Registration Document And Annual Financial Report

Transcription

Registration Document
And Annual Financial Report
2009
The original french document was filed with the AMF (French Securities Regulator)
on April 28, 2010 , in accordance with the 212-13 article of the General Regulation
of the AMF. It may be used to support a financial operation if accompanied by a
prospectus duly approuved by the AMF.
Freely translated from french.
2
Crédit du Nord Group - Registration Document 2009
Contents
1
ACTIVITY
2
CONSOLIDATED FINANCIAL STATEMENTS
3
INDIVIDUAL FINANCIAL STATEMENTS
4
5
Key figures as at December 31, 2009 ...................................................................................... 6
2009 highlights ......................................................................................................................... 8
Group structure ...................................................................................................................... 10
11
Management report ................................................................................................................ 12
Chairman’s Report on Internal Control and Risk Management ................................................ 32
Report of the Statutory Auditors on the Chairman’s Report on Internal Control
and Risk Management ........................................................................................................... 44
Consolidated balance sheet ................................................................................................... 46
Consolidated income statement ............................................................................................. 48
Change in shareholders’ equity .............................................................................................. 50
Statement of cash flows ......................................................................................................... 53
Notes to the consolidated financial statements....................................................................... 54
Statutory Auditor’s Report on the consolidated financial statements..................................... 136
138
2009 Management Report ................................................................................................... 139
Five-year financial summary.................................................................................................. 141
Individual Balance sheet at December 31 ............................................................................. 142
Income statement ............................................................................................................... 144
Notes to the individual financial statements .......................................................................... 145
Information on the Corporate Officers................................................................................... 184
Statutory Auditors’ Report on the Annual Financial Statements ............................................ 196
Statutory Auditors’ Special Report on Regulated Agreements
and Commitments with Third Parties .................................................................................... 198
General Meeting of Shareholders (Draft resolutions) ............................................................. 200
ADDITIONAL INFORMATION
203
General description of Crédit du Nord .................................................................................. 204
Group activity ....................................................................................................................... 207
Responsibility for the registered document and audit ........................................................... 208
Concordance tables ............................................................................................................. 209
3
S
Corporate Governance
as December 31, 2009
Z Board of Directors
Z Date of 1st appointment
Z Term of mandate *
Chairman of the Board of Directors
Alain PY
October 1, 2002
2012
Directors
Séverin CABANNES
February 21, 2007
2012
Pascal COULON
July 23, 2009
2012
Patrick DAHER
September 15, 2005
2013
Jean-Pierre DHERMANT **
November 16, 2006
2012
Bruno FLICHY
April 28, 1997
2011
Angélina HOLVOET **
December 19, 2009
2012
Jean-François SAMMARCELLI
November 3, 2009
2013
Patrick SUET
May 3, 2001
2011
Vincent TAUPIN
November 3, 2009
2011
*
General Meeting of Shareholders convened to approve the financial statements for the fiscal year ended.
**
Employee representative
The Board of Directors met four times during the course of 2009 in order to examine the budget, yearly and half-yearly accounts
and discuss strategic decisions concerning commercial, organisational and investment policies.
The Compensation Committee, consisting of two Directors – Didier ALIX and Patrick SUET, met to submit a proposal to the Board
of Directors concerning fixed and performance-based compensation, including benefits, for corporate officers.
Z Executive Committee
Alain PY, Chairman and Chief Executive Officer,
Marc BATAVE, Executive Vice Chairman,
Alain CLOT, Executive Vice Chairman,
Jean-Pierre BON, Deputy Chief Executive Officer (Finance Division),
Pierre BONCOURT, Head of Human Resources,
Jean DUMONT, Head of the Central Risk Division,
Thierry LUCAS, Head of Information Systems, Projects and Banking Operations,
Gilles RENAUDIN, Head of Legal Affairs and Controls,
Jérôme FOURRE, Head of Communications (attends Executive Committee meetings)
4
Activity
Key figures as at December 31, 2009................... 6
2009 highlights ...................................................... 8
Group structure ................................................... 10
5
1I
Activity
I
Key figures as at December 31, 2009
S Key figures as at December 31, 2009
Group: consolidated figures
Z Balance sheet
31/12/2009
IAS/IFRS
31/12/2008
IAS/IFRS
% change
2009/2008
IAS/IFRS
Customer deposits
18,349.8
19,496.9
-5.9
Customer loans
25,496.7
25,761.4
-1.0
2,164.3
1,912.8
+13.1
1,653.4
1,364.3
+21.2
-801.1
-656.6
+22.0
TOTAL BALANCE SHEET
38,506.3
40,740.9
-5.5
ASSETS UNDER MANAGEMENT (2)
25,123.3
23,470.9
+7.0
31/12/2009
IAS/IFRS
31/12/2008
IAS/IFRS
% change
2009/2008
IAS/IFRS
(in EUR millions)
Shareholders’ equity
(1)
Doubtful loans (gross)
Depreciation on individually impaired loans
(1) Includes income in progress
(2) Excluding custody for third parties and restated for the mutual funds included in life insurance products
Z Income
(in EUR millions)
Net Banking Income
6
1,579.8
1,543.9
+2.3
Gross Operating Income
534.0
512.4
+4.2
Operating income before corporation tax
460.0
382.5
+20.3
Consolidated net income
347.9
252.7
+37.7
I
Activity
I
Key figures as at December 31, 2009
Z Ratios
31/12/2009
31/12/2008
Cost of risk / outstanding loans
0,82
0,51
Shareholders’ equity / Total balance sheet
5,62
4,70
8,90 %
8,32 %
8,50 %
7,23 %
(as %)
Consolidated solvency ratio
(1)
Tier 1 capital (2) / weighted assets (1)
(1) After application of additional floor capital requirements, i.e. with a floor of 80% at 31/12/09 and 90% at 31/12/08.
(2) Tier One
(1) and (2) include net income, net of forecasted dividend payout.
Z Ratings
Standard and Poor’s
Fitch
31/12/2009
31/12/2008
ST
A-1
A-1+
LT
A +
AA -
ST
F1 +
F1
LT
A+
A+
Intrinsic (*)
BC
BC
(*) The intrinsic rating is Crédit du Nord Group’s individual rating as determined by the rating agency, i.e. separate from Société Générale Group.
Z Contribution of Crédit du Nord (parent company)
(in EUR millions)
Net Banking Income
31/12/2009
IAS/IFRS
31/12/2008
IAS/IFRS
% change
2009/2008
IAS/IFRS
1 006,1
1 016,4
- 1,0
Gross Operating Income
335,4
354,2
- 5,3
Net income
299,9
224,7
+ 33,5
7
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Activity
I
2009 highlights
S 2009 highlights
Z Network structure
In 2009, the banks of Crédit du Nord Group expanded their network with the opening of 14 branches to the public:
Crédit du Nord
Banque Courtois
Banque Laydernier
Amiens Alexandre Dumas
Cesson-Sévigné
Colombes
Montigny le Bretonneux
Paris Malesherbes
Paris Pyrénées
Paris Rennes
Montauban Cladel
Saint Jean de Maurienne
Banque Nuger
Banque Tarneaud
Aurillac
Angoulême Saint Cybard
Challans
Vannes
Banque Kolb
Sens
Z Individual customers
January
Launch of the Livret A savings passbook
October
Launch of Antarius Duo
All banks have been able to distribute the Livret A savings
passbook since January 1, 2009. Our advisers can open
Livret A passbooks by creating passbooks for customers
not yet holding them or via transfer for customers holding
Livret A or Bleu passbooks with historic distributors.
An increasing number of French banking customers are
taking advantage of life insurance products to build up
savings. To meet this expectation, the banks of Crédit du
Nord Group launched Antarius Duo, an easy and userfriendly
life insurance policy. Antarius Duo is a life insurance policy
offering subscribers various management approaches
corresponding to different risk profiles. Antarius Duo offers
subscribers the chance to save at their own pace, without
having to worry about financial management concerns and
while enjoying life insurance tax benefits.
Launch of online account statement option
Starting June 23, 2009, Individual Crédit du Nord Group
customers subscribing to the Internet service may ask to
receive their account statements online.
Z Professionals and Associations
January
Launch of the Livret A savings passbook
for Associations
On January 1, 2009, the Livret A was added to our range
of products for Associations.
The Livret A offers our customers a number of benefits:
U returns exempt of taxes and social security contributions;
U a high limit;
U savings available at all times, with customers able to enter
funds through one-off and/or regular payments.
8
May
Launch of Webaffaires Immo
The banks of Crédit du Nord Group are partners with real
estate professionals and have acquired in-depth knowledge
of their specific requirements and environment.
They now offer property management unions and
administrators an innovative online payment solution known
as Webaffaires Immo, allowing tenants and co-owners to
pay their rent or expenses online.
I
Activity
I
2009 highlights
Z Business and Institutional customer market
February
Launch of Canvassing Insurance Financing
Within the framework of our partnership with Coface, and to
aid our customers in their penetration of new export markets,
we offer financing for the canvassing expenses incurred by
companies via the Canvassing Insurance policy signed with
Coface. Through this insurance, companies with annual
revenue of less than EUR 150 million are able to canvas foreign
markets in complete security. This insurance now comes with
the option of bank financing for canvassing expenses.
Z Financial operations
Over the course of 2009, Crédit du Nord helped its customers
prepare and carry out many types of financial transactions:
U IPOs;
U takeovers, public buyout offers, squeeze-out procedures;
U disposal/recovery of a business;
U LMBOs;
U acquisitions;
U sales of small companies to larger companies operating
in the same sector.
These transactions were completed by Crédit du Nord’s
Finance Division, some of which in cooperation with Étoile
ID, Crédit du Nord Group’s venture capital company, and
brokerage firm Gilbert Dupont.
U debt relief and syndication;
Z Awards and distinctions
February
2009 Qualiweb/Strategies Award: Crédit du Nord
Group acknowledged once again
At the 2009 Qualiweb/Strategies Awards for online customer
relations, Crédit du Nord Group ranked No. 2 in the “BankingFinancing” category. This award recognises the quality of
response provided by the Internet Banking webmasters
team to e-mails submitted by Group customers through our
websites.
May
2009 Awards for best SICAVs and funds
At Le Revenu’s 2009 Awards for best SICAVs and funds,
held on May 28, 2009, the magazine awarded Crédit du
Nord Group the Silver Trophy for the best range of three-year
sector-oriented equity funds and the Bronze Trophy for the
best three-year EUR-denominated bond range (in the branch
banking category).
March
Competition surveys
For the fifth year in a row, Crédit du Nord Group has
outperformed the top French banks (1) in terms of customer
satisfaction in the Individual and Professional Customer
markets and is No. 2 in the Business Customer market.
(1) Competition surveys performed by CSA: from March 2 to April
4, 2009 based on a sample of 4,527 Individual customers of the
market’s top 11 banks; from March 2 to April 9, 2009 based on a
sample of 3,363 Professional customers of the market’s top 10 banks;
from March 2 to April 2, 2009 based on a sample of 2,700 Business
customers of the market’s top 10 banks.
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Activity
I
Group structure
S Group structure
The diagram below presents the links between the main Crédit du Nord Group entities.
Direct shareholdings are listed as well as the overall percentage of capital directly or indirectly held by the Group.
The consolidation scope is presented in its entirety in Note 2.
A presentation of the businesses of the main Group entities is provided in Note 45
CREDIT
DU NORD
78.44%
96.82%
99.87%
BANQUE
KOLB
100%
BANQUE
COURTOIS
98.34%
3.18%
100%
BANQUE
LAYDERNIER
99.99%
BANQUE
RHONE-ALPES
1.65%
21.43%
63.19%
64.70%
BANQUE
NUGER
1.51%
2.91% 69.42%
7.73%
100%
2.83%
KOLB
INVESTISSEMENT
0.07 %
0.46%
100%
ETOILE
GESTION
HOLDING
7.08%
2.36%
7.14 %
100%
100%
100%
50%
35%
SDB
GILBERT DUPONT
NORFINANCE
GD ET ASSOCIES
NORBAIL
IMMOBILIER
ANTARIUS
BANQUE
POUYANNE
99.80%
99,80%
100%
100%
100%
100 %
100%
NORD ASSURANCES
COURTAGE
ETOILE ID
STAR LEASE
NORIMMO
NORBAIL
SOFERGIE
0.20%
0.20%
100%
S.F.A.G.
0.10%
99.90%
99.96%
100%
100%
100%
SC FORT
DE NOYELLES
CREDINORD
CIDIZE
PARTIRA
0.04%
10
80%
BANQUE
TARNEAUD
Consolidated financial
statements
Management report ............................................. 12
Chairman’s Report on Internal Control
and Risk Management ........................................ 32
Consolidated balance sheet ............................... 46
Consolidated income statement ......................... 48
Change in shareholders’ equity .......................... 50
Statement of cash flows ..................................... 53
Notes to the consolidated
financial statements ............................................ 54
Statutory Auditor’s Report on the
consolidated financial statements ..................... 136
11
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Consolidated financial statements
I
Management report
S Management report
FISCAL YEAR 2009
Z A global economic crisis of
unprecedented magnitude
At the end of 2008, the global economy was hit with a crisis
of a magnitude and gravity not seen since the end of World
War II. The failure of US investment bank Lehman Brothers
brought growth to a sudden halt across almost all regions
of the world, with economic activity becoming so weak that
most countries (with the exception of China and a few other
emerging countries) saw their GDP slide in 2009. After years
of nearly 100% employment, unemployment is on the rise
in the majority of the world’s industrialized countries. The
unemployment rate in the US and Europe is expected to
come out at around 10% for end -009.
The monetary and government authorities of the major
industrialised countries did not sit on their hands when
confronted with the severity of the crisis. Under the aegis
of the G20, the economic majors set up aggressive fiscal
stimulus plans in early 2009, with the support of the central
banks, which worked in coordination to implement particularly
accommodating monetary policies. The benchmark rates of
the largest central banks thus hit extremely low levels, with
the FED and ECB in particular launching unconventional
measures aimed at shoring up the bond market. These
economic stimulus measures sparked a mid-2009 recovery
in industrialized countries. The return to growth in the second
half was nonetheless a very fragile one, as the impact of the
crisis on private-sector demand and investment could still
be intensely felt.
Commodities and energy prices, which had peaked and
caused an inflationary spiral until mid-2008, subsequently
plummeted in early 2009 under the weight of falling demand
and the shift in investment towards other asset classes. This
trend reversed over the course of the year as the economic
situation gradually improved and the substantial liquidity on
the markets was reinvested in these assets.
Like all European countries, France fell victim to the recession
and saw its GDP drop by about 2% in 2009, owing to the
collapse of industrial output and sharp contraction in demand.
At 63,000, the number of business failures in 2009 was the
highest since 1993. The unemployment rate is forecasted at
around 9% for end 2009.
The recessionary environment caused the stock markets
to plunge at the start of the year. They were able to start
climbing again with economic activity gradually returning
12
to normal as from the second half. In France, the CAC 40
closed at 3,936 points on December 31, 2009, i.e. up 22%
over the year as a whole.
With such a harsh crisis gripping its key asset
management and SME markets, Crédit du Nord
Group consolidated its gross operating income
but was nonetheless hurt by the higher cost of
risk.
Results at December 31, 2009 were drawn up under IFRS.
They are compared to 2008 figures, which were also drawn
up under IFRS.
Crédit du Nord Group posted consolidated NBI growth
of 2.3% and GOI growth of 4.2% at December 31, 2009.
Operating income shed 14.2% due to the increase of over
50% in cost of risk compared to 2008. Operating income
totalled EUR 460.0 million, including EUR 122.6 million in
capital gains on the disposal of asset management subsidiary
Etoile Gestion to AMUNDI, and EUR 7.1 million recorded
on the disposal of the Group’s stake in Dexia-C.L.F Banque
when Société Générale bought the 20% of Crédit du Nord’s
capital held by Dexia. Consolidated net income amounted
to EUR 347.9 million. Excluding capital gains on disposals,
consolidated net income fell 11.9% on 2008.
ROE came out at 19.8% for a Tier One ratio of 8.5%.
2008 results were impacted substantially by the results
generated by the Group’s asset management company,
Etoile Gestion, which was forced to sell off assets held by
some of its funds, leading to a loss of EUR 72.2 million.
Furthermore, as a member of the economic interest group,
“Carte Bleue”, Crédit du Nord benefited from the 2008 IPO
of Visa Inc. in the United States, in the form of shares and
dividends with a positive impact of EUR 12.0 million on NBI.
Finally, the Group had to recognise its financial liabilities at
fair value, in accordance with IFRS, generating a positive
impact of EUR 28.4 million on NBI at December 31, 2008.
Conversely, the tightening of credit spreads and slight dip in
assets under management in 2009 resulted in an expense of
EUR 16.3 million, booked at December 31, 2009.
Adjusted for these items, in addition to changes in PEL and
CEL provisions, Group NBI rose by 1.3% at December 31,
2009.
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Management report
In 2009’s trying economic environment, the Group was
able to limit the increase in its operating expenses to 1.4%.
Consequently, GOI adjusted for non-recurring items posted
a slightly positive improvement of 1.1% over 2008.
The margin on deposits declined by 5.7% in 2009, mainly
due to easing of interest rates and the fact that the rate of
return on regulated savings accounts was maintained at
a high level at the start of the fiscal year. This price effect
was only partially offset by the strong performance in sight
deposits across all markets.
The margin on loans improved, as the process of restoring
margin levels, begun in 2008, carried over into 2009, with
the rise in the cost of access to cash integrated into our
pricing scales. Nevertheless, the economic recession
resulted in the collapse of business investment and corporate
financing requirements. Faced with falling revenue, the
inventory reduction movement, reduced supplier payment
deadlines and government measures aimed at speeding
up VAT repayment, companies significantly reduced their
drawdowns on short-term credit lines and instead called
upon their receivables.
Strong consumer uncertainties during the crisis, coupled
with the property market downturn, led to a decline in new
housing loans in 2009 compared to 2008, which was,
it should be pointed out, a historically high benchmark.
Outstanding housing loans continued to rise, however, driven
by substantial new lending in 2008 and at the end of 2009,
with an improving margin level. Uses of revolving credit lines
made satisfactory progress, although they tended to slow
towards the end of the fiscal year. Conversely, the economic
crisis and its negative impact on consumption generated a
sharp downturn in new personal loans over the majority of
the year. There was nevertheless a turnaround towards the
end of the year, linked to the rise in car sales in France linked
to the scrap bonus programme.
On the whole, the margin on loans rose by 13.2% in 2009,
thanks to the rebuilding of margin rates.
Income from service fees recorded respectable growth of
3.2%, as a result of the expansion of the customer base, the
contributions of new branches, and the efforts to improve
the range of banking and insurance products and services.
These positive factors were partially offset by the negative
impact of the decline in flows from our SME and professional
customers.
In 2009’s persistently uncertain financial and stock market
environment, the Group’s financial fees dropped by 10.9%,
excluding losses on the disposal of Etoile Gestion assets
in 2008.
In 2009, only life insurance fees improved, driven by growth
of net inflows and assets under management.
Asset management company Etoile Gestion returned to the
growth track in 2009, after incurring losses on disposals of
assets in 2008. Adjusted for this exceptional effect, Etoile
Gestion’s NBI was down 19.4%, owing to the impact that
the troubles plaguing the market and the decline in equity
products had on its management fees. Bear in mind that
Etoile Gestion was removed from the consolidation scope
on December 31, 2009, when Société Générale Group
contributed its asset management business to AMUNDI.
Against the backdrop of the economic and financial crisis,
and given the lack of transactions on the primary market
(completely closed since the crisis started), the NBI
generated by brokerage firm Gilbert Dupont, specialising in
small and mid cap stocks, nevertheless picked up by 2.9%
at December 31, 2009.
Crédit du Nord expands the coverage
of its network with new branch openings
Without setting a deliberate goal as it did for the 2004 2008
period, Crédit du Nord Group nonetheless opened 14
branches to the public in 2009.
The development of these new branches was perfectly in
line with expectations, with growth in NBI a little higher than
expected, thanks to a dynamic approach to gaining new
market share in the individual customers market and a slightly
higher-than-expected share of professional customers in
the Bank’s customer base. Moreover, the branch openings
enabled a number of individual customers in large cities, and
particularly in the Paris and greater Paris area, to transfer
their accounts to branches closer to their place of residence,
thereby facilitating their banking relations.
In five years, over 140 new branches have been opened in
high-potential areas spread out across mainland France.
These new branches are making significant contributions
to Crédit du Nord Group’s commercial and financial
performances, and their development represents a real
growth driver.
Crédit du Nord presses ahead with major
technical and organisational projects
Crédit du Nord is wrapping up technical and infrastructure
projects launched a number of years ago, while laying the
foundation for new renovation projects to be carried out with
Société Générale’s retail networks.
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Management report
The workstation in branches boasts new functionalities,
including new working situations and new products and
services. This major Group project is coming to full maturity
with its individual customers, with the integration of all Front
and Middle Office working situations in the workstation. 2010
will see this programme finalised with the extension of the
workstation to professional and business customers.
Furthermore, the flow system renovation project is aimed at
taking the obligation to adopt payment systems under SEPA
and turning it into an opportunity to consolidate the bank’s
flow strategy.
The regulatory project concerning the transition to the
new Basel II prudential standards, which called for the
renovation of the information system and the overhauling
of the risk management and steering systems, entered into
the operational phase. The valuation of weighted assets has
been used to calculate capital requirements under Basel II
since 2008. Crédit du Nord Group received authorization
from the banking authorities to use advanced credit risk
calculation methods on nearly all of its outstanding loans.
In sales, a renovated steering application based on a single
data model was gradually deployed throughout the network
in 2009. This application should help the network improve
its sales dynamic and improve the number of products and
services to which customers subscribe.
From an organisational standpoint, the Middle Office
streamlining project launched by Crédit du Nord three years
ago is progressing according to plan. This project, which will
be completed in early 2010, takes account of changes in
customer behaviour with the development of telephone and
internet banking. New functionalities have been added to
the workstation, particularly in the area of loan management
processes, which are now automated.
Efforts to modernise and unify the functional components of
the Multi-channel system were continued in 2009, resulting
more specifically in the delivery of the new Internet portal.
Crédit du Nord also launched several new projects this year,
including the overhaul of portfolio management processes
and applications in order to optimise the monitoring and
prevention of breaches, and the renovation of marketing tools
for the launch of national and regional campaigns.
Finally, the Group also initiated the modernisation and
extension of the Internet offering to professional and business
customers.
The methodical and automated implementation of the
information system’s renovation provides Crédit du Nord with
a high-quality system.
A joint project with Société Générale to establish a single
system for managing SG Group’s retail banks could,
consequently, draw on those of the most high¬performance
IT assets developed by Crédit du Nord.
14
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Management report
Z Commercial activity
The present analysis of Crédit du Nord Group’s commercial
activity extends across the entire scope of the Group’s banks,
i.e. Crédit du Nord and its six subsidiary banks: Courtois,
Rhône-Alpes, Tarneaud, Laydernier, Nuger and Kolb.
Indicators shown relate to euro-denominated businesses,
which account for virtually all of the Group’s activities.
Outstanding loans and growth in customer bases are based
upon period-end figures (i.e. end-December).
Stepped-up development of the customer base
and further efforts to improve customer loyalty
during the economic crisis
Growth in the Individual customer base remained solid at
1.9% year-on-year, in a relatively unsupportive environment
for banking mobility. At December 31, 2009, the individual
customer base came out at 1.4 million, representing an
increase of 100,000 customers over three years.
The expanding customer base drew on the Group’s efforts
to win new customers, notably through recommendations,
prevention of departures and contributions from new
branches.
This growth went hand-in-hand with the sharp pick-up in the
rate of product sales to customers. The number of customers
with six or more products remained at a high level (44.3%).
New products and services were launched in 2009. Over
the course of the year, more than 175,000 Livret A savings
passbooks were opened by our customers or their children,
for total savings deposits of EUR 670 million at December 31.
New services included the “Accidents de la Vie (Everyday
Accidents) policy, an offering developed with insurer
Sogessur, which provides customers with financial coverage
for accidents occurring in everyday life. This life insurance
policy complements, and completes, the Group’s range
of personal insurance policies. Its launch proved to be a
commercial success, with over 20,000 policies sold over the
year.
In the life insurance field, the overhaul of the commercial
offering with the year-end launch of the new Antarius Duo
policy was promising, with 10,700 policies sold in just three
months.
In addition, the Antarius Protection Famille (family protection)
policy, which was very well received after its launch in 2008,
enjoyed further success in 2009, with 20,500 policies sold
by the end of the year (up 47% on 2008).
Lastly, the Protection Juridique (legal protection) policy
enjoyed continued success as well: 3 years after its launch,
nearly 30,000 policies have been sold. Year-on-year, this
represented an improvement of 12.1% at December 31,
2009.
INDIVIDUAL CUSTOMER BASE
Number of customers (in thousands)
+1.9%
+2.6%
+2.8%
Access to the Bank via remote channels continued to rise
at a very fast pace, with almost 28 million visitsns to the
individual customers website recorded this year. The number
of active contracts climbed by 19.8%.
1,318
1,356
1,391
1,418
2006
2007
2008
2009
Rates of growth are calculated on the basis of precise figures and not on the basis of the rounded figures presented in the charts. This remark applies to all
of the charts featured in this document
15
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Management report
Expanding the Professional customer base remained
a priority this year, though the crisis called for adopting a
more selective approach. The customer base was relatively
stable, with a 1.0% increase in the number of sight accounts
year-on-year, thanks in large part to contributions from new
branches in spite of the measures taken to prevent risks and
the rise in non-performing loans. This result testifies to the
quality of Crédit du Nord Group’s close-knit network, with
dedicated account managers to deal with both the private
and commercial aspects of banking relations, counter
services in all Group branches and a tailored offering.
Speaking directly to the confidence of our customers,
the number of automated service contracts for retailers
posted growth of 1.3%, while the number of subscribers
to the Convention Alliance package rose by 5.0% on 2008
(with 59.1% of customers subscribing). Furthermore,
the percentage of customers having established both a
commercial and a private relationship with the Bank rose
by 1.5 points to around 50%. In terms of life insurance,
the number of subscriptions to the Étoile Sécurité policy,
designed as an additional savings vehicle providing coverage
in the event of accidental death, climbed by 6.5% on 2008;
similarly, in the individual customers market, the Protection
Juridique policy enjoyed further success, with nearly 5,500
policies sold by end-December 2009. Year-on-year, this
represented an improvement of 11.1%.
The number of Plans d’Epargne Interentreprises (intercompany savings plans) created for small businesses,
individual entrepreneurs and independent professionals
posted yet another significant increase of 13.4% year-onyear.
Visits to the Professional Customers website rose
substantially, with over 10 million visits recorded in 2009 (i.e.
up 13.9% on 2008).
The Business customer base expanded very slightly by
0.6% on 2008, hurt by the rise in certain customers’ nonperforming loans and the slowdown in market share gains
during the crisis, though with an increase in penetration of
the highest-revenue companies.
Nearly three out of four companies now hold an active
Internet contract, i.e. up 6 points year-on-year. The number
of visits to the Business customers website stood at almost
4 million in 2009, i.e. a gain of 9.2% on 2008.
A competition survey (1) of customer satisfaction carried out in
2009 by CSA on a representative panel of customers across
all its main markets placed Crédit du Nord Group first out
of the main French banks in the individual and professional
customer markets and second on the business customer
market, on most of the issues cited: overall customer
satisfaction, image, trust, advisers. The results of the survey
reflected the excellent quality of our customer relations,
which are the foundation of our growth model.
BUSINESS CUSTOMER BASE
Number of customers (in thousands)
-0.6%
+4.1%
+4.2%
PROFESSIONAL CUSTOMER SIGHT
ACCOUNTS (at December 31)
Number of sight accounts (in thousands)
+4.2 %
157.7
2007
+3.4 %
163.0
+1.0 %
1 391
2008
27.6
28.7
29.9
29.7
2006
2007
2008
2009
164.6
2009
(1) Source: CSA survey institute, from March 2, 2009 to April 9, 2009,
competition survey (telephone survey)
16
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Savings deposits on the rise
Driven by positive developments on the financial markets,
savings deposits improved in 2009 as the economic crisis
continued.
Having collapsed in late 2008 under the weight of the
financial crisis, the stock markets fell even further at the start
of 2009. With economic activity gradually returning to normal
starting in the second quarter, the stock markets took off
again, with the CAC 40 recording a 22.3% increase over the
year as a whole. In light of this valuation effect and net new
inflows, savings deposits (on and off-balance sheet) limited
their decline to 1.3% on average year-on-year.
Sight deposits posted considerable growth across all markets,
i.e. individual customers, and particularly professional and
business customers, as money market investments became
less attractive due to the decline in short rates. Furthermore,
the 275-bp drop in the rate of return on regulated savings
accounts, which took place on three separate occasions
(February 1, May 1 and August 1, 2009), drove individual
customers to increase the cash levels in their sight accounts
over the entire year.
ON-BALANCE SHEET SAVINGS DEPOSITS
(annual averages)
(in EUR billions)
16.75
18.19
19.06
-0.6%
+4.8%
+8.6%
18.95
3.33
3.05
5.60
8.11
+33.1%
+16.1%
4.71
-29.2%
-1.8%
5.50
-1.0%
5.44
+16.2%
6.33
+6.5%
8.64
+3.1%
8.91
+4.2%
9.29
2006
DAV
4.06
2007
CERS*
2008
After delivering robust growth in 2008, term deposit accounts
saw their volumes plummet by 67.6% year-on-year, owing to
the steep drop in short rates. This capital was shifted towards
EUR-denominated life insurance policies or reinvested in
short-term bank savings products.
Consequently, net inflows in Livret A savings passbooks
(sales of which began at the start of the year) made swift
gains, reaching EUR 670 million by the end of 2009.
On the whole, liquid bank savings were stable in 2009, with
losses limited to just 1.2% on 2008.
The life insurance business expanded significantly in 2009,
outperforming the market on the back of a strong showing
from Private Banking. Net inflows came out at a solid +17.0%
as customers turned away from term deposit accounts
and risk aversion swept over the financial markets. The
percentage of unit-linked policies dropped steeply compared
to EUR-denominated policies, reflecting the withdrawal of
customers towards lower-risk investment vehicles. In light
of the positive valuation effect on unit-linked policies at
December 31, 2009, life insurance outstandings nonetheless
rose by an average of 6.3% year-on-year.
The taxation of home savings plans aged 12 years or more
(in force since January 1, 2006) again led to a net outflow
in outstandings over 2009. On a positive note, the rate of
withdrawals slowed significantly and a positive net inflow
trend was even observed in the second half of the year, as
the rate of return on this product became competitive again
versus the rate of return on certain other savings products.
Despite the rally on the financial markets, assets under
management in medium- and long-term mutual funds
were stable, showing a very small improvement of 1.1% at
December 31, 2009. The number of market orders slowed,
ending up stable for the year, thus reflecting the wait-andsee attitude and risk aversion on the part of customers.
Net inflows of medium- and long-term mutual funds were
once again negative in 2009, under the influence of a natural
inclination towards redemptions, though the trend started to
improve towards the end of the year.
2009
Other deposits
* CERS: Comptes d’Epargne à Régime Spécial – special regime savings
accounts (passbook accounts, sustainable development savings
accounts, etc.) or similar plans (e.g. home savings plans)
17
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Management report
OFF-BALANCE SHEET SAVINGS DEPOSITS
(annual averages)
(in EUR billions)
26.85
28.51
25.35
24.89
-11.1%
+6.2%
-1.8%
4.97
4.86
+5.6%
3.40
8.03
+10.1%
+4.1%
2006
Other custody
+6.3%
9.82
-26.4%
2007
Life insurance
2.71
7.90
7.89
+0.9%
5.77
-20.4%
+0.1%
-1.8%
9.73
8.84
5.54
-31.6%
+2.3%
7.60
I
4.25
10.43
-9.3%
2008
ST mutual funds
3.85
2009
Medium-to-long-term
mutual funds
Assets under management in short-term mutual funds
climbed by 0.1% on average year-on-year. Money market
mutual funds reserved for individual and professional
customers shed 0.3% due to the particularly low level of short
rates, with customers defecting to other savings products.
With money market investments becoming less attractive
for companies owing to the drop in short rates, business
customer subscriptions also dropped off. Even so, assets
under management in short-term mutual funds dedicated
to business and institutional customers made a slight
improvement of 0.3%. What’s more, negotiable mediumterm notes sold by Crédit du Nord met with success, allowing
the bank to meet its medium-term liquidity needs.
Uncertainties born of the economic crisis
cause new loans to individual customers to
slide
In 2008, growth in new housing loans was driven by the solid
positioning of our pricing schedules coupled with persistently
strong demand for loans, despite the gradual rebuilding of
margins and the integration of the higher cost of access to
cash.
The very strong uncertainties born of the economic crisis have
since driven the property market downward, thus leading to
a drop in demand and in new housing loans in 2009, despite
a rebound towards the end of the year. Total disbursements
of housing loans were limited to EUR 2.2 billion at December
31, 2009, i.e. down 26.1% on 2008. It should be noted,
however, that 2008 made for a high comparison base (up
22.8% on 2007). The percentage of customers onboarded
via housing loans was maintained at around 10%, testifying
to our ability to win over new customers. In addition, the
rebuilding of margins which began in late 2008 continued
throughout 2009 even though competition intensified.
In this challenging environment, Crédit du Nord continued to
implement a cautious and selective risk policy, setting rules for
the required level of customer contributions and reasonable
debt ratios, and by offering only fixed- or adjustable-rate
loans limited to terms of under 25 years.
NEW HOUSING LOANS
(in EUR millions)
-26.1%
-5.8%
+22.8%
Direct ownership of securities rose by 23.3% in value terms at
December 31, 2009, boosted by a positive valuation effect.
18
2,530
2,383
2,927
2,164
2006
2007
2008
2009
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Management report
As a result of the «wait-and-see»-ism and caution adopted
by consumers during the crisis, combined with the risk
prevention measures implemented by the network, individual
customer overdrafts decreased by an average of 8.1% in
2009.
NEW PERSONAL LOANS
(in EUR millions)
-8.5%
+4.3%
-8.9%
The use of revolving credit lines remained on an uptrend,
with growth picking up to an average of 2.9% in 2009 on the
back of the overhauled commercial offering completed two
years ago and our efforts to increase the number of products
and service subscriptions per customer. The rate of growth
slowed, however, towards the end of the year.
750
782
2006
715
2007
651
2008
2009
The economic crisis and its negative impact on consumption
generated a downturn in new personal loans over the majority
of the year. There was nevertheless a turnaround towards the
end of the year, linked to the rise in car sales in France on the
back of scrap bonuses. The drop in new personal loans over
2009 was limited to 8.9%.
LOANS TO INDIVIDUAL CUSTOMERS
(annual averages)
Loans to businesses (1) deeply impacted by the
recession
The magnitude of the economic recession, its propagation
to all business sectors, and the uncertainties surrounding
the likelihood of a sustainable recovery caused business
investments to positively plunge in 2009. New capex loans
shed 19.6% in volume and 14,900 in number as December
31, 2009. Despite the problems generated by the crisis, the
Group continued to aid its customers with their projects,
without making any substantial changes to its cautious
lending policy aiming for profitability and risk control.
BUSINESS LOANS – CAPEX
(including PBE) (2)
(in EUR billions)
(in EUR billions)
10.79
12.51
+7.0%
13.26
0.30
0.32
0.32
0.33
1.65
1.60
+14.1%
+6.0%
+8.5%
1.50
-19.6%
+18.9%
11.54
-1.2%
1.63
+3,6%
+6.1%
+7.4%
8.96
2006
Housing loans
+9.6%
9.62
2007
Consumer loans
1,579
1,802
2,143
1,723
2006
2007
2008
2009
+7.5%
10.54
11.3
2008
2009
Overdrafts
(1) including loans to business, professional and institutional customers.
(2) including special financing arrangements.
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LEASING ACTIVITY
OUTSTANDING BUSINESS LOANS
(annual averages)
(in EUR millions)
(in EUR billions)
-31.7%
8.44
+22.2%
8.84
9.90
9.82
-0.8%
+12.0%
+12.7%
+4.7%
+6.2%
+17.3%
1,79
-17.7%
1.53
1.44
1.47
1.37
1,67
-13.1%
1.84
521
587
717
1.60
2007
2008
2009
Given the decline in economic activity, new leasing activity
fell sharply (-31.7%) despite the Group’s solid strategic
determination to increase business lending in this format,
which is more secure for the bank.
The collapse in activity over the majority of the year, the
associated decline in corporate revenue, and the impact
of the accelerated repayment of VAT by the government
all resulted in a major contraction in short-term credit lines,
with companies calling instead upon their receivables.
At December 31, 2009, outstanding short-term loans to
businesses were down 17.7% year-on-year.
20
-17.8%
+12.6 %
+8.3%
489
+10.6%
2006
+4.6%
5.17
5.72
2006
2007
Medium & long-term loans
6,44
2008
Commercial & cash loans
6.97
2009
Overdrafts and others
Change in total outstanding business loans excluding oneoff carry of CDN papers: +0.2% (i.e. -15.6% in outstanding
short-term loans).
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Management report
Z Financial developments
The figures presented below are taken from the Group’s fully
consolidated financial statements.
The figures shown were prepared under IFRS, including IAS
32 and 39 and IFRS 4.
Two subsidiaries were removed from the consolidation scope
in fiscal year 2009: Etoile Gestion and Dexia-C.L.F Banque.
The breakdown of changes in the consolidation scope is
presented in Note 2 to the consolidated financial statements.
In order to provide complementary information on specific
accounting items, reference will be made to managerial
accounting analyses applicable to different scopes of
consolidation as explained in the accompanying text.
These analyses concern Retail Banking, whose NBI accounts
for over 90% of Group NBI.
(in EUR millions)
(including change in PEL/CEL provision)
Net interest and similar
Net fee income
31/12/2009
31/12/2008
% change 2009/2008
816.9
829.9
-1.6
762.9
714.0
+6.8
NBI
1,579.8
1,543.9
2.3
After the write-back of the provision for future commitments
on PEL home savings products (EUR 1.6 million in 2009 vs.
EUR 1.7 million in 2008), NBI increased by 2.3%.
NET BANKING INCOME (at December 31)
Consolidated Group scope (in EUR millions)
-3.4%
Bear in mind that in 2008, the Group’s asset management
company was obligated to sell off assets to ensure the
liquidity of certain funds. The capital loss on the disposal of
these assets totalled EUR 72.2 million. At the same time, the
Group had to recognise its financial liabilities at fair value, in
accordance with IFRS, generating a positive impact of EUR
28.4 million on NBI.
+2.3%
+5.4%
Conversely, this valuation resulted in an expense of EUR 16.3
million in fiscal year 2009.
Adjusted for (i) this non-recurring loss, (ii) changes in
provisions for future commitments on PEL and CEL home
savings products, (iii) the IPO of Visa Inc. and (iv) the change
in fair value of the liabilities, NBI increased by 1.3%.
1,516.0
1,597.5
1,543.9
1,579.8
2006
2007
2008
2009
Despite a substantial drop in financial fees linked to the
persistently uncertain market environment, this NBI growth
drew on the solid resilience of the sales margin on the back of
low interest rates, aiding the rebound in the margin on loans.
The margin on loans suffered, however, as the adjustment of
interest rates on special regime savings accounts came late
given the circumstances on the market.
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Management report
An analysis of the full scope of consolidation of the Group’s
banks is useful in gaining a better understanding of NBI and
the underlying trends in its different components.
The sales margin improved by 1.7%, i.e. EUR 12.0 million,
thanks to the major rebound in the margin on loans (though
hurt by the decline in the margin on deposits).
NET FEE INCOME (at December 31)
713.4
790.3
714.0
762.9
- 9.7%
+6.8%
+10.8%
The margin on loans rose by 13.2%, i.e. EUR 36.3 million,
owing to the rebuilding of margins begun in 2008.
Due to the low demand for loans during the crisis, volumes
of business and consumer loans underwent regular declines.
By end-December, outstanding loans were nevertheless up
by 3.6% thanks to a 7.8% rise in capex loans and a 7.5%
increase in housing loans, driven by new lending in 2008 and
despite the sharp drop in short-term business loans (-7.3%).
+10.2%
-29.6%
+11.3%
The margin on deposits shed 5.7%, i.e. EUR 24.3 million, due
to a very negative price effect.
The downturns in the rate of return on Livret A savings
passbooks (from 4.00% in January 2009 to 1.25% at August
1 and unchanged since) were too gradual compared to
market rates, which remained at an exceptionally low level
throughout the year.
However, these rate declines did not impact special-regime
savings deposits, which increased sharply (+16.2%). This
rise was partially offset, however, by ongoing net outflows
from home saving plans and accounts which began in late
2005 (-9.6%) and the substantial net outflows from term
deposits (-29.3%). It should be noted that sight deposit
volumes made a major comeback in terms of growth at the
end of the fiscal year, reaching an average of +4.1% for 2009,
thanks in large part to a hefty rise in business customer sight
deposits (+7.8% vs. +3.0% in 2008). The more moderate
growth in individual customer sight deposits (+1.6%) can be
attributed to the shift towards special-regime savings and life
insurance products, both of which offered attractive returns.
On the whole, net interest and similar income shed 1.6%.
The cost of the search for regulatory liquidity had a major
negative impact on the first half of 2009. However, given
that this phenomenon has its roots in late 2008, a positive
comparison base effect arose towards the end of 2009.
Restated for (i) the change in the fair value of financial
liabilities, (ii) the IPO of Visa Inc and (iii) the change in
provisions for future commitments on PEL and CEL home
savings products, net interest and similar income were up
5.6%.
22
364.5
2006
Service fees
305.6
270.8
384.5
348.9
+12.8%
+9.2%
+3.2%
405.8
443.2
457.3
2007
2008
2009
Financial fees
Consolidated net fee income rose by 6.8%. Excluding losses
on the disposal of Etoile Gestion assets in the first half of
2008, consolidated net fee income fell by 3.0% over the
year. This poor performance is attributable to the change in
financial fees which, excluding losses on the disposal of Etoile
Gestion assets, slid by 10.9% due to the sharply negative
impact of the significantly deteriorated financial environment.
Income from service fees picked up by 3.2%, driven by the
expansion of the customer base and robust sales of products,
which helped offset the decline in customer savings deposits.
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Management report
Z Operating expenses
(in EUR millions)
Personnel expenses
Taxes
Other expenses
Depreciation and amortization
31/12/2009
31/12/2008
% change
2009/2008
-634.9
-617.5
+2.8
-30.9
-29.0
-6.6
-304.8
-310.4
-1.8
-75.2
-74.6
+0.8
TOTAL OPERATING EXPENSES
-1,045.8
-1,031.5
+1.4
General operating expenses rose just 1.4% to EUR
1,045.8 million.
Thanks to the Group’s significant cost-cutting efforts
undertaken from 2008, and despite the 5.3% rise in rent and
rental charges on property (mainly linked to the application
of inappropriate revision formulas during the crisis), other
expenses declined by 1.8% over the year. The biggest cuts
were made in supplies and outsourcing (-28.7% and -12.2%,
respectively).
Offset against the streamlining of the Middle Office structure
launched in 2006, the rise in the headcount required to open
14 new branches to the public in 2009 resulted in a Group
headcount decrease of 1.6%.
Personnel expenses rose by 2.8% (i.e. 1.6% adjusted for
fluctuations in compensation paid out through profit-sharing
schemes).
Taxes were increased by a relatively high 6.6%, compared
to the relatively low tax rate in 2008 (owing to the positive
resolution of old disputes with the tax authorities).
The increase in amortization was limited to 0.8% due to the
maturity of the amortization expense on IT projects.
The deployment of IT projects in 2009 amounted to EUR
28.4 million, down 1.1% on 2008. The corresponding
amortization expense totalled EUR 25.4 million
(EUR 26.7 million in 2008).
31/12/2009
31/12/2008
% change
2009/2008
Pro rata staff count in activity – Group
7,605
7,725
-1.6
Average net staff count present – Group (1)
8,737
8,775
-0.4
(1) including apprenticeship and temporary employment agreements.
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Management report
OPERATING EXPENSES (at December 31)
GROSS OPERATING INCOME
(at December 31)
+1.4%
+1.9%
+3.7%
-12.5%
+8.4%
975.9
1,011.9
1,031.5
1,045.8
2006
2007
2008
2009
+4.2%
540.1
585.6
512.4
534.0
2006
2007
2008
2009
Consolidated net income gained 4.2% to EUR 534.0 million.
Excluding PEL/CEL effects, the change in financial liabilities,
and after the correction of the Visa Inc. IPO and losses on
the disposal of Etoile Gestion assets in 2008, gross operating
income was up 1.1%.
Gross operating income
(in EUR millions)
NBI
General operating expenses
GOI
24
31/12/2009
31/12/2008
% change
2009/2008
1,579.8
1,543.9
+2.3
-1,045.8
- 1,031.5
+1.4
534.0
512.4
+4.2
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Management report
COST-TO-INCOME RATIO (at December 31)
Consolidated Group scope (as %)
The cost-to-income ratio improved by 0.6 points compared
to December 31, 2008.
Excluding exceptional items (mentioned above), operating
expenses/NBI were relatively stable at 65.6% vs. 65.5% at
the end of 2008.
64.4
63.3
66.8
66.2
2006
2007
2008
2009
Z Cost of risk
Crédit du Nord Group’s consolidated cost of risk (1) totalled
EUR 207.8 million at end-2009 versus EUR 132.0 million at
end-2008 and EUR 73.5 million at end-2007. Divided by total
net lending by the Group, cost of risk came out at 0.82%,
thus representing a substantial improvement compared to
December 31, 2008.
(in EUR millions)
Cost of risk
Outstanding loans
Cost of risk / outstanding loans
This change reflects the impact on our customers (particularly
SMEs) of the extremely challenging crisis plaguing the
economy since mid-2008, the impacts of which could very
much still be seen in 2009.
31/12/2009
31/12/2008
% change
2009/2008
- 207.8
- 132.0
- 73.5
25,496.7
25,761.4
24,060.1
0.82 %
0.51 %
0.31 %
(1) Cost of risk represents the net provisioning charge on banking activities (allocations to provisions less write-backs), plus non-provisioned losses on
irrecoverable loans, less amounts recovered on amortized loans. Under IFRS, cost of risk includes the effect of discounting of provisions due to the
delay in recovering cash flows on doubtful loans (principal and interest).
25
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Management report
Crédit du Nord Group’s loan business predominantly
targets French customers, whose economic environment
continued to deteriorate sharply over the large majority of
fiscal year 2009. The landscape for French VSEs and SMEs
was hit especially hard. In the wake of a highly depressed
first half, these companies often recorded stable activity at
best (though at low levels) in the second half of the year. In
France, 2009 once again saw a major rise in the number of
collective proceedings that were both preventative (ad hoc
mandates, conciliations, safeguard procedures) and curative
(restructuring and liquidation under the supervision of the
court) in nature.
Against this backdrop, the ratio of doubtful and disputed
loans to total loans stood at 6.3%.
It should be noted that neither individual nor professional
customers saw a significant rise in their cost of risk over the
fiscal year.
Furthermore, the Group maintained its usual provisioning
policy.
31/12/2009
31/12/2008
31/12/2007
1,653.4
1,364.3
1,187.4
-801.0
-656.6
-602.4
Gross doubtful and disputed loans/gross
outstanding loans
6.3%
5.3%
4.9%
Net doubtful and disputed loans/net outstanding
loans
3.3%
2.7%
2.4%
Provisioning ratio for doubtful and disputed loans
(includes lease finance)
48.4%
48.1%
50.7%
(in EUR millions)
Doubtful and disputed loans (gross)
Depreciation for individually impaired loans
Z Operating income before corporation tax
(in EUR millions)
GOI
Cost of risk
OPERATING INCOME
Net income from companies account for by the equity method
26
31/12/2009
31/12/2008
% change
2009/2008
534.0
512.4
+4.2
-207.8
-132.0
+57.4
326.2
380.4
-14.2
3.1
2.1
+47.6
Gains or losses on fixed assets
130.7
-
-
OPERATING INCOME BEFORE CORPORATION TAX
460.0
382.5
+20.3
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Management report
OPERATING INCOME (at December 31)
GOI 540.1
585.6
+8.4%
472.5
-67.6
512.4
-25.7%
512.1
+8.7%
-73.5
534.0
Thanks to the exceptional capital gains generated by the
contribution of the asset management business to AMUNDI
and the disposal of the stake held in subsidiary Dexia-C.L.F
Banque, operating income before corporation tax amounted
to EUR 460 million (+20.3%).
-14,2%
380.4
+79.6%
Taking cost of risk into account, Crédit du Nord Group
generated operating income of EUR 326.2 million in 2009,
a decrease of 14.2% on December 31, 2008. Excluding
the above-mentioned exceptional items, operating income
dropped by 17.0%.
326.2
+57.4%
-132.0
-207.8
2006
Cost of risk
2007
2008
2009
Operating income
Z Net income
(in EUR millions)
OPERATING INCOME BEFORE CORPORATION TAX
Corporate tax
Minority interests
CONSOLIDATED NET INCOME AFTER TAXES
31/12/2008
% change
2009/2008
460,0
382,5
+ 20,3
- 102,1
- 123,3
- 17,2
10,0
6,5
+ 53,8
347,9
252,7
+ 37,7
31/12/2009
Finally, consolidated net income after taxes came out at 347.9 million, up 37.7% compared to December 31, 2008. Excluding
all above-mentioned exceptional items, consolidated net income declined by 14.3%.
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Z Shareholders’ Equity (under Basel II standards)
31/12/2009
31/12/2008
Shareholders’ equity at year-end (1)
2,164.3
1,912.8
o/w Group share (1)
2,107.3
1,862.4
(in EUR millions)
Average shareholders’ equity
(1)
BIS-weighted credit risk
Shareholders’ equity (2)
Consolidated solvency ratio
(2) (3)
2,038.6
1,901.5
13,700.6
14,501.8
1,489.3
1,688.6
8.90 %
8.32%
8.50 %
7.23%
o/w Tier One (2) (3)
Movements which affected Group shareholders’ equity in
2009 included the incorporation of consolidated net income
after distribution of dividends into reserves.
After-tax return on book equity came in at 19.8% (2) at end2009 for a Tier One ratio of 8.5%(2) (3), compared with an
ROE of 14.9% (2) and a Tier One ratio of 7.2%(2) (3) in 2008.
ROE in 2009 was substantially boosted by the capital gains
generated on the contribution of the asset management
business to AMUNDI and the disposal of the stake in DexiaC.L.F Banque.
Restated for 2008 and 2009 exceptional items, ROE came
out at 13.6% (2), vs. 16.2% (2) last year.
The solvency ratio observes the calculation method
determined by the French Banking Commission (Basel II
solvency ratio). It is established on a consolidated «banking»
basis and eliminates the contribution of insurance entities.
Prudential capital, comprised of core capital and
supplementary capital, is determined in accordance with
CRBF Regulation No. 90-02 in force. Supplementary capital
is not included in the 100% core capital limit.
Regulation No. 95-02 on prudential supervision of market
risks allows for the inclusion of tertiary capital and, to this
end, allows for subordinated issues with an initial maturity
of two years or more. Crédit du Nord Group does not make
use of this possibility.
The solvency ratio represents the amount of capital available
to meet all of the risks to which the Bank is exposed.
Minimum capital requirements are set at 8% of these risks,
expressed in terms of weighted exposures with respect to
credit risks and in terms of capital requirements multiplied by
12.5 with respect to market risks and operational risks. Risks
are calculated using internal models for which the Group
received approval from the French Banking Commission in
2007.
Basel II introduces new deductions, half of which are
applicable to core capital and half to supplementary capital
(shareholdings in companies engaged in financial operations,
inadequacy of provisions).
Crédit du Nord observed the prudential solvency ratios over
the course of 2009.
Z Financial assets
In light of the asset write-downs carried out since 2007, the portfolio of securities taken from the fund managed by Etoile Gestion
stood at EUR 1,196.2 million at December 31, 2009.
Note that there are no derivative credit products booked on Crédit du Nord’s balance sheet.
(1) Includes income in progress.
(2) Includes income in progress, net of forecasted dividend payout.
(3) After application of additional floor capital requirements, i.e. with a floor of 80% at 31/12/09 and 90% at 31/12/08; excluding the floor effect, the
solvency ratio was 10.87% at 31/12/09 and 11.64% at 31/12/08, and the Tier One stood at 10.38% at 31/12/09 and 10.13% at 31/12/08.
28
I
I
Management report
Z Outlook
2009 was one of the worst years for the global economy
since 1945: economic activity was so week that, with the
exception of a few emerging companies (with China leading
the pack), most economies found themselves in a recession;
France saw its GDP fall by over 2%. Industrial output has
been at a standstill for several months, despite a slow
movement towards recovery observed in the second half
of the year, while consumption has remained sluggish. The
crisis has had a hard-felt impact on the employment scene.
The unemployment rate is expected to reach about 9% at
end-2009 in France.
Economists are now raising questions about what will
happen after the crisis, particularly in terms of the weight
of public debt, its restrictive impact on domestic demand,
and on monetary policy, which is expected to remain
accommodating until at least the end of the first half of 2010.
Crédit du Nord Group was by no means spared from the
crisis, which hit asset management customers and SMEs
the hardest. The Bank nonetheless succeeded in maintaining
dynamic commercial activity, having in particular continued
to expand its individual customer base. Despite having
deliberately adopted a more selective commercial approach
and development policy, the Group saw only a limited decline
in its professional and business customer bases. This
performance confirmed the resilience of its business model,
based on close relations with its customers and the balanced
distribution of its business portfolio between the individual,
professional and business customer markets.
To this end, 14 branches were opened to the public in 2008
in high-potential areas, in line with the Group’s selective
policy for expanding its geographic coverage. A few more
branch openings are scheduled to take place in 2010. This
type of momentum guarantees Crédit du Nord’s mediumterm profitability.
Excluding non-recurring items, the Group posted NBI growth
of 1.3% in 2009, despite the decline in financial fees, which
were particularly impacted by the economic and financial
crisis, and the decline in the margin on deposits. The change
in operating expenses was kept under control. Operating
income, however, took a major turn for the worse, with net
cost of risk increasing by over 50% compared to 2008.
In the wake of the timid rebound launched in the second
half of the year, the greatest consensus is leaning towards a
positive growth scenario for 2010: several activity indicators
appear to be saying that the recovery seen in the sectors
hit hardest, combined with the widespread implementation
of accommodating monetary policies, are beginning to bear
fruit. The equity markets have picked up again, and the fact
that the CAC 40 alone has remained at around 4,000 points
is a huge growth driver for our financial fees. Having said that,
the economies are expected to remain in a tough spot over
the coming months, especially in Europe where consumption
could continue to be impacted by rising unemployment and
where no recovery in business investment can be expected
until production capacity usage rates have returned to
normal.
In spite of this environment, Crédit du Nord Group is
determined to maintain its commercial development policy
across all markets, in line with its full service local banking
model. This commercial momentum should help it lay the
best possible groundwork for the post-crisis period and will
continue to underpin the structural increase in its results.
In addition to expanding its network, Crédit du Nord can
anchor its NBI growth in the growth of savings deposits by
continuing to promote the Livet A savings passbook as well
as its life insurance products with the overhaul of the sales
offering in late 2009 and the promising launch of the new
Antarius Duo policy.
On the lending front, the return to positive NBI growth should
support demand for individual loans and lead to a moderate
recovery in drawdowns on short-term credit lines and in flows
in the professional and business customer segments.
At the same time, efforts to streamline processes will be
stepped up in order to further improve management of
operating expenses, which are expected to continue rising,
but at a slower pace than in previous years, due to the maturity
of the amortization expense on IT projects, the slowdown
in the branch opening programme, and the initiatives
undertaken to reduce current expenses. Furthermore, in
2010 Crédit du Nord is launching a programme entitled
«Convergence» with Société Générale, the goal of which is
to share Group best practices, build a shared information
system drawing on the assets of each of the networks, and
advance the synergy development programme in certain
non-commercially differentiating activities.
Finally, risk management will continue to be stressed during
this persistently trying period, thus facilitating the widespread
availability of many risk management tools deployed by the
Group in recent years and in 2010.
Starting in the second quarter of 2010, cost of risk may
therefore begin to decrease slightly from the high point
reached over the past year.
29
2I
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Management report
Z 2 or 3 market branches opened to the public in 2009
Amiens Alexandre Dumas
Paris Pyrénées
Paris Rennes, Paris Malesherbes
A
Colombes
Montigny-le-Bretonneux
B
Cesson-Sévigné
2
C
D
Sens
Vannes
Challans
6
4
5
3
Saint-Jeande Maurienne
Angoulème
Saint Cybard
E
1
Aurillac
Montauban Cladel
30
Régions Crédit du Nord
Filiales
A
B
C
D
E
1
2
3
4
5
6
Les Provinces du Nord / Nord Métropole
Picardie
Normandie - Haute Bretagne
Île de France
Provence-Alpes-Côte d’Azur
Banque Courtois
Banque Kolb
Banque Laydernier
Banque Nuger
Banque Rhône-Alpes
Banque Tarneaud
I
I
Management report
Crédit du Nord Group does not have a uniform network of branches throughout France. As a result, while its share of the
domestic market was ranged from 1.3% to 1.4% at September 30, 2009, it occupies particularly stronger market shares in
those areas in which it has been long established, notably north-western France, the Limousin region (Banque Tarneaud), the
Auvergne region (Banque Nuger) and in the Midi-Pyrénées region (Banque Courtois).
Market share in loans (all customer
segments combined) of Crédit du Nord
Group at September 30, 2009
Domestic market share: 1.4%
Market share in deposits (all customer
segments combined) of Crédit du Nord
Group at September 30, 2009
Domestic market share: 1.3%
6,5 %
6.4%
6.1%
4,9 %
4.5%
2.4%
3,8 %
3.5%
1,5
%
1.4%
1,1 %
1.1%
0.6%
0,9
%
0.9%
1.1%
1,1
%
0.8%
0,7
%
1.0%
0,9
%
0.5%
0,4
%
0.2%
0,3%
0.2
%
0,3 %
0.3%
0.1%
0.6%
0.7%
1.4%
2.0%
2,5
%
0.9%
2.0%
2,1
%
1.7%
1,8
%
1.8%
1.5%
1.2%
2.8%
2,8
%
0,1% to 1,5%
1.2%
0.0%
1.0%
1,2%
0
0.8%
1.0%
0.3
0,3
%
0.2%
4.0%
1,6% to 3%
1.4%
1,3
%
1.9%
1.7%
1,9
%
>3%
0
0,1% to 1,5%
0.9%
1,6% to 3%
1.4%
>3%
Source: Local statistics in deposits/loans recorded by the Banque de France
31
2I
S
I
Chairman’s Report on Internal Control and Risk Management
Chairman’s Report on Internal Control and Risk
Management
Prepared for fiscal year 2009, in accordance with Article L.225-37 of the French Commercial
Code, this report covers the preparation and organisation of the activities of the bank’s Board
of Directors as well as its Internal Control procedures.
Note:
The information presented below concerns fiscal year 2009. As from January 1, 2010, the functions of Chairman of the
Board of Directors and Chief Executive Officer have been separated. This has resulted in a certain number of changes
in the organisation of the Board’s activities and on the role of the Chief Executive Officer. These changes are detailed
in the 2010 report.
Z Preparation and organisation
of the boardis activities
– the other members of the Executive Committee concerned
by items on the agenda;
The Board of Directors typically meets three times a year at
least: in February, July and October.
– the Corporate Secretary in his capacity as Secretary of
the Board;
The agenda of all Board meetings is set by the Chairman and
Chief Executive Officer during a preparatory meeting with
the Corporate Secretary, and following consultation with the
Executive Committee. During the preparatory meeting, the
following points are reviewed:
– the Secretary of the Central Workers’ Council.
– items that must be examined by the Board pursuant to
the law;
The information pack sent to each Director includes:
– the reports prescribed by law: Management Report,
Chairman’s Report on the Board’s activities and on
internal control procedures, etc.;
– draft resolutions for shareholders’ meetings;
– items of particular interest, in order to report to the Board
on the proper functioning of the Company and its strategic
choices (sales, organisational and investment strategies,
etc.).
– draft resolutions whose purpose is to inform the Board or
on which the Directors must make a decision.
