NATIXIS_PILLAR_III_2017_EN

CREDIT RISK Credit risk mitigation techniques

all the legal documents are binding to all parties and are j legally valid in all relevant jurisdictions; the bank has the right to realize or take ownership of the j collateral in case of default, insolvency or bankruptcy; there is no material positive link between the quality of the j counterparty credit and the value of the collateral; the asset must be liquid and its value sufficiently stable over j time for its realization to be certain. In terms of monitoring, collateral and netting agreements are: analyzed, when a loan application is approved or reviewed, to a ascertain the suitability of the instrument or guarantee provided as well as any associated improvement in risk quality; checked, processed and documented based on standard a contracts or contracts approved by the Legal department; subject to registration and monitoring procedures in the risk a administration and management systems.

Similarly, providers of sureties (via signature guarantees or CDS) are examined, rated and monitored, as with debtors. Natixis may take steps to reduce commitments in order to lower concentration risk by counterparty, sector and geographic area. Concentration risk is rounded out with an analysis, based on stress test methodologies (migration of ratings according to macroeconomic scenarios). Natixis may buy credit-default swaps and enter into synthetic securitization transactions in order to reduce all or part of the credit risk exposure attached to some assets by transferring the risk to the market. CDS-protected loans remain on Natixis’ balance sheet, but bear the counterparty risk attached to the credit-default swap sellers, which are generally OECD banks. Transactions with non-bank third parties are fully collateralized in cash. These transactions are subject to decision-making and monitoring procedures that apply to derivative transactions.

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NATIXIS Risk report Pillar III 2017

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