NATIXIS - 2018 Registration document and annual financial report

5 FINANCIAL DATA

Consolidated financial statements and notes

and incentive fees are obtained on the market and are consistent with the services rendered, since the asset management activity takes place on a competitive and international market. In the absence of rights held by third parties (e.g. withdrawal or fund redemption/liquidation rights), the control of mutual funds managed by Natixis Investment Managers and Natixis Wealth Management is assessed according to the combined interests held by the entities and business lines within Natixis’ consolidated scope: as managers, Natixis Investment Managers and Natixis Wealth a Management do not invest in the funds and generally own only a few units; Natixis Assurances may take out interests in mutual funds a managed by Natixis Investment Managers via its insurance subsidiaries. These interests are subscribed in the form of euro-denominated or unit-linked insurance policies: euro-denominated policies are policies under which the j insured party receives a minimum guaranteed return plus the major share of the surpluses generated by the insurance Company’s main fund. Any shortfall between the fund’s return and the minimum guaranteed return is borne by the insurer, which thus incurs the risks, unit-linked policies are policies under which the insured party j selects the funds in which the insurer invests on its behalf. The value of the insurer’s interest in such funds is reflected in the insurance policies. Invested funds representing unit-linked policies are consolidated under IFRS 10 if all the control criteria are met cumulatively and if the funds have a material impact; other Natixis entities and business lines may hold minority a interests, intended mainly to meet cash investment needs. A fund is subject to consolidation: if Natixis acts as principal, i.e. if Natixis is a manager and is not a revocable by a limited number of people and if Natixis holds a large enough material interest to conclude that it controls the fund; or if Natixis is not a manager but owns virtually all the units. a Non-guaranteed mutual funds subject to consolidation but not consolidated due to their materiality are listed in Note 19.1. 2. Guaranteed mutual funds Natixis guarantees the capital and/or performance of certain mutual funds. These packaged funds are passively-managed funds. Once the structuring is established initially, it is fixed for the fund’s entire lifetime. Natixis has relatively limited exposure to negative variable returns thanks to the fund’s strict management by the NAM management company and a robust risk control system put in place upon structuring and monitored throughout the fund’s lifetime. These controls significantly limit the risk of guarantee activation. As with non-guaranteed mutual funds, guaranteed mutual funds are subject to consolidation under IFRS 10 whenever Natixis acts as principal (e.g. Natixis acts as a non-revocable manager and holds a material interest). Guaranteed mutual funds subject to consolidation but not consolidated due to their materiality are listed in Note 19.1.

a restricted scope of interests held in real estate funds and j external Private Equity funds for which Natixis acts simply as a minority investor. The structured entities with which Natixis has dealings can be categorized into four groups: entities created within the context of Structured Financing, asset management funds, securitization vehicles and entities established for other types of transactions. In accordance with IFRS 10, consolidation analyses of structured entities are performed taking into account all the criteria referred to in Note 3.2.1. 5.1.2 In order to meet financing requirements for movable assets (involving air, sea or land transportation), real estate, corporate acquisitions (LBO financing) or commodities, Natixis may be required to create structured entities for a specific financial transaction on behalf of a customer. Auto-pilot mechanisms are generally in place for these structures. In the case of lease contracts, the transaction must be structured such that its income always amounts to zero. This means that only default events are able to modify the structured entity’s income, by leading to the disposal of the rights over the assets once the guarantees have been exercised. Natixis has the power to have the assets sold in the event of a default event, acting either alone or via the bank syndicate’s agent. This right equates to a protective right because Natixis would never benefit from the income from the sale beyond the amount of the balance due under the loan agreement. Natixis does not therefore have power over such entities’ relevant activities. If auto-pilot mechanisms are not in place for these structures, it is generally the sponsor who oversees activities which are relevant and which generate returns. As previously, Natixis’ rights as lender are protective rights limited to the amount of its receivable. As such, Natixis does not have power over such entities’ relevant activities. In addition, Natixis is rarely a shareholder in such entities and, when it is, it generally holds a minority interest. The entities for which Natixis is the majority shareholder are limited in number and do not have a material impact on the consolidated financial statements. 5.1.3 Mutual funds In general, seed money investments held for less than one year were not consolidated. 1. Non-guaranteed mutual funds In the context of mutual funds, relevant activities are investment and divestment activities involving securities in fund assets. These activities are managed in a discretionary manner on behalf of investors by Natixis Investment Managers’ and Natixis Wealth Management’s management companies. The compensation of Natixis Investment Managers and Natixis Wealth Management as managers is marginal compared with the returns generated for investors. Indeed, the management Structured finance transactions Asset management transactions

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Natixis Registration Document 2018