Annual report 2008
Annual report 2008
Management report ...... 2 Consolidated financial statements ...... 102 Annual financial statements ...... 216 Additional information...... 242
Dexia - Rapport annuel 2008 1 COMPTES SOCIAUX Management report
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General information Activity andresultsofthebusinesslines Financial results Risk management Sustainable development Human resources Shareholder information Corporate governance 2008 andearly2009highlights Message fromtheChairmen Group profile......
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COMPTES SOCIAUX COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 4 Dexia Annual report 2008 Banking inEurope, mainlyBelgium,LuxembourgandTurkey. banking andfinancialsolutions,onRetailCommercial ing, providing localpublicfinanceactorswithcomprehensive 31, 2008.DexiaGroup focusesonPublicandWholesaleBank- a core shareholders’ equityofEUR17.5billionasDecember Dexia isaEuropean bank,with36,760membersofstaff and Group profile service toabroader customerbase. go beyonditsrole ofspecialistlenderinorder tooffer abetter is already largelyeffective inBelgium,willenabletheGroup to of products andservicestocustomers.Thisapproach, which Its strategyinthisfieldisaimingatstrengthening the range and socialeconomy. finance, thefinancingofhealthandsocialhousingsectors, its core markets–amajorplayerinpublicandinfrastructure solvency northeirfinancingneeds.AndDexiaremains –on The ongoingfinancialcrisisdoesneitherquestionourclients’ will besignificantlyreduced. The activitiesintheUnitedKingdomandStates Switzerland toretain platformsforaccesstofunding sources. Banking. Dexiawillmaintainapresence inGermany, Japan and markets willremain core marketsforPublicandWholesale Italy andtheIberianPeninsulahavebeenconfirmedthese The commercial franchisesinFrance,Belgium,Luxembourg, and potentialforprofitable growth. strong commercial franchises,along-termfundingcapacity rent marketenvironment. Itwillfocusonmarketscombining line hasbeenrevisited inorder totakeintoaccountthecur- in November2008,thePublicandWholesaleBankingbusiness As aconsequenceofthetransformationplaninitiatedbyDexia Public andWholesaleBanking BUSINESS LINES as ofDecember31,2008. world. Total assetsundercustodyamountedtoUSD1.9trillion istration andshareholder servicestoinstitutionsaround the offers itsexpertiseinglobalcustody, fundandpension admin- Services, ajointventure withRoyalBankofCanada, which investor servicesbusinessisconductedbyRBCDexiaInvestor of assetsundermanagementasDecember31,2008.The services activities.DexiaAssetManagementhadEUR79billion This businesslinealsoincludesassetmanagementandinvestor lion customers. ing servicesaswellinsuranceproducts tomore thansixmil- offering awiderangeofretail, commercial andprivatebank- position inTurkey. Itisalsopresent inSlovakia.Thebankis major banksinBelgiumandLuxembourgholdingastrong Dexia isaleadingEuropean bank,rankingamongthethree Retail andCommercial Banking bourg –are ratedAA-byFitch,A1Moody’s andAby àLuxem- Dexia CréditLocalandBanqueInternationale The Group’s mainoperatingentities–DexiaBankBelgium, Triple-A ratedsecured bonds. Standard &Poor’s. Three ofDexia’s European subsidiariesissue RATINGS (1) Entitybeingsold;excl.FinancialProducts. SIMPLIFIED GROUPSTRUCTURE 70% Crediop Dexia Assurance Security Financial DEXIA SHAREHOLDINGSTRUCTURE 2.1% 3.0% 26.9% 5.0% Other InstitutionalandIndividualShareholders Employee shareholding CNP Assurances Ethias Group Three BelgianRegions Belgian federalState French State Arco Group Holding Communal Caisse desdépôtsetconsignations (1) 60% Sabadell Dexia as ofDecember31,2008 5.7% 5.7% 5.7% 100% Deutschland bank Kommunal- Dexia 100% Crédit Local Dexia 17.6% 13.9% 14.3% 100% Bank kredit Kommunal- Dexia 99.9% à Luxembourg Internationale Dexia Banque 100% Agency Municipal Dexia Dexia SA 100% Sofaxis Dexia (1) Includingself-employednetworksand RBC DexiaInvestorServices. 2,708 100% Belgium Bank Dexia 4,113 as ofDecember31,2008 MEMBERS OFSTAFF 6,850 Other countries France Luxembourg Turkey Belgium 50% Services Investor Dexia RBC 8,044 100% Management Asset Dexia (1) Dexia 15,045 99.8% DenizBank Annual report 2008 99.8% Belgium Insurance Dexia Group profile 5
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 6 Group profile Dexia Annual report 2008 (1) Theratiobetweenthecostsandincome. (2) Fortheyears2000-2004:shareholders’equity Report 2005“Accounts&Reports”. (1) ThereconciliationbetweenDexiaGAAPandIFRSasadoptedbyEU,theimpactoffirst-timeapplicationisexp (1) ThereconciliationbetweenDexiaGAAPandIFRSasadoptedbyEU,isexplainedintheAnnualReport2005“Accounts&r e noe ru hr ,0 ,2 ,9 ,3 ,7 ,2 ,3 ,5 ,3 (3,326) 2,533 2,750 2,038 1,822 1,772 1,431 1,299 1,426 1,001 Net incomeGroupshare rs prtn noe160238210214230256277351302(563) 3,062 3,531 2,747 2,566 2,380 2,104 2,120 2,308 1,690 Gross operatingincome ot (,5)(,2)(,3)(,5)(,1)(,5)(,2)(,7)(,3)(4,119) (3,834) (3,474) (3,229) (3,057) (3,012) (3,056) (3,037) (3,323) (2,050) Costs noe3705615175105325635967056863,556 6,896 7,005 5,976 5,623 5,392 5,160 5,157 5,631 3,740 Income Cost-income ratio (in millionsofEUR) RATIOS RESULTS ir1rto93 .%93 .%1.%1.%10.3% 10.0% 10.7% 9.9% 9.3% 9.3% 9.3% Tier 1ratio aia dqayrto98 15 07 12 17 11 10.9% 11.1% 11.7% 11.2% 10.7% 11.5% 9.8% Capital adequacyratio Core shareholders’equity etscrte 3. 4. 4. 3. 4. 4. 7. 8. 0. 188.1 204.0 184.7 175.7 144.2 143.9 134.9 146.5 140.9 134.4 Debt securities eois5. 408. 239. 719. 1. 2. 114.7 126.7 116.2 97.7 87.1 97.6 92.3 85.3 84.0 52.4 deposits Customers borrowingsand nnilivsmns7. 2. 3. 2. 4. 4. 9. 2. 5. 141.1 257.9 223.2 198.9 147.3 144.5 127.9 134.7 125.9 77.7 financial investments through profitorlossand Financial assetsatfairvalue ocsoes144164178119162195124265226368.8 242.6 226.5 192.4 169.5 166.2 161.9 157.8 156.4 134.4 to customers Loans andadvances Total assets BALANCE SHEET (in billionsofEUR) (1) (2) Dec. 31, 48 90 89 92 59 44 54.0% 54.4% 55.9% 59.2% 58.9% 59.0% 54.8% 257.8 0020 0220 042004 2004 2003 2002 2001 2000 2000 0020 0220 0420 0520 072008 2007 2006 2005 2004 2004 2003 2002 2001 2000 . 031. 161. 051. 441. 17.5 16.1 14.4 11.5 10.5 12.3 11.6 10.9 10.3 8.1 + + general bankingrisksreserve. Dec. 31, 351.4 2001 ei APIFRSasadoptedbyEU Dexia GAAP ei APIFRSasadoptedbyEU Dexia GAAP ei APIFRSasadoptedbyEU Dexia GAAP Dec. 31, 5. 4. 8. 0. 0. 6. 604.6 566.7 508.8 404.6 389.2 349.9 350.9 2002 Dec. 31, 2003 Dec. 31, 2004 2005 Jan.1, (1) (1) Dec. 31, 2005 0520 072008 2007 2006 2005 Dec. 31, 10.3% 49.6% 2006 9.8% lained intheDexiaAnnual eports”. Dec. 31, 56 115.8% 55.6% .%11.8% 9.6% 10.6% 9.1% 2007 Dec. 31, 651.0 2008 (4) TheratiobetweenthetotaldividendandnetincomeGroupshare. GAAP: includingGBRRGroupshare. shares)attheendof (3) Theratiobetweenthecoreshareholders’equityandnumberofshares(afterdeductiontreasury (2) TheBoardofDirectorsdecidedtoproposethenextShareholders’MeetingonMay13,2009thatexceptionallynodividend (1) TheratiobetweenthenetincomeGroupshareandaverageweightednumberofshares(undilutedforyearsunderIFRS The triple-AratingofDexiaMunicipalAgency wasaffirmedbyFitch(October1,2008),Moody’s 23,2009)andStandard& (January 2008) andAA(low)withnegativetrendby DBRS(November17,2008). outlook byFitch(September30,2008),A1 withnegativeoutlookbyMoody’s 19,2009),AwithstableoutlookbyStandar (January The Group’s principal banking entities–DexiaBankBelgium,CréditLocalandBanqueInternationale àLuxembourg– (2) Theratiobetweentheportfolioimpairmentsandimpairedloans. (1) Theratiobetweentheimpairedloansandgrossoutstandingloans. Assets qualityratio Net assets Earnings pershare i iloso U)951871921781721721431391283,535 1,218 1,359 1,473 1,722 1,722 1,708 1,942 1,897 905 (in millionsofEUR) Impaired loanstocustomers Coverage ratio rs iied04 .804 .306 .207 .109 - 0.91 0.81 0.71 0.62 0.62 0.53 0.48 0.48 0.43 Pay-out ratio Gross dividend (in EUR) RATINGS ei rdtLcl tbeotokA-1 R-1(middle) A-1 R-1(middle) - Negativetrend Negativetrend P-1 Stableoutlook A-1 R-1(middle) - P-1 Stableoutlook AA(low) AA(low) Negativetrend F1+ A AAA F1+ A Negativeoutlook - P-1 Stableoutlook Negativeoutlook AA(low) A1 Aaa Stableoutlook F1+ A A1 Stableoutlook Negativeoutlook Dexia BanqueInternationaleàLuxembourg Dexia CréditLocal AAA AA- Dexia BankBelgium DBRS A1 AA- Stableoutlook Dexia MunicipalAgency Dexia BanqueInternationaleàLuxembourg Dexia CréditLocal Dexia BankBelgium Standard &Poor’s AA- Dexia MunicipalAgency Dexia BanqueInternationaleàLuxembourg Dexia CréditLocal Dexia BankBelgium Moody’s Dexia MunicipalAgency Dexia BanqueInternationaleàLuxembourg Dexia CréditLocal Dexia BankBelgium Fitch DATA PERSHARE QUALITY OFRISKS (3) (4) (2) (1) (1) 19 93 30 21 87 76 79 43 20 - 42.0% 34.3% 37.9% 37.6% 38.7% 42.1% 43.0% 39.3% 41.9% 50 67 80%7.%7.%7.%6.%6.%6.%58.9% 67.2% 0.99% 69.3% 0.50% 69.1% 0.61% 73.2% 0.78% 1.04% 73.2% 72.8% 1.04% 68.0% 1.05% 66.7% 1.23% 65.0% 1.20% 0.68% 0020 0220 0420 0520 072008 2007 2006 2005 2004 2004 2003 2002 2001 2000 0020 0220 0420 0520 072008 2007 2006 2005 2004 2004 2003 2002 2001 2000 .283 .992 .588 .61.01.79.92 12.87 (2.54) 11.60 2.18 9.86 2.49 8.87 1.87 1.63 9.95 9.25 1.58 8.79 1.24 8.39 1.13 8.02 1.25 1.15 ei APIFRS as Dexia GAAP ei APIFRS as Dexia GAAP ogtr ulo Shortterm Outlook Long term adopted byEU adopted byEU Poor’s (October7,2008). be paidfor2008. theperiod.UnderDexia d &Poor’s (December 19, are rated AA- with stable are ratedAA-withstable as adoptedbyEU). Dexia Annual report 2008 Group profile (2) 7
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 8 Dexia Annual report 2008 Message from theChairmen which isatahighlevelincomparison tothesectorasawhole. guarantee. FSA,whichcontributedEUR3.1billiontoDexia’s lossin2008,nolongerconstitutesarisktotheGroup’s solvency whilst retaining USD17billionofassetsintheFinancialProducts activity, onwhichtheBelgianandFrenchgrant governments subsidiary andamajorfactorinthecrisisofconfidencesuffered byDexia,signinganagreementAssured tosellFSA Guarant were absolutelyvitaltothecompany. Firstly, weundertooktotransfertheinsuranceactivitiesofFSA,UScredit enhancem Supported byanewandtightenedmanagementteamconsistingof experienced bankers,weannouncedaraftofmeasures that situation andimmediatelyworkedtoredefine theimproved basesonwhichtorebuild Dexia’s future. Called upontoleadtheGroup inthesedifficultcircumstances, togetherwetooktheurgentstepsrequired bythatdeteriorating in order tocopewiththesenewconstraints. revision oftheportfolioandmodedevelopmentDexia,aswellmethodfinancingitslong-termcommitments The financialcrisishighlightedtheneedtoapplystricterthaneverbanking disciplinewithintheGroup andtomakeanin-dept Group hasadequateliquidity. alsograntedonOctober9,2008theirguaranteesinparticulartocertainnewissues,ensureLuxembourg governments the in anamountofEUR6.0billiononSeptember30,2008order tore-establish theGroup’s solvency. TheFrench, Belgianand an intenseliquiditycrisis.Ourshareholders andtheFrench participatedintherecapitalization andBelgiangovernments ofDe of marketoperatorsintherobustness ofourbank,and thecontractionofinterbankmarketled,atendSeptember, to financial sector, andthesedidnotspare ourGroup. Too muchexposure totherisksofUSmarketweakenedconfidence at thebeginningofautumn,insolvencyUSbankLehmanBrothers suddenlyrevealed theimbalancesin The year2008wasmarkedbythesevere crisiswhichswept thefinancialmarketsandseriouslyaffected Dexia.Theannouncement, Jean-Luc Dehaene Pierre Mariani ent xia a y, y, h ,
confidence inDexia’s abilitytorediscover thepathtoprofitability andtocontrolled development. provide itsclientswiththeservicestheyexpectandtogiveshareholders apromising future. Thatiswhatgivesusourun thebenefitofacknowledgedexpertiseonitsprincipalmarkets andare-found discipline,Dexiawillbeinapositionto With the worktheyare doingwithourclients. bank hasthestrength ofitsteamsandmembersstaff whohavemobilizedwithoutdemurtofindsolutionsandcontinue bank’s liquidityandcredit. Then,Dexiahasaclientfranchiseinwhichloyalty, sosorely triedof late,hasneverfailed.Fi of itsshareholders andoftheFrench, whichhaveprovided BelgianandLuxembourggovernments, themeanstomaintain the shortterm,butDexiacanrely onitssolidattributes torediscover itsprofitability. Firstly, itcanrely ontheunceasin Of course2009isshapinguptobeadifficultyear, andtheeconomicenvironment isnotshowinganysignsofimprovement in 2008. exceptionally, theBoard ofDirectors willpropose tothenextShareholders’ Meeting thatnodividendbepaidtoshareholders f Dexia. Managementwillreceive nobonusfortheyear 2008.Finally, consideringthenetlossofEUR3,326millionfor2008,and and totherefocusing ofactivitiesisnowunderway, observingtherulesofsocialdialoguewhichhavealwaysprevailed in vital toitsprofitable development.Theworkforce reduction necessarytoadaptourorganizationthenewmarketenvironment at acostreduction intheorder of15%overthree yearshasnowbegunandisintendedtogiveDexiatheefficiencyagility The transformationplanrelies ontheshared endeavorsofemployees,managementandshareholders alike.Anexercise aimed States willbesignificantlyreduced. providing accesstolocalfinancinginJapan,Germany andSwitzerland.Finally, activitiesintheUnitedKingdomandUnit Europefinance activitiesinAustralia,Eastern (excludingSlovakia),Mexico,IndiaandScandinavia.Dexiawillonlyretain plat higher thaninSeptember2008.Implementationofthetransformationplanwillbereflected in2009bythecessationofpublic lines showedgoodresilience, aswitnessedbythetotal depositswiththebankwhichatendofDecember2008were ataleve Turkey, ItalyandtheIberianPeninsula.Beyondlossesstrictlyassociatedwitheffects ofthecrisis,Dexia’s historic Group’s principalbusinesslines,localpublicfinanceandcommercial banking,anditscore markets,France,Belgium,Luxembourg Then wehadtorethink thedevelopmentofGroup’s businesslines.Dexia’s future profitability requires arefocusing onthe activities were stoppedandthecorresponding assetsstillonthebalancesheetwillgraduallybereduced. a cessationofproprietary tradingactivities.Treasury managementandriskwere centralized.Bondinvestment First ofall,inadditiontotheagreement tosellFSA,reduction oftheriskprofile beganwithalimitationofmarketactiviti of theGroup’s riskprofile, prioritygiventoclientsandthehistoricalbusinesslines,adaptationofcoststructure. November 14,2008andimplementedsincethatdate.Itrevolves around three fundamentalaxesforthefuture ofDexia:reduction We thenredefined themeasures necessarytoreduce theimbalances:thiswasobjectoftransformationplanpresented on himno h or fDrcosChiefExecutiveOfficer Chairman oftheBoardDirectors enLcDheePierre Mariani Jean-Luc Dehaene Dexia al business g support nally, the derlying Annual report 2008 es and forms ed or , l
