NATIXIS - 2018 Registration document and annual financial report

5 FINANCIAL DATA

Consolidated financial statements and notes

Short-term employee benefits are recognized as an expense in the period in which the employee provides the service in exchange for said benefits. A provision is accrued for termination benefits when the employer is demonstrably committed to providing such benefits, or when the employer recognizes the costs of restructuring providing for the payment of such benefits. In accordance with the principles of recognition set out in IAS 19, Natixis has identified the following types of post-employment benefit: defined contribution plans, under which an entity has no a obligation to pay a specified benefit amount; defined benefit plans, under which Natixis has a legal or a constructive obligation to pay a specified benefit amount. Contributions paid under defined contribution plans are expensed in the period in which the employee rendered the service in exchange for said contributions. A provision is set aside for defined benefit plans based on an actuarial assessment of the benefit obligation using the projected unit credit method. This method draws on demographic and financial assumptions reviewed annually (specifically the discount rate based on the AA Corporate bond rate curve). The value of plan assets is deducted from the actuarial debt. This valuation is carried out on a regular basis by independent actuaries. Insurance contracts taken up with a related party to Natixis and intended to finance all or part of Natixis’ defined-benefit plan commitments are recorded in the asset side of the balance sheet as “Accruals and other assets”. Revaluation adjustments for actuarial debt related to changes in actuarial assumptions and experience adjustments (impact of differences between actuarial assumptions and actual experience) are booked under items not recycled to comprehensive income among “Gains and losses recognized directly in other comprehensive income”. The annual payroll costs recognized in respect of defined-benefit plans consist of: the costs of services rendered, representing rights vested by a beneficiaries over the period; past service costs, arising from possible plan changes or a curtailments as well as the effects of possible plan settlements; the net interest cost reflecting the impact of unwinding the a discount on the net obligation. Other long-term benefits are valued using the same actuarial method as that applied to post-employment benefits under defined benefit plans, except that liability revaluation items are recognized directly as an expense. The estimated amount of the expense related to cash-settled variable compensation, subject to the employee’s continued service in accordance with the Employee Retention and Performance Recognition plans, is recognized over the vesting period.

a) Provisions for restructuring A provision for restructuring costs is recognized when the following standard criteria for recognizing provisions and the two following conditions are met: there is a detailed formal plan for the restructuring on the a closing date, identifying at least: the operations or part of the operations concerned, j the principal locations affected, j the location, function, and approximate number of j employees who will be compensated upon termination of their services, the expenditures that will be undertaken, j and the date the plan will be implemented; j Natixis has raised a valid expectation in those affected that it a will carry out the restructuring by starting to implement that plan or announcing its main features on the closing date. Provisions for restructuring costs include only expenditures directly related to the restructuring. b) Provisions for risks and litigation A description of the main risks and litigation to which Natixis is exposed is given in Section 3.2.9 of Chapter [3], “Risk factors, risk management and the pillar III report”. No contingent assets or liabilities were recorded. Changes in provisions are recognized in the income statement on the line items corresponding to the type of future expenditure. The provisions booked on the liability side of Natixis’ financial statements as at December 31, 2018 and as at December 31, 2017, are presented in Note 8.17 “Summary of provisions”, and the possible allocations are set out in Note 7.6 “Other income and expenses”, Note 7.7 “Operating expenses” and Note 7.8 “Provision for credit losses”. Employee benefits 6.15 In accordance with IAS 19, employee benefits are classified in one of four categories: “short-term benefits” , including salaries, social security a contributions, annual leave, employee profit-sharing, incentive plans, top-up contributions and bonuses payable for the period; “severance payments” , comprising employee benefits a granted in return for termination of a staff member’s employment before the normal retirement age, resulting from a decision by the entity, or a decision by the employee to accept a severance package in exchange for terminating their employment; “post-employment benefits” , such as pensions, other a supplementary retirement benefits applicable to the banking industry, end-of-career awards and other contractual benefits payable to retirees; “other long-term employee benefits” , including long-service a awards and deferred compensation payable in cash under Employee Retention and Performance Recognition Plans.

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Natixis Registration Document 2018