NATIXIS_REGISTRATION_DOCUMENT_2017

RISKS AND CAPITAL ADEQUACY Summary of annual risks

RISK FACTORS 3.1.2

Risks related to ties with BPCE 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 appointmentof Natixis’directorsand executiveofficers,and on any other corporatedecisionsrequiringshareholderapproval. BPCE’s interests in relation to these decisionsmay differ from those of other Natixisshareholders. Natixis’ risk management policies and procedures are subject to the approval and control of BPCE Natixis is part of Groupe BPCE, a major French mutual banking group. Under French law, BPCE, as the central institution of Groupe BPCE, is required to ensure that all of Groupe BPCE complieswith regulationsin force governingthe banking sector in France in areas such as regulatory capital adequacy, risk appetite and risk managementrequirements.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 appointmentor removalof Natixis’Chief Risk Officer,as well as certain aspects of risk managementsuch as the approvalof credit limits and the classificationof loans granted to joint Natixis and Groupe BPCE customers as non-performing loans. BPCE’s own interests concerningrisk managementmay differ from those of Natixis. Natixis obtains a portion of the funding for its activities from Groupe BPCE through the public and private issuance of medium- and long-termvanilla debt (senior and subordinate)by BPCE, which is the main issuer of medium-and long-termdebt in GroupeBPCE. If the credit ratingsof BPCEwere 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 Groupe BPCE), the cost of funding and liquidityof Natixiscould be adverselyaffected. Risks related to macroeconomic conditions and regulatory developments Adverse market or economic conditions may negatively affect the net revenues, profitability and financial condition of Natixis The businesses of Natixis are sensitive to changes in the financial markets and more generally to economicconditions in France, Europe and the rest of the world. Economic conditions in the markets where Natixis operates could in particular have some or all of the followingimpacts: Natixis’ funding of its activities depends on BPCE

Overview of risks to which Natixis is exposed Natixis is exposedto a numberof types of risks associatedwith its Asset & Wealth Management, Corporate & Investment Banking, Insurance, and Specialized Financial Services businesses,includingin particularthe following: credit risk , which is the risk of financial loss relating to the a failure 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 financingactivitiesand guarantees,and also in other activities where Natixis is exposed to the risk of counterpartydefault, such as its trading, Capital markets,Insuranceand settlement activities; market risk , which is the risk of loss generated by any a negative fluctuations in market parameters, such as interest rates, share prices, foreign exchange rates and commodity values. Market risk arises in connectionwith substantiallyall the activities of Natixis. It includes both direct exposures to market parametersarising from activities such as trading and Asset Management(where commissionsare largely based on the market value of managedportfolios),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 a honor 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 obligationsto creditors; operationalrisk , 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. Operationalrisk also includesnon-complianceand 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 regulatoryobligations,or with ethicalstandards; insurance risk is the risk to profits arising from any a discrepancy between expected and incurred claims under insurance policies issued by Natixis group insurance companies. Each of these risks is discussedin further detail in this Chapter. Quantitative information relating to these risks and their potential impact on Natixis' business, results and financial conditionare set out in Chapter 3of the registrationdocument. That section also discusses Natixis' risk mitigation measures. Any inadequacyof Natixis'risk managementstrategyto address any of the foregoing risks could affect its business, results and financialposition.

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Natixis Registration Document 2017