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COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 10 Dexia Annual report 2008 to EUR73.2billion. environment andtoreestablish asolidbase. forced totakemajorstepsovercome theseverely disrupted In viewofthedeteriorationmarketconditions,Dexiawas tion isdetailedinthechapterFinancialResultsonpage71. crisis. TheimpactofthecrisisonGroup’s financialsitua- The year2008wasmarkedbyanunprecedented financial 2008 andearly2009highlights state-guarantee.php site( via theDexiainternet The guaranteedamountsare subjecttodailycommunication renewed betweenOctober9,2008and31,2009. fall duebefore October31,2011andare contracted,issuedor counterparts, provided thattheseliabilities,bondsorsecurities well asbondsandotherdebtsecuritiesissuedforthesame towards credit institutionsandinstitutional counterparts,as mum amountofEUR150billionandcoversDexia’s liabilities This severalbutnotjointguaranteerelates toatotalmaxi- were definedonDecember9,2008. that Dexiawasbeinggrantedaguarantee,thetermsofwhich forassistance.OnOctober9,2008,theyannounced ernments system, DexiaaskedtheBelgian,French andLuxembourg gov- Lehman anditsconsequencesontheliquidityofbanking Facing difficultiesinrefinancing followingthefailure of invested EUR3billion. (Caisse desdépôtsetconsignationsandCNPAssurances) andthereferenceIn France,thegovernment shareholders Ethias) jointlyinvestedEUR3billion. the reference shareholders (HoldingCommunal,Arcofin and thethreeIn Belgium,thefederalgovernment, Regionsand share equaltoEUR9.90. approximate totalof600millionshares, issuedatapriceper 2008, theBelgianandFrench shareholders subscribedtoan thiscapitalincrease, whichtookplaceonOctober3, With intheformofconvertiblebonds. bourg government announced aninvestmentofEUR0.4billionbytheLuxem- togetherwithexistingreferenceernments shareholders. Italso of EUR6.0billionunderwrittenbytheBelgianandFrench gov- On September30,2008,Dexiaannouncedacapitalincrease STATES’ GUARANTEE CAPITAL INCREASEOFEUR6BILLION .Asof March 31,2009,theyamounted ). http://www.dexia.com/e/services/ to 100%. Austria inDexiaKommunalkredit Bank,thusraising its share ess offinalizingthepurchase oftheshare ofKommunalkredit 49% holdinginKommunalkredit Austriaandisinthe proc- Austria announcedonNovember3,2008,Dexiasoldits As aconsequenceoftheplantorecapitalize Kommunalkredit Slovensko inSlovakia,whichalsooperatesasaretail bank. Europe, countries ofCentralandEastern includingDexiabanka Public andWholesaleBankingactivitiesoftheGroup inthe Kommunalkredit Austriaand51%byDexia.Itcontrolled the Europe.Eastern DexiaKommunalkredit Bankwasheld 49%by Kommunalkredit Bank–tooverseeoperationsinCentral and Austria andDexiaalsoinvestedinajointventure – Dexia oping itspublicfinancefranchiseinAustria.Kommunalkredit further increased to49%in2001withtheobjective of devel- back to1992whenDexiatooka26%stakeinit,whichwas The partnershipbetweenDexiaandKommunalkredit Austria 2008. port fromattheendofOctober theAustriangovernment Dexia’s Europe, partnerinCentralandEastern calledforsup- second quarter2009. Dexia aimstoconcludethetransaction atthebeginningof the USanti-trustauthoritiesgranted authorizationforthesale. An importantmilestonewaspassed onJanuary20,2009with Assured Guaranty uptoamaximumof24.7%. of Through thistransaction,Dexiawouldbecomeashareholder holders’ meetingofAssured GuarantyonMarch 16,2009. authorization toissuetheseshares wasgrantedbytheshare- in shares are thepurchaser’s discretion, before closing). The half incashandshares (upto75%incashand25% results in(i)atotalpaymentofUSD722millionand(ii) on November13,2008(USD8.10pershare), thetransaction shares. OnthebasisofclosingpriceAssured Guaranty fetdb h nnilcii,Kmuakei uti AG, Affected bythefinancialcrisis,Kommunalkredit Austria (1) 44,567,901shares. cash andUSD44.6million The considerationreceived byDexiawillbeUSD361millionin ance businesswithsignificantexposure totheUSmarket. Through thistransaction,Dexiawillexitanolongercore insur- of FSAHoldings,excludingitsFinancialProducts activity. chase agreement” withAssured Guarantyrelating tothesale On November14,2008,Dexiaentered intoa“saleand pur- DEXIA KOMMUNALKREDITBANK TAKEN INTHECAPITAL OF WITHA100%HOLDING AUSTRIA WITHDRAWAL FROMKOMMUNALKREDIT FFNNILSCRT ASSURANCE(FSA) SECURITY FINANCIAL OF SALE OFTHEINSURANCEBUSINESS (1) innewlyissuedAssured Guaranty dates dates activities. of run-off portfolios) inorder tostrengthen control ofthe in Brussels(trading,centraltreasury) andDublin(management – tighteningoftheorganizationaround twomarketplatforms, ing activitiesare stopped; ties andreduction oftheactivityperimeterasproprietary trad- – reduction byhalfoftheValue atRisklimitsfortradingactivi- around thefollowingkeyprinciples: to operationalrisks.Theseactivitieshavebeenreorganized tralized astheywere, wasinefficientandexposedtheGroup run-off andare nowmanagedcentrally. s s have abeneficialeffect onliquidity. trading activitiesandtherun-off ofbondportfolios,which will activities, describedabove),anin-depthreorganization of of certainactivities(inparticularthesaleFSA’s insurance The Group intendstoimprove itsriskprofile withthedisposal Improvement oftheGroup’s riskprofile communicated tothemarketonJanuary30,2009. to optimizeitscostbase.Aprogress report ontheplanwas cus onitscore clientfranchises,toimprove itsriskprofile and The linesofthistransformationplanwillenableDexiatorefo- re-establishing strictdisciplineinfinancialandactivity terms. formation planaimedatmanagingrisksevenmore firmly and On November14,2008,Dexiaannouncedanimportanttrans- ted forapproval toaDexiaextraordinary shareholders’ meeting. Dexia orprofit-sharing certificates.Thismechanismwill be submit- USD 4.5billion,thestateswillbeentitledtoordinary shares of million collectiveimpairmentonUSRMBS).Ifthelossesexceed (USD 1.5billionontheFinancialProducts portfolioanda USD420 USD 2billionhasalready beenreserved asofDecember31,2008 cover thefirstlossofUSD4.5billionwhichanamountabout Commission onMarch 13,2009andprovides thatDexiawill Products assets.Thisguaranteewasapproved bytheEuropean haveagreed governments toprovide aguaranteeontheFinancial Dexia, whichalready provides itsliquidity. TheBelgianandFrench the transactionandplacedinrun-off, undertheresponsibility of of thesaleFSAHoldings.Thisactivitywillbecarvedout est marginactivityofGlobalFunding,isexcludedfrom thescope the guaranteedinvestmentcontractbusinessandnetinter- The FSAFinancialProducts portfolio,whichcomprises TRANSFORMATION PLAN Credit spread andpublicbondportfolios havebeenplacedin The organizationoftradingactivities,dispersedanddecen- primarily cant geographicalreorientation: The applicationofthesethree criteriahasresulted inasignifi- of environment. and significantcross-selling opportunities; ot America; North cial development; particular theGerman lishments toretain platformsforaccesstofundingsources, in markets combining: the Group’s fundingcapacities.TheGroup willnowfocuson order totakeaccountofthecurrent marketenvironment and The Management andInvestorServicesactivities. Commercial andPrivateBankingaswellInsurance,Asset and RetailCommercial BankingwhichnowincludesRetail, sive bankingactivitiesfocusedonlocalpublicfinanceclients ent franchises:PublicandWholesaleBankingforcomprehen- The organizationoftheGroup willbefocusedontwocore cli- selected geographies. Public, RetailandCommercial Bankingincore marketsand Dexia’s activitieswillberefocused oncore clientfranchisesin Priority oncore franchises s s s s s s s Peninsula; gium andLuxembourg,aswellinItalytheIberian and socialeconomy. finance, thefinancingofhealthandsocialhousingsectors, its core markets–amajorplayerinpublicandinfrastructure solvency northeirfinancingneeds.AndDexiaremains –on The ongoingfinancialcrisisdoesneitherquestionourclients’ customer base. cialist lenderinorder tooffer abetter servicetoabroader Belgium, willenabletheGroup togobeyonditsrole ofspe- customers. Thisapproach, whichisalready largelyeffective in line, inorder toenlargetherangeofproducts andservicesto aims toredeploy thecommercial development ofthisbusiness Beyond thegeographicalredeployment ofitsactivities,Dexia Scandinavia. (excluding DexiabankaSlovensko),Mexico,Indiaand appropriate stableorlong-termdomesticfundingbase; significant reduction ofactivitiesintheUnitedKingdom and attractive returnsbasedonalowrisk“localauthority”type strong commercial franchiseswithdirect clientrelationships in Japan,GermanyandSwitzerland,maintenanceofestab- confirmation ofthecommercial franchiseinFrance, Bel- discontinuation of activities in Australia, Eastern Europediscontinuation ofactivitiesinAustralia,Eastern Public andWholesaleBanking Pfandbriefe , butwithoutanycommer- modelwillberevisited in 2008 andearly2009highlights Dexia Annual report 2008 11
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 12 2008 andearly2009highlights Dexia Annual report 2008 crisis willbediscontinued. inacontextofgloballiquidity ing attractivereturnpatterns Certain developmentsinretail andprivatebankingnotoffer- tomer deposits. bourg andSlovakia,withstronger focusonattractingcus- commercial bankingfranchisesinBelgium,Turkey, Luxem- Dexia willcontinuetodevelopattractiveretail, privateand the overallliquidityofGroup. onstrated goodresilience duringthecrisisandhavesupported Dexia Retail andCommercial Banking activitieshavedem- 900 joblossesfortheentire Group in2009. panied byanoverallworkforce reduction plan,involvingsome The review andreorientation ofactivitieswillalsobeaccom- financial statementswillbeintheorder ofEUR200million. crisis context.From 2009,theimpactofsavingsplanon to adaptitsorganizationandcommercial product rangeina 15% inthree years.Itreflects theefforts madebytheGroup The ambitionoftheDexiaGroup istoreduce itscostbaseby Reduction ofcostsandadaptationjobs control” sectiondeals withtheStatutoryAuditor’s tasksand nal audit,professional ethicsandcompliance.The“external trol” partofthissection containsinformationrelating tointer- exercised overand within theDexiaGroup.con- The“internal capital andshares. Thefourthsectionsummarizesthecontrol tions withitsshareholders andsummarizesthefeatures ofDexia the shareholders andtheDexiashare. ItdescribesDexia’s rela- the centralfunctionsofDexiaSA.Thethird sectiondiscusses the competencesofgeneralmanagementatGroup level,and provided intheirentirety. Thispartof theCharteralsodescribes the Board ofDirectors andoftheManagement Board are also of Directors andtheManagementBoard.rulesof Theinternal entities, whichconsistoftheshareholders’ meeting,theBoard responsibilities andoperatingmodesofthedecision-making thecomposition, includes allnecessaryinformationconcerning section describesDexia’s structure, corporategovernance and the Group’s historysinceitwasestablishedin1996.Thesecond tional chartfortheDexiaGroup. Italsoprovides abriefreview of sections. Thefirstsectiondealswiththestructure andorganiza- Directors wantedtobecompleteandtransparent, containsfive aspects ofthecompany. Thisdocument,whichtheBoard of “Charter”) givesadetailedoverviewoftheprincipalgovernance CharterofDexiaSA(hereafter The CorporateGovernance the evenmore.governance rules inorder tostrengthenof DexiaSAamendeditsinternal its At itsmeetingonNovember13,2008,theBoard of Directors Directors andtheManagementBoard. committee andarevisionrulesoftheBoard oftheinternal of charter,of acorporategovernance rulesfortheaudit internal The workofthiscommitteeresulted notablyinthedevelopment at Dexia. andonanyadaptationsfortheexistingsituation governance issuestreated ous governance bytheBelgianCodeofcorporate ducting astudyandformulatingrecommendations on thevari- the Board (composedofdirectors ofDexiaSA),inchargecon- Dexia SAcreatedcommitteewithin a“corporategovernance” At itsmeetingonFebruary3,2005,theBoard ofDirectors of nies. Dexiaintendstorespect thesenineprinciples. contains ninemandatoryprinciplesforpubliclytradedcompa- January 1,2005.TheBelgianCodeofcorporategovernance prises inBelgiumandEuronext Brusselsbecameeffective on Finance andInsuranceCommission,theFederationofEnter- the recommendations madeonthisissuebytheBanking, whichreplacesThe BelgianCodeofcorporategovernance, of DexiaSA Charter Governance Introduction: TheCorporate Corporate governance ny’s website( ter hasbeenavailablesinceDecember31,2005onthecompa- theChar-Pursuant totheBelgianCodeofcorporategovernance, inthischapteroftheannualreportgovernance, ofDexiaSA. restated, asrecommended bytheBelgianCodeofcorporate Charterare Several elementsoftheCorporateGovernance the ManagementBoard. pensation policyfordirectors ofthecompanyandmembers mission. ThefinalsectionoftheCharterdescribesDexia’s com- Group signedwiththeBanking,FinanceandInsuranceCom- the protocolprudentialmanagementofDexia concerning Holding Communal,Caissedesdépôts etconsignations,Ethias no individualshareholder, withtheexceptionofArco Group, At thatsamedate,andtotheknowledge ofthecompany, held 2.06%ofthecompany’s capital. 0.02% ofownshares. Membersofstaff oftheDexiaGroup As ofDecember31,2008,DexiaSAdirectly orindirectly held Dexia SA(asofDecember31,2008): The followingtableshowstheprincipalshareholders of Shareholder relation SHAREHOLDER BASE alo ein 2.01% 0.86% 2.97% 5.04% 2.87% 5.73% Brussels-Capital Region 13.92% Walloon Region Vlaamse Toekomstfonds Flemish Regionthrough 14.34% 5.73% CNP Assurances Ethias Group de participationl’État through Sociétédeprise French government participations etd’investissement 17.61% through Sociétéfédéralede Belgian federalgovernment Arco Group Holding Communal Caisse desdépôtsetconsignations Name ofshareholder www.dexia.com ) andisupdatedonaregular basis. December 31,2008 existing shares Dexia Percentage of Dexia SA’s held asof Annual report 2008 13
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 14 Corporate governance Dexia Annual report 2008 and generalpolicyoftheDexiaGroup. the latterretaining itsautonomyinestablishingthe strategy ing oftheshareholders’ meetingandoftheBoard ofDirectors, ance inforce withinDexiaSA,includingtherole andfunction- This agreement doesnotunderminetheprinciplesof govern- this annualreport onpage98). offers (seesection6.5.oftheGeneralInformationchapter in Article 74,§7ofthelawApril1,2007onpublictender Dexia SAwasinformedofthisagreement inaccordance with resolutions tobepassedwithregard tothecompany. sions whilsteachretained therighttodecidefreely onthe ances) ofanagreement toconsulteachotheroncertain occa- Caisse desdépôtsetconsignations,EthiasandCNPAssur- sion bysomeofitsshareholders (Arcofin, HoldingCommunal, company asofDecember31,2008. In addition,thedirectors ofDexiaSAheld58,808shares inthe of thecapitalDexiaSA. fédérale departicipationsetd’investissementheld3%ormore Group, Sociétédepriseparticipationl’Étatand website shareholders canbe madebytelephone,e-mailorthrough the cifically forthem.Registration the European ClubofDexia the Group through publicationsanddocumentsdesignedspe- mation toshareholders whowanttofollowtheevolutionsin The clubisacenterforthedistributionoffinancialinfor- 15,000 members,primarilyBelgianandFrench shareholders. The European clubforindividualshareholders todayhasnearly European clubforindividual shareholders The cated pagesonthewebsite,whichare updatedinreal time. ual shareholders, whoalsobenefitfrom acallcenteranddedi- shareholders andtheEuropean advisory committeeofindivid- shareholders. ItisbasedontheEuropean clubforindividual interactive systemforproviding informationtoindividual Over theyears,Dexiahasdevelopedarigorous, regular and Relations withindividualshareholders transparency inrelations withshareholders. ority fortheGroup, whichwantstostrengthen dialogueand vidual andinstitutionalshareholders. Theserelations are apri- Dexia isattentivetothequalityofitsrelations withboth indi- August30,2007,DexiaSAwasinformedoftheconclu- On EAIN IHSHAREHOLDERS RELATIONS WITH SHAREHOLDERS AMONG RELATIONS www.dexia.com. meeting byashareholder is20%. holding forthesubmissionofproposals duringashareholders’ As requested bythe BelgianCompanyCode,thelevelofshare- debates andresolutions atthemeetings. allowing shareholders whocannotattendtofollowthe Shareholders’ meetingsare broadcast liveontheinternet, from theinternet. able inEnglish,French andDutchthatcanalsobedownloaded toll-free number;inaninvitationtoattendthemeetingavail- France andLuxembourg;withinformationprovided bythe published inthenationalinvestmentpress mediainBelgium, legal announcementbulletin,the in officialnoticespublishedthe holders’ meetingbenefitsfrom aspecialinformationsystem: A keymomentinthelifeofcompany, theordinary share- SAshareholders’ meeting Dexia site ( financial reports andonehalf-yearfinancialreport onitsweb- French, EnglishandDutch.Dexiaalsopublishestwo quaterly The the website. and toshareholders whorequest it.Theyare alsoavailableon The of DexiaSA. ties, itsresults anddecisionstakenatshareholders’ meetings holders uptodateondevelopmentsintheGroup, its activi- Dutch twiceayear. Thispublicationkeepsindividualshare- Dexia publishesa Information media ings organizedinAalst,Bruges,LiègeandNamur. Individual Belgianshareholders were alsoinformed,withmeet- with itsshareholders. and givesDexiatheopportunitytoengageindirect dialogue held inParis,attractsthousandsofvisitorsovera2-dayperiod This importantexposition,whichisdesignedforsaversand Every year, Dexiaisalsopresent attheActionariaconvention. seilles, Lyons, Bordeaux andLille. Indeed in2008,Dexiametnumerous shareholders inMar- and theCercle deliaisondesinformateursfinanciersin France. ized bytheFédérationfrançaisedesclubsd’investissement Dexia alsoparticipateswithothercompaniesinmeetingsorgan- and organizedinpartnershipwithamajorinvestmentjournal. in SeptemberontheoccasionofameetingheldStrasbourg holders intheregions were notforgottenasDexiametthem May 15attheMaisondelaChimieinParis.TheFrench share- In 2008,managementchaired ameetingofshareholders