Directors, the list of whom is presented in the Registration
Document, are convened no less than two weeks before
the planned date of the Board meeting. Their notification
includes:
– to each Director: a list of all other company directorships
held by the Director, it being the responsibility of each
Director to verify and amend the list as necessary;
– the agenda of the meeting;
– the draft minutes of the preceding Board meeting.
In addition to the Directors the following also participate in
Board meetings:
– the Executive Vice Chairmen and the Deputy Chief
Executive Officer;
32
– the Statutory Auditors;
For the Board meetings called to approve the annual financial
statements, the following information must also be sent:
– to the Chairman and Statutory Auditors, by virtue of current
regulations, a list of all significant agreements entered into
between Crédit du Nord and its senior managers and/or
those companies with which Crédit du Nord shares senior
managers or shareholders.
Board meetings last approximately three hours.
I
I
Items are presented by the Chairman, by a member of the
General Management, and in particular by the Deputy Chief
Executive Officer in his capacity as Chief Financial Officer,
or by the Project Manager where the item in question is of
a technical nature. A deliberation process ensues in which
views and opinions are expressed, at the close of which the
Board is asked to vote, where necessary.
A draft of the minutes of the meeting is prepared by the
Secretary of the Board, who submits the same to the
Chairman and members of the Executive Committee present
at the meeting. The draft minutes are then submitted for the
approval of the Board at the start of the following meeting.
There are no Internal Rules governing the Board, nor is
there a code of corporate governance; information on
the accumulation of mandates and the independence of
Directors is presented in the Registration Document.
General Meetings of Shareholders are convened in
accordance with all currently applicable laws and regulations.
All shareholders receive a meeting notice.
Limits to the powers of the Chief Executive Officer
The Chairman of the Board of Directors is also Chief Executive
Officer.
The term of office and remuneration of the Chief Executive
Officer are determined by the Board of Directors.
The Chairman and Chief Executive Officer is vested with
extensive powers to act under all circumstances on behalf of
the company, within the limits set out by the corporate bylaws
and excluding those powers expressly attributed by law to
the Shareholders’ Meetings and the Board of Directors.
The Chairman and Chief Executive Officer is supported by
two Deputy Chief Executive Officers.The scope and term of
the powers granted to the Executive Vice Chairmen, as well
as their remuneration, were set by the Board of Directors on
the proposal of the Chairman and Chief Executive Officer.
Both Executive Vice Chairmen have the same powers as
the Chairman and Chief Executive Officer in respect of third
parties.
The company has a Special Compensation Committee
consisting of two Directors.
The compensation of the Chairman and Chief Executive
Officer and the Executive Vice Chairmen is established by
the Board of Directors. Said compensation is comprised of
a fixed component and a performance-based component
linked to the company’s results. Detailed information is
provided in the section entitled “Information on the Corporate
Officers” of the annual report.
Z Internal control procedures
This report discusses the internal control procedures that
apply to all entities within Crédit du Nord Group. The various
units involved in internal control helped to prepare those parts
of the report.
The activities of Crédit du Nord Group are subject to a secure
control framework, in that they must comply with both
banking regulations and the systems and procedures of its
majority shareholder (I).
As a network bank with strong regional roots and a customerbase essentially comprised of individuals and SMEs, Crédit
du Nord and its subsidiaries are exposed to risks, the most
significant of which is counterparty risk (II).
Due to its chosen business mix, Crédit du Nord Group has
limited exposure to risks related to international and real
estate activities.
Internal control at Crédit du Nord Group has been based on
a system that separates permanent and periodic controls (III).
As regards accounting and financial management, a
common information system is shared by virtually all Group
companies and in particular the banking subsidiaries. This
information system provides subsidiaries with access to all
Crédit du Nord rules and procedures and facilitates their
implementation, while allowing Crédit du Nord to centralise
all data required to monitor the results and activities of Group
companies in real time (IV).
I.
A SECURE FRAMEWORK
1- Regulated reporting
The annual reports on internal control and the measurement
and supervision of risks, prepared in accordance with Articles
42 and 43 of CRBF Regulation No. 97-02, as amended, are
transmitted to the decision-making body, addressed to the
Statutory Auditors and to the main shareholder.
The French Banking Commission receives reports from each
subsidiary of Crédit du Nord, along with the consolidated
report of Crédit du Nord Group.
Each year, the Group’s RSCIs (Heads of Investment Service
Compliance) submit a general report on compliance with
investment service provider requirements and a special
report addressing a specific topic to the AMF (French market
authority). These reports are also submitted to the decisionmaking body of each entity.
33
2I
2- Control procedures of the shareholder
Specialised committees and systems
As part of Société Générale Group since 1997, Crédit du
Nord also benefits from the control system established by its
majority shareholder.
In order to monitor and manage risk, Crédit du Nord Group
has set up specialised risk committees and structures at both
a Group and a regional/subsidiary level.
The shareholder’s internal control system focuses primarily
on risk exposure, the accuracy of financial and management
accounting data, and the quality of information systems.
– a Risk Committee, chaired by the Chairman and Chief
Executive Officer, that meets once a month. A member of
the Risk Division of the majority shareholder also sits on
this committee;
Systematic controls are performed by the majority shareholder
as part of a programme of regular visits to Group entities
aimed at ensuring that the defined standards are being met.
As the majority shareholder is itself a banking establishment,
continuous comparisons between the two networks
facilitates the analytical review of accounts and risks.
II. MAIN BANKING RISKS
1- Counterparty risk
The credit policy of Crédit du Nord Group is based on a set
of rules and procedures concerning lending, delegation of
responsibilities, risk monitoring, rating and classification of
risk, and the identification of impaired risks.
This policy is defined by the Central Risk Division, which
reports directly to the Chairman and Chief Executive Officer.
The identification of counterparty risk impairment is the
responsibility of all personnel in charge of managing,
monitoring and controlling risks, i.e. the sales function, risk
management function, risk control department and periodic
control department.
Risk management is organised on two levels:
The Central Risk Division (DCR), which reports directly to the
Chairman and Chief Executive Officer of Crédit du Nord and
reports functionally to the Risk Division of Société Générale.
This division assists with the definition of credit policies,
oversees their implementation and participates in the credit
approval process.
The DCR is responsible for identifying and classifying risks,
and also participates in the risk control process, determining
the proper provisioning for doubtful loans and collections of
doubtful loans.
The Regional and Subsidiary Risk Departments, which report
directly to the Regional Managers or Subsidiary Chairmen
and which report in functional terms to Crédit du Nord’s
Central Risk Division, are responsible for implementing the
Group’s credit policies and managing risks at their level.
Their main areas of activity are: the credit approval process;
monitoring and classification of risks; recovery of doubtful
and disputed loans.
34
I
– a Regional Risk Strategy Committee that meets once a
year in each region and at each subsidiary. This committee
is chaired by the Chairman and Chief Executive Officer of
Crédit du Nord;
– a review of impaired risks is performed every six months
by the Control and Provisioning Division of the DCR.
On the Group’s main customer markets, the risk monitoring
and control procedures have been enhanced by risk
modelling systems developed while preparing to implement
Bale II adequacy ratio.
These committees and structures regularly contribute to the
definition of risk policy, the implementation of this policy, the
examination of significant risks, the monitoring of impaired
risks, provisioning for risks and overall risk analysis.
Crédit du Nord also prepares a quarterly report on major
regulatory risks for its majority shareholder, which is
then consolidated and submitted to the French Banking
Commission.
2- Interest rate, exchange rate and liquidity
risk (excluding market activities)
With regard to global risk management, Crédit du Nord
Group distinguishes the management of structural balance
sheet risks (Asset and Liability Management or ALM) from the
management of risks related to trading activities.
2-1 Asset and liability management (ALM)
Reporting directly to the Finance Division of Crédit du Nord,
the ALM unit comes under the authority of the Head of the
Financial Management Division.
It is responsible for monitoring and analysing Crédit du Nord
Group’s exposure to maturity mismatch, interest rate and
liquidity risks.
All decisions concerning the management of any interest rate
and/or liquidity mismatch positions generated by the Group’s
client-driven activities are made by the ALM Committee,
which meets on a monthly basis under the chairmanship of
the Chairman and Chief Executive Officer. A member of the
I
I
Finance Division of the majority shareholder also sits on this
committee.
Liquidity risk
The ALM unit monitors the outstandings and regulatory ratios
of Crédit du Nord and its subsidiaries. Short-term liquidity
management, on the other hand, is delegated to each
subsidiary as part of its cash management activities and is
subject to certain limits (i.e. liquidity requirements).
Changes in the structure of the balance sheet are managed
by the ALM unit and monitored by the ALM Committee,
which in turn determines the refinancing requirements of
the Group’s entities. A quarterly report on liquidity risk is
submitted to the majority shareholder.
Interest rate risk
All assets and liabilities of Group banks, excluding those
related to trading activities, are subject to an identical set of
rules governing interest rate risk management.
The ALM Committee delegates the management of shortterm interest rate risk to the Weekly Cash Flow Committee.
This risk is managed in large part by the following two
indicators:
– the daily short term interest rate, which is subject to limits;
– exposure to short rates incurred by all balance sheet
transactions, which is also subject to a limit.
The Weekly Cash Flow Committee makes sure these limits
are observed.
The overall interest rate risk of Crédit du Nord Group is
subject to exposure limits in euros and local currencies. The
observance of these limits is verified within the framework of
reports to the majority shareholder.
Crédit du Nord Group operates a consistent hedging policy
against ALM risks and implements the appropriate hedges
to reduce the exposure of Group entities to interest rate
movements.
The hedging activities of the ALM unit cover all Crédit du Nord
Group entities.
Each Group entity is monitored individually and hedged on
an ad hoc basis.
Note that the Group is equipped with the ALM application,
«Almonde». «Almonde» is used to produce the Weekly Cash
Flow Committee’s reports, the ALM Committee indicators and
the quarterly shareholders’ report. The hedge effectiveness
tests required by the new international financial reporting
standards (IFRS) are performed using market valuations
calculated by Evolan (software used by the Trading Room).
«Evolan» supplies a reliable restatement of positions, as
asset-liability mismatches are now exhaustive and calculated
as a monthly average.
2-2 Trading activity
Transactions involving derivatives linked to customer
transactions are, generally, hedged by Crédit du Nord
shareholder Société Générale, since Crédit du Nord holds
only limited proprietary positions in these products.
The control of limits assigned to these trading activities by
the General Management are monitored by the Treasury
and Foreign Exchange Department in accordance with the
standards adopted by the shareholder.
The results of these activities are checked by the appropriate
audit teams (see «Market risks» below).
3- Market risks linked to client driven
transactions
Crédit du Nord consistently matches customer orders, mainly
through its shareholder Société Générale, thus significantly
reducing its exposure to market and counterparty risks.
A specialised unit from the Treasury and Foreign Exchange
Department monitors market and counterparty risks.
These risks are calculated on a daily basis and compared
with the limits. Any overruns are reported to the specialist unit
in the Treasury and Foreign Exchange Department.
A report on limit controls is submitted to the shareholder
once every two weeks. The CFO also receives a weekly
status report on results and limits and a monthly report on
changes in limits from the Treasury and Foreign Exchange
Department. The Chairman and Chief Executive Officer also
receives a quarterly report on changes in limits from the
Treasury and Foreign Exchange Department.
In addition, a weekly review of any limit overruns is submitted
to the Head of the Central Risk Division.
4- Operational risks
The business activities of the various Group entities are
exposed to a whole series of risks (administrative, accounting,
legal, IT, etc.), which are covered by the term «Operational
risks».
In accordance with the recommendations of the Basel
Committee, and in consultation with the majority shareholder,
operational risks have been newly classified. Moreover, all
losses in excess of an amount set at EUR 10,000 for Crédit
du Nord Group are systematically reviewed.
35
2I
Major projects are monitored by the Steering Committee. The
Chairman and Chief Executive Officer sits on the Committee
for the most significant projects.
Plan. This plan is in addition to the continuity procedures
already in place throughout the network.
Within the Central Risk Management Division, the Operational
Risk Management Department steers and coordinates the
procedures implemented Groupwide in terms of Operational
Risks, Business Continuity Plans, crisis management and
central management of IT authorisations.
5- Non-compliance risk
The division uses a network of Operational Risk
Correspondents working in the different head office entities,
at the subsidiaries and throughout the operating network.
An Operational Risk Committee, comprising members
of the General Management, the Head of the Legal Affairs
and Controls Division (DAJDC), the Head of the Central Risk
Division, the Head of Information Systems, Projects and
Banking Operations, and the Head of Operational Risks,
meets three times a year.
This committee reviews operational losses and the mapping
of operational risks, and also assesses the progress of
Business Continuity Plans and the Crisis Management
system.
Furthermore, the Head of Operational Risks is a member
of the Compliance Committee and the Internal Control
Coordination Committee (CCCI) of Credit du Nord.
An Operational Risk Review Meeting, with the participation
of the Head of Information System Security, the Head of
Operational Risks and the Heads of Internal Control, meets
prior to delivery of each new IT application or new version of
an existing application in order to ascertain risk in terms of
availability, integrity, confidentiality, testability, control (audit
trail) and compliance
An IT Security Committee, chaired by the Head of
Information System Security, meets three times a year.
A Crisis Plan is designed to convene a crisis unit at any time,
at one or more sites established for this purpose, comprised
of a core unit containing continuous services called upon
independently of the type of crisis and working under the
authority of the crisis manager who oversees the crisis and
reports to the General Management. This unit can request
the presence of any executives, managers and experts
directly concerned by the event.
The strategic Head Office entities, i.e. those needed to ensure
the continuity of operations, prepared a Business Continuity
36
I
In accordance with the rules applicable to credit institutions,
special procedures were developed to address noncompliance risk, defined by the consequences (penalties,
financial losses, damaged reputation) liable to result from
failure to comply with regulations governing banking and
financial activities.
At Crédit du Nord, the Corporate Secretary is Head of
Compliance; at its subsidiaries, the Head of the executive
body fulfils this role.
Crédit du Nord’s Head of Compliance reports to the
executive body where necessary, and provides a link with
the Compliance Committee of Société Générale Group, on
which he sits.
Crédit du Nord’s Compliance Committee has the following
duties:
– ensuring the effectiveness and consistency of the structure
and procedures relating to compliance;
– identifying new non-compliance risks;
– developing quantitative and qualitative indicators needed
to monitor anomalies;
– monitoring major anomalies and assessing the
effectiveness of corrective measures.
Crédit du Nord Group’s Management Committee, on which
the heads of the main subsidiaries sit, periodically reviews
progress on compliance issues.
Before being launched, each new product or significant
modification to an existing product is reviewed to make sure
the risks are properly identified and addressed. A written
opinion is then prepared by the Head of Compliance.
Management and the internal control teams are responsible
for controlling compliance.
The Heads of Compliance ensure that all employees
have access to the directives governing compliance with
regulations. They also see to it that the proper compliance
training initiatives are in place.
Guidelines stipulate the rules which apply to outsourced
banking and financial services.
I
I
III. ORGANISATION OF INTERNAL CONTROL
A member of the Executive Committee supervises a Legal
Affairs and Controls Division (DAJDC), whose scope
of authority covers Permanent Control, Periodic Control,
Compliance, Investment Services Compliance (RCSI), Ethics
and Anti-Money Laundering, and Legal Affairs and Disputes.
An Internal Control Coordination Committee (CCCI) meets
twice a year, under the authority of the Chairman and Chief
Executive Officer, and is comprised of the members of
the Executive Committee, the Heads of Periodic Control,
Permanent Control, Compliance, Operational Risks,
Information System Security, Ethics, RSCI and Anti-Money
Laundering.
Over the course of fiscal year 2009, the incident alert
system was expanded to meet new regulatory requirements
pertaining to the information of the Board of Directors and the
French Banking commission on the most serious incidents.
1- Permanent Control
The head of each entity or department must carry out a
Level One permanent control of transactions carried out
under his responsibility. Operating branches must adhere to
a predetermined plan (detailing frequency and risks to be
controlled), formalise certain controls performed. Specialist
supervisory staff also assist branches in the day-to-day
monitoring of accounts.
A Level Two permanent control is conducted by dedicated
personnel who report directly to the relevant Regional
Manager, Subsidiary Manager or Functional Division, and
report functionally to the Head of Permanent Control of Crédit
du Nord.
The scheduling and details of these controls are determined
by the Head of Permanent Control, in conjunction with the
Central Risk Division with respect to counterparty risk.
The Head of Permanent Control reports on his activities to
the General Management of Crédit du Nord.
1-1 Regional and subsidiary Level One and
Two administrative and accounting controls
The Line Management Control Manual defines day-to-day
security requirements covering, inter alia, reception desks,
the opening of mail and filing of documents, as well as a
limited number of controls that require formalisation at the
supervisory level (recognition of securities in branches,
sensitive procedures such as anti-money laundering, MiFID
compliance, etc.). These controls may be delegated on
the condition that each delegation of power is subject to
supervisory control.
Level Two controls are performed by dedicated personnel
who report directly to the Regional Manager or to the
Chairmen of the subsidiaries. These controls are performed
using specific «control forms» prepared with the Head of
Permanent Control, and according to a pre defined plan
which specifies the frequency of controls based on the
degree of risk that each procedure or transaction represents.
Level Two control teams consisted of 70 staff members at
end-December 2009.
Whenever an on-site control of a procedure is performed,
the procedure is rated for its degree of compliance with
applicable rules, using a software application. This allows the
Head of Permanent Control to map procedural compliance
at both a local and national level.
Following each of these assignments, the Periodic Control
department evaluates the control structures for the regions
in which the audited entities are based.
1- 2 Level One and Two risk controls of regions and
banking subsidiaries
Level One permanent controls are carried out at the regional
and subsidiary level by the sales management and by the
Risk Department of the region or subsidiary in question.
In accordance with the Line Management Control Manual,
the Branch or Business Centre Manager is responsible for
overseeing compliance with delegated limits and the validity
of loan decisions taken by subordinate staff to whom the
limits are assigned (customer advisers, etc.), as well as for
controlling any credit limit overruns at the branch or business
centre. These controls are performed monthly, are formalised
and may not be delegated.
As line manager, the Group Director receives the reports on
the Level Two controls. He assists the branches in preparing a
response to these reports and supervises the implementation
of the Auditors’ recommendations.
Regional or subsidiary Risk Divisions are responsible for
supervising limit overruns and the proper classification
of risks. They primarily ensure the appropriateness of
counterparty classification. They may decide to classify loans
as “performing loans under watch” or to reclassify them as
“doubtful” in the event loans are renewed, loans requests are
made in the interim or overruns are identified.
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Level Two controls are performed by regional or subsidiary
Risk Controllers, as well as Central Risk Control. The Level
Two control unit consisted of 29 staff members at endDecember 2009.
The role of regional or subsidiary Risk Controllers is to
continuously ensure that loans classified as «performing
loans» merit their classification. They examine and monitor
“performing loans under watch” and “doubtful loans” for the
purpose of reclassifying them if necessary. They oversee the
proper application of rules relating to ratings.
The majority of their work is carried out with the help of
computer applications and the monthly delegated limit
reports. These controls can be performed on site or remotely.
During the course of on-site controls, Risk Controllers use
sampling tests to verify: the quality of branch risks; the
quality of risk management performed by operational staff,
with special attention given to monitoring procedures and
compliance with Level One control requirements.
1-3 Central Risk Control, under the DCR’s Control
and Provisioning Division, performs the
following duties:
– ensuring that the regions and subsidiaries apply the risk
management system defined by the Central Risk Division,
as defined in the Credit Policy Manual;
– controlling compliance with applicable rating rules;
– continuously overseeing counterparty risks remotely via
the centralised monitoring of limit overruns and deferred
settlement market (SRD) margin calls;
– performing on-site audits;
– conducting a quarterly analysis of changes in impaired
risks, with particular attention given to risks linked to
“performing loans under watch» and «doubtful loans».
Annual on-site audits conducted by the Control and
Provisioning Division include:
– audits of all loans approved by Regional Managers,
Chairmen of subsidiaries and/or regional or subsidiary
Risk Managers. Of these loans, a sample of 20 to 40
(maximum), with an emphasis on business loans, is
taken and examined for the appropriateness of the credit
decisions, with an effort to avoid duplicating any controls
performed by the regions or subsidiaries;
– the entity’s risk monitoring system established by the Risk
Department;
– the audit of the appropriateness of risk classifications,
particularly in respect of loans classified as «performing
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loans under watch» or «doubtful loans», and of their
management (Branch, Out-of-Court Collection, Special
Regional Affairs, Special Head Office Affairs).
Moreover, the analysis of changes in risks and, more
particularly, in impaired risks linked to “performing loans
under watch”, “doubtful loans”, “non-performing loans” and
“disputed loans” throughout Crédit du Nord Group is used to
compile a summary report by region, subsidiary and market.
Monitoring of these changes and in the associated level of
provisioning is performed by Central Risk Control, mainly
during the half-yearly reviews of impaired risks.
1-4 Level One and Two controls of functional
divisions and specialised subsidiaries
Certain functional divisions, including Financial Affairs
(DAF), Finance, Banking Operations, Wealth and Asset
Management (DPGA, which mainly oversees discretionary
private banking), and Information Systems and Projects,
have their own Level Two Controllers who report directly
to the Head of the Division (exceptionally, the controllers
of the Financial Affairs and Wealth and Asset Management
Divisions report directly to Crédit du Nord’s RSCI), and report
functionally to the Head of Permanent Control.
The same is true for specialised subsidiaries Étoile Gestion
and Gilbert Dupont (Crédit du Nord’s brokerage firm), as
well as for the fixed income and foreign exchange activity
(Treasury and Foreign Exchange Division), which is part of
the Finance Division.
In 2009, two controllers reporting to the Head of Permanent
Control came to support the functional divisions without
Level Two controllers.
At end-December 2009, there were 19 such controllers.
Internal control at Norfinance Gilbert Dupont, which is
coordinated by the Financial Affairs Division, is carried out by
the Administrative Controller of the Nord Métropole region,
and by the Wealth and Asset Management Division for
private banking.
The size of the specialised subsidiary sometimes means
that its senior director carries out these controls (e.g. Norbail
Immobilier and Norbail Sofergie).
In other cases, internal control is outsourced. Starlease
subcontracts internal control to Franfinance, while the
internal control of Antarius is outsourced to Crédit du Nord’s
insurance partner, Aviva.
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1-5 Permanent Control Committee
A Permanent Control Committee meets twice a year in the
presence of the Chairman and Chief Executive Officer. It
comprises the Heads of Permanent Control, the Central Risk
Division, Compliance, Periodic Control, the CFO, the Head
of Information Systems, Projects and Banking Operations
(DSIP) and the Head of DAJDC.
The Committee’s role is to ensure the consistency and
effectiveness of the Permanent Control system. It examines
the summary of the main observations presented by the
division heads involved in the Group’s Permanent Control
system; analyses and assesses any significant anomalies
identified by the various internal or external audit teams; and
is informed of the progress on the correction of anomalies
selected.
2- Periodic Control System
Crédit du Nord Group’s Periodic Control system covers all
Crédit du Nord Group activities.
The number of staff members dedicated to periodic controls
was unchanged at end-December 2009 (22 people) and
mainly included university graduates, supervised by senior
inspectors with experience in risk controls and administrative
and accounting countries, all of whom are supervised by
a member of the General Management. An audit leader
specialising in IT provides support where needed or
conducts targeted inspections of the central or decentralised
IT systems or payment systems.
The Head of Periodic Control reports on his activities to
the General Management of Crédit du Nord, mainly during
meetings of the Periodic Control Committee (two of which
were held in 2009), the annual Audit Committee meeting held
in the presence of the Head of Group Internal Audit of Société
Générale, and meetings of the Internal Control Coordination
Committee (two of which were held in 2009).
He is placed under the functional authority of the Head of
Group Internal Audit of Société Générale and under the
hierarchical authority of the Head of the Legal Affairs and
Controls Division (DAJDC) of Crédit du Nord, which ensures
that the Head of Periodic Control operates independently
from those structures on which it conducts its assignments.
The various entities in the operating network are controlled
approximately once every five years, depending on the
priorities established by the General Management and any
audits performed by the shareholder.
These audits conform to written procedure and are based
upon a pre-selection of loans to be audited on-site. They are
broken down into three phases: pre-audit, on-site audit and
audit report.
The Periodic Control Department analyses the administrative
and accounting operations of the audited entities, as well
as their exposure to different types of risk (notably to
counterparty risk). These audits also cover Basel II regulations
pertaining to counterparty and operational risks.
It also assesses the quality of Level One and Two controls
and carries out audits of Head Office divisions or on specific
topics chosen by the General Management.
Audits of specialised entities often involve a preliminary
learning phase, which can lead the General Management to
make use of the specialised audits conducted by the majority
shareholder.
The reports prepared upon completion of the audits are
directly submitted to the General Management by the Head
of Periodic Control.
Monitoring of the implementation of recommendations
appearing in the reports is carried out by the Head of
Permanent Control, under the authority of the Head of
Periodic Control, in accordance with procedures which were
enhanced in 2008.
3- Ethics and Investment Service Compliance
Under the authority of DAJDC, this Division ensures that the
rules of professional conduct governing relations between
the Bank, its employees and its customers are well defined,
understood and observed.
Banking and financial compliance guidelines that all staff
must adhere to are outlined in a specific appendix to the
company bylaws, which are distributed to all staff. Added to
these principles are a number of specific measures relating
to certain activities (e.g. discretionary portfolio managers).
In addition to compliance with AMF regulations, and in
particular principles of organisation and rules of professional
conduct defined in Book III of the General Regulations of the
AMF, this Division is also in charge of anti-money laundering
and anti-terrorism financing procedures.
Anti-money laundering is essentially based on knowledge
of the Bank’s customers, vigilance in the processing of
transactions (blacklists of countries and individuals), specific
monitoring of certain payment instruments (cheques,
electronic payments) and the flagging of isolated transactions
or a series of transactions by a single customer.
The decree of January 31, 2009, which transposed the third
European anti-money laundering and terrorism financing
directive into French law, was addressed in an internal
directive and, from September 2009, in a training course
provided to all relevant staff.
This decree enhanced KYC requirements in the onboarding
process, and in the event unusual activity is detected at the
39
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central level, and calls for the supervision of certain risky
customers or transactions by the branches.
Each of the Group’s legal entities nevertheless has a Tracfin
agent in charge of declarations of suspicious activity for his
entity, and a Head of Investment Service Compliance.
IV. PRODUCTION AND CONTROL
OF FINANCIAL AND MANAGEMENT
ACCOUNTING DATA
The Chief Financial Officer, who reports directly to the
Chairman and Chief Executive Officer and is a member of
the Executive Committee, is responsible for the production
and control of financial and management accounting data.
As such, he oversees the proper application of
applicable accounting rules and guidelines, and monitors
recommendations issued by the Statutory Auditors.
1- Production of accounting data
1-1 Role of the Accounting and Summary
Information Department (DCIS)
This department, under the authority of the CFO, fulfils two
major roles
– accounting structure and procedures: a centralised
definition for the whole of Crédit du Nord Group of a set
of accounting rules conforming to current accounting
regulations, including the definition of accounting
frameworks and procedures, the management of the
internal charts of accounts and the definition of parameters
by type of report, etc.;
– production and analysis of accounting and financial
reports: preparation of the individual company and
consolidated financial statements for Crédit du Nord
Group, preparation of regulatory status reports for the
various supervisory authorities (Banque de France, French
Banking Commission, etc.).
1-2 Accounting information system
Crédit du Nord’s information system is a multi bank network:
all seven Group banks are managed on the same information
network.
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operating systems. The BSR data is then transferred to the
end-of-month balance database (inventories): the Expanded
Benchmark Summary Database (BSRE), which includes
non-accounting data from repositories (e.g. economic agent
code, residence code, etc.) or from operating systems (e.g.
duration, interest rates, etc.).
At the hub of Crédit du Nord Group’s summary system, the
BSRE is notably used to:
– provide data for all accounting and tax-related reports;
– prepare the different regulatory reports (BAFI, Cofinrep,
etc.);
– provide data for risk drivers in the Basel II ratio
determination process, thus ensuring «native» accounting
consistency.
This unified IT architecture shared by all Group banks is
instrumental in improving accounting consistency throughout
the Group. DCIS oversees the definition and validity of
accounting rules and procedures, from the point of input to
the preparation of the financial statements.
– the accounting treatment of Group-wide transactions
is based on automated procedures. Regardless of
whether the accounting frameworks are defined at the
accounting user level (over two-thirds of book entries) or
defined automatically by operating system software, all
accounting procedures have been defined, tested and
approved by DCIS.
Manual entries, which are limited and on the decline, are
subject to restrictive authorisations and numerous controls.
– accounting databases are interfaced to automatically
input data into the consolidation packages and reports
intended for the French Banking Commission and the
Banque de France.
1-3 Production of accounting data
Preparation of individual financial statements and
individual consolidation packages
The figures presented in regulatory reports and individual
consolidation packages are pre-estimated using parameters
managed centrally by DCIS.
As such, they share the same processing systems for banking
transactions and the same summary reporting systems.
Each “controlled” entity (using the same accounting
information system) then records all non-automated items
at the balance sheet date (representing a very low volume
of entries).
The summary system for accounting production is comprised
of the Benchmark Summary Database (BSR), which is
supplied daily with accounting entries from the different
Finally, each entity controls, analyses and records, where
applicable, the adjustment accounting entries for all financial
reports.
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Once approved, the entities transmit the regulatory reports
to the supervisory authorities and the individual financial
statements are published.
All “non-controlled” entities transmit consolidation packages
as produced by their internal accounting systems, in
accordance with the Group’s rules and procedures,
in addition to the regulatory reports transmitted to the
supervisory authorities.
The consistent application of accounting principles and
methods is ensured by meetings organised by DCIS with
the accounting managers of the Group’s companies in order
to present and comment on current accounting issues as
well as any account-closing decisions made by the Group.
This frequent contact ensures that the key points of each
account closing have been integrated and interpreted by
each company within the Group.
the Line Manager of the staff in charge of monitoring the
accounts.
The Level Two control is conducted quarterly by the regional
and subsidiary Permanent Control departments.
2-2 At the Head Office division levelge
Each Head Office division is responsible for overseeing
accounting operations within its entity. The monitoring of
accounts is performed daily by division staff, who also use
the day-to-day account monitoring application. A Level One
supervisory control is performed. The finalization of this
control will be formalised in 2010.
The Level Two control is performed annually by the Permanent
Control department of the Head Office; the application of this
procedure to all Head Office Divisions will be completed in
2010.
Account consolidation process
This phase culminates with the production of the consolidated
financial statements, used for Group management, legal and
regulatory publications as well as shareholder reports.
During this phase, individual consolidation packages from
Group companies are controlled and approved, consolidation
entries are booked and intercompany eliminations are
recognised. The consolidated financial statements are then
analysed and approved before they are released internally and
externally. The majority of these operations are performed on
a monthly basis, which increases the reliability of the process.
Group tax consolidation and reporting are also carried out
during this phase.
2- Internal accounting control
2-1 At the network branch level
The day-to-day monitoring of accounts is carried out by staff
at the banking services divisions for the branches and by staff
at the business assistance units for the business centres.
They use a day-to-day account monitoring application
developed and maintained by DCIS, which identifies
accounts requiring further examination (balance or directional
anomalies, failure to comply with regulatory thresholds,
manual entries).
The formalised and reported Level One control to ensure
that this monitoring is property performed is carried out by
2-3 Control of preparation of individual and
consolidated financial statements
The process of consolidating accounting data and preparing
consolidated financial statements is subject to several types
of control.
Control of data input:
The software used to generate the consolidated reports
includes configurable data consistency tests.
As long as the reporting company has not satisfied control
requirements, it may not transmit accounting information to
DCIS.
Once received, the consolidation packages sent by each
consolidated company are analysed, corrected as necessary,
and approved, notably with the help of tests for consistency
with preceding monthly reporting packages and budgets,
where available, and with unusual events for the month.
Entries specific to consolidation are then recorded.
Lastly, DCIS performs a variation analysis of consolidated
statements, focusing primarily on changes in equity levels.
Control of consolidation tools:
A Group chart of accounts specific to consolidation is
managed by DCIS and aids in breaking down information to
improve analysis.
Careful attention is paid to the configuration of the
Group consolidation system, and the various automated
41
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consolidation processes are subject to validations and
controls.
Lastly, the automation of the monthly consolidated reporting
process in itself helps to control changes in data over time
and the understanding of any problems as they arise.
All of these controls help guarantee the quality of accounting
documents.
Accounting controls:
The purpose is to ensure the quality of accounting document
preparation by setting up a certification process.
To this end, Société Générale has launched an «accounting
control process management» project, drawing on the
lessons of a SOX-type approach.
The aim of this approach is to provide Société Générale
Group with a consolidated view of accounting controls in
order to:
– enhance the accounting control system;
– ensure the quality of the financial statement preparation
process and of the accounting and financial information
published (certification process).
– meet the request issed by the Group’s Audit Committee.
Crédit du Nord Group is taking part in this project.
2-4 Organisation established to guarantee the
quality and reliability of the audit trail
The audit trail is present from the beginning to the end of
the information chain at Crédit du Nord Group. Given the
complexity of different banking systems and data production
circuits, this trail is comprised of various tools interconnected
by references which are representative of search keys.
It is defined by procedures established at each phase of the
data production circuit.
The audit trail is organised to be able to optimally respond
to different types of search queries. In fact, a different tool
is used depending on whether the user wishes to locate a
specific event or to recreate the production of a regulatory
filing comprised of a large number of accounting entries and
requiring the tracking of reference tables.
The tools used by Crédit du Nord Group include:
– a search application ranging from Event Reports (CREs)
to accounting entries with an audit trail at the accounting
user level,
– accounting database search engines (accounting flows
and balances),
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– search engines that work within report preparation
applications (regulatory reporting software, consolidation
software, etc.).
Furthermore, the accounting documents used to monitor
and control accounting operations are archived for durations
set forth by legal and contractual texts.
2-5 Isolation and monitoring of assets held for
third parties
As an investment service provider with custody of customer
assets, Crédit du Nord is required
– to protect the rights of its customers to the financial
instruments belonging to them,
– to prevent their use for proprietary purposes, barring
customer approval.
Monitoring and management of assets held for third parties
over the long term are separate from proprietary activities and
are handled by separate departments and accounts.
IT authorisations for the applications used for both activities
are restricted and separate, thus facilitating their separate
management.
The Statutory Auditors issue an annual report on the
measures taken by the Group to ensure the protection of
customer assets.
3- Preparation and control of financial
and management accounting data
3-1 Production of financial and management
accounting data
Crédit du Nord Group bases its financial management on
financial accounting data.
Analytical accounting data needed for the financial
management of Crédit du Nord Group are generated by
the accounting information system and operating systems,
which are able to break down data by item and by entity. This
information is stored in a unified management database,
which covers Crédit du Nord and its six banking subsidiaries.
The Financial Management Division (DGF), placed under the
authority of the CFO, manages the integration of general
accounting data into the analytical accounting items on the
basis of the rules defined by the unit in charge of Group ALM
and the match-funding of assets and liabilities.The analytical
accounting system enables a switch from an interest paid/
received view to an analytical approach in terms of margins
on notional match-funding.
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Information from the management database is accessible
from the branch level up to the Group level and is identical
from one level to the next. As a result, the data can be
used by all Crédit du Nord Group management control
teams, including subsidiaries, regional divisions, functional
departments and the Financial Management Division, which
use this information in particular to prepare the half-yearly
management report.
3-2 Verification of financial and management
information
Financial and management accounting data is controlled
during the monthly data entry process by checking that all
balance sheet, income statement and operating system data
gathered by the Group have been properly integrated into
the analytical framework. Variations in totals and material
movements are systematically analysed. Downstream of
the process, a monthly reconciliation is also performed
by comparing the financial accounting figures with the
management reporting figures.
A Cost Monitoring Committee, which includes the
Chairman and Chief Executive Officer and the head-office
divisional managers, meets four times during the course of
the year. A DGF executive reviews the change in network
operating expenses.
An IT Project Monitoring Committee meets quarterly with
the Chairman and Chief Executive Officer in order to examine
the progress of projects and their financial impact on budgets
and medium-term planning.
Chairman of the Board of Director
Budgets are monitored, in the presence of the General
Management, three times a year: twice in the first half, during
the Regional Board Meetings of the Group’s regions and
subsidiaries, and once in the third quarter during the budget
meeting. These meetings, which are systematically attended
by the Deputy Chief Executive Officer or the Head of the
DGF, review the change in net banking income, operating
expenses, investments and the main risk indicators.
43
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S
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Report of the Statutory Auditors on the Chairman’s Report
on Internal Control and Risk Management
Report of the Statutory Auditors
on the Chairman’s Report on Internal Control
and Risk Management
Fiscal year ended december 31, 2009
This is a free translation into English of a report issued in French and it is provided solely for the convenience of English
speaking users. This report should be read in conjunction with and construed in accordance with French law and professional
standards applicable in France.
Statutory auditors’ report, prepared in accordance with article L. 225-235 of the French
Commercial Code (Code de commerce), on the report prepared by the Chairman of the Board
of Directors of Crédit du Nord
To the Shareholders,
In our capacity as statutory auditors of Crédit du Nord and in accordance with article L. 225-235 of the French Commercial
Code (Code de commerce), we hereby report on the report prepared by the Chairman of your company in accordance with
article L. 225-37 of the French Commercial Code (Code de commerce) for the year ended December 31, 2009.
It is the Chairman’s responsibility to prepare and submit for the Board of Directors’ approval a report on internal control and
risk management procedures implemented by the company and to provide the other information required by article L. 225-37
of the French Commercial Code (Code de commerce) relating to matters such as corporate governance.
Our role is to:
– report on any matters as to the information contained in the Chairman’s report in respect of the internal control and risk
management procedures relating to the preparation and processing of the accounting and financial information,
– confirm that the report also includes the other information required by article L. 225-37 of the French Commercial Code
(Code de commerce). It should be noted that our role is not to verify the fairness of this other information.
We conducted our work in accordance with professional standards applicable in France
Information on internal control and risk management procedures relating to the preparation and processing
of accounting and financial information
The professional standards require that we perform the necessary procedures to assess the fairness of the information
provided in the Chairman’s report in respect of the internal control and risk management procedures relating to the preparation
and processing of the accounting and financial information. These procedures consist mainly in:
U obtaining an understanding of the internal control and risk management procedures relating to the preparation and
processing of the accounting and financial information on which the information presented in the Chairman’s report is
based and of the existing documentation;
U obtaining an understanding of the work involved in the preparation of this information and of the existing documentation;
U determining if any material weaknesses in the internal control procedures relating to the preparation and processing of
the accounting and financial information that we would have noted in the course of our work are properly disclosed in the
Chairman’s report.
44
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I
Report of the Statutory Auditors on the Chairman’s Report
on Internal Control and Risk Management
On the basis of our work, we have no matters to report on the information relating to the company’s internal control and risk
management procedures relating to the preparation and processing of the accounting and financial information contained in
the report prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the French Commercial
Code (Code de commerce).
Other disclosures
We confirm that the report prepared by the Chairman of the Board of Directors also contains the other information required by
article L. 225-37 of the French Commercial Code (Code de commerce).
Neuilly-sur-Seine, April 9, 2010
The Statutory Auditors
French original signed by:
DELOITTE & ASSOCIES
Jean-Marc MICKELER
ERNST & YOUNG et Autres
Bernard HELLER
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I
Consolidated balance sheet
S Consolidated balance sheet
Z Assets
(in EUR millions)
Notes
31/12/2008
Cash, due from central banks
4
958.1
684.0
Financial assets measured at fair value through profit or loss
5
1,305.0
1,483.5
Hedging derivatives
6
274.5
213.3
Available-for-sale financial assets
7
5,698.1
5,657.0
Due from banks
8
3,500.5
5,390.0
9
23,476.5
23,769.7
10
1,859.2
1,836.0
161.0
155.7
58.2
59.4
Customer loans
Lease financing and similar agreements
Revaluation differences on portfolios hedged against interest rate risk
Held-to-maturity financial assetsv
11
Tax assets
12
190.4
313.4
Other assets
13
527.3
628.1
Non-current assets held for sale
Deferred profit sharing
23
Investments in subsidiaries and affiliates accounted for by the equity
method
-
-
-
60.1
7.4
10.4
Tangible and intangible fixed assets
14
436.3
426.5
Goodwill
15
53.8
53.8
38,506.3
40,740.9
TOTAL
46
31/12/2009
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I
Consolidated balance sheet
Z Liabilities
Notes
31/12/2009
2.2
1.8
Financial liabilities at fair value through profit or loss
5
695.1
677.8
Hedging derivatives
6
316.7
282.8
(in EUR millions)
Due to central banks
31/12/2008
Due to banks
17
3,552.0
3,988.3
Customer deposits
18
18,314.6
19,478.4
Debt securities
19
7,345.1
8,893.0
35.2
18.5
Tax liabilities
12
469.1
439.2
Other liabilities
13
989.3
972.6
-
-
Underwriting reserves of insurance companies
23
3,840.1
3,260.2
Provisions
16
148.0
145.0
Subordinated debt
22
634.6
670.5
36,342.0
38,828.1
Subscribed capital
740.3
740.3
Equity instruments and associated reserves
124.6
117.3
Retained earnings
882.3
759.8
Net income
347.9
252.7
2,095.1
1,870.1
24
12.2
-7.7
2,107.3
1,862.4
57.0
50.4
Liabilities linked to non-current assets held for sale
TOTAL DEBT
Sub-total
Gains or losses booked directly to equity
Sub-total equity, Group share
Minority interests
TOTAL SHAREHOLDERS’ EQUITY
TOTAL
2,164.3
1,912.8
38,506.3
40,740.9
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I
Consolidated income statement
S Consolidated income statement
Notes
2009
2008
% change
2009/2008
Interest and similar income
29
1,607.6
1,918.5
-16.2
Interest and similar expenses
29
-797.7
-1,132.1
-29.5
3.9
16.6
-76.5
(in EUR millions)
Dividend income
Commissions (income)
30
879.5
900.7
-2.4
Commissions (expenses)
30
-116.6
-186.7
-37.5
3.8
16.3
-76.7
Net gains or losses on financial transactions
o/w net gains/losses on financial instruments at fair value
through profit or loss
31
-13.2
11.5
-
o/w net gains/losses on available-for-sale financial assets
32
17.0
4.8
-
Income from other activities
33
18.5
25.3
-26.9
Expenses from other activities
33
-19.2
-14.7
30.6
Net banking income
28
1,579.8
1,543.9
2.3
Personnel expenses
34
-634.9
-617.5
2.8
-30.9
-29.0
6.6
Other expenses
35
-304.8
-310.4
-1.8
Amortisation and depreciation and impairment of intangible
and tangible fixed assets
36
-75.2
-74.6
0.8
Taxes
Total operating expenses
Gross operating income
Cost of risk
Operating income
-1,045.8
-1,031.5
1.4
534.0
512.4
4.2
37
-207.8
-132.0
57.4
326.2
380.4
-14.2
Net income from companies accounted for by the equity
method
38
3.1
2.1
47.6
Net income/expenses from other assets
39
130.7
-
-
-
-
-
Impairment losses on goodwill
Earnings before tax
Income tax
Consolidated net income
Minority interests
460.0
382.5
20.3
40
-102.1
-123.3
-17.2
357.9
259.2
38.1
41
10.0
6.5
53.8
347.9
252.7
37.7
3.76
2.73
92,532,906
92,532,906
CONSOLIDATED NET INCOME
Consolidated net earnings per share (in EUR)
Number of shares making up the company’s capital
48
I
I
Consolidated income statement
Z Statement of net income and gains and losses booked directly to equity *
(in EUR millions)
Net income
Translation gain (loss)
Revaluation of available-for-sale assets
Revaluation of derivatives qualified as cash flow hedges
Share of gains or losses booked directly to equity from companies accounted for
by the equity method
Taxes
Total gains or losses booked directly to equity
NET INCOME AND GAINS AND LOSSES BOOKED DIRECTLY TO EQUITY
2009
2008
357.9
259.2
-
-
33.9
-71.0
-
-
-
-
-14.2
20.7
19.7
-50.3
377.6
208.9
of which Group share
367.8
202.2
of which minority interests
9.8
6.7
* See Note 24.
49
2I
I
Change in shareholders’ equity
S Change in shareholders’ equity
Retained
earnings
Capital and associated reserves
(in EUR millions)
SHAREHOLDERS’
EQUITY AT DECEMBER
31, 2007
Common
stocks
Equity instr.
& associated
reserves
Elimination
of treasury
stock
740.3
110.4
-
Change in
fair value Change in Deferred
of avalaible fair value
tax on
Retained
for sale of hedging change in
earnings
assets derivatives fair value
-1.1
Shareholder’s
equity
Minority
interests
Total
consolidated
shareholder’s
equity
1,842.5
47.7
1,890.2
43.9
Increase in common stock
-
-
Elimination of treasury
stock
-
-
Issuance of equity
instruments
-
-
7.4
-
Shareholder’s
equity
Group
share
949.0
Equity component of
share-based payment
plans
7.4
-189.7
-189.7
-
-189.7
-
Changes in value of
financial instruments
having an impact on
shareholders’ equity
Changes in value of
financial instruments as a
percentage of income
Tax impact of change
in value of financial
instruments having an
impact on shareholders’
equity or as a % of income
2008 dividends paid
Impact of acquisitions
and disposals on minority
interests
Sub-total of changes
linked to relations with
shareholders
-
7.4
-
2008 net income
Sub-total
-
-
-
Change in equity of
associates and joint
ventures accounted for by
the equity method
Translation differences and
other changes
Sub-total
SHAREHOLDERS’
EQUITY AT
DECEMBER 31, 2008
50
Gains and losses booked
directly to equity
-0.5
-
-
7.4
-4.0
-193.7
-
-182.3
-4.0
-186.3
-71.2
-71.2
0.2
-71.0
-
-
20.7
20.7
20.7
252.7
252.7
-71.2
-
-
0.5
-
-
-
20.7
252.7
6.5
259.2
202.2
6.7
208.9
-
-0.5
-
0.5
-
-
-
-
-
-
740.3
117.3
-
1,012.5
-27.3
-
19.6
1,862.4
50.4
1,912.8
I
I
Retained
earnings
Capital and associated reserves
Gains and losses booked
directly to equity
Change in
fair value Change in Deferred
of avalaible fair value
tax on
Retained
for sale of hedging change in
earnings
assets derivatives fair value
Shareholder’s
equity
Group
share
Shareholder’s
equity
Minority
interests
Total
consolidated
shareholder’s
equity
1,012.5
-27.3
19.6
1,862.4
50.4
1,912.8
Increase in common stock
-
-
Elimination of treasury
stock
-
-
Issuance of equity
instruments
-
-
(in EUR millions)
SHAREHOLDERS’
EQUITY AT DECEMBER
31, 2008
Common
stocks
Equity instr.
& associated
reserves
Elimination
of treasury
stock
740.3
117.3
-
Equity component of
share-based payment
plans
6.6
-
6.6
-129.5
-129.5
-129.5
-
Changes in value of
financial instruments
having an impact on
shareholders’ equity
Changes in value of
financial instruments as a
percentage of income
Tax impact of change
in value of financial
instruments having an
impact on shareholders’
equity or as a % of income
2009 dividends paid
Impact of acquisitions
and disposals on minority
interests
Sub-total of changes
linked to relations with
shareholders
-
Translation differences and
other changes
6.6
-
0.7
2009 net income
Sub-total
-
0.7
-
Change in equity of
associates and joint
ventures accounted for by
the equity method
Sub-total
SHAREHOLDERS’
EQUITY AT
DECEMBER 31, 2009
6.6
-3.2
-132.7
-
-
-122.9
-3.2
-126.1
34.1
34.1
-0.2
33.9
-
-
-14.2
-14.2
-14.2
-0.7
-
-
347.9
347.2
34.1
-
-
-
347.9
10.0
357.9
-14.2
367.8
9.8
377.6
-
-
-
-
-
-
-
-
-
-
-
-
740.3
124.6
-
1,230.2
6.8
-
5.4
2,107.3
57.0
2,164.3
51
2I
I
Z Basel II prudential capital
At end-2009, total prodential capital stood at EUR 1,489.3 millions.
31/12/2009
31/12/2008
2,107.3
1,862.4
-323.9
-129.5
Minority interests
57.0
50.4
Estimate of provisional dividends of minority interests
-4.8
-
-221.3
-202.4
1,614.3
1,580.9
(in EUR millions)
BOOK SHAREHOLDERS' EQUITY, GROUP SHARE
Estimate of provisional dividends
Prudential deductions (1)
PRUDENTIAL CORE CAPITAL
Basel II deductions (2)
-192.0
-112.2
TIER ONE CAPITAL
1,422.3
1,468.7
Supplementary capital
Other deductions
PRUDENTIAL CAPITAL
401.4
474.5
-334.4
-254.6
1,489.3
1,688.6
(1) Goodwill, intangible fixed assets and IFRS prudential filters.
Unaudited information pertaining to Pillar 3 under Basel II regulations applicable to Crédit du Nord Group is available
at www.groupe.credit-du-nord.com.
52
I
I
Statement of cash flows
S Statement of cash flows
31/12/2009
(in EUR millions)
31/12/2008
NET CASH INFLOW/OUTFLOW RELATED TO OPERATING ACTIVITIES
Net income (I)
Amortisation expense on tangible and intangible fixed assets
Net allocation to provisions (including underwriting reserves of insurance companies)*
Net income/loss from companies accounted for by the equity method
Deferred taxes
Net income from the sale of long-term available-for-sale assets and consolidated subsidiaries
357,9
259,2
76,7
75,7
519,4
336,9
-3,1
-2,1
58,6
99,2
-130,7
-0,1
Change in deferred income
5,2
6,8
Change in prepaid expenses
9,1
-18,9
82,3
-21,8
Change in accrued income
Change in accrued expenses
Other changes (mainly adjustment in the value investments held to guarantee unit-linked policies
Non-monetary items included in net income and other adjustments (not including income on
financial instruments measured at fair value through profit or loss) (II)
Net income on financial instruments measured at fair value through profit or loss (III)
Interbank transactions
Transactions with customers
Transactions related to other financial assets and liabilities
-148,0
8,0
9,8
80,3
479,3
564,0
13,2
-11,5
1 959,1
-472,2
-1 018,2
-245,3
-695,3
-433,1
16,0
-157,8
261,6
-1 308,4
1 112,0
-496,7
Cash flow/outflow related to acquisition and disposal of financial assets and long-term investments
-16,9
-172,2
Tangible and intangible fixed assets
-83,4
-77,2
-100,3
-249,4
-132,7
-193,7
-45,8
-2,0
-178,5
-195,7
833,2
-941,8
Transactions related to other non-financial assets and liabilities
Net increase/decrease in cash related to operating assets and liabilities (IV)
NET CASH INFLOW/OUTFLOW RELATED TO OPERATING ACTIVITIES (A)=(I)+(II)+(III)+(IV)
NET CASH INFLOW/OUTFLOW RELATED TO INVESTMENT ACTIVITIES
NET CASH INFLOW/OUTFLOW RELATED TO INVESTMENT ACTIVITIES (B)
NET CASH INFLOW/OUTFLOW RELATED TO FINANCING ACTIVITIES
Cash flow from/to shareholders
Other net cash flows arising from financial activities
NET CASH INFLOW/OUTFLOW RELATED TO FINANCING ACTIVITIES (C)
NET INFLOW/OUTFLOW IN CASH AND CASH EQUIVALENTS (A) + (B) + (C)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the start of the year
Net balance of cash accounts and accounts with central banks (excluding related receivables)
680,5
1352,9
Net balance of accounts, demand deposits and loans with banks
370,0
639,4
Net balance of cash accounts and accounts with central banks (excluding related receivables)
954,7
680,5
Net balance of accounts, demand deposits and loans with banks
929,0
370,0
NET INFLOW/OUTFLOW IN CASH AND CASH EQUIVALENTS
833,2
-941,8
Cash and cash equivalents at the close of the year
* Amounts reclassified with respect to the financial statements published at December 31, 2008: the value adjustments to investments carried out for unit-linked insurance policies
were reclassified under «Net allocation to provisions and impairment».
53
2I
I
Notes to the consolidated financial statements
S Notes to the consolidated financial statements
CONTENTS
Note 1
Principles and methods of consolidation,
accounting principles
55
Note 24
Gains and losses booked directly to equity
113
Note 2
Consolidation scope
76
Note 25
Assets and liabilities by period remaining
to expiration
114
Note 3
Risk management
78
Note 26
Commitments
115
Note 4
89
Note 27
Foreign exchange transactions
117
Note 5
Financial assets at fair value through
profit or loss
90
Note 28
Net Banking income
117
Financial liabilities at fair value through
profit or loss
Note 29
118
91
Note 30
Commissions
119
Note 6
Hedging derivatives
92
Note 31
Net income and expense from financial
instruments at fair value through profit or loss 120
Note 7
Available-for-sale assets
92
Note 8
Due from banks
94
Note 32
Net gains or losses on available-for sale
financial assets
120
Note 9
Customer loans
95
Note 33
Income and expenses from other activities
121
Note 10
Lease financing and similar agreements
97
Note 34
Frais de personnel
121
Note 11
Held-to-maturity financial assets
98
Note 35
Others charges
126
Note 12
Tax assets and liabilities
99
Note 36
Note 13
Other assets and liabilities
99
Provisions, impairment and depreciation
of tangible and intangible fixed assets
127
Note 14
Fixed assets
100
Note 37
Cost of risk
127
Note 15
Goodwill
102
Note 38
Income from companies accounted for
128
Note 16
Summary of depreciations
102
Note 39
Net gains or losses on other assets
128
Note 17
Due to banks
103
Note 40
Income tax
128
Note 18
Customer deposits
104
Note 41
Minority interests
129
Note 19
Securitised debt repayables
104
Note 42
Statement of fair value
130
Note 20
PEL/CEL mortgage saving accounts
105
Note 43
Transactions with related parties
130
Note 21
Employee benefits
106
Note 44
Note 22
Subordinated debt
110
Contribution to net income by business
line and company
132
Note 23
Insurance activities
111
Activities of subsidiaries and affiliates
133
Note 5 bis
54
Note 45
I
I
S Note 1
Principles and methods of consolidation, accounting principles
MAIN RULES FOR EVALUATING
AND PRESENTING THE CONSOLIDATED
FINANCIAL STATEMENTS
Pursuant to European Regulation No. 1606/2002 of July 19,
2002 concerning the application of International Accounting
Standards, the consolidated financial statements of Crédit du
Nord Group (“the Group”) for the year ended December 31,
2009, were prepared in compliance with IFRS (International
Financial Reporting Standards) as adopted by the European
Union and in force at said date (the IFRS are available on
the website of the European Commission at the following
address:
http://ec.europa.eu/internal_market/accounting/
ias_fr.htm#adopted-commission.
The Group is fully subject to these standards as it regularly
issues redeemable subordinated notes which are admitted
to trading on the primary market.
The IFRS framework includes IFRS (International Financial
Reporting Standards) 1 to 8 and IAS (International Accounting
Standards) 1 to 41, as well as the interpretations of these
standards as adopted by the European Union at December
31, 2009.
The Group also made use of the provisions of IAS 39, as
adopted by the European Union, relating to macro fair value
hedge accounting (IAS 39: “carve out”).
The consolidated financial statements are presented in euros.
The principal valuation and presentation rules applied during
the preparation of the consolidated financial statements are
indicated below.
Excluding the application of the new standards and
amendments described below, these principles and
accounting methods were applied consistently in 2008 and
2009.
Z Use of estimates
In drawing up the consolidated financial statements, the
application of the accounting principles and methods
described below leads Management to develop assumptions
and make estimates which may have an impact on the
amounts booked to the income statement, on the valuation
of balance sheet assets and liabilities, and on the disclosures
presented in the notes to the consolidated financial
statements.
In order to make these estimates and develop these
assumptions, Management uses data available at the
date on which the consolidated accounts were prepared
and may be called upon to use its own judgement. By
nature, the valuations based on these estimates contain
risks and uncertainties regarding their materialisation in
the future, particularly in light of the financial crisis which
developed in 2008. Consequently, the final future results
of the transactions in question may be different from these
estimates and therefore have a significant impact on the
financial statements.
The use of estimates primarily concerns the following
valuations:
U the fair value on the balance sheet of financial instruments
not listed on an active market, recorded in «Financial
assets or liabilities at fair value through profit or loss»,
«Hedging instruments» or «Available-for-sale financial
assets» (see Notes 5 to 7), and the fair value of unlisted
instruments for which this information must be presented
in the notes to the financial statements;
U the amount of depreciation of “Loans and receivables”,
“Available-for-sale financial assets”, “Held-to-maturity
financial assets”, lease financing and similar agreements,
tangible and intangible assets, and goodwill (see Note 16);
U provisions recorded on the liabilities side of the balance
sheet, including provisions for employee benefits and
underwriting reserves of insurance companies (see Notes
21 and 23);
U the initial value of goodwill recognised for business
combinations (see Note 15).
Z Segment reporting
Given that insurance and intermediation activities are nonmaterial in relation to banking activities, Crédit du Nord Group
only reports on one business segment. Similarly, as Crédit
du Nord Group is a national banking group, it only reports on
one geographic segment
55
2I
I
Z IFRS and IFRIC interpretations applied by the Group as from January 1, 2009
Standards and interpretations
IFRIC 11 " IFRS 2 - Group and treasury share transactions"
IFRS 8 "Operating segments"
Amendments to IAS 23 "Borrowing costs"
Amendment to IFRS 2 "Vesting conditions and cancellations"
Date of adoption by European Union
November 2, 2006
June 1, 2007
November 30, 2006
November 21, 2007
March 29, 2007
December 10, 2008
January 17, 2008
December 16, 2008
June 28, 2007
December 16, 2008
July 4, 2007
December 16, 2008
September 6, 2007
December 17, 2008
February 14, 2008
January 21, 2009
Improvements to IFRS - May 2008 - except IFRS 5
May 22, 2008
January 23, 2009
Amendments to IFRS 1 and IAS 27 "Cost of investment in a subsidiary,
jointly controlled entity or associate"
May 22, 2008
January 23, 2009
March 5, 2009
November 27, 2009
March 12, 2009
November 27, 2009
IFRIC 13 "Customer loyalty programmes"
IFRIC 14 "The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and Their Interaction"
IAS 1 (revised) "Presentation of financial statements"
Amendments to IAS 32 and IAS 1 "Financial instruments puttable at the
option of the holder and obligations arising on liquidation"
Amendments to IFRS 7 and IFRS 4 "Improving disclosures about derivative
instruments"
Amendments to IFRIC 9 and IAS 39 "Reassessment of embedded
derivatives"
The application of these new provisions had no significant
impact on the Group’s results and shareholders’ equity. .
IFRIC 11 «IFRS 2 - Group and Treasury Share
Transactions»
This interpretation of IFRS 2 («Share-based payments»)
sets forth the accounting treatment to apply in the individual
financial statements of each entity in a Group which receives
services from the employees, to record share-based
payments carried out by one or more entities within the
Group (parent company or another entity within the same
Group). However, as regards the clarification pertaining to the
individual or separate financial statements of an entity in the
Group which does not alter the accounting treatment at the
consolidated level, the application of this interpretation had
no impact on the Group’s financial statements.
IFRS 8 “Operating segments”
This standard amends the segment reporting to be provided
in the notes to the financial statements, requiring said
information to be identical to the information presented to the
Group’s main operational decision-makers for the purposes
of making decisions concerning the distribution of resources
to the Group’s sectors of activity and the evaluation of their
performances.
56
Date of publication by IABS
The application of this standard had no impact on the
presentation of the notes to the financial statements. Given
that insurance and intermediation activities are non-material
in relation to banking activities, Crédit du Nord Group only
reports on one operating segment.
Amendment to IAS 23, “Borrowing costs”
The purpose of this amendment was to eliminate the option
of recognising all borrowing costs as expenses and to require
entities to capitalise borrowing costs directly relating to the
acquisition, production or construction of eligible assets.
Insofar as the Group already applies the optional accounting
treatment, which has become mandatory, the application
of this amendment had no impact on the Group’s financial
statements.
Amendment to IFRS 2, “Vesting conditions and
cancellations”
This amendment clarified the definition of vesting conditions
as well as the accounting treatment of vesting conditions and
the cancellation of share-based payment plans.
IFRIC 13 “Customer loyalty programmes”
IFRIC 13 offers a more detailed interpretation of the
accounting treatment of customer loyalty programmes. The
Group is not affected by this interpretation, which therefore
I
I
had no impact on the Group’s net income or shareholders’
equity.
