NATIXIS_PILLAR_III_2017_EN

GOVERNANCE AND RISK MANAGEMENT ORGANIZATION Risk factors

The tax regime applied to Natixis’ operations, intra-group transactions or reorganizations (past or future) managed by Natixis or its affiliates and financial products sold to customers, is based on Natixis’ own interpretations of applicable tax laws and regulations, on the opinions received from independent tax advisers and occasionally on authorizations or rulings by the tax authorities. Since tax laws and regulations in the various jurisdictions in which Natixis operates may not always provide clear-cut or definitive guidelines, there can be no assurance that the tax authorities will not seek to challenge such interpretations in the future, in which case Natixis could be subject to tax reassessments. More generally, any failure to comply with the tax laws or regulations of the countries in which Natixis operates may result in reassessments, late payment interests, fines and penalties. Furthermore, tax laws and regulations may change, and there may be changes in their interpretation and application by the relevant authorities, especially in the context of international and European initiatives. The occurrence of any of the preceding factors may result in an increase in the tax burden of Natixis and have a material adverse effect on its business, results of operations or financial condition. Natixis’ profitability and business outlook could be adversely affected by reputational and legal, as well as the risk of non-compliance with banking laws and regulations Natixis’ reputation is essential in attracting and retaining its customers. The use of inappropriate means to promote and market its products and services and the inadequate management of potential conflicts of interest, legal and regulatory requirements, compliance issues, money laundering laws, information security policies and sales and trading practices may damage Natixis’ reputation. Its reputation could also be harmed by any inappropriate employee behavior, fraud or misappropriation of funds committed by participants in the financial sector to which Natixis is exposed, any decrease, restatement or correction of its financial results and any legal or regulatory action that has a potentially unfavorable outcome. Any damage caused to Natixis’ reputation could be accompanied by a loss of business likely to threaten its results and its financial position. Inadequate management of these issues could also give rise to additional legal risk for Natixis and lead to civil or criminal legal proceedings with potentially significant damages claimed against Natixis, or expose Natixis to sanctions from the regulatory authorities. Natixis currently is and will likely in the future be the subject of legal actions. Actions instituted against Natixis

(including ongoing proceedings) could result in judgements, settlements, fines, or penalties, which could increase Natixis’ operational and litigation costs and result in material losses. Holders of Natixis securities may suffer losses if Natixis undergoes resolution proceedings The Directive 2014/59/EU dated May 15, 2014 on Bank Recovery and Resolution Directive (the “BRRD”) and the Single Resolution Mechanism introduced by EU Regulation no. 806/2014 of July 15, 2014, as transposed into French law by decree-law no. 2015-1024 dated August 20, 2015, provide resolution authorities with the power to “bail in” capital instruments and eligible liabilities of an issuing institution such as Natixis, meaning writing them down or (except in the case of shares) converting them to equity or other instruments, if resolution proceedings are initiated in respect of the issuing institution. A resolution proceeding may be initiated in respect of an institution if it or the group to which it belongs is failing or likely to fail, there is no reasonable prospect that another measure would avoid such failure within a reasonable time period, and a resolution measure is required to ensure the continuity of critical functions, to avoid a significant adverse effect on the financial system, to protect public funds by minimizing reliance on extraordinary public financial support, and to protect client funds and assets, in particular those of depositors. Resolution authorities must write down capital instruments such as shares before initiating resolution proceedings, if the issuing institution is failing or likely to fail (and there is no reasonable prospect that another measure would avoid such failure within a reasonable time period) or requires extraordinary public support. Thereafter, the bail-in power may be exercised by a resolution authority in respect of any remaining capital instruments, subordinated debt instruments, senior non-preferred debt instruments and finally senior preferred debt instruments, in reverse order of seniority, excluding certain limited categories of liabilities. The use of these powers by a resolution authority could result in the full or partial write-down or conversion to equity (or other instruments) of shares or other securities of Natixis. In addition, the BRRD provides resolution authorities with broader powers to implement other resolution measures, which may include, among other things, the sale of the institution’s business to a third party or a bridge institution, the separation of assets, the replacement or substitution of the institution as obligor in respect of debt instruments, modifications to the terms of debt instruments (including altering the maturity and/or the amount of interest payable and/or imposing a temporary suspension on payments) and discontinuing the listing and admission to trading of financial instruments.

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NATIXIS Risk report Pillar III 2017