on nesses, theGroup’s strategy, itsresults andfinancialoutlook. Dexia regularly meetswithitsshareholders todiscussthebusi- Meetings withindividualshareholders Letter totheshareholders www.dexia.com Dexia AnnualReport Letter totheshareholders ). isavailableinthree languages: issuesare senttoclubmembers BALO Belgian Gazette , inFrance;notices inFrench and andinthe same timetable(onlyfrom afixedtelephoneline). This serviceisavailableat0080033 942andfollowsthe in BelgiumandLuxembourg. of abilingual(French-Dutch) toll-free number forshareholders withthesetting-up In 2007,theservicewasinternationalized meeting ofDexiaSA. and methodoftaxation,VVPRstripstheshareholders’ share price,thetaxstatusofDexiashares, dividendamounts holders regularly makeuseofitforquestionsrelating tothe through Friday, from 9amuntil7pm at 0800355000.Share- The serviceisavailableinFrancefree ofcharge,Monday Telephone informationserviceforshareholders previous year. meeting andreported ontheworkofBoard duringthe Finally, oneoftheBoard’s membersspoketotheshareholders’ which waspublishedin2008. the website 94,074visitorsinamonth,up14.4%compared to2007 With site( The internet on thereshaping ofthe Group’s annualfinancialstatements.TheBoard alsoworked In 2008,theAdvisoryBoard metonMarch 17todealwiththe regard toindividualshareholders. Its role istoadvisetheGroup initscommunicationpolicywith Luxembourg, reflect theGroup’s European identity. Belgian shareholders, fiveFrench shareholders andthree from sory Board ofDexiaFrance,formedin1997.Itsmembers, four Individual Shareholders tookoverfrom theShareholders’ Advi- Created inJune2001,Dexia’s European AdvisoryBoard of Shareholders European AdvisoryBoard ofIndividual The and French. sulted forthemostpartbyEuropean surfers,mainly Belgian In English,French andDutch,thetrilingualDexiasite iscon- information letterstoshareholders. as annualandquarterlyreports, aswellpress releases and The siteprovides accesstotheGroup’s mainpublicationssuch compared to2007. almost 97,100visits,i.e.a12.7%increase invisitfrequency In 2008,itshomepage“You are ashareholder” received funds andethicalfunds,theDexiashare price. news, alistwithpricesandvaluesofalltheGroup’s investment all informationonthelifeofGroup, itsactivities,latest tors. Thesiteispracticalinstructure, givingquickaccessto vidual shareholders,aswellinstitutionalinves- journalists major forumforinformationabouttheDexiaGroup forindi- www.dexia.com www.dexia.com Shareholders’ Guide confirmedin2008thatitisa ) , anewversionof tries and25cities. tor Relationsteam,metseveralhundred investorsin16 coun- In 2008,theManagementofGroup, assistedbythe Inves- bers oftheManagementBoard orDexia’s management. tions abouttheGroup’s results orstrategydirectly tothemem- with themajorinstitutionalinvestors,whocanthenaskques- information meetingsare organizedthroughout theworld After eachpresentation ofresults orinothercircumstances, Contact withinstitutionalshareholders tions and36press releases. financial report, 1generalpresentation, 14adhocpresenta- ing 3 which resulted inthepreparation of57publications,includ- In 2008,there wasawealthoffinancialnewsfrom Dexia, investor”. Itcanalsobeobtainedbye-mail. tion onthewebsite Group news.Allthisinformationisavailableasfrom publica- tions andpress releases onthebusiness,financialresults and quarterly financialreports, annualreports, themepresenta- During theyear, Dexiaregularly publishesinformationthrough Regular informationchannels responsible forrelations withinvestorsandanalysts. a teambasedpartlyinBrusselsandParisisspecifically of thecapital,are extremely importanttoDexia.Forthispurpose, Relations withinstitutionalshareholders, whoholdabout16% Relations withinstitutionalshareholders in thecircular. on thewebsitereserved forthefinancialinformationstipulated several conditions,particularlythecreation ofadistinctsection In makingthischoice,DexiaSAmadeacommitmenttomeet stipulated bythedecree andthecircular. siteto meet itsobligationstopublishtheinformation internet with thisregulation, DexiaSAhasdecidedsince2003touseits published acircular explainingthisRoyalDecree. Inaccordance ber 2007,theBanking,FinanceandInsuranceCommission their obligationstoholdersoffinancialinstruments.InDecem- with regard totheinformationbeprovided tothepublicand Belgian regulated marketstipulatestheobligationsofissuers tions ofissuersfinancialinstrumentslistedfortradingona A RoyalDecreetheobliga- ofNovember14,2007concerning IAC N NUAC COMMISSION INSURANCE AND FINANCE THEBANKING, FROM FMI/2007-02 CIRCULAR financial reports, 2quarterlyfinancialreports, 1half-year www.dexia.com onthepage“You are an Dexia Corporate governance Annual report 2008 15
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 16 Corporate governance Holds 700shares 2008 Director since Belgian 68 yearsold director Independent DEHAENE JEAN-LUC AESPECIALIST NAME Dexia Annual report 2008 Charter ofDexiaSA. institutional investorsisalsofoundintheCorporateGovernance website. Thissamepolicyoftransparency forshareholders and found undertheheading“Legalinformation”onDexia from theBanking,FinanceandInsuranceCommissioncanbe investors. Theinformationrequired byCircular FMI/2007-02 to ensure transparency foritsshareholders andinstitutional datory financialinformationisonecomponentofDexia’s policy Maximum useofthewebsiteforcommunicationman- specific andperiodicinformation. and respect foritslegalandregulatory obligationstoprovide compliance withtheprincipleofequalityamongshareholders trading inBelgium,FranceandLuxembourg,Dexiaensures As acompanyunderBelgianlaw, whoseshares are listedfor OPINEWT URN LEGISLATIONS CURRENT COMPLIANCE WITH Strategy Committee Chairman ofthe Committee, Compensation Appointment and Chairman ofthe COMMITTEES 2008-2013 MANDATE OF CURRENT AND END BEGINNING Dexia SA Board ofDirectors, Chairman ofthe FUNCTION PRIMARY s s s Dexia Group: Companies belongingtothe s s s s s Director: European Convention ofthe Vice-Chairman Europe Directors oftheCollege of Chairman oftheBoard of parliamentary functions. different and governmental Politician whoexercises FUNCTIONS OTHER MANDATES AND Luxembourg à Banque Internationale $IRECTOR OF $EXIA Belgium of Directors ofDexiaBank 6ICE #HAIRMAN OF THE "OARD Local Directors ofDexiaCrédit #HAIRMAN OF THE "OARD OF .OVOVIL 4ROMBOGENICS 5MICORE ,OTUS "AKERIES )NBEV sents atleastonethird oftheBoard. members asithasFrench membersandeachnationality repre- nature ofDexiaSA.Indeed,theBoard hasasmanyBelgian Its compositionalsorespects theFrench andBelgianstatutory posed ofseventeenmembers. As ofDecember31,2008,theBoard ofDirectors wascom- is composedofbetweensixteenandtwentydirectors. The articlesofassociationDexiaSAstipulatethattheBoard (as ofDecember31,2008) Members oftheBoard ofDirectors Dexia Group Management ofthe status assuchinactsandpublicationsofprofit-makingcompanies. as membersorformerofLegislativeAssembliestomentiontheir 1931)forbidsministers,formerministersandStateMinisters,aswell 14, (1) Article2oftheLawAugust6,1931( THE BOARDOFDIRECTORSDEXIASA European level. functionsatfederaland governmental occupying severalparliamentaryand He startedhispoliticalcareer in1967, (ACW). ment oftheChristianWorkers’ Union 1965 memberoftheResearch Depart- van KatholiekeScouts)andbecamein Scouting Federation(VlaamsVerbond Association Secretary totheFlanders’ He startedhisprofessional activitiesas Namur andtheK.U.Leuven. Doctor ofLawfrom theUniversityof BIOGRAPHY (1) Belgian Gazette ofAugust shares Holds 300Dexia 1999 Director since French 62 yearsold director Independent GILLES BENOIST share Holds noDexia 2008 Director since French 52 yearsold MARIANI PIERRE AESPECIALIST NAME Committee and Conformity Control, Risks the Internal Chairman of Committee, Accounts the Chairman of Strategy Committee Member ofthe COMMITTEES 2006-2010 2008-2013 MANDATE OF CURRENT AND END BEGINNING N Assurances CNP Managing Director, of DexiaSA Management Board Chairman ofthe Officer Chief Executive FUNCTION PRIMARY Company SA Suez Environnement strategy commiteeof Director andmemberofthe anonymes d’assurance française dessociétés Chairman oftheFédération des Dépôts Board oftheGroup Caisse Member oftheManagement s s s Director: Dexia Group: Companies belongingtothe FUNCTIONS OTHER MANDATES AND à Luxembourg $EXIA "ANQUE )NTERNATIONALE $EXIA #RÏDIT ,OCAL $EXIA "ANK "ELGIUM Retail ServicesofBNPParibas. activities andfortheInternational jointly responsible forRetailBanking Deputy ManagingDirector in2008 BNP ParibasGroup. Hewasappointed RetailBankingofthe International 2003, headofFinancialServicesand RetailBankingand,fromInternational 1999, hewasappointedheadof Management Board in1997.In which hebecameChairmanofthe the commercial arm ofBNP, of pour l’expansionindustrielle(Banexi), the ManagementBoard ofBanque Managing Director andmemberof Group. In1996, hewasappointed estate companyintheFimalac immobiliers etdegestion,areal Société françaised’investissements appointed ManagingDirector ofthe of communication.In1995hewas spokesman,andhead government the CabinetofBudgetMinister, 1993 hewasappointedDirector of Ministry ofEconomyandFinance.In occupied variousfunctionsinthe (ENA). Between1982and1992he the Écolenationaled’administration the Hautesétudescommerciales and Graduate inlaw, formerstudentof 2007. waschangedonJuly10, governance when thecompany’s corporate he wasappointedManagingDirector of CNPAssurancesonJuly9,1998; Chairman oftheManagementBoard from 1993onwards, hebecame Caisse desdépôtsetconsignations member oftheExecutiveBoard of since 1987,General-Secretary and Secretary ofCréditlocaldeFrance the ManagementBoard andGeneral- havingbeenamemberof After (ENA). of theÉcolenationaled’administration d’études politiquesdeParis(IEP)and Law degree. Graduate oftheInstitut BIOGRAPHY Dexia Corporate governance Annual report 2008 17
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 18 Corporate governance Dexia share Holds no 2007 Director since French 47 yearsold DE BEAUNE DE ROMANET AUGUSTIN share Holds noDexia 2008 Director since French 45 yearsold BRUNO BÉZARD AESPECIALIST NAME Dexia Annual report 2008 Strategy Committee Member ofthe Committee, Compensation Appointment and Member ofthe Strategy Committee Member ofthe Committee, and Conformity Control, Risks the Internal Member of COMMITTEES 2007-2011 2008-2013 MANDATE OF CURRENT AND END BEGINNING consignations des dépôtset of theCaisse Managing Director l’État (APE) participations de of theAgencedes Managing Director FUNCTION PRIMARY stratégique d’investissement of Directors ofthe Fonds Chairman oftheBoard immobilière Board oftheSociété nationale Chairman oftheSupervisory s s s s s Director: FUNCTIONS OTHER MANDATES AND 6EOLIA %NVIRONNEMENT )CADE #.0 !SSURANCES #$# %NTREPRISES !CCOR of CréditAgricoleSA. member oftheExecutiveCommittee Director ofFinance andStrategya before being appointed Deputy Presidency ofthe RepublicofFrance Deputy GeneralSecretary tothe Corporate. Hewasthenappointed Associate ManagerofOddoPinatton of theMinistryEmploymentand Budget Ministry, Director oftheOffice Brussels, Director oftheOffice France totheEuropean Communityin to thePermanentRepresentation of He wasinparticularFinancialAttaché École nationaled’administration(ENA). politiques deParis(IEP)andofthe Graduate oftheInstitutd’études Director sinceFebruary 2007. (APE), ofwhichhehasbeenManaging Agence desparticipationsdel’État and tookpartinthecreation ofthe French tookaholding, government involved withcompaniesinwhichthe Office. SinceJuly2002hehasbeen with theFrench Treasury andMinisterial posts andinternal various international General ofFinancesandoccupied d’administration (ENA).HeisInspector technique andtheÉcolenationale Graduate from theÉcolePoly- BIOGRAPHY Dexia shares Holds 250 2008 Director since French 58 yearsold director Independent KOPP CATHERINE Dexia shares Holds 15,285 1999 Director since French 56 yearsold director Independent KESSLER DENIS AESPECIALIST NAME Committee Compensation Appointment and Member ofthe COMMITTEES 2008- 2012 2006-2010 MANDATE OF CURRENT AND END BEGINNING Group of theAccor Human Resources Managing Director Director, SCORSE Managing Chairman and FUNCTION PRIMARY Schneider Electric Director of Investments SE Board ofSCORGlobal Chairman oftheSupervisory s s s s s s s Director: s s s s s s Chairman: FUNCTIONS OTHER MANDATES AND 3#/2 'LOBAL ,IFE 3% Company 3#/2 #ANADA 2EINSURANCE )NVESCO ,TD 53 d’investissement &ONDS STRATÏGIQUE $ASSAULT !VIATION "OLLORÏ ".0 0ARIBAS 3! 3#/2 53 #ORPORATION 53 Company (US) 3#/2 2EINSURANCE AG (Switzerland) 3#/2 (OLDING Texas (US) reinsurance companyof 3#/2 'LOBAL ,IFE reinsurance Company(US) 3#/2 'LOBAL ,IFE 53 3#/2 'LOBAL 0# 3% France the MouvementdesEntreprises de Discriminations andEquality. Within Authority fortheFightAgainst appointed hermemberoftheHigh In 2006,theFrench PrimeMinister of Directors ofSchneiderElectric. Kopp isalsomemberoftheBoard the ExecutiveCommittee.Catherine of theAccorGroup andmemberof Managing Director HumanResources Group. Since2002,shehasbeen of HumanResources oftheLVMH From 2001to2002,shewashead Managing Director ofIBMFrance. Director andlater Chairmanand sales) before becoming Managing (human resources, marketingand held severalmanagementpositions worked fortheIBMGroup, where she After studyingmathematics,she Board. Global CounselortoTheConference Medical Research Foundationand Economic Commissionandthe Company Committee,theNational Association ofGeneva,theInsurance Social Council,theCouncilof member oftheEconomicand of theReinsuranceAdvisoryBoard, l’Orchestre deParis,Vice-Chairman du SiècleandoftheCercle de Today heisamemberoftheConseil des hautesétudescommerciales. Economics, graduateoftheÉcole and SocialSciences,Doctorof University Professor ofEconomics of theNationalOrder ofMerit. of theLegionHonorandKnight Kopp isKnightoftheNationalOrder Catherine resulted inanagreement. Labor Market(2006),which ofthe (2006) andonModernization sector negotiationsonDiversity BIOGRAPHY Dexia Corporate governance (MEDEF) Annual report 2008 sheledthecross- both 19
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 20 Corporate governance Dexia shares Holds 38,000 2000 Director since French 71 yearsold director Independent LEVY-LANG ANDRÉ Dexia share Holds no 2005 Director since Belgian 61 yearsold SERGE KUBLA AESPECIALIST NAME Dexia Annual report 2008 Committee of theStrategy Committee and Accounts the Member of COMMITTEES 2006-2010 2006-2010 MANDATE OF CURRENT AND END BEGINNING Paris-Dauphine Professor, Université Associate Emeritus Otherpositionwithinthe Mayor ofWaterloo FUNCTION PRIMARY s s Chairman: Board ofParisOrléans Member oftheSupervisory s s s Director: Dexia BankBelgium Dexia Group: director of FUNCTIONS OTHER MANDATES AND )NSTITUT ,OUIS "ACHELIER &ONDATION DU 2ISQUE &ONDATION #GENIAL (IFRI) internationales )NSTITUT FRANÎAIS DES RELATIONS 3#/2 Paris-Dauphine andcompanydirector. Associate Professor attheUniversityof of theManagementBoard ofParibas, Stanford University. FormerChairman PhD inBusinessAdministrationfrom Graduate oftheÉcolepolytechnique. active inregional politics. of Industry. Since2004,hehasbeen year hechaired the European Council national politics.In2002,forhalfthe he hasbeenactiveinregional and then, from 1982,mayor. Since1977, with responsibility forsportsand for Waterloo, where hewasalderman four years).From 1976acouncilor Solvay BusinessSchool(three outof BIOGRAPHY Dexia share Holds no 2008 Director since French 47 yearsold ALAIN QUINET Dexia share Holds no 2005 Director since Belgian 59 yearsold LUX BERNARD AESPECIALIST NAME Committee and Conformity Control,ternal Risks Member oftheIn- COMMITTEES 2008-2013 2005-2009 MANDATE OF CURRENT AND END BEGINNING des Dépôts of theGroup Caisse Management Board member ofthe and Strategy Head ofFinances Mons de of theUniversité Rector-Chairman FUNCTION PRIMARY Local s DIRECTOR OF $EXIA #RÏDIT Group: Other functionintheDexia s s #OMPAGNIE DES !LPES Board: Member oftheSupervisory s &INANCIÒRE 4RANSDEF s Managing director: s 4RANSDEV s )#!$% s 3OCIÏTÏ FORESTIÒRE DE LA #$# s s %IFFAGE s #.0 !SSURANCES s #$# )NTERNATIONAL s s ! Director: supérieur del’emploi Federal memberoftheConseil logement of theSociétéwallonnedu Directors andVice-Chairman Member oftheBoard of SOGEPA SA Compensation Committeeof of Directors andof the Member oftheBoard Directors ofWhestia SA Chairman oftheBoard of courses resources management management andhuman in chargeofstrategic faculty ofEconomicSciences, Lecturer attheWarocqué FUNCTIONS OTHER MANDATES AND Rhône #OMPAGNIE NATIONALE DU Investissement #$# %NTREPRISES #APITAL d’investissement &ONDS STRATÏGIQUE (chairman) #$# )NFRASTRUCTURE ccor the ManagementBoard. Finance andStrategymemberof June 2008hewasappointedheadof the Group CaissedesDépôtsandin Minister’s Office.In2008,hejoined Head ofEconomicMattersinthePrime In 2005hewasappointedasDeputy AdvisortothePrimeMinister. Economic until 1999).In2002,hewasappointed the French NationalBank(from 1997 macroeconomic research departmentof 1992 until1994),thenwasheadofthe post ofeconomistwiththeOECD(from In themeantime,healsooccupied he occupiedseveralpostsuntil2002. Economy, FinanceandIndustrywhere department oftheFrench Ministryof 1988 asaneconomistintheforecast Finances. Hestarded hiscareer in (ENA). HeisInspectorGeneralof of theÉcolenationaled’administration politiques deParisandformerstudent Graduate oftheInstitutd’études articles. author ofstudiesandscientific PhD inappliedeconomicsciences, BIOGRAPHY Dexia Corporate governance Annual report 2008 21
