NATIXIS // 2021 Universal Registration Document

RISK FACTORS, RISK MANAGEMENT AND PILLAR III Risk management

The framework defined by these risk policies distinguishes between recommendationsbased on best practices, and strict (qualitative or quantitative) supervisory criteria, any deviation from which affects the decision-making process and the usual system of limit authorizations. The quantitative framework is generally based on: commitment ceilings by business line or sector; V commitment sub-limits by type of counterparty, type of product, V or sometimes by geographic area. This framework helps monitor the concentration of the bank’s commitments in relation to a given sector or type of risk. The qualitative framework is, for its part, built on the following criteria: business sectors: preferred sectors, banned sectors; V targets: customers to be targeted or excluded based on various V criteria (size, rating, country of operation, etc.); structuring: maximum durations, financial ratios, contractual V clauses, collateral arrangements, etc.; products. V Checks are carried out as required during the individual processing of loan applications to ensure the correct application of the risk policy. Overall monitoring also takes place on a quarterly basis (checking compliance with ceilings and the number of deviations) and is presented to the Global Risk Committees. Finally, a global policy also governs exposure to Natixis’ main sectors. As with any credit policy, any breach of one of the sector limits in place is reported to the relevant Committee/body for decision and, if necessary, a remediation plan is proposed to reduce the sector exposure below the level of the corresponding limit. General principles for granting 3.2.4.4 and managing credit risks Natixis’ credit risk measurement and management procedures are based on: a standardizedrisk-taking process, structured via a systemof limit V authorizations and decision-making Committees; independent analyses carried out by the Risk division during the V loan application review process; rating tools and methodologiesprovidingstandardizedand tailored V assessments of counterparty risk, thereby making it possible to evaluate the probability of default within one year and the loss given default; a system for monitoring counterparties with a high level orfisk; V information systems that give an overview of outstanding loans V and credit limits; a system for monitoring and escalating limit violations; V regular information to management and the central body via the V dissemination of dashboards, in particular to monitor changes in the indicators defined as part of the risk appetite system;

In addition, in the context of the health crisis, Natixis has strengthened its creditrisk monitoring and anticipation processes by: the implementation of identifiers in its information systems for V customers who have benefited from support measures (loans guaranteed by the State, moratoriums, adjustments or specific financing related to the crisis, etc.); the introduction of new dashboards to monitor changes in the V exposures of clients who have benefited from the support measures; specific reviews of portfolios in vulnerable sectors with the V implementation in certain cases of risk management actions; cost of risk anticipation exercises based on granular portfolio V reviews. With regard to CSR (Corporate social responsibility), Natixis has gradually rolled out several tools to assess and manage its exposure within Corporate & Investment Banking. The Credit Risk Department ensures the integration of ESG (environmental, social and governance) criteria into sectoral credit policies and the consideration of climate risk in the Bank’s transaction approval and review process for Corporate & Investment Banking and ensures the operational implementationof climate risk identification tools. It relies on the expertise of the CSR Department for the most sensitive transactions. Thus, during the credit granting and periodic review process, each file is subject to a specific assessment according to the following system: application of the “GreenWeightingFactor” system, which consists V of assessing the climate impact of transactions via the allocation of a climate rating; updating of the climate ratings assigned to each transaction V during periodic reviews and presentation to the Credit Committee; analysis of compliance with commitments (compliance with V applicable CSR policies and associated exclusion lists, particularly in the coal and oil and gas sectors); application of the “ESR Screening” system: identification and V assessment of the environmental, social and governance risks of corporate customers during the KYC system and in-depth analysis for customers identified as being the most at risk; analysis according to the Equator Principles for project financing V in the broad sense (including financing of project acquisitions, financing of projects with corporate guarantees, etc.). This due diligence is based on the dual involvement of the business lines and the CSR Department. In order to strengthen its assessment of physical and transition climate risks, in 2020, Natixis launched work on methodologies for the quantitative measurement of its exposure to climate, physical and transition risks. This work should continue in the cominygears. Counterparty risk management 3.2.4.5 (Data certifiedby the Statutory Auditors in accordance with IFRS 7) The principles of counterparty risk management are based on: measurement of exposure to counterparty risk; V counterparty risk limits and allocation procedures; V a value adjustment in respect of counterpartyrisk (Credit Valuation V Adjustment); counterparty risk mitigation; V incorporation of wrong-way risk. V

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2021