EuroBusiness Media (EBM): Natixis, the Corporate and Investment Banking, Investment Solutions and Specialized Financial Services subsidiary of Groupe BPCE, France’s second largest banking group, has announced earnings for 2011. Laurent Mignon, welcome. You are the Chief Executive Officer of Natixis. What are your comments on your 2011 earnings?
Laurent Mignon: We are pleased to report a net income of €1.562 billion. We are very proud to have achieved this performance despite a turbulent environment, especially in the second half of 2011. Commercial momentum is strong, with net banking income up 3% – a fine performance in this environment – and operating earnings are highly satisfactory, with pretax profit keeping pace with last year’s at €2.241 billion. All this good news illustrates the in-depth transformation of Natixis’ business model over the last three years, since we launched the New Deal plan. These efforts are now showing up in the numbers. We have refocused the business model on our clients in a less-risky approach, and this has helped Natixis to navigate the crisis much better than many other institutions. For shareholders, this means that we plan to distribute a dividend of €0.10 per share. The dividend will be paid in cash, and represents a yield of more than 4% on the current stock price of €2.39.
EBM: Banks’ capital structure is a major issue for the market these days. How is Natixis faring in this regard?
Laurent Mignon: You’re right, this is a very important matter. We are quite careful about it, and over the past three years, we have taken very positive steps to strengthen our capital. During this time, we have managed to boost our solvency as expressed by our Core Tier One ratio to 10.2%, an increase of 370 basis points in three years to a highly satisfactory level, which we achieved by taking a number of decisive actions. First of all, our earnings: in 2010 and 2011, we reserved part of our significant earnings to improve our solvency. Second, we took decisive action to reduce risk-weighted assets, a measure of risk-taking in the business. This illustrated the change in our business model. This step helped us reduce our risk-weighted assets by €64 billion, or nearly 40% in three years. And third, we implemented a substantial program with BPCE, known as Operation P3CI. It is a bit technical, but basically it gives us the ability to offset a large portion of the risks associated with the CCIs (Cooperative Investment Certificates), as the CCIs represent our stake in BPCE’s retail banking profits. So, we have taken three important steps, and it is worth noting that our current Core Tier One ratio of 10.2% is one of the highest in the business.
EBM: Turning to strategy, can you tell us about any major advances in your New Deal plan in 2011?
Laurent Mignon: First of all, as I said, this plan made a big difference in helping us to weather the crisis. We owe our progress to it. And 2011 actually helped us to confirm the strategic course that we have set. At times we have even stepped up the pace, but throughout this time we have confirmed the course that has helped us to prepare for and manage the 2011 crisis better than if we had not taken all those actions ahead of time.
That being said, we must continue – our work is not finished. We must complete CIB’s refocusing on its clients, with a less risky approach. We plan to develop our “Originate to Distribute” model further in order to offer our clients a broader range of services, financing options and expertise. In particular, we plan to continue to reorganize our teams as we did for the debt platform. In our asset management business, we plan to continue our “multi-boutique” policy, enabling us to bring new, high-performance services to all of our clients through a single, global distribution platform, designed to broaden our range of expertise and make it available to all. This original model helped us to achieve real success in 2011, collecting €3.7 billion when the market was actually shrinking. We must also enhance synergies with the BPCE network, especially the Specialized Financial Services business lines. We have set an objective to achieve €395 million in synergies by the end of 2013. By the end of December 2011, we had found €274 million in synergies with the networks. We still have much to do, but we are on the right track. Finally, we must note the progress at Coface. Coface needed a new strategic focus, and we have implemented it – Coface has now been tightly refocused on credit insurance.
EBM: To wrap up, what major events can your shareholders look forward to in the next few months?
Laurent Mignon: The first date is May 9, when we plan to announce first-quarter earnings after the close of the market. Then, May 29 is the big day when the General Meeting will take place at 3pm in Paris. Shareholders will gather to approve the dividend for 2011, a sign of the company’s sound financial structure and of our confidence in the future.
EBM: Laurent Mignon, Chief Executive Officer of Natixis, thank you.
Laurent Mignon: Thank you.
