NATIXIS - Universal registration document and financial report 2019

FINANCIAL DATA Consolidated financial statements and notes

In the euro zone, most of the uncertainties surrounding the definition of new benchmark rates were cleared up in the first of half 2019. Indeed, the work done to propose new indices was finalized in the case of Eonia, which became a €STER tracker on October 1, 2019 and will continue to be one until December 31, 2021. The latter will replace the so-called “recalibrated” Eonia from January 1, 2022. As regards the Euribor, a new calculation methodology (recognized by the Belgian regulator as complying with BMR requirements), aimed at switching to a “hybrid” Euribor, was finalized in November 2019. As far as the Libor is concerned, alternative “risk-free-rates” have been defined for the GBP, USD; CHF and JPY Libor, although proposals are still being developed for forward structures based on these alternative rates. As it stands, there is still significantly more uncertainty surrounding transactions using the Libor. Since the first half of 2018, Natixis has had a project team in place tasked with anticipating the impacts associated with the benchmark index reform from a legal, commercial, financial and accounting standpoint. Governance involving all four Natixis business lines has been set up to analyze the operational aspects of this issue. In 2019, it focused on the Euribor reform and the transition from Eonia to €STR. A new, more operational phase began in 2020 on the transition and the reduction of exposure to benchmarks that may disappear. It covers the use of new indices, inventory remediation and more active communication with bank clients. With regard to the latter point, the IASB published the amendments to IFRS 9, IAS 39 and IFRS 7, in respect of hedging-related issues, in September 2019. The amendments to IAS 39 and IFRS 9 provide for temporary exceptions to the requirements set forth by these standards in terms of hedge accounting, while the amendments to IFRS 7 require that, in respect of the hedging relationships to which these exceptions apply, information be provided on the entities’ exposure to the IBOR reforms, the way they manage the transition to alternative benchmark rates, and the assumptions or judgments made in order to apply these amendments. Through these amendments, the IASB aims to prevent entities from having to discontinue hedging relationships due to uncertainties associated with the IBOR reform. Talks are underway at the IASB with regard to post-IBOR reform considerations. No draft text has been published at this stage. Accordingly, in respect of this transition, close attention will need to be paid to the potential impacts of the reform in terms of the modification or derecognition of IBOR-indexed financial assets and liabilities, and also the application of the SPPI criterion, fair value and hedging relationships during the transition.

Other Uncertainties related to Brexit

On June 23, 2016, the UK decided to leave the European Union (Brexit) following a referendum. After the triggering of Article 50 of the treaty on European Union on March 29, 2017, the United Kingdom and the 27 other member countries of the European Union gave themselves two years to prepare for the country’s effective withdrawal. This deadline was postponed three times, ultimately falling on January 31, 2020. This led into a transition period, running until December 31, 2020, during which time trade agreements concerning the future exchange of goods and services will be negotiated and current European rules will continue to apply. The political and economic consequences of Brexit are now contingent upon the agreements reached over the course of 2020, bearing in mind that European legislators already consider this schedule much too tight. In light of this situation, Natixis has prepared for the various possible withdrawal outcomes and will be closely monitoring the conclusions of these negotiations so that, where necessary, these may be factored into the assumptions and estimates made when preparing the consolidated financial statements. The potential non-recognition of British CCP under European regulations is no longer a risk in the short term. Regulation (EU) 2016/1011 of June 8, 2016 on the indices used as benchmarks (“the Benchmark Regulation” or “BMR”) introduces a common framework aimed at guaranteeing the accuracy and integrity of the indices used as benchmarks for financial instruments and contracts, or to measure the performance of investment funds within the European Union. The purpose of the Benchmark Regulation is to regulate the provision of benchmarks, the provision of data underlying benchmarks, and the use of benchmarks, within the European Union. It provides for a transition period for administrators, who have until January 1, 2022 to be approved or registered. After this date, the use by entities supervised by the EU of benchmarks whose administrators are not approved or registered (or, if they are not located in the EU, are not subject to equivalent or otherwise recognized or approved regulations) will be prohibited. Under the BMR, interest rate benchmarks Euribor, Libor and Eonia have been designated as critical. Uncertainties related to the application of certain provisions of the BMR

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019