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 22 Corporate governance Dexia share Holds no 2007 Director since Belgian 56 yearsold SWIGGERS FRANCINE Dexia share Holds no 2003 Director since Belgian 59 yearsold RENDERS JAN AESPECIALIST NAME Dexia Annual report 2008 Strategy Committee Member ofthe Committee Compensation Appointment and Member ofthe COMMITTEES 2008-2012 2008-2012 MANDATE OF CURRENT AND END BEGINNING Arco Group Management Board, Chairman ofthe ACW of General Chairman FUNCTION PRIMARY s s Group: Other functionintheDexia s s Audit Committee: Director andmemberofthe s s s s Director: s s s s s Management Board: Chairman ofthe van deArbeidvzw Management Board ofHuis Chairman ofthe s s Board: Member oftheManagement s s s s s s Directors: Chairman oftheBoard of FUNCTIONS OTHER MANDATES AND 30, 2009) Belgium (asfrom January DIRECTOR OF $EXIA "ANK Crédit Local DIRECTOR OF $EXIA !QUAlN 6$+ 3PAARBANK Brussel (OGESCHOOL 5NIVERSITEIT $E 7ARANDE VZW !RCOlN !RCOPAR 0ROCURA VZW )NTERlNANCE !RCOSYN !UXIPAR !RCOPLUS Entreprises) dansles et laVigilance pour l’Environnement )"%6% !3", )NSTITUT "ELGE au travail(IDEWE) prévention etdeprotection 3ERVICE EXTERNE DE 7ERELDSOLIDARITEIT VZW $UURZAME TOEKOMST VZW with socialpurpose 3OCIAAL %NGAGEMENT n CVBA !RCOlN !RCOPAR Arbeid (HIVA) (OGER )NSTITUUT VOOR DE Planning from 1995. Bank where shewas HeadofStrategic had acareer of 20 yearsatBACOB this Board since 2007. Previously she Group since1997 andChairmanof of theManagementBoard oftheArco (K.U. Leuven).Shehasbeenamember Master ofBusinessAdministration Graduate inAppliedEconomicsand General Chairmanin2002. General-Secretary. Hewasappointed Secretary ofACWandin1997Deputy In 1990,hewasappointedNational Research DepartmentoftheACV. his career in1972asAdvisorthe Graduate insociology. Hestarted BIOGRAPHY Dexia share Holds no 2000 Director since British 73 yearsold director Independent UNWIN BRIAN shares Holds 100Dexia 2001 Director since Belgian 54 yearsold TINANT MARC AESPECIALIST NAME Committee and Conformity Control, Risks the Internal Member of Committee, Accounts the Member of COMMITTEES 2006-2010 2006-2010 MANDATE OF CURRENT AND END BEGINNING Limited Assettrust Housing, Chairman of Arcofin of Board anddirector the Management of Vice-Chairman FUNCTION PRIMARY for Education&Research Director oftheFederalTrust Conservation Centre forNature Chairman oftheEuropean catholique deLouvain(UCL) Committee oftheUniversité Member oftheFinancial s s director: Chief ExecutiveOfficerand s s s s s s s s s Director: of Directors ofEPC oftheBoardVice-Chairman Chief ExecutiveOfficerand s s s s director: Management Board and ofthe Vice-Chairman FUNCTIONS OTHER MANDATES AND #%43 !3", &).%80! 0AULS %URO 6ILLAGES !RDENNES 39.%#/ !3", 3/&!4/ !3", 3/&!$) -EDIABEL )NTERlNANCE Investment Company) 32)7 7ALLOON 2EGIONAL Brussels) 2ETAIL %STATES 3ICAl LISTED IN !RCOSYN !RCOPAR !UXIPAR !RCOPLUS Honorary President since2000. European InvestmentBankin1993. Kingdom. HebecamePresident ofthe Prime Minister’s staff intheUnited cellor oftheExchequerandon diplomat alsoworkedfortheChan- Studied atOxford andYale. Former Company. of theWalloon RegionalInvestment Advisor totheManagementBoard Group in1991,hewasGeneral economics. Before joiningtheArco Graduate andMaster’s Degree in BIOGRAPHY Dexia Corporate governance Annual report 2008 23
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 24 Corporate governance Dexia Dexia shares Holds 3,100 2004 Director since Belgian 72 yearsold VERMEIREN FRANCIS Dexia shares Holds 1,073 2008 Director since Belgian 36 yearsold LOO VAN KOEN AESPECIALIST NAME Annual report 2008 Strategy Committee Member ofthe Committee, Compensation Appointment and Member ofthe Committee the Strategy Member of Committee, and Conformity Control, Risks the Internal Member of COMMITTEES 2005-2009 2008-2013 MANDATE OF CURRENT AND END BEGINNING -AYOR OF :AVENTEM et d’investissement de participations Société fédérale Committee ofthe of theStrategy and Member Managing Director FUNCTION PRIMARY s s s s Director: Communal of Directors ofHolding Chairman oftheBoard s s s s Director: Airholding SN Audit Committeeof Director andMemberofthe Directors ofFEDIMMO Chairman oftheBoard of FUNCTIONS OTHER MANDATES AND 6IVAQUA )NTERCOMMUNALE 0UBLI 4 !SCO )NDUSTRIES %LIA nv Participatiemaatschappij :ILVER !VENUE "EL TO MUNDIAL VZW #ERTI &ED :EPHYR &). politics atanationallevel. manager ofataxoffice.Nowactivein Former insuranceinspector. Former tions etd’investissement. of theSociétéfédéraledeparticipa- Member oftheStrategyCommittee appointed ManagingDirector and until November2006.Hewasthen head oftheCabinetfrom May2003 Advisor totheCabinetandwasthen November 2000hewasappointed as anexpertinSeptember1999.In of theBelgianMinisterFinance l’économie before joiningtheOffice AdvisortotheConseilcentralde uty ation. Hebeganhiscareer asaDep- holds apost-graduatedegree inTax- Graduate inAppliedEconomicsand BIOGRAPHY discussed thismatter, intheabsenceofChief Execu- non-executive membersoftheBoard ofDirectors ofDexiaSA Chief ExecutiveOfficerandother executivedirectors. The management andmeetatleast onceayearwithoutthe a regular assessment oftheirinteractionswiththeexecutive that non-executivedirectors ofthecompanyare toconduct also stipulatesThe BelgianCodeofcorporategovernance Board’s activitiesisalsoassessed. ing thisprocess, theissueofeachdirector’s contributiontothe consultant,aswasthecasein2006.Dur-out byanexternal of Directors. Thisself-assessmentprocess mayalsobecarried its operation,whichisconductedbytheChairmanofBoard Periodically, theBoard ofDirectors conducts aself-assessmentof Assessment members. the membersofthiscommitteeoradelegation experience. Thecandidateattendsaninterviewconductedby mittee reviews thecandidates’expertise,knowledgeand For thispurpose,theAppointmentandCompensationCom- justify thisrecommendation. It submitsadetailedreport totheBoard onthefactorsthat knowledge oftheGroup’s businesslines. experienceand cial andaccountingexpertise,international vision andstrategy, leadershipandmanagementskills,finan- ence andspecializationinoneormore ofthefollowing fields: his/her potentialcontributionintermsofknowledge,experi- each newdirector. Eachcandidateisproposed onthebasisof ble forproposing totheBoard ofDirectors theappointmentof AppointmentandCompensationCommitteeisresponsi- The Appointment of theBoard ofDirectors Procedure fornominatingandassessingmembers ships inlistedcompanies. Non-executive directors maynotholdmore thanfivedirector- required toperformhisobligationsasadirector. Any memberoftheBoard ofDirectors musthavethetime rulesoftheBoardthe internal ofDirectors. of expertise.Theseprofiles ofexpertiseformanintegral partof ber 15,2007theBoard ofDirectors drew updirectors’ profiles On aproposal from theAppointmentCommittee,onNovem- its businesses. basis totakeintoaccountchangesintheDexiaGroup and ing profiles ofexpertisethatwillbereviewed onaregular mittee created withintheBoard isresponsible forestablish- In thiscontext,theAppointmentandCompensationCom- tration ofthecompany. expertise andthecontributiontheycanmaketoadminis- tors are electedbytheShareholders’ Meetingbecauseoftheir rulesoftheBoardThe internal ofDirectors stipulatethatdirec- Eligibility criteria December 8,2008. tors notedtheresignation ofFabioInnocenzitakingeffect on Ordinary Shareholders’ MeetingofDexia SA. Their definitiveappointmentwillbesubmittedtothe2009 replace AxelMiller. Executive OfficerandChairmanoftheManagementBoard, to Pierre Marianiwasappointedwithimmediateeffect asChief Chairman oftheBoard ofDirectors to replace Pierre Richard. Jean-Luc Dehaenewasappointedwithimmediateeffect as Axel Miller, resigning. directors, withimmediateeffect, toreplace Pierre Richard and unanimously co-optedJean-LucDehaeneandPierre Mariani as Dexia SA; at the end ofthe2012Ordinary Shareholders’ Meetingof of JanRendersasadirector forafour-year termtoexpire resigning; provisionally bytheBoard ofDirectors toreplace RikBranson, holders’ MeetingofDexiaSA,FrancineSwiggers,appointed of fouryearstoexpire attheendof2012Ordinary Share- holders’ MeetingofMay14,2008: Ordinary Shareholders’ MeetingofDexiaSA. Their definitiveappointmentwill be submittedtothe2009 resigning. Guerber, DominiqueMarcel andGuyBurtonrespectively, Van Looasdirectors withimmediateeffect, toreplace Jacques tors decidedtoco-optBrunoBézard, AlainQuinetandKoen Idrac, resigning. provisionally bytheBoard ofDirectors toreplace Anne-Marie holders’ MeetingofDexiaSA,CatherineKopp,appointed of fouryearstoexpire attheendof2012Ordinary Share- 1. 4. 3. 2. s s s as follows. the compositionofBoard ofDirectors ofDexiaSAwere During the2008financialyear, significantchangesconcerning of DexiaSAin2008 Changes inthecompositionofBoard ofDirectors 2008). pensation in2008,andthedistributionofstockoptions for calculatingtheChiefExecutiveOfficer’s variablecom- the 2008fiscalyear(fixedcompensation,settingsystem pensation forthe2007fiscalyear(variableportion)and connection withsettingtheChiefExecutiveOfficer’s com- tive Officer, whentheBoard metonFebruary28,2008,in the definitiveappointmentasadirector, foranewmandate the resolution toproceed withtherenewal ofthemandate Thefollowingdecisionswere madebytheOrdinary Share- the definitiveappointmentasdirector, foranewmandate At itsmeetingonOctober7,2008,theBoard ofDirectors At itsmeetingonOctober20,2008,theBoard ofDirec- At itsmeetingonJanuary29,2009, theBoard ofDirec- Dexia Corporate governance Annual report 2008 25
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 26 Corporate governance Dexia Annual report 2008 fédérale departicipationsetd’investissement. Director andmember ofthestrategycommitteeSociété 2003 untilNovember2006.Hewas thenappointedManaging sor totheCabinetandwasthenhead oftheCabinetfrom May September 1999.InNovember2000, hewasappointedAdvi- ing theOfficeofBelgianMinister ofFinanceasanexpertin AdvisortotheConseilcentraldel’économie before join- Deputy a post-graduatedegree intaxation.Hebeganhiscareer asa European level. functionsatfederaland ing parliamentaryandgovernmental Union (ACW).Hebeganhispoliticalcareer in1967, occupy- member oftheResearch DepartmentoftheChristianWorkers (Vlaams Verbond vanKatholiekeScouts)andbecamein1965 AssociationSecretary totheFlanders’ScoutingFederation as Namur andtheK.U.Leuvenstartedhisprofessional activities Managing Director sinceFebruary2007. Agence desparticipationsdel’État(APE)ofwhichhehasbeen participation del’État)andtookpartinthecreation ofthe the Frenchtookaholding(Sociétédeprise government Since July2002hehasbeeninvolvedwithcompaniesinwhich postswith theFrenchinternal Treasury andMinisterialOffice. and General ofFinancesandoccupiedvariousinternational the Écolenationaled’administration(ENA).HeisInspector Mariani, BrunoBézard, KoenVan LooandAlainQuinet. directors were appointed,namelyJean-LucDehaene,Pierre As indicatedabove,duringthefinancialyear2008fivenew New directors s s s s the International RetailServicesofBNPParibas. the International 2008, jointlyresponsible forRetailBankingactivities andfor BNP Paribas.HewasappointedDeputyManagingDirector in RetailBankingofGoupe Financial ServicesandInternational RetailBankingand,fromHead ofInternational 2003, the managementboard in1997.In1999,hewasappointed commercial bankofBNP, ofwhichhebecameChairman board oftheBanquepourl’expansionindustrielle(Banexi), the appointed ManagingDirector andmemberofthemanagement a real estatecompanyintheFimalacGroup. In1996,hewas Société françaised’investissementsimmobiliersetdegestion, tion. In1995,hewasappointedManagingDirector ofthe Minister, spokesman,andheadofcommunica- government 1993, hewasappointeddirector oftheCabinet Budget various functionsintheMinistryofEconomyandFinance.In d’administration (ENA).Between1982and1992heoccupied the Hautesétudescommerciales andtheÉcolenationale Pierre Mariani,agraduateinLaw, isaformerstudentof Koen Van Looisagraduate inAppliedEconomicsandholds Bruno Bézard isagraduateoftheÉcolePolytechnique and Jean-Luc Dehaene,DoctorofLawfrom theUniversityof consolidation. company orapersonassociatedwithitwithinitsscopeof ment staff, executiveormemberofstaff ofDexiaSAora agement Board, ChiefExecutiveOffcer, memberofmanage- or occupiedapostasdirector, manager, memberoftheMan- independent director, theymaynothaveexercised amandate 2. 1. renewal ofthemandateasnon-independent director. the endofthatperiodtwelve years shallnothamperthe ing twelveyears:thelossofstatus asindependentdirector at than three successive mandateswithoutthatperiodexceed- of Directors ofDexia SAasnon-executivedirector formore applied byDexiaSAtoitsdirectors are asfollows. pany Code.Asaconsequence,theindependencecriteria the newlegalcriteriacontainedinArticle526 the independencecriteriaretained byDexiaSAinrelation to On January29,2009,theBoard ofDirectors decidedtoadapt as independentdirectors untilJuly1,2011. pendence criteriamaycontinuetositontheBoard ofDirectors directors whoqualifiedasindependentundertheformer inde- Thislawexpresslyof corporategovernance. provides that ence, andreplaced thecriteriacontainedinBelgian Code nies hasstrengthened theminimumlegalcriteriaofindepend- Audit Committeeinlistedcompaniesandfinancialcompa- The LawofDecember17,2008inparticularestablishingthe Belgian andFrench Codesofcorporategovernance. whole tothecriteriadefinedinCompanyCodeand In 2007,theBoard ofDirectors decidedtoalignthemasa mended intheBelgiancodeofcorporategovernance. des entreprises privées)in2002)were identicaltothoserecom- the Board ofDirectors ofDexiaSA(basedbothontheBelgian justafewexceptions,thecriteriaretained in2004by With Independent membersoftheBoard ofDirectors Management Board. appointed headofFinancesandStrategyaMemberthe joined theGroup CaissedesDépôtsandinJune2008 hewas of thePrimeMinister’s OfficeofEconomicAffairs. In2008,he the PrimeMinister. In2005,hewasappointedDeputyDirector s ment desEntreprises deFrance)andAFEP(Association française ommended inthereport bytheworkingpartyofMedef (Mouve- Company CodeandontheFrenchrec- principlesofgovernance until 1999).In2002,hewasappointedEconomicsAdvisorto research departmentoftheFrench NationalBank(from 1997 (from 1992until1994)thenwasheadofthemacroeconomic time healsooccupiedthepostofeconomistwithOECD where heoccupiedseveralpostsuntil2002.Inthemean- ment oftheFrench MinistryofEconomy, FinancesandIndustry He startedhiscareer asaneconomistintheforecast depart- d’administration (ENA).HeisInspectorGeneralofFinances. tiques deParis,andaformerstudentoftheÉcolenationale Alain QuinetisagraduateoftheInstitutd’étudespoli- For aperiodoffiveyearspreceding theirappointmentas The independentdirector maynothavesatontheBoard ter oftheCom- 3. Dexia SAthrough an interest inothercompaniesorentities. not haveothersignificanttieswith theexecutivedirectors of non-executive director orachiefexecutiveofficer, andmay executive director or ChiefExecutiveOfficerofDexiaSAisa tor orchiefexecutiveofficerofanother companyinwhichan of anykindwhatsoever withDexiaSA,acompany affili- mandate asdirector. of acompanyinwhichDexiaSAdirectly orindirectly holdsa the points1to10. management staff, executiveorpersonreferred toinoneof of theManagementBoard, ChiefExecutiveOfficer, memberof removed performingamandateasdirector, manager, member with whomtheylegallycohabit,parent, orrelative uptotwice in acompanyassociatedwithit,havespouseorperson years. of DexiaSAoranassociatedcompanyovertheprevious five partner oremployeeofacurrent orprevious auditor external director. with itoutsidepercentages andfeesreceived asnon-executive the assetsofcompanyorapersonassociated any compensationorothersignificantadvantageinvolving relationship. agement staff ofacompanyorpersonenteringinto sucha holder, memberoftheBoard ofDirectors ormemberofman- the lastfinancialyear, eitherdirectly orasapartner, share- pany orwithacompanypersonassociateditover maintained asignificantbusinessrelationship withthe com- ments towhichtheindependentdirector hassubscribed. be subjecttoanycontractualagreements orunilateral commit- shares ortheexercise oftherightsattachedtothemmaynot by theindependentdirector; lastly, thetransferdeeds forthese of 3%whenaddedtothoseheldbythecompaniescontrolled of shares ofDexiaSA,theserightsmaynotexceedsaid limit hold rightsrepresenting lessthan3%ofthecapitaloraclass the capitalorofaclassshares ofDexiaSA.Ifthese persons two removes, mayholdshares representing 3%ormore of marriage, oranimmediatefamilymemberarelative upto the person,withwhomheorshelivesunderacommonlaw might havesubscribed. visions orunilateralundertakingstowhichtheshareholder rights relating tothemmaynotbesubjectcontractualpro- Deeds ofdisposalrelating totheirshares ortheexercise of panies hecontrols, more than10%of thecapitalofDexiaSA. shareholder oronedirectly orindirectly controlling viacom- 11. 