Banking - Banque Fédérative du Crédit Mutuel

Transcription

www.moodys.com
Moody’s Global
Banking
Credit Analysis
August 2009
Table of Contents:
Summary Rating Rationale
1
Group Structure
3
Crédit Mutuel Group
4
Business Activities
6
Distribution Capacity and Market Shares 13
Company History
15
Ownership and Structure
17
Key Issues
18
Analysis of Rating Considerations
19
Discussion of Qualitative Rating Drivers 19
Discussion of Quantitative Rating Drivers
22
Discussion of Support Considerations 26
Company Annual Statistics
29
Moody’s Related Research
33
Strasbourg, France
Summary Rating Rationale
Bank Financial Strength Rating
Long-Term Bank Deposit Rating
Analyst Contacts:
Paris
Banque Fédérative du Crédit
Mutuel
33.1.70.70.22.29
Stéphane Le Priol
Vice President - Senior Credit Officer
Virginie Merlin
Vice President - Senior Analyst
Stéphane Herndl
Associate Analyst
Frankfurt
49.69.70730.700
Carola Schuler
Team Managing Director
This Credit Analysis provides an in-depth
discussion of credit rating(s) for Banque
Fédérative du Crédit Mutuel and should be
read in conjunction with Moody’s most recent
Credit Opinion and rating information available
on Moody's website. Click here to link.
Moody's assigns a bank financial strength rating (BFSR) of C to Banque
Fédérative du Crédit Mutuel (BFCM), which translates into an A3 baseline credit
assessment (BCA). The rating reflects BFCM's strong positioning in banking and
insurance through its subsidiaries, Crédit Industriel et Commercial group (CIC
group) and Groupe des Assurances du Crédit Mutuel (GACM), respectively, and
its role, delegated by the central entity of CM5-CIC (the third-largest domestic
bancassurance group in France), in providing liquidity management for the whole
CM5-CIC group. The rating also incorporates the deterioration of the bank’s
financial fundamentals as a result of the increasing cost of risk and high
impairments on the bank’s financial markets activities.
Credit Analysis
Moody’s Global Banking
Banque Fédérative du Crédit Mutuel
BFCM's long-term global local currency (GLC) deposit rating is Aa3 – under Moody's joint default analysis
(JDA) methodology – based on its BCA of A3 and on a very high probability of support in the event of need
from CM5-CIC group. Although BFCM is not part of the group's cross-guarantee and solidarity mechanisms,
the role which is to specifically cover the mutualist part of the group, it is fully integrated within CM5-CIC both
strategically and operationally and it is core to the group. BFCM's GLC deposit rating also incorporates a very
high probability of systemic support in the event of a crisis, through CM5-CIC.
The outlook on the BFSR is negative and reflects Moody's view that BFCM’s financial markets activities and
assets lead to high volatility in its P&L. It also reflects the likely further deterioration of the French retail
activities given the challenging macro environment, as well as the addition of potentially more volatile
consumer finance activities into BFCM's business mix, following the acquisitions of Citibank Deutschland and
Cofidis (both unrated). BFCM's Aa3 long-term debt and deposit ratings carry a stable outlook.
Moody's cautions that, given the group's structure and BFCM's specific role within the group, BFCM's BFSR –
which expresses its financial strength as if it were a standalone entity – conveys only part of the information.
We do not rate the CM5-CIC group or its central institution, CFCMCEE.
The BFSR is unlikely to be upgraded in the foreseeable future as it currently carries a negative outlook.
Likewise, the deposit and debt ratings are unlikely to be upgraded in the foreseeable future given the negative
outlook on the bank’s BFSR and the likelihood that Moody’s assessment of the probability of group and
systemic support will remain unchanged.
Conversely, any further deterioration of the bank’s financial fundamentals beyond Moody’s expectations,
resulting notably from an increase in the cost of risk or higher-than-expected volatility in the bank’s earnings,
could exert negative pressure on the BFSR. Other factors that could exert downward pressure on the BFSR
include any lapse in controls and risk management or our assessment of a higher risk appetite; for instance, if
the group were to stop short of de-risking its remaining financial markets activities.
The deposit and debt ratings could be downgraded in the event of a severe deterioration of the bank’s intrinsic
creditworthiness. They could also be downgraded if we were to perceive a decrease in the probability of
support from CM5-CIC, which we do not expect given the strategic roles of BFCM as a liquidity provider for the
whole of CM5-CIC group and as a holding company for CIC group and GACM.
2
August 2009 Credit Analysis Moody’s Global Banking – Banque Fédérative du Crédit Mutuel
Credit Analysis
Group Structure
Exhibit 1: Simplified structure of CM5-CIC Group
(Please refer to the “Ownership and Structure” section for a more complete chart)
CM CEE Federation
CM SE Federation
Local cooperative banks
(North-Eastern France)
(Lyon area)
CM IdF Federation
CM SMB Federation
CM MA Federation
(Paris area)
(French Alps)
(Toulouse area)
CFCMCEE
(Central body)
"CM5" (mutualist part of CM5-CIC Group)
BFCM
Funding and treasury operations for
CM5-CIC group
(and some other CM federations)
CIC Group
GACM
and subsidiaries
(retail banking)
and subsidiaries
(insurance)
Other subsidiaries
BFCM goup (non-mutualist part of CM5-CIC Group)
Source: Moody’s
Banque Fédérative du Crédit Mutuel (BFCM) is a subsidiary of CM5-CIC group, itself part of the Crédit Mutuel
group. In Moody’s view, Crédit Mutuel group is a less cohesive and more complex French mutualist network
than other such networks. 1 The Crédit Mutuel group comprises 2,017 local co-operative banks, grouped into
18 regional federations.
BFCM is the entity that provides refinancing, treasury management and other financial services 2 to the various
entities grouped together in five of these federations (CMCEE, CM Ile-de-France, CM du Sud-Est, CM SavoieMont Blanc and CM Midi-Atlantique; 3 together with their subsidiaries known as CM5-CIC). 4 (See Exhibit 1 for
the organisation chart of the wider Crédit Mutuel Group.)
After briefly introducing the Crédit Mutuel group as a whole, the descriptive section of this report will focus on
CM5-CIC group (including BFCM), while the analytical section of the report will exclusively focus on BFCM
and its affiliates.
1
2
3
4
3
For more information on the traditional group structure of French mutual groups, please refer to Moody’s Banking System Outlook on France, last published
in July 2009.
These activities are undertaken on behalf of the Caisse Fédérale du Crédit Mutuel Centre Est Europe (CFCMCEE).
CM Midi-Atlantique joined CM4-CIC on 1 January 2009. The new grouping became CM5-CIC.
CM5-CIC is not a legal entity but refers to the aggregate of the five regional federations, their common central body and their subsidiaries.
Credit Analysis
Crédit Mutuel Group
The organisational structure of the Crédit Mutuel Group 5 is less cohesive and more complex than other
mutualist networks. At year-end 2008, the group comprised:

2,017 local co-operative banks or Caisses locales. These are at the root of the organisation, and are
regulated as credit institutions. They collect deposits, make loans and provide a wide range of financial
services to retail customers, professionals and small corporates. These local banks are owned by 7.2
million bank customers or sociétaires, from a pool of around 11.2 million customers.

18 regional groups or federations, each of which has its own central body or Caisse fédérale. Each Caisse
locale and its joint subsidiary, the Caisse fédérale, are members of the regional federation. Federations
are not financial institutions. They are entrusted by French banking law with responsibility for controlling
the Caisses locales, ensuring their solvency, defining the strategy at regional level, designing products and
services, and optimising asset and liability management. They are the strategic and control entities
representing Crédit Mutuel group at regional level.
The Caisses fédérales provide refinancing, treasury management and other financial services to their
Caisses locales. Some federations have decided to join forces into “super-regional” groupings and merge
their Caisses fédérales. Five of them are grouped together into “CM5” (CMCEE, CM Ile-de-France, CM du
Sud-Est, CM Savoie-Mont Blanc and CM Midi-Atlantique), three others into Arkéa (CM de Bretagne, CM
du Sud-Ouest and CM Massif Central) and two into Crédit Mutuel Sud Europe Méditerranéen (CM
Méditerranéen and CM Dauphiné-Vivarais).
Banque Fédérale du Crédit Mutuel (BFCM) and CIC are subsidiaries of CM5’s central body, CFCMCEE.
In addition to the 18 regional groups, the Fédération du Crédit Mutuel Agricole et Rural (CMAR) has
competence over the domestic agricultural sector nationwide.

The National Federation (Confédération Nationale du Crédit Mutuel or CNCM) is the central regulatory
body according to French banking law. It represents Crédit Mutuel at the national level and oversees the
regional federations. At each level – local, regional and national – representatives are elected by the
sociétaires to supervise the various entities of the network.

The central bank of the group, Caisse Centrale du Crédit Mutuel (CCCM), is owned by the Caisses
fédérales. It manages their treasury but plays a very limited role in the network.
Altogether, Crédit Mutuel group had 18.7 million customers (of which 17.1 million individuals) and
approximately 5,600 branches at year-end 2008 (figures including the branches of the Caisses locales of
Crédit Mutuel as well as branches of Crédit Industriel et Commercial –CIC– network.
5
4
Crédit Mutuel Group is not a legal entity but refers to the aggregate of all 2,017 local cooperative banks and their subsidiaries.
Credit Analysis
Exhibit 2: Organisation chart of Crédit Mutuel Group
7.2 million bank customers
or “sociétaires”
mutualist group
2,017 local "Caisses"
local cooperative banks
Confédération Nationale du
Crédit Mutuel
18 regional groups or “Fédérations” + CMAR
Arkéa
regional
federations
(3 federations)
CM de Bretagne
CM du Sud-Ouest
CM Massif Central
central bodies
CM Arkea *
Sud Europe
Méditerranée
(SEM)
(2 federations)
CM DauphineVivarais
CM Méditerranéen
CICMSEM
Centre Est Europe
("CM5")
(5 federations)
CM Centre Est Europe
CM Ile-de-France
CM du Sud-Est
CM Savoie-Mont Blanc
CM Midi Atlantique
CFCMCEE
8 other separate
regional federations
+ CMAR
(CNCM)
8 "Caisses
Fédérales"
Caisse Centrale du Crédit
Mutuel
(CCCM)
common law subsidiaries
outside of the
mutualist scope
* CM Arkea is the
result of the merger
of former CICM
(central body) w ith
former CFCM
(common law holding
subsidiary) into one
single entity
95.0%
5.0%
(BFCM)
and its subsidiaries
CM 5-CIC group
Sources: Moody’s, Crédit Mutuel Group.
While the Crédit Mutuel group boasts nationwide coverage, the size and financial strength of the regional
groups are diverse, with two of them – CM5-CIC and Arkéa – and their relevant subsidiaries accounting for
more than 80% of the total group’s assets.
BFCM is the main refinancing vehicle of CM5-CIC. The five federations, which are collectively referred to as
“CM5” (i.e. CMCEE, CM du Sud Est, CM Ile–de-France, CM Savoie-Mont Blanc and CM Midi-Atlantique),
control BFCM through their common Caisse fédérale, Caisse Fédérale du Crédit Mutuel Centre Est Europe
(CFCMCEE). BFCM, which does not benefit from mutualist status, also acts as the holding company of CM5CIC’s main affiliates, including Groupe du Crédit Industriel et Commercial (CIC group) and Groupe des
Assurances du Crédit Mutuel (GACM).
The pooling of resources appears somewhat weaker than within other mutualist banking groups but is
increasing within super-regional groupings of federations (which now comprise ten of the 18 federations). Cooperation is also growing in refinancing, asset management and insurance activities. Finally, the central
institutions of the network wield much less influence than their counterparts in other mutualist networks as their
usual role of acting as a central funding conduit is assumed by the local banks, which also conduct their
business strategies largely autonomously.
Within each of the 18 regional groups (or their super-regional groupings), cross-guarantee and solidarity
schemes ensure that all Caisses locales remain solvent via:
1. A cross-sharing of loan losses;
2. Additional liquidity being provided by each Caisse fédérale to its Caisses locales in case of stress; and
3. A balancing-out of losses and profits between the Caisses locales and the use of regional guarantee funds
that must equal 0.50% of total deposits.
5
Credit Analysis
Furthermore, the solidarity between all Caisses locales and Caisses fédérales is formalised by CNCM at the
national level:
1. Under the 1984 Banking Law, CNCM is endowed with supervisory powers to monitor the solvency of the
members of the network;
2. Regional groups must satisfy internal liquidity ratios;
3. Regional groups must deposit 2% of their customers’ deposits at the CCCM; these funds can be used to
provide support to an ailing member; and
4. As a last resort, the CNCM is empowered to take decisions allowing it to make advances, grants or
provide additional financing in order to rescue a troubled member.
For a more detailed discussion on CM5-CIC’s structure and the position of BFCM in the CM5-CIC group,
please refer to the Ownership and Structure sub-section.
Sources: Moody’s, Credit Mutuel Group and CM5-CIC.
Business Activities
This section focuses on CM5-CIC group (including BFCM)
CM5-CIC is organised around five business units 6 , each of which corresponds to one type of activity, such as
retail banking, insurance, corporate and investment banking. These reporting lines are:
Exhibit 3: Organisation of CM5-CIC by business
CM5-CIC
CMCEE
CM du Sud Est
CM Ile–de-France
CM Savoie-Mont Blanc
CM Midi-Atlantique
and subsidiaries
Retail Banking
Insurance
- Retail banking
- Life
- P&C
- Specialised activities:
consumer finance, leasing, - Reinsurance
real estate, factoring, fund
management
Financing and
Markets
Private Banking
Private Equity
Administration and
Holding
- Corporate banking
- Financial markets
- Brokerage and custody
- Financial transactions
- Specialised financing
Sources: Moody’s, BFCM.
6
6
Under CM5-CIC’s consolidated accounts, a sixth business unit, named Administration and Holding, groups together the various components that cannot be
allocated to the other divisions, along with logistics structures. It includes intermediate holding companies, operating property assets held by specific entities
and IT companies. Source: BFCM.
Credit Analysis
Retail Bank
This business unit comprises the retail banking activities undertaken essentially in France 7 as well as all of the
specialised activities whose products are marketed through the branch network (including consumer finance,
the leasing of goods and property, real estate, fund management, employee savings plans and factoring).
Retail banking activities are undertaken by CM5 networks and BFCM Group (mainly through CIC) while all
other retail finance activities are undertaken by BFCM Group, i.e. BFCM and its subsidiaries.
Activities undertaken under the umbrella of BFCM group
Retail activities undertaken within the scope of BFCM are purely those of its subsidiaries as BFCM does not
undertake itself any retail activity. BFCM’s subsidiaries active in the retail business are CIC group, Banque de
l’Economie, du Commerce et de la Monétique (BECM) and CIC Iberbanco, which are described in more detail
below:

CIC group is composed of Crédit Industriel et Commercial (CIC) and its subsidiaries. The group’s retail
activities are undertaken by CIC in the Paris area, and by its five regional banks, which together offer retail
coverage nationwide. 8
In 1998, CIC was privatised and BFCM acquired a 67% stake. CIC was previously owned by GAN, a then
state-owned insurance company.
CIC group’s activities are carried out under the CIC brand. 9 While CIC and its regional banks share the
same brand and graphic charter, no reference on the linkage with Crédit Mutuel group is made to the
customers.
In terms of segmentation with private banking, clients serviced by the retail network of CIC are those with a
net worth of less than €1 million. Insurance products of the Groupe des Assurances du Crédit Mutuel
(GACM) are also cross-sold to retail customers of the retail banking segment (for more details on
insurance products and services, please refer to the Insurance sub-section below).

BECM is 98.5% owned by BFCM and focuses on three main business activities:

Services to large corporates and medium enterprises such as treasury operations, medium-tolong term loans, real estate leases, cash management and payment systems, but also LBOs. For
these activities, BECM is largely integrated with CIC Ile-de-France (CIC’s subsidiary in the Paris area)
for commercial developments, processes and credit risk;

Financing real estate companies mainly for real estate promotion. For real estate-related business,
BECM acts as a centre of expertise for all CM5-CIC networks; and

Wealth management for entrepreneurs, in close co-operation with CIC and CM5 networks.
BECM is a niche player with a relatively small size (at year-end 2008, its total assets amounted to €12.5
billion). It benefits from national coverage in France with dedicated branches for each of the activities and
relies largely on the CM5 and CIC networks. In addition, BECM also has a local bank in Frankfurt.
The activities of BECM are undertaken under its own brand, but the graphic charter and information
provided on its Internet site refer to Crédit Mutuel group.

7
8
9
7
CIC Iberbanco was acquired in June 2008 by BFCM from Banco Popular Español. It has a network of 18
branches in France, four businesses centres and a retail promotion branch. Although Banco Popular
France was re-branded as CIC Iberbanco in April 2009, it is directly held by BFCM and CIC holds no stake
in it.
The Retail Bank business unit also comprises the foreign activities of Banque de l’Economie, du Commerce et de la Monétique in Frankfurt as well as the
retail activities of Banque de Tunisie (Tunisia) and Banque Marocaine du Commerce Extérieur (Morocco).
Each regional bank is responsible for retail activities for a specific region and there is no overlap between CIC’s regional banks.
Previously, CIC’s regional banks’ branches used their own brand, which was called CIC followed by the name of the regional bank. The regional banks also
used CIC’s graphic charter. In 2008, all regional banks switched to the CIC brand.
Credit Analysis

BFCM also consolidates activities 10 undertaken in Tunisia by Banque de Tunisie and in Morocco by
Banque Marocaine pour le Commerce Extérieur (BMCE Bank). The stakes in both banks were previously
held by CIC Group, which transferred the ownership to BFCM on 5 January 2009. BFCM group holds 20%
in Banque du Tunisie and in February 2009 it increased its stake in BMCE Bank to 19.94% from 15%
previously. In addition, BFCM holds 5% of Banca Popolare de Milano (BPM).
Activities undertaken by the rest of the CM5-CIC group
Retail activities within the scope of BFCM are complemented by retail banking activities undertaken by the
local co-operative banks (Caisses locales) of the five federations of the CM5-CIC group, which conduct
operations in separate regions: 11

Caisses locales of the CM Centre Est Europe federation are active in north-eastern France;

Caisses locales of the CM du Sud Est federation are active in Lyon area;

Caisses locales of the CM Ile-de-France federation are active in the Paris area;

Caisses locales of the CM Savoie-Mont Blanc federation are active in the French Alps; and

Caisses locales of the CM Midi-Atlantique federation are active in Toulouse area.
12
The retail banking activities serve individuals with a net worth of less than €1 million as well as SMEs. They
provide them with a wide variety of products and services, from current accounts to assets under
management, savings products (including Livret Bleu, 13 the equivalent of Livret A offered to retail customers of
the Crédit Mutuel group’s co-operative network). 14
Specialised Activities
This business line comprises the specialised activities of CM5-CIC. All the specialised activities are
undertaken by BFCM’s subsidiaries and as such appear in BFCM’s reporting.
Consumer Finance
Consumer credit activities are undertaken by Sofémo group (Société Fédérative Européenne de
Monétique et de Financement), Citibank Germany and by Cofidis SA, which are described in more detail
below:
Sofémo is held 66.7% by BFCM and 33.3% by CIC. It provides individuals with consumer loans marketed
through four dedicated centres and payment facilities to customers of more than 50,000 stores that have
entered into co-operation with Sofémo. This service is also available in the retail networks of CM5-CIC (i.e.
of both the Caisses locales of CM5 and of CIC group) and in the retail networks of other CM federations,
with the exceptions of Arkéa and CM Nord Europe.
Citibank Deutschland was acquired by BFCM in December 2008 from Citibank. Citibank Deutschland is
a specialist in consumer finance with more than 3.25 million customers, 6,800 employees and 340
branches at year-end 2008. Unlike traditional consumer finance companies, Citibank Germany also
collects deposits from its customers and had a deposit base of €9.4 billion at year-end 2008 (versus a total
loan portfolio of €10.4 billion at the same point in time). The final agreement valued BFCM’s 100% stake in
Citibank Deutschland at €4.9 billion. Citibank Deutschland was consolidated on 5 December 2008.
10
11
12
13
14
8
In accordance with IFRS, the results of Banque de Tunisie are accounted using the equity method (mise en équivalence), as BFCM can exercise significant
influence. The results of BMCE are not consolidated in CIC group’s results as the group holds less than 20% of the voting rights.
The size and the boundaries of each federation are based on the historical consolidation of Caisses locales. For more details, please refer to the Company
History section of this report.
Corporates not considered to be SMEs are served by CM5-CIC’s Financing and Capital Markets business unit.
For more details on Livret Bleu and Livret A, please refer to Moody’s Banking System Outlook on France, last published in July 2009.
Until year-end 2008, Livret Bleu savings products could only be sold under the Crédit Mutuel brand. In the case of CM5-CIC group, it could only be provided
to retail customers of the Caisses locales of the five Federations of CM5 (CMCEE, CM du Sud Est, CM Ile-de-France, CM Savoie-Mont Blanc and MidiAtlantique) and not to CIC’s customers. From this year, all French banks have been authorised to sell Livrets A. CIC will sell the product as Livret A while the
Livret Bleu name will be kept for products sold through the five federations’ networks.
Credit Analysis
Cofidis SA provides consumer credit services, such as revolving credit, loans repayable in instalments,
and credit cards. It has 11.5 million customers in France, Belgium, Spain, Italy, Portugal, Greece, the
Czech Republic and Hungary. In March 2009, BFCM and 3 Suisses International (3SI, a French retailer
which previously owned 100% of Cofidis SA through Cofidis Participations), reached a final agreement
whereby BFCM took 51% control and a 34.17% economic interest in Cofidis. More specifically, BFCM and
3SI created a joint holding company (held 67% by BFCM and 33% by 3SI), which owns 51% of Cofidis
Participations, while the remaining 49% in Cofidis Participations is owned directly by 3SI. Cofidis
Participations owns 100% of Cofidis SA, the operating entity.
Under the final terms of the acquisition, BFCM will potentially increase its ownership in Cofidis
Participations to 67% from 51%, should BFCM and 3SI decide on this by 2016. Under the final terms,
Cofidis Participations also has the exclusive right to potentially acquire 3SI’s 66% stake in Monabanq, an
online retail bank with 250,000 individual customers.
Leasing
In leasing, CM5-CIC operates under CM-CIC Lease for real-estate leasing and under CM-CIC Bail for
equipment-leasing activities (e.g. car leasing, industrial equipment leasing). CIC group owns 15 54% of CMCIC Lease and 99% of CM-CIC Bail.
At year-end 2008, CM-CIC Lease’s portfolio mainly consisted of warehouses, commercial premises and
industrial premises (26% of total portfolio each), retail premises (10%) and offices (12%).
Equipment-leasing contracts are generated by the banking networks and specialised financing entities of
the CM5-CIC group and also by the networks of other CM federations (except Arkéa and CM Nord
Europe).
Real Estate
Real estate-related activities are undertaken by subsidiaries of CIC group. The activities include:

The investment in real-estate development projects in France through CM-CIC Participations
Immobilières SA;

Real estate investments for the group through CM-CIC Soparim; and

Realtor business through CM-CIC Agence Immobilière (AFEDIM), which sells new residential
properties on behalf of the Crédit Mutuel and CIC networks (including CIC Banque Privée).
Fund Management
CM-CIC Asset Management SA (CM-CIC AM) is the entity responsible for asset management for the
whole CM5-CIC group, including BFCM. 16 It manages a large number of mutual funds invested in four
17
categories: equity and diversified funds, money market funds, bond funds and formula funds.
CM-CIC AM’s products are marketed in the two branch networks of CM5’s Caisses locales and of CIC
group, but also in the networks of other CM federations (except Arkéa and CM Nord Europe). That said,
some products are exclusively marketed in one of the two networks. In addition, CM-CIC AM resorts to
external funds for funds invested in international equities.
In addition to the mutual funds for the group’s customers, CM-CIC AM manages a number of employees’
mutual investment funds schemes for corporates (referred to as OPCVM). These activities are undertaken
by CM-CIC Epargne Salariale, 18 a 100%-owned subsidiary of CIC group.
15
16
17
18
9
Aggregate shareholding through CIC (main shareholder) and its regional banks. BFCM also owns 45.9% of CM-CIC Lease. Source: BFCM.
CM-CIC AM was created in 2004 via the merger of Crédit Mutuel Finance and CIC AM. It is now jointly owned by BFCM (51%) and by CIC (23.5%).
Source: BFCM.
CM-CIC Epargne Salariale was created via the merger of CIC group’s subsidiary CIC Epargne Salariale and BFCM’s subsidiary Crédit Mutuel Participation in 2007.
Credit Analysis
Factoring
Factoring activities are undertaken by Factocic and CM-CIC Laviolette Financement.

Factocic was created in 1992 as a partnership between CIC, Crédit Mutuel Group and GE
FactoFrance, which, respectively, own 51%, 15% and 34% of the voting rights.

CM-CIC Laviolette Financement is 100%-owned by CIC group.
Both subsidiaries offer factoring services to SME and large corporate customers of the branch networks of
the 18 federations of the Crédit Mutuel Group and of CIC. The factoring services include cash advances
and the settlement of customers’ accounts as well as the purchase of assigned business receivables.
In 2007, three new partners (CIC Société Bordelaise, a regional bank of CIC group, Crédit Mutuel Nord
Europe and Crédit Mutuel de Normandie) entered into business with CM-CIC Laviolette Financement.
CM-CIC Covered Bonds
CM-CIC Covered Bonds is a subsidiary of BFCM created in June 2007 to issue covered bonds backed
with French real-estate mortgage loans and prêts cautionnés 19 originated by the retail networks of CM5CIC and other CM federations. The entity, which is supervised by the Banque de France, issued covered
bonds for the first time in July 2007. 20
Insurance
The insurance activities of BFCM are undertaken by GACM, which is ultimately owned 73.3% 21 by BFCM.
GACM is the holding company of a number of subsidiaries specialising in specific insurance products and
services.

Life insurance activities are undertaken by ACM Vie SA, Sérénis Vie, ACM Vie SAM and International
Crédit Mutuel Life (ICM LIFE), all 100% subsidiaries of the GACM;

Personal and P&C insurance activities are undertaken by ACM IARD SA (owned 96.4% by GACM),
Sérénis Assurances SA (owned 99.13% by GACM) and S.A. Partners Assurances. S.A. Partners
Assurance was fully acquired by GACM in 2006;

Reinsurance activities are undertaken by Crédit Mutuel Reinsurance (ICM RE), a 100% owned subsidiary
of GACM.
GACM’s life insurance, personal risk and P&C policies are provided to the customers of the branch networks
of CIC group (including private banking clients), CM5 and to those of other federations of Crédit Mutuel group,
with the exception of Arkéa and CM Nord Europe. In addition to selling its own insurance products, GACM is
also active in insurance brokerage through its subsidiary Procourtage and in a number of specialised niche
insurance services.
GACM also owns minority stakes in several foreign insurance companies, including three Canadian non-life
insurance companies that are part of Mouvement Desjardins (a 10% stake in each), the Tunisian insurance
company Astree (30%), the Moroccan company Royale Marocaine d’Assurance-Watanya (20.25%) and the
Spanish firms SA Nostra and Serbrok (5% and 10%, respectively). More recently, in October 2008, the Group
created a joint venture with the Royal Automobile Club of Catalonia (RACC). The joint company, RACC
Seguros, is 51% held by RACC and 49% by GACM. The company offers insurance policies, spanning from car
insurance to other P&C products, as well as to life insurance products. Through its 240 branches, the RACC
has more than 1 million members, is the fifth-largest insurance broker in Spain with more than 850,000
19
20
21
10
Prêts cautionnés are residential housing loans guaranteed by credit institutions such as Crédit Logement or Saccef. For more details on prêts cautionnés,
please refer to Crédit Logement on moodys.com.
CM-CIC Covered Bonds has established a €15 billion EMTN programme under which it issues its covered bonds.
BFCM directly owns 55.96% of the shares of GACM, while 20.52% are owned by ADEPI, a 100%-owned subsidiary of CIC group; 23.52% are owned by the
central bodies of Crédit Mutuel federations other than CM5 federations.
Credit Analysis
insurance contracts (all insurance contract types included), but is also the leading car insurance broker in
Spain (with 400,000 contracts).
Financing and Markets
In addition to providing large corporate customers with banking services and products, the financing and
markets business unit groups together all of the group’s financial market activities, the financial transactions on
the primary market (such as M&A, IPO) as well as project finance.
The activities are organised into the two divisions that follow.

General banking activities service large corporates as well as customers of the retail and private banking
business units who require the expertise of the proprietary trading desks for specific products/services.
The products marketed are interest and FX hedges, as well as investment propositions.

Financial market activities are undertaken by CM-CIC Marchés, a division within CIC created in 2006 as
22
a merger of BFCM’s, CIC’s and CIC Banque CIAL’s formerly separate trading activities. CM-CIC
Marchés’ activities are twofold:

Proprietary trading activities of the CIC group (and thus consolidated in CIC group’s accounts). These
activities were previously organised into four trading groups (equity trading, hybrids trading, trading of
fixed-income securities issued by corporates and financial institutions and trading of sovereign fixedincome securities).
In 2009, the group decided to scale down its proprietary trading activities. In addition to reducing the
equity allocation to this business segment, it decided to focus on trading activities with potential crosssale opportunities with corporate or private banking customers.
In addition, the group also reorganised the proprietary trading activities as follows:

Equity and hybrids:
On equity trading, the main focus is on cash equity. This business involves taking arbitrage
positions on M&A deals, event-driven positions and long/short equity positions (including
quantitative trading). In addition to trading cash equity products, this group has also recently
started to trade volatility products;
Hybrids trading focuses on convertibles and structured products, mostly on convertible bonds;

Trading of fixed-income securities issued by financial institutions, mostly from Europe and
of correlation;

Trading of fixed-income securities issued by corporates, mostly from Europe and of assetbacked securities (ABS).

Trading of sovereign fixed-income securities, mostly arbitrage between sovereign
securities and the equivalent swap.
Treasury, refinancing and ALM for CM5-CIC group, as well as the other federations of Credit
Mutuel group, with the exception of Arkéa and CM Nord Europe. These positions are booked
directly in BFCM’s accounts and do not appear in CIC group’s reporting.
All activities are undertaken by the same trading floors but are booked either in CIC group’s accounts 23 or
directly in BFCM’s own accounts.
22
23
11
CIC Banque CIAL, a regional bank of CIC Group headquartered in Strasbourg, France, had its own investment banking department until 2006. This
department was combined with its parent, CIC, in order to create a single entity, CM-CIC Marchés.
Activities booked in CIC group’s accounts are also fully accounted for in BFCM’s accounts as BFCM ultimately owns 91% of CIC group.
Credit Analysis

Brokerage and custody: CM-CIC Securities, a 100% subsidiary of CIC group, acts as a broker-dealer,
clearing agent and custodian. In brokerage, CM-CIC Securities is a member of ESN LLP, a “multi-local”
network of ten brokers in European equity markets and covering 15 European countries. Custodian
activities are undertaken by its subsidiary, CM-CIC Titres.

Financial transaction activities comprise all businesses involved in the primary market.

Specialised financing comprises the services extended to Crédit Mutuel group’s clients for the funding of
acquisitions, assets or projects.
Private Bank
This business unit comprises all of the private banking activities of CM5-CIC. These activities are exclusively
undertaken under the umbrella of CIC group by its private banking business unit, CIC Banque Privée 24 , both in
France and abroad. Private banking customers are defined as customers with a net worth of €1 million and
more.
The main private banking subsidiaries in France are:

CIC Banque Transatlantique (100% owned by CIC); and

Dubly-Douilhet (61.9% owned by CIC);
The private banking arm of BFCM has established itself in a number of foreign countries with strong private
banking markets. Private banking operations are carried out through a number of entities. The major ones are:

Banque de Luxembourg and Banque Transatlantique Luxembourg (71.1% and 60% owned by CIC,
respectively) in Luxembourg;

Banque CIC Suisse and CIC Private Banking-Banque Pasche in Switzerland (both 100% owned by CIC
group); and

CIC Singapour and CIC Private Limited Hong Kong (both 100% owned by CIC group).
Private Equity
This business unit mainly comprises three entities of CIC group, each responsible for private equity activities in
a specific region of France. These subsidiaries of CIC group are:

CIC Finance (100%-owned), which is active in the Paris region and in north-eastern France. It engages in
proprietary transactions and provides M&A advisory services;

IPO, which is 76.6%-owned by CIC group, is active in western France; and

CIC Banque de Vizille (93.9%-owned) in southern France
Administration and Holding
The administration and holding unit comprises the various components that cannot be allocated to the other
divisions, along with logistics structures. These components are intermediate holding companies, operating
property assets held by specific entities and IT companies of BFCM.
24
12
CIC Banque Privée is a business unit of CIC group and is not a legal entity.
Credit Analysis
Exhibit 4: Breakdown of net banking income (NBI) by BFCM’s business units
NBI by activity (in %) (1)
0.6%
16.6%
9.2%
2.4%
Retail banking
Insurance
Private Bank
Venture Capital
71.2%
Segment Net Banking Income (NBI)
H1 2009 (2)
YE 2008 (3)
(EUR million)
Retail banking
1,636
3,289
Insurance
491
765
-88
26
Private Bank
225
427
94
112
Structure and Holding
-195
-671
Intra-Group
-19
-46
2,144
3,902
Venture Capital
GROUP
(1) Excluding Structured and Holding and Intra-Group.
(2) Including full contribution of CIC Iberbanco, Citibank Deutschland and Cofidis.
(3) Including contribution of CIC Iberbanco and Citibank Deutschland since the date of acquisitions.
Source: Moody's, BFCM.
Distribution Capacity and Market Shares
Retail Banking
As regards the distribution capacity and the market shares of the business activities carried out solely under
the umbrella of BFCM:
25
13

The CIC retail network comprises five CIC regional commercial banks with more than 2,122 branches (of
which 1,702 are retail oriented, 59 geared toward private banking activities and 294 cater services to
corporate customers). It has approximately 22,600 employees, catering services and products offered to
3.45 million individual customers (including customers of the private banking business unit) and
approximately 691,300 corporates and self-employed professionals; 25

BECM has 26 corporate branches in France, nine real estate branches and three private banking
branches. BECM’s own distribution capacity is supplemented by that of the CM5 federations and of CIC
group. The bank has 330 employees and approximately 15,400 customers; and

Banco Popular, rebranded CIC Iberbanco, has 18 branches in France.
As disclosed by CIC group, without breakdown between customers of the retail banking business line and those of financing and capital markets.
Credit Analysis
Activities undertaken by the rest of the CM5-CIC group
At year-end 2008, the retail network of the Caisses locales of the CM5-CIC group comprised 1,309 branches
and boasted more than 4 million customers.
More specifically:

The CMCEE federation has 900 branches and reports market shares of more than 45% in deposits and
loans in the Alsace region, approximately 20% in the Lorraine region and over 15% in the Franche Comté
region. Its market shares in the Bourgogne region are lower, at 7.5% for deposits and 13.1% for loans; 26

CM du Sud-Est federation has 134 branches with market shares of 6.0% of deposits and 13.3% of loans in
the Rhône-Alpes region; 27

CM Ile-de-France federation has 171 branches and market shares of 1.7% in deposits and 3.2% of loans
28
in the Paris area;

CM Savoie-Mont Blanc federation has 64 branches and market shares of 7.1% of deposits and 8.6% of
loans in the Savoie-Mont Blanc region; 29 and

CM Midi- Atlantique federation has 84 branches and 260.000 customers and market shares of 4.5% of
deposits and 3.5% of loans in the Toulouse area.
Specialised Activities

In Consumer Finance, Sofémo has four dedicated centres and more than 50,000 points of sale that have
entered into partnership with it. The services and products of Sofémo are also available through the retail
networks of CM5-CIC.
Citibank Deutschland has more than 3.25 million customers serviced through 340 branches.
Cofidis SA has 11.5 million customers in France, Belgium, Spain, Italy, Portugal, Greece, the Czech
Republic and Hungary.

During 2008, CM-CIC Lease SA increased its real estate portfolio by €474 million, with 279 new leasing
operations. As regards equipment leasing activities, CM-CIC Bail had 170,000 leasing transactions at
year-end 2008 and its equipment portfolio stood at €4.7 billion, up by 12% from YE 2007.

The real estate investments of CM-CIC Participations Immobilières SA generated €95 million of revenues
in 2008 and represented nine new projects (corresponding to approximately 471 housing units).
As regards real estate activities in 2008, 2,750 homes worth €480 million were sold by CM-CIC Agence
Immobilière AFEDIM, which generated €17.4 million of fees before tax.

CM CIC Asset Management has €54.7 of funds under management. CM-CIC Epargne Salariale offered
231 OPCVM 30 to approximately 44,332 corporates and 1.6 million employees at year-end 2008. Assets
under management stood at approximately €3.8 billion at year-end 2008.

In factoring, Factocic works with one in ten companies in factoring services in France. In 2008, it reached
a market share of 7.5% in receivables purchased; it had 2.849 active contracts and 214 employees at
year-end 2008.
As regards receivables purchasing, in 2008 CM-CIC Laviolette Financement processed approximately
255,000 invoices, representing inflows of approximately €1.5 billion.
26
27
28
29
30
14
Source: CM5-CIC.
Source: CM5-CIC.
Source: CM5-CIC.
Source: CM5-CIC.
For a definition of OPCVM, Please refer to the description of the fund management business unit in the Business Activities section of this report.
Credit Analysis
Insurance
The consolidated income of GACM in 2008 stood at €6.71 billion, down by 13.9% from 2007. The IFRS net
result stood at €395 million, down by 29% from 2007. GACM had 6.5 million customers (in P&C and life
insurance together) at year-end, up by 4.8% from 6.2 million customers at year-end 2007, while the number of
contracts was up by 9% to 19.3 31 million from 8.2 million at year-end 2007.
GACM distributes its products through the retail banking networks of CM5, CIC and the other federations of
Credit Mutuel group, with the exception of Arkéa and CM Nord Europe. GACM is the second-largest
bancassurer in France, after Crédit Agricole Assurances. Overall, it is the fourth-largest life insurer in France
and one of the leaders in P&C insurance.
Financing and Capital Markets

As regards financial markets activities, three sales teams cater services and products to the retail
networks (including SMEs), the large corporates and the regional and local governments (RLGs) and
sovereign investors.

Brokerage activities at CM-CIC Securities are undertaken by a team of 50 salespersons, which is
supported by a research team of 30 analysts and strategists.
Private Bank
In France, CIC Banque Privée offers its products through 59 dedicated branches. Abroad, this network is
complemented by the group’s foreign private banking entities.
Private Equity
CIC Finance has a team of 55 employees in Paris and in the rest of France and managed a portfolio of €1.3
billion at year-end 2008, of which €629 million was funds managed for third parties (consolidated figures
including portfolios held by CIC Finance’s subsidiaries).
IPO comprised a team of 15 employees and managed €345 million invested in 156 regional corporates at
year-end 2008, in which year IPO took part in 27 new deals, managing €82.9 million.
CIC Banque de Vizille comprised 42 employees and managed 153 investment portfolio lines and a €465
million invested portfolio at year-end 2008.
The new investments of the three private equity subsidiaries of CIC group totalled €341 million in2008 and the
investment portfolio stood at over €2.1 billion at year-end 2008. 32
Company History
BFCM was created in 1919 as a member of the Fédération d’Alsace-Lorraine (federation of the AlsaceLorraine region) of the Caisses Locales of Crédit Mutuel. In 1958, Crédit Mutuel was granted legal status as a
mutualist group and the Fédération d’Alsace-Lorraine was renamed Fédération du Crédit Mutuel d’Alsace et
de Lorraine. In 1971, the group started its insurance activities under its subsidiary, GACM. In 1972, the
Caisses locales of the Franche Comté region joined the federation and were followed by the Caisses Locales
of Fédération du Crédit Mutuel Centre-Est in 1992. The federation was then renamed Fédération du Crédit
Mutuel Centre-Est-Europe (CMCEE).
In 1998, Crédit Industriel et Commercial (CIC) was privatised by the state and CMCEE, one of the bidders,
was allowed to acquire a 67% stake in CIC. This stake was increased to 90% in 2001.
CMCEE established a partnership with Fédération du Crédit Mutuel du Sud-Est (CM Sud-Est) in 1993 and with
Fédération du Crédit Mutuel Ile-de-France in 2002. Fédération du Crédit Mutuel Savoie Mont Blanc joined in
2006.The last partner to join was the Fédération Midi-Atlantique, in January 2009. Together, the five
31
32
15
Excluding ACM Vie Mutuelle
Source: CM5-CIC.
Credit Analysis
federations and their subsidiaries are now known as “CM5” (when referring only to the mutualist part of the
group) or “CM5-CIC” (when referring to the overall group, including common law subsidiaries).
In 2004, CIC acquired a 10% minority stake in Banque Marocaine du Commerce Extérieur (BMCE).
In December 2008, BFCM acquired 100% of Citibank Germany, Citigroup’s German retail banking operation
and, in March 2009, BFCM acquired 51% ownership (34.17% economic interest) of Cofidis Participations, the
parent company of the French consumer finance provider Cofidis SA. 33
33
16
For more details on the ownership structure of Cofidis S.A., please refer to the Business Activities section of this report.
Credit Analysis
Ownership and Structure
BFCM is the entity that provides refinancing, treasury management and other financial services 34 to the
entities comprising the five federations (CMCEE, CM Ile-de-France, CM du Sud-Est, CM Savoie-Mont Blanc
and CM Midi–Atlantique) together referred to as CM5-CIC 35 (see Exhibit 1 for the organisation chart of the
wider Crédit Mutuel group), but also to most of the other federations of the Crédit Mutuel group, with the usual
exceptions of Arkéa and Crédit Mutuel Nord Europe.
Exhibit 5: Structure of CM5-CIC Group
CM5-CIC Group
CM CEE Federation
CM SE Federation
CM IdF Federation
CM SMB Federation
CM MA Federation
78.08%
Caisse Fédérale du CM CEE, CM SE,
CMIdF, CM SMB et CM MA
(CFCMCEE)
central body
18.98%
" CM5" (muatualist part of CM5-CIC Group)
94.56%
BFCM group (non-mutualist part of CM5-CIC group)
Banque Fédérative du Crédit Mutuel (BFCM)
Ventadour
Investissement
100%
72%
20.34%
67%
Funding and liquidity management for
CM5-CIC group
56%
98.5%
66.7%
51%
Joint holding with 3SI
*
Cofidis Participations
*
51%
100%
100%
Cofidis SA
Internationel
consumer finance
100%
CIC
GACM
BECM
Sofémo
CM-CIC AM
Technologies
CIC Iberbanco
Citibank Germany
Retail & commercial
banking in Paris area,
CIB
Insurance
Commercial
Banking
Consumer
Finance in Crédit
Mutuel network
Asset
Management
Specialised
entities
Retail banking in
France
Consumer finance
in Germany
23%
33.3%
90%
100%
ADEPI
ACM Vie S.A.
ACM IARD S.A.
NRJ Mobile
20.52%
100%
100%
100%
100%
100%
CIC
Banque BSD-CIN
CIC
Banque CIO-BRO
CIC
Société Bordelaise
CIC Lyonnaise
de Banque
CIC EST
Retail banking in North
France
Retail banking in West
France
Retail banking in South
West France
Retail banking in South
East France
Retail banking in East
France
100%
CIC Banque
Transatlanique
Private banking
100%
61.90%
Dubly-Douilhet
60%
Banque Transatlantique
Luxembourg
Private banking
100%
CIC Private Banking
Banque Pasche
76.6% / 93.9%
100%
CIC Suisse
71.1%
Banque de Luxembourg
29%
Private Banking
Private banking
Private banking
100%
98.9%
Private Banking
54.1%
51%
CIC Finance
IPO &
CIC Banque de Vizille
CM-CIC
Securities
CM-CIC Bail *
Factocic *
CM-CIC Lease *
Private equity
Private equity
Brokerage and custody
Leasing
Factoring
Real-estate leasing
45.9
* The remainder is held by 3SI (3 Suisse International). For more details, please refer to the Business Activities section of
this report.
Sources: Moody’s, BFCM.
34
35
17
These activities are undertaken on behalf of Caisse Fédérale du Crédit Mutuel Centre Est Europe (CFCMCEE).
CM5-CIC is not a legal entity but relates to the consolidation of the five regional groups and their subsidiaries since they merged their central bodies.
Credit Analysis
Key Issues
CM5-CIC: a pole of consolidation within a loose mutualist group
In comparison with other French mutualist groups, Crédit Mutuel group appears to be less cohesive, with
much looser co-operation at the group level and more independence for the regional federations. The cooperative support mechanisms of Credit Mutuel group are somewhat weaker than those of other French
mutualist groups. Each federation also has its own central body, responsible for treasury operations and
funding, although those central bodies can –and do– delegate their operations to designated entities, mainly to
BFCM.
However, over the past decade, some of the federations within the group have started to develop partnerships
in specific businesses to improve efficiency and rationalise their activities. Some have gone further and
merged their central bodies while extending their partnerships to all activities, as is the case for CM5-CIC. 36 In
Moody’s view, the cohesiveness and centralisation within CM5-CIC is at least as strong –and in many
instances stronger– than in the other French mutualist groups.
In summary, Credit Mutuel group is probably the least cohesive of the French mutualist groups, but it consists
of sub-groups that are, in some cases, among the most cohesive of the French mutualist groups.
Moody’s notes that most of the federations’ central bodies have delegated their treasury and funding to CM5CIC’s subsidiary – BFCM – with the exception of Arkéa and Crédit Mutuel Nord Europe. In addition, the
insurance arm of CM5-CIC services its products for the customers of the entire Crédit Mutuel group (with the
same exceptions: Arkéa and CM Nord Europe), as do other “factories” within CM5-CIC (factoring, leasing,
etc.]).
In the context of high competition and the need for Caisses locales to provide retail and commercial customers
with more complex or tailor-made products, it appears likely, in Moody’s view, that other federations of the
Crédit Mutuel group will decide to join CM5-CIC, as was the case for the Midi-Atlantique federation, which
joined CM4-CIC on 1 January 2009, thus forming CM5-CIC. This process is facilitated by the gradual migration
of most federations to CM5-CIC’s IT platform. Moody’s expects the trend of the “concentration” of Credit
Mutuel group around CM5-CIC to continue.
Franchise developments under the scope of BFCM
BFCM’s strong presence throughout France through CIC group and BECM in retail and commercial banking
as well as in insurance through GACM is an important rating driver. Alongside the integration of CIC group,
BFCM has managed to develop cross-selling opportunities with its insurance arm, GACM. Moody’s expects
the cross-sales to continue to deliver improved profitability in the medium term. In Moody’s view, CM5-CIC –
and BFCM within CM5-CIC – has developed a complete universal banking model in France, which has helped
the group to maintain its growth in the past few years.
Given the stiff competition in France and the deterioration of the macroeconomic environment, we believe it
will be difficult for CM5-CIC to organically improve its market shares. We understand that some of BFCM’s
businesses activities could, however, benefit in the event that other federations of the Crédit Mutuel group
decide to join CM5-CIC. Indeed, although the Caisses locales of CM5-CIC are outside the scope of BFCM, a
significant proportion of the services and products they offer to their clients stem from BFCM and its
subsidiaries. 37
We note also that BFCM has recently been acquisitive, with the purchase of controlling stakes in CIC
Iberbanco (previously Banco Popular France) in June 2008, Citibank Deutschland, a German consumer
finance company previously controlled by Citibank, in December 2008, and Cofidis Participations, the parent of
the French consumer-lending arm of 3 Suisses retailer (Cofidis SA), in March 2009.
36
37
18
CM5-CIC group is not a legal structure. For more details of this partnership between the five federations, please refer to the Group Structure of the Crédit
Mutuel Group and to the Company History sections of this report.
This includes the consumer finance products of Sofémo, the funds from CM-CIC AM and the insurance products from GACM.
Credit Analysis
In addition to bringing some earnings diversification, the acquisition of significant franchises in the consumerlending field has also brought geographic diversification, particularly given that Citibank Deutschland’s
operations are concentrated in Germany, where BFCM previously had only one branch (through BECM).
We note that the group had viewed consumer finance as a strategic development focus for some time, but
caution about the timing of the acquisition given the deterioration of the macro-economic environment in
France and Germany and our expectation of an increase of the cost of risk, especially in consumer-lending
activities, which are more vulnerable to an increase in unemployment rates and individual insolvencies.
Analysis of Rating Considerations
Discussion of Qualitative Rating Drivers
Franchise Value
Strong national bancassurance franchise
BFCM’s franchise is characterised by a strong foothold in retail and commercial banking and insurance in
France, resulting in a resilient earnings mix. Its franchise is also growing in the field of consumer finance,
although we caution that this activity results in higher earnings volatility, especially in the current
macroeconomic environment.
Market Share and Sustainability
Strong bancassurance franchise and increasing integration within CM5-CIC group
BFCM has built strong domestic franchises in banking and insurance. While the banking activities have
significantly increased as a result of the acquisition of CIC group, the GACM’s insurance activities were
developed internally by the group.
CM5-CIC group as a whole (i.e. including CM5’s mutualist network and BFCM’s networks, but excluding
the 13 other Crédit Mutuel federations’ networks) ranks as the third-largest domestic bank in France,
ahead of Société Générale and BNP Paribas. CIC group on its own has attained good national coverage in
retail and commercial banking. GACM ranks second in France in bancassurance, fourth overall in life
insurance and among the market leaders in P&C insurance.
Moody’s views positively BFCM’s cross-selling opportunities with the mutualist network (Caisses locales)
of CM5’s federations. Indeed, although CM5’s retail banking activities are carried out outside the scope of
BFCM, the strong and increasing integration within CM5-CIC group enables retail coverage and
penetration to be carried out and promoted on a group basis. As such, CIC group’s network, like the
mutualist network of CM5, has adopted a model of cross-selling products and promotes GACM’s
insurance policies and CM-CIC Asset Management’s products.
Moody’s also notes that BFCM’s franchise extends beyond CM5-CIC group. BFCM, through its
subsidiaries, acts as the product factory for most of Crédit Mutuel group’s other federations. BFCM’s
subsidiaries’ products and services are distributed throughout these federations’ networks under common
brand names.
The bank has also recently acquired significant existing franchises in consumer finance in France, through
Cofidis, and in Germany, through Citibank Deutschland. While Citibank Deutschland’s customer base does
not overlap with that of BFCM and while Cofidis’s customer base may differ from that of BFCM’s retail arm,
we believe the group may benefit from the technology and know-how of both firms in the fields of
consumer lending in terms of streamlining its own consumer-lending activities and those of CM5-CIC’s
network (and, more widely, those of the rest of Crédit Mutuel’s network).
Overall, Moody's views BFCM's franchise as strong and we expect it to improve in the medium term
thanks to the increasing cross-selling opportunities within CM5-CIC’s networks and those of the other
19
Credit Analysis
federations. However, we view the successful operational and risk management integration of the new
consumer-lending activities as the key to maintaining BFCM’s risk profile and earnings volatility level.
Geographic Diversification
Growing presence abroad, albeit in relatively risky markets
BFCM’s retail activities remain predominantly focused on the French banking and insurance markets;
following the acquisition of Citibank Deutschland, the German consumer-lending market represents
BFCM’s first significant non-domestic foothold. BFCM’s insurance activities have also developed a life and
P&C insurance partnership in Spain with the Royal Automobile Club of Catalonia.
While the acquisition of consumer-lending activities is a positive driver for the bank’s earnings and
customer diversification over the medium-to-long term, we caution that the weakening macroeconomic
environment in France and in Germany may prove challenging, especially given the rising unemployment
rate and greater levels of individual insolvency.
Earnings Stability and Earnings Diversification
Increasing diversification mitigated by high volatility in financial markets
activities
BFCM’s strong reliance on retail activities –including banking and insurance– results in a high proportion of
relatively stable earnings. Moody’s also considers the liquidity management activities undertaken by BFCM
for both CIC and CM5 to be stable. 38
In addition to these activities, BFCM also has riskier and more volatile businesses, including proprietary
trading activities. Moody’s understands that BFCM has decided to scale down some of its financial
markets activities, but notes that such activities had a significant adverse effect on the bank’s earnings in
2008. What is more, BFCM’s net result would have been negative had the group not reclassified its assets
as permitted under the IAS 39 amendments.
We further note that the consumer-lending activities will also bring some extra volatility, at least in the
short-to-medium term, given the deteriorating macroeconomic environments in France and Germany.
Risk Positioning
Controls and Risk Management
Improving, yet not sufficiently integrated, controls and risk management
Following the losses linked to CIC’s structured equity derivatives portfolio in 2005, the group decided to
restructure its market activities and beef-up its risk management capacity. A number of projects started
after the 2005 losses, including a group-wide effort to put in place a historical VaR and stress-testing
models covering the bulk of market-related activities. The models were established in late 2007 and
provided a much-needed improvement.
Moody’s understands that the group has decided to scale down its financial markets activities after losses
incurred in the financial turmoil since 2007. For more details, please refer to the Market Risk Appetite subsection, below.
Another development has been the establishment at group level of an independent risk department with
oversight over credit, market and operational risk. However, this department has not been empowered with
decision-making or sanction capacities. The risk department's main attributes are to measure and control
risks and to validate processes. For all practical and operational purposes, the various business lines have
retained control over their various risk departments.
38
20
CFCMCEE, the central body of CM5’s five federations, delegated its liquidity management activities to BFCM. Moody’s does not expect any change in that
respect in the foreseeable future.
Credit Analysis
Overall, Moody's believes that, given CIC's size and broad market activities, its risk management teams
are probably not sufficiently integrated and remain primarily linked to the operational business lines. That
said, the group has developed or is developing tools that will allow for effective management of risks. For
instance, the credit department has developed its own state-of-the-art IT tool to fully identify, follow and
consolidate all credit risks within CM5-CIC, including BFCM and its subsidiaries (including CIC) but also
including all credit activities carried out by the local banks of the co-operative network.
Financial Reporting Transparency
Weak financial transparency
The quality of information publicly available on BFCM is weak and, in our view, does not provide market
participants and counterparties with all the necessary information to fully assess the risks undertaken at
the level of BFCM. More specifically, the information on market risk appears to be poor in comparison to
the still sizeable market activities undertaken at the CIC level and the importance of BFCM to the whole
CM5-CIC group for treasury and funding activities. Moody’s is aware that the French regulator does not
require specific capital adequacy measures at BFCM’s level. Thus, we note that the risk-weighted assets
and capital adequacy ratios, such as the Tier 1 ratio, are publicly available at the levels of CIC group and
CM5-CIC, but are not disclosed at the level of BFCM.
The bank’s annual reports are complemented by semi-annual summarised reports and a Reference
Document (Document de Référence). Despite being richer in terms of information, the latter is published
only later in the year and does not provide market participants and counterparties with timely information.
The information disclosed at the level of BFCM’s subsidiary CIC group is slightly richer and is a direct
consequence of the listing of CIC group’s shares. As such, CIC group publishes semi-annual press
releases but containing only selected items of the profit & loss account and balance sheet. 39
Credit Risk Concentration
Higher granularity provided by the proportion of retail activities
As is the case for other important banks and financial institutions in France, BFCM has a high borrower
concentration to other financial institutions and to sovereigns. However, Moody’s notes that the bulk of
these exposures are highly rated (A3 and above) and, when adjusted for this, the credit risk concentration
is average.
We view positively the high proportion of “retail activities” stemming from CIC group and GACM, as they
result in a higher granularity of the bank’s overall exposure.
Excluding the exposures to individuals and to financial institutions, insurance and sovereigns, the biggest
industry exposure is to real estate, 40 encompassing all real estate-related sectors and representing
14.13% of total commitments, followed by manufacturing (12.5%).
Liquidity Management
A reflection of BFCM’s role in managing CM5-CIC group’s liquidity
Although CM5-CIC has a strong retail base and solid retail-deposit-gathering capacity, which is helping it
through the present crisis, BFCM and its subsidiaries are slightly more reliant on market funding. The
group took steps, however, to alleviate and manage the situation and it has adequate liquidity
management, in our view. Notably:
39
40
21

BFCM monitors its liquidity risk through various crisis scenarios;

The share of medium-term refinancing has been growing over the past few years;
Itemised accounts are available only in the annual report.
As reported in BFCM’s Reference Document for 2008. These figures are based on loan exposures and exclude other exposures encompassed by Moody’s
definition of credit risk concentration. For more details of Moody’s definition of credit risk concentrations, please refer to Moody’s ‘Bank Financial Strength
Ratings: Global Methodology’, published in February 2007.
Credit Analysis

The group set up a covered bonds issuer (CM-CIC Covered Bonds) in 2007;

The group maintains at all times 30% cover of its deposits by available liquid assets;

The net one-day borrowing position is closely monitored and strictly limited to a maximum of €10
billion; and

The total cash inflows and outflows over a month must be balanced at all times for all entities within
the group.
Market Risk Appetite
Scaled down, yet still sizeable proprietary trading activities
Following the losses linked to CIC’s equity structured derivatives business in 2005, the group decided to
restructure its market activities. As such, CIC’s market activities were largely discontinued and merged into
those of CIAL (then one of CIC’s regional subsidiaries) and re-grouped directly at CIC level. However,
although CIC is no longer active in some of the riskier businesses, its market activities remain somewhat
similar to those of a hedge fund and they are not dominated by client-driven flows.
Earlier in 2009, the group took the decision to downsize its proprietary activities and to focus on trading
activities, which lead to cross-selling opportunities with corporate and private banking customers. Although
the trading desks have been maintained, we understand that the group has decided to reduce the capital
allocation for proprietary trading activities as a whole.
We will closely monitor developments in CIC’s financial markets activities and notably its proprietary
trading activities to ensure they remain within the risk appetite of the bank and of the group. Moody’s views
the large losses generated by those activities as an indicator of a larger risk appetite than we had
previously anticipated.
Regulatory Environment
In common with other banks incorporated in France, BFCM is first and foremost subject to the French
regulatory environment.
For a detailed discussion of the French regulatory environment, please refer to Moody's latest Banking System
Outlook on France, published in July 2009.
Operating Environment
This factor is common to all French banks. For detailed discussion of the French operating environment,
please refer to Moody's latest Banking System Outlook on France, published in July 2009.
We note that the proportion of earnings stemming from and the ratio of assets located in foreign countries
increased in late 2008/early 2009, following the acquisition of Citibank Deutschland and Cofidis, and the
increased stake in BMCE.
Moody's expectation of deteriorating operating environments in BFCM’s main markets, namely France and
Germany, leads to a weakening perspective for the bank's overall operating environment.
Discussion of Quantitative Rating Drivers
Profitability
Satisfactory commercial performance hampered by impairments and
increasing cost of risk
Thanks to the stable income generated by retail banking activities and insurance (which accounted for 56.3%
and 17.2% of NBI in 2007, respectively), BFCM’s profitability steadily improved from the 2005 trough until
2007.
22
Credit Analysis
In light of the impairments the bank had to book on its structured credit and securities portfolios, the
contribution of the financing and markets activities wiped out its net income, which stood at €138 million in
2008 (2007: €1.703 billion). We note that net income would have been negative without the reclassification of
assets as permitted under IAS 39 and effective from 1 July 2008 for CIC and BFCM. Following the
reclassification, we expect the bank’s earnings to be less severely affected by the mark-to-market fluctuations
on its securities and structured credit portfolio going forward.
We expect BFCM’s net interest income (NII) to benefit from the re-pricing of loans and deposits in France and,
more marginally, from the consolidation of Citibank Deutschland and Cofidis, both of which charge high
interest rates to their customers. However, we do not expect the bank’s pre-provision profit to be restored to
pre-crisis levels given the lower appetite for life insurance and mutual funds products, the lower demand for
complex products and the strong competition between banks.
Furthermore, we expect the bank’s bottom-line profitability to be hampered by the increased cost of risk,
stemming from the deterioration of the macroeconomic environment in the markets where BFCM operates. In
addition, the cost of risk will mechanically remain higher because of the higher proportion of consumer-lending
activities since the consolidation of Citibank Deutschland and Cofidis.
Liquidity
A reflection of BFCM’s role in managing CM5-CIC group’s liquidity
Although the bulk of BFCM’s activities are geared towards retail banking and insurance, the bank is heavily
reliant on market funding. This is mainly explained by BFCM’s role as the liquidity manager for the whole CM5CIC group on behalf of the central body of the group (CFCMCEE), as well as for some of the other Crédit
Mutuel federations. BFCM bears the weight of the re-financing of the whole CM5-CIC group on its balance
sheet, while it does not consolidate the co-operative networks’ retail deposits. Hence, BFCM’s strong asset
growth has only been partly compensated for by on-balance-sheet retail deposits and has resulted in an
increasing recourse to market funding.
Unlike Cofidis, which was historically a wholesale funding institution, Citibank Deutschland collects deposits in
addition to servicing consumer loans. We estimate that the consolidation of Citibank Deutschland, unlike that
of Cofidis, has been overall neutral for the bank’s liquidity position.
Exhibit 6
Market Funds - Liquid Assets Ratio (%)
3.00
2.00
2.36
1.00
0.34
0.00
-1.00
-2.00
-1.06
-2.05
-3.00
-4.00
2005
-3.43
2006
2007
Source: Moody's
At end-June 2009, BFCM’s main sources of funding were:
23

Customer deposits (30.4% of total funding);

Interbank (28.5%);
2008
H1-2009
Credit Analysis

Market funding (39.7%); and

Subordinated debt (1.4%).
These are balance-sheet figures at end-June 2009, relative to the sum of all four items (source: Moody's
Investors Service).
BFCM benefits from a high proportion of marketable securities and pledgeable assets (at end-June 2009,
41
liquid assets accounted for 55% of total assets).
Capital Adequacy
We estimate capitalisation to be satisfactory, although it is not publicly
disclosed
Moody's views BFCM's capital adequacy as satisfactory. However, the lack of disclosure at the level of BFCM
does not provide us with a fair and complete picture of the bank's solvency. The French regulator focuses on
CM5-CIC's consolidated capital adequacy levels rather than on BFCM's own consolidated capital adequacy
figures.
At the CIC level, which accounted for around 56% of BFCM's total assets at end-June 2009 and which
undertakes market activities, 42 the Tier 1 ratio was 9.1% at end-March 2009. 43
BFCM issued a titre super subordonné à durée indéterminée (TSSDI – French deeply subordinated debt) in
late 2008 in order to finance the acquisition of Cofidis Participations. This TSSDI was subscribed by GACM.
We also note that the Crédit Mutuel group, like other French banking groups, benefited from a capital injection
from the French government through its Société de Prises de Participations de l’Etat (SPPE), a vehicle
established in October 2008.
Out of the total €1.2 billion allocated to Crédit Mutuel group for the first issuance of SPPE, 44 the bulk was
streamlined to CM5-CIC. CM5-CIC announced that it would not tap the second tranche of SPPE. In our
analysis of BFCM, we take the whole amount into account as it is our understanding that CM5 (i.e. the retail
part of CM5-CIC not consolidated under BFCM) has high capital adequacy when looked at on a stand-alone
basis.
Efficiency
Will not be restored to pre-crisis levels in the short-to-medium term
After several years of relative stability, BFCM’s efficiency deteriorated in 2008 when the cost-to-income ratio
stood at 80.9%. Admittedly, this indicator was hampered by the mark-to-market impairments on the bank’s
structured credit and securities portfolios.
The bank’s cost-to-income ratio was of 60.65% in H1 2009, on the back of satisfactory commercial
performance, improved NII and the positive contribution of the financing and markets activities. Moody’s views
this level as a better reflection of the bank’s recurring efficiency. We understand that the consolidation of
Citibank Deutschland and Cofidis might also have a positive impact on the bank’s overall cost-to-income ratio,
since they do not have to bear the same level of costs on their network as does the rest of BFCM.
We expect the bank’s efficiency to remain under pressure in the short-to-medium term because of the strong
competition in the French banking market and the costs linked to the integration of Citibank Deutschland and
Cofidis.
41
42
43
44
24
Estimate of liquid assets as the sum of cash & cash equivalents due from banks and securities. Source: Moody’s.
Excluding refinancing activities undertaken directly by BFCM for the whole CM5-CIC Group. For more details, please refer to the Business Activities section.
Ratio not available for end-June 2009.
For more details on SPPE, please refer to moodys.com. Please also refer to Moody’s Banking System Outlook on France, published in July 2009.
Credit Analysis
Exhibit 7
Cost - Incom e Ratio (%)
90.00
80.88
80.00
70.00
65.63
60.00
60.65
57.25
53.06
50.00
40.00
30.00
20.00
10.00
0.00
2005
2006
2007
2008
H1-2009
Source: Moody's
Asset Quality
Acquired consumer-lending activities leading to weaker asset quality
We believe CM5-CIC has developed tools that allow for effective credit risk management. For instance, CM5CIC, and thus BFCM, is able to identify, follow and consolidate credit risks within the whole group and make
sure credit risk concentration is carefully managed.
Historically, BFCM’s asset quality ratios were commensurate with the French averages, but we note that the
ratios have deteriorated since year-end 2008, mainly under the influence of two drivers:

the deterioration of the macroeconomic environment in France, especially in the professionals/SME
segment, where CIC has strong market shares.

the one-off effect of the consolidation in BFCM’s accounts of the two recently acquired consumer finance
businesses, Citibank Deutschland and Cofidis (in 2008 and H1 2009, respectively).
Following the consolidation of the newly acquired entities in BFCM’s accounts, its consumer-lending activities
have now become much larger. Such business has a higher cost of risk and weaker asset quality metrics, in
parallel to charging higher margins on consumer loans. Consequently, BFCM’s asset quality ratios have
deteriorated and the ratio of non-performing loans to gross loans stood at 5.41% at end-June 2009, up from
3.78% at year-end 2008 (YE 2007: 2.68%).
In addition to this one-off consolidation effect, we expect BFCM’s asset quality to deteriorate further in light of
the deteriorating macro-economic environments in France and Germany and the expected increase of the cost
of risk, especially in consumer-lending activities, which are more vulnerable to an increase in unemployment
rates and individual insolvencies.
25
Credit Analysis
Exhibit 8
Problem Loans % Gross Loans
6.00
5.00
5.41
4.24
4.00
3.78
3.42
3.00
2.68
2.00
1.00
0.00
2005
2006
2007
2008
H1-2009
Source: Moody's
Exhibit 9
Problem Loans % (Shareholders' Equity + LLR)
60.00
47.72
50.00
40.00
35.91
33.01
30.00
28.10
24.68
20.00
10.00
0.00
2005
2006
2007
2008
H1-2009
Source: Moody's
As is the case for all French banks, the asset quality figures cannot be directly compared with those of
European peers as accounting practices in France tend to overstate NPLs when compared with other
European systems.
In contrast to banks in other systems, French banks keep their impaired loans on their balance sheets,
irrespective of whether they have them fully provisioned, as long as the legal procedure is ongoing. Writing
them off their balance sheets could jeopardise their claims and the tax relief already received. 45
Discussion of Support Considerations
Very high probability of support
Moody's assigns a GLC deposit rating of Aa3 to BFCM. Under our JDA methodology, the rating is supported
not only by BFCM's A3 BCA (which maps from the C BFSR, see Exhibit 10) but also by our assessment of the
probability of support from the five federations of the CM5-CIC group (CMCEE, CM Sud Est, CM Ile-deFrance, CM Savoie-Mont Blanc and CM Midi-Atlantique – together referred to as CM5). 46 Although BFCM is
not part of the cross-guarantee system within the mutualist group, we estimate the probability of support from
45
46
26
For a more detailed discussion of the comparability of BFCM’s asset quality ratios with those of its European peers, please refer to Moody’s Banking System
Outlook on France, last published in July 2009.
Please refer to Exhibit 2 for the structure of the group and BFCM’s affiliation with CM5.
Credit Analysis
CM5 as very high, taking into consideration its liquidity management and funding role, as well as core strategic
importance within the CM5-CIC group.
Additionally, in our view, BFCM's GLC deposit rating is supported by a very high probability that it would
receive systemic support through the five federations of the CM5-CIC group should a crisis occur, given CM5CIC’s size in the French retail market (it is France's third-largest retail network in terms of both deposits and
lending market shares) and its importance to the French payments system. Given these elements and CM5CIC's high overall intrinsic creditworthiness, BFCM's GLC deposit rating receives a three-notch uplift from its
BCA.
The country support guideline for France is high. The history of bank failures is very limited and confined to
tiny institutions with no presence in retail and whose main shareholders were not French regulated banks. In
addition, we note that the French market has become relatively concentrated among the top six to seven
players and has significant weight in the economy.
27
Credit Analysis
Exhibit 10: Mapping the BFSR to the Baseline Credit Assessment (BCA)
The discussions of qualitative and quantitative rating drivers presented in this report form the
analytical basis for assigning a bank financial strength rating (BSFR) of C to Banque Fédérative
du Crédit Mutuel.
BFSRs are Moody’s opinions on the intrinsic safety and soundness of a bank enterprise and, in
effect, address the susceptibility of a particular institution to financial distress.
The BFSR array of ratings is not on Moody’s traditional rating scale (Aaa, Aa, etc.). There is a
useful method, however, for translating BFSRs to Moody’s traditional scale – the baseline credit
assessment. In effect, the baseline credit assessment measures a bank’s stand-alone default risk
assuming there is no systemic or other external support.
Banque Fédérative du Crédit Mutuel’s C BFSR maps to a baseline credit assessment of A3.
However, considering external support factors, its deposit ratings are Aa3.
BFSR/Baseline Credit Assessment Mapping for Banque Fédérative du
Crédit Mutuel
28
BFSR
Baseline Credit Assessment (BCA)
A
Aaa
A-
Aa1
B+
Aa2
B
Aa3
B-
A1
C+
A2
C
A3
C-
Baa1
C-
Baa2
D+
Baa3
D+
Ba1
D
Ba2
D-
Ba3
E+
B1
E+
B2
E+
B3
E
Caa1
E
Caa2
E
Caa3
Credit Analysis
Company Annual Statistics
Banque Federative du Credit Mutuel
06/30/09
12/31/08
12/31/07
12/31/06
12/31/05
9,488
13,487
6,083
4,021
3,919
Summary Balance Sheet (EUR million)
Cash & central bank
Due from banks
104,907
104,449
96,726
94,966
80,123
Securities
114,332
119,416
146,614
115,119
99,610
Gross loans
159,383
151,920
123,542
102,070
85,730
-5,611
-4,231
-2,194
-2,340
-2,480
0
0
—
—
477
Loan loss reserves (LLR)
Insurance assets
Fixed assets
2,832
2,628
2,448
2,428
1,377
Other assets
30,622
37,554
22,691
22,761
30,107
Total assets
415,953
425,223
395,910
339,025
298,863
Total assets (USD million) [1]
583,433
591,080
578,841
447,056
352,524
Total assets (EUR million)
415,953
425,223
395,910
339,025
298,863
Demand deposits
57,333
52,152
42,223
38,043
35,680
Savings deposits [2]
42,998
35,440
27,288
22,934
21,200
Due to banks
94,184
103,330
83,940
106,834
89,185
Market funds
131,201
139,391
156,291
90,236
84,583
47,477
45,834
45,355
42,187
37,990
Insurance liabilities
Other liabilities
22,823
30,732
22,787
21,711
16,701
Total liabilities
396,016
406,879
377,884
321,945
285,339
4,770
4,651
5,011
5,400
3,760
Shareholders' equity
12,453
11,771
11,230
10,096
8,534
Total capital funds
19,937
18,344
18,026
17,080
13,524
Total liabilities & capital funds
415,953
425,223
395,910
339,025
298,863
Derivatives - notional amount
604,597
593,697
562,743
500,435
853,868
5,580
12,361
9,214
5,141
6,346
57,467
49,910
47,323
42,866
40,242
Risk weighted assets (RWA)
—
—
—
—
—
Assets under management (EUR million) [3]
—
54,600
53,100
51
—
32,369
30,803
25,197
25,246
25,564
Subordinated debt
Derivatives - replacement value
Contingent liabilities
Number of employees
29
Credit Analysis
06/30/09
12/31/08
12/31/07
12/31/06
12/31/05
8,803
18,980
14,763
11,913
11,582
-Interest expense
6,665
17,421
14,666
11,251
10,941
=Net interest income
2,138
1,559
97
662
641
Summary Income Statement
+Interest income
+Trading income
+Fee & commission income
+Insurance income (net)
+Dividend income and other operating income
101
-14
2,701
2,549
1,616
1,012
1,490
1,475
1,315
1,214
0
0
—
—
0
403
867
1,114
1,132
922
=Operating income
3,654
3,902
5,387
5,658
4,393
-Personnel expenses
1,192
1,747
1,746
1,721
1,663
924
1,251
1,193
1,146
1,040
-Other operating expenses
1,538
904
2,448
2,791
1,690
-Amortisation/depreciation
= Operating funds flow
100
158
145
135
180
(Total operating expenses)
2,216
3,156
3,084
3,002
2,883
=Pre-provision income (PPI)
1,438
746
2,303
2,656
1,510
823
1,016
128
90
104
-Loan loss provisions
+Impairment of goodwill, fixed assets and investments [4]
+Result of subsidiaries and associates
+Non-recurring items
2
8
13
10
10
39
96
64
30
23
0
0
—
—
0
=Pretax income
656
-166
2,252
2,606
1,439
-Taxes
210
-304
549
724
347
=Net income
446
138
1,703
1,882
1,092
-Minority interests
106
109
239
240
148
=Net income (group share)
340
29
1,464
1,642
944
9.82
22.97
21.04
19.06
15.16
Growth Rates (%)
Gross loans
Total assets
-4.36
7.40
16.78
13.44
14.32
Customer deposits (demand and savings)
29.09
26.01
14.00
7.20
6.31
174.28
1507.22
-85.35
3.28
-39.59
35.84
1.02
12.17
8.32
1.42
Net interest income
Fee and commission income
Operating expenses
Pre-provision income
Net income
30
40.43
2.33
2.73
4.13
4.72
285.52
-67.61
-13.29
75.89
0.60
2244.83
-98.02
-10.84
73.94
19.34
Credit Analysis
06/30/09
12/31/08
12/31/07
12/31/06
12/31/05
—
—
—
—
—
Income Statement in % Average Risk-Weighted Assets
Net interest income
Trading income
—
—
—
—
—
Fee and commission income
—
—
—
—
—
Insurance income
—
—
—
—
—
Operating income
—
—
—
—
—
Operating expenses
—
—
—
—
—
Pre-provision income
—
—
—
—
—
Loan loss provisions
—
—
—
—
—
Extraordinary profit
—
—
—
—
—
Net income
—
—
—
—
—
Liquidity, Funding (including sub debt) & Balance Sheet Composition
Avg. liquid assets % avg. total assets
55.41
59.81
62.66
62.36
64.35
Avg. gross loans % avg. total assets
37.01
33.32
30.62
29.44
27.82
Avg. customer deposits % avg. total funding
28.24
23.67
22.30
23.67
24.65
Avg. interbank funds % avg. total funding
29.68
27.17
34.64
39.37
37.75
Avg. market funds (excl. interbank) % avg. total funding
40.66
47.58
41.28
35.11
35.58
1.42
1.57
1.79
1.84
2.02
Avg. liquid assets % avg. customer deposits
248.02
318.61
358.24
337.49
332.56
Avg. gross loans % avg. customer deposits
165.65
177.47
175.03
159.35
143.78
Avg. market funds reliance [5]
-67.91
-71.11
-107.53
-123.71
-137.37
—
—
—
—
—
58.51
39.95
1.80
11.70
14.59
2.76
-0.36
50.14
45.05
36.79
27.70
38.19
27.38
23.24
27.63
Avg. sub debt % avg. total funding
Avg. RWA % avg. total assets
Breakdown of Operating Income in %
Net interest income % operating income
Trading income % operating income
Fee & commission income % operating income
Insurance income % operating income
Other operating income % operating income
31
0.00
0.00
—
—
0.00
11.03
22.22
20.68
20.01
20.99
Credit Analysis
06/30/09
12/31/08
12/31/07
12/31/06
12/31/05
Yield on avg. earning assets (%)
4.70
5.13
4.36
4.14
4.44
Cost of interest bearing liabilities (%)
4.01
5.37
5.02
4.52
4.85
Net interest margin (%) [6]
1.17
0.45
0.05
0.25
0.26
Recurring earning power (Pre-prov. inc. % avg. assets)
0.68
0.18
0.62
0.83
0.53
—
—
—
—
—
0.29
-0.07
0.58
0.80
0.49
Profitability
Risk-weighted recurring earning power (PPI % avg. RWA)
Post-provision income % avg. assets
Post-provision income % avg. risk weighted assets
—
—
—
—
—
0.21
0.03
0.46
0.59
0.38
Return on avg. RWA (%)
—
—
—
—
—
Post-provision income % tier 1 capital
—
—
—
—
—
Return on equity (period end) (%)
5.46
0.25
13.04
16.26
11.06
Net interest income coverage of loan loss provisions
2.60
1.53
0.76
7.36
6.16
Loan loss provisions % pre-provision income
57.23
136.19
5.56
3.39
6.89
Pre-tax income % operating income
Return on average assets (%)
17.95
-4.25
41.80
46.06
32.76
Internal capital growth (%)
—
—
—
17.60
12.85
Dividend payout ratio (%)
—
—
—
8.53
14.72
Cost/income ratio (op. expenses % op. income) [7]
60.65
80.88
57.25
53.06
65.63
Adjusted cost/income ratio (incl. non-operating items)
59.52
78.22
55.82
52.35
64.88
Efficiency
Operating expenses % average assets
1.05
0.77
0.83
0.94
1.00
Operating income / employee (EUR thousand)
225.77
126.68
213.80
224.11
171.84
Operating expenses / employee (EUR thousand)
136.92
102.46
122.40
118.91
112.78
88.85
24.22
91.40
105.20
59.07
PPI / employee (EUR thousand)
Asset Quality and Risk Measurement
Problem loans % gross loans
LLR % problem loans
LLR % gross loans
Loan loss provisions % gross loans
5.41
3.78
2.68
3.42
4.24
65.09
73.62
66.22
66.97
68.21
3.52
2.79
1.78
2.29
2.89
1.03
0.67
0.10
0.09
0.12
Problem loans % (shareholders' equity + LLR)
47.72
35.91
24.68
28.10
33.01
Replacement value % shareholder's equity
44.81
105.01
82.05
50.92
74.36
Tier 1 ratio (%)
—
—
—
—
—
Total capital ratio (%)
—
—
—
—
—
Capital Adequacy (Period End)
Shareholders' equity % total assets
Equity participations % shareholders' equity
2.99
2.77
2.84
2.98
2.86
19.26
18.00
17.44
15.45
17.92
[1] Historical exchange rates are applied accordingly for USD and EUR figures.
[2] Full disclosure may not be available for all years. The amount is then included in demand deposits.
[3] As reported by the bank.
[4] Includes goodwill amortisation (pre-IFRS).
[5] Avg. [(market funds-liquid assets) % (earning assets-liquid assets)].
[6] Although not part of net interest income calculation, the NIM includes dividend income.
[7] Cost/income ratio excludes goodwill amortisation, which is included together with net non-operating income in the adjusted cost/income ratio.
[8] Statement period in which the bank switched to Basel II accounting framework.
32
Credit Analysis
Moody’s Related Research
Credit Opinions:

Crédit Industriel et Commercial

Banque de Tunisie

BMCE Bank
Banking System Outlook:

Banking System Outlook: France, July 2009 (118416)
Banking Statistical Supplement:

France, December 2008 (113907)
Country Statistics:

France, May 2009
Rating Methodologies:

Bank Financial Strength Ratings: Global Methodology, February 2007 (102151)

Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology, March 2007
(102639)
Special Comments:

Calibrating Bank Ratings in the Context of the Global Financial Crisis, February 2009 (114705)

Moody’s Approach to Estimating Bank Credit Losses and their Impact on Bank Financial Strength Ratings,
May 2009 (117326)

Moody’s Assesses Bank Hybrid Securities in the Context of the Credit Crisis, December 2008 (112358)
Request for Comment:

Moody’s Proposed Changes to Bank Subordinated Capital Ratings, June 2009 (117894)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication
of this report and that more recent reports may be available. All research may not be available to all clients.
33
Credit Analysis
Report Number: 119648
Authors
Statistical Analyst
Editor
Senior Production Associate
Stéphane Le Priol
Stéphane Herndl
Jimena Olarte
Daniel Ward
Judy Torre
CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S (MIS) CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT
COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL,
FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS
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34