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Compagnie Financière du Crédit Mutuel
Organization of Compagnie Financière du Crédit Mutuel within the Arkéa Group
A unique identity and expertise at work
Economic conditions during the year 2007
Compagnie Financière du Crédit Mutuel has chosen a dual theme of intersecting images to illustrate its Annual Report. The first series of images, by photographer Paul Maurer, portrays the Grand National Theatre of China, inaugurated in 2008. Paul Andreu, the building’s architect, charged Maurer with restoring “the spirit, the essence of the building before it becomes inhabited, at the moment in which the architect withdraws.” The second series of images portrays one of the most recent traditional Chinese art pageants, created by Divine Performing Arts, which “invests” this magnificent building as a counterpoint.
Balance sheet and income statement
Outlook for 2008
List of offices held by directors and officers
National Grand Theatre, China: © Paul Maurer - Architect: Paul Andreu Other pictures: © Divine Performing Arts Thanks to Mr Tang, Mr Zhang, to Lumière d’Asie Association and to The Epoch Times.
Report of Chairman of the Board of Directors
Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel
Satisfactory results, despite highly turbulent conditions in the financial markets
Compagnie Financière du Crédit Mutuel posted 66.3 million euros in consolidated net income in 2007. This noteworthy result, especially given the unprecedented crisis that will change the course of banking and finance history, was achieved by capitalizing on the effectiveness of the business model developed by Compagnie Financière. This model is built around a strategy of diversified business lines coupled with ongoing research into the greatest synergies achieved among our various subsidiaries attests to the Group’s capacity for resistance in the face of downturns in the economy or the banking industry. Compagnie Financière’s capital markets activities were naturally affected by the crisis. Accordingly, as part of a proactive, stringent and conservative risk management policy adapted to the specificities of these activities, the impairment recognized on financial instruments and the large reserves set aside by the group increased its operating ratio to an unusually high 63.4%. This did not, however, change the group’s goal of bringing that ratio down to its structural level of approximately 50% as early as 2008. It should be noted, however, that the group’s financial fundamentals remain strong, and that its capital adequacy ratios remain much higher than required. It is also worth observing that Compagnie Financière was able to weather the liquidity crisis observed in the second half of 2007 thanks to the controlled diversification of its funding sources and the quality of its image with investors. All of Compagnie Financière’s other areas of expertise posted good results. The corporate banking, private wealth management, consumer credit, online brokerage and insurance subsidiaries all achieved remarkable performances in 2007 both in terms of growth and financial productivity. Lastly, Compagnie Financière spent 2007 optimizing the operating efficiency of its organization. The last months were spent integrating the activities of the ProCapital group – acquired in 2006 – and notably the founding of Fortuneo, which was generated by the merger of Fortuneo Direct Finance with Symphonis. Another highlight of 2007 was Compagnie Financière’s assumption of full control of Suravenir Assurances, the specialized non-life insurance subsidiary. Armed with a solid balance sheet, Compagnie Financière du Crédit Mutuel begins 2008 with confidence. With the help of its entire staff, it will focus on controlled, sustainable growth in order to consolidate its economic fundamentals under increasingly secure conditions. Compagnie Financière’s solid base, its talent for innovation, its aptitude for adaptation and change all help to fuel the Group’s powerful ambitions.
Chairman of the Board of Directors
Humbert de Fresnoye
Chief Executive Officer
© Simon Cohen
Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel
of Compagnie Financière du Crédit Mutuel >>> Organization within the Arkéa Group // as of December 31, 2007
Crédit Mutuel de Bretagne
228 Local banks
Crédit Mutuel du Sud-Ouest
81 Local banks
Crédit Mutuel Massif Central
30 Local banks
Caisse Interfédérale de Crédit Mutuel 100%
Compagnie Financière du Crédit Mutuel *
• Banque Commerciale pour le Marché de l’Entreprise (80%) • Caméfi-Banque (51%) • Bail Entreprises (92%) • Sobrepar (100%) • Synergie Finance Gestion (85%) • Synergie Finance (44.5%) • • • •
Fédéral Immo (100%) Europim (99.1%) Armorique Habitat (68.2%) Foncière Investissement (99.34%)
• Suravenir (85%) • Suravenir Assurances (32.5%) • Novélia (94%) • • • • • • •
Banque Privée Européenne (99.08%) Fortuneo (99.9%) Financo (73.54%) Federal Finance Banque (100%) Federal Finance Gestion (100%) ProCapital (99.95%) Acta Voyages (40%)
* Percentages of capital consolidated by the Compagnie Financière du Crédit Mutuel and its subsidiaries’ group
organization of Compagnie Financière >>> Internal du Crédit Mutuel //
as of December 31, 2007 Chief Executive Officer
Humbert de Fresnoye
Administration of Equity Investments
Development and partnerships
Financial markets and international
Humbert de Fresnoye*
Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel
2000 • Share capital: 715. comprising Caisse Interfédérale du Crédit Mutuel and its affiliates the Crédit Mutuel Federations of Bretagne.>>> Organization >>> 1. with special expertise in the areas of corporate lending and specialized finance. • The group that includes Compagnie Financière du Crédit Mutuel and its subsidiaries. Through the subsidiaries whose growth it manages.France • Twenty subsidiaries throughout France. 29480 Le Relecq-Kerhuon . Compagnie Financière du Crédit Mutuel covers the entire spectrum of banking. Compagnie Financière is the holding company for the Arkéa Group’s subsidiaries and conducts the Group’s capital markets and investment banking activities. Sud-Ouest and Massif-Central. Compagnie Financière du Crédit Mutuel puts its widely recognized skills and expertise to work for the Arkéa Group’s customers and partners. 5 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . finance and insurance services. a unique identity and expertise at work for the Arkéa Group Organization of Compagnie Financière du Crédit Mutuel The Arkéa Group.000. wealth management. life and non-life insurance and online brokerage. of which Compagnie Financière du Crédit Mutuel (CFCM) is a member. providing them with funding and investment management services. mutual fund management. Compagnie Financière du Crédit Mutuel: • A French corporation (société anonyme) created October 20. comprises two legally distinct groups: • The mutual savings bank group. Compagnie Financière du Crédit Mutuel. Compagnie Financière du Crédit Mutuel’s scope of activity also extends to the real estate and travel industries. which is organized under ordinary corporate law.000 euros • Corporate headquarters: 1 rue Louis Lichou.
• Nomination by the shareholder’s meeting of Michel Gourtay as a director. businesspeople. This report summarizes the conditions under which the Board prepared and organized its work and describes the internal control procedures set in place by Compagnie Financière du Crédit Mutuel. Changes made to the governance structure of Compagnie Financière du Crédit Mutuel in 2007: • Nomination by the Shareholders’ Meeting of Christian Péron as a director. • Capital markets counterparty credit committee. to replace Jean-Pierre Guédon. • Credit committee. Various specific committees. The duties of the Board of Directors in 2007 are described in detail in the report of the Chairman of the Board of Directors attached to this management report and submitted voluntarily to the independent auditors for their evaluation. Jean-Louis Chartier and Jean-Louis Dussouchaud as directors. a French corporation subject to ordinary law for trading companies and all legislation applicable to banking and financial institutions. Compensation of members of the Board of Directors The Shareholders’ Meeting of May 3. • Financial management committee. The Board of Directors currently comprises 15 directors elected from among the shareholders (fourteen men and one woman. 6 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. charged with examining certain specific matters in detail. 2007 voted to cap the total amount of directors’ fees paid at 20. Christian Touzalin and Albert Le Guyader are respectively Chairman and Vice-Chairman of Compagnie Financière. each of which lasted an average of three hours.>>> Organization Governance of Compagnie Financière du Crédit Mutuel Organization Compagnie Financière du Crédit Mutuel. All are directors of a local Crédit Mutuel savings bank and are. Two employee representatives also participate in the meetings of the Board of Directors. Humbert de Fresnoye is the Chief Executive Officer. responsible for all executive and operational matters. • Renewal of the appointments of Christian Cadiou. Directors are paid fees only if they actually attend a meeting. • Nomination by the Shareholders’ Meeting of Marcel Favrot as a director. average age: 59). assist the Chief Executive Officer and the Board of Directors with the performance of their duties: • Executive committee. The directors posted an 82% average attendance rate. especially as concerns accounting and financial information. Composition of the Board of Directors since May 3. or were.000 euros per year. the amounts paid as directors’ fees totaled 13. 2007 Chairman Christian Touzalin Vice-Chairman Albert Le Guyader Directors Rémy Cabaret Christian Cadiou Joseph Carret Jean-Louis Chartier Jean-Pierre Corlay Jean-François Devaux Jean-Louis Dussouchaud Marcel Favrot Marcel Garnier Michel Gourtay Marie-Thérèse Groussard Christian Péron Gilbert Tronel Duties of the Board of Directors In 2007. to replace Amand Denieul. Since the Shareholders’ Meeting of May 2002.50 euros. the Board of Directors held 12 meetings.] . In 2007. • Permanent controls committee.906. • Partner approval committee.10 euros per director. its corporate governance has been based on the principal of the segregation of duties of the Chairman and the Chief Executive Officer. an average of 927. is administered by a Board of Directors.
Growth also slowed materially in the last quarter of 2007 in the most dynamic regions (Northern Europe. is threatened by the rise in lending costs. Europe: the economy held up European economies held up well against the financial shocks of 2007. activity levels closed the year at their lowest for two and a half years.>>> Economic conditions >>> 2. Growth in the eurozone was 2. The dramatic decline in building permit and new construction figures and the collapse of house prices are the main effects of the U. The world economy grew at a sustained pace in 2007 (+5.6% (including 2. The Spanish economic boom. The German employment market posted its best performance since 1990. In the services sector. with a corresponding increase in their funding costs. economy also suffered from the downturn in the real estate market and the slowdown in financial services. activities that had contributed the most to sustaining growth over the previous three years.3% lower than in 2006. real estate crisis. however.5% in Germany and 1. 0. however. with GDP exceeding 3% over five consecutive years based largely on the construction sector. housing crisis.K. Ireland and Greece). 7 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . The year was also marked by a further dollar weakness and rising commodity prices.S.9% in France).3%) due to the dynamism of emerging economies. The credit crisis was accompanied by a liquidity crisis and increased aversion to risk and volatility. with an accumulation of indicators of a sharp downturn in the first half of 2008. turned in most major Western countries: the OECD region faced a series of shocks originating in the U.S. The economic cycle. The U. The most dynamic economies saw their growth rates slow towards the year end. Economic conditions during the year 2007 Bank balance sheets deteriorated as a result of their subprime exposures. United States: a clear slowdown The quarterly profile of economic activity was badly hit in 2007.
Eurozone inflation broke through the 3% mark. Singapore. During the second half of 2007 pressure on prices built up. Emerging countries: the engine of world growth The winding down of growth in OECD countries contrasted with the economic dynamism of emerging countries and the exceptionally robust growth of the Chinese (+11. Abu Dhabi. The manufacturing sector nevertheless made the most of world growth. forcing them to rely on major capital injections by sovereign funds in oil-producing emerging countries. as the U.1%. especially as the unemployment rate climbed gradually to reach 5% of the active population from 4. many major U.50% in September and then twice. to an annual moving average of 3.K economy appeared vulnerable to any downturn in the real estate cycle. China. for the first time since 2001. Against the euro. closely monitoring inflationary pressures. The yen benefited from mistrust of the dollar following the credit crisis and as carry trades (a strategy under which low interest-rate currencies are borrowed in order to invest in high interest-rate currencies) were unwound. • The Federal Reserve’s reaction in rapidly adopting a more accommodating monetary policy. China and Kuwait. • The desire by Asian and oil-producing countries’ central banks to diversify their foreign exchange reserves.4% at end-2006. among others. although not to the same extent as the inflationary forces of the 1990s.25% on each occasion. It weakened in the first half against the dollar and the euro. Bank balance sheets however were massively hit by the subprime crisis. but reacted vigorously to the financial crisis by lowering the Fed Funds rate by 0. the ECB injected liquidity into the financial system between August and December to try and The markets Foreign exchange markets: dollar weakening The weakening of the dollar that started in 2006 intensified in 2007. Several factors prompted this rapid decline: • The impact of the real estate crisis on U.50 in November 2007.5%) and Russian (+7. Like the Fed. Emerging countries built up enormous foreign exchange reserves in 2007 from their trade surpluses. due to rapid growth in domestic demand and significant imbalances in the economies of a number of countries.S. 8 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . Sterling followed a similar pattern to the dollar. in October and December. thanks not only to a record trade surplus but also to strong domestic demand. edged Germany out as the world’s third-largest economy in 2007. Fixed income markets: liquidity crisis The Federal Reserve maintained the status quo in the first half. the dollar moved from its January average of 1. which now contributes significantly to the country’s growth.>>> Economic conditions The bursting of the real estate bubble and the hardening of credit distribution conditions affect the confidence and spending power of U. as seen in the high level of exports and the sound health and excellent profitability of businesses. and European investment banks recognized significant asset impairment provisions in the third and fourth quarters.25% in both March and June and persistently reaffirmed its vigilance concerning inflation. whose GDP has been growing at a rate of over 10% p.S. Its decline against the euro was sparked by the subprime crisis in August. households. Part of these reserves was recycled into Western countries by sovereign funds from. by 0. The European Central Bank raised its intervention rate by 0.5%).S. before recovering from August onwards against the backdrop of rising volatility and risk aversion.a. Indian (+8. The yen experienced contrasting pressures in 2007.5%) economies. since 2003. growth.30 to flirt with 1.