10. 9. 8. 7. 6. 5. 4. The independentdirector maynotbeanexecutivedirector The independentdirector maynot,whetherinDexiaSAor The independentdirector maynotreceive orhavereceived Neither theindependentdirector, norhisorherspouse, The independentdirector maynotrepresent acontrolling The independentdirector maynothavebeenanauditor, The independentdirector maynothaveentered intoor The independentdirector maynotbeanexecutivedirec- A director isindependent ifheorshehasnorelations rules whenitdeems ittobeintheinterests ofthecompany. The Board ofDirectors isentitledtodeviatefrom theabove 2006 whichmaybeexercised untiltheirnormalexpirydate. dates inforce since the Ordinary Shareholders’ Meetingin May ing followingtheirbirthday. This ruledoesnotapplytoman- with effect from thedateofordinary shareholders’ meet- The agelimitfordirectors is72.Thedirectorsresign concerned tion ofthislimitation. made from May10,2006are takeninto accountforapplica- tors ofthecompanyislimitedtotwo.Onlymandaterenewals The numberofrenewals ofmandatesnon-executivedirec- four years.Board memberscanbere-elected. The termofofficeforBoard memberselectedisamaximumof Term ofoffice member oftheBoard. Directors isunabletopreside andis replaced byanother ent nationalities,evenwhentheChairmanofBoard of necessarily beentrustedtodifferent individualsofdiffer- Board ofDirectors andChiefExecutiveOfficer. Theymust rule forseparationofthefunctionsChairman nal rulesoftheBoard ofDexiaSA,specificallydefine the The articlesofassociationDexiaSA,aswelltheinter- Officer Executive of Directors andChief Separation ofthefunctionsChairmanBoard executive directors. the membersofBoard ofDirectors ofDexiaSAare non- the exceptionofPierre Mariani,ChiefExecutiveOfficer, all must benon-executivedirectors. Itistobenotedthat with Board ofDirectors stipulatethatatleasthalfoftheBoard rules oftheDexiaSA pany oftheDexiaGroup. Theinternal ber whodoesnotexercise managementfunctionsin acom- A non-executivememberoftheBoard ofDirectors isamem- Non-executive membersoftheBoard ofDirectors s s s s s s They are: by theBoard ofDirectors meetingonJanuary29,2009. six independentdirectors asofDecember31,2008,confirmed Considering thesecriteria,theBoard of independence. any othercompanywhichmightcallintoquestionhisorher judgment. Heorshemaynotmaintainanyrelations with might compromise theexercise ofhisorherfreedom of ated toDexiaSAorthemanagementofSA,which Catherine Kopp; Denis Kessler; Gilles Benoist; Jean-Luc Dehaene; Brian Unwin. André Levy-Lang; Directors ofDexia Dexia Corporate governance Annual report 2008 SA has 27
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 28 Corporate governance Dexia Annual report 2008 of Directors Duties andresponsibilities oftheBoard financial statements; tralized basis; auditandcomplianceproceduresment, andinternal onacen- control functions,whichmostnotablyincluderiskmanage- tors provide thattheBoard: rulesoftheDexiaBoardFor thispurpose,theinternal ofDirec- the companyandofGroup andmonitorsrisks. The Board ofDirectors controls anddirects themanagementof the company Management control andriskmanagementfor acquisitions anddisposalsofmajorassets. rulesgivetheBoardThe internal specificresponsibilities for opinion oftheManagementBoard. ted are appropriate; chosen strategyandthehumanfinancialmeanscommit- approves theannualbudgetand,more generally, seesthatthe to beimplementedbytheManagementBoard, setspriorities, agement Board; lines; and thestrategicissuesfacingDexiaitsvariousbusiness Directors: Dexia’s rulestherefore internal require thattheBoard of of goodgovernance. The Board furthermore ensures compliancewiththeprinciples mentation ofthestrategyforGroup. It alsosetsthestandards fortheGroup andensures theimple- company andtheDexiaGroup. the ManagementBoard, thestrategyandgeneralpolicy ofthe holders andontherecommendation from orontheadviceof The DexiaBoard ofDirectors defines,inthenameofallshare- Strategy andgeneralpolicy auditors; Board; areas: tise andresponsibilities oftheBoard ofDirectors inthree rulesoftheBoardThe internal ofDirectors describetheexper- s s s s s s s s s s s takes allmeasures necessary toensure theintegrityof evaluates theimplementationofstrong andindependent defines thevaluesofDexiaGroup afterreceiving the decides onthestrategyofDexiaanditsvariousbusinesslines reviews thestrategicrecommendations madebytheMan- meets atleastonceayearinorder toassessthechallenges relations withshareholders. management control andmonitoringrisks; strategy andgeneralpolicy; supervises the performances of the statutory and internal supervises theperformancesof statutoryandinternal assesses theperformancesofmembers oftheManagement s the performanceofitsduties. are understoodandmetreports totheshareholders on The Board ensures thatitsobligationstoward itsshareholders members ofstaff. company withrespect totheshareholders, customersand The Board’s actionsare guidedsolelybytheinterest ofthe the companyshareholders The role oftheBoard ofDirectors towards Officer. bers oftheManagementBoard otherthantheChiefExecutive the recommendation oftheChiefExecutiveOfficerformem- the recommendation oftheCompensationCommitteeand compensation forthemembersofManagementBoard on mendation oftheChiefExecutiveOfficer;Board setsthe of itscomposition,operationandobligationsontherecom- s s s theoperationofBoardrules thatgovern ofDirectors: The company’s articlesofassociationsetforththefollowing Articles ofassociation Operation oftheBoard ofDirectors have beeninexistence since1999andwhichcodify allthe rulesoftheBoardThe internal ofDirectors ofDexiaSA,which rulesoftheBoardInternal ofDirectors ofDexiaSA Officer. Chairman oftheBoard ofDirectors andtheChiefExecutive Anydecisionrelating totheappointmentordismissalof - a resolution toamendthecompany’s articlesofassociation; Anydecisiontosubmittheordinary shareholders’ meeting - senting more than10%ofthecompany’s equity; Anydecisionrelating totheacquisitionorsaleofassetsrepre- - these decisions; exceeds 10%oftheamountcapitalexistingpriorto the exercise ofthesewarrantsorotherfinancialinstruments shares ortheconversionredemption ofthesebondsor capital increases whichwouldresult from theissueofthese conferring therighttoshares, whentheamountof shares, warrantsorotherfinancialinstrumentseventually the issueofshares, bondsconvertibleorredeemable in the ordinary shareholders’ meetingaresolution toapprove Anydecisiontoemployauthorizedcapitalorsubmit - members present orrepresented: members oftheBoard, andatwothirds majorityofallthe the presence orrepresentation ofatleasttwothirds ofthe the memberreplacing himshallcastthedecidingvote; present orrepresented. Ifthere isatievote,thechairmanor least halfofthemembersBoard; defines theorganizationofManagementBoard interms Decisions concerning theoperationsdescribedbelowrequireDecisions concerning Decisions are adoptedbyamajorityvoteofallmembers All deliberationsrequire thepresence orrepresentation ofat parties. in questionandabanondisclosing thisinformationtothird third parties,transactions onthesecuritiesofcompanies bition againstexecuting,onhisown behalforonof The knowledgeofprivilegedinformation leadstotheprohi- such informationisstrictlymaintained. intuitu personæ cialist committees,orduringprivateinterviews,isprovided of theirduties,duringBoard meetings,meetingsofthespe- The informationprovided tothedirectors intheperformance Obligation ofconfidentiality specifying reservations issuedbysomedirectors, ifapplicable. The minutesreport discussionsandrecord thedecisionsmade, vote. are listedforinformationpurposes,discussion,ora The agendaliststheitemstobediscussedandspecifiesifthey is desired. effective attendanceatthree quartersofthemeetingsatleast and committeesisthefirstconditionofthisparticipation tees onwhichtheysit.AttendanceatmeetingsoftheBoard participate activelyintheworkofBoard andthe commit- Board toperformitsresponsibilities. Board membersagree to The meetingsoftheBoard are frequent enoughtoallowthe of itsexpertiseandresponsibilities. The Board ofDirectors isorganizedtoachievethebestexercise General organizationalprinciples former attributionsofthetwocommittees. ment andCompensationCommitteewhichcombinesallthe Compensation Committeewere mergedintoasingleAppoint- On theotherhand,AppointmentCommitteeand Appointment Committee. approved bytheBoard ofDirectors ontheproposal ofthe ruleswhichhavebeen of themissubjecttospecificinternal nies andfinancialinstitutions,meetatleastonceayear. Each particular establishinganauditcommitteeinlistedcompa- within themeaningofLawDecember17,2008in two committees,whichtogetherformtheAuditCommittee Control,Internal RisksandConformityCommittee.These split intotwocommittees:theAccountsCommitteeand alter theoperationofAuditCommittee,whichisnow The objectoftheseamendmentswas,ontheonehand,to within it. the tasksandcompositionofspecialistcommitteescreated of Directorsrulestoalter infactdecidedtoadaptitsinternal ing theGroup’s andriskmonitoring.TheBoard governance Directors onNovember13,2008withtheaimofstrengthen- 2005. Thelatestamendmentswere adoptedbytheBoard of bution madebyeachdirector, haveevolvedsignificantlysince its competencesandtoincrease theeffectiveness ofthecontri- rules intendedtoenabletheBoard ofDirectors fullytoexercise ; theyshallensure thattheconfidentialityof above. a conflictinginterest asdefinedbytheprovisions setforth the decisionsmadebyBoard ofDirectors whichincluded of thefinancialconsequencesresulting forthecompanyfrom The auditors’report mustalsoincludeaseparatequalification above. management report containscopyoftheminutesdescribed made andthefinancialconsequencesforcompany. The or operationinquestionandthereasons forthedecision of Directors describesintheminutestypeofdecision For publicationintheannualmanagementreport, theBoard he mustinformthecompany’s auditors. the Board meetingthatmustmakethedecision.Inaddition, flicting financialinterest, mustberecorded intheminutesof deliberate. Hisdeclaration,includingthereasons for his con- he mustinformtheothermembersofBoard before they decision oroperationtobedecidedbytheBoard ofDirectors, If adirector directly orindirectly hasafinancialinterest ina office asaDexiadirector. change intheirsituationcreates anincompatibilitywith their ment andCompensationCommittee.Theymustresign ifa resignation insuchcases,afteranopinionfrom theAppoint- in theirdutiesandtheBoard decideswhethertoaccept their Directors report totheBoard ifthere isasignificantchange avoided. itself. Inparticular, cross-exchanges ofdirectors are tobe complete independencefrom interests outsidethecompany They mustensure thattheirparticipationintheBoard reflects represent. either personallyorbecauseoftheprofessional interests they Directors isnotasource ofdirect orindirect conflictofinterest, Directors makesure thattheirparticipationintheBoard of Conflicts ofinterest Committee. Control,Committee andtheInternal RisksConformity of Directors,rulestheAccounts andinthespecificinternal mittees arerulesoftheBoard clearlydefinedintheinternal outside expertsasneeded.Thetasksofthesespecialistcom- chosen onthebasisoftheirspecificskills.Theyare assistedby The Board memberswhositonthespecialistcommitteesare within theGroup. they takeoffice,tooneortwodaysofcontactsandvisits the newmembersofBoard ofDirectors are invited,when In order toacquire asolidunderstandingoftheDexiaGroup, Training ofBoardmembers Dexia Corporate governance Annual report 2008 29
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 30 Corporate governance Dexia Annual report 2008 rules setforthintheprevious paragraphsbythedirectors. The ChiefComplianceOfficerensures compliancewiththe Dexia SA. apply toobserversasdefinedinthearticlesofassociation tors andtopersonscloselyassociatedwiththem.Theyalso financial instrumentsdescribedaboveare applicabletodirec- The rulesandrestrictions relating to transactionsonDexia to register theirshares. of theDexiaGroup orinaninstitutionapproved byDexia,or account openedintheirnameoneofthecredit institutions ments theyhaveacquired orplantoacquire inasecurities Board membersalsoagree toholdthe Dexiafinancialinstru- transfer ofshares upontheexercise of options. have carriedoutwithinaperiodofsixmonthsit,exceptthe opposite direction toatransactionwhichtheymightpreviously period”); context ofaspecificfileortransaction(“adhocrestriction following theirentryonalistofoccasionalinsiderswithinthe ods communicatedtothembytheChiefComplianceOfficer, utory restriction period”); 1 monthpriortothepublicationoffinancialresults (“stat- In anyevent,directors refrain from carryingout: the transactionthattheyare planningtoexecute. ments, thedirectors informtheChiefComplianceOfficer of Before anytransactioninvolvingtheDexiafinancial instru- instruments theyhold. priate notificationsandpublications; that theyhold; question orvoteontheseissues. the Board’s deliberationsonthetransactionsordecisionsin The director withaconflictinginterest maynotparticipatein s s s s s s Officer: the directors declare thefollowingtoGroup Compliance rulesstipulatethat Dexia financialinstruments,theinternal In order topromote thetransparency oftransactionsinthe Own-account transactionsonDexiasecurities conditions. and thedirectors mustbeentered intoundernormalmarket The transactionsbetweenacompanywithintheDexiaGroup and Boardmembers Transactions betweenacompanyoftheDexiaGroup during positiveinterventionperiods,anytransactioninthe any transactiononDexiafinancialinstrumentsduringperi- any transactiononDexiafinancialinstrumentsforaperiodof at theendofeachyear, anupdateoftheDexiafinancial after eachtransactionitsdetails,inorder tomakethe appro- at thetimetheytakeoffice,Dexiafinancialinstruments tors’ attendancerateatBoard meetingswas86%. The Board ofDirectors mettwentytimesin2008.Thedirec- Attendance byBoardmembers ei SAduringthe2008financialyear Dexia Activity andoperationoftheBoard ofDirectors of market abusesintoBelgianlaw. March 5,2006,whichtransposedtheEuropean directives on provision hasbeenineffect sincetheBelgianRoyalDecree of Insurance Commission,forpublicationonitswebsite;this financial instrumentsare the company’s annualreport, individualtransactionswith In additiontothepublicationoftotalholdingsshares in s lar onthefollowingmatters: of theManagementBoard), theBoard concentratedinparticu- the budget,appointmentandcompensationofmembers of theBoard ofDirectors (follow-upof theresults, approval of In additiontotheitemsbelongingordinary competence Activities oftheBoardDirectors (4) FrancisVermeiren wasabsentfrom11meetings duetoillhealth. (3) Inatotalof19meetings. (2) Inatotalof3meetings. (1) Inatotalof5meetings. Francis Vermeiren Koen Van Loo Brian Unwin Marc Tinant Francine Swiggers Jan Renders Alain Quinet Bernard Lux André Levy-Lang Serge Kubla Catherine Kopp Denis Kessler Augustin deRomanetBeaune Bruno Bézard Gilles Benoist Pierre Mariani Jean-Luc Dehaene MEETINGS OFTHEBOARDDIRECTORS ATTENDANCE RATE OFEACHDIRECTORAT evolution oftheDexiashare price; notified totheBanking,Financeand 100% 100% 100% 100% 100% 100% 100% 100% 100% 45% 33% 79% 80% 95% 85% 85% 75% (4) (2) (2) (3) (2) (1) (1) s FSA. and their impact on the activities of FSA and Dexia; and theirimpactontheactivitiesofFSADexia; evolution ofthegeneralenvironment ofthefinancialmarkets norms andthecapitalratiosofDexiaunderBaselII; activities; stock optionplanfor2008; &Hauspiecase; the contextofLernout case; within thecontextofDexiaBankNederland(Legiolease) lance in2007; the Group in2007; SA ontheoperationofBoardaudit andontheinternal 2007 andapproval oftheauditplanforyear2008; committees withintheBoard; its acquisition; institutions; Commission relating totheproperoffinancial governance with thecircular from theBanking,FinanceandInsurance capital; the conflictinginterest includedinthenotificationheading the Board member’s notificationandthereasons justifying before thematteris discussedbytheBoard. Inaddition,both Directors, thedirector mustnotifythe other Board members action thatcomeswithinthecompetenceofBoard of that isdirectly orindirectly opposedto adecisionortrans- As indicatedpreviously, ifadirector hasafinancialinterest Conflicts ofinterestin2008 s s s s s s s s s s s s s s s s s s s s DexiaGroup transformationplan,inparticularthesaleof strategy concerning thebuybackprogramstrategy concerning ofownshares; financial crisis associated with subprimes on the US markets, financial crisisassociatedwithsubprimesontheUSmarkets, plan toacquire theIstrobanka bankinSlovakia; minutes ofmeetingsspecialistcommittees; theimplementationofBaselII policy ofDexiaconcerning strategy anddevelopmentofPersonalFinancialServices shareholding planforGroup membersofstaff, aswellthe progress madeinthevariousongoingproceedings within progress madeonongoingproceedings intheNetherlands consideration ofthereport onriskassessmentand surveil- report from theChairmanofBoard ofDirectors ofDexia auditreportdiscussion andconsiderationoftheinternal in 2008 Dexiastrategicreview; composition oftheBoard ofDirectors andofspecialistsub- directors’ independencecriteria; surveillance ofdealingrooms; development oftheactivitiesDenizBanktwoyearsafter establishedinaccordance“Memorandum ofGovernance” Dexia Group budgetfor2008; capital increase onOctober3,2008withintheauthorized [...] representing Towers Perrin. Resources ofDexiaand,forpartthemeeting,MarcelRottiers, Guy Burton.AlsopresentwereNicolasMeire,HeadofHuman Unwin, AxelMiller(exceptontheitemsrelatingtohim)and 22, 2008inthepresenceofDenisKessler, PierreRichard,Brian from theCompensationCommitteewhichmetonFebruary In theabsenceofDenisKessler, GuyBurtonpresentsthereport Report bytheCompensationCommittee of DirectorsDexiaSAheldonFebruary28,2008 Extract fromtheminutesofmeetingBoard Mariani are reproduced below. ber and,ontheotherhand,withJean-LucDehaeneandPierre dealing, ontheonehand,withAxelMillerandJacquesGuer- Extracts from theminutesrelating totheitemsonagenda tors ontheirowncompensation. participating inthedeliberationsandvotebyBoard of Direc- (in accordance withArticle523oftheCompanyCode) from Officer andChairmanoftheManagementBoard, who refrained of theBoard ofDirectors, andPierre Mariani,ChiefExecutive into fixingthecompensationofJean-LucDehaene,Chairman At themeetingheldonNovember13,2008,Board looked compensation. deliberations andvotebytheBoard ofDirectors ontheirown Article 523oftheCompanyCode)from participatinginthe agement Board respectively, theyrefrained (incompliancewith were oftheMan- atthattimeChairmanandVice-Chairman Management Board. SinceAxelMillerandJacquesGuerber the amountofcompensationtobepaidmembers At itsmeetingonFebruary28,2008,theBoard considered question. ing whichadecisionmustbemaderegarding thematterin must berecorded intheminutesofBoard meetingdur- Dexia Corporate governance Annual report 2008 31
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 32 Corporate governance Dexia Annual report 2008 relation totheirresponsibilities; targets specifictoeachmemberoftheManagementBoardin the EuroStoxxBanksIndex; tion ofthePriceEarningsmultipleDexiacomparedtobanksin ing netincomeandtotalincome),likewisetherelativeevolu- the resultsachievedbyDexia(grossoperatingincome,underly- the voteinrelationthereto)asfollows. of interests,andwhodonottakepartinthedeliberationsor regarding theitemsrelatingtothemwhodeclaretheirconflict mously decides(withoutAxelMillerandJacquesGuerber the CompensationCommittee,BoardofDirectorsunani- After discussionandconsideringtheproposalsdrawnupby Decisions relatingtoAxelMillerandJacquesGuerber s s To recall: considering each1/3ofthetotalresult. approved theprinciplesofcalculationbasedon3components, agement Board,onMarch1,2007theBoardofDirectors Regarding thevariablecompensationofmembersMan- of AxelMillerandJacquesGuerberfor2008 Principles ofthevariablecompensation sation ofAxelMillerandJacquesGuerber. The BoardofDirectorsdecidesnottoalterthefixedcompen- for 2008 Fixed compensationofAxelMillerandJacquesGuerber as follows: Jacques Guerberavariablecompensationfortheyear2007 The BoardofDirectorsdecidestoattributeAxelMillerand for 2007 Variable compensationofAxelMillerandJacquesGuerber Jacques Guerber xlMle 56% Axel Miller xlMle EUR825,000 EUR640,000 Jacques Guerber Axel Miller a first Group component based on a formula associated with a firstGroupcomponentbasedonformulaassociatedwith a secondindividualcomponentbasedontheachievementof 3 components Average % Average % 59.33% of the of the EUR 1,024,000 EUR 1,856,250 Fixed compensation2008 Maximum extent EUR 1,039,500 compensation compensation EUR 607,573 Variable 2007 Guerber underthe2008optionplan: the followingnumberofoptionstoAxelMillerandJacques As aconsequencetheBoardofDirectorsdecidestoattribute proposes apercentageequalto30%). Executive Officer, forwhomtheCompensationCommittee of classicoptionsattributedtothemfor2008(excepttheChief number ofperformanceoptionsequalto20%the the membersofManagementBoardbeingattributeda tors authorizesthecreationofperformanceoptions,each Compensation CommitteeproposesthattheBoardofDirec- In linewiththebenchmarkestablishedbyTowers Perrin,the 2008 options s two componentsoftheirvariablecompensation. Management Board,theGroupformulaisappliedtofirst For theChiefExecutiveOfficerandVice-Chairman ofthe member oftheManagementBoard. of leadershipandmanagementtargets,alsospecifictoeach [...] tion totheirowncompensation. refrain fromtakingpartinthedeliberationsandvoterela- interests regardingthepartofreportrelatingtothemand Jean-Luc DehaeneandPierreMarianideclaretheirconflictof In applicationofArticle523(1)theBelgianCompanyCode, mittee whichmetonNovember10,2008. Denis KesslerpresentsthereportfromCompensationCom- Report fromtheCompensationCommittee of DirectorsDexiaSAheldonNovember13,2008 Extract fromtheminutesofmeetingBoard xlMle 5,0 50,000 14,000 150,000 70,000 Jacques Guerber Axel Miller a thirdindividualcomponentbasedontheachievement options 2008 of classic Number of performance of performance options 2008 Number Number [...] within theotherentitiesofDexiaGroup. Pierre Marianiwillreceivenopercentagefeesforhismandates tion withacorerateat50%of225%. s s of Dexia,namely: Mariani asamemberandChairmanoftheManagementBoard posals oftheCompensationCommitteeinrelationtoPierre tion ofPierreMarianiwhodoesnotvote,toacceptthepro- The BoardofDirectorsunanimouslydecides,lesstheabsten- Group. age feeforhismandateswithinotherentitiesoftheDexia ist committees;Jean-LucDehaenewillreceivenopercent- attendance atBoardmeetingsaswellitsdifferentspecial- in termsoffixedandvariablecompensationrelationto equal todoublethecompensationofanotherdirector, both pensation oftheChairmanBoardDirectorswillbe tion ofJean-LucDehaenewhodoesnotvote,thatthecom- The BoardofDirectorsunanimouslydecides,lesstheabsten- and PierreMariani Decisions relatingtoJean-LucDehaene variable compensationupto225%ofthefixedcompensa- fixed compensationofEUR1,000,000gross; tion ofdirectors. amount isincludedintheaforementioned globalcompensa- his mandatesinotherentitiesoftheDexiaGroup. Thistotal specialist committees.TheChairmanwillnotreceive feesfor ances atmeetingsoftheBoard ofDirectors andthedifferent for fixedandvariablecompensationinrelation toattend- represent doubletheemolumentsof anotherdirector, both The emolumentsoftheChairmanBoard ofDirectors will from thecompensationcommitteeonNovember10, 2008. compensation oftheChairmanBoard ona proposal On November13,2008,theBoard ofDirectors fixedthegross of Directors Compensation paidtotheChairmanofBoard January 1,2009. one ofthespecialistcommittees.Theseprinciplesapplyasfrom tion) ofEUR2,000permeetingtheBoard ofDirectors or fixed compensation),anddirectors’ fees(variablecompensa- EUR 10,000(=2,500insteadof5,000perquarter, tors decidedtogranteachdirector afixedannualamount of Atitsmeetingon January29,2009,theBoard ofDirec- 2009. control, thedirectors decidedtoreduce theircompensationfor For thatpartoftheDexiatransformationplandedicatedtocost of Directors andwere therefore alsoappliedin2008. tively beeninoffice.Theseprincipleswere retained bytheBoard based onthenumberofquartersduringwhichtheyhaveeffec- aproportion for lessthanonefullyearshallearn ofthisfixedfee specialist committeemeeting.Directors whohavebeen inoffice fees (variablecompensation)ofEUR2,000perBoard meeting or (EUR 5,000perquarter–fixedcompensation),anddirectors’ to granteachdirector afixedcompensationofEUR 20,000 At itsmeetingonMay23,2002,theBoard ofDirectors decided cal procedures andindividualallocationofthiscompensation. This meetingalsoauthorizedtheBoard todeterminethepracti- the directors fortheirservices,effective January1,2005. a totalmaximumcompensationamountofEUR1,300,000to Dexia SA’s 2006Ordinary Shareholders’ Meetingdecidedtopay Review oftheprinciplesapplied of DexiaSAfor2008 Compensation ofthedirectors Dexia Corporate governance Annual report 2008 33
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 34 Corporate governance Dexia Annual report 2008 efiting from increased socialinsuranceprotection. because ofthemandatecarriedout atDexiaSAwithoutben- therefore berequired topay contributionsinBelgiumsimply benefit from socialinsuranceunderanothersystemandmay ance andrelated items.Now, someBoard membersalready pendent workers’fundand,inprinciple paythesocialinsur- a self-employedworkerandconsequently mustjoinaninde- Every Board memberofDexiaSA isconsidered inBelgiumas Payment ofsocialsecuritycontributionssomedirectors (5) Directors’andotherfeesobtainedbyvirtueofadirector’s mandatewithinDexiaBanqueInternationaleàLuxembourg. (4) Directors’andotherfeesobtainedbyvirtueofadirector’s mandatewithinDexiaCréditLocal. (3) Directors’andotherfeesobtainedbyvirtueofadirector’s mandatewithinDexiaBankBelgium. (2) Doesnotwishtoreceivedirectors’andotherfeesasadirectorofDexiaSA. participation inmeetingsoftheBoardDirectors)werepaidtoFrenchgovernment account. a directorofDexiaSA,amountingintotaltoEUR11,000(EUR5,000fixedcompensation andEUR6,000variablecompensationasa French governmentaretobepaidtheaccount.Thedirectors’ feesrelatedtothemandateperformedin2008 (1) InaccordancewithArticle139oftheFrenchLawonneweconomicregulations, directors’feesformandatesperformedby .Vrern2,0 600200004004,0 80000 0 38,000 42,000 4,000 0 0 2,000 16,000 20,000 F. Vermeiren .VnLo50060000001,0 ..00 0 n.a. 11,000 0 0 0 0 6,000 5,000 K. Van Loo .Uwn2,0 8000040006,0 80000 0 38,000 62,000 0 4,000 0 0 38,000 20,000 B. Unwin .Tnn 0003,0 600007,0 20000 0 42,000 74,000 0 0 16,000 0 38,000 20,000 M. Tinant .Sigr 0003,0 ,0 ,0 4007001,4 19,500 14,143 7,000 64,000 4,000 0 0 2,000 38,000 20,000 F. Swiggers .Shete 00060000001,0 4006,7.861,973.38 61,973.38 34,000 16,000 0 0 0 0 6,000 10,000 G. Schwertzer .Rnes2,0 80000005,0 80000 0 28,000 58,000 0 0 0 0 38,000 20,000 J. Renders .Qie ..00 0 n.a. 0 0 0 0 0 0 0 A. Quinet .Mre ,2 20,000 6,429 0 0 0 0 0 0 0 0 D. Marcel .Lx2,0 00000005,0 0002,0 22,500 22,500 30,000 50,000 0 0 0 0 30,000 20,000 B. Lux .Lv-ag2,0 6002001,0 2003,0 0 0 38,000 72,000 0 0 14,000 2,000 36,000 20,000 A. Levy-Lang .Kba2,0 20000005,0 4002,0 16,875 22,500 34,000 52,000 0 0 0 0 32,000 20,000 S. Kubla .Kp 0002,0 800na 0 0 n.a. 48,000 0 0 0 0 28,000 20,000 C. Kopp .Kslr2,0 200004004006,0 20000 0 32,000 60,000 4,000 4,000 0 0 32,000 20,000 D. Kessler .Incni2,0 20000004,0 60000 0 26,000 42,000 0 0 0 0 22,000 20,000 F. Innocenzi .M da 20000 0 22,000 0 0 0 0 0 0 0 A.-M. Idrac .Gebr0000000000 0 0 0 0 0 0 0 0 0 J. Guerber eBan 0 0 0 0 0 0 0 0 0 0 de Beaune A. deRomanet .Bro 5001,0 ,0 3003,0 0 0 34,000 33,000 0 2,000 0 0 16,000 15,000 G. Burton .Bzr ..00 0 n.a. 0 0 0 0 0 0 0 B. Bézard .Bnit2,0 80001,0 4004,0 0 0 44,000 74,000 0 0 16,000 0 38,000 20,000 G. Benoist .Mrai0000000na 0 0 n.a. 0 0 0 0 0 0 0 P. Mariani .Mle 0 0 0 0 0 0 0 0 0 0 A. Miller .L ean 0002,0 ,0 ,0 800na 0 0 n.a. 38,000 4,000 4,000 0 0 20,000 10,000 J.-L. Dehaene .Rcad3000000003000400000 0 400,000 300,000 0 0 0 0 0 300,000 P. Richard IETR’ADOHRFE O EVN SADRCO FDXAS N H OTHER THE OFDEXIASAAND DIRECTOR A AS THEGROUP SERVING OF FOR ENTITIES FEES OTHER AND DIRECTORS’ in EUR) amounts (gross comp.) BoD (fix. comp.) (var. BoD Commit- Strategy tee mittee Audit Com- Commit- pensa- Com- tion tee additionally because of the mandate carried out in Belgium additionally because ofthemandatecarriedout in Belgium and whoisrequired tocontributeasanindependentworker to thesystemapplicablepublicservants asaprincipalactivity in Belgiumwhoissubjecttothesalaried employeessystemor to anunrecovered annuity. Likewise,aBoard memberresident social insuranceandwhoare required tocontributeinBelgium Belgium whoalready benefit,intheircountryofresidence, from This isthecasefor, forinstance,Board membersnotresident in Appoint- Commit- ment tee Total 2008 (2) (2) (2) (1) Total 2007 entities Group Other 2008 representativesofthe byBrunoBézardas consequence ofhis (4) (5) (4) (3) (3) entities Group Other 2007 (4) (5) (4) (3) (3) of Directors. a report onthecommittee’s workissubmittedtotheBoard of twoyears,whichmayberenewed. Aftereachmeeting, members appointedbytheBoard ofDirectors foraperiod These committeesare composedofthree toeightBoard decision-making powers. egated bytheBoard, thespecialistcommitteeshaveindeedno ing solelyitsresponsibility. Unlesstheyhavebeenspeciallydel- are chargedwithpreparing Board decisions,thelatterremain- Committee andanAccountsCommittee.Thesecommittees Control,been dividedintoanInternal RisksandConformity Appointment CommitteeonNovember13,2008; of themergerCompensationCommitteeand s s s tees, namely: ted toit,theBoard ofDirectors created fourspecialistcommit- In order tomakeanin-depthexaminationofthefiles submit- of Directors Specialist committeescreated bytheBoard Management Board (seehereafter). responsibilities asChiefExecutiveOfficerandChairman ofthe position asdirector. However, heisremunerated forhis The ChiefExecutiveOfficerdoesnotreceive anyfee forhis Officer Executive Compensation paidtotheChief in 2007andEUR39,177.542008. 121,040.69 in2005,EUR119,400.672006,54,579.65 for theyears2000to2008andpaidbyDexiatotaledEUR the required conditions.Theamountofthecontributionsowed insurance contributionsaswellanynewdirector who meets directors ofthecompanyasJanuary1,2005for all social The personsqualifyingforthispaymentare thosewho were tors’ compensationfrom EUR700,000to1,300,000. of Dexiaand,therefore, raisedthemaximumceilingfordirec- penalties andotheramountsowedforservingasadirector pay theunrecovered socialsecuritycontributionsandthelate ers’ MeetingofMay10,2006decidedthatDexiaSAwill in order toreflect changesinstatus),theOrdinary Sharehold- directors whoare inthisposition(subjecttoanannualreview In order tooffset theunrecovered socialsecuritycostpaidby what healready qualifiesforbecauseofhisprincipalactivity. without benefitingfrom increased socialinsurancecompared to h AuditCommitteewhichsinceNovember13, 2008 has the the StrategyCommittee; AppointmentandCompensationCommittee,theresult the pendent director, chairmanofthecommittee s 2008): Members oftheStrategyCommitteeare (asofDecember31, the committee,andChiefExecutiveOfficer. including theChairmanofBoard ofDirectors, whochairs The StrategyCommitteeiscomposedofeightdirectors, Composition taeyCommittee Strategy November 13,2008. (4) BrunoBézardwasappointedmember oftheStrategyCommitteeon November 13,2008. (3) KoenVan LoowasappointedmemberoftheStrategyCommitteeon November 13,2008toreplaceAxelMiller. (2) PierreMarianiwasappointedmember oftheStrategyCommitteeon on November13,2008toreplacePierreRichard. (1) Jean-LucDehaenewasappointedchairman oftheStrategyCommittee s s s s s s s of oneitsbusinesslines; consolidation oftheGroup and/oronitsresults ortheresults third partythatcouldhaveasignificantimpactonthescopeof - aproject ofjointventure, consortium orpartnershipwitha equal toorgreater thanEUR300million; - aproject ofacquisitionordisposalassetsforanamount considered tobeofastrategicnature: option; within itmayasktheManagementBoard tostudyastrategic the StrategyCommitteeandtoBoard ofDirectors; initiative tostudyandpropose projects ofastrategicnature to s s s principles: The Group’s strategyisdevelopedonthebasisoffollowing Committee. Any ofitsmembersmayalsorequest ameetingofthe Strategy repercussions onthefinancialmarkets. require particularconfidentialitybyvirtueinoftheir prior totheirexaminationbytheBoard ofDirectors, ifthey ment linesinthemediumterm,andtostudyimportantfiles, Group’s environment anditsmarketsaswelldevelop- tioning oftheDexiaGroup, consideringtheevolution ofthe of theChiefExecutiveOfficer, toexaminethestrategicposi- The StrategyCommitteemeetsasrequired, ontheinitiative Responsibilities (asofDecember31,2008) Jean-Luc Dehaene,ChairmanoftheBoard ofDirectors, inde- Augustin deRomanetBeaune,director; Francis Vermeiren, director; Francine Swiggers,director; André Levy-Lang,independentdirector; Koen Van Loo,director Pierre Mariani,ChiefExecutiveOfficer Bruno Bézard, director projects thatmeetatleastoneofthefollowingcriteriaare the Board ofDirectors andtheStrategy Committeeformed it istheresponsibility oftheManagementBoard totakethe (4) (3) . ; (2) ; (1) Dexia ; Corporate governance Annual report 2008 35
