NATIXIS_REGISTRATION_DOCUMENT_2017

5 FINANCIAL DATA

Consolidated financial statements and notes

STRUCTURED ENTITIES

NOTE 4

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to the administrative tasks only and the relevant activities are directedby meansof contractualarrangements. Structured entities generally have one or more of the following characteristics: restrictedand narrowly-definedactivitiesand objectives; a or non-existentequity, i.e. insufficientto allow it to finance its a activitieswithoutsubordinatedfinancialsupport; financing in the form of multiple contractually linked a instrumentsthat create concentrationsof credit or other risks (tranches); few or no employees. a 4.1.1 In accordancewith IFRS 12, Natixis discloses informationfor all the structuredentities in which it holds interestsand for which it acts in one or more of the followingroles: originator/structurer/arranger; a placementagent; a managerof relevantactivities; a or any other role in which it has a decisive impact on the a structuringor managementof the transaction. Interest in an entity is understood to mean a contractual or non-contractualrelationshipthat exposesthe entity to the risk of variable returns associated with the performance of another entity. Interests in other entities may be evidenced by, among others, the ownershipof equity instrumentsor debt securitiesas well as by other links, such as financing, cash loans, credit enhancement and the issuance of guarantees or structured derivatives. Consequently,the followingare not included in the consolidation scope (IFRS 10) or in the scope applicable to the disclosure of additionalinformation(IFRS 12): structured entities linked to Natixis solely through an ongoing a transaction. This corresponds to an unstructured financial instrumentwhich does not generallyhave a material impact on the variabilityof the structuredentity’s returns and which may be concluded by Natixis with structured entities or with traditionally-governedentities alike. Ongoing transactions are most commonly: vanilla fixed-income/currency derivatives, derivatives with j other underlying assets and the lending/borrowing of securitiesand repos, Scope of structured entities 4.1 with which Natixis has dealings General principles

guaranteesand plain vanilla financing granted to family SCIs j or certainholdings; external structuredentities for which Natixis acts simply as an a investor.Thismainly includes: investments in external mutual funds not managed by j Natixis, with the exception of those in which Natixis owns virtuallyall the shares, interests held in external securitization vehicles for which j Natixis acts simply as a minority investor (exposureto these funds is included in the informationdisclosedwith regard to exposuresas recommendedby the Financial Stability Forum (FSF)), a restricted scope of interests held in real estate funds and j externalPrivateEquity funds for whichNatixis acts simply as a minorityinvestor. The structured entities with which Natixis has dealings can be categorized into four groups: entities created within the context of structured financing, asset managementfunds, securitization vehiclesand entitiesestablishedfor other types of transactions. In accordancewith IFRS 10,consolidationanalysesfor structured entities are performedtaking into account all the criteria referred to in paragraph 2.2.1. 4.1.2 In order to meet financing requirements for movable assets (involving air, sea or land transportation),real estate, corporate acquisitions (LBO financing) or commodities, Natixis may be required to create structured entities around a specific financial transactionon behalf of a customer. Auto-pilot mechanisms are generally in place for these structures.In the case of leasing contracts,the transactionmust be structured such that its income always amounts to zero. As such, only default events would be capable of modifying the structured entity’s income, by leading to the disposal of the rights to the assets once the guarantees have been exercised. Natixis has the power to have the assets sold in the event of a defaultevent, acting either alone or via the bank syndicateagent. This right equates to a protective right because Natixis would never benefit from the income from the sale beyond the amount of the balance due under the loan agreement. As such, Natixis does not have powerover such entities’relevantactivities. When auto-pilot mechanisms are not in place for these structures, it is generally the sponsor who oversees activities which are relevant and which generate returns. As previously, Natixis’ rights as lender are protective rights limited to the amount of its receivable. As such, Natixis does not have power over such entities’relevantactivities. In addition, Natixis is rarely a shareholder in such entities and, when it is, it generally holds a minority interest. The entities for which Natixis is the majority shareholder are limited in number and do not have a material impact on the consolidatedfinancial statements. Structured finance transactions

222

Natixis Registration Document 2017