NATIXIS_PILLAR_III_2017_EN

2 GOVERNANCE AND RISK MANAGEMENT ORGANIZATION Risk factors

RISKS RELATED TO NATIXIS’ 2.6.3 OPERATIONS

Legislative action and regulatory measures in response to the global financial crisis may materially impact Natixis and the financial and economic environment in which it operates Legislation and regulations have recently been enacted or proposed with a view to introducing a number of changes, some permanent, in the global financial environment. While the objective of these measures is to avoid a recurrence of the global financial crisis, the new measures have changed substantially, and may continue to change, the environment in which Natixis and other financial institutions operate. The measures that have been or may be adopted include more stringent capital and liquidity requirements, taxes on financial transactions, limits or taxes on employee compensation over specified levels, limits on the types of activities that commercial banks can undertake (particularly proprietary trading and investment and ownership in Private Equity funds and hedge funds), new ring-fencing requirements relating to certain activities, restrictions on the types of entities permitted to conduct swaps activities, restrictions on certain types of activities or financial products such as derivatives, mandatory write-downs or conversions into equity of certain debt instruments, enhanced recovery and resolution regimes, revised risk-weighting methodologies (particularly with respect to capital markets, financing and insurance businesses), periodic stress testing and the creation of new and strengthened regulatory bodies. Moreover, the general political environment has evolved unfavorably for banks and the financial industry, resulting in additional pressure on legislative and regulatory bodies to adopt more stringent regulatory measures, despite the fact that these measures can have adverse consequences on lending and other financial activities, and on the economy. Because of the continuing uncertainty regarding the new legislative and regulatory measures, it is not possible to predict what impact they will have on Natixis. Natixis has incurred and may continue to incur significant costs in connection with updating or expanding its compliance structures and information technology systems in response to, or in anticipation of, the new measures. Despite its efforts, Natixis might find itself unable to achieve full compliance with all applicable legislation and regulations, in which case it may be subject to penalties. Moreover, the new legislative and regulatory measures could require significant changes to Natixis’ business and/or adversely impact the results of operations and financial condition of Natixis. The new regulations may require Natixis to raise new capital at a time when it is costly or difficult to do so, or they may increase the overall funding costs of Natixis. The new legislative and regulatory measures could require significant changes to Natixis’ business and/or adversely impact the results of operations and financial condition of Natixis.

Natixis may not achieve the goals of its strategic plan Natixis may be unable to meet the objectives set out in its “New Dimension” strategic plan for the period from 2018 to 2020, or in any future or replacement strategic plan. The New Dimension plan, announced on November 20, 2017, aims to contribute to the development of high value-added solutions for Natixis’ clients. The strategy focuses on three initiatives: deepening the transformation of Natixis’ business models; investing in digital technologies; and seeking to become clients’ key representatives in areas where Natixis’ teams have developed strong and recognized expertise. The New Dimension strategic plan contains forward-looking information and guidelines, and while Natixis believes the plan provides a number of opportunities, it will face uncertainties given the potentially volatile state of financial markets and the global economy, and there is no guarantee that Natixis will achieve the goals of this new strategic plan or any other strategy it announces or undertakes in future periods. In particular, in connection with the New Dimension strategic plan, Natixis announced certain financial targets, including profitability and risk-weighted asset growth rates, capital generation targets and shareholder dividend objectives, as well as targets for regulatory capital ratios and strategic initiatives and priorities. The financial objectives were established primarily for purposes of planning and allocation of resources, are based on a number of assumptions, and do not constitute projections or forecasts of anticipated results. The actual results of Natixis are likely to vary (and could vary significantly) from these targets. If Natixis does not realize these objectives, its financial condition and the market value of its securities could be adversely affected. A substantial increase in asset impairment charges in respect of Natixis’ loan and receivables portfolio could adversely affect its results of operations and financial condition In connection with its lending activities, Natixis periodically establishes asset impairment charges, whenever necessary, to reflect actual or potential losses in respect of its loan and receivables portfolio, which are recorded in its profit and loss account under “cost of risk.” Natixis’ overall level of such asset impairment charges is based upon its assessment of prior loss experience, the volume and type of lending being conducted, industry standards, past due loans, economic conditions and other factors related to the recoverability of various loans. Although Natixis uses its best efforts to establish an appropriate level of asset impairment charges, its lending activities may require it to increase its charges for loan losses in the future as a result of increases in non-performing assets or for other reasons, such as deteriorating market conditions or factors affecting particular countries. Any significant increase in charges for loan losses or a significant change in the estimate of the risk of loss inherent in Natixis’ portfolio of non-impaired loans, as well as the occurrence of loan losses in excess of the charges recorded with respect thereto, could have an adverse effect on the results of operations and financial condition of Natixis.

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NATIXIS Risk report Pillar III 2017