NATIXIS_REGISTRATION_DOCUMENT_2017

3 RISKS AND CAPITAL ADEQUACY Summary of annual risks

It is difficultto predictwhen economicor marketdownturnswill occur, and whichmarketswill be most significantlyimpacted.If economic or market conditions in France or elsewhere in Europe,or globalmarketsmore generally,were to deteriorateor become more volatile, Natixis’ operations could be disrupted, and its business, results of operations and financial condition could be adverselyaffected. An economic environment characterized by sustained low interest rates could adversely affect the profitability and financial condition of Natixis During periods of low interest rates, Natixis may be unable to lower its funding costs sufficiently to offset reduced income from lending at such rates. Low interest rates may also negatively affect the profitability of the Insurance activities of Natixis becauseInsuranceaffiliatesmay not be able to generate an investment return sufficient to cover amounts paid out on certain of their Insuranceproducts.Low interest rates may also adversely affect commissions charged by Natixis Asset Managementaffiliateson moneymarketand other fixed income products. Furthermore,if market interest rates were to rise in the future, a portfolio featuring significant amounts of lower interest rate loans and fixed income securitiesas a result of an extended period of low interest rates would be expected to decline in value at a time when Natixis’ cost of funding could increase.If Natixis’ hedgingstrategiesare ineffectiveor provide only a partial hedge against such a change in value, Natixis could incur losses. 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 environmentin whichNatixisand other financialinstitutionsoperate. The measuresthat have been or may be adopted includemore stringent capital and liquidity requirements, taxes on financial transactions, limits or taxes on employee compensation over specifiedlevels, limits on the types of activitiesthat 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,enhancedrecoveryand resolutionregimes,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 lendingand other financialactivities,and on the economy.

adverse economic conditions could affect the business and a operations of Natixis’ customers, resulting in an increased rate of defaulton loans and receivables; a decline in market prices of bonds, shares and commodities a could impact many of the businesses of Natixis, including in particular trading,investmentbankingand AssetManagement revenues; macro-economic policies adopted in response to actual or a anticipated economic conditions could have unintended effects, and are likely to impact market parameters such as interest rates and foreign exchangerates, which in turn could affect the businesses of Natixis that are most exposed to marketrisk; perceived favorable economic conditions generally or in a specific business sectors could result in asset price bubbles, which could in turn exacerbate the impact of corrections when conditionsbecomeless favorable; a significanteconomicdisruption (such as the global financial a crisis of 2008 or the European sovereign debt crisis of 2011) could have a severe impact on all the activities of Natixis, particularlyif the disruption is characterizedby an absence of market liquiditythat makes it difficultto sell certain categories of assetsat their estimatedmarketvalue or at all. On the whole, the economicconditionsof the markets in which Natixis operatesare favorable.There is no guarantee,however, that such conditions will continue. European markets may be affected by a number of factors, including ongoing uncertainty regarding commercial and other relationships between the UnitedKingdom and the European Union following the UK's decision to leave the EU. Markets in the United States may be affected by recently enacted tax reforms or by a tendency towards political stalemate, which has resulted in government shutdowns and affected credit and currency markets. Asian markets could be impacted by factors, such as slower-than-expectedrates of economic growth in China or by geopolitical tensions on the Korean peninsula. Share prices could fall from their currenthistoricallyhigh levels, the impact of which could be exacerbatedif the correctionis particularlyrapid or if broad groups of market participantswithdrawassets from share-basedproductsat the same time. Credit markets and the value of fixed income assets could be adversely affected if interest rates were to rise sharply as the European Central Bank, the Federal Reserve Bank and other central banks begin to scale back the extraordinary support measures they put in place in response to recent adverse economic conditions. Commodity prices could be impacted by unpredictable geopolitical factors in regions such as the Middle East and Russia. More generally, increased volatility of financial markets could adverselyaffect Natixis’ trading and investmentpositions in the debt, currency,commodityand equitymarkets,as well as its positions in other investments. Severe market disruptions and extrememarket volatilityhave occurred in recent years and may occur again in the future, which could result in significant losses for Natixis’ Capital markets activities. Such losses may extend to a broad range of trading and hedging products, including swaps, forward and future contracts, options and structured products. Volatility of financial markets makes it difficult to predict trends and implement effective trading strategies; it also increases the risk of losses from net long positions when prices decline and, conversely, from net short positions when prices rise. Such losses, if significant, could have an adverse effect on Natixis’ results of operations and financialcondition.

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Natixis Registration Document 2017