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 36 Corporate governance Dexia Annual report 2008 committee; financial statementsandinparticular, from thedocumentssub- It examinesallquestionsrelating tothoseaccountsandthe by theBoard ofDirectors. Group, whichmust thenbepresented, adoptedandpublished and quarterlysocialconsolidated financialstatementsofthe The AccountsCommitteeexamines draftannual,half-yearly Regarding accountsandfinancialinformation Responsibilities (asofDecember31,2008) s s s 2008): Members oftheAccountsCommitteeare (asofDecember31, Committee. may attend,butnotbeamemberoftheAccounts ings oftheAccountsCommittee.TheChiefExecutiveOfficer The ChairmanoftheBoard ofDirectors mayattendmeet- non-executive, includingatleastoneindependentdirector. AccountsCommitteeconsistsofthree tofivedirectors, all The Composition s and auditmatters. independent director andadirector competentinaccounting sively ofnon-executivedirectors amongwhichatleast one tions, meetonceayear. TheAuditCommitteeconsistsexclu- an auditcommitteeinlistedcompaniesandfinancialinstitu- with theLawofDecember17,2008inparticularestablishing tees, whichtogetherformtheAuditCommittee,inaccordance Control, RisksandConformityCommittee.Thesetwo commit- Operation andactivitiesin2008 change intheshareholding structure ofDexiaSA. - aproject ofallianceorpartnershipthatimpliesasignificant cialist committees: the Accounts Committee and the Internal cialist committees:theAccountsCommitteeandInternal monitoring. Thecommitteewastherefore splitintotwospe- tee inorder inparticulartostrengthenand risk governance tors decidedtochangetheoperationofAuditCommit- At itsmeetingonNovember13,2008theBoard of Direc- Committee Audit meeting onJune24,2008. Romanet deBeauneandAxelMillerwhowere excused forthe this committeewas100%in2008exceptforAugustinde The individualattendancerateofdirectors atmeetingsof of theStrategyCommittee Attendance ofeachindividualdirectoratmeetings The StrategyCommitteemetoncein2008. Marc Tinant, director.Marc Tinant, André Levy-Lang,independentdirector; Gilles Benoist,independentdirector andchairmanofthe Committee Accounts The for DexiaSAandtheGroup asawhole. auditdepartment, both dence oftheoperationsinternal The committeeensures theperformanceandindepen- Regarding internalaudit which theentire Group isexposedbyvirtueofitsactivities. Board andtheriskmanagementsystemregarding therisksto controlthe internal systemputinplacebyManagement The committeehasthetaskofsupervisingperformance Regarding internalauditandriskmanagement Responsibilities (asofDecember31,2008) s s s s s mittee are (asofDecember31,2008): Control,Members oftheInternal RisksandConformityCom- Risks andConformityCommittee. Control,may attendbutnotbeamemberoftheInternal Risks andConformityCommittee.TheChiefExecutiveOfficer man oftheBoard ofDirectors Control, mayattendtheInternal utive, includingatleastoneindependentdirector. The Chair- The committeeconsistsofthree tofivedirectors, allnon-exec- Composition s committee; internal rulesofthatcommittee. internal operation oftheAccountsCommitteeare described inthe the Board ofDirectors. Thecompetencesandthemodeof at therequest ofoneitsmembers,ortheChairman of and quarterlyfinancialstatements.Thecommitteemaymeet tors’ meetingscalledtoapprove theannualandhalf-yearly Two ofthesemeetingstakeplacepriortotheBoard ofDirec- The AccountsCommitteemeetsatleastfourtimesayear. auditors. it ensures observanceofthepolicyindependence of the nal auditfortheneedsofGroup, andinthat regard h AccountsCommitteeensures theadequacyofexter- The Regarding externalaudit matters whichmighthaveasignificantimpactontheaccounts. cation ofthequarterlyresults andregarding delicateandsensitive It advisestheBoard ofDirectors regarding thefinancialcommuni- consolidation scopeadopted. ing principlesandmethodsappliedtheadequacyof dential norms,thepertinenceandconsistencyofaccount- choice ofaccountingreferences, provisions, observanceofpru- mitted toit,itcheckstheconditionsofestablishment, Alain Quinet,director. Bruno Bézard, director; Koen Van Loo,director; director;Marc Tinant, Gilles Benoist,independentdirector andchairmanofthe Committee Control, Internal RisksandConformity The pendent director andchairmanoftheCommittee 2008; the fullyear2007andforfirst,secondthird quarters plan 2008; 2008; Dexia andFSA; s mittee are (asof The membersoftheAppointmentandCompensationCom- not beamember(sinceheisnon-executivedirector). Chief ExecutiveOfficermayalsoattendmeetings,buthe the Board ofDirectors andatleastoneindependent director. The three tofivenon-executivedirectors including theChairmanof The AppointmentandCompensationCommitteeconsistsof Composition Committee AppointmentandCompensation The whose attendanceratewas88%. committee was100%in2008,exceptforAndréLevy-Lang The individualattendancerateofdirectors atmeetings ofthis of theAuditCommittee Attendance ofeachindividualdirectoratmeetings s s s s s s s s dealt withthefollowingsubjects: AuditCommitteemeteighttimesin2008.Inparticularit The Operation andactivitiesoftheAuditCommitteein2008 rules ofthatcommittee. Risks andConformityCommitteeare describedintheinternal Control,The competencesandoperatingmodeoftheInternal ence oftheoperationscompliancedepartment. The committeeensures theperformanceandindepend- Regarding compliance s s s s Jean-Luc Dehaene,ChairmanoftheBoard ofDirectors, inde- the choiceofaccountingreferences. reporting theactivitiesofComplianceactivityline; the stateofimplementation2007auditplan; the examinationofresults forthefourthquarter and the report ontheoperationsofdealingrooms; the annualreportcontrol oninternal 2007andthe audit the ComplianceReport2007andcomplianceactionplan the evolutionoffinancialmarketscrisisanditsimpacton Francis Vermeiren, director. Augustin deRomanetBeaune,director; Francine Swiggers,director; Denis Kessler, independentdirector; December 31,2008): (1) ; of Directors relating to: AppointmentCommitteeprepares decisionsfortheBoard The Regarding appointment social representatives oflistedcompaniesinFrance. published inOctober2008onthecompensationofexecutives, privées) andMEDEF(Mouvementdesentreprises de France) mendations oftheAFEP(Associationfrançaisedesentreprises the French CompaniesCode,andinparticulartothe recom- and mendations oftheBelgianCodeCorporateGovernance In performingitstasks,theCommitteeconformstorecom- fees todirectors. tions onthefeespaidtodirectors andtheallocation of those regarding employeeshare plans.Italsomakesrecommenda- incentives toexecutivesoftheGroup, aswellthe policy It isconsultedmoreover onthepolicyofcompensationand principles definedbytheBoard ofDirectors. of theManagementBoard; Officer’s recommendation, thecompensationformembers Chief ExecutiveOfficerand,basedonthe composition andoperationofBoards ofDirectors. ing procedures adoptedbymajorlisted companiesintermsof For thesepurposes,thecommitteeisresponsible formonitor- agement Board ofDexiaSA; composition, organizationandoperatingmodeoftheMan- of theBoard; utive Officer; Board ofDirectors andtheirchairman; Directors asanindependentdirector; be describedas“independent”; as wellproposals fortheco-optingofdirectors; of directors madebytheBoard totheshareholders’ meeting, s s The Committeeproposes: Regarding compensation Responsibilities (asofDecember31,2008) s s s s s s s s Richard. and CompensationCommitteeonNovember 13,2008toreplacePierre (1) Jean-LucDehaenewasappointedChairman oftheAppointment the grantingofstockoptionsinapplicationgeneral the compensationforChairmanofBoard andthe amendments to the internal rulesoftheBoardamendments totheinternal ofDirectors. proposals fromthe theChiefExecutiveOfficer concerning appointment andrenewal ofthemandateChairman appointment andrenewal ofthemandateChiefExec- appointment ofmembersthespecialistcommittees qualification ofanexistingornewmembertheBoard of determining theindependencecriteriaenablingadirector to proposals fortheappointmentandrenewal ofthemandate Dexia Corporate governance Annual report 2008 37
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 38 Corporate governance Dexia Annual report 2008 ticular, itdealtwiththefollowingsubjects: The Belgian Codeofcorporategovernance; the compensationofGroup executives,inaccordance withthe s these committeeswas100%in2008. The individualattendancerateofdirectors atmeetings of Committee the CompensationCommitteeandofAppointment Attendance ofeachindividualdirectoratmeetings s s s s s s s s ticular, itdealtwiththefollowingsubjects: The Operation andactivitiesin2008 compensation oftheGroup’s executives; amendments to the internal rulesoftheBoardamendments totheinternal ofDirectors. qualification ofindependentdirectors; composition ofthespecialistcommittees; composition oftheManagementBoard; composition oftheBoard ofDirectors 2008 stockoptionplan. 2008 employeeshare plan; publication intheannualreport ofinformationrelating to Compensation Committee Appointment Committee Philippe Rucheton metfourtimesin2008.Inpar- metthree timesin2008.Inpar- Pascal Poupelle Pierre Mariani Directors. renewed unlessthere isacontrarydecisionbytheBoard of they are appointedforatermoffouryearswhichmay be theexceptionofChairman, Chief Executive.With the Board ofDirectors ontherecommendation ofthe Chief ExecutiveOfficer, are appointedanddismissed by The membersoftheManagementBoard, otherthan the ment ofDexia. whom theBoard ofDirectors hasentrustedthedailymanage- members andischaired bytheChiefExecutiveOfficer to On December31,2008,theManagementBoard has five Composition from tentofivemembers. decision-making process andtoreduce themanagementteam Directors onNovember13,2008,inparticulartosimplifythe within theGroup followingdecisionstakenbytheBoard of ment Board andinthemandatesexercised byitsmembers Major changesoccurred inthecompositionofManage- H AAEETBADO EI SA OFDEXIA MANAGEMENTBOARD THE Stefaan Decraene Claude Piret rules. ment Board (seeabove),theRegulationsincludefollowing thecompositionofManage- In additiontorulesgoverning Insurance Commission. the DexiaGroup signedwiththeBelgianBanking,Financeand cific provisions intheprotocol onthe prudentialstructure of thestatusofmembersarerules governing alsosubjecttospe- gial decision-makingprocess, theBoard’s powersandcertain Regulations defineitsrole andmodeofoperation.Thecolle- after the“Regulations”).Amendedonseveraloccasions,these Board hasoperatedaccordingrules(herein- toaset of internal Since thecreation ofDexiaSAin1999,theManagement Operation execution ofthedecisionstakenbyBoard ofDirectors. defined bytheBoard ofDirectors. Inaddition,itensures the context ofthestrategicobjectivesandgeneralpolicy ages andcoordinates thedifferent businesslines,inthe of thecompanyandDexiaGroup, forwhich it man- The ManagementBoard isentrustedwiththemanagement Responsibilities Chief RiskOfficer PIRET Claude Chief FinancialOfficer RUCHETON Philippe Dexia CréditLocalSA Chairman oftheManagementBoard of Head ofPublicandWholesaleBanking POUPELLE Pascal Dexia BankBelgiumSA Chairman oftheManagementBoard of Head ofRetailandCommercial Banking Stefaan DECRAENE Chief ExecutiveOfficer Chairman oftheManagementBoard Pierre MARIANI COMPOSITION ASOFDECEMBER31,2008 hereafter). pensation ofthemembersManagementBoard (see debated bytheManagementBoard. with theBoard ofDirectors thepointsofviewpreviously initiative, theChiefExecutiveOfficerpresents toand defends Management Board hasanacknowledgedrightofopinion or Board ofDirectors oritsspecialistcommittees,forwhichthe If theChiefExecutiveOfficertakespartindiscussionsby tors through theChiefExecutiveOfficer. Group. Itmaymakerecommendations totheBoard ofDirec- egy Committeeintermsofstrategyorgeneralpolicythe any proposals debatedbytheBoard ofDirectors ortheStrat- ment Board mustformulateapreliminary opinionregarding Board initsdealingswiththeBoard ofDirectors. TheManage- The RegulationsfirstdefinethepowersofManagement Board initsdealingswiththeofDirectors s 2ULES RELATING TO THE POWERS OF THE -ANAGEMENT s subjects ofacertainimportance. form ofaGroup ExecutiveCommitteetodealwithtransversal its Chairman,theManagementBoard mayalsomeetinthe the agendawhichissetbyChairman.Ondecisionof member. EachmemberoftheBoard maypropose anitemfor Board, butamembermaynotrepresent more thanoneother able toattendmayberepresented byanothermemberofthe so desire. AnymemberoftheManagementBoard whoisun- vened atanytimebytheChairmanoriftwomore members in principleonceaweek.Ifnecessary, meetingscanbecon- Management Board meetingsare convenedbyitsChairman, s 2ULES RELATING TO MEETINGS with theunanimousconsentofitsmembers. decisions maybetakenbytheManagementBoard in writing the Chairmanshallcastdecidingvote.Inexceptionalcases, all memberspresent orrepresented. Intheeventofatievote, debate toavote.Resolutionsare adoptedbyamajority voteof on request from twoothermembers,submittheissueunder man oftheManagementBoard may, onhisowninitiative or joint responsibility forsuchdecisions.Ifapplicable,the Chair- decisions result from aconsensusofitsmembers.Itassumes The ManagementBoard operatesinacollegialmanner andits s 2ULES RELATING TO DECISION MAKING The Regulationsalsospecifythebasicprinciplesforcom- Dexia Corporate governance Annual report 2008 39