Amendments to IFRS 7 and IFRS 4 «Improving
disclosures about derivative instruments»
IFRIC 14 «The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and Their
Interaction»
These amendments require the publication of additional
disclosures in the notes to the financial statements pertaining
to financial instruments, and particularly on the fair value
measurements and liquidity risk associated with these
instruments.
This interpretation clarifies how to determine the limit
placed on the amount of a surplus (linked to repayments
or reductions in future contributions) in a pension plan that
can be recognised as an asset, and how a minimum funding
requirement affects that asset.
IAS 1 (revised) “Presentation of financial statements”
The impact of this revised standard was to change the format
of the Group’s financial statements.
In accordance with this revised standard, the Group
maintained a distinct presentation of the consolidated
income statement in order to detail the components of its
net income, and also presents (in a new statement beginning
with this net income) the breakdown of gains and losses
booked directly to equity («Report of net income and gains
and losses booked directly to equity»).
The new additional information pertaining to gains and losses
booked directly to equity, required by IAS 1 (revised), are
presented in Note 24 to the financial statements.
Amendments to IAS 32 and IAS 1 «Financial
instruments puttable at the option of the holder and
obligations arising on liquidation»
These amendments clarify the accounting classification of
financial instruments puttable at the option of the holder or
in the event of the issuer’s liquidation.
Improvements to IFRS - May 2008 - except IFRS 5
As part of the annual procedure to improve International
Financial Reporting Standards, the IASB published 35 minor
amendments to 20 different standards. These amendments
will become mandatory for fiscal years beginning on January
1, 2009 (with the exception of the amendments to IFRS
5, “Non-current assets held for sale and discontinued
operations”, of which the date of first application has been
moved forward to fiscal years beginning on July 1, 2009).
Amendments to IFRIC 9 and IAS 39 “Reassessment
of Embedded Derivatives»
These amendments confirm that, for entities having carried
out the reclassifications authorised by the amendments to
IAS 39 and IFRS 7, it is necessary to reassess embedded
derivatives by taking account of the conditions which
prevailed at the time of their initial recording.
The Group did not make use of the reclassification provided
by IAS 39 during financial year 2008.
Z IFRS applied in advance by the Group
IFRS 3 (revised), “Business combinations”, and IAS
27 (revised), “Consolidated and separate financial
statements”
The Group applied both revised standards, published on
January 10, 2008 and adopted by the European Union
on June 3, 2009, prior to January 1, 2009. Their purpose
was to amend the accounting treatment of acquisitions and
disposals of consolidated subsidiaries.
The main changes pertained to the accounting treatment of
acquisition-related costs and contingent considerations, the
calculation of goodwill, the assessment of non-controlling
interests in the acquired entity, the treatment of step
acquisitions and the calculation of proceeds on disposals
upon the loss of control of a consolidated entity. The
application of these revised standards is forward-looking and
therefore had no impact on the treatment of acquisitions prior
to January 1, 2009.
Amendments to IFRS 1 and IAS 27 “Cost of
investment in a subsidiary, jointly controlled entity or
associate”
These amendments only concern entities presenting their
individual financial statements under IFRS for the first time.
Consequently, they had no impact on the Group’s financial
statements.
57
2I
I
Z Account standards and interpretations
that the group will apply in the future
Not all of the standards and interpretations published were
adopted by the European Union as at December 31, 2009.
These standards and interpretations shall not become
mandatory until January 1, 2010 or the date of their adoption
by the European Union. Consequently, they were not applied
by the Group in 2009.
Accounting standards, amendments and interpretations adopted by the European Union
Date of adoption
by European Union
IFRIC 12 "Service concession arrangements"
March 25, 2009
March 29, 2009
IFRIC 15 "Agreements for the construction of real estate"
July 22, 2009
December 31, 2009
IFRIC 16 "Hedges of a net investment in a foreign operation"
June 4, 2009
July 1, 2009
IFRIC 17 "Distribution of non-cash assets to owners"
November 26, 2009
October 31, 2009
IFRIC 18 "Transferts of assets from customers"
November 27, 2009
October 31, 2009
IFRS 1 (revised) "First-time adoption of international financial reporting
standards"
November 25, 2009
January 1, 2010
Amendment to IAS 32 "Classification of rights issued"
December 23, 2009
February 1, 2010
September 15, 2009
July 1, 2010
Amendment to IAS 39 for eligible hedged items
IFRIC 12 “Service concession arrangements”
accounting treatment of service concession arrangements.
As it does not concern the Group’s activities, it will not have
an impact on net income or shareholders’ equity.
IFRIC 15 “Agreements for the construction of real
estate”
of the receiving entity. It determines the circumstances and
conditions in which the revenue associated with this transfer
of assets from customers must be recognised within the
framework of a commercial agreement.
IFRS 1 (revised), “First-time adoption of international
financial reporting standards”
accounting treatment of revenue from the sale of real estate,
particularly from the sale of residential buildings.
This revision of IFRS 1 deals exclusively with presentation
format, which was completely overhauled and simplified,
whereas the technical content remained unchanged. This
restructuring will make it possible to incorporate future
changes in standards more easily.
IFRIC 16, “Hedges of a net investment in a foreign
operation”
Amendment to IAS 32 «Classification of rights
issues»
accounting treatment of hedges of a net investment in a
foreign operation. The future application of this interpretation
should have no impact on the Group’s net income or
shareholders’ equity.
This amendment covers the accounting treatment of
subscription rights (pre-emptive subscription rights, options,
warrants, etc.) issued in a functional currency other than the
issuer’s currency. These rights were previously recognised
as derivatives. Now, under certain restrictive conditions, they
can be classified under shareholders’ equity, regardless of
the currency in which their exercise price is denominated.
IFRIC 17, “Distribution of non-cash assets to
owners”
IFRIC 17 addresses the measurement and accounting
treatment of the distribution of non-cash assets to owners.
IFRIC 18, “Transfers of assets from customers”
This interpretation covers the accounting treatment of
transfers of property, plant and equipment to the accounts
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Application dates: financial years
beginning from
Amendment to IAS 39 for eligible hedged items
This amendment will stipulate the conditions of application
of the provisions of IAS 39 on hedging in two specific cases:
the hedging of inflation risk and the incorporation of the time
value of options in hedge accounting. This amendment will
be applied retroactively.
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Accounting standards and interpretations not yet adopted by the European Union
at December 31, 2009
Date of publication by IASB
Application dates: financial years
beginning from
IFRS 9 "Financial instruments" (Phase 1: classification and measurement)
November 12, 2009
January 1, 2013
IFRIC 19 "Extinguishing financial liabilities with equity instruments"
November 26, 2009
July 1, 2010
Improvements to IFRS - April 2009
April 16, 2009
July 1, 2009 at the earliest
Amendments to IFRS 2 "Group cash-settled share-based payment"
June 18, 2009
January 1, 2010
Amendments to IFRS 1 "First-time adoption of international financial
reporting standards: additional exceptions"
IAS 24 (revised) "Related party disclosures"
Amendments to IFRIC 14 "Prepayments of a limited funding requirement"
July 23, 2009
January 1, 2010
November 4, 2009
January 1, 2011
November 26, 2009
January 1, 2011
IFRS 9 «Financial instruments - Phase 1:
classification and measurement»
IFRIC 19 «Extinguishing financial liabilities with
equity instruments»
This standard, which represents the first phase in the
overhaul of the provisions of IAS 39, defines a new method
of classification and measurement of financial assets. The
classification and measurement of financial liabilities, the
methodology for impairing financial assets, as well as hedging
transactions shall be addressed in subsequent phases to
complete IFRS 9.
This interpretation provides guidance on how a debtor entity
should handle the accounting treatment of a debt-for-equity
swap. The equity instruments must be measured at their
fair value. The difference between the book value of the
cancelled debt and the fair value measurement of the equity
instruments issued must be booked to profit or loss.
Financial assets will be classified in three categories
(amortised cost, fair value through profit or loss, and fair
value through other comprehensive income) depending on
the details of their contractual flows and the way the entity
manages its financial instruments («business model»).
Debt instruments (loans, receivables or debt securities) shall
be recorded at their amortised cost, provided that they are
held for the purpose of receiving contractual cash flows and
they present standard characteristics (the cash flows must
be solely payments of principle and interest on the principal
outstanding). All other debt instruments are measured at fair
value through profit or loss.
Equity instruments shall be recorded at fair value through
profit or loss, except in the event of an irrevocable OCI option
(provided that these instruments are not held for transaction
purposes and classified as such under financial assets at fair
value through profit or loss).
Embedded derivatives shall no longer be booked separately
from the financial host instruments, where they are financial
assets within the scope of IFRS 9. Instead the hybrid assets
in their entirety are measured at fair value through profit or
loss.
Improvements to IFRS - April 2009
As part of the annual procedure to improve International
Financial Reporting Standards, the IASB published 12
amendments to 20 existing standards. These amendments
shall become mandatory for financial years beginning from
July 1, 2009 at the earliest.
Amendments to IFRS 2 «Group cash-settled sharebased payment»
The IASB provided guidance on how a subsidiary should
record in its financial statements any transactions within
the Group whose payment is share-based and which shall
be settled in cash. Goods and services received must be
measured by the subsidiary from its own point of view and
not take into account the accounting treatment by the Group,
which pays for the goods and services in cash or securities.
Amendments to IFRS 1 “First-time adoption
of international financial reporting standards:
additional exceptions”
These amendments introduce new exceptions concerning
the retroactive application of IFRS by entities belonging
to certain business sectors (oil and gas assets, lease
agreements) and adopting IFRS for the first time.
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IAS 24 (revised) «Related party disclosures»
PRINCIPLES OF CONSOLIDATION
This revised version simplifies the disclosures made by
entities controlled exclusively or jointly by the government
or on which the government exercises a notable influence,
and clarifies the concept of a related party for these entities.
Companies that do not qualify as significant under the
Group’s accounting standards have been excluded from the
consolidation scope. In order to qualify as not significant,
Group companies must meet all of the following three criteria
for two consecutive fiscal years:
Amendments to IFRIC 14 «Prepayments of a limited
funding requirement»
This amendment sets forth the conditions under which a net
asset may be recorded under a post-employment benefits
scheme in the event of exceptional prepayments to reduce
future contributions.
PRESENTATION OF THE FINANCIAL
STATEMENTS
In the absence of a model imposed by IFRS, the format used
for the financial reports complies with the format for financial
reports proposed by the Conseil National de la Comptabilité
(French accounting standards board) in Recommendation
No. 2009-R-04 of July 2, 2009, which cancelled and replaced
Recommendation No. 2004-R-03 of October 27, 2004. This
new recommendation introduced the changes to IAS 1, as
adopted by the European Union on December 17, 2008.
The Group thus maintained a distinct presentation of
the consolidated income statement in order to detail the
components of its net income, and also presents (in a new
statement beginning with this net income) the breakdown of
gains and losses booked directly to equity («Report of net
income and gains and losses booked directly to equity»).
The new additional disclosures pertaining to gains and losses
booked directly to equity, required by IAS 1 (revised), are
presented in Note 24 to the financial statements:
U disclosures on the transfer of gains and losses booked
directly to equity to net income and;
U disclosures on taxes pertaining to each component of the
gains and looses booked directly to equity.
U total assets of under EUR 10 million;
U net income of below EUR 1 million;
U no ownership of a stake in the capital of a consolidated
company.
The voting rights taken into consideration in order to
determine the Group’s degree of control over an entity
and the corresponding consolidation method include
potential voting rights where these can be freely exercised
or converted at the time the assessment is made. Potential
voting rights are instruments such as call options on ordinary
shares outstanding in the market or rights to convert bonds
into new ordinary shares.
The following methods of consolidation are used:
Z Full consolidation (IAS 27)
Group companies which are exclusively owned and
controlled by Crédit du Nord Group are fully consolidated.
Full consolidation involves recognising the full value of all
subsidiary assets and liabilities, net of minority interests in
both shareholders’ equity and net income.
The exclusive control over a subsidiary is the power to govern
the financial and operating policies so as to obtain benefits
from its activities. Control results from:
U either owning, directly or indirectly, the majority of the
voting rights in the subsidiary;
U or having the power to appoint or remove the majority
of members of the administrative, management or
supervisory bodies of the subsidiary or to command the
majority of the voting rights at meetings of these bodies;
U or having the power to exercise a dominant influence over
the subsidiary through an agreement or provisions in the
company’s bylaws.
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Z Proportionate consolidation (IAS 31)
substantially controlled by the Group, even in the absence
of capital ties.
Group companies which are jointly owned and controlled
by Crédit du Nord Group are consolidated proportionately.
This method consists in recognising a proportion of the
company’s assets and liabilities equal to the percentage of
Group ownership in the company, rather than the value of
the ownership interest in the company. Minority interests are
not booked.
U the SPE’s activities are being conducted on behalf of the
Group so that the Group obtains benefits from the SPE’s
operation;
Joint control is the sharing of control over a subsidiary
by a limited number of partners or shareholders, where
the financial and operating policies of said subsidiary are
determined by mutual agreement.
U the Group has the decision-making powers to obtain
the majority of the benefits of the SPE, whether or not
this control has been delegated through an “auto-pilot”
mechanism;
A contractual agreement must specify that the consent of
all partners or shareholders is required for exercising control
over the economic activity of the subsidiary and for all
strategic decisions.
U the Group has the ability to obtain the majority of the
benefits of the SPE;
Z Equity method (IAS 28)
Companies in which the Group holds a significant ownership
are consolidated using the equity method. Significant
influence is defined as the power to influence the policies of
a subsidiary without exercising control over said subsidiary.
This can result from representation on the management
or supervisory bodies, participation in the policy-making
process, the existence of significant intercompany
transactions, interchange of managerial personnel or the
provision of essential technical information. The Group is
presumed to exercise significant influence if it holds, directly
or indirectly, at least 20% of the voting rights.
Under the equity method, Crédit du Nord substitutes
the value of the ownership interest in the company with a
proportionate share of the company’s equity and net income.
The net difference resulting from this substitution is recorded
under «Consolidated reserves». The Group’s share in
the company’s income is recorded under «Income from
companies accounted for by the equity method».
Z Specific treatment of special purpose
entities (SIC 12)
The distinct legal structures, Special Purpose Entities or
SPEs, created specifically to manage a transaction or
group of similar transactions are consolidated if they are
The following criteria are used on a non-cumulative basis
to assess whether a special purpose entity is controlled by
another entity:
U the Group retains the majority of the risks of the SPE.
In consolidating SPEs considered to be substantially
controlled by the Group, those parts of entities not held by
the Group are recognised as debt in the balance sheet.
Z Restatements and eliminations
The financial statements of consolidated companies are
restated as necessary according to Group accounting
principles. Consolidated net assets and net income are
presented after eliminations for intra-group transactions.
Z Business combinations and goodwill
(IFRS 3)
Crédit du Nord Group uses the purchase method to account
for its business combinations. In order to determine goodwill,
IFRS 3 requires that all assets, liabilities, off-balance sheet
items and contingent liabilities of the acquired entities be
valued individually at fair value, regardless of their purpose.
The analyses and appraisals necessary for the initial valuation
of these items, and any corrections to the value based on
new information, must be carried out within 12 months of
the date of acquisition.
Upon the first consolidation of a company, an analysis
is performed to determine the difference between the
acquisition cost of the shares and the assessed fair value of
the proportion of the net assets acquired. This difference is
then booked to correct the value of the balance sheet items
and commitments of the consolidated company, on the
one hand, and recorded as intangible assets, as defined by
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IAS 38. Any residual balance is recorded as goodwill. If the
residual difference is positive, it is booked on the assets side
of the consolidated balance sheet under “Goodwill”. If the
difference is negative, it is immediately recognised in profit
or loss.
U during an acquisition, contingent liabilities are booked to
the consolidated balance sheet where they represent a
current obligation (and no longer a potential obligation, as
was previously the case) at the acquisition date and where
their fair value can be reliably measured.
Goodwill is carried on the balance sheet at historical cost,
and is subject to impairment tests whenever there is any
indication that its value may have diminished, and at least
once a year. At the acquisition date, each item of goodwill is
attributed to a Cash Generating Unit (CGU) which is expected
to derive benefits from the acquisition. Any impairment of
goodwill is calculated based on the recoverable value of the
relevant CGU. When the recoverable value of the CGU is less
than its carrying value, an irreversible impairment is recorded
in the consolidated income statement for the period under
“Impairment of goodwill”. At present, the Group has only
defined one CGU: the retail bank.
U the acquiree’s deferred tax assets not recognised at the
date control was obtained are subsequently booked on
the income statement with no goodwill adjustment.
For transactions executed from January 1, 2009, the
accounting treatment described above was amended
due to the early application of IFRS 3 (revised), «Business
Combinations», and IAS 27 (revised) «Consolidated and
separate financial statements». The main changes were as
follows:
U costs directly associated with acquisitions are now
booked to the income statement for the period;
U contingent considerations are included in the acquisition
cost at their fair value on the date control is obtained,
regardless of their nature. This recording is made to
equity or debt (depending on the method of settlement):
subsequent revisions of these gaps are booked to the
income statement for financial debts within the scope of
IAS 39 and in accordance with the appropriate standards
for debts not falling within the scope of IAS 39. In the event
of equity instruments, these revisions do not give rise to
remeasurement.
U non-controlling interests can, at the date control is
obtained, be measured either at fair value (with a fraction
of the goodwill allocated to these non-controlling interests)
or at their proportionate share of the acquiree’s net assets
(continued use of the previous method described above).
The choice between these two approaches must be made
individually for each acquisition. Subsequent acquisitions
of non-controlling interests are then systematically booked
to equity, regardless of the choice made when control was
obtained.
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U on the date control was obtained, any share in the entity
previously held by the Group is remeasured at its fair value
and booked to the income statement. In the event of a
step acquisition, goodwill is determined in reference to the
fair value at the date control was obtained and no longer
in reference to the fair value of the assets and liabilities
acquired at each transaction date.
U when a Group loses control of a consolidated subsidiary,
any share it keeps is remeasured at fair value and booked
to the income statement.
Z Non-current assets held for sale and
discontinued operations
A fixed asset or group of assets and liabilities is deemed
to be «held for sale» if its carrying value will primarily be
recovered via a sale and not through its continuing use. For
this classification to apply, the asset must be immediately
available for sale and its sale must be highly probable. Assets
and liabilities falling under this category are reclassified as
“Non-current assets held for sale” and “Liabilities directly
associated with non-current assets classified as held for
sale”, with no netting.
Any negative differences between the fair value less costs to
sell off non-current assets and groups of assets held for sale
and their net carrying value is recognised as an impairment
loss in profit or loss. Non-current assets held for sale are no
longer amortised as from their reclassification.
An operation is classified as discontinued at the date the
Group has actually disposed of the operation, or when the
operation meets the criteria to be classified as held for sale.
Discontinued operations are recognised as a single item in
the financial statements for the period, at their net income for
the period up to the date of sale, combined with any net gains
or losses on their disposal or on the fair value less costs to
sell of the assets and liabilities making up the discontinued
operations. Similarly, cash flows generated by discontinued
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operations are booked as a separate item in the statement
of cash flows for the period
Z Fiscal year-end
The consolidated financial statements were prepared on
the basis of accounts closed on December 31, 2009 for all
consolidated companies.
ACCOUNTING PRINCIPLES
These accounting principles have been applied since
January 1, 2005.
Z Classification and valuation of financial
assets and liabilities
In general, regardless of their category (held-to-maturity
securities, available-for-sale securities, securities at fair value
through profit or loss), sales and purchases of securities are
recognised on the balance sheet on the date of settlementdelivery. Loans are initially recognised on the date of
disbursement.
Derivative financial assets and liabilities at fair value through
profit or loss are booked at their trading date.
When initially recognised, financial assets and liabilities are
measured at fair value including transaction costs (with the
exception of financial instruments recognised at fair value
through profit or loss) and are classified under one of the
following financial categories.
Loans and receivables
Loans and receivables include non-derivative fixed- or
determinable-income financial assets which are not listed on
an active market and which are not held for trading purposes
or held for sale from the time of their acquisition or issuance.
Loans and receivables are presented on the balance sheet
under “Due from banks” or “Customer loans”, depending on
the counterparty. They are valued after their initial recognition
at their amortised cost, based on the effective interest rate,
and may be subject to impairment if appropriate
Financial assets and liabilities at fair value
“Financial assets and liabilities at fair value through profit
or loss”. Changes in fair value are booked on the income
statement for the period, under the heading “Net gains or
losses on financial instruments at fair value through profit
or loss.”
Added to financial assets and liabilities held for trading
purposes are non-derivative financial assets and liabilities
that the Group has designated at fair value through profit
or loss, in application of the option provided by IAS 39, as
defined in the amendment thereto in June 2005. The Group
uses this option in the following cases.
U to book certain compound instruments at fair value
and thereby avoid the need to separate out embedded
derivatives that would otherwise have to be booked
separately. These include unlisted securities containing
embedded derivatives (convertible bonds or bonds
redeemable in shares) as well as structured issues
of negotiable medium-term notes and structured
borrowings;
U to eliminate or reduce discrepancies in the accounting
treatment of certain financial assets and liabilities. The
Group thus recognises at fair value through profit or loss
the financial assets held to guarantee unit-linked policies
of its life insurance subsidiaries to ensure their financial
treatment matches that of the corresponding insurance
liabilities. Under IFRS 4, insurance liabilities have to be
recognised according to local accounting principles.
The revaluations of underwriting reserves on unit-linked
policies, which are directly linked to revaluations of the
financial assets underlying their policies, are accordingly
recognised in profit or loss. The fair value option thus
allows the Group to record changes in the fair value of
the financial assets through profit or loss so that they
match fluctuations in the value of the insurance liabilities
associated with these unit-linked policies.
U to measure the fair value of securities held for venture
capital activities, where the Group’s stake is between
20% and 50%, as the performance of these securities is
valued on the basis of fair value in accordance with a duly
documented risk management or investment strategy.
The business of capital venture companies involves
investing in financial assets in order to make a profit from
their total return in the form of dividends and changes in
fair value.
This category covers financial assets and liabilities held for
trading purposes. They are measured at fair value at the
balance sheet date and recorded on the balance sheet under
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Held-to-maturity investments
This category includes non-derivative fixed- or determinableincome assets with a fixed maturity, which are listed on
an active market and which the Group has the intention
and ability to hold to maturity. They are valued after their
acquisition at their amortised cost and may be subject to
impairment if appropriate. Amortised cost includes account
premiums, discounts and transaction costs. These financial
assets are recorded on the balance sheet under “Held-tomaturity financial assets”.
This category covers non-derivative financial assets held for
an indefinite period and which the Group may sell at any
time. By default, these are financial assets which are not
classified in one of the three categories above. Available-forsale financial assets are measured at fair value at the balance
sheet date, and any changes in value excluding accrued or
earned interest are recorded in shareholders’ equity under
“Unrealised gains or losses”.
Accrued or earned interest on fixed-income securities is
recorded in profit or loss under “Interest and similar income
– transactions in fixed-income financial instruments”.
Income from equity securities classified as available-for-sale
securities is booked to profit or loss under “Dividend income”.
Changes in fair value are only recognised in profit and loss,
under « Net gains or losses on available-for-sale financial
assets” when the asset is sold or permanently impaired.
Write-downs affecting equity securities classified as availablefor-sale assets may not be reversed.
Reclassification of financial assets
After their initial recognition on the Group’s balance sheet,
financial assets may not be reclassified as “Financial assets
at fair value through profit or loss”.
A financial asset initially recorded on the balance sheet
under “Financial assets at fair value through profit or loss”
may be reclassified in different categories under the following
conditions:
U if a fixed- or determinable-income financial asset held
for trading purposes can no longer be traded on an
active market following its acquisition, and the Group
has the intention and the ability to hold the asset for the
foreseeable future or to maturity, then this financial asset
may be reclassified in «Loans and receivables», subject to
compliance with the applicable eligibility criteria;
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U if rare circumstances lead to a change in holding strategy
for non-derivative financial assets or equity investments
initially held for trading purposes, these assets may be
reclassified either as “Available-for-sale financial assets”
or as “Held-to-maturity financial assets”, subject to
compliance with the applicable eligibility criteria.
Under no circumstances may derivative financial instruments
or financial assets using fair value option be reclassified in
a category other than «Financial assets and liabilities at fair
value through profit or loss».
Financial assets initially recorded as “Available-for-sale
financial assets” may be transferred to “Held-to-maturity
financial assets”, subject to compliance with the appropriate
eligibility criteria.
Furthermore, if a fixed- or determinable-income financial asset
initially recorded under “Available-for-sale financial assets” is
no longer available for sale following its acquisition, and the
Group has the intention and the ability to hold the asset for
the foreseeable future or to maturity, then this financial asset
may be reclassified in «Loans and receivables», subject to
compliance with the applicable eligibility criteria.
Reclassified financial assets are transferred to their new
category at their fair value at the date of reclassification after
which they are valued in accordance with the provisions
applicable to the new category.
The amortised cost of financial assets reclassified from
“Financial assets at fair value through profit or loss”
or “Available-for-sale financial assets” to “Loans and
receivables”, as well as the amortised cost of financial assets
reclassified from “Financial assets at fair value through profit
or loss” to “Available-for-sale financial asset”, are determined
on the basis of expected future cash flow estimates made on
the date of reclassification. The estimate of expected future
cash flows must be revised at each balance sheet date; in the
event of an increase in estimates of future inflows following a
rise in their recoverability, the effective interest rate is adjusted
on a forward-looking basis; however, if there is an objective
indication of impairment resulting from an event which took
place after the reclassification of the financial assets in
question, and this event has a negative impact on initially
expected future cash flows, a write-down on the asset in
question is booked to “Cost of risk” on the income statement.
Financial liabilities measured at amortised cost
using the effective interest method
Group borrowings that are not classified as “Financial
liabilities measured at fair value through profit or loss” are
initially booked at cost, corresponding to the fair value of the
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sums borrowed net of transaction costs. This debt is valued
at amortised cost at the end of the financial period, using the
effective interest method.
Amounts due to banks, Customer deposits
Amounts due to banks and customer deposits are classified
according to their initial duration and type into: demand
(demand deposits, current accounts) and term borrowings
in the case of banks; special savings accounts and other
deposits for customers.
Accrued interest on these amounts is recorded as related
payables through profit or loss. This debt includes pension
transactions, in the form of securitised debt payables, carried
out with these economic operators.
recognises separately as asset or liability any rights and
obligations created or retained as a result of the asset’s
transfer. If the Group has retained control of the asset, it
continues to recognise it on the balance sheet to the extent
of its continuing involvement in that asset.
When a financial asset is derecognised in its entirety, a gain
or loss on disposal is recorded in the income statement for
the difference between the carrying value of the asset and
the payment received for it, adjusted where necessary for
any unrealised profit or loss previously recognised directly
in equity.
The Group only derecognises all or part of a financial liability
when it is extinguished, i.e. when the obligation specified in
the contract is discharged, cancelled or expires.
Securitised debt payables
These liabilities are classified by type of security: mediumterm notes, savings bonds, negotiable debt instruments,
bonds and other debt securities (with the exception of
subordinated notes, which are classified under subordinated
debt).
Interest accrued and payable in respect of these securities is
booked as related payables through profit or loss. Bond issue
and redemption premiums are amortised using the effective
interest rate method over the life of the bonds in question.
The resulting charge is recorded as interest expenses in profit
or loss.
Subordinated debt
This item includes all dated or undated subordinated
borrowings, which in the event of the liquidation of the
borrowing company may only be redeemed after all other
creditors have been paid. Interest accrued and payable
in respect of subordinated debt, if any, is shown with the
underlying abilities as related payables.
Z Derecognition of financial assets
and liabilities
The Group derecognises all or part of a financial asset (or
group of similar assets) when the contractual rights to the
cash flows on the asset expire or when the Group has
transferred the contractual rights to receive the cash flows
and substantially all of the risks and rewards of ownership
of the asset.
Where the Group has transferred the cash flows of a financial
asset but has neither transferred nor retained substantially all
the risks and rewards of its ownership and has not retained
control of the financial asset, the Group derecognises it and
Z Impairment of financial assets
Financial assets carried at amortised cost
The criteria for determining whether the credit risk on an
individual loan is identified are similar to those used under
French regulations to determine whether a loan is doubtful.
At each balance-sheet date, the Group determines whether
there is objective evidence that any asset or group of
individually assessed financial assets has been impaired as
a result of one or more events occurring since they were
initially recognised (“a loss-generating event”) that has (have)
an impact on the estimated future cash flows of the asset
or group of financial assets which can be reliably estimated.
The Group first determines if there is objective evidence of
impairment in any individually significant financial assets,
and similarly, whether individually or collectively, for financial
assets which are not individually significant. Notwithstanding
the existence of a guarantee, the criteria used to determine
probable credit risk on individual outstanding loans include
the occurrence of one or more payments at least over 90
days due (six months for real estate and property loans and
nine months for municipal loans), or, even in the absence of
missed payments, the existence of probable credit risk or the
presence of procedures to contest the loan.
In the event there is no objective evidence of impairment for
a financial asset, whether considered individually significant
or not, the Group includes this financial asset in a group of
financial assets presenting similar credit risk and collectively
subjects them to an impairment test.
If a loan is considered to carry an identified credit risk which
makes it probable that the Group will be unable to recover
all or part of the amount owed by the counterparty under
the initial terms and conditions of the loan agreement,
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notwithstanding any loan guarantees, an impairment loss is
booked for the loan in question, and deducted directly from
the value of the asset.
The amount of the impairment loss is equal to the difference
between the carrying value of the asset and the present
value, discounted at the original effective interest rate, of
the total estimated recoverable sum, taking into account
the value of any guarantees. The impaired receivable
subsequently generates interest income, calculated by
applying the effective interest rate to the net carrying value
of the receivable. Impairment allowances and reversals,
losses on non-recoverable loans and amounts recovered on
impaired loans are booked under “Cost of risk”.
In a homogenous portfolio, as soon as a credit risk is
incurred on a group of receivables, collective impairment
loss is recognised without waiting for the risk to individually
affect one or more receivables. This impairment loss is
directly deducted from the value of the loans/receivables in
the balance sheet. The collective impairment losses cover,
on the one hand, the credit risk incurred on a portfolio of
counterparties which are sensitive or on the watch-list, and,
on the other hand, sector risk exposure.
Performing loans under watch
Within the “Performing loan” risk category, the Group has
created a subcategory called “Performing loans under watch”,
to cover loans/receivables requiring closer surveillance. This
category includes loans/receivables where certain evidence
of deterioration has appeared since they were granted.
The Group conducts historical analyses to determine the
rate of classification of these loans/receivables as doubtful
and the impairment ratio, and updates these analyses on a
regular basis. It then applies these figures to homogenous
groups of receivables in order to determine the amount of
impairment.
Impairment due to sector credit risk
The Group’s Central Risk Division regularly lists the business
sectors that it considers represent a high probability of
default in the short-term due to recent events that may have
caused lasting damage to the sector. A rate of classification
as doubtful loans is then applied to the total outstandings in
these sectors in order to determine the volume of doubtful
loans. Impairments are then booked for the overall amount of
these outstanding loans, using impairment ratios which are
determined according to the historical average impairment
rates of doubtful customers, adjusted to take into account
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an analysis of each sector by an independent expert on the
basis of the economic environment.
Where there is evidence of lasting impairment to an availablefor-sale financial asset, an impairment loss is booked to
profit or loss. Where a non-permanent unrealised capital
loss has been directly booked to shareholders’ equity and
subsequently objective evidence of lasting impairment
emerges, the Group recognises the total accumulated
unrealised loss previously booked to shareholders’ equity in
profit or loss:
U under “Cost of risk” for debt instruments (fixed-income
securities);
U under “Net gains or losses on available-for-sale financial
assets” for equity instruments (equity securities).
The sum of the cumulated loss is calculated as the difference
between the acquisition cost of the security (net of any
repayments of principal and amortisation) and its current fair
value, minus, if necessary, any loss of value on the security
previously booked through profit or loss.
For listed equity instruments, a significant or prolonged
decline in their share price to a value below their acquisition
cost constitutes an objective indication of impairment. The
Group believes this is particularly the case for listed equities
which present, at the balance sheet date, unrealised losses
exceeding 50% of their acquisition cost, as well as for listed
equities posting unrealised losses for a continuous period of
24 months or more prior to the balance sheet date. Other
factors, such as the financial situation of the issuer or its
development prospects, may lead the Group to conclude that
it may not recover its investment even if the above-mentioned
criteria were not met. In such cases, an impairment loss is
recorded on the income statement for the difference between
the share’s listed price at the balance sheet date and its
acquisition cost.
For unlisted equity instruments, the impairment criteria used
are the same as those described above.
Impairment losses recognised through profit or loss on
equity instruments considered as available-for-sale are not
reversed until the financial instrument is sold. Once an equity
instrument has been impaired, any further loss of value is
booked as an additional impairment loss. However, losses of
value on debt instruments are reversed through profit or loss
if the instruments subsequently appreciate in value
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The impairment criteria for debt instruments are similar to
those applied for the impairment of financial assets measured
at amortised cost.
Z Derivatives and hedging
IAS 39 requires that all derivatives be recognised at fair
value in the balance sheet, and that variations in value be
recognised in profit or loss for the period, with the exception
of financial derivatives classified as cash flow hedges for
accounting purposes. Derivatives are recorded on the
balance sheet at the trading date.
Derivative instruments are divided into two categories:
Trading financial derivatives
Financial derivative instruments are considered to be trading
financial derivatives by default, unless they are designated
as hedging instruments for accounting purposes. They
are booked in the balance sheet under «Financial assets
or liabilities at fair value through profit or loss». Changes in
fair value are booked on the income statement under the
heading “Net gains or losses on financial instruments at fair
value through profit or loss.”
Changes in fair value of derivative contracts entered into with
counterparties which end up defaulting are booked under
«Net gains or losses on financial instruments at fair value
through profit or loss» until the date the instruments are
cancelled and recognised on the balance sheet, for the fair
value at this same date of the receivable or debt vis-à-vis the
counterparties in question. Any subsequent impairments on
these receivables are recorded under “Cost of risk” on the
income statement.
Derivative instruments in the «Trading» category include rate
swaps, caps, floors and collars, interest-rate options, futures
contracts, Matif contracts and forex options.
Hedging derivatives
Under IFRS, hedge accounting is deemed to be an
exceptional treatment and is therefore subject to very strict
requirements.
As a result, as soon as the hedge is established, Crédit du
Nord Group produces documentation indicating: the item
hedged, the risk to be hedged, the type of financial derivative
used and the evaluation method applied to measure the
effectiveness of the hedge.
The hedge must be highly effective, such that variations in the
value of the derivative hedging instrument offset variations
in the value of the hedged instrument. This effectiveness is
measured when the hedge is first set up and throughout its
life.
Depending on the type of risk hedged, the Group defines the
derivative financial instrument as a fair value hedge, a macro
fair value hedge, a cash flow hedge or a net investment
hedge.
Fair value hedge
The main instruments used for fair value hedges are interest
rate swaps.
In a fair value hedge, the hedging derivative is measured
at fair value through profit or loss, as is the portion of the
hedged item that is exposed to the hedged risk, i.e. the gains
or losses on the hedged item attributable to the hedged
risk adjust the carrying amount of the hedged item and are
recognised in profit or loss under «Net gains or losses on
financial instruments at fair value through profit or loss –
Derivative financial instruments».
For interest rate derivates, accrued interest income or
expenses on the hedging derivative are booked to profit or
loss under the same heading, at the same time as the interest
income or expense related to the hedged item.
The Group discontinues the hedge, on a forward-looking
basis, if:
U the effectiveness criteria for the hedging instrument are
no longer respected;
U the financial derivative is sold or terminated early;
U the hedged item is sold before maturity.
As a result, with the exception of the last case, the balance
sheet value of the hedged item is no longer adjusted to take
into account variations in value, and cumulated gains or
losses on the previously hedged item are amortised over the
remaining life of the item.
Macro hedging
In this type of hedge, interest rate derivatives are used to
hedge the Group’s overall structural interest rate risk. Crédit
du Nord Group has decided to use the carve-out version of
IAS 39 as adopted by the European Union, which facilitates:
U the use of fair value hedge accounting for macro-hedges
used in Asset & Liability Management including customer
demand deposits in the fixed rate positions being hedged;
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U the application of the effectiveness test required by IAS
39, adopted in the European Union.
The main instruments used for macro fair value hedges are
interest rate swaps and cap purchases.
booked where the Group has a commitment to a third party
which makes it probable or certain that it will never incur an
outflow of resources to this third party without receiving at
least an equivalent value in exchange.
Financial derivatives used for macro fair value hedges are
accounted for in a similar way to derivatives used in fair value
hedges. Changes in the fair value of the macro-hedged
portfolio are booked in the balance sheet under ”Revaluation
differences on hedged items” through profit or loss.
The estimated amount of the expected outflow is then
discounted to present value to determine the size of the
provision, where this discounting has a significant impact.
Allocations to and write-backs of provisions are booked
through profit or loss under the items corresponding to the
future expense.
Cash flow hedge
At Crédit du Nord Group, provisions are made up of
provisions for disputes and provisions for general risks.
Crédit du Nord Group has no financial instruments in
its balance sheet classified as cash flow hedges or net
investment hedges.
Contingent liabilities, where they exist, are not accounted for
but are disclosed in the notes to the financial statements.
Embedded derivatives
An embedded derivative is a component of a hybrid
instrument. While hybrid instruments are not measured at
fair value through profit or loss, the Group does separate
embedded derivatives from their host instrument where, on
the initiation of the transaction, the economic characteristics
and risks associated with the embedded derivatives are not
closely linked to the characteristics and risks of the host
instrument and where they meet the definition of a derivative
financial instrument. Once separated, the derivative financial
instrument is booked at fair value on the balance sheet under
“Financial assets and liabilities at fair value through profit or
loss” under the terms described above.
Z Foreign exchange transactions
At period-end, monetary assets and liabilities denominated
in foreign currencies are converted into euros (Crédit du
Nord Group’s operating currency) at the prevailing spot rate.
Realised or unrealised foreign exchange losses or gains are
recognised in profit or loss.
Foreign exchange contracts are valued at the spot rate on
the balance sheet date. Forward contracts are valued using
the forward exchange rate for the remaining maturity, and
changes in fair value are recorded on the income statement.
Z Provisions (IAS 37) – Excluding
provisions for employee benefits
Provisions, excluding those related to employee benefits
and credit risks, represent liabilities, the timing or amount
of which cannot be precisely determined. Provisions are
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Z Commitments under “contrats
d’épargne logement” (mortgage
savings agreements)
Comptes d’épargne-logement (CEL or mortgage savings
accounts) and plans d’épargne-logement (PEL or mortgage
savings plans) are savings schemes for individual customers
(in accordance with Law No. 65 554 of July 10, 1965), which
combine an initial deposit phase in the form of an interestearning savings account with a lending phase where the
deposits are used to provide property loans. The latter phase
is subject to the previous existence of the savings phase and
is therefore inseparable from it. The deposits collected and
loans granted are booked at amortised cost.
These schemes generate two types of commitments for the
Group: the obligation to lend subsequently to the customer
at an interest rate set upon the signing of the agreement,
and the obligation to pay interest on the customer’s savings
in the future at an interest rate set upon the signing of the
agreement, for an indefinite period.
Commitments with future adverse effects for the Group are
subject to provisions booked as balance-sheet liabilities,
any changes in which are recorded on the interest margin
line under “Net Banking Income”. These provisions relate
exclusively to commitments under mortgage savings
accounts and schemes existing at the date of the provision’s
calculation.
Provisions are calculated for each generation of home
savings schemes, on the one hand, with no netting between
the different generations of schemes, and for all home
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savings accounts taken together, which constitutes a single
all-encompassing generation, on the other hand.
Infrastructures
During the savings phase, provisions are calculated
according to the difference between average expected
outstanding savings and minimum expected outstanding
savings, both of which are determined statistically based on
historical observations of actual customer behaviour.
During the lending phase, provisions are calculated according
to loans already issued but not yet due at the balance sheet
date, as well as future loans considered as statistically
probable on the basis of customer savings deposits on the
balance sheet at the date of calculation and on historical
observations of actual customer behaviour.
A provision is booked if the discounted value of expected
future earnings for a given generation of mortgage savings
products is negative. The provision is estimated on the basis
of interest rates available to individual customer for equivalent
savings and loan products, with similar estimated life and
date of inception.
Z Tangible and intangible assets
(IAS 16, 36, 38, 40)
Operating and investment fixed assets are booked on the
balance sheet at cost. Borrowing expenses incurred to fund
a lengthy construction period for the fixed assets are included
in the acquisition cost, along with other directly attributable
expenses. Investment subsidies received are deducted from
the cost of the relevant assets.
Fixed assets purchased before December 31, 1976 are booked
at their estimated value in use in accordance with the legal
revaluation rules published 1976.
As soon as they are fit for use as decided by the Group,
fixed assets are depreciated over their useful life using the
straight-line method.
Any residual value of the asset is deducted from its
depreciable amount.
Where one or several components of a fixed asset are used
for different purposes or to generate economic benefits over
a different time period from the asset considered as a whole,
these components are depreciated over their own useful
life. The Group has applied this approach to its operating
and investment properties, breaking down said assets into
at least the following components, with their corresponding
depreciation periods:
Major structures
50 yrs
Doors and windows, roofing
20 yrs
Façades
30 yrs
Elevators
Electrical installations
Electricity generators
Air conditioning, smoke
extractors
Technical
installation
Heating
10-30 yrs
Security & surveillance
installations
Plumbing
Fire safety equipment
Fixtures & fittings
Finishing, surroundings
10 yrs
These depreciation periods are listed as an indication only
and may vary depending on the type fixed asset.
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the following
ranges:
Safety and publicity equipment
5 yrs
Transport
4 yrs
Furniture
10 yrs
IT and office equipment
3-5 yrs
Software (acquired or developed)
3-5 yrs
Business software purchased from third parties is capitalised
and depreciated using the straight-line method over a period
of 3-5 years. Software developed internally is capitalised
and depreciated, in the same way as business software,
if it stems from an IT project involving significant amounts
which the Group expects to yield future benefits. Fixed costs
correspond to the development phase and include the
costs related to the detailed design, programming, testing
of the software, and to the production of the technical
documentation.
Fixed assets are subject to impairment tests whenever
there is an indication that their value may have diminished.
Evidence of a loss in value is assessed at every balance sheet
date. Impairment tests are carried out on assets grouped
by cash-generating unit. Where a loss is established, an
impairment loss is booked to the income statement, which
may be reversed if there is an improvement in the conditions
that initially led to it being recognised. The impairment loss
reduces the depreciable amount of the asset and thus also
affects its future depreciation schedule.
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The useful life and the residual value of fixed assets are
reviewed annually. If this data needs to be changed, the
depreciation schedule is modified accordingly.
Z Leases (IAS 17)
There are two categories of lease transaction:
U finance leases, which transfer substantially all the risks
and rewards incidental to ownership to the lessees;
U operating leases, which are leases other than finance
leases.
Lease finance receivables are recognised in the balance
sheet under “Finance lease receivables” and represent the
Group’s net investment in the lease, calculated as the present
value of the minimum payments to be received from the
lessee, plus any unguaranteed residual value, discounted at
the interest rate implicit in the lease.
Interest included in the lease payments is booked under
income from other banking activities on the income
statement such that the lease generates a constant periodic
rate of return on the lessor’s net investment. In the event of
a decline in unguaranteed residual value, used in calculating
the lessor’s gross investment in the lease financing contract,
an expense is recorded to correct the amount of financial
income already booked.
Fixed-assets arising from operating lease activities are
presented in the balance sheet under “Investment fixed
assets” and are treated accordingly. In the case of buildings,
they are booked under “Real estate leasing”. Income from
lease payments is recognised in the income statement on
a straight-line basis over the life of the lease under “Other
banking income”.
Z Loan commitments
Financing commitments which are not considered as financial
derivative instruments are initially booked at their fair value.
These financing commitments are subsequently provisioned,
if necessary, in accordance with accounting principles relating
to “Provisions – excluding provisions for employee benefits”.
Z Financial commitments given
The Group initially recognises financial guarantees given as
financial instruments at their fair value, then subsequently
values them at the higher of the two amounts between the
amount of the obligation and the initially recorded amount,
minus the amortisation of the guarantee commission where
applicable. If there is objective evidence of impairment,
financial guarantees given are provisioned as balance sheet
liabilities.
Z Interest income and expenses
Interest income and expenses are booked to the income
statement for all financial instruments valued at amortised
cost using the effective interest rate method.
The effective interest rate is taken to be the rate that discounts
the future cash inflows and outflows over the expected life
of the instrument to the book value of the financial asset or
liability. To calculate the future cash flows, the Group takes
into account all the contractual provisions of the financial
instrument without taking account of possible future loan
losses. The calculation includes commission paid or received
between the parties where these are assimilable to interest,
transaction costs and all types of premiums and discounts.
When a financial asset or a group of similar financial assets
has been impaired following an impairment of value,
subsequent interest income is booked through profit or loss
using the same interest rate that was used to discount the
future cash flows when measuring the loss of value.
Provisions that are booked as balance sheet liabilities,
except for those related to employee benefits, generate
interest expenses for accounting purposes. This expense
is calculated using the same interest rate as was used to
discount to present value the expected outflow of resources
that gave rise to the provision.
Z Commissions (lAS 18)
Crédit du Nord Group books its commission revenues on the
income statement according to the nature of the transaction
for which they are charged.
Fees for one-off services are booked to income when the
service is provided.
Fees for ongoing services are spread across the duration of
the service.
Commissions that are part of the effective return of a financial
instrument are accounted for as an adjustment to the
effective return of the financial instrument.
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Z Employee benefits (IAS 19)
In accordance with IAS 19 and IFRS 2, the Group recognises
four categories of benefit:
Pension commitments and benefits
Commitments under statutory pension systems are covered
by the contributions paid to independent pension funds
which then manage all payments of retirement benefits.
Under IAS 19, these are defined contribution plans, which
limit the company’s liability to the subscription paid into the
plan, and which do not commit the company to a specific
level of future benefit. Contributions paid are booked as an
expense for the year in question.
All commitments under defined benefit plans are valued
using an actuarial method.
Defined benefit plans commit the Group, either formally or
constructively, to pay a certain amount or level of future
benefits and the Group therefore bears the medium- and
long-term actuarial and financial risk.
Said plans cover several types of benefits, notably any
residual complementary benefits afforded by specialist
pension funds.
Since 1 January 1994, pursuant to an agreement signed
by all French banks on 13 September 1993, the banking
institutions of the Group, excluding Crédit du Nord, are
no longer affiliated with specialist pension funds and are
henceforth affiliated with the ARRCO-AGIRC funds of
the general system. This agreement gave rise to residual
commitments to current retirees and active employees (for
periods of employment in the Group prior to 31 December
1993).
For Crédit du Nord, following the Branche agreement of
February 25, 2005, which provided for the amendment of
the provisions relating to complementary benefits, and in
light of the negative balance of its pension fund, an internal
agreement was signed in 2006 setting forth the following
provisions:
U for beneficiaries of complementary benefits still employed
with Crédit du Nord, the value of the complementary
benefits was transferred to a supplementary savings plan
outsourced to an insurer;
U retirees and beneficiaries of a survivor’s pension were
given a choice of opting for a single lump-sum payment
of their complementary benefits.
Any residual complementary benefits are therefore linked to
retirees and beneficiaries of a survivor’s pension who did not
opt for a single lump-sum payment of their complementary
benefits, on the one hand, and to beneficiaries no longer
employed with Crédit du Nord, on the other hands.
Employee benefits also include termination benefits,
complementary retirement plans and post-employment
medical care. These commitments and the coverage thereof
as well as the main underlying assumptions therein are
outlined in Note 21. Valuations are performed once a year
by an independent actuary, using the projected unit credit
method, on the basis of data as at August 31.
Pre-retirement benefits consist exclusively of those benefits
payable by Group companies between the effective day of
departure of an employee and the date from which they are
covered by their respective pension schemes. Said benefits
are provisioned in full as soon as an agreement is signed.
«Actuarial differences» reflect the difference between
actuarial assumptions and actual figures as well as the
impact of any change in actuarial assumptions. In the
specific case of pension benefits, these differences are only
booked in part on the income statement where they exceed
10% of the maximum between the discounted value of the
commitment and the fair value of the plan assets (referred
to as the «corridor» method). The proportion of said booked
differences is equal to the surplus defined above divided by
the average residual working lives of the beneficiaries. If a
plan has plan assets, these are valued at fair value at the
balance sheet date and are subtracted from the recorded
commitments.
The annual charge booked under personnel expenses for
defined benefit plans includes:
U additional entitlements vested by each employee (current
service cost);
U interest costs arising from the unwinding of the discounting
effect;
U the expected return on plan assets (gross yield);
U the amortisation of actuarial gains and losses and past
service cost;
U the effect of settlement or curtailment of plans.
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Other long-term benefits
IAS 19 defines long-term benefits as benefits paid to
employees more than 12 months after the end of the period
in which they rendered the related service.
In various Group companies, staff may benefit from time
savings accounts as well as seniority bonuses. These
obligations are valued using the same actuarial method
described above and are provisioned in full (including any
actuarial gains or losses). These plans do not have plan
assets. The different commitments and the assumptions
used are detailed in Note 21. Commitment valuations
are performed by an independent actuary once a year.
For commitments excluding time savings accounts, the
valuation made on December 31 was calculated on the basis
of data as at August 31. For commitments linked to time
savings accounts, the valuation made on December 31 was
calculated on the basis of data as at December 31.
Share-based payments
As the Group does not issue listed shares, its employees are
entitled to the equity instruments of the majority shareholder.
Share-based payments include payments in equity
instruments and cash payments, whose amount depends
on the performance of equity instruments.
or subscribing to Société Générale shares. Under IFRS 2,
these stock option plans are treated as share-based
payments.
If the Group has adequate statistics on the behaviour of
option beneficiaries, Group stock option plans are valued by
an independent actuary using a binomial model. If this data is
not available, the Black & Scholes model is used. The options
are valued on the date on which the employee is notified of
the award, without waiting for the conditions that trigger the
award to be met.
The cost of the plan, measured at the assignment date,
is booked under “Personnel expenses” on a straight-line
basis over the vesting period, which is the period between
the award date and the date at which the options can first
be exercised and recognised in shareholders’ equity, in
accordance with IFRIC 11.
Z Income taxes (IAS 12)
The income tax expense includes:
U current income tax for the fiscal year including dividend
tax credits and tax credits actually used for tax settlement
purposes. Said tax credits are booked under the same line
item as the income to which they relate;
Under the employee shareholder scheme, all the Group’s
current and former staff are entitled to participate in the
parent company’s capital increase reserved for employees.
U deferred taxes.
During the period in which the employees subscribe to
parent company shares, Crédit du Nord Group books, on
a straight-line basis, a personnel expense equivalent to the
difference between the fair value of the shares acquired and
the subscription price paid by the employee.
In France, standard income tax is 33.33%. Since January
1, 2007, long-term capital gains on equity investments
have been taxed at 15% for shares in companies whose
main activity is real estate and tax-exempt for other equity
investments (subject to a share for fees and expenses of
5% of net income on capital gains during the fiscal year).
Added to this is a Social Security Contribution of 3.3% (after a
deduction of EUR 0.763 million) initiated in 2000. In addition,
under the regime of parent companies and subsidiaries,
dividends received from companies in which the equity
investment is at least 5% are tax-exempt (with the exception
of a share for fees and expenses equivalent to 5% of the
dividends paid).
The fair value of the acquired securities takes into account
the cost of the associated legal obligatory holding period,
estimated using interest rates available to beneficiaries to
estimate the free disposal ability.
The overall discount therefore takes into account the total
number of shares subscribed by employees, the difference
between the acquisition price fixed by the Board of Directors
and the share price on the day of the announcement of the
subscription price, as well as the cost of the holding period
as defined by financial market parameters.
This accounting treatment complies with the provisions of
the CNC statement dated December 21, 2004, relating to
company savings plans.
Société Générale Group’s stock option plans offer certain
employees of Crédit du Nord Group the option of purchasing
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Current income tax
Tax credit arising in respect of revenues from receivables
and security portfolios, when they are effectively used for the
settlement of corporate tax due for the fiscal year, are booked
under the same line item as the revenues to which they relate.
The corresponding income tax expense is kept in the income
statement under “Income tax”.
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Deferred taxes
Capitalisation reserve
Deferred taxes are recognised whenever there is a temporary
difference between the book values of assets and liabilities
on the balance sheet and their respective tax base, where
said differences will have an impact on future tax payments.
The capitalisation reserve of insurance companies consists
of capital gains generated on the sale of obligations and
is designed to offset subsequent capital losses. The
capitalisation reserve is split between technical reserves and
shareholders’ equity according to forecasts of future capital
losses and therefore of the use of reserves. As the recognition
of part of the capitalisation reserve under shareholders’
equity generates a taxable temporary difference, Credit du
Nord Group records a deferred tax liability in its consolidated
financial statements
Deferred taxes are calculated based on a tax rate which has
been approved or almost approved and should be in effect
at the time when the temporary difference will reverse. These
deferred taxes are adjusted in the event of a change in the tax
rate. Their calculation is not subject to discounting.
In France, the «Contribution Economique Territoriale»
(CET), established by the 2010 Finance Act published on
December 31, 2009, will replace the professional tax as
from January 1, 2010; the expense corresponding to this
contribution shall be booked entirely to «Other administrative
expenses» and shall not be recorded under taxes on
the income statement. The implementation of this new
contribution therefore had no impact on the tax rate used at
December 31, 2009 for the determination of deferred taxes.
Deferred tax assets may result from temporary deductible
differences or tax loss carry forwards. Deferred tax assets
are only recognised if it is likely that the tax entity in question
has the prospect of recovering them over a given time period,
particularly by deducting these differences and tax loss carry
forwards from future profits.
Current and deferred taxes are booked to tax income or
expenses, under «Corporate tax» on the consolidated
income statement, with the exception of deferred taxes
relating to gains or losses booked directly to equity amongst
«Unrealised or deferred gains or losses», for which the
expense or income is booked to the same line under equity.
These deferred taxes are calculated according to the liability
method by applying the expected effective tax rate (including
temporary increases) for the period in which the tax asset is
to be applied to income. The amount of deferred tax assets
and liabilities recognised in this manner is detailed in Note 12
to the balance sheet.
Since fiscal year 2000, Crédit du Nord has opted to apply
the Group’s tax regime to those of its subsidiaries in which it
holds a direct or indirect ownership interest of at least 95%.
The convention adopted is that of neutrality.
Z Insurance activity
General framework
Antarius, a mixed (life and non-life) insurance company, is
the Group’s only consolidated insurance company, which is
jointly held with Aviva.
Financial assets and liabilities
The financial assets and liabilities of companies which are
part of the subsidiary Antarius are booked and valued using
methods described above for the valuation of financial
instruments.
Under IFRS 4 on insurance contracts, underwriting reserves
for life and non-life insurance contracts are still measured
using the methods defined under local regulations.
Embedded derivatives which are not valued with reserves
are booked separately.
Under the “shadow accounting” principles defined in IFRS
4, an allocation to a provision for deferred profit-sharing is
booked in respect of insurance contracts that provide for
discretionary profit-sharing. This provision is calculated to
reflect the potential rights of policyholders to unrealised
capital gains on financial instruments measured at fair value
or their potential liability for unrealised losses.
IFRS 4 also requires that a liability adequacy test be carried
out to assess whether underwriting reserves are sufficient.
Z Terms and conditions for establishing
fair value
Fair value is the amount for which an asset can be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm’s length transaction.
The fair value used to measure a financial instrument is, firstly,
the listed price where the financial instrument is listed on an
active market. In the absence of an actively traded market,
fair value is determined using valuation techniques.
A financial instrument is regarded as listed on an active
market if quoted prices are readily and regularly available
from an exchange, dealer, broker, pricing service or regulatory
agency, and those prices represent real and regularly
occurring transactions on an arm’s length basis.
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A market is considered to be inactive on the basis of
indicators such as the significant decline in trading volumes
and the level of activity on the market, the significant disparity
between prices available over time and between the different
market operators mentioned above or the length of time that
has transpired since the most recent transactions took place
on the market on an arm’s length basis.
Where the financial instrument is traded on different markets
and the Group has immediate access to these markets, the
financial instrument’s fair value is represented by the most
beneficial market price. Where there is no listing for a given
financial instrument, but the components of the instrument
are listed, fair value is equal to the sum of the listed prices
of the various components of the financial instrument and
including the buy or sell price of the net position, given the
direction of the transaction.
Where the financial instrument’s market is not actively
traded, its fair value is determined using valuation techniques
(internal valuation models). Depending on the financial
instrument, these include the use of data derived from recent
transactions, fair values of substantially similar instruments,
discounted cash flow models, option valuation models and
valuation parameter models. These valuations are adjusted
notably to reflect (where applicable and depending on the
financial instruments in question and their associated risks)
the buy or sell price of the net position and model risks in the
case of complex products.
Where observable market data are used as valuation
parameters, fair value is equal to market price, and the
difference between the transaction price and the value
derived from the internal valuation model, which represents
the sales margin, is immediately booked to the income
statement. However, where the valuation parameters are
not observable or the valuation models are not recognised
by the market, the financial instrument’s fair value at the time
of the transaction is deemed to be the transaction price
and the sales margin is generally recorded on the income
statement for the duration of the product’s life, except
where held to maturity or where sold prior to maturity for
certain products, given their complexity. For issued products
subject to significant redemptions on a secondary market
and products for which there are listings, the sales margin is
recorded on the income statement in accordance with the
method used to determine the price of the product. Where
a product’s valuation parameters become observable, the
part of the sales margin not yet booked is recorded on the
income statement.
The methods described below are used by the Group to
determine the fair value of financial instruments carried at fair
value through profit or loss and financial instruments carried
on the balance sheet at amortised cost, for which the fair
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value is given in the notes to the financial statement purely for
information purposes.
Fair value of securities
Listed securities
The fair value of listed securities is determined on the basis
of their market price at the balance sheet date.
Unlisted securities
U the fair value of unlisted equity instruments as the
proportion of the restated net asset value that the
securities represent, when possible, as the last known
price paid for the securities in purchase, subscription
or sale transaction, taking into account certain potential
valuations of assets or liabilities.
U for debt instruments, fair value is determined by
discounting future cash flows to present value at market
rates.
Securities containing embedded derivatives
In the case of securities containing embedded derivatives,
the fair value is calculated for the combined instrument.
Fair value of loans
At Crédit du Nord Group, fair value of the following assets is
assumed to be their carrying amount:
U short-term loans (with an initial maturity of one year or
less), insofar as their sensitivity to interest rate risk and
credit risk for the fiscal year is negligible;
U floating-rate loans, due to the frequency of interest rate
adjustments (at least once a year for all products), except
in the case of a significant variation in the credit spread
of a borrower.
In the case of fixed-rate loans with an initial maturity of over
one year, and in the absence of an active market for bank
loans, Crédit du Nord Group decided to determine the fair
value of these assets by using internal valuation models. The
method used consists in discounting to present value the
future recoverable flows of principal and interest payments
over the remaining term to maturity at the interest rate on new
lending in the month of calculation, for groups of similar loans
with the same maturity.
Fair value of finance lease contracts
Crédit du Nord Group determines the fair value of finance
lease contracts using internal valuation models:
U for property leases (Norbail Immobilier), all future
recoverable cash flows are discounted to present value
for the remaining term of the contract, at the market rate
increased by the initial margin on the contract.
I
I
U for equipment leases (Star Lease), all remaining payments
(including their residual value) are discounted to present
value over the remaining term of the contract at the
average weighted interest rate on new lending in the
previous month.
Fair value of financial guarantees given
Given the nature of the financial guarantees given by Société
Générale Group, fair value is taken to be the same as book
value.
Fair value of debt
In general, in the case of floating-rate debt, current account
deposits and debts with an initial maturity of one year or less,
fair value is assumed to correspond to their carrying amount.
For fixed-rate borrowing with initial maturities of more than
one year, and in the absence of an actively traded market
for these debts, fair value is taken to be the present value of
future cash flows discounted at the market rate in effect at
the balance sheet date.
For deposits in regulated savings accounts excluding PEL
contracts, Crédit du Nord Group considers that the applicable
rate is a market rate as it is identical for all establishments in
the sector and the carrying amount is therefore considered
to be representative of their fair value.
