief Executive Officer, Caisse des Dépôts
Jean-Charles COCHET
December 15, 2003
of the Caisse d’Epargne de Lorraine
October 21, 2004
of the Caisse d’Epargne de Bretagne
RESOLUTIONS
Jacques MOUTON
CHAIRMAN’S REPORT
To the Company’s knowledge, there are no family links between Management Board members.
RISK
MANAGEMENT
Business address of Management Board members: 50, avenue Pierre-Mendès-France – 75201 Paris Cedex 13.
Business address: 2, rue Royale – 57000 Metz
Dominique COURTIN
December 15, 2003
of the Caisse d’Epargne de Côte d’Azur
Business address: 455, promenade des Anglais – BP 297 – 06205 Nice Cedex 3
Michel DOSIÈRE
December 15, 2003
of the Caisse d’Epargne de Poitou-Charentes
Business address: 18, rue Gay-Lussac – BP 156 – 86004 Poitiers Cedex
Marcel DUVANT
INFORMATION
ON THE ISSUER
Business address: 4, rue du Chêne-Germain – 35510 Cesson-Sévigné
December 15, 2003
of the Caisse d’Epargne des Pays du Hainaut
Business address: 31, avenue Georges-Clemenceau – BP 249 – 59306 Valenciennes Cedex
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Information relating to the issuer
Yves HUBERT
Date of appointment
Main duties
December 15, 2003
of the Caisse d’Epargne de Picardie
Business address: 2, boulevard Jules-Verne – BP 727 – 80007 Amiens Cedex
Alain LEMAIRE
December 15, 2003
of the Caisse d’Epargne de Provence-Alpes-Corse
Business address: Place Estrangin-Pastré – BP 108 – 13254 Marseille Cedex 6
Jean LEVALLOIS
December 15, 2003
of the Caisse d’Epargne de Basse-Normandie
Business address: 7, rue Colonel-Rémy – BP 5007 – 14052 Caen Cedex
Bernard SIROL
December 15, 2003
of the Caisse d’Epargne de Midi-Pyrénées
Business address: 42, rue du Languedoc – BP 629 – 31002 Toulouse
Hervé VOGEL
December 15, 2003
of the Caisse d’Epargne Rhône-Alpes Lyon
Business address: 42, boulevard Eugène-Deruelle – 69003 Lyon
Members of the Supervisory Board representing holders of class “B” shares
Caisse des Dépôts
December 15, 2003
Represented by Dominique Marcel,
Senior Executive Vice President, Finance
and Strategy of the Caisse des Dépôts Group
Étienne BERTIER
December 15, 2003
Chairman and Chief Executive Officer of ICADE
Albert OLLIVIER
January 21, 2004
Chairman of CDC-PME, member of the Management
Committee of the Caisse des Dépôts Group
December 15, 2003
Corporate Secretary of the Caisse des Dépôts
Group
January 21, 2004
Executive Vice-President, Finance and Strategy
of the Caisse des Dépôts Group
56, rue de Lille – 75007 Paris
Jean SEBEYRAN
Franck SILVENT
Members of the Supervisory Board representing the employees of the Caisses d’Epargne network
Serge HUBER
January 1, 2003
Business address: 2 bis, rue Denis-Papin – 37300 Joué-lès-Tours
Jacques MOREAU
Business address: 7, rue Mornay – 75004 Paris
Non-voting members of the Supervisory Board
May 15, 2000
Joël BOURDIN
December 15, 2003
Jean-Marc ESPALIOUX
December 15, 2003
Jean-Charles NAOURI
December 15, 2003
Chairman of Euris
Henri PROGLIO
December 15, 2003
of Veolia Environnement
of the Caisse d’Epargne de Haute-Normandie,
Senator
Government representative
Antoine MERIEUX
Representatives of the Workers’ Committee on the Supervisory Board
Patrick MELLUL
Jean-Luc DEBARRE
Françoise AMILHAT
Marcelle JANVIER
To the Company’s knowledge, there are no family links between Supervisory Board members.
210
Page 211
FINANCIAL REPORT
OF THE CNCE GROUP
15:13
3. Management and Supervisory Boards
To our knowledge, over the last five years, none of the members of the Management Board and the Supervisory Board have been:
■ convicted of fraud;
■ associated with any bankruptcy, receivership or liquidation;
■ incriminated or subject to any official public sanction pronounced by the statutory or regulatory authorities;
■ barred by a court from acting as a member of a management or supervisory board or a board of directors of an issuer or from
being involved in managing or conducting its business affairs.
As of the date of this document, no member of the Management Board or the Supervisory Board has a service agreement with
the CNCE or any of its subsidiaries providing for any benefits to be granted.
There is no conflict of interest between the duties of the members of the Management Board and the Supervisory Board with
regard to the issuer and their private interests or other obligations.
RISK
MANAGEMENT
To our knowledge, no arrangement or agreement has been entered into with the main shareholders, clients, suppliers or any
other parties pursuant to which a member of the Management Board or a member of the Supervisory Board may have been
selected as a member of any management or supervisory boards or of any board of directors or as a member of the executive
management.
4. Remuneration and benefits
4.1 Members of the Management Board
MILHAUD Charles
MERINDOL Nicolas
ORSATELLI Anthony
SERVANT Pierre
COTRET Guy
Base
remuneration
Corporate
office
2005
benefits in
kind
490,000.00
356,559.24
369,384.56
373,770.55
373,331.88
0.00
40,000.00
40,000.00
40,000.00
40,000.00
60,056.00
4,392.40
6,000.00
4,032.12
5,448.48
Profit
sharing
Variable
remuneration
paid in 2005
Gross
remuneration
Attendance
Other
fees remuneration
270,000.00
191,400.00
191,400.00
191,400.00
184,800.00
820,056.00
592,351.64
614,543.16
611,136.65
603,580.36
94,488.93
67,113.65
27,179.00
24,232.00
37,578.86
7,758.60
1,933.98
Total
914,544.93
83.36 659,548.65
130,543.84 772,266.00
635,368.65
641,159.22
4.2 Remuneration granted to members of the Supervisory Board during 2005
■
FINANCIAL REPORT OF
12/07/06
Members of the Supervisory Board representing holders of class “A” shares
CHAIRMAN’S REPORT
Chairman
Vice-Chairman
Member
Member
Member
Member
Member
Member
Member
Member
Member
Member
(1) Excludes an indemnity received in his capacity as Chairman of the Supervisory Board, amounting to €80,000.
N.B.: for Alain Maire who resigned on October 21, 2004, attendance fees amount to €545 for 2005.
49,000 (1)
36,000
20,000
25,455
36,000
20,000
36,000
45,182
34,182
36,000
36,000
26,364
INFORMATION
ON THE ISSUER
Jacques MOUTON
Bernard COMOLET
Jean-Charles COCHET
Dominique COURTIN
Michel DOSIÈRE
Marcel DUVANT
Yves HUBERT
Alain LEMAIRE
Jean LEVALLOIS
Bernard SIROL
Hervé VOGEL
RESOLUTIONS
Attendance fees received in 2005
(in €)
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Page 212
■
Members of the Supervisory Board representing holders of class “B” shares
The attendance fees received by CDC and representatives of the holders of class "B" shares amount to €202,556 and were
paid over to CDC Holding Finance.
Caisse des Dépôts represented by Dominique Marcel
Member
NA
Étienne BERTIER
Francis MAYER
Albert OLLIVIER
Jean SEBEYRAN
Franck SILVENT
Member
Vice-Chairman
Member
Member
Member
NA
NA
NA
NA
NA
NA: not applicable
■
Employee Representatives
The attendance fees received by Serge Huber amount to €20,000 and were paid over to the unified labor union.
Attendance fees received in 2005 (in €)
Serge HUBER
Jacques MOREAU
NA
20,000
NA: not applicable
■
Non-voting members
Attendance fees received in 2005 (in €)
Joël BOURDIN
Jean-Marc ESPALIOUX
Jean-Charles NAOURI
Henri PROGLIO
16,364
9,394
11,940
19,394
4.3 Information on the pension plan applicable to the members of the Management Board of the CNCE
and the Chairmen of the Management Boards of the Caisses d’Epargne
Pursuant to an agreement entered into on July 18, 2005, the members of the Management Board of the CNCE and
the Chairmen of the Management Boards of the Caisses d’Epargne are entitled to benefit from a supplementary defined-benefit
pension plan, as an addition to the other plans from which they may benefit, intended to offer them additional pension benefits
calculated on the basis of their salary.
In order to benefit from this pension plan, beneficiaries are required to meet all the conditions set out below at the date of their
retirement:
■ they must be a member of the Management Board of the CNCE or a Chairman of the Management Board of one of the Caisses
d’Epargne at the time when the plan is introduced;
■ they must put a final end to their professional careers while with the CNCE or a Caisse d’Epargne;
■ they must have at least ten years’ length of service as a member of the Management Board of the CNCE or as Chairman of the
Management Board of a Caisse d’Epargne at the time of their retirement at their own initiative or at the Company’s initiative;
■ they must have applied to receive their pension entitlements under the basic French social security system and
the mandatory supplementary French pension systems, the Arrco and Agirc.
Beneficiaries will be entitled to receive pension annuities equal to 10% of their gross average remuneration over the last three
years prior to their retirement.
4.4 System of collective variable remuneration
An incentive profit-sharing agreement was signed on June 30, 2003, for a term of three years. Pursuant to the amendment to
this agreement signed in June 2005, the percentage of payroll to be distributed in respect of both compulsory and optional
profit-sharing agreements is capped at 8% of total payroll for fiscal year 2005. Under this agreement, the employer may pay out
a matching contribution amounting to up to €1,500 per annum, per eligible employee in respect of this profit-sharing bonus.
The average amount of profit sharing paid in 2005 with respect to 2004 was €3,260 per eligible employee. The matching
contribution per employee was equal to €1,450 and 1,442 employees received an incentive profit-sharing payment.
A new mandatory profit-sharing agreement, of an exceptional nature, took effect on January 1, 2005. Furthermore, as the optional
profit-sharing agreement signed in 2003 is due to expire, a new incentive profit-sharing agreement should be implemented in 2006.
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5. Functioning of the Management Board and Supervisory Board
FINANCIAL REPORT
OF THE CNCE GROUP
The Statutory Auditors must mandatorily be convened to Management Board meetings during which the annual financial
statements are approved. Any other persons may be convened to Management Board meetings at the Chairman’s initiative or
at the request of at least half its members. Non-members of the Management Board who are invited to attend Management
Board meetings shall have a consultative vote.
For deliberations to be valid, the effective presence of at least half the members is required. Decisions shall be made by
a majority vote of the members present and each member shall have one vote. A member of the Management Board may not be
represented at Management Board meetings. In the event of a tie in the voting, the Chairman has the casting vote.
With the Supervisory Board’s authorization, the members of the Management Board may divide management tasks among
them, upon the proposal of the Chairman of the Management Board. However, this sharing of responsibilities may not in any
event undermine the collegial nature of the management by the Management Board.
The Supervisory Board shall decide on the method and amount of the remuneration of each of the members of the
Management Board.
This remuneration may be fixed or proportional or a mixture of both fixed and proportional.
RISK
MANAGEMENT
In accordance with the Company’s bylaws, the Management Board meets as often as required in the interests of the Company
and at least once a quarter when convened by its Chairman, either at the registered office or in any other place stated
in the convening letter. However, each member of the Management Board may convene a Management Board meeting,
providing an agenda, if no Management Board meeting has been held for over two months.
FINANCIAL REPORT OF
A – Functioning of the Management Board
The Supervisory Board appoints the members of the Management Board and has the power to recommend their removal from
office; it sets their remuneration, and appoints the Chairman of the Management Board and has the power to remove him from
office. The Supervisory Board receives a quarterly report from the Management Board on the Company’s business. It is also
responsible for checking and reviewing the interim and annual parent company and consolidated financial statements, which
the Management Board prepares and submits to the Supervisory Board, along with a written report on the situation and
business activities of the Company and its subsidiaries during that financial year. The Supervisory Board then presents its
observations on the Management Board’s report and on the financial statements to the Ordinary Shareholders’ Meeting. Other
powers of the Supervisory Board include the power to transfer the registered office within the same département
(administrative district) or to a neighboring département, subject to ratification by the next Ordinary Shareholders’ Meeting.
Moreover, the Supervisory Board also has the power to decide, based on proposals put forward by the Management Board, on a
number of issues specified in the CNCE bylaws. The scope of these powers was extended at the Combined Shareholders’
Meeting of June 30, 2004.
RESOLUTIONS
Members of the Supervisory Board have tenure of six years. The Supervisory Board met nine times during 2005. In accordance
with French legal provisions concerning sociétés anonymes (joint-stock corporations) governed by a Management Board and
a Supervisory Board, and with article 30 of the CNCE bylaws, the Supervisory Board oversees the management activities of the
Management Board on an ongoing basis. It carries out checks and controls as it sees fit, and may ask for any documents it
considers necessary for the fulfillment of its responsibilities. It proposes the appointment of the Statutory Auditors to the
Shareholders’ Meeting. The Supervisory Board meets whenever required in the interests of the Company and by the legal and
regulatory provisions, and at least once a quarter in order to review the quarterly activity report written by the Management Board.
CHAIRMAN’S REPORT
B – Functioning of the Supervisory Board
■
approving any investment, divestment, asset-for-share exchange, merger, demerger, joint venture or alliance carried out by
the Company and/or its subsidiaries of a total amount in excess of €250 million, or of a total amount of between €100 million
and €250 million if the main features of the transaction are not provided for in the annual budget or strategic plan;
■
authorizing any decision relating to the admission to listing on a stock exchange of the shares of the Company or the shares
of major subsidiaries (IXIS Corporate & Investment Bank, IXIS Asset Management Group and IXIS Investor Services, or any
other CNCE subsidiary that may be substituted for them in full or in part or which has control over them as defined in article
L. 233-3 of the French Commercial Code and exercises a determining influence over their strategy and governance);
■
drawing up and approving the annual budget (both parent company and consolidated);
■
reviewing the consolidated financial statements of Groupe Caisse d’Epargne;
INFORMATION
ON THE ISSUER
These issues are as follows:
■ approving the Company’s strategic plan and successive revisions thereof, and the strategic objectives of the Caisses
d’Epargne and the main CNCE subsidiaries;
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■
deciding whether to establish a mutual guarantee and solidarity fund (fonds commun de garantie et de solidarité),
and drawing up general rules for the operation thereof;
■
appointing and dismissing the Director of the Internal Audit Department;
■
deciding to set up or close any Caisse d’Epargne et de Prévoyance and approving restrictions on the activities of a Caisse
d’Epargne et de Prévoyance or of an affiliated entity;
■
approving or withdrawing approval of members of the Management Boards of the Caisses d’Epargne et de Prévoyance and
of executive directors of affiliated entities;
■
dismissing all the members of the Steering and Supervisory Board of a Caisse d’Epargne et de Prévoyance and appointing
a provisional committee pending the appointment of a new Steering and Supervisory Board;
■
formulating an injunction with regard to the Steering and Supervisory Board of a Caisse d’Epargne et de Prévoyance or to
the management body of a network entity, affiliated entity, or any other entity falling within the scope of the regulations
governing Groupe Caisse d’Epargne;
■
dismissing all the members of the Management Board of a Caisse d’Epargne et de Prévoyance;
■
authorizing any proposal relating to the issuance of financial instruments (bonds, other debt securities and composite
securities) by the Company (directly or via a subsidiary) other than those approved in the budget or issuance program
of the Company or its subsidiaries.
In addition to topics routinely discussed (business activities, approval of executive directors of affiliated entities, quarterly
Management Board reports), the main issues dealt with at Supervisory Board meetings were as follows:
■
■
presentation of the interim financial statements of the CNCE and the Group for 2005;
■
project regarding potential listing: review of the conditions for admission to listing on a stock exchange of the CNCE shares
at the same time as setting up a holding company to hold the CNCE shares held by the Caisses d’Epargne;
■
approval of the 2006 budget;
■
review and adaptation of the strategic plan;
■
various transactions involving alliances or acquisitions;
■
commercial banking action plan for 2005.
Depending on the nature of the files submitted to the Supervisory Board, it discussed matters and made decisions in the light
of the report or reports of the Chairman of the relevant Supervisory Board Committee.
C – Functioning of committees set up by the Supervisory Board
The membership and rules of functioning of the Audit Committee, the Remuneration & Selection Committee and the Strategy
& Development Committee are specified in the bylaws.
These committees all consist of seven members (including a chairman), comprising four representatives of Groupe Caisse
d’Epargne and three representatives of the Caisse des Dépôts.
The Supervisory Board may also appoint a non-voting member from outside the Group to any of these committees, subject to
prior consent from a majority of the Board representatives of the shareholders of each class of shares. Under this provision,
two non-voting members serve on committees, one attending meetings of the Audit Committee, and the other attending
meetings of the Remuneration & Selection Committee.
At the end of the past fiscal year, the non-voting member sitting on the Audit Committee resigned in this capacity, in the light
of the number of other activities he performs, but he continued to remain a member of the Supervisory Board.
A committee may only validly deliberate if at least half of its members are present. Each committee issues an opinion
at a majority of the members present.
The Audit Committee met nine times in 2005.
The Audit Committee assists the Supervisory Board in its role of checking and reviewing the financial statements and
the Management Board’s report on the Company’s business.
In this respect, it monitors the quality of the information provided to shareholders, and more generally fulfils the responsibilities
stipulated in regulation 2001-01 issued by the French Banking Regulations Committee (CRBF) on June 26, 2001 relating
to internal control within credit institutions and investment companies, which amended CRBF regulation 97-02 issued
on February 21, 1997.
214
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Other powers granted to the Audit Committee are:
■
reviewing the annual and interim parent company and consolidated financial statements, the Company’s draft budgets,
at both parent company and consolidated level, and corporate financial documents distributed at accounting period-end.
The preparatory files for the review of the financial statements are provided to it at least eight days prior to meetings;
■
issuing an opinion on measures proposed by the Management Board in the event of a deterioration in the financial position
of the Company, its subsidiaries, or the Caisses d’Epargne or of the triggering of financial guarantee clauses;
■
issuing an opinion on the appointment or reappointment of the Company’s Statutory Auditors and reviewing their work
programs, audit conclusions and recommendations, and any follow-up action in response to their recommendations;
■
issuing an opinion on the procedures adopted by the Company in the areas of regulatory compliance and the monitoring
and control of risk;
■
issuing an opinion on the appointment and dismissal of the Director of the Internal Audit Department;
■
monitoring follow-up action taken in response to engagements conducted by the Internal Audit Department and the French
Banking Commission;
■
signing off on the Company’s annual internal audit work program, including internal audits conducted within subsidiaries;
■
ensuring that all new agreements between the Company’s subsidiaries on the one hand, and the Caisses d’Epargne or the
Caisse des Dépôts Group on the other, are entered into on an arm’s length basis;
■
examining, at the request of any Audit Committee member, any issue within its sphere of competence that it sees fit,
and reporting thereon to the Supervisory Board.
The Audit Committee may, at the request of the Supervisory Board, examine all questions of a financial or accounting nature
submitted to its attention.
FINANCIAL REPORT
OF THE CNCE GROUP
15:13
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
at the initiative of the Chairman of the Supervisory Board, report by the Chairman of the Supervisory Board to
the shareholders on the work of the Supervisory Board and internal control procedures for 2004;
■
2005 budget adjusted to take into account the reorganization of the CNCE;
■
■
review of the impact of IFRS on the parent company financial statements and the Group’s consolidated financial statements;
■
review of the findings of the audits by the Internal Audit Department and the follow-up reports and letters from
the supervisory authorities following the report by the Director of the Group’s Internal Audit Department;
■
annual report by the Internal Audit Department on the functioning of the audit mechanism and on risk management in 2004;
■
organization of the Group’s Risk Management function;
■
organization of the Group’s ongoing control;
■
taking of interests and acquisitions.
Members of the Audit Committee
■
representatives of Groupe Caisse d’Epargne: Bernard Comolet, Jean-Claude Créquit, Marcel Duvant, Alain Lemaire;
■
representatives of the Caisse des Dépôts: Dominique Marcel (Chairman), Franck Silvent, Jean Sebeyran.
The Remuneration & Selection Committee met ten times in 2005.
RESOLUTIONS
■
CHAIRMAN’S REPORT
The main issues dealt with by the Audit Committee in 2005 were as follows:
The Remuneration & Selection Committee prepares decisions of the CNCE Supervisory Board on the following topics:
Remuneration
The Committee is tasked with making proposals to the Supervisory Board on:
■ the level and methods of remuneration of the members of the Management Board of the Company and major subsidiaries;
■ the allocation of attendance fees among members of the Supervisory Board, and the total amount of attendance fees
submitted for approval by the Company’s Shareholders’ Meeting.
■
Selection
The Committee makes proposals and recommendations to the Supervisory Board on:
■ the appointment, removal from office and replacement of the members of the Management Board of the Company
and major subsidiaries;
■ the approval and withdrawal of approval of members of the Management Boards of the Caisses d’Epargne et de Prévoyance
(in particular their chairmen), combined with oversight of the nature and application of the approval criteria laid down by
the CNCE Management Board;
■ the appointment or removal from office of the members of other Committees of the Supervisory Board and their chairmen.
INFORMATION
ON THE ISSUER
■
215
12/07/06
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Page 216
The main issues dealt with by the Remuneration & Selection Committee in 2005 were as follows:
■ approvals;
■ corporate officers of the CNCE: updating of civil liability insurance for CNCE corporate officers;
■ allocation and method of payment of attendance fees to Supervisory Board members;
■ the variable portion of remuneration allocated to the members of the Management Board for 2004;
■ the criteria for the variable remuneration to be allocated to the members of the CNCE Management Board for 2005;
■ remuneration of the corporate officers of Caisses d’Epargne et de Prévoyance: allocation of the variable and fixed
remuneration of the members of the Management Boards;
■ additional pension plan for the members of the CNCE Management Board and the Chairmen of the Management Boards
of the Caisses d’Epargne.
Members of the Remuneration & Selection Committee
■
representatives of Groupe Caisse d’Epargne: Jacques Mouton (Chairman), Yves Hubert, Jean Levallois, Bernard Sirol;
■
representatives of the Caisse des Dépôts: Francis Mayer, Étienne Bertier, Jean Sebeyran;
■
independent, non-voting member: Henri Proglio
The Strategy & Development Committee met nine times in 2005.
The Strategy & Development Committee prepares decisions taken by the Company’s Supervisory Board in the following areas:
■
setting of strategic objectives and growth priorities for the CNCE, the Caisses d’Epargne et de Prévoyance, and their
subsidiaries;
■
preparation and revision of the strategic plan and of proposals relating to acquisitions or alliances.
The Strategy & Development Committee must be kept informed on a regular basis of progress on acquisitions and alliances.
Moreover, it is kept informed twice a year of the achievement of the targets set in the strategic plan.
At its meetings, the Strategy & Development Committee primarily reviewed the files on acquisitions and alliances implemented
by the Group.
Members of the Strategy & Development Committee:
■
representatives of Groupe Caisse d’Epargne: Yves Hubert (Chairman), Dominique Courtin, Jacques Mouton, Hervé Vogel;
■
representatives of the Caisse des Dépôts: Dominique Marcel, Francis Mayer, Jean Sebeyran.
The Company takes action and the Management and Supervisory Boards function within the framework of corporate
governance practices in force in France.
D – List of offices and duties performed during 2005 by each corporate officer
MEMBERS OF THE MANAGEMENT BOARD
Charles MILHAUD
CNCE
216
SA (corporation) governed by a Management Board and Supervisory Board
F Chairman of the Management Board
F Chairman of the Supervisory Board
CNP Assurances
F Member of the Supervisory Board
PEREXIA
F Vice-Chairman of the Supervisory Board
Sopassure
SA (corporation)
F Director
Financière OCÉOR
Banque des Iles
Saint-Pierre-et-Miquelon
SA (corporation)
F Permanent Representative of the CNCE,
Director
Banque des Antilles
françaises
SA (corporation)
Director
SA (corporation)
Director
Banque de Tahiti
SA (corporation)
Director
Banque de Nouvelle-Calédonie SA (corporation)
Director
IXIS Asset Management Group SA (corporation) governed by a Management Board and Supervisory Board
Page 217
IXIS AM
Member of the Supervisory Board
IXIS Corporate &
Investment Bank
Chairman of the Remuneration Committee
Sodexho Alliance
SA (corporation)
F Director
SOGIMA
F Permanent Representative of PEREXIA,
ISSORIA
ERIXEL
SAS (simplified joint-stock company)
F Chairman
CDC Entreprises
Compagnie Générale des Eaux SCA (limited liability partnership with shares)
F Director
CNED
SARL (limited liability company)
F Chairman of the Board of Directors
Fondation Caisses d’Epargne
Foundation
ECUFONCIER
Limited partner
CM Investissements
F Manager
Terms of office that expired in 2005
IXIS Private Capital
Management
Banque internationale
des Mascareignes
Company governed by Mauritian law
FINANCIAL REPORT
OF THE CNCE GROUP
15:13
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
Permanent Representative of the CNCE,
Director
F Member of the Management Board
IXIS Corporate &
Investment Bank
Member of the Supervisory Board,
Member of the Remuneration Committee
Gestrim
SA (corporation)
F Director
Gestitres
SA (corporation)
ISSORIA
ARPEGE
EIG (economic interest grouping)
IXIS Asset Management
F Member of the Supervisory Board,
Member of the Audit Committee
Banque des Antilles françaises SA (corporation)
Director
Banque des Mascareignes
Company governed by Mauritian law
PEREXIA
GIE Ecureuil Crédit
GCE NEWTEC
SEDI-RSI
F Chief Executive Officer
RESOLUTIONS
Director
GEMO-RSI
Girce Stratégie
Director
La Chaîne Marseille
SA (corporation)
Director
SOCFIM
Girce Ingénierie
INFORMATION
ON THE ISSUER
CNCE
CHAIRMAN’S REPORT
Guy COTRET
217
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Page 218
Foundation
F Director
CICOBAIL
SA (corporation)
Odacia
SA (corporation)
Director
A3C
SA (corporation)
F Chairman
Nicolas MÉRINDOL
218
CNCE
PEREXIA
GESTRIM
Banque Palatine
CEFi
SA (corporation)
Director
HOLGEST
SA (corporation)
F Chairman-directeur général
Financière OCÉOR
F Director
SA (corporation)
F Director
Ecureuil Gestion
Chairman Remuneration & Selection
Committee
Ecureuil Gestion FCP
Chairman Remuneration & Selection
Committee
Ecureuil Vie
SA (corporation)
IXIS Corporate &
Investment Bank
F Vice-Chairmen of the Supervisory Board
Member of the Strategy Committee
IXIS Private Capital Management SA (corporation) governed by a Management Board and Supervisory Board
CDC Entreprises Capital
Investissement
SA (corporation)
F Director
INGEPAR
SA (corporation)
Sopassure
SA (corporation)
F Director
CNP Assurances
EFIDIS
La Compagnie 1818 –
Banquiers privés
ISSORIA
Alliance Entreprendre
member of the Management Board
Développement
F Permanent Representative of the SAS
Ecureuil Participations, shareholder
ERILIA
SA (corporation)
F Director
ERIXEL
SA (corporation)
F Director
IXIS AM Participations 1
ECUFONCIER
SCA (limited liability partnership with shares)
limited partner
15:13
Page 219
GEMO-RSI
SEDI-RSI
Director
GCE NEWTEC
Girce Stratégie
Director
CEMM
GCE Fidélisation
F Chairman
SERENA
USA Member of the board
of Directors US Corporation
Banca Carige
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Italy Permanent Representative of the CNCE
on the Board of Directors
Entenial
SA (corporation)
F Director
IXIS IS
Revenus trimestriels
SICAV
Director
Vigeo
F Director
CNCE
CACEIS
Member of the Remuneration &
Selection Committee Member of the
RISK
MANAGEMENT
CIFG Assurance North America
USA Member of the Board of Directors
CIFG Europe
SA (corporation)
F Permanent Representative of CIFG
Guaranty on the Supervisory Board
CIFG Guaranty
SA (corporation)
F Permanent Representative of CIFG Holding,
CIFG Holding
SA (corporation)
CIFG Services Inc.
USA Member of the board of Directors
Ecureuil Gestion
Euroclear plc
England Member of the Board of Directors
Euroclear SA/NV
Belgium Director
GIAT Industries
SA (corporation)
F Director
Member of the Remuneration committee
Chairman of the Strategy
& Development Committee
IXIS Asset Management US
Corporation
IXIS Asset Management US LLC
IXIS Capital Markets North America
USA Chairman of the Board of Directors
RESOLUTIONS
Luxembourg Chairman of the Board of Directors
INFORMATION
ON THE ISSUER
IXIS SP (ex CDC SP)
CHAIRMAN’S REPORT
Anthony ORSATELLI
219
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15:13
Page 220
IXIS Corporate &
Investment Bank
Director of Central Functions
IXIS Funding Corp.
IXIS North America
IXIS Private Capital
Management
USA Chairman of the board of Directors
IXIS Securities North
America Inc.
USA Member of the board of Directors
NEXGEN Financial Holding
Limited
Ireland Chairman of the Board
NEXGEN RE LIMITED
Ireland Chairman of the Board
San Paolo IMI SpA
Italy Director
LAZARD Ltd
Bermuda Director
SOGEPOSTE
IXIS Securities
Pierre SERVANT
CNCE
F Chairman
IXIS Corporate &
Investment Bank
Chairman du comité d’audit
Chairman of the Audit Committee
CIFG Holding
ECUFONCIER
F Chairman of the Supervisory Board,
Limited partner
CACEIS
IXIS AM US Corp.
220
F Vice-Chairman of the Supervisory Board,
Financière OCÉOR
Participations Ecureuil
SNC (general partnership)
F Representative of Ecureuil Participations,
Manager
Mifcos Participations
SNC (general partnership)
F Representative of Ecureuil Participations,
Manager
Fonds de Garantie des Dépôts SA (corporation) governed by a Management Board and Supervisory Board
GIE CDC International
F Director
SA (corporation)
F Director
Martignac Finance
IXIS Italia holding
MEMBERS OF THE SUPERVISORY BOARD
Jean-Charles COCHET
CNCE
SA coopérative (cooperative company) governed by a Management Board
and a Steering and Supervisory Board
Société Lorraine d’Habitat
Nancy
SA d’HLM (subsidized housing corporation) governed by
a Board of Directors
F Director
BATIGÈRE SAS – METZ
SAS (simplified joint-stock company) governed by a Management Board
and Supervisory Board
LOGIEST – METZ
SA d’HLM (subsidized housing corporation) governed by
a Board of Directors
F Director
CILEST – METZ
Comité Interprofessionnel
du Logement de l’Est
Not-for-profit organization
F Director
Caisse Générale de Retraite
du Personnel des Caisses
d’Epargne – Paris
Mutual insurance company
F Director,
Officer of the Board of Directors
Caisse Générale de
Prévoyance du Personnel
des Caisses d’Epargne de Paris
Mutuelle Nationale des
Caisses d’Epargne – Reims
Meurthe-et-Moselle
Habitat – Nancy
OPAC de la ville de Nancy
GIE ARPEGE
Foncier Vignobles
ISSORIA
Ecureuil Protection Sociale
Livret Bourse Investissement
GCE Garanties
Association pour l’Histoire
du Groupe Caisse d’Epargne
GIE Production Ecureuil Est
State-owned corporation
F Chairman
Mutual insurance company
F Director
F Director
EIG (economic interest grouping) in the IT sector
SA (corporation)
SICAV (investment fund)
SA (corporation)
F
F
F
F
F
F
F
F
F Director
CNCE
Caisse d’Epargne
Ile-de-France Paris
CNP Assurances
SA coopérative (cooperative company) governed by a
Management Board and a Steering and Supervisory Board
Director
Member of the Executive Committee
Director
Director
Director
Bernard COMOLET
RISK
MANAGEMENT
Entenial
FINANCIAL REPORT OF
FINANCIAL REPORT
OF THE CNCE GROUP
Page 221
CHAIRMAN’S REPORT
15:13
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
F Non-voting Member of the Supervisory
Board
221
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15:13
Page 222
IXIS Corporate &
Investment Bank
Immobilière 3F
SA HLM (subsidized housing corporation)
F Permanent Representative of the CEIDF,
Director
Chairman of the Strategy
F Chairman of the Steering
Dominique COURTIN
CNCE
Caisse d’Epargne de Bretagne SA coopérative (cooperative company) governed by a
SOCOBRET – Société
SA (corporation)
coopérative HLM de Bretagne
SOCLAM – Société coopérative SA (corporation)
HLM de Location-Attribution
du Morbihan
Les Provinces
SA (corporation)
ARCOMAIN – Architectures
et Constructions Maisons
SEMBA – Société d’Economie
Mixte de Bruz Aménagement
Espacil Construction
SEM (semi-public company)
F Director
F Director
F Director representing
the SAS “Espacil Construction”
F Joint manager, non-shareholder
F Director representing
the SA HLM Espacil-Habitat
F Director
222
CNCE
Caisse d’Epargne et de
Prévoyance Côte d’Azur
Banque Palatine
Foncier Expertise
SOCFIM – Société Centrale pour
le Financement de l’Immobilier
SA (corporation)
F Director
Développement
F Chairman
GIE ARPEGE
EIG (economic interest grouping) in the IT sector
SIPAREX Associés
SA (corporation)
F Director
SOREFI TGV Bail 3
F Representative of the Caisse d’Epargne
Côte d’Azur, member
SEP CECAZ CETELEM CEFi
Joint venture
Côte d’Azur, manager
Comité des Banques des
Alpes-Maritimes de la
Fédération Bancaire Française
Union Patronale
Interprofessionnelle
des Alpes-Maritimes
Union Patronale du Var
Finances Méditerranée
Association TGV Provence
Côte d’Azur
Term of office that expired in 2005
Ecureuil Vie
SA (corporation)
F Director
CNCE
Caisse d’Epargne
et de Prévoyance
de Poitou-Charentes
Ecureuil Actions Futur
FCP (investment trust)
Poitou-Charentes,
Chairman of the Board of Directors
CEPAR1
Poitou-Charentes,
CEPAR3
Poitou-Charentes,
Epargne, Finance et
Investissement
FCPR (venture investment fund)
Poitou-Charentes,
Member of the Board of Directors
Michel DOSIERE
Caisse d’Epargne Financement SA (corporation)
F Member of the Board of Directors
SEDI RSI
Poitou-Charentes, Member of the
Supervisory Board
Ecureuil Assurance IARD
SA (corporation)
F Vice-Chairman of the Board of Directors
GEMO-RSI
Poitou-Charentes, Member of the
Supervisory Board
F Director
Ecureuil Vie
SA (corporation)
CNCE
Prévoyance des Pays
du Hainaut
F Chairman of the Steering and
Supervisory Board, Member of the
Remuneration & Selection Committee
Union Européenne
d’Assurance – UEA
Société Locale d’Epargne
de Valenciennes
Société coopérative (cooperative company) with variable capital
Val’Hainaut Habitat
OPAC (state-owned not-for-profit company in the housing
des Pays du Hainaut, Director
Hainaut PromotionValenciennes
F Member
Les Jardiniers de France –
Valenciennes
Marcel DUVANT
FINANCIAL REPORT OF
RISK
MANAGEMENT
Communauté Economique
et Financière Méditerranée
FINANCIAL REPORT
OF THE CNCE GROUP
Page 223
CHAIRMAN’S REPORT
15:13
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
223
12/07/06
15:13
Page 224
Yves HUBERT
CNCE
& Selection Committee, Chairman
of the Strategy & Development
Committee
Prévoyance de Picardie
Supervisory Board
de Senlis
Banquiers privés
SURASSUR
SA (corporation)
Luxembourg Permanent Representative of the
SAS Ecureuil Participations, Director
Alain LEMAIRE
CNCE
Caisse d’Epargne ProvenceAlpes-Corse
Ecureuil Gestion
SOCFIM – Société Centrale pour SA (corporation) governed by a Management Board and Supervisory Board
le Financement de l’Immobilier
GIE Arpège
EIG (economic interest grouping) Informatique
PROXIPACA Finance
Société Civile et Forestière
de Py et Rotja
Non-trading company
F Manager
Banquiers privés
La Chaîne Marseille
SA (corporation)
F Permanent Representative of the CE
Provence-Alpes-Corse, Director
SA (corporation)
F Permanent Representative of la CE
Provence-Alpes-Corse, Member
of the Supervisory Board
Provence-Alpes-Corse, Member
of the Management Committee
Marseille Aménagement
SAEM (semi-public development corporation)
Compagnie Financière OCÉOR SA (corporation) governed by a Management Board and Supervisory Board
ERILIA
SA HLM (subsidized housing corporation)
Viveris
Ecureuil Vie
SA (corporation)
F Director
Jean LEVALLOIS
CNCE
224
& Selection Committee
15:13
Page 225
Prévoyance de BasseNormandie
de Cherbourg
CEMM
Supervisory Board
F Director
Association pour le
Pluralisme d’Expression
pour la Solidarité
SA HLM du Cotentin
Les Editions de l’Epargne
Public interest foundation
SA (corporation)
SA (corporation)
F Permanent Representative of the
Caisse d’Epargne de Basse-Normandie,
Director
CNCE
Caisse d’Epargne
Aquitaine-Nord
Caisse des Dépôts
de Bordeaux
EXPANSO SDR
EXPANSO Capital
Aquitaine Valley
BRA (Agence de Développement
Economique de Bordeaux
et de la Gironde)
Medef Gironde
Congrès et Expositions
de Bordeaux
Chambre de Commerce et
d’Industrie de Bordeaux
SCI Saint-André
SCI Château Rouquey
Chairman of the Remuneration &
Selection Committee, Member of the
Supervisory Board, Chairman of the
Remuneration Committee,
F Member of the Supervisory Commission
SA (corporation)
SA (corporation)
F
F
F
F
F Director
F Director
Public administrative establishment
F Elected member
SCI (non-trading real-estate investment company)
SCI (non-trading real-estate investment company)
F Manager
F Manager
CNCE
Caisse d’Epargne
Midi-Pyrénées
Toulouse Centre
Member of the Remuneration
Supervisory Board
FINANCIAL REPORT
OF THE CNCE GROUP
12/07/06
FINANCIAL REPORT OF
Hervé VOGEL
CNCE
Caisse d’Epargne
Rhône-Alpes Lyon
Caisse d’Epargne Financement SA (corporation)
CEFi
Member of the Strategy
CHAIRMAN’S REPORT
RESOLUTIONS
Bernard SIROL
INFORMATION
ON THE ISSUER
Executive Chairman
RISK
MANAGEMENT
Jacques MOUTON
225
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Page 226
ARPEGE
SIPAREX Associés
Rhône-Alpes PME Gestion
SA Régionale d’HLM de Lyon
SCIC Habitat Rhône-Alpes
CEPRAL Participations
SA (corporation)
SA d’HLM (subsidized housing corporation)
OPAC du Rhône
Lyon Confluence
Local semi-public company
Term of office that expired during 2005
VIVALIS Investissement
F
F
F
F
F
F
F
Member of the Board of Directors
Director
Permanent Representative
of the CE Rhône-Alpes Lyon, Chairman
of the Board of Directors
Rhône-Alpes Lyon, Director
F Non-voting Member of the Board,
Representative of the CE Rhône-Alpes Lyon
F Director
Dominique MARCEL
CNCE
Caisse des Dépôts
CDC Entreprises
SAS (simplified joint-stock company) governed by a Management Board
CNP Assurances
Société Nationale Immobilière SA (corporation) governed by a Management Board and Supervisory Board
C3D
CDC DI
CDC Holding Finance
ICADE
SA (corporation)
German company
SA (corporation)
SA (corporation)
Société Forestière de la CDC
TRANSDEV
SA (corporation)
SA (corporation)
Compagnie des Alpes
Financière Transdev
SA (corporation)
Accor
SA (corporation)
Dexia Crédit Local
Dexia
Belgian company
Terms of office that expired during 2005
IXIS Corporate & Investment SA (corporation) governed by a Management Board and Supervisory Board
Bank
F Permanent Representative of the CDC,
Member of the Supervisory Board,
Chairman of the Audit Committee,
Member of the Strategy
F Director of Finance and Strategy
F Director
Director
F Director
F Permanent Representative of
Financière Transdev, Director
F Chairman and Chief Executive
F Director
Director
Étienne BERTIER
226
CNCE
ICADE
SA (corporation)
ICADE Foncière des Pimonts
ICADE EMGP
SA (corporation)
SA (corporation)
F Chairman and Chief Executive Officer,
Member of the Appointments
& Remuneration Committee,
Member of the Investment Committee
F Director
F Permanent Representative of ICADE,
Director, Member of the Appointments
& Remuneration Committee, Member
of the Strategy Committee
Page 227
SA (corporation)
Director
ICADE Patrimoine
SCI Rond-Point des Martyrs,
Member of the Management Board
SCI Patrimoniales
SCI (non-trading real estate investment company)
Manager
ICADE Pierre pour Tous
F Member of the Steering Committee
SA (corporation) governed by a Management Board and Supervisory Board F Member of the Supervisory Board
CNP Assurances
SA (corporation) governed by a Management Board and Supervisory Board F Member of the Supervisory Board
Financière Lille
SA (corporation)
F Director
Club Méditerranée
SA (corporation)
F Non-voting Member of the Board
FINECO VITA
SA (corporation)
Italy Director
CIRP
SA (corporation)
Director
CAPRI
SA (corporation)
Director
SCIC Habitat
SA (corporation)
Director
SCET
SA (corporation)
Director
FINANCIAL REPORT
OF THE CNCE GROUP
ICADE Patrimoine
15:13
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
CDC Entreprises
CNP Assurances
Société Nationale Immobilière
IXIS Corporate & Investment
Bank
Accor
Casino Guichard-Perrachon
Dexia
& Selection Committee,
Member of the Strategy & Development
Committee
SA (corporation)
SA (corporation)
Belgian company
SA (corporation)
F Director
F Director
Director
F Director
SA (corporation)
SA (corporation)
SAS (simplified joint-stock company) à directoire et conseil de surveillance
SA (corporation)
F
F
F
F
F
Albert OLLIVIER
CNCE
Avenir Entreprises Gestion
CDC Entreprises
Investissement
CDC Entreprises Innovation
CDC Entreprises Services
Industrie
Commissariat à l’Énergie
Atomique
Fondation Sophia Antipolis
FP Gestion
OSEO
SIPAREX Associés
Member of the Management Board
Chairman
Chairman of the Board of Directors,
Chief Executive Officer
F Director
Foundation
SA (corporation)
F
F
F
F
RESOLUTIONS
INFORMATION
ON THE ISSUER
Caisse des Dépôts
CNCE
CHAIRMAN’S REPORT
Francis MAYER
Associate member
Chairman
Member of the Steering Committee
Permanent Representative of CDC
Entreprises, Director
227
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Page 228
Averroes Finance
SA (corporation)
F Permanent Representative of CDC
Entreprises, Chairman of the Board
of Directors
F Permanent Representative of CDC
Entreprises Capital Investissement,
Jean SEBEYRAN
CNCE
Caisse des Dépôts
CDC Holding Finance
Financière Lille
Informatique Caisse des Dépôts
SCDC
Société Nationale Immobilière
CACEIS
SA (corporation)
SA (corporation)
Consortium de Réalisation
Fondation de France
Member of the Audit Committee,
Member of the Strategy Development
Committee, Member of the Remuneration
F Member of the Management Committee
F Director
F Director
F Director
F Permanent Representative of the CDC
F Permanent Representative of the CDC
non-voting member of the Board
F Permanent Representative of
the Chief Executive Officer of the CDC
Franck SILVENT
CNCE
CI2S
Musée Grévin
SA (corporation)
SA (corporation)
Société Forestière de la CDC SA (corporation)
Société Nationale Immobilière SA (corporation) governed by a Management Board and Supervisory Board
Term of office that expired during 2005
CDC Holding Finance
SA (corporation)
Joël BOURDIN
F Chairman
Compagnie des Alpes,
F Director
Professor,
Senator for the Eure Region
CNCE
Prévoyance de HauteNormandie
de Eure-Ouest
F Non-voting member
Supervisory Board
CNCE
SA (corporation)
Air France KLM
SA (corporation)
Groupe Lucien Barrière
F Non-voting member
F Director and Member of the Accounts,
Audit and Commitments Committee
F Director,
Chairman of the Remuneration
Committee
F Permanent Representative of ACCOR
Jean-Marc ESPALIOUX
228
ACCOR UK
Jean-Charles NAOURI
CNCE
RALLYE
EURIS
Groupe EURIS
FINATIS
HSBC
Marc de Lacharrière
FIMALAC
Rothschild & Cie Banque
Penthièvre Seine
Penthièvre Neuilly
Banque de France
Promotion des Talents
Fondation Euris
Institut d’Expertise
de l’École Normale Supérieure
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
Limited liability partnership
SA (corporation)
Foundation
F Non-voting Member
F Chairman and Chief Executive Officer
F Chairman and Chief Executive Officer
F Chairman
F Director
F Non-voting Member of the Board
F Limited partner
F Manager
F Manager
F Member of the Consultative Board
F Chairman
F Vice-Chairman
F Honorary Chairman
Henri PROGLIO
CNCE
SA (corporation)
Thalès
Elior
EDF
Lagardère
CNP Assurances
Veolia Transport
Veolia Eau
Veolia Propreté
Veolia Water
Dalkia
Dalkia France
Dalkia International
Société des Eaux de Marseille
SARP
SARP Industries
Collex
Veolia Transport Australia
Veolia Environnement Services
Holdings Plc
Siram
Onyx Asia
Connex Northern Europe
Onyx North America Corp.
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
SA (corporation)
F Non-voting Member
F Chairman and Chief Executive Officer,
F Director
F Director
F Director
F Manager
F Director
F Director
F Director
F Director
Director
Director
Director
FINANCIAL REPORT OF
Chairman of the Strategy Committee
United Kingdom Director
RISK
MANAGEMENT
ACCOR
Club Méditerranée
FINANCIAL REPORT
OF THE CNCE GROUP
Page 229
CHAIRMAN’S REPORT
15:13
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
Director
Director
Director
Director
229
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Page 230
ADDITIONAL
INFORMATION
1
SHARE CAPITAL
The Company’s share capital is €7,251,677,773.50, divided into 475,519,854 fully paid-up shares with a par value of
€15.25 each.
The Company has issued no bonds that may be converted, exchanged or redeemed in the form of securities giving access
to share capital, warrants or other securities.
Ownership structure and voting rights
There are three classes of shares, A, B and C:
■
the class “A” shares being those held by Groupe Caisse d’Epargne that is defined as follows: Caisses d’Epargne et
de Prévoyance, any company under the control – as provided for in article L. 233-3 of the French Commercial Code – of one or
several Caisses d’Epargne et de Prévoyance, as well as (i) by all individuals holding a position of responsibility within Groupe
Caisse d’Epargne or for whom the ownership of shares is required for their position as a member of the Supervisory Board
of the Company in their capacity as candidates presented by the holders of class “A” shares, and (ii) by all members of
the Supervisory Board elected by the employees of the Caisses d’Epargne network in accordance with the provisions
contained in the bylaws;
■
the class “B” shares being those held by the CDC Group and by any individuals for whom the ownership of shares is required
for their position as a member of the Supervisory Board of the Company in their capacity as candidates presented
by the holders of class “B” shares;
■
the class “C” shares being those held by all other shareholders.
The number of shares of each class is as follows: 309,085,997 class A shares, 166,433,857 class B shares and no class C
shares, although these numbers may vary in accordance with the provisions of the bylaws.
Class “A” shareholders holding more than 5% of the voting rights: Caisse d’Epargne Ile-de-France Paris, a French corporation
governed by a Management Board and Supervisory Board, known as the Steering and Supervisory Board, holding 6.04%
of the voting rights.
There are no shares granting multiple voting rights.
Changes in the share capital
When the Company was first created, a total sum of one billion French francs corresponding to the par value of ten million
FRF100 shares subscribed for and fully paid up, was initially contributed to the Company. Société Centrale de Trésorerie des
Caisses d’Epargne (SCT) contributed in relation to its merger with Société Centrale des Caisses d’Epargne et de Prévoyance
pour l’Emission et le Crédit (SEC) its entire assets and liabilities in return for the allocation to the SCT shareholders of two
million FRF100 shares to be issued by SEC through an increase in its share capital.
The share capital was increased as follows:
■
230
October 29, 1999
■
by a total of FRF6,955,140,300 following the issue of 69,551,403 new shares with a par value of FRF100 each, at the price
of FRF122.46 per share subscribed for in cash by the Caisses d’Epargne,
■
by a total of FRF2,799,948,100 following the issue of 27,999,481 new shares with a par value of FRF100 each, at the price
of FRF137.24 per share subscribed for in cash by CDC Holding Finance,
by a total of FRF852,943,700 by the issue of 8,529,437 new shares with a par value of FRF100 each, at the price of
FRF137.24 per share allocated to the Caisse des Dépôts in exchange for its contribution of 124,876 shares in CDC Asset
Management Europe and 5,970,000 shares in CDC Marchés,
■
following the authorization granted by the Extraordinary Shareholders’ Meeting convened on October 29, 1999, the
Management Board at its Meeting on November 8, 1999 increased the Company’s share capital by a total of FRF3,948,901.14
by capitalizing reserves and converted the capital into euros.
December 31, 2001
■
■
by a total of €709,203,873 following the issue of 46,505,172 new fully paid-up class “A” shares with a par value of €15.25
each, to be allocated to the Caisses d’Epargne et de Prévoyance in exchange for their contributions of equity interests,
by a total of €8,627,001.25 following the issue of 565,705 new fully paid-up class “A” shares with a par value of €15.25 each,
by a total of €386,523,645.25 following the issue of 25,345,801 new fully paid-up class “B” shares with a par value of
€15.25 each, to be allocated to CDC Holding Finance in exchange for its contribution of 7,568,441 CDC IXIS shares.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 231
■
■
■
■
by a total of €37,546,643.75, following the issue of 2,462,075 new fully paid-up class “B” shares with a par value
of €15.25 each, with full dividend rights as from January 1, 2004, in exchange for the contribution by CDC to the CNCE
of 7,665,525 shares in IXIS Italia Holding valued at €64,126,162.80. The share capital was therefore increased
to €2,942,625,878.50,
by a total of €3,738,267,681.25, following the issue of 245,132,307 new fully paid-up shares – 123,214,588 class “A”
shares and 121,917,719 class “B” shares – with a par value of €15.25 each, with full dividend rights as from January 1,
2004, in exchange for the contribution to the CNCE by Compagnie Financière Eulia of its entire assets and liabilities. The
share capital was therefore increased to €6,680,893,560.25.
■
September 6, 2004: in accordance with the decision of the Combined Shareholders’ Meeting of May 26, 2004, shareholders
were invited to opt for the payment of their 2003 dividend in shares. The price per share was set at €17.95, including a share
premium of €2.70. The Management Board which met on September 6, 2004 recorded that the number of shares that had
been subscribed for was 4,669,576 for an amount of €83,818,889.20, share premium included. The amount of the shares
subscribed for, excluding the share premium, represented €71,211,034. The amount of the share capital therefore stood at
€6,752,104,594.25 divided into 442,760,957 fully paid-up shares with a par value of 15.25 each.
■
On December 6, 2004, the share capital was increased by the issuance, by way of an interim dividend payment in respect of
the accounting year then in progress, payable in cash or in shares, of 10,082,691 new fully paid-up shares with a par value of
€15.25 each, with full dividend rights as from January 1, 2004. The 10,082,691 new shares were issued at a price per share
of €20.20, which represented a capital increase of €153,761,037.75 and an aggregate share premium of €49,909,320.45.
■
On September 6, 2005: in accordance with the decision of the Combined Shareholders’ Meeting of May 26, 2005,
shareholders were invited to opt for the payment of their 2004 dividend in shares. The price per share was set at €19.97,
a share premium of €4.72 included. The Management Board which met on September 5, 2005 recorded that the number
of shares that had been subscribed for was 22,676,206 for an amount of €452,843,833.25, share premium included.
The amount of the shares subscribed for, excluding the share premium, represented €345,812,141.50.
The amount of the share capital is therefore set at €7,251,677,773.25 divided into 475,519,854 fully paid-up shares with a par
value of 15.25 each.
RISK
MANAGEMENT
June 30, 2004
CHAIRMAN’S REPORT
■
15:13
RESOLUTIONS
■
12/07/06
FINANCIAL REPORT OF
2 CERTIFICATE OF INCORPORATION AND BYLAWS
The corporate purpose is defined in article 2 of the bylaws.
The task of the Company is to facilitate and promote the business activities and the development of the Caisses d’Epargne
et de Prévoyance and the whole of Groupe Caisse d’Epargne.
INFORMATION
ON THE ISSUER
2.1 Purpose
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Additional information
The purpose of the Company is:
I – To be the central company of the network of Caisses d’Epargne and other affiliated entities, within the meaning of the
French Monetary and Financial Code. On this basis, it has the following responsibilities in particular:
1° to represent the network of Caisses d’Epargne, including as an employer, to assert its shared rights and interests;
2° to negotiate and enter into national and international agreements in the name of the network of Caisses d’Epargne;
3° to draw up standard-form bylaws for the Caisses d’Epargne et de Prévoyance and local savings companies;
4° to create or acquire any company or entity that is appropriate for development of the business activities of the network
of Caisses d’Epargne and ensure the control thereof, or acquire interests in any such company or entity;
5° to adopt all provisions of an administrative, financial and technical nature with regard to the organization and management
of the Caisses d’Epargne et de Prévoyance, their joint subsidiaries and entities, in particular with regard to IT resources;
6° to take any measure aimed at creating any Caisse d’Epargne or affiliated entity or at closing down any Caisse d’Epargne
or affiliated entity, by means of liquidation, merger or through the sale of all or part of the ongoing business assets of any
affiliated entity;
7° to define the products and services offered to clients and coordinate sales policy;
8° to pool the surplus cash resources of the Caisses d’Epargne et de Prévoyance;
9° to carry out all financial transactions that are appropriate for the development and refinancing of the network of Caisses
d’Epargne, notably with respect to the management of liquidity and market risk exposure;
10° to take all useful measures for the organization, smooth running and development of the network of Caisses d’Epargne,
and require the payment of the contributions required to carry out its responsibilities as central entity of the network;
11° to provide guarantees for depositors and subscribers in accordance with article L. 512-96 of the French Monetary and
Financial Code and take all measures required for this purpose; to guarantee the liquidity and solvency of the affiliated
entities, in accordance with article L. 511-31 of the French Monetary and Financial Code;
12° to ensure application by the Caisses d’Epargne et de Prévoyance of the general interest assignments provided for in
article L. 512-85 of the French Monetary and Financial Code, in accordance with the guidelines set by the Fédération
Nationale des Caisses d’Epargne et de Prévoyance;
13° to decide on the provisions relating to the status of authorized agents.
II – To be a credit institution, officially approved as a bank. In this respect, it conducts, both in France and abroad, all banking
activities referred to by the French Monetary and Financial Code and provides the investment services referred to in articles
L. 321-1 and L. 321-2 of the French Monetary and Financial Code, to any French or foreign customers and, notably, to the
Caisses d’Epargne and all entities and companies contributing to the development of Groupe Caisse d’Epargne.
III – To acquire and hold investments in companies contributing to the purposes defined above or to the development of Groupe
Caisse d’Epargne and, more generally, to conduct all operations of any nature related directly or indirectly to these purposes
and liable to facilitate their development or achievement.
2.2 Provisions of the bylaws (and other provisions) relating to the members of the Management
and Supervisory Boards
Title IV of the Company’s bylaws contains provisions relating to the management and control of the company.
The Management Board is composed of five individual members maximum who may be up to 65 years of age and may be
chosen from outside the shareholders. Members of the Management Board may perform other offices subject to compliance
with the rules of the laws and regulations in force. A member of the Management Board may only perform similar duties with a
Caisse d’Epargne et de Prévoyance with the authorization of the Supervisory Board. Any employee of the Company may also
be a member of the Management Board and the removal from his/her corporate office shall not lead to termination of his/her
employment contract.
The members of the Management Board are appointed for a term of six years by the Supervisory Board which appoints one
of the Management Board members as Chairman.
The Management Board is vested with the broadest powers to act in all circumstances in the name of the Company, within
the scope of the corporate purpose and subject to the powers attributed by law to the Supervisory Board or to Shareholders’
Meetings.
232
In particular, in accordance with the provisions of article 20 of the bylaws:
■
it performs the responsibilities of central entity of a network as provided for by law;
■
it exercises all the bank, financial, administrative and technical powers;
■
it appoints non-voting members on the Boards of the Caisses d’Epargne et de Prévoyance and affiliated entities;
■
it proposes to the Supervisory Board to grant approval or withdraw approval of the members of the Management Boards
of the Caisses d’Epargne et de Prévoyance, as well as the executive directors of the affiliated entities;
■
it proposes to the Supervisory Board the dismissal of all the members of the Management Board of a Caisse d’Epargne et de
Prévoyance and appoints the provisional commission exercising the powers of the Management Board that has been
removed from office;
■
it decides, in any urgent situations, on the suspension as a protective measure of one or more members of the Management
Board of a Caisse d’Epargne et de Prévoyance or executive directors of affiliated entities;
■
it formulates injunctions of a regulatory nature with regard to the Caisses d’Epargne et de Prévoyance and affiliated entities.
The Supervisory Board is made up of twenty members, including two members elected by the employees of the network
of Caisses d’Epargne in accordance with the provisions of article L. 512-94 of the French Monetary and Financial Code and
under the conditions provided for in article 26 of the bylaws.
The representation of the holders of class “B” shares is proportional to the stake they hold in the Company’s share capital, while
the other members of the Board, except for the employees’ representatives, are appointed from among the candidates
proposed by the holders of class “A” shares. Accordingly, the number of representatives of the holders of class “B” shares will
be equal to the total number of members making up the Board, excluding the employees’ representatives, multiplied by the
percentage of capital of the Company held by the holders of class “B” shares, as recorded on the first calendar day of each
calendar quarter, rounded off where applicable by applying the rounding-off rule provided for in the bylaws (rounding-off to the
nearest whole number such that, if the result of the calculation does not give a whole number, the result will be rounded down
to the nearest lower whole number, if the decimal is less than .5, and rounded up to the nearest higher number if the decimal is
equal to or more than .5).
In the event of a decrease in the percentage of the share capital held by the shareholders of one class such that the rule
of proportionality provided for above is no longer complied with, the Chairman of the Supervisory Board must give notice of
this decrease to all the members of the Supervisory Board within a reasonable time period. If one of the representatives of
the holders of shares of the class whose number of seats has decreased fails to tender his/her resignation within a period
of fifteen days as from this notice, the oldest Supervisory Board member belonging to this class of shares shall be deemed
to have automatically resigned.
The age limit for the performance of duties as a member of the Supervisory Board is set at 72 years of age. The number
of Supervisory Board members who are over 68 years of age may not exceed one third of the number of members in office.
If this limit is reached, the oldest member is deemed to resign automatically at the next Shareholders’ Meeting.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 233
FINANCIAL REPORT OF
15:13
RISK
MANAGEMENT
12/07/06
CHAIRMAN’S REPORT
The Board shall elect a Chairman from among its individual members; this Chairman shall be responsible for convening Board
meetings and directing Board discussions. The Board shall elect two Vice-Chairmen, one of whom shall be appointed upon the
recommendation of the Board members representing the holders of class “A” shares, and the other upon the recommendation
of the representatives of the holders of class “B” shares holding at least 15% of the share capital. The Vice-Chairman
representing the holders of “class” A shares shall replace the Chairman in the event that he is unable to act or if the Chairman
temporarily delegates his/her powers.
In accordance with French law, the sale of the fixtures and fittings and sales of all or part of the investments, as well as
the setting up of security interests over the Company’s property may only be made by the Management Board after receiving
the prior authorization of the Supervisory Board. The Supervisory Board may set every year an aggregate amount or
an individual amount per commitment below for which its authorization is not required.
2.3 Rights, privileges and restrictions attached to each class of existing shares
INFORMATION
ON THE ISSUER
A member of the Supervisory Board may not serve on the Company’s Management Board. A legal entity may be appointed as
member of the Supervisory Board, in which case it must appoint a permanent representative. Articles 26 and 27 of the bylaws
describe the method of appointment of the members and of election of the members elected by the employees.
RESOLUTIONS
Each member of the Supervisory Board, including those elected by employees, must hold at least one share issued by the Company.
Shares must mandatorily be in registered form. They shall be registered in an account kept by the Company or by an approved
intermediary. Transfers of shares whether for or without consideration in favor of a shareholder’s ascendants, descendants or
spouse as well as transfers between shareholders are carried out freely subject to compliance with the French Monetary and
Financial Code, and in particular article L. 512-94.
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Any transfer of shares to a non-shareholder third party is subject to the approval of the Supervisory Board under the conditions
provided for in the bylaws. By way of exception to the foregoing, transfers of one share, and one share alone, made to any
person in order for such person to remain or become a member of the Supervisory Board are not subject to prior approval
by the Supervisory Board, on condition that the transferor obtains a prior written undertaking of the transferee to transfer
this share back to it upon the expiration of his/her term of office as a member of the Supervisory Board.
Shares are indivisible as far as the Company is concerned. The voting right attached to the share belongs to the beneficial
holder at Extraordinary Shareholders’ Meetings. Joint owners of shares are represented at Shareholders’ Meetings by any
of their number or by a joint representative. In the event of disagreement, the representative of joint owners shall be appointed
by the courts at the request of the first joint owner to refer the matter to the courts.
Each share entitles the holder to a share in the corporate assets in proportion to the number of existing shares and,
furthermore, to a share in the profits. The share gives the right to participate in Shareholders’ Meetings under the conditions
set by law and the bylaws, and to pass resolutions. Whenever it is required to own a certain number of shares to exercise
a right, it is the responsibility of the owners who do not hold such number of shares to personally arrange to collect the number
of shares required and potentially to arrange for the purchase and sale of the number of shares or rights required
in compliance with the conditions set by the bylaws.
The shareholders are only liable for the amount of the share capital represented by the shares they own. The rights and
obligations attached to the share continue to be attached to the share regardless of the shareholder who owns them.
In exchange, the holding of one share automatically entails adherence to the bylaws and to the decisions duly taken by
the Shareholders’ Meeting.
2.4 Shares required to modify the rights of shareholders
The bylaws do not contain any stricter provision than those required by ordinary law in this respect.
2.5 Conditions governing Ordinary Shareholders’ Meetings and Extraordinary Shareholders’ Meetings
Shareholders’ Meetings are convened and held under conditions laid down by the regulations in force. Such meetings are held
at the Company’s registered office or at any other place specified in the notice of the Meeting.
Shareholders’ Meetings are chaired by the Chairman of the Supervisory Board or by the Vice-Chairman in his absence; in the
absence of both the Chairman and the Vice-Chairman, Shareholders’ Meetings are chaired by a member of the Supervisory Board
specially delegated for this purpose by the Supervisory Board. Failing this, the Shareholders’ Meeting may elect its Chairman itself.
The Shareholders’ Meeting elects its officers.
An Ordinary Shareholders’ Meeting held when convened for the first time only validly deliberates if the shareholders present
or represented own at least one quarter of the shares with voting rights. An Ordinary Shareholders’ Meeting held when convened
for the second time validly deliberates whatever the number of shareholders present or represented, including shareholders
having voted by mail. Decisions of the Ordinary Shareholders’ Meeting are taken at a majority of the votes of the shareholders
present or represented, including shareholders having voted by mail.
Ordinary Shareholders’ Meetings for approval of the annual financial statements for the past fiscal year must be held within
a period of five months following the fiscal year-end.
An Extraordinary Shareholders’ Meeting held when convened for the first time only validly deliberates if the shareholders present
or represented own at least one third of the shares with voting rights. An Extraordinary Shareholders’ Meeting held when convened
for the second time only validly deliberates if the shareholders present or represented own at least one quarter of the shares
having voting rights. If this latter quorum is not reached, the second Shareholders’ Meeting may be postponed until a date which is
no more than two months after the date on which it was originally convened.
The decisions of the Extraordinary Shareholders’ Meeting are taken at a majority of two thirds of the votes of the shareholders
presented or represented, including shareholders having voted by mail.
Copies or extracts from the minutes of Shareholders’ Meetings are validly certified by the Chairman of the Supervisory Board,
by a duly empowered member of the Management Board or by the secretary of the Shareholders’ Meeting.
Ordinary and Extraordinary Shareholders’ Meetings exercise their respective powers under the conditions provided for by
the regulations in force.
234
Page 235
2.6 Provisions of the certificate of incorporation, the bylaws, a charter or regulations of the issuer which
could have the effect of delaying, postponing or preventing a change in its control
In accordance with the provisions of article L. 512-94 of the French Monetary and Financial Code, the Caisses d’Epargne et de
Prévoyance jointly hold at least an absolute majority of the share capital and voting rights of the Caisse Nationale des Caisses
d’Epargne et de Prévoyance.
2.7 Court and arbitration proceedings
There are no government, court or arbitration proceedings that could have a significant impact on the issuer’s financial position
or its profitability or that have recently had such a significant impact.
2.8 Material changes in the financial position
Since December 31, 2005, no exceptional event has occurred or new lawsuit has arisen that may have a material impact on
the results of operations, financial position and business activities of the Group. In March 2006, Groupe Caisse d’Epargne
and Banques Populaires entered into exclusive negotiations, that should terminate by June 1, 2006 at the latest, aimed at
linking up certain of their business activities (corporate and investment banking, specialized financial services, private asset
management) under the aegis of NATIXIS.
2.9 Major contracts
The CNCE has not entered into any major contracts other than those entered into in the normal course of business.
FINANCIAL REPORT
OF THE CNCE GROUP
15:13
FINANCIAL REPORT OF
12/07/06
RISK
MANAGEMENT
The documents relating to the CNCE (bylaws, historical financial information for each of the two fiscal years prior to the publication
of this document) are partly included in the document de référence and may be consulted at administrative headquarters.
This document de référence is available on the website of the Autorité des marchés financiers (www.amf- france.org) and on
the website www.groupe.caisse-epargne.com.
Caisse Nationale des Caisses d’Epargne et de Prévoyance publications
The table on annual information set out below lists the information published or made public over the last twelve months by
the Caisse Nationale des Caisses d’Epargne et de Prévoyance to meet the obligations of the laws or regulations with regard
to financial instruments, issuers of financial instruments and financial instruments markets as required by article 221.1.1
of the general regulations of the AMF as amended by the ruling of September 1, 2005.
CHAIRMAN’S REPORT
2.10 Publicly accessible documents
The following documents have been published on the website www.groupe.caisse-epargne.com and on the website of the
Autorité des marchés financiers (www.amf-france.org):
Date of publication
Nature of documents
May 24, 2005
Document de référence – AMF filing D.05-0761
June 27, 2005
Amendment to the document de référence – AMF filing D.05-0761-R01
August 29, 2005
Update of the document de référence – AMF filing D.05-0761-A01
November 15, 2005
Update of the document de référence – AMF filing D.05-0761-A02
RESOLUTIONS
1. Reference documents
■
The following documents were published on the website www.groupe.caisse-epargne.com and on the website of the Autorité
des marchés financiers (www.amf-france.org):
Date of publication
Nature of documents
June 14, 2005
Issuance and admission to listing of subordinated redeemable securities
AMF approval 05-543
August 31, 2005
Issuance and admission to listing of subordinated redeemable securities
AMF approval 05-667
November 23, 2005
Issuance and admission to listing of ordinary bonds
AMF approval 05-807
January 31, 2006
Issuance and admission to listing of ordinary bonds
AMF approval 06/30
INFORMATION
ON THE ISSUER
2. Securities issuance programs, prospectuses and summaries of transactions
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■
The following documents were published on the website www.groupe.caisse-epargne.com and on the website of the
Luxembourg Stock Exchange (www.bourse.lu) and approved by the Luxembourg Stock Exchange and/or the CSSF:
■
Euro Medium Term Notes (EMTN) issuance program:
Date of publication
Nature of documents
November 30, 2005
Base prospectus of the Euro Medium Term Notes (EMTN) issuance program
March 27, 2006
Supplement to the base prospectus of the Euro Medium Term Notes (EMTN) issuance program
■
Documents relating to the issuance and admission to listing of medium- and long-term bonds (“Pricing Supplements” and/or “Final
Terms”) Dates of publication:
May 2, 2005, May 9, 2005, May 12, 2005 (2 issuances), May 13, 2005 (2 issuances), June 3, 2005, June 9, 2005, June 17, 2005
January 18, 2006 (2 issuances), January 30, 2006 (2 issuances), January 31, 2006 (3 issuances), February 24, 2006,
February 28, 2006 (2 issuances), March 3, 2006, March 10, 2006, March 13, 2006, March 14, 2006, March 21, 2006
(2 issuances), March 28, 2006, April 5, 2006 (3 issuances), May 5, 2006, May 9, 2006
■
Base prospectuses relating to the issue and admission to listing of super-subordinated securities:
– January 27, 2006: USD300,000,000 Deeply Subordinated Fixed Rate Notes
– February 1, 2006: EUR350,000,000 Deeply Subordinated Fixed changing to Floating Rate Notes
Person responsible for the information contained in this document
Group Finance Director. Mr François CHAUVEAU
+33 (0)1 58 40 41 52
Auditors
Principal Statutory Auditors:
Mazars & Guérard
Tour Le Vinci
4, allée de l’Arche
92075 Paris La Défense Cedex
63, rue de Villiers
92208 Neuilly-sur-Seine Cedex
Mazars & Guérard was appointed as Statutory Auditor at the Ordinary Shareholders’ Meeting of May 26, 2004 for a term of
six years expiring at the close of the Ordinary Shareholders’ Meeting called to vote on the financial statements for the fiscal
year ending December 31, 2009.
Mazars & Guérard is represented by Michel Barbet-Massin and Odile Coulaud.
The appointment of PricewaterhouseCoopers Audit as Statutory Auditor was renewed at the Ordinary Shareholders’ Meeting of
May 26, 2004 for a term of six years expiring at the close of the Ordinary Shareholders’ Meeting called to approve the financial
statements for the fiscal year ending December 31, 2009.
PricewaterhouseCoopers Audit, represented by Anik Chaumartin and Yves Nicolas, is a member of the PricewaterhouseCoopers
network.
KPMG Audit (a department of KPMG SA) were appointed as Statutory Auditors at the Ordinary Shareholders’ Meeting of May 26,
1998 for a period of six years. Their appointment expired at the close of the Ordinary Shareholders’ Meeting of May 26, 2004
approving the financial statements for the fiscal year ended December 31, 2003.
Mazars & Guérard and PricewaterhouseCoopers Audit are registered as Statutory Auditors (members of the Compagnie
Nationale des Commissaires aux Comptes (National Institute of Statutory Auditors) and placed under the authority of the
Haut Conseil du Commissariat aux Comptes (the Supreme Council of Statutory Auditors).
Alternate Statutory Auditors:
236
■
M. Patrick de Cambourg, Le Vinci, 4, allée de l’Arche – 92075 Paris La Défense Cedex ;
■
M. Pierre Coll, 63, rue de Villiers – 92208 Neuilly-sur-Seine Cedex.
FINANCIAL REPORT
OF THE CNCE GROUP
Page 237
Fees paid by the Group to Auditors (1) and members of their networks
Joint Statutory Auditors of the Caisse Nationale des Caisses d’Epargne Group (2)
2004
2005
2004
Amount
%
Amount
%
Amount
%
Amount
%
Statutory and contractual
audits of parent company and
consolidated financial statements
France
Other countries
7,622
4,301
3,321
86.5
48.8
37.7
5,466
3,558
1,908
77.4
50.4
27.0
2,302
2,302
0
77.5
77.5
0.0
2,168
2,168
0
76.3
76.3
0.0
Other engagements
France
Other countries
Sub-total
863
267
596
8,485
9.8
3.0
6.8
96.3
1,099
494
605
6,565
15.6
7.0
8.6
92.9
648
648
0
2,950
21.8
21.8
0.0
99.3
672
672
0
2,840
23.7
23.7
0.0
100.0
259
48
211
2.9
0.5
2.4
499
249
250
7.1
3.5
3.5
5
5
0
0.2
0.2
0.0
0
0
0
0.0
0.0
0.0
0
0.0
0
0.0
0
0.0
0
0.0
0
71
330
0.0
0.8
3.7
0
0
499
0.0
0.0
7.1
17
0
22
0.6
0.0
0.7
0
0
0
0.0
0.0
0.0
8,815
100.0
7,064
100.0
2,972
100.0
2,840
100.0
in thousands of euros
Other services
Tax, legal and labor-related
France
Other countries
Other movements:
Information technology
Other movements: Internal audit
Other movements
Sub-total
Total
(1) Including non-deductible tax, costs and out-of-pocket expenses.
(2) Including the fully-consolidated subsidiaries of the Caisse Nationale des Caisses d’Epargne.
FINANCIAL REPORT OF
2005
Mazars & Guérard
RISK
MANAGEMENT
CHAIRMAN’S REPORT
15:13
RESOLUTIONS
12/07/06
INFORMATION
ON THE ISSUER
237
12/07/06
15:13
Page 238
Joint Statutory Auditors of Groupe Caisse d’Epargne (1)
2005
Statutory and contractual
audits of parent company and
consolidated financial statements
France
Other countries
Other engagements
France
Other countries
Sub-total
2004
2005
2004
Amount
%
Amount
%
Amount
%
Amount
%
9,158
5,837
3,321
88.4
56.3
32.1
6,497
4,589
1,908
80.0
56.5
23.5
3,856
3,856
0
84.4
84.4
0.0
3,356
3,356
0
73.8
73.8
0.0
863
267
596
10,021
8.3
2.6
5.8
96.7
1,116
511
605
7,613
13.7
6.3
7.5
93.8
659
659
0
4,515
14.4
14.4
0.0
98.8
1,159
1,159
0
4,515
25.5
25.5
0.0
99.3
267
56
211
2.6
0.5
2.0
499
249
250
6.1
3.1
3.1
5
5
0
0.1
0.1
0.0
10
10
0
0.2
0.2
0.0
0
0.0
0
0.0
0
0.0
0
0.0
0
71
338
0.0
0.7
3.3
5
0
504
0.1
0.0
6.2
17
32
54
0.4
0.7
1.2
22
0
32
0.5
0.0
0.7
10,359
100.0
8,117
100.0
4,569
100.0
4,547
100.0
Other services
Tax, legal and labor-related
France
Other countries
Other movements:
Information technology
Other movements: Internal audit
Other movements
Subtotal
Total
Mazars & Guérard
(1) Including the fully-consolidated subsidiaries of Groupe Caisse d’Epargne.
Other Statutory Auditors responsible for fully-consolidated Groupe Caisse d’Epargne companies
KPMG
2005
238
Ernst & Young
2004
2005
Others
2004
2005
2004
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Statutory and
contractual audits
of parent company
and consolidated
financial statements
Other engagements
Total
3,948
260
4,208
93.8
6.2
100.0
2,425
492
2,917
83.1
16.9
100.0
2,113
122
2,235
94.5
5.5
100.0
1,706
54
1,760
96.9
3.1
100.0
948
45
994
95.4
4.6
100.0
856
33
889
96.3
3.7
100.0
12/07/06
15:13
Page 239
FINANCIAL REPORT
OF THE CNCE GROUP
Person responsible for the document de référence
Mr. Charles Milhaud, Chairman of the Management Board
Paris, May 11, 2006
RISK
MANAGEMENT
The annual historical financial information for 2003 and 2004 for the Caisse Nationale des Caisses d’Epargne et de Prévoyance
(annual and consolidated financial statements) and Groupe Caisse d’Epargne was commented on by reports drawn up by
the Statutory Auditors that are set out, in respect of 2003, in the document de référence filed with the Autorité des marchés
financiers on May 19, 2004 under number D.04-0775, on pages 190, 213 and 119 and, in respect of 2004, in the document
de référence filed with the Autorité des marchés financiers on May 24, 2005 under number D.05-0761, on pages 222, 249
and 155. These reports give an unqualified opinion and include one observation on the changes in methods that took place
in 2003 and 2004, as well as on the presentation of the New Foundations agreement and its impacts on the financial
statements for fiscal year 2004 and the consolidated financial statements of the Caisse Nationale des Caisses d’Epargne et
de Prévoyance Group and Groupe Caisse d’Epargne.
CHAIRMAN’S REPORT
The historical financial information for 2005 as shown in the document de référence (pages 26 to 155) was commented on in
reports by the statutory auditors, as set out on pages 78 to 79 for the consolidated financial statements of the Caisse Nationale
des Caisses d’Epargne et de Prévoyance Group and on pages 156 to 157 for the consolidated financial statements of Groupe
Caisse d’Epargne which give an unqualified opinion and contain one observation on the changes in accounting method that
took place during the fiscal year.
RESOLUTIONS
The Caisse Nationale des Caisses d’Epargne et de Prévoyance has obtained from the Statutory Auditors, Mazars & Guérard and
PricewaterhouseCoopers Audit, an end-of-engagement letter, in which they state that they have audited the information with
respect to the financial position and financial statements included in this document de référence and read the entire
document de référence.
INFORMATION
ON THE ISSUER
I attest, after taking all reasonable measures for this purpose, that the information contained in this document de référence is, to
my knowledge, in line with the actual situation and does not contain any omission that is liable to alter the significance thereof.
FINANCIAL REPORT OF
Statement by the person responsible for the document de référence
239
12/07/06
15:13
Page 240
CROSS REFERENCE TABLE
Heading
Page number
document de référence
1. Persons responsible
239
2. Statutory Auditors
236
3. Selected financial information
3.1. Selected historical financial information regarding the issuer, presented for each financial year
3.2. Selected financial information for interim financial periods
4. Risk factors
159 to 180 – 186 to 192
5. Information about the issuer
5.1 History and development of the Company
5.2 Investments
6 – 208
24
6. Business overview
6.1. Principal activities
6.2. Principal markets
6.3. Exceptional events
6.4. Level of dependence on patents, licenses, industrial, commercial or financial contracts
or new manufacturing processes
6.5. Basis for any statements made by the issuer regarding its competitive position
8 to 23
11 to 23 – 30 – 99
73 – 151 – 235
N/A
N/A
7. Organizational structure
7.1. Brief description of the Group
7.2. List of significant subsidiaries
7 – 26
54 to 61 – 84 to 86 – 129 to 137
8. Property, plant and equipment
8.1. Information regarding existing or planned material tangible fixed assets
8.2. Description of any environmental issues that may affect the issuer’s utilization
of the tangible fixed assets
65
N/A
9. Operating and financial review
9.1. Financial condition
9.2. Operating results
27 to 39 – 88 to 112
40 to 42 – 114 to 116
42 – 116
10. Capital resources
10.1. Information concerning the issuer’s capital resources
10.2. Sources and amounts of the issuer’s cash flows
10.3. Information on the borrowing requirements and funding structure of the issuer
10.4. Information regarding any restrictions on the use of capital resources that have affected
or could affect, the issuer’s operations
10.5. Information regarding the anticipated sources of funds needed to fulfill commitments
referred to in items 5.2 and 8.1
11. Research and development, patents and licenses
12. Trend information
13. Profit forecasts or estimates
14. Administrative, management, and supervisory bodies and senior management
14.1. Administrative bodies
14.2. Administrative, management, and supervisory bodies and senior management
conflicts of interests
15. Remuneration and benefits
15.1. Amount of remuneration paid and benefits in kind
15.2. Total amounts set aside or accrued by the issuer to provide pension,
retirement or similar benefits
16. Board practices
16.1. Date of expiration of the current term of office
16.2. Information about members of the administrative bodies’ service contracts
16.3. Information about the issuer’s Audit Committee and Remuneration Committee
16.4. A statement as to whether or not the issuer complies with its country’s
of incorporation corporate governance regime
240
4 to 5
N/A
67 – 83 – 145 – 230
76 to 77 – 155
62 – 64 – 65 – 68 – 167 to 170
N/A
N/A
N/A
39 – 112 and 113
N/A
182 to 185 – 209 to 211 – 213 to 229
211
194 to 197 – 211 to 212
212
209
211
183 to 185 – 214 to 216
216
12/07/06
15:13
Page 241
FINANCIAL REPORT
OF THE CNCE GROUP
20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
20.1. Historical financial information
40 to 86 – 114 to 155
20.2. Pro forma financial information
N/A
20.3. Financial statements
40 to 77 – 114 to 155
20.4. Auditing of historical annual financial information
78 to 79 – 156 to 157
20.5. Age of latest financial information
40 – 114
20.6. Interim and other financial information
N/A
20.7. Dividend policy
67 – 205
20.8. Legal and arbitration proceedings
235
20.9. Significant change in the issuer’s financial or trading position
235
21. Additional information
21.1. Share capital
21.2. Memorandum and articles of association
67 – 145 – 230
231 to 234
22. Material contracts
235
23. Third-party information and statement by experts and declarations of any interest
N/A
24. Documents on display
25. Information on holdings
FINANCIAL REPORT OF
N/A
114 to 155 – 86 – 199 to 204
80 – 235 to 236
63 to 64 – 140 to 141
In accordance with article 28 of European regulation no. 809/2004 of April 29, 2004 the following information is incorporated
in this document de référence:
■
the CNCE consolidated financial statements and the parent company financial statements for the year ended December 31,
2003 and the Statutory Auditors’ reports on the consolidated financial statements and the parent company financial
statements for the year ended December 31, 2003 set out respectively on pages 122 to 191 and 192 to 214 of the document
de référence filed with the Autorité des marchés financiers (AMF) on May 19, 2004 under no. D. 04-0775;
■
the consolidated financial statements of Groupe Caisse d’Epargne for the year ended December 31, 2003 and the Statutory
Auditors’ report on the consolidated financial statements for the year ended December 31, 2003 set out on pages 50 to 120
of the document de référence filed with the Autorité des marchés financiers (AMF) on May 19, 2004 under no. D. 04-0775;
■
the CNCE consolidated financial statements and the parent company financial statements for the year ended December 31,
2004 and the Statutory Auditors’ reports on the consolidated financial statements and the parent company financial
statements for the year ended December 31, 2004 set out respectively on pages 158 to 223 and 224 to 250 of the document
de référence filed with the Autorité des marchés financiers (AMF) on May 24, 2005 under no. D. 05-0761;
■
the consolidated financial statements of Groupe Caisse d’Epargne for the year ended December 31, 2004 and the Statutory
Auditors’ reports on the consolidated financial statements for the year ended December 31, 2004, set out on pages 70 to 156
of the document de référence filed with the Autorité des marchés financiers (AMF) on May 24, 2005 under no. D. 05-0761;
The chapters of the documents de référence no. D. 04-0775 and no. D. 05-0761 not referred to above are, either of no relevance
to the investor, or covered elsewhere in this document de référence.
RISK
MANAGEMENT
19. Related party transactions
230
N/A
26
CHAIRMAN’S REPORT
18. Major shareholders
18.1. Shareholders holding more than 5% of the issuer’s capital or voting rights
18.2. Voting rights of above-mentioned shareholders
18.3. Control of the issuer
18.4. A description of any arrangements, known to the issuer, the operation of which may
at a subsequent date result in a change in control of the issuer
5 – 20 – 38
211
N/A
RESOLUTIONS
17. Employees
17.1. Number of employees
17.2. Directors’ shareholdings and stock options
17.3. Description of any arrangements for involving the employees in the capital of the issuer
Page number
document de référence
INFORMATION
ON THE ISSUER
Heading
241
12/07/06
15:13
Page 242
The English language version of this report is a free translation from the original, which was prepared in French.
All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation,
views or opinions expressed in the original language version of the document in French take precedence over the translation.
Design and production:
— Photos: Xavier Lambours — Getty Images/Éric Larrayadieu.
0603589_CEPA_DocdeRef GB - couvA4.qxp
12/07/06
10:50
Page couv4
Caisse Nationale des Caisses d’Epargne
50, avenue Pierre-Mendès-France
75201 Paris Cedex 13 – France
Tel.: (33) 1 58 40 41 42
Fax: (33) 1 58 40 48 00
Internet: www.groupe.caisse-epargne.com
Limited company governed by a Management Board
and a Supervisory Board (société anonyme
à directoire et conseil de surveillance)
Head office: 5, rue Masseran – 75007 Paris – France
Share capital of €7,669,974,720.50
Registered in Paris under registration number: 383 680 220

reference document 2005 - Luxembourg Stock Exchange

Transcription

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