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 40 Corporate governance Dexia Annual report 2008 to all those persons concerned intheDexiaGroup.to allthosepersonsconcerned Thefor- with theresults achievedbyDexiaSA,applicableidentically Compensation by reference tothebudgettarget. the firstthree indicators,Dexia’s performanceisdetermined tive PER(averageoftheDJEuroStoxx BanksIndex)). For income, underlyingnettotalincomeandrela- mula isbasedonfourindicators(underlyinggross operating assessed bytheChiefExecutiveOfficer. Dexia leadership model.Thesetargetsareinternal fixedand ment Board. Thesepersonaltargetsare fixedinrelation tothe of personaltargetsspecifictoeachmembertheManage- management contract. measured inrelation toperformanceindicators includedinthe gets. Inthemajorityofcases,achievementtargetsis toassesstheachievementofthosetar-the personsconcerned as thecasemaybe,betweenChiefExecutiveOfficerand year 2008.Quarterlyorhalf-yearlymeetingsare planned, tract fixesaseriesoftasksandtargetstobeachievedforthe (except theChiefExecutiveOfficer).Thismanagementcon- is establishedforeachmemberoftheManagementBoard ance managementsystembywhichacontract This componentisassessedwithinthecontextofperform- of theManagementBoard inrelation totheirresponsibilities. Compensation ofmemberstheManagementBoard s s s three componentparts. Board, withtheexceptionofChiefExecutiveOfficer, has The variablecompensationofmemberstheManagement positions). (and takingaccountofmarketreferences forcomparable and importanceoftheresponsibilities assumed by each The fixedcompensationisdeterminedconsideringthenature consists ofafixedandvariableportion. The compensationofmemberstheManagementBoard consultant. support ofaspecialistexternal to periodicstudybytheCompensationCommitteewith the CompensationCommittee.Theircompensationissubject fixed bytheBoard ofDirectors ofDexiaSAonproposals from The compensationofmemberstheManagementBoard is Fixed andvariablecompensation A third A second A first Group individual business componentbasedonaformulaassociated componentbasedontheachievement componentspecifictoeachmember and theBoard ofDirectors onJanuary29,2009. This proposal wasacceptedbytheCompensationCommittee proposed thattheydonotreceive anyvariablecompensation. For theyear2008,membersofManagementBoard have fixed compensation. COMPONENT REPRESENTS BETWEEN AND 8 MAXIMUM OF THE member oftheManagementBoard, whichmeansthat each maximum extentofthevariablecompensationisfixedforeach s s percentage, thetargetrateofwhichissituatedatone half.A Each ofthesecomponentsgivesrisetotheapplicationa tion Committee. Officer thesetargetsare fixedandassessedbytheCompensa- Dexialeadershipmodel.FortheChiefExecutive to theinternal of personaltargets.Thesetargetsare fixedinrelation with theresults achievedbyDexiaSA(asdescribedabove). two componentparts. The variablecompensationoftheChiefExecutiveOfficerhas s s schemes are applicabletoeachofthesemembers: plementary extralegalpensionputinplacebyDexia.Various Some membersoftheManagementBoard receive asup- Extralegal pensions thatapplyinFranceandBelgium. corporate governance March 30,2009,aswelltotheregulations withregard to decree No.2009-348whichwasapproved inFranceon From 2009onwards, Dexiawillconformtothecriteriaof in whichamandateisexercised inthenameoronbehalfof Dexia. Board byacompanyintheDexiaGroup orbyathird partycompany directors’ feeorpercentage paidtoamemberoftheManagement agement Board constitutesawholefrom whichisdeductedany The fixedandvariablecompensationofmemberstheMan- fixed percentage of acappedannualfixedcompensation. the capitalizationofannualcontributions.Theserepresent a retirement, theywillbeentitledtothe capitalconstitutedby Management Board underBelgiancontracts.Atthetimeof scheme oftheextralegalpensionplanformembers December 31,2007. acquired andfuture rightsofthepersons affiliatedpriorto extralegal pensionschemewhilstmaintainingthe sation. In2007,Dexiadecidedtoclosethissupplementary retirement, toanamountof80%a cappedfixedcompen- to abenefitequalanannualretirement annuity, iftheyenter certain conditions,inparticularaminimumcareer of35years, A second A first Pierre MarianiandPhilippeRuchetonbenefitfrom thenew Claude Piret andStefaanDecraeneare entitled,subjectto Group individual componentbasedonaformulaassociated componentbasedontheachievement (I) The Compensation Committee and the Board of Directors decided to grant Philippe Rucheton compensation for the loss of earnings resulting from his leaving hispreviouspositionattheendof the year.from Thatcompensationwillbepaidin2009uptoanamountofEUR500,000. resulting earnings of loss the for compensation Rucheton Philippe grant to decided Directors of Board the and Committee Compensation The (I) 1,2007. the ManagementBoardwhotookuptheirpostsonJanuary (G) (F) Lump-sumannualindemnityforcostsofrepresentationandhireacarprivate use. (E) Lump-sumannualindemnityforcostsofrepresentation. for death,permanentinvalidityandmedicalcosts. permanent disability and the costs of medical treatment and EUR death, 37,285.44 for in cover favor additional of for French members Board of Management the the Board of for members obligatory and Belgian supplementary cover of favor in 2008 in paid were 262,352 EUR of premiums collective Annual (D) the amountsindicatedinthissection. in included not are costs associated The use. private and professional for Board Management the of members the of each to provided is car company A (C) This contributiondoesnotconstituteanacquiredbenefitandrelatestopersonsother thanmembersoftheManagementBoard. (B) Amount borne by Dexia in 2008 for the supplementary pension plans. B1: a total amount of EUR 2,181,422 was paid as supplementary extralegal pension. amounts indicatedinthissection,bytheDexiaGroup.Forothermembers,no”employer’s” socialcontributionwaspaid. (A) For Pascal Poupelle, Jacques Guerber, Rembert von Lowis, Bruno Deletré and Alain Delouis ”employer’s” social contributions were paid, in addition to the (H) (until October8,2008) Axel Miller (as fromOctober7,2008) Pierre Mariani Claude Piret(year2008) Hugo Lasat Jacques Guerber Marc Huybrechts Rembert vonLowis Alain Delouis Benoît Debroise Xavier deWalque Dirk Bruneel (until July3,2008) Bruno Deletré (in thousandsofEUR) of ment C (as fromDecember15,2008) Philippe Rucheton (as fromNovember13,2008) Pascal Poupelle Stefaan Decraene(year2008) (in thousandsofEUR) M C
This amount was paid to Bruno Deletré when he left Dexia and is aimed at compensating the absence of a supplementary pension plan for members of members for plan pension supplementary a of absence the compensating at aimed is and Dexia left he when Deletré Bruno to paid was amount This The leavingindemnitytoAxelMillercorrespondsayearoffixedsalary. TheleavingindemnitytoBrunoDeletrécorrespondsayearoffixedsalary. ompensation ompensation ana
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the 2007 compensation
825 450 640 425 500 430 150 500 560 450 benefits benefit B 2007
compensation Gross fixed in 470 450 oard
year Gross fixed
- - - office 636.50 262.50 2008 229.17 480 640 450 500 500 500 560 250 20.83 62.50 S 2008
2008 since 480 450
recei recei (A)
(A) on 1,039.50 430.95 607.57 391.00 360.00 326.51 485.00 403.20 443.70 N D 408.90 v v 2007 compensation Gross variable 400.5 250 2007 o ed ed ecember compensation Gross variable v
ember - - - by by
2008 former current 2008 0 0 0 0 0 0 0 0 0 0 31,2008 13,2008 0 0 0 0 0 Pension Pension 964.10 120.82 192.2 33.76 109.2
121.5 members plan plan
82.0 82.0 225 32.8 members (B1) (B1) 3.5 -
- (H) (B) or (B)
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the
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(D) (D) (D) (D) (D) members ana Dexia Corporate governance g 24.71 A Other Other e 0.52 6.32 6.09 1.44 6.32 6.32 6.19 6.32 6.32 500 825 nnual report 200841 -
(G) (G) (E) (E) (E) (E) (E) (E) (E) (E) (E) (F) - - - - (C) (C)
comptes sociaux comptes consolidés Management Report COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 42 Corporate governance Dexia Annual report 2008 The membersoftheManagementBoard received Dexiaoptionsinthe2008plan share atanexercise priceequaltothevalueofDexiashare atthetimewhenoptionsare granted. options issuedfortheplanare subscriptionrightsgivingtheentitlement,duringalimitedexercise period,to acquire anew Since itsunification,theDexiaGroup haseachyearputastockoptionplaninplacefavorofcertainmembersstaff. The Stock optionplan is oneofthemarketindicatorsvaluecreation. the endofperiod(atamarketvalueMVt’) inthemeantimereceivingdividends(D).TheTSRmeasuresperformanceover t The TSRcorrespondstothereturnobtained byashareholderwhopurchasedtheshareatbeginningofperiod(atmarket v date. than theaverageTSRofEuroStoxxBank IndexduringtheperiodfromJune30,2008and2011(ii)beneficiary Performance optionswillbedefinitivelyacquired onJune30,2011ifandonly(i)theaverageTotal ShareholderReturn (“TSR classic options). (3) In2008,performanceoptionswereintroducedinadditiontotheso-called“classic” options(numberofperformance twenty tradingdaysprecedingtheoffer. In France,theexercisepricemaynotbelessthan95%ofaverageopening pricesoftheDexiashareonEurolist average oftheclosingpricesDexiashareonEurolistEuronextBrusselsduring thethirtytradingdayspreceding (2) InBelgium,theexercisepriceisequaleithertoclosingofDexiashare onEuronextBrusselsthetrading of thatrecommendationareachievedbytheprocedurefollowedDexia. a priorvotebyshareholdersanylong-termprofit-sharingschemesfromwhichmembers oftheManagementBoardbenefit,toexte Meeting. Asaconsequence,incontrasttotherecommendationofBelgiancode of corporategovernance,Dexiadoesnotthink decisions takenbytheBoardofDirectorsinthisregardarebasedoncompetences devolvedlegallytotheBoardofDirector compensation ofmemberstheManagementBoardandincludinglong-term profit-sharingschemesfromwhichtheybenefit.Furth (1) TheseareissuedbytheBoardofDirectorswithinlimitsauthorized capital. Dexiademonstratesthegreatesttra li eoi 00/0884,000 30/06/2008 Alain Delouis rn eer 00/087,0 26 00/022/621 0.8968 29/06/2018 30/06/2012 12.65 70,000 30/06/2008 Bruno Deletré xlMle 30/06/2008 Axel Miller hlpeRceo 0 Philippe Rucheton eotDbos 00/083,0 00 10/022/621 1.72 84,000 29/06/2018 60,000 01/01/2012 72,000 10.09 30,000 60,000 30/06/2008 84,000 30/06/2008 84,000 30/06/2008 Rembert vonLowis Hugo Lasat Marc Huybrechts 30/06/2008 30/06/2008 30/06/2008 Benoît Debroise 30/06/2008 Xavier deWalque Dirk Bruneel Jacques Guerber tfa eree3/620 0001.90/121 90/081.72 0 29/06/2018 01/01/2012 72,000 10.09 50,000 30/06/2008 Claude Piret 30/06/2008 Pascal Poupelle Stefaan Decraene Pierre Mariani NOFC NDCME 1 08O OLNE EBR FTHEDEXIAMANAGEMENT OF MEMBERS SINCENOVEMBER13,2008 LONGER BOARD NO ONDECEMBER31,2008OR OFFICE IN PIN RNE N20 OFRE EBR FTEMNGMN OR OLONGER NO THEMANAGEMENTBOARD OF MEMBERS IN2008TOFORMER OPTIONS GRANTED IN2008 THEMANAGEMENTBOARD OF MEMBERS THECURRENT TO OPTIONS GRANTED Date of Date of offer offer Nature of Nature of Subscrip- Subscrip- options options options options tion tion of options of options Number granted Number granted 200,000 0 (3) (3) (3) (3) (3) (3) (3) (3) (3) Exercise Exercise 2008 2008 00 10/022/621 1.72 29/06/2018 01/01/2012 10.09 26 00/022/621 0.8968 1.72 1.72 29/06/2018 0.8968 29/06/2018 30/06/2012 29/06/2018 01/01/2012 12.65 1.72 29/06/2018 01/01/2012 10.09 1.72 30/06/2012 10.09 0.8968 12.65 1.72 29/06/2018 29/06/2018 01/01/2012 29/06/2018 01/01/2012 10.09 29/06/2018 30/06/2012 10.09 01/01/2012 12.65 10.09 price price (2) (1) (2) . exercise exercise Start of Start of period period the offer. of EuronextBrusselsduringthe ”) ofDexiaisequaltoorhigher day precedingtheofferor exercise exercise period End of period End of nsparency concerningthe he periodinquestionand alue MVt)andresolditat it necessary tosubmit it necessary s andtheShareholders’ is equalto20%ofthe isstillinofficeonthat nt thattheobjectives Valuation ermore, the Valuation Dexia Employee shareholdingplan principles decreed atagloballevel. Group levelinorder toensure theirconsistencywiththegeneral systems oftheprincipalsubsidiaries are subjecttovalidationat banking andsoon)incomparable groups. Thecompensation cial markets,privatebanking,asset management,commercial practices observedonthedifferent activitiesoftheGroup (finan- A comparativeanalysisiscarriedout annuallyofthecompetitive budget procedures. mercial targets,assignedtothemwithinthecontextofannual the achievementofobjectives,inparticularfinancialandcom- subject. Infact,eachtopexecutiveisassessedwithregard to lar around theannualassessmenttowhicheachexecutiveis Taking individualperformancesintoaccountrevolves inparticu- of thetopexecutiveandhisbusinessline. ance criteriaandalsoperformancespecifictotheactivity Variable compensationtakes accountbothofGroup perform- market references andtheresponsibilities carried. Fixed compensationisdeterminedbytakingaccountoflocal Group CompensationCommittee. tion tothegeneralprinciplesandorientationsdecreed bythe ferent subsidiariesandunder-subsidiaries oftheGroup inrela- quarter oftheyear. Itisdeterminedfortopexecutivesofthedif- Compensation isexaminedonceperannumduringthefirst Principles ofcompensationtopexecutives might beapplicable. 18 months,notwithstandingtherulesofCommonLawwhich fixed andvariablecompensationcorresponding toaperiod of will beentitledtoanamountofcompensationequalthe twelve monthsofachangecontrol, PhilippeRucheton If DexiaterminatesthecontractbindinghimtoDexia,within company. calculated onthebasisofagreements applicablewithin the Pascal Poupellewillbeentitledtoanamountofcompensation If DexiaterminatesthecontractbindinghimtoDexia, and otherbenefitscorresponding toaperiodof24months. of compensationequaltothefixedandvariable Stefaan DecraeneandClaudePiret willbeentitledtoanamount If DexiaterminatesthecontractbindingthemtoDexia, rules inforce. pensation tobedeterminedinrelation totheAFEP-MEDEF Mariani willbeentitledtoasinglelump-sumamountofcom- If DexiaterminatesthecontractbindinghimtoDexia,Pierre Conditions relatingtodeparture of theshareholding plantoalaterdate. tions, Dexia’s Board ofDirectors decidedtodeferimplementation At itsmeetingonOctober20,2008,consideringmarketcondi- 20%, withalock-upperiodoffiveyears. enables themtosubscribenewDexiashares atadiscountof plan inplace.Theisoffered toallGroup membersofstaff and Since 2000,eachyearDexiahasputanemployeeshareholding and supportfunctionsoftheGroup inorder: Audit hasbeenalignedtotheorganizationbybusinesslines Since January1,2007,theorganizationalstructure of Internal attached. to theGeneralAuditorsofentitieswhichtheyare The auditdepartmentsofthebranchesreport hierarchically Auditor ofDexiaSA. Committee oftheentity, andoperationallytotheGeneral Board ofDirectors, totheSupervisoryBoard ortotheAudit chically eithertotheChairmanoflocalexecutiveor The headsofauditdepartmentsinsubsidiariesreport hierar- authorities. and localregulations orinstructionsfrom prudentialcontrol SA whichtakesaccountoftherequirements oflegislations in different entitiesoftheGroup. There are fiveofthesesegmentsandtheir headswere chosen now monitored bysegmenttransversallyfortheentire Group. To thatend,asingleauditplanwasputinplaceandaudits are exchanges andthesharingofexperiences. teams andoptimummanagementofmeans,topromote tacts (correspondents) ofabusinesslineorsupportfunction; approach/theme andtocreate anetwork ofkeyspecialistcon- s s h AuditCommittee the ment Board ofDexiaSA,withinaframeworkapproved by of theDexiaGroupAuditare Internal fixedbytheManage- The strategy, thelevelofrequirement andtheoperatingrules them. residual risksare inlinewithmanagement’s perception of activities andinallitsentitiesare adequatelycovered andthat work whethertherisksrunbyDexiaGroup inits various Auditassessesinits thatcontext,inparticularInternal Within effective control applicationofthesysteminternal in force. Auditensuresties andentities,Internal theperformance with thehigheststandards andconsistentlyforallDexiaactivi- and contributingtothecreation ofaddedvalue.Inaccordance of control ofitsoperations,providing adviceonimprovements task ofgivingtheDexiaGroup anassuranceastothedegree Auditisanindependentandobjectiveactivitywiththe Internal Dexia Group control the other. Conformity Committeeontheonehand, and anAccountsCommitteeon (1) ConsistingsinceNovember13,2008of anInternalControl,Risksand NENLAUDIT INTERNAL to proceed towards greater integrationofexistingaudit to offer atransversalviewofrisks,toensure consistencyof (1) oftheBoard ofDirectors ofDexia Dexia Corporate governance Annual report 2008 43
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 44 Corporate governance Dexia Annual report 2008 and processes. order toensure thecorrect applicationoftheauditmethod to organizetheauditortrainingplan andqualityreviews in ance teams,toproduce taskperformanceindicatorsand line, tocoordinate work withoperationalriskandcompli- tain thetoolsnecessaryforgood operationoftheaudit activity reports to management, toimplementandmain- the auditprocess, tomanageauditplanning,prepare tