NATIXIS_PILLAR_III_2017_EN

2 GOVERNANCE AND RISK MANAGEMENT ORGANIZATION Risk factors

Risk factors 2.6

RISKS RELATED TO TIES WITH BPCE 2.6.1

Overview of risks to which Natixis is exposed

Natixis’ principal shareholder has a significant influence on certain corporate actions At December 31, 2017, Natixis’ main shareholder, BPCE, held 71% of its share capital (and 71.02% of its voting rights). BPCE is therefore in a position to exercise significant influence over the appointment of Natixis’ directors and executive officers, and on any other corporate decisions requiring shareholder approval. BPCE’s interests in relation to these decisions may differ from those of other Natixis shareholders. Natixis’ risk management policies and procedures are subject to the approval and control of BPCE Natixis is part of BPCE Group, a major French mutual banking group. Under French law, BPCE, as the central institution of BPCE Group, is required to ensure that all of BPCE Group complies with regulations in force governing the banking sector in France in areas such as regulatory capital adequacy, risk appetite and risk management requirements. As a result, BPCE has been vested with significant rights of approval over important aspects of Natixis’ risk management policies. In particular, BPCE has the power to approve the appointment or removal of Natixis’ Chief Risk Officer, as well as certain aspects of risk management such as the approval of credit limits and the classification of loans granted to joint Natixis and BPCE Group customers as non-performing loans. BPCE’s own interests concerning risk management may differ from those of Natixis. Natixis obtains a portion of the funding for its activities from BPCE Group through the public and private issuance of medium- and long-term vanilla debt (senior and subordinate) by BPCE, which is the main issuer of medium- and long-term debt in BPCE Group. If the credit ratings of BPCE were downgraded by major rating agencies, or if BPCE were to experience difficulties in obtaining financing in the markets (including as a result of financial or operational problems with entities other than Natixis that are part of BPCE Group), the cost of funding and liquidity of Natixis could be adversely affected. Natixis’ funding of its activities depends on BPCE

Natixis is exposed to a number of types of risks associated with its Asset & Wealth Management, Corporate & Investment Banking, Insurance and Specialized Financial Services activities, including in particular the following: Credit risk , which is the risk of financial loss relating to the failure a of a counterparty to honor its contractual obligations. The counterparty may be a bank, a financial institution, an industrial or commercial enterprise, a government, an investment fund, or a natural person. Credit risk arises from financing activities and guarantees, and also in other activities where Natixis is exposed to the risk of counterparty default, such as its trading, capital markets, insurance and settlement activities. Market risk , which is the risk of loss generated by any negative a fluctuations in market parameters, such as interest rates, share prices, foreign exchange rates and commodity values. Market risk arises in connection with substantially all the activities of Natixis. It includes both direct exposures to market parameters arising from activities such as trading and asset management (where commissions are largely based on the market value of managed portfolios), as well as the risk of mismatches between assets and liabilities (for example, where assets carry different interest rate bases or currencies than liabilities). Liquidity risk , which is the risk that Natixis will be unable to honor a its commitments to its creditors due to the mismatching of maturities between assets and liabilities, or that Natixis may be unable to sell assets and realize their value at a time when it needs to do so in order to meet its obligations to creditors. Operational risk , which is the risk of losses due to inadequate a or failed internal processes, or due to external events, whether deliberate, accidental or natural occurrences. Operational risk also includes non-compliance and reputational risk, including legal and tax-related risks, and the risk to the image of Natixis that may arise in cases of non-compliance with legal or regulatory obligations, or with ethical standards. Insurance risk is the risk to profits arising from any discrepancy a between expected and incurred claims under insurance policies issued by Natixis group insurance companies. Each of these risks is discussed in further detail elsewhere in this chapter. Quantitative information relating to these risks and their potential impact on the results of operations of Natixis is set forth in Chapter 3 of the registration document. That section also discusses the manner in which Natixis seeks to manage these risks. If the risk management strategy of Natixis is not effective, any of the foregoing risks could affect its business, results of operations and financial condition.

18

NATIXIS Risk report Pillar III 2017