Arcelor-Mittal (+66%). economy and whether the world’s largest economy. As in the second half of 2007. driven by the inflation theme. and asset reallocations by investors deserting the equity and fixed-income markets. Oil prices brushed against 100 dollars in November compared with 60 dollars at the start of the year. Through 2007. Commodity markets: soaring inflation Commodity . before dropping. but eased significantly from July onwards. in August and November. emerging economies maintained robust growth rates but they would have difficulties in maintaining such a pace if the risks of recession or stagflation turned into reality. corporate profits and investment. Equity markets: volatility and dispersion The trend of 2003-2006 continued in the first half of 2007. Sovereign bonds took on their safe-haven role in a hostile environment marked by risk aversion and expectations of a sharp downturn in growth. Trends in oil prices. declining U. contain the liquidity crisis.S. but equity markets experienced significant volatility during the subprime crisis. STMicro (-30%). with gains of 96% in China. Long rates followed a clear upward path in the first half of the year. the energy.and especially energy prices soared in 2007. stock market performances and short.S. fixed income. all combined to force oil prices higher. The impact on the financial markets depends on the macroeconomic scenario and the ability of budgetary and monetary authorities to react (central bank intervention). These factors explain in part the almost uninterrupted rise in gold prices from mid-August onwards to its historical peak of 830 dollars per ounce in November. The CAC 40 held above 6000 in June-July. EDF (+48%) and Alstom (+43%) were the best performers in the CAC 40. commodities and utilities sectors profited from the rise in prices worldwide and the new-found attraction to defensive stocks. Outlook for 2008 Macroeconomic and financial uncertainties abound as we enter 2008. coordinated action by the central banks had only a limited impact on the interbank market. volatility and sharp swings will probably characterize the equity.31% over the year. and the German DAX rose by an exceptional 22. it was the emerging markets that clearly outperformed those in the West. in line with the major world indices.9%. The burning question concerns the amplitude and duration of the slowdown in the U.>>> Economic conditions These regional contrasts were accompanied by sector variations. In contrast.3%. and currency and commodity markets.] . In all.8%) performed better. the Paris index gained just 1. strong demand in emerging economies (including China for one third). 9 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [.8% over the year and that of the Eurostoxx index fell back by 16. 47% in India. In France. oil inventories.to medium -term interest rates will be largely conditioned by the resistance of developed economies to the subprime crisis and the extent to which shocks to the financial markets are transmitted to the real economy in terms of household consumption and employment. The Dow Jones (+6. will go into recession. credit. accounting for nearly one quarter of world GDP.4%) and the Nasdaq (+9. 44% in Brazil and 41% in Turkey. Crédit Agricole (-26%) and Société Générale (-23%). The financial sector component of the Standard & Poor’s 500 index shed 20. as mistrust soared between financial institutions. Gold is a safe haven at times of volatility in financial assets and during liquidity crises. Banks’ successive announcements of their results and credit risk exposures were reflected in a collapse in banking and financial sector stock market indices. OPEC’s firm stance on production quotas. Nevertheless. while bottom place went to Alcatel-Lucent (-54%). Again.
Against this particularly Unfavorable context for proprietary trading The assets managed by Compagnie Financière du Crédit Mutuel’s Front Office are invested mainly on the credit market in asset swaps. In line with its strategy since 2001. 41% of the capital raised through EMTN programs came from outside France. the other Front Office proprietary trading activities (interest rates. Capital markets and investment banking Capital markets Funding: strong growth in medium. Compagnie Financière du Crédit Mutuel continued its policy of raising medium. a record 3. In all. and the eligibility of Compagnie Financière du Crédit Mutuel CDNs for European Central Bank tender offers were decisive advantages. Business review of Compagnie Financière du Crédit Mutuel and its subsidiaries in 2007 demanding backdrop to raising resources. demonstrating the geographic diversification of Compagnie Financière du Crédit Mutuel’s funding. the provisions raised are expected to be written back gradually. the returns on which are related directly to market and credit risk trends. in compliance with the applicable reguations. entered into transactions designed to limit their interest-rate risk.>>> Activities 2007 >>> 3. equities. This strategy was reflected in June 2007 by the 10-year 750 million euro public issue at Euribor +17 basis points. The activities of the new Paris-based institutional and sales dealing desk. Nevertheless. and EMTN outstandings exceeded 7. Compagnie Financière du Crédit Mutuel successfully ensured the Group’s funding by using. In total.and long -term The Front Office of Compagnie Financière du Crédit Mutuel was able to enhance the Group’s funding position in the first part of 2007. alternative management) continued to develop but were unable to offset such substantial unrealized capital losses. significant 6-month to 1-year CDN issues. securitisations and CDOs. Consequently. Robust sales and marketing activity The Front Office sales and marketing activities remained robust in 2007.and long -term resources to reduce the Group’s liquidity risk. Compagnie Financière du Crédit Mutuel set aside the necessary provisions against its proprietary trading book. On the foreign exchange side. sharp swings in the euro/dollar exchange rate prompted the Group’s corporate customers to take out hedges in order to optimize their costs and/or revenues.8 billion euros at the year end. At end-2007. Likewise. in particular. in terms of debt management. The second half of the year was marked by the serious liquidity crisis in major financial markets. In this very difficult market environment. Lastly. given the quality of the loan portfolio. the Compagnie Financière du Crédit Mutuel Front Office launched new structured investment products offering subscribers potential performances exceeding bond market rates. convertible bonds. proprietary trading activities posted a loss for the year as a whole. borrowing companies 10 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel .66 billion euros was issued over the year. Market turbulence and the rise in credit spreads had a direct impact on the valuation of these investments.
01 million euros.55% year-on-year to 7.Customers Suravenir Compagnie Financière . the Back Offices department processed 98.000 International services International trade transactions grew by 21% in 2007.000 2. a “Back Office internship” was set up to combine training in the theory of Back Office activities with practical work within the various units concerned. of which 58.500 4. At the same time. Back Office activities Compagnie Financière du Crédit Mutuel’s Back Offices department processes.Subsidiaries Compagnie Financière . incident management.500 1. up by 11% relative to 2006. and will be rolled out in the first quarter of 2008. 11 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . its subsidiaries and its customers. • Commencement of the Customer Activity project.Total* Federal Finance Gestion * The Compagnie Financière du Crédit Mutuel total includes transactions processed for proprietary trading. Revenues rose by in excess of 3. 2007. This growth is due to the continued development of proprietary trading and customer activities by the Front Office and to the ever-increasing success of the unit-linked life insurance policies of Suravenir. and by year end the 56 lines under management. In 2007. Significant efforts were made throughout the year to ensure Compagnie Financière du Crédit Mutuel’s capability of processing transactions under the new SEPA (Single Euro Payments Area) environment. which itself saw comparable growth.7 million euros (net of early repayments) in 2007.>>> Activities 2007 Change in average monthly transaction volumes 5.1% in fees and 4.000 500 0 Compagnie Financière . • Implementation of a customer/bank/customer Internet transfer application dedicated to processing import documentary credit transactions. • Development of a system to secure processing and modeling of all processes and controls for its activities.3% from equity interests. • Migration of the Back Offices department to a new regulations platform. the documentary credits activity grew by more than 10% in terms of number of openings and by 22% in utilization volumes. Documentary activities were determined by two key features in 2007: • Application of the new International Chamber of Commerce regulations on documentary credits (Publication 600) effective from July 1.9 million euros at December 31.500 3. Specialized financing In a buoyant market during the first half year that turned especially troubled from the summer onwards. Against this backdrop. • 10% in asset and project financing (Public-Private Partnerships) and investment fund holdings. strict processing rules at both national and international levels. the Specialized Financing activity generated new lending of 104.046 transactions.6% in interest margins. • 53% in LBO financing. In 2007. • Continuation of the study into development of a new IT system to reinforce the security of market transactions from 2008. and in order to enhance the forward-looking management of Back Office human resources. It also serves as custodian for the Arkéa Group’s asset management companies and is responsible for the processing and unwinding of all specialized financing transactions. the Back Offices department carried out or completed significant developments linked primarily to regulatory requirements and to securing its processes: • Final integration of the accounting requirements under IAS-IFRS and implementation of new regulatory requirements concerning securities disclosures (RDT and Protide). reviewing development requests and the functional administration of applications.500 2. could be analyzed as follows: • 37% in corporate syndicated loans. Efforts to diversify the portfolio by both sector and by lending type continued. 4. • Euroclear Settlement of Euronext-zone Securities (ESES). Flows within this framework are subject to identical. • Continuation of preparatory work for implementation of the Target 2 system for managing euro-denominated interbank flows. averaging 9 million euros each. unwinds and accounts for transactions initiated by the Front Office. This work was carried out in particular thanks to the setting up within the department of a Development unit charged with steering projects.000 1. The slight slowdown in growth since August 2007 is due mainly to the transfer of processing for Suravenir’s external mutual funds to ProCapital in September 2007 to improve efficiencies. which sets a common regulatory framework for euro payments between the 31 countries using the single currency or that are signatories to the agreement. 2007. resulting in a 30% rise in year-end outstandings to 506. 37.Proprietary trading Compagnie Financière . This application will enhance the effectiveness of the Arkéa Group’s offering and services in this highly competitive environment.000 3.
broken down as follows: • Corporates: 2. and those relating to Basel II and the SEPA will be brought into operation in 2008. Caméfi-Banque in 2007 Caméfi-Banque had an excellent year in 2007.362 customers (+3%) by the year end. Outstandings linked to real estate financing increase by nearly 51% over the year to reach 66. loan outstandings totaled 3. an inter-federation company providing project management services for equipment and installations held by local authorities. to 825 million euros. The bank’s resources rose to 165 million euros. Net income for the year was 15. compared with 1. Internet-based collections increased 81% to 166 million euros and international payment business by 22% to 634 million euros.45% in Compagnie Financière du Crédit Mutuel’s equity interest in Sodérec. Sobrepar and Financo. Loan outstandings maintained a robust growth pattern. • Lastly.10% to 16.1 million euros.650 accounts for 2.5%. Bail Entreprises and with Caisse Interfédérale de Crédit Mutuel in the context of “payment business . Banque Commerciale pour le Marché de l’Entreprise in 2007 BCME increased new lending in its three markets (corporates. rising 29% year-on-year to 512 million euros. by 8%. 2007. Corporates Holding company Administration of equity investments The net carrying amount of Compagnie Financière du Crédit Mutuel’s portfolio of equity interests rose by 2% (23 million euros) to 1. The well-established partnership with Federal Finance was added to with partnerships with BPE (BCME is its second-largest business provider).495 million euros. The customer portfolio increased by 6% over the year to total 4.635 million euros (+10%) • Local authorities: 685 million euros (+13%) • Real estate development: 175 million euros (+38%) Savings deposits declined slightly.>>> Activities 2007 Subsidiaries By promoting and coordinating the growth of its many subsidiaries. in 2007 to 975 million euros. Compagnie Financière du Crédit Mutuel is able to offer a broad range of products and of services. Compagnie Financière du Crédit Mutuel sold its 0.246 million euros at December 31. local authorities and real estate development) by 4% year-on-year. BCME also provides financing to local authorities. up by 16.14 million euros in net income for the year. BCME and Caméfi-Banque have also recently been retained to provide payment services to the largest provident institution in France. which had an existing interest in the capital of Compagnie Financière du Crédit Mutuel’s consumer credit subsidiary. Thanks to significant sales and marketing efforts to win new market share. 12 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . Federal Finance Banque. At end-2007. The rise was due to: • Compagnie Financière adding to its majority holdings in subsidiaries by purchasing from Caisse de Bretagne de Crédit Agricole Mutuel (CBCAM) the shares it had held since their founding in Suravenir. driven by corporate term and demand deposits.5 million euros.72% minority interest in the capital of Groupe des Assurances de Crédit Mutuel and 11. for over 18 million euros.8 million euros in 2006.016 corporate customers comprising 617 groups and including 71 new customer accounts.5% of Financo’s capital to Laser Cofinoga. Regulatory changes brought about by the Markets in Financial Instruments Directive (MiFID) were finalized in 2007.services” requests for proposals. payment services and financial engineering as well as advisory services and appraisal. • An increase from 12. Caméfi-Banque reported 2. The corporate and investment banks Banque Commerciale pour le Marché de l’Entreprise (BCME) and Caméfi-Banque provide project assistance to corporates with revenues exceeding 4 million euros and real estate developers. Their services comprise financing. it now has 1.
Synergie Finance Gestion. credit insurance and term life insurance). Gross revenues (excluding provident insurance) declined 7% to 2. Development Capital division in 2007 Activity levels stabilized in 2007. with the two venture capital companies making investments totaling 5 million euros (including 4. 2007 totaled 88. The net portfolio managed at December 31. • Improvements to policies with multiple investment options by reducing arbitrage delays.69 million euros.840 million euros at the year end. and a venture capital fund management company. It therefore has expertise in three areas: economic. As with most other life insurance players. Several actions were implemented rapidly in order to boost growth: • Structural changes to meet the needs of the various product distribution lines.669 policies at December 31. Provident insurance revenues (up 20 %) amounted to 158 million euros.191 new life insurance policies (excluding Fourgous subscriptions) were taken out.4 million euros was in the venture capital firms. introducing daily valuations for euro-denominated funds and harmonizing management charges.4 million euros in 2006. real estate and taxation. Net income totaled 1. Marché de l’assurance Suravenir.598 million euros Suravenir in 2007 A highlight of 2007 was the merger between Suravenir and Vie Plus (acquired in December 2005) and the consequent relaunch of the website and migration of personal unit-linked life insurance policies to a single application. Bail Entreprises in 2007 Bail Entreprises achieved a marked increase in new loan production in 2007. At December 31. In 2007. Net income for the division was 8. Suravenir’s net income for the year was 92. Sobrepar and Synergie Finance. 90. of which 147 million euros correspond to credit insurance and 11 million euros to individual provident insurance policies. including: • Sobrepar: 3.458 million euros. Total life insurance savings administered were 21.492 million euros. • Forging a new partnership with the brokerage firm Linxea to provide online marketing of life insurance policies.7 million euros • Synergie Finance Gestion: 0. Suravenir’s activities are exercised mainly through the Crédit Mutuel de Bretagne. bringing the portfolio to 1.394 million euros • Synergie Finance: 4.7 million euros. a leading French life insurance player. signing new agreements totaling 86 million euros compared with 36 million euros in 2006.8 million euros by Synergie Finance in 15 transactions) and 8 million euros invested by the Synergie Finance Gestion mutual fund. compared with 1. 13 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . Suravenir experienced a slight downturn in 2007. of which 47. They provide equity capital to companies in the development phase and facilitate buyouts in the event of a total or partial transfer of ownership by taking minority stakes. Sud-Ouest and Massif Central regional banks and through partner networks.208. is specialized in the design.>>> Activities 2007 The real estate leasing company Bail Entreprises purchases or builds offices for professionals that it leases out over long periods with an option to buy at a predetermined price on maturity of the lease. compared with 62. 2007 it had loan outstandings of 352 million euros and its portfolio comprised 520 buildings. The Development Capital division comprises two venture capital companies. 2007. This growth was driven by the pickup in corporate real estate investments but also by new signings carried over into 2007. structuring and management of life and provident insurance policies (personal and group life insurance.3 million euros.9 million euros in 2006.
compared with 225.>>> Activities 2007 Suravenir Assurances specializes in non-life and personal insurance. 14 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel .000 euros in 2006. compared with 2. with fee income totaling 3. • “Paper” real estate tax-based and high-yield real estate investment partnerships.975 million euros. compared with 1. Europim in 2007 The real estate sales activity was exceptionally robust in 2007. is specialized in the following activities: • Policies designed to meet the specific needs of corporate customers. Novélia in 2007 Gross revenues rose 5% in 2007 to 11. At December 31.2 million euros in 2006. Novélia generated net income of 1.500 residential rental units (over 55% of which are single-family homes) in 160 municipalities. in line with the trend of steady growth seen in recent years.64 million euros in 2006 on 386 reservations. Armorique Habitat is a public housing corporation with special expertise in: • Regulated rental public housing. • First-time buyers for new and existing housing. a year-on-year increase of 7%.39 million euros on 413 reservations. Suravenir Assurances managed 1. • Design of innovative retail policies. 2007. • Property improvements.975 policies in all.875. compared with 16.6 million euros in 2006. Europim reported net income of 382. Suravenir Assurances in 2007 The Arkéa Group decided to take full control of Suravenir Assurances in 2007. Against the backdrop of a hardening real estate leasing market. Revenues totaled 237. Europim succeeded in maintaining its highly selective policy in terms of both its partners and its offering. compared with 1. Europim provides real estate products to customers in the Arkéa Group’s distribution networks and offers targeted products for investment in: • New buildings. an insurance brokerage. Its rental income reached 15.000 euros in 2007. The company’s net income in 2007 came to 2. Armorique Habitat delivered 139 residential units and started work on a further 61 units.2 million euros. Suravenir Assurances launched various new products during the year: • A new and innovative auto and household comprehensive insurance product offering reduced tariffs.5 million euros. It designs and manages a full range of products and services in the following fields: • • • • • Household comprehensive cover Automobile cover Accident cover Supplemental health cover Dependency cover Europim works actively alongside the distribution networks in sales and marketing.300 insurance brokers and agents. of which 877.7 million euros.692 were major policies (+9% year-on-year). Its offering is designed to meet the specific needs of individual and family customers. Net income for the year was 20. • Design and integration of customized solutions for major corporate accounts. distributed through a national network comprising 1. covering the full range of tax incentives. • The “Privilège” loyalty-building program under which customers holding at least three major policies receive various benefits.2 million euros. Real estate The owner of more than 4.42 million euros in 2006. Novélia.8 million euros. Armorique Habitat in 2007 In 2007.
• Implementation of a new Front Office and customer relationship management application.166 million euros Mutual funds Mutual fund assets increased year-on-year by 8% to 6.6 million euros in 2006).6 million euros in 2006.9 million euros (9. compared with 11. equity savings plans/CTO management mandates. it has an active asset-switching policy and coordinates monitoring of the Group’s real estate management. including: Foncière Investissement is a company specialized in real estate investment with the aim of diversifying Compagnie Financière du Crédit Mutuel’s assets.>>> Activities 2007 Federal Finance in 2007 Federal Finance undertook a number of important developments in 2007. Its mutual fund range was placed second in the Corbeilles d’Or rankings for performances over one year in the “best large network of more than 100 branches” category. Elegius mandates) but were insufficient to offset outflows of 71 million euros on older products.4 million euros (one in Brest and the other in Aix-en-Provence). Net collections during 2007 amounted to 265 million euros. Net income in the two group companies. Federal Finance Banque and Federal Finance Gestion. compared with 1. broken down into: • Mutual funds: 6. Enhancements are underway to the Excelsius range and the Previ Options mandate in particular to boost collections in 2008. • Federal Finance Gestion.064 million euros. Institutional asset management The Federal Finance group managed under mandate a total of 18. account holding and portfolio management. the Federal Finance group comprises two complementary but distinct legal entities: • Federal Finance Banque. At end-2007. • Compliance with the requirements of the MiFID. it offers a range of mutual investment funds.166 million euros at December 31.1 million euros.5 million euros (4. mandated asset management plans and employee savings plans. • The transfer of old mandated management offers. As the principal company for the Arkéa Group’s real estate investments.6 million euros in 2006) • Federal Finance Gestion: 11. the Federal Finance group managed assets of 24. Net income for the year came to 2. 2007.455 contracts. up 18% year-on-year. Federal Finance group’s net income in 2007 was 14. up by 12% year-on-year. assets managed in employee savings plans totaled 254 million euros for 5.064 million euros • Employee savings: 254 million euros • Private asset management: 459 million euros • Institutional asset management: 18.5 million euros.943 million euros. Private asset management Net outflows of funds in this activity totaled 13 million euros in 2007.9 million euros. 15 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . • Switching responsibility for the custodianship of securities for mandated management customers from Gestitres to ProCapital. the Federal Finance group has four areas of expertise: mutual fund asset management. Rental income in 2007 amounted to 6. private asset management. institutional asset management and employee savings plans. In this respect. The net collections on new products came to 59 million euros due to the excellent dynamism of Banque Privée Européenne sales (Myrialis mandates. increased very satisfactorily during the year: • Federal Finance Banque: 8.15 million euros in 2006. Other • Asset management A specialist in third-party asset management. Employee savings At end-2007. Collections during the year increased by 3% to 43 million euros. Foncière Investissement in 2007 In 2007 the company focused on two acquisitions totaling 11. To ensure full compliance with requirements for separation of its two business lines.
aimed at young customers. Financo’s net income for the year came to 4. Net loan outstandings increased 11% year-on-year.478 million euros at December 31. total loan outstandings stood at 2. Banque Privée Européenne in 2007 In 2007. Eole Finance. BPE’s net income for the year of BPE came to 10. generated 50 million euros in new loans in 2007. including: • Consolidating the structure of its network. in particular. compared with 9. Fortuneo offers its customers a full range of market investment products (equities. Loan production increased 10% year-on-year to 488 million euros.465 million euros.3 million euros in 2006. hedging of stock-options and LBO support. • Boosting its communication effort with.A.000 euros. Eole Finance’s net income for the year came to 595 K euros. • 26 million euros in P3F three-installment financing. compared with 43 million euros in 2006. joint offering to all customers. Financo specializes in the distribution of consumer credit and also has a unit dedicated to collections. It also provides customers with technologically-advance analysis and information tools via its website that are comparable to those found in a dealing room. Banque Privée Européenne concluded a wide range of projects. • Enhancing its product range: mandated management for standard securities accounts or equity savings plans is now available from 60. a Financo subsidiary specialized in advances on employee savings plans. Net collections totaled 388 million euros and savings deposits totaled 2. it has forged a partnership with the Laser group (Cofinoga).394 million euros. 16 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . certificates.414 million euros at December 31. warrants.7 million euros. Basel II implementation and compliance with the MiFID). 2007. • 45 million euros in lease-to-own financing. Its innovative products and services include. loans and other services) for high-net-worth customers.>>> Activities 2007 • Wealth management • Consumer credit • Online brokerage Banque Privée Européenne (BPE) offers a full range of banking services (interest bearing checking accounts. leasing investment. broken down into: • 467 million euros in real estate lending (+9%) • 21 million euros of consumer credits (+28%) Following a slight 3% increase year-on-year. 2007. Fortuneo S. • 34 million euros in personal loans. Eole Finance (acquired in 2004 by Financo) markets revolving credit through Works Councils to employees holding employee savings plans. with new lending rising by 7% year-on-year to 714 million euros (up 14% excluding loans extended to civil servants under the 2006 Crédit Social des Fonctionnaires agreement. which was not renewed in 2007). France’s second-largest online broker. mutual funds and life insurance). • 118 million euros in revolving credits. such as market information. Fortuneo in 2007 The major development in 2007 was the regrouping of Fortuneo Direct Finance and Symphonis into a single legal entity. Consumer credit in 2007 Financo had a good year in 2007. • The optimization of suppliers’ financial terms and conditions. resulting notably in: • The provision of a unique. compared with 200 K euros in 2006. in particular. • 54 million euros in home furnishing loans. Outstandings totaled 115 million euros at end-2007. The priority was to maximize synergies. To boost its presence in the revolving credit sector. a new media unit and distribution of two information letters including one on wealth management. to 1. multi-management services. • The implementation of shared applications. bonds. • 146 million euros in home improvement loans. • Convergence towards best practices. securities data and real-time pricing. • Securing and modernizing its existing applications (lending policy. which now holds 15% of Financo’s capital. compared with 5 million euros in 2006. broken down as follows: • 291 million euros in car-motorcycle-leisure loans. the launch at end-2007 of the VIP range. savings products.
210 million euros.be website booked nearly 30.12 million euros in 2006.778 new policies were taken out.307 million euros and 12. Outstandings increased 10% to 2. Assets held in custody amounted to 12.038 orders were executed in 2007. and multiple direct access to markets such as Euronext and Liffe). ProCapital in 2007 At December 31. • The use of cutting-edge technologies for processing market orders (transactional websites. compared with 5.6% were mutual fund orders. compared with 10.000 new accounts opened during the year.15 million euros. Fortuneo’s net income for the year came to 11. with the support of ProCapital. private banks. 2007.>>> Activities 2007 Other highlights of the year included: • The launch in early 2007 by Fortuneo Direct Finance. which obtained six awards from the financial press in 2007. the portfolio comprised 229. including 940 million euros in Symphonis Vie policies. • The marketing at end-2007 of an “asset account” offer. Ille-et-Vilaine. of which 4. Net collections totaled 351 million euros.8 million euros from tourism activities. and Loire-Atlantique and Maineet-Loire in the Loire region) and works through Caisse de Crédit Mutuel de Bretagne.5% share) in the online brokerage segment in 2007 and confirmed its place as the leader in remote distribution of life insurance products with Symphonis Vie. Its volumes of orders executed increased by 25% year-on-year to 4. • Business travel. of which 86 million euros for mutual funds.000 orders in 2007 and 2.008 accounts. asset management companies. Acta Voyages has 12 agencies operating in 6 French départements (Côtes d’Armor.487.2 million euros in 2006. The regrouped Fortuneo consolidated its market share (18. Total life insurance savings at December 31. and Morbihan in Brittany.be. 2. comprising an advance on an investment associated with a bank card.156 securities accounts were opened for outstandings of nearly 50 million euros.3 million euros of which : • 20. ProCapital is a leading securities services provider to financial institutions. ProCapital is characterized by: • Its complete mastery of the traditional features of financial market business lines. with over 29. • Securities services A subsidiary of Compagnie Financière du Crédit Mutuel since mid-2006.000 orders. • 18. including Fortuneo. specializing in three areas: • Personal travel. bank networks and brokers.000 and its mutual fund business doubled in 2007 to 448. net life insurance collections reached 204 million euros and 6. real-time platforms.] . With growth of 9% year-on-year. In 2007. of its Belgian stock market website Fortuneo. At December 31. providing customers with liquidity without the need to touch their savings or cut back their stock market activities.310 new accounts were opened in 2007 taking the total to 73. 2007. • Group travel. In its first year. Finistère. ProCapital was the fourth largest French player in terms of orders executed. Acta Voyages in 2007 In 2007.419 million euros. the Fortuneo. • Travel Acta Voyages is the leading travel agency network in Western France. 17 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [.7 million euros. ProCapital’s net income for the year was 7.345. Acta Voyages generated revenue of 39. 2007 amounted to 1.5 million euros from ticketing business.000 active accounts.
dependency and comprehensive household policies in the “non-life” category Federal Selection Tonique in the “investment funds” category One-year performance of its investment fund range International equities range in the “investment funds” category PEE Eparialis in the “employee savings” category Management of work-related relocations Straigh though processing of dollar payment orders Award Label d’Excellence Trophée d’Or Palme d’or Awarded by Les Dossiers de l’Epargne Le Revenu Journal des Finances Symphonis Symphonis Fortuneo Suravenir Laurier d’Argent Oscar Label d’excellence Label d’Excellence Investir Magazine Gestion de Fortune Les Dossiers de l’Epargne Les Dossiers de l’Epargne Suravenir Label d’Excellence Les Dossiers de l’Epargne Suravenir Suravenir Suravenir Suravenir Assurances Label d’Excellence Trophée d’Argent Trophée de bronze Label d’Excellence Les Dossiers de l’Epargne Le Revenu Le Revenu Les Dossiers de l’Epargne Groupe Federal Finance Groupe Federal Finance Groupe Federal Finance Victoire des SICAV 2eme place des Corbeilles d’Or Trophée de Bronze La Tribune and Standard & Poor’s Mieux Vivre Votre Argent Le Revenu Groupe Federal Finance Novélia Compagnie Financière du Crédit Mutuel Label d’Excellence Label Développement Durable Award Les Dossiers de l’Epargne Rennes Métropôle JP Morgan Chase Bank >>> 18 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . Symphonis-Vie in the “life insurance” category PERP Prévi-Horizon in the “PERP retirement savings plan” category Prévi-Famille and Prévi-Obsèques in the “provident” category Prévi-Options (PERP) in the “life insurance” category Myrialis in the “life insurance” category Accidental risk.>>> Subsidiary Symphonis Symphonis Symphonis 2007 awards Product Securities accounts Symphonis-Vie in the “life-insurance” category Symphonis-Vie in the “web-based multi-investment vehicle policy” category Symphonis-Vie in the “life insurance” category Symphonis-Vie in the “best service to policyholders” category Securities accounts Prévi-Options. Myrialis (BPE product).
and the monitoring of all types of risk. as amended. while ensuring compliance with all directives set down by the supervisory authorities and Confédération Nationale du Crédit Mutuel. The audit committee discusses all of the committee’s work and recommendations concerning entities within Compagnie Financière du Crédit Mutuel’s consolidation scope with the Board of Directors of the company. All procedures are then adapted where appropriate and implemented within each entity. overall interest rate risk. liquidity risk. Audit committee The committee is composed of five members appointed to three-year terms by the Board of Directors of Caisse Interfédérale du Crédit Mutuel. the central body with which Caisse Interfédérale du Crédit Mutuel. and it maintained these efforts in 2006 and 2007. market risk. is affiliated. The committee meets at least three times each year.>>> Risk management >>> 4. The audit committee met six times in 2007. operational risk. the parent company of the Arkéa Group. the Group began adapting its procedures to incorporate the new provisions of French Banking and Financial Regulatory Committee (CRBF) Regulation 97-02. It reports on its activities to the Board of Directors of Caisse Interfédérale du Crédit Mutuel. which also appoints the committee Chairman. It oversees the proper functioning of the company’s management bodies. Four committees and two Departments of Caisse Interfédérale du Crédit Mutuel are specifically responsible for these controls. In 2005. 19 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . The audit committee validates the annual periodic control plan and examines all work performed by the Internal Audit and Periodic Controls Department and the conclusions and recommendations of all independent audits. compliance with laws and regulations governing the industry. including credit risk. the control of all Arkéa Group entities. Internal controls are organized around a system that incorporates distinct periodic controls and permanent controls. Risk management Risk management in the Arkéa Group The organization and procedures of the risk management function within Compagnie Financière du Crédit Mutuel and its subsidiaries are established and monitored at Arkéa Group level. etc.
