NATIXIS - Universal registration document and financial report 2019

3 RISK FACTORS, RISK MANAGEMENT AND PILLAR III Risk management

Under its annual medium-term funding program in 2019, Natixis raised €11.5 billion net (€7.4 billion net the value of buybacks and calls) in resources with a term of more than one year versus €14.6 billion in 2018 (€11 billion net the value of buybacks and calls). The difference is attributable chiefly to the deconsolidation of SFS entities (mainly the long-term refinancing leasing activity). Structured private placements account for 40% of this program (marginal in net terms), with the remainder predominantly provided by BPCE as part of the Group’s medium-term funding policy approved by the Group ALM Committee.

2019 gross MLT funding program

2018 gross MLT funding program

9 % Other long-term loans (including Financing of the Natixis Deposit fund)

18 % Other long-term loans (including Financing of the Natixis Deposit fund)

43 % Natixis issues

49 % Natixis issues

48 % Borrowings from BPCE

33 % Borrowings from BPCE

an ambitious monetary stimulus package, characterized largely by the implementation of a tiering system serving to limit the harmful effects of negative rates on the soundness of European financial institutions. It is still too early to fully measure the tiering program’s effects; it could have consequences on the cost for banks when raising funds on the money market. Generally speaking, liquidity was fairly abundant in dollars during the second half, most tellingly in the form of a steady increase in assets in money market funds denominated in dollars. In 2019, the total amount of Natixis issue programs increased. The increase is attributable to the increase in demand for dollar-denominated securities. This phenomenon was focused on the Euro Commercial Paper program under the effect of Asian flows, as well as on the American CD program, resulting from additional interest from local investors. But the increase was partially offset by a decline in the stock of deposits. The market also prepared for the introduction of new benchmarks, with the introduction of the €STR and the reform of the Euribor on the euro. Some transactions have already been made on the European Central Bank’s new benchmark. This transition stage is crucial, because many issues on the money market include a reference to Eonia.

Comments on the Bank’s funding Short-term funding

2019 was marked by rising uncertainties and by adjustments to developed countries’ monetary policies, which enabled the world economy not to suffer too badly from a decline in private investment. The Sino-American trade and Brexit sagas contributed to the anxiety-provoking climate throughout the year, but an agreement between Beijing and Washington, and a new majority in the British parliament allowed decisive progress on those issues. And while they are still far from being definitively settled, the markets are looking at them with less apprehension. Meanwhile, the fall in banks’ dollar reserves, a consequence of the programmed normalization of the Fed’s balance sheet, caused severe tension in the American money markets in September. To respond to this situation, the Fed decided to resume purchasing treasury securities and injecting liquidity via reverse repo operations. The American central bank also decided to lower its policy rates three times in 2019 to combat the negative effects of global uncertainties. The European Central Bank only made a minor adjustment to the “low” rate of its monetary policy, by lowering the deposit facility from -0.40% to -0.50% in September, but it accompanied this gesture with

Natixis’ short-term issuance program outstandings

(in millions of euros or euro equivalents)

Deposit certificates

Commercial papers

Program ceiling*

45,000 26,746

25,352 13,196

Outstandings at 31/12/2019

For certificates of deposit, NEU CP program ceiling only (NEU: New European Medium Term Note) *

142

NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019