The fair value of PEL deposits is assumed to be their carrying
amount minus any provisions for PEL accounts
Fair value of debt securities
Negotiable medium-term notes, excluding structured issues,
are booked at amortised cost. The fair value of issued
negotiable medium-term notes is determined using internal
valuation models and by discounting future cash flows using
a zero coupon yield curve.
Structured issues of negotiable medium-term notes are
booked at fair value, which is determined either from prices
obtained from counterparties or from internal valuation
models that use observable market parameters.
Fair value of subordinated debt
Given that “titres participatifs” are quoted on an active
market, their fair value is determined on the basis of their
quoted price at the balance sheet date.
Redeemable subordinated notes are comparable to listed
bonds and their fair value is taken to be their quoted price on
Euronext at the balance sheet date.
Fair value of financial derivatives
Interest rate derivatives (interest rate swaps and
options)
Crédit du Nord Group calculates the fair value of interest
rate derivatives using internal valuation models that take into
account market data. As a result, the fair value of swaps
is calculated by discounting future interest flows to present
value. The fair value of interest rate options is calculated on
the basis of valuations with measurements of future events,
in accordance with the Black & Scholes method.
Forward contracts
These are derivative financial instruments carried at fair value
on the balance sheet, with changes in fair value recognised
in profit or loss. The fair value of a forward contract is
determined by the remaining forward term at the balance
sheet date.
Fair value of fixed assets
The fair value of the Group’s investment property is
determined on the basis of an external assessment by an
independent property expert.
The most important properties are assessed annually and
other properties every three to four years (unless a particular
event has a significant impact on the value of the asset).
Between each appraisal, fair value is estimated using internal
valuation models (capitalisation calculation)
The fair value of the Crédit du Nord Group’s certificates of
deposit is assumed to be their carrying amount, insofar as
all the certificates of deposit have maturities of less than one
year.
75
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S Note 2
Consolidation scope
31/12/2009
Consolidation
method
Ownership
interest
31/12/2008
Ownership
voting rights
Consolidation
method
Consolidating company
full
Ownership
interest
Ownership
voting rights
Crédit du Nord
28, place Rihour
59800 Lille
full
Banque Rhône-Alpes
20-22, boulevard Edouard Rey
38000 Grenoble
full
99.99
99.99
full
99.99
99.99
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
full
80.00
80.00
full
80.00
80.00
Banque Courtois
33, rue de Rémusat
31000 Toulouse
full
100.00
100.00
full
100.00
100.00
Banque Kolb
1-3, place du Général-de-Gaulle
88500 Mirecourt
full
99.87
99.87
full
99.87
99.87
Banque Laydernier
10, avenue du Rhône
74000 Annecy
full
100.00
100.00
full
100.00
100.00
Banque Nuger
7, place Michel-de-l’Hospital
63000 Clermont-Ferrand
full
64.70
64.70
full
64.70
64.70
Norbail Immobilier
50, rue d’Anjou
75008 Paris
full
100.00
100.00
full
100.00
100.00
Star Lease
59, boulevard Haussmann
75008 Paris
full
100.00
100.00
full
100.00
100.00
Etoile ID
75008 Paris
full
100.00
100.00
full
100.00
100.00
Norfinance Gilbert Dupont et Associés
42, rue royale
59000 Lille
full
100.00
100.00
full
100.00
100.00
Societe de Bourse Gilbert Dupont
50, rue d’Anjou
75008 Paris
full
100.00
100.00
full
100.00
100.00
Norimmo
75008 Paris
full
100.00
100.00
full
100.00
100.00
Turgot gestion
2-6, rue Turgot
87000 Limoges
full
80.00
100.00
full
80.00
100.00
entity removed from consolidation scope
full
97.03
99.99
-
-
-
Consolidating company
(1)
Etoile Gestion
75008 Paris
Etoile Gestion Holding (1)
75008 Paris
full
97.73
100,00
(1) The Etoile Gestion shares held by CDN Group entities were contributed to Etoile Gestion Holding at December 31, 2009.
On the same day, Etoile Gestion Holding then contributed the newly held Etoile Gestion shares to Amundi, a company created from the merger of the asset management
activities of the Société Générale and Crédit Agricole groups.
Subsequent to this transaction, Etoile Gestion Holding held 3.0% of Amundi’s capital.
76
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I
31/12/2009
31/12/2008
Consolidation
method
Ownership
interest
Ownership
voting rights
Consolidation
method
Ownership
interest
Ownership
voting rights
Anna Purna
75008 Paris
full
100.00
100.00
full
100.00
100.00
Nice Broc
75008 Paris
full
100.00
100.00
full
100.00
100.00
Nice Carros
75008 Paris
full
100.00
100.00
full
100.00
100.00
Kolb Investissement
75008 Paris
full
100.00
100.00
full
100.00
100.00
Nord Assurances Courtage
28, place Rihour
59800 Lille
full
100.00
100.00
full
100.00
100.00
Norbail Sofergie
75008 Paris
full
100.00
100.00
full
100.00
100.00
Sfag
75008 Paris
full
100.00
100.00
full
100.00
100.00
Partira
75008 Paris
full
100.00
100.00
full
100.00
100.00
Crédinord Cidize
75008 Paris
full
100.00
100.00
full
100.00
100.00
SC Fort De Noyelles
75008 Paris
full
100.00
100.00
full
100.00
100.00
equity
35.00
35.00
equity
35.00
35.00
entity removed from consolidation scope
equity
20.00
20.00
proportionate
50.00
50.00
Banque Pouyanne
12, place d’armes
64300 Orthez
Dexia-C.L.F Banque
1 passerelle des Reflets
Tour Dexia La Défense 2
92919 La Défense Cedex
(1)
Antarius
75008 Paris
proportionate
50.00
50.00
(1) Including sub-consolidated insurance UCITS.
In addition, the following companies, in which the Group holds
ownership interests ranging from 33.21% to 100%, were not
included in the consolidation scope: Starquatorze, Starquinze,
Starseize, Stardixsept, Stardixhuit, Starvingt, Star vingt trois,
Starvingt six, Starvingt sept, Starvingt huit, Starvingt neuf,
Startrente, Startrente quatre, Startrente cinq, Startrente six,
Startrente sept, Startrente huit, Startrente neuf, Starquarante,
Amerasia 3, Amerasia 4, Silk1, Snc Obbola, Snc Wav II,
Immovalor service, Cofipro, Scem Expansion, Snc Hedin, Snc
Legazpi, Snc Nordenskiöld and Snc Verthema.
77
2I
S Note 3
Risk management
This note describes the main risks incurred on the Group’s
banking activities, i.e.:
U credit risk: the risk of losses stemming from the inability of
a counterparty to meet its financial commitments;
U structural risk: the risk of loss or of residual depreciation
in balance sheet items arising from variations in interest
rates or exchange rates;
U liquidity risk: the risk that the Group may not be able to
meet its financial commitments when they mature;
U market risk: the risk of loss resulting from changes in
market rates and prices, in correlations between these
elements, and in their volatility.
CREDIT RISK
The provision of loans makes a significant contribution to
Crédit du Nord Group’s development and results. However,
it also exposes the Group to credit and counterparty risk,
i.e. to the risk of partial or complete default on the part of
the borrower.
For this reason, all lending activities are monitored and
controlled by a dedicated organisational structure, the risk
function, which is independent from the commercial divisions
and coordinated by the Central Risk Division (DCR), and are
subject to a body of rules and procedures governing the
granting of loans, delegation of responsibilities, monitoring
of risks, rating and classification of risks, identification of
deteriorations in credit risk and loan impairment.
Z Organisation
The Central Risk Division, which reports directly to the
Chairman of Crédit du Nord, contributes to the development
and profitability of the Group by ensuring that the risk
management framework in place is both sound and effective.
To this end, it ensures that a consistent approach to risk
assessment and monitoring is applied at the Group level.
U It assists in the definition of the Group’s credit policies and
oversees its implementation;
U It defines or validates methods and procedures for
analysing, rating, approving and monitoring risk;
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I
U It contributes to the assessment of credit risk during
the loan granting process by giving an opinion on the
transactions put forward by the commercial divisions;
U It takes part in controlling and provisioning risks, and in the
recovery of non-disputed doubtful loans;
U It identifies all Group risks;
U It monitors the consistency and adequacy of the risk
management information system.
The Central Risk Division reports on its activity and general
changes in the Group’s risk exposure to the General
Management at Monthly Risk Committee meetings. This
committee takes decisions on the main strategic issues: risktaking policies, measurement methods, analyses of portfolios
and of the cost of risk, detection of credit concentrations, etc.
Each region of Crédit du Nord parent company and each
Crédit du Nord banking subsidiary has a Risk Division which
reports to the Regional Manager or Subsidiary Chairman
and is responsible for implementing the Group’s credit policy
and managing risk exposure within their particular region or
subsidiary. The Risk Divisions report on a functional level to
the Central Risk Division.
Z Procedures and methods
Loan approval
The Group has a strict procedure for the provision of loans
to counterparties:
U a preliminary examination is conducted of all applications
for loans to ensure full information has been obtained
before any risk is incurred;
U aid in the decision-making process via the establishment
of counterparty and loan ratings;
U analysis and decision-making within the sales units and
risk units at the most relevant level in accordance with the
risk involved;
U decisions to grant loans must be formally set out in a
dated and signed written or electronic document that
specifies the limits of the commitment and the period of
validity of the approval.
U the notion of Group is integrated into risk appreciation
and an internal lead manager is designated for each
Group identified, who is responsible for presenting a
consolidated credit application.
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I
The lending procedure also complies with a number of
the core principles of the Group’s credit policy which are
designed to limit counterparty risk.
with ratings now forming an integral part of its day-to-day
operations.
U loans are mainly provided for the financing of operations
and customers in mainland France. However, loans may
be provided to certain neighbouring or OECD member
countries, under specific conditions;
Risk management and control
U division and distribution of risk;
U counter-guarantees must be sought from specialised
companies such as CREDIT LOGEMENT for residential
property loans and OSEO for loans to professionals and
businesses;
U wherever possible, loans provided to finance a business’s
operating cycle should be secured with customer
receivables;
U Investments in equipment and property by professional
and business customers should preferably be funded
through lease finance agreements;
U guarantees and collateral are systematically sought.
Measurements of internal ratings system risks
For several years, the Group has used internal quantitative
models for measuring credit risk as a tool in the loan approval
process. These models have gradually been extended to
include the main customer markets in which the Group
operates.
Beginning in 2005, these internal rating models (some of
which were based on Société Générale Group models) were
amended to take account of new regulatory requirements.
There are three pillars to the Group’s internal rating system
for the business customer market:
U internal rating models drawing on:
– the counterparty rating (debtor’s probability of default
at one year);
– the loan rating (loss in the event of default);
U a body of procedures which covers banking principles and
the rules for using the models (scope, frequency of rating
revision, approval procedure, etc.);
U the human judgment of those involved in the ratings
process who apply the models in compliance with the
relevant banking principles and whose expertise is
invaluable in drawing up the final ratings.
The Rating Systems Governance unit, created in 2007,
oversees the adequacy of ratings models and their rules of
use, and monitors compliance with rating procedures.
Across all of its operating markets, the Group has
progressively developed its credit risk management policy,
All employees of commercial and risk functions are
responsible for risk management within the Group. It is
incumbent upon all employees to observe the limits and
terms of loan decisions, show vigilance and respond quickly
in detecting the deterioration of a counterparty’s financial
situation, and take the necessary measures to reduce the
risk incurred by the Bank. Loan decisions are addressed in
a monthly report.
The purpose of risk control is to continuously verify the
quality of counterparty risks to which Crédit du Nord Group
is exposed through its lending operations, and to make sure
that its commitments are classified in the appropriate risk
categories. This is an integral part of the processes defined
by the Group’s three-level control system (supervisory,
permanent and periodic controls).
The Central Risk Division and Legal Affairs and Controls
Division have developed risk analysis tools with a view to
optimising risk controls: these tools are updated on a regular
basis, notably to adjust to regulatory changes.
Management of non-disputed doubtful loans is usually
conferred to dedicated teams (out-of-court collection of
individual customer loans, special affairs, etc.). Where
doubtful loans become disputed, however, they are handed
over to teams specialising in collections of disputed loans.
Provisions for impairment
A counterparty is deemed to be in default where any of the
following takes place:
U a significant deterioration in the counterparty’s financial
situation creates a strong probability that it will not be able
to meet all of its commitments and thus represents a risk
of loss for the bank;
U one or more instalments have gone unpaid for at least 90
days and/or a collection procedure is instigated (180 days
for housing loans);
U a proceeding such as bankruptcy, compulsory liquidation
or legal protection is underway.
Once reclassified, doubtful loans are usually reviewed to
determine the possibilities of recovering the Bank’s funds.
This analysis takes into account the financial position of the
counterparty, its economic prospects and the guarantees
called up or which may be called up. The collection flows
thus determined are discounted to calculate the appropriate
level of provisioning.
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2I
I
The appropriateness of these provisions is reviewed quarterly,
under the supervision of the Central Risk Division.
Crédit du Nord also sets aside general portfolio based
provisions, which are reviewed quarterly, in order to factor in
any credit risks incurred on similar portfolio segments before
any impairments are recorded at an individual counterparty
level.
Z Credit risk exposure
The table below outlines the credit risk exposure of the Group’s
financial assets before any bilateral netting agreements and
collateral (notably any cash, financial or non-financial assets
received as collateral and any guarantees received from legal
entities).
2009/2008 change
(in EUR millions)
Assets at fair value through profit or loss (excluding floating-rate
securities)
Hedging derivatives
Available-for-sale financial assets (excluding floating-rate securities)
31/12/2008 in value
in %
131.0
262.8
-131.8
-50.2
274.5
213.3
61.2
28.7
5,248.0
5,331.4
-83.4
-1.6
Due from banks
3,500.5
5,390.0
-1,889.5
-35.1
Customer loans
23,476.5
23,769.7
-293.2
-1.2
Held-to-maturity financial assets
161.0
155.7
5.3
3.4
1,859.2
1,836.0
23.2
1.3
58.2
59.4
-1.2
-2.0,
34,708.9
37,018.3
-2,309.4
-6.2
Financial commitments given
3,102.8
3,060.6
42.2
1.4
Financing guarantees given
8,175.7
7,698.7
477.0
6.2
-35.5
-22.0
-13.5
61.4
Exposure of balance sheet commitments, net of impairments
Provisions on guarantees and endorsements
Exposure of off-balance sheet commitments, net of impairment
TOTAL
Z Additional analysis of the loan portfolio
(IFRS 7)
This analysis covers concentration risk as well as unpaid or
impaired loans.
Disclosures relating to risk concentration
Crédit du Nord Group’s core business is Retail Banking
in France, which naturally ensures diversification of
risks. Concentration risks are monitored with respect to
counterparties and economic sectors.
U counterparty concentration risk is reviewed during
the loan approval phase, during which the Group’s
commitments are systematically summarised: it is also
subject to a special half-yearly review (along with sector
concentration risk). At September 30, 2009, commitments
linked to the top 10 counterparties accounted for 10.5%
80
31/12/2009 Crédit du Nord Group - Registration Document 2009
11,243.0
10,737.3
505.7
4.7
45,951.9
47,755.6
-1,803.7
-3.8
of outstandings for Crédit du Nord Group’s business and
professional customers (excluding lease finance and
disputed loans), i.e. representing no change year-onyear. Of these counterparties, the top three were major
construction companies with commitments primarily in
the form of guarantees on very diversified markets (with
low historical risks).
U sector concentration risk is reviewed on a half-yearly
basis (at March 31 and September 30). At September
30, 2009, a single sector accounted for over 10% of
outstandings for the Group’s business and professional
customers: construction, with a rather favourable
positioning in terms of the type of risk (see above). The
No. 2 sector was wholesale trade (8%), comprised of
highly divided outstandings. All other sectors accounted
for less than 5% of business and professional customer
outstandings.
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I
Breakdown in loan outstandings
2009/2008 change
Gross outstandings
31/12/2009 31/12/2008 in value
in %
24,536.8
24,288.0
248.8
1.0
93.2 %
94.3%
Unpaid but not impaired
139.7
109.1
30.6
28.0
As a % of total gross outstandings
0.5%
0.4%
1,653.4
1,364.3
289.1
21.2
6.3%
5.3%
26,329.9
25,761.4
568.5
2.3
(in EUR millions)
Performing and not unpaid or impaired
Impaired
TOTAL GROSS OUTSTANDINGS
The relative percentage of gross impaired outstandings rose in 2009 due to the significant overall deterioration in the economic
environment. At December 31, 2009, they accounted for 6.3% of total outstandings, vs. 5.3% at end-2008.
Unimpaired outstandings with past due amounts
Unimpaired outstandings with past due amounts increased by 28% in 2009, also due to the worsening economic environment.
The total amount nevertheless remained low (0.5% of outstanding loans).
0-29 days
30-59 days
60-89 days
90-179 days
180 days-1 yr
> 1 yr
TOTAL
Business and institutional customer
loans
13.3
1.9
1.3
0.7
0.8
-
18.0
Very small company & property
company loans
15.0
6.2
4.0
2.9
0.7
1.5
30.3
Mortgage lending
36.0
18.5
9.1
7.9
1.9
-
73.5
Other individual customer loans
13.2
2.5
1.1
0.9
0.2
-
17.8
77.5
29.1
15.6
12.4
3.7
1.5
139.7
(in EUR millions)
TOTAL
The amounts presented in the table above refer to the total
amounts of loans (remaining principle, interest and unpaid
portions) with past due amounts. These loans primarily
concern payments less than 90 days overdue.
When payments are more than 90 days overdue (180 days
for property loans), the loans are reclassified as “doubtful
loans”.
A small number of customers may, on an exceptional basis,
be kept or reclassified in the performing loans category where
they agree to rectify their payment status.
Due to the impact of the economic climate, our business
customers saw a considerable increase in overdue
payments from their clients in 2009. At December 31, 2009,
these overdue payments totalled EUR 12.2 million for our
customers in the performing loans category on this market
(vs. EUR 4 million at end-2008).
Impaired loans reclassified as performing loans
after renegotiation
“Renegotiated” loans cover all customer groups.
Renegotiated loans are loans that have been restructured
(in terms of principal and/or interest rates and/or maturities)
due to the probability that the counterparty will be unable to
meet its commitments in the absence of such a restructuring.
This does not include commercial renegotiations freely
entered into by the Bank in order to maintain the quality of its
relations with a customer.
These loans are identified from automated data retrieval
for small loans to individual customers, and from reporting
forms for other loans. They correspond to loans restructured
between October 1, 2007 and December 31, 2008, when
they were in default, and for which their post-restructuring
status qualified them for reclassification as performing loans.
The amount of loans restructured since October 1, 2008
was insignificant (EUR 0.5 million) at the en of 2009, as the
majority of the loans restructured over the period were still
identified as being in default at December 31, 2008.
Crédit du Nord Group’s banking practices call for most
customers whose loans have been renegotiated to be
maintained in the “impaired loans” category, as long as the
bank remains uncertain of their ability to meet their future
commitments (definition of default under Basel II).
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In 2006, Crédit du Nord developed an IT application for
managing guarantees received by the Bank.
considered as fully guaranteed; for other medium-term
loans to property investment companies, guarantees were
noted at their recorded value in the database. By default,
other loans were considered as not covered by guarantees.
At end-2007, Crédit du Nord’s risk management systems
began using this new database, with the exception of data
relating to non-performing (disputed) loans, in the process of
being incorporated into the database.
U For other customers: short-term loans were considered
as not covered by guarantees, with the exception of
receivable-backed loans, which were considered as fully
guaranteed.
Guarantees on impaired loans or loans with
past due amounts
The following method was used to calculate the rate of loans
covered by guarantees: the amount of guarantees was
capped at the amount of the loan guaranteed, on a loan by
loan basis. As a result, certain guarantees were not included,
such as guarantees on loans already benefiting from an
intrinsic guarantee (e.g. those linked to the mobilisation of
customer receivables).
Mortgages were considered as fully guaranteed; for other
medium-term loans, guarantees were noted at their recorded
value in the database.
Some guarantees were not counted because their real value
in the event are called is difficult to estimate (particularly for
pledges of unlisted securities, personal sureties except for
those of major guarantors, etc.).
U For individual customers (including property investment
companies owned by individuals): mortgages were
Guarantees on impaired outstandings at Dec. 31, 2009
Doubtful
Coverage rate
Non-performing
doubtful
Coverage rate
Business and institutional customer loans
179.8
29.6%
278.7
NC
Very small company & property company loans
184.3
55.8%
292.5
NC
Mortgage lending
148.1
100.0%
94.9
NC
(in EUR millions)
Other individual customer loans
TOTAL
98.0
-
174.8
NC
610.2
49.9%
840.9
NC
For our Business customers, the magnitude of the crisis in 2009 resulted in the accelerated declaration of default of previously
well-rated counterparties (thus with less well-guaranteed outstandings). Hence the change in 2009 in the rate of loans covered
by guarantees in this customer category.
Guarantees on unimpaired outstandings with past due amounts at December 31, 2009
(in EUR millions)
Business and institutional customers
Due amounts on loans
Coverage rate
Other due amounts
Coverage rate
4.3
93.4%
13.7
NC
VSEs and Property investment companies
26.0
82.0%
4.3
NC
Housing loans to individual customers
73.5
100.0%
-
NC
Other loans to individual customers
TOTAL
14.5
-
3.4
NC
118.3
83.6%
21.4
NC
For business customers, the Risk function validates procedures governing the periodic revaluation of guarantees, which is
notably performed during annual loan reviews and systematically when a loan is reclassified as doubtful.
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STRUCTURAL INTEREST RATE AND
EXCHANGE RATE RISKS
With regard to the Group’s structural risk management, Crédit
du Nord Group distinguishes the management of structural
balance sheet risks (Asset and Liability Management or ALM)
from the management of risks related to trading activities.
U Structural interest rate and exchange rate risks are incurred
on client-driven and propriety activities (transactions
involving shareholders’ equity and investments
– Wherever possible, client-driven transactions are
hedged against interest rate and exchange rate risks,
either through micro-hedging (individual hedging
of each commercial transaction) or macro-hedging
techniques (hedging of portfolios of similar commercial
transactions within a treasury department).
– Interest rate risks on proprietary transactions must also
be hedged as far as possible. There is no exchange
rate risk on these transactions at Crédit du Nord.
The general principle is to reduce positions exposed to
interest rate and exchange rate risk as much as possible
by regularly implementing appropriate hedges.
Consequently, structural interest rate and exchange rate
risks are only borne on residual positions.
U Management of interest rate and exchange rate risks
associated with market activities is addressed in the
section entitled, “Market risks linked to trading activities”.
Z Organisation of the management of
structural interest rate and exchange
rate risks
The principles and standards for managing these risks are
defined by the shareholder. However, each entity is primarily
responsible for managing these risks.
Crédit du Nord Group therefore develops its own models,
measures its risks and sets up hedges on an ad hoc basis,
within the framework defined by these risk management
standards.
The majority shareholder’s assets and liability management
department carries out a Level Two control on the risk
management performed by the entities.
At Crédit du Nord, the ALM division, which reports directly
to the Finance Division and comes under the authority of the
Financial Management Division, is responsible for monitoring
and analysing global, interest rate, liquidity and maturity
transformation risk.
All decisions concerning the management of any interest rate
and/ or liquidity mismatch positions generated by the Group’s
client-driven activities are made by the ALM Committee,
which meets on a monthly basis under the chairmanship of
the Chairman and Chief Executive Officer in 2009 and the
CEO in 2010. A member of the Finance Division from the
majority shareholder also sits on this committee.
It should be noted that the ALM Committee delegates the
management of short-term interest rate risk to the Treasury
and Foreign Exchange Department. This department is
responsible for approving hedging transactions with an initial
maturity of less than one year, needed to limit short-term
interest rate exposure.
The Weekly Cash Flow Committee monitors this exposure by
examining the following indicators each week:
U the short-term fixed interest rate position. In absolute
value terms, this position must remain under EUR 1,500
million.
U exposure to short rates incurred by all transactions, which
is limited to EUR 3 million.
Z Structural interest rate risk
Structural interest rate risk arises from residual positions
(surplus or deficit) in fixed-rate positions with future maturities.
All assets and liabilities of Group banks, excluding those
related to trading activities, are subject to an identical set of
rules governing interest rate risk management.
The Group’s principal aim is to reduce each entity’s
exposure to interest rate risk as much as possible, once the
transformation policy has been defined.
Consequently, Crédit du Nord Group follows a policy of
systematically hedging structural interest rate risk and, where
applicable, implements the hedges needed to reduce the
exposure of Group entities to interest rate movements.
To this end, the overall interest rate risk of Crédit du Nord
Group is subject to sensitivity limits set by the Finance
Committee of the majority shareholder. Sensitivity is defined
as the variation in the net present value of future (maturities
of up to 20 years) residual fixed-rate positions (surplus or
deficits on assets and liabilities) for a 1% parallel shift in the
yield curve. The observance of these limits is verified within
the framework of regular reports to the shareholder. Crédit
du Nord Group’s overall limit is EUR 63.3 million (representing
around 4.3% of shareholders’ equity).
83
2I
Over 2009, the overall sensitivity of Crédit du Nord Group’s
net present value (measured quarterly for the purpose of Risk
Phase reporting) reached EUR 3.17 million at December 31,
2009, following a parallel shift in the yield curve of +1%.
It remained well below this limit in each quarter, for each
period (short, medium and long term).
Note that a sensitivity limit was set at EUR 1 million for Swiss
francs by the majority shareholder with the aim of issuing
property loans in Swiss francs to Swiss customers.
The sensitivity of the Group’s net present value in Swiss
francs came out at CHF -0.16 million at December 31, 2009,
i.e. EUR - 0.11 million for a parallel shift of +1% of the yield
curve. From an overall standpoint or by period, sensitivity
was below the EUR 1 million limit throughout 2009.
Z Measurement and monitoring
of structural interest rate risk
In order to quantify its exposure to structural interest rate
risks, the Group analyses all fixed-rate assets and liabilities
with future maturities to identify gaps. These positions come
from operations remunerated or charged at fixed rates and
from their maturities.
Assets and liabilities are generally analysed independently
without any a priori matching. Maturities on outstandings are
determined on the basis of the contractual terms governing
transactions (loans, etc.) or based on adopted conventions.
These conventions are the result of models of customer
behaviour patterns (special savings accounts, rates of early
repayments, etc.) as well as conventional assumptions
relating to certain aggregates (principally shareholders’ equity
and sight deposits).
Once the Group has identified the gaps in its fixed rate
positions (surplus or deficit), it calculates their sensitivity (as
defined above) to variations in interest rates. The stress tests
currently used correspond to an immediate parallel shift of
+1% and -1% in the yield curve.
The analysis of structural interest rate risks at Crédit du Nord
revealed that:
U all on- and off-balance sheet transactions are matchfunded, according to their specific characteristics
(maturity, interest rate, explicit or implicit options). A model
developed by the ALM unit («notional balance sheet»
model) is used to monitor indicators of interest rate risk
management, in particular a fixed-rate limit, as well as the
risks associated with options appearing on the balance
sheets of Group entities;
84
I
U options risk is also subject to regular monitoring and the
implementation of appropriate hedges (purchases of caps
or swaps);
U sight deposits and regulated savings products are subject
to specific modelling to lock in medium- and long-term
yields. The conservative nature of the models has enabled
the Group’s banks to maintain their interest margin.
Z Structural exchange rate risk
The overall foreign exchange position is kept within
conservative limits and remains small relative to the bank’s
net shareholders’ equity.
Z Hedging of interest rate and exchange
rate risks
In order to protect the bank’s balance sheet against certain
market risks, Crédit du Nord Group uses hedges designated
as fair value hedges for accounting purposes.
It also manages the exposure of its fixed-rate financial assets
and liabilities (mainly loans/borrowings, security issues and
fixed-rate securities) to risks of variations in long-term interest
rates, by setting up hedges recorded as fair value hedges for
accounting purposes, principally using interest rate swaps
and caps.
In order for these transactions to qualify as hedges, the
Group documents the hedging relationship in detail, from
inception, specifying the risk hedged, the risk management
strategy and the way in which the effectiveness of the hedge
will be documented.
The bank’s aim is to prevent an accounting reclassification of
portfolios of hedging derivatives in order to protect the bank
against an unfavourable variation in the fair value of an item
which, as long as the hedge is effective, has no impact on
profit or loss, but could affect it if the item were eliminated
from the balance sheet.
Tests are regularly carried out to prove the hedging
relationship and measure its effectiveness. These tests are
both forward-looking and retrospective.
The future effectiveness of the hedge is calculated using
a sensitivity analysis that integrates probable scenarios for
changes in market parameters.
Retrospective effectiveness is assessed by comparing the
variations in fair value of the hedging instrument with the
variations in fair value of the hedged item. The hedge is
deemed effective if variations in the fair value of the hedged
item are almost fully offset by the variations in fair value of the
hedging instrument, i.e. the ratio between the two variations
I
I
is in the 80% - 125% range (sliding quarter-on-quarter
changes).
Effectiveness is measured on a forward-looking basis each
quarter (expected effectiveness over future periods) as well
as retrospectively (actual effectiveness).
In 2009, Crédit du Nord Group restructured the portfolio of
derivatives used to hedge limited adjustable-rate mortgages
in order to better guard against the risk of losses in the
event of interest rate hikes. This restructuring called for the
improvement of the method for assessing the effectiveness
of the hedging of limited adjustable-rate mortgages, which
is now identical to the method used for the accounting
treatment of loans marketed by the network under the
Société Générale brand.
LIQUIDITY RISK
Z Organisation of the management
of liquidity risk
The principles and standards for the management of liquidity
risk are defined by the majority shareholder. As Crédit du
Nord is nevertheless responsible for managing its liquidity
and complying with regulatory restrictions, it develops its
own models, measures its liquidity positions and finances
its activities or reinvests surplus cash in accordance with the
standards defined at the Group level.
Z Measurement and monitoring
of liquidity risk
Crédit du Nord acts as the central refinancing unit of the
Group’s banks and financial subsidiaries. The ALM unit
monitors outstanding loans and regulatory ratios. While
short-term liquidity management is delegated to each
subsidiary as part of its cash management activities and is
subject to certain limits.
Crédit du Nord has had to finance some of its subsidiaries
while maintaining a high level of liquidity. In accordance with
the regulations governing liquidity (CRB regulation 88-01),
Crédit du Nord’s short-term ratio averaged 131% over 2009,
which is significantly higher than regulatory requirements.
Z Mismatch risk
Changes in the structure of the balance sheet are carefully
monitored and managed by the ALM unit in order to
determine and adjust the refinancing requirements of the
Group’s entities.
The elimination of the ratio of capital and long-term funds (by
the Order of June 28, 2007, repealing CRBF Regulation No.
86-17) removed the long-term funding requirement. Crédit du
Nord Group nonetheless decided to continue calculating this
indicator pending the upcoming deployment of an internal
liquidity management application.
Measurement of the Group’s long-term financing
requirements is based on budget estimates and results of
past transactions, making it possible to plan appropriate
financing solutions.
Crédit du Nord Group’s financing requirements result from:
U its commercial activities. The Group saw strong growth
in outstanding housing loans (+7.5%) and capital
expenditure loans (+8.3%) in 2009. Deposits experienced
less sustained growth, however (+4.2% for sight deposits
and +16.2% for special savings accounts);
U and the recovery of commercial paper formerly held by
funds managed by Étoile Gestion: the redemption of
about EUR 1.1 billion in securities over 2007 and 2008 put
pressure on the Group’s financing requirements in 2009.
Despite the impacts of the financial crisis, Crédit du Nord
Group had no trouble securing its financing, mainly thanks
to its substantial, diversified deposits, which account
for a large portion of its short-, medium- and long-term
resources. Short-term deposits with contractual schedules
(term accounts, certificates of deposits and medium-term
negotiable bonds sold to customers) are also closely
monitored on a monthly basis as of 2008. This monitoring
enabled the Group to precisely follow developments in these
outstandings over the year.
To meet its short-term requirements, as part of its cash flow
management, the Group was led to issue a large number
of certificates of deposit (average annual outstandings of
more than EUR 5 billion) and to take advantage of the cash
injections carried out by the ECB (EUR 500 million borrowed
in March, EUR 300 million in April, EUR 750 million in June).
As regards long-term refinancing transactions, Crédit du
Nord Group executed the following financing transactions
over 2009, for a total amount around EUR 2 billion:
U Crédit du Nord launched a EUR 748 million medium- and
long-term structured product programme;
U over the course of 2009, Crédit du Nord obtained
almost EUR 1 billion from the Société de Financement
de l’Economie Française (SFEF). These loans range in
maturity from two to five years;
U Crédit du Nord obtained three loans from the Casse de
Refinancement de l’Habitat totalling EUR 225 million.
These loans range in maturity from four to ten years.
85
2I
During the liquidity crisis, Crédit du Nord launched a project
to optimise its capital pool. The Group has a large capital
pool providing it with a capacity that exceeds its current
requirements. Works aimed at enhancing the information
system were initiated in order to ensure the optimal
allocation of the collateral pool, in conjunction with the works
undertaken by the shareholder in this area.
A quarterly report on mismatch risk is submitted to the
majority shareholder.
MARKET RISKS LINKED TO TRADING
ACTIVITIES
Z Methods of measuring market risk
Market risk is assessed using three main indicators which are
used to define exposure limits:
U the 99% Value at Risk (VaR) method, in accordance
with the regulatory internal model, a composite indicator
for day-to-day monitoring of market risks incurred by the
bank, in particular covering most of the regulatory scope
of its trading activities;
U stress-test measurements, based on the decennial
shock-type indicator, are established by Société Générale
and transmitted to Crédit du Nord so that it can incorporate
them into its limit monitoring methods;
All capital market activities carried out by Crédit du Nord
Group are client-driven. In terms of both products and
regions, Crédit du Nord Group only conducts transactions on
its own behalf in business segments where it has significant
customer interests. The primary purpose of its activities in
this area is to maintain a regular presence on the financial
markets in order to be able to offer its clients competitive
price quotations.
U complementary limits (sensitivity, nominal, holding
periods, etc.) which ensure consistency between the
total risk limits and the operational limits used by the front
office. These limits also enable risks only partially detected
by VaR or stress-test measurements to be controlled (as
is the case for options).
As part of this fundamental strategy
This method was introduced at the end of 1996 and is
constantly being improved with the addition of new risk
factors and the extension of the scope covered. The new risk
parameters and changes in the scope of the portfolios are
incorporated by Société Générale into the TRAAB application,
and Crédit du Nord then receives the new updated versions.
Société Générale then uses files sent back by Crédit du Nord
in TRAAB format to calculate the VaR.
U Crédit du Nord holds only a few positions on derivatives
and regularly matches customer orders through its
shareholder, thereby significantly reducing its exposure to
market and counterparty risks;
U with regard to other instruments, the trading limits
imposed on the cash position in terms of geographic
regions, authorised volumes and the duration of open
positions are determined jointly with the bank’s majority
shareholder and are kept low relative to Crédit du Nord’s
equity.
Although the main responsibility for risk management falls
naturally to the front office managers, responsibility for
supervision lies with a special structure which is part of the
Treasury and Foreign Exchange Department. This structure
notably carries out the following functions:
U permanent monitoring of positions and results, in
collaboration with the front office;
U verification of the market parameters used to calculate
risks and results;
U daily calculation of market risk, using a formal and secure
procedure;
U daily limit monitoring for each activity.
86
I
Value at Risk (VaR) method
The method used is the “historical simulation” method, which
is based on the following principles:
U the creation of a database containing historical information
on the main risk factors which are representative of the
Société Générale Group’s positions (interest rates, share
prices, exchange rates, commodity prices, volatility,
credit spreads, etc.). VaR is therefore calculated using a
database of several thousand risk factors;
U the definition of 250 scenarios, corresponding to one-day
variations in these market parameters over a sliding one
year period;
U the application of these 250 scenarios to the daily market
parameters;
U the revaluation of daily positions, on the basis of the
adjusted daily market conditions, and on the basis of
a revalaution taking into account the non-linearity of
positions.
I
I
The 99% Value at Risk is the largest loss that would be
incurred after eliminating the top 1% of the most unfavourable
occurrences: over one year, or 250 scenarios, it corresponds
to the average of the second and third largest losses
observed.
its own consolidated risk monitoring. The model is based on
a historical data series of daily movements in interest rate
or exchange rate instruments, which are applied to daily
positions in order to measure risk with a 99% confidence
interval and sensitivity to 10 basis points.
Crédit du Nord has access to an application developed by
Société Générale known as TRAAB (gross annual actuarial
rate of return) used by the Treasury and Foreign Exchange
Department since June 30, 1998, which incorporates the data
(taken from the Treasury and Foreign Exchange Department’s
operating system) required to calculate risk profiles on a daily
basis. This information is also used by Société Générale for
The table below shows the evolution of the Group’s 99%
Value at Risk over the course of 2009. The values given have
the following characteristics:
U change in the portfolio over a holding period of 1 day;
U a confidence interval of 99%;
U historical data considered for the last 260 business days.
Trading Value at Risk (VaR): breakdown by risk factor
1 day – 99% / FY 2009
(in EUR thousands)
02/01/2009
Foreign exchange
Treasury Currency
Securities and
off-balance sheet
interest rate
-112
-105
-108
110
-215
(1)
-329
Compensation
effect
Overall
Minimum
-310
-215
-148
Maximum
-24
-34
-22
NS (1)
-75
Average
-81
-98
-69
96
-152
31/12/2009
-44
-48
-62
51
-103
LIMITS
-1 000
NS
-1 000
(1) Compensation is not significant, minimum/maximum potential losses do not occur on the same date.
A confidence interval of 99% means that over a one-day
period, there is a 99% probability that an eventual loss will
not exceed the defined value.
Compensation is defined as the difference between the
total VaR and the sum of the VaRs per risk factor. It reflects
the extent of elimination between the different type of risks
(interest rate, equity, exchange rate, commodities).
87
2I
I
Value at Risk (1 DAY - 99%)
(in EUR thousands)
-400
-300
-200
-100
0
02/01/2009
02/03/2009
02/05/2009
02/09/2009
02/11/2009
The VaR assessment is based on a conventional model and
assumptions: the main methodological limitations therein are
as follows:
U supplementing the VaR system with stress test
measurements. Note that, in today’s environment of
dislocated markets, the historical 99% 1-day VaR is less
relevant than other risk indicators, such as stress tests.
U the use of «1-day» shocks assumes that all positions can
be unwound or hedged within one day, which is not the
case for some products and in some crisis situations;
Z Allocation of limits and organisation of
limit monitoring
Limitations in the VaR calculation
U the use of the 99% confidence interval does not take into
account any losses arising beyond this interval; the VaR
is therefore an indicator of losses under normal market
conditions and does not take into account exceptionally
large fluctuations;
U VaR is calculated using closing prices, so intra-day
fluctuations are not taken into account;
U there are a number of approximations in the VaR
calculation. For example, benchmark indices are used
instead of certain risk factors and, in the case of some
activities, not all of the relevant risk factors are taken into
account which can be due to difficulties in obtaining daily
data, and options held in the trading portfolio are not taken
into account.
Crédit du Nord controls the limitations of the VaR model by:
U systematically assessing the relevance of the model by
back-testing to verify that the number of days for which
the negative result exceeds the VaR complies with the
99% confidence interval;
88
02/07/2009
Capital market exposure limits are allocated as follows:
a proposal is drawn up internally and presented to the
Executive Committee. If approved, it is transmitted to the
Risk Division of Société Générale (the market risk team) for
their opinion. The proposed limits are reviewed at least every
two years, and the last review was carried out in June 2009.
Once a final opinion has been received, the limits are sent
by Société Générale to the Chairman’s office and are then
compiled and integrated into the daily monitoring and
reporting system.
A monitoring report is submitted daily to Société Générale, in
which any overruns are reported.
Counterparty exposure limits are allocated as follows:
U in the case of banking counterparties, the Treasury and
Foreign Exchange Department opens a file for each
counterparty and records the details of requests for credit
lines by product and duration. The file is then submitted to
the relevant teams at Société Générale and to the Central
Risk Division for approval and validation. The allocated
limits are entered into the daily monitoring and reporting
systems;
I
I
U where the counterparty is a customer, the manager in
charge of the account asks for the limits from the Regional
and Subsidiary Risk Divisions. These limits allocated for
the products are then fed into the monitoring systems.
The Finance Division also receives a weekly status report on
results and limits from the Treasury and Foreign Exchange
Department, along with a monthly report indicating changes
in risk exposure and results. The CEO and the Chief Financial
Officer also receive a quarterly report on changes in limits.
S Note 4
2009/2008 change
31/12/2009 31/12/2008 in value
in %
Cash
175.4
166.4
9.0
5.4
Due from central banks
781.5
515.9
265.6
51.5
1.2
1.7
-0.5
-29.4
TOTAL
958.1
684.0
274.1
40.1
Fair value
958.1
684.0
(in EUR millions)
Related receivables
89
2I
I
S Note 5
Financial assets at fair value through profit or loss
31/12/2009
(in EUR millions)
ASSETS
TRADING PORTFOLIO
Treasury notes and similar securities
Valuation
determined
using prices
published
on an active
market (L1)
Valuation
technique
Valuation
based on
based on
observable unobservable
market parameters
data (L2)
(L3)
Valuation
determined
using prices
published
on an active
Total market (L1)
Valuation
technique
Valuation
based on
based on
observable unobservable
market parameters
data (L2)
(L3)
Total
-
-
-
-
-
-
-
-
Bonds and other debt securities
11.4
-
-
11.4
53.1
-
-
53.1
Shares and other equity securities
13.9
-
-
13.9
25.3
-
-
25.3
Other financial assets
-
-
-
-
-
-
-
-
SUB-TOTAL TRADING ASSETS
FINANCIAL ASSETS USING FAIR
VALUE OPTION THROUGH PROFIT
OR LOSS
25.3
-
-
25.3
78.4
-
-
78.4
-
-
-
-
-
-
-
-
4.7
114.9
-
119.6
4.3
205.4
-
209.7
Shares and other equity securities (1)
2.2
1,070.5
-
1,072.7
1.7
962.4
-
964.1
-
-
-
-
-
-
-
-
6.9
1,185.4
-
1,192.3
6.0
1,167.8
-
-
-
-
Other financial assets
SUB-TOTAL OF FINANCIAL ASSETS
USING FAIR VALUE OPTION
THROUGH PROFIT OR LOSS
SUB-TOTAL OF SEPARATE ASSETS
RELATING TO EMPLOYEE BENEFITS
- 1,173.8
-
-
-
-
TRADING DERIVATIVES
Interest rate instruments
-
41.9
-
41.9
-
73.1
-
73.1
Firm transactions
-
32.4
-
32.4
-
65.4
-
65.4
Swaps
-
32.4
-
32.4
-
65.4
-
65.4
FRA
-
-
-
-
-
-
-
-
-
9.5
-
9.5
-
7.7
-
7.7
-
-
-
-
-
-
-
-
Options
Options on organised markets
OTC options
-
-
-
-
-
-
-
-
Caps, floors, collars
-
9.5
-
9.5
-
7.7
-
7.7
Foreign exchange instruments
-
45.5
-
45.5
-
158.2
-
158.2
Firm transactions
-
42.0
-
42.0
-
155.7
-
155.7
Options
-
3.5
-
3.5
-
2.5
-
2.5
Equity and index instruments
-
-
-
-
-
-
-
-
Other forward financial instruments
-
-
-
-
-
-
-
-
Instruments on organised markets
-
-
-
-
-
-
-
-
OTC instruments
-
-
-
-
-
-
-
-
SUB-TOTAL TRADING DERIVATIVES
TOTAL ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS (1)
-
87.4
-
87.4
-
231.3
-
231.3
32.2
1,272.8
-
1,305.0
84.4
1,399.1
(1) Including UCITS.
90
31/12/2008
- 1,483.5
I
I
S Note 5 bis
31/12/2009
(in EUR millions)
31/12/2008
Valuation
determined
Valuation
Valuation
using prices technique based
based on
published on observable unobservable
on an active
market parameters
market (L1)
data (L2)
(L3)
Valuation
determined
Valuation
Valuation
using prices technique based
based on
published on observable unobservable
on an active
market parameters
Total market (L1)
data (L2)
(L3)
Total
LIABILITIES
TRADING PORTFOLIO
Securitised debt payables
Amounts payable on borrowed
securities
Bonds and other debt securities sold
short
Shares and other equity securities sold
short
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.5
-
-
0.5
2.8
-
-
2.8
-
-
-
-
-
-
-
-
0.5
-
-
0.5
2.8
-
-
2.8
-
67.0
-
67.0
-
68.3
-
68.3
Firm transactions
-
59.3
-
59.3
-
61.7
-
61.7
Swaps
-
59.3
-
59.3
-
61.7
-
61.7
FRAs
-
-
-
-
-
-
-
-
Options
-
7.7
-
7.7
-
6.6
-
6.6
Options on organised markets
-
-
-
-
-
-
-
-
OTC options
-
-
-
-
-
-
-
-
Other financial liabilities
SUB-TOTAL TRADING LIABILITIES
TRADING DERIVATIVES
-
7.7
-
7.7
-
6.6
-
6.6
-
41.7
-
41.7
-
133.6
-
133.6
Firm transactions
-
38.2
-
38.2
-
131.0
-
131.0
Options
-
3.5
-
3.5
-
2.6
-
2.6
Equity and index instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
OTC instruments
-
-
-
-
-
-
-
-
SUB-TOTAL TRADING DERIVATIVES
SUB-TOTAL FINANCIAL LIABILITIES
USING FAIR VALUE OPTION
THROUGH PROFIT OR LOSS
TOTAL FINANCIAL LIABILITIES AT
FAIR VALUE THROUGH PROFIT OR
LOSS
-
108.7
-
108.7
-
201.9
-
201.9
-
585.9
-
585.9
-
473.1
-
473.1
0.5
694.6
-
695.1
2.8
675.0
-
677.8
31/12/2009
(in EUR millions)
TOTAL OF FINANCIAL LIABILITIES
MEASURED USING FAIR VALUE
OPTION THROUGH PROFIT OR
LOSS (1)
Amount repayable
Fair value
at maturity
585.9
624.1
31/12/2008
Difference between
fair value and amount
repayable at maturity
-38.2
Amount repayable
Fair value
at maturity
473.1
557.3
Difference between
fair value and amount
repayable at maturity
-84.2
(1) Balance sheet liabilities were impacted by the change in fair value of +EUR 16.3 million (at December 31, 2009) attributable to the Group’s own credit risk.
This change corresponds to an expense of EUR -16.3 million booked through profit or loss.
91
2I
I
S Note 6
Hedging derivatives
31/12/2009
31/12/2008
(in EUR millions)
Assets
Liabilities
Assets
Liabilities
Fair value hedge (1)
274.5
316.7
213.3
282.8
259.4
316.7
204.6
282.8
259.4
316.7
204.6
282.8
15.1
-
8.7
-
15.1
-
8.7
-
-
-
-
-
274.5
316.7
213.3
282.8
Firm transactions
Swaps
Options
Caps. floors. collars
Cash flow hedge
TOTAL
(1) Including Macro Fair Value Hedge derivatives.
S Note 7
Available-for-sale assets
31/12/2009
(in EUR millions)
31/12/2008
Valuation
determined
using prices
published
on an active
market
(L1)
Valuation
technique
based on
observable
market data
(L2)
Valuation
based on
unobservable
parameters
(L3)
Total
Valuation
determined
using prices
published
on an active
market
(L1)
Valuation
technique
based on
observable
market data
(L2)
Valuation
based on
unobservable
parameters
(L3)
Total
500.5
-
-
500.5
CURRENT ASSETS
Treasury notes and similar
securities
1,698.0
-
-
1,698.0
o/w related receivables
7.4
4.7
-
-
1,504.4
2,045.6
-
3,550.0
41.2
54.2
-13.1
-9.7
1.1
69.1
4.1
74.3
-
-
o/w impairments
-4.5
-4.6
3,203.5
2,114.7
4.1
5,322.3
1,581.1
3,846.1
3.4
5,430.6
5.1
-
370.7
375.8
5.0
0.4
221.0
226.4
-
o/w write-downs
Bonds and other debt
securities
o/w write-downs
Shares and other equity
securities (1)
SUB-TOTAL
Long-term investment
Securities
o/w impairments
SUB-TOTAL
TOTAL AVAILABLE-FORSALE FINANCIAL ASSETS
1.0
3,751.3
94.8
3.4
4,830.9
99.2
0.3
-4.9
-
370.7
375.8
5.0
0.4
221.0
226.4
3,208.6
2 114.7
374.8 5,698.1 (2)
1,586.1
3,846.5
224.4
5,657.0
-
-
-
-
-
-
-
-4.7
Including UCITS.
(2) o/w EUR 996.8 million in callable securities whose valuation reflects the exercise of the call by the issuer in accordance with market practices.
This amount is spread out over the following call dates:
- EUR 11.6 million in 2010
92
-
5.1
o/w loaned securities
1)
1,079.6
I
I
Movements in available-for-sale assets
2009
2008
Balance at January 1
5,657.0
5,141.0
Acquisitions
3,725.4
1,392.4
-3,800.6
-728.5
(in EUR millions)
Disposals/redemptions/mergers
-
-33.1 (3)
-28.8
(4)
-
159.8
(5)
-111.5
-3.4
-9.7
-0.2
0.8
-10.5
5.1
Reclassification (outflows) of available-for-sale financial assets
Change in scope
Gains and losses on changes in fair value booked to equity
Change in write-downs on fixed-income securities booked to equity.
Change in impairment of equity instruments
Change in related receivables
Foreign exchange differences
BALANCE AT DECEMBER 31
-0.6
0.5
5,698.1
5,657.0
(3) Given that certain available-for-sale assets (OBSAARs) were intended to be held to maturity, a reclassification at fair value was carried out between these two categories at
December 31, 2008, in the amount of EUR 33.1 million.
(4) The amount reported on this line corresponds to the removal of Etoile Gestion from the consolidation scope at December 31, 2009.
(5) The difference from the Change in value of financial instruments line under Shareholders’ equity, totalling EUR 126.7 million, came from the Insurance - Deferred profit sharing line
Change in inventory of available-for-sale assets whose valuation is not based on market parameters
(in EUR millions)
Treasury notes
and similar
securities
Bonds and Shares and other
other debt securities equity securities
Long term
investment securities
Total
3.4
221.0
224.4
Opening balance at January 1, 2009
-
-
Acquisitions
161.7
161.7
Disposals/redemptions
-0.1
-2.5
-2.6
Transfers to N2
-
Transfers from N2
-
Gains and losses for the period booked to equity
0.8
-9.1
-8.3
Change in write-downs on fixed-income securities
booked through profit or loss
-
O/w :
increase
-
write-back
-
others
-
Impairment of equity instruments booked through
profit or loss
-0.2
-0.2
Change in related receivables
-0.2
-0.2
Foreign exchange differences
-
-
-
4.1
370.7
374.8
CLOSING BALANCE AT DECEMBER 31, 2009
93
2I
I
S Note 8
Due from banks
2009/2008 change
(in EUR millions)
31/12/2009 31/12/2008 in value
in %
Current accounts
1,282.6
825.9
456.7
55.3
Overnight deposits and loans and others
1,602.6
1,866.6
-264.0
-14.1
Loans secured by overnight notes
Related receivables
TOTAL DEMAND AND OVERNIGHTS
Term deposits and loans
Loans secured by notes and securities
Securities acquired under term repurchase agreements
Subordinated loans and participating securities
Related receivables
TOTAL TERM
TOTAL GROSS
PROVISIONS FOR IMPAIRMENT
TOTAL NET
Fair value of amounts due from banks
-
-
-
-
0.4
1.2
-0.8
-66.7
2,885.6
2,693.7
191.9
7.1
521.3
856.3
-335.0
-39.1
-
-
-
-
0.5
1,716.5
-1,716.0
-100.0
90.7
89.1
1.6
1.8
2.9
34.9
-32.0
-91.7
615.4
2,696.8
-2,081.4
-77.2
3,501.0
5,390.5
-1,889.5
-35.1
-0.5
-0.5
-
-
3,500.5
5,390.0
-1,889.5
-35.1
3,500.5
5,389.9
Note that, at December 31 2009, EUR 1,435.5 million of the total amount due from banks represented transactions with Société
Générale Group (EUR 2,017.3 million at December 31, 2008).
Amounts due from banks outside France represented 6.4% of the total amount on the balance sheet. These banks are mainly
situated in the European Economic Area. Other countries represented 1.3% of the balance-sheet outstanding
94
I
I
S Note 9
Customer loans
2009/2008 change
(in EUR millions)
Trade notes
Related receivables
TOTAL TRADE NOTES
Other customer loans
Short-term loans
Export loans
Equipment loans
Housing loans
Other loans
Related receivables
TOTAL OTHER CUSTOMER LOANS
Overdrafts
Related receivables
TOTAL OVERDRAFTS
GROSS AMOUNT
Depreciation for groups of homogeneous receivables
31/12/2009 31/12/2008 in value
in %
703.5
758.4
-54.9
-7.2
0.8
0.4
0.4
100.0
704.3
758.8
-54.5
-7.2
1,894.5
2,146.3
-251.8
-11.7
42.3
71.1
-28.8
-40.5
4,911.5
4,907.2
4.3
0.1
11,674.6
11,137.1
537.5
4.8
3,254.7
2,985.8
268.9
9.0
56.8
71.5
-14.7
-20.6
21,834.4
21,319.0
515.4
2.4
1,669.4
2,054.8
-385.4
-18.8
23.6
38.0
-14.4
-37.9
1,693.0
2,092.8
-399.8
-19.1
24,231.7
24,170.6
61.1
0.3
-783.4
-646.1
-137.3
21.3
-32.2
-30.2
-2.0
6.6
DEPRECIATION
-815.6
-676.3
-139.3
20.6
NET AMOUNT
23,416.1
23,494.3
-78.2
-0.3
60.4
275.4
-215.0
-78.1
23,476.5
23,769.7
-293.2
-1.2
23,743.3
23,278.1
Securities purchased under resale agreements (including related
receivables)
TOTAL AMOUNT OF CUSTOMER LOANS
Fair value of customer loans
The provisioning rate for doubtful customer loans was 51.9% vs. 50.4% at December 31, 2008 (excluding depreciation for
groups of homogeneous receivables).
95
2I
I
Breakdown of other customer loans (1)
2009/2008 change
(in EUR millions)
Non-financial customers
31/12/2009 31/12/2008 in value
in %
21,775.8
21, 245.7
530.1
2.5
-0.6
Business customers
9,467.1
9,526.3
-59.2
Individual customers
11,306.9
10,814.5
492.4
4.6
7.5
9.1
-1.6
-17.6
784.8
775.4
9.4
1.2
95.5
0.7
94.8
-
114.0
119.7
-5.7
-4.8
1.8
1.8
-
-
21,777.6
21,247.5
530.1
2.5
Local authorities
Professional customers
Governments and central administrations
Others
Financial customers
TOTAL BREAKDOWN OF OTHER CUSTOMER LOANS
Related receivables
TOTAL OTHER CUSTOMER LOANS (1)
56.8
71.5
-14.7
-20.6
21,834.4
21,319.0
515.4
2.4
(1) The breakdown by sector now includes doubtful loans. Data at December 31, 2008 were restated accordingly.
Other customer loans are mainly based in France (96.5% of total). The remaining amount is represented for the most part by
customers who are nationals of one of the member states of the European Economic Area or Monaco (1.9% of the remaining
amount).
Analysis of performing customer loans and receivables (including related receivables)
Commercial receivables and other performing customer loans held on «Invididuals» totalled EUR 11,180.6 million (49.1% of
performing outstandings). Performing outstandings excluding Individual customers (50.9% of total) break down as follows:
Others 0.7%
Finance and insurance 13.7 %
Public administrations 0.1%
Healthcare, social services 3.0 %
Education, associations 1.6%
Multi-activity conglomerates 4.7 %
Media and telecoms 0.8%
Hotels and catering 4.3%
Utilities 1.3%
Business services 7.3%
Chemicals, rubber, plastic
0.8%
96
Food and agriculture 2.9%
Consumer goods 1.3%
Metals, minerals Ind. 2.0%
Machinery and equipment 1.5%
Construction 3.2%
Transport and logistics 2.4%
Wholesale trade 6.9%
Automobiles 0.2%
Retail trade 6.6%
Forestry, paper 0.8%
Retail estate 33.9%
I
I
S Note 10
2009/2008 change
(in EUR millions)
Non-real estate lease financing agreements
Real estate lease financing agreements
Related receivables
SUB-TOTAL
Depreciation for lease finance assets
SUB-TOTAL
NET AMOUNT
Fair value of receivables on lease financing and similar assets
31/12/2009 31/12/2008 in value
in %
1,387.8
1,414.5
-26.7
-1.9
489.1
432.6
56.5
13.1
0.4
0.2
0.2
100.0
1,877.3
1,847.3
30.0
1.6
-17.6
-10.5
-7.1
67.6
-0.5
-0.8
0.3
-37.5
-18.1
-11.3
-6.8
60.2
1,859.2
1,836.0
23.2
1.3
1,872.8
1,822.3
Lease financing outstandings rose by 1.3% versus December 31, 2008. Activity in the real estate financing sector made
significant gains over the period. Conversely, activity in the non-real estate financing sector, carried out by the subsidiary Star
Lease, decreased slightly. Star Lease’s operations break down as follows: 57% industrial equipment, 37% transport equipment,
4% IT hardware and 2% office equipment.
Breakdown of lease financing outstandings (excluding doubtful outstandings)
(in EUR millions)
Gross investments
Less than one year
1-5 years
More than five years
Present value of minimum payments receivable
31/12/2009
31/12/2008
2,004.5
1,987.3
607.8
587.9
1,142.0
1,133.9
254.7
265.5
1,808.6
1,783.1
Less than one year
586.5
568.9
1-5 years
998.5
987.4
More than five years
223.6
226.8
127.6
140.8
68.3
63.4
Unearned financial income
Non-guaranteed residual values receivable by the lessor
97
2I
I
S Note 11
2009/2008 change
31/12/2009 31/12/2008 in value
in %
-
-
-
-
Listed
-
-
-
-
Unlisted
-
-
-
-
(in EUR millions)
Related receivables
-
-
-
-
58.2
59.4
-1.2
-2.0
Listed
41.8
43.7
-1.9
-4.3
Unlisted
16.3
15.4
0.9
5.8
0.1
0.3
-0.2
-66.7
Related receivables
Provisions for impairment
TOTAL HELD-TO-MATURITY FINANCIAL ASSETS
Fair value of held-to-maturity financial assets
-
-
-
-
58.2
59.4
-1.2
-2.0
58.4
59.5
Changes in held-to-maturity financial assets
(in EUR millions)
2009
Balance at January 1
59.4
3.9
-
23.7 (1)
-2.3
-1.5
Acquisitions
Redemptions (at maturity)
Changes in impairment
Reclassification (inflows) of held-to-maturity financial assets
Others
BALANCE AT DECEMBER 31
-
-
-
(2)
1.1
0.2
59.4
(2) Given that certain available-for-sale assets (OBSAARs) were intended to be held to maturity, a reclassification at fair value was carried out between these two categories at
December 31, 2008, in the amount of EUR 33.1 million
33.1
58.2
(1) Exclusively OBSAARs.
98
2008
I
I
S Note 12
Tax assets and liabilities
2009/2008 change
(in EUR millions)
Current tax assets
31/12/2009
31/12/2008
in value
in %
102.3
187.0
-84.7
-45.3
Deferred tax assets
88.1
126.4
-38.3
-30.3
k on balance sheet items
88.1
125.6
-37.5
-29.9
k on items credited or charged to shareholders’ equity
for unrealised gains or losses
-
0.8
-0.8
-
190.4
313.4
-123.0
-39.2
Current tax liabilities
111.9
115.4
-3.5
-3.0
Deferred tax liabilities
357.2
323.8
33.4
10.3
k on balance sheet items
362.6
342.6
20.0
5.8
TOTAL TAX ASSETS
k on items credited or charged to shareholders’ equity
for unrealised gains or losses
TOTAL TAX LIABILITIES
-5.4
-18.8
13.4
-71.3
469.1
439.2
29.9
6.8
Deferred taxes on shareholders’ equity pertain to unrealised gains or losses on available-for-sale securities and on deferred
profit sharing for the insurance business
S Note 13
Other assets and liabilities
(in EUR millions)
2009/2008 change
31/12/2009
31/12/2008 in value
in %
OTHER ASSETS
Securities transactions
Guarantee deposits paid
Accruals and other liabilities
Depreciation
6,5
7,4
-0,9
-12,2
28,2
100,1
-71,9
-71,8
245,1
271,7
-26,6
-9,8
-0,2
-0,2
-
-
247,7
309,2
-61,5
-19,9
527,3
688,2
-160,9
-23,4
Accounts payable after cashing
212,9
246,8
-33,9
-13,7
139,0
134,7
4,3
3,2
Guarantee deposits received
60,7
10,7
50,0
-
Expenses payable on employee benefits
88,2
79,4
8,8
11,1
483,1
494,9
-11,8
-2,4
5,4
6,1
-0,7
-11,5
989,3
972,6
16,7
1,7
Other insurance assets
TOTAL OTHER ASSETS
OTHER LIABILITIES
Accruals and other liabilities
Other insurance liabilities
TOTAL OTHER LIABILITIES
99
2I
I
S Note 14
Fixed assets
(in EUR millions)
Gross value at
31/12/2008
Intangible assets
Software created
Inflows
Outflows
Change in scope and
reclassifications
176.9
28.4
-0.1
-
Software purchased
79.0
3.8
-1.6
3.1
Other intangible assets
24.9
3.0
-
-4.7
280.8
35.2
-1.7
-1.6
Land and buildings
172.2
7.5
-1.3
7.3
IT hardware
125.9
10.3
-5.3
1.2
Other intangible assets
430.6
32.6
-12.2
-8.9
728.7
50.4
-18.8
-0.4
Non-operating property
20.1
0.1
-0.6
1.0
Operating lease activities
13.4
-
-
-
13.4
-
-
-
SUB-TOTAL – INTANGIBLE ASSETS
Tangible assets
SUB-TOTAL – TANGIBLE ASSETS
Real estate leasing
Equipment leasing
SUB-TOTAL – INVESTMENT FIXED ASSETS
TOTAL – TANGIBLE AND INTANGIBLE FIXED ASSETS
100
-
-
-
-
33.5
0.1
-0.6
1.0
1,043.0
85.7
-21.1
-1.0
I
I
Amortisation and depreciation for the year
Gross value at
31/12/2009
Cumulated amortisation and
depreciation at 31/12/08
Allocations
Write-backs
used
Change in scope and
reclassifications
Net value at
31/12/2009
Net value at
31/12/2008
205.2
-86.7
-25.4
0.1
-
93.2
90.2
84.3
-69.5
-5.9
1.7
0.7
11.3
9.5
23.2
-0.1
-
-
-
23.1
24.8
312.7
-156.3
-31.3
1.8
0.7
127.6
124.5
185.7
-56.1
-4.9
132.1
-103.1
442.1
-284.3
759.9
125.7
116.1
1.0
-
-10.7
5.3
-
23.6
22.8
-28.4
11.8
-
141.2
146.3
-443.5
-44.0
18.1
-
290.5
285.2
20.6
-9.2
-1.1
0.9
-
11.2
10.9
13.4
-7.5
-0.3
1.4
-
7.0
5.9
13.4
-7.5
-0.3
1.4
-
7.0
5.9
-
-
-
-
-
-
-
34.0
-16.7
-1.4
2.3
-
18.2
16.8
1,106.6
-616.5
-76.7
22.2
0.7
436.3
426.5
101
2I
I
S Note 15
Goodwill
(in EUR millions)
Gross value at 31/12/2008
53.8
Acquisitions and other increases
-
Disposals and other decreases
-
GROSS VALUE AT 31/12/2009
53.8
Impairment of goodwill at 31/12/2008
-
Impairment losses
-
IMPAIRMENT OF GOODWILL AT 31/12/2009
-
Under IFRS, goodwill is no longer amortised. It is subject to an impairment test once a year.
Net value at 31/12/2008
53.8
NET VALUE AT 31/12/2009
53.8
Main sources of net goodwill at December 31, 2009
(in EUR millions)
Banque Courtois
10.2
Banque Laydernier
12.8
Banque Kolb
22.3
Banque Tarneaud
3.3
Fortis branches
5.2
NET VALUE AT 31/12/2009
53.8
S Note 16
Summary of depreciations
Depreciation and amortisation
(in EUR millions)
Notes
Write-backs Write-backs
Allocations
available
used
Others
Asset
depreciations
at 31/12/2009
Banks
8
0.5
-
-
-
-
0.5
Customer loans
9
646.1
331.1
-154.3
-39.5
-
783.4
Provisions for homogeneous receivables
9
30.2
2.1
-0.1
-
-
32.2
Lease financing and similar agreements (1)
10
11.3
15.3
-6.8
-1.7
-0.5
17.6
Available-for-sale assets (1)
7
18.9
3.9
-0.3
-
-
22.5
11
-
-
-
-
-
-
Fixed assets
14
3.5
-
-1.6
-0.3
-
1.6
Others
13
0.2
0.1
-0.1
-
-
0.2
710.7
352.5
-163.2
-41.5
-0.5
858.0
Held-to-maturity assets
TOTAL
1)
102
Asset
depreciations
at 31/12/2008
O/w net provisions impacting counterparty risk: EUR 12.2 million.
I
I
Provisions
(in EUR millions)
Provisions at
Write-backs Write-backs
31/12/2008 Allocations
available
used
Discount
effect
Provisions at
Others 31/12/2009
Provisions for post-employment benefits
66.4
10.1
-0.8
-24.7
-
-
51.0
Provisions for long-term benefits
28.1
10.7
-1.7
-4.8
-
-
32.3
Provisions for severance pay
Provisions for other employee benefits
Provisions for property risks (2)
-
-
-
-
-
-
-
3.0
2.2
-0.8
-0.9
-
-
3.5
0.4
-
-
-
-
-
0.4
12.7
1.7
-1.5
-0.7
0.2
-
12.4
Provisions for off-balance sheet commitments
with credit institutions
-
-
-
-
-
-
-
with customers
22.0
22.1
-8.6
-
-
-
35.5
Other provisions (3) (4)
12.4
2.7
-2.2
-
-
-
12.9
145.0
49.5
-15.6
-31.1
0.2
-
148.0
Provisions for disputes (3)
TOTAL PROVISIONS
(2) Provisions for property risks cover termination losses relative to investments in property programmes.
(3) o/w net provisions relative to net cost of risk: EUR 0.1 million.
(4) o/w home savings provision: EUR 9.3 million at December 31, 2009 versus EUR 10.9 million at December 31, 2008, i.e. a net write-back of EUR 1.6 million over the year (see
Note 20).
S Note 17
Due to banks
2009/2008 change
31/12/2009 31/12/2008 in value
in %
Current accounts
177.1
248.2
-71.1
-28.6
Overnight deposits and borrowings
373.3
378.8
-5.5
-1.5
-
-
-
-
(in EUR millions)
Borrowings secured by overnight notes
Securities sold under repurchase agreements overnight
-
-
-
-
0.1
1.0
-0.9
-90.0
TOTAL DEMAND DEPOSITS
550.5
628.0
-77.5
-12.3
Term deposits and borrowings
2,942.5
3,311.8
-369.3
-11.2
-
-
-
-
Related payables
Borrowings secured by notes and securities
Securities sold under term repurchase agreements
Related payables
TOTAL TERM DEPOSITS
Revaluation of hedged items
TOTAL
Fair value of amounts due to banks
-
-
-
-
15.3
21.2
-5.9
-27.8
2,957.8
3,333.0
-375.2
-11.3
43.7
27.3
16.4
60.1
3,552.0
3,988.3
-436.3
-10.9
3,552.0
3,988.3
,
,
Note that at December 31, 2009, EUR 1,794.3 million of the total due to banks represented transactions with
Société Générale Group.
103
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S Note 18
Customer deposits
2009/2008 change
(in EUR millions)
Demand regulated savings accounts
31/12/2009 31/12/2008 in value
in %
5,008.2
4,086.3
921.9
22.6
Term regulated savings accounts
1,629.1
1,618.4
10.7
0.7
Demand and overnight accounts
10,611.0
10,139.9
471.1
4.6
Companies and individual entrepreneurs
6,292.7
6,073.3
219.4
3.6
3,796.5
3,578.1
218.4
6.1
Financial customers
Others
Term accounts
Financial customers
Others
Related payables
Guarantee deposits
TOTAL
Fair value of customer deposits
15.8
6.0
9.8
163.3
506.0
482.5
23.5
4.9
382.3
1,666.0
-1,283.7
-77.1
264.5
829.0
-564.5
-68.1
94.1
808.1
-714.0
-88.4
-
0.9
-0.9
-
23.7
28.0
-4.3
-15.4
-
150.0
-150.0
-
71.8
261.0
-189.2
-72.5
535.2
1,428.4
-893.2
-62.5
76.3
127.7
-51.4
-40.3
0.7
0.7
-
-
18,314.6
19,478.4
-1,163.8
-6.0
18,314.4
19,478.3
31/12/2009 31/12/2008 in value
in %
11.7
14.4
-2.7
-18.8
6,997.0
8,201.7
-1,204.7
-14.7
304.9
554.7
-249.8
-45.0
31.2
121.9
-90.7
-74.4
7,344.8
8,892.7
-1,547.9
-17.4
0.3
0.3
-
-
7,345.1
8,893.0
-1,547.9
-17.4
7,378.3
8,904.9
S Note 19
2009/2008 change
(in EUR millions)
Savings certificates
Money market and negotiable debt securities
Bonds
Related payables
SUB-TOTAL
TOTAL
Fair value of debt securities
104
I
I
S Note 20
PEL/CEL mortgage saving accounts
A. Outstanding deposits in PEL/CEL accounts
2009/2008 change
(in EUR millions)
PEL accounts
31/12/2009 31/12/2008 in value
10.7
6.3
in %
Less than 4 years old
181.5
170.8
Between 4 and 10 years old
657.9
655.5
2.4
0.4
More than 10 years old
536.6
587.4
-50.8
-8.6
1,376.0
1,413.7
-37.7
-2.7
282.8
298.9
-16.1
-5.4
1,658.8
1,712.6
-53.8
-3.1
SUB-TOTAL
CEL accounts
TOTAL
B. Outstanding housing loans granted with respect to PEL/CEL accounts
2009/2008 change
31/12/2009 31/12/2008 in value
in %
42.7
18.8
23.9
127.1
13.8
28.2
-14.4
-51.1
3.8
9.4
-5.6
-59.6
60.3
56.4
3.9
6.9
(in EUR millions)
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
2009/2008 change
(in EUR millions)
31/12/2009 31/12/2008 in value
in %
PEL accounts
-
3.7
-3.7
-
2.1
-
2.1
-
5.4
-
5.4
-
SUB-TOTAL
7.5
3.7
3.8
102.7
CEL accounts
0.1
5.3
-5.2
-98.1
Drawn down loans
1.7
1.9
-0.2
-10.5
9.3
10.9
-1.6
-14.7
TOTAL
(1) These provisions are booked as Allowances for general risk and commitments.
105
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I
D. Methods used to establish the parameters
for valuing provisions
The parameters used for estimating the future behaviour
of customers are derived from historical observations of
customer behaviour patterns over periods of between 10 and
15 years. The value of these parameters can be adjusted if
any changes are subsequently made to regulations that might
undermine the effectiveness of past data as an indicator of
future customer behaviour.
The values of the different market parameters used, notably
interest rates and margins, are calculated on the basis of
observable data and constitute a best estimate, at the date of
valuation, of the future value of these elements for the period
concerned, in line with the retail banking division’s policy of
interest rate risk management.
The discount rates used are derived from the zero coupon
swaps vs. Euribor yield curve at the date of valuation,
averaged over a 12-month period.
S Note 21
Employee benefits
A. Post-employment defined contribution plans
Defined contribution plans limit the Group’s liability to the
contributions paid to the plan but do not commit the Group
to a specific level of future benefits.
The main defined contribution plans provided to employees
of the Group are located in France.
106
They include State pension plans and other national
retirement plans such as ARRCO and AGIRC, pension
schemes for which the only commitment is to pay annual
contributions (PERCO) and multi-employer plans.
Expenses relating to these plans totalled EUR 55.4
million at December 31, 2009 vs. EUR 54.3 million at
December 31, 2008.
I
I
B. Post-employment benefit plans (defined benefit plans) and other long-term benefits
B1. Reconciliation of assets and liabilities recorded in the balance sheet
31/12/2009
Post employment benefits
(in EUR millions)
Breakdown of provisions recorded in the
balance sheet
Breakdown of assets recorded in the
balance sheet
Net provision
BREAKDOWN OF DEFICIT
IN THE PLAN
Pension
plans
34.5
31/12/2008
Others
Other
long-term
benefits
16.5
32.2
Total plans
Pension
plans
83.2
50.3
Others
Other
long-term
benefits
Total plans
16.1
28.1
94.5
-
-
-
-
-
-
-
-
34.5
16.5
32.2
83.2
50.3
16.1
28.1
94.5
Present value of defined benefit
obligations
107.2
-
-
107.2
116.2
-
-
116.2
Fair value of plan assets
-68.2
-
-
-68.2
-59.0
-
-
-59.0
ACTUARIAL DEFICIT (A)
39.0
-
-
39.0
57.2
-
-
57.2
PRESENT VALUE OF UNFUNDED
OBLIGATIONS (B)
17.4
16.4
32.2
66.0
17.8
14.0
28.1
59.9
1.0
-
-
1.0
1.1
-
-
1.1
20.9
-0.1
-
20.8
23.6
-2.1
-
21.5
-
-
-
-
-
-
-
-
Unrecognised items
Unrecognised Past Service Cost
Unrecognised net actuarial gain/loss
Separate assets
Plan assets impacted by change in Asset
Ceiling
TOTAL UNRECOGNISED ITEMS (C)
NET PROVISION A + B - C
-
-
-
-
-
-
-
-
21.9
-0.1
-
21.8
24.7
-2.1
-
-22.6
34.5
16.5
32.2
83.2
50.3
16.1
28.1
94.5
Notes :
1. For defined-service pension schemes, in accordance with IAS 19, Crédit du Nord Group uses the projected credit units method to calculate
employee benefits, and amortises actuarial gains and losses which exceed 10% of the greater of the defined benefit obligations or funding
assets on the estimated average remaining working life of the employees participating in the plan (corridor method). The Group uses the
straight-line method over the residual working lives of employee beneficiaries to recognise past service cost resulting from an amendment
of the plan.
2. Pension plans include pension benefits as annuities and end of career payments. Pension benefit annuities are paid additionally to State
pension plans.Other post employment benefit plans are insurance schemes covering accidental death at 3 institutions located in France.
Other long-term employee benefits include deferred bonuses, flexible working provisions (compte épargne temps) and long-service awards.
3. The present value of defined benefit obligations have been valued by independent qualified actuaries.
4. Information regarding plan assets:
k only end of career payments and additional complementary retirement plans are partially covered by assets managed by an external
company;
k the fair value of plan assets is comprised of 16.4% bonds, 64.5% equities, 19.1% money market funds and 3% property investments.
5. In general, the expected rates of return on scheme assets are based on a weighted average of expected returns on each category of assets
at fair value.
6. Benefits payable under post-employment plans in 2010 are estimated at EUR 14.5 million.
107
2I
I
The actual return on plan and separate assets was, in millions of euros:
(as a % of the item measured)
31/12/2009
31/12/2008
13.0
-37.3
-
-
31/12/2009
31/12/2008
7.7
-22.0
-
-
Plan assets
Separate assets
(in EUR millions)
Plan assets
Separate assets
B2. Charges actuarielles des régimes
31/12/2009
(in EUR millions)
Others
Other
long-term
benefits
4.6
0.2
-
-
7.1
0.9
1.6
-3.8
-
-
Pension
plans
Current service cost for the year,
including social security contributions
Employee contributions
Interest cost
Expected return on plan assets
31/12/2008
Expected return on separate assets
Others
Other
long-term
benefits
Total plans
4.6
0.3
4.1
9.0
-
-
-
-
9.6
6.8
0.8
1.7
9.3
-3.8
-5.1
-
-
-5.1
Total plans
Pension
plans
3.8
8.6
-
-
-
-
-
-
-
-
-
-
Amortisation of past service cost
1.1
-
-
1.1
11.2
-
-
11.2
Amortisation of gains/losses
0.5
-0.1
3.6
4.0
-
-
-4.5
-4.5
-
-
-
-
-
-
-
-
9.5
1.0
9.0
19.5
17.5
1.1
1.3
19.9
Settlement
TOTAL NET CHARGES
RECOGNISED IN THE INCOME
STATEMENT
B3. Changes in net liabilities of post-employment plans booked to the balance sheet
B3a. Changes in the present value of defined benefit obligations
2009
Other
plans
Total
post-employ.
Pension
schemes
Other
plans
Total
post-employ.
134.0
14.0
148.0
133.0
14.5
147.5
Current service cost, including social security
contributions
4.6
0.2
4.8
4.6
0.3
4.9
Interest cost
7.1
0.9
8.0
6.8
0.8
7.6
-
-
-
-
-
-
2.3
1.9
4.2
-8.4
-1.1
-9.5
-
-
-
-
-
-
(in EUR millions)
VALUE AT JANUARY 1
Actuarial gains/loses generated over the fiscal year
Foreign currency exchange adjustment
Benefit payments
-23.4
-0.6
-24.0
-13.0
-0.5
-13.5
Past service cost generated over the fiscal year
-
-
-
11.0
-
11.0
Acquisition of subsidiaries
-
-
-
-
-
-
Transfers and others
-
-
-
-
-
-
124.6
16.4
141.0
134.0
14.0
148.0
VALUE AT DECEMBER 31
108
2008
Pension
schemes
I
I
B3b. Variations de la juste valeur des actifs du régime et des actifs distincts
2009
2008
Pension
schemes
Other
plans
Total
post-employ.
Pension
schemes
Other
plans
Total
post-employ.
59,0
-
59,0
81,7
-
81,7
3.8
-
3.8
5.1
-
5.1
-
-
-
-
-
-
3.9
-
3.9
-27.1
-
-27.1
Foreign currency exchange adjustment
-
-
-
-
-
-
-
-
-
-
-
-
(en millions d’euros)
Value at January 1
Actuarial gains/loses generated over the fiscal year
Employer contributions
Benefit payment
3.1
-
3.1
4.3
-
4.3
-1.1
-
-1.1
-5.0
-
-5.0
Acquisition of subsidiaries
-
-
-
-
-
-
-0.5
-
-0.5
-
-
-
68.2
-
68.2
59.0
-
59.0
B4. Main assumptions for post employment plans
2009
2008
Expected return on assets (separate and plan assets)
6.6%
6.6%
Future salary increase (including inflation)
3.5%
3.5%
The expected rate of return on assets (separate and plan
assets) has been 6.6% since 2005. The range in the
expected rate of return on assets is due to the composition
of the assets.
The discount rate used depends on the term of each plan
(2.94% for up to 3 years / 3.86% for up to 5 years / 5.01%
for up to 10 years / 5.35% for up to 15 years and 5.69% for
up to 20 years).
The average remaining lifetime is established individually by
benefit for each Group entity and is calculated taking into
account turnover assumptions.
Inflation depends on the term of each plan (1.90% for up to
3 years / 2.51% for up to 5 years / 2.57% for up to 10 years
/ 2.62% for up to 15 years and 2.66% for up to 20 years).
B5. Sensitivities analysis of post-employment defined benefit obligations compared to main
assumption ranges
2009
(as % of item measured)
Variation of +1% in discount rate
Impact on defined benefit obligations at December 31
Impact on total expenses
Variation of +1% in expected return on assets
(plan assets and separate assets)
Impact on plan assets at December 31
Variation of +1% of future salary increases
net of inflation
Impact on defined benefit obligations at December 31
2008
Pension schemes
Other plans
Pension schemes
Other plans
-5.9%
-13.5%
-4.8%
-12.4%
-10.6%
-23.3%
-8.4%
-20.7%
1.0%
-
1.0%
-
-14.5%
-
-9.6%
-
7.1%
17.5%
5.4%
16.1%
13.8%
33.7%
11.1%
29.3%
109
2I
I
B6. Experience adjustments on post-employment defined benefit obligations
31/12/2009
31/12/2008
124.6
134.0
68.2
59.0
Deficit / (negative: surplus)
56.4
75.0
Experience adjustments on plan liabilities
-4.0
-5.6
3.9
-27.1
(in EUR millions)
Defined benefit obligations
Experience adjustments on plan assets
S Note 22
Subordinated debt
2009/2008 change
31/12/2009
(in EUR millions)
Equity investments
Redeemable subordinated notes
TOTAL
in value
in %
-
-
-
-
592.5
638.3
-45.8
-7.2
Undated subordinated notes
Interest payable
31/12/2008
-
-
-
-
9.4
10.2
-0.8
-7.8
32.7
22.0
10.7
48.6
634.6
670.5
-35.9
-5.4
The fair value of subordinated debt was EUR 607.2 million at December 31, 2009 (EUR 634.7 million at December 31, 2008)
calculated entirely via reference to a price quoted on an active market.
Schedule of redeemable subordinated notes issued by Crédit du Nord
Subordinated debt
110
2010
2011
2012
2013
2014
Others
Outstanding
at 31/12/2009
Outstanding
at 31/12/2008
151.5
160
-
-
-
281
592.5
638.3
I
I
S Note 23
Insurance activities
2009/2008 change
31/12/2009 (in EUR millions)
Underwriting reserves for unit-linked policies
Life insurance underwriting reserves
Non-life insurance underwriting reserves
TOTAL
Provisions for deferred profit sharing
(1) (2)
Share of underwriters
Underwriting reserves of insurance companies (including
deferred profit sharing) net of underwriters' share
31/12/2008 in value
in %
978.9
876.1
102.8
11.7
2,792.8
2,382.5
410.3
17.2
2.1
1.6
0.5
31.3
3,773.8
3,260.2
513.6
15.8
66.3
-60.1
126.4
-
-232.0
-221.1
-10.9
4.9
3,608.1
2,979.0
629.1
21.1
(1) o/w a provision for deferred profit sharing for assets at fair value through shareholders’ equity of EUR 66.3 million at December 31, 2009 and EUR 60.4 million at December 31,
2008.
Statement of changes in underwriting reserves of insurance companies
Underwriting reserves
for unit-linked policies
Life insurance
underwriting reserves
Non-life insurance
underwriting reserves
Reserves at 01/01/2009
876.1
2,382.5
1.6
Allocation to insurance reserves
163.1
417.1
0.4
Revaluation of unit-linked policies
-76.1
-
-
(in EUR millions)
Charges deducted from unit-linked policies
8.6
-
-
Transfers and arbitrage
7.2
-7.1
-
New customers
-
-
-
Profit sharing
-
0.3
-
Others
-
-
-
978.9
2,792.8
2.0
RESERVES AT DECEMBER 31, 2009 (EXCLUDING
DEFERRED PROFIT SHARING)
In accordance with IFRS and Group principles, the Liability Adequacy Test (LAT) was carried out at December 31, 2009.
This test is based on stochastic models, consistent with a Market Consistent Embedded Value approach.
111
2I
I
Net investments by insurance companies
2009/2008 change
(in EUR millions)
31/12/2009 31/12/2008 in value
in %
-
-
-
-
116.3
206.2
-89.9
-43.6
1,072.7
964.1
108.6
11.3
-
-
-
-
Due from banks
,
,
,
,
254.7
279.3
-24.6
-8.8
2,397.2
1,763.3
633.9
35.9
42.7
30.8
11.9
38.6
-
-
-
-
Investment property
TOTAL
-
-
-
-
3,883.6
3,243.7
639.9
19.7
2009
2008
in value
in %
Technical income from insurance companies
2009/2008 change
(in EUR millions)
Earned premiums
591.3
523.0
68.3
13.1
-708.9
-190.7
-518.2
-
Net income from investments
165.5
-286.6
452.1
-
Other net technical income/expenses
-27.4
-25.5
-1.9
7.5
20.5
20.2
0.3
1.5
-1.5
-1.5
-
-
19.0
18.7
0.3
1.6
2009
2008
in value
Cost of benefits (including changes in reserves)
CONTRIBUTION TO OPERATING INCOME BEFORE
ELIMINATION OF INTRA-GROUP OPERATIONS
Elimination of intra-group operations
CONTRIBUTION TO OPERATING INCOME AFTER
ELIMINATION OF INTRA-GROUP OPERATIONS
Net fee income (1)
2009/2008 change
(in EUR millions)
Fees received
Acquisition fees
12,4
11,9
0,5
4,2
Management fees
32,7
30,7
2,0
6,5
0,1
0,1
-
-
Others
Fees paid
Acquisition fees
-10,7
-10,7
-
-
Management fees
-10,8
-9,4
-1,4
14,9
Others
TOTAL FEES
(1) This table presents the contribution of fees before the elimination of intra-group operations.
112
in %
-1,3
-1,5
0,2
-13,3
22,4
21,1
1,3
6,2
I
I
S Note 24
Gains and losses booked directly to equity
31/12/2009
(in EUR millions)
Period
31/12/2008 Change in gains and losses booked directly to
equity
Translation difference
-
-
-
Revaluation difference over the period
Recycled to the income statement
-27.1
Revaulation of available-for-sale assets (1)
6.8
33.9
38.9
-5.0
Revaluation of hedging derivatives
-
-
-
Amounts transferred in the value of the hedged
item
Share of unrealised or deferred gains or losses on
companies accounted for by the equity method
-
-
-
Taxes
5.4
-14.2
19.6
12.2
19.7
-7.5
Minority interests
-
-0.2
0.2
GROUP SHARE
12.2
19.9
-7.7
TOTAL
31/12/2009
31/12/2008
Gross
Tax
Net of tax
Gross
Tax
-
-
-
-
-
-
6.8
5.4
12.2
-27.1
19.6
-7.5
Revaluation of hedging derivatives
-
-
-
-
-
-
Share of unrealised or deferred gains or losses on
companies accounted for by the equity method
-
-
-
-
-
-
Total gains and losses booked directly to equity
-7.5
(in EUR millions)
Translation differences
Revaluation of available-for-sale assets
Net of tax
6.8
5.4
12.2
-27.1
19.6
Minority interests
-
-
-
0.2
-
0.2
GROUP SHARE
6.8
5.4
12.2
-27.3
19.6
-7.7
Breakdown of revaluation differences on available-for-sale assets
(in EUR millions)
Unrealised gains and losses on available-for-sale financial assets
Unrealised gains and losses on available-for-sale debt instruments
Unrealised gains and losses on assets reclassified under Loans and
Receivables
Unrealised insurance company gains and losses
o/w on available-for-sale financial assets
o/w on available-for-sale debt instruments and assets reclassified
under Loans and Receivables
o/w deferred profit sharing
TOTAL
Unrealised capital gains Unrealised capital losses
Net revaluation
28.4
-0.3
28.1
1.7
-23.3
-21.6
-
-
-
92.8
-92.5
0.3
1.3
-
1.3
91.5
-26.2
65.3
-
-66.3
-66.3
122.9
-116.1
6.8
113
2I
I
S Note 25
Assets and liabilities by period remaining to expiration
Contractual maturities of financial liabilities (1)
At December 31, 2009
(in EUR millions)
Less than
3 months 3 months - 1 year
Due to central banks
2.2
Financial liabilities at fair value through
profit or loss (excluding derivatives)
Due to banks
Customer deposits
Debt securities
TOTAL LIABILITIES
Guarantee commitments given
TOTAL COMMITMENTS GIVEN
> 5 years
Undated
Total
-
-
-
2.2
7.9
122.4
347.0
148.0
-
625.3
704.3
938.7
1,608.2
257.1
-
3,508.3
17,957.4
168.6
180.1
8.5
-
18,314.6
4,251.5
878.7
1,350.4
865.7
-
7,346.3
0.2
160.7
160.0
281.0
-
601.9
22,923.5
2,269.1
3,645.7
1,560.3
-
30,398.6
941.5
572.5
1,346.9
241.9
-
3,102.8
Subordinated debt
Loan commitments given
1 - 5 years
-
285.2
482.2
1,219.9
1,558.7
-
3,546.0
1,226.7
1,054.7
2,566.8
1,800.6
-
6,648.8
1 - 5 years
> 5 years
Undated
Total
-
3,773.7
-
3,840.1
(1) The amounts indicated are the contractual amounts excluding estimated interest
Underwriting reserves of insurance companies (2)
(in EUR millions)
Less than
3 months 3 months - 1 year
Underwriting reserves of insurance
companies
66.4
-
(2) Maturities of book amounts.
Notional maturities of commitments on financial derivatives (3)
0-1 year
(in EUR millions)
Assets
1-5 years
Liabilities
More than 5 years
Liabilities
Assets
Total
Liabilities
Assets
Liabilities
Firm transactions
6 952,2
6 952,5
6 405,9
6 405,6
5 302,2
5 302,2
18 660,3
18 660,3
-
-
-
-
-
-
-
-
Swaps
FRA
Options
383,7
260,6
1 625,5
380,9
493,4
223,6
2 502,6
865,1
111,3
111,3
1,7
1,7
-
-
113,0
113,0
Other forward instruments
-
-
-
-
-
-
-
-
Foreign exchange options
(3) These items are presented based on the maturities of the financial instruments.
114
Assets
I
I
S Note 26
Commitments
A. Financing commitments given and received
2009/2008 change
(in EUR millions)
COMMITMENTS GIVEN
Loan commitments
To banks
To customers
31/12/2009
31/12/2008
in value
in %
230.0
103.4
126.6
122.4
2,872.8
2,957.2
-84.4
-2.9
150.8
256.9
-106.1
-41.3
3,395.2
3,536.8
-141.6
-4.0
Guarantee commitments
On behalf of banks
On behalf of customers
On behalf of insurance activities
304.1
272.2
31.9
11.7
4,325.6
3,632.8
692.8
19.1
1,340.2
-
1,340.2
-
7,690.3
6,831.8
858.5
12.6
From customers
237.6
237.4
0.2
0.1
Others (1)
102.1
84.8
17.3
20.4
Others
COMMITMENTS RECEIVED
Loan commitments
From banks
Guarantee commitments
From banks
(1) o/w EUR 102.1 million in guarantee commitments received from government administrations and local authorities at December 31, 2009 (vs. EUR 71.7 million
at December 31, 2008).
At December 31, 2009, Société Générale Group’s financing and guarantee commitments totalled EUR 0.1 million vs. EUR 6.3
million at December 31, 2008.
The financing commitments and guarantees given to Société Générale Group amounted to EUR 1,595.2 million vs. EUR 210.02
million at December 31, 2008.
B. Securities transactions and foreign exchange transactions
2009/2008 change
(in EUR millions)
Securities to be received
31/12/2009
31/12/2008
in value
in %
2.8
54.3
-51.5
-94.8
12.7
78.2
-65.5
-83.8
Currency to be received
4,460.4
6,291.8
-1,831.4
-29.1
Currency to deliver
4,457.3
6,273.5
-1,816.2
-29.0
Securities to deliver
At December 31, 2009, commitments of this nature with Société Générale Group stood at EUR 567.7 million (vs. EUR 423.7
million at December 31, 2008).
115
2I
I
C. Financial derivatives
31/12/2009
(in EUR millions)
31/12/2008
Assets
Liabilities
Assets
Liabilities
6 008,5
6 008,5
8 687,4
8 687,4
-
-
-
-
-
-
-
-
981,5
865,1
717,4
758,1
113,0
113,0
83,7
83,7
TRADING FINANCIAL DERIVATIVES
Firm transactions
Swaps
FRAs
Options
OTC options
SUB-TOTAL TRADING FINANCIAL DERIVATIVES
-
-
-
2,0
7 103,0
6 986,6
9 488,5
9 531,2
12 651,8
12 651,8
13 217,7
13 217,7
FAIR VALUE HEDGE INSTRUMENTS (1)
Firm transactions
Swaps
Options
SUB-TOTAL HEDGING INSTRUMENTS
TOTAL
1 521,1
-
1 522,0
-
14 172,9
12 651,8
14 739,7
13 217,7
21 275,9
19 638,4
24 228,2
22 748,9
(1) Including macrohedging derivatives at fair value through profit or loss.
At December 31, 2009, commitments of this nature with Société Générale Group stood at EUR 17,196.4 million (vs. EUR
20,459.0 million at December 31, 2008).
Note that, under the current regulations, transactions processed on behalf of and on the order of customers are classified in
the “Trading” category, even if any hedging of them is classified in “Fair value hedging through profit or loss”.
116
I
I
S Note 27
Euro
CHF
GBP
USD
JPY
Other
currencies
31/12/2009
Total
4,002.8
68.4
71.6
148.6
40.1
127.1
4,458.6
25,296.0
107.5
3.1
87.6
1.7
0.8
25,496.7
(in EUR millions)
ASSETS
Short-term
Customer loans
Other assets
TOTAL
8,533.9
-
0.2
16.9
-
-
8,551.0
37,832.7
175.9
74.9
253.1
41.8
127.9
38,506.3
2,925.6
84.7
23.5
479.2
13.1
28.1
3,554.2
18,349.8
LIABILITIES
Short-term
Customer deposits
18,060.4
6.9
28.4
237.1
2.5
14.5
7,176.0
13.5
112.6
43.0
-
-
7,345.1
Other liabilities
9,240.6
-
0.1
16.4
-
0.1
9,257.2
37,402.6
105.1
164.6
775.7
15.6
42.7
38,506.3
TOTAL
FOREIGN EXCHANGE COMMITMENTS
Currencies bought, not yet
received
1,380.3
269.5
267.7
1,822.2
31.5
689.2
4,460.4
Currencies sold, not yet delivered
1,808.9
344.3
177.2
1,295.6
57.3
774.0
4,457.3
Assets
37,832.7
175.9
74.9
253.1
41.8
127.9
38,506.3
Liabilities
37,402.6
105.1
164.6
775.7
15.6
42.7
38,506.3
-428.6
-74.8
90.5
526.6
-25.8
-84.8
3.1
1.5
-4.0
0.8
4.0
0.4
0.4
3.1
NET POSITION
Net foreign exchange
commitments
BALANCE
Currency positions are kept within very conservative limits, with respect of prudential capital, which stood at EUR 1,489.3
million. As a result, the largest net position, in CHF, accounted for 0.27% of prudential capital.
Note that the euro represents a very significant share of the Group’s total transactions. The most significant foreign currency
exposure besides the euro, i.e. the dollar and the Swiss franc, accounted for 1.4% and 0.2% of total assets, respectively.
S Note 28
Net Banking income
(in EUR millions)
Notes
2009/2008 change
2009 2008 in value
in %
29
809.9
786.4
23.5
3.0
Fees and commissions
30
762.9
714.0
48.9
6.8
-76.5
Income from equity securities
3.9
16.6
-12.7
Net gains/losses on financial instruments at fair value
31
-13.2
11.5
-24.7
-
Net gains/losses on available-for-sale Financial assets
32
17.0
4.8
12.2
-
Income and expenses from other businesses
33
-0.7
10.6
-11.3
-
1,579.8
1,543.9
35.9
2.3
48.3%
46.2%
NET BANKING INCOME
% of commissions in NBI
117
2I
I
S Note 29
2009/2008 change
(in EUR millions)
Interest and similar income from
Transactions with banks
Transactions in financial instruments
Securities lending
Hedging derivatives
2009
2008
in value
in %
67.5
167.3
-99.8
-59.7
1,081.2
1,217.3
-136.1
-11.2
305.2
382.4
-77.2
-20.2
163.2
237.8
-74.6
-31.4
1.7
0.9
0.8
88.9
-
-
-
-
140.3
143.7
-3.4
-2.4
153.7
151.5
2.2
1.5
72.9
73.6
-0.7
-1.0
Non-real estate lease financing agreements
80.8
77.9
2.9
3.7
-
-
-
-
1 607.6
1 918.5
-310.9
-16.2
-91.7
-147.0
55.3
-37.6
-255.6
-391.2
135.6
-34.7
Finance leases
Other interest and similar income
SUB-TOTAL
Interest and similar expenses from
Subordinated and convertible debt
Securities borrowing
Hedging derivatives
Finance leases
Non-real estate financing agreements
Other interest and similar expenses
SUB-TOTAL
TOTAL INTEREST AND SIMILAR INCOME
-393.3
-537.1
143.8
-26.8
-152.6
-378.3
225.7
-59.7
-29.6
-30.8
1.2
-3.9
-
-
-
-
-211.1
-128.0
-83.1
64.9
-56.9
-56.1
-0.8
1.4
-51.9
-49.4
-2.5
5.1
-5.0
-6.7
1.7
-25.4
-0.2
-0.7
0.5
-71.4
-797.7
-1,132.1
334.4
-29.5
809.9
786.4
23.5
3.0
2009
2008
in value
2009/2008 change
(in EUR millions)
Net income/expenses from
-24.2
20.3
-44.5
-
825.6
826.1
-0.5
-0.1
134.1
156.9
-22.8
-14.5
1.4
4.1
-2.7
-65.9
Equipment loans
162.3
193.9
-31.6
-16.3
Housing loans
531.3
526.5
4.8
0.9
Short-term loans
Export loans
Other loans
-3.5
-55.3
51.8
-93.7
-88.1
-154.7
66.6
-43.1
Finance leases
96.8
95.4
1.4
1.4
Others
-0.2
-0.7
0.5
-71.4
809.9
786.4
23.5
3.0
TOTAL INTEREST AND SIMILAR INCOME
118
in %
I
I
S Note 30
Commissions
2009/2008 change
(in EUR millions)
Fee income
Foreign exchange transactions and financial derivatives
Loan and guarantee commitments
Services
Others
SUB-TOTAL
FEE EXPENSE
2009
2008
in value
in %
-
-
-
-
247.9
240.7
7.2
3.0
6.4
5.5
0.9
16.4
1.8
1.9
-0.1
-5.3
21.7
22.9
-1.2
-5.2
601.7
629.7
-28.0
-4.4
-
-
-
-
879.5
900.7
-21.2
-2.4
-0.7
-0.7
-
-
-4.7
-78.8 (1)
74.1
-94.0
Foreign exchange transactions and financial derivatives
-0.1
-0.1
-
-
Loan and guarantee commitments
-0.3
-0.5
0.2
-40.0
Others
-110.8
-106.6
-4.2
3.9
SUB-TOTAL
-116.6
-186.7
70.1
-37.5
762.9
714.0
48.9
6.8
TOTAL NET FEES AND COMMISSIONS
(1) o/w exceptional expenses of EUR -72.2 million at December 31, 2008 linked to losses on disposals of assets from funds managed by Étoile Gestion.
This fee income and expenses includes:
k fee income, excluding EAT linked to financial instruments
not measured at fair value through profit or loss
269.5
263.7
5.8
2.2
k fee income relating to trust or similar activities
173.6
200.8
-27.2
-13.5
-0.3
-0.5
0.2
-40.0
-16.1
-18.4
2.3
-12.5
*
k fee expenses, excluding EAT * linked to financial instruments
not measured at fair value through profit or loss
k fee expenses relating to trust or similar activities
* Effective Interest Rate.
119
2I
I
S Note 31
Net income and expense from financial instruments at fair value
2009/2008 change
2009 2008 in value
in %
4.8
6.9
-2.1
-30.4
-0.1
4.1
-4.2
-
-
-
-
-
-19.8
29.8
-49.6
-
Gain/loss on derivative financial instruments held for trading
-2.6
-38.6
36.0
-93.3
Net gain/loss on hedging instruments, Statement of fair value
35.7
-61.9
97.6
-
-38.5
63.0
-101.5
-
-
-
-
-
(in EUR millions)
Net gain/loss on non-derivative financial assets held for trading
Net gain/loss on financial assets measured using fair value
option
Net gain/loss on non-derivative financial liabilities held for trading
Net gain/loss on financial liabilities measured using fair value
option (1)
Revaluation of hedged items attributable to hedged risks
Ineffective portion of cash flow hedge
Net gain/loss on foreign exchange transactions
TOTAL
7.3
8.2
-0.9
-11.0
-13.2
11.5
-24.7
-
(1) Including an expense of EUR -16.3 million for the improvement of the Group’s credit spread on the revaluation of the Group’s financial liabilities at December 31, 2009 (versus
income of EUR 28.4 million at December 31, 2008).
Net income and expense from financial assets and liabilities at fair value through profit or loss is measured using valuation
techniques based on observable parameters.
The income from this margin is therefore not impacted by the change in the fair value of instruments initially valued using
valuation parameters not based on market data.
S Note 32
Net gains or losses on available-for sale financial assets
2009/2008 change
(in EUR millions)
CURRENT ACTIVITIES
2008
in value
in %
Gains on sale
2.7
2.6
0.1
3.8
Losses on sale
-0.8
-0.7
-0.1
14.3
Impairment of equity instruments
-0.1
-
-0.1
-
Net capital gain on the sale of available-for-sale financial assets
(insurance activity)
7.0
-1.5
8.5
-
SUB-TOTAL
8.8
0.4
8.4
-
-
8.6
5.2
3.4
65.4
LONG-TERM EQUITY INVESTMENTS
Gains on sale
Losses on sale
Impairment of equity instruments
SUB-TOTAL
TOTAL
120
2009
-
-
-
-
-0.4
-0.8
0.4
-50.0
8.2
4.4
3.8
86.4
17.0
4.8
12.2
-
I
I
S Note 33
Income and expenses from other activities
2009/2008 change
2009
2008
Real estate development (1)
0.1
0.1
-
-
Real estate leasing (2)
5.8
6.2
-0.4
-6.5
(in EUR millions)
in value
in %
INCOME FROM OTHER ACTIVITIES
Equipment leasing
1.4
1.7
-0.3
-17.6
Other activities (3)
11.2
17.3 (3)
-6.1
-35.3
SUB-TOTAL
18.5
25.3
-6.8
-26.9
-0.2
-0.1
-0.1
100.0
Real estate leasing
-1.7
-1.6
-0.1
6.2
Equipment leasing
-0.3
-0.2
-0.1
50.0
-17.0 (4)
-12.8
-4.2
32.8
-19.2
-14.7
-4.5
30.6
-0.7
10.6
-11.3
-
EXPENSES FROM OTHER ACTIVITIES
Real estate development
(1)
Other activities
SUB-TOTAL
NET AMOUNT
(1) Income and expenses from property development are mainly generated by Norimmo Group (registered estate agents), whose activity is now marginal.
(2) O/w rent on investment property: EUR 3.0 million at December 31, 2009 and EUR 2.7 million at December 31, 2008.
(3) O/w net income on insurance business: EUR 8.2 million at December 31, 2008, which breaks down into income of EUR 979.7 million and expenses of EUR 971.5 million.
(4) O/w net income on insurance business: EUR -4.2 million at December 31, 2009, which breaks down into income of EUR 790.9 million and expenses of EUR 795.1 million.
S Note 34
Frais de personnel
A. Personnel expenses
2009/2008 change
(in EUR millions)
Employee compensation
2009
2008
in value
in %
-379.8
-366.0
-13.8
3.8
Social security charges and payroll taxes
-93.3
-92.2
-1.1
1.2
Retirement expenses
-65.6
-71.7
6.1
-8.5
Defined contribution plans
-55.4
-54.3
-1.1
2.0
Defined benefit plans
-10.2
-17.4
7.2
-41.4
Other social security charges and taxes
-51.9
-50.3
-1.6
3.2
Employee profit-sharing and incentives
-50.9
-43.3
-7.6
17.6
Transfer of charges
TOTAL
6.6
6.0
0.6
10.0
-634.9
-617.5
-17.4
2.8
Performance-based compensation paid in 2009 for 2008 came out at EUR 18.5 million.
121
2I
I
B. Headcount
2009/2008 change
Registered workforce
(1)
Average staff count in activity (1)
Average staff count in activity compensated
by Crédit du Nord Group
Maternity leave, qualification/apprenticeship contracts
2009
2008
in value
in %
8,680
8,797
-117
-1.3
8,737
8,775
-38
-0.4
7,939
7,956
-17
-0.2
798
819
-21
-2.6
(1) Excluding staff at Banque Pouyanne.
C. Share-based payment plans
Expenses recorded on the income statement
2009/2008 change
(in EUR millions)
2009
2008
in value
in %
Net expenses from stock option purchase plans
-2.9
-4.2
1.3
-31.0
Net expenses from stock option and free share allocation plans
TOTAL
-2.5
-2.9
0.4
-13.8
-5.4
-7.1
1.7
-23.9
The charge described above relates to equity-settled stock-option plans attributed after November 7, 2002 and to
all cash-settled plans.
122
I
I
Z Main characteristics of stock-option plans
Equity-settled stock option plans for Crédit du Nord Group employees for the year ended December 31, 2009 are briefly
described hereunder.
Stock options
Issuer: Société Générale
Type of plan
2009
2008
2007
2006
2005
2004
2003
Subscription Subscription
options
options
Purchase
options
Purchase
options
Purchase
options
Purchase
options
Purchase
options
Shareholders’ agreement
27/05/2008
30/05/2006
30/05/2006
29/04/2004
29/04/2004
23/04/2002
23/04/2002
Board of Directors decision
09/03/2009
21/03/2008
19/01/2007
18/01/2006
13/01/2005
14/01/2004
22/04/2003
Number of stock options granted (1)
58,068
63,535
47,444
82,485
324,361
332,860
236,978
Term of validity of options
7 years
7 years
7 years
7 years
7 years
7 years
7 years
SG shares
SG shares
SG shares
SG shares
SG shares
SG shares
SG shares
Settlement
Vesting period
Performance-based (2)
Conditions linked to departure from Group
Conditions linked to dismissal
09/03/2009 - 21/03/2008 - 19/01/2007 - 18/01/2006- 13/01/2005- 14/01/2004- 22/04/200331/03/2012 31/03/2011 19/01/2010 18/01/2009 13/01/2008 14/01/2007 22/04/2006
yes
yes
no, except
corporate
officers
Lost
Lost
Lost
no
no
no
no
Lost
Lost
Lost
Lost
Lost
Lost
Lost
Lost
Lost
Lost
Lost
Conditions linked to retirement
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
In event of death
Maintained
6 months
Maintained
6 months
Maintained
6 months
Maintained
6 months
Maintained
6 months
Maintained
6 months
Maintained
6 months
23.18
63.60
115.60
93.03
64.63
60.31
44.81
0%
0%
0%
0%
0%
0%
0%
Share price at grant date (in euros)
(average of 20 days prior to grant date)
Discount
Exercise price (in euros)
23.18
63.60
115.60
93.03
64.63
60.31
44.81
Options exercised at December 31, 2009
-
-
-
-
-
19,414
111,031
Options forfeited at December 31, 2009
-
-
-
4,911
13,000
24,529
37,578
58,068
63,535
47,444
77,574
311,361
288,917
88,369
-
-
(3)
(3)
(3)
288,917
88,369
(3)
(3)
44.51
45.11
Options outstanding at December 31, 2009
Number of shares reserved at December
31, 2009
Share price of shares reserved (in euros)
-
-
(3)
Total value of shares reserved
(in EUR millions)
-
-
(3)
(3)
(3)
12.9
4.0
First authorised date for selling the
shares
31/03/2013
21/03/2012
19/01/2011
18/01/2010
13/01/2009
14/01/2008
22/04/2007
Delay for selling after vested period
1 year
1 year
1 year
1 year
1 year
1 year
1 year
27%
24%
18%
16%
17%
21%
25%
Fair value (% of share price at grant date)
Valuation method used to determine
fair value
Monte-Carlo Monte-Carlo Monte-Carlo Monte-Carlo Monte-Carlo Monte-Carlo Monte-Carlo
(1) In accordance with IAS 33, as a result of the detachment of Société Générale share preferential subscription rights, the historical share date has been adjusted by the coefficient
given by Euronext which reflects the part attributable to the share after detachment following the capital increase which took place in the fourth quarter of 2006, the first quarter
of 2008 and the fourth quarter of 2009.
(2) The performance-based conditions are described in the section pertaining to corporate governance in Société Générale Group’s registration document. At December 31, 2008, it
was determined that EPS performances on which 2009 stock option attributions were based would not be attained. It was also determined that the EPS performances on which
2009 stock option attributions were based would be attained at a level of 14%.
(3) 2005, 2006 and 2007 stock option plans have been hedged using call options.
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Free shares
Issuer: Société Générale
2009
2008
2007
2006
Type of plan
Free shares
Free shares
Free shares
Free shares
Shareholders’ agreement
27/05/2008
30/05/2006
30/05/2006
09/05/2005
Board of Directors decision
20/01/2009
21/03/2008
19/01/2007
18/01/2006
Number of free shares granted
Settlement
Vesting period
123,732
75,144
30,768
35,938
SG shares
SG shares
SG shares
SG shares
20/01/2009 31/03/2012
21/03/2008 31/03/2010
19/01/2007 31/03/2009
18/01/2006 31/03/2008
21/03/2008 31/03/2011
19/01/2007 31/03/2010
18/01/2006 31/03/2009
ROE conditions
for a list of
beneficiaries
lost
(1)
yes
yes
ROE conditions
for a list of
beneficiaries
Conditions linked to departure from Group
lost
lost
lost
Performance-based
Conditions linked to dismissal
lost
lost
lost
lost
Conditions linked to retirement
maintained
maintained
maintained
maintained
In event of death
Maintained
6 months
Maintained
6 months
Maintained
6 months
Maintained
6 months
23.36
58.15
116.61
93,66
-
-
13,592
33,414
1,248
1,730
3,584
2,524
Share price at grant date (in euros)
Shares delivered at December 31, 2009
Shares forfeited at December 31, 2009
Shares outstanding at December 31, 2009
122,484
73,414
13,592
-
Number of shares reserved at December 31, 2009
122,484
73,414
13,592
-
60.98
100.88
112.00
-
Share price of shares reserved (in euros)
Value of shares reserved (in EUR millions)
7.5
7.4
1.5
-
First authorised date for selling the shares
31/03/2014
31/03/2012
31/03/2011
31/03/2010
31/03/2013
31/03/2012
31/03/2011
2 years
2 years
2 years
2 years
Delay for selling after vested period
Fair value (% of share price at grant date)
78%
- Vesting period 2 years
87%
86%
86%
- Vesting period 3 years
81%
81%
81%
Arbitrage
Arbitrage
Arbitrage
Arbitrage
Valuation method used to determine fair value
(1) The performance conditions are described in the corporate governance chapter of the Société Générale Registration Document. For 2007 stock option attributions with a ROE
performance-based condition, it has been determined that this condition will not be met. At December 31, 2009, it was determined that the EPS performances on which the
2008 stock option attributions were based would not be attained. It was also determined that the EPS performances on which the 2009 stock option attributions were based
would be attained at a level of 14%.
Furthermore, Banque Tarneau attributed 12,000 shares for all of its employees in 2009. These shares were valued at EUR
59.89 and have an acquistion period of three years.
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Statistics concerning stock-option plans
Main figures concerning Crédit du Nord Group stock-option plans for the year ended December 31, 2009:
Weighted average Weighted average
remaining fair value at grant
contractual life
date
Weighted average
share price at
exercise date
(euros)
Number of options
Plan
2009
Plan
2008
Plan
2007
Plan
2006
Plan
2005
Plan
2004
Plan
2003
76,510 294,764 272,427
94,460
Options outstanding
at January 1, 2009
-
-
-
-
61,038
44,968
Options granted in 2009
-
-
-
58,068
2,497
2,476
4,190
18,162
16,785
6,249
Options forfeited in 2009
-
-
-
-
-
-
3,126
1,565
295
12,228
Options exercised
in 2009
-
-
49.29
-
-
-
-
-
-
112
Options expired in 2009
-
-
-
-
-
-
-
-
-
-
Outstanding options
34 months
12.54
-
58,068
63,535
47,444
77,574 311,361 288,917
88,369
Exercisable options
-
-
-
-
-
-
48,786 311,361 288,917
88,369
The main assumptions used to value Société Générale stock option plans are as follows:
Risk-free interest rate
Implicit share volatility
(1)
Forfeited rights rate
Expected dividend (yield)
Expected life (after grant date)
2009
2008
2007
2006
2005
2003-2004
3.0%
4.2%
4.2%
3.3%
3.3%
3.8%
55.0%
38.0%
21.0%
22.0%
21.0%
27.0%
0%
0%
0%
0%
0%
0%
3.5%
5.0%
4.8%
4.2%
4.3%
4.3%
5 years
5 years
5 years
5 years
5 years
5 years
(1) The implicit volatility used is that of Société Générale 5-year share options traded OTC (TOTEM database), which was around 55% in 2009.
This implicit volatility reflects the future volatility.
Allocation of SG shares with a discount
As part of the Group employee shareholding policy, Société
Générale offered on April 23, 2009 to employees of the Group
the opportunity to subscribe to a reserved capital increase
at a share price of EUR 27.09, with a discount of 20% to the
average share price of the Société Générale share for the 20
prior to the offering date.
holding period cost is valued as the net cost of the Société
Générale shares cash purchase financed by a non-affected
and non-revolving five-year credit facility and by a forward
sale of these same shares with a 5-year maturity.
566,973 shares were attributed, representing an expense of
EUR 2.9 million euros for the Group after taking into account
the qualified five-year holding period. The valuation model
used, which complies with the recommendation of the
National Accounting Council on the accounting treatment of
company savings plans, compares the gain the employees
would have obtained if they had been able to sell the shares
immediately and the notional cost that the 5-year holding
period represents to the employees. This notional 5-year
U average price of the Société Générale share over the
subscription period: EUR 39.63;
The main market parameters used to value this notional
5-year holding cost, determined at the attribution date, are:
U risk-free interest rate: 2.79%;
U interest rate of a non-affected 5-year credit facility
applicable to market players benefiting from nontransferable shares: 6.5%.
The notional 5-year holding period is valued at 18.7% of
Société Générale’s share price at the attribution date.
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S Note 35
Others charges
2009/2008 change
(in EUR millions)
Rent and rental charges
Lease finance charges
External services and other
Temporary employees and external contractors
2009
2008
in value
in %
-45.2
-41.7
-3.5
8.4
-0.4
-0.4
-
-
-254.9
-259.0
4.1
-1.6
-3.4
-4.5
1.1
-24.4
Telecoms expenditure
-10.4
-9.4
-1.0
10.6
Transport and travel
-18.3
-20.7
2.4
-11.6
Charges reinvoiced to third parties
Transfer of charges
TOTAL OTHER CHARGES
2009 saw a decline in other operating expenses, which fell by
1.8% compared to December 31, 2008.
6.0
2.5
3.5
140.0
21.8
22.8
-1.0
-4.4
-304.8
-310.4
5.6
-1.8
at end-2008). This sum corresponds to the expenses generated
by the production of different software packages for the Group’s
internal use. After capitalisation, these software packages are
amortised over 3 to 5 years as of their installation.
In addition, the figures in the preceding table, line to line, are
gross, i.e. before any capitalisation; if and when charges are
capitalised, they also appear, deducted from total, in the last
line, «Transfer of charges».
In 2009, the Group’s global audit budget for the Statutory
Auditors and the members of their networks stood at, for fully
and proportionately consolidated companies, EUR 972,000
excluding tax (excluding expenses and outlay).
Note that, in according with the measures provided for in
accounting regulations, and in respect of these measures, in
2009 Crédit du Nord capitalised EUR 21.8 million in charges
from the «External services and other» entry (vs. EUR 22.8 million
This sum is entered into the heading «External services and
other» and breaks down as follows:
DELOITTE
(in EUR thousands)
Statutory Auditors, certification, examination of individual
and consolidated accounts, for fully and proportionately
consolidated companies
Additional assignments
TOTAL
126
ERNST & YOUNG
OTHERS
2009
2008
2009
2008
2009
2008
512.0
527.0
319.0
239.0
141.0
130.3
-
16.0
-
25.0
-
-
512.0
543.0
319.0
264.0
141.0
130.3
I
I
S Note 36
Provisions, impairment and depreciation of tangible and intangible
fixed assets
Operating fixed assets
2009/2008 change
(in EUR millions)
Intangible fixed assets
Tangible fixed assets
DEPRECIATION AND AMORTISATION
O/w computer hardware and software
Note that the amortisation expense of IT hardware and
software represented EUR 75.2 million euros of the total EUR
42.0 million depreciation allowance (i.e. 56% of total), thus
2009
2008
in value
in %
-31.3
-32.3
1.0
-3.1
-43.9
-42.3
-1.6
3.8
-75.2
-74.6
-0.6
0.8
-42.0
-42.6
0.6
-1.4
clearly reflecting the Group’s focus on investment over recent
years in both IT equipment for the Group’s sales network and
specific central operating systems.
S Note 37
Cost of risk
2009/2008 change
(in EUR millions)
COUNTERPARTY RISK
Net allocation for impairment
Losses not covered by provisions
Amounts recovered on amortised receivables
SUB-TOTAL
OTHER RISKS
2009
2008
in value
in %
-204.6
-126.9
-77.7
61.2
-8.2
-13.8
5.6
-40.6
5.9
8.1
-2.2
-27.2
-206.9
-132.6
-74.3
56.0
Net allowance for other provisions and liability items
-0.1
1.5
-1.6
-
Losses not covered by provisions
-0.8
-0.9
0.1
-11.1
SUB-TOTAL
TOTAL
-0.9
0.6
-1.5
-
-207.8
-132.0
-75.8
57.4
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S Note 38
Income from companies accounted for by the equity method
2009/2008 change
(in EUR millions)
Financial
Non-financial
TOTAL
2009
2008
in value
in %
3.1
2.1
1.0
47.6
-
-
-
-
3.1
2.1
1.0
47.6
No non-financial companies are consolidated using the
equity method.
2008) and Dexia-C.L.F. Banque (EUR 2.5 million in 2009 vs.
EUR 1.1 million in 2008).
The income of EUR 3.1 million from financial companies in
2009 is due to the Group’s proportionate share in Banque
Pouyanne (EUR 0.6 million in 2009 vs. EUR 1.0 million in
As Dexia-CLF Banque was sold in December 2009, CDN
Group’s proportionate share of this entity was recorded for
the full year.
S Note 39
Net gains or losses on other assets
2009/2008 change
2009
2008
in value
in %
122.6
-
122.6
-
Disposal of shares in Dexia-C.L.F
7.1
-
7.1
-
Capital gains or losses on disposals of operating fixed assets
1.0
-
1.0
-
130.7
-
130.7
-
(in EUR millions)
Disposal of shares in Etoile Gestion
TOTAL
S Note 40
Income tax
2009/2008 change
(in EUR millions)
2009
2008
in value
in %
Current taxes
-43.5
-24.1
-19.4
80.5
-58.6
-99.2
40.6
-40.9
-102.1
-123.3
21.2
-17.2
Deferred taxes
TOTAL
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Reconciliation of the difference between the Group’s normative tax rate and its effective tax rate:
(in EUR millions)
Income before tax and net income from companies accounted for by the equity
method
Normal tax rate applicable to French companies (including 3.3% contribution)
2009
2008
456.9
380.4
34.43%
34.43%
-10.09%
-0.40%
Differential on items taxed at reduced rate
-1.18%
-0.49%
Tax differential on profits taxed outside France
-0.52%
-0.41%
Gain due to tax consolidation
-0.21%
-0.88%
0.05%
-0.02%
Permanent differences
Adjustments and dividend tax credits
Change in tax rate
-
-
Other items
-0.13%
0.18%
Group effective tax rate
22.35%
32.41%
In France, standard corporate income tax is 33.3%.
Since January 1, 2007, long-term capital gains on equity
investments have been tax-exempt, subject to taxation of
a share for fees and expenses of 1.66%. Added to this is a
Social Security and Solidarity Contribution of 3.3% (after a
deduction of EUR 0.76 million) initiated in 2000. In addition,
under the regime of parent companies and subsidiaries,
dividends received from companies in which the equity
investment is at least 5% are tax-exempt.
The normal tax rate applicable to French companies to
determine their deferred tax is 34.43% and the reduced
rate is 1.72% depending on the nature of the transactions
in question.
S Note 41
Minority interests
2009/2008 change
(in EUR millions)
SHARE OF MINORITY INTERESTS
IN CONSOLIDATED NET INCOME
2009
2008
in value
in %
10,0
6,5
3,5
53,8
The share of minority interests in consolidated net income is mainly generated by Banque Tarneaud and Banque Nuger.
129
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S Note 42
Statement of fair value
Net book value
At 31/12/2009
(in EUR millions)
Fixed rate
Floating
rate
FAIR VALUE OF ASSETS
Less than 1 More than 1
year
year
Not broken
down
Total NBV
Fair value
Due from banks
3,082.0
271.8
146.7
3,500.5
3,500.5
Customer loans
7,269.1
212.5
15,994.9
23,476.5
23,743.3
197.0
87.3
1 574.9
1,859.2
1,872.8
-
0.1
58.1
58.2
58.4
Investments in subsidiaries and affiliates accounted for
7.4
7.4
7.4
604.5
Fixed assets (excluding intangible assets)
308.7
308.7
FAIR VALUE OF LIABILITIES
2,459.5
126.6
965.9
3,552.0
3,552.0
11,491.0
5,305.9
1,517.7
18,314.6
18,314.4
5,404.2
1,329.6
611.3
7,345.1
7,378.3
65.3
9.2
560.1
634.6
607.2
Due to banks
Customer deposits
Debt securities
Subordinated debt
For financial instruments which are recognised at fair value in the balance sheet, the figures given in the notes should not be
taken as an estimate of the amount that would be realised if all such financial instruments were to be settled immediately.
S Note 43
Transactions with related parties
In accordance with the definitions provided under IAS 24, Crédit du Nord’s related parties include the following: members of the
Board of Directors, corporate officers (the Chairman and Chief Executive Officer and the two Deputy Chief Executive Officers)
and their respective spouses and any children residing in their family home, on the one hand, and affiliated companies, on the
other.
Z A. SENIOR MANAGERS
A.1. Remuneration of the Group’s managers
(1)
This includes amounts effectively paid by Crédit du Nord Group to directors and corporate officers as remuneration (including
employer charges), and other benefits under IAS 24, paragraph 16, as indicated below:
2009/2008 change
2009
2008
in value
in %
Short-term benefits
1,8
1,0
0,8
80,0
Post-employment benefits
0,3
0,3
-
-
Long-term benefits
-
-
-
-
Termination benefits
-
-
-
-
0,4
0,5
-0,1
-20,0
2,5
1,8
0,7
38,9
(in EUR millions)
Share-based payments
TOTAL
(1) At December 31, 2009, there were three Corporate Officers: the Chairman and Chief Executive Officer, and two Deputy Chief Executive Officers. As the appointment of the two
Deputy CEOs took place on November 1, 2008, their appointments only appear for the period since that date in the 2008 figures.
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Information about company directors contains a detailed description of the remuneration and benefits of the Crédit du Nord’s
senior managers.
A.2. Related party transactions
The transactions with members of the Board of Directors, Chief Executive Officers and members of their families included in
this note comprise loans and guarantees outstanding at December 31, 2009 and securities transactions. These transactions
are insignificant.
Z B. PRINCIPAL SUBSIDIARIES AND AFFILIATES
Crédit du Nord Group has reported the following companies as affiliated entities: on the one hand Antarius, consolidated using
the proportional method, and on the other hand Société Générale Group with which it carries out transactions.
2009/2008 change
(in EUR millions)
OUTSTANDING ASSETS WITH RELATED PARTIES
Other assets
TOTAL OUTSTANDING ASSETS
31/12/2009
31/12/2008
in value
in %
24.2
66.2
-42.0
-63.4
1,654.0
4,218.5
-2,564.5
-60.8
1,678.2
4,284.7
-2,606.5
-60.8
31/12/2009
31/12/2008
in value
2009/2008 change
(in EUR millions)
OUTSTANDING LIABILITIES WITH RELATED PARTIES
Customer deposits
Other liabilities
TOTAL OUTSTANDING LIABILITIES
in %
29.6
25.8
3.8
14.7
-
-
-
-
3,555.2
3,546.2
9.0
0.3
3,584.8
3,572.0
12.8
0.4
2009
2008
in value
in %
-109.3
13.2
-122.5
-
-5.8
-6.3
0.5
-7.9
6.3
-126.2
132.5
-
2009/2008 change
(in EUR millions)
NBI FROM RELATED PARTIES
Fees and commissions
Net income from financial transactions
Net income from other activities
NBI
-
-
-
-
-108.8
-119.3
10.5
-8.8
31/12/2009
31/12/2008
in value
in %
2009/2008 change
(in EUR millions)
COMMITMENTS TO RELATED PARTIES
Forward financial instrument commitments
-
-
-
-
1,595.2
210.2
1,385.0
-
17,196.4
20,459.0
-3,262.6
-15.9
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S Note 44
Contribution to net income by business line and company
Due to the restatements inherent in the consolidation process the contribution of Group companies to consolidated net
income may differ significantly from amounts appearing in individual financial statements. The following table presents the net
contribution (i.e. after restatement for consolidation purposes) by company, grouped by sector of activity, to consolidated net
income.
Contribution to consolidated net income (Group share)
(in EUR millions)
2009
2008
Crédit du Nord
162.0
135.4
Banque Rhône-Alpes
30.9
28.5
Banque Tarneaud
22.9
18.5
Banque Courtois
40.5
33.2
Banque Laydernier
13.7
10.9
6.6
4.4
Banque Nuger
Banque Kolb
11.7
8.9
Norbail Immobilier
2.6
3.5
Gilbert Dupont (brokerage firm)
0.7
0.7
Star Lease
4.5
5.0
2.5
1.1
1.2
1.1
10.8
9.8
310.6
261.0
23.8
-21.6
Dexia-C.L.F Banque
(1)
Nord Assurances Courtage
Other companies
SUB-TOTAL BANKING
Etoile Gestion (2)
(2)
-
-
23.8
-21.6
Antarius (3)
13.5
13.3
SUB-TOTAL INSURANCE
13.5
13.3
347.9
252.7
Etoile Gestion Holding
SUB-TOTAL ASSET MANAGEMENT
TOTAL
(1) As Dexia-C.L.F Banque was sold in December 2009, CDN Group’s proportionate share of this entity was recorded in accordance with previous years for a full year on the income
statement under «companies accounted for by the equity method».
(2) The shares of Etoile Gestion held by CDN Group entities were contributed to Etoile Gestion Holding at December 31, 2009.
2009 income on the Etoile Gestion line presented above (EUR 23.8 million) corresponds to Credit du Nord Group’s share of this entity’s income for full-year 2009.
(3) including sub-consolidated insurance mutual funds.
Share of each activity in overall net income
Banking
132
2009
2008
89.3%
103.3%
Asset management
6.8%
-8.6%
Insurance
3.9%
5.3%
I
I
S Note 45
Activities of subsidiaries and affiliates
The figures provided below are taken from the companies’ IFRS reporting packages, prior to consolidation restatements.
Z A. Banks
Name
(% shareholding)
(in EUR millions)
Date
Total
balance Customer Customer
sheet deposits
loans
Net
Income
BANQUE RHONE-ALPES
31/12/09
2,533.7
1,404.9
2,088.2
32.6
(99.99%)
31/12/08
2,676.2
1,411.8
2,200.0
27.2
BANQUE TARNEAUD
31/12/09
2,538.4
1,256.7
1,976.8
30.8
(80.00%)
31/12/08
2,396.1
1,195.6
1,933.8
21.4
BANQUE COURTOIS
31/12/09
3,144.1
1,741.6
2,614.9
42.7
(100;00%)
31/12/08
3,092.9
1,695.6
2,557.1
31.2
BANQUE LAYDERNIER
31/12/09
1,126.1
683.7
961.7
14.9
(100,00 %)
31/12/08
1,157.0
653.8
958.9
10.6
BANQUE KOLB (1)
31/12/09
1,137.0
639.0
1,011.4
12.7
(99,87 %)
31/12/08
1,174.7
642.4
1,023.0
8.4
Remarks
The interest margin on customers* dropped by 6.1% while net
fees remained stable compared to 2008. NBI was positively
impacted by Etoile Gestion’s income: the dividend received
from this entity was negative in 2008 and positive in 2009.
Operating expenses remained under control, whereas the
cost of risk underwent a sharp increase.
The rise in net income (+19.9%) can therefore be attributed
primarily to the capital gain on the disposal of Etoile Gestion
shares (EUR 8.8 million).
The interest margin on customers* dropped by 4.3%
while fees picked up by 2.4% compared to 2008. NBI was
positively impacted by Etoile Gestion’s income: the dividend
received from this entity was negative in 2008 and positive in
2009. Operating expenses remained under control, whereas
the cost of risk underwent a sharp increase. The rise in net
income (+43.9%) can therefore be attributed primarily to
the capital gain on the disposal of Etoile Gestion shares
(EUR 9.0 million).
The interest margin on customers* rose by 3.2% while fees
remained stable compared to 2008. NBI was positively
Operating expenses remained under control, whereas the
cost of risk underwent a sharp increase. The rise in net
income (+36.9%) can therefore be attributed primarily to
the capital gain on the disposal of Etoile Gestion shares
(EUR 9.6 million).
The interest margin on customers* rose by +1.2% while
fees remained stable compared to 2008. NBI was positively
Operating expenses were in line with last year, whereas
the cost of risk underwent a sharp increase. The rise in net
income of 40.6% can be attributed to the capital gain on the
disposal of Etoile Gestion shares (EUR 3.6 million).
The interest margin on customers* fell by 8.3% while fees
remained stable compared to 2008. NBI was nevertheless
positively impacted by Etoile Gestion’s income: the dividend
received from this entity was negative in 2008 and positive in
2009. Operating expenses remained under control. The rise
in net income of 51.2% can be attributed to the capital gain
on the disposal of Etoile Gestion shares (EUR 3.6 million).
133
2I
I
Name
(% shareholding)
(in EUR millions)
Date
Total
sheet deposits
loans
Net
Income
BANQUE NUGER
31/12/09
585.0
447.8
425.5
10.8
(64.70%)
31/12/08
574.6
433.2
422.5
6.2
BANQUE POUYANNE
31/12/09
234.7
186.4
128.5
2.7
(35.00%)
31/12/08
220.1
196.4
126.9
3.0
Remarks
The interest margin on customers* increased by 7.7%. Fees
rose slightly compared to 2008. NBI was positively impacted
by Etoile Gestion’s income: the dividend received from this
entity was negative in 2008 and positive in 2009. Operating
expenses remained under control, whereas the cost of risk
underwent a sharp increase. The rise in net income (+74.2%)
can therefore be attributed primarily to the capital gain on the
disposal of Etoile Gestion shares (EUR 2.9 million).
Net income fell by 10% over 2009.
* interest margin on customers, excluding lease financing
(1) As this is a lease financing company, the income and outstandings presented here were taken from the financial accounts to best reflect the economic reality.
Z B. Specialised banks and financial institutions
Name
(% shareholding)
(in EUR millions)
Date
Total
sheet deposits
loans
Net
Income
BROKERAGE FIRM
GILBERT DUPONT
31/12/09
39.8
-
-
1.1
(100.00%)
31/12/08
53.5
-
-
1.4
NORBAIL IMMOBILIER (1)
31/12/09
506.0
23.8
477.3
2.9
(100.00%)
31/12/08
441.3
18.6
425.4
3.7
TURGOT GESTION (1)
31/12/09
1.4
-
-
1.1
(80.00%)
31/12/08
1.5
-
-
0.1
NORFINANCE
G. DUPONT ET ASSOCIES
31/12/09
22.5
9.5
-
1.9
(100.00%)
31/12/08
17.6
5.5
-
1.6
DEXIA-C.L.F BANQUE
31/12/09
2,970.2
1,501.1
1,255.1
12.3
(0.00% versus 20.00%
at 31 December 2008)
31/12/08
3,944.0
1,880.7
2,050.3
5.3
NORBAIL SOFERGIE (1)
31/12/09
63.1
3.5
47.5
-0.5
(100.00%)
31/12/08
56.6
2.3
40.4
-1.4
STAR LEASE (1)
31/12/09
1,515.8
2.0
1,328.2
4.5
(100.00%)
31/12/08
1,518.7
1.5
1,361.6
5.0
Remarks
Brokerage firm Gilbert Dupont’s net income fell by 21.4%
compared to 2008. This decline was mainly attributable to
a rise in operating expenses (+6.6%) partially offset by the
increase in NBI (+2.9%).
Norbail Immobilier is a Crédit du Nord Group leasing
company. 2009 net income dropped by 21.6% versus 2008,
due mainly to the decline in net income on lease financing
(-14.1%) and in net income on operating leases (-14.8%)
compared to 2008.
The leasing activity of Banque Tameaud has been redirected
from Turgot Gestion towards Star Lease, a Crédit du Nord
Group leasing company. The sharp rise in net income versus
2008 is mainly attributable to the capital gain on the disposal
of long-term investment securities (EUR 1.0 million).
Norfinance is an asset management company. 2009 net
income rose by 18.8% versus 2008, mainly due to the
capital gain from the disposal of Etoile Gestion shares
(EUR 0.6 million).
DEXIA-C.L.F Banque’s net income improved significantly
on 2008. Crédit du Nord Group’s shareholding in Dexia-CLF
Banque was sold over the month of December 2009.
Norbail Sofergie continued to expand its wind farm financing
business in 2009. The development of its net banking income
helped significantly reduce the loss recorded in 2009 versus
2008.
Star Lease is a Crédit du Nord Group leasing company. Star
Lease’s 2009 NBI rose by 5.8% versus 2008. The increase in
net risk nevertheless resulted in a 10.0% decline in net income.
(1) As these are lease financing companies, the income and outstandings presented here were taken from the financial accounts to best reflect the economic reality.
134
I
I
Z C. Others Companies
Name
Date
Total
balance
sheet
Net
Income
ETOILE GESTION
31/12/09
67.5
25.3
(0.00% versus 97.03%
at 31 December 2008)
31/12/08
95.8
-36.7
ANTARIUS
31/12/09
8,040.7
27.1
(50.00%)
31/12/08
6,729.7
26.6
ETOILE ID
31/12/09
30.5
6.3
(100.00%)
31/12/08
35.0
6.7
SFAG
31/12/09
4.6
-
(100.00%)
31/12/08
4.6
-
CREDINORD CIDIZE
31/12/09
20.2
0.5
(100.00%)
31/12/08
83.0
0.9
NORIMMO
31/12/09
8.6
1.2
(100.00%)
31/12/08
8.6
1.2
ANNA PURNA
31/12/09
-
-
(100.00%)
31/12/08
-
-
NICE BROC
31/12/09
8.3
1.3
(100.00%)
31/12/08
8.2
1.2
NICE CARROS
31/12/09
1.1
-
(100.00%)
31/12/08
1.1
-0.1
NORD ASSURANCES
COURTAGE
31/12/09
6.6
1.8
(100.00%)
31/12/08
6.4
1.7
PARTIRA
31/12/09
1.7
-
(100.00%)
31/12/08
1.7
-
KOLB INVESTISSEMENT
31/12/09
11.1
1.3
(100.00%)
31/12/08
9.8
1.6
SC FORT DE NOYELLES
31/12/09
0.9
-
(100.00%)
31/12/08
0.9
-
ETOILE GESTION
HOLDING
31/12/09
155.0
-
(% shareholding)
(in EUR millions)
Remarks
The Etoile Gestion brokerage firm manages UCITS for Crédit du Nord Group. In
2008, the impact of the financial crisis resulted in the recording of an exceptional
expense of EUR 72.2 million.
The environment was more positive in 2009, resulting in a positive income of
EUR 25.3 million.
As part of the merger of the asset management activities of SG Group and Crédit
Agricole Group, Etoile Gestion was sold by Crédit du Nord Group. Etoile Gestion
was consolidated by AMUNDI as at 31 December 2009 and is therefore no longer
a part of Crédit du Nord’s consolidation scope.
Antarius, which was created through a partnership with Aviva, is Crédit du
Nord Group’s life insurance company. Net income rose by 1.9% versus
31 December 2008 to EUR 27.1 million, thanks in large part to the increase of
13.3% in premiums acquired.
Etoile ID, Crédit du Nord Group’s venture capital company, derives the majority of
its income from capital gains on disposals and revenues on securities. Its portfolio
is comprised exclusively of unlisted companies.
Fiscal year 2009 was highlighted by disposals generating substantial caiptal gains
of EUR 6.5 million (excluding reversals of provisions).
The company’s business remains very marginal.
(97.73%)
This company, specialising in certain market activities, posted income of
EUR 0.5 million in 2009. Most of its assets are comprised of long-term investment
securities.
Norimmo is a registered estate agent engaged in property development. Its 2009
income was stable compared to 2008. This income was comprised in part by the
net income contributed by its subsidiaries, Nice Broc and Nice Carros. Note that
the entity’s tax expense was borne by its partners.
These three companies are subsidiaries of Norimmo and specialised in real
estate and property operations. Their 2009 income was stable on 2008: Nice
Broc generated income of EUR 1.3 million, up 8.3% on 2008.
This insurance brokerage company generated earnings before taxes of EUR 1.8
million in 2009, up 5.9% versus 2008.
Note that the entity’s tax expense was borne by its partners.
Partira manages a residual inventory of assets comprised of shares in property
investment companies.
This holding company, acquired in 2001, owns 21.4% of Banque Kolb. Its income
is derived almost exclusively from dividends received from the latter.
This property development company was created in 2005 for a single property
construction and rental operation.
The Etoile Gestion shares held by Crédit du Nord Group entities were contributed
to Etoile Gestion Holding at 31 December 2009.
On the same day, Etoile Gestion Holding then contributed the newly held Etoile
Gestion shares to Amundi, a company created from the merger of the asset
management activities of the Société Générale and Crédit Agricole groups.
Subsequent to this transaction, Etoile Gestion Holding held 3.0% of Amundi’s
capital.
135
2I
S
I
Statutory Auditor’s Report on the consolidated financial statements
Statutory Auditor’s Report on the consolidated
Fiscal year ended december 31, 2009
This is a free translation into English of the statutory auditors’ report on the consolidated financial statements issued in French
and it is provided solely for the convenience of English-speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not.
This information is presented below the audit opinion on the consolidated financial statements and includes an explanatory
paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments
were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not
to provide separate assurance on individual account balances, transactions or disclosures.
This report also includes information relating to the specific verification of information given in the group’s management report.
This report should be read in conjunction with and construed in accordance with French law and professional auditing standards
applicable in France.
In compliance with the assignment entrusted to us by your
annual general Meeting, we hereby report to you, for the year
ended December 31, 2009, on:
U the audit of the accompanying consolidated financial
statements of Crédit du Nord;
U the justification of our assessments;
U the specific verification required by law.
The consolidated financial statements have been approved
by the Board of Directors. Our role is to express an opinion on
these consolidated financial statements, based on our audit.
Z I. Opinion on the consolidated
We conducted our audit in accordance with professional
standards applicable in France; those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are
free of material misstatement. An audit involves performing
procedures, using sampling techniques or other methods of
selection, to obtain audit evidence about the amounts and
disclosures in the financial statements. An audit also includes
evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made, as
well as the overall presentation of the financial statements.
136
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion..
In our opinion, the consolidated financial statements give
a true and fair view of the assets and liabilities, and of the
financial position of the Group as at December 31, 2009 and
of the results of its operations for the year then ended in
accordance with IFRSs as adopted by the European Union.
Without qualifying our opinion, we draw your attention to the
matter set out in Note 1 to the financial statements which
details the changes in accounting methods applied by the
Group as from January 1, 2009, and in particular the early
application of IFRS 3 (revised), «Business Combinations»,
and IAS 27 (revised), «Consolidated and separate financial
statements».
Z II. Justification of our assessments
The accounting estimates used in the preparation of the
consolidated financial statements as at December 31,
2009 were made in a persistently unfavourable economic
and market environment. It is in this context that, in
accordance with the requirements of Article L. 823-9 of
the French Commercial Code relating to the justification of
our assessments, we draw your attention to the following
matters:
I
I
Statutory Auditor’s Report on the consolidated financial statements
U In preparing the financial statements, as indicated in
Note 1 to the financial statements, your Company makes
provisions to cover the credit risks which are inherent
to its activities. Bearing in mind the specific context of
the financial crisis, we have reviewed and tested the
procedures implemented by Management to identify and
assess non-recovery risks and determine the amount of
individual and collective provisions necessary.
U In the context of the financial crisis, as indicated in the
Note 1 to the financial statements, your company uses
internal models to value financial instruments which are
not listed on active markets. As such, we have reviewed
the system for controlling the models used and assessed
the data and assumptions used, as well as the integration
of the risks and results associated with these instruments.
U Furthermore, in this context, we have examined the
controls of accounting data on financial instruments which
can no longer be traded on active markets, or whose
valuation parameters are no longer observable, as well as
the methods used to value said instruments.
U As indicated in Note 3, your company carried out
estimated designed to take into account the impact of
the change in its credit risk on the valuation of certain
financial liabilities measured at fair value. We have verified
the appropriateness of the parameters used in these
estimates.
U In preparing its financial statements, your company also
makes significant accounting estimates, in accordance
with the methods described in Note 1 to the financial
statements, notably relating to the fair value of financial
instruments carried at amortised cost, the valuation
of goodwill, pension commitments and other postemployment benefits. Bearing in mind the specific context
of the crisis, we have reviewed and tested the procedures
implemented by management, the assumptions and
parameters used, and ensured that these accounting
estimates are based on documented methods in
accordance with the principles described in Note 1 to the
financial statements.
These assessments were made as part of our audit of the
consolidated financial statements taken as a whole and,
therefore contributed to the opinion we formed which is
expressed in the first part of this report.
Z III. Specific verification
As required be law, we have also verified, in accordance with
professional standards applicable in France, the information
presented in the group’s Management Report. We have no
matters to report as to its fair presentation and its consistency
with the consolidated financial statements.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
Bernard HELLER
137
Individual financial
statements
2009 Management Report ................................. 139
Five-year financial summary .............................. 141
Individual Balance sheet at December 31 ......... 142
Income statement ............................................. 144
Notes to the individual financial statements ...... 145
Information on the Corporate Officers ............... 184
Statutory Auditors’ Report
on the Annual Financial Statements .................. 196
Statutory Auditors’ Special Report
on Regulated Agreements
and Commitments with Third Parties ................ 198
Draft resolutions
General Meeting of Shareholders
of May 12, 2010 ................................................ 200
138
I
Individual financial statements
I
2009 Management Report
S 2009 Management Report
While the end of 2009 held the promise of a slow recovery in
economic activity, the year was nonetheless highlighted by an
unprecedented recession which affected the main economic
indicators and most business sectors.
With such a harsh crisis gripping its key asset management
and business customer markets, Crédit du Nord Group
consolidated its gross operating income but was nonetheless
hurt by the higher cost of risk.
Z Fiscal year activity
Owing to uncertainties arising from the economic crisis,
outstanding customer loans marked time (-2.7%) after
several years of continuous growth. For individual customers,
although outstanding housing loans rose again in 2009
(+5.2%), driven by a high number of new loans in 2008, the
decline in the property market led to a drop in new housing
loans in 2009. For business customers, the recession and
uncertainties concerning the possibility of a lasting recovery
led to a collapse in business investments, with inventory
reductions generating a sharp contraction in demands for
loans. Outstanding treasury and capex loans fell by 10.0%
and 1.1%, respectively.
Outstanding sight deposits (+2.9%) rose across all markets
(individual customers and particularly professional and
business customers) given the low appeal of money market
investments and regulated savings products in the wake
of the drop in short rates and rates of return. The drop in
short rates also explains the substantial fall in term account
deposits (-78.7%), with capital having been transferred to
regulated sight savings accounts (+22.6%). Consequently,
net inflows in Livret A savings passbooks (sales of which
began at the start of the year) made swift gains, reaching
EUR 411.9 million.
Driven by positive developments on the financial markets,
custody of securities managed by the Bank for its clients rose
significantly: EUR 20.2 billion in 2009 versus EUR 18.6 billion
in 2008. The share of UCITS dropped by 51.8% to 48.9%.
Z 2009 Net Income
In 2008, net banking income was impacted by various
non-recurring items: by the negative income from asset
management company Etoile Gestion which was obligated
to sell off assets held by some of its funds, causing Crédit
du Nord to record an exceptional expense of EUR -51.2
million; by write downs (EUR -58.8 million) on long-term
investment securities bought from the Etoile Gestion funds
and by dividends (+EUR 9.3 million) received from VISA
Incorporation.
In 2009, net banking income amounted to EUR 1,054.7
million, up 13.2%. Adjusted for the above items and for
net write-backs of provisions booked in 2009 on long-term
investment securities bought from the Etoile Gestion funds
(+EUR 33.9 million), net banking income declined by 1.1%.
Despite a substantial drop in financial fees linked to the
persistently uncertain market environment, this stabilisation
in NBI drew on the solid resilience of the sales margin on the
back of low interest rates, aiding the rebound in the margin
on loans.
Operating expenses totalled EUR 672.5 million. As in previous
years, operating expenses were kept under control with
respect to the previous fiscal year (+1.3% versus +1.8%
last year).
In light of all these factors, gross operating income came
out at EUR 382.2 million (+42.8%). Restated for the abovementioned items, it was down 5.5%.
Cost of risk (EUR -114.2 million) rose by 33.4% in the wake of
a sharp rise in 2008. This change reflects the impact on our
customers (particularly business customers) of the extremely
challenging crisis plaguing the economy since mid-2008,
the impacts of which could very much still be seen in 2009.
Operating income stood at EUR 268.0 million.
Within the framework of the Amundi deal (contribution of
Société Générale’s Group’s asset management business
to Crédit Agricole Asset Management), Crédit du Nord
generated a capital gain of EUR 87.8 million linked to the
contribution of its entire stake in Etoile Gestion to the new
entity. Thanks to this capital gain and the gain from the sale
of the share held in Dexia-C.L.F Banque (+EUR 11.5 million),
earnings before taxes amounted to EUR 368.5 million.
After corporate tax, net income for fiscal year 2009 came out
at EUR 331.4 million versus EUR 168.2 million in 2008.
139
3I
I
2009 Management Report
Z Outlook
The outlook for the economic situation points to a slow
improvement which should benefit all players on the economic
scene. In spite of the uncertain environment, Crédit du Nord
Group is determined to maintain its commercial development
policy across all markets, in line with its full service local
banking model.
The various investments undertaken in recent years, both
in terms of branch openings as well as technical and
organisational projects, will be continued. This type of
momentum guarantees Crédit du Nord’s medium-term
profitability.
Z Timetable of accounts payable
Unmatured debt
(in EUR million)
Amount at 31/12/2009
1 to 30 days
31 to 60 days
More than 60 days
Matured debt
Total
2.1
0.1
-
-
2.2
The maturity dates correspond to the payment dates listed on
the invoices or to supplier terms and conditions, independent
of their date of receipt.
At Crédit du Nord, supplier invoices are processed centrally
for the most part. The Purchasing Department records the
invoices and carries out the payments requested by all of the
functional departments. The network branches have special
teams to process and pay their own invoices.
140
In accordance with Crédit du Nord’s internal control
procedures, invoices are only paid after they are approved
by the departments which ordered the services. Once the
approval is obtained, they are entered into a joint application,
with payments made according to the terms set by the
suppliers.
I
I
Five-year financial summary
S Five-year financial summary
2009
CAPITAL AT YEAR-END
2008
2007
2006
2005
740,263,248
740,263,248
740,263,248
740,263,248
740,263,248
92,532,906
92,532,906
92,532,906
92,532,906
92,532,906
Revenue, without tax (1)
1,698,558
2,126,540
2,009,819
1,675,274
1,497,077
Net banking income (NBI)
Common stock (in euros)
Shares outstanding
RESULTS OF OPERATIONS FOR THE YEAR
(in EUR thousands)
1,054,647
931,564
1,062,358
973,749
903,044
Income before tax, depreciation, provisions
and profit-sharing
520,679
404,049
468,649
400,172
366,353
Income tax
-37,134
-14,635
-30,672
-83,078
-72,242
Income after tax, depreciation, provisions
and profit-sharing
331,356
168,230
336,109
238,017
180,834
Total dividends (2)
323,865
129,546
189,692
175,813
143,426
Earnings after tax and profit-sharing but before
depreciation and provisions (3)
4.98
4.05
4.48
3.17
2.88
Income after tax, depreciation, provisions
and profit-sharing (3)
3.58
1.82
3.63
2.57
1.95
3.50
1.40
2.05
1.90
1.55
5,913
5,965
5,918
5,850
5,856
263,915
260,091
257,216
246,059
236,419
113,801
113,314
111,933
117,396
117,163
EARNINGS PER SHARE (in euros)
Dividend per share
(2)
EMPLOYEE DATA
Number of employees
Total payroll (in EUR thousands)
Total benefits (social security, social works, etc.)
(in EUR thousands) (4)
(1) Defined as the sum of bank operating income and other income deducted for interest paid on swaps.
(2) For the financial year.
(3) Based on the number of shares issued at year-end.
(4) 2008 figures have been adjusted with respect to those published last year.
141
3I
I
Individual Balance sheet at December 31
S Individual Balance sheet at December 31
Z Assets
Notes
31/12/2009
31/12/2008
783.2
485.8
Treasury notes and assimilated
4
1,441.5
221.1
Due from banks
2
5,034.4
6,939.2
Current accounts
2,502.7
2,531.2
Term accounts
2,531.7
4,408.0
14,482.5
14,877.2
352.6
391.1
13,336.1
13,339.4
793.8
1,146.7
(in EUR millions)
Cash, due from central banks and postal accounts
Transactions with customer
3
Commercial loans
Overdrafts
4
4,416.3
6,529.6
4
1.2
0.9
Equity investments and other long-term investment securities
5
93.2
96.0
Investments in subsidiaries and affiliates
5
806.6
725.2
5.6
6.7
Leases and rentals with option to purchase
Intangible assets
6
123.2
120.0
Tangible assets
6
196.5
194.8
-
-
Capital subscribed but unpaid
Treasury shares
-
-
247.9
398.8
Other assets
7
Accrued income
7
389.9
596.5
28,022.0
31,191.8
Notes
31/12/2009
31/12/2008
TOTAL
Z Off-Balance sheet items
(in EUR millions)
2,328.2
2,276.2
To banks
228.0
127.6
To customers
2,100.2
2,148.6
3,476.0
3,696.1
239.1
346.0
3,236.9
3,350.1
1.3
51.0
To banks
To customers
Securities commitments given
Securities acquired with option to repurchase or recover
-
-
Other commitments given
1.3
51.0
17
5,805.5
6,023.3
TOTAL COMMITMENTS GIVEN
142
I
I
Individual Balance sheet at December 31
Z Liabilities
Notes
31/12/2009
31/12/2008
Due to central banks and postal accounts
2.2
1.8
Due to banks
9
4,122.4
4,532.6
743.5
910.5
(in EUR millions)
Current accounts
Term accounts
Special and regulated savings accounts
Current accounts
Term accounts
Other debts
Current accounts
Term accounts
Debt securities
3,378.9
3,622.1
10
12,158.5
13,450.2
4,318.2
3,756.6
3,268.0
2,697.8
1,050.2
1,058.8
7,840.3
9,693.6
7,083.4
7,076.3
756.9
2,617.3
12
8,061.8
9,629.2
Short-term notes
12.0
14.4
7,744.5
9,057.1
305.3
557.7
Other liabilities
Bonds
13
383.0
395.7
Accrued expenses
13
813.1
858.4
Provisions
14
131.1
129.0
Subordinated debt
15
637.2
683.7
16
1,712.7
1,511.2
Subscribed capital
740.3
740.3
Additional paid-in capital
10.4
10.4
Reserves
628.9
591.2
Badwill
-
-
Regulated provisions
0.8
0.9
Retained earnings
0.9
0.2
Net income
331.4
168.2
28,022.0
31,191.8
Notes
31/12/2009
31/12/2008
1,340.2
-
TOTAL
Z Off-Balance sheet items
(in EUR millions)
Loan commitments received
From banks
Guarantee commitments received
From banks
Securities commitments received
Securities sold with option to repurchase or recover
Other commitments received
TOTAL COMMITMENTS RECEIVED
1,340.2
-
5,243.1
4,671.5
5,243.1
4,671.5
1.3
50.6
-
-
1.3
50.6
17
6,584.6
4,722.1
143
3I
I
Income statement
S Income statement
(in EUR millions)
2009
2008
925.5
1 268.8
Interest and similar expenses
-381.1
-860.8
Net interest and similar income (expenses)
20
544.4
408.0
20
108.8
103.4
Fee income
489.2
504.0
Fee expenses
-49.3
-48.7
Net fee income or (expenses)
21
439.9
455.3
Gains or losses on trading portfolio transactions
20
-73.2
24.7
Gains or losses on investment portfolio and similar transactions
20
33.7
-58.5
Other banking income
10.5
9.3
Other banking expenses
-9.4
-10.6
Net other banking income (expenses)
1.1
-1.3
19
1,054.7
931.6
NET BANKING INCOME
Personnel expenses
23
-422.5
-412.4
Other operating expenses
24
-190.8
-192.4
Amortisation and depreciation expense on tangible and intangible fixed assets
24
-59.2
-59.1
Operating expenses, depreciation and amortisation expense
22
-672.5
-663.9
GROSS OPERATING INCOME
Cost of risk
OPERATING INCOME
382.2
267.7
25
-114.2
-85.6
268.0
182.1
26
100.5
0.7
PRE-TAX PROFIT
368.5
182.8
Exceptional income
-
-
27
-37.1
-14.6
Income tax
Net allocation to regulated provisions
NET INCOME
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Notes
-
-
331.4
168.2
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Notes to the individual financial statements
S Notes to the individual financial statements
S Note 1
Accounting principles and valuation method
Crédit du Nord’s individual financial statements were drawn
up in accordance with the provisions of CRB (Banking
Regulation Committee) Regulation No. 91-01 applicable to
credit institutions, and the generally accepted accounting
principles of the French banking profession. The presentation
of the financial statements complies with the provisions
of CRC (Accounting Regulation Committee) Regulation
No. 2000-03 relating to individual financial statements of
companies under the authority of the CRBF (French Banking
and Financial Regulation Committee), amended by CRC
Regulation No. 2005-04 of November 3, 2005.
Z Change in accounting methods
relating to fiscal year 2009
Over the course of fiscal year 2009, Crédit du Nord applied
CRC Regulation No. 2009-04 of December 3, 2009 relating
to the valuation of swaps and amending CRC Regulation
No. 90-15 relating to the accounting treatment of interest rate
and currency swaps.
This change in method had no significant impact
Z Due from banks and customers
Amounts due from banks and customers are recorded on the
balance sheet at face value. They are classified according to
their initial duration or type into: demand (current accounts
and overnight transactions) and term accounts in the case
of banks; customer receivables financing, current accounts
and other loans in the case of customers.
Amounts due from banks and customers include outstanding
loans and repurchase agreements for which the securities
are not delivered, entered into with these economic parties.
Z Amounts due to banks,
customer deposits
Amounts due to banks and customer deposits are classified
according to their initial duration and type into: demand
(demand deposits, current accounts) and term borrowings
in the case of banks; special savings accounts and other
deposits for customers. Amounts due to banks and customer
deposits include repurchase agreements for which the
securities are not delivered.
payables through profit or loss.
Z Debt securities
These liabilities are classified by type of security: medium-term
notes, savings bonds, negotiable debt instruments, bonds
and other debt securities (with the exception of subordinated
notes, which are classified under subordinated debt).
Interest accrued and payable in respect of these securities
is booked as related payables through profit or loss. Bond
issuance and redemption premiums are amortised using the
actuarial method over the life of the related borrowings. The
resulting charge is recorded as interest expenses through
profit or loss.
Z Subordinated debt
This item includes all dated or undated subordinated
borrowings, which in the event of the liquidation of the
borrowing company may only be redeemed after all other
creditors have been paid. Interest accrued and payable
in respect of subordinated debt, if any, is shown with the
underlying abilities as related payables.
receivables through profit or loss.
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Z Impairment of individual outstanding
loans due to probable credit risk
In accordance with CRC Regulation No. 2002-03, published
on December 12, 2002, if a loan is considered to bear a
probable risk that all or part of the sums owed by the
counterparty under the initial terms and conditions of the
loan agreement will not be recovered, and regardless of the
existence of loan guarantees, the loan in question is classified
as doubtful. In any event, outstanding loans are reclassified
as doubtful where one or more payments is “90 days
overdue” (six months for real estate and property loans, nine
months for municipal loans), or where, any missed payments
notwithstanding, there is a probable risk of loss or where a
loan is disputed.
Unauthorised overdrafts are classified as doubtful loans
after a period of no more than three uninterrupted months
during which the account limits are exceeded (limits of which
individual customers are notified; limits resulting from legal
or de facto agreements with other categories of customers).
Where a given borrower’s loan is classified as a «doubtful
loan», any other loans and commitments of the same borrower
are also automatically classed as doubtful, regardless of any
guarantees.
Doubtful loans and non-performing loans give rise to
impairment for the probable portion of doubtful and nonperforming loans that will not be recovered, recorded
as an asset write-down. The amount of the impairment
loss for doubtful and non-performing loans is equal to the
difference between the book value of the asset and the
present value discounted for estimated recoverable future
cash flows, taking into account the value of any guarantees,
discounted at the original effective interest rate of the loans.
The impaired receivable subsequently generates interest
income, calculated by applying the effective interest rate to
the net book value of the receivable. Impairment allowances
and reversals, losses on non-recoverable loans and amounts
recovered on impaired loans are booked under “Cost of risk”.
Doubtful loans can be reclassified as performing loans once
there is no longer any probable credit risk and once payments
have resumed on a regular basis according to the initial
contractual schedule. Moreover, doubtful loans which have
been restructured may be reclassified as performing.
In the event the creditworthiness of the borrower is such that
after a reasonable period of classification in doubtful loans, a
reclassification to normal loan status is no longer plausible, the
loans is specifically classified as a non-performing loan. This
status is conferred at close-out or upon cancellation of the loan
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agreement and, in any event, one year following classification
in doubtful loans, with the exception of doubtful loans for
which the contractual clauses are respected and/or doubtful
loans with valid enforceable guarantees. Restructured loans
for which the borrower has not respected payment schedules
are also classified as non-performing loans.
Z Performing loans under watch (“3S”)
Within the “Performing loan” risk category, Crédit du Nord has
created a subcategory called “Performing loans under watch”,
to cover loans/receivables requiring closer supervision. This
category includes loans/receivables where certain evidence
of deterioration has appeared since they were granted.
The Group conducts historical analyses to determine the
rate of classification of these loans/receivables as doubtful
and the impairment ratio, and updates these analyses on a
regular basis. It then applies these figures to similar groups of
receivables in order to determine the amount of impairment.
Z Impairment due to sector credit risk
This type of impairment is not made on an individual loan
basis and covers several classes of risk, including regional
sector risk (global risk in sectors of the regional economy
undermined by specific unfavourable business conditions).
Crédit du Nord’s Central Risk Division regularly lists the
business sectors that it considers to represent a high
probability of default in the short term due to recent events
that may have caused lasting damage to the sector. A rate
of classification as doubtful loans is then applied to the total
outstanding in these sectors in order to determine the volume
of doubtful loans. Impairments are then booked for the overall
amount of these outstanding loans, using impairment ratios
which are determined according to the historical average
rates of doubtful customers, adjusted to take into account
an analysis of each sector by an independent expert on the
basis of the economic environment.
Z Securities portfolio
Securities are classified according to their type (Treasury notes
and assimilated, bonds and other fixed-income securities,
shares and other equity securities) and according to the
purpose for which they were required (trading, short-term
investment, investment, equity investments and subsidiaries,
other long-term investment securities, shares intended for
portfolio activity).
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Sales and purchases of securities are recognised in the
balance sheet on the date of settlement-delivery.
In accordance with the provisions of amended CRB
Regulation No. 90-01 relating to the accounting treatment
of securities transactions, as amended by CRC Regulation
No. 2008-17, the rules for classifying and evaluating each
portfolio category are as follows:
Trading securities
Trading securities include all positions taken on liquid markets
with the intention of reselling the securities or of selling them to
customers in the short term. At the close of the fiscal year, the
securities are measured at their market value. The net balance
of differences resulting from price changes is recorded to
income.
Trading securities are recorded on the balance sheet at cost,
net of expenses.
Trading securities no longer held with the intention for reselling
them in the short term, no longer held for market-making
purposes, or for which the specialised portfolio management
strategy for which they are held no longer offers a recent
profit-taking profile in the short term, can be transferred to the
“Short-term Investment Securities” or “Investment Securities”
category if:
U an exceptional market situation requires a change in
holding strategy;
U or if the fixed-income securities can no longer be traded on
an active market following their acquisition, and if Crédit du
Nord intends and is able to hold them for the foreseeable
future or until their maturity.
Transferred securities are recorded in their new category at
their market value on the date of transfer.
Short-term investment securities
This category includes securities which are not included with
trading securities, investment securities, equity investments
and subsidiaries, other long-term investment securities or
shares intended for portfolio activity.
Short-term investment securities are recorded at cost, net
of expenses. Accrued interest at the time of purchase is
recorded as related receivables. The difference between the
value on the date of acquisition and the redemption value of
these securities is spread on a pro rata basis over the period
remaining to the date of redemption. This difference is spread
using the actuarial method.
At year-end, the value of the securities is estimated on the
basis of the most recent price in the case of listed securities,
or according to probable market value in the case of unlisted
securities.
Unrealised capital losses resulting from this valuation are
amortised, while capital gains are not recorded.
Short-term investment securities can be transferred to the
“Investment Securities” category if:
U an exceptional market situation requires a change in
holding strategy;
U or if the fixed-income securities can no longer be traded on
an active market following their acquisition, and if Crédit du
Nord intends and is able to hold them for the foreseeable
future or until their maturity.
Investment securities
Investment securities include fixed-income securities
purchased with the intention of holding them until maturity
and financed by earmarked permanent resources. The
difference between the value on the date of acquisition and
the redemption value of these securities is spread on a pro
rata basis over the period remaining to the date of redemption.
This difference is spread using the actuarial method.
At the close of the accounts, unrealised losses are determined
by a book-to-market value comparison but are not amortised.
Unrealised gains are not recorded.
Equity investments and subsidiaries
Equity investments and subsidiaries include the securities of
companies in which a significant fraction of capital (10-50%
for affiliates, over 50% for subsidiaries) is held over the long
term. These investments are recorded at cost, including
expenses.
basis of their useful value, derived mainly using the net asset
value method. Unrealised capital losses are amortised, while
potential capital gains are not recorded.
Other long-term investment securities
Long-term investment securities include investments made
by Crédit du Nord in order to foster the development of lasting
business relations by creating a special link with the issuing
company without exercising any influence on its management
due to the small percentage of voting rights attached to said
investments.
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basis of their useful value, derived mainly using the net asset
value method. Unrealised capital losses are amortised, while
potential capital gains are not recorded.
Shares intended for portfolio activity
This category of securities covers investments made on a
regular basis with the sole aim of realising a capital gain in
the medium term and without making a long-term investment
in the development of the issuing company, or participating
actively in its operational management. This category notably
includes shares held for venture capital activities.
These securities are recorded at cost, net of any expenses.
At year-end, they are valued at their «useful value» which
is determined by taking into account the issuer’s general
growth prospects and the projected holding period. The
useful value of listed securities is determined by referring to
the stock market price over a sufficiently long period and by
taking into account the projected holding period. Unrealised
capital losses resulting from this valuation are amortised,
while unrealised capital gains are not recorded.
Securities lending and borrowing
Loaned securities are removed from the asset line item in
which they appeared and a receivable equal to the book
value of the loaned securities is recorded. At year-end, this
receivable is valued according to the rules applicable to the
original portfolio from which the securities were loaned.
Borrowed securities are recorded to assets in the appropriate
line item, while a debt of securities vis-à-vis the lender is
recorded to liabilities. At year-end, borrowed securities
appearing in assets follow the accounting rules applicable to
trading securities. Conversely, the debt recorded to liabilities
is valued at market. Compensation generated by securities
lending or borrowing is recorded on a pro rata basis to income.
Securities with repurchase or resale options
The amount of the repurchase agreement (the security
sales price) is recorded to assets (securities purchased)
or to liabilities (securities sold). Compensation relating to
repurchase agreements is recorded on a pro rata basis to
income.
Securities pledged remain as originally booked to assets and
are valued according to the rules applicable to the portfolio
to which they belong. Income relating to these securities is
also recorded as if the securities were still in the portfolio.
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Symmetrically, securities purchased in this manner are not
included in the bank’s securities portfolio.
Income from the securities portfolio
Income from stocks, dividends and interim dividends is
recognised as it is received. Income from bonds is booked
to income on a prorata basis. Interest accrued at the time of
purchase is entered in a deferred income account.
Income from securities disposals
Capital gains and losses are calculated on the basis of the
gross value of securities sold and selling costs are deducted
from the proceeds of the disposal.
Z Tangible and intangible fixed assets
Fixed assets purchased before December 31, 1976 are
recorded on the balance sheet at their “useful value”,
estimated according to the rules of the “legal revaluation of
1976”, while fixed assets acquired after that date are entered
at cost.
Borrowing expenses incurred to fund a lengthy construction
period for the fixed assets are included in the acquisition cost,
along with other directly attributable expenses. Investment
subsidies received are deducted from the cost of the relevant
assets.
Software developed internally is capitalised and depreciated,
in the same way as business software, if it stems from an IT
project involving significant amounts declared as strategic
by Crédit du Nord, which expects it to yield future benefits.
In accordance with Note No. 31 issued in 1987 by the
CNC (French National Accounting Council), fixed costs
correspond solely to the costs related to the detailed design,
programming, testing of the software, and to the production
of the technical documentation.
As soon as they are fit for use, fixed assets are depreciated
over their useful life using the straight-line method. Any
residual value of the asset is deducted from its depreciable
amount.
Where one or several components of a fixed asset are used
for different purposes or to generate economic benefits over
a different time period from the asset considered as a whole,
these components are depreciated over their own useful life.
Crédit du Nord has applied this approach to its operating
purposes investment property, breaking down its assets into
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at least the following components, with their corresponding
depreciation periods:
Infrastructures
Major structures
50 years
Doors and windows, roofing
20 years
Façades
30 years
Elevators
where the Group has a commitment to a third party which
makes it probable or certain that it will never incur an outflow
of resources to this third party without receiving at least an
equivalent value in exchange. The estimated amount of the
expected outflow is then discounted to present value to
determine the size of the provision, where this discounting
has a significant impact.
Electrical installations
Electricity generators
Technical
installations
Air conditioning, smoke
extraction
Heating
10
to
30 years
Security and surveillance
installations
Plumbing
Fire safety equipment
Fixtures & fittings
Finishings, surroundings
10 years
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the following
ranges:
Safety and publicity equipment
5 yrs
Transport
4 yrs
Furniture
10 yrs
IT and office equipment
3 to 5 yrs
Software (developed or acquired)
3 to 5 yrs
These depreciation periods are listed as an indication only
and may vary depending on the specific characteristics of
the fixed assets in question.
Land, lease rights and business premises are not depreciated.
Fixed assets are subject to impairment tests whenever there
is an indication that their value may have diminished. Where
an impairment loss is booked to the income statement, it can
be reversed if there is a change in the conditions that initially
led to it being recognised. The impairment loss reduces the
depreciable amount of the asset and thus also affects its
future depreciation schedule.
The useful life and the residual value of fixed assets are
reviewed annually. If data needs to be changed, the
depreciation schedule is modified accordingly.
Z Provisions
Provisions, excluding those related to employee benefits
and loans, represent liabilities, the timing or amount of which
cannot be precisely determined. Provisions are booked
Z Commitments under home savings
accounts
Home savings accounts and plans are savings schemes for
individual customers, in accordance with Law No. 65-554 of
July 10, 1965, which combine an initial deposit phase in the
form of an interest-earning savings account with a lending
phase where the deposits are used to provide property loans.
By regulation, this latter phase is subject to the previous
existence of the savings phase and is therefore inseparable
from it. The deposits collected and loans granted are booked
at amortised cost.
These schemes generate two types of commitments for Crédit
du Nord: the obligation to lend subsequently to the customer
at an interest rate set upon the signing of the agreement,
and the obligation to pay interest on the customer’s savings
in the future at an interest rate set upon the signing of the
agreement, for an indefinite period.
Commitments with future adverse effects for Crédit du Nord
are subject to provisions booked as balance-sheet liabilities,
any changes in which are recorded on the interest margin
line under “Net Banking Income”. These provisions relate
exclusively to commitments under home savings accounts
and schemes existing at the date of the provision’s calculation.
Provisions are calculated for each generation of home savings
schemes, on the one hand, with no netting between the
different generations of schemes, and for all home savings
accounts taken together, which constitutes a single allencompassing generation, on the other hand.
During the savings phase, provisions are calculated according
to the difference between average expected customer
savings deposits and minimum expected customer savings
deposits, both of which are determined statistically based on
historic observations of actual customer behaviour.
During the lending phase, provisions are calculated according
to loans already issued but not yet due at the balance sheet
date, as well as future loans considered as statistically
probable on the basis of customer savings deposits on
the balance sheet at the date of calculation and on historic
observations of actual customer behaviour.
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A provision is booked if the discounted value of expected
future earnings for a given generation of home savings
products is negative. These earnings are estimated on
the basis of interest rates available to individual customers
for equivalent savings and loan instruments, with similar
estimated life and date of inception.
market value and by recording changes in value from one
closing date to the next.
This category covers futures, Matif contracts, and exchangetraded interest-rate and forex options, which are booked in
accordance with amended CRB Regulation No. 88-02.
Z Transactions in forward financial
instruments or options
Margin calls paid or received on futures and Matif contracts of
a speculative nature, or on contracts used to hedge markedto-market positions, are recorded directly to income.
Interest rate swaps
In the event these contracts are used to hedge non markedto-market items, margin calls are recorded in suspense
accounts in order to be distributed, after contracts are settled,
on a pro rata basis over the remaining life of the hedged
transactions.
This category covers all transactions relative to swaps, FRAs,
caps, floors, collars and interest rate options, accounted for
under amended CRB Regulation No. 90 15.
From origination, these contracts are classified in four
separate categories and recorded in distinct accounts. The
risks and income/expenses relative to each category are
subject to specific monitoring:
a) Contracts whose purpose is to maintain open positions in
order to benefit from any eventual interest rate movements.
All relative income and expenses are booked to the
income statement on a prorata basis. Unrealised losses,
determined by a book-to-market value comparison, are
provisioned. Unrealised gains are not recorded.
b) Contracts whose purpose is to hedge interest rate risk
affecting one specific item or a homogeneous set of
items (also called «microhedges»). All relative income
and expenses are booked to the income statement on a
prorata basis in the same manner as those relating to the
hedged item. The same applies to unrealised gains and
losses.
c) Contracts whose purpose is to hedge and manage
the institution’s global interest rate risk (also called
“macrohedges”). All relative income and expenses are
booked to the income statement on a prorata basis.
Unrealised gains and losses, determined by a book-tomarket value comparison, are not recognised.
d) Contracts whose purpose is to specifically manage a
trading portfolio. All relative income and expenses are
recorded to income symmetrically with income and
expenses relating to trades made in the opposite direction.
This symmetry is respected by valuing the contracts at
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Premiums paid or received are entered in suspense accounts.
Premiums on unexpired and unexercised exchange-traded
options are re-valued on the closing date. Revaluations are
treated in the same manner as margin calls.
At the time of expiration or exercise of the option, premiums
are either recorded immediately to income (speculative
options, hedge options on marked-to-market items), or
distributed on a pro rata basis over the residual life of the
hedged transactions (hedge options on non marked-tomarket items).
Z Foreign exchange transactions
At period-end, monetary assets and liabilities denominated in
foreign currencies are converted into euros at the prevailing
spot rate. Realised or unrealised foreign exchange losses or
gains are recognised in profit or loss.
Foreign exchange contracts are valued at the spot rate on
the balance sheet date. Forward contracts are valued using
the forward exchange rate for the remaining maturity, and
variations in fair value are recorded on the income statement.
Z Guarantees given and received
Guarantees given at the request of customers or banks
are recorded as off-balance sheet items in the amount of
the commitment. For guarantees received, only those from
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lending institutions, States, government administrations and
local authorities are recorded.
Off-balance sheet guarantees and endorsements correspond
to irrevocable cash loan commitments and guarantee
commitments which did not give rise to any fund movements.
Where necessary, these financing guarantees and
commitments are subject to provisions.
Z Employee benefits
Crédit du Nord has elected to apply CNC Recommendation
2003 R01, relative to the rules for booking and evaluating
pension commitments and other related benefits.
Pension commitments and benefits
Commitments under statutory pension systems are covered
by the contributions paid to independent pension funds which
then manage all payments of retirement benefits.
All commitments under defined benefit plans are valued using
an actuarial method.
Said plans cover several types of benefits, notably any residual
complementary benefits afforded by specialist pension
funds. Following the Branche agreement of February 25,
2005, which provided for the amendment of the provisions
relating to complementary benefits, and in light of the negative
balance of its pension fund, Crédit du Nord signed an internal
agreement in 2006 setting forth the following provisions:
U for beneficiaries of complementary benefits still employed
with Crédit du Nord, the value of the complementary
benefits was transferred to a supplementary savings plan
outsourced to an insurer;
U retirees and beneficiaries of a survivor’s pension were given
a choice of opting for a single lump-sum payment of their
complementary benefits.
Any residual complementary benefits are therefore linked to
retirees and beneficiaries of a survivor’s pension who did not
opt for a single lump-sum payment of their complementary
benefits, on the one hand, and to beneficiaries no longer
employed with Crédit du Nord, on the other hands.
In the case of Crédit du Nord, valuations are performed by an
independent actuary once a year, with the valuation made on
December 31 calculated on the basis of data as at August 31.
These commitments and the coverage thereof as well as the
main underlying assumptions therein are outlined in the notes
to the financial statements.
Employee benefits also include end-of-career benefits,
complementary retirement plans and post-employment
medical care and life insurance. These commitments and the
coverage thereof as well as the main underlying assumptions
therein are outlined in the notes to the financial statements.
Commitment valuations are performed by an independent
actuary using the projected credit units method, twice a year,
with the valuation of December 31 calculated on the basis of
data as at August 31.
In accordance with Note 2004/A dated January 21, 2004 of
the Emergency Committee of the CNC, the Group uses the
straight-line method over the average residual working lives
of employee beneficiaries to account for the amendments
linked to Law No. 2003-775 of August 21, 2003 governing
pension reforms.
«Actuarial differences» reflect the difference between actuarial
hypothesis and actual figures as well as the impact of any
change in actuarial hypothesis. In the specific case of pension
benefits, these differences are only booked in part on the
income statement where they exceed 10% of the discounted
value of the commitment (referred to as the «corridor»
method). The proportion of said booked differences is equal
to the surplus defined above divided by the average residual
working lives of the beneficiaries. If a plan has plan assets,
these are valued at fair value at the balance sheet date.
Z Other long-term benefits
Crédit du Nord’s personnel can also benefit from time savings
accounts as well as from various seniority bonuses. These
benefits are calculated according to the same actuarial
method described above and are provisioned in full, as are any
actuarial differences. These commitments and the coverage
thereof as well as the main underlying assumptions therein are
outlined in the notes to the financial statements. Commitment
valuations are performed by an independent actuary once
a year. For commitments excluding time savings accounts,
the valuation made on December 31 was calculated on the
basis of data as at August 31. For commitments linked to time
savings accounts, the valuation made on December 31 was
calculated on the basis of data as at December 31
Interest and fee income
Interest and similar fee income are recorded on the income
statement on a prorata basis.
Fees are booked according to the type of services to which
they relate.
Fees for one-off services are booked to income when the
service is provided.
Fees for continuous services are booked over the life of the
service rendered.
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Commissions that are part of the effective return of a financial
instrument are accounted for as an adjustment to the effective
return of the financial instrument.
settlement of corporate tax due for the fiscal year, are booked
under the same line item as the revenues to which they relate.
The corresponding income tax expense is kept in the income
statement under «Income Tax”.
Z Taxes
Since January 1, 2006, the annual flat-rate corporate tax (IFA
or imposition forfaitaire annuelle) has been deducted from
taxable income and recorded under “Taxes” in accordance
with Note No. 2006-05 of the CNC.
All taxes (excluding income tax) whose assessment refers to
items for the fiscal year in question are recorded as expenses
for said year, whether or not the tax was actually paid during
the course of the fiscal year.
Current income tax
Current income tax for the fiscal year includes dividend
tax credits and tax credits actually used for tax settlement
purposes. Said tax credits are booked under the same line
item as the income to which they relate.
In France, standard corporate income tax is 33.33%.
In addition, a social security contribution of 3.3% (after
deduction from taxable income of EUR 0.763 million), was
introduced in 2000. Since January 1, 2007, long-term capital
gains on equity investments have been taxed at 15%, while
capital gains on other equity investments are tax-exempt,
subject to a share for fees and expenses of 5% of net income
on capital gains during the fiscal year. In addition, under the
regime of parent companies and subsidiaries, dividends
received from companies in which the equity investment is
at least 5% are tax-exempt (with the exception of a share for
fees and expenses equivalent to 5% of the dividends paid).
Tax credit arising in respect of revenues from receivables
and security portfolios, when they are effectively used for the
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Deferred taxes
Deferred taxes are recognised whenever there is a difference
between the carrying amount of assets and liabilities in the
balance sheet and their respective tax base, which will have
an impact on future tax payments.
Deferred taxes are calculated based on a tax rate which has
been voted or almost voted and should be in effect at the
time when the temporary difference will reverse. If there is a
change in the tax rate, the corresponding effect is booked
under “Income Tax” on the income statement.
Crédit du Nord recognises deferred tax assets for deductible
temporary differences, tax loss carry-forwards and deferred
depreciation liable to be deducted from future taxable income.
These deferred taxes are calculated according to the liability
method by applying the expected effective tax rate (including
temporary increases) for the period in which the tax asset is
to be applied to income. Since fiscal year 2000, Crédit du
Nord has opted to apply the Group’s tax regime to those of
its subsidiaries in which it holds a direct or indirect ownership
interest of at least 95%. The convention adopted is that of
neutrality.
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S Note 2
Due from banks
(in EUR millions)
Related receivables
2009/2008 change
31/12/2009
31/12/2008
in value
in %
2,502.5
2,530.2
-27.7
-1.1
0.2
1.0
-0.8
-80.0
Total demand receivables
2,502.7
2,531.2
-28.5
-1.1
Term accounts
2,423.9
2,556.7
-132.8
-5.2
-
1,710.8
-1,710.8
-100.0
Subordinated loans
90.9
89.1
1.8
2.0
Related receivables
16.9
51.4
-34.5
-67.1
-
0.5
-0.5
-100.0
-
-0.5
0.5
-100.0
0.5
-
0.5
-
Doubtful loans (impairment)
Non-performing loans (gross)
Non-performing loans (impairment)
Total term receivables
TOTAL
-0.5
-
-0.5
-
2,531.7
4,408.0
-1,876.3
-42.6
5,034.4
6,939.2
-1,904.8
-27.4
The schedule of term receivables due from banks (excluding related receivables) at December 31, 2009 was as follows:
Maturity
< 3 months
3 months to 1 yr
1 to 5 yrs
> 5 yrs
Total
435.8
450.3
1,202.2
335.6
2,423.9
0.2
19.6
67.9
3.2
90.9
436.0
469.9
1,270.1
338.8
2,514.8
31/12/2009
31/12/2008
in value
Transactions with Crédit du Nord Group
2,181.6
2,059.9
121.7
5.9
Transactions with Société Générale Group
1,194.5
1,804.6
-610.1
-33.8
3,376.1
3,864.5
-488.4
-12.6
Term accounts
Subordinated loans
TOTAL
Of the total amount due from banks, the following were intra-Group transactions
(in EUR millions)
TOTAL
2009/2008 change
in %
153
3I
I
S Note 3
(in EUR millions)
Commercial loans
Related receivables
Total performing commercial loans
2009/2008 change
31/12/2009
31/12/2008
in value
in %
337.5
380.8
-43.3
-11.4
0.3
0.2
0.1
50.0
337.8
381.0
-43.2
-11.3
Short-term loans
1,244.2
1,381.9
-137.7
-10.0
Capital expenditure loans
2,988.6
3,022.8
-34.2
-1.1
Housing loans
7,444.8
7,078.5
366.3
5.2
Other loans
1,201.0
1,164.0
37.0
3.2
2.0
2.5
-0.5
-20.0
60.4
274.8
-214.4
-78.0
Non-attributed stock
31.9
77.9
-46.0
-59.1
Related receivables
33.9
44.2
-10.3
-23.3
13,006.8
13,046.6
-39.8
-0.3
708.8
1,058.2
-349.4
-33.0
Total other performing customer loans
Overdrafts
Related receivables
Total performing overdrafts
SUB-TOTAL PERFORMING LOANS
12.9
22.1
-9.2
-41.6
721.7
1,080.3
-358.6
-33.2
14,066.3
14,507.9
-441.6
-3.0
369.3
358.7
10.6
3.0
Doubtful loans (impairment)
-76.8
-76.5
-0.3
0.4
Non-performing loans (gross)
488.3
375.4
112.9
30.1
-364.6
-288.3
-76.3
26.5
Non-performing loans (impairment)
SUB-TOTAL DOUBTFUL LOANS
416.2
369.3
46.9
12.7
14,482.5
14,877.2
-394.7
-2.7
51.5,%
49.7,%
- o/w non-performing loans:
74.7,%
76.8,%
- o/w other loans:
20.8,%
21.3,%
TOTAL
Impairment rate for doubtful loans:
Term receivables due from customers (excluding related receivables and non-allocated stock) at December 31, 2009 can be
broken down as follows:
Maturity
3 months to 1 yr
1 to 5 yrs
> 5 yrs
Total
Commercial loans
335.9
1.6
-
-
337.5
745.7
1,407.3
5,189.4
5,536.2
12,878.6
0.1
0.4
1.5
-
2.0
TOTAL
154
< 3 months
60.4
-
-
-
60.4
1,142.1
1,409.3
5,190.9
5,536.2
13,278.5
I
I
S Note 4
Securities portfolio
(in EUR millions)
Trading securities
TOTAL
2009/2008 change
31/12/2009
31/12/2008
in value
in %
1.7
40.2
-38.5
-95.8
5,780.2
6,654.3
-874.1
-13.1
77.1
57.1
20.0
35.0
5,859.0
6,751.6
-892.6
-13.2
Z Breakdown by portfolio
31/12/2009
31/12/2008
Listed
Unlisted
Total
Listed
Unlisted
Total
-
-
-
-
-
-
Bonds and other fixed-income securities
-
1.7
1.7
-
40.2
40.2
Trading securities
-
-
-
-
-
-
SUB-TOTAL (1)
-
1.7
1.7
-
40.2
40.2
1,438.1
-
1,438.1
221.1
-
221.1
87.6
4,281.8
4,369.4
94.4
6,361.1
6,455.5
Write-downs
SUB-TOTAL (2)
0.1
4.8
4.9
0.1
4.9
5.0
-24.3
-18.1
-42.4
-35.1
-37.5
-72.6
1,501.5
4,268.5
5,770.0
280.5
6,328.5
6,609.0
Write-downs
SUB-TOTAL (3)
TOTAL (1)+(2)+(3)
-
-
-
-
-
-
41.8
35.8
77.6
41.5
16.7
58.2
-
-
-
-
-
-
-
-0.6
-0.6
-0.1
-1.2
-1.3
41.8
35.2
77.0
41.4
15.5
56.9
1,543.3
4,305.4
5,848.7
321.9
6,384.2
6,706.1
Related receivables (4)
10.3
45.5
TOTAL (1)+(2)+(3)+(4)
5,859.0
6,751.6
1,441.5
221.1
4,416.3
6,529.6
1.2
0.9
o/w:
155
3I
I
Z Additional information on securities:
Short-term investment portfolio
31/12/2009
31/12/2008
Estimated value of short-term investment securities
Unrealised capital gains
9,1
4,1
• Unrealised capital gains on shares and other equity securities
3,1
2,4
• Unrealised capital gains on bonds and other fixed-income securities
6,0
1,7
-
-
81,8
88,4
3,9
4,5
Shares of UCITS held
Subordinated notes
Premiums and discounts relating to short-term investment securities
Investment portfolio
The investment portfolio is wholly comprised of OBSAARs (bonds with redeemable and/or acquisition warrants).
Three new transactions were booked to the investment portfolio for EUR 18.9 million (excluding related receivables).
The schedule (excluding related receivables) for fixed-income investment securities (treasury notes and bonds) is as follows:
Maturity
TOTAL
< 3 months
3 months to 1 yr
1 to 5 yrs
> 5 yrs
Total
640.6
797.5
-
-
1,438.1
2,082.0
73.8
227.1
1,986.5
4,369.4
2,722.6
871.3
227.1
1,986.5
5,807.5
31/12/2008
in value
S Note 5
Equity investments and subsidiaries
(in EUR millions)
Equity investments and other long-term investment securities
Shares in affiliates
TOTAL
156
31/12/2009
2009/2008 change
in %
93.2
96.0
-2.8
-2.9
806.6
725.2
81.4
11.2
899.8
821.2
78.6
9.6
I
I
The equity investments and subsidiaries portfolio evolved as follows over fiscal year 2009:
(in EUR millions)
Short-term
Other long-term
Real estate
investment securities investment companies
Total
Gross book value
Amount at December 31, 2008
756.2
65.4
0.3
821.9
Investments
107.7
0.4
-
108.1
Disposals
-28.8
-0.2
-
-29.0
-0.2
-0.2
-
-0.4
834.9
65.4
0.3
900.6
0.7
-
-
0.7
Allocations to provisions
0.1
-
-
0.1
-
-
-
-
Other changes
Write-downs
Reversals
Other changes
Amount at 31 December 2009
NET VALUE AT DECEMBER 31, 2009
The changes in the equity investment portfolio can be primarily
attributed to three transactions.
Within the framework of the Amundi deal (contribution of
Société Générale’s Group’s asset management business to
Crédit Agricole Asset Management), on 31 December 2009
Crédit du Nord contributed all of its Etoile Gestion shares
(net book value EUR 19.8 million) to Etoile Gestion Holding.
-
-
-
-
0.8
-
-
0.8
834.1
65.4
0.3
899.8
In exchange for this contribution, Crédit du Nord received
shares in Etoile Gestion Holding totalling EUR 107.6 million.
The same day, Etoile Gestion Holding contributed these newly
held shares to Amundi.
Furthermore, two disposals took place in 2009: sale of all
Dexia-C.L.F Banque shares (EUR 1.5 million) and partial sale
of the Visa Incorporation shares (EUR 1.0 million).
S Note 6
Fixed assets
2009/2008 change
(in EUR millions)
31/12/2009
31/12/2008
in value
in %
Operating fixed assets
Land and buildings
Other tangible fixed assets
94.2
87.1
7.1
8.2
100.4
105.5
-5.1
-4.8
Developed intangible fixed assets
93.2
90.2
3.0
3.3
30.0
29.8
0.2
0.7
317.8
312.6
5.2
1.7
Net value of operating fixed assets
Fixed assets (excluding operating fixed assets)
Land and buildings
0.7
0.8
-0.1
-12.5
1.2
1.4
-0.2
-14.3
Net value of fixed assets (excluding operating fixed assets)
1.9
2.2
-0.3
-13.6
319.7
314.8
4.9
1.6
FIXED ASSETS
157
3I
I
Tangible operating fixed assets
(in EUR millions)
Land & Buildings
Gross book value
Inflows
Outflows
Other changes
Others
Tangible fixed
assets (excl. op.
fixed assets) (1)
Intangible fixed assets
Developed
Acquired
Total
123.0
385.9
7.0
176.9
94.6
787.4
3.6
27.8
-
28.4
5.3
65.1
-
-2.5
-0.1
-
-
-2.6
6.8
-15.9
-
-0.1
-0.9
-10.1
133.4
395.3
6.9
205.2
99.0
839.8
4.8
86.7
64.8
472.6
35.9
280.4
Allocations during fiscal year 2009 (see
Note 24)
3.2
25.6
0.3
25.4
5.0
59.5
Depreciation relating to asset disposals
-
-2.5
-0.1
-0.1
-
-2.7
Other changes
NET VALUE AT DECEMBER 31, 2009
0.1
-8.6
-
-
-0.8
-9.3
39.2
294.9
5.0
112.0
69.0
520.1
94.2
100.4
1.9
93.2
30.0
319.7
(1) Allocations to depreciation of fixed assets (excluding operating fixed assets) are included in Net Banking Income
IT investments totalled EUR 33.7 million in 2009, down 22.0%
on 2008, and accounted for 51.8% of total investments in
2009. On the whole, EUR 28.4 million in development
expenses for certain major IT software projects were
capitalised in 2009, vs. EUR 29.2 million in 2008, of which
EUR 21.8 million from “Other expenses” (see Note 24) and
EUR 6.6 million from “Personnel expenses” (see Note 23).
S Note 7
Accruals and other accounts receivable
2009/2008 change
31/12/2009
31/12/2008
in value
in %
Other assets
247.9
398.8
-150.9
-37.8
Sundry debtors
195.9
351.9
-156.0
-44.3
20.4
15.8
4.6
29.1
(in EUR millions)
Premiums on derivatives purchased
Others
Accruals and other accounts receivable
31.1
0.5
1.6
596.5
-206.6
-34.6
Securities received for deposit
19.4
8.1
11.3
139.5
Deferred taxes
39.9
54.6
-14.7
-26.9
212.3
415.9
-203.6
-49.0
32.1
49.8
-17.7
-35.5
Income to be received
Prepaid expenses
Others
TOTAL
158
31.6
389.9
86.2
68.1
18.1
26.6
637.8
995.3
-357.5
-35.9
I
I
S Note 8
Depreciation and amortisation deducted from assets can be broken down as follows:
2009/2008 change
(in EUR millions)
31/12/2009
31/12/2008
in value
in %
0.5
0.5
-
-
441.4
364.8
76.6
21.0
42.4
72.6
-30.2
-41.6
0.6
1.3
-0.7
-53.8
Impairment of loans to banks
Impairment of customer loans
Write-downs on short-term investment securities
Write-downs on investment securities
Write-downs on equity investments and other long-term
TOTAL
0.8
0.7
0.1
14.3
485.7
439.9
45.8
10.4
Write-backs
and uses
Other
changes
Stock
31/12/2009
Changes in depreciation and amortisation
(in EUR millions)
Stock
31/12/2008
Impairment of loans to banks
Impairment of customer loans
Write-downs on short-term investment securities
Allocations to
provisions
0.5
0.5
-0.5
-
0.5
364.8
184.6
-108.0
-
441.4
72.6
9.2
-39.2
-0.2
42.4
Write-downs on investment securities
1.3
-
-0.7
-
0.6
Write-downs on equity investments and other long-term
0.7
0.1
-
-
0.8
439.9
194.4
-148.4
-0.2
485.7
5.8
-39.2
188.5
-108.5
TOTAL
Changes in depreciation and amortisation impacting Net Banking Income (Note 19):
Changes in depreciation and amortisation impacting “Cost of risk” (Note 25):
Changes in depreciation and amortisation impacting income from
short-term investment securities (Notes 5 and 26):
0.1
-0.7
159
3I
I
S Note 9
Due to banks
(in EUR millions)
Related payables
Total demand borrowings
Term accounts
Related payables
Total term borrowings
TOTAL
2009/2008 change
31/12/2009
31/12/2008
in value
in %
743.4
909.5
-166.1
-18.3
0.1
1.0
-0.9
-90.0
743.5
910.5
-167.0
-18.3
3,362.6
3,600.4
-237.8
-6.6
16.3
21.7
-5.4
-24.9
3,378.9
3,622.1
-243.2
-6.7
4,122.4
4,532.6
-410.2
-9.0
The schedule of term borrowings from banks (excluding related payables) can be broken down as follows at December 31, 2009:
Maturity
Term accounts
TOTAL
< 3 months
3 months to 1 yr
1 yr to 5 yrs
> 5 yrs
Total
154.6
1,039.0
1,990.6
178.4
3,362.6
154.6
1,039.0
1,990.6
178.4
3,362.6
Of the total amount due to banks, the following were intra-Group transactions:
2009/2008 change
(in EUR millions)
Transactions with Crédit du Nord Group
Transactions with Société Générale Group
TOTAL
160
31/12/2009
31/12/2008
in value
in %
594.8
543.8
51.0
9.4
1,785.8
988.6
797.2
80.6
2,380.6
1,532.4
848.2
55.4
I
I
S Note 10
2009/2008 change
31/12/2009
31/12/2008
in value
in %
Demand special savings accounts
3,223.0
2,628.6
594.4
22.6
Term special savings accounts
1,049.7
1,058.0
-8.3
-0.8
4,013.8
4,002.2
11.6
0.3
2,635.3
2,468.4
166.9
6.8
(in EUR millions)
Financial customers
29.2
23.9
5.3
22.2
332.2
318.4
13.8
4.3
7,010.5
6,812.9
197.6
2.9
135.7
489.7
-354.0
-72.3
64.1
516.1
-452.0
-87.6
Financial customers
-
0.9
-0.9
-100.0
Others
SUB-TOTAL
Term accounts
Others
19.5
21.5
-2.0
-9.3
SUB-TOTAL
219.3
1,028.2
-808.9
-78.7
Guarantee deposits
Related payables
TOTAL
-
150.0
-150.0
-100.0
71.8
261.0
-189.2
-72.5
535.2
1,428.4
-893.2
-62.5
0.5
0.4
0.1
25.0
48.5
82.7
-34.2
-41.4
12,158.5
13,450.2
-1,291.7
-9.6
The schedule of term special savings accounts, term accounts and securities sold under term repurchase agreements can be
broken down as follows:
Maturity
< 3 months
3 months to 1 yr
1 yr to 5 yrs
> 5 yrs
Total
950,1
18,5
80,9
0,2
1,049,7
Term accounts
123,0
80,0
16,3
-
219,3
535,2
-
-
-
535,2
1,608,3
98,5
97,2
0,2
1,804,2
Term special savings accounts
TOTAL
Assets under custody for customers stood at EUR 20.2 billion, of which UCITS accounted for 48.9%.
161
3I
I
S Note 11
Home savings accounts and plans
A. Outstanding deposits in PEL/CEL accounts
2009/2008 change
31/12/2009
31/12/2008
114.2
109.1
5.1
4.7
Four to 10 years old
416.2
417.7
-1.5
-0.4
(in EUR millions)
in value
in %
PEL accounts
360.0
395.6
-35.6
-9.0
SUB-TOTAL
890.4
922.4
-32.0
-3.5
CEL accounts
167.2
177.1
-9.9
-5.6
1,057.6
1,099.5
-41.9
-3.8
TOTAL
B. Outstanding housing loans granted with respect to PEL/CEL accounts
2009/2008 change
31/12/2009
31/12/2008
in value
in %
2.5
11.1
-8.6
-77.5
4 to 10 years old
7.8
15.8
-8.0
-50.6
24.1
5.1
19.0
-
34.4
32.0
2.4
7.5
31/12/2009
31/12/2008
in value
in %
(in EUR millions)
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
2009/2008 change
(in EUR millions)
PEL accounts
-
2,3
-2,3
-100,0
4 to 10 years old
1.4
-
1.4
-
3.8
-
3.8
-
SUB-TOTAL
5.2
2.3
2.9
126.1
CEL accounts
0.1
3.2
-3.1
-96.9
Drawn down loans
0.9
1.0
-0.1
-10.0
6.2
6.5
-0.3
-4.6
TOTAL
(1) These provisions are booked as Allowances for general risk and commitments (see Note 14).
D. Methods used to establish the parameters for valuing provisions
The parameters used for estimating the future behaviour
of customers are derived from historical observations of
customer behaviour patterns over periods of between 10 and
15 years. The value of these parameters can be adjusted if
any changes are subsequently made to regulations that might
undermine the effectiveness of past data as an indicator of
future customer behaviour.
162
The values of the different market parameters used, notably
interest rates and margins, are calculated on the basis of
observable data and constitute a best estimate, at the date of
valuation, of the future value of these elements for the period
concerned, in line with the retail banking division’s policy of
interest rate risk management.
The discount rates used are derived from the zero coupon
swaps vs. Euribor yield curve at the date of valuation,
averaged over a 12-month period.
I
I
S Note 12
Debt securities
2009/2008 change
31/12/2009
(in EUR millions)
Bonds
Related payables
TOTAL
31/12/2008
in value
in %
10.0
12.1
-2.1
-17.4
7,714.4
8,933.7
-1,219.3
-13.6
305.0
555.0
-250.0
-45.0
32.4
128.4
-96.0
-74.8
8,061.8
9,629.2
-1,567.4
-16.3
> 5 yrs
Total
The schedule for debt securities (excluding related payables) was as follows at December 31, 2009:
Maturity
Bonds
TOTAL
< 3 months
3 months to 1 yr
1 yr to 5 yrs
6.6
1.4
2.0
-
10.0
4,224.5
744.1
1,540.8
1,205.0
7,714.4
-
155.0
150.0
-
305.0
4,231.1
900.5
1,692.8
1,205.0
8,029.4
S Note 13
Accruals and other accounts payable
2009/2008 change
(in EUR millions)
Other accounts payable
31/12/2009
31/12/2008
in value
in %
383,0
395,7
-12,7
-3,2
Sundry creditors
234,2
237,9
-3,7
-1,6
Payments remaining on non paid-up securities (1)
136,6
145,0
-8,4
-5,8
12,1
12,6
-0,5
-4,0
0,1
0,2
-0,1
-50,0
Accruals
813,1
858,4
-45,3
-5,3
Unavailable accounts in collection accounts
232,7
252,3
-19,6
-7,8
Deferred taxes
205,6
168,5
37,1
22,0
Expenses payable
282,3
394,2
-111,9
-28,4
51,3
39,0
12,3
31,5
Premiums on derivatives sold
Others
Deferred income
Others
TOTAL
41,2
4,4
36,8
-
1 196,1
1 254,1
-58,0
-4,6
(1) Of which, at December 31, 2009: Antarius (EUR 45.0m) - Hedin (EUR 28.1m) - Verthema (EUR 21.5m) - Nordenskiöld (EUR 28.7m) - Legazpi (EUR 11.0m)
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S Note 14
Provisions
The changes in provisions over fiscal year 2009 can be broken down as follows:
Stock at
31/12/2008
Allocations to
provisions
Reversals
and use
Other
Changes
Stock at
31/12/2009
Provisions for post-employment benefits
56.2
9.4
-21.5
-
44.1
Provisions for long-term benefits
18.4
6.8
-4.2
-
21.0
Provisions for other employee benefits
1.4
0.7
-0.5
-
1.6
Provisions for property risks
0.4
-
-
-
0.4
(in EUR millions)
Provisions for disputes with customers
7.3
1.1
-0.7
0.2
7.9
Impairment due to sector credit risk
19.4
0.5
-
-
19.9
11.9
15.7
-3.6
-
24.0
6.5
-
-0.3
-
6.2
Provisions for PEL/CEL commitments
Other provisions
TOTAL
7.5
0.1
-1.6
-
6.0
129.0
34.3
-32.4
0.2
131.1
-
-1.0
Changes in provisions impacting “Operating expenses” (Note 23):
Changes in provisions impacting “Net Banking Income” (Note 19):
16.9
-26.2
Changes in provisions impacting “Cost of risk” (Note 25):
17.4
-5.2
Provisions for property risks cover termination loss relative
to property programmes in which Crédit du Nord is invested.
Impairment due to sector credit risk, which is not made on
an individual loan basis, covers several classes of unrealised
risk, including regional sector risk (global risk in sectors of
the regional economy undermined by specific unfavourable
business conditions).
S Note 15
Subordinated debt
2009/2008 change
(in EUR millions)
Subordinated notes and borrowings
Interest payable
TOTAL
No new redeemable subordinated notes were issued in 2009.
164
31/12/2009
31/12/2008
in value
in %
627,5
673,2
-45,7
-6,8
9,7
10,5
-0,8
-7,6
637,2
683,7
-46,5
-6,8
I
I
Z Details of redeemable subordinated notes issued by Crédit du Nord
Issuance in June 1998 of a total 300 million French francs
with the following characteristics:
Issuance in May 2000 of a total EUR 40 million
Size:
300 million French francs
(EUR 45.73 million)
Size:
EUR 40 million
Principal:
EUR 1,000
Principal:
5,000 FF (EUR 762.25)
Number of notes:
40,000
Number of notes:
60,000
Issue price:
100.15% of principal
Issue price:
100.87 %
Maturity:
10 yrs
Maturity:
12 yrs
Coupon:
5.5% of principal
Coupon:
5.40% of principal
Redeemable at par on:
May 5, 2010
June 5, 2010
Issuance in October 1998 of a total 300 million French francs
Issuance in November 2000 of a total EUR 20 million
Size:
EUR 20 million
300 million French francs
(EUR 45.73 million)
Principal:
EUR 1,000
Number of notes:
20,000
Principal:
5,000 FF (EUR 762.25)
Issue price:
Number of notes:
60,000
Maturity:
10 yrs
Issue price:
Coupon:
5.75% of principal
Maturity:
12 yrs
November 3, 2010
Coupon:
4.55% of principal
October 12, 2010
Size:
Issuance in May 2001 of a total EUR 40 million
Issuance in June 1999 of a total EUR 40 million
Size:
EUR 40 million
Principal:
EUR 1,000
Size:
EUR 40 million
Number of notes:
40,000
Principal:
EUR 1,000
Issue price:
Number of notes:
40,000
Maturity:
10 yrs
Issue price:
100% of principal
Coupon:
5.75% of principal
Maturity:
12 yrs
May 23, 2011
Coupon:
4.75% of principal
June 30, 2011
Issuance in October 1999 of a total EUR 30 million
Size:
EUR 50 million
Principal:
EUR 1,000
Size:
EUR 30 million
Number of notes:
50,000
Principal:
EUR 1,000
Issue price:
Number of notes:
30,000
Maturity
10 yrs
Issue price:
100% of principal
Coupon:
5.30% of principal
Maturity:
12 yrs
November 14, 2011
Coupon:
5.45% of principal
October 22, 2011
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Issuance in June 2004 of a total EUR 50 million
Issuance in October 2006 of a total EUR 100 million
Size:
EUR 50 million
Size:
EUR 100 million
Principal:
EUR 300
Principal:
EUR 10,000
Number of notes:
166,667
Number of notes:
10,000
Issue price:
99.87% of principal
Issue price:
100% of principal
Maturity:
12 yrs
Maturity:
10 yrs
Coupon:
4.70% of principal
Coupon:
4.38% of principal
June 14, 2016
October 18, 2016
Issuance in July 2005 of a total EUR 100 million
Size:
EUR 100 million
Principal:
Principal:
EUR 10,000
Number of notes:
EUR 300
Number of notes:
10,000
Issue price:
220,000
Issue price:
100% of principal
Maturity:
Maturity:
10 years and 25 days
Coupon:
12 yrs
Coupon:
Principal x ((1 + CNO-TEC
10 - 0.48%)^1/4 - 1)
4.15% of principal
November 6, 2018
EUR 66 million
July 25, 2015
For all redeemable subordinated notes, Crédit du Nord
has placed a self-imposed ban on the early amortisation of
subordinated notes via redemption, but reserves the right
to carry out early amortisation via stock market purchases
and the public offer of exchange or purchase of redeemable
subordinated notes.
The unamortised credit balance of the issuance premiums of
these borrowings stands at EUR 11,700.
S Note 16
2009/2008 change
31/12/2009
31/12/2008
in value
in %
Common stock
740.3
740.3
-
-
Additional paid-in capital and reserves
639.3
601.6
37.7
6.3
10.4
10.4
-
-
(in EUR millions)
Additional paid-in capital
Legal reserve
Ordinary reserve
Regulated reserve
Retained earnings
Net income
Regulated provisions
TOTAL SHAREHOLDERS’ EQUITY
166
74.0
74.0
-
-
554.0
516.0
38.0
7.4
0.9
1.2
-0.3
-25.0
0.9
0.2
0.7
-
331.4
168.2
163.2
97.0
0.8
0.9
-0.1
-11.1
1,712.7
1,511.2
201.5
13.3
I
I
The change in shareholders’ equity can be broken down as follows:
(in EUR millions)
Common stock
Shareholders’ equity at Dec. 31, 2008
Other
shareholders’equity
Total
740,3
770,9
1 511,2
3rd Resolution of the General Meeting of Shareholders of May 13,2009 (1)
-129,5
-129,5
Net income
331,4
331,4
-0,4
-0,4
740,3
972,4
1 712,7
Reversals of provisions and regulated reserves in accordance
with legal provisions in force
SHAREHOLDERS’ EQUITY AT DEC. 31, 2009
(1) Distribution of a dividend of EUR 129.5 million to shareholders.
Société Générale owned 100% of Crédit du Nord’s capital at
December 31, 2009. As a result, Crédit du Nord’s accounts
are fully consolidated in Société Générale’s consolidated
accounts.
Given that the legal reserve has been fully allocated, and
that net income plus retained earnings from fiscal year 2008
(i.e. EUR 872,371.84) resulted in total income available for
distribution of EUR 332,228,784.87, the following proposals
will be submitted to the General Meeting:
Z Proposed distribution of earnings
U distribution of a dividend of EUR 323,865,171.00 to
shareholders, i.e. a dividend per share of EUR 3.50;
Net income for fiscal year 2008 amounted to EUR
331,356,413.03.
U allocation of EUR 8,000,000.00 to the ordinary reserve;
U allocation of EUR 363,613.87 to retained earnings.
S Note 17
Off-balance sheet commitments
A. Financing commitments given and received
2009/2008 change
(in EUR millions)
Financing commitments to banks
Financing commitments to customers
Guarantee commitments to banks
31/12/2009
31/12/2008
in value
in %
228.0
127.6
100.4
78.7
2,100.2
2,148.6
-48.4
-2.3
239.1
346.0
-106.9
-30.9
Guarantee commitments to customers
3,236.9
3,350.1
-113.2
-3.4
Financing commitments from banks
1,340.2
-
1,340.2
-
Guarantee commitments from banks
5,243.1
4,671.5
571.6
12.2
98.6
70.0
28.6
40.9
Guarantee commitments from customers
(1) Since 2009, a financing commitment received from the Banque de France was recorded for the amount it accepted for assets used as collateral.
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B. Securities transactions and foreign exchange transactions
2009/2008 change
31/12/2009
31/12/2008
in value
in %
Securities to be received
1.3
50.6
-49.3
-97.4
Securities to deliver
1.3
51.0
-49.7
-97.5
(in EUR millions)
Securities acquired with option to repurchase or recover
-
-
-
-
Currency to be received
4,115.9
5,694.3
-1,578.4
-27.7
Currency to deliver
4,113.2
5,671.1
-1,557.9
-27.5
Forward exchange transactions
C. Forward financial instruments
Trading
Speculative
Macro
hedging
Micro
hedging
Total
31/12/2009
Total
31/12/2008
Contract category under CRB
Regulation 90/15
D
A
C
B
Firm transactions
On organised markets
-
-
-
-
-
-
(in EUR millions)
Futures
OTC
Interest rate swaps
-
2,256.0
18,829.5
2,177.9
23,263.4
26,082.5
FRAs
-
-
-
-
-
-
Options
Interest rate options
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
226.1
226.1
167.4
Other options
-
-
-
-
-
-
Caps
-
1,335.0
2,195.3
-
3,530.3
3,774.8
Floors
-
295.7
-
224.5
520.2
208.8
TOTAL
-
3,886.7
21,024.8
2,628.5
27,540.0
30,233.5
OTC
At end-2009, of all off-balance sheet commitments,
commitments with the Group totalled EUR 24,304.5 million
(of which EUR 17,756.3 million with Société Générale Group
and EUR 6,548.2 million with Crédit du Nord Group). Note
that, under current regulations, transactions processed
168
on behalf of and on the order of customers are classified
in Category A (speculative), even if any hedging of them is
classified in Category C (macrohedging). Also note that Crédit
du Nord does not manage trading portfolios.
I
I
Finally, in accordance with CRC Regulation 2004-16, the fair value of financial derivatives is indicated in the table below:
Trading
Speculative
Macro
hedging
Micro
hedging
Total
31/12/2009
Total
31/12/2008
D
A
C
B
-
-
-
-
-
-
Interest rate swaps
-
-3.0
-116.7
132.6
12.9
8.6
FRAs
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-0.1
-0.1
-0.1
(in EUR millions)
Contract category under CRB Regulation
90/15
Firm transactions
Futures
OTC
Options
OTC
Other options
-
-
-
-
-
-
Caps
-
-1.4
10.5
-
9.1
0.5
Floors
-
1.9
-
1.6
3.5
3.6
TOTAL
-
-2.5
-106.2
134.1
25.4
12.6
S Note 18
Post-employment defined contribution plans
A. Post-employment defined contributions plans
Defined contribution plans limit Crédit du Nord’s liability to the
contributions paid to the plan but do not commit the Group
to a specific level of future benefits.
The main defined contribution plans provided to Crédit du
Nord employees notably include State pension plans and
other national retirement plans such as ARRCO and AGIRC,
pension schemes for which the only commitment is to pay
annual contributions (PERCO) and multi-employer plans.
Expenses relating to these plans totalled EUR 35.9 million
at December 31, 2009 vs. EUR 35.4 million at December
31, 2008.
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B. Post-employment benefit plans (defined benefit plans) and other long-term benefits
B1. Reconciliation of assets and liabilities recorded in the balance sheet
31/12/2009
(in EUR millions)
Breakdown of provisions recorded in the
balance sheet
Pension
plans
Others
Other
long-term
benefits
29.4
14.7
-
Others
Other
long-term
benefits
Total plans
41.8
14.4
18.4
74.6
-
-
-
-
-
21.0
65.1
41.8
14.4
18.4
74.6
-
-
82.5
89.4
-
-
89.4
Total plans
21.0
65.1
-
-
29.4
14.7
82.5
BREAKDOWN OF THE DEFICIT
IN THE PLAN
Present value of defined benefit
obligations
Pension
plans
Breakdown of assets recorded in the
balance sheet
Net provisions
31/12/2008
-50.0
-
-
-50.0
-43.6
-
-
-43.6
BALANCE OF PLAN ASSETS (A)
32.5
-
-
32.5
45.8
-
-
45.8
PRESENT VALUE OF UNFUNDED
OBLIGATIONS (B)
17.4
14.6
21.0
53.0
17.8
12.5
18.4
48.7
Unrecognised items
Unrecognised Past Service Cost
Unrecognised net actuarial gain / loss
1.1
-
-
1.1
1.2
-
-
1.2
19.4
-0.1
-
19.3
20.6
-1.9
-
18.7
Separate assets
-
-
-
-
-
-
-
-
Plan assets impacted by change
in Asset Ceiling
-
-
-
-
-
-
-
-
TOTAL UNRECOGNISED ITEMS (C)
BALANCE (A+B-C)
20.5
-0.1
-
20.4
21.8
-1.9
-
19.9
29.4
14.7
21.0
65.1
41.8
14.4
18.4
74.6
Notes :
1. For defined-service pension schemes, Crédit du Nord uses the projected credit units method to calculate employee benefits, and amortises
actuarial gains and losses which exceed 10% of the greater of the defined benefit obligations or funding assets on the estimated average
remaining working life of the employees participating in the plan (corridor method). Crédit du Nord uses the straight-line method over the
residual working lives of employee beneficiaries to recognise past service cost resulting from an amendment of the plan.
2. Pension plans include pension benefits as annuities and end-of-career payments. Pension benefit annuities are paid additionally to State
pension plans.Other post-employment benefit plans are insurance schemes covering accidental death.Other long-term employee benefits
include deferred bonuses, flexible working provisions (compte épargne temps) and long-service awards.
3. The present value of defined benefit obligations have been valued by independent qualified actuaries.
4. Information regarding plan assets:
k only end-of-career payments and additional complementary retirement plans are partially covered by assets managed by an external
company.
k the fair value of plan assets is comprised of 16.9% bonds, 66.2% equities, 16.9% money market funds.
5. In general, the expected rates of return on scheme assets are based on a weighted average of expected returns
on each category of assets at fair value.
6. Benefits payable under post-employment plans in 2010 are estimated at EUR 11.6 million.
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The actual return on plan and separate assets was:
(as a % of the item measured)
31/12/2009
31/12/2008
13.3
-41.6
-
-
31/12/2009
31/12/2008
5.7
-18.2
-
-
Plan assets
Separate assets
(in EUR millions)
Plan assets
Separate assets
B2. Actuarial costs of plans
31/12/2009
(in EUR millions)
Pension
plans
3.3
Service cost (including social security
contributions)
Employee contribution
Interest cost
31/12/2008
Others
Other
long-term
benefits
0.2
2.2
Total plans
Pension
plans
5.7
3.4
Others
Other
long-term
benefits
Total plans
0.2
2.3
5.9
-
-
-
-
-
-
-
-
5.8
0.8
1.0
7.6
5.4
0.7
1.1
7.2
-2.8
-
-
-2.8
-3.9
-
-
-3.9
Amortisation of past service cost
1.1
-
-
1.1
8.3
-
-
8.3
Amortisation of gains/losses
0.4
-0.1
2.6
2.9
-
-
-2.0
-2.0
-
-
-
-
-
-
-
-
7.8
0.9
5.8
14.5
13.2
0.9
1.4
15.5
Settlement
TOTAL NET CHARGES
RECOGNISED IN THE INCOME
STATEMENT
B3. Changes in net liabilities of post-employment plans booked to the balance sheet
B3a. Changes in the present value of defined benefits obligations
2009
2008
Pension
schemes
Other
plans
Total
post-employ.
Pension
schemes
Other
plans
Total
post-employ.
107.2
12.5
119.7
106.2
13.0
119.2
Current service cost (including social security
contributions)
3.3
0.2
3.5
3.4
0.2
3.6
Interest cost
5.8
0.8
6.6
5.4
0.7
6.1
-
-
-
-
-
-
(in EUR millions)
VALUE AT JANUARY 1
Actuarial gains/losses generated over the fiscal year
Benefit payments
2.7
1.7
4.4
-5.5
-0.9
-6.4
-19.1
-0.6
-19.7
-10.5
-0.5
-11.0
Past service cost generated over the fiscal year
-
-
-
8.2
-
8.2
Settlement
-
-
-
-
-
-
-
-
-
-
-
-
99.9
14.6
114.5
107.2
12.5
119.7
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B3b. Changes in fair value of plan assets and separate assets
2009
(in EUR millions)
VALUE AT JANUARY 1
Pension
schemes
Other
plans
Total
post-employ.
Pension
schemes
Other
plans
Total
post-employ.
43.6
-
43.6
62.3
-
62.3
2.9
-
2.9
3.8
-
3.8
-
-
-
-
-
-
Actuarial gains/losses generated over the fiscal year
2008
2.9
-
2.9
-22.0
-
-22.0
-
-
-
-
-
-
Employer contributions
1.1
-
1.1
3.3
-
3.3
-
-
-
-3.8
-
-3.8
Benefit payments
-0.5
-
-0.5
-
-
-
50.0
-
50.0
43.6
-
43.6
B4. Main assumptions for post-employment plans
2009
2008
Expected return on assets (separate and plan assets)
6.6%
6.6%
Future salary increase (including inflation)
3.5%
3.5%
The expected rate of return on assets (separate and plan
assets) has been 6.6% since 2005. The range in the expected
rate of return on assets is due to the composition of the assets.
The average remaining lifetime is established individually
by benefit and is calculated taking into account turnover
assumptions.
The discount rate used depends on the term of each plan
(2.94% for up to 3 years / 3.86% for up to 5 years / 5.01%
for up to 10 years / 5.35% for up to 15 years and 5.69% for
up to 20 years).
Inflation depends on the term of each plan (1.90% for up to
3 years / 2.51% for up to 5 years / 2.57% for up to 10 years
/ 2.62% for up to 15 years and 2.66% for up to 20 years).
B5. Sensitivities analysis of post-employment defined benefit obligations compared to main
assumption ranges
2009
(as % of item measured)
Variation of +1% in discount rate
Impact on present value of defined benefit
obligations at December 31
2008
Pension schemes
Other plans
Pension schemes
Other plans
-5.7%
-13.2%
-4.7%
-12.1%
-10.5%
-23.3%
-8.1%
-20.6%
1.0%
-
1.0%
-
-9,1%
-
-30,0%
-
6.7%
17.1%
5.0%
15.7%
13.8%
33.8%
10.8%
29.2%
Variation of +1% in expected return on assets
(plan assets and separate assets)
Impact on plan assets at December 31
Variation of +1% in future salary increases
(net of inflation)
Impact on present value of defined benefit
obligations at December 31
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B6. Experience adjustments on post-employment defined benefit obligations
31/12/2009
31/12/2008
Defined benefit obligations
99.9
107.2
50.0
43.6
Deficit / (negative: surplus)
49.9
63.6
Experience adjustments on plan liabilities
-3.4
-4.1
2.9
-22.0
(in EUR millions)
Experience adjustments on plan assets
S Note 19
Net banking income (NBI)
2009/2008 change
(in EUR millions)
2009
2008
in value
in %
544.4
408.0
136.4
33.4
Net fee income
439.9
455.3
-15.4
-3.4
108.8
103.4
5.4
5.2
Gains or losses on trading portfolio transactions
-73.2
24.7
-97.9
-
33.7
-58.5
92.2
-
1.1
-1.3
2.4
-
1,054.7
931.6
123.1
13.2
41.7%
48.9%
Gains or losses on short-term investment portfolio transactions
Other banking income (expenses)
NET BANKING INCOME
Share of net fee income in Net Banking Income
Overall, Net Banking Income increased by 13.2% in 2009. This change resulted mainly from the rise in interest and similar
income (See Note 20).
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S Note 20
Interest and similar income, other income from securities
Z Net interest and similar income
The change in interest and similar income can be broken down as follows:
2009/2008 change
2009
2008
in value
in %
134.1
223.4
-89.3
-40.0
123.8
174.2
-50.4
-28.9
10.3
49.2
-38.9
-79.1
655.3
751.6
-96.3
-12.8
12.6
20.5
-7.9
-38.5
,
,
,
,
Short-term loans
87.3
101.4
-14.1
-13.9
Capital expenditure loans
96.4
125.6
-29.2
-23.2
Home loans
335.6
329.3
6.3
1.9
Other loans
49.9
62.0
-12.1
-19.5
59.1
91.4
-32.3
-35.3
0.9
9.0
-8.1
-90.0
13.5
12.4
1.1
8.9
(in EUR millions)
Interest and similar income on
Transactions with banks (including central banks)
Commercial loans
Overdrafts
136.1
293.8
-157.7
-53.7
SUB-TOTAL
925.5
1,268.8
-343.3
-27.1
-95.1
-170.1
75.0
-44.1
-95.1
-158.7
63.6
-40.1
Interest and similar income on
Transactions with banks (including central banks)
-
-11.4
11.4
-100.0
-100.1
-203.3
103.2
-50.8
Special savings accounts (1)
-78.3
-106.7
28.4
-26.6
Other amounts due to customers
-14.3
-64.0
49.7
-77.7
-7.3
-32.0
24.7
-77.2
-0.2
-0.6
0.4
-66.7
Debt securities
-185.9
-487.4
301.5
-61.9
SUB-TOTAL
-381.1
-860.8
479.7
-55.7
39.0
53.3
-14.3
-26.8
Net income/expenses from
555.2
548.3
6.9
1.3
136.1
293.8
-157.7
-53.7
-185.9
-487.4
301.5
-61.9
544.4
408.0
136.4
33.4
Debt securities
TOTAL
174
I
I
Z Income from equity securities
2009/2008 change
(in EUR millions)
TOTAL INCOME FROM EQUITY SECURITIES
Income from equity securities is comprised mainly of EUR
78.4 million in dividends received from subsidiaries and
EUR 21.7 million in positive earnings from partnerships in
which Crédit du Nord is a shareholder, vs. EUR 83.4 million
2009
2008
in value
in %
108.8
103.4
5.4
5.2
108.8
103.4
5.4
5.2
in dividends received from subsidiaries and EUR 7.1 million
in positive earnings from partnerships in 2008. Furthermore,
a dividend from VISA Incorpoation of EUR 9.3 million was
recorded in 2008.
Z Income from the trading portfolio
2009/2008 change
(in EUR millions)
Income from fixed income instruments
Income from foreign exchange instruments
Income from trading securities
GAINS OR LOSSES ON TRADING PORTFOLIO TRANSACTIONS
2009
2008
in value
-79.2
15.0
-94.2
-
5.4
6.0
-0.6
-10.0
in %
0.6
3.7
-3.1
-83.8
-73.2
24.7
-97.9
-
Z Income from the short-term investment portfolio
2009/2008 change
2009
2008
in value
in %
Amortisation
-5.8
-60.0
54.2
-90.3
Reversals
39.2
1.6
37.6
-
0.3
-0.1
0.4
-
33.7
-58.5
92.2
-
(in EUR millions)
Income from disposals
GAINS OR LOSSES ON SHORT-TERM INVESTMENT
PORTFOLIO TRANSACTIONS
In 2009, impairment reversals were mainly linked to bonds for EUR 13.1 million and negotiable debt instruments for EUR 25.6
million which had been impaired in 2008.
175
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I
S Note 21
Net fee income
Net fee income can be broken down by type, as follows:
2009/2008 change
(in EUR millions)
Fee income from
2009
2008
in value
in %
152.4
149.7
2.7
1.8
80.3
92.3
-12.0
-13.0
1.2
1.2
-
-
16.8
16.2
0.6
3.7
Services
238.5
244.6
-6.1
-2.5
SUB-TOTAL
489.2
504.0
-14.8
-2.9
-0.7
-0.7
-
-
-0.1
-
-0.1
-
Financing and guarantee commitments
Fee income from
Financing and guarantee commitments
-0.4
-0.3
-0.1
33.3
Services
-48.1
-47.7
-0.4
0.8
SUB-TOTAL
-49.3
-48.7
-0.6
1.2
439.9
455.3
-15.4
-3.4
2009
2008
in value
-422.5
-412.4
-10.1
2.4
-17.4
-16.7
-0.7
4.2
-173.4
-175.7
2.3
-1.3
TOTAL NET FEE INCOME
S Note 22
Operating expenses
2009/2008 change
(in EUR millions)
Personnel expenses
Taxes
Other expenses
OPERATING EXPENSES
176
in %
-59.2
-59.1
-0.1
0.2
-672.5
-663.9
-8.6
1.3
I
I
S Note 23
Personnel expenses
Personnel expenses, which came out at EUR 422.5 million, can be broken down as follows:
2009/2008 change
(in EUR millions)
Employee compensation
2009
2008
in value
in %
-249.2
-243.6
-5.6
2.3
Social security charges and payroll taxes
-70.8
-71.1
0.3
-0.4
Retirement expenses
-44.3
-48.4
4.1
-8.5
-35.9
-35.4
-0.5
1.4
-8.4
-13.0
4.6
-35.4
Defined contribution schemes
Defined benefit plans
Other social security charges and taxes
-35.5
-34.5
-1.0
2.9
Employee profit-sharing and incentives
-29.3
-20.8
-8.5
40.9
-17.7
-15.1
-2.6
17.2
-4.8
-
-4.8
-
o/w incentives
o/w profit-sharing
Transfer of charges
TOTAL
6.6
6.0
0.6
10.0
-422.5
-412.4
-10.1
2.4
«Employee compensation» includes salaries, changes in provisions in company liabilities excluding complementary benefits.
«Social security charges and payroll taxes» includes contributions to statutory benefit plans excluding pensions.
«Retirement expenses - defined contribution plans» includes contributions to statutory and retirement plans and complementary pension plans as well as benefits payable for
retirement.
«Retirement expenses - defined benefit plans» includes changes in provisions for complementary retirement pension plans and insurance premiums and payments for retirement
benefits.
«Other social security charges and taxes» covers all other salary charges paid to specialised bodies.
“Employee profit-sharing and incentives (including top-ups)” includes sums paid for employee profit-sharing schemes, incentives and top-ups paid by the Group’s businesses on
payments by employees into the company savings plan.
“Transfer of charges” corresponds to personnel expenses capitalised for the development of business software.
2009/2008 change
2009
2008
in value
in %
Average staff count in activity
5,415
5,415
-
-
Staff count recorded at December 31
5,913
5,965
-52
-0.9
(in EUR millions)
Compensation of the administrative and decision-making bodies stood at EUR 2.2 million as at December 31, 2009
177
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S Note 24
Other operating expenses, depreciation and amortisation
Z Other operating expenses
2009/2008 change
2009
2008
in value
in %
-17.4
-16.7
-0.7
4.2
-173.4
-175.7
2.3
-1.3
Rent and rental charges
-36.1
-31.2
-4.9
15.7
Sub-contracting expenses
-72.9
-80.8
7.9
-9.8
Postal and telecommunication expenses
-17.9
-16.6
-1.3
7.8
Transport and travel
-11.0
-13.4
2.4
-17.9
(in EUR millions)
Taxes
Other expenses
Sales development and marketing operations
Other operating expenses
-9.5
-10.3
0.8
-7.8
-47.8
-46.2
-1.6
3.5
21.8
22.8
-1.0
-4.4
-190.8
-192.4
1.6
-0.8
Transfer of charges
TOTAL
The figures in the table above, line to line, are gross, i.e. before
any capitalisation: if and when charges are capitalised, they
also appear, deducted from total, in the last line, “Transfer of
charges”.
generated by the production of different software packages
for internal use at Crédit du Nord. After capitalisation, these
software packages are amortised over 3 to 5 years as of their
installation.
Note that, in accordance with the measures provided for in
accounting regulations, and in respect of these measures, in
2009 Crédit du Nord capitalised EUR 21.8 million in charges
from the «Sub contracting expenses» entry (vs. EUR 22.8
million at end-2008). This sum corresponds to the expenses
In 2009, the Group’s global audit expenses for the Statutory
Auditors amounted to EUR 405,000 excluding tax (excluding
expenses and outlay). This sum is entered into the heading
“Other operating expenses”, which can be broken down as
follows:
Deloitte
(in EUR millions)
Statutory Auditors, certification,examination
of individual and consolidated accounts
Additional assignments
Ernst & Young
2009
2008
2009
2008
-180.5
-177.0
-180.5
-177.0
-14.0
-5.0
-30.0
-25.0
Z Amortissements
2009/2008 change
(in EUR millions)
Amortisation expense on tangible fixed assets
Depreciation expense on tangible fixed assets
Amortisation expense on intangible fixed assets
TOTAL
178
2009
2008
in value
in %
-28.8
-27.8
-1.0
3.6
-
-
-
-
-30.4
-31.3
0.9
-2.9
-59.2
-59.1
-0.1
0.2
I
I
S Note 25 Cost of risk
2009
(in EUR millions)
Impairment of doubtful loans
(1)
TOTAL
(1) o/w disputes
Note that «Cost of risk» corresponds exclusively to
counterparty risk relative to banking intermediation activities.
2009/2008 change
2008
in value
in %
-114.2
-85.6
-28.6
33.4
-114.2
-85.6
-28.6
33.4
-1.6
1.1
Allowances and reversals for other risks are recorded to the
same accounts as the covered expenses.
Cost of risk can be broken down as follows:
(in EUR millions)
Allowance for the fiscal year (see Notes 8 and 14)
2009
2008
-205.9
-176.0
-6.7
-7.7
Losses not covered by impairments
Losses covered by impairments
-19.2
-30.7
Reversals (including uses of impairments) (see Notes 8 and 14)
113.7
123.3
Amounts recovered on impaired loans
TOTAL
In the difficult environment of 2009, cost of risk shot up
33.4% on 2008. Divided by the total number of outstanding
loans, the level of provisioning stood at 0.79% (2) in 2009
versus 0.58% in 2008 and 0.26% in 2007. Also note that
3.9
5.5
-114.2
-85.6
Crédit du Nord booked EUR 19.9 million in «Allowances for
credit risks» (see Note 14).
(2) 0.76%, excluding provisions on MALACHITE securities (rerversed
during the purchase of certain Etoile Gestion assets) for EUR 3.4 million.
S Note 26
2009/2008 change
(in EUR millions)
2009
2008
in value
in %
Net income from equity investments
99.8
0.2
99.6
-
Net income from investment securities
Net income from disposals of operating fixed assets
TOTAL
Net income from equity investments was mainly derived from
the capital gain on the sale of Dexia-C.L.F Banque shares for
EUR 11.5 million and a gross capital gain of EUR 87.8 million
0.7
-
0.7
-
-
0.5
-0.5
-100.0
100.5
0.7
99.8
-
generated on the contribution of all Etoile Gestion shares to
Etoile Gestion Holding (Note 5).
179
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I
S Note 27
Income tax
2009/2008 change
2009
2008
in value
in %
Current income tax
-51,4
-16,4
-35,0
-
Deferred tax
-52,7
-59,0
6,3
-10,7
67,0
60,8
6,2
10,2
-37,1
-14,6
-22,5
154,1
(in EUR millions)
Gain due to tax consolidation
TOTAL
Since January 1, 2000, Crédit du Nord, as the head of the
Group, has established the overall net income relative to the
companies belonging to the tax consolidation scope (Art. 223
A to U of the French General Tax Code).
The tax savings in 2009 resulting from this tax consolidation
came out at EUR 67.0 million, which was booked to income.
The tax consolidation convention adopted is that of
neutrality. This means that, as regards corporate tax (as
well as the additional social security contributions and the
social contribution on profits), the tax is determined by the
subsidiaries as if there were no tax consolidation.
U current tax of EUR 51.4 million (representing income tax
payable for 2009);
Once calculated, after deduction of any dividend tax credits
and tax credits, these amounts are due to the parent company.
As a result, the corporate tax (an expense of EUR 37.1 million)
corresponds to:
U deferred tax on temporary differences totalling EUR 52.7
million (expenses);
U tax consolidation income of EUR 67.0 million (income).
Z Breakdown of the tax expense
The tax expense can be broken down as follows in relation to pre-tax income:
Pre-tax income
Theoretical tax expense
-126.9
Normal tax rate, including temporary increases
34.43%
Permanent differences and other items
-8.01%
Tax differential on profits taxed outside France
-0.64%
Differential on items taxed at a reduced rate
-9.77%
Net gain of tax consolidation
-6.00%
Miscellaneous
Apparent tax rate, including temporary increases
Real tax expense
180
368.5
0.06%
10.07%
-37.1
I
I
S Note 28
Information concerning subsidiaries and equity investments
(in EUR thousands)
Capital
Reserves
and
Share of
retained
capital
earnings owned (in %)
Net asset
value of
shares Unpaid loans
owned and advances
Guarantees
Net
and endorse Banking
given Income
2009 Net
Income
Dividends
received Obserin 2009 vations
A. Information concerning subsidiaries and equity investments owned by Crédit du Nord, whose net
asset value exceeds 1% of the bank’s capital.
Subsidiaries (at least 50% of capital owned)
Banque Courtois
33, rue Rémusat
31000 Toulouse
17,384
123,464
100.00
54,056
56,794
32,160 154,678
42,764
21,078
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
26,529
134,250
80.00
74,881
48,500
67,993 116,750
30,506
7,428
Banque Rhône-Alpes
20-22, boulevard Edouard Rey
38000 Grenoble
3,953 132,800
32,384
19,044
7,695
3,325
1,500
11,917
118,756
98.34
93,886
45,051
Norbail Immobilier
50, rue d’Anjou
75008 Paris
8,000
10,017
100.00
7,811
441,260
Société de Bourse Gilbert
Dupont
50, rue d’Anjou
75008 Paris
3,806
7,306
99.99
8,062
-
- 13,970
1,113
-
Banque Nuger
7, place Michel-del’Hospital
63000 Clermont-Ferrand
11,445
34,162
63.19
13,921
-
3,402 33,861
10,794
2,365
Banque Laydernier
10, avenue du Rhône
74000 Annecy
24,789
32,516
96.82
44,435
101,633
4,573 61,758
14,824
5,550
Etoile ID
75008 Paris
15,400
7,644
100.00
22,977
-
6,801
6,554
5,282
Banque Kolb
1-3, place du Général-deGaulle
88500 Mirecourt
14,099
48,679
78.44
46,606
3,975
4,634 60,200
13,385
4,554
Kolb Investissement
75008 Paris
77
9,714
100.00
38,964
-
1,321
1,273
-
Star Lease
75008 Paris
55,000
19,171
100.00
55,000
1,316,562
352,077 22,479
4,509
-
170, place Henri-Régnault
92043 Paris-la-Défense
155,000
-
69.42
107,595
10
-
-
-4
-
Hedin
75008 Paris
32,147
-7,374
94.99
30,540
-
-
-3,406
-3,593
-
Nordenskiöld
75008 Paris
32,656
-7,135
94.99
31,023
-
-
-2,370
-2,435
-
85,440
-
-
(1)
181
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I
Capital
(in EUR thousands)
Reserves
and
Share of
retained
capital
earnings owned (in %)
Net asset
value of
shares Unpaid loans
owned and advances
Guarantees
Net
and endorse Banking
given Income
2009 Net
Income
Dividends
received Obserin 2009 vations
Verthema
75008 Paris
24,451
-5,379
94.99
23,229
-
-
-1,787
-1,852
-
Legazpi
17, cours Valmy
92800 Puteaux
23,888
-5,366
50.00
11,944
-
-
-2,063
-2,067
-
Equity investments (less than 50% of capital owned)
Crédit Logement
50, boulevard Sébastopol
75003 Paris
Sicovam Holding
18, rue La Fayette
75009 Paris
Antarius
75008 Paris
Croissance
Nord Pas-de-Calais
Euralliance - Porte A
2 avenue de Kaarst
59777 Euralille
1,253,975
57,785
3.00
38,852
86,665
112,000 169,002
85,103
2,423
(2)
10,265
620,095
6.10
14,889
-
- 10,959
-82,408
627
(3) (4)
284,060
5,297
49.99
142,407
-
- 55,820
27,077
11,451
47,500
5,890
13.20
7,883
-
-
289
-
(2) (4)
6,882
B. General information concerning other subsidiaries and equity investments
Subsidiaries not covered in Paragraph A
a) French subsidiaries
(combined)
-
-
-
11,243
158,841
43,245
-
-
-
b) Foreign subsidiaries
(combined)
-
-
-
-
-
-
-
-
-
Equity investments (5) not covered in Paragraph A
a) French equity
investments (combined,
incl. property dvlpt.
companies)
-
-
-
17,934
24,316
7,053
-
-
391
b) Foreign equity
investments (combined)
-
-
-
2,400
-
-
-
-
28
1)
The company’s 2009 net income is partially included in Crédit du Nord’s net income.
(2) Data in italics pertain to Dec. 31, 2008 (2009 data unavailable).
(3) Data in italics taken at July 31, 2009.
(4) For non-banking companies, revenue is indicated rather than Net Banking Income.
(5) Including equity investments of less than 10% recorded in equity investment accounts, in accordance with the provisions of the internal charts of accounts.
Note Net income and Net Banking Income for 2009 are indicated for some companies, subject to the approval of the financial statements by the General Meeting of Shareholders
scheduled to meet in 2010.
182
I
I
S Note 29
Main changes in the investment portfolio in 2009
None
In accordance with the provisions of Article L.233.6 of the
French Commercial Code, the table below summarises the
significant changes in Crédit du Nord’s investment portfolio
recorded in 2009 (note that legal thresholds exist at 5%,
10%, 20%, 33% and 50%).
Acquisition:
Upwards threshold crossings:
Crédit du Nord carried out the following transactions on its
securities portfolio during fiscal year 2009:
Creation:
Valeur Pierre Alliance (merger with Valeur Pierre 3)
Participation in capital increases:
Etoile Gestion Holding (formerly Starquarante et un) - Adevia
(formerly Artois Developpement) - Caisse de Refinancement
de l’Habitat
% of capital
Threshold
Company
50%
(formerly Starquarante et un)
31/12/2009
previous
69,42%
0,00%
Downward threshold crossings:
Liquidation – complete disposal:
Etoile Gestion - Dexia-C.L.F Banque - Axecia - Valeur Pierre
3 (merger with Valeur Pierre Alliance) - Les Parcs de Sausset
- Groupe Seagull - Etudes Rochelaises - Automatisme Avenir
Informatique - Lep Group PLC
Reduction of equity investment:
% of capital
Threshold
Company
5%
Axecia
0,00%
5,00%
20%
Dexia-C.L.F Banque
0,00%
20,00%
20%
Les Parcs de Sausset
0,00%
20,00%
50%
Etoile Gestion
0,00%
64,05%
31/12/2009
previous
Visa Inc - Financière Tour Boieldieu - FCPR PME France
investissement A - Caisse de Refinancement de l’Habitat Swift - SAS Carte Bleue - FCPI Gen-i
183
3I
I
Information on the Corporate Officers
S Information on the Corporate Officers
Over the course of 2009, the composition of the Board of Directors was affected by the following events:
U the appointment of Messrs. Stefaan DECRAENE, Pierre MARIANI, Philippe RUCHETON, Jean-François SAMMARCELLI
and Vincent TAUPIN;
U the renewal of the mandates of Messrs. Didier ALIX and Patrick DAHER;
U the resignations of Messrs. Didier ALIX, Stefaan DECRAENE, Jacques GUERBER, Hugo LASAT, Pierre MARIANI, Alex
PEYTAVIN, Christian POIRIER, Philippe RUCHETON and Alain PY.
U finally, following the elections of Employee Directors at the end of the year, Ms. Angélina HOLVOET was elected and replaced
Fabien FOUTRY, while Messrs. Pascal COULON and Jean-Pierre DHERMANT were re-elected.
Mandates and functions held over the past five years
Alain PY (resigned December 31, 2009)
Alain CLOT (resigned December 31, 2009)
– Chairman and CEO, Crédit du Nord (*);
– Chairman of the Board of Directors: Antarius (*);
– Permanent Representative of Crédit du Nord
• on the Supervisory Board: Banque Rhône-Alpes
(09/2002 to 02/2007);
• on the Board of Directors: Banque Rhône-Alpes
(since 02/2007);
– Director: Banque Tarneaud (*), Banque Laydernier (since
02/2007), SGAM (*).
– Chairman and Chief Executive Officer: Coupole Investment
Management (2007 to 10/2008);
– Chairman of the Board of Directors: SGAM IBERIA
(06/2004 to 12/2008); SGAM - SUISSE (12/2007 to
10/2008);
– Chairman: SGAM (10/2005 to 09/2008); SGAM AI (02/2004
to 10/2008); SGAM Index (formerly PARGESFOND)
(05/2005 to 10/2008); VOURIC (05/2008 to 06/2008);
– Chief Executive Officer: SGAM (02/2004 to 09/2008);
– Executive Vice Chairman, Crédit du Nord (11/2008 to
12/2009)
– Director: BAREP Asset Management SGAM (05/2004 to
06/2009); SOGECAP DSFS (12/2004 to 12/2008); SGAM
JAPON (since 06/2004); SGAM GROUP LTD (03/2004 to
04/2009); SBI FM SGAM (since 12/2004); SGAM Invest
Liquidités Euro (04/2002 to 01/2009); Banque RhômeAlpes (02/2009 to 12/2009)
– Member of the Supervisory Board: Banque Nuger
(05/2009 to 12/2009)
Marc BATAVE
– Executive Vice Chairman, Crédit du Nord (since 11/2008);
– Chairman of the Board of Directors: NORBAIL Immobilier
(03/ 2000 to 01/2007); STAR LEASE (09/2001 to 12/2006);
– Chairman of the Supervisory Committee: Banque Courtois
(since 05/2008); Banque KOLB (since 09/2005);
– Chairman of the Supervisory Committee: SNC Etoile
Gestion (*)
– Permanent Representative of Crédit du Nord: Banque
KOLB (05/2001 to 09/2005); Banque Pouyanne (02/2004
to 12/2006);
– Director: Antarius (*); Banque Tarneaud (*); Étoile ID
(formerly SPTF) (since 02/2004); STARLEASE (*); NORBAIL
Immobilier (since 05/2007);
– Member of the Supervisory Committee: Norfinance Gilbert
Dupont –SNC- (*);
(*)
184
Mandats exercés pendant les 5 dernières années.
I
I
Didier ALIX (resigned November 31, 2009)
Patrick DAHER
– Chairman and Chief Executive Officer: Sogébail (*);
– Chairman of the Supervisory Board: Komercni Banka (*);
– Deputy Chief Executive Officer: Société Générale (since
09/2006);
– Director: Crédit du Nord (since 07/2007); Franfinance (*) ;
Yves Rocher (*); Sogessur (2003 to 11/2006); Fiditalia (2003
to 12/2006); Banque Roumaine de Développement (*);
National Société Générale Bank SAE (NSGB) (*); Société
Générale de Banques au Cameroun (*); Société Générale
de Banques au Sénégal (*); Société Générale au Liban (*);
MSR International Bank (2005 to 12/2006);
– Director and Vice-Chairman: Société Générale de Banques
en Côte d’Ivoire (*);
– Member of the Supervisory Board: Société Générale
Marocaine de Banques (*); Groupama Banque (2003 to
10/2006);
– Permanent Representative of Salvépar on the Board
of Directors of Latécoère (2005 to 12/2006);
– Permanent Representative of Salvépar on the Board
of Directors of Latécoère (since 01/2007).
– Chairman of the Board of Directors: Compagnie DAHER
(since 2005);
– Chairman of the Supervisory Board : Grand Port Maritime
de Marseilles (2009)
– Chief Executive Officer: Compagnie DAHER (since 2005);
– Director and CEO: Sogemarco DAHER (since 2005);
– Director: Crédit du Nord (since 09/2005); DAHER
International Développement (since 2005); DAHER
Aérospace Ltd (2007); DAHER Inc. (2007); DAHER Sawley
Ltd (2005 to 2006); LISI (since 04/2008)
– Permanent Representative of DAHER MTS: Océanide
since 2005
– Permanent Representative of DAHER FLS: Transports
Angeleri (2005).
Séverin CABANNES
– Deputy Chief Executive Officer : Société Générale (since
05/2008);
– Director: Crédit du Nord (since 02/2007); Fiditalia (01/2007
to 04/2008); Genefimmo Cafi 1 (04/2007 to 04/2009); SG
Global Solution RESG/ITS (since 2007); Rosbank BHFM
(05/2008 to 06/2009); TCW Group (since 06/2009) ;
Amundi Group (since 31/12/2009);
– Member of the Supervisory Board: Komercni Banka (*);
Groupe Steria SCA (since 02/2007).
Stefaan DECRAENE
(resigned December 11, 2009)
– Chairman of the Board of Directors: Adinfo Belgium
(01/2005 to 05/2009) ; Dexia Asset Management
Luxembourg ; Dexia Participation Luxembourg (since
07/2009) ; FEBELFIN ; Dexia Foundation (ASBL) (02/2006
to 06/2009) ;
– Director : Crédit du Nord (05/2009 to 12/2009) ;
Denizbank ; Dexia (since 07/2009) ; Dexia Banka
Slovensko (since 03/2009) ; Dexia Banque Belgique ; Dexia
Bank International Luxembourg (since 02/2009) ; Dexia
Insurance Belgium ; Dexia Nederland Holding ; Europalia
International SCRL ; RBC Dexia Invesors Services Limited
(since 04/2009) ; Voka Vlaams Economisch Verbond ;
– Member of the Supervisory Board: Aviva France ( 2004
to 11/2008).
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Bruno FLICHY
Pierre MARIANI (resigned December 11, 2009)
– Director: Crédit du Nord (*) ; Eiffage (*) ; Aviva Participations (*);
Dexia Banque Belgique (since 02/2004); Aviva France
(since (11/2008);
– Member of the Supervisory Board: Aviva France (2004 to
11/2008).
– Director: Crédit du Nord (05/2009 to 12/2009) ; Dexia
(deputy director since 05/2009) ; Dexia Banque Belgique ;
Dexia Crédit Local ; Dexia Banque Internationale
Luxembourg ; EDF (since 11/2009) ;
– Member of the Supervisory Board: Aviva France (2004 to
11/2008).
Jacques GUERBER (resigned January 23, 2009)
– Vice-Chairman of Management Committee: Dexia SA
(2006 to 11/2008);
– Vice-Chairman of the Board of Directors: Dexia Asset
Management France (2003 to 09/2004);
– Director: Dexia SA (05/2007 to 10/2008); Dexia Crédit
Local (since 2007); Dexia Banque Belgique SA (since
2006); Dexia Banque Internationale à Luxembourg (since
03/2007); Crédit du Nord (02/2000 to 01/2009); Financial
Security Assurance Ltd(*); Dexia Participation Luxembourg
(since 06/2007); Dexia Insurance (2003 to 02/2006);
– Member of the Management Committee: Dexia Banque
Internationale à Luxembourg (2006 to 02/2007); Dexia
Banque Belgique (2006 to 02/2007);
– Chairman of the Supervisory Board: Dexia Municipal
Agency (*);
– Chairman of the Management Board: Dexia Crédit Local
(2003 to 01/2006);
– Chairman of the Board of Directors: IFAX (2003 to
11/2004);
– Member of the Supervisory Board: Financière Centuria
(2003 to 10/2007);
– Permanent Representative of Dexia Crédit Local: Dexia
Finance (2003 to 06/2006).
Hugo LASAT
– Chairman of the Board of Directors: Dexia Asset
– Management SA (since 04/2003); Dexia Asset
Management Luxembourg (since 02/2007); Dexia Banque
Privée (since 03/2007);
– Chairman: Crédit du Nord (02/2007 to 01/2009); Dexia
Bank Denmark (since 03/2005); Dexia Insurance (since
05/2007); Popular Banca Privada (since 03/2006);
Denizbank AS (since 01/2007);
– Member of the Management Committee: Dexia SA (2007).
186
Christian POIRIER (resigned October 22, 2009)
– Chairman: SOGEFINANCEMENT SAS (until 05/2005);
– Director: Crédit du Nord 04/1997 to 10/2009) ; Fiditalia
(until 09/2009) ; Genefinance (until 09/2009) ; Sogébail
(2003 to 03/2007) ; Deltacrédit (2006 to 09/2009) ; Fimat
Banque (2007) ; Génébanque (05/2007 to 09/2009) ;
Généval (06/2007 to 09/2009) ; UIB (08/2007 to 09/2009) ;
Rosbank BHFM (2009)
– Member of the Supervisory Board: Groupama Banque
(until 10/2009); Komercni Banka (*);
– Permanent Representative of Société Générale: Crédit
Logement (2003 to 04/2007); ECS (*); SOGECAP (03/2007
to 09/2009); OSEO SOFARIS (05/2005 to12/2006); SIAGI
(08/2006 to 12/2006);
Philippe RUCHETON
(resigned December 11, 2009)
– Chairman: Dexia Municipal Agency (since 05/2009);
– Member of the Supervisory Board: Dexia Municipal Agency
(since 05/2009);
– Director: Crédit du Nord (05/2009 to 12/2009); Dexia
Asset Management Luxembourg (since 02/2009); Dexia
Crédit Local (since 02/2009); Dexia Insurance Belgium
(since 05/2009);
Patrick SUET
– Chairman of the Board of Directors: Généras SA (*);
– Chairman of SGBT Luxembourg (since 06/2009);
– Member of the Supervisory Board: Lyxor Asset
Management (since 05/2005); Lyxor International Asset
Management (since 05/2005);
– Director: Crédit du Nord (*) ; Généras SA (*) ; Sogé
Participations (04/2001 to 05/2008); Clickoptions (*); SGBT
Luxembourg (since 11/2006);
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Vincent TAUPIN
– Deputy Chief Executive Officer of Société Générale since
2009
– Chairman of the Board of Directors: CGA (since 2005);
– Director: Crédit du Nord (since 11/2009); SOGECAP (since
03/2005); SOGESSUR (*); SG Equipement Finances (*);
SOGESSUR (since 12/2006); SOGEPROM (since 2009);
Boursorama (since 05/2009); Généfinance, Généfim and
Mibank (until 2006); Société Financière Lyonnaise (until
2005);
– Member of the Supervisory Board of: SKB Banka (until
05/2009); SG Marocaine de Banque (since 2007); public
limited company “Fonds de garantie des dépôts” (since
06/2009);
– Permanent Representative of SG FSH on the Board of
Directors of Franfinance (since 12/2007);
– Non-Voting Director of Ortec Expansion (since 04/2009).
– Chairman and Chief Executive Officer: Boursorama
(05/1999 to 12/2009);
– Director: Crédit du Nord (since 11/09); Antarius (since
12/2009); Euromirabelle (until 06/2009); Talos Securities
Limited (until 12/2009); Talos Holdings Limited (until
12/2009); Veritas (until 07/2008); ESGL (until 03/2008);
Amundi Group (since 12/2009);
– Member of the Supervisory Board of public limited
company “On Vista Bank” (09/2009 to 12/2009). Pascal COULON
– Employee Director: Crédit du Nord (since 07/2009).
Jean-Pierre DHERMANT
Angélina HOLVOET
To the best of Crédit du Nord’s knowledge, there are no conflicts of interest between Crédit du Nord and the members of the
Board of Directors, with respect to either their personal or professional interests.
Other information
Shares held by the Directors
Ethics
U In accordance with Article 11 of the by-laws, the Directors
hold at least 10 shares.
U All Directors refrain from carrying out transactions in the
shares of the companies on which (and to the extent that)
they hold, by virtue of their offices, information which has
not yet been made public.
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SENIOR MANAGEMENT
REMUNERATION POLICY
The remuneration of the three senior management corporate
officers includes:
U fixed annual compensation;
U performance-based compensation in the form of a bonus,
paid at the end of each fiscal year following the closing
of accounts, which is determined as a percentage of the
fixed compensation.
Mr. Alain PY: as his fixed annual compensation had not
been revised since 2007, it was decided that it would be
raised by 5% in 2009. The percentage of his performancebased compensation, initially set by decision of the Board of
Directors meeting of July 26, 2006, re-approved by the Board
of Directors meeting of February 20, 2009, is 60% maximum
of the fixed annual compensation; this percentage shall be
valid through to the expiry of his mandate.
Payment of the percentage of fixed compensation indicated
above is subject to return on equity reaching a pre-determined
percentage, set at 16.6% for fiscal year 2009 by the Board of
Directors on February 20, 2009.
If for any given fiscal year, return on equity observed does not
match return on equity expected, the amount of performancebased compensation, expressed as a percentage of the
fixed compensation, is modified in proportion to the ratio
between return on equity observed divided by return on equity
expected.
Messrs. BATAVE and CLOT: the Special Compensation
Committee, which met on February 20, 2009, proposed that
the directors maintain their fixed compensation and benefits
(company car, housing) at the same level.
Their performance-based compensation is set at 40%
maximum of their fixed compensation; for 2009, this rate will
be paid if the bank’s 2009 ROE reaches 16.6%.
Post-mandate benefits
Alain PY benefited from the supplementary pension plan for
senior group managers of Société Générale, to which he was
entitled as an employee of Société Générale.
This plan guarantees that at the date on which their pension
benefits are settled by Social Security, beneficiaries will receive
a total amount equal to a percentage of compensation serving
as a base, determined according to the number of annuities
taken into account and capped at 70% of said compensation.
The base compensation is the fixed compensation plus
performance-based compensation (equal to 5% of fixed
compensation). The pension for which the Company is
responsible is equal to the difference between the overall
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pension defined above and all pension funds and similar
benefits paid by Social Security and all other retirement plans
for the beneficiary’s salaried activity. 60% of said pension shall
be paid to any surviving spouse in the event of the death of
a beneficiary.
Mr. Alain PY remained a corporate officer until
December 31, 2009, the date on which he resigned in order
to take his retirement. None of the costs of Mr. PY’s pension
shall be borne by Crédit du Nord, as it is fully covered by
Société Générale.
Alain Clot benefited from the complimentary pension plan
for senior group managers, to which he was entitled as an
employee of Société Générale. This complementary regime
was set up in 1991. At the date of settlement of their Social
Security pension, it offers beneficiaries a total pension equal
to the product of the following two terms:
U the average, over the last ten years of the beneficiary’s
career, of the fraction of fixed compensation exceeding
«Tranche B” of the AGIRC, plus performance-based
compensation equal to 5% of fixed compensation;
U the rate equal to the number of annuities corresponding
to the beneficiary’s periods of employment with Société
Générale divided by 60.
AGIRC’s “Tranche C” pension, acquired by the beneficiary
for employment with Société Générale, is deducted from
this overall pension. The complementary allocation paid by
Société Générale is increased for beneficiaries having raised
at least three children and for those taking their retirement
after age 60. It cannot be less than one-third of the full-rate
value of service of AGIRC “Tranche B” points acquired by
the beneficiary since his or her entry in Société Générale’s
“Unclassified” category.
Mr. Alain CLOT remained a corporate officer until
December 31, 2009, the date on which he resigned. No
pension costs shall be borne by either Crédit du Nord
or Société Générale, as these benefits depend on the
employee’s continued employment with the company upon
the settlement of the pension.
Marc BATAVE holds an employment contract with Crédit
du Nord, the application of which was suspended during
his appointment in November 2008, and for the term of his
corporate mandate.
This employment contract will become fully effective again in
the event of the termination of the corporate mandate, at the
date of said termination, for any reason whatsoever.
For the term of his corporate mandate, Marc BATAVE shall
maintain all of the benefits acquired prior thereto as an
employee of Crédit du Nord. He shall notably maintain the
benefit of the provisions of the supplementary pension plan
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I
for senior group managers established by the Supervisory
Board of Crédit du Nord on September 5, 1996.
This plan guarantees that, at the date on which the pension
benefits are settled by Social Security, beneficiaries shall
receive an additional pension corresponding to the difference
between:
U an amount equal to 50% of the average, calculated
over the last five best years out of the last ten years of
employment, of the annual gross sums received for
employment with Crédit du Nord Group, although the
amount thus determined may not exceed 60% of the
annual contractual compensation for these same years;
U if less, the total of the pension plans (excluding increases
for large families) and other income acquired from Social
Security, of any other basic plans, of any other statutory
retirement plans by distribution or capitalisation, of any
compensation received for dismissible positions after
retirement, and of any compensation received from
positions held prior to employment with the Group.
It has been expressly agreed that during the term of the
mandate, fixed compensation (excluding the annual allocation
linked to the mandate addressed above) and performancebased compensation, paid during the term of the mandate,
shall be considered as salaried employment periods and
compensations for the determination of the amount of
guarantees provided for by this plan at the appropriate time.
Messrs. PY, BATAVE and CLOT do not benefit from any
provisions providing for compensation in the event they are
led to step down from their corporate mandates.
At the Board of Directors’ meeting of November 3, 2009, Mr.
Alain PY – Chairman and Chief Executive Officer of Crédit du
Nord – notified the Board that, in order to take his retirement,
he was tendering his resignation as Chairman and Chief
Executive Officer on December 31, 2009.
At the same meeting of the Board, the decision was made
to separate the duties of the Chairman from those of the
Chief Executive Officer. Consequently, on January 1, 2010,
Mr. Jean-François SAMMARCELLI became Chairman of
the Board of Directors of the Bank, and Mr. Vincent TAUPIN
became Chief Executive Officer.
ATTENDANCE FEES PAID TO DIRECTORS
The amount of attendance fees was set at EUR 75,000 by the
General Meeting of Shareholders on May 4, 2000.
The rules for distributing attendance fees among directors,
drawn up by the Board of Directors on March 12, 1998, are
as follows:
U half of the attendance fees are distributed in equal parts
among the directors;
U the balance is divided up among directors in proportion to
the number of Board meetings attended by each director
during the fiscal year. The share belonging to absentees
is not redistributed among the other directors but is kept
by Crédit du Nord.
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AFEP/MEDEF AND AMF RECOMMENDATIONS
The Board of Directors of Crédit du Nord examined and decided to apply the AFEP/MEDEF recommendations on compensation
of senior management corporate officers.
The standardised presentation of their compensation, prepared in accordance with AFEP/MEDEF recommendations, is
presented below.
STANDARDISED TABLES IN COMPLIANCE WITH AFEP/MEDEF AND AMF RECOMMENDATIONS
Table 1
STATEMENT OF COMPENSATION, OPTIONS AND SHARES AWARDED TO EACH SENIOR MANAGEMENT CORPORATE OFFICER
Fiscal year 2008
Fiscal year 2009
Remuneration due for the fiscal year (detailed in Table 2)
541,517
684,710
Valuation of options awarded during the fiscal year (detailed in Table 4)
357,746
0
Alain PY, Chairman and Chief Executive Officer
Valuation of performance-based shares awarded during the fiscal year
(detailed in Table 6)
TOTAL
96,510
0
995,773
684,710
Marc BATAVE, Executive Vice Chairman (*)
26,667
306,541
0
28,300
0
39,122
26,667
373,963
46,668
411,752
0
0
TOTAL
Alain CLOT, Executive Vice Chairman (*)
TOTAL
0
0
46,668
411,752
(*) The mandates of Messrs. BATAVE and CLOT as Executive Vice Chairmen began on November 1, 2008.The compensation indicated concerns the period during which these
mandates were held during fiscal year 2008.
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Table 2
STATEMENT OF COMPENSATION PAID TO EACH SENIOR MANAGEMENT CORPORATE OFFICER (1)
Fiscal year 2008
Fiscal year 2009
Amount
paid
Amount due
for the fiscal year
Amount
paid
Amount due
for the fiscal year
- fixed compensation
360,000
360,000
378,000
378,000
- performance-based compensation (2)
251,748
176,184
176,184
255 000
(3)
47,328(3)
0
0
Alain PY, Chairman and Chief Executive Officer
- exceptional compensation
0
0
- attendance fees
0
0
- benefits in kind
(3)
TOTAL
47,328
5,333
5,333
4,382
4,382
617,081
541,517
558,566
684,710
26,667
26,667
205,000,(6)
205,000,(6)
0
0
0
81,000
Marc BATAVE, Executive Vice Chairman (4)
- performance-based compensation
(2)
0
0
0
14,000
- attendance fees
0
0
0
0
- benefits in kind
(3)
TOTAL
1,579
1,579
6,541
6,541
28,246
28,246
306,541
306,541
46,668
46,668
280,000
280,000
Alain CLOT, Executive Vice Chairman (4)
- performance-based compensation
(2)
0
0
0
126 000
0
0
0
0
- attendance fees
0
0
0
0
- benefits in kind
(3)
TOTAL
0
0
5,752
5,752
46,668
46,668
285 752
411 752
(1) Compensation items are denominated in euros, on a gross pre-tax basis.
(2) The criteria based on which these items were calculated are detailed in the section pertaining to the compensation of corporate officers.
(3) This amount includes the payment of paid holiday and the monetisation of days in the Time Savings Account.
(4) Provision of a company car.
(5) For the period of activity at Crédit du Nord as Chairman and Chief Executive Officer (2 months in 2008 and 12 months in 2009).
(6) o/w EUR 25,000 in compensation paid for the impacts of the suspension of the employment contract with Crédit du Nord.
(7) Concerns the provision of a company car and the payment of a housing allowance, paid on a prorata basis for the period during which the mandate was exercised, i.e.
EUR 3,835 and EUR 2,706, respectively, for 2009.
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Table 3
STATEMENT OF ATTENDANCE FEES
Members of the Board
Alain PY (1)
Attendance fees
paid in 2008
Attendance fees
paid in 2009
5,000
5,000
-
-
Marc BATAVE
Alain CLOT
-
-
Didier ALIX
4,375
5,000
Séverin CABANNES (1)
5,000
4,375
-
3,750
Pascal COULON (2)
Patrick DAHER
3,750
4,375
-
1,875
Jean-Pierre DHERMANT (2)
4,375
5,000
Bruno FLICHY
4,375
5,000
-
3,750
4,375
-
3,125
-
Stefaan DECRAENE
Fabien FOUTRY
(3)
Jacques GUERBER
(4)
Hugo LASAT (4)
Pierre MARIANI
(5)
Axel MILLER (4)
Alex PEYTAVIN
(2)
Christian POIRIER (1)
Marie-Christine REMOND
(4)
-
2,500
3,125
-
5,000
1,250
5,000
3,750
5,000
-
-
2,500
Philippe RUCHETON (5)
Patrick SUET (1)
TOTAL
5,000
5,000
57,500
53,125
(1) Paid to Société Générale
(2) Paid to the CFDT Crédit du Nord union
(3) Paid to the CGT du Crédit du Nord union
(4) Director having left prior to the first Board meeting of 2009
(5) Paid to Dexia SA
Table 4
STOCK OPTIONS AWARDED DURING THE FISCAL YEAR TO EACH SENIOR MANAGEMENT
CORPORATE OFFICER BY THE ISSUER AND BY ANY COMPANY BELONGING TO THE GROUP
Name of senior
management
corporate officer
Date
of plan
Valuation of options Number of options
Type of options
based on the method
awarded during
(purchase or used for the consolidated
the
subscription)
accounts (1)
fiscal year
Strike
price
Exercise
period
Alain PY
09/03/2009
Subscription
5.88
0
€23.18
09/03/2012
to 03/03/2016
Marc BATAVE
09/03/2009
Subscription
5.88
4,813
€23.18
09/03/2012
to 03/03/2016
Alain CLOT
09/03/2009
Subscription
5.88
0
€23.18
09/03/2012
to 03/03/2016
(*) This value corresponds to the value of the options at the time they were awarded, in accordance with IFRS 2, after primarily taking into account a potential discount linked to
performance criteria and the probability of the individual’s continued presence in the company at the end of the acquisition period, but before the averaging effect under IFRS 2 of
the expense over the acquisition period.
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Table 5
STOCK OPTIONS AWARDED DURING THE FISCAL YEAR
Date
of plan
Name of senior management corporate officer
Number of options exercised
during the fiscal year
Alain PY
No options exercised in 2009
Marc BATAVE
Alain CLOT
TOTAL
Strike price
0
Table 6
PERFORMANCE-BASED SHARES AWARDED TO EACH CORPORATE OFFICER (1)
Performance-based shares awarded
to each corporate officer
over the fiscal year, by issuer
Date
of plan (2)
Number of shares
awarded during
fiscal year 2008
Valuation of
shares (3)
Acquisition date
Date
of availability
Performance
based
Alain PY
20/01/2009
0
17.38€
31/03/2012
31/03/2014
Yes (5)
Marc BATAVE
20/01/2009
2,251
17.38€
31/03/2012
31/03/2014
Yes (5)
Alain CLOT
20/01/2009
0
17.38€
31/03/2012
31/03/2014
Yes (5)
TOTAL
2,251
(1) Performance-based shares are free shares awarded to corporate officers, in accordance with Articles L.225-197-1 et seq. of the French Commercial Code, and which are subject
to additional requirements provided for by the AFEP/MEDEF recommendations of October 2008.
(2) Date of the Board of Directors meeting.
(3) Value of the shares at the time they were awarded, in accordance with IFRS 2, after primarily taking into account a potential discount linked to performance criteria and the
probability of the individual’s continued presence in the company at the end of the acquisition period, but before the averaging under IFRS 2 of the expense over the acquisition
period.
(4) The performance-based conditions were established by the parent company, Société Générale, and are detailed in the section entitled «Corporate Governance» in its registration
document.
Table 7
PERFORMANCE-BASED SHARES (*) PERMANENTLY AWARDED TO EACH SENIOR
MANAGEMENT CORPORATE OFFICER DURING THE FISCAL YEAR
Date of plan
Number of shares which became
available during the fiscal year
Alain PY
18/01/2006
413
Alain PY
19/01/2007
309
Marc BATAVE
18/01/2006
163
Marc BATAVE
19/01/2007
165
Alain CLOT
18/01/2006
187
Alain CLOT
19/01/2007
171
TOTAL
1 408
(*) Performance-based shares are free shares awarded to corporate officers, in accordance with Articles L.225-197-1 et seq. Of the French Commercial Code, and which are subject
to additional requirements provided for by the AFEP/MEDEF recommendations of October 2008.
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Table 8
HISTORY OF STOCK OPTIONS AWARDED
INFORMATION ON SUBSCRIPTIONS OR PURCHASES (1)
Date of Board of Directors meeting
Total number of shares (2) available for
subscription or purchase
09/03/09
21/03/08
19/01/07
18/01/06
13/01/05
14/01/04
22/04/03
16/01/02
1,344,552
2,328,296
1,418,954
1,738,367
4,656,319
4,270,014
4,110,784
3,614,262
0
22,774
18,118
25,649
40,040
38,300
33,902
23,200
o/w number of shares available for
subscription or purchase by the corporate
officers
Corporate officer 1: Alain PY
Corporate officer 2: Marc BATAVE (3)
4,813
Corporate officer 3: Alain CLOT (3)
0
Beginning of exercise period
09/03/12
21/03/11
19/01/10
18/01/09
13/01/08
14/01/07
22/04/06
16/01/05
Expiry date
08/03/16
20/03/15
18/01/14
17/01/13
12/01/12
13/01/11
22/04/10
15/01/09
23.18
63.60
115.60
93.03
64.63
60.31
44.81
57.17
Subscription or purchase price (4)
Terms of exercise (where the plan
includes several tranches)
Number of share subscriptions
at Dec. 31, 2009
411
0
0
2,174
53,340
727,877
2,543,311
2,685,280
Total number of cancelled
or expired stock options
419,986
54,570
47,763
89,728
244,220
134,496
205,783
928,982
Number of stock options remaining
at period end
924,155
2,273,726
1,371,191
1,646,465
4,358,759
3,407,641
1,361,690
0
(1) The table covers only those plans in which corporate officers were awarded stock options.
(2) Exercising an option gives the holder the right to one Société Générale share. This table reflects the adjustments made following capital increases. This line does not reflect the
options exercised since the date of allocation.
(3) Appointed as a corporate officer on November 1, 2008.
(4) The subscription or purchase price is equal to the average of the 20 share prices preceding the Board of Directors meeting.
Table 9
STOCK OPTIONS AWARDED TO THE TOP TEN EMPLOYEES (NON CORPORATE OFFICERS)
OF CRÉDIT DU NORD GROUP AND OPTIONS EXERCISED BY THESE EMPLOYEES
Options awarded during the fiscal year, by the issuer, to the top ten employees
of Crédit du Nord Group (the number indicated is the highest number of options
awarded)
Options held by the issuer, exercised during the fiscal year, by the top ten
employees of Crédit du Nord Group (the number indicated is the highest number of
options exercised)
* A single exercise in 2009
194
Total number of options
awarded/share subscriptions
or purchases
Average weighted price
4,409
€ 24.45
112
€ 44.81
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Table 10
SITUATION OF THE SENIOR MANAGEMENT CORPORATE OFFICERS
Dates of mandates
start
end
Alain PY
Chairman and CEO
2002
Marc BATAVE
Executive Vice Chairman
Alain CLOT
Executive Vice Chairman
Employment contract
with Crédit du Nord (1)
yes
Supplementary
pension plan (2)
Compensation or
benefits due or liable
to be due as a result of
the termination of the
mandate or a change
in position
no
yes
no
Compensation
relative to a noncompetition clause
no
yes
yes
no
2009
X
X
X
X
2008
2009
X (3)
X
X
X
2008
2009
X
X
X
X
(1) As regards the combination of a corporate mandate with an employment contract, the only positions addressed by the AFEP/MEDEF recommendations are Chairman of the
Board of Directors, the Chairman and Chief Executive Officer, and the Chief Executive Officer of companies with a Board of Directors.
(2) Detailed information on the supplementary pension plans is provided in the section entitled «Information on the corporate officer».
(3) Employment contract through to October 31, 2008, suspended since the start of the mandate
195
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I
Statutory Auditors’ Report on the Financial Statements
Statutory Auditors’ Report on the Financial
Statements
Year ended december 31, 2009
This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and it is provided
solely for the convenience of English-speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or
not. This information is presented below the audit opinion on the financial statements and includes an explanatory paragraph
discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were
considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate
assurance on individual account balances, transactions or disclosures.
This report also includes information relating to the specific verification of information given in the management report and in
the documents addressed to the shareholders.
This report should be read in conjunction with and construed in accordance with French law and professional auditing standards
applicable in France.
In compliance with the assignment entrusted to us by your
annual general meeting, we hereby report to you, for the year
ended December 31, 2009, on:
U the audit of the accompanying financial statements of
Crédit du Nord;
U the justification of our assessments;
U the specific verifications and information required by law.
These financial statements have been approved by the
board of directors. Our role is to express an opinion on
these financial statements based on our audit.
In our opinion, the financial statements give a true and fair
view of the assets and liabilities and of the financial position
of the company as at December 31, 2009, and of the results
of its operations for the year then ended, in accordance with
French accounting principles.
Without qualifying our opinion, we draw your attention to
the matter set out in Note 1 to the financial statements,
which details changes in accounting methods resulting from
the application, as from fiscal year 2009, of the new CRC
accounting regulation on the valuation of swaps.
Z II. Justification of our assessments
Z I. Opinion on the financial
statements
We conducted our audit in accordance with professional
standards applicable in France; those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit involves performing procedures,
using sampling techniques or other methods of selection, to
obtain audit evidence about the amounts and disclosures in
the financial statements. An audit also includes evaluating
the appropriateness of accounting policies used and the
reasonableness of accounting estimates made, as well as the
overall presentation of the financial statements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
196
The accounting estimates used to prepare the individual
financial statements as at December 31, 2009 were made in a
persistently unfavourable economic and market environment.
It is in this context that, in accordance with the requirements
of Article L. 823-9 of the French Commercial Code relative to
the justification of our assessments, we bring to your attention
to the following matters:
U In preparing the financial statements, as indicated in
Note 1 to the financial statements, your Company makes
provisions to cover the credit risks which are inherent
to its activities. Bearing in mind the specific context of
the financial crisis, we have reviewed and tested the
procedures implemented by Management to identify and
assess non-recovery risks and determine the amount of
individual and collective provisions necessary.
I
I
Statutory Auditors’ Report on the Financial Statements
U In the specific context of the current financial crisis, as
detailed in Note 1 to the financial statements, your
company uses internal models to measure financial
instruments that are not listed on active markets. Our
procedures consisted in reviewing the control procedures
for the models used, assessing the underlying data and
assumptions, and verifying that the risks and results
related to these instruments were taken into account.
U Also, in this context, we have reviewed the control
procedures relating to the identification of financial
instruments that can no longer be traded on an active
market or for which market parameters could no longer
be observed, and the methodology used for their valuation
as a consequence.
U In preparing its financial statements, your company
also made significant accounting estimates, using the
methods described in Note 1 to the financial statements.
These estimates notably relate to the valuation of equity
investments and portfolio securities, as well as pension
commitments and other post-employment benefits.
Bearing in mind the specific context of the crisis, we have
reviewed and tested the procedures implemented by
Management, the assumptions and parameters used, and
ensured that these accounting estimates are based on
documented methods in accordance with the principles
described in Note 1 to the financial statements.
These assessments were made as part of our audit of
the financial statements taken as a whole and, therefore,
contributed to the opinion we formed which is expressed in
the first part of this report.
Z III. Specific verifications
and information
We have also performed, in accordance with professional
standards applicable in France, the specific verifications
required by French law.
We have no matters to report as to the fair presentation and the
consistency with the financial statements of the information
given in the management report of the Board of Directors,
and in the documents addressed to the shareholders with
respect to the financial position and the financial statements.
Concerning the information given in accordance with the
requirements of article L. 225-102-1 of the French Commercial
Code (code de commerce) relating to remunerations and
benefits received by the directors and any other commitments
made in their favour, we have verified its consistency with
the financial statements, or with the underlying information
used to prepare these financial statements and, where
applicable, with the information obtained by your company
from companies controlling your company or controlled by
it. Based on this work, we have formulated the following
observation on the accuracy and fairness of this information:
this information does not include all of the compensation and
benefits paid by the company controlling your company to the
corporate officers for their mandates, duties or assignments
other than those exercised at or for Crédit du Nord Group.
In accordance with French law, we have verified that the
required information concerning the purchase of investments
and controlling interests and the identity of the shareholders
and holders of the voting rights and mutual shareholders has
been properly disclosed in the management report.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
Bernard HELLER
197
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Statutory Auditors’ Report on Related Party Agreements and Commitments
Statutory Auditors’ Report on Related Party
Agreements and Commitments
Year ended december 31, 2009
This is a free translation into English of a report issued in French and it is provided solely for the convenience of English
speaking users. This report should be read in conjunction with and construed in accordance with French law and professional
standards applicable in France.
In our capacity as Statutory Auditors of your company, we hereby
report on certain related party agreements and commitments.
Z Agreements and commitments
authorized during the year
In accordance with Article L. 225-40 of the French Commercial
Code, we have been advised of certain related party agreements
and commitments which received prior authorization from your
Board of Directors.
We are not required to ascertain the existence of any other
agreements and commitments but to inform you, on the basis
of the information provided to us, of the terms and conditions of
those agreements and commitments indicated to us. We are
not required to comment as to whether they are beneficial or
appropriate. It is your responsibility, in accordance with Article
R.225-31 of the French commercial code (Code de Commerce),
to evaluate the benefits resulting from these agreements and
commitments prior to their approval.
We performed those procedures which we considered
necessary to comply with professional guidance issued by the
national auditing body (Compagnie Nationale des Commissaires
aux Comptes) relating to this type of engagement. These
procedures consisted in verifying that the information provided
to us is consistent with the documentation from which it has
been extracted.
1. With Société Générale, shareholder
of your company
Nature and purpose
The invoicing of the services rendered in 2009 totalled
EUR 3.2 million without tax.
2. With Star 41, now Etoile Gestion Holding
Nature and purpose
Contribution of Etoile Gestion shares to holding company
Star 41.
Conditions
This contribution, authorized by the Board of Directors’ meeting
of October 22, 2009, took place within the framework of the
merger of the asset management activities of Société Générale
and Crédit Agricole. Crédit du Nord and its subsidiaries
contributed the shares they held in Etoile Gestion (Crédit du Nord
Group’s asset management company) to holding company
Star 41, renamed Etoile Gestion Holding at the end of 2009.
In exchange, Crédit du Nord and its subsidiaries received a
3% shareholding in Crédit Agricole Asset Management Group
(Amundi).
The contribution took place at the real value of the shares, i.e.
EUR 107,594,800 for Crédit du Nord, resulting in a book capital
gain of EUR 87,757,944.80.
3
With Société Générale, shareholder
of your company
Pooling of IT infrastructures.
Nature and purpose
Conditions
Protocol signed between Société Générale, Société Générale
Asset Management, Crédit du Nord and Star 41.
In the interest of generating Groupwide synergies, a subcontracting agreement with a Société Générale department
198
(GTS) was developed in the first half of 2009 and implemented
on August 1, 2009. This sub contracting agreement pertained
to the deployment, production and maintenance of IT technical
infrastructure services, and involved the invoicing in euros of
expenses incurred by GTS in 2009. Your Board of Directors,
which met on July 23, 2009, authorized the signing of the
necessary agreements for the implementation of this agreement.
I
I
Statutory Auditors’ Report on Related Party Agreements and Commitments
Conditions
Conditions
Within the framework of the creation of Amundi, your Board
of Directors, which met on October 22, 2009, authorized the
signing of a protocol defining the rules between the different
parties. Consequently, Crédit du Nord assumes responsibility
for the provisions of the Framework Agreement, Guarantee
Agreement and Shareholders Agreement, for which Société
Générale and SGAM served as guarantors of its commitment
towards the entities of Crédit Agricole Group.
Mr. Marc BATAVE holds an employment contract with Crédit
du Nord, the application of which was suspended during his
appointment as Deputy CEO in November 2008 and for the term
of his corporate mandate.
In addition to the terms of management of Star 41’s stake in
CAAM, the protocol establishes Société Générale’s intent to
purchase shares in Star 41 in favour of Crédit du Nord Group,
and Crédit du Nord Group’s intent to sell the Star 41 shares in
favour of Société Générale.
Z Commitment with no prior authorization
We also hereby report on the commitment covered by Article L.
225-42 of the French Commercial Code.
Our role is to advise you, on the basis of the information provided
to us, of the terms and conditions of these agreements and
commitments and of the reasons for which authorization was
not requested.
In accordance with Article L. 823-12 of the French Commercial
Code, we inform you that this commitment did not receive prior
authorization of your Board of Directors, was not, by omission,
brought into compliance with the provisions of Law No. 20071223 of August 21, 2007. This authorisation was given after the
fact by your Board of Directors on February 17, 2010.
With Mr. Marc BATAVE, Deputy CEO
Nature and purpose
Pension commitments in favour of Mr. Marc Batave.
During the term of his corporate mandate, Mr. Marc BATAVE
shall maintain all of the benefits acquired prior thereto as an
employee of Crédit du Nord. He shall notably maintain the benefit
of the provisions of the supplementary pension plan for senior
group managers established by the Supervisory Board of Crédit
du Nord on September 5, 1996.
This plan guarantees that, at the date on which the pension
benefits are settled by Social Security, beneficiaries shall receive
an additional pension corresponding to the difference between:
U an amount equal to 50% of the average, calculated over the
last five best years out of the last ten years of employment, of
the annual gross sums received for employment with Crédit
du Nord Group, although the amount thus determined may
not exceed 60% of the annual contractual compensation for
these same years;
U if less, the total of the pension plans (excluding increases for
large families) and other income acquired from Social Security,
of any other basic plans, of any other statutory retirement
plans by distribution or capitalisation, of any compensation
received for dismissible positions after retirement, and of
any compensation received from positions held prior to
employment with the Group.
It has been expressly agreed that during the term of the
mandate, fixed compensation (excluding the annual allocation
linked to the mandate addressed above) and performancebased compensation, paid during the term of the mandate,
shall be considered as salaried employment periods and
compensations for the determination of the amount of
guarantees provided for by this plan at the appropriate time.
Mr. Marc BATAVE’s mandate as Deputy CEO was renewed
by the Board of Directors on January 7, 2010.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
Bernard HELLER
199
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General Meeting: Draft resolutions
Draft resolutions - General Meeting
of Shareholders of May 12, 2010
Z Resolutions within the authority of the Ordinary General Meeting
First resolution Approval of the consolidated
The General Meeting of Shareholders, under the conditions required by Ordinary
General Meetings as to quorum and majority, having been informed of the Statutory
Auditors’ report on the consolidated financial statements, approves the transactions
cited therein, the balance sheet closed December 31, 2009, and the income statement
for fiscal year 2009.
The General Meeting approves the net income after taxes (Group share) of EUR
347,935,000.00.
Second resolution
Approval of the individual
financial statements and
release of the Chairman and
Chief Executive Officer and
Directors from their duties
The General Meeting of Shareholders, under the conditions required by Ordinary General
Meetings as to quorum and majority, having been informed of the Board of Directors’
report and the Statutory Auditors’ general report on the individual financial statements,
approves the transactions cited therein, the balance sheet closed December 31, 2009,
and the income statement for fiscal year 2009. The General Meeting approves the net
income after taxes of EUR 331,356,413.03.
Consequently, the General Meeting fully and without reservation releases the Chairman
and Chief executive Officer and Directors from their mandates for said fiscal year.
Third resolution
Distribution of earnings
The General Meeting, under the conditions required by Ordinary General Meetings as to
quorum and majority, is distributing the net income after taxes of EUR 331,356,413.03.
Given that the legal reserve has been fully allocated, and that net income plus retained
earnings from fiscal year 2008 (i.e. EUR 872,371.84) resulted in total income available for
distribution of EUR 332,228,784.87, the General Meeting is allocating this sum as follows:
– Distribution of a dividend of EUR 323,865,171.00 to shareholders, i.e. a dividend
per share of EUR 3.50;
– Allocation of EUR 8,000,000.00 to the ordinary reserve;
– Allocation of EUR 363,613.77 to retained earnings.
The ordinary reserve will thus be increased from EUR 554,000,000.00
to EUR 562,000,000.00.
For individuals domiciled in France, the dividend is subject to income tax on a progressive
scale and is eligible for the deduction resulting from Article 158-3-2° of the French
General Tax Code, unless the option is taken, prior to depositing the dividends or
income of a similar nature received over the same year, to pay the flat-rate withholding
tax provided for in Article 117 quater of the French General Tax Code.
In accordance with the law, shareholders are hereby reminded that the following
dividends were distributed over the past three years:
– fiscal year 2008: EUR 1.40 per share (1)
(1) Dividend eligible for the 40% tax deduction in favour of individual shareholders or for the flat-rate
withholding tax.
(2) Dividend eligible for the 40% tax deduction in favour of individual shareholders.
200
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I
Fourth resolution
Agreements addressed by
Articles L 225-38 et seq.
of the French Commercial
Code
The General Meeting, under the conditions required by Ordinary General Meetings as
to quorum and majority, has been informed of the Statutory Auditors’ Special Report
on agreements addressed by Articles L 225-38 et seq. of the French Commercial Code
and approves this report.
Fifth resolution
Approval of the co-opting
of a Director
The General Meeting, under the conditions required by Ordinary General Meetings
as to quorum and majority, hereby approves the co-opting of Mr. Jean-François
SAMMARCELLI to replace Mr. Didier ALIX, having resigned, in his duties as Director for
the remaining term of Mr. ALIX’s mandate, i.e. until the General Meeting convened to
approve the financial statements for the fiscal year ended December 31, 2012.
Sixth resolution
of a Director
quorum and majority, hereby approves the co-opting of Mr. Vincent TAUPIN to replace
Mr. Christian POIRIER, having resigned, in his duties as Director for the remaining term
of Mr. POIRIER’s mandate, i.e. until the General Meeting convened to approve the
financial statements for the fiscal year ended December 31, 2010.
Seventh resolution
of a Director
to quorum and majority, hereby approves the co-opting of Mr. Didier ALIX to replace
Mr. Alain PY, having taken his retirement, in his duties as Director for the remaining term
of Mr. PY’s mandate, i.e. until the General Meeting convened to approve the financial
statements for the fiscal year ended December 31, 2011.
Eighth resolution
Appointment of a Director
to quorum and majority, hereby appoints Philippe HEIM as a Director for a term of four
years. His mandate shall expire at the end of the General Meeting held to approve the
financial statements for the fiscal year ending December 31, 2013.
Ninth resolution
quorum and majority, hereby appoints Ms./Mr............... as a Director for a term of four
years. His/her mandate shall expire at the end of the General Meeting held to approve
the financial statements for the fiscal year ending December 31, 2013.
Tenth resolution
quorum and majority, hereby appoints Ms./Mr............... as a Director for a term of four
years. His/her mandate shall expire at the end of the General Meeting held to approve
the financial statements for the fiscal year ending December 31, 2013.
Eleventh resolution
Adjustment of the total
budget for attendance fees
to quorum and majority, having read the Board of Directors’ report, hereby establishes
the annual budget for attendance fees to be paid to the Directors at EUR 65,000 as
from fiscal year 2010, until further notice.
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Z Resolutions within the authority of the Extraordinary General Meeting
Twelfth resolution
Capital increase reserved
for employees
The General Meeting, having noted the provisions of Article 29 of Law 2001-152 of
February 19, 2001 on employee savings, under the conditions required by Extraordinary
General Meetings as to quorum and majority, having read the Board of Directors’
report and the Statutory Auditors’ Special Report, hereby authorises the Board of
Directors, in accordance with the provisions of Articles L. 225-129 and L. 225-138 of
the French Commercial Code and under the terms and conditions of Article L. 443-5
of the French Labour Code, to increase the share capital in one or more transactions at
its own discretion, up to a maximum nominal amount of EUR 7,402,632, via the issue
of shares purchasable in cash and reserved, where applicable in separate tranches,
for the employees and former employees of the Company belonging to a Company
Savings Plan.
The present delegation calls for the shareholders to forego their preferred subscription
rights in favour of the adherents to a Company Savings Plan;
The present delegation is valid for a period of two years as from the present General
meeting.
The General Meeting hereby delegates all powers to the Board of Directors to implement
the present authorisation, within the limit of the legal and regulatory provisions in force,
notably for the purpose of:
U setting the subscription price of new shares, within the legal limits;
U approving all terms and conditions of the transaction or transactions to follow and,
in particular:
– setting, where applicable, the terms and conditions of seniority which the
beneficiaries of the new shares must meet and, within the legal limits, the period
of time granted to subscribers to pay up these shares;
– determining whether or not the subscriptions must be carried out directly or via
a mutual fund;
– deciding the amount of the issue, the duration of the subscription period, the
date of first entitlement to dividends and, in general, all terms and conditions of
each issue;
U at its own discretion, after each capital increase, deducting the expenses of the
capital increase from the amount of the associated premiums and withdrawing the
necessary sums from this amount to raise the legal reserve to 10% of the new capital;
U carrying out all related acts and formalities required to record the completion of each
capital increase in the amount of the shares actually acquired, making any related
amendments to the by-laws and, in general, taking any necessary actions.
Thirteenth resolution
Powers
202
All powers are granted to bearers of a copy or extract of the minutes of this General
Meeting of Shareholders to carry out all formalities and publications relating to the
preceding resolutions.
Additional information
General description of Crédit du Nord ............... 204
Group activity ..................................................... 207
Responsibility for the registered
document and audit ........................................... 208
Concordance tables ........................................... 209
203
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General description of Crédit du Nord
S General description of Crédit du Nord
Z Company name
Crédit du Nord
Z Head Office
28, place Rihour - 59000 Lille, France
Z Legal form
A limited liability company (Société Anonyme) registered
in France and governed by Articles L. 210-1 et seq. of the
French Commercial Code.
The company has the status of a bank governed by Articles
L. 311-1 et seq. of the French Monetary and Financial Code.
Z Registration number
SIREN No. 456 504 851 RCS Lille
Z APE activity code
651 C
Z Creation and expiration date
Crédit du Nord was founded in 1848 under the company
name “Comptoir national d’escompte de l’arrondissement
de Lille».
It adopted the status of a public limited company (société
anonyme) in 1870 and took the name “Crédit du Nord” in
1871.
The date of expiration of the company is set at 21 May 2068,
barring dissolution before this date or an extension thereof
as provided by law.
- any and all transactions related to banking transactions,
including, in particular, all investment or related services
as referred to in Articles L. 321-1 and 321-2 of the French
Monetary and Financial Code;
- any and all acquisitions of ownership interests in other
companies.
In accordance with the conditions set forth by the French
Banking and Financial Regulation Committee, the company
may also regularly engage in any and all transactions other
than those mentioned above, including in particular insurance
brokerage.
Generally, the company may, on its own behalf, on behalf
of third parties or jointly, engage in any and all financial,
commercial, industrial, agricultural or real estate transactions
that are directly or indirectly related to the above mentioned
activities or are likely to facilitate the execution thereof.
Z Share capital
The company’s share capital is set at EUR 740,263,248. It
is divided into 92,532,906 fully paid-up shares with a face
value of EUR 8.
The shares comprising the company’s capital are not subject
to any pledge agreements.
Z Form of shares
All shares must be registered.
Z Disclosure requirements
No restrictions have been made to legal provisions concerning
ownership thresholds.
Z Share transfer approval
Z Corporate purpose
(article 3 of the by laws)
The purpose of the company, under the conditions set forth
by the laws and regulations applicable to credit institutions,
is to perform with individuals or corporate entities, in France
or abroad:
- any and all banking transactions;
204
The General Meeting of 28 April 1997 ruled that the
assignment, sale or transfer of shares to a third party which
does not have the right to be a shareholder for any reason
whatsoever, except in the event of estate transmission,
liquidation, community property between spouses or transfer
to a spouse or next-of-kin, is subject to the company’s
approval in order to become final.
I
I
Z Parent company documents
The documents relating to Crédit du Nord, including its
bylaws, financial statements, and the reports presented at
its General Meetings by the Board of Directors or Statutory
Auditors, can be consulted at 59, boulevard Haussmann,
75008 Paris, France
Z Fiscal year
From 1 January to 31 December.
Z Allocation and distribution
of income (Article 22 of the by laws)
Net income for the year is determined in accordance with all
currently applicable laws and regulations. At least 5% of net
income for the year, less previous accumulated losses if any,
must, by law, be set aside to form a legal reserve until this
reserve reaches one-tenth of share capital.
Net income available after said allocation to legal reserves,
as well as any earnings carried over, constitutes «income
available for distribution» from which dividends may be
paid out and/or funds allocated to ordinary, extraordinary or
special capital reserves as approved by the General Meeting
on the basis of the recommendations made by the Board of
Directors.
The General Meeting called to approve the financial
statements of the fiscal year may, in respect of all or part
of final or interim dividends proposed for distribution, offer
each shareholder the choice between payment of the final or
interim dividends in cash or in shares, under the conditions
set forth by the currently applicable legislation. Shareholders
must exercise this option for the entire amount of final or
interim dividends to be received for the fiscal year.
Except in the case of a reduction in share capital, no distribution
to shareholders may take place where shareholders’ equity is
or would as a result of said distribution be lower than the sum
of the company’s share capital plus any legal reserves which,
in accordance with the law or under the company’s bylaws,
are not available for distribution.
Z General Meeting
(Article 19 of the by laws)
The General Meeting, if it is regularly constituted, represents
all the shareholders and exercises the powers devolved to
it by law.
It is convened to statute on those issues listed on the
agenda in accordance with the currently applicable legal and
regulatory provisions.
The right to take part in the Meeting is subject to registration
of shares in the name of the shareholder at least five days
before the date of the meeting.
Z Profit-sharing
A profit-sharing agreement was signed on 7 June 2007 which
applies to fiscal years 2007 through 2009.
AII payments therein are calculated on the basis of 6% of
gross operating income adjusted for certain parameters.
35% of profit-sharing is paid out in equal amounts (capped
at EUR 4 million), with the remainder paid in proportion to
gross annual salaries excluding performance bonuses. Total
profit-sharing is capped at 8% of gross fiscal remuneration
paid to all company employees in the year in question.
Crédit du Nord makes an additional «employer’s contribution»
where employees pay any profit-sharing into the Company
Savings Plan or into the Company Pension Savings Plan
(PERCO), in accordance with pre-defined scales and limits.
205
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Z Change in capital
Shares outstanding
Par value per share (in EUR)
Share capital (in EUR)
Maximum no. of new shares (*)
Shares outstanding adjusted for potential dilution
Adjusted potential share capital (in EUR)
2009
2008
2007
2006
2005
92,532,906
92,532,906
92,532,906
92,532,906
92,532,906
8
8
8
8
8
740,263,248
740,263,248
740,263,248
740,263,248
740,263,248
-
-
-
-
-,
92,532,906
92,532,906
92,532,906
92,532,906
92,532,906
740,263,248
740,263,248
740,263,248
740,263,248
740,263,248
(*) Created by convertible debt and/or the exercise of stock options.
Z Ownership and voting rights (as at 31 December 2009)
Société Générale
100% (*)
Members of the Management Bodies
-
Employees (via specialised fund managers)
-
(*) On December 11, 2009, Société Générale became Crédit du Nord’s sole shareholder by purchasing the 20% stake half-owned by Dexia Crédit Local.
Z Double voting rights
None.
Z Changes in ownership in the last three years
On December 11, 2009, Dexia Crédit Local and Dexia Banque Belgique each sold the 10% stakes they held in Crédit du Nord
to Société Générale, making Société Générale the sole shareholder of Crédit du Nord with a shareholding of over 99%.
Z Dividend payments
- A dividend per share of EUR 1.55 was paid out in respect of FY 2005.
- A dividend of EUR 3.50 per share for fiscal year 2009 will be proposed at the General Meeting of May 12, 2010.
Z Stock market information
Not applicable: Crédit du Nord shares are not listed on any markets.
206
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Group activity
S Group activity
Z Use of patents and licences
Not applicable.
Risks covered by the Société Générale Global
Insurance Policy
1. Theft/fraud
Z Legal risks
Crédit du Nord is a credit institution approved in its capacity
as a bank. As such, it may engage in any and all banking
transactions.
It is also authorized to provide any and all investment or
related services as referred to in Articles L. 321-1 and L.
321-2 of the French Monetary and Financial Code. As an
investment service provider, Crédit du Nord is subject to
the applicable regulatory framework, in particular prudential
rules and the controls of the French Banking Commission. All
managers and employees are bound by professional secrecy,
the breach of which is subject to criminal penalties.
These risks are included in a «global banking» policy that
insures the banking activities of Crédit du Nord and its
subsidiaries.
2. Professional liability insurance
The consequences of any lawsuits are insured under the
global policy. The level of coverage is the best available on
the market.
3. Operating losses
The consequences of an accidental interruption in activity
are insured under the global policy. This policy complements
the business continuity plans.
Crédit du Nord is also an insurance broker.
Z Litigation and extraordinary
circumstances
To date there are no extraordinary circumstances and/or
ongoing litigation that may have, or may have had in the
recent past, a significant effect on the business, income,
financial position or assets and liabilities of Crédit du Nord or
its subsidiaries.
Z Other special risks
To the best of Crédit du Nord’s knowledge, no such risk
currently applies
Z Insurance
General policy
Crédit du Nord’s insurance policy aims to obtain the best
coverage with respect to the risks to which it is exposed.
A certain number of major risks are covered by policies taken
out as part of Société Générale’s Global Insurance Policy,
while others are covered by policies taken out by Crédit du
Nord.
4. Third-party liability insurance
of Corporate Officers
The purpose of this policy is to cover the company’s managers
and directors in the event of claims filed against them and
invoking their liability.
Risks covered by Crédit du Nord policies
1. Buildings and their contents
Buildings and their contents are insured by a multi-risk policy
with a ceiling of EUR 76,500,000.
2. IT risks
This insurance covers any loss or damages to equipment
(hardware, media) used to process information.
3. Liability insurance linked to operations
This insurance covers any pecuniary damages to third parties
incurred by all persons or equipment deemed necessary for
the company’s operations.
Other risks linked to activities
Within the framework of all Group contracts, Crédit du Nord
offers customers death and invalidity insurance on their loans
(property, consumer loans, etc.).
207
4I
S
I
Responsibility for the registered document and audit
Responsibility for the registered document
and audit
Z Responsibility for the registered
document
Vincent TAUPIN, Chief Executive Officer
Z Certification of the person
responsible for the registered
document
I hereby certify, having taken all reasonable measures to
this end, that to the best of my knowledge, the information
contained in this registered document is true and that there
are no omissions that could impair its meaning.
I received a letter of completion from the statutory auditors in
which they state that they verified the information in respect of
the financial position and accounts presented in the registered
document and that they read through the entire document.
The historic financial information presented in the registered
document was addressed in statutory auditors’ reports,
which appear on pages XXX - XXX and XXX XXX of this
document. In addition, financial information for fiscal year
2008 was incorporated for reference purposes from pages
XXX and XXX-XXX of the 2008 registered document. The
statutory auditors’ reports referring to the 2007, 2008 and
2009 annual company and consolidated financial statements
contain observations.
Paris, April 28, 2010
I certify that to the best of my knowledge, the financial
statements were drawn up in accordance with applicable
accounting standards and present fairly, in all material
respects, the financial position and results of the parent
company and of the entire Group as constituted by the
consolidated companies, and that the Management Report
accurately reflects the development of business, results and
the financial situation of the parent company and of the entire
Group as constituted by the consolidated companies, as well
as a description of the main risks and uncertainties to which
they are exposed.
Chief Executive Officer,
Vincent TAUPIN
Z Statutory auditors
ERNST & YOUNG & AUTRES
Represented by Bernard HELLER
DELOITTE & ASSOCIÉS
Represented by Jean-Marc MICKELER
Address:
41, rue d’Ybry – 92200 Neuilly-sur-Seine, France
Address:
185, avenue Charles de Gaulle – 92200 Neuilly-sur-Seine,
France
Date appointed:
May 18, 2006 for a term of six fiscal years
Substitute auditor:
PICARLE et Associés
208
Date appointed:
May 18, 2006 for a term of six fiscal years
Substitute auditor:
Société BEAS
I
I
Concordance tables
S Concordance tables
Z 1. Table de concordance du Document de Référence
In accordance with Article 28 of CE Regulation No. 809/2004 of April 29, 2004, the following information is included for reference
purposes in the registered document:
U individual and consolidated financial statements for the fiscal year ended December 31, 2008, the related Statutory Auditors’
reports and the Group Management Report appearing on pages 44-200, page 149, page 208 and pages 12-31 of the
registered document filed with the AMF on April 28, 2009 under No. D.09-0323;
U individual and consolidated financial statements for the fiscal year ended December 31, 2007, the related Statutory Auditors’
reports and the Group Management Report appearing on pages 44-167, pages 147-148, pages 174-175 and pages 12-31
of the registered document filed with the AMF on April 25, 2008 under No. D.08-0294.
U the chapters of registered document Nos. D. 09-0323 and D. 08-0294 not listed above are either not applicable
for investors or are covered in another section of this registered document.
Chapters
Page number
of the registered document
1. Responsibility for the registered document
208
2. Statutory auditors
208
3. Select financial information
3.1. Select historic financial information for the issuer,
for each fiscal year
6-7
3.2. Select financial information for interim periods
4. Risk factors
–
39-40; 78 to 89; 207
5. Information concerning the issuer
5.1. History and development of the company
5.2. Investments
204
8; 13-14; 30; 100-101
6. Overview of activities
6.1. Core businesses
6.2. Key markets
6.3. Exceptional events
6.4. Degree of issuer dependence on patents, licences, industrial,
commercial, and financial contracts, and upon new manufacturing
processes
15 to 20
31; 95-96
12; 128; 139; 179
207
6.5. Basis of issuer statements concerning its competitive position
31
7. Organisation chart
7.1. Overall description of the Group
7.2. List of major subsidiaries
10
133 to 135; 181-182
209
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Concordance tables
Chapters
Page number
8. Buildings, plant and equipment
8.1. Major existing or planned tangible fixed assets
8.2. Environmental issues with the potential to influence the use
of tangible assets
100-101
–
9. Overview of financial situation and results
9.1. Financial situation
21 to 29
9.2. Operating income
21 to 27
10. Cash flow and capital
10.1. Information on the issuer’s capital
10.2. Source and amount of the issuer’s cash flow
10.3. Information on the issuer’s borrowing conditions
and financing structure
28; 46 to 52
53
94; 103-104; 110
10.4. Information concerning any restrictions on the use of capital
having influenced or capable of influencing the issuer’s
transactions
–
10.5. Information concerning the expected sources of financing
needed to honour the commitments listed
in chapters 5.2 and 8.1
–
11. Research and development, patents and licences
12. Information on trends
13. Profit forecasts or estimates
–
29
-
14. Administrative, Management and Supervisory bodies and
General Management
14.1. Board of Directors and General Management
14.2. Conflicts of interest involving the administrative, management
and supervisory bodies, and General Management
4
184 to 187
15. Compensation and benefits
15.1. Amount of compensation paid and benefits in kind
188 to 195
15.2. Total amount provisioned or recorded by the issuer
for the payment of pensions and other benefits
130-131
16. Corporate Governance
16.1. Expiry of current mandates
4
16.2. Service agreements binding members
of the administrative bodies
–
16.3. Information on the issuer’s Audit Committee
and Compensation Committee
16.4. Declaration indicating whether or not the issuer complies with
corporate governance policy
210
4; 188-189
–
I
I
Concordance tables
Chapters
Page number
17. Employees
17.1. Number of employees
17.2. Ownership interests and stock options of Directors
17.3. Agreement allowing for employees to invest in the issuer’s capital
23; 122
190 to 195
206
18. Key shareholders
18.1. Shareholders owning more than 5% of the share capital or voting
rights
206
18.2. Other voting rights
206
18.3. Ownership of the issuer
206
18.4. Agreement of which the issuer is aware, the implementation
of which could lead to a change in ownership at a future date
19. Transactions with affiliâtes
–
130-131 ; 133 to 135; 181-182
20. Financial information concerning the issuer’s financial
situation and results
20.1. Historic financial information
46 to 135; 139 to 183
20.2. Pro forma financial information
20.3. Financial statements
20.4 Verification of annual historic financial information
20.5. Date of latest financial information
_
46 to 135; 139 to 183
136-137; 196-197
46 ; 142
20.6. Interim financial information
–
20.7. Dividend policy
206
20.8. Legal and arbitrage procedures
207
20.9. Significant change in the financial or commercial situation
29
21. Additional information
21.1. Share capital
21.2. Articles of incorporation and by laws
204
204-205
22. Major contracts
–
23. Information from third parties, expert certifications
and interest declarations
–
24. Documents available to the public
25. Information on ownership interests
204
133 to 135; 181-182
211
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Concordance tables
Z 2. Concordance table for the Annual Financial Report
In accordance with Article 222-3 of the General Regulations of the Autorité des Marchés Financiers (French market authority),
the annual financial report mentioned in Section I of Article L.451-1-2 of the French Monetary and Financial Code includes the
items described in the following pages of the Registration Document:
Chapters
Page number
Annual financial report
Certification of the person responsible for the registration document
208
Management report
- Analysis of the results, financial situation, and risks of the parent company
and the consolidated group, and list of powers delegated for the purposes of capital
increases (Article L.225-100 and L.225-100-2 of the French Commercial Code).
N.A.
- Information required by Article L.225-100-3 of the French Commercial Code
relating to items liable to have on impact on the public offer.
N.A.
- Information relating to share buybacks (Article L.225-211 paragraph 2
of the French Commercial Code).
N.A.
Financial statements
- Annual financial statements
- Statutory Auditors’ Report on the Annual Financial Statements
- Consolidated financial statements
- Statutory Auditors’ report on the consolidated financial statements
212
139 to 183
196-197
46 to 135
136-137
This registration document is available online at www.groupe-credit-du-nord.com
Responsible for the information : Jean-Pierre Bon – Tel : 33 (0)1 40 22 23 91 – Email : [email protected]

Registration Document And Annual Financial Report

Transcription

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