The committee met five times in 2007. Periodic controls committee Under the chairmanship of the Chief Executive Officer of the Arkéa Group. this committee. and the effectiveness and pertinence of all control procedures. and operations. One specific control plan is developed for the Crédit Mutuel local bank network. analyzes the Group’s earnings and verifies the annual report and all regulatory declarations to be filed with the supervisory authorities. Internal Audit and Periodic Controls Department This Department. prevent. information systems. Its role is to help the Board of Directors of Caisse Interfédérale de Crédit Mutuel evaluate the financial information and verify its accuracy. It addresses of the findings of control and audit reports by the Internal Audit and Periodic Controls Department and by external bodies such as supervisory authorities and Confédération Nationale du Crédit Mutuel. The plan includes in particular annual audits of all major risks in the areas of credit. which also appoints the committee Chairman. branches and subsidiaries and another for the various Group companies. It 20 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . monitor and reduce these risks. notably as concerns the accuracy of the systems for measuring. monitors all credit. validates the recommendations contained in those reports and monitors their implementation. which reports directly to the Chief Executive Officer of the Arkéa Group. Risk Management Department This Caisse Interfédérale du Crédit Mutuel Department provides continuous controls over compliance. periodically checks the compliance of all transactions with regulations and procedures. security. It informs the Board of Directors of Compagnie Financière du Crédit Mutuel of its work regarding entities within the Compagnie Financière du Crédit Mutuel consolidation scope. including Compagnie Financière du Crédit Mutuel and subsidiaries’ central functions. It issues an opinion regarding the appointment of the independent auditors and analyzes the findings of their audit. monitoring and managing the risks to which the Group is exposed at the consolidated level. accounting processes. Its control plan is validated by the audit committee. It has oversight over all employees responsible for permanent controls within the various operating entities. The committee met five times in 2007. ensures that all financial information is accessible. the level of risk run. It specifies which areas are covered by permanent controls and which by periodic controls. and validation of transactions and ensures compliance with all measures related to the oversight of all types of risk throughout the entire Group. examines the pertinence of the accounting choices made. Permanent controls committee Under the chairmanship of the Chief Executive Officer of the Arkéa Group. It reports its works and conclusions to the Board of Directors of Caisse Interfédérale de Crédit Mutuel. The Risk Management Department is also responsible for preparing the Arkéa Group to implement all of the provisions established by the Basel Committee. and to propose all additional measures necessary. proposes exposure limits to Caisse Interfédérale du Crédit Mutuel’s Board of Directors and ensures that each Group structure complies with the prudential rules that have been established by implementing the most appropriate permanent control procedures. It examines the financial statements of the Arkéa Group before they are presented to the Board. It participates in the establishment of the annual periodic control plan. this committee is responsible for evaluating the quality of all periodic controls. checks all changes in total exposure levels. It ensures compliance with all regulations and procedures concerning risk exposures. Annual report on internal controls and the measurement and monitoring of risk within the Arkéa Group The annual report on internal controls and the measurement and monitoring of major risks within the Group is prepared under the responsibility of the Chief Executive Officer of the Group. It develops and makes available the tools required to identify. market and operational risk. The Department operates throughout the Arkéa Group. The committee examined Compagnie Financière du Crédit Mutuel’s 2007 annual and consolidated financial statements. capital markets. whose members include notably Compagnie Financière du Crédit Mutuel’s Chief Executive Officer and Head of Periodic Controls.>>> Risk management Financial statements committee The financial statements committee is composed of five directors of Caisse Interfédérale du Crédit Mutuel and/or Compagnie Financière du Crédit Mutuel appointed to three-year terms by the Board of Directors of Caisse Interfédérale du Crédit Mutuel.
by either the operator himself or by a third party. Internal control comprises both permanent control and periodic control. Based on the application of Comité de la Réglementation Bancaire et Financière Regulation 97-02. as well as of compliance with other requirements related to risks of all types associated with operations (see Article 6. and is thus ultimately determined and monitored by Caisse Interfédérale de Crédit Mutuel. i. • The applicable executive body has final responsibility for compliance with regulatory requirements in terms of permanent control. as amended. In 2007. The organization of permanent control is therefore based on the Group’s pyramid structure. Given this distinction. each of which has operational responsibility for the permanent control of its own activities. 1997. • Each Group entity organizes its own permanent control structure and reports back to Caisse Interfédérale de Crédit Mutuel. Internal control in the Arkéa Group The aim of internal control is to ensure the protection of the company’s employees and assets. Based on a mapping of the procedures applied. For the subsidiaries. this consisted of identifying all risks that could affect the procedures and of setting out the applicable first-level permanent controls in order to review the existing or required second-level controls. with each entity being responsible for the quality of its own permanent controls. The Arkéa Group is overseen by the regulatory authorities on a consolidated basis and has organized its internal control systems in the following manner: Decision-taking body Permanent control The organization of the permanent control of the compliance. the entity that heads the Arkéa Group and that controls Compagnie Financière du Crédit Mutuel and its subsidiaries. the legitimacy of transactions. as modified by the decree dated March 31. Within each entity. Board of Directors Audit committee Control committees (Crédit Mutuel Federations in the Arkéa Group) Executive body Executive Board Periodic control committee Permanent control committee Periodic control (=level 3 control) Level 2 permanent control Level 1 permanent control (= “operational” control) Internal control Operations 21 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . under the responsibility of its management. Such responsibility within the Group is determined by legal entity. and a copy is then provided to the supervisory authorities. organizes and implements the procedures and applications deemed necessary to exercise permanent control over its activities. of CRBF Regulation 97-02 of February 21. the organization of permanent control in the Arkéa Group is based on the following principles: • The organization of permanent control covers all risks in all the Group’s business lines. reports are drafted by the Permanent Control Department of Compagnie Financière du Crédit Mutuel. the application of directives and the achievement of objectives. as well as the quality of information and the effectiveness of the company’s operations.a of CRBF Regulation 97-02) is based on the distinction between first. The organization of the internal control function within the Arkéa Group has been adapted in compliance with the provisions. security and validation of operations. responsibility is determined by management line. within this framework each operational Department adopts. In practice. Second-level permanent control is exercised by a control function.and second-level permanent controls: First-level permanent control is exercised at the “operational” level. regardless of the legal structure of the activities generating the risks. Any control exercised until the completion of a process is deemed to be a first-level control.>>> Risk management is presented to the audit committee and the Board of Directors of Caisse Interfédérale du Crédit Mutuel. relating to internal controls in credit institutions and investment firms. It has no involvement in the process being controlled but is exercised on completion of the transaction concerned by a person independent of those responsible for the transaction itself. The executive and decision-taking bodies of the Arkéa Group are the Board of Directors and The Executive Board of Caisse Interédérale de Crédit Mutuel. 2005. Internal controls are exercised within each entity and follow the principles adopted at end-2005 by the Boards of Directors of Caisse Interfédérale de Crédit Mutuel and Compagnie Financière du Crédit Mutuel. risk management requires both effective internal controls that integrate the provisions of the Basel II agreement and the specific tracking of each type of risk. They are applicable by all components of the Arkéa Group. The aim of this structure is to enable Caisse Interfédérale de Crédit Mutuel’s management bodies to manage exposure to risk and to control the potential impact of such exposure with reasonable assurance. who is also Chief Executive Officer of the Arkéa Group. and is under the direct responsibility of the Chief Executive Officer of Caisse Interfédérale de Crédit Mutuel. when the transaction is entered into or being processed. significant efforts were made in the field of operational risk to recast the management of second-level permanent control.e.
Being responsible for the Group’s capital markets activities and the management of all its subsidiaries. having an adverse financial impact of 1. Assignments are performed on site and/or remotely. In parallel to its permanent control system. compliance with procedures. via Compagnie Financière du Crédit Mutuel for its subsidiaries and central Departments. 22 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . Segregation of duties The organization adopted within Compagnie Financière du Crédit Mutuel and its subsidiaries guarantees a segregation of duties. Compagnie Financière du Crédit Mutuel has implemented a system that is well suited to its particular activities and risks. In addition to the periodic control of CICM itself. when the half-yearly and annual accounts are prepared. Only these two entities participate in the capital markets. Persons involved in periodic control are independent of those involved in operations and the associated risks. Each permanent control manager applies the second-level controls applicable to his area of responsibility. They are reported to the permanent control manager in each entity and. specialized by type of risk. The risks linked to such incidents are assessed twice each year. in the widest sense. In the Arkéa Group. The control program is established at least annually and reflects the control objectives of the Group’s executive and decision-taking bodies. Periodic control Periodic control ensures the “legitimacy of transactions. Caisse Interfédérale de Crédit Mutuel’s Head of Internal Audit and Periodic Control has been designated with the French Banking Commission as the periodic control manager for the Arkéa Group. the Department reports to the periodic control committee and the audit committee. • Intercompany committees. the level of risk effectively run.000 euros or more. notably to guarantee the primacy of customers’ interests. With line responsibility to the Executive Board of Caisse Interfédérale de Crédit Mutuel. and independent of those responsible for permanent control. which are carried out in close collaboration with Caisse Interfédérale de Crédit Mutuel. organizational entity and process. The results of such controls are stored and may be accessed by risk type. of Caisse Interfédérale de Crédit Mutuel. Periodic control is carried out within the framework of an annual plan determined in accordance with the periodic control planning procedure applied in the Arkéa Group. combined with the audit of permanent control procedures. They are provided with specific. The control program and activities falling within the scope of the authorizations delegated to Caisse Interfédérale de Crédit Mutuel by all other Group companies are totally independent of the exercise of periodic controls on a consolidated basis over Caisse Interfédérale de Crédit Mutuel in its capacity as the central body of the Arkéa Group. Periodic control of operational risk is carried out through the audit of procedures. which are carried out by Compagnie Financière du Crédit Mutuel. proprietary applications in terms of methodology and information systems. and the effectiveness and appropriateness of the permanent control system” (Article 6 of Comité de la Réglementation Bancaire et Financière Regulation 97-02). This approach associates: • Segregation of duties. the Group has adopted an incident-reporting procedure designed to record all operational risk incidents. • The risk management and internal control functions.>>> Risk management These control procedures are used to ensure the effective management of permanent control. to prevent conflicts of interest. the Department has been authorized by each Group entity to exercise periodic control over that entity. independently from one another. firstly between all third-party management activities – which are entrusted to the Federal Finance Gestion asset management company – and the company’s proprietary trading activities. Compagnie Financière du Crédit Mutuel’s risk management system The Compagnie Financière du Crédit Mutuel risk management system is part of the general framework of the Arkéa Group system described above. and this. all periodic controls are the responsibility solely of the Internal Audit and Periodic Control Department of Caisse Interfédérale de Crédit Mutuel.
These committees are: • Credit committee. to review all credit requests (specialized financing. in a spirit of intercompany cooperation. subject to the same rules as employees deemed to be “concerned” within the definition set by the French securities regulator. issuers and capital market intermediaries. examined hereafter in greater detail. • Capital markets counterparty credit committee. within the framework of formal agreement. while the Front Office reports to the Financial Markets and International Activities Department. the Autorité des Marchés Financiers (AMF). • Ensure the effectiveness of procedures in the fight against money laundering and the financing of terrorism. Permanent control The organization adopted by Compagnie Financière du Crédit Mutuel is reflected notably in the deployment of the Permanent Control Department formed in 2005 and strengthened in 2007. therefore. each structure organizes and performs its own permanent first. • Credit risk monitoring committee. for the selection of interbank counterparties. its subsidiaries and. • Financial management committee. the Arkéa Group.). and act as custodians of proprietary and third-party assets. and for decisions to grant such requests. Committees Compagnie Financière du Crédit Mutuel’s committees were set up to prepare and monitor all operating and strategic decisions by uniting the expertise contained throughout Compagnie Financière. These committees rely greatly on the analyses and monitoring provided by Compagnie Financière du Crédit Mutuel’s Middle Office department. This Department’s assignments are intended to: • Check the compliance of banking and insurance activities. the duties are also segregated by having both the Back Offices and the Middle Office departments report to the Corporate Secretary of Compagnie Financière. guarantees given. if appropriate.trades financial instruments for the account of Compagnie Financière du Crédit Mutuel.trades interest rate and foreign currency hedging instruments on behalf of corporate clients of the Group’s banking networks and partners. Compagnie Financière du Crédit Mutuel is organized in the following manner: • The Front Office: . compliance with financial ratios and the financial management of Compagnie Financière du Crédit Mutuel through its performances and its profitability. To improve security over these activities. The discussions that take place within these committees often involve insider information. Under this organization. Compagnie Financière du Crédit Mutuel’s internal control system Compagnie Financière du Crédit Mutuel has organized its permanent and periodic internal control system in compliance with the framework system adopted by the Arkéa Group to meet the requirements of the new Comité de la Réglementation Bancaire et Financière Regulation 97-02. . • Check the compliance of investment services. etc. in order to avoid any inappropriate spreading or illicit use (insider trading) of such information.>>> Risk management This segregation of duties effective at the institutional level is also found at the operational level. 23 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . and the permanent controls committee. which monitors sensitive credit files and those placed on alert. for optimizing and ensuring the security of all purchases of financial products and services for the entire Group (notably for selection of the management companies and mutual funds marketed). syndicated loans. • The Back Offices record the transactions and their unwinding in the accounting system.and second-level controls. • The Middle Office is responsible for day-to-day monitoring of operations and credit and counterparty risk linked to Compagnie Financière du Crédit Mutuel’s activities. and take their decisions in accordance with the limits that have been established by the Board of Directors. which is responsible for broad balance sheet equilibria. and credit risk on the other. All participants are. • Monitor risk controls in respect of market and counterparty risk on the one hand. • Partner approval committee. funds guaranteed.
] . the Board of Directors of Compagnie Financière du Crédit Mutuel. The Executive Board. Moreover.>>> Risk management It is responsible for monitoring that permanent control procedures and actions are complied with and conducted in accordance with the permanent control system adopted by Compagnie Financière du Crédit Mutuel. which already complied with the requirements for independence of periodic and permanent controls as set out in the reform of Comité de la Réglementation Bancaire et Financière Regulation 97-02. Management of the permanent controller’s function is provided.and second-level controls are implemented by the various Compagnie Financière du Crédit Mutuel entities. the executive body. • Undertake additional controls where required. • Establish the annual permanent control plan. chairs Compagnie Financière du Crédit Mutuel’s permanent control committee. and with assessing the quality and effectiveness of the permanent control systems. examines the internal control reviews presented to it. In this context. its decision-taking body. • Ensure that first. This structure. Concerning the various governance bodies. the Compagnie Financière du Crédit Mutuel Board of Directors has delegated the exercise of periodic control within Compagnie Financière du Crédit Mutuel to the Internal Audit and Periodic Control Department (formerly the General Inspection and Audit Department). which also comprises the heads of each central entity within Compagnie Financière. by Compagnie Financière du Crédit Mutuel’s Permanent Control Department in liaison with Caisse Interfédérale de Crédit Mutuel’s Risk Management Department. has been confirmed. Compagnie Financière du Crédit Mutuel’s Permanent Control Department assumes responsibility for the permanent control of compliance. in accordance with the procedures applicable to all companies in the Arkéa Group. which reported to The Executive Board of Caisse Interfédérale de Crédit Mutuel. implementation of periodic controls within CFCM was the responsibility. the Financial Markets and International Activities Department and the Corporate Secretariat have each appointed a permanent controller with line responsibility to the department head. within each of the two departments. 24 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. Within the framework of this system. are to: • Adapt each Department’s permanent systems to the risks generated by their activities. as in most Arkéa Group entities. Periodic control Even before the changes to Comité de la Réglementation Bancaire et Financière Regulation 97-02. The committee meets quarterly and is charged in particular with monitoring the deployment of applications and the progress of work in respect of controls. Their responsibilities. of the General Inspection and Internal Audit Department. within its sphere of activities.
debt and credit ratings).7 million euros) and Caméfi-Banque (down 1. Breakdown of outstandings by type 30% Professionnals 28% Housing loans Credit risk on capital markets counterparties Compagnie Financière du Crédit Mutuel and its subsidiaries’ manage their counterparty credit risk by adhering to internal procedures that are compliant with all current regulations.3 million euros in 2007.1% Other 34. up by 9% year-on-year.2 million euros). from 5. 2007 compared with 58. 2007. Risks Non-performing loans fell to 4. defining both amounts and terms.56% compared with the 421. 18% Consumer credits 18% Cash 48% Non-financial companies Breakdown of outstandings by counterparty 6% Self employed 32% Individuals 55% Non-financial companies 6% Public sector 1% Other Impairment losses on customer loans of 21.8 million euros in 2006. are used to establish a lending limit for each counterparty. There were 242.04% at December 31. The coverage ratio on non-performing loans was relatively stable.1% BCME 2.2% 27. the subsidiaries specialized in lending to corporates. based primarily on the shareholders’ equity of the Arkéa Group and the counterparty’s fundamentals (shareholders’ equity.2 million euros the previous year.5% Bail Entreprises CEOI 11% CFCM 2. This decline was particularly noticeable in BCME (down 8. the internal credit ratings. Breakdown of non-performing loans by counterparty 13% Self employed 39% Individuals 6% Municipalities Credit risk on customers Gross customer outstandings of Compagnie Financière and its subsidiaries amounted to 9. 25 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . • Compagnie Financière du Crédit Mutuel establishes individual limits within the framework defined by these overall limits.95% the previous year.48% of total loans in 2007. A system of counterparty credit limits has been set in place to limit the credit exposure on these companies’ capital markets activities. 2007 compared with 32.01% in 2006. the Board of Directors of Caisse Interfédérale du Crédit Mutuel approves an overall credit limit matrix that takes into account both counterparties’ internal credit ratings and the shareholders’ equity of the Arkéa Group.1 million euros reported in 2006.6 million euros at December 31. a decline of 2.1% Eole 0. • At the suggestion of the risk committee. the heart of the counterparty credit decision-making process.>>> Risks >>> 5. compared with 248. at 59.15 billion euros at end-2007.3% Caméfi-Banque 2. Breakdown of non-performing loans by subsidiary BPE 20% 0.2 million euros of provisions on non-performing loans at December 31.7% Financo Compagnie Financière du Crédit Mutuel Group had total non-performing loans (including leases) of 410. As required by the rules determining the new Basel II ratio.
Breakdown by external rating AA.8 billion euros on December 31.9.>>> Risks The Board of Directors of Compagnie Financière du Crédit Mutuel is responsible for setting credit limits.2 billion euros (57. Compagnie Financière du Crédit Mutuel and its subsidiaries had no holdings with a speculative rating (D+. The Compagnie Financière du Crédit Mutuel Group invests above all in the banking sector (55% of outstandings).6 billion euros (10.1% B+ 18. Breakdown by region 10% US/Canada 2% Rest of world A. at B.9% B. most counterparties are located in Western Europe (88% of total outstandings). Compagnie Financière du Crédit Mutuel’s Permanent Controls Department carries out second-level controls. based on suggestions made by the Compagnie Financière du Crédit Mutuel capital markets counterparty credit committee. Breakdown by internal rating From a geographical standpoint.27% A+ 10% AA 13% AA+ 2% AAA 31% A 6% A.0.5%) The internal rating of the portfolio of Compagnie Financière du Crédit Mutuel and its subsidiaries is stable. at December 31. 2007.37. The Middle Office of Compagnie Financière du Crédit Mutuel is responsible for analyzing. with 70.4% The concentration of exposure to the best credit risks reflects the Group’s desire to remain conservative and to actively manage its risk. where the average internal credit rating in the portfolio is stable at B+. monitoring and providing first-level controls over all credit risks within Compagnie Financière du Crédit Mutuel and its subsidiaries. Overall. The committee meets each quarter. Caisse Interfédérale du Crédit Mutuel is responsible for consolidating the Arkéa Group’s exposures.6 billion euros in less than 1 month 26 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel .1% C+ 1. At December 31. 2007. and especially so in France (51%). This system of limits and controls is applied to each structure within Compagnie Financière du Crédit Mutuel and its subsidiaries that operates on the capital markets. as a result of the decreased weighting of less well-ranked counterparties. whether in a proprietary trading role (Compagnie Financière du Crédit Mutuel) or on behalf of a third party (Suravenir and Federal Finance Gestion).3% A+ 33. D. 2007. which may be broken down in the following manner: Suravenir 14. The department is made up of a team of credit analysts who prepare documented opinions on the credit quality of the counterparties of Compagnie Financière du Crédit Mutuel and its subsidiaries. The average internal rating of the corporates portfolio comes in slightly lower.2%) Federal Finance Gestion 2.2% 37% Western Europe C.5% (BBB+ BBB-) 4% nn 2% 51% France Breakdown by type of counterparty 14% Sovereigns 5% Public sector 2% Insurance 12% Corporates 12% Guaranteed bonds and debt securitization funds 55% Banks CFCM 8 billion euros (32. the portfolio presents a satisfactory degree of risk diversification by internal rating category. The total bond and money market portfolio of the Compagnie Financière du Crédit Mutuel Group amounted to 24.(12% of the total portfolio).or E+) other than in specialized finance. Furthermore.3%) of which 1. at B+.5% of its exposures to issuers rated A+ or A-. as well as controlling them.
Daily position reports. The capital required for general risks amounted to 19. are sent to the executive bodies of Compagnie Financière du Crédit Mutuel and the Arkéa Group. Limits applicable to activities. At the same time. mainly constitute 240 million euros of capital required for credit risks. First-level permanent controls are performed by operational staff. values Compagnie Financière du Crédit Mutuel’s capital markets’ positions and verifies compliance with limits. a crisis monitoring committee was formed and the capital markets activities’ prudential procedures were adapted to be more effective in 2008. foreign exchange and equities) and defines the main choices in terms of market risk.5 million euros for fixed income instruments. trends in Group exposures and management decisions were made subject to detailed disclosure to the Boards of Directors of both Caisse Interfédérale de Crédit Mutuel and Compagnie Financière du Crédit Mutuel. • Limits on the use of shareholders’ equity.>>> Risks Intermediary risk Every year. In addition. managed by the Front Office. given the major upheavals in the international financial situation. and based on the overall limits set by the Caisse Interfédérale de Crédit Mutuel Board of Directors. which subsequently became the Consultative Committee on Financial Legislation and Regulation (Comité Consultatif de Législation et de Réglementation Financière . • Asset management for Compagnie Financière du Crédit Mutuel’s subsidiaries’ proprietary trading. • Asset management for Compagnie Financière du Crédit Mutuel’s proprietary trading: balance sheet (fixed income. The Middle Office department performs periodic controls and has set in place an internal rating system to assess the quality of all intermediaries on the basis of financial and qualitative criteria. 2007. In Caisse Interfédérale de Crédit Mutuel. Reporting to the Compagnie Financière du Crédit Mutuel Corporate Secretary’s team. with second-level controls exercised by both the permanent controllers in each operational department and the Compagnie Financière du Crédit Mutuel Permanent Control Department. and calculates the shareholders’ equity required by capital markets activities (Capital Adequacy Directive (CAD) and Value-at-Risk (VaR)).CCLRF) and by the French securities regulator. At December 31. credits. the Board of Directors of Compagnie Financière. In this context. In addition. on the proposal of the Chief Executive Officer following a meeting of the permanent control committee. distinguishing between: • Authorized transactions. which is independent of the Front Office (which reports to the Head of Financial Markets and International Activities). • Sensitivity risk limits. against the backdrop of sharp swings on the financial markets. the Compagnie Financière du Crédit Mutuel capital markets counterparty credit committee establishes a list of intermediaries with which Group companies are authorized to enter into financial market transactions.2 million euros and. Market risk Capital markets activities are conducted within a regulatory framework that is strictly defined by the Comité de la Réglementation Bancaire et Financière. these shareholders’ equity requirements amounted to 259. analyses it. Compagnie Financière has undertaken a detailed analysis of the compliance of capital markets transactions. This list is submitted to the Board of Directors of Compagnie Financière du Crédit Mutuel for approval. the Autorité des Marchés Financiers (AMF). as in 2006. of which 15. The capital markets activities’ risk monitoring control functions within Compagnie Financière du Crédit Mutuel are mainly under the responsibility of the Middle Office and the Permanent Control Department. This resulted in the adoption of a Compagnie Financière du Crédit Mutuel capital markets activities charter and a review of the compliance of proprietary trading and funding activities. the Middle Office. In order to strengthen controls and to secure its capital markets activities. Limits applicable to transactions. The capital requirements in respect of signature and market risk for the proprietary trading activities of Compagnie Financière du Crédit Mutuel and its subsidiaries are assessed using the standard method set out in the Basel I regulations. In accordance with the regulatory framework. the capital markets activities of Compagnie Financière du Crédit Mutuel and its subsidiaries are carried out within a system of limits defined by the Board of Directors of Compagnie Financière at least annually in order to reflect changes in such activities. The market risk control system is continuously adjusted in order to improve controls and to ensure its independence from operational structures. sets trading limits by type of activity (fixed income. derivatives and foreign exchange. This capital markets activities trading limits system for Compagnie Financière covers mainly: 27 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . credits and equities). validates the main monitoring methodologies used. • Customers.2 million euros. distinguishing between: • Funding. the Risk Management Department consolidates the Group’s market risk. • Loss risk limits. the Internal Audit and Periodic Control Department of Caisse Interfédérale de Crédit Mutuel carries out targeted audit assignments defined in the context of the periodic control annual plan.
9 5.3 General interest rate risk 15.17. Sensivity analysis Interest rate risk Equity risk* Currency risk Spread risk (in millions of euros) Uniform rise of 57bp over one month Price drop of 15.728 .3 6.with a 99% confidence interval and 10-business day time horizon.20% .6.0 200. The report below is based on estimates established for the “T3” regulatory report prepared for Suravenir at December 126.96.36.199 10.9.894 .640 0 E(TEC10)-200 bps 1.0 50.0 0. 2007.36.047 0 E(TEC10)+400 bps .106. The historical time period selected depends on the risk factors concerned and includes at least one major crisis period.5 16.191 .0 Market risk Signature risk A broader measure of sensitivity.577.189. expressed in equity equivalents The above scenarios derive from an historical analysis of changes in representative risk factors for the Group’s proprietary trading positions.0 211.6% over one month Rise of 54bp in spreads on euro financials and 174bp in spreads on US financials over six months Rise of 114bp in corporate spreads over six months Drop of 30% in mark to market of financial CDOs and of 5% in mark to market of corporate CDOs over six months 2007 . The first part of the table shows the sensitivity of bond portfolios and other fixed income products based on hypothetical rate trends on 10-year government bond rates (from base value . The second part of the table shows the effects of changes in the market value of portfolios composed of stocks and other comparable assets.0 May-07 Dec-06 Aug-07 Sep-07 Oct-07 Jan-07 Nov-07 June-07 Julyl-07 Mar-07 Dec-07 Dec-07 Feb-07 Apr-07 CAD shareholders’ equity requirements (in millions of euros) 2007 2006 259. The calculations are based on a 99% confidence interval.>>> Risks CAD (in millions of euros) 300.382 55.7 0.27.9 million euros .6 12 11 10 9 8 7 6 5 4 3 2 1 0 May-07 Dec-06 Jan-07 Apr-07 July-07 Aug-07 Feb-07 June-07 Mar-07 Overall Interest rate Equities Currency Sep-07 Oct-07 28 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel Nov-07 .3 General equities risk 3.9 5.103 0 E(TEC10)+200 bps .948 0 E(TEC10) 273. The forward time horizon takes into account liquidity on the markets concerned.7.096 .441 .40% .30% .0 0.610 By way of indication.0 150.2 million euros * Including derivatives.2 4. These projections take into account the proportional share of deferred income (95.0 .26.34. general market risk is subject to a second measurement made using an internal analytical model – which has not been audited by the Statutory Auditor .759.0 250. which incorporates notably spread risk.300 basis points to base value + 400 basis points).382 .0 0.379.4.10% .9.3 million euros . Capital markets VAR: 10d-99% Value at risk (in millions of euros) (in millions of euros) Interest rate risk Equity risk Currency risk Diversification benefit 2007 2006 9.569. gives the following potential effects on earnings and shareholders’ equity.796 .2 million euros -59.636 17.831 .814.0.9 Foreign exchange risk 0.5 Signature risk 240.287 .220 .25. Sensivity analysis – Insurance activity Change in fixed income assets (in thousands of euros) Deferred income Shareholders’ equity Earnings E(TEC10)-300 bps 2.6 0.7 million euros .9 million euros .43%).241 144.318.935 98.28.0 100.5% over one month Unfavorable change of 6.932 .864 .1.2 228.038 0 Change in diversification assets (in thousands of euros) Deffered income Shareholders’ equity Earnings .378 0 E(TEC10)-100 bps 896.2 .
0. Objectives are defined in terms of hedging rates by maturity for both sources and applications of liquidity.38.11 million euros . • When rates fall. equity. and their effects in terms of unrealized capital gains are shown in the table below. For life insurance activities. For banking intermediation. expressed in equity equivalents The crisis scenario calculations for interest rates. These current risk assessment tools are rounded out with crisis scenarios on interest rate.4 million euros . the financial management policy and provisions cover this risk fully.3 million euros . The 29 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . the minimum rates guaranteed on liabilities are largely covered by the yields on assets.7 million euros . Simulations of a sharp rise in interest rates show that the characteristics of commitments in euros.3 million euros • When rates rise sharply. interest rate maturity profiles for assets and liabilities are analyzed each quarter using both standard and stress scenarios. Each quarter. banking activity is exposed to interest rate risk on proprietary trading whereas the life insurance activity’s exposure is essentially from third-party asset management.74. asset and liability maturity profiles are analyzed under both standard and stress scenarios. are also subject to strict limits. The policy is based essentially on liquidity blockages. Market trading volumes. * Including derivatives.6 million euros . Compagnie Financière du Crédit Mutuel’s liquidity risk The liquidity risk management policy defined annually by the Caisse Interfédérale de Crédit Mutuel Board of Directors for the Arkéa Group is applied to the scope of activities of Compagnie Financière du Crédit Mutuel. Interest rate risk for Compagnie Financière is analyzed and managed separately for its banking and life insurance activities and is not consolidated given the different nature of the risks concerned. equities and credits apply to the overall scope of the trading desk’s activities. Limits and management rules are based on sensitivity indicators of net banking income to interest rate changes. Compagnie Financière du Crédit Mutuel’s interest rate risk The interest rate risk management policy is also defined by the Caisse Interfédérale de Crédit Mutuel Board of Directors for the Arkéa Group. This calculation covers the proprietary capital markets activities of Compagnie Financière de Crédit Mutuel. asset yields may be insufficient to cover the minimum rates guaranteed to customers. In this area.2. foreign exchange and spread risks. Shocks to the main risk factors have been selected based on observations of past crises. and is based on simulations of the impact of 1% and + and – 2% changes in interest rates. large-scale redemptions may result in capital losses being realized on fixed-rate bond investments. in terms of both investment and funding.>>> Risks The increase in VaR in 2007 is due mainly to the significant rise in interest rate volatility from the second quarter onward.78. Compagnie Financière is exposed essentially in the short term to an increase in interest rates. If interest rates fall. The assumptions used were updated in 2007 to take into account the financial crisis in the credit markets. interest rate exposure potentially covers both increases and decreases in rates: (in millions of euros) Crisis scenarios Interest rate risk Equity risk* Currency risk Credit risks Uniform rise of 100bp Price drop of 40% Unfavorable change of 20% Rise of 70bp in credit spreads on euro financials and of 240bp in credit spreads on US financials Rise of 150 bp in credit spreads on corporates Drop of 40% in mark to market of financial CDOs and of 8% in mark to market of corporate CDOs 2007 .
consisting essentially of capital markets transactions. Company financial statement at December 31. The fall in value of financial assets prompted the recognition of significant capital losses and.2 million euros compared with an expense of 5.712. subsidiaries and other Crédit Mutuel federations represented 13.5 million euros.43 euros.1 million euros in 2006.5 billion euros at December 31.4 billion euros. the last five months of 2007 were hit hard by a severe financial crisis resulting from the contagion of European banks by the U. net banking income dropped to 43.807.762. Net income for the year totaled 4.23 euros • To retained earnings 11.61 euros and is stated after the reallocation to Compagnie Financière du Crédit Mutuel by Caisse Interfédérale de Crédit Mutuel of a 29. The company acts as the market operator for the Arkéa Group and as a holding company.04 euros.9 million euros in 2006. the constitution of additional provisions against proprietary trading CDOs.9 million euros in 2006. required on Leveraged Buy Outs (LBOs) were reversed. A gross operating loss of 65 million euros was posted.8 billion euros in interest rate swaps.1 million euro loss carry-back.797.964. This reduction in net banking income was partially offset by the receipt of interim dividends and the realization of capital gains on sales of securities.603. It included provision writebacks and capital gains on disposals from the equity interests’ portfolio of 33 million euros.S.7%) from 2006 as a result of the development of activities and participation in strategic projects. In this context. Compagnie Financière du Crédit Mutuel had shareholders’ equity of 864 million euros excluding the Reserve for General Banking Risk and 857 million euros of subordinated debt.8 million euros was made. Balance sheet and income statement of Compagnie Financière du Crédit Mutuel and its subsidiaries Off-balance sheet Compagnie Financière du Crédit Mutuel’s off-balance sheet items consist essentially of transactions in forward financial instruments totaling 33.81 euros 30 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. subprime crisis. compared with current income of 65. distributable earnings in respect of fiscal 2007 amounted to 11.5 billion euros (up 4.5 million euros from 89.5 billion euros. an increase of 1. Income statement Following a first half-year marked by rising short rates and the erosion of credit margins. Net risk provisions resulted in a credit to the income statement of 7. Compagnie Financière du Crédit Mutuel’s overhead expense totaled 21. compared with gross operating income of 69.6 billion euros year-on-year due to the increased requirements of subsidiaries and the mutual networks) and Front Office proprietary trading transactions accounted for 7. as provisions no longer Company net income (in millions of euros) 60 50 40 30 20 10 0 2003 2004 2005 2006 2007 Including retained earnings of 7. including 250 million euros of super subordinated debt. 2007.2 billion euros.5 million euros (7.748. 2007 Balance sheet Compagnie Financière du Crédit Mutuel had total assets of 22.] .7 million euros in 2006. compared with 1.013. Funding transactions for Caisse Interfédérale de Crédit Mutuel. Its portfolio of equity interests and similar holdings totaled 1. for reasons of caution. virtually unchanged year-on-year.3 million euros in 2006. A pre-tax loss on ordinary activities of 24. The proposed appropriation of distributable earnings submitted to the Shareholders’ Meeting is as follows: • To legal reserve 204.094. including 25.>>> Balance sheet and income statement >>> 6.
5% in 2006. Lastly.2 2005 2006 2007 Consolidated income statement Net banking and insurance income (in millions of euros) 535. The operating ratio was atypical in 2007. up 16% from the previous year. Banque Privée Européenne. Impairment provisions recognized in 2007 reflect the reduced value of portfolios that were hard hit by global changes in the credit market and widening spreads.2 billion euros. 2007 was characterized by satisfactory control over overheads. comprising mainly unit-linked investments (other than euro-denominated funds) on behalf of life insurance policyholders. the quality of which remains high. On the liabilities side. Excluding changes in consolidation scope. and Caméfi-Banque) totaled 8. and the strong growth in negotiable certificates of deposit brought total debt securities to 15.9 million euros (16. net banking and insurance income would have 31 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// .3 billion euros.6 million euros (1.9 million euros (1. Overhead expense (in millions of euros) 314 270 213.9% year-on-year. down by 7. compared with 1. These portfolios have been temporarily penalized by the widening of credit spreads but the quality of their assets remains high.8% from the previous year and represented 2. Financo. This decline was a direct result of the financial crisis and attributable to two causes: the reduction in Compagnie Financière du Crédit Mutuel’s consolidated net income for the year.7% of total liabilities at December 31. 41% of the capital raised through EMTN programs was from countries other than France. At end-2007.642 in 2007. as its portfolio consists essentially of asset swaps and securitizations. particularly in CDOs. rose by 39% to 8.4% compared with 50.7 billion euros. and decisions taken at the year end.>>> Balance sheet and income statement Consolidated financial statements at December 31. in line with the Arkéa Group’s liquidity management policy.4 billion euro rise in life insurance technical provisions. as a direct result of the financial markets crisis and its significant impact on the trading desk’s proprietary trading activities. The first-time consolidation of Eole Finance and the full-year consolidation of the ProCapital group (consolidated for five months in 2006) accounted for 90% of the increase in Compagnie Financière du Crédit Mutuel’s consolidated overheads.2%) from 2006. After restatement of the capital markets activities. increased by over 24% under the combined effect of the strong performances by insurance activities (up by nearly 23%) and by retail banking. which rose by 4.8%). Resources raised through the 2007 EMTN program. as the counterpart to changes in investments on the asset side of the balance sheet. amounts due from credit institutions rose by 3. Net banking and insurance income declined by 7. notably to provide fully against investments exposed to subprime risk. Compagnie Financière and its subsidiaries had an average headcount of 1. It was hard hit by the impact of impairment provisions recognized in banking and insurance net income from capital markets activities.7 billion euros as a result of the higher level of life insurance outstandings. and the negative impact directly through shareholders’ equity of the unrealized losses on asset swap and securitization portfolios managed by the Front Office for Compagnie Financière du Crédit Mutuel’s proprietary trading activities. 2007. mainly as a result of the increased requirements of the mutual networks and the replacement of liquidity raised in the last quarter of 2007. On the assets side.622 the previous year.6 billion euros. up by 9. personnel expense increased by 2. which have an average maturity of seven years.3 456.7 million euros (2.3 495 2005 2006 2007 Overhead expense consists mainly of personnel expense. growth in the number of policies and customer outstandings at Suravenir triggered a 1. 2007.3%) at constant consolidation scope. to 22.6 billion euros to 7.5% to 495 million euros. Financial assets at fair value through the income statement. Shareholders’ equity net of minority interests totaled 1. at 63. up by 3.6%) in accordance with the terms of collective bargaining agreements. customer loans by Compagnie Financière and its subsidiaries (BCME.3% rise in net banking and insurance income. demonstrating the geographic diversification of Compagnie Financière du Crédit Mutuel’s funding.3 billion euros year-on-year. which represents virtual stability in the context of the continued development of the Arkéa Group’s subsidiaries’ activities. which posted an 18.9 billion euros at December 31. up by 43. On the same basis. Other administrative charges increased by 1. Such investments account for only a marginal share of the Arkéa Group’s capital markets activities.9 billion euros. and reached 314 million euros in 2007. other administrative charges and amortization of provisions. 2007 Consolidated balance sheet Compagnie Financière du Crédit Mutuel had total assets of 47.
the ratio for the Arkéa Group was 70%. was raised to cover the Group’s credit risks.>>> Balance sheet and income statement Gross operating income (in millions of euros) 265.8 million euros. 2007.2 243.1 2005 2006 2007 Compagnie Financière du Crédit Mutuel’s consolidated gross operating income in 2007 declined by 31.3 122. 32 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. 2007. Shareholders’ equity and long-term resources ratio This long-term ratio measures the extent to which assets longer than five years are covered by resources longer than five years.3 Liquidity ratio In terms of monitoring short-term liquidity.1 181. the Arkéa Group’s shareholders’ equity requirement was covered 133%. compared with 32.3 million euros. compared with the required minimum of 100%. it would have increased by 22. compared with a regulatory minimum of 60%. Major risks control ratio Compagnie Financière du Crédit Mutuel and its subsidiaries complied with the major risks control ratio. the regulatory one-month liquidity ratio for the Arkéa Group was 163% at December 31. The surplus long-term resources of Compagnie Financière du Crédit Mutuel are used to finance the long-term assets of Caisse Interfédérale de Crédit Mutuel and of Group subsidiaries.1 million euros. After restatement of the capital markets activities.8 million euros in 2006.3%.1 Prudential ratios 66. 2005 2006 2007 Compagnie Financière du Crédit Mutuel’s consolidated net income in 2007 declined by 52% year-on-year to 66.] .7% to 181. Consolidated net income (in millions of euros) 138. A provision of 21. Tier One capital accounted for 81% of this coverage. 2007. At December 31. Capital adequacy ratio At December 31. No risk exceeded 10% of net shareholders’ equity.
33 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. At the same time. • Controlled and sustainable growth to consolidate the Group’s economic fundamentals in a more secure environment and enhanced flexibility of the risk control system. Compagnie Financière du Crédit Mutuel will participate actively in building the “Arkéa Horizon 2015” development project. Outlook for 2008 In 2008. the mid-point of the 2005-2010 medium-term plan. appropriate and diversified growth. notably through promoting synergies between Arkéa Group entities and by exporting expertise.] .>>> Les perspectives 2008 >>> 7. Compagnie Financière du Crédit Mutuel will focus its actions on two major strategic themes: • Strong.
Director • Vice Chairman of Caisse de Crédit Mutuel de Erquy-Pléneuf • Director of Armorique Habitat • Member of the Supervisory Board of SAS Foncière Investissement • Director of Acta Voyages • Member of Association de Gestion du Fonds d’Entraide Christian Cadiou. Director • Chairman of the Supervisory Board of Federal Finance Banque • Chairman of the Supervisory Board of Federal Finance Gestion • Vice Chairman of Caisse de Crédit Mutuel de Brest Bellevue-Quizac • Member of the Supervisory Board of ProCapital 34 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel .>>> List of offices held by directors and officers >>> Chairman Christian Touzalin Vice-Chairman Albert Le Guyader 8. Vice Chairman • Chairman of the Supervisory Board of SAS Foncière Investissement • Vice Chairman of the Supervisory Board of Banque Commerciale pour le Marché de l’Entreprise • Director of Caisse de Crédit Mutuel de Lorient Porte des Indes • Member of the Supervisory Board of Caméfi-Banque • Member of the audit committee Rémy Cabaret. Chairman • Chairman of Fédération du Crédit Mutuel du Sud-Ouest • Chairman of Caisse Régionale du Crédit Mutuel du Sud-Ouest • Director of Caisse de Crédit Mutuel d’Angoulême “Ma Campagne” • Vice Chairman of Caisse Interfédérale du Crédit Mutuel • Director of Suravenir Assurances Holding • Director of Suravenir Assurances • Director of Confédération Nationale du Crédit Mutuel • Chairman of the Control and Audit Commission of Crédit Mutuel du Sud-Ouest • Member of the Supervisory Board of Infolis • Chief Executive Officer of STGA (Société de Transport du Grand Angoulême) • Member of the Supervisory Board of Synergie Transport • Director of SLEC (Société d’Exploitation du Câble du Grand Angoulême) Albert Le Guyader. List of offices held by directors and officers Date term first began Date term will expire 1996-2009 1996-2008 Directors Rémy Cabaret Christian Cadiou Joseph Carret Jean-Louis Chartier Jean-Pierre Corlay Jean-François Devaux Jean-Louis Dussouchaud Marcel Favrot Marcel Garnier Michel Gourtay Marie-Thérèse Groussard Christian Péron Gilbert Tronel 1997-2009 1998-2010 2005-2008 2006-2010 1991-2009 2003-2009 2001-2010 2007-2009 2000-2008 2007-2010 2005-2008 2007-2010 2006-2009 Christian Touzalin.
Director • Vice Chairman of Fédération du Crédit Mutuel du Sud-Ouest • Director of Caisse Régionale du Crédit Mutuel du Sud-Ouest • Chairman of Caisse de Crédit Mutuel de Pessac-Centre • Director of Caisse Interfédérale de Crédit Mutuel • Director of Novélia • Member of the Real Estate Investment and Cooperative Action Commission of Crédit Mutuel du Sud-Ouest • Director of the Le Teste de Buch semipublic company (SEM) • Member of the financial statements committee Marcel Favrot. Director • Vice Chairman of Caisse de Crédit Mutuel de Fougères • Director of Financo Jean-François Devaux. Director • Vice Chairman of Caisse de Crédit Mutuel de Quimper Centre • Chairman of the Supervisory Board of Suravenir • Director of Novélia • Member of the Supervisory Board of Fortuneo Marie-Thérèse Groussard. Director • Chairman of Crédit Mutuel Agricole et Rural • Chairman of Caisse de Bretagne de Crédit Agricole Mutuel • Chairman of Caisse de Crédit Mutuel de Bannalec • Member of the Supervisory Board of Suravenir • Member of the Supervisory Board of Banque Commerciale pour le Marché de l’Entreprise Gilbert Tronel. Director • Chairman of the Supervisory Board of Banque Commerciale pour le Marché de l’Entreprise • Vice Chairman of Caisse de Crédit Mutuel de LoudéacPlouguenast • Director of Synergie Finance • Member of the Supervisory Board of Caméfi-Banque • Director of Société Condi Plus • Chairman and Chief Executive Officer of SAS Transports Garnier Jean-Louis Chartier. Director • Director of Caisse de Crédit Mutuel du Relecq-Kerhuon • Member of the Supervisory Board of Banque Commerciale pour le Marché de l’Entreprise Jean-Pierre Corlay. Director • Chairman of Caisse de Crédit Mutuel de Plougastel-Daoulas • Chairman of the Negotiation Commission of U. Director • Chairman of Banque Privée Européenne • Chairman of Fédération du Crédit Mutuel Massif Central • Vice Chairman of Caisse Interfédérale de Crédit Mutuel • Director of Caisse de Crédit Mutuel de Clermont-Galaxie • Director of Caisse Régionale de Crédit Mutuel Massif Central • Director of Confédération Nationale du Crédit Mutuel • Non-voting member of the Board of Suravenir Assurances Holding • Member of the Control and Audit Commission of Crédit Mutuel Massif Central • Director of Suravenir Assurances • Director of APCAS (Association de Prévoyance Collective et Assurance Santé) • Director of Société Clermontoise de Télévision Christian Péron.E.>>> List of offices held by directors and officers Joseph Carret. Director • Vice Chairman of Caisse de Crédit Mutuel de Langueux-Trégueux • Representative of Caisse Interfédérale de Crédit Mutuel to Société Civile Immobilière Interfédérale • Member of the Supervisory Board of Suravenir Jean-Louis Dussouchaud.S Arkade • Vice Chairman of the Supervisory Board of Federal Finance Gestion • Member of the Supervisory Board of Federal Finance Banque • Director of Fédération du Crédit Mutuel de Bretagne • Member of the Finistère Departmental Control Commission of Crédit Mutuel de Bretagne Marcel Garnier. Director • Director of Caisse de Crédit Mutuel de Fougères 35 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . Director • Vice Chairman of Caisse de Crédit Mutuel de Pontivy • Director of Banque Privée Européenne • Member of Association Créavenir Bretagne Michel Gourtay.
>>> List of offices held by directors and officers List of offices held by members of the Compagnie Financière du Crédit Mutuel Executive Board in 2007 Primary function Humbert de Fresnoye Chief Executive Officer Offices held • Chairman of the Supervisory Board of ProCapital • Chairman of Novélia • Chairman of Financo • Chairman of Eole Finance • Vice Chairman of the Supervisory Board of Eurobretagne 12 • Director of Suravenir Assurances Holding • Director of Suravenir Assurances • Member of the Executive Board of Suravenir (to 01/11/07) • Member of the Supervisory Board of Infolis • Member of the Supervisory Board of Caméfi-Banque • Director of Banque Privée Européenne • Chief Executive Officer of Fédéral Immo • Director of Europim • Chairman and Chief Executive Officer of Foncière Investissement (to 28/09/07) Gilbert Richard EVP – Development and partnerships • Chairman of the Executive Board of Banque Commerciale pour le Marché de l’Entreprise • Chairman of the Executive Board of Caméfi-Banque • Director of Synergie Finance (representing Compagnie Financière du Crédit Mutuel) • Director of Bail Entreprises (representing Murs II) • Director of Sobrepar • Director of Soderec Jean Chausse EVP – Financial markets and international activities (to 07/11/07) • Chairman of the Supervisory Board of Eurobretagne 12 • Vice Chairman of the Supervisory Board of ProCapital • Director of Banque des Marchés et d’Arbitrage (representing CFCM) • Director of Synergie Finance (representing Sobrepar) Alain Tarouilly Corporate Secretary • Member of the Supervisory Board of Eurobretagne 12 René Gil EVP – Real estate division • Director of Eurobretagne • Chairman and Chief Executive Officer of Foncière Investissement 36 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [.] .
the procedures used to prepare this report are based on the concerted initiatives of the Corporate Secretary’s team and the Permanent Control Department of Compagnie Financière in conjunction primarily with the Finance Department and the Risk Management Department of Caisse Interfédérale de Crédit Mutuel. manages all of the company’s operational and executive components and represents the company in its relations with third parties. ensures that they are properly implemented and makes sure that all control systems are compliant and efficient. Conditions for preparing and organizing the work of the Board of Directors The work of the Board of Directors is organized and prepared in the following manner: Compagnie Financière du Crédit Mutuel. a French corporation governed by Articles L 225-17 to L 225-56 of the French Commercial Code.>>> Report of the Chairman of the Board of Directors >>> Report of the Chairman of the Board of Directors To the shareholders. Pursuant to the Arkéa Group’s corporate governance and internal control principles. I am pleased to inform you of the conditions in which your Board of Directors prepared and organized its work as well as the internal control procedures implemented by Compagnie Financière du Crédit Mutuel for the financial year ended December 31. • The Board of Directors establishes the company’s business strategies. notably with regard to limits pertaining to capital market and investment transactions. As you know. Under this system: • The Chairman heads the Board of Directors. • The Chief Executive Officer. the consolidating company of the Arkéa Group. by replicating and adapting them to suit the specific needs of the company’s businesses. Humbert de Fresnoye. He also acts as a liaison between the Board and Executive Management. This report is attached to the Board of Directors’ Management Report presented to the annual Shareholders’ Meeting. In this regard. it addresses all matters pertaining to the company’s smooth operation and settles all relevant matters through its deliberations. Moreover. since in 2007 we sought to carry on the work begun or implemented in 2006 with respect to the organization of corporate governance and internal control. 37 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . 2007. ensures that it operates properly and that it is kept fully informed at all times. has chosen to base its corporate governance on the segregation of the functions of the Chairman and the Chief Executive Officer. audit committee and periodic control committee in connection with annual risk control and risk management presentations. This report is also based on the available reporting packages and procedural manuals in use at Compagnie Financière for the internal control system mandated by the applicable regulations. This report is very similar to the previous year’s report. Compagnie Financière applies the procedures and policies adopted by Caisse Interfédérale de Crédit Mutuel (CICM). the Board of Directors regularly discussed Compagnie Financière’s internal control and risk management at meetings on the basis of the work of the company’s permanent control committee and the Group’s financial statements committee.
whose members must observe the rules of procedure adopted by the Arkéa Group. the deliberations of the Board covered the following matters in particular: • Review and approval of 2007 parent company and consolidated financial statements. • Monitoring and analysis of company’s earnings and capital commitments. • Monitoring and management of the Brit Alliance joint venture issue. with an average attendance rate by directors of 82%. • Proposal of candidates to become directors of Compagnie Financière and its subsidiaries. • Training for the performance of their duties. and according to an annual schedule adopted at the end of the previous year. divestments and partnerships of the company and its subsidiaries. the Board of Directors of Compagnie Financière du Crédit Mutuel met 12 times. • Approval of a system for monitoring changes in the situation of the capital markets business in light of the international financial crisis. Except in the event of an emergency. • Approval of Compagnie Financière’s annual management report. • All personal and financial relations with the Group. the main topics addressed at the Board meetings are contained in documents or summary memoranda that are submitted at the time of the meeting. • Monitoring of the operating results of the company and its subsidiaries. The term of office of directors is three years and is renewable. The by-laws set the age limit for directors at 65 for a first appointment and at 70 for a renewal.>>> Report of the Chairman of the Board of Directors The Board of Directors of Compagnie Financière du Crédit Mutuel consists of 15 members. along with adoption of 2008 operating plan. • Approval of strengthening of internal control and compliance initiatives and procedures. These matters are prepared by the Chairman of the Board of Directors and the Chief Executive Officer with the assistance of the company’s administrative and operating units. • Presentation of transactions related to acquisitions. • Privacy of all deliberations. and one was held in Rennes (35). investments. They must be submitted for approval by the directors at the next meeting. The documents and matters warranting more in-depth review must be sent to the directors together with the notice of meeting whenever possible to enable them to study them before the meeting and prepare their observations. The company has neither non voting director nor director elected by the employees on its board. the Board was regularly informed of the Compagnie Financière’s financial situation. The names of potential board candidates are submitted to the Shareholders’ Meeting upon the recommendation of Caisse Interfédérale de Crédit Mutuel. the Board’s meetings included one agenda item on the financial crisis and its consequences for the company. Each director may ask the Chairman at any time for any document pertaining to the company that the director believes may be useful in the fulfillment of his duties. In any event. • Status report on initiatives related to the fight against money-laundering and terrorism financing. taking care to fulfill the selection criteria such as availability and competency in the areas related to the company’s activity. In addition to the decisions that must be on the agenda in compliance with current statutes and regulations. notices of meetings containing the agenda must be sent by the Chairman seven days before the Board meetings. Theses rules for all companies the duties and commitments of directors with respect to: • Attendance at meetings. • Current news trends that affect Compagnie Financière’s activities. • Establishment of 2008 development policy and strategy for Compagnie Financière and its subsidiaries. • Presentation and approval of 2010 Real Estate project. • Approval of bond issue procedure. including one special meeting. Minutes must be prepared at the end of each meeting. • Presentation of the work of the audit committee of Caisse Interfédérale de Crédit Mutuel on the consolidation scope of Compagnie Financière and its subsidiaries. suggestions and decisions. • Analysis and adoption of counterparty limits. • Periodic analysis of economic conditions. All but two meetings were held at the company’s main office. 38 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . one was held at Crouesty (56) to coincide with a directors’ training seminar. Most are active in the business world. Other documents that may assist the Board in making a decision may also be used. • Presentation of internal control measures with respect to the activities of the company and its subsidiaries. and each member owns a share in the company. During these meetings. Starting with its march meeting and each month thereafter. During the previous financial year. The Board of Directors may hold as many meetings as it deems necessary in the interests of the company. • Independence and absence of conflict of interests. • Updating and approval of risk management system for 2007.
In that respect. whose purpose and members are determined ad-hoc and whose work contributes to the preparation of decisions made by the Board of Directors. with the exception of one abstention on a vote regarding Brit Alliance. organizes the flow of information within Compagnie Financière and its subsidiaries. Limitation of the powers of the Chief Executive Officer The Board of Directors has not set any specific limits on the powers of the Chief Executive Officer. it supports the strategic operations decided by senior management in each operating and administrative area. professional standards. monitors changes in sensitive credit files. in particular the capital markets activity. which was established in 2007 and met once last year. It assesses the quality and effectiveness of the internal control system. ethics and rules of procedure of the company. is entirely under control. which has been carefully monitored and analyzed. In order to ensure that it operates correctly and to enhance its operational effectiveness. Internal control procedures The purpose of the internal control procedures in effect at Compagnie Financière du Crédit Mutuel is to: • First. these training initiatives focused largely on Compagnie Financière’s businesses. The committee met four times in 2007. It performs financial management using such ratios. It also identifies and studies cross expansion between the various components of the Arkéa Group. which includes the heads of Compagnie Financière’s main divisions and is chaired by the Chief Executive Officer. This committee met 26 times in 2007 and its decision-making authority is set by the Board of Directors. the relevancy of its decisions and the full exercise of their responsibilities. The Chief Executive Officer of Compagnie Financière is the chairman of the committee. The executive committee. verify that the accounting. to which Compagnie Financière is exposed for the parent company and the consolidated group. It oversees the installation of software applications and monitors its progress. and with the applicable statutes and regulations. This committee meets every week. ensure that all management acts and transactions as well as staff behavior are compliant with the business strategies adopted by the decision-making and executive bodies of Compagnie Financière du Crédit Mutuel. I would like to point out that this issue. In 2007. financial and management information provided to the corporate bodies of Compagnie Financière presents fairly the company’s business and financial position. Training is regularly offered to Board members in order to improve the effectiveness of the Board of Directors. 39 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . which was covered in a special seminar and received close attention. values.>>> Report of the Chairman of the Board of Directors All of the Board of Directors’ decisions were unanimously approved by members in attendance or represented. The credit committee reviews the banking commitments given by Compagnie Financière and the counter-guarantees given in connection with the loans extended by its subsidiaries. by type and by business line. It coordinates major projects. It met five times in 2007. Compagnie Financière has set up specialized committees. It met three times in 2007. The capital markets counterparty credit committee analyzes and prepares counterparty credit limit recommendations. whose duties are performed in accordance with the prudential rules adopted by the Board and the internal control procedures described below. The credit risk monitoring committee. The permanent control committee’s role is to monitor the major risks. The partner approval committee is responsible for optimizing and securing the financial product and service purchasing policy followed by the entire Arkéa Group. The financial management committee ensures compliance with the financial ratios of Compagnie Financière du Crédit Mutuel. • Second. changes in prudential rules and approvals of intermediaries submitted for approval to the Board of Directors.
Given the turbulent market environment in 2007. high-performance IT system aimed at strengthening the security of transactions performed by Compagnie Financière. Using the procedural manuals containing the prudential rules to be observed and the procedures specific to each business. financial transactions (Front Office). the IT applications of the various Group entities are based on an automated flow monitoring system that enables the detection of certain pre-defined transactions as well as the use of lists of people whose assets have been frozen. a two-person custody control unit. it does not provide an absolute guarantee that all these risks have been totally eliminated. the permanent control staff ensures the consistency of the methods used. carries out the activities and control assignments required by regulations and ensures that the interests of financial savings subscribers and shareholders are protected. is the custodian for the mutual funds of the Arkéa Group’s management companies. The system generates warnings. as for all Arkéa Group entities. the anti-money-laundering system is prescribed by the Caisse Interfédérale de Crédit Mutuel. This approach focusing on the proprietary trading activity will be extended in 2008 to cover the refinancing and third-party trading activities even more closely. The Back Office department. To further enhance its control over its activities. Compagnie Financière’s internal control system is organized as follows: • A first level of permanent control is performed by the operational Departments that have a dedicated permanent control function. As with all control systems.>>> Report of the Chairman of the Board of Directors Internal control system The internal control system of Compagnie Financière du Crédit Mutuel and its subsidiaries seeks to control all types of activities and risk in order to ensure smooth. This Department is independent of the operating units. In addition. and ensures the consistency of these two systems. Staff members are responsible for defining and documenting the applicable control system. formerly the CRBF) and is based on the standards issued by regulatory authorities and by Confédération Nationale du Crédit Mutuel. the company also continued updating its risk mapping. and coordinated the activities of Compagnie Financière and its subsidiaries in the fight against money-laundering and terrorism financing. • A second level of permanent control is performed by the Permanent Control Department. The entire system is part of the overall system adopted by the Arkéa Group to comply with the regulations set forth by the Financial Legislation and Regulation Advisory Committee (CCLRF. which sets forth the company’s principles for managing and securing the risk exposure in this activity. As such. Back Office and Middle Office (risk analysis). which are then processed by the operations staff members and subjected to a second-tier control by 40 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . As a result. 97-02. It is also part of Caisse Interfédérale. • A General Audit and Periodic Control Department. Specifically. risk management and control activities focused mainly on the continuation of research studies begun in 2006 for the development of a new. It administers the control system together with the Risk Management Department of Caisse Interfédérale de Crédit Mutuel. each operating Department at Compagnie Financière has its own full-time controllers who carry out their assignments in the areas of international activities. In that respect. efficient and secure transactions. Compagnie Financière paid close attention to its capital markets activities. which is part of the Company Secretary’s team. which reports directly to the Company Secretary. and ensure that a risk map and business continuity plans are prepared. In 2007. the reliability of all information and the safe-keeping of the company’s assets. which is responsible for periodic control. strengthening its control and safeguards while adding to its risk analysis resources and risk monitoring and control activities. the Permanent Control Department actively participated in the analysis and implementation of the necessary modifications required by the MiFID directive. however. It also adopted the capital markets Charter. and integrated into the internal control system adopted in accordance with the provisions of Regulation No. Permanent controllers report regularly to Compagnie Financière’s senior management bodies. as amended.
Compagnie Financière is part of the Arkéa Group’s overall control organization. where applicable. Compagnie Financière du Crédit Mutuel has implemented a training program for new staff members that covers the fight against money-laundering and terrorism financing. report their concerns to Tracfin. it performs the management control that is responsible for ensuring that 41 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel /// . Internal control procedures related to the preparation and processing of accounting information Compagnie Financière prepares and processes all the accounting information using a secured accounting sub-system that is part of the Finance Department of Caisse Interfédérale de Crédit Mutuel. As a subsidiary of Caisse Interfédérale du Crédit Mutuel. its control system is based on the following structures: The audit committee of the Arkéa Group consists of 3 to 5 non-salaried members. In addition. Its role is to assess the quality of the internal control. It also performs the control and analysis procedures required to prepare and process accounting information. If suspect transactions are detected. the control process for investment services compliance and the code of ethics were updated to reflect the regulatory changes governing “relevant persons” as defined by the General Regulation of the French securities market regulator (AMF). This Department defines the accounting rules and methods and implements the consolidation process. the Finance Department performs the account justification process in cooperation with the management structures of the Group and it subsidiaries. gather the necessary data and. which take into account the latest legislative and regulatory changes. Lastly. In addition. This department works closely with the Permanent Control Department of Compagnie Financière. The committee’s role is to ensure compliance with the rules governing the assumption of risk and check that the ongoing control systems are suitable for the Group’s and Compagnie Financière’s businesses and risks. who may or may not be from the Arkéa Group.>>> Report of the Chairman of the Board of Directors the permanent controllers. It coordinates permanent control by defining and implementing joint tools that are appropriate for all Group companies. As such. The Risk Management Department of Caisse Interfédérale du Crédit Mutuel ensures and promotes the effectiveness of permanent control. complemented by regular training sessions for employees. In addition. the permanent controllers perform a detailed analysis of the relevant account activity. it prepares the financial statements and issues the regulatory disclosures of Compagnie Financière and most of its subsidiaries. The effectiveness of the internal control system is enhanced by the work of the group permanent control committee. The Board of Directors of CFCM is kept regularly informed of the conditions for implementing the system to combat money-laundering and terrorism financing. the consistency and effectiveness of risk assessment and oversight systems and the control of the major risks of the Group including those to which Compagnie Financière and its subsidiaries are exposed. the permanent control department ensured that the various units adopted and implemented procedures suited to their activities while ensuring uniform and coordinated practices. The Department is therefore organized and structured in a way that allows it to perform its duties for all relevant companies in the Arkéa Group. Moreover. In that respect.
Such decisions and proposals are based on a valuation method approved by the statutory auditors in cooperation with the Finance Department of Caisse Interfédérale de Crédit Mutuel. Accordingly. Some of the planned changes still need to be implemented. the Board of Directors. They are appointed for three-year terms by the Board of Directors of Caisse Interfédérale de Crédit Mutuel. All the processes performed by the Finance Department of Caisse Interfédérale de Crédit Mutuel are checked by the statutory auditors. it analyzes the financial statements and assesses the relevance of the accounting methods adopted before they are submitted to the Board. As a part of its role. Performance indicators and revenue and earnings reports are submitted on a regular basis to the Board of Directors of Compagnie Financière. operation and deliberations are all compliant with regulatory requirements. To conclude. I wish to point out that presently none of the findings of the various internal control bodies or independent auditors of Compagnie Financière. The committee meets at least twice a year. This five-person committee includes one director of Compagnie Financière and one subsidiary company director. the Equity Investment Department.>>> Report of the Chairman of the Board of Directors accounting and financial data are reliable. especially through the presentation of the internal control and risk monitoring and assessment report. we will continue the efforts undertaken to date to bring about further improvements in the control procedures and systems. In that respect. senior management and relevant units of Compagnie Financière and the Arkéa Group receive detailed information on the internal control and risks as they arise.] . which reports directly to the Chief Executive Officer. I would note that Compagnie Financière intends to sustain this continuous improvement approach to internal control regarding the reliability of financial information. Chairman of the Board of Directors Christian Touzalin 42 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. The committee is responsible for helping the Board of Directors assess the financial information and control its accuracy. More generally. For the upcoming year. I would add that that the Board of Directors’ organization. but no major difficulties have arisen in these areas. nor any of the initiatives taken by the company to strengthen its control system have uncovered any significant deficiency that would call into question the current overall effectiveness of the internal control system in the preparation of accounting and financial information. in particular by carrying out budgetary controls and analyzing results. which were submitted to the Board and its committees. Finally. Lastly. the Arkéa Group’s financial statements committee examines the parent company and consolidated financial statements of Compagnie Financière every year. prepares investment and divestment decisions as well as the compensation and provisioning proposals for all the equity investments as part of its role to monitor the company’s equity investment portfolio. The committee also checks the annual report and the regulatory documents required to be filed with supervisory bodies. The financial statements committee issues a recommendation concerning the appointment of the statutory auditors and analyzes their audit conclusions. It reports on its duties and conclusions to the Board of Directors of Caisse Interfédérale de Crédit Mutuel. Compagnie Financière has its own secure system for preparing and processing proprietary accounting information.
2 0 0 7 >>> General information 43 General information 44 Person responsible for the document of reference 45 Person responsible for auditing the financial statements >>> .
29480 Le Relecq-Kerhuon French corporation (Société Anonyme) with the status of credit institution All laws and regulations applicable to credit institutions. and notably the French Monetary and Financial Code The French Commercial Code October 20. and notably documents its articles of incorporation. are available for inspection at the company’s registered office.>>> Company name General information ■ ■ ■ ■ ■ Compagnie Financière du Crédit Mutuel 1. securities or real-estate transactions directly or indirectly related to the corporate purpose SIREN 433 383 122 RCS Brest Code APE 6419 Z All documents pertaining to the company. 2000 All banking transactions. and all reports presented to its Annual General Meetings by the Board of Directors and the statutory auditors. including notably the provision of investment services Insurance-related brokerage and intermediary activities Capital markets transactions All types of equity investment All commercial. Registered office Legal form Applicable legislation Date founded Corporate purpose ■ ■ ■ ■ ■ ■ Identification ■ ■ ■ Documents 44 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel . its financial statements. rue Louis Lichou. industrial. transactions that are related and ancillary to banking transactions.
] . and includes all information required to form an opinion of the assets. villa Houssay. 92524 Neuilly-sur-Seine Cedex 2007 5 years Following the Annual General Meeting held to approve the financial statements for the year ending December 31. the information contained in this document of reference is accurate. 2011 Name Address Date first term began Current term Term expires 45 Annual Report // 2007 >>> Compagnie Financière du Crédit Mutuel [. rue Henri Régnault. It contains no omissions that would alter that opinion. avenue Charles de Gaulle. 2011 Pascal Pincemin 7-9.>>> General information Person responsible for the document of reference Humbert de Fresnoye Executive Managing Director of Compagnie Financière du Crédit Mutuel Statement of the person responsible for the document of reference To our knowledge. The Chief Executive Officer Humbert de Fresnoye Persons responsible for auditing the financial statements Statutory auditors Name Address Date first term began Current term Term expires Mazars & Guérard 61. rue Henri Régnault. the business. 2011 Deloitte et Associés 185. the financial position and the results of the company. 92400 Courbevoie 2000 6 years Following the Annual General Meeting held to approve the financial statements for the year ending December 31. 2011 Name Address Date first term began Current term Term expires Substitute statutory auditors Name Address Date first term began Current term Term expires Manuela Baudoin-Revert 61. 92400 Courbevoie 2000 6 years Following the Annual General Meeting held to approve the financial statements for the year ending December 31. 92524 Neuilly-sur-Seine Cedex 2007 5 years Following the Annual General Meeting held to approve the financial statements for the year ending December 31.
: 02 98 00 22 22 Fax : 02 98 30 52 10 Société anonyme au capital de 715 000 000 euros Banque et société de courtage en assurances Siren : 433 383 122 RCS Brest Layout and design: HDI/Isabelle Huguenin/Studio Alain Millet . rue Louis Lichou 29808 Brest cedex 9 Tél.Siège social et Direction Générale 1.
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