Financial statements

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Annual report 20 0 8
Couv RA 2008_GB:Couv RA 2008_GB 31/07/09 14:16 Page1
Crédit Mutuel
Annual report 2008
ANNUAL REPORT
2008
Sommaire
20 0 8
Chairman's message
3
GROUP PROFILE
4
General presentation
Board of Directors of Confédération nationale du Crédit Mutuel
CRÉDIT MUTUEL, THE MUTUAL BANK
A decentralised structure
Membership structure and governance
Fondation du Crédit Mutuel
Banking for all members of society
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8
10
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RESULTS AND KEY FIGURES
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BANKINSURANCE
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France's second-largest retail bank
A major retail bank
The leading bank for non-profit associations
Number two for SMEs
The challenger in the farming sector
A technological lead
Retail banking subsidiaries
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Insurance
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OTHER ACTIVITIES
Corporate and investment banking
Asset management and private banking
Technological services
FINANCIAL REPORT
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60
62
65
68
Board of Directors' management report
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100
Independent Auditor’s report
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Chairman’s Message
A year to remember
The year 2008, which marked a watershed for the world’s economic and financial system, saw Crédit Mutuel
move forward yet further with its development strategy.
Against the backdrop of a crisis of unprecedented scale, which inevitably had a strong impact on the year’s
results, the group once again showed dynamism, responsiveness and resilience.
An expert bankinsurer for 30 years now, it consolidated its position as France’s second largest retail bank.
Always attentive and responsive to its customer members, it continues to innovate to cater to their needs
with tailored products and services. One such service is its mobile telephony offer, designed in preparation
for the major changes on the horizon for this technology, and a first in the banking sector.
With €25 billion in shareholders’ equity and a solvency ratio and ratings that place it among the most highly
ranked institutions, it can count on the trust of its customer members. According to a recent Bearing Point
TNS Sofres survey, which ranked Crédit Mutuel as one of the leading banks for customer relations,
it enjoys the absolute confidence of 94% of its customers.
New interfederation partnerships and shared tools have enabled it to enhance its range of products and
services while keeping its costs under control.
In 2008, the group acquired both Citibank Deutschland – with a network of 340 branches and 3.3 million
clients in Germany – and Cofidis, the 3 Suisses subsidiary with operations in around ten European countries,
as well as expanding its insurance activity abroad, particularly in Spain. Ten years after the acquisition of CIC,
these developments pave the way for a new period of growth for the group by diversifying its businesses
and positioning it on new, upcoming markets.
By constantly adapting and growing, Crédit Mutuel remains true to its mission of serving its customer
members and to its distinctive economic and social model.
Today’s demand for commitment, transparency and responsible solidarity is met through a local presence
based on the group’s dense network of 5,600 points of sale, local mutual banks and CIC branches, as well
as through remote banking services. Other strengths include customer members’ effective participation
in shareholder meetings, the democratic governance ensured by their election of the bank’s directors,
and the ongoing commitment to mutualist values, ethics and compliance.
It is during periods of crisis that mutualist values come into their own, and there is no better upholder
of these values than Crédit Mutuel.
Etienne Pflimlin
Rapport annuel 2008
3
Group profile
The Crédit Mutuel group, which is France's second-largest retail bank,
comprises the Crédit Mutuel network and its subsidiaries, including
CIC. The group offers a comprehensive range of financial expertise
to its 18.7 million customers, including 17.1 million retail customers.
Its overriding priority, and the key to its success, is the quality
of its customer relationships and services.
Its strategy is aimed at achieving controlled growth centred on high-street
retail banking, bankinsurance and technological excellence.
2008
The group focuses on strong neighbourhood customer relationships,
combining the strengths of Crédit Mutuel – a cooperative, mutual bank
with strong regional and local ties - with those of CIC, a commercial
bank taken over by Crédit Mutuel Centre Est Europe through Banque
Fédérative du Crédit Mutuel in 1998.
Along with the outlets of 2008 acquisitions Citibank Deutschland
and CIC Iberbanco, Crédit Mutuel and CIC have a network of more
than 5,600 points of sale.
Crédit Mutuel is composed of local mutual banks organised into
18 regional federations, which in turn belong to Conféderation nationale
du Crédit Mutuel, the central body that heads the network.
“The Crédit Mutuel
Group comprises
the Crédit Mutuel
network and
subsidiaries,
including CIC”
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Crédit Mutuel
CIC operates a branch network in the Paris region and is the holding
company for a group of five regional banks, insurance subsidiaries
and specialised financial subsidiaries in France and abroad.
A high street retail bank
With a strong presence in retail banking and insurance, Crédit Mutuel plays a key role in financing the
economy, providing a comprehensive range of financial services to retail customers, local professionals and
businesses of all sizes. In France, it has a 12.1% market share in deposits and 16.9% share in bank loans.
It is the leading French bank in non-life insurance and fourth in life insurance. Its insurance subsidiaries
manage 26.6 million contracts comprising life savings products, as well as motor, home, health, personal
and retirement insurance, for nearly 11 million policyholders.
It is number two in France in home loans and Europe’s fourth-largest consumer credit provider. It is the leading
bank for non-profit associations, the second largest for the farming sector and provides banking services
to one out of every three self-employed professionals. Its customer base includes more than fifty of the top
one hundred French businesses.
Leading the way in banking technology
A 12.1% market share
in deposits
A 16.9% market share
in bank loans
The branch network is supported by a comprehensive multi-channel banking offer featuring cutting-edge
functionalities. In 2008, remote banking clocked up 370 million contacts, 90% of them via the Internet.
The group is gaining prominence in upcoming fields such as mobile telephony, which provides another
channel for bankinsurance, services and electronic payments.
This new strategic direction broadens the group’s know-how and expertise, adding highly innovative
services that confirm its leadership position.
It ranks number two in France in electronic payments, with a 20.7% share of the overall market and a share
of more than 26.5% among retailers.
2008 Annual Report
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A solid, highly rated bank
The crisis has not affected the group’s solidity, and its 9.8% Tier 1 ratio makes it one of the best-performing
French banking groups.
While the average bank rating has fallen to A+, the group continues to be rated as a high-quality issuer.
Crédit Mutuel and CIC are rated A-1/A+ with a stable outlook by Standard & Poor’s, while Banque
Fédérative du Crédit Mutuel (holding company for the Centre Est Europe group and a direct shareholder
of CIC) has an Aa3 rating from Moody’s and AA- from Fitch.
A bank with an international presence
Crédit Mutuel has international operations, mainly in financing, insurance and electronic payments,
enabling it to serve its customers wherever they happen to be.
The group is present, notably, in Europe (Germany, Belgium, United Kingdom, Luxembourg and Switzerland),
North Africa (Morocco and Tunisia), the United States (New York) and Asia (Hong Kong and Singapore).
CIC's three foreign branches – in London, New York and Singapore – and representative offices
have strengthened Crédit Mutuel's international network by around 40 outlets. The group has strategic
partnerships in Italy with Banca Popolare di Milano, in North Africa with Banque Marocaine du
Commerce Extérieur and Banque de Tunisie, and in China with Bank of East Asia.
An expanding bank
In 2008, Crédit Mutuel realised a number of major strategic goals in France and abroad. In acquiring
Citibank Deutschland, it affirmed its European development strategy in the various retail banking fields
– consumer credit in particular – and in insurance and international financial services.
The group’s acquisition of a controlling interest in Cofidis gives it a firm foothold in the European
consumer credit market, where it now ranks fourth.
The creation of RACC Seguros, a joint holding of Assurances du Crédit Mutuel (ACM) and Royal
Automobile Club de Catalogne, has strengthened the group’s Spanish insurance division.
Crédit Mutuel also acquired Banco Popular Español’s French subsidiary, renamed CIC Iberbanco,
and is negotiating a commercial cooperation agreement with this group.
Ten years after the takeover of CIC, this controlled development opens up new avenues of growth
for the group and confirms its position as a major player in the banking market both in France
and elsewhere in Europe.
www.creditmutuel.com
www.cic.fr
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Crédit Mutuel
Business profile
2008
Net banking income: €8.4 billion
Net profit, group share: €440 million
Shareholders’ equity: €24.7 billion
Tier 1 ratio: 9.8%
5,169 points of sale*
65,545 employees
18.7 million customers
Customers' deposits amounting to €478.1 billion
Loans amounting to €295.5 billion
The no. 2 retail bank in France
16.9% market share in loans
12.1% market share in deposits
No. 1 bankinsurer in non-life
No. 1 bank for non-profit associations and works councils
No. 2 bank in housing loans
No. 2 bank for the SME sector
No. 2 bank in electronic banking
No. 2 bank for the farming sector
No. 4 bankinsurer in life insurance
No. 5 bank in bank factoring
No. 4 in European consumer credit
A high-quality issuer
Standard & Poor’s : A-1/A+
with a stable outlook for both Crédit Mutuel and CIC
Fitch : AA- /F1+
with a stable outlook for BFCM and CIC
Moody’s : Aa3/P-1
with a positive outlook for BFCM and CIC
* The figures relating to points of sale, employees, customers, customer deposits and loans take account of Citibank Deutschland and Banco Popular France,
which was renamed CIC Iberbanco in 2009.
2008 Annual Report
7
Board of Directors
of Confédération Nationale
du Crédit Mutuel
at 30 June 2009
Bureau
Chairman
Etienne Pflimlin,
Chairman of Crédit Mutuel Centre Est Europe
Other members
of the bureau
Pierre Arrivé,
Representative of Crédit Mutuel Océan
Michel Bokarius,
Deputy Chairman
Director of Crédit Mutuel Centre Est Europe
Georges Coudray,
Gérard Bontoux,
Honorary chairman of Crédit Mutuel Bretagne
Chairman of Crédit Mutuel Midi-Atlantique
Vice-Chairman
Christian Péron,
Chairman of Crédit Mutuel Agricole et Rural
Chief Financial Officer
Philippe Vasseur,
Chairman of Crédit Mutuel Nord Europe
Group Secretary
Pierre Filliger,
Chairman of Crédit Mutuel Méditerranéen
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Crédit Mutuel
Jean-Pierre Denis
Chairman of Crédit Mutuel Bretagne
François Duret,
Chairman of Crédit Mutuel Centre
Alain Fradin,
Deputy General Manager of Caisse Fédérale
Centre Est Europe
Alain Têtedoie,
Chairman of Crédit Mutuel Loire-Atlantique
et Centre-Ouest
Bureau:
François Duret (1), Philippe Vasseur (2),
Christian Péron (3), Alain Têtedoie (4),
Pierre Filliger (5), Alain Fradin (6),
Michel Bokarius (7), Gérard Bontoux (8),
Etienne Pflimlin (9), Georges Coudray (10),
Pierre Arrivé (11).
Not pictured: Jean-Pierre Denis
Other directors
Philippe Andru,
Daniel Leroyer,
Vice-Chairman of Crédit Mutuel Bretagne
Chairman of Crédit Mutuel Maine-Anjou,
Basse-Normandie
Jean-Louis Boisson,
The following also sit
on the Board
Vice-Chairman of Crédit Mutuel Centre Est Europe
Jean-Luc Menet
Michel Lucas,
Eric Charpentier,
General Manager of Crédit Mutuel Océan
Chief Executive Officer
General Manager of Crédit Mutuel Nord Europe
Albert Peccoux,
Thierry Brichant,
Jacques Chombart,
Chairman of Crédit Mutuel Savoie-Mont Blanc
Deputy Chief Executive Officer
Vice-Chairman of Crédit Mutuel Agricole et Rural
Jean-Noël Roul,
Gilles Le Noc,
Gérard Cormorèche,
Vice-Chairman of Crédit Mutuel
Loire-Atlantique et Centre-Ouest
Corporate Secretary
Chairman of Crédit Mutuel Sud-Est
Louis Crusol,
Chairman of Crédit Mutuel Antilles-Guyane
Roger Danguel,
Director of Crédit Mutuel Centre Est Europe
Denis Schitz
Vice-Chairman of Crédit Mutuel
Centre Est Europe
Jean-Pierre Schneider,
Jean-François Devaux,
General Manager of Crédit Mutuel Maine-Anjou,
Basse-Normandie
Chairman of Crédit Mutuel Massif Central
Eckart Thomä,
Bernard Flouriot,
Chairman of Crédit Mutuel Anjou
Jean-Louis Girodot,
Chairman of Crédit Mutuel Ile-de-France
André Halipré,
Vice-Chairman of Crédit Mutuel Nord Europe
Ronan Le Moal
General Manager of Crédit Mutuel Arkéa
Chairman of Crédit Mutuel Normandie
Christian Touzalin,
Chairman of Crédit Mutuel Sud-Ouest
Michel Vieux,
Chairman of Crédit Mutuel Dauphiné-Vivarais
Christine Zanetti,
Chief Executive Officer of Crédit Mutuel
Loire-Atlantique et Centre-Ouest
2008 Annual Report
9
THE mutual banking group
The Group's main entity, Crédit Mutuel, is a cooperative bank under the 10 September 1947 Act governing French
cooperatives. It is owned solely by its members, who hold member shares ('A' shares). Members are each entitled to one
vote at general meetings, where their powers include, in particular, the election of directors of the local mutual banks.
As a mutual bank, Crédit Mutuel places its member customers at the heart of all its decisions. It considers its values
– responsibility, solidarity and social commitment – as having the same strategic importance as service quality.
2008 Annual Report
11
THE banque mutualiste
To serve its customers and society, Crédit Mutuel's strategy combines sustainable
development* and solidarity. Historically, the bank has played a key social role,
notably through its action in favour of the most vulnerable members of society.
THE CRÉDIT MUTUEL
NETWORK
Crédit Mutuel runs an innovative corporate sponsorship programme through its
regional and national foundations under the aegis of the new Fondation du Crédit
Mutuel, which was created in 2009 and oversees the various strands of the group’s
patronage initiatives at national level:
- promotion of reading and of the French language in all its forms through Fondation
du Crédit Mutuel pour la Lecture,
- solidarity and research-based initiatives,
- implementation of independent, sustainable banking networks in developing countries
through Centre International du Crédit Mutuel (CICM).
These initiatives demonstrate the group’s ongoing commitment to solidarity
on the ground.
3,168 branches, including
2,017 local mutual banks
In 2008, the number of Crédit Mutuel’s members increased by 164,000 to 7.2 million,
while customer numbers were up 190,500 to 11.2 million.
11.2 million customers,
including 10.2 million
private individuals
Each year, 20,000 board meetings and 2,000 general meetings are held - with an overall
attendance target of 10% - ensuring a genuinely democratic base for the group's
corporate governance.
In terms of gender equality, the Group has exceeded its initial target of 20% of board
seats held by women, who now represent nearly 25% of the 24,000 elected directors.
This percentage exceeds 30% in more than half of the Federations, and the group's
new target is to bring the overall proportion of women directors up to 30%.
The group comprises more than 2,000 local mutual banks, of which more than half
are located in rural areas. They are organised into 18 regional federations which
in turn belong to the Confédération Nationale.
These three levels of organisation (local, regional and national) operate on a decentralised
basis in accordance with the principle of subsidiarity, with the local mutual banks
– which are closest to members and customers – carrying out all the key functions
of bank branch offices, and the other two levels exercising only those for which
the local entities are not equipped.
This organisation favours direct responsibility at each level, which in turn encourages
deeper involvement, leading to greater responsiveness and higher standards
of customer service. The resultant simple decision-making structure optimises risk
spreading and quality control.
Crédit Mutuel, a non-listed company, is concerned first and foremost with serving
its members to the best of its ability through a strategy of sustainable development
unconstrained by demand for short-term profits.
*Crédit Mutuel's Social Responsibility report is available on www.creditmutuel.com
12
Crédit Mutuel
2008 Annual Report
13
A decentralised
structure
2,017 Local
mutual banks
The first level of organisation is made up of Local
mutual banks or Caisses locales, which have the
legal status of cooperative companies with variable
capital (sociétés coopératives à capital variable).
These are credit institutions governed by French
banking law, with the capital owned by their members,
who are both shareholders and customers.
Financially autonomous, the local mutual banks collect
savings, distribute loans and provide a full range of
banking services. Most decisions concerning customers
are taken at this level.
Each Local mutual bank is governed by a board of
voluntary directors and/or a supervisory board,
made up of members elected by members at
General Meeting on a “one person, one vote” basis.
In all, there are more than 2,000 Local mutual banks,
whose 24,000 directors represent 7.2 million members.
18 regional
groups
At the next level up, there are 18 regional groups, each
of which comprises a Regional Federation and a
Federal Caisse (or, in some cases a Interfederal Caisse,
such as those which encompass, respectively,
the Centre-Est-Europe, Ile-de-France, Sud-Est and
Savoie-Mont Blanc and Midi-Atlantique Federations;
the Bretagne, Massif Central and Sud-Ouest Federations;
and the Crédit Mutuel Méditerranéen and DauphinéVivarais Federations)1.
The Local mutual banks and the Federal Caisse,
of which they are shareholders, are members of a
Regional Federation.
The Regional Federation is responsible for strategy
and supervision, and represents Crédit Mutuel in
its region.
The Federal Caisse is responsible for functions such
as cash management and providing technical and
IT services.
The Federation and Federal Caisse are governed by
boards elected by the local mutual banks.
In addition to the 18 Regional Federations, there is a
federation with nationwide scope in the farming
sector – Crédit Mutuel Agricole et Rural (CMAR).
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Crédit Mutuel
7.2 millionIle-de-France
members
3,168 outlets
anss including
ans
2,017 local mutual banks
National confederation
and Central caisse
These bodies make up the third and top level of
organisation.
The National confederation, which has the legal
status of a non-profit organisation, is the central
body governing the network under the Banking Act
of 1984.
The 19 Federations and the Central caisse du Crédit
Mutuel are affiliates of the National confederation,
which represents Crédit Mutuel vis-à-vis the authorities
and is responsible for defending and promoting
its interests.
The National confederation also oversees the proper
operation of its member establishments, supervises
the regional groups and ensures the overall cohesion
of the network, as well as co-ordinating business
development and providing shared services.
18 regional Groups
(Federations and Federal Caisse)
1 farming Federation
ClermontC
lermontermonto
erran
a d
(CMAR) FFerrand
National Massif
Central
confederation
Central
caisse
The Central caisse, which is the central financing body,
manages treasury for regional groups and organises
the pooling of Crédit Mutuel's financial resources.
Its capital is jointly owned by the Federal Caisse.
Rapport annuel 2008
15
Membership
and governance
7.2 million members
24,000 directors
37,308 employees
Coming
together
As a cooperative bank, Crédit Mutuel receives capital contributions through subscriptions
to member shares (1) that earn interest at a fixed rate set by the General Meeting
of member shareholders, who are associates and co-owners of the local mutual bank.
Reserves are not distributable, but serve to back the shared obligations of members
and as security for deposits. They are also used to finance long-term development.
At the end of 2008, Crédit Mutuel member shares represented a total of €6.4 billion,
up 2.4% compared with the previous year, while dividends paid to members had risen
by 19.3% to €226 million, representing nearly 36% of the net earnings of the core
cooperative business carried out by the local mutual banks and Caisses Fédérales.
More than 2,000 Local
mutual bank general
meetings every year.
“Participation and
democracy are the basis
for Crédit Mutuel’s operation
as a cooperative”.
(1) 'A' shares are those shares initially subscribed to by persons wishing to become members of a local mutual bank and to acquire the right to vote
at general meetings on a “one person, one vote” basis.
'B' shares represent additional amounts paid in by members. These earn interest but carry no voting rights.
16
Crédit Mutuel
Participation
and democracy
Participation and democracy are the basis for Crédit
Mutuel’s operation as a cooperative.
The 7.2 million Crédit Mutuel members supervise the
management of the local mutual banks and elect the
directors at general meetings, ensuring genuinely
democratic governance.
The 24,000 voluntary directors present at all three
levels of the organisation - local, regional and
national - are responsible for the group’s management and supervision. Attentive to the needs and
aspirations of the members they represent, these
directors are themselves committed, active members
and participate in the administration of the local
mutual banks alongside the employees. As members
of the local communities, they also exemplify the
values that Crédit Mutuel stands for, and help to
ensure their implementation.
The regional groups cooperate freely to rationalise
resources and costs through technical partnerships,
notably in areas such as information technology
and financing. Other avenues for cooperation are
provided by the Interfederal Caisses serving more
than one regional Federation and by joint subsidiaries
in insurance, leasing, factoring, corporate banking,
investment banking, asset management and private
banking.
Regional groups’ membership of the National
confederation and the central Caisse ensures cohesion
and shared responsibility at national level.
As the central body for the Crédit Mutuel group
as a whole, the National confederation approves
appointments to management positions and regional
audit teams, and takes all necessary steps to ensure
the group’s proper operation, with responsibility for
overall control and for the coherence of business
development.
Jointly with Internal Control committees at the levels
of Regional Federations, National confederation
reviews audit reports and reports its findings to the
boards concerned.
The National confederation’s Board of Directors
comprises representatives of all the regional
Federations, elected by the General Meeting
of National confederation shareholders.
Business
The General Meeting also elects the Chairman and
operation
Deputy Chairman for five years.
The decentralised structure with decision-making Mutual members are thus represented at all three
processes at regional level favours entrepreneurship, levels of the organisation through the directors
they elect.
a sense of personal responsibility and team spirit.
The ties between the local mutual banks and the
Regional Federations and Federal Caisses ensure the
cohesion of the various entities into regional groups
that operate as fully-fledged credit institutions within
the framework of French banking regulations.
The 37,308 Crédit Mutuel staff members, of whom
36% are executives or supervisors and 53%
are women, are responsible for implementing the
strategy and operating the business under the
supervision of the elected directors.
“ONE PERSON,
ONE VOTE”
The annual general meetings
that members and customers
of the local mutual banks are
invited to attend each year are
the basis of Crédit Mutuel's
democratic structure.
General meetings provide
members with a special
opportunity to learn more about
the business and express their
own views. They also offer
a forum for suggestions and
discussion of ways to enhance
services, reflecting the values
that distinguish Crédit Mutuel
from other banks.
Required items on the agenda
include a report on the
management and activities
of the mutual and on its specific
action as a cooperative bank,
leading up to approval of the
financial statements and the
election of directors on the basis
of one person, one vote.
A second part of the meeting
is devoted to the presentation
and discussion of current themes
and events.
Several hundred thousand
members attend the regional
and local annual meetings held
between February and May.
Rapport annuel 2008
17
A pro-active human
resources policy
To keep pace with its robust growth and anticipate future needs, Crédit Mutuel
recruited 1,655 people in 2008 (excluding CIC).
The vast majority of these new hires concerned newly-qualified students in branch-based commercial
posts. The campaign involved providing vocational training contracts to nearly 700 young people with
a level of Bac to Bac +2, enabling them to move rapidly to account manager posts for retail or professional
customers.
In 2008, the workforce averaged 37,308 employees, 2% more than in 2007.
2008
1,655 new hires
700 training contracts
5.7% of payroll allocated
to training
Crédit Mutuel provides staff members with training opportunities throughout their careers, a fact
that was reflected in a training budget equivalent to 5.7% of the payroll in 2008.
More than 1,100 training courses, ranging in length from several weeks to several months,
were provided to long-standing staff wishing to train in new posts, notably as advisors to retail
or professional customers.
The group has set up a permanent internal labour statistics database. This will notably contain
company-wide job stratification data and comparative data relating to the number of men and women
employed, in application of the gender equality agreement signed by the Crédit Mutuel division
in March 2007.
r
Gende t
ity a
l
a
u
q
e
ent
m
t
i
u
r
rec
level
18
Crédit Mutuel
pay
l
a
u
Eq
Vocational
training
Crédit Mutuel division: a framework agreement
for the employment of people with disabilities
Signed at the beginning of 2008 by all of the unions representing this division, the agreement “expresses a shared determination to improve
the integration and employment situation for disabled workers within the division and to encourage… the Federations and entities of Crédit
Mutuel to initiate a pro-active strategy to employ more people with disabilities.”
Valid indefinitely and applicable to all employees of the regional Federations, Federal Caisse, Interfederal Caisses , CNCM and CCCM,
it prioritises action in a number of areas: promoting hiring, integration, training and initiatives to keep disabled people in work and help them
adapt to technological changes as well as to adapt work stations to their specific needs.
The Crédit Mutuel Federations and other affiliated organisations “will organise communication and awareness-raising campaigns about their
objectives and initiatives for training institutes, universities, schools, associations and specialist local organisations.” The agreement also
provides for “people with disabilities” to be “taken on for any type of job and/or at any hierarchical level that is compatible with their
professional abilities and skills.” It also recommends “making special reception arrangements” to facilitate integration into, or resumption of,
a position for the employees in question, particularly to help them develop relationships with their colleagues, their managers,
the HR department, company doctors and employee representatives.
Rapport annuel 2008
19
Fondation du Crédit Mutuel,
a new framework for
broader corporate
sponsorship
Under the aegis of Fondation de France, Fondation du Crédit Mutuel – which was
created at the beginning of 2009 – oversees the Confédération Nationale’s various
corporate sponsorship initiatives.
It works to combat economic and social exclusion through social economy
and social assistance projects, to support cooperatives and research initiatives,
to promote reading and the French language in all its forms in France and,
where appropriate, abroad, and to encourage the implementation and support
of independent, sustainable banking networks in developing countries,
in particular through its financial support of the CICM association.
Research, social assistance
initiatives and promotion
of cooperatives
Part of Fondation du Crédit Mutuel’s remit is to forge
partnerships with research organisations, or think
tanks, and to invest in research into economics and
finance. In this role it works alongside such entities as
Institut français des relations internationales (IFRI),
Confrontations Europe, Fondation Robert Schuman,
Semaines sociales de France, the European League
for Economic Cooperation, the French European
Movement, Centre interprofessionnel de recherche en
droit bancaire de l’université de Lyon 3 (Lyon University
interprofessional banking law research centre), Centre
des professions financières and Institut de l’Entreprise.
20
Crédit Mutuel
The Fondation is also dedicated to supporting
work in the social economy and cooperative fields.
In this area it supports Réseau national des Juniors
Associations, France générosité and Semaine de la
coopération. Likewise, it provides funding for
initiatives in connection with its partnerships with
Adie, for publications such as Revue des études
coopératives, mutualistes et associatives (Recma)
and for Fondation de France projects and initiatives
linked to specific organisations such as Groupement
national de la coopération and Finansol. By supporting
these research groups through the financing
of specialised studies, Crédit Mutuel helps raise
awareness concerning banking, cooperative
ventures and social aid.
An innovative sponsorship
initiative with Fondation
du Crédit Mutuel pour
la Lecture (Crédit Mutuel
Foundation for Reading)
An active promoter of access to knowledge and of
social integration, reading and French literature,
Fondation du Crédit Mutuel pour la Lecture has been
involved for some 20 years in an innovative campaign
combining social and cultural commitment and
focusing on local action.
In 2008, the Foundation sponsored almost 90 projects
encouraging reading in all its forms and facilitating
access to knowledge for members of the least
privileged sections of society, regardless of age.
Priority is given to long-term initiatives drawing
support from people in every part of Crédit Mutuel.
This means that the Foundation’s budget is supplemented by contributions from the 18 Crédit Mutuel
federations and any local mutual banks – whether
general or teacher-focused1 – that choose to support
local initiatives by associations in their areas.
The first project outside France is due to be
launched in 2009. It will take place in Madagascar in
coordination with the association Trait d’union.
In 2008, the Fondation reaffirmed and strengthened
its commitment to promoting cooperation between
the various stakeholders and pressure groups working
to facilitate access to knowledge. By supporting
the “Quand les livres relient” (“The binding power
of books”) network, it is reasserting its commitment
to channelling energies and fostering discussion and
interaction.
“Literature
always
anticipates life.”
Oscar Wilde
Vaincre
l'illettrisme
(Reading the Town)
This programme features reading and writing activities
encompassing all subjects in the school curriculum,
and involves more than 4,000 primary and secondary
schoolchildren every year. Lire la Ville’s success
derives from the wealth of players that it brings
together: the town’s school pupils, teachers, writers,
historians, architects and cultural experts all share
their experience of literature, each contributing
their own angle of insight. At the end of the school
year, pupils present the work they have done
through exhibitions, film shows, plays, etc.
(The Voice of Literature)
(Combating illiteracy)
This is where the Fondation is most active, with
support given to 42 programmes in 2008.
Ranging from childcare establishments, hospitals
and medical teaching institutes to prison workshops
and mobile libraries, the channels through which
the Fondation supports reading are as diverse as its
initiatives are innovative. Its long-term commitment
to reducing illiteracy is reflected in its training courses
designed to give people with limited knowledge
of French a better chance of finding employment.
Through this initiative, the Fondation provides people
from all walks of life - children in particular - with the
opportunity to participate in France’s literary culture.
The aim is to stimulate literary creation and the desire
to read. In 2008, the Fondation took part in eight
literary contests, including the Prix des Incorruptibles,
the first prize in France voted for exclusively by young
readers.
Rapport annuel 2008
21
PA first initiative abroad
In 2009, Fondation du Crédit Mutuel pour la Lecture will, in partnership with the Alliance
Française, assist the Trait d’union France Madagascar association by funding training
programmes for librarians and coordinators from Madagascan reading, information and
cultural centres, known as CLICs.
The association has been working since 2000 to supply new books to organisations already
set up in Madagascar in order to disseminate French language and culture. In this venture,
it relies, notably, on help from the Alliance Française and other French networks. Today it
is active in the libraries of 21 CLIC centres in rural villages with the capacity to cater for
nearly 250,000 children, adolescents and young adults every year.
22
Crédit Mutuel
THE CICM IS ACTIVE
IN SIX AFRICAN AND
ASIAN COUNTRIES :
• Central African Republic
through Crédit Mutuel
de Centrafrique,
• Cameroon through Mutuelle
de développement
et d’investissement
du Cameroun (MdiC)
Development aid through
Centre International
du Crédit Mutuel (CICM)
Active for some 30 years in building banking networks
in developing countries, Centre International du Crédit
Mutuel (CICM) stands at the intersection of microfinance
and development aid. It works in several areas:
extending banking services to communities as a means
of improving their welfare, helping to develop the local
socio-economic fabric, disseminating the cooperative
model and its democratic values, and promulgating
professional savings and credit management.
This non-profit association, to which the 18 Regional
Federations contribute, works to set up independent, sustainable cooperative networks in countries
where individuals cannot always access existing
banking services.
Its aim is to help local populations to take charge
of their own development, either by enabling them
to create their own cooperative networks for savings
and credit, or by providing technical assistance to
existing mutual organisations.
CICM's approach is based on Crédit Mutuel's guiding
principles: the responsibility of its members, the use
of voluntary directors and a community approach
that gives priority to local banking services. In often
unstable political and economic environments, the
CICM networks enable local people to protect their
assets, build up personal savings and fund work
projects.
Through micro-credit and the provision of banking
services, these cooperative networks make a major
contribution to the development of local economies
by fostering social cohesion and the settlement
of nomads. CICM's operations are financed by
the Federations with contributions from external
sponsors.
• Republic of the Congo
through Mutuelles congolaises
d’épargne et de crédit
(Mucodec),
• Niger through Crédit Mutuel
du Niger (CMN),
CREDIT MUTUEL IN SENEGAL: THE COUNTRY’S
FIRST INDEPENDENT BANKING NETWORK
In 2008, the 340,000 or so members of Crédit
Mutuel du Sénégal decided to dispense in future
with CICM’s support. The 106 CMS local mutual
banks, with their 540 employees, now operate
entirely independently. Given that the independence
of governing and operating bodies is the CICM’s
primary objective, Crédit Mutuel is delighted with
this development.
NEW SHARED TOOLS TO ASSIST THE NETWORKS
2009 will see the launch of the CICM network’s
new information system enabling centralised
transaction management. A real-time management
control application will follow.
Project Afric@rte will also be launched in the
Mucodec banks this year. Initially, the card will
replace the account book and serve as a means
of identifying members who visit the bank. It will
then be incorporated into the group’s long-term
project to improve access to banking services via
the installation of ATMs in CICM branches.
• The Philippines through
Mutual saving and credit
cooperative of Philippines
(MsccP),
• Cambodia through
the Crédit Mutuel savings
and credit network (CMsc).
THE CICM NETWORK
IN 2008
86 local mutual banks
557 employees
570,000 active members
588 elected directors
€190 million in deposits
€40 million in
outstanding loans
2008 Annual Report
23
Banking for
all members of society
Following on from the tradition of the social pioneers of the 19 th and 20 th centuries,
Crédit Mutuel was one of the first banks to offer an economic response to issues
of social exclusion. The group's determined commitment to providing banking services
to those sections of the population usually denied access to the conventional
banking system is reflected in the development of micro-credit in close collaboration
with non-profit associations.
Social
micro-credit
Crédit Mutuel assists the most vulnerable sections
of the population by extending micro-credit within
the framework of partnerships.
Seventy experimental projects are underway throughout
France through regional or local partnerships with
social aid organisations such as Secours Catholique,
Coorace (Comité des Organismes d’Aide aux Chômeurs
par l’Emploi), Unhaj (Union nationale par l’habitat des
jeunes), Udaf and a number of other family-oriented
social aid networks such as Admr, Familles Rurales,
Emmaüs and Restos du Cœur, together with
neighbourhood agencies, local employment agencies,
community social aid centres and local social
integration organisations.
The goal is to develop a joint approach to helping
people in difficulty who wish to implement a project
that will enable them to find a job. By opening
accounts for them and extending loans that are
partly guaranteed by the Fonds de Cohésion Sociale
(French social aid fund), Crédit Mutuel enables them
to regain access to the banking system and to
become normal bank customers once again.
Crédit Mutuel assumes 50% of the risk on these loans.
24
Crédit Mutuel
The Fonds de Cohésion Sociale (and Secours Catholique
for its own network) covers the remaining risk under
an agreement signed in January 2006 with Caisse
des Dépôts et Consignations.
These loans, for amounts ranging between €500
and €3,000, are granted to people who do not have
a chequebook, have little or no access to credit,
have no stable employment or are living on social
welfare but are actively trying to regain a place in
society.
Professional
micro-credit
In 2008, the group financed €145 million in loans
through three networks: Association pour le Droit à
l’Initiative Economique (Adie), France Active and
France Initiative.
Crédit Mutuel has been a partner of Adie, the pioneer
of micro-lending in France, ever since it was set up
and, in 2008, it financed 10% of all lending by this
organisation, which granted 1,500 loans averaging
€2,700, representing a total of €3.6 million.
For over 20 years, the group has been working with
France Initiative, a network of associations set up to
promote local economic development that handles
15% of bank-financed business start-ups in France. The
group is actively involved with over 60% of its local
initiative platforms and a member of its "Entreprises"
collegial body of partner companies. In 2008, it lent
€132 million via the network, representing over 20%
of its overall financing volume.
Crédit Mutuel also works alongside the France Active
network, which offers grants and loans to initiatives
oriented to economically-driven social integration. It sits
on half of the organisation’s financing committees,
and in 2008 backed 23% of the guarantees extended,
representing a commitment of €10 million.
MEMBERS IN FINANCIAL DIFFICULTY: SPECIFIC ASSISTANCE PROGRAMMES
Crédit Mutuel’s social assistance converts words into action. Through its Regional Federations,
the group runs a number of initiatives of which several are listed below. They offer a daily reminder
of the group’s commitment to its most vulnerable members.
Since 1986, the Association de gestion du fond d’entraide du Crédit Mutuel de Bretagne (CMB)
has been providing aid to members faced with loan repayment difficulties resulting from unforeseen
circumstances. The association covers up to 75% of the instalments for a period of up to 12 consecutive
months, with a maximum of €16,000 available per borrower or per household.
Operational since January 2006 in Lille, Caisse Solidaire du Crédit Mutuel Nord Europe was created
to enable people to re-enter the system after being excluded from it, and to provide basic financial
services to people with little money or who are encountering temporary difficulties due to their
professional situation or to health or other problems.
It grants micro-loans of €500 to €2,000, repayable over six to 24 months, at market conditions
and can in some cases finance the purchase of subsidised housing.
This entity works in partnership with a number of aid organisations, some of which have a seat
on its Board of Directors.
At the end of 2007, Crédit Mutuel Maine-Anjou Basse-Normandie set up Crédit Mutuel Solidaire
(CMS), which acts both as a social aid fund and a micro-lending organisation. Its primary aim is
to assist members in difficulty who have personal recovery projects by helping them to obtain aid
from the specialised associations and bodies with which CMS has partnership agreements.
CMS works closely with the local mutual banks, which are responsible for identifying the potential
partner associations and handling relations with these partners with help from CMS. Repayments
on loans granted, which amount to between €500 and €4,000 over six to 48 months, cannot
exceed €100 per month.
In early 2008, the Nantes federation set up Créavenir Budget, a special initiative to help
customers with payment difficulties. Aimed at federation members only, this association is a vehicle
for the group’s “individual solidarity micro-credit” programme, and aims to support those in financial
difficulty by providing budget management advice and help with certain administrative procedures.
In doing this, the group – while not seeking to act as social security substitute – shows its commitment
to seeking solutions that require input from its directors and employees. Créavenir Budget relies
on two voluntary directors for each area, with one employee per area acting in a consulting role.
The Economic and Social Action task force (Aes) is responsible for coordinating the scheme.
A SOCIALLY SUPPORTIVE BANK
Crédit Mutuel helps develop
socially beneficial savings
schemes through two Finansol*accredited products: Livret
d’épargne pour les autres (Lea)
and Crédit Mutuel France Emploi.
Launched in 2006, the Lea
operates like a traditional savings
account but with an interest
-sharing component whereby the
saver donates 50%, 75% or 100%
of the interest on deposits to one
or more social aid associations in
France or abroad.
Crédit Mutuel France Emploi is a
mutual fund (Fcp) allowing
holders to donate half of the
interest income they earn to the
France Active association. The
association uses these funds to
grant loans to business start-ups
by unemployed people or to
inject working capital into social
enterprises, such as integration
initiatives and intermediation and
residential services companies.
* This professional association, of which
Crédit Mutuel is a founder member, is a
federation of organisations that provide
finance for social aid initiatives. Its aims
are to support and promote the
principle of socially beneficial saving
and financing, to coordinate the
collection and investment of related
funds and to guarantee the social
usefulness and the transparency of
accredited financial investments.
2008 Annual Report
25
2008 results
The financial and economic crisis affected Crédit Mutuel’s results, underlined its responsiveness
and demonstrated its resilience in equal measure.
Its net profit group share, taking into account CIC, came to €440 million, compared with €2,730 million in 2007.
Rapport annuel 2008
27
2008 results
Despite the economic turmoil, Crédit Mutuel strengthened its core retail banking
business, expanded its coverage and won market share. It also embarked on
a new stage of its growth strategy with the acquisition of Citibank Deutschland
and Cofidis.
Net banking income
(€ billions)
10.6
10.8
8.4
2008
The group’s financial structure remains strong: with 9.8% in Tier 1 capital,
Crédit Mutuel has one of the highest solvency ratios of all French banks and continues
to rank among the euro zone’s most highly-rated banking groups.
2007
2006
With sustained network activity, a high level of deposit-taking and constant provision
of support in all areas of the economy in 2008, Crédit Mutuel – one of France’s
leading banks with a 15% market share – once again showed remarkable
development potential.
Operating expenses
(€ billions)
6.7
6.5
Firm resistance
in an unusual yeare
6.3
2008
2007
2006
Net banking income came to €8,424 million,
representing a 20.3% decrease. This decline largely
reflected a fall in income for the corporate and
investment banking division (from €1,234 million
in 2007 to a loss of €64 million in 2008), which
Cost-to-income ratio
– retail banking
(%)
72.2
71.4
2008
IFRS
2007
IFRS
28
Crédit Mutuel
Like many credit institutions in France and abroad,
the group suffered collateral damage from the
US-born crisis and the ensuing collapse in investor
confidence.
bore the brunt of the crisis with, in particular, the
depreciation of its financial instruments portfolio.
The retail banking division’s net banking income
rose 1.9% to €7,485 million, or 83% of total net
banking income, confirming that the group’s core
business is in good shape.
The negative market trend also weighed on the
insurance business, which saw its net banking income
fall 31.1% to €995 million. This division nevertheless
generated 11% of total net banking income.
Income from asset management and private banking
was marginally down (3.3%) at €549 million.
2008 Key figures
at 31 December*
€ millions
2007
IFRS
2008
IFRS
2008/2007
Total assets
553,302
581,709
5.1%
Shareholders’ equity (after appropriation of income)
26,864
25,036
- 6.8%
26,442
24,676
- 6.7%
- of which attributable to group
Customers' deposits
482,342
478,083
- 0.9%
o/w
Deposits
171,602
197,219
- Debt securities issued
- Insurance-linked savings
230,545
80,195
199,712
81,153
14.9%
(9.5% excluding Citibank)
- 13.4%
1.2%
Outstanding loans
258,619
295,497
14.3%
(9.7% excluding Citibank)
Net banking income
10,568
8,424
- 20.3%
Operating expenses
6,511
6,677
2.5%
Gross operating profit
4,057
1,747
-56.9%
Cost of risk
186
1,405
ns
Net operating profit
3,871
342
- 91.2%
Net profit
2,785
442
- 84.1%
Net profit, group share
2,730
440
- 83.9%
MAIN RATIOS
2007
IFRS
2008
IFRS
2008/2007
IFRS
71.4%
25.5%
9.6%
72.2%
31.0%
9.8%
2007
2008
Including Citibank
5,206
15.0
59,455
5,262
15.3
60,075
5,619
18.7
65,545
Cost-to-income ratio (retail banking)
Fees and commissions / Net banking income
Tier 1 solvency ratio (Basel II)
Points of sale
Customers (millions)
Workforce
0.8%
5.5%
0.2%
*Taking all of Citibank Deutschland’s assets and liabilities into account. In terms of impact on results, on the other hand, these figures reflect only the post-acquisition period (from 5 to 31
December 2008).
Rapport annuel 2008
29
Les résultats
2008
results
du groupe en 2006
Operating expenses increased by a moderate 2.5%
to €6,677 million, a smaller rise than in 2007, despite
a 1% growth in the workforce (excluding Citibank*
and Banco Popular) and ongoing investment in network
expansion.
Gross operating profit came to €1,747 million,
a decrease of 56.9%.
The cost of risk rose from €186 million to
€1,405 million, reflecting the initial impact of
the economic crisis and exceptional events during
the year - mainly the Lehman Brothers exposure.
Discounting these exceptional items, the cost would
have risen €499 million, to reach €685 million.
Strong sales and
increased market share
Sales growth continued at a sustained pace. The efforts
of the Crédit Mutuel and CIC networks and its competitive
products and services offer enabled the group to open
245,000 new current accounts and win 350,000 new
customers, bringing the total number of customers
to 15.3 million. Of these, 13.7 million are retail (up
304,000). In all, 56 new branches were opened,
bringing the total number of outlets to 5,260.
Alongside the network’s development there was
increased sharing of tools between the groups.
Further interfederal partnerships developed around
the Caisses Interfédérales, subsidiaries and work
platforms. Crédit
Mutuel Midi-Atlantique joined the Caisse Interfédérale
comprising the Centre Est Europe, Ile-de-France,
Sud-Est and Savoie-Mont Blanc federations, and a
partnership agreement was signed between these
five federations and the Marseille and Valence
groups. Operational development work to increase
CM-CIC Services’ production and logistics capacity
also gathered pace.
These developments allowed the group to become
more competitive, enhance product and service
quality, control its costs and profitability and
strengthen and optimise its equity capital.
Crédit Mutuel-CIC gained further market share to
16.9% (up 0.3 points) in loans and 12.1% in deposits
(up 0.6 points).
Customers’ deposits with the group totalled
€478.1 billion in 2007 (down 0.9%). While deposits
remained upbeat, with a 14.9% increase to €197.2 billion,
the financial crisis took its toll on the securities
segment, which contracted by 13.4% to €199.7 billion,
and on life insurance, which gained just 1.2% to
€81.2 billion.
The crisis combined with the rise in regulated rates
led savers to shift their cash towards liquid, risk-free
savings products.
Accordingly, deposits taken amounted to €25.6 billion,
compared with €15.1 billion in 2007, representing
a 14.9% increase in the overall deposit base to
€197.2 billion. Deposits were particularly substantial
for the “livret bleu” savings account, where the
savings rate doubled from the previous year, while
standard savings book accounts and term deposits
also did well.
The collapse in demand for lending in the second
half of the year, accentuated at year-end, led to a
contraction of 16.1% in loans granted, to €62.6 billion,
which is nevertheless a healthy level. Outstandings
came to €295.5 billion at year-end, up 14.3%, or
9.7% excluding Citibank, for which outstandings
came to €11.8 billion.
* Taking all of Citibank Deutschland’s assets and liabilities into account. In terms of impact on results, on the other hand, these figures reflect only
the post-acquisition period (from 5 to 31 December 2008).
30
Crédit Mutuel
Credit risk (IFRS)
Operating profit (IFRS)
as a %
in € billion
2.9
2.4
Net profit, group share (IFRS)
in € million
2.5
2,730
2,946
61.0
65.7
66.6
4.1 3.9
1.7 0.3
4.5 4.3
-1.4
-0.19
2008*
-0.24
440
2008
2008
2007
2007
2007
2006
2006
2006
Impaired loans
Cost of risk
Coverage rate
*excluding Citibank Deutschland
Operating profit
Shareholders' equity, group share (IFRS)
Solvency ratio,
of which Tier 1
in € million
as a %
12.3
(inc. floor)
24,676
26,442
(excl. floor)
9.5
11.3
12.0
Tier
one
23,983
Tier
one
Tier
one
Tier
one
12.7
9.8
9.6
10.0
2008 (IFRS)
2008
2007
2007 (IFRS)
2006
2006 (IFRS)
As from 2007, figures have been calculated in accordance
with the decree of 20 February 2007 relating to Basel II
capital adequacy requirements.
Breakdown by activity
8,424
Net banking income
in € million
in € million
8,971
440
440
1,017
7,485
549
6
(547)
420
74
995
(335)
(64)
(736)
Retail banking
Other
Insurance
Total
Retail banking
Intra-group elimination
Insurance
Other
Asset management
and private banking
Consolidated
Total
Asset management
and private banking
Consolidated
Rapport annuel 2008
31
Les résultats
2008
results
du groupe en 2006
The group remains the second-largest lender
in home loans with a market share of nearly 20%
for new loans. New housing loans decreased by
24.6% to €31.6 billion in a “wait-and-see” market.
Outstanding housing loans increased by 9.3% to
€155.6 billion.
The integration of Citibank Deutschland, whose
loan book consists essentially of consumer loans,
multiplied outstandings in this lending category
by 1.8, bringing them to €27.3 billion. At constant
scope, new loans decreased 4.2% to €9 billion.
STRATEGIC DEVELOPMENT
2008
(excluding Citibank)
including 13.7 million retail
customers
350,000 new customers
56 new branches
No. 1 bank in non-life
insurance
No. 2 in home loans
No. 4 in European
consumer credit
No. 2 in France for
electronic payments
32
Crédit Mutuel
In 2008, ten years after the acquisition of CIC
and against the backdrop of a major crisis,
Crédit Mutuel entered a new phase of strategic
development.
Thanks to its acquisition of Citibank Deutschland,
Germany's leading consumer credit provider
with a network comprising 300 branches and
3.4 million customers, and of its controlling
interest in Cofidis, the 3 Suisses International
consumer credit subsidiary with 11.5 million
customers that posts 40% of its sales in nine
European countries, the group has strengthened
both its international presence and its positioning
in consumer credit, where it is now Europe’s fourth
largest provider.
In early 2008 the group acquired the 18 branches
and offices that made up Banco Popular Español's
French network.
It thereby strengthened its network in three areas
earmarked for development – Ile-de-France,
the south-east and the south-west – and diversified
into a new category of customers. As a result
it is also working on extensive commercial
agreements with Banco Popular Español, Spain’s
third-largest bank.
The group has a number of development projects
under way, notably in insurance, where it has
created RACC Seguros, a joint venture between
Assurances du Crédit Mutuel (ACM) and Royal
Automobile Club de Catalogne, and in IT, where
it has investment agreements in Spain, Morocco
and Tunisia.
Outstanding loans to businesses and self-employed
professionals for equipment and operating
requirements increased by 12.6% to €80.1 billion,
while leases grew by 9.3% to €9 billion. However,
new loans and leases combined shrank by 5.8%
under the impact of investment freezing in some
areas.
The group reinforced its position as the leading
bankinsurance player in non-life insurance with
a 6.5% increase in premiums to €2.3 billion,
while life insurance sales dipped in line with
the market, with premium income down 18.5%
to €8 billion.
The insurance subsidiaries generated total premium
income of €10.2 billion, a 14% decrease. Overall
they had 26.6 million contracts under management
– an increase of 4.4% – of which 22.5 million are in
non-life, reflecting a 5% increase in that category.
At 31 December 2008, they catered for 10.7 million
policyholders, a rise of 6% year-on-year.
The group is a leading player in breakthrough
areas such as mobile banking, which is a major
new sector for diversification.
It continues to hold second place in electronic
payments in France with 20.7% of the market.
Customers
Outlets
Average workforce
15.3 (excl. Citibank)
millions
18.7 (incl. Citibank)
60,075
15
5,260
65,545
(incl. Citibank)
(excl.
Citibank)
59,455
14.5
58,720
13.7
13.3
5,206
5,065
37,310
36,570
12.9
5,620
(incl. Citibank)
3,168
(excl.
Citibank)
3,151
2008
35,710
2008
3,075
2008
2007
2007
2007
2006
2006
2006
Customers
Total number of employees
Outlets
o/w retail customers
o/w Crédit Mutuel
o/w Crédit Mutuel
+ 0.7 point
+ 0.7 point
Market share
over 3 years (France)
12.1%
%
16.9%
11.5%
16.6%
11.4%
16.2%
2008
2008
2007
2007
2006
2006
Deposits
Breakdown of customer deposits:
€478 billion in 2008
Loans
Breakdown of new loans:
€62.6 billion in 2008
Breakdown of outstanding loans:
€295.5 billion in 2008
8%
17%
41.2%
36%
41,.8%
52.7%
11.3%
18.8%
14%
Deposits
Securities issued
Insurance-linked savings
50%
Home loans
Consumer credit
Equipment and cash
9.2%
Home loans
Consumer credit
Equipment + leasing
Operating loans
Other loans
2008 Annual Report
33
Bankinsurance
Bankinsurance, the group's core business, covers retail banking and life and non-life insurance activities.
In 2008, it generated net banking income of €8.5 billion and net profit group share of €1.4 billion.
The group assists its customers in all their projects, providing solutions in the areas of investment and borrowing,
electronic payments and technology, life and non-life insurance, real estate, residential services and wealth management.
2008 Annual Report
35
Bankinsurance
Bankinsurance
France's second-largest retail bank and leading bankinsurer, the Crédit Mutuel group
has 13.7 million retail customers of whom more than 11 million have taken out
insurance cover. Indeed, it is precisely in order to better address their needs that
Crédit Mutuel developed bankinsurance activities, i.e. the sale of insurance products
through its bank branches, in the 1970s. It was this same commitment that led it
to become the leader in home video surveillance, with 29% of the market.
KEY FIGURES
of which 13.7 million retail
customers
10.7 million policyholders
and 26.6 million insurance
contracts
5,262 outlets
7,558 ATMs
To stay close to its customers, the group has increased its coverage with an
appropriate balance between physical networks and remote banking technology.
It opened 56 outlets in 2008, mainly in large and medium-sized cities, where
it has traditionally had a less satisfactory presence.
It is France's second-largest retail banking network(1), with 5,262 branches
and almost 7,600 ATMs.
It thus offers a truly local banking service backed up by state-of-the-art
multi-channel technology: remote banking services alone recorded close
to 367 million contacts in 2007, 90% of them via Internet. The group is a leader
in breakthrough areas such as mobile banking, which is a major new area
for diversification.
367 million remote
banking contacts
(1) Excluding the French post office bank, La Banque Postale
36
Crédit Mutuel
Livret bleu: higher savings and increasing
numbers of account holders
Regulated savings accounts (Livret A/Livret Bleu) have been distributed by all banks since 1 January 2009.
This reform, which was implemented at the request of the European Commission, in no way changes
the group’s philosophy. As a traditional distributor of Livret Bleu savings books, Crédit Mutuel will
continue to distribute this popular savings product, frequently the first rung on the savings ladder for
retail customers. The generalised distribution will not modify the characteristics of this savings product,
and Livret Bleu account holders – be they individuals or associations – will still be free to manage their
accounts either as pure savings products or as quasi-ondemand deposit accounts. This flexibility is particularly
useful for lower-income customers wishing to carry
out day-to-day transactions.
The Livret Bleu continues to be what
it has always been: a popular basic
savings product offering availability
and reliability, and Crédit Mutuel will
continue to distribute this product,
sharing costs between large and small
savings accounts, which is another
form of solidarity.
In 2008, deposits with the bank doubled to
€4.8 billion, helped by an attractive rate
of interest and the branches’ marketing
and sales campaigns. This brought total
savings held to €25.3 billion, a rise of
23.6%. The number of savings accounts
under management continued to rise,
reaching 6 million by the end of 2008, a
trend which remained undented when the
market opened up earlier this year.
CREDIT MUTUEL,
NUMBER 1 BANK
FOR CUSTOMER
RELATIONSHIPS IN 2009
The customer relationship is
seen as the key to successful
development, and Crédit
Mutuel was once again
rewarded for the quality
and efficiency of its customer
relationships in 2009.
For the second consecutive
year, Crédit Mutuel came first
in BearingPoint – TNS Sofres’s
customer relationship survey (1).
These awards differ from others
in that they are judged, not
by panels of experts and
professionals, but by
consumers themselves.
(1) Survey carried out in France in April 2009 on
a sample of 4,000 customers and users of more
than 100 businesses and bodies in 11 sectors:
insurance, automobile, banking, specialised retail,
services companies, mass retail, public services,
landline telephony/Internet access providers,
mobile telephony, tourism and transport.
2008 Annual Report
37
Bankinsurance
France's second-largest
retail bank
Retail banking, the group's main business, encompasses the offers of Crédit
Mutuel’s18 Regional Federations and CIC's five regional banks. It also covers
the specialised products and services marketed through the network,
notably leasing, factoring, fund management and real estate.
KEY FIGURES FOR
RETAIL BANKING
Retail banking generated net banking income of
€7.5 billion in 2008 (83% of the group total) a rise of
1.9% underlining the dynamic nature of this division.
In € millions
Net banking
income: 7,485
Gross operating
profit: 2,081
Net profit,
group share: 1,017
304,000 new customers
Number two in home loans
Number four in European
consumer credit
38
Crédit Mutuel
As the day-to-day banking partner for 13.7 million
retail customers, the group is thriving, as witness
the 304,000 new customers attracted in 2008.
Together with CIC, it has a 12.1% share of the market for
deposits and a 16.9% share of the bank loans market.
It has continued to diversify its offer so as to meet
all the needs – from the simplest to the most sophisticated – of its retail customers and, more generally,
of its various customer segments, i.e. young people,
who constitute one of its priority areas of development,
but also associations, farmers, self-employed
professionals and very small to medium-sized
businesses.
For the more vulnerable segments of its customer
base, notably those without access to a chequebook,
the Crédit Mutuel group offers a full range of services
for withdrawing cash and making payments in all
circumstances: Facil’accès at Crédit Mutuel and
Service Accueil at CIC.
As the number two in housing loans with a 20%
share of new loans granted, the group is a key
player in the financing of programmes to facilitate
home ownership among the less well-off sections
of society, particularly through the distribution of
interest-free home loans.
Following the acquisition in 2008 of Citibank
Deutschland, Germany's leading consumer credit
provider, and Cofidis, which has 11.5 million customers
across Europe, the group is now Europe’s fourth
largest player in this sector.
I
Savings: Strong deposit inflow, and
decline in securities subscriptions
Although boosted by deposits, the savings business
was hampered by the fall in securities subscriptions
and a disaffection for life insurance products,
in keeping with the general market trend, causing
savings to fall marginally by 0.9% to €478.1 billion.
The crisis and the rise in regulated rates led savers
to shift their cash towards short-term, fixed-rate
bank savings products.
Deposits naturally benefited from this situation,
with the total rising considerably by 14.9% to
€197.2 billion, and deposits collected increasing
to €25.6 billion from €15.1 billion in 2007.
The deposit inflow was particularly robust for:
• Savings accounts, for which overall deposits
increased by 18.7% to €62.8 billion thanks largely
to campaigns designed to win new customers and
retain existing ones for the “livret bleu” account
and for related investments such as the Fidélité
savings accounts and term deposits.
• Negotiated deposits, with a 28.7% increase to
€49.6 billion, boosted by term deposits.
Residential savings, and in particular the PEL
residential savings plan, which did not benefit from
the successive rises in regulated interest rates,
lost further ground to €26.3 billion, a decline
of 6.1%. It is expected that the maintenance of
the PEL rate in a context of falling savings
books regulated rates will make PEL plans more
attractive again.
The financial crisis and market turmoil led to
a wholesale decline in securities-related savings,
with both the custody business and mutual funds
affected. Total deposits fell 13.4% to €199.7 billion.
Life insurance suffered as a result of customers’
preference for interest-bearing deposits, which were
marketed more aggressively by the networks.
Despite a reduced inflow of €8 billion (down 18.5%),
total funds rose slightly by 1.2% to €81.2 billion.
2008 Annual Report
39
Bankinsurance
ANNUAL BANK
CHARGES STATEMENT:
CLEARER THAN EVER
In accordance with current
regulations applicable to all banks,
customers receive a yearly statement
summarising the charges they
have incurred for banking products
and services provided in connection
with their current accounts.
A leading retail banks
Crédit Mutuel endeavours to anticipate, and respond to, customers’ needs with an
appropriate and particularly innovative offer of products and services.
This statement provides an overview
of the charges levied over the past
year, and reflects Crédit Mutuel’s
ongoing commitment, made some
years ago, to providing clear, useful
advice and enhanced access
to information.
In line with this, it has strengthened its financing
offer for energy-saving home improvements and
renewable energy installations and has been offering
interest-free “eco-loans” (Eco-prêts) since spring
2009. This scheme, which resulted from the Grenelle
Environment Round Table process, targets individual
owner-occupiers and landlords of properties
– including those in co-owned buildings – built
before 1 January 1990 and used as main residences.
The annual charges statement
provided the bank’s branches with
a fresh opportunity to approach
its members and customers to help
them rationalise their use of banking
services by adjusting their
consumption and the related
costs to reflect their real needs
more closely.
Similarly, Crédit Mutuel has gained a genuine lead
concerning the quality and performance of new
technological services provided to customers in the
areas of remote banking, home video surveillance,
electronic payments and mobile telephone services.
This positioning is integral to the group’s strategy of
diversifying through new activities in recent years.
Residential services are another facet of Crédit
Mutuel’s offer. These are paid for using universal
service vouchers (chèque emploi service universel
- CESU) issued by Crédit Mutuel under a partnership
with Chèque Domicile, the leader in this area, a
scheme that offers retail customers cheaper access
to home services and provides companies with a
new instrument for their human resources policies.
Tranquil’ADOM, which puts customers in touch with
residential services providers, is bundled into
the bank’s Eurocompte Confort et Sérénité offer and
the Assurances du Crédit Mutuel home insurance
packages, and can be subscribed to by telephone
or online, exclusively via the CyberMUT site.
This initiative met with emphatic
approval on the part of the customers.
FOSTERING RENEWABLE ENERGY
The partnership concluded with EDF ENR in April 2008 has resulted in a financing package for the installation
of solar panels on individual homes. The aim is to foster the development of renewable energy in France.
The package entitles retail customers building a detached house to borrow money for up to 20 years at
an attractive rate.
The solutions offered by participating local mutual banks* and by all the CIC branches form part
of the solar panels offer developed by EDF’s Bleu Ciel division.
Alongside CIC’s sustainable development loan and Crédit Mutuel’s Crédinergie package, this latest offer
is an additional differentiating factor for the group.
* Crédit Mutuel Centre Est Europe, Savoie-Mont Blanc, Ile-de-France, Sud-Est and Loire-Atlantique et Centre-Ouest
40
Crédit Mutuel
Home loans:
a major player
I
Number two
in home loans
Falling demand was compounded at the end of the
year by the combined effect of a crisis in confidence
and the shelving of investment plans. This led to a
market-wide drop in the number of home loans
granted by banks.
Despite a 24.6% fall in new loans to €31.6 billion,
the group remained France’s second biggest lender for
this segment, with 20% of the market. At 31 December,
home loans outstandings stood at €155.6 billion,
up 9.3%.
The group also plays a key role in subsidised home
purchases and the distribution of interest-free
home loans with 20% of the market.
I
An active partner
in subsidised housing
Crédit Mutuel has a longstanding relationship with
the bodies involved in the so-called “1% logement”
subsidised housing scheme, traditionally active in
the rental sector for low-income households and
now involved in subsidised acquisition schemes.
It has begun to set up schemes for separating the
purchase of land from that of the actual buildings.
It is committed to working alongside the main bodies
involved in collecting the “1% logement” contribution,
by providing financing in conjunction with the local
authorities’ contributions (aid in addition to interestfree loans, reduced VAT rate of 5.5% and carrying of
cost of the land by the CIL cross-sector housing
committees thanks to the Pass-Foncier scheme).
In 2009, this activity has benefited from measures
to stimulate new-builds (raising of the interest-free
loan ceiling to twice its former level since 15 January
and gradual roll-out of the legal and tax arrangements
for using the Pass-Foncier for multi-occupancy housing).
The group is an active player in several regions, with a
range of activities:
• it has capital stakes in around 40 subsidised housing
bodies (Entreprises sociales de l’habitat - Esh) to which
it offers intermediary rental loans (Pls, Psla and Pli).
It also contributes its know-how in the sale of social
housing (HLM) through subsidised homebuyer loans;
• it is a close partner of social housing cooperatives
for construction programmes under subsidised
homebuyer schemes, which it finances through
interest-free loans or tenant home purchase schemes;
• it has extended its direct presence through partnership
agreements with social housing bodies (Opac and
Ophlm), which manage more than half of France’s
existing subsidised housing and have projects for
priority zones designated in the government's urban
development policy.
As a traditional partner of the French agency for housing
improvement (Agence nationale pour l’amélioration
de l’habitat - Anah), the group aims to work more
closely with social housing bodies in sensitive urban
areas covered by French urban renovation agency
(Agence nationale pour la rénovation urbaine Anru) programmes.
IMPROVED INTERESTFREE LOANS: THE GROUP
AN ACTIVE PLAYER IN
SENSITIVE URBAN AREAS
Crédit Mutuel favours greater local
involvement in aid schemes and
was the first entity to bring its
engineering skills to bear on
improved interest-free loan
packages for the most
disadvantaged urban areas.
In 2008, it handled two fifths
of the Prêts-Logement 92
interest-free loans in the
Hauts-de-Seine department
and more than a quarter of
the Prêts Paris-Logement loans
in neighbouring Paris.
MEDIATION: MORE THAN 1,700 OPINIONS ISSUED IN 2008
Created by the Murcef Act, bank mediation has become an integral part of the customer relationship.
Initially linked to retail deposit accounts, the scope was extended in January 2008 to cover disputes
linked to financial instruments, savings products, loans and investment services, insofar as these
concern a contract’s execution rather than its negotiation.
Crédit Mutuel's ombudsman received more than 2,810 requests in 2008, a rise of 11.6% from 2007.
More than half of these (62%) fell within his ambit, and 79% of the requests received a response
within a month.
The ombudsman issued 1,753 opinions in 2008, 56% of which were partly or totally in the
customer’s favour.
Although the ombudsman's opinion is not binding for the network, its position has been followed
in all cases by Crédit Mutuel’s Regional Federations and CIC's regional banks.
2008 Annual Report
41
Bankinsurance
CRÉDIT MUTUEL
ENSEIGNANT:
A SPECIAL RELATIONSHIP
Union nationale du Crédit Mutuel
Enseignant (UNCME) now
has more than 40 mutuals
throughout France*.
It offers a service combining
clear conditions, quality products
and mutualist values to civil
servants employed by the
departments of education,
research, youth and sports
and culture.
Since 2008, CME have been
able to extend membership
to teachers and non-teaching
staff in the private education
sector within the framework
of a partnership with the State.
In all areas - package for young
teachers, loans, savings, banking
and insurance - CME promotes
the mutualist values that have
made it such a success with its
members and customers.
* www.cmutuel.com
Nearly four million
young customers
In 2008, the Crédit Mutuel group invested further in
developing its offer for people under the age of 26,
who represent nearly a quarter of its customer base.
Teaching young people how to use basic banking
services, encouraging savings from an early age
and assisting young people along the road to
independence: these are the main lines of the bank’s
offer – comprising two products: Pop Corn and VIP – for
a customer segment that is central to its development
strategy.
Â Pop Corn covers the period from birth to 11 years:
savings book, life insurance, organisation of
birth-related schemes, Christmas gifts, birthday
gifts, etc., while
Â VIP caters for the 11-25 age bracket in three major
areas:
• day-to-day banking needs, notably through
Eurocompte VIP, a service package enabling
customers to manage their budgets;
• accommodation, with Clic-Clac, a package for
young people comprising a loan to finance
the guarantee deposit, a bank guarantee for
the landlord and a home insurance policy.
These products can be subscribed to separately
if required;
• projects: computer loans, the €1 per day driving
licence scheme, and flexible student loans,
including, since the end of 2008, the new Oséo
government-backed student loan, which enables
the student to borrow up to €15,000 over
a two- to ten-year period and comes with a
government guarantee of 70% for the unpaid
portion of capital. This loan is specifically
tailored for young people without a parental
guarantee.
The VIP offer is mainly marketed through Crédit Mutuel’s
advertising on educational material handed out to
students throughout their school years and at key
moments in their academic and career paths.
As well as Parcours J, CIC offers the Starts Jeunes
Actifs package, which provides all of the bank's
services at half price.
As well as these specific products, the group offers
intergenerational savings products that can be
subscribed by the parents or grandparents in their
own names or directly in that of the child.
42
Crédit Mutuel
HELPING YOUNG TALENT
EMERGE WITH CERCLE
PASSEPORT TÉLÉCOMS
THE BANK FOR MUSIC
Allowing our customers to express themselves is the basis of our
relationship. Sponsoring their music is one way of thanking them
for the trust they place in us. Crédit Mutuel therefore gives
its support to some of the leading music events and programmes
on television and radio, such as the NRJ Music Awards on TF1
and NRJ, the Victoires de la Musique on France 2 and France Inter,
Taratata and N'oubliez pas les paroles.
In 2007, it concluded a partnership with Radio France to support
music programmes and discussions on France Inter, France Info
and Le Mouv’, as well as the France Bleu talent showcase night.
Crédit Mutuel is also involved in major music events such as NRJ
concerts, the Printemps de Bourges festival, the Francofolies
de la Rochelle and the Fête de la Musique. In addition, it promotes
numerous regional events.
With a view to bringing live music to as many people as possible,
Crédit Mutuel is associated with Jeunesses Musicales de France,
and with the 2,000 concerts they give each year in primary and
secondary schools, as well as with Confédération Musicale de
France which groups some 700,000 musicians in 6,000 music
schools, orchestras and choirs.
Since 2008, Crédit Mutuel has been making its voice heard
over the Internet, notably with Goomradio, through which it
broadcasts two exclusively digital radio programmes targeting
young people: Pop Corn radio for 8-to-12 year olds and VIP radio
for 12-to-18 year olds.
Again through music, Crédit Mutuel works for sick children
by supporting the “Tout le monde chante” cancer prevention
and support endeavour.
Since 2007, Crédit Mutuel has been
a partner in the Cercle Passeport
Télécoms initiative, which enables
scholarship students from
disadvantaged areas to go to
engineering or business schools
by eliminating all financial
discrimination. Crédit Mutuel offers
student loans requiring no parental
guarantee, with
the possibility
of deferring
repayment
until the
recipient has
finished his/her studies.
In conjunction the Cercle,
it also runs educational
workshops on the subject of
budget management in the
schools concerned.
This equal opportunity partnership
reflects Crédit Mutuel's goal of
becoming the bank for young talent
in areas targeted for development by
the government's urban policy plan,
by providing material help for young
people to enter top-level professional
careers. In 2009, Cercle Passeport
Télécoms was one of the winners
in the 26th Admical Oscars corporate
patronage awards.
CIC also supports young performers through its patronage, since
2003, of the classical music awards, Victoires de la Musique
Classique. This event, which enables young classical musicians
to build a name, helps to promote classical music to an
increasingly wide audience throughout France.
Channelling energies, being attentive and developing individual
talents and goals are just some of the values to be found in
music and which justify the group's commitment to this form
of expression.
2008 Annual Report
43
Bankinsurance
CREDIT MUTUEL
LAUNCHES ASSOCIATHEQUE
On 1 September 2009, Crédit Mutuel
launched Associathèque, a public
information and services website
designed to consolidate the group’s
position in the non-profit
associations market.
Designed for everyday use by voluntary
workers and current and future
association directors, Associathèque
provides a wealth of information
(legal, tax, accounting, community and
events news, along with handy guides,
downloadable information sheets
and templates, Partenaire Associations
and other newsletters, etc.).
It also offers numerous online services
to help manage and promote an
association, such as a directory,
an association profiling tool, small ads,
legal and tax advice from a partner
law firm and data upload to the local
CM-CIC branch.
Associathèque is regularly updated and
enhanced by our partner companies*.
It is a free service with a subscriber
area reserved for customer associations
with a remote banking contract or a
Eurocompte account (subject to
region-specific terms and conditions).
The public part of the site offers various
useful features, such as a guide on
how to launch an association.
As well as providing assistance to
associations, Associathèque is a
means for Crédit Mutuel to win new
customers, secure the loyalty of
existing ones, and burnish its image.
Go to:
http://www.associatheque.fr
* Editions Juris Associations (an Editions Dalloz
company), In Extenso, an accounting firm belonging
to the Deloitte group, and Service 1901, a consultancy
specialised in the associations sector.
44
Crédit Mutuel
The leading bank
for associations
With nearly 400,000 associations in its customer base, Crédit Mutuel is the active
partner of at least one out of three associations and one out of two works councils.
It responds to the needs of this sector which plays a key role in reinforcing social
cohesion and creating new community ties.
I
A specifically
targeted banking offer
At end-2008, the group managed €11.6 billion in
deposits and €1.7 billion in loans for non-profit
associations.
A specifically targeted offering and close relationships
with associations and their federations at national
and regional level have helped to make Crédit
Mutuel their natural partner.
These close relationships, built as much on the group's
values as on its professional efficiency, have created
a climate of trust: CNRS-Matisse’s survey, which
was launched in 2005 and introduces new evaluation
criteria every year, ranks Crédit Mutuel as the leading
bank for medium-sized and large associations, with
a third of the market.
Crédit Mutuel manages 22% of the funds of all the
associations in France: it is their leading banking
partner in the areas of healthcare, social work,
education, training, social integration and humanitarian
aid, and the second largest bank for associations in
the areas of sport, culture, human rights, charities,
local economic and development initiatives, and
campaign groups.
I
Renewed
support
In 2009, Crédit Mutuel renewed its partnership with
the Familles Rurales (rural families) association.
For the fifth year in a row, this partnership provides
financial support for humanitarian, ecological,
cultural and social projects handled by young people
aged 12-25 under the Trophées J.Pass competition.
The Group has partnered the Réseau National des
Juniors Associations (Rnja) ever since its creation
in 1998. This association enables young people under
eighteen to organise initiatives and carry out projects
within an association framework. During the 2007/2008
school year there were over 800 Junior Associations
working with some 8,000 under-18s handling projects.
As one of RNJA’s leading banking partners, Crédit Mutuel
also contributes to the financing of the guides it
publishes. In 2008, it helped fund a study of the
impact of involvement in voluntary work on the
career paths of young people.
Crédit Mutuel has been a partner to Coorace for
more than ten years, and renewed its ties with this
national federation for socially cohesive economic
development in 2009.
Coorace’s purpose is to assist people who are
temporarily out of work and to contribute to developing
employment at national level. It notably helps
its 450 members to implement quality certification
procedures (Cedre and Afnor Services) to heighten
their professionalism and capacity to create jobs
and produce quality goods and services.
Crédit Mutuel financed the 2009 First Prize
for Innovation designed to stimulate and encourage
the ingenuity of Coorace’s members in the area
of social inclusion.
A COMMITTED BANK
Children, young people, the elderly and social aid: Crédit Mutuel supports numerous networks
within the framework of long-term agreements, including:
• Union Nationale pour l’Habitat des Jeunes (Unhaj), a housing scheme formerly known as Foyers
de jeunes travailleurs. The bank provides financial support and communication tools to ensure
more publicity for its action and notably for its development programme aimed at building
10,500 new housing units and renovating another 3,500.
• Association des Directeurs au Service des Personnes Agées (AD-PA, formerly Adepa - care
for the elderly). Crédit Mutuel is providing financial support over three years for communication,
the organisation of events and the development of relations between retirement homes,
home care services and families.
• Fédération nationale des jardins familiales, which focuses on nature conservation and
the environment, sustainable development and the enhancement of the living environment.
Crédit Mutuel contributes to the development of this association on the basis of shared values.
• Ashoka (business development aid), which Crédit Mutuel helps by its part-financing of the Impact
competition. Entries are selected based on the criteria of social impact, development strategy
feasibility and creative fund-raising, and this year’s finalists received their prizes in February
at the Salon des Entrepreneurs in Paris.
• Fédération sportive et culturelle de France. This sporting and cultural association is present in
74 departments throughout France and comprises more than 3,700 associations and sub-associations
with 500,000 members, of which half are under 17, and 40,000 voluntary supervisors.
• Union nationale interfédérale des oeuvres et organismes privés sanitaires et sociaux (Uniopss),
a national federation of private healthcare and social work organisations. As a member of its Club
des partenaires (partners’ club), Crédit Mutuel provides financial support for a number of projects
and is well represented at the federation’s conventions and annual meetings.
2008 Annual Report
45
Bankinsurance
Number 2 in the small
and medium-sized
business sector
Crédit Mutuel plays an active role alongside all those involved in the regional economy,
whether independent professionals, very small enterprises or small and medium-sized
businesses. It ranked as the number two bank for the sector in 2008 with nearly
€68 billion in outstanding loans to very small, small and medium-sized enterprises.
I
Specialised
subsidiaries
Business financing activities are carried out by the
network and by specialised subsidiaries: Banque de
l’Economie du Commerce et de la Monétique (BECM),
a subsidiary of Crédit Mutuel Centre Est Europe;
Banque Commerciale pour le Marché de l’Entreprise
(BCME), a subsidiary of Crédit Mutuel Arkéa and
Crédit Mutuel de Loire-Atlantique et du Centre-Ouest;
Banque Commerciale du Marché Nord Europe (BCMNE),
holding company for the business banking division of
Crédit Mutuel Nord Europe – the majority shareholder
in SA Crédit Professionnel, the central body for
Crédit Professionnel Belge; CAMEFI Banque, a
jointly-owned subsidiary of Crédit Mutuel Arkéa
and Crédit Mutuel Méditerranéen.
For its part, CIC has put in place a system ensuring
the local presence of account managers and rapid
response through a short decision-making structure.
MEDIATION: A LOWER RATE THAN THE NATIONAL AVERAGE
At the end of October 2008, the French government put in place a business mediation facility
as one of a number of measures to support the economy. The facility is designed in particular
to help businesses facing cash flow or financing difficulties.
The mediaton unit works directly with the various players responsible for financing businesses.
Out of a portfolio of 850,000 corporate customers, at end-March 2009 the group was handling
fewer than 1,800 cases, and had a mediation rate of 45% compared with a national average of 65%,
an achievement made possible thanks to the mediation scheme1.
The group’s mediation rate highlights the network’s in-depth approach to referrals and its excellent
level of local knowledge, as well as the higher percentage number of companies experiencing
structural difficulties, which can be partly attributed to a surge of applications on the facility’s
introduction. A great number of companies, notably very small businesses, applied to the mediator,
which invariably approved the Crédit Mutuel and CIC’s decisions.
The mediation remit is being gradually broadened, and now covers credit insurance, with the introduction
of the Complément d’Assurance Crédit Public scheme, the revitalisation of depressed job markets
and the bolstering of companies’ share capital by private equity firms.
As part of a charter signed with the mediator, the country’s socioprofessional networks have made
a commitment to coordinate their actions at ground level to provide advice to companies and,
where necessary, to help them prepare mediation applications.
46
Crédit Mutuel
SPECIALISED MUTUALS FOR
THE HEALTHCARE SECTOR
The group also plays a major role among independent
professionals and tradesmen with almost 650,000
customers and a 23.5% penetration rate.
It is also strongly positioned among business start-ups,
notably through the assistance provided to business
creators and through the distribution of business
start-up loans (Prêts à la création d’cntreprise – Pce)
in which it holds third place with a market share of
22% for start-up financing.
In 2006, the long-standing partnership with Oseo
was strengthened through a nationwide agreement.
This agreement was implemented by the regional
banks in 2007.
This agreement significantly accelerates procedures,
with Oseo delegating loan guarantee decisions for
very small business customers to Crédit Mutuel and
CIC's regional banks; in return, the group undertakes
to ensure a rapid response from examination of the
financing application through to implementation.
The group is also involved in France Active, a network
that aids and finances social inclusion through
economic initiatives.
As founder of six of the 38 local funds, Crédit Mutuel
is present on nearly half of the loan acceptance
committees and accounts for 23% of the guarantees
given in 2008.
In January 2009, Crédit Mutuel formed a partnership
with Réseau des Boutiques de Gestion, a nonprofit association and the leading independent
network for business start-up aid. Through the
partnership it helps businesses from the ideas stage
through to their third anniversary. The Boutiques
de Gestion initiate and manage a variety of schemes
(business workshops, experimental business incubators,
financial engineering for projects, enterprise zones
and entrepreneur networks) to encourage job creation,
initiative-taking, wealth creation and social cohesion.
With nationwide coverage provided by 401 local
branches, the network contributed to the creation
of 16,000 businesses – and 19,500 jobs – in 2008.
CMPS, which was created more than
30 years ago, is a network of branches
dedicated exclusively to professionals
working in the healthcare sector*.
Representatives from all segments
of the medical and related healthcare
sectors sit on the boards and
supervisory bodies of these mutuals.
These mutuals assist practitioners
with their strategic and financial
decisions, whether professional
or private. In each case they offer
personalised solutions, from
bankinsurance, electronic payments
and financing packages for individual
projects to wealth management
from a savings strategy perspective,
retirement planning and tax planning.
In addition to banking expertise,
the CMPS have developed active
partnerships with professional
associations, unions, specialised
management associations,
professional guilds and regional
and national institutional bodies.
*www.cmutuel.com
The Group is also a long-standing partner of the Adie,
France Initiative, France Active and Boutiques de
Gestion business development networks.
It has worked for more than 20 years with France
Initiative, the largest business creation aid network
in France.
The group is a member of the France Initiative
"Entreprises" collegial body. It is actively involved
with more than 60% of the local initiative platforms,
with Crédit Mutuel covering 141 and CIC 128. In 2008
it distributed 2,270 loans totalling nearly €132 million
and accounting for more than 20% of total bank
financing.
2008 Annual Report
47
Bankinsurance
The challenger
in the farming sector
Crédit Mutuel is the number two bank for the farming sector with 13.1%
of subsidised loans and 11.8% of the medium- and long-term loan market.
Medium- and long-term loans increased by 10.9% to
€1.3 billion in 2008. Taking all loan categories into
account, outstandings came to €4.6 billion, up 9.1%.
Through Fédération du Crédit Mutuel Agricole
et Rural (FCMAR), a specific national structure
with elected members of the farming community,
and its own specialised advisors, Crédit Mutuel is
particularly attentive to trends in the sector – all the
more so as more than half its local mutual banks are
located in rural areas.
It provides farmers with loans, savings products and
insurance and ensures that its offer remains simple and
suited to the specific needs and hazards of farming.
48
Crédit Mutuel
Actimat is a farm machinery financing offer
distributed directly through farm machinery
dealers in the form of conventional credit or through
operating leases. Dealers have direct access to
www.actimat.net, enabling them to make simulations,
input data, and file and monitor loan requests online.
Préviris offers online access to grain futures
markets, with an internal control system ensuring
the security of orders.
Agridispo provides farmers with a new range of
short-term cash facilities to enable them to respond
rapidly to sudden financing needs.
Technology:
at the cutting edge
Using its technological skills to serve its customers remains a central element
of the group's development strategy. The latest developments confirm its position
as a leading provider of innovative technological services.
Since the end of 2006, Crédit Mutuel has been
testing secure contact-free payments at merchants
in Strasbourg with NRJ and SFR mobile telephony
customers, and since January 2008 with Orange and
Bouygues customers. This service breaks new
ground by its simplicity and ease of use, and
its interoperability will rapidly set a standard
for mobile phone payments. Crédit Mutuel has
also been experimenting with contactless cards
compatible with mobile-phone payment equipment,
whose key advantage is rapid payment of amounts
of less than €20. There are already 4,500 CM-CIC
customers using these cards.
The group's priority has always been to serve
customers better and offer innovative products and
services that respond to their needs. Remote home
and business surveillance are just two examples
that reflect this priority, and the group is now the
leader in this activity with 29% of the market
and 160,000 subscribers. New roaming services
are regularly being added to these surveillance
solutions, such as SMS alerts to inform parents of
their children’s return from school and mobile
phone activation of alarm systems.
Close to customers at all times, the group provides
a full range of remote banking channels.
As in previous years, there were significant
developments as regards the Internet:
the bank’s provision of ten-years’ free storage
of statements in electronic rather than paper form
has triggered real interest among customers
and also contributes to sustainable development.
The number of customers using this service doubled
in 2008 to reach 220,000 at year-end, with 6.5 million
documents stored;
• in order to facilitate the use of ATMs and save time,
customers can now use the Internet to specify
favourite parameters for withdrawals from group
ATMs, thus reducing the amount of time spent
taking money out. This service is a good illustration
of how remote banking channels can complement
each other, with a functionality set up using the
Internet for use via another channel;
• customers’ interest in online operations is growing
steadily, with a doubling of online savings account
subscriptions from 10,000 to 20,000 over the year
and over 100 requests per day for instant quotes,
or 40,000 for the year as a whole. Internet services
now also represent a major means of sourcing
information for customers, with over 400,000 requests
logged in 2008. Lastly, the new online consumer
credit application service has got off to an extremely
promising start.
Remote banking continued to gather steam in 2008
with a 27% increase in contacts to 367 million.
The Internet accounted for 354 million of these
contacts, representing a 29% rise.
2008 Annual Report
49
Bankinsurance
NRJ MOBILE – THE BEST
MOBILE TELEPHONY
SERVICES
Crédit Mutuel’s partnership with
NRJ Mobile in the area of telephone
services provides a new channel
for bankinsurance and services
and constitutes a new approach
to payments.
In October 2008, NRJ Mobile showed
once again its ability to innovate
by being the first mobile virtual network
operator (MVNO) to offer services
via two physical networks
(SFR and Orange).
An Internet simulation enables
customers to find the mobile phone
offer best suited to their needs
by answering key questions.
Services, which include unlimited
talk time offers, are marketed under
the "NRJ Mobile", "Crédit Mutuel Mobile"
and "CIC Mobile" brands and allow
the Group to provide its members
and customers with the best in mobile
telephony.
50
Crédit Mutuel
Crédit Mutuel also added new features and services
to the other channels of its remote banking offer:
• In integrating e-mails into the information system
and linking them to sales data, the MailTiers
system represents a major step forward in managing
our remote relationships with members and
customers. This innovate solution accounted for
over 3.5 million contacts in 2008 and comes with
a secure messaging system integrated into
CyberMut.
• Another new service allows customers to transfer
funds via mobile phone or ATM to a beneficiary
created online using CyberMut.
• In 2008, 2.1 million connections were made to our
mobile Internet service, an increase of 41%. In
2009 we introduced a new platform equipped to
handle all current mobile phones, from the traditional WAP devices to the more sophisticated
Apple iPhone and Google Android.
• The Top Infos and Filbanque Alert services delivered
24% more alerts than in 2007, with a total of over
5 million, of which 95% were via SMS and the rest
via e-mail. The special SMS+ services, which enable
customers to request their account balances by
SMS, recorded nearly 70,000 connections in 2008.
• Following its mobile phone video call back offer,
Crédit Mutuel inaugurated the first ever “video
call back” banking service via Skype for CyberMUT
customers; the group’s remote offer now includes
videophone via PC and mobile telephone.
There were also new developments in the area of
e-commerce transaction security:
• CM-CIC has provided effective protection for
its remote banking customers since 2005 thanks
to a secure identification process and the bank’s
bar code. Protection is now even greater thanks
to the recent introduction of 3D Secure, the Visa
and MasterCard authentication technology used
to offer added security for web purchases;
• At end-2008 the CyberMUT P@iement and P@iement
CIC brands merged to become CM-CIC P@iement.
The renewal of our Payment Card Industry Data
Security Standard (PCI-DSS) certification confirms
the high standard of security offered by our
Visa/MasterCard payment solution.
Setting up and managing a SWIFTNet connection
to process inter-company banking transactions is a
complex process: the group has developed three
customised offers to facilitate secure international
data transmission between companies and SWIFTaffiliated banks:
• WEB CM-CIC services for small businesses;
• CM-CIC’s SWIFTNet Plug & Play for medium-sized
and large businesses;
• Service Bureau SWIFTNet for major corporates.
Lastly, Crédit Mutuel supplies State-appointed
legal guardians throughout France with a ward
management software called Gestutel. This software
is the most comprehensive in the market catering
to the special needs of guardians, whether in the
public or private sector. Gestutel is currently used
to manage 26,500 adult Wards of the State.
LEADING THE WAY IN ELECTRONIC PAYMENTS
Crédit Mutuel ranks second in France in electronic payments with a 20.7% share
of the overall market and a 26.5% share of card payments at merchants’. It is also
number two in bankcard issuance with 9.4 million cardholders, and in ATM networks
with 7,558 ATMs and over 230 million ATM withdrawals. In 2008, 1.7 billion card
payments were made at 222,500 acquired merchants.
In addition to a range of ordinary banking transactions (account balances, transfers,
deposits, requests for new cheque books, etc.), customers can use the ATM network
to carry out an ever increasing range of reload transactions for mobile phones,
electronic purses, travel cards (Monéo, Navigo, etc.).
Crédit Mutuel-CIC strengthened its leadership in public sector purchasing cards in
2008. These cards simplify administrative procedures and reduce processing costs
while giving greater responsibility to the cardholder by delegating purchases within
allocated budget limits.
The group has been selected by over 80 large and medium-sized public bodies in
various parts of France: ministries, regional governments (Poitou-Charentes),
departments (Aude, Côte d’Or, Ille-et-Vilaine, etc.), metropolitan authorities
(Mulhouse, Nancy, etc.) and municipal authorities (Le Havre, Orléans, Toulouse, etc.),
as well as universities (Angers and Paris), hospitals and public institutions.
The group's expertise in electronic payments allows it to handle 34% of international
payments made by French companies with sales of €50 million to €500 million.
In 2008, it signed major electronic payment processing contracts with distribution
groups Carrefour and Leclerc (through the latter’s banking subsidiary, Edel). These
contracts strengthen its position as Europe’s second largest “acquirer” of electronic
payments, an acquirer being the intermediary between a transaction’s remitting
bank and that of the associated supplier.
Crédit Mutuel’s technical know-how has enabled the group to break into
the Moroccan market with the creation of EurAfric Information, a joint venture
between Euro Information and Banque Marocaine du Commerce Extérieur (BMCE),
which will handle the BMCE’s IT requirements and any other business opportunities
that arise in Africa.
2008 Annual Report
51
Bankinsurance
Retail banking
subsidiaries
I Factoring
FactoCIC, the group's factoring subsidiary, is the
fifth-largest bank factor in France. It has a market
share of 7.5% in terms of volume of receivables
purchases, 2,849 active contracts, turnover of over
€10 billion – up 12.7% - and total outstandings
of €1.99 billion, up by 9.4%.
New production was centred on new contracts
representing a potential volume of €3.9 billion, up 50%,
thanks to strong growth in the corporate segment.
Implementation of a new sales and marketing
coordination throughout the network, growth in
the export activity and development of the
Crédit Mutuel Factor product within the federations
contributed to earnings. Net profit rose by 35%
to €23.2 million.
I Consumer credit
A number of specialised entities round off the consumer
credit offering marketed through the network:
Financo, a subsidiary of Crédit Mutuel Arkéa and six
other Crédit Mutuel groups; Sofemo, a subsidiary
jointly owned by Crédit Mutuel Centre Est Europe
and CIC; and Créfidis, a subsidiary jointly owned by
Crédit Mutuel Nord Europe and Cofidis.
Total production was €9 billion (down 4.2%), of which
the subsidiaries accounted for €1.4 billion (up 9%).
The acquisition in mid-2008 of Citibank Deutschland,
Germany's leading consumer credit provider, and
in Q1 2009 of a controlling stake in Cofidis, the
3 Suisses International consumer credit subsidiary
with operations in around ten European countries,
has enabled the group to enter a new phase of
strategic development: it is now Europe’s fourth
largest consumer credit provider, with outstandings
of €27.3 billion.
52
Crédit Mutuel
I Real Estate
The Crédit Mutuel group is active in all areas of the
property market from property sales and promotion
through to property development and facilities
management.
The main subsidiaries are Ataraxia (Crédit Mutuel
de Loire-Atlantique et du Centre-Ouest and Crédit
Mutuel de Bretagne) which is active in all segments,
UFG (Crédit Mutuel Nord Europe), CM-CIC Agence
Immobilière (Crédit Mutuel Centre Est Europe) and
Soderec.
The property crisis took its toll on business in 2008,
a year characterised by lengthening placement
times, a 25% contraction in sales for existing
properties and a 40% fall in investment in new-build
sales, which had, for some years, been buoyed
by tax breaks.
Taken all together, the subsidiaries made more than
3,400 property sales (down 7.3%) in 2008, mainly in
new property, for a total amount of €601 million,
corresponding to a drop of 1%.
Ataraxia, the only subsidiary to operate in property
management, manages more than 5,800 individually
owned and 19,500 collectively owned properties.
The market downturn led to the disposal in
October 2008 of the Avis Immobilier franchise and
a restructuring of this business.
CM-CIC Agence Immobilière, CM-CIC Participations
Immobilières, Sarest and Sofedim make up Centre
Est Europe-CIC's property division.
CM-CIC Agence Immobilière (formerly Afedim)
markets new property developments on behalf
of the Crédit Mutuel-Centre Est Europe and CIC
networks – including CIC private banking – to investors
and homebuyers. In 2008, 1,869 residential units
were marketed, representing total sales of nearly
€321 million.
Business was satisfactory in 2008, when revenues
from service provision came to €5.7 million with net
profit of €1 million.
CM-CIC Participations Immobilières (formerly
Soparim) supports property developers by helping
finance non-trading property companies (Société
Civile Immobilier – SCI) used for residential property
development programmes throughout France.
In 2008, CM-CIC Soparim was involved in nine new
transactions representing around 470 residential units
for a total amount of €95 million.
Soderec won several tenders for new projects such
as medical research centres, the redevelopment
of the Thionville psychiatric hospital, and extensions
to hospitals in Saint-Cloud and Pontarlier.
It also completed a number of major contracts
in 2008, including the Zénith music venue in SaintEtienne, the Saint-Louis secondary school, the offices
of the Seine-Saint-Denis department’s headquarters
for public safety, the emergency ward of the Nantes
teaching hospital and, under tenancy scheduling
agreements, three police stations in Alsace.
While Sofedim operates as a property broker Sarest, a
property developer, made significant progress with the
projects set up through the newly opened branches
in Lyon, Lille and Paris, with nearly 450 units under
development. It sold 189 lots, mainly in AlsaceLorraine, and secured reservations for a further 126,
generating sales of €23 million and net profit
of nearly €600,000.
UFG REM is the property management company of
the UFG group (Crédit Mutuel Nord Europe). The French
leader in property investment funds with managed
funds of €5.2 billion, or almost 30% of total French
capitalisation, UFG REM manages a wide range of
property investment funds: SCPI, SCI and OPCI.
In early 2009 it launched the first OPCI dedicated to
socially responsible investment, a product of UFG’s
partnership, via UFG REM, with Banque Sarrasin.
UFG REM offers expertise in all areas of property
management, from product innovation, asset
management, investments and sales to transaction
processing, marketing, and the maintenance and
development of portfolio properties.
It markets properties to three broad customer categories
including retail (through the UFG Partenaires-developed
sales network), institutional (through a dedicated
institutional sales team) and customers introduced
through the Crédit Mutuel Nord Europe networks.
Soderec, a nationwide Crédit Mutuel subsidiary,
operates in the field of public works projects, where
it acts as an agent or site manager on behalf of the
State, local authorities or affiliated bodies. It also
undertakes private contracting work for these clients.
Europe’s number 4
consumer credit network
I Equipment leasing
For the fifth year running, CM-CIC Bail (Crédit Mutuel
Centre Est Europe) recorded sustained growth in 2008
with an 8.6% increase in sales to €2.6 billion, taking
its total outstandings to €4.8 billion (up 12.7%).
Following the creation in 2007 of CM-CIC Belgium,
a Brussels-based subsidiary, a second European
subsidiary was set up in Frankfurt.
CM-CIC Bail, Bail Actéa (Crédit Mutuel Nord Europe)
and Sodelem (a subsidiary owned jointly by several
Crédit Mutuel groups in the west of France) manage
202,000 contracts representing a total of €6.2 billion,
corresponding to an increase of 11% in 2008.
Aggregate production on 81,000 contracts came to
more than €3 billion, giving the group a 12.1% share
of the overall market (up 0.4 points).
I Property leasing
As well as medium and long-term loan financing,
business customers are offered specialised property
leasing products, through CM-CIC Lease (jointly
owned by Crédit Mutuel Centre Est Europe and CIC),
Bail Entreprises (Crédit Mutuel Arkéa), Bail Immo
Nord and Batiroc Normandie (Crédit Mutuel Nord
Europe).
Production grew by 9.4% to €623 million, i.e. 12% of
the market (0.5 points up on 2007), while managed
outstandings increased 5.9% to €2.6 billion.
2008 Annual Report
53
Bankinsurance
Insurance
KEY FIGURES
No. 1 in non-life insurance
Insurance is the group's second-largest business. In 2008, it generated net banking
income of almost €1 billion, i.e. 11% of the total, and net profit, group share
of €420 million.
No. 4 in life insurance
10.7 million policyholders
26.6 million contracts
(in € millions)
Net banking income: 995
Gross operating profit: 535
Net profit, group share: 420
In non-life, the group retained its position as the
leading non-life bankinsurer with an 6.5% increase
in premiums to €2.2 billion. It ranked fourth in life
insurance but premiums declined significantly
by 18.5% in 2008 to €8 billion, in line with the
contraction in the sector. This was caused by lower
premium collections and, above all, by the situation
in the financial markets.
In 2008, the group's insurance subsidiaries posted
aggregate premiums of €10.2 billion, down by 14%.
Numbers of contracts managed increased by 4.4%
to 26.6 million, of which 22.5 million were non-life
contracts, while policyholders numbered almost
11 million.
The insurance activity is carried out through
Groupe des Assurances du Crédit Mutuel (GACM),
Suravenir (life), Suravenir Assurances (non-life)
and Assurances du Crédit Mutuel Nord (ACMN)
(life / non-life).
Groupe des Assurances du Crédit Mutuel, flagship
of the bankinsurance concept invented by Crédit
Mutuel in 1970, is 53% owned by Banque Fédérative
du Crédit Mutuel, 20.5% by CIC and 26.71% by the
Crédit Mutuel federations. In 2008, GACM posted
consolidated premiums of €6.7 billion, down by
13.9%, in line with the trend in the French market.
Life insurance company premiums totalled €4.8 billion,
down by 21%, while premiums for non-life subsidiaries
continued to grow steadily, rising 11.1% to €1.9 billion.
54
Crédit Mutuel
Consolidated net profit contracted by 14% to
€473 million.
With over a million new contracts subscribed
in 2008, the insurance division was managing
20 million contracts, for more than seven million
policyholders, by year-end.
ACM’s range of insurance products is marketed
by the 15 Crédit Mutuel federations and all of the CIC
regional banks, representing more than 4,500 sales
outlets in total.
A highlight of 2008 internally was the transfer to ACM’s
non-life subsidiaries of Suravenir Assurances’s
non-life portfolio by Fédération du Crédit Mutuel
Loire-Atlantique et du Centre-Ouest, which is now
responsible for marketing ACM’s property and
casualty and personal insurance businesses.
The company’s entire product range was upgraded
with improved cover offers and services.
In property and casualty insurance, home cover was
added to notably with a flat- or house-sharing offer
and the Dépannage à domicile home assistance
service, which was bundled into certain policies.
Since 2009, an “eco package” offering cover for
renewable energy-based installations has been
available as an option for high-end policies, while
the company has broadened the scope of its motor
insurance policies with a view to offering optimal
cover for drivers and their vehicles.
In personal insurance, the “Plans Autonomie” contract
offers comprehensive cover for dependency risk,
while the “Pack Protection Sociale” contract, targeting
sole traders and shareholder-managers of small
companies, was launched in 2008.
The “Assurance Santé” health insurance offer is being
gradually adapted to the specific needs of all
customer types thanks to a variety of options based
on their stated requirements.
“Réflexe Prévention Santé”, the contract dedicated
to alternative medicine, was upgraded to offer
extra cover. This innovative solution is available to all
policyholders as an add-on to their traditional health
insurance policy.
In life insurance, a number of alternative investment
options were made available to multisupport
subscribers: “Plan Assur Horizons”, “Plan Assur
Horizons Pro”, “Plan Assur Horizons Agri” and “Plan
Patrimonio”. Among the new offers for 2009 is the
“Livret Assurance”, a scheme for encouraging network
members to embark on renewed marketing of life
insurance products. The CIC network also launched a
new collective cover contract.
or the third year running, ACM's Plan Assur Horizon received
a “Label d'Excellence” from Dossiers de l’Epargne. This contract
also received La Vie Financière’s Etoile de Bronze award and
Le Revenu’s Trophée d’Argent.
Plan Patrimonio received a “Label d'Excellence” from Dossiers
de l’Epargne.
For the second consecutive year, the Dossiers de l’Epargne panel
awarded the Assurance Santé and Assurance Habitation
contracts a “Label d'Excellence”.
For the fourth year in a row, the Plans Prévoyance,
XL Prévoyance and Sécuritys contracts received
a “Label d'Excellence” from Dossiers de l’Epargne.
Since Assurance Auto (auto cover) won a “Label d'Excellence”
in 2008, the entire range of ACM products has now earned
distinction.
2008 Annual Report
55
Bankinsurance
CREDIT MUTUEL ARKEA: MAIN PRIZES
AWARDED BY THE FINANCIAL PRESS
Life insurance
• Etoile d’Or (gold) in the bank category for Prévi-Options
(La Vie Financière).
• Trophée d’Or (gold) for Symphonis-Vie (Le Revenu).
• Labels d’Excellence for Symphonis-Vie, Myrialis and
Accord Avenir (Les Dossiers de l’Epargne).
• Laurier d’Argent (silver) in the “seasoned investor
multisupport” category for Symphonis-Vie (Investir Magazine).
• Laurier de Bronze (bronze) in the “euro funds” category
for Symphonis-Vie (Investir Magazine).
• Palme d’Or (gold) in the Internet multisupport category for Suravenir’s
Symphonis-Vie and Meilleurtaux Vie contracts (Journal des Finances).
Personal protection
• Label d’Excellence for the Prévi-Obsèques contract (Les Dossiers
de l’Epargne).
Non-life
• Labels d’Excellence for Suravenir Assurances’ automobile, motorcycle,
camper van, home cover, personal accident and dependency contracts
(Les Dossiers de l’Epargne).
ACM’s international expansion was supported by
its bankinsurance experience and logistics.
Insurance contracts are marketed under the European
passport in Germany and Luxembourg, and in Spain,
through the savings bank network of Sa Nostra,
the Balearic Islands’ leading financial institution.
In Belgium, Partners uses its agency network to
market property, casualty and personal insurance.
ACM is also present in Tunisia, Morocco and Canada
through its shareholdings in a number of companies.
In the first half of 2009, Royal Automobile Club de
Catalogne (RACC), Spain’s largest auto insurance
broker with over a million policyholders, used its
network of over 200 outlets to roll out ACM’s auto
and home insurance contracts, specially tailored for
the Spanish market.
Suravenir continued to expand in life insurance and
personal protection, and now manages 3.2 million
contracts for more than 2 million customers.
In a testing environment, and following an exceptional
year in 2007, this Crédit Mutuel Arkéa / Crédit Mutuel
de Loire-Atlantique et du Centre-Ouest subsidiary
posted a strong performance despite a 25.4%
decline in premiums to €2 billion, making a net
56
Crédit Mutuel
profit of €86.8 million (down 6% from 2007 but
up 35% compared with 2006), and maintaining
its sustainable growth trajectory.
A blend of innovation and caution enabled the
company to weather the storm last year, when
it consolidated the numerous partnerships initiated
in 2006 and 2007, worked to secure its innovations
for long-term use and brought new products and
services closer to completion.
In parallel, its four distribution channels delivered
an enhanced performance. These comprise a banking
network channel made up of the Crédit Mutuel
shareholder federations – Bretagne, Sud-Ouest,
Massif Central and Loire-Atlantique et Centre-Ouest,
together with Banque Privée Européenne, Financo
and Crédit Municipal de Nîmes; a “white label” channel
for online distribution under other brand names
(Fortunéo, Fidelity Investments, Accord Avenir,
meilleurtaux.com and Linxea); a channel dedicated
to independent financial advisers; and a company
retirement savings channel for brokers specialised
in group insurance.
The quality of Suravenir’s products and services,
which prioritise innovation and customer satisfaction,
is regularly singled out for praise by specialist
publications.
Suravenir Assurances became a wholly-owned
subsidiary of Crédit Mutuel Arkéa following the
withdrawal of ACM and Crédit Mutuel de LoireAtlantique et du Centre-Ouest at the end of 2007.
This company manages 1.4 million contracts
(up 8% at constant scope) covering a full range
of non-life products. Following the sale of a
portfolio of 140,000 customers to ACM, it has almost
354,000 policyholders.
In 2008, as well as adding to its products and
services offer, Suravenir Assurances focused on
restoring its portfolio to full potential, notably by
diversifying its distribution networks. With this in
mind, it strengthened its brokerage arm and
launched a new unit for direct marketing over the
Internet under the name "AssurAvenue".
Premiums came to €175 million in 2008 with a 12.4%
increase in net profit to €23.6 million.
JOURNAL DES FINANCES
LIFE INSURANCE AWARDS
(APRIL 2009)
Crédit Mutuel Nord Europe manages nearly
two million life and non-life contracts through two
subsidiaries: ACMN Vie and ACMN Iard.
In 2008, against a backdrop of marked economic
and financial turbulence, ACMN Vie recorded a 7%
rise in sales to €890 million, thanks notably to
the development of new distribution networks.
The company upgraded a number of its products
over the course of the year, and CMNE’s flagship
product ACMN Avenir was overhauled to adapt it to
a fast-changing, more demanding client base. ACMN
Vie also launched a number of new products online,
which won numerous plaudits from the financial
press on account of their innovative nature.
Managed funds amounted to €6.5 billion, spread over
nearly 282,000 life insurance contracts. AMCN Vie
posted net profit of €14 million in 2008, compared
with €38 million in 2007, a decline attributable to
the financial markets’ underperformance.
ACMN Iard’s sales continued to rise in 2008, gaining 4%
to €111 million. In a highly competitive environment,
new signings increased and existing contracts attracted
additional deposits, while the adoption rate and
market share both rose. Net profit decreased 42%
to €5 million owing to an increase in claims, notably
in relation to tornado Haumont.
Against a backdrop of intense competition, ACMN
Iard continued to adapt its offer to its policyholders’
requirements and to develop its portfolio, while
working hard to secure loyalty among existing
customers. With this in mind, it pushed its strongest
products, enhanced its day-to-day management and
prioritised asset protection initiatives.
ACMN Vie Horizon Patrimoine
won bronze in the general profile
multisupport category.
Abivie also won bronze in
the Internet multisupport category.
2009 LE REVENU AWARDS: CRÉDIT MUTUEL’S SUBSIDIARIES
WELL PLACED
The group received numerous awards at the 32nd edition of Le Revenu* magazine’s
Trophées life insurance awards.
● Euro-denominated contracts:
- Trophée d’Argent (silver) for ACMN Horizon Patrimoine (ACMN Vie),
- Trophée de Bronze (bronze) for Livret Avenir (ACM Vie).
● Active multisupport category, “high-potential contracts”: ACMN Avenir (ACMN Vie).
● Diversified multisupport category, “attractive contracts”: Accord Avenir (Suravenir).
● Diversified multisupport category, “promising contracts”: Prévi-Options (Suravenir).
● Diversified multisupport category, “high-potential contracts”: Plan Assur Horizons (ACM Vie).
● Aggressive multisupport category, “attractive contracts”: ACMN Horizon Patrimoine (ACMN Vie),
Hedios Vie (ACMN Vie), MeilleurTaux Vie (Suravenir) and Symphonis-Vie (Fortuneo).
● Aggressive multisupport category, “promising contracts”: Plan Patrimonio (ACM Vie).
* April 2009
2008 Annual Report
57
Other main
businesses
The network draws on the expertise of specialised subsidiaries for the benefit of all its customers.
Some activities of group-wide strategic importance, such as corporate and investment banking, asset
management and private banking and technical services, are carried out through shared entities such as CM-CIC
Asset Management, CM-CIC Securities, CM-CIC Marchés and CM-CIC Epargne Salariale.
2008 Annual Report
59
Other Activities
Corporate and
investment banking
KEY FIGURES
(in € millions)
Net banking income: (64)
The corporate and investment banking arm was the worst hit by the financial crisis,
suffering in particular from the depreciation of its financial instruments portfolio.
The decline in its net banking income - from €1.2 billion in 2007 to a loss of
€64 million in 2008 - was the sharpest among all the bank’s divisions. It also made
a negative contribution of €736 million to the group share of net profit.
Gross operating profit: (440)
Net profit, group share: (736)
Corporate banking covers all the banking and related services provided to companies with annual sales
of more than €50 million.
Investment banking covers capital markets, merchant
banking, venture capital, development capital, stock
market trading and investment positions.
Corporate banking, market activities and investment
banking are carried out by Banque Fédérative
du Crédit Mutuel (BFCM), the
holding company for the Crédit
Mutuel Centre Est Europe, and
by Crédit Mutuel Arkéa.
Crédit Mutuel, together with CIC,
finances more than half of the
100 largest French companies.
There were two distinct periods in 2008:
- that running up to the end of summer, when business continued to grow steadily in terms of both
new transactions and loans;
- that following Lehman Brothers’ collapse in
September, characterised by a very sharp fall in
new lending related in particular to the stalling of
the syndication market.
In a deteriorated economic environment, our major
corporate customers concentrated on looking after
their own customers’ financing requirements, which
led to a significant rise (around 20%) in loans drawn
down. At the end of the year, ebbing growth led to a
sharp decline in loan applications.
The London, New York, Singapore and Hong Kong
branches and CIC's 38 representative offices
throughout the world assist the group’s major
corporate customers in foreign markets.
Market activities, on behalf of customers or on the
group's own account, are carried out by CM-CIC
Marchés, the joint dealing room set up by BFCM and
CIC in 2005, which is the main dealing room for the
group, and by Crédit Mutuel Arkéa.
60
Crédit Mutuel
To facilitate access to the financial markets, BFCM
created CM-CIC Covered Bonds in 2007, providing
the additional refinancing capacity that is essential
to the network’s development.
Having made two issues in its first year for a total
amount of €4.5 billion, CM-CIC Bonds was faced
with a particularly depleted debt market in 2008.
The liquidity crisis that began during the summer of
2007 intensified following the collapse of Lehman
Brothers in September 2008. Investors withdrew en
masse from the credit markets, causing covered
bond issues to suffer, despite the guarantees
offered.
Against this backdrop, in 2008 CM-CIC Covered
Bonds cut down on its issuance activity, making a
single public issue of €1.5 billion with a two-year
term, in June. The transaction benefited from broad
international placement and, on top of the portion
subscribed by French investors, enjoyed significant
participation from Germany, the Nordic countries,
Italy, Ireland and Portugal.
In addition, the group made internally-placed issues
for a total of €8 billion in order to improve liquidity.
I
Stock market
brokerage
As an operator, clearing house and custodian/
account keeper, CM-CIC Securities covers all
the needs of institutional investors, private asset
management companies and security issuers. As a
member of ESN LPP, a multilocal network composed
of 10 brokers operating in 15 countries in Europe,
CM-CIC Securities can trade on its customers’ behalf
in all European and American equity markets.
At the end of 2008, CM-CIC Securities was providing
services to 90 management companies and managing
38,000 individual customer accounts and 233 mutual
funds representing almost €13.7 billion in assets.
I Venture capital
With an investment portfolio of more than €2 billion at
the end of 2008, Crédit Mutuel Centre Est Europe is a
major French venture capital player, through three CIC
entities that operate individually and jointly to cover
the whole of France:
Â CIC-Finance, which operates in venture capital
and M&A advisory services, covering north-east
France;
Â IPO, covering the west of France for the past
30 years and the south-west region since 2006.
The main event of 2008 was its merger by absorption
of Ar Men and its takeover of Financière Voltaire,
both subsidiaries of CIC Banque CIO-BRO managed
by IPO since 2006 under an extinction management
mandate;
Â Banque de Vizille, which offers a comprehensive
range of investment banking services, covering
the south of France.
These three entities invested €341 million in 2008
in an unfavourable market environment.
Crédit Mutuel has several dedicated structures:
Sobrepar, Synergie Finance, Océan Participations,
Nord Europe Private Equity, CM-CIC Soparim and
FCPR CM Arkéa. Their combined net investment
portfolios amounted to nearly €170 million at the
end of 2008.
2008 Annual Report
61
Other Activities
CHIFFRES CLÉS
(in € millions)
Gross operating profit: 211
Asset management
and private banking
Net profit, group share: 74
In 2008, asset management and private banking saw net banking income decline
slightly to €549 million owing to a drop in fee income, as very poor trading
conditions in financial markets prompted a “wait-and-see” approach among
investors. Against this particularly unfavourable backdrop, net profit, group
share remained positive – if slightly down – at €74 million.
I
Asset
management
Asset management covers fund management,
employee savings plans, and securities and custodian
services when these apply to customers outside the
retail network.
This activity is carried out through CM-CIC Asset
Management, the fund management skill centre
that provides the Crédit Mutuel and CIC banking
networks with a broad, innovative range of financial
products, and through specialised subsidiaries,
Federal Finance (Crédit Mutuel Arkéa group)
and Groupe UFG, a multi-specialist asset manager
serving institutional customers, intermediaries and
private individuals for Crédit Mutuel Nord Europe.
With net banking income of €549 million and net
profit, group share of €74 million, the asset
management and private banking division
contributed in similar proportions to group net
banking income and share of net profit (6.1% and
16.8% respectively).
The subsidiaries specialised in employee savings
schemes (CM-CIC Epargne Salariale and Federal
Finance Banque) manage assets amounting to
€4 billion. They offer a variety of products catering
for companies of all sizes and notably for very small
companies (fewer than 10 employees).
The merger of CIC Epargne Salariale and Crédit Mutuel
Participation, which took effect on 1 January 2008,
62
Crédit Mutuel
€30 BILLION IN ASSETS UNDER
MANAGEMENT FOLLOWING THE MERGER OF
UFG AND LA FRANCAISE DES PLACEMENTS
In April 2009, CMNE’s multi-specialist asset
management subsidiary UFG and independent
third-party asset management company
La Française de Placements, announced an
agreement to “merge their asset management
activities to create a joint entity offering a
sound reputation, innovation, independence
and a solid shareholder structure”.
The agreement involves UFG’s acquisition of
a majority stake in La Française de Placements
based on the purchase and exchange of holdings.
In the second stage of proceedings, UFG and
La Française de Placements will merge their
asset management activities to give rise to
a new entity, UFG-LFP.
The combination of the two companies’ expertise
and businesses will create a new group with nearly
€30 billion in managed assets, compared with UFG’s
€21.5 billion under management at 31 March 2009.
With over 600 investment professionals, it will
constitute a major player in the asset management
market, covering diversified management, bond
management, commercial real estate investment
and services, alternative multimanagement,
equity management, socially responsible
investment and private asset management.
TROPHIES AND PERFORMANCE AWARDS FOR CM-CIC AM
Awards won at regular intervals, with performance measured by panels of independent experts, are a good
indication of recognition of sustained achievement by the specialised press. In 2008 and 2009, CM-CIC
AM received numerous awards for all of its investment products, which offer bond, equity and diversified
management over periods of one, three, five and ten years. This illustrates the high quality of the service
provided to the group's networks by its fixed-income and equity managers. The main awards include:
• Trophies – Le Revenu (performance to 31 March 2009)
Trophée d’Or (gold) for the best three-year euro-denominated bond range (retail banking)
Trophée d’Argent (silver) for three-year overall performance (retail banking)
Trophée d’Argent (silver) for the best three-year diversified fund range (retail banking)
• Trophies – Le Revenu (performance to 31 March 2008)
Trophée d’Or (gold) for the best “overall performance” over three years in retail banking (Crédit Mutuel-CIC range)
Trophée d’Or (gold) for the best three-year “sector equities” range in retail banking (CM range)
Trophée d’Or (gold) for the best three-year euro-denominated bond range in retail banking (CIC range)
Trophée d’Argent (silver) for the Union Obli Moyen Terme ten-year fund (euro-denominated bonds)
• Corbeilles awards – Mieux Vivre Votre Argent
Second place in the Corbeilles d’or awards for performance over a year in the retail banking category
(CM range, performance to 31 March 2008)
Second place in the FCPE awards for three-year funds (performance to 30 June 2008)
created CM-CIC Epargne Salariale. This new entity,
which provides services to both networks, is the French
number 5 in custody services and number 6 in terms
of managed assets. It has 44,000 customer businesses,
1.6 million employee accounts and €3.7 billion in
assets under management.
At the end of 2008 total assets under management (1)
came to €71.7 billion (down 15.3%), of which €38 billion
in mutual funds marketed by the Crédit Mutuel and CIC
networks, and €29.7 billion under mandate for private
(€4.4 billion) and institutional (€25.3 billion) customers.
Including the real estate investment funds business
(€5.3 billion mainly managed by UFG REM), the total
comes to €77 billion, down 14.5% compared with 2007.
The group's asset management subsidiaries win
awards regularly for their quality and reliable
performances.
I
Private
banking
Through its network and through specialised
subsidiaries in France, Luxembourg and Switzerland,
the Crédit Mutuel group offers a comprehensive
range of private banking wealth management and
advisory services for customers with financial
assets in excess of €1 million.
The main private banking entities are:
• CIC Banque Private Banking, the umbrella
organisation for Crédit Mutuel-CIC’s global private
banking activities, which is conducted mainly in
Europe (Luxembourg, Switzerland and Belgium)
and Asia (Singapore and Hong Kong). Two main
banks handle the group’s French business:
CIC Banque Privée, which provides high-end
services to company directors, and CIC Banque
Transatlantique, which offers a range of customised
solutions, including in private banking, principally
to French citizens residing abroad;
• Federal Finance, a Crédit Mutuel Arkéa subsidiary;
• Nord Europe Private Bank SA, a Crédit Mutuel
Nord Europe subsidiary.
The group also offers wealth management services
through entities such as Crédit Mutuel Arkéa
subsidiaries Banque Privée Européenne, which
provides catch-all banking solutions for wealthy
clients, and Fortuneo, which is France’s secondlargest online brokerage house, offering a wide
range of investment vehicles and sophisticated
analytical tools.
(1) These comprise mutual funds, excluding master funds, assets managed
under mandates and company investment funds (employee savings
schemes).
2008 Annual Report
63
Other Activities
MORE THAN €200 BILLION IN SECURITIES UNDER CUSTODY
CREDIT MUTUEL
ARKEA: MAIN
AWARDS IN 2008
Investment funds
• Trophée de Bronze (bronze) for
Federal Finance for the performance
over three years of its range of
diversified funds (Le Revenu).
• Label d’Excellence for Federal
Finance for its Eparialis Pee and Pei
and its Federal Finance Pee and
Perco company savings products
(Les Dossiers de l’Epargne).
Securities accounts
• Label of Excellence for Fortuneo
for its small investors’ securities
account (Les Dossiers de l’Epargne).
64
Crédit Mutuel
CM-CIC Titres, the group's securities services arm, provides the Caisses Fédérales du Crédit Mutuel,
the CIC regional banks and other group subsidiaries such as CM-CIC AM, CM-CIC Securities and
the insurance subsidiaries with securities custody/account keeping, fund administration and
issuer services.
The firm’s activity suffered as a result of the financial crisis and its widespread economic
repercussions on investors and issuers. It nevertheless maintained a high level of income,
experiencing a less acute downward drag than the falling market indices might have suggested.
At end 2008, CM-CIC Titres managed €242.5 billion in securities (up 1.9%), with 1.6 million active
securities accounts representing 4.8 million portfolio lines. It carried out 15.6 million securities
transactions in 2008, representing a slight 2.9% decrease year-on-year and including 2.1 million
stock market orders in France (down by 15%) and five million mutual fund transactions
(unchanged from 2007).
Among the steps taken by CM-CIC Titres to ward off the effects of the financial crisis were:
• strengthening of its operating and monitoring systems to counteract deposit risk,
counterparty risk, interest payment default risk and securities redemption risk;
• circulation of information to the network and the heads of control of the group’s investment
departments concerning the Madoff affair, non-payment of dividends, prohibition of short
selling, etc.
• provision of assistance to the networks.
ProCapital, a subsidiary of Crédit Mutuel Arkéa with operations in France and Belgium,
is a provider of securities services to financial institutions - fund management companies,
private banks, retail banks, insurance companies and online brokers and banks – that require
flexible solutions ranging from account-keeping and transaction execution services on behalf
of customers to the development of transactional websites.
Since its creation in 2000, ProCapital has been providing its institutional customers with
guaranteed top-quality service thanks to its integrated platform based on cutting edge
technology.
ProCapital had €15.3 billion in assets under custody and 340,000 active accounts as at
31 December 2008.
Technological
services
A wide range of technological services – IT, payment-related, telephony,
remote surveillance and electronic document management – are available
to the Crédit Mutuel group and its customers.
KEY FIGURES
I
Gross operating profit: (-640)
Information technology
In 2008, net banking income for this division fell
considerably, mainly as a result of capital losses
and the recognition of long-term impairment on
holdings in listed companies.
This activity is organised around two information
system platforms provided by Euro-Information
and Crédit Mutuel Arkéa.
Euro-Information, the holding company for
Crédit Mutuel Centre Est Europe-CIC's technology
subsidiaries, provides financial and technical
services that meet the needs of the group’s
various components: Crédit Mutuel federations,
CIC banks, insurance subsidiaries, business line
centres and other subsidiaries. In this context,
Euro-Information acts as a centralised procurement
platform and also manages relations with suppliers,
the logistics of leasing and selling equipment and
software, payment and remote deposit authorisations
and remote banking channels. Euro-Information is
supported by dedicated technical structures in charge
of operating, developing and maintaining the group's
IT resources and of developing telephony-related
activities, document dematerialisation and card
and cheque processing and personalisation.
Euro-Information Production serves as an information
system platform for the Crédit Mutuel federations
– of which there are now 15 since the integration in
May 2009 of Crédit Mutuel Anjou and Crédit Mutuel
Océan – and for all of the CIC banks. The system is
plugged into the stock market networks, electronic
payment systems, and the Target2 settlement system,
as well as data exchange systems such as Stet
(Système technique des échanges et des traitements),
for Sepa and Eba transactions, and naturally,
international systems. It is supported by five
interconnected high-security IT centres (Lille, Lyon,
Nantes, Paris and Strasbourg), by a help centre, a
broadband network and by Euro-Information
Développements, a company dedicated to the
development and maintenance of the applications
used by Crédit Mutuel Centre Est Europe-CIC and
the associated federations and subsidiaries.
Euro-Information Services and Sicorfé Maintenance
install and maintain the equipment and workstations,
the Eftpos terminals, ATMs and telephony and video
surveillance equipment.
(in € millions)
Net profit, group share: (-335)
The Arkéa platform is shared by the three
Crédit Mutuel Arkéa federations (Crédit Mutuel
de Bretagne, Crédit Mutuel du Sud-Ouest and
Crédit Mutuel du Massif Central).
2008 Annual Report
65
Other Activities
I
Telephony and
electronic payments
A partner of NRJ Group since the creation of NRJ
Mobile in 2005, Crédit Mutuel raised its stake in NRJ
Mobile in May 2008. The subsidiary is now 90%owned by Euro-Information, with the remaining 10%
belonging to NRJ Group.
The partnership – a mobile communications services
agreement for future offers – concluded in May 2008
between NRJ Mobile and Orange France, enables it
to offer even more attractive packages.
NRJ Mobile’s offer is marketed mainly through
the Crédit Mutuel and CIC networks.
The group launched two new brands to highlight its
positioning in the mobile telephony market by linking
the bank’s name with the mobile concept: "Crédit
Mutuel Mobile" and "CIC Mobile".
The innovative “C le mobile” offer, launched at the end
of 2007, was the first to combine a mobile telephony
package and remote bankinsurance services.
In 2008, new offers were added to target a new, more
mobile-oriented, type of customer.
The full range comprises essentially:
• Prepaid packages
• Subscriptions
• Various refillable blocked accounts specially intended
for young customers and including unlimited text
messaging.
This MVNO also serves as a platform for testing new
technology such as contact-free payment.
Payment-related services are managed through Euro
P3C, a subsidiary specialised in the personalisation of
cheques, cards and other electronic components and
which works for Crédit Mutuel and CIC as well as for
outside customers and partners. Two production sites
enable it to offer permanent back-up.
66
Crédit Mutuel
Euro TVS (Traitement des Valeurs et Services) is
number two in France in batch cheque processing.
It provides processing services to Crédit Mutuel Centre
Est Europe-CIC, large retail groups, institutional
customers and, more generally, any large document
issuer wishing to dematerialise documentary
and financial exchanges. Euro TVS forms part of the
project to offer invoice management services to
customers.
I
Residential video surveillance
and document management
Crédit Mutuel is the French leader in residential video
surveillance through Euro-Protection Surveillance
(EPS), which provides remote surveillance services
to residential customers. At end 2008, it had
160,000 subscribers and an estimated 29% share
of the market. Its customer base, which grew by
more than 17% in 2008, has doubled over the past
four years.
Euro Télé Services (ETS) is a 24/7 incoming call centre,
providing top-quality service to Centre Est Europe-CIC
and its customers (cardholders, merchants and NRJ
mobile users).
Euro Information Direct Services (EIDS) plans and
executes telemarketing campaigns for Crédit Mutuel
Centre Est Europe-CIC. These campaigns use outgoing
call centres with the aim of winning new customers
and boosting the loyalty of existing customers.
Euro GDS (Gestion de Documents et Services)
dematerialised 6.9 million documents in 2008, up from
4.2 million the previous year, representing 17.4 million
pages in 2008, compared with 14.3 million in 2007.
Keynectis has 95% of the electronic certification
market and is the only French player with two
PSCE (provider of digital certification services)
certificates, a benchmark sign of professionalism
and quality.
I
Other
services
Communication and media
Crédit Mutuel Centre Est Europe owns 80% of the
capital of printing company Sfejic, the holding
company for the L’Alsace group.
In 2007, Banque Fédérative du Crédit Mutuel (BFCM)
acquired 100% of the capital of Républicain Lorrain.
Since June 2008, it has held a 51% stake in the
Est Republicain group, which in turn owns Ebra
(formerly Socpresse's Rhône-Alpes division), among
other entities.
Travel
ACTA Voyages, the leading travel agency network
in western France, is jointly owned by Crédit Mutuel
Arkéa and Carlson Wagonlit Travel. It specialises in
three areas – tourism, business travel and business
conventions – and its services are distributed by
Crédit Mutuel de Bretagne.
2008 Annual Report
67
Financial report 2008
2008 Annual Report
69
Contents
MANAGEMENT REPORT OF THE BOARD OF DIRECTORS
OF CONFÉDÉRATION NATIONALE DU CRÉDIT MUTUEL
72
Economic and financial background
72
Activity and results
75
Analysis by sector of activity
77
Results by activity
78
Shareholders' equity and risk exposure
81
Recent trends and outlook
99
FINANCIAL STATEMENTS
100
Balance sheet and profit and loss account
100
Statement of changes in shareholders' equity
102
Cash flow statement
106
Notes to the financial statements
108
STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
162
2008 Annual Report
71
Management report
Management Report
Board of Directors
of National Confederation
of Crédit Mutuel
Economic and financial
background
I
A financial crisis of historic proportion
that rocked the world economy
In the space of a few months, the crisis that originated in the United States
with the subprimes – mortgage loans granted to modest households
– spread to Europe, Asia and emerging countries, affecting all sectors
of activity and bringing to their knees some of the world’s best
known financial institutions. By blocking interbank financing
the world over, the collapse of Lehman Brothers mid-September
undermined trust between the different members of the financial
system. The leaders of the world’s major economies and their central
banks rallied, demonstrating their ability to act together to prevent
a world crash. The resistance of the global capitalist model was
tested by this first crisis since the onset of globalisation, bring to an
end the period of economic expansion that had been fuelled by
the United States and by emerging countries, notably China.
Nonetheless, world gross domestic product continued to expand
by an estimated 3.0% in 2008. However, from an annual rate of 4.5%
in the first quarter of the year, economic growth slowed to just 1.1%
in the last months of 2008, a far cry from the 5% achieved in recent
years. The financial crisis that set in back in the summer of 2007,
the rise in crude oil prices and the surge in the price of foodstuff
commodities transformed a financial crisis into a major economic
crisis that has spared no country. This sharp slowdown concerned
first and foremost developed economies. Thanks to measures taken
72
Crédit Mutuel
to support its economy, the United States managed to record growth,
but it was limited to 1.1% in 2008. The European Union, which has
seen its ranks swell to twenty five, also recorded growth of 1.1%, but
this was only 0.8% in euro zone countries that had to contend with
successive shocks. Japan slipped into recession. Even emerging
countries could not prevent a dip in economic activity. Growth in
China slowed to 9%, its lowest level in seven years. 2008 will go down
as a watershed year for world finance and the global economy,
marked also by a complete change of trend for commodities.
I
Commodities reeled under shock
and counter-shock, causing
a correction of inflation
Commodity prices declined for the first time in six years. The shock
on the upside, which saw prices surge 50% in the first half of 2008, and
the ensuing crash in the space of six months were of unprecedented
amplitude, exceeding the two previous oil shocks of 1973 and 1979
and the counter-shock of 1986. After racing to a high of $145 per barrel
on 3 July, Brent crude fell back, dropping to just $34.7 per barrel at
the year-end because of the world crisis. In fact, all commodity
prices plummeted because of the sharp contraction in world trade.
In the first half, concern that inflation would be fuelled by the surge
in the price of energy and agricultural commodities dissipated as the
financial shockwave sent these prices tumbling and even raised the
spectre of deflation. While average inflation rates (3.9% in the United
States, 3.3% in the euro zone, 3.6% in the United Kingdom, and 2.8%
in France and Germany) masked the contraction that occurred late in
the year, consumer prices in December were down year-on-year to
0.1% in the United States, 1.6% in the euro zone and 1% in France.
I
Europe had to contend
with a series of shocks
With the financial crisis spreading from the United States, Europe
saw GDP growth shrink from 3% in 2007 to 1% in 2008 (just 0.7% for the
six large industrialised countries of the euro zone). Business sentiment
deteriorated in all countries, sparing no sector of activity. Private
consumption was undermined by the erosion in purchasing power
despite inflation pulling back in the last months of the year. Under
these conditions, the euro’s steady appreciation seriously hampered
European exporters. Companies gradually reined in their investments.
Germany, which recorded growth of 1.0% in 2008, was as badly
affected as its partners towards the end of the year because of its
significant foreign exposure. The long spell of growth enjoyed by the
United Kingdom also came to an abrupt end. As in the United States,
the momentum fuelled by rising household indebtedness, a booming
property market and strong growth in consumption, stimulated
in part by a wealth effect, ground to a halt. The downturn of the
property market, which started back in the second half of 2006,
concerned many euro zone countries, not least Spain and Ireland.
I
French growth not spared
by the slowdown
As in the rest of Europe, France saw its economy slip into recession
in the second quarter of 2008. French GDP growth reached 0.7% in real
terms in 2008, near the euro zone average. There was also a sharp
deterioration in business confidence at the end of 2008. Household
spending on both housing and consumption – which had partly made
up for the structural lack of competitiveness since the late 1990s –
slackened. Caused by an erosion in purchasing power, this slump
spread to companies, through destocking and the first signs of a
downturn in productive investments. The French economy has no
engine of growth that might take over now household demand has
softened. The lower level of activity in the construction sector was
abrupt. These trends have sent employment on the retreat, affecting
first temporary staff, with the rise in jobless numbers gathering
momentum.
I
Stimulus plans implemented to get
the world economy out of the rut
Billions of dollars were promised by the world’s governments to
finance plans aimed at rescuing the financial system and stimulating
the economy. These plans differ markedly from one country to the
next, in some cases focusing on direct spending by the government in
the form of public investments, in other cases consisting of bolstering
household income by cutting VAT or by reducing taxation and social
security contributions. Among the five largest European countries,
the plans represent between 1.3% and 1.4% of GDP in Germany and
0.4% in Italy. In France, after measures taken in October to support
the bank sector, the government announced a €26 billion economic
stimulus plan aimed first at facilitating companies’ access to financing.
I
Change of course
for monetary policies
Consumer prices were overshooting, after which inflation pulled
back in the wake of the counter-shock in commodity prices, which
had a significant influence on the conduct of monetary policies.
Whereas the Federal Reserve and the Bank of England cut their rates
on an unprecedented sale, other central banks, notably in emerging
countries, raised their intervention rates during the first half of
2008, only to be hurried into an about-turn because of the severity
of the financial crisis and the urgent need to provide liquidity to the
interbank market. The federal funds rate is currently camped within
a narrow range from 0 to 0.25%, down from 4.25% at the start of
2008. The Bank of England cut its official bank rate from 5.5% to 2%
at end-2008 and then to 1.5% in January 2009. After apparently
going against the macroeconomic tide and raising rates one final
time to 4.25% in July 2008, the European Central Bank lowered the
interest rate for the main refinancing operations first to 2.5% and
then to 2% on 15 January 2009. Central banks also took sweeping
measures, including the direct purchase of corporate commercial
paper by the Federal Reserve, to prevent the credit market from
drying up altogether. As for the European Central Bank, it broadened
the range of eligible assets and extended the average term of its
refinancing operations.
2008 Annual Report
73
Management report
I
Bond yields determined
by fluctuations in risk aversion
Government bond yields were first driven higher by the spectre
of inflation, before being dragged down by the financial crisis. In the
Unites States, the yield for 10-year Treasury Notes, which had managed
to put on 25bp despite a 225bp cut in the federal funds rate, fell from
4.3% in July to 2.2% at end-December. Over the same period, the
10-year rate slumped from 5.3% to 3.1% in the United Kingdom and
from 4.9% to 3.5% in the euro zone, with at the same time a widening
of intra-EMU spreads. The decline on government bond yields was
accompanied by a surge in corporate bond yields to dizzy heights,
whatever the issuer’s credit rating. French companies were relatively
spared by the credit crunch, but in other European countries credit
has become scarcer and more expensive.
I
Change of trends
in the currency markets
Trends observed in 2007 carried over into the first half of 2008.
The dollar fell back against most currencies apart from sterling,
the South Korean won and the South African rand. The euro reached
an all-time high of $1.59 on 22 July. The rate then fell back to $1.25
at end-October, before bouncing back slightly. Sterling experienced
an unprecedented fall, down 22% against the euro and 27% against
the US dollar in 2008. In the second half of the year, the depreciation
of emerging currencies against the US dollar added to the disarray
of the global monetary system. The Chinese yuan’s slow appreciation
since the end of 2005 came to an end. As for the Brazilian real, it fell 31%.
The Russian rouble’s fall was checked by successive rate increases by
the Russian central bank. Because of their status as safe-haven currencies, the Japanese yen and Swiss franc did recover towards the end of
the year.
74
Crédit Mutuel
I
Stock markets crashed and the bubble
subsided in emerging markets
In the space of a few months, the financial crisis caused stock markets
to spiral downwards. Volatility surged to all-time highs, reflecting
the fact that this was a rollercoaster ride. Over one year, stock markets
lost 40% to 60% of their value, as much as 80% in some cases. Global
market capitalisation melted by more than $23,000 billion. Paris
lost 42.7%, New York 33.8%, London 31.3%, Frankfurt 40.4%, Tokyo
42.1% and Shanghai 69.7%. Particularly sharp falls were recorded
by emerging markets. The swift and significant cuts in intervention
rates everywhere (apart from Russia) failed to provide much relief,
with stock markets remaining depressed because of fears there would
be a global recession.
I
Recession looms
in 2009
Despite a very strong mobilisation, there will be no avoiding an
economic crisis, as measures taken to bolster activity will not kick
in until the second half of the year. The search is on for a new model
of sustainable growth and for a new regulatory framework for the
banking and financial sectors. On 2 April 2009, the G20 Summit will
see world leaders meet in an attempt to analyse where financial
innovation went awry and to get to grips with the world economy.
There will be some changes that will impact directly the function
of the European Union. The crisis is straining certain of the dogmas
laid down in the Maastricht Treaty. In particular, the stimulus
plans are contributing to a widening of public deficits well past
the 3% ceiling set by the Growth and Stability Pact.
Activity and results
The Crédit Mutuel group is not listed and is consequently under
no obligation to present financial statements in accordance with
International Financial Reporting Standards (IFRS). However, for the
sake of greater transparency and to promote comparability with other
leading financial institutions, the Board of Directors of Confédération
Nationale du Crédit Mutuel, which is the group's central governing
body within the meaning of Article L.511-31 of the French Monetary
and Financial Code, has opted to prepare consolidated financial
statements in accordance with International Financial Reporting
Standards as approved by the European Union.
The Board of Directors approved the consolidated financial
statements for the year ended 31 December 2008 when it met on
18 March 2009 and is presenting them, together with this report,
to the General Meeting for its approval.
I
Against the backdrop
of the group’s development…
2008 was marked by significant changes in the consolidation scope,
notably:
- the acquisition of Citibank Germany (€2,800 million of goodwill)
and of Banco Popular France;
- the creation of CM Arkea Covered Bonds and Banque Transatlantique
London; and
- the transformation of NRJ Mobile into a wholly owned subsidiary.
Goodwill on the acquisition of Citibank Germany ‑ being the positive
difference being the cost of acquisition of the shares and the
acquisition-date value of the identifiable assets acquired and
liabilities assumed ‑ amounted to €2,800 million. As required
by IFRS 3, the impacts of this acquisition, when material, are indicated
in this note.
Warnings: the assets and liabilities of Citibank Germany were
consolidated at 100% in the balance sheet. By contrast, the impact on
the income statement is limited to the period since the acquisition,
i.e. from 5 to 31 December 2008.
I
… and brisk business
There was another increase in loans and advances to customers1,
up to €295,497 million (€283,691 million without Citibank Germany).
Without Citibank Germany ‑ which was the change in consolidation
scope that had the greatest impact on the loan book, at €11.8 billion
– there was an increase of 9.7% over 2007. Crédit Mutuel group
increased its share of bank lending by 0.3 percentage points to 17.7%
in 2008.
Instalment loan production, which has fallen back more sharply since
the second half of 2008, came to €62.6 billion:
- in a wait-and-see market, home loans totalling €31.6bn were made
available (24.6% less than in 2007), as a result of which this loan
book increased to €155.6bn at the year-end (up 9.3% year-on-year);
- consumer credits distributed by the Group’s networks and specialist
subsidiaries inched lower to €9bn (4.2% less, in line with market
data published by the ASF). With Citibank Germany, the loan book
increased to €27.3bn. At constant consolidation scope, the loan
book increased to €16.2 billion (up 5% year-on-year).
- lending to businesses and professionals was affected by certain
investments being put on hold, as a result of which loan production
declined to €22 billion (5.8% less than in 2007). Outstanding
equipment and operating loans increased to €80 billion (up 12.6%)
and there was also an increase in lease financing (up 9.3%).
At €643 million, general provisions included €366 million arising
from the consolidation of Citibank Germany. Without this company,
general provisions increased by 34.8% year-on-year. Net of provisions,
loans written down individually came to €3,413 million, of which
€324 million relates to Citibank Germany that has not recognised
through the income statement. Without this company, loans having
given rise to specific provisions increased by 31.3% year-on-year.
Without Citibank Germany, gross doubtful loans increased by 15.2%,
equivalent to 2.5% of total loans.
Customer deposits2 increased strongly, up 14.9% to €197,219 million.
Without SFEF and Citibank Germany, these deposits increased
by 8.4% to €186,023 million, Without Citibank Germany, which had
€9.3 billion of customer deposits at the year-end, there was an
increase of 9.5%. On this basis, the Group’s market share of deposit
taking increased by 0.6 percentage points to 12.1%.
The financial crisis channelled customer savings into intermediated
products, as these offered a better return because of the increase in
interest rates decided in 2008:
1 & 2 - Analysis of activity with customers includes management accounting data
2008 Annual Report
75
Management report
- savings book deposits increased by 18.7% to €62.8 billion, thanks to
the mutual banks’ blue passbook deposits and ordinary passbook
deposits, which grew by respectively 23.6% and 19.7%;
- home savings plans continued to decline, down 6.1%;
- non-remunerated cash deposits increased by 13.8%, mainly because
of Citibank Germany which had €4,191 million of current account
deposits at the year-end;
- term deposits increased strongly, up 37.8% to €41.5 billion, of which
€4,360 million was contributed by Citibank Germany and a further
€1,861 million was linked to loans taken out with Société de
Financement de l’Economie Française (SFEF).
Because of the development of its activities, the Group’s refinancing
requirements increased.
Amounts due to credit institutions increased by €11,180 million,
notably because of accounts and loans with agreed maturity dates or
periods of notice, this being offset partly by a decrease in repurchase
transactions. There were also increases in debts represented by securities
(up 1.6%) and in subordinated debts (up 31.4%), which included
€1,200 million of super subordinated securities subscribed to by
Société de Prise de Participation de l’Etat (SPPE) in connection with
France’s economic stimulus plan. Regarding debts represented by
securities, the liquidity crisis left its imprint, with notably a strong
increase in negotiable certificates of deposit, attractive for having a
maturity of up to one year, at the expense of other negotiable debt
instruments.
The net interest margin increased strongly, up €1,294 million to
€3,970 million under the influence of opposing trends:
- net interest income from customer transactions (including income
from finance and operating leases) came to €8,330 million, up 13.2%
year-on-year, reflecting the higher level of activity, loans and
advances having increased by 14.4% and deposits by 15%;
- net interest payable on amounts due to credit institutions, debts
represented by securities and subordinated debts increased by 8.5%
to €6,638 million;
- hedging transactions generated a net gain of €524 million;
- net income from the sale of available-for-sale securities and heldto-maturity securities increased by 24.8% to €1,754 million because
of the increase in the size of the portfolios.
Net income from other activities declined by 16.8% to €1,966 million,
due notably to the lower contribution made by life insurance, the crisis
having led customers to channel their savings into investment products
perceived as less risky, notably passbook deposits.
76
Crédit Mutuel
Net commission income also declined slightly, down 2.9% to
€2,615 million, notably as a result of commissions generated on
securities transactions.
I
Markets gripped by a crisis…
On the balance sheet, assets and liabilities at fair value through
profit or loss came to respectively €69,257 million and €48,334 million.
They include derivative instruments (not classified as for hedging
purposes), other assets held for trading, and assets designated at fair
value through profit or loss on inception. Changes in fair value are
recognised directly to profit or loss.
The main reason for the decrease in net banking income was the
collapse in net gains on asset and liabilities at fair value through
profit and loss to €12 million, down €2,484 million from the preceding
year. Securities amounting to €18,792 million were transferred on
1 July 2008 as permitted under the amendment to IAS 39 released in
October 2008, better reflecting the management of these transactions.
Market conditions may lead the Group to revise its investment strategy
and management intention for these securities. When it is considered
untimely to sell securities purchased initially for trading, these securities
may be reclassified. Assets at fair value through profit or loss amounting
to €16,118 million were therefore reclassified as available-for-sale
securities and a further €2,674 million as loans and receivables.
This reclassification had a pre-tax impact of €973 million on the profit
and loss account.
The loss on available-for-securities increased sharply from
€139 million to €481 million, due to realised losses on the sale
of bonds, to impairment losses totalling €515 million, and to the
non-recurrence of the gains realised in 2007.
In accordance with the provisions of the amendment to IAS 39,
available-for-sale securities amounting to €6,091 million were
reclassified as loans and receivables, being fixed income securities
not traded in an active market, which are to be held over the foreseeable
future. At the same time there was a €16,118 million increase in availablefor sale securities increase as a result of the transfer of securities
previously classified as held at fair value through profit or loss.
All in all, available-for-sales securities increased by €11,214 million to
€96,135 million. In addition to the aforementioned reclassifications,
this increase was due to the purchases made in 2008 and to the
first-time consolidation of Citibank Germany, which had €730 million
of available-for-sale securities at the year-end. Unrealised losses
linked to the crisis amounted to €2,171 million at the year-end.
Note too that operational risks arising from the Madoff fraud amounting
to €104.6 million were recognised. These concerned solely trading
for own account.
General expenses continued to be tightly controlled overall, increasing
by only 2.5%. Staff costs were stable, while other operating overheads
increased by 6.9%. This increase was related to the commercial
development department that oversees 5,260 points of sale for the
bank’s customers and recruited 3,570 new members of staff, the same
level as in 2007, for a total of 65,550 (up 1% at constant consolidation
scope).
The gross operating profit came to €1,747 million, down 56.9% from
the preceding year.
Analysis by sector
of activity
The Crédit Mutuel group is organised into five segments of activity.
Retail Banking comprises the networks of Crédit Mutuel's regional
federations and those of CIC's regional banks. This sector also
includes some of the specialised activities whose products and
services are marketed by the network such as finance leasing, factoring,
real estate businesses (investment, facilities management, distribution
and property development) and collective management of products
distributed by the network.
Cost of risk increased to €1,405 million due to exceptional items and
to the already perceptible consequence of the economic crisis
in 2008. The collapse of Lehman Brothers and of Iceland’s banks cost
respectively €654 million and €66 million (€720m in total). But for
this, cost of risk would have increased by €499 million to €685 million,
up 3.7 times because of the increase in doubtful loans and compromised
loans. Cost of risk represented just 0.19% of average customer loans
and advances, not taking into account general provisions.
On the same basis, the coverage rate was 62% compared with 62.4%
at 31 December 2007.
Insurance is considered as a separate segment given its importance
in the group's activities. The group has historically been the leading
bank in this activity, having started its bankinsurance activity in
1970. The activity covers both life and non-life insurance.
After taking into account the share in net profit or loss of companies
accounted for by the equity method, net gains and losses on other
assets, and changes in goodwill recognised through profit or loss, the
profit on ordinary activities before tax came to €409 million.
Asset management and private banking comprises the subsidiaries
that are mainly engaged in private banking, both in France and
abroad, together with the asset management and employee savings
activities.
After a tax credit of €33 million and taking into account minority
interests of €2 million, the Group’s share of net profit was €440
million.
"Other activities" cover all the activities that cannot be attributed
to any of the above segments, together with subsidiaries involved
purely in logistical support, whose expenses are generally re-billed
to the other entities. They include intermediate holding companies,
companies owning the property used in the Group’s operations and
the IT subsidiaries.
Shareholders’ equity (excluding minority interests) declined by
6.7% to €24,676 million, affected by market conditions in 2008 and
the lower earnings generated by the Group, despite an increase
in reserves of €2,471m before taking into account unrealised gains
and losses. The reclassification of securities had an impact of
€255 million on unrealised gains and losses on a pre-tax basis.
Corporate and Investment Banking covers financing for large
corporates and institutional customers, added-value financing
activities, private equity, international activities and market activities,
whether on its own behalf or on behalf of customers, including stock
market intermediation.
Crédit Mutuel group remains one the most highly rated banks in the
euro zone. Standard & Poor’s has assigned A+/A-1 ratings to Crédit
Mutuel and CIC with a Stable outlook. Banque Fédérative du Crédit
Mutuel (the holding company for Crédit Mutuel Centre Est Europe, and
a direct shareholder in CIC) is rated Aa3 (Stable outlook) by Moody’s
and AA- (Stable outlook) by Fitch.
2008 Annual Report
77
Management report
Results by activity
Note that the weight of the data by sector of activity is calculated before elimination of intra-group transactions.
I
Retail
Banking
(in €m)
2008
2007
Change
2008/2007
Net banking income
Profit before tax
7,485
2,081
1,565
1,017
7,342
2,101
1,969
1,307
1.9%
-1.0%
-20.5%
-22.2%
The Caisses Fédérales du Crédit Mutuel and certain of CIC’s regional
banks are included in this operating segment despite carrying on an
activity trading in securities and derivative instruments for their own
account, as a result of which they have market exposure. Although
certain transactions are with Corporate and Investment Banking
entities, the standard requires the information to be provided before
the elimination of inter-segment transactions.
Adjusted for the effects of the financial crisis on retail banking
activities (minimum basis, i.e. transferring securities at fair value
through profit and loss and the cost of Lehman’s collapse to
Corporate and Investment Banking1), net banking income contributed
by Retail Banking increased by 1.9%. This segment, which is the
Group’s main business line, generated 83.4% of consolidated net
banking income and made a substantial contribution to the Group’s
net profit.
In addition:
- there was an increase in refinancing costs linked to the volume
of customer transactions and to the higher market rates as a result
of the liquidity crisis;
- there was an increase in the cost of customer deposits due notably
to an increase in regulated interest rates in France and to strong
growth in savings invested in regulated products, including the blue
passbook. The higher deposit rates squeezed the intermediation
margin (i.e. the differential in rates paid to customers and paid by
customers) by 27bp.
The Group attracted 350,000 new customers, of which 304,000 retail
customers, bringing the total to 15.3 million, of which 13.7 million
retail customers. The number of current accounts increased by
250,000 to more than 10 million.
Furthermore, there was an increase in commission income from
customers, mainly account management and services, credit cards
and payment instruments.
General expenses were contained overall, rising by just 3.1% bearing
in mind the Group continued to develop at a brisk pace and to invest
in expanding its network. Points of sales increased to 5,270, up
56 over the preceding year.
Cost of risk increased sharply, up €383 million to €558 million,
due to the deterioration in the economic situation and in risks.
Against the backdrop of a crisis of exceptional proportions, Retail
Banking posted a slight increase in net banking income and a net
attributable profit of €1,017 million.
3 - The transfer of securities at fair value through profit and loss resulted in a loss of €138 million in 2008 compared with a gain of €191 million in 2007, while the collapse of Lehman Brothers
resulted in a loss of €139m. Tax on these items represented a credit of €95 million in 2008 and a debit of €66 million in 2007
78
Crédit Mutuel
I
Insurance
(in €m)
Net banking income
Profit before tax
Insurance remained the Group's second-largest activity in 2008.
It contributed 11% of consolidated net banking income.
The insurance subsidiaries manage 26.6 million insurance contracts (of
which 22.5 million non-life contracts), up by 4.4% in 2008, for 10.7 million
policyholders, up by 6.0%.
This activity was also affected by the crisis, with net banking income
down 31.1% from the preceding year. Life insurance was more particularly
impacted, with premium income declining to €8 billion, notably because
customer savings were diverted into investment products perceived as
less risky such as passbook deposits
I
2008
2007
Change
2008/2007
995
535
543
420
1,144
1,017
1,032
701
-31.1%
-47.4%
-47.4%
-40.1%
Premium income from non-life insurance increased by 6.5% to €2.3bn
due to the particularly high level of activity recorded by the network
distributing health and whole-life insurance.
The fall in net banking income was compounded by a 7.7% increase in
general expenses, as a result of which gross operating profit decreased
by 47.4% to €535 million.
Cost of risk came to €8 million and was related mainly to the collapse
of Lehman Brothers.
As a result, the pre-tax profit contributed by Insurance fell by 47.4% in
2008 and net attributable profit by 40.1% to €420m.
Corporate and
Investment Banking
(in €m)
2008
2007
Change
2008/2007
Net banking income
Profit before tax
(64)
(440)
(1,163)
(736)
1,234
813
811
621
-105.2%
-154.1%
ns
ns
This operating segment recorded the sharpest decrease in net banking
income, down €1,298 million from the preceding year. Several factors
contributed to this downturn, first and foremost market transactions,
which accounted for nearly three quarters of the decrease, the crisis
having led to sharp downward adjustments to portfolio valuations
when marked to market. Private equity also contributed to the downturn
but its 2007 results had been particularly high, buoyed by dividend
income and profits on disposal. Finally, the Madoff fraud reduced net
banking income by €86 million.
Unlike other activities, general expenses in fact declined, down 10.7%
year-on-year, notably due to lower staff costs.
The sharp deterioration in cost of risk, up €719m, was due for nearly
three quarters to the €544m of losses incurred in connection with
the collapse of Lehman Brothers and the €65 million of losses of
losses incurred on Iceland’s banks. Corporate and Investment
Banking contributed 51.6% of the cost of risk at group level compared
with only 3.2% in 2007.
Finally, despite recording a tax credit, this activity contributed a net
attributable loss of €736 million.
2008 Annual Report
79
Management report
I
Asset Management
and Private Banking
(in €m)
Net banking income
Profit before tax
Asset management and private banking recorded a slight €19 million
decline in net banking income, linked to a decline in commissions due
to the extremely strained market conditions that caused customers
to adopt a wait-and-see attitude.
Not taking into account life insurance, managed assets declined
to €191.7bn, mainly under the impact of securities custody.
The employee savings activity remained buoyant, with amounts
collected rising by 14%.
I
Crédit Mutuel
2007
Change
2008/2007
549
211
103
74
568
257
252
174
-3.3%
-17.9%
-59.1%
-57.5%
General expenses increased by 8.7%. The increase in cost of risk to
€102 million was due the collapse of Lehman Brothers. Because of
the extremely unfavourable environment, net profit fell by 57.5%,
but this activity nonetheless made a positive contribution of
€74 million.
Other activities
(in €m)
2008
2007
Change
2008/2007
Net banking income
Profit before tax
6
(640)
(639)
(335)
392
(131)
(135)
(73)
-98.5%
x5
x5
x5
Other activities recorded a significant decrease in net banking
income, linked notably to reduced profits on disposal and to higher
impairment losses on listed investments. General expenses increased
80
2008
by €123 million, taking into account the Group’s diversification into
mobile telephony and the development of its IT function, which are
included in this operating segment.
Shareholders' equity
and risk exposure
The data provided in the tables on the following pages are expressed
in millions of euros. The figures correspond to audited figures unless
indicated otherwise by an asterisk.
I
Under CRBF Regulation 2000-03, the networks of banking institutions
with a central body must comply with management ratios both on an
individual basis (for each of the groups making up Crédit Mutuel) and
on a consolidated basis at national level (market risk and credit risk,
large risks, and equity holdings).
The consolidating entity and the scope of prudential supervision of
Crédit Mutuel-CIC (CM-CIC) are identical to those used for the group's
consolidated financial statements. Only the consolidation method
changes, notably as regards the insurance companies, which are
consolidated for accounting purposes using the full consolidation
method and consolidated using the equity method for prudential
purposes.
The global capital adequacy ratio defines the capital requirement needed
to cover credit and market risks. Total shareholders' equity corresponds
to the sum of core shareholders' equity (Tier 1 including undated
super-subordinated securities), additional shareholders' equity (including
redeemable subordinated securities and undated subordinated
securities) and regulatory deductions (some investments in
non-consolidated or equity-accounted financial institutions). In 2008,
the Group modified the treatment applied to investments in its
insurance subsidiaries. As permitted by the regulations, it opted
to deduct the value of these investments from total shareholders’
equity instead of deducting the difference arising from the
application of the equity method from Tier 1 capital.
Accounting shareholders' equity is restated to take into account
the effect of prudential filters, whose purpose is to reduce the volatility
of shareholders' equity induced by the international standards,
notably by the introduction of fair value.
The Group also complies with the reporting requirements arising from
the EU Directive applicable to financial conglomerates. This requires,
among other things, additional monitoring of the coverage by consolidated
shareholders' equity of the cumulative capital adequacy requirements
of banking activities and those of the insurance companies.
Crédit Mutuel Group complies with all the applicable regulatory ratios.
The data presented below has been drawn up using the same method,
meaning therefore that the 2007 data was restated to apply Basel II
requirements instead of Basel I requirements.
Capital adequacy
31.12.2008 (IFRS)
31.12.2007 (IFRS)
25,599
24,761
201,966
9.50%
9.80%
23,934
28,104
173,875
11.30%
9.60%
Tier 1 capital
Total prudential shareholders' equity
Weighted risk
Overall capital adequacy ratio
Tier 1 ratio
I
Risk management
policy
Risks are managed at the level of each Crédit Mutuel regional group.
As the group's central governing body, risk measurement and
monitoring form part of Confédération Nationale du Crédit Mutuel's
supervisory duties.
I
Credit
risk
The implementation of a credit risk management policy has several
objectives:
- to help steer the group by controlling its commitments through
compliance with limits (unit amount, sector and geographic);
- to reduce annual losses and provisions;
- to optimise equity allocated to cost of risk;
- to respond efficiently to Basel II and internal control regulations.
2008 Annual Report
81
Management report
As part of the overall group risk policy adopted by the Confédération's
Board of Directors, each regional group is responsible for its lending
policy and defines its own limits in line with CNCM guidelines.
The regional groups have a common internal rating system, set
in place to comply with Basel II requirements. For retail banking,
it has been developed based on algorithms specific to the customer
market segment. For large corporates, bank counterparties and
specialised market activities, the ratings are established by experts.
All the counterparties are rated according to a single rating scale
comprising 12 levels, with nine corresponding to unimpaired credit
(A+ to E+) and three corresponding to impaired credit (E- for doubtful,
E= for non-performing, and F for default). The networks revise the
internal ratings at least once a month for retail banking.
The decision-taking procedure is established at regional group level.
Rules have been established at the Crédit Mutuel group level so as to
harmonise the notion of default and comply with the new standards
resulting from adoption of the Basel II guidelines.
The declassification and provisioning systems are integrated
into the information systems and operate on a monthly basis,
reclassifying performing loans as doubtful loans where applicable.
The software also integrates the notion of contagion to a third party.
Provisions are calculated according to the outstanding amount and
the guarantees taken, and adjusted by the risk managers according
to the estimated expected loss.
Summary description of commitment limits set for credit risk
The Crédit Mutuel regional groups and their banking subsidiaries
have established financing limits adapted to the entity in question
and to the delegations granted to staff.
Data retrieval and steering tools have been set in place, with reports
sent to the Commitment Departments, Regional Management and
General Management, in order to obtain risk measurements (based
on internal and external data).
Credit risk exposure on loans and receivables
Loans and receivables
Credit institutions
Customers
Gross exposure
Provisions for impairment
Credit institutions
Customers
Net exposure
31.12.2008
31.12.2007
48,374
302,150
350,524
(6,549)
(344)
(6,205)
343,975
48,923
262,944
311,867
(4,117)
(9)
(4,108)
307,750
Net exposure to credit risk increased by 11.8%, with a rise of 14.3% for the customer loans portfolio reasoning on a net basis (+14.9% on a gross
basis) and a decrease of 1.8% for loans to credit institution on a net basis (-1.1% on a gross basis).
82
Crédit Mutuel
Credit risk exposure on commitments given
Financing commitments given
Credit institutions
Customers
Guarantee commitments given
Credit institutions
Customers
Provisions for risk on commitments given
31.12.2008
31.12.2007
1,758
47,236
1,848
48,204
3,282
16,090
151
1,396
16,288
105
Credit risk exposure arising from commitments increased by 0.9% reflecting an increase in risk exposure on commitments given to credit
institutions (+55.4%) and a decrease in exposure on commitments given to customers (-1.8%).
Exposure to credit risk on debt securities
Debt securities (*)
Government securities
Bonds
Derivatives
Repurchase agreements and securities lending
Gross exposure
Net exposure
31.12.2008
31.12.2007
20,569
111,936
13,109
12,767
158,381
(383)
157,998
25,357
120,332
9,845
26,485
182,019
(20)
181,999
* Excluding securities classified under loans and receivables
Credit risk exposure on securities decreased by 13.2%.
2008 Annual Report
83
Management report
Rating structure of interbank outstandings and geographic breakdown of interbank loans
The two tables below concern the group's retail banking and insurance activities.
Rating structure of interbank
outstandings
AAA and AA+
AA and AAA+ and A
A- and BBB+
BBB and below
31.12.2008
as a %
31.12.2007
as a %
5.4%
20.6%
50.5%
11.2%
12.3%
10.3%
59.4%
22.3%
6.9%
1.1%
Following a new mapping between the internal ratings and the agency ratings, the BBB+ category that was associated to the A- category in 2007
is now regrouped on the last line. The 2007 data for the last two lines of the above has been restated but the impact was immaterial (6.2% and
1.8% instead of 6.9% and 1.1%).
The significant change in the structure of interbank risk by internal rating between 2007 and 2008 reflects the consequences of the financial
crisis on the banks’ ratings. Nevertheless, nearly 88% of the Group’s exposure to banks is concentrated on counterparties that are rated above A-.
Geographic breakdown
of interbank loans
France
Rest of Europe
Rest of world
31.12.2008
as a %
31.12.2007
as a %
33.7%
50.6%
15.7%
32.1%
50.6%
17.3%
There was a slight change in the geographic breakdown of interbank loans. Some 84% of these loans were to French and European banks.
As in 2007, the increase was due to the financial crisis as interbank lending shifted away from US banks, perceived as riskier in the context.
Customer credit risk
Breakdown of loans and advances (default exposure)
by customer segment
A - Central governments and banks
B – Banks
C- Corporates
D – Retail
Retail customers account for over 50% of the Group’s exposure
84
Crédit Mutuel
31.12.2008
as a %
31.12.2007
as a %
15.5%
11.8%
20.6%
52.1%
14.5%
11.0%
20.9%
53.5%
Geographic breakdown
of customer risk
France
Germany
Rest of Europe
Rest of world
31.12.2008
as a %
31.12.2007
as a %
92.1%
4.3%
2.5%
1.0%
96.0%
3.0%
1.0%
The bulk of customer risk is concentrated in France (including French overseas departments).
Concentration of customer risk
Commitments exceeding €300m
Number
Loans (€ million)
Off balance sheet commitments (€ million)
Securities (€ million)
Commitments of between €200m and €300m
Number
Loans (€ million)
Off balance sheet commitments (€ million)
Securities (€ million)
31.12.2008
31.12.2007
74
16,634
13,949
15,024
49
13,262
13,133
6,765
34
2,765
2,037
2,581
13
1,581
1,433
165
Taking all commitments into account (loans, off balance sheet and securities), the average unit amount of the 74 risks exceeding €300 million
was €616 million (2007: €677 million) while the average unit amount of the 34 risks between €200 million and €300 million was €217 million
(2007: €245 million).
Quality of risk
Loans and advances written down individually
Individual provisions
General provisions
Overall coverage ratio
Coverage ratio (individual provisions only)
31.12.2008
31.12.2007
8,975
(5,562)
(643)
69.1%
6,250
(3,898)
(210)
65.7%
62.0%
62.4%
After representing 2.9% of customer loans in 2006 and 2.4% in 2007, impaired loans increased to 3.0% in 2008, while the overall coverage
ratio improved to 69.1%.
2008 Annual Report
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Management report
Past dues
< 3 months
> 3 months
< 6 months
> 6 months
< 1 year
> 1 year
Total
3,000
12
14
22
442
2,510
3,000
75
14
61
75
22
10
12
22
15
6
9
15
3,112
12
14
22
472
2,592
3,112
< 3 months
> 3 months
< 6 months
> 6 months
< 1 year
> 1 year
Total
3,051
12
14
17
379
2,629
3,051
41
5
36
41
4
1
3
4
4
4
4
3,100
12
14
17
385
2,672
3,100
31.12.2008
Debt instruments
Central governments
Credit institutions
Financial institutions other than credit institutions
Large corporates
Retail customers
Loans and advances
Central governments
Credit institutions
Large corporates
Retail customers
Other financial assets
Total
31.12.2007
Debt instruments
Central governments
Credit institutions
Large corporates
Retail customers
Loans and advances
Central governments
Credit institutions
Large corporates
Retail customers
Other financial assets
Total
Past dues concern mainly retail customers (83%) and large corporates (15%).
86
Crédit Mutuel
Breakdown of risk by economic sector
Finance and insurance
Real estate
Manufacturing and mining
Wholesale and retail trade
Specialised, scientific and technical activities
Construction
Administration, education, health, social
Agriculture
Transport and warehousing
Hotels and restaurants
Information and communication
Energy, waste and water
Not broken down and other
31.12.2008
as a %
31.12.2007
as a %
23.4%
22.8%
10.8%
10.8%
6.8%
6.8%
5.7%
3.6%
2.7%
2.2%
1.7%
1.4%
1.3%
19.6%
24.0%
11.7%
10.9%
8.0%
7.3%
5.9%
3.7%
2.7%
2.3%
1.6%
1.2%
1.2%
Source: Centralisation of risks for French banks (excluding general government)
Four economic sectors account for nearly 68% of loans granted to businesses, with the two main sectors – finance and insurance, and real
estate– accounting for over 46%.
2008 Annual Report
87
Management report
I
Exposures linked
to the financial crisis
In response to the financial crisis, the Financial Stability Board (FSB)
issued recommendations in terms of transparency aimed at improving
financial information in respect of certain risk exposures. The General
Secretariat of the Banking Commission (Secrétariat Général de la
Commission Bancaire - SGCB), the French Banking Federation
(Fédération Bancaire Française - FBF) and the French financial markets
supervisor (Autorité des Marchés Financiers - AMF) were responsible for
the application at national level of the best practices for transparent
financial communication, urging credit institutions to comply with
these recommendations. Crédit Mutuel Group decided to apply these
recommendations with a view to improving its financial communication.
The information below is expressed in millions of euro.
Exposure to residential mortgage backed securities (RMBS)
RMBS exposure (Residential
Mortgage Backed Securities)
Exposure after Impairment Impairment
hedging and
losses
losses
impairment recognised recognised
losses
to profit
to equity
and loss
31.12.2008
AFS
Trading
Available-for-sale (AFS)
Loans (held-to-maturity/loans and receivables)
TOTAL
1,169
2,864
3,147
7,180
(390)
(12)
(36)
(438)
Reclassifications
Other
movements
Exposure
after
hedging and
impairment
losses
31.12.2007
(3,025)
61
2,964
0
(260)
(253)
202
(311)
4,844
3,320
17
8,181
(252)
(252)
In their very great majority, residential mortgage backed securities are valued based on information provided by external sources
(counterparties, brokers, etc.) after analysis of the elements obtained in this way.
Breakdown by geographical area
Amount
% of total
France
United States
United Kingdom
Spain
Other European Union Member States
Rest of the world (*)
TOTAL
20
3,122
1,311
437
1,662
628
7,180
0%
44%
18%
6%
23%
9%
100%
(*) Mainly Australia.
88
Crédit Mutuel
Exposure to RMBS issued
in the United States
Breakdown by type of portfolio
Agencies
Prime
Alt A
Subprime
Other
TOTAL
Analysed by year of origination
- 2005 and before
- 2006
- 2007
- 2008
TOTAL
Analysed by rating
- Agencies
- AAA
- AA
-A
- BBB
- BB
- BB+ and less
TOTAL
Exposure after
Exposure after
hedging and
hedging but
impairment losses before impairment
losses
Cumulated
impairment
losses
Cumulated
impairment
losses as a %
1,223
451
1,834
100
3
3,611
4
(42)
(415)
(36)
(489)
0%
-9%
-23%
-35%
-12%
-14%
Exposure after
Exposure after
hedging and
hedging but
losses
Cumulated
impairment
losses
Cumulated
impairment
losses as a %
847
1,480
1,228
56
3,611
(137)
(236)
(113)
(3)
(489)
-16%
-16%
-9%
-5%
-14%
Exposure after
Exposure after
hedging and
hedging but
losses
Cumulated
impairment
losses
Cumulated
impairment
losses as a %
4
(61)
(25)
(17)
(48)
(15)
(327)
(489)
0%
-11%
-34%
-20%
-10%
-13%
-30%
-14%
1,227
409
1,419
64
3
3,122
710
1,244
1,115
53
3,122
1,227
472
49
69
422
101
782
3,122
1,223
532
74
87
470
116
1,109
3,611
Mainly collateralized mortgage obligations (CMO).
These securities were reclassified from trading securities to loans and receivables and from available-for-sale securities to loans and
receivables.
2008 Annual Report
89
Management report
Guarantees received from monoliner insurance companies
Commitments by type
of obligation
Exposure Impairment Impairment Reclassifications
Other
Exposure
after hedging
losses
losses
movements
after
and impairment recognised recognised
hedging and
losses
to profit
to equity
impairment
and loss
losses
31.12.2008
AFS
31.12.2007
RMBS issued in the United States
Non covered bonds
TOTAL
64
4
68
(22)
(22)
(1)
(1)
-
Commitments on monoliner
insurers
(6)
(6)
93
4
97
Expositions après couvertures
et pertes de valeur
31.12.2008
FSA
MBIA
Ambac
FGIC
TOTAL
4
7
34
23
68
Exposure to commercial mortgage backed securities (CMBS)
Exposure to commercial
mortgage backed securities
(CMBS)
Other
Exposure
after hedging
losses
losses
movements
after
hedging and
losses
to profit
to equity
impairment
and
loss
losses
31.12.2008
AFS
31.12.2007
Trading
TOTAL
Breakdown by geographical areae
France
Rest of Europe
United States
Other
TOTAL
54
380
139
573
(14)
(14)
(31)
(31)
(68)
61
7
0
Crédit Mutuel
68
340
164
572
Montants
Répartition %
61
311
0
200
572
11%
54%
0%
35%
100%
These exposures have arisen in connection with market activities carried out for own account.
90
68
10
(32)
46
Exposure to collateralized debt obligations (CDO)
Exposure to collateralized debt
obligations not hedged by credit
default swaps
Other
Exposure
after hedging
losses
losses
movements
after
hedging and
losses
to profit
to equity
impairment
and loss
losses
31.12.2008
AFS
31.12.2007
Trading
TOTAL
58
1,700
1,758
13
30
43
France
Rest of Europe
United States
Other
TOTAL
Breakdown by rating
Trading
TOTAL
(1,359)
29
1,330
-
1,319
(50)
365
1,634
27
56
5
88
Amount
% of total
9
484
354
911
1,758
0%
28%
20%
52%
100%
Amount
- AAA
- AA
- Other
TOTAL
Exposure to collateralized debt
obligations and asset back
securities hedged by credit
default swaps
(6)
(6)
1,697
45
16
1,758
Exposure after hedging
and impairment losses
31.12.2008
872
872
Impairment losses
recognised to profit
and loss
12
12
Impairment losses
recognised to equity AFS
298
298
2008 Annual Report
91
Management report
Commitments by type
of obligation
Other
Exposure
after hedging
losses
losses
movements
after
hedging and
losses
to profit
to equity
impairment
and
loss
losses
31.12.2008
AFS
31.12.2007
Trading
1,084
786
436
TOTAL
2,306
France
Rest of Europe
United States
Other
TOTAL
Breakdown by rating
- AAA
- AA
-A
- Autres
TOTAL
(42)
(42)
(40)
(40)
(489)
394
94
-
Crédit Mutuel
1,851
275
100
2,226
Amount
% of total
571
1,622
113
2,306
25%
70%
0%
5%
100%
Amount
1,884
181
89
152
2,306
Exposure to collateralized debt obligations on the American residential market is not material.
92
(237)
157
242
162
Leverage buy-out financing
Leverage buy-out
financing
Carrying
amount
Special purpose financing vehicles
French banking network
TOTAL
Value
Value
adjustments to adjustments
profit or loss
to equity
3 771
3 012
6 783
Breakdown by geographical area of LBO financing
via special purpose financing vehicles
France
Rest of Europe
USA
Other
TOTAL
Breakdown by nature of LBO financing
via special purpose financing vehicles
Construction
Telecommunications
Distribution
Services
Food processing
Manufacturing
Other
TOTAL
Reclassifications
(38)
(38)
0
0
Other Carrying
movements amount
627
1 359
1 986
3 182
1 653
4 835
Amount
% of total
1,556
919
1117
179
3,771
41%
24%
30%
5%
100%
Amount
% of total
295
349
378
956
229
1,359
205
3,771
8%
9%
10%
25%
6%
36%
6%
100 %
LBO financing corresponds to the definition used for the purpose of the Basel II solvency ratio. The above amounts correspond to carrying
amounts as reported on the balance sheet.
Transactions with special purpose vehicles
Crédit Mutuel Group does not act as originator in connection with
securitisation programmes.
On behalf of customers, the Group organises securitisation programmes
in connection with which it may provide liquidity lines to mutual
loan funds.
At 31 December 2008, liquidity lines totalling €228 million had been
granted to three mutual loan funds.
2008 Annual Report
93
Management report
I
Basel II system
- Credit risk
To better take into account the quality of the borrower, a Framework
for the Convergence of Capital Measurements and Capital Standards
(Basel II), including notably the implementation of an internal system
of ratings specific to each institution, has been instituted by the Basel
Committee on Banking Supervision and by the European Commission.
In France, these new prudential requirements were published
on 20 February 2007 in the form of a decree issued pursuant
to the recommendations of the Advisory Committee on Financial
Legislation and Regulation (Comité Consultatif de la Législation
et de la Réglementation Financières - CCLRF) dealing with capital
requirements for credit institutions and investment companies.
This decree describes the three pillars:
- the First Pillar introduces new minimum capital requirements, with the
calculation of a capital ratio for credit, market and operational risks;
- the Second Pillar requires banks to perform their own assessment
to determine they have adequate capital to support all the risks in
their business and to perform stress tests to assess their capital
requirements in the event of a deterioration in the economic
environment.
- the Third Pillar tightens up market discipline by requiring more
extensive disclosure and transparency regarding the risk profile of
banks governed by the new Framework. To this end, Crédit Mutuel
Group will release a specific report in the first half of 2009 that will
be available on its institutional website.
Regarding the minimal capital requirements of Pillar I, the major changes
compared with the Cooke ratio concern the two following points:
- treatment of credit risk: modification of calculation of weighted
risks related to unexpected losses (UL) included in the ratio’s
denominator and possible correction of the capital on the basis
of the differential between expected losses (EL) and provisions
included in the ratio’s numerator; and
- the introduction of an explicit treatment of operational risk
The new regulations also introduce various modifications to the
measurement of market risk for the trading book.
As regards credit risk measurement, banks must choose between
three approaches of rising risk sensitivity subject to the authorisation
and under the control of their national supervisory bodies:
standardised approach, foundation internal ratings-based approach,
and advanced internal ratings-based approach. Each banking institution
is required to adopt the approach best suited to the stage of development
of its activities and to its organisation.
94
Crédit Mutuel
Standardised approach
The so-called standardised method is similar to the Basel I
Framework in so far as it is based on the application of fixed risk
weightings to the different categories of exposures as defined by
the regulations. The main modifications result from the possibility
to differentiate applicable risk weightings on the basis of credit
assessments provided by reputed external institutions and from
the broader range of sureties, guarantees and credit derivatives that
may be taken into account by banks.
With the agreement of the French Banking Commission (Commission
Bancaire), claims on sovereigns and on regional governments and
local authorities will be measured using the standardized method
over the foreseeable future.
Internal ratings-based approaches
These approaches are more sophisticated. Credit risk is a function
of the characteristics of each exposure (or pool of exposures) based
on the four following parameters: probability of default (PD) by
the debtor over a 1-year horizon, loss given default (LGD), credit
conversion factors (CCF) for off balance sheet exposures, and the
effective maturity (M).
There are two main approaches:
- Foundation internal ratings-based approach (F-IRB), under which
banks provide their own empirical model to estimate the probability of default. Other risk components (LGD, CCF and M) are defined
in the regulations. Confédération Nationale du Crédit Mutuel
has been authorised by the French Banking Commission to use its
internal ratings models on bank exposures at 31 December 2008.
- Advanced internal ratings-based approach (A-IRB), under which
banks provide their own internal estimates for the PD, CCF, LGD
and M risk components. This approach requires historical records
stretching back over a long enough period of time for statistical
purposes. Confédération Nationale du Crédit Mutuel has been
authorised by the Banking Commission to use its internal ratings
models on retail exposures at 30 June 2008.
The use of internal ratings-based approaches is conditional upon
complying with a series of quantitative and qualitative requirements
aimed at guaranteeing the integrity and credibility of the processes
as well as the estimation of parameters used for calculating the
regulatory capital.
As a cooperative bank owned by its members, Crédit Mutuel Group’s
purpose is not to redistribute an eventual capital gain to its shareholders.
By opting for an internal ratings-based approach for most of its
exposure, the Group has:
- complied with requirements laid down in the regulations and by the
French Banking Commission;
- adopted a national framework that has helped standardise practices;
- improved its customer risk segmentation, helping fine-tune its
management and steering; and
- brought up to standard its information systems and work methods
at all levels of its organisation given the obligation to use ratings
in its management.
All in all, Crédit Mutuel has structured it management and credit risk
management system by capitalising on the Basel II Framework,
based upon:
- a single counterparty rating system that is based very largely on
statistical algorithms;
- a harmonised definition of default that is consistent with the
approach for accounting purposes; and
- the use of national parameters incorporating a margin of prudence
- significant investments in its information systems.
I
Interest
rate risk
Interest rate risk arises from the bank’s commercial activities.
It results from differences in interest rates and benchmark indices
for customer loans and advances on the one hand and customer
deposits on the other hand, based on a prospective analysis of expected
changes in these components, taking into account embedded
options (early repayments, extensions, drawdowns against confirmed
credit lines, etc.).
The regional groups are responsible for defining their interest rate
risk management and coverage strategies. As required by the
regulations (CRBF Regulation 97-02 as amended and extended to
central bodies), CNCM’s Risk Management department is responsible
for the consolidated and homogeneous measurement of this risk by
co-ordinating methodologies and by regular measurement of overall
risk at group level.
The Crédit Mutuel Group has established harmonised risk management
and risk limits, which are set out in the "Group asset and liability
management guidelines".
Measurement and supervision of interest rate risk is carried out at
regional level by the Crédit Mutuel regional groups and at national
level by CNCM.
scenarios and early repayment), which is measured excluding
the trading book. The trading book is monitored at the level of the
dealing desk.
Group entities have introduced systems of limits that are consistent
with the national system. Management and hedging decisions are
taken by the regional committees.
Interest rate risk is analysed and the residual balance sheet position
is hedged, if appropriate, by entering into so-called macro hedging
transactions. These transactions are accounted for in accordance
with IAS 39 as adopted by the European Union, i.e. in accordance
with the carved out version. High-value or special-purpose vehicle
customer transactions may be hedged specifically.
At national level
Interest rate risk is measured by two indicators:
- risk relating to future income, analysed in terms of the sensitivity
of the margin over the short term (1 to 5 years);
- risk relating to the instant value of the entity, measured as the
sensitivity of net present value over a long-term horizon.
At national level, a sensitivity limit for net banking income over one
or two years, including new loan production, has been implemented
based on a scenario of moderate changes in interest rates (+/- 1%
for variable rates and +/- 0.5% for regulated interest rates).
Sensitivity to a rise in interest rates
Dynamic approach
2007
2008
0.5 %
- 0.18%
0.0 %
- 0.75%
- 0.5 %
- 1.0 %
- 0.44%
- 1.58%
- 1.5 %
- 2.0 %
Year 1
Year 2
At regional level
Each of the Crédit Mutuel regional groups has an ALM unit dedicated
to monitoring overall interest rate exposure.
Crédit Mutuel Group’s sensitivity to a rise in interest rates is
moderate.
The Crédit Mutuel entities all use a common base for measuring overall
interest rate risk (application of common methodology for scheduling,
Other scenarios (including stress scenarios) are calculated at
the level of CNCM.
2008 Annual Report
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Management report
I
Liquidity
risk
Like all credit institutions, the Crédit Mutuel Group is exposed to the
risk of insufficient liquidity to meet its commitments at a given
moment.
The regional federations each have an ALM unit or committee tasked
notably with ensuring there is sufficient liquidity to meet commitments.
They have concluded agreements with CCCM, BFCM or Compagnie
Financière to cover their refinancing needs.
Liquidity risk is monitored by the regional groups using notably the
following indicators:
- the liquidity ratio as defined by regulations, which compares
resources with maturities at less than one year with applications with
maturities at less than one year. Some of the regional federations
and Caisses Fédérales apply limits that are stricter than those
required by the regulations;
- medium- to long-term liquidity ratio defined at national level, the
general principle being to match all assets and all liabilities and to
measure the coverage ratio of applications by resources of equivalent
duration at different maturities. A system of limits has been put
into place.
- projected refinancing requirements over 5 years.
Breakdown of financial assets and financial liabilities (excluding hedging)
31.12.2008
< 1 month > 1 months > 3 months > 1 year > 2 years > 5 years
< 3 months
< 1 year < 2 years < 5 years
No set
maturity
Total
Assets
Financial assets held for trading
1,071
1,046
7,312
4,659
5,938
7,333
767
28,126
Financial assets at fair value
through profit and loss
4,328
7,579
1,512
456
1,336
504
729
16,444
Financial assets available for sale
2,035
1,655
3,192
4,805
8,934
15,756
5,250
41,627
Loans and advances
(including leasing)
41,413
14,970
26,596
30,827
71,907
148,560
9,982
344,255
804
1,081
824
1,221
1,168
1,500
10
6,608
1,963
306
50
-
-
-
-
2,319
896
632
5,770
943
2,803
3,353
502
14,899
10,912
14,982
5,204
124
11
4
-
31,237
193,901
67,176
38,656
16,699
36,031
29,862
14,270
396,595
Financial assets held to maturity
Liabilities
Central bank deposits
Financial liabilities held for trading
Financial liabilities at fair
value through profit and loss
Financial liabilities valued
at amortised cost
96
Crédit Mutuel
31.12.2007
< 1 month > 1 months > 3 months > 1 year > 2 years > 5 years
< 3 months
< 1 year < 2 years < 5 years
No set
maturity
Total
Assets
Financial assets held for trading
1,798
1,298
5,491
3,914
15,910
22,071
5,027
55,509
13,462
11,420
2,739
613
1,898
601
849
31,583
728
908
3,829
4,342
8,690
7,487
4,630
30,614
45,175
14,675
23,194
25,138
55,964
130,187
13,991
308,324
116
186
473
906
1,323
877
41
3,921
34
25
0
0
0
0
0
59
Financial liabilities held for trading
1,042
21
1,886
1,028
3,128
7,002
5,379
19,486
Financial liabilities at fair value
18,161
18,219
7,735
63
51
9
32
44,269
155,886
62,267
37,315
11,089
25,450
32,201
30,947
355,154
Financial assets at fair value
Loans and advances
(including leasing)
Liabilities
Central bank deposits
Financial liabilities valued
at amortised cost
Comments:
This table was established using the FIN50 grid in application of CB instruction 2006-04 applied for the first time for the year ended 31 December 2007.
The entities included are those included within the prudential scope.
The scheduling rules are as follows:
- Outstandings as reported in the balance sheet drawn up in accordance with IFRS.
- Maturities are the contractual maturities for repayment of the principal.
- Shares are recorded under “No set maturity”, as are undated loans and securities
- Debts and related liabilities are broken down according to their actual maturity and, failing that, under “less than 1 month”.
- Provisions are analysed in the same way as the assets concerned.
- Non-performing loans are analysed according to their contractual date, if not yet past, and classified under “No set maturity” if the contractual date is past.
Receivables in litigation are recorded under “No set maturity”.
- The market value of derivatives is recorded in the flow corresponding to the end date of the contract.
- When it is not possible to establish a reliable repayment schedule, the carrying amount is recorded under “No set maturity”.
2008 Annual Report
97
Management report
I
Foreign
exchange risk
Each bank hedges the currency risk on customer transactions.
This risk is not material at the Crédit Mutuel group level.
I
Market risk
The main group entities engaged in market activities are Crédit Mutuel
Centre Est Europe-CIC and Crédit Mutuel Arkéa. They trade on their
own account and on behalf of the other federations. Their activities
include refinancing the local mutual banks' activities, securities
management and commercial activities for corporate customers
(foreign exchange transactions, interest-rate risk and foreign
exchange hedging).
Moreover, both in terms of risks and performances, the dealing desk
activities are the subject of regular reporting.
The permitted activities and terms and conditions of capital markets
activities are included in each regional group's internal regulations.
At operational level, these are analysed by the various Committees
involved and reported upon regularly to the Boards of Directors
concerned.
At national level, a market activities monitoring mechanism enables
the main risk indicators to be monitored.
I
Operational risk
In response to Basel II requirements, Crédit Mutuel has since 2002
progressively implemented a comprehensive operational risk
management system, with group risk management guidelines and
common quantitative measurement methods.
The system for measuring and controlling operational risk is based on
a risk mapping comprising the identification and modelling of risks and
the calculation of final capital requirements for operational risk.
98
Crédit Mutuel
subsidiaries located abroad (Belgium, Luxembourg, Switzerland, etc.)
and the subsidiaries involved in factoring will be the only group entities
that will continue to apply the standardised approach for the time
being.
Main objectives
The operational risk management policy is designed to achieve the
following:
• improve group management by controlling risks and related costs;
• at human level, protect people, foster individual responsibility,
autonomy and controls, capitalise on the skills within the group;
• at economic level: preserve margins by managing operational
risk close to the ground in all activities, ensure the return on
investment of regulatory compliance, optimise capital allocated
to the cost of risk and adapt insurance programmes to the risks
identified.
• at regulatory level: comply efficiently with Basel II requirements
and regulatory obligations, be supported by internal control (CRBF
97.02), optimise business continuity plans (BCP) for key activities,
and adapt financial disclosure (Third Pillar of Basel II)
Measurement and control of operational risk
Homogenous risk mapping by business lines and by type of risk has
been completed for all activities based on experts’ assessments and
then using probabilistic models. These models are validated by the
operational risk technical committees. Allocated capital is calculated
at national level and then allocated at regional level.
The general guidelines for reducing risk include:
• efficient preventive actions (identified during the risk mapping)
that are implemented by operational staff through permanent controls;
• protective measures that focus primarily on generalising business
continuity plans in all key areas (business activities, logistics and
information systems).
A methodology for drawing up business continuity plans has been
defined. It constitutes the reference document within the Crédit
Mutuel Group.
The Group has put into place an operational risk management system
that is structured and coherent, featuring summaries according to the
eight business lines and seven loss event types (actual losses and
potential risks) defined in the Basel II Framework.
A coherent crisis management plan – dovetailed into the general crisis
management plan for the interbank sector ‑ has been implemented
throughout the group. This plan covers crisis communication and the
efficient organisation of the three phases of the business continuity
plan: rescue plan, continuity plan and resumption plan.
The Crédit Mutuel Group is in the process of homologating the advanced
measurement approach (Ama) for operational risk. The banking
Since 2008 the Group has been overhauling the insurance programmes
of CMCIC entities to bring them in line with Basel II risk mitigation
requirements. A system is being put into place to enable the Group
to recognise insurance mitigation within the limit of 20% of the total
operational risk capital allocation.
Reporting and general supervision
The application of the operational risk management policy and risk
profile are monitored using key indicators, thresholds and warning
systems for the measurement of potential risk, loss events, effectiveness
of risk reduction measures and allocated financing. Reports are
submitted to the group’s management and supervisory bodies at
regular intervals.
Documentation and procedures
The Group has implemented permanent procedures that have been
approved by its executive bodies, which cover:
- governance: general governance defining the role and composition
of the decision-making bodies, the contents of reports, their periodicity
and the recipients, the scope for identifying losses and intervals at
which updated;
- loss event collection: general procedure for collecting and processing
risk frontiers, and quality assurance review of the loss event database;
- measurement system: general procedure for the application of the
advanced measurement method, methodology for mapping and
for probabilistic models, the process for retrieving risk indicators
from the information systems, calculation of net banking income
by business line, capital allocation keys, and Corep filings.
Recent trends and outlook
At commercial level, the Group’s development in the first months
of 2009 was comparable with the last months of 2008. The Crédit
Mutuel and CIC networks recorded growth of around 8% in their
loans and deposits.
Looking ahead to the rest of 2009, in which the environment will
remain difficult, the Group will continue to develop its activities
financing the real economy, relying on the organic growth of its
network of neighbourhood banks and branches and also the
diversification of its activities through the acquisitions completed
recently in France and abroad in 2008 (Citibank Germany) and
at the start of 2009 (Cofidis).
2008 Annual Report
99
for the year ended 31 december 2008
Balance Sheet - Assets – IFRS
€m
Cash in hand, balances with central banks and post office accounts
Financial assets at fair value through profit or loss
Derivative hedging instruments
Available for sale financial assets
Loans and advances to credit institutions
Loans and advances to customers
Re-measurement adjustment on portfolios hedged for interest rate risk
Current tax assets
Deferred tax assets
Prepayments, accrued income and other assets
Non-current assets classified as held for sale
Holdings in companies accounted for using the equity method
Investment property
Plant, property and equipment
Intangible assets
Goodwill
Total assets
31.12.2008
31.12.2007
Notes
18,090
69,257
4,984
96,135
48,734
295,837
729
13,710
1,785
2,176
20,673
3
257
1,328
3,358
801
3,852
8,300
115,646
3,377
84,921
49,853
258,781
(67)
11,184
1,277
779
13,047
323
1,408
3,042
479
952
1a
2a, 2c, 4, 9
3a, 4
5a, 5b, 9
1a, 9
6a, 9
3b
7, 9
10a
10b
11a
581,709
553,302
31.12.2008
31.12.2007
Notes
2,319
48,334
8,617
54,030
196,507
134,373
(1,414)
504
958
17,275
59
67,349
3,093
42,850
170,894
132,321
239
558
733
15,381
1b
2b, 2c, 4
3a, 4
1b
6b
16
3b
10a
10b
11b
85,274
1,345
8,551
25,036
24,676
6,826
18,920
(1,510)
440
360
85,315
1,140
6,506
26,864
26,442
6,666
16,449
597
2,730
422
17
18
19
581,709
553,302
12
13
14a
14b
15
Liabilities and shareholders’ equity – IFRS
€m
Central banks, post office accounts
Financial liabilities at fair value through profit or loss
Amounts due to credit institutions
Amounts due to customers
Debt securities
Re-measurement adjustment on portfolios hedged for interest rate risk
Current tax liabilities
Deferred tax liabilities
Accrued charges, deferred income and other liabilities
Liabilities directly associated with non-current
assets classified as held for sale
Technical provisions for insurance contracts
Provisions for risks and charges
Subordinated debt
Shareholders' equity - group share
Share capital and related reserves
Consolidated reserves
Unrealised or deferred gains or losses
Profit for the year
Minority interests
Total liabilities and shareholders’ equity
100
Crédit Mutuel
20a
20a
20b
Profit and loss account – IFRS
€m
31.12.2008
31.12.2007
Notes IFRS
25,538
(21,568)
3,734
(1,119)
20,636
(17,960)
3,820
(1,128)
22
22
23
23
12
(139)
11,582
(9,616)
2,496
342
17,628
(15,266)
24
25
26
26
Net banking income - IFRS
8,424
10,568
General operating expenses
Provisions, amortisation and depreciation for non-current assets
(6,210)
(467)
(6,074)
(437)
1,747
4,057
(1,405)
(186)
342
3,871
24
20
23
10
34
14
409
3,929
33
(1,144)
442
2,785
2
55
440
2,730
Interest and similar income
Interest and similar expense
Fees and commissions (income)
Fees and commissions (charges)
Net gains (losses) on financial instruments
at fair value through profit or loss
Net gains (losses) on available for sale financial assets
Income from other activities
Expenses on other activities
Gross operating profit – IFRS
Cost of risk
Operating profit – IFRS
Share in net profit or loss of companies accounted
for using the equity method
Net gains (losses) on other assets
Changes in goodwill
Profit on ordinary activities before tax - IFRS
Corporation tax
Total consolidated profit
Minority interests
27a, 27b
27c
28
12
29
30
31
2008 Annual Report
101
Statement of changes in shareholders equity
Share capital and reserves
€m
Balance at 1 January 2007
Capital increase
Elimination of treasury shares
Issue of preference shares
Equity component of hybrid instruments
Equity component of share-based payment schemes
Appropriation of profit for 2007
Dividends paid in 2007 in respect of 2007
Sub-total of changes in capital linked
to relations with shareholders
Changes in the value of financial instruments
and non-current assets recognised through equity
and non-current assets recognised through profit and loss
Net profit for the year 2007
Sub-total
Impact of acquisitions and disposals on minority interests
Changes in accounting methods
Share of changes in the capital of companies
accounted for using the equity method
Changes in foreign exchange rates
Other changes
Shareholders' equity at 31 December 2007
102
Crédit Mutuel
Consolidated
reserves
Share capital
Other paid
in capital
Elimination
of treasury
shares
Consolidated
reserves
6,373
256
32
5
-
13,712
2,946
(169)
256
5
-
2,777
-
-
-
(2)
0
-
-
-
0
(44)
6
6,629
37
-
16,449
Unrealised or deferred gains/losses (after tax)
Translation
differences
(1)
Revaluation
differences
(excluding
financial
instruments)
2
Changes in the value of
financial instruments
Net profit, Group share of
group share shareholders'
equity
Changes in
the fair value
of AFS
securities
Changes in
the fair value
of derivative
hedging
instruments
932
(12)
2,946
(2,946)
-
-
(32)
-
-
(193)
8
(2,946)
(107)
(32)
-
(300)
8
2,730
2,730
Minority
Total
interests consolidated
shareholders’
equity
23,983
261
(169)
339
(8)
24,322
261
(177)
92
(8)
83
(217)
1
(216)
(107)
2,730
2,406
(3)
55
53
(110)
2,786
2,460
(2)
10
8
0
-
-
-
-
-
0
(44)
6
0
(1)
29
0
(45)
35
-33
2
632
-4
2,730
26,442
422
26,864
2008 Annual Report
103
Statement of changes in shareholders equity
Share capital and reserves
€m
Balance at 1 January 2008
Capital increase
Elimination of treasury shares
Issue of preference shares
Equity component of hybrid instruments
Equity component of share-based payment schemes
Appropriation of profit for 2007
Dividends paid in 2008 in respect of 2007
Sub-total of changes in capital linked
to relations with shareholders
Share capital
Other paid
in capital
6,629
159
37
1
Consolidated
reserves
Elimination
of treasury
shares
Consolidated
reserves
16,449
2,730
(196)
159
1
2,534
and non-current assets recognised through equity
and non-current assets recognised through profit and loss
Net profit for the year 2008
Sub-total
Impact of acquisitions and disposals on minority interests
Changes in accounting methods
Share of changes in the capital of companies
accounted for using the equity method
Changes in foreign exchange rates
Other changes
Shareholders' equity at 31 December 2008
104
Crédit Mutuel
(67)
(3)
(1)
18
(9)
6,788
38
18,920
Unrealised or deferred gains/losses (after tax)
Translation
differences
(33)
Revaluation
differences
(excluding
financial
instruments)
2
Changes in the value of
financial instruments
Net profit, Group share of
group share shareholders'
equity
Changes in
the fair value
of AFS
securities
Changes in
the fair value
of derivative
hedging
instruments
632
(4)
2,730
Minority
Total
interests consolidated
shareholders’
equity
26,442
160
422
26,864
160
(196)
(11)
(207)
(36)
(11)
(47)
(1,479)
1
(1,478)
(628)
440
(1,667)
(12)
2
(9)
(640)
442
(1,676)
(67)
(3)
(31)
0
(97)
(3)
(1)
18
(9)
(1)
4
(14)
(2)
22
(23)
24,676
360
25,036
(2,730)
(2,730)
33
(1,443)
(69)
(628)
33
(2,071)
2
(1,439)
(69)
(73)
440
440
440
2008 Annual Report
105
Cash flow statement
€m
106
Crédit Mutuel
31.12.2008
31.12.2007
Net profit
Tax
Pre-tax profit
+/- Net provision for depreciation of tangible and intangible non-current assets
- Impairment of goodwill and other non-current assets
+/- Net charges to provisions
+/- Share of results of companies accounted for using the equity method
+/- Net loss/income from investment activities
+/- (Income)/charges on financing activities
+/- Other movements
= Total of non-monetary items included in net profit before tax and other adjustments
+/- Flows relating to transactions with credit institutions (a)
+/- Flows relating to transactions with customers (b)
+/- Flows relating to other transactions affecting financial assets or liabilities (c)
+/- Flows relating to other transactions affecting non-financial assets or liabilities
- Tax paid
= Net reduction/(increase) in assets and liabilities from operational activities
TOTAL NET CASH FLOW GENERATED BY THE OPERATIONAL ACTIVITY (A)
443
(33)
410
466
1
1,323
(24)
(56)
2,785
1,144
3,929
441
6
3,712
(10)
(173)
(2,271)
(561)
4,666
(11,722)
11,162
(3,924)
(1,051)
(869)
(1,020)
1,695
5,671
(8,588)
(23,920)
29,360
1,644
(1,596)
(3,100)
6,500
+/- Flows relating to financial assets and holdings (d)
+/- Flows relating to investment property (e)
+/- Flows relating to tangible and intangible non-current assets (f)
TOTAL NET CASH FLOW RELATING TO INVESTMENT ACTIVITIES (B)
(2,057)
12
(674)
(2,719)
(753)
(4)
(579)
(1,336)
+/- Cash flows from or to shareholders (g)
+/- Other cash flows from financing activities (h)
TOTAL CASH FLOW RELATING TO FINANCING ACTIVITIES (C)
(48)
3,211
3,163
79
7,452
7,531
EFFECT OF EXCHANGE RATE VARIATIONS ON CASH AND CASH EQUIVALENT (D)
Net increase/(reduction) in cash and cash equivalents (A + B+ C + D)
Net cash flow from operational activities (A)
Net cash flow relating to investment activities (B)
Net cash flow relating to financing activities (C)
Effect of exchange rate variations on cash and cash equivalents (D)
8
(568)
(1,020)
(2,719)
3,163
8
13
12,708
6,500
(1,336)
7,531
13
Cash and cash equivalents on opening
Cash, central banks, post office accounts (assets and liabilities)
Accounts (assets and liabilities) and lending/borrowing with credit institutions
16,884
8,239
8,645
4,176
5,855
(1,679)
Cash and cash equivalents on closing
Cash, central banks, post office accounts (assets and liabilities)
Accounts (assets and liabilities) and lending/borrowing with credit institutions
16,316
15,774
542
16,884
8,239
8,645
CHANGE IN NET CASH
(568)
12,708
€m
31.12.2008
31.12.2007
(830)
5,496
19,540
(28,128)
(25,981)
14,259
(38,145)
14,225
29,061
(19,262)
(1,989)
(37,702)
41,348
(2,144)
3,352
27,858
(3,304)
1,550
(1,196)
893
(1,356)
1,163
(953)
393
(e) Flows relating to investment property break down as follows
- Outflows linked to acquisitions of investment property
+ Inflows linked to sales of investment property
(273)
285
(101)
97
(f) Flows relating to non-current assets break down as follows:
- Outflows linked to acquisition of non-current assets
+ Inflows linked to sales of non-current assets
(827)
153
(775)
196
159
256
(207)
(177)
13,821
(12,411)
1,984
(183)
15,931
(8,408)
440
(511)
(a) Flows relating to transactions with credit institutions break down as follows:
+/- Inflows and outflows linked to loans and advances to credit institutions
(other than items included in cash and cash equivalents), excluding related receivables
+/- Inflows and outflows linked to amounts due to credit institutions, excluding related liabilities
(b) Flows relating to transactions with customers break down as follows:
+/- Inflows and outflows linked to loans and advances to customers, excluding related receivables
+/- Inflows and outflows linked to amounts due to customers, excluding related liabilities
(c) Flows relating to other transactions affecting financial assets or liabilities break down as follows:
+/- Inflows and outflows linked to financial assets at fair value through profit and loss
+/- Inflows and outflows linked to financial liabilities at fair value through profit and loss
- Outflows on acquisitions of fixed income available for sale securities
+ Inflows on disposals of fixed income available for sale securities
+/- Inflows and outflows on derivative hedging instruments
+/- Inflows and outflows on debt securities
(d) Flows relating to financial assets and holdings break down as follows:
- Outflows on acquisitions of subsidiaries, net of acquired cash
+ Inflows on disposals of subsidiaries, net of cash ceded
- Outflows linked to purchase of securities of companies accounted for using the equity method
+ Inflows linked to sales of securities of companies accounted for using the equity method
+ Inflows from dividends received
- Outflows linked to purchases of held-to-maturity financial assets
+ Inflows linked to sales of held-to-maturity financial assets
- Outflows on acquisitions of variable income available for sale securities
+ Inflows on disposals of variable income available for sale securities
+/- Other flows linked to investment transactions
+ Inflows from interest received, excluding accrued interest not yet due
(g) Flows from or to shareholders break down as follows:
+ Inflows from issuance of shares and similar securities
+ Inflows from sales of shares and similar securities
- Outflows linked to dividends paid
- Outflows linked to other remuneration paid
(h) Other net cash flows from financing activities break down as follows:
+ Inflows linked to issuance of bonds and debt securities
- Outflows linked to repayment of bonds and debt securities
+ Inflows linked to issuance of subordinated debt
- Outflows linked to repayment of subordinated debt
- Outflows linked to interest paid, excluding accrued interest not yet due
2008 Annual Report
107
Notes to the financial statements
The Crédit Mutuel group is not listed and is consequently under no obligation to present financial statements in
accordance with IFRS. However, for the sake of transparency and comparability with other leading financial
institutions, the Board of Directors of Confédération Nationale du Crédit Mutuel, which is the group's central
governing body within the meaning of Article L511-31 of the French monetary and financial code, has decided to
present consolidated financial statements according to IFRS.
These financial statements are presented in accordance with CNC
Recommendation 2004-R03 relating to summary financial statements.
They comply with international financial reporting standards as adopted
by the European Union.
Information regarding risk management is presented in the group’s
management report.
I/ Accounting principles
I
Note 1:
Consolidation scope
1.1 Determination of the consolidation scope
The Group's main entity, Crédit Mutuel, is a co-operative bank under
the 10 September 1947 Act governing French co-operatives. It is
owned solely by its members, who hold member shares ('A' shares).
Members are each entitled to one vote at general meetings, where
their powers include in particular the election of directors.
The three levels of organisation—local, regional and national—operate
on a decentralised basis in accordance with the principle of subsidiarity,
which means that decisions are taken as close to the ground as possible.
The local mutual banks, which are in closest contact with members
and customers, carry out all the principal functions of bank branch
offices, with the other two levels exercising only those functions the
local entities are not equipped to carry out.
108
Crédit Mutuel
Under Article L511-30 of the French monetary and financial code,
Confédération Nationale is the central body for the group. As such
it is responsible for:
- ensuring the liquidity and solvency of the Crédit Mutuel network,
- representing Crédit Mutuel vis-à-vis the public authorities and
defending and promoting its interests,
- and, more generally, ensuring the overall cohesion of the network
and overseeing its business development while at the same time
exercising an administrative, technical and financial control over
the regional groups and their subsidiaries.
The method for consolidating a group with such a distinctive capital
ownership structure is based on determining a consolidating entity
that reflects the community of members linked by shared financial
solidarity and governance.
The analysis of the control exercised by the consolidating entity
complies with IAS 27, thus enabling the group to present consolidated
financial statements according to IFRS.
• Consolidating entity
The consolidating entity for the Crédit Mutuel group is composed of
all the local mutual banks, the Caisses Fédérales (general purpose or
farming and rural), the Regional Federations, Caisse Centrale du
Crédit Mutuel, Confédération Nationale du Crédit Mutuel, and
Fédération du Crédit Mutuel Agricole et Rural.
The capital of the consolidating entity is owned exclusively by all the
members of the local mutual banks.
• Basis of consolidation
The general principles for the inclusion of an entity within the
consolidation scope are as defined in IAS 27, IAS 28 and IAS 31.
All the entities included in the consolidation scopes of the regional
groups are included in the national consolidation scope. Joint
companies, not consolidated at regional level, are excluded from
the national consolidation scope if their total balance sheet or
earnings have an impact of less than 1% on the consolidated
equivalent. However, an entity that does not reach this threshold
may be consolidated if its activity or development is considered
a strategic investment.
The consolidation scope comprises:
- entities controlled exclusively: exclusive control is presumed
to exist when the Group holds, directly or indirectly, a majority
holding in the capital and either the majority of the voting
rights or the power to appoint the majority of the members of
the administrative, management and supervisory bodies, or when
the Group exercises dominant influence. The accounts of entities
controlled exclusively are fully consolidated.
- entities controlled jointly: joint control arises when, in accordance
with the terms of a contractual agreement, control of an economic
activity is shared with one or more third parties regardless of the
structure or form in which the activities are undertaken. Entities
controlled jointly are consolidated using the proportional method.
- entities over which significant influence is exercised: these are
entities over whose financial and operational policies the Group
exerts significant influence but does not have control. Entities over
which significant influence is exercised are consolidated using
the equity method.
Special-purpose entities are consolidated when the conditions
defined in SIC 12 are met, namely that the entity’s activities are
carried out exclusively on the Group’s behalf, the Group has
decision-making or management power to obtain the majority
of the benefits deriving from the entity’s ordinary activities and the
capacity to profit from the entity’s benefits, and retains the majority
of the risks.
Holdings belonging to private equity companies and over which joint
control or significant influence is exercised are excluded from
the consolidation scope and are recognised at fair value by option.
2008 Annual Report
109
1.2 Composition of the consolidation scope
The following entities were included in the Crédit Mutuel group's
consolidation scope at 31 December 2008:
Consolidated entities are presented according to the sectors
used for preparing segment information under IAS 14.
Accordingly, for example, entities included under
Retail Banking do not necessarily have the legal
status of credit institutions
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
Acman
Actéa Environnement
Actimo
Agence de l'hotel de ville
Agerim
AMOFI (EX ERIF)
Amofi B
Ataraxia Distribution
Ataraxia Finance
Ataraxia Gestion
Ataraxia Production
Ataraxia Sud Aménagement
Avis Developpement
Avis Immobilier
Bail Actea
Bail Entreprises
Bail Immo Nord
Banco Popular France
Banque de Tunisie
Banque Delubac
Banque Privée Européenne
Bâtiroc
BCME
BCMI
Bcmne
BECM
BECM Francfort
BECM Saint Martin
BEDE
BKCP
BKCP Brabant
BKCP NOORD
BKCP Wallonie
Bonnasse LB
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
20.00
20.98
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
100.00
93.80
91.14
98.36
-
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
20.00
20.98
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
100.00
93.80
91.14
98.36
-
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
NC
FC
FC
FC
FC
EM
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
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
65.00
100.00
100.00
100.00
20.00
20.98
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
100.00
93.80
91.12
90.12
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
91.25
65.00
100.00
100.00
100.00
19.40
20.98
100.00
100.00
100.00
100.00
100.00
99.99
99.99
99.98
100.00
93.80
91.12
90.12
96.99
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
EM
EM
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
BSD
Caisse de Bretagne de C.M.A.
Camefi Banque
Centrale des Marchés de l'Immobilier
CIC Est
CIC Luxembourg
100.00
92.48
100.00
100.00
100.00
-
97.33
92.48
100.00
100.00
97.33
-
FC
FC
FC
FC
FC
NC
100.00
92.35
100.00
100.00
100.00
100.00
96.99
92.35
100.00
100.00
96.99
96.99
FC
FC
FC
FC
FC
FC
CIO
Citi Finanzberatung GmbH
Citibank Privatkunden AG & Co. KGaA
Citicorp Dienstleistung GmbH
CM Arkea Covered Bonds
100.00
100.00
100.00
100.00
100.00
97.33
100.00
100.00
100.00
100.00
FC
FC
FC
FC
FC
100.00
-
96.99
-
FC
NC
NC
NC
NC
A. Retail Banking
Method: FC = Full Consolidation, PM = Proportional Method, EM = Equity Method, NC = Not Consolidated, ALT = Asset Liability Transfer
110
Crédit Mutuel
Deconsolidated
Deconsolidated
Acquired
Consolidated for first time
Merger with
Lyonnaise de Banque
Merger with
Banque de Luxembourg
Acquired
Acquired
Acquired
Created
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
CMCIC AM
CMCIC Bail
CMCIC Bail Belgium
CMCIC Covered Bonds
CMCIC Epargne Salariale
CMCIC Gestion
CMCIC Lease
CMN Environnement (SNC)
CMO Immobilier
CPI (Crédit Professionnel Interfédéral)
Crefidis
Eole
Ermaxia
Factocic
FCP Haussmann Gestion
FCP Nord Europe Gestion
FCP Richebe Gestion
Fédéral Equipements
Fédéral Immo
Fédéral Service
Federale Kaas Voor Het Beroepskrediet
Filaction
Financo
Fininmad sa
Foncière d'Investissement
France Luxembourg Invest Holding
Gesnov SA
99.98
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
100.00
50.00
66.00
100.00
100.00
99.66
100.00
97.86
96.66
100.00
85.00
100.00
100.00
100.00
-
99.35
97.35
97.35
100.00
97.33
97.33
98.56
100.00
100.00
50.00
85.00
50.00
64.64
100.00
100.00
99.38
100.00
97.80
96.66
100.00
85.00
100.00
100.00
100.00
-
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
PM
FC
PM
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
NC
99.98
99.99
100.00
100.00
99.99
100.00
100.00
100.00
100.00
99.52
50.00
100.00
50.00
66.00
100.00
100.00
99.62
100.00
100.00
97.87
94.44
100.00
85.00
100.00
100.00
100.00
100.00
99.27
97.02
97.02
100.00
96.99
96.99
98.38
100.00
100.00
99.52
50.00
85.00
50.00
64.47
100.00
100.00
99.30
100.00
100.00
97.81
94.44
100.00
85.00
100.00
100.00
100.00
81.21
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
PM
FC
PM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Gesteurop
GICM
GICMO
GIE CMA
GIE CMO Relations
GIE Sud Europe Méditerranée
GIEMAT
Golfimmo
Habitat Gestion
Immobilière des Marsauderies
Immobilière du CMN
Immoprix Gestion
Investlaco
Lacocim
Laviolette Financement
Lyonnaise de Banque
Mobilease
Nord Europe Private Bank
Oostvlaamse Invest Company
SA Ataraxia
SA Sofimpar
Saint-Pierre SNC
SBCIC
SCI Astrée
SCI Cafimmo Gap
SCI Cafimmo Marseille
SCI Centre Gare
SCI CMDV
100.00
100.00
100.00
100.00
25.00
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
100.00
100.00
99.96
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
97.33
98.17
100.00
100.00
25.00
100.00
100.00
100.00
90.00
100.00
100.00
97.32
97.33
100.00
100.00
91.10
100.00
100.00
97.33
97.33
100.00
100.00
100.00
100.00
100.00
FC
FC
NC
FC
NC
NC
FC
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
100.00
100.00
100.00
100.00
100.00
100.00
100.00
25.00
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
100.00
100.00
99.96
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
96.99
98.15
100.00
100.00
100.00
100.00
100.00
25.00
100.00
100.00
100.00
90.00
100.00
100.00
96.99
96.99
100.00
100.00
91.08
100.00
100.00
96.99
96.99
100.00
100.00
100.00
100.00
100.00
FC
FC
FC
FC
FC
FC
FC
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Merger with BKCP Wallonie
ALT to CFCM
ALT to UFG Property
Management
Not material
Not material
Wound up
2008 Annual Report
111
31.12.2008
31.12.2007
Comments
Control
Interest
+
Control
Interest
+
SCI CMN
SCI CMN 1
SCI CMN 2
SCI CMN 3
SCI CMN location
SCI CMN location 2
SCI CMN Richebé Inkerman
SCI des Antons
SCI DVPT CMM
SCI Familia
SCI Fontainebleau
SCI Gambetta Immob
SCI Gueydan
SCI Interfédéral
SCI Jeanne d'Arc
SCI les Trois Rues
SCI Maurice Faure
SCI Mende
SCI Merlet Immobilier
SCI Nice Avenue
SCI Nice Joffre
SCI Nice République
SCI Palais de la Mer
SCI Plantagenets
SCI Provence Languedoc
SCI Puget
SCI SCMDV
SCI Sud-Est Gestion Immobilière
SCI Vercoulor
Selaco
SI du Vivier
SL2A SARL
SNC Credit Mutuel Anjou Immobilier
SNVB Financements
Société Générale d'Etudes de Transactions et d'Expertises
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
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
-
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
FC
NC
NC
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
65.00
100.00
100.00
99.90
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
100.00
100.00
100.00
52.79
100.00
96.99
81.13
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Sodelem
Sofemo
Sofim
Sofimmo3
Sud-Est Transactions Immobilières
Transactimmo
Trefliere SCI
UFG Partenaires (ex ICO)
UFG Property Management
UFG Transaction
Union Immobiliere Ocean SCI
West-Vlaamse Bank SCRL
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
78.79
100.00
100.00
95.52
100.00
99.11
97.33
100.00
100.00
100.00
100.00
100.00
78.79
100.00
100.00
95.52
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
100.00
100.00
100.00
100.00
100.00
100.00
100.00
97.78
82.55
100.00
100.00
-
100.00
99.00
96.99
100.00
100.00
100.00
100.00
97.78
81.21
97.78
100.00
-
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
Acquired
100.00
97.69
100.00
100.00
-
100.00
95.18
100.00
100.00
-
FC
FC
FC
FC
NC
NC
100.00
97.66
100.00
100.00
33.73
20.00
100.00
94.84
100.00
100.00
33.73
99.62
FC
FC
FC
FC
EM
FC
Deconsolidated
Deconsolidated
%
Method
%
Method
Deconsolidated
Merger with CMCIC Bail
ALT to UFG Property
Management
B. Corporate and Investment Banking
Actimut
Banque de Vizille
BFCM Francfort
BKCP Securities
BMA
Brit Alliance Finance
112
Crédit Mutuel
C.E.O.I
CIC Finance
CIC Investissement
CIC Investissement Alsace
CIC Investissement Est
CIC Investissement Nord
CIC Vizille Participation
Cigogne Management
Cloe
CMCIC Mezzanine
CMCIC Securities
Compagnie Financière du Crédit Mutuel
Fin Voltaire
Financière Armen
Fortunéo (ex Symphonis)
Groupe Victor Hugo
IPO
IPO Ingenierie
Normandie Partenariat
Ocean Participations
Procapital
SDR de Normandie
Sobrepar
Sudinnova
Synergie Finance
UFG private Equity (ex NEPE)
Vizille Capital Finance
Vizille Capital Innovation
Volney Développement
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
100.00
99.94
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.05
100.00
100.00
90.63
80.05
99.65
100.00
99.98
99.79
100.00
50.32
100.00
100.00
100.00
100.00
100.00
100.00
97.27
97.27
97.27
97.27
97.27
96.23
98.54
100.00
97.33
100.00
70.95
99.98
100.00
88.63
70.95
99.63
100.00
99.98
99.79
100.00
47.89
100.00
100.00
95.17
95.18
100.00
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
100.00
99.95
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.98
100.00
100.00
100.00
89.20
99.65
100.00
99.95
99.86
100.00
49.69
100.00
75.00
100.00
100.00
100.00
100.00
96.94
96.94
96.94
96.94
96.94
95.90
98.37
100.00
97.53
96.99
100.00
96.97
96.99
99.97
100.00
86.86
99.64
100.00
99.95
99.86
100.00
47.13
100.00
75.00
94.84
94.84
100.00
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
70.00
45.00
52.50
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
70.00
100.00
99.98
62.19
100.00
100.00
100.00
-
68.13
60.34
51.10
97.33
98.07
97.33
97.33
95.49
97.33
97.33
98.40
97.32
68.13
97.33
99.98
60.53
97.33
100.00
100.00
-
FC
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
NC
FC
FC
NC
53.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.94
100.00
99.98
100.00
61.88
100.00
100.00
100.00
100.00
51.41
96.99
97.86
96.99
96.99
95.15
96.99
98.20
96.94
96.99
99.58
100.00
60.02
98.38
100.00
100.00
100.00
NC
NC
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
NC
FC
FC
FC
FC
NC
FC
FC
FC
FC
Deconsolidated
Merger with IPO
C. Asset Management and Private Banking
Agefor SA Genève
Alternative Gestion SA Genève
Banque Pasche (Liechtenstein) AG
Banque Pasche Monaco SAM
Banque de Luxembourg
CIC Private Banking - Banque Pasche
Banque Transatlantique
Banque Transatlantique Belgique
Banque Transatlantique Jersey
Banque Transatlantique Londres
Banque Transatlantique Luxembourg
BLC Gestion
Calypso Management Company
CIC Suisse
CM Habitat Gestion
CMO Gestion
Dubly-Douilhet
Elite Opportunities (Liechtenstein) AG
Eurogérance
Fédéral Finance Banque
Fédéral Finance Gestion
Financiere Malesherbes
Created
Deconsolidated
ALT to UFG REM
Merger with
Nord Europe Participations
et Investissements (NEPI)
2008 Annual Report
113
Financière Nord Europe
Franklin Gérance
GPK Finance SA
LRM Advisory SA
Multi Financière de l'Anjou SA
Nord Europe Gestion SA (NEGE)
Pasche (International) Services Ltd Gibraltar
Pasche Bank & Trust Ltd Nassau
Pasche Finance SA Fribourg
Pasche Fund Management Ltd
Pasche International Holding Ltd
Pasche SA Montevideo
Serficom Family Office Inc
Serficom Family Office Ltda Rio
Serficom Family Office SA
Serficom Investment Consulting (Shangaï) Ltd
Serficom Maroc Sarl
Synergie Finance Gestion
Transatlantique Finance
UFG Alteram
UFG Courtage
UFG REM (ex Immobilier)
UFGIM (ex Multifonds)
Valeroso Management Ltd
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
100.00
100.00
87.83
70.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
45.00
100.00
100.00
85.48
68.13
100.00
100.00
97.33
97.33
97.33
97.33
97.33
97.33
49.64
97.33
97.33
97.33
100.00
97.32
100.00
100.00
100.00
99.99
60.34
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
EM
100.00
100.00
87.28
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
73.06
100.00
98.38
98.24
-
100.00
98.38
84.66
100.00
96.99
96.99
96.99
96.99
96.99
96.99
96.99
100.00
96.99
73.06
97.78
98.38
98.24
-
FC
FC
FC
NC
FC
NC
FC
FC
FC
FC
FC
NC
NC
NC
FC
NC
FC
FC
FC
FC
FC
FC
FC
NC
100.00
97.33
100.00
100.00
100.00
100.00
97.33
97.33
97.33
97.33
FC
FC
FC
FC
FC
100.00
96.37
100.00
100.00
100.00
100.00
97.00
97.00
97.00
97.00
FC
FC
FC
FC
FC
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
30.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.47
99.45
100.00
99.45
99.73
100.00
97.33
100.00
29.84
100.00
100.00
100.00
100.00
100.00
100.00
99.45
99.45
99.45
99.45
99.47
FC
FC
FC
FC
FC
FC
FC
FC
EM
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
30.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.41
99.38
100.00
99.38
99.70
100.00
97.00
100.00
29.82
100.00
100.00
100.00
100.00
100.00
100.00
99.38
99.45
99.38
99.38
99.38
99.41
FC
FC
FC
FC
FC
FC
FC
FC
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Liquidated
D. Multisector
BFCM
CIC IDF
CIC Londres
CIC New York
CIC Singapour
E. Insurance
ACM IARD
ACM Services
ACM VIE SAM
ACM VIE
ACMN iard
ACMN Vie
Adepi
Alverzele
astrée
Atlancourtage Anjou
Atlancourtage Entreprise
Atlancourtage Ouest Atlantique
Courtage CMN
Courtage Ocean
CP-BK reinsurance (lux)
EPS
FONCIERE ACM
GIE ACM
GACM
ICM LIFE
ICM RE
114
Crédit Mutuel
Absorbed by GACM
IMMOBILIERE ACM
Infolis
La Pérénnité
La Pérennité Entreprises
Lebrun
SIIC Foncière Massena
MASSIMOB
MTRL
Nord Europe Assurances
Nord Europe Life Luxembourg
Nord Europe Retraite
Novelia
PARTNERS
Pro Courtage
Massena Property
RMA Watanya
SA SAINT GERMAIN
SAS TOULON LIBERTE
SCI ACTIFIMO
SCI ADS
SCI ATALANTE BEAULIEU
SCI BLATIN
SCI CARNOT LILLE
SCI KLEBER
SCI LA BOETIE
SCI LE TRIANGLE
SCI METROPOLIS
SCI MIRABEAU
SCI MONTBONNOT
SCI OPERA ANTIN
SCI RD1
SCI RD2
SCI RUE ROYALE
SCI SOCAPIERRE
SCI Suravenir
SCI VITON
SERENIS ASS
SERENIS VIE
SNC LINE
Société de Réassurance Lavalloise
Suravenir
Suravenir Assurances
Suravenir Assurances Holding
Vie Services
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
100.00
100.00
100.00
90.00
98.88
100.00
100.00
100.00
100.00
100.00
99.99
100.00
100.00
100.00
20.00
100.00
99.59
100.00
99.99
100.00
100.00
100.00
77.50
99.45
100.00
100.00
90.00
98.42
99.47
100.00
100.00
100.00
100.00
99.99
99.45
99.45
99.45
20.00
99.04
99.04
99.45
99.99
100.00
100.00
100.00
77.50
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
EM
NC
NC
NC
FC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
FC
FC
NC
FC
FC
FC
FC
FC
100.00
100.00
100.00
90.00
100.00
98.86
100.00
100.00
100.00
100.00
100.00
99.99
100.00
100.00
100.00
20.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.29
100.00
100.00
99.99
100.00
100.00
100.00
77.50
99.38
100.00
100.00
90.00
100.00
98.30
99.41
100.00
100.00
100.00
100.00
99.99
99.38
99.38
99.38
20.00
99.38
100.00
100.00
98.68
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.38
100.00
100.00
98.68
99.38
100.00
99.99
100.00
99.79
100.00
77.50
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
EM
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
40.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
40.00
100.00
97.33
97.33
97.33
97.33
100.00
100.00
EM
FC
FC
FC
FC
FC
FC
FC
40.00
100.00
100.00
100.00
100.00
100.00
-
40.00
100.00
97.00
96.99
96.99
97.00
-
EM
FC
FC
FC
FC
FC
NC
NC
Deconsolidated
Absorbed by GACM
Not material
Merger with Suravenir
Immaterial
Absorbed by GACM
Not material
F. Other
ACTA Voyages
BKCP it
CIC migrations
CIC participations
Cicor
Cicoval
Citicorp Akademie GmbH
Citicorp Deutschland GmbH
Acquired
Acquired
2008 Annual Report
115
31.12.2008
%
31.12.2007
Method
%
Comments
Method
Control
Interest
+
Control
Interest
+
Citicorp Management AG
Citigroup IT Consulting GmbH
Citigroup Reality Services GmbH
CM Akquisition
CMCIC Services
CMCP
CMN Tel
CMNE Belgium
CNCP - NKBK Pool sa
EFSA
EI Developpements
EIP (ex GTOCM)
Euro Information
GEIE CMNE Assets Management
Gestunion 2
Gestunion 3
Gestunion 4
GIE BCMNE Gestion
GIE CMN Gestion
GIE CMN Prestations
GIE UFG Trésorerie
Groupe UFG (ex NEAM)
Immo W16
Impex Finance
Marsovalor
Nord Europe Participations et Investissements (NEPI)
NRJ Mobile
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
90.00
100.00
100.00
100.00
100.00
100.00
99.98
100.00
100.00
100.00
97.33
99.65
100.00
99.65
97.33
97.33
97.33
100.00
100.00
100.00
100.00
100.00
100.00
97.33
97.33
100.00
89.69
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
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
50.00
99.98
100.00
100.00
100.00
97.00
99.61
100.00
99.61
100.00
97.00
97.00
97.00
100.00
100.00
100.00
100.00
100.00
100.00
97.00
97.00
100.00
49.81
NC
NC
NC
NC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
EM
Pargestion 2
Pargestion 3
Pargestion 4
Pargestion 5
Placinvest
Poujoulat Belgique
Services et Crédits aux Professions Independantes et PME
Sicorfe Maintenance
SNP Sicorfe
Société de Développement et Participations (CLS)
100.00
100.00
100.00
100.00
99.96
34.53
56.22
90.00
92.29
-
97.33
97.33
97.33
97.33
97.26
34.53
55.30
87.19
92.29
-
FC
FC
FC
FC
FC
EM
FC
FC
FC
NC
100.00
100.00
100.00
100.00
99.96
34.53
56.22
90.00
92.29
100.00
97.00
97.00
97.00
97.00
96.93
34.53
50.68
87.16
92.29
81.21
FC
FC
FC
FC
FC
EM
FC
FC
FC
FC
Sodelem Services
Sofiholding 2
Sofiholding 3
Sofiholding 4
Sofinaction
UFG Hotel
UFG Services
Ufigestion 2
Ufigestion 3
Ugépar Service
Valimar 2
Valimar 4
Ventadour investissement
VTP1
VTP5
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.97
100.00
100.00
97.33
97.33
97.33
97.33
100.00
97.33
97.33
97.33
97.33
97.33
100.00
97.29
97.33
FC
FC
FC
FC
FC
NC
FC
FC
FC
FC
FC
FC
FC
FC
FC
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.97
100.00
100.00
97.00
97.00
97.00
96.99
98.38
100.00
97.00
97.00
97.00
97.00
97.00
100.00
96.96
97.00
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Acquired
Acquired
Acquired
Acquired
Immaterial
Change of method
from EM to FC
ALT to UFG
Management
Immaterial
Note that a number of economic interest groupings (Groupement d'interêt économique – GIE), support subsidiaries shared by several Groups,
are not consolidated because they are immaterial.
116
Crédit Mutuel
I
Note 2:
Consolidation methods and principles
2.1 Consolidation methods
The following consolidation methods have been used:
• Full consolidation
This method consists of substituting the various assets and liabilities
of the subsidiary concerned for the value of the securities held and
of recognising the share of minority interests in shareholders’ equity
and net profit. It is applied to all exclusively-controlled entities,
including those with a different accounts structure, regardless of
whether the activity concerned forms part of the consolidating
entity’s activities.
2.4 Translation of accounts denominated
in a foreign currency
Concerning foreign entities whose accounts are denominated in a
foreign currency, the balance sheet is translated using the official
exchange rate on the closing date. The translation difference arising
on the capital, reserves and retained earnings is recognised in
shareholders’ equity, under “Translation reserves”. The profit and
loss account is translated using the average exchange rate for the
year. The resulting translation differences are recognised directly in
the translation reserve. Such differences are transferred to the profit
and loss account in the event of the disposal or liquidation of all or
part of the holding in the foreign entity.
2.5 Goodwill on acquisition
• Valuation differences
• Proportional consolidation
This method consists of including in the accounts of the consolidating
entity the proportion of the subsidiary’s assets and liabilities
represented by the interest held in the consolidated entity, as restated
where required; minority interests are therefore not recognised.
It is applied to all jointly-controlled entities, including those with
a different accounts structure, regardless of whether the activity
concerned forms part of the consolidating entity’s activities.
• Equity method of consolidation
The equity method of consolidation consists of substituting the
Group’s share of the shareholders’ equity and net profit of the equity
affiliate for the value of the securities held. It is applied to all entities
over which significant influence is exercised.
2.2 Closing date
All the companies included in the Group consolidation scope close their
accounts on 31 December of each year.
2.3 Elimination of intra-group transactions
Intra-group accounts and any profits resulting from intra-group
transfers that would have a material impact in terms of the consolidated
financial statements are eliminated. Intra-group receivables, liabilities,
reciprocal commitments, charges and income are eliminated for
entities consolidated using the full or proportional methods.
On the date control of a new entity is acquired, the assets, liabilities
and contingent operating liabilities are measured at their fair value.
Differences between the carrying amount and the fair value are
recognised under 'valuation differences'.
• Goodwill on acquisition
In compliance with IFRS 3, on the date control of a new entity is
acquired, the assets, liabilities and contingent liabilities are measured
at their fair value. The difference between the price paid for the
securities and the total valuation of the assets, liabilities and
contingent liabilities constitutes the goodwill. If goodwill is positive,
it is recorded as an asset, and if it is negative, it is recognised
immediately in profit or loss, under “Changes in goodwill”.
If the Group’s percentage holding in a controlled entity is increased,
the difference between the acquisition cost of the securities and
the incremental share of consolidated shareholders’ equity
represented by such securities on the acquisition date is recognised
in shareholders’ equity.
The Group regularly (at least once each year) tests goodwill for
impairment. These tests are intended to ensure that such goodwill has
not experienced any permanent impairment. If the recoverable value
of the cash-generating unit (CGU) to which the goodwill is allocated
is less than its carrying amount, the difference is recognised as
an impairment. This impairment, recognised in profit and loss, is
irreversible. In practice, the Group’s CGUs are its various business lines.
2008 Annual Report
117
I
Note 3:
Accounting principles and methods
International Financial Reporting Standards (IFRS) offer a choice of
accounting methods in certain areas. The main options adopted
by the Group concern:
• use of fair value or re-measurement as the presumed cost of
non-current assets at the time of transition: this option may be
applied to any tangible or intangible non-current asset that satisfies
the re-measurement criteria, or to any investment property stated
on a cost basis. The Group chose not to adopt this option;
• immediate recognition in shareholders’ equity of actuarial differences
linked to employee benefits has not been applied by the Group;
• the Group has opted to zero out translation reserves in the opening
balance sheet on 1 January 2005, as permitted by IFRS 1.
• mark to market of certain liabilities issued by the enterprise that are
not included in a trading portfolio. In June 2005, the IASB published
an amendment to IAS 39 "Financial Instruments: Recognition and
Measurement", setting out the conditions for use of the “fair value
through profit or loss” option for financial assets and liabilities,
which was adopted by the European Union on 15 November 2005.
The Group adopted this option with effect from 1 January 2005;
• the eligibility for fair-value hedging relationships of macro-hedging
transactions entered into in the context of the asset-liability
management of fixed-rate positions (notably including customer
demand deposits) authorised by EU Regulation 2086/2004 has been
applied by the Group.
• the Group availed itself of the amendments to IAS 39 issued
in October 2008 permitting the reclassification of some financial
instruments from the fair-value-through-profit-or-loss category to
loans and receivables or assets held to maturity (see Note 3.4).
3.1 Loans and receivables
Loans and receivables are fixed or determinable-income financial
assets not listed on an active market, which are not intended for sale
when acquired or granted. They include loans granted directly or the
bank’s share of syndicated loans, loans acquired and unlisted
debt securities. When first recorded on the balance sheet, they are
recognised at their fair value, which is generally the net amount
disbursed. The rates applied are presumed to be market rates in that
the rate scales are constantly adjusted as a function, in particular,
of the rates applied by the large majority of competitor institutions.
At subsequent period ends, they are measured at their amortised
cost using the effective interest rate method (other than those
recognised using the fair value by option method).
All commissions received or paid relating directly to the setting in
place of the loan and resembling interest are spread over the life of
118
Crédit Mutuel
the loan in accordance with the effective interest rate method and
are recorded in the profit and loss account as an interest item.
The fair value of loans and advances is disclosed in the notes to the
financial statements on each closing date: it comprises the present
value of projected future cash flows discounted using a zero-coupon
interest rate curve, which includes the signature cost inherent to the
debtor.
3.2 Provisions for impairment of loans and receivables,
loan commitments and guarantees
• Individual provision for impairment of loans and receivables
Impairment is recognised once there is objective evidence of the
existence of an event or events occurring subsequent to the granting
of the loan – or group of loans – likely to generate a loss. An analysis
is performed on a contract-by-contract basis at each period end.
The amount of impairment is equal to the difference between the
carrying amount and the present value of the projected future cash
flows discounted at the original effective interest rate on the loan,
taking into account any guarantees. For variable rate loans, the last
known contractual rate is used.
The existence of unpaid past due amounts for more than 3 months
(or 6 months for mortgages and local governments, or for current
accounts that have been irregular for more than 3 months)
represents objective evidence of a loss event. Similarly, an objective
indication of loss is identified when it is probable that the debtor will
not be able to repay all the amounts due or when a default event has
taken place or in the event of a court-ordered liquidation.
Impairment is recognised in the form of a provision, and all corresponding
charges and recoveries are reflected in the cost of risk, with the
exception of the portion relating to the impact of the passage of time
associated with the discounting mechanism, which is recognised as
interest income. The provision is deducted from the asset for the
impairment of loans and is recognised as a liability under
provisions for risks on loan commitments and guarantee obligations.
Irrecoverable receivables are written off and the corresponding
provisions are written back.
• General provisions for loans and receivables
All loans to customers not written down for impairment on an individual basis are subject to an impairment provision by homogeneous
portfolios of loans in the event of an observed erosion of internal or
external ratings, based on the actual loss rate and the probability of
default to maturity observed internally and externally applied to the
loan outstandings.
This provision is recognised as a deduction from the corresponding
assets in the balance sheet and changes during the period are
recognised in cost of risk in the profit and loss account.
3.3 Leases
A lease is an agreement under which the lessor grants to the lessee,
for a predetermined period, the right to use an asset in exchange
for a payment or series of payments.
A finance lease is a lease under which virtually all of the risks and
benefits inherent in ownership of an asset are transferred to the
lessee. Ownership of the asset may or may not eventually be
transferred.
An operating lease is any lease that is not a finance lease.
On initial recognition of a financial instrument, fair value is generally
the transaction price.
When measured subsequently, fair value must be determined.
The measurement method applied varies depending on whether the
financial instrument is traded in a market considered as active or not.
• Financial instruments traded in an active market
When financial instruments are traded in an active market, fair value
is determined by reference to their quoted price as this is considered
to represent the best estimate of fair value. A financial instrument is
regarded as quoted in an active market if quoted prices are readily
and regularly available from an exchange, dealer, broker or pricing
service, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
• Finance leases – lessor
• Financial instruments not traded in an active market
In accordance with IAS 17, finance lease transactions with non-Group
companies are reported on the consolidated balance sheet at their
financial accounting amount.
Analysis of the economic substance of transactions results, in the
accounts of the lessor, in:
• recognition of a financial receivable due from the customer, amortised
by the lease payments received;
• breakdown of the lease payments between interest and the
amortisation of the principal, known as financial amortisation;
• recognition of a net unrealised reserve, equal to the difference
between:
• the net financial outstanding: the amount due by the lessee, comprising
the remaining capital due and accrued interest at the closing date;
- the net carrying amount of the leased non-current assets;
- the deferred tax provision.
• Finance leases - lessee
In accordance with IAS 17, the non-current assets concerned are
recorded on the balance sheet as assets and the borrowing from
credit institutions is recorded as a liability. Lease payments are
broken down between interest expense and repayment of principal.
3.4 Securities
When the market is illiquid, market prices may be used as an element in
determining fair value, but cannot be the overriding element. When
there is no observable data or when adjustments to market prices
require reliance to be placed on non-observable data, the entity may use
internal assumptions regarding future cash flows and discount rates,
integrating adjustments for market risks in the same way as the market
would (i.e. credit risk and liquidity risk). Observable market data is used
when this data reflects the reality of a transaction in an arm’s length
exchange motivated by normal business considerations and do not
require material adjustments to the valuation obtained in this way.
Otherwise, the Group uses non-observable data, applying a markto-model approach. In all instances, the adjustments made by the Group
are reasonable and appropriate, with reliance placed on judgement.
• Classification of securities
Securities may be classified in one of the following categories:
- financial assets at fair value through profit or loss;
- available-for-sale financial assets;
- held-to-maturity financial assets; or
- loans and receivables.
Classification in one or other of these categories reflects the Group’s
management intention and determines how a particular financial
asset is recognised and measured in the financial statements
• Determination of fair value
Fair value is the amount for which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm's
length transaction.
2008 Annual Report
119
• Financial assets and financial liabilities at fair value through
profit or loss
Classification criteria and transfer rules
Securities are classified in this category when acquired for the
purpose of selling them in the near term or because, upon initial
recognition, they were designated as at fair value through profit
or loss.
a) Instruments held for trading
Securities are classified as held for trading if they were acquired
principally for the purpose of selling them in the near term or if they
are part of a portfolio for which there is evidence of a recent actual
pattern of short-term profit-taking.
Market conditions may prompt the Group to review the investment
strategy and management intention for these securities. When it
would be untimely to sell securities purchased initially for the
purpose of selling them in the near term, these securities may be
reclassified in accordance with the provisions of the amendments
to IAS 39 issued in October 2008. Transfers to financial assets held
for trading or to financial assets held to maturity are permitted in
limited circumstances. Transfers to loans and receivables are permitted
when the Group has the positive intention and ability to hold
these securities over the foreseeable future or until their maturity.
These portfolio transfers are intended to better reflect the current
management intention for these instruments and to reflect more
fairly their impact on the Group’s results.
b) Instruments designated at fair value through profit on loss
Financial instruments may be designated as at fair value through
profit or loss upon initial recognition. Once designated as such,
financial instruments cannot be reclassified. This classification is
permitted in the following circumstances:
- financial instruments consisting of one or several separable
embedded derivatives;
- instruments for which the accounting treatment would be inconsistent
with that applied to another related instrument;
- instruments belonging to a pool of financial assets measured and
accounted for at fair value.
The Group has used this option in particular for unit-linked insurance
policies, for consistency with the treatment applied to liabilities,
and for private equity securities and certain liabilities issued that
contain embedded derivatives.
Basis for the measurement and recognition of income and charges
120
Crédit Mutuel
Securities classified as assets and liabilities at fair value through
profit or loss are recognised on the balance sheet at fair value when
they are first recorded and at all subsequent balance sheet dates
until such time as they are disposed of. Changes in fair value and
revenues received or accrued on fixed-income securities classified in
this category are recorded in the profit and loss account under
“Net gains (losses) on financial instruments at fair value through
profit or loss”.
Purchases and sales of securities measured at fair value through
profit or loss are recognised on the settlement date. Changes in fair
value between the transaction and settlement dates are recognised
in profit or loss.
If there is a transfer to one of the three other categories, the asset’s
fair value on the transfer date is treated subsequently as representing
cost or amortised cost. No gain or loss recognised prior to transfer
may be reversed.
• Financial assets and financial liabilities available for sale
Available-for-sale financial assets comprise financial assets not
classified as loans and receivables, as held-to-maturity financial
assets, or as at fair value through profit or loss.
Fixed income securities may be reclassified as:
- held-to-maturity financial assets if there is a change in management
intention, provide these assets meet the classification criteria for
this category;
- loans and receivables if there is a change in management intention
and a positive intention and ability to hold these securities over the
foreseeable future or until their maturity, provide these assets
meet the classification criteria for this category.
Basis for measurement and recognition of income and charges
These assets are recognised on the balance sheet at fair market value
when they are acquired and at subsequent balance sheet dates until
such time as they are disposed of. Changes in fair value are recorded
in shareholders’ equity under a specific heading entitled “Unrealised
or deferred gains or losses”, excluding accrued income. Unrealised
gains or losses recognised in shareholders’ equity are recognised in
the profit and loss account only when the assets are disposed of or
when evidence of permanent impairment is observed. On disposal,
the unrealised gains or losses previously recognised in shareholders’
equity are transferred to the profit and loss account under “Net gains
(losses) on available-for-sale financial assets”, together with the gain
or loss on disposal. Purchases and sales of securities are recognised
on the settlement date.
If securities with a fixed maturity are transferred out to held-tomaturity financial assets or to loans and receivables, unrealised gains
or losses previously recognised directly to equity are reversed over
the residual life of the asset. If securities with no fixed maturity are
transferred out to loans and receivables, unrealised gains or losses
previously recognised directly to equity are maintained in equity until
the sale of the securities.
Impairment losses may be reversed. Any subsequent appreciation
resulting from an event occurring since the recognition of
the impairment is also recognised to profit or loss under “Cost of risk”
when there has been an improvement in the borrower’s credit
situation.
Income accrued or received on fixed-income securities is recognised
in profit or loss under “Interest and similar income”. Dividends
received on variable-yield securities are recorded in profit or loss
under “Net gains (losses) on available-for-sale financial assets”.
Impairment and credit risk
a) Lasting diminution in the value of shares and other equity
instruments
Impairment losses are recognised in respect of variable income financial
assets classified as available for sale in the event of a prolonged and
material decline in fair value relative to cost.
In the case of variable income securities, Crédit Mutuel considers
that, in the absence of exceptional market volatility, a loss in the value
of an instrument relative to its acquisition cost of 20% or more over
a period of six months is sufficient to trigger impairment testing.
Impairment testing is carried out on a line by line basis. If this
analysis indicates a probable loss, this loss is recognised in profit and
loss under "Net gains (losses) on available-for-sale financial assets".
Any subsequent impairment is also recognised in profit and loss.
Losses for permanent impairment of equities and other equity
instruments recorded in profit and loss may not be reversed as long
as the instrument is carried on the balance sheet. Any subsequent
appreciation is recognised to equity under “Unrealised or deferred
gains and losses”.
b) Impairment losses in respect of credit risk
Impairment losses relating to fixed-income securities available for sale
(mainly bonds) are recognised under “Cost of risk”. The existence of a
credit risk alone justifies recognising impairment losses against fixed
income securities, whereas a decline in value due simply to an
increase in interest rates does not. In the event an impairment loss is
recognised, all accumulated unrealized losses taken to equity must be
reversed to profit or loss.
• Held-to-maturity financial assets
Held-to-maturity financial assets are securities with fixed or
determinable payments and a fixed maturity, and which the Group
has the positive intention and ability to hold to maturity.
Transactions to hedge the interest rate risk in respect of this
category of securities are not eligible for hedge accounting under
IAS 39.
Possibilities for selling or transferring held-to-maturity securities
are extremely restricted under IAS 39, which depending on the
circumstance may require the entire portfolio to be reclassified
at the level of the Group and prohibit the use of this category for
two years.
Held-to-maturity securities are recognised at fair value when
acquired. Subsequently they are measured at amortised cost using
the effective interest rate method, which factors in the amortisation
of any premium, discount and acquisition costs if material.
Purchases and sales of securities are recognised on the date of
settlement.
Income received from these securities is recorded under “Interest
and similar income” in the profit and loss account.
Credit risk
An impairment loss is recognised when there is objective evidence
that the asset is impaired as a result of one or more events having
occurred after initial recognition of the asset and when this could
generate a loss (proven credit risk). Impairment testing is carried out
at each balance sheet date for each security in turn. The amount of
the loss is measured as the difference between the asset's carrying
amount and the present value of estimated cash flows discounted at
the asset's original effective interest rate, taking into account any
guarantees. The impairment loss is recognised to profit or loss under
“Cost of risk”. Any subsequent appreciation resulting from an event
having occurred since the recognition of the impairment loss is also
recognised to profit or loss under “Cost of risk”.
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• Loan and receivables
• Classification of derivatives and hedge accounting
• Derivatives classified as financial assets or financial liabilities
at fair value through profit or loss
IAS 39 authorises certain securities to be classified as loans and
receivables when they have fixed or determinable payments and
they are not quoted in an active market. Classification as loans and
receivables may take place upon initial recognition of the securities
or upon their transfer from financial assets at fair value through
profit or loss or from available-for-sale securities pursuant to the
amendments to IAS 39.
Loans and receivables are recognised initially at fair value.
Subsequently they are accounted for and measured in accordance
with the rules applied to loans and receivables described in Note 3.1
dealing with loans and receivables.
Credit risk
An impairment loss is recognised when there is objective evidence
that the asset is impaired as a result of one or more events having
occurred after initial recognition of the asset and when this could
generate a loss (proven credit risk). The amount of the loss is
measured as the difference between the asset's carrying amount
and the present value of estimated cash flows discounted at
the asset's original effective interest rate, taking into account any
guarantees. The impairment loss is recognised to profit or loss under
“Cost of risk”. Any subsequent appreciation resulting from an event
having occurred since the recognition of the impairment loss is also
recognised to profit or loss under “Cost of risk”.
As a rule, all derivatives not designated as hedging instruments under
International Financial Reporting Standards are classified as financial
assets or financial liabilities at fair value through profit or loss, even when
for financial purposes they were entered into to hedge one or more risks.
Embedded derivatives
An embedded derivative is a component of a hybrid instrument that,
when separated from its host contract, meets the definition criteria
for a derivative. It has the effect, notably, of changing certain cash
flows in a manner analogous to a separate derivative.
The derivative is detached from the host contract and recognised
separately as a derivative instrument at fair value through profit
or loss only if all of the following three conditions are satisfied:
- the hybrid instrument hosting the embedded derivative is not
measured at fair value through profit or loss’
- the economic characteristics of the derivative and the associated
risks are not considered as being closely related to those of the host
contract; and
- separate measurement of the embedded derivative is sufficiently
reliable to provide relevant information.
Accounting
Realised and unrealised gains and losses are recognised to profit or
loss under “Gains and losses on financial instruments at fair value
through profit or loss”.
3.5 Derivatives and hedge accounting
• Hedge accounting
• Determination of fair value of derivatives
The majority of over-the-counter derivatives, swaps, future rate
agreements, caps, floors and simple options are valued using
standard, generally accepted models (present value of future cash
flows, Black and Scholes model, interpolation techniques), based
on observable market data such as the yield curve for instance.
The valuations given by these models are adjusted to take into
account the liquidity risk and the credit risk.
Derivatives are recognised as financial assets when their market
value is positive and as financial liabilities when their market value
is negative.
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IAS 39 provides for three types of hedging relationship. The choice of
the hedging relationship is made according to the nature of the risk
being hedged.
A fair value hedge is a hedge of the exposure to changes in the fair
value of financial assets or financial liabilities.
A cash flow hedge is a hedge of the exposure to the variability in cash
flows of financial assets or financial liabilities, firm commitments
and forward transactions.
Hedges of net investments in foreign operations, which are accounted for in
the same way as cash flow hedges, are not used by the group.
Hedging derivatives must meet the criteria required by IAS 39 to be
designated as hedging instruments for accounting purposes.
The hedging instrument and the hedged item must both qualify
for hedge accounting.
The relationship between the instrument covered and the hedging
instrument is documented formally immediately upon inception of
the hedging relationship. This documentation includes the management
objectives of the hedging relationship, the nature of the risk hedged,
the underlying strategy, the identification of the hedging instrument
and of the item hedged, and the methods used to measure the
effectiveness of the hedge.
Hedge effectiveness is assessed immediately upon inception of
the hedging relationship and subsequently throughout its life, at
the very least at each balance sheet date. Changes in the fair value
or cash flows of the hedging instrument must approximately offset
changes in the fair value or cash flows of the hedged item. Actual
results must be within a range of 80% to 125%. If this is not the case,
hedge accounting is discontinued prospectively.
The group has availed itself of the possibilities offered by the
European Commission for managing macro-hedging transactions.
The European Union's so-called carve out amendment to IAS 39
enables customer demand deposits to be included in hedged fixed-rate
liability portfolios with no effectiveness measurement if under
hedged. The maturities of the deposits are established as a function
of the run-off rules defined for asset-liability management purposes.
For each portfolio of assets or liabilities, the maturity schedule of the
hedging derivatives is reconciled with that of the hedged items to
ensure that there is no over-hedging.
The accounting method for fair value macro-hedging derivatives is
the same as for fair value hedges.
Changes in the fair value of the hedged portfolios are recorded in a
specific line of the balance sheet, “Revaluation difference on portfolios
hedged for interest rate risk”, the other side of the entry being to the
profit and loss account.
Cash flow hedges
Fair value hedge of identified assets and liabilities
In the case of a fair value hedge, derivatives are measured at their
fair value as an offset to the profit and loss account in “Net gains
(losses) on financial instruments at fair value through profit or loss”
symmetrically to the revaluation of the hedged items. This rule is
also applied if the hedged item is recognised at its amortised cost or
in the case of a financial asset classified as available for sale.
The change in the fair value or cash flow hedge must approximately
offset the change in the value of the item whose fair value or cash flows
are hedged; only the ineffective portion of the hedge is recognised
in profit or loss.
The portion corresponding to the rediscounting of the derivative
financial instrument is recognised in the profit and loss account in
“Interest income and charges” symmetrically to the interest income
or charges for the hedged item.
If the hedging relationship is interrupted or the effectiveness criteria
are not met, hedge accounting is discontinued on a prospective
basis. Hedging derivatives are transferred to financial assets or
financial liabilities at fair value through profit or loss and are
accounted for in accordance with the principles applicable to this
category. The carrying amount of the hedged item is subsequently
no longer adjusted to reflect changes in fair value. In the case of
identified interest rate instruments, valuation adjustments are amortised
over their remaining life. If the hedged has been derecognised,
due notably to early repayments, the cumulative adjustments are
recognised immediately in the profit and loss account.
In the case of cash flow hedging relationships, the derivatives are
recognised in shareholders’ equity on the balance sheet at their fair value
for the portion considered effective while the portion considered as
ineffective is recorded in the profit and loss account in “Net gains (losses)
on financial instruments at fair value through profit or loss”.
Amounts recorded in shareholders’ equity are reversed through
profit or loss under “Interest income and charges” symmetrically to
the flows of the hedged item affecting the profit and loss account.
The hedged items continue to be recognised in accordance with
the rules specific to their accounting category. If the hedging
relationship is interrupted or the effectiveness criteria are not met,
hedge accounting ceases to be applied. The cumulative amounts
recorded in shareholders’ equity for the re-measurement of the
hedging derivative are maintained in shareholders’ equity until such
time as the hedged transaction itself affects the profit and loss
account or when it is determined that the transaction will not take
place. These amounts are then transferred to profit or loss.
If the hedged item has been derecognised, the cumulative amounts
recorded in shareholders' equity are immediately transferred to
profit or loss.
3.6 Debt securities
Debt securities (interest-bearing notes, interbank market securities,
bond loans etc.) that are not classified at fair value through profit
or loss by option are recognised at their issue amount, generally
reduced by the transaction costs.
These securities are subsequently measured at amortised cost using
the effective interest rate method.
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3.7 Subordinated debt
Both dated and undated subordinated debt is separated from other
debt securities, as in the event of the issuer’s liquidation it is repaid
only after claims by other creditors have been extinguished.
Subordinated debt is measured at amortised cost.
3.8 Distinction between liabilities
and shareholders’ equity
In accordance with IFRIC 2, the interests of members are classified as
shareholders’ equity if the entity has the unconditional right to
refuse to redeem such interests, or if there are legal or statutory
provisions that prohibit or strictly limit such redemption. Under
existing statutory and legal provisions, shares issued by the
structures comprising the consolidating entity of the Crédit Mutuel
group are recognised under shareholders’ equity.
The other financial instruments issued by the Group qualify for
accounting purposes as debt instruments if the Group has a contractual
obligation to deliver cash to the holders of such instruments. This is
the case, in particular, for all the subordinated securities issued by
the Group.
• Regulated savings contracts
Home savings accounts (comptes épargne logement - CEL) and home
savings schemes (plans épargne logement - PEL) are French regulated
products available to individual customers. These products provide
retail investors with interest-bearing savings vehicles during a first
phase, and grant them access to a mortgage during a second phase.
They generate two kinds of commitments for the establishments
that distribute them:
• a commitment to pay a fixed rate of interest in the future on the
savings (solely for home savings schemes, as the interest rate
on home savings accounts is comparable to a variable rate and is
periodically revised in accordance with an indexation formula);
• a commitment to extend a loan based on predetermined conditions
to customers who request one (both products).
These commitments are estimated on the basis of customer
behavioural statistics and market data. A provision is set aside on
the liability side of the balance sheet to cover future charges related
to the potentially disadvantageous conditions of these products in
comparison with the interest rates offered to individual customers
for products that are similar but whose remuneration is not regulated.
This approach is carried out by homogeneous generation in terms of
the regulated conditions for both products. The impact on the profit
and loss account is recorded as interest paid to customers.
3.9 Provisions for risks and charges
3.11 Cash and cash equivalents
Provisions and reversals of provisions for risks are classified by type
under the corresponding item of income or expenditure. A provision
is set aside whenever it is probable that an outflow of resources
representing economic benefits will be necessary to extinguish
an obligation arising from a past event and when the amount of
the obligation can be estimated accurately. Where applicable,
the net present value of this obligation is calculated to determine
the amount of the provision to be set aside.
The provisions constituted by the Group cover, in particular:
– operating risks;
– employee commitments (see Note 3.12);
– execution risks on signature commitments;
– legal disputes and liability guarantees;
– tax risks;
– risks related to home savings (see Note 3.10).
3.10 Amounts due to customers and credit institutions
These are fixed- or determinable-rate financial liabilities. They are
initially recognised at fair value and measured at subsequent balance
sheet dates at amortised cost using the effective interest rate
method, except in the case of those recognised at fair value by option.
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Cash and cash equivalents comprise cash in hand, deposits
and demand loans and borrowings with central banks and credit
institutions.
For cash flow statement purposes, UCITS are classified as an
“operating” activity and are not therefore reclassified as cash.
3.12 Employee benefits
Employee benefits are recognised in accordance with IAS 19. Where
applicable, employee obligations are recognised under “Provisions
for risks and charges”. Changes in such provisions are recognised in
the profit and loss account under “Staff costs”.
• Post-employment defined benefit plans
These comprise retirement, early retirement and supplementary
retirement plans under which the Group has a formal or implicit
obligation to provide employees with pre-defined benefits.
These obligations are calculated using the projected unit credit
method, which involves allocating entitlement to benefits to periods
of service by applying the contractual formula for calculating plan
benefits. Such entitlements are then discounted using demographic
and financial assumptions such as:
- a discount rate, determined by reference to the rate on long-term
private-sector bonds as a function of the term of the commitments;
- the rate of salary increases, assessed as a function of age brackets,
manager/non-manager classification and regional characteristics;
- inflation rates, estimated by comparing treasury bond rates and
inflation-linked treasury bond rates at different maturities;
- staff turnover rates, determined by age bracket, using the threeyear average for the ratio of resignations and dismissals relative
to the year-end number of employees with permanent contracts;
- retirement ages: estimated on a case-by-case basis using the actual
or estimated date of commencement of full-time employment
and the assumptions set out in the so-called Fillon law, with
a ceiling set at 65 years of age; and
- life expectancy rates set out in INSEE table TH/TF 00-02.
Differences arising from changes in these assumptions and from
differences between previous assumptions and actual experience
constitute actuarial differences. When the plan is funded by assets,
these are measured at fair value and recognised in the profit and
loss account for their expected yield. Differences between actual and
expected yields also constitute actuarial differences.
The Group has opted to recognise immediately to profit or loss any
actuarial differences exceeding the corridor (i.e. more than 10%
of the greater of the present value of the gross defined benefit
obligation at the balance sheet date and the fair value of plan
assets), rather than to spread it over the residual active life
of employees. Any plan curtailments or terminations generate a
change in the obligation, which is recognised immediately to the
profit and loss account.
• Post-employment defined contribution plans
Group entities contribute to various retirement plans managed by
independent organisations, to which they have no formal or implicit
obligation to make supplementary payments in the event, notably,
that the fund’s assets are insufficient to meet its commitments.
end of the financial year in which staff rendered the corresponding
service. They include, for example, long-service awards and time
savings accounts.
The Group’s commitment in respect of other long-term benefits
is measured using the projected unit credit method. Actuarial
differences are recognised immediately through profit or loss as the
corridor method cannot be used.
Certain commitments in respect of long-service awards are covered
by insurance policies. Only the portion not covered is provisioned.
• End-of-contract indemnities
These indemnities consist of benefits granted by the Group when an
employment contract is terminated before the usual retirement age
or following the employee’s decision to leave the Group voluntarily
in exchange for an indemnity.
End-of-contract indemnity provisions are discounted if payment is
expected to be made more than 12 months after the balance sheet date.
• Short-term benefits
These are benefits, other than end-of-contract indemnities, payable
within the 12 months following the closing date and include salaries,
social security contributions and certain bonuses.
A charge is recognised in respect of short-term benefits in the period
in which the services giving rise to entitlement to the benefit are
provided to the entity.
3.13 Insurance activities
The accounting principles and measurement rules relating to assets
and liabilities arising from the writing of insurance policies, including
inwards and outwards reinsurance, and financial contracts that
include a discretionary profit-sharing clause (which entitles subscribers
to receive a share of the entity’s financial results in addition to any
guaranteed remuneration) are in accordance with IFRS 4.
• Other long-term benefits
Other assets held and liabilities issued by fully-consolidated
insurance companies are recognised in accordance with the rules
common to all assets and liabilities of the Group. Financial assets
representing technical provisions relating to contracts denominated
in units of account are therefore presented under “Financial assets
at fair value through profit or loss” and the asset and corresponding
liability are measured on the closing date at the realisable value of
the investment instruments concerned.
These represent benefits other than post-employment benefits and
end-of-service indemnities payable more than 12 months after the
Moreover, contracts governed by IFRS 4 continue to be recognised
and consolidated in accordance with French accounting standards
As such plans do not represent a commitment for the Group, they are
not subject to a provision. The charges are recognised in the period
in which the contribution is due.
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and are measured and recognised in accordance with the same
rules, other than for certain limited restatements. These are,
notably, restatements linked to the elimination of regulatory
equalisation reserves and the recognition of deferred interests
in accordance with the French regulations applied to valuation
differences. They relate mainly to provisions for the deferred sharing
of income relating to unrealised gains and losses recognised
on assets in accordance with IAS 39 (which, according to IFRS 4,
corresponds to the application of mirror accounting: to reflect the
share of such unrealised gains and losses, the “discretionary
income sharing component” being recognised entirely in provisions
and not in shareholders’ equity). These provisions for the deferred
sharing of income are shown under assets or liabilities by
each legal entity and are not netted off between entities in the
consolidation scope.
Apart from the various provisions recognised and reversed on the
liability side of the balance sheet, the other transactions generated
by these contracts are measured and recognised in accordance
with the same rules. These relate notably to contract acquisition
costs, receivables and liabilities arising on contracts, advances on
policies and recourse and subrogation features resulting from
insurance and reinsurance contracts.
At the balance sheet date, a test is performed to determine if the
liabilities recognised in connection with the contracts (net of
other related assets and liabilities such as deferred acquisition
costs and portfolio securities acquired) are adequate to cover
estimated future cash flows at that date. Any shortfall in technical
provisions is recognised in the profit and loss account for the period,
and may subsequently be reversed if appropriate.
The capitalisation reserve constituted free of tax in the accounts of
French companies as a result of the sale of redeemable transferable
securities, for the purpose of deferring a part of the net gains
realised in order to maintain the actuarial return on the portfolio in
line with the contractual commitments, is cancelled on consolidation.
Movements in the reserve during the period are recognised in
the profit and loss account of the companies concerned but are
reversed in the consolidated profit and loss account. As required
by IAS 12, a deferred tax liability has been recognised in relation
to the effective reclassification in shareholders’ equity of the
capitalisation reserve. In contrast, if there is a strong probability
that profits will be shared with policyholders, notably to reflect
their entitlements in respect of certain insurance portfolios of
Group entities, a deferred profit share is recognised following
restatement of the capitalisation reserve.
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3.14 Non-current assets
Non-current assets reported on the balance sheet include tangible
and intangible assets used in operations as well as investment
properties. Operating non-current assets are used for the
production of services or for administrative purposes.
Investment properties are property assets held to generate
rental income and/or gains on the invested capital. The historical
cost method is used to recognise both operating and investment
properties.
Non-current assets are initially recognised at acquisition cost
plus any directly attributable costs required to bring them into
working order with a view to their use. Finance charges incurred
during the construction or transformation of property assets are
not capitalised.
Non-current assets are subsequently measured at amortised
historical cost, i.e. their cost less accumulated depreciation and
amortisation and any impairment.
When a non-current asset comprises several components likely to
be replaced at regular intervals, with different uses or providing
economic benefits over differing lengths of time, each component
is recognised separately from the outset and is depreciated or
amortised in accordance with its own depreciation schedule. The
component approach is applied to both operating and investment
properties.
The depreciable or amortisable value of a non-current asset
is determined after deducting its residual value net of
disposal costs. As the useful life of non-current assets is
generally equal to their expected economic life, residual
values are not recognised.
Non-current assets are depreciated or amortised over their estimated useful lives at rates reflecting the holding entity’s estimated consumption of the assets’ economic benefits. Intangible
assets with an indefinite useful life are not amortised.
Depreciation and amortisation charges on operating non-current
assets are recognised under “Provisions, amortisation and
depreciation for operating non-current assets” in the profit and
loss account.
Depreciation charges on investment properties are recognised
under “Expenses on other activities” in the profit and loss
account.
The following depreciation and amortisation periods are used:
Property, plant and equipment:
- Land improvements:
- Buildings – shell:
15-30 years
20-80 years
(depending on the type of building)
- Buildings – equipment:
10-40 years
- Fixtures and fittings:
5-15 years
- Office furniture and equipment:
5-10 years
- Safety equipment:
3-10 years
- Vehicles and moveable equipment:
3-5 years
- IT hardware:
3-5 years
Intangible assets:
- Software purchased or developed
internally:
1-10 years
- Business goodwill acquired
9-10 years
(if customer contract portfolios acquired)
The fair value of investment property is disclosed in the notes to the
financial statements at the end of each financial year end based
on an appraisal carried out by independent valuers.
3.15 Fees and commissions
Fees and commissions in respect of services are recorded as
income and charges according to the nature of the services
involved.
Fees and commissions linked directly to the grant of a loan are
amortised (see Note 3.1).
Fees and commissions remunerating a service provided on a
continuous basis are recognised to profit or loss over the period
during which the service was provided.
Fees and commissions remunerating a significant service are
recognised to profit or loss in full upon execution of the service.
3.16 Corporation tax
Depreciable non-current assets are tested for impairment at
each period end whenever there is evidence of loss of value.
Non-depreciable non-current assets such as lease rights are tested
for impairment once a year. If evidence of impairment is found,
the asset’s recoverable amount is compared with its net carrying
amount. In the event of a loss of value, impairment is recognised in
the profit and loss account, thus modifying the basis for future
depreciation. Impairment losses are reversed if there is an improvement
in the estimated recoverable value or there is no longer any
evidence of impairment. The net carrying amount following the
reversal of an impairment provision cannot exceed the net carrying
amount that would have been calculated if the impairment had not
been recognised.
The tax charge includes all tax, both current and deferred, chargeable
in respect of the income for the period under review.
Current taxes are determined in accordance with applicable tax
regulations.
• Deferred tax
As required by IAS 12, deferred taxes are calculated in respect of
temporary differences between the value on the consolidated
balance sheet of an asset or liability and its tax value, with
the exception of goodwill.
Impairment charges and reversals on investment properties are
recognised in the profit and loss account under “Expenses on other
activities” and “Income from other activities”, respectively.
Deferred taxes are calculated using the liability method, applying the
corporation tax rate known at the end of the period and applicable
to subsequent years.
Deferred tax assets net of deferred tax liabilities are recorded only
when there is a high probability that they will be utilised. Current
or deferred tax is recognised as income or a charge, except for
that relating to unrealised or deferred gains or losses recognised in
shareholders’ equity, for which the deferred tax is allocated directly
to shareholders’ equity.
Gains or losses on disposals of operating non-current assets are
recorded in the profit and loss account on the line “Net gains (losses)
on other assets”.
Deferred tax assets and liabilities are netted if they arise in the same
entity or in the same tax group subject to the same tax authority and
if there is a legal right of set off.
Gains or losses on disposals of investment properties are recorded
in the profit and loss account on the lines “Income from other
activities” and “Expenses on other activities” respectively.
Deferred tax is not discounted.
Impairment charges on operating non-current assets are recognised
under “Provisions, amortisation and depreciation for operating
non-current assets” in the profit and loss account.
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3.17 Interest payable by the State on certain loans
In the context of government measures to assist the agricultural
sector and the rural economy, and to assist with home purchases,
certain Group entities grant loans at reduced rates that are set by
the State. Such entities therefore receive State subsidies equivalent
to the differential between the interest rate granted to the customer
and a pre-determined benchmark rate. Accordingly, these subsidised
loans are not discounted.
The terms and conditions of the compensation mechanism are
periodically re-examined by the State.
The State subsidies received are recognised under “Interest and
similar income” and are spread over the term of the relevant loans,
in accordance with IAS 20.
• Monetary financial assets and liabilities
Foreign exchange gains and losses arising on the translation of such
items are recognised to profit or loss account under “Net gains
(losses) on portfolios at fair value through profit or loss”.
• Non-monetary financial assets and liabilities
Foreign exchange gains and losses arising on the translation of
non-monetary assets and liabilities are recognised to profit or loss
under “Net gains (losses) on portfolios at fair value through profit or
loss” if the item is classified at fair value through profit or loss, or
under “Unrealised or deferred gains or losses” if the item is
classified under available-for-sale financial assets.
When consolidated securities denominated in a foreign currency are
funded by a borrowing in the same foreign currency, the future cash
flows relating to the borrowing are hedged.
3.18 Financial guarantees and financing commitments
A financial guarantee is similar to an insurance policy if it provides
for a specific payment to be made to reimburse the holder of the
guarantee for a loss incurred as the result of the failure of a specific
debtor to make a payment on maturity of a debt instrument.
In accordance with IFRS 4, such financial guarantees continue to be
measured using French accounting standards, i.e. they are treated as
off-balance sheet items until such time as the current standards are
revised. Accordingly, they are subject to a provision for liabilities if
an outflow of resources is probable.
By contrast, financial guarantees requiring a payment to be made in
the event of a change in a financial variable (price, rating, credit
index, etc.) or a non-financial variable, provided that in such a case
the variable is not specific to one of the parties to the contract,
are covered by IAS 39 and are therefore treated as derivative
instruments.
Financing commitments that are not considered as derivatives
within the meaning of IAS 39 are not shown on the balance sheet.
However, they give rise to provisions in accordance with the
provisions of IAS 37.
3.19 Transactions denominated in foreign currencies
Assets and liabilities denominated in a currency other than the local
currency are translated at the exchange rate ruling at the balance
sheet date.
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3.20 Non-current assets classified as held
for sale and discontinued operations
Non-current assets and or groups of assets are classified as held for
sale if their carrying amount will be recovered through a sale and
provided a sale is highly probable and likely to be completed within
the next 12 months.
The related assets and liabilities are presented on two distinct
balance sheet lines under, respectively, “Non-current assets classified
as held for sale” and “Liabilities directly associated with assets
classified as held for sale”. They are recognised at the lower of their
carrying amount and their fair value less the costs to sell, and are no
longer depreciated or amortised.
Any recognised impairment loss on such assets and liabilities
is recognised to profit and loss.
Discontinued operations are a component of an entity that either has
been disposed of or is classified as held for sale, or they correspond
to a subsidiary acquired exclusively with a view to resale. They are
shown on a separate line of the profit and loss account under “Gains
and losses on discontinued operations, net of tax”.
3.21 Judgements and estimates used
in preparation of the financial statements
The preparation of the Group’s financial statements necessitates
the formulation of assumptions in order to effect the required
measurements, which carry risks and uncertainties concerning their
future outcome.
The future outcome of such assumptions may be influenced by
several factors, in particular:
- the activities of national and international markets;
- changes in interest rates and foreign exchange rates;
- economic and political conditions in certain business sectors or
countries; and
- regulatory and legislative changes.
- investment banking, which covers market activities, merchant
banking, venture capital, private equity, financial intermediation,
mergers and acquisitions, etc.
Accounting estimates requiring the formulation of assumptions are
used mainly for measurement of the following items:
- fair value of financial instruments not quoted on an active market.
The distinction between an active and not active market, the definition
of a forced transaction, and the definition of an observable
parameter all require the exercise of judgement (see Note 3.4
Securities1);
- retirement plans and other future employee benefits;
- permanent impairment losses;
- provisions in respect of impaired receivables;
- provisions for risks and charges;
- impairment of intangible assets and goodwill; and
- deferred tax assets.
Asset Management and Private Banking comprises two activities:
- asset management: fund management (UCITS, real estate funds),
employees savings schemes, custody and depositary services for
its own customer base, as opposed to that of the network; and
- private banking: wealth management and estate planning.
Insurance comprises the life and non-life insurance activities
(life insurance, property and casualty insurance and insurance
brokerage).
Other Activities comprise technical support subsidiaries that cannot
be included in the retail banking segment (technology, electronic
payments, media, travel).
Transactions between the different segments are carried out at market
conditions.
• Segment reporting by geographic zone (secondary level)
I
Note 4:
Segment reporting (IAS 14)
In terms of segment reporting, the Group has two levels of disclosure.
Data by sector of activity is the primary level and data by geographic
sector is the secondary level.
• Segment reporting by activity (primary level)
Three geographic zones have been defined for this secondary level
of reporting:
– France;
– rest of Europe; and
– rest of world.
The geographic analysis of assets and earnings is based on the country
in which the activities are recorded for accounting purposes.
Sector data for the Crédit Mutuel group is organised into five activities:
- Retail Banking;
- Corporate and Investment Banking;
- Insurance;
- Asset Management and Private Banking; and
- Other Activities.
Retail Banking covers the network of Crédit Mutuel’s local mutual
banks, CIC's regional banks as well as all the specialised activities
marketed through the network: all business banking (other than
for large corporates), finance and property leasing, factoring, real
estate, etc.
Corporate and Investment Banking comprises the following activities:
- corporate banking, which covers banking and related services
provided to large companies through a specific department or
subsidiary; and
2008 Annual Report
129
I
Note 5:
Related parties
Parties related to the Crédit Mutuel group are the consolidated
companies, including companies accounted for using the equity method,
and the third-level administrative entities (Central Caisse of Crédit
Mutuel and National Confederation of Crédit Mutuel).
Transactions between the Crédit Mutuel group and related parties are
carried out at the normal market conditions prevailing at the time of
the transaction.
I
The list of consolidated companies is provided in note 1.2. As transactions
carried out and any outstandings at the end of the period between
group companies consolidated using the full method are eliminated on
consolidation; only transactions between companies over which the
group exercises joint control (consolidated using the proportional
method) are included in the tables in the notes for the portion not
eliminated on consolidation, and transactions between companies over
which the group exercises considerable influence, consolidated using
the equity method, are included in the tables in the notes.
Note 6 :
Standards and interpretations adopted
by the European Union not yet applied
due to their application date
IAS / IFRS
Title
Application
date
Impact of
application
IAS 1
Presentation of Financial Statements, amendments to standard applied currently
Effective for annual periods beginning
on or after 1 January 2009
Significant impact
on presentation
IAS 23
Borrowing Costs, amendments to standard
applied currently
Not concerned
IFRS 2
Share-based Payment, amendments to standard
applied currently
Not concerned
IFRS 8
Operating Segments, replaces IAS 14, Segment
Reporting
Impact not material
IFRIC 11
IFRS 2: Group and Treasury Share Transactions,
amendments to standard applied currently
Not concerned
IFRIC 13
Customer Loyalty Programmes
Not concerned
IFRIC 14
IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their
Interaction
Not concerned
IFRS
130
Crédit Mutuel
II/ Financial data
The notes to the financial statements are expressed in millions of euro
unless indicated otherwise.
1. Notes to the balance sheet
I
Note 1 : Cash in hand, balances with central banks
and post office accounts
1.a Loans and advances to credit institutions
31.12.2008
31.12.2007
16,939
1,869
1,151
7,378
1,101
922
18,090
8,300
28,865
2,575
5,877
1,223
9,024
739
376
399
(344)
24,917
2,609
19,092
1,266
618
983
13
364
(9)
48,734
49,853
31.12.2008
31.12.2007
2,319
-
59
-
Total
2,319
59
Crédit Mutuel network accounts
Other ordinary accounts
Loans
Others liabilities
Repurchase agreements
Accrued interest
1,688
49,190
711
2,182
259
1
2,040
22,657
1,234
16,572
346
54,030
42,850
Cash in hand, balances with central banks and post office accounts
Central banks
of which mandatory reserves
Cash in hand, post office accounts
Total
Crédit Mutuel network accounts (1)
Other ordinary accounts
Loans
Other receivables
Securities not listed on an active market (2)
Repurchase agreements
Loans having given rise to specific provisions
Accrued interest
Provisions
Total
(1) Relates mainly to outstandings with CDC (LEP, Codevi, Livret Bleu)
2) Change from last year due mainly to the reclassification of securities (see Note 9)
1.b Amounts due to credit institutions
Central banks and post office accounts
Central banks
Post office accounts
Total
2008 Annual Report
131
I
Note 2 :
Financial assets and liabilities at fair value through profit or loss
2.a Financial assets at fair value through profit or loss
31.12.2008
Trading
Fair value
by option
31.12.2007
Total
Transaction
Fair value
by option
Total
Securities (1)
- Government securities
- Bonds and other fixed-income securities
. Listed
. Not listed
- Shares and other variable-yield securities
. Listed
. Not listed
Trading derivatives
Other financial assets (2)
of which repurchase agreements
20,013
4,273
15,200
15,194
6
540
540
8,124
-
28,951
167
11,985
11,051
934
16,799
15,060
1,739
12,169
12,028
48,964
4,440
27,185
26,245
940
17,339
15,600
1,739
8,124
12,169
12,028
49,064
20,355
26,476
26,463
13
2,233
2,233
6,469
-
34,511
405
14,813
13,443
1,370
19,293
17,737
1,556
25,602
25,502
83,575
20,760
41,289
39,906
1,383
21,526
19,970
1,556
6,469
25,602
25,502
Total
28,137
41,120
69,257
55,533
60,113
115,646
(1) After transfer out of the trading portfolio to loans and receivables and available-for-sale assets (see Note 9).
(2) Other financial assets at fair value by option are composed of loans and advances to customers and credit institutions.
The maximum exposure to credit risk on loans and receivables classified at fair value by option through profit and loss amounted to €41,737 million in 2008.
2.b - Financial liabilities at fair value through profit or loss
Financial liabilities held for trading purposes
Financial liabilities at fair value by option through profit or loss
Total
31.12.2008
31.12.2007
14,907
33,427
19,495
47,854
48,334
67,349
31.12.2008
31.12.2007
3,568
3,316
252
8,150
3,189
11,998
11,101
897
6,869
628
14,907
19,495
• Financial liabilities held for trading purposes
Short sales of securities
- Shares and other variable-yield securities
Debt securities under repurchase agreements
Trading derivatives
Other financial liabilities held for trading purposes
Total
132
Crédit Mutuel
• Financial liabilities at fair value by option through profit or loss
31.12.2008
Carrying
amount
Debt securities
Subordinated debt
Due to credit institutions
Due to customers 3,777
28,576
1,074
Amount due
at maturity
31.12.2007
Difference
3,763
28,499
1,073
14
77
1
Total
Carrying
amount
Amount due
at maturity
Difference
1,809
43,619
2,426
1,809
43,637
2,426
0
(18)
0
47,854
47,872
(18)
2.c - Fair value hierarchy
Financial assets
- Government securities - Trading
- Government securities - Fair value option
- Bonds and other fixed-income securities - Trading
- Bonds and other fixed-income securities - Fair value option
- Shares and other variable-yield securities - Trading
- Shares and other variable-yield securities - Fair value option
- Loans and receivables from credit institutions - Fair value option
- Loans and receivables from customers - Fair value option
- Derivatives and other financial assets - Trading
Derivative instruments entered into for hedging purposes
Total
Financial liabilities
- Due to credit institutions - Fair value option
- Due to customers - Fair value option
- Debt securities - Fair value option
- Subordinated debt - Fair value option
- Derivatives and other financial liabilities - Trading
Derivative instruments entered into for hedging
Total
Level 1
Level 2
Level 3
Total
4,273
167
15,149
8,099
540
15,226
268
43
51
3,886
6,126
6,043
7,856
4,941
1,573
-
4,273
167
15,200
11,985
540
16,799
6,126
6,043
8,124
4,984
43,765
28,903
1,573
74,241
3,715
70
28,576
1,074
3,777
11,192
8,547
-
28,576
1,074
3,777
14,907
8,617
3,785
53,166
-
56,951
Level 1: values based on quoted prices on an active market
Level 2: values based on quoted prices on an active market or on valuation models for which key model inputs derive from observable market data
Level 3: values based on internal models for which some key model inputs are unobservable data.
At 31 December 2008, level three concerned mainly the portfolios of venture capital and private equity entities.
2008 Annual Report
133
I
Note 3 :
Hedging
3a - Derivative hedging instruments
31.12.2008
Assets
Liabilities
Cash flow hedges
Fair value hedges (change through profit or loss)
Total
31.12.2007
Assets
Liabilities
3
4,981
134
8,483
17
3,360
23
3,070
4,984
8,617
3,377
3,093
- The ineffective portion recognised in profit or loss is not material.
- No amounts relating to changes in cash flow were recognised in profit or loss.
3b - Revaluation difference on portfolios hedged against interest rate risk
Fair value
31.12.2008
31.12.2007
Fair value of interest rate risk by portfolio
. Financial assets
. Financial liabilities
134
Crédit Mutuel
729
(1,414)
(67)
239
Change in
fair value
796
(1,653)
I
Note 4 :
Breakdown of derivatives
31.12.2008
Notional
Trading derivatives
Interest rate instruments
Swaps
Other firm contracts
Options and conditional instruments
Foreign exchange instruments
Swaps
Other instruments
Swaps
Sub-total
Hedging derivatives
Fair Value Hedges
Swaps
Cash Flow Hedges
Swaps
Sub-total
Total
Assets
31.12.2007
Liabilities
Notional
Assets
Liabilities
433,746
27,502
55,085
6,447
12735
6,892
19
343
421,408
43,542
41,971
4,614
11
830
5,668
8
185
205
11,603
76
365
182
100
334
180
183
6,762
45
233
83
51
209
80
29,744
4,506
4,569
566,960
27
172
8,124
24
11
247
8,150
37,908
2,977
14,116
568,867
125
0
528
6,469
40
61
567
6,869
63,369
90
4,920
61
8,483
-
25,027
326
3,244
117
3,070
-
86
63,545
3
4,984
134
8,617
377
25,730
14
2
3,377
23
3,093
630,505
13,108
16,767
594,597
9,846
9,962
2008 Annual Report
135
I
Note 5 :
5a - Financial assets available for sale
Government securities
Bonds and other fixed-income securities
- Listed
- Not listed
Shares and other variable-yield securities
- Listed
- Not listed
Long-term investments
- Investments in associates
- Other long-term investments
- Investments in related undertakings
- Securities lent
- Non-performing current account advances
Accrued interest
Total(1)
o/w unrealised gains or losses recognised in shareholders' equity
o/w impaired assets
o/w impaired bonds
o/w provisions for impairment
o/w listed investments
31.12.2008
31.12.2007
14,600
71,692
68,697
2,995
6,616
6,075
541
2,483
1,366
658
459
744
2,972
68,847
66,090
2,757
9,735
8,892
843
2,722
1,347
1,058
317
645
96,135
84,921
(1,439)
3
259
(990)
888
599
4
14
(279)
825
(1) Variance was due mainly to the effects of reclassifying securities (see note 9)
5 b - 5b – List of main unconsolidated investments
Est Républicain
Caisse de Refinancement de l'Habitat (CRH)
Banca di Legnano
Crédit Logement
Veolia
Nyse Euronext (1)
Foncière des Régions
Banca Popolare di Milano
BMCE Bank
Not listed
Not listed
Not listed
Not listed
Listed
Listed
Listed
Listed
Listed
The above information, except for percentages held, relates to 2007.
(1) In US dollars and in respect of 2008
136
Crédit Mutuel
% held
Shareholders’
Equity*
Total
Assets*
Net banking
income
or revenue*
Net profit
or loss*
80%
< 34%
< 10%
< 10%
< 5%
< 5%
< 5%
< 5%
< 5%
9
160
1,232
1,416
10,191
6,556
7,163
3,598
750
9
34,646
4,151
11,437
46,307
13,948
18,974
43,627
9,439
n/a
6
n/a
155
32,628
4,474
901
n/a
394
n/a
3
90
80
1,255
(738)
1,233
335
123
I
Note 6 :
Customers
6a - Customer loans and receivables
31.12.2008
31.12.2007
Performing receivables
. Receivable-related claims
. Other customer loans and advances
- Home loans
- Other loans and receivables including repurchase agreements
. Accrued interest
. Securities not quoted on an active market
Insurance and reinsurance receivables
Loans having given rise to specific provisions
Gross loans and advances
Specific provisions
General provisions
SUB-TOTAL I
Finance leases (net investment)
. Equipment
. Property
. Receivables having given rise to specific provisions
SUB-TOTAL II
283,824
5,313
277,283
155,205
122,078
888
340
270
8,810
292,904
(5,449)
(643)
286,812
9,138
6,293
2,680
165
(113)
9,025
248,145
5,226
241,970
141,966
100,004
787
162
283
6,107
254,535
(3,794)
(210)
250,531
8,354
5,687
2,524
143
(104)
8,250
Total
298,837
258,781
21
155
20
24
Of which participating loans
Of which subordinated loans
In 2008, customer loans and advances of Citibank amounted to €11,806 million, of which €10,554 million classified under other customer loans and advances.
• Finance leases with customers
Gross carrying amount
Impairment of uncollectable lease payments
Net carrying amount
31.12.2007
Increase
Decrease
Other
31.12.2008
8,354
(104)
8,250
1,624
(38)
1,586
(837)
30
(807)
(3)
(1)
(4)
9,138
(113)
9,025
2008 Annual Report
137
6b - Amounts due to customers
. Regulated savings deposits
- On demand
- Term
. Liabilities associated with savings deposits
Sub-total
. Demand accounts
. Term accounts and borrowings
. Repurchase agreements
. Related liabilities
. Insurance and reinsurance liabilities
Sub-total
Total
31.12.2008
31.12.2007
97,529
67,586
29,943
96
97,625
57,200
40,382
326
860
114
98,882
89,584
57,520
32,064
107
89,691
50,344
29,035
1,022
562
240
81,203
196,507
170,894
In 2008, deposits and other amounts due to the customers of Citibank amounted to €9,336 million, of which €8,552 million classified under demand deposits.
I
Note 7 :
31.12.2008
31.12.2007
Securities
. Listed
. Not listed
. Conversion
Accrued interest
TOTAL – GROSS
Of which written down for impairment
13,706
1,332
12,374
10,341
2,033
155
13,861
158
(151)
11,122
1,532
9,590
8,785
805
65
11,187
3
(3)
Total net
13,710
11,184
Variance was due mainly to the effects of reclassifying securities (see note 9)
138
Crédit Mutuel
I
Note 8 :
Change in impairment provisions
Charges
Writebacks
Citibank
Impact
(9)
(4,108)
(279)
(3)
(336)
(1,384)
(729)
(156)
2
1,119
34
8
(1,814)
-
(1)
(18)
(16)
-
(344)
(6,205)
(990)
(151)
(4,399)
(2,605)
1.163
(1,814)
(35)
(7,690)
31.12.2007
Loans and receivables due from credit institutions
Customer loans and receivables
Securities available for sale
Securities held to maturity
Total
I
Other 31.12.2008
Note 9 :
Reclassifications of financial instruments
31.12.2008
. From trading portfolio to loans and receivables
. From trading portfolio to available-for-sale assets
. From trading portfolio to held-to-maturity assets
. From available-for-sale portfolio to loans and receivables
. From available-for-sale portfolio to held-to-maturity assets
. From held-to-maturity portfolio to available-for-sale assets
For the period when the assets were reclassified
. Gains (losses) to profit or loss in respect of assets reclassified in period
. Gains (losses) to equity in respect of assets reclassified in period
. On reclassification date, estimated non-discounted value
of cash flows for reclassified assets
. Effective interest rates for financial instruments
transferred were positive.
The highest effective interest rate was 10.97%.
31.12.2007
2,674
16,118
6,091
938
(33)
(543)
26,309
* Section 12 of IFRS 7 requires information to be provided in respect of the prior year.
This information is not available.
For the period following reclassification (and period during which
assets were reclassified) and until de-recognition of the assets
. Carrying amount of the reclassified assets
. Fair value of the reclassified assets
. Gains (losses) that would have be recognised to profit or loss
in application of fair value rule had the assets not been reclassified
. Gains (losses) that would have be recognised
to equity had the assets not been reclassified
. Gains (losses) recognised to profit or loss
in respect of reclassified assets
24,166
23,422
(973)
(255)
(35)
2008 Annual Report
139
I
Note 10 :
Taxes
10 a - Current taxes
31.12.2008
31.12.2007
1,785
504
1,277
558
31.12.2008
31.12.2007
1,402
774
937
21
677
102
628
105
Current tax assets (to profit or loss)
Current tax liabilities (to profit or loss)
10 b - Deferred taxes
Deferred tax assets (to profit or loss)
Deferred tax assets (to shareholders' equity)
Deferred tax liabilities (to profit or loss)
Deferred tax liabilities (to shareholders' equity)
Deferred tax liabilities recognised to profit and loss in respect of Citibank amounted to €390 million in 2008.
• Breakdown of deferred tax by main category
31.12.2008
Assets
Liabilities
. Tax losses carried forward
. Temporary differences
- Deferred gains or losses on available-for-sale securities
- Provisions
- Unrealised finance leasing reserve
- Results of transparent companies
- Other temporary differences
. Offsetting
Total deferred tax assets and liabilities
31.12.2007
Assets
Liabilities
658
1,830
780
347
6
697
(313)
1,272
21
210
34
12
995
(313)
189
859
106
269
1
2
366
(269)
1,002
112
3
127
29
309
(269)
2,175
959
779
733
Deferred tax is calculated using the liability method.
For French companies, the deferred tax rate is 34.43%.
Net deferred tax in respect of insurance activities included
in the table above represents:
Deferred tax on profit and loss items
Deferred tax on reserves
20
Total
20
Deferred liabilities recognised to profit and loss in respect of Citibank amounted to €390 million in 2008.
140
Crédit Mutuel
240
240
307
I
Note 11 :
Accrual accounts and other assets and liabilities
11a - Prepayments, accrued income and other assets
Prepayments and accrued income
Securities collection accounts
Currency adjustment accounts
Accrued income
Sundry accruals
Sub-total
Other assets
Settlement accounts on securities transactions
Other debtors (1)
Inventories and similar
Sundry
Sub-total
Other assets of insurance companies
Other
Sub-total
Total
31.12.2008
31.12.2007
1,04
96
620
3,65
5,4
1,25
19
730
3,91
5,91
296
12,49
28
2
12,81
215
6,49
17
3
6,72
2,46
2,46
411
411
20,67
13,05
In 2008, prepayments, accrued income and other assets in respect of Citibank amounted to €457 million, of which €448 million classified under other debtors.
(1) Variance due notably to €4.9 billion of collateral paid (master agreements for derivative products).
11b - Accrued charges, deferred income and other liabilities
Accrued charges and deferred income
Blocked accounts on collection transactions
Currency adjustment accounts
Accrued charges
Sundry accruals
Sub-total
Other liabilities
Settlement accounts on securities transactions
Payments to be made on securities
Other creditors
Sub-total
Other liabilities of insurance companies
Security deposits and guarantees received
Other
Sub-total
Total
31.12.2008
31.12.2007
606
1,7
959
9,54
12,81
859
1,7
1,1
7,44
11,09
428
134
3,77
4,33
835
63
3,28
4,18
136
136
110
110
17,28
15,38
In 2008, accrued charges, deferred income and other liabilities in respect of Citibank amounted to €558 million, of which €542 million classified under other creditors.
2008 Annual Report
141
I
Note 12 :
Investments in companies accounted for using the equity method
• Share in net profit or loss of companies accounted for using the equity method
31.12.2008
Share of net
profit or loss
Investment
Share of net
profit or loss
194
42
13
8
14
7
2
1
179
80
38
11
7
8
14
(12)
5
2
1
257
24
323
10
RMA Watanya
NRJ Mobile
Banque de Tunisie
Astrée
Banque de Marché et d'Arbitrage
Other
Total
I
Note 13 :
Investment property
Historical cost
Depreciation and impairment
Net carrying amount
31.12.2007
Increase
Decrease
Other
31.12.2008
1,61
(197)
273
(30)
(327)
5
(9)
8
1,54
(214)
1,408
243
(322)
(1)
1,328
The fair value of property recognised at cost came to €1,750m at 31 December 2008 (€1,829 million at 31 December 2007).
142
Crédit Mutuel
31.12.2007
Investment
I
Note 14 :
Non-current assets
14a - Property, plant and equipment
31.12.2007
Increase
Decrease
Citibank
Impact
446
3,876
2,065
6,337
8
321
326
655
(2)
(87)
(233)
(322)
2
124
230
356
8
76
(38)
46
462
4,31
2,35
7,12
(2)
(1,902)
(1,443)
(3,345)
(203)
(202)
(405)
65
157
222
(37)
(173)
(210)
1
(40)
15
(26)
(1)
(2,117)
(1,646)
(3,764)
3,042
250
(100)
146
20
3,358
Cost
Land used in operations
Buildings used in operations
Other property, plant and equipment
Total
Land used in operations
Buildings used in operations
Other property, plant and equipment
Total
Net carrying amount
Other
changes 31.12.2008
• Of which buildings rented under finance leases
31.12.2007
Acquisition
Cession
Autres
31.12.2008
Gross carrying amount
178
(56)
(1)
-
(1)
1
177
(56)
Total
122
(1)
-
-
121
14b - Intangible assets
Historical cost
. Non-current assets produced internally
. Non-current assets acquired
- software
- other
Total
Amortisation and impairment
Non-current assets produced internally
. Non-current assets acquired
- software
- other
Total
Net carrying amount
31.12.2007
Increase
Decrease
Citibank
Impact
Other
changes 31.12.2008
7
938
256
682
945
12
159
21
138
171
(40)
(2)
(38)
(40)
8
238
61
177
246
72
36
36
72
27
1,37
372
995
1,39
(466)
(218)
(248)
(466)
(61)
(31)
(30)
(61)
8
1
7
8
(43)
(43)
(43)
(31)
(29)
(2)
(31)
(593)
(320)
(273)
(593)
479
110
(32)
203
41
801
2008 Annual Report
143
I
Note 15 :
Goodwill
Subsidiaries
Carrying amount
of goodwill
at 31/12/2007
Increase
Decrease
515
122
107
32
26
21
16
14
13
12
7
67
2,8
78
15
7
2
-
(2)
-
2,800
515
122
107
78
32
26
21
16
15
14
13
12
12
69
952
2,9
-
(2)
3,852
Citibank
Groupe CIC
Procapital
Fortuneo
NRJ Mobile
S.F.B.
SCI Foncière Masséna
IPO
Massena Property
Banco Popular France
Parteners
Banque du Luxembourg
Pérénnité
C.L.S.
Other
Total
• Acquisition of Citibank Germany
The Group took over the retail banking activities of Citibank Germany
in December 2008. The goodwill on acquisition recognised in the
2008 accounts is based in preliminary values that may be adjusted
at a later date depending on the outcome of the work underway.
Determination of goodwill on acquisition1:
Price including acquisition costs
Fair value of assets acquired and liabilities assumed
Goodwill on acquisition
144
Crédit Mutuel
4,874
2,074
2,800
Impairment Carrying amount
of goodwill at
31/12/2008
The goodwill on acquisition has not yet been allocated to the Group’s
cash generating units given that control of these activities was
acquired at the end of 2008 and they are still in the process of being
integrated. Impairment testing was performed to determine if there
was any evidence of impairment. The fair value of the assets acquired
and liabilities assumed was estimated at the balance sheet date by
reference to the present value of the estimated future cash flows of
Citibank Germany, based on assumptions that included factoring in a
premium over the risk free rate when setting the discount rate (8%)
and making allowance for the depressed conditions of the German
economy when estimating long-term growth (1%). This test did not
indicate the need for an impairment loss to be recognised.
• 2008 consolidated results on a pro forma basis consolidating Citibank Germany from 1 January 2008
31.12.2008
31.12.2007
Total CM-CIC as published
Total CM-CIC with
Citibank consolidated
over 12 months
Net banking income
Net profit
8,424
442
9,637
424
Total
440
422
This table indicates the theoretical impact on the profit and loss account of the acquisition of Citibank Germany as if it had taken effect on 1 January 2008 and had therefore been
consolidated over 12 months. The impact is calculated based on the actual purchase consideration and includes notional finance costs which it was assumed would represent 5%
of the purchase consideration. The goodwill on acquisition was not modified and therefore corresponds to the amount determined on the acquisition date.
I
Note 16 :
Debt securities
Certificates of deposit
Interbank certificates and negotiable debt securities
Bonds
Accrued interest
Total
I
31.12.2008
31.12.2007
696
93,540
38,817
1,320
691
92,992
37,437
1,201
134,373
132,321
31.12.2008
31.12.2007
73,258
2,389
9,347
280
70,254
2,231
12,526
304
85,274
85,315
Note 17 :
Insurance technical reserves
Life
Non-life
Unit-linked
Other
Total
2008 Annual Report
145
I
Note 18 :
Provisions for risks and charges
18a - Provisions for risks and charges
31.12.2007
Provisions for retirement commitments
Provisions for risks
Other
Total
Total
Reversals
for the period
(used)
Reversals
for the period
(not used)
Other
changes
31.12.2008
249
346
545
12
182
221
(12)
(20)
(25)
(9)
(68)
(109)
9
15
9
249
455
641
1,140
415
(57)
(186)
33
1,345
Reversals
for the period
(used)
Reversals
for the period
(not used)
Other
changes
31.12.2007
31.12.2006
Provisions for retirement commitments
Provisions for risks
Other
Increases
Increases
279
413
500
12
106
136
(9)
(39)
(61)
(41)
(100)
(66)
8
(34)
36
249
346
545
1,192
254
(109)
(207)
10
1,140
• Provisions for home savings accounts and schemes
Deposits in respect of home savings schemes during the savings phase
Provisions in respect of home savings schemes
Deposits taken on home savings accounts during the savings phase
Provisions in respect of home savings accounts
Provisions set aside in respect of home-savings products
Reversal of provisions in respect of home-savings products
Outstanding loans granted in respect of home-savings products
Provisions in respect of these loans
Home saving scheme deposits excluding the Capital range of products.
146
Crédit Mutuel
0-4 years
4-10 years
+10 years
Total
2,492
114
8,958
6
7,141
9
18,591
129
4,263
92
(13)
15
1,684
49
• Commitments for retirement and similar benefits
31.12.2007
Obligations relating to defined benefit retirement plans
and similar, excluding pension funds
Retirement indemnities
Top-up retirement benefits
Premiums linked to long-service awards
(other long-term benefits)
Total recognised
Top-up defined benefit plans covered
by the Group's retirement funds
Commitments to employees and retired employees
Fair value of assets
Total recognised
(retirement funds’ assets include 35,000 CIC shares)
Commitments in respect of early retirement agreements
Commitments
Total recognised
Total
Increases
Reversals
31.12.2008
Other
changes
88
95
6
8
(5)
(3)
(2)
(2)
87
98
60
243
(1)
13
(2)
(10)
(1)
(5)
56
241
4
4
-
(2)
(2)
6
6
8
8
2
2
-
(1)
(1)
(1)
(1)
-
249
13
(13)
-
249
18b - Contingent liabilities
A regional group of Crédit Mutuel has appealed a court ruling
concerning a €186.5 million claim. As the ruling handed down by the
court of first instance is enforceable, the funds have been deposited
at the Banque de France.
I
Given the legal grounds of this case and the other legal actions
undertaken, this matter was determined to be in the nature of a
contingent liability and, accordingly, based on the current status of
the case, a provision was not recognised in 2008.
Note 19 :
Subordinated debt
Subordinated debt
Participating loans
Perpetual subordinated debt
Other debt
Accrued interest
Total
31.12.2008
31.12.2007
4,972
161
3,294
124
4,152
161
2,098
95
8,551
6,506
2008 Annual Report
147
• Principal subordinated debt issues
(in € thousands)
Emetteur
Banque Fédérative du Crédit Mutuel
I
Type
Date
Emission
Montant
Emission
Montant
fin d’exercice
Echéance
Redeemable
Redeemable
Redeemable
Redeemable
Redeemable
Redeemable
Redeemable
Redeemable
Redeemable
Perpetual
Perpetual
December 2006
December 2008
September 2003
July 2001
June 2008
December 2007
May 2007
May 2006
September 2008
July 2004
December 2008
957
500
500
400
300
300
300
300
270,8
250
164
957
500
500
400
300
300
300
300
270,2
250
164
December 2016
December 2016
September 2015
July 2013
June 2016
December 2015
May 2017
February 2016
September 2018
Undated
Undated
Note 20 :
Shareholders' equity and reserves
20a - Shareholders' equity - Group share
(excluding unrealised gains or losses)
148
Crédit Mutuel
31.12.2008
31.12.2007
. Capital and capital reserves
- Share capital
. Consolidated reserves
- Regulated reserves
- Translation reserves
- Other reserves (including impact of first-time adoption)
- Retained earnings
6,826
6,798
18,920
12
(47)
18,882
73
6,666
6,629
16,449
12
(42)
16,440
39
Total
25,746
23,115
20b - Unrealised or deferred gains and losses
31.12.2008
31.12.2007
(1,439)
(73)
2
599
(4)
2
(1,510)
597
31.12.2008
31.12.2007
Financing commitments
Commitments given to credit institutions
Commitments given to customers
1,758
47,236
1,848
48,204
Guarantee commitments
Commitments given to credit institutions
Commitments given to customers
3,282
16,090
1,396
16,288
2,321
2,924
31.12.2008
31.12.2007
Financing commitments
Commitments received from credit institutions
Commitments received from customers
8,146
14
102
14
Guarantee commitments
Commitments received from credit institutions
Commitments received from customers
25,594
11,077
23,642
8,215
Commitments on securities
Securities sold under repurchase agreements
Other commitments received
2,273
2,097
Unrealised or deferred gains or losses(*) on:
- Available-for-sale assets
- Cash flow hedges
- Other
Total
(*) Net of tax and after adjustment for mirror accounting
I
Note 21 :
Commitments given and received
Commitments given
Commitments on securities
Securities acquired under resale agreements
Other commitments given
Commitments received
2008 Annual Report
149
2. Notes to the profit and loss account
I
Note 22 :
Interest and similar income and charges
31.12.2008
Credit institutions and central banks
Customers
. Of which finance leases
Hedging derivative instruments
. Financial assets held to maturity . Debt securities
. Subordinated debt
Total
Of which interest income and charges calculated
at the effective interest rate
Of which interest on liabilities at amortised cost
I
31.12.2007
Income
Charges
Income
Charges
4,534
15,978
3,028
3,272
1,503
251
-
(4,826)
(7,648)
(2,560)
(2,748)
(6,191)
(155)
3,982
13,820
2,813
1,438
1,251
155
-
(4,787)
(6,460)
(2,418)
(1,402)
(5,169)
(142)
25,538
(21,568)
20,636
(17,960)
22,266
-
(18,820)
(18,820)
19,208
-
(16,558)
(16,558)
Note 23 :
Fees and commissions
31.12.2008
Credit institutions
Customers
Securities
Of which activities managed on behalf of third parties
Derivative instruments
Foreign exchange
Loan commitments and guarantee obligations
Services rendered
Total
150
Crédit Mutuel
31.12.2007
Income
Charges
Income
Charges
30
1,087
860
575
14
30
19
1,694
(6)
(28)
(62)
(23)
(17)
(5)
(978)
30
1,026
1,036
629
5
23
17
1,683
(9)
(34)
(55)
(11)
(7)
(5)
(1,007)
3,734
(1,119)
3,820
(1,128)
I
Note 24 :
Net gains (losses) on financial instruments at fair value through profit or loss
Trading instruments
Instruments at fair value by option
Ineffective portion of hedges
. On cash flow hedges
. On fair value hedges
. Change in fair value of hedged items
. Change in fair value of hedging items
Foreign exchange gain (loss)
Total changes in fair value
Of which trading derivatives
Of which estimates based on a valuation model
comprising non-observable market data
I
31.12.2008
31.12.2007
503
(626)
78
78
854
(776)
57
2,488
(7)
(13)
(13)
(35)
22
28
12
2,496
(150)
(76)
-
-
Note 25 :
Net gains (losses) on financial assets available for sale
Dividends
. Government securities, bonds and other fixed-income securities
. Shares and other variable-yield securities
. Long-term investments
. Other
Total
31.12.2008
Gains/losses
Impairment
realised
Total
52
236
-
(46)
105
32
(3)
(1)
(171)
(343)
-
(47)
(14)
(75)
(3)
288
88
(515)
(139)
31.12.2007
Gains/losses
Impairment
realised
Total
Dividends
. Government securities, bonds and other fixed-income securities
. Shares and other variable-yield securities
. Long-term investments
. Other
16
106
-
17
100
129
2
(2)
(2)
(24)
-
15
114
211
2
Total
122
248
(28)
342
2008 Annual Report
151
I
Note 26 :
Income and charges from other activities
Income from other activities
. Insurance policies
- Premiums earned
- Net investment income
- Technical and non-technical income
. Investment property:
- Reversal of provisions/depreciation
- Gains on disposal
. Charges rebilled
. Other income
Sub-total
Charges on other activities
. Insurance policies:
- Cost of benefits
- Changes in provisions
- Technical and non-technical charges
. Investment property:
- Changes in provisions/depreciation (depending on method used)
- Losses on disposals
. Other charges
Sub-total
Total other net income (charges)
31.12.2008
31.12.2007
10,833
10,090
103
640
7
2
5
4
738
11,582
17,035
11,825
3,458
1,752
12
12
10
571
17,628
(9,249)
(5,200)
(968)
(3,081)
(30)
(30)
(337)
(9,616)
(15,050)
(4,885)
(5,195)
(4,970)
(31)
(29)
(2)
(185)
(15,266)
1,966
2,362
To improve the quality of the information, an “other charges” that was structurally positive has been reclassified as “other income”. The impact on the 2007 comparative figures was
€42 million.
I
Note 27 :
General operating expenses
Staff costs
Other charges
Total
152
Crédit Mutuel
31.12.2008
31.12.2007
(3,871)
(2,806)
(3,885)
(2,626)
(6,677)
(6,511)
27 a - Staff costs
Wages and salaries
Social security costs
Short-term benefits
Employee profit-sharing and incentives
Payroll and other similar taxes
Other
Total
Average staff numbers
Operational staff
Executives
Total
31.12.2008
31.12.2007
(2,431)
(1,011)
(9)
(124)
(303)
7
(2,332)
(1,007)
(10)
(280)
(268)
12
(3,871)
(3,885)
31.12.2008
31.12.2007
41,861
23,684
37,309
22,146
65,545
59,455
31.12.2008
31.12.2007
(322)
(1,921)
(96)
(319)
(1,838)
(32)
(2,339)
(2,189)
31.12.2008
31.12.2007
(467)
(407)
(60)
-
(438)
(392)
(46)
1
1
-
(467)
(437)
27 b - Other operating charges
Taxes other than corporation tax
External services
Sundry expenses (transport, travel, etc.)
Total
27 c - Depreciation, amortisation and impairment
of property, plant and equipment and intangible assets
recognised and reversed
Depreciation and amortisation:
- Property, plant and equipment
- Intangible assets
Impairment:
- Property, plant and equipment
- Intangible assets
Total
2008 Annual Report
153
I
Note 28 :
Cost of risk
31.12.2008
154
Crédit Mutuel
Reprises Uncollectable
receivables
covered
Uncollectable
receivables
not covered
Collections of
receivables
previously
written off
TOTAL
Credit institutions
Customers
. Finance leases
. Other
Sub-total
Held-to-maturity assets
Available-for-sale assets
Other
(323)
(1,295)
(9)
(1,286)
(1,618)
(154)
(215)
(170)
2
1,036
9
1,027
1,038
8
7
64
(2)
(317)
(5)
(312)
(319)
-8
-
(2)
(58)
(3)
(55)
(60)
(4)
(1)
25
25
25
2
(325)
(609)
(8)
(601)
(934)
(146)
(220)
(105)
Total
(2,157)
1,117
(327)
(65)
27
(1,405)
Reprises Uncollectable
receivables
covered
Uncollectable
receivables
not covered
Collections of
receivables
previously
written off
TOTAL
31.12.2007
I
Increases
Increases
Credit institutions
Customers
. Finance leases
. Other
Sub-total
Held-to-maturity assets
Available-for-sale assets
Other
(2)
(1,029)
(6)
(1,023)
(1,031)
(86)
3
1,234
17
1,217
1,237
3
115
(407)
(11)
(396)
(407)
(3)
-
(3)
(49)
(4)
(45)
(52)
-
32
32
32
6
(2)
(219)
(4)
(215)
(221)
35
Total
(1,117)
1,355
(410)
(52)
38
(186)
Note 29 :
Gains or losses on other assets
31.12.2008
31.12.2007
Property, plant and equipment and intangible assets
. Losses on disposals
. Gains on disposals
Gains (losses) on disposals of consolidated securities
20
(22)
42
-
34
(26)
60
-
Total
20
34
I
I
Note 30 :
Changes in goodwill
31.12.2008
31.12.2007
Impairment
Negative goodwill charged to profit and loss
(2)
25
14
Total
23
14
31.12.2008
31.12.2007
(534)
565
2
(1,190)
38
8
33
(1,144)
31.12.2008
31.12.2007
34.43%
34.43%
-5.36%
-34.82%
-5.85%
23.24%
-1.73%
-9.46%
-8.50%
-8.05%
410
-1.86%
-0.88%
-0.43%
-0.82%
-0.12%
-0.12%
-1.08%
29.12%
3,929
33
(1 144)
Note 31 :
Tax charge for the period
• Breakdown of tax charge for the period
Current taxes
Deferred taxes
Adjustments for prior years
Total
• Reconciliation of actual tax charge and theoretical tax charge
Theoretical tax rate
Impact of special tax regime for venture capital companies
and real property leasing companies
Impact of reduced tax rate on long-term capital gains
Impact of specific tax rates at foreign entities
Permanent timing differences
Rate differentials Tax credits
Other
Effective tax rate
Taxable income
Tax charge
2008 Annual Report
155
3. Segment reporting
• Breakdown of results by activity
31.12.2008
Retail
banking
Insurance
Corporate and
investment
banking
(in €m)
Total
Elimination
of intra-group
transactions
Consolidated
total
7,347
995
74
549
6
8,971
(547)
8,424
General expenses
(5,404)
(460)
(376)
(338)
(646)
(7,224)
547
(6,677)
1,943
535
(302)
211
(640)
1,747
-
1,747
(697)
10
(9)
-
(586)
2
(108)
-
(5)
8
(1,405)
20
-
(1,405)
20
7
25
17
-
-
-
(2)
24
23
-
24
23
409
Profit before tax
1,288
543
(886)
103
(639)
409
-
Corporation tax
(435)
(121)
323
(24)
290
33
-
33
Consolidated net profit
853
422
(563)
79
(349)
442
-
442
Minority interests
18
835
2
420
(9)
(554)
5
74
(14)
(335)
2
440
-
2
440
Retail
banking
Insurance
Corporate and
investment
banking
Asset
management/
and private
banking
Other
Total
Elimination
of intra-group
transactions
Consolidated
total
7,533
1,444
1,043
568
392
10,980
(412)
10,568
(5,241)
(427)
(421)
(311)
(523)
(6,923)
412
(6,511)
2,292
1,017
622
257
(131)
4,057
-
4,057
(175)
23
-
(6)
4
(5)
-
7
(186)
34
-
(186)
34
6
14
15
-
-
-
(11)
-
10
14
-
10
14
2,160
1,032
620
252
(135)
3,929
-
3,929
(711)
(328)
(97)
(69)
61
(1,144)
-
(1,144)
1,449
704
523
183
(74)
2,785
-
2,785
17
1,432
3
701
27
496
9
174
(1)
(73)
55
2,730
-
55
2,730
31.12.2007
(in €m)
Net banking income
General expenses
Cost of risk
Income (loss) on non-current assets
Share in profit or loss
of equity-accounted companies
Change in goodwill
Profit before tax
Corporation tax
Minority interests
Crédit Mutuel
Other
Net banking income
Cost of risk
Income (loss) on non-current assets
Share in profit or loss
of equity-accounted companies
Change in goodwill
156
Asset
management/
and private
banking
• Breakdown of total assets by business line
31.12.2008
Retail
banking
Insurance
Corporate and
investment
banking
Asset
management/
and private
banking
Other
Total
Elimination
of intra-group
transactions
Consolidated
total
737,630
68.0%
95,118
8.8%
187,803
17.3%
28,213
2.6%
35,433
3.3%
1,084,196
100.0%
(502,487)
581,709
549,243
58.5%
96,304
10.3%
242,553
25.9%
19,414
2.1%
30,759
3.3%
938,273
100.0%
(384,971)
553,302
(in €m)
2008
Total Assets
2007
Total Assets
• Analysis of balance sheet by geographic zone
- Assets
Germany
16,362
68,107
4,903
87,349
39,860
272,589
13,358
851
1
730
34
12,772
-
809
592
81
6,501
6,598
7,379
352
20
-
2
(in €m)
Cash in hand, balances with central banks
and post office accounts
Financial assets at fair value through profit or loss
Available for sale financial assets
Holdings in companies accounted for using
the equity method
31.12.2008
Rest of
Rest of
Europe world (*)
France
31.12.2007
Rest of Rest of
Europe world *
Total
France
Total
68
557
1,555
2,242
3,097
-
18,090
69,257
4,984
96,135
48,734
295,837
13,710
7,886
112,960
3,184
71,064
46,229
248,448
10,638
409
394
192
11,280
2,239
7,854
546
5
2,293
1
2,577
1,385
2,479
0
8,300
115,647
3,377
84,921
49,853
258,781
11,184
235
257
106
-
217
323
(*) United States, Singapore, Morocco and Tunisia
2008 Annual Report
157
- Liabilities
France
Germany
43,581
8,218
53,459
170,935
122,692
7,309
9,411
-
(in €m)
Central banks, post office accounts
Financial liabilities at fair value through profit or loss
Amounts due to customers
Debt securities
31.12.2008
Rest of
Rest of
Europe world (*)
Total
France
31.12.2007
Rest of Rest of
Europe world *
359
10
4,306
554
2,675
2,319
48,334
8,617
54,030
196,507
134,373
63,289
2,929
51,699
154,507
114,287
59
3,901
164
(12,890)
15,806
14,154
159
0
4,041
581
3,880
59
67,349
3,093
42,850
170,894
132,321
31.12.2008
Rest of
Rest of
Europe world (*)
Total
France
31.12.2007
Rest of Rest of
Europe world *
Total
2,319
4,394
389
(11,044)
15,607
9,006
Total
• Analysis of profit and loss by geographic zone
France
Germany
8,006
(6,196)
1,810
(1,138)
18
690
605
599
121
(85)
36
(29)
7
5
5
(in €m)
Net banking income
General expenses
Cost of risk
Gains on other assets (**)
Change in goodwill
Profit before tax
474
(347)
127
(187)
6
23
(31)
(22)
(24)
(177)
(49)
(226)
(51)
20
(257)
(146)
(140)
8,424
(6,677)
1,747
(1,405)
44
23
409
442
440
(**) including net profit or loss of companies accounted for using the equity method and goodwill impairment
158
Crédit Mutuel
10,189
(6,172)
4,019
(178)
24
0
3,863
2,699
2,646
482
(292)
189
(12)
1
14
193
141
137
(103)
(47)
(149)
4
19
0
(127)
(55)
(53)
10,568
(6,511)
4,057
(186)
44
13
3,929
2,785
2,730
4. Other information
I
Note I1 :
Fair value
Fair value of financial instruments recognised
at amortised cost
The fair values given here are estimates based on observable
parameters as at 31 December 2008. They are based on discounted
future cash flows estimated based on a yield curve that takes into
account the debtor's inherent signature risk.
The financial instruments referred to in this note are loans and
borrowings. They do not include non-monetary instruments (equities),
trade payables, other assets, other liabilities or accrual accounts.
Non-financial instruments are not covered by this note.
The fair value of on-demand financial instruments and customers'
regulated savings contracts is the amount that can be demanded by
the customer, i.e. the carrying amount. Some group entities also
apply the following assumption: the market value is the carrying
amount for contracts based on variable rates and for contracts with
a residual maturity of one year or less.
Please note that, excepting financial assets held to maturity, financial
instruments recorded at amortised cost cannot be sold or, in practice,
disposed of before maturity. Accordingly, capital gains or losses are
not recognised.
However, if a financial instrument recognised at amortised cost were
to be sold, the disposal proceeds could be significantly different to
the fair value calculated as at 31 December
31.12.2008
Market value
(in €m)
Carrying
amount
31.12.2007
Unrealised
gain or loss
Market value
Carrying
amount
Unrealised
gain or loss
Actifs
Loans and receivables due from credit institutions
Loans and receivables due from customers (*)
Held-to-maturity financial assets
46,746
292,226
13,722
48,734
295,837
13,710
(1,988)
(3,611)
12
49,791
264,792
11,168
49,853
258,781
11,184
(62)
6,011
(16)
Passifs
Due to customers
Debt securities
Subordinated debt
53,773
190,599
133,149
8,572
54,030
196,507
134,373
8,551
257
5,908
1,224
-21
43,887
168,457
132,351
6,520
42,850
170,894
132,321
6,506
(1,037)
2,437
(30)
(14)
(*) Market value of customer loans and receivables at 31 December 2007 was restated to include amounts relating to finance and operating leases.
2008 Annual Report
159
I
Note I2 :
Dividends
The consolidating entity intends to pay €214 million in dividends outside the CM-CIC group.
I
Note I3 :
Related parties
31.12.2008
(in €m)
Assets
. Ordinary accounts
Liabilities
Due to customers
Debt securities
Subordinated debt Companies
consolidated using the
proportional method
31.12.2007
Companies accounted
Companies
for using the consolidated using the
equity method proportional method
Companies accounted
for using the
equity method
16
-
-
12
-
-
5
-
-
4
-
-
The small amounts above reflect the extremely low number of companies consolidated using the proportional method or accounted for using the equity method at national level.
Amounts relating to companies consolidated under the full consolidation method are wholly eliminated on consolidation and are therefore not included in the above table.
160
Crédit Mutuel
I
Note I4 :
Remuneration of corporate officers
(in €000)
Main corporate officers
Salary fixed portion
Salary variable portion
Benefits in-kind
Total
1,844
500
9
2,353
These amounts relate to overall remuneration paid to the main corporate officers of CNCM in respect of their functions in the various group entities.
In addition, most members of senior management benefit from group retirement and supplementary pension schemes. However, those who are remunerated for their corporate function but
who, due to their status, cannot benefit from the usual entitlement in respect of incentive schemes, profit sharing and retirement indemnities will receive a compensating indemnity when
they leave office.
The Group’s senior management receive no other specific benefits. They have not been granted any equity instrument or other instrument giving access to the capital of CIC. No stock options
have been issued because of the mutual bank status. Note that senior management does not receive board attendance fees in respect of their functions at group companies or at other
companies, only in respect of their Group functions.
Senior management may hold assets in the group or receive loans from the group on the same conditions as applicable to all the staff.
2008 Annual Report
161
Independent Auditors' Report
Independent Auditors’ Report
on the consolidated financial statements
for the year ended 31 December 2008
Year ended 31 December 2008
MAZARS
ERNST & YOUNG ET AUTRES
To the Shareholders,
In fulfilment of the assignment entrusted to us by your General Meeting of Shareholders, we present to you our report for the year
ended 31 December 2008 on:
• the audit of the consolidated financial statements of Crédit Mutuel, as attached to this report;
• the basis of our opinion; and
• the specific verifications required by law.
The consolidated financial statements have been prepared under the responsibility of the Board of Directors. It is our responsibility,
based on our audit, to express an opinion on these financial statements.
I - Opinion on the consolidated financial statements
We conducted our audit in accordance with auditing standards applied in France. Those standards require that we plan and perform
the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes
examining, on a sample basis or via other means of selection, the evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that the information we have obtained provides
an adequate and reasonable basis for our opinion.
In our opinion, having regard to International Financial Reporting Standards (IFRS) as adopted by the European Union, the consolidated
financial statements give a true and fair view of the Group’s financial position and its assets and liabilities at 31 December 2008, and
of the results of operations of the companies and entities included in the consolidation scope for the year then ended.
Without bringing into question the unqualified opinion expressed above, we draw your attention to Part I of the notes to the consolidated
financial statements dealing with accounting principles, which sets out the change in accounting method arising from the application
of the amendment to IAS 39 published on 15 October 2008 permitting the reclassification of certain financial assets in limited circumstances.
II – Basis of our opinion
The financial and economic crisis has impacted credit institutions in many ways, affecting their activities, results, risk exposures and
refinancing (as indicated in the introduction to the notes, inviting readers to refer to the Management Report). This situation meant
that the conditions under which the consolidated financial statements were prepared were unique, notably as regards the reliance
placed on accounting estimates. It is against this backdrop that, pursuant to the provisions of article L823.9 of the French Commercial
Code requiring that we indicate the basis for our opinion, we draw your attention to the following elements:
162
Crédit Mutuel
• Accounting principles
When assessing the accounting policies used by the Group, we ensured that the change of accounting method relating to the amendment
to IAS 39 published on 15 October 2008, mentioned above, had been applied properly and appropriate disclosures provided in Note 9
to the consolidated financial statements.
• Accounting estimates
As indicated in the introduction to the notes, where readers are invited to refer to the Management Report, and in Note 9 of the consolidated
financial statements, details are provided about the exposures of Crédit Mutuel Group to the effects of the crisis and the value adjustments
and impairment losses recognised in respect of these exposures at 31 December 2008. We examined the system implemented by management
to identify and measure these risks and we checked that the resulting accounting estimates were based on fully documented methods
complying with the principles described in the aforementioned notes and in Part I of the notes to the consolidated financial statements
describing the accounting policies applied by the Group.
As explained in Part I of the notes to the consolidated financial statements describing the accounting policies that have been applied, the
Group uses internal models and methods for valuing financial instruments that are not quoted on an active market and for determining
certain provisions. We examined the system of controls used to determine that a market is not active, to check the models used,
and to determine the parameters used.
As explained in Part I of the notes to the consolidated financial statements describing the accounting policies that have been applied
and in Note 5, impairment losses in respect of available-for-sale assets are recognised when there exists objective evidence of a prolonged
or significant diminution in an asset’s value. We examined the system of controls used to identify evidence of impairment and to value
the most material holdings and the estimates relied upon to recognise provisions in respect of these impairment losses.
As explained in Part I of the notes to the consolidated financial statements describing the accounting policies that have been applied and
in Notes 6, 18 and 28, impairment losses and provisions are recognised to cover credit risks inherent to the group’s activities. We examined the
system of controls used to monitor credit risks, to assess the risks of non recovery, and to cover these risks by specific or general provisions.
and in Note 10, deferred tax assets have been recognised in respect of tax losses carried forward. We examined the key estimates
and assumptions used to recognise these deferred tax assets.
and in Note 18a, provisions are recognised in respect of employee benefits. Our work consisted in reviewing the assumptions and
calculation methods used to determine these obligations.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed
to determining the unqualified opinion expressed in the first part of this report.
III – Specific verifications
We have also verified, in accordance with the requirements of French law, the information on the Group contained in the Management Report.
We have no comment to make as to its fair presentation and its consistency with the consolidated financial statements.
Courbevoie and Neuilly-sur-Seine, 6 May 2009
The Independent Auditors
MAZARS
Pierre Masieri
ERNST & YOUNG ET AUTRES
Olivier Durand
2008 Annual Report
163
Confédération nationale du Crédit Mutuel
88-90, rue Cardinet - 75847 Paris Cedex 17 - France
Tel: +33 (0)1 44 01 10 10 - Fax: +33 (0)1 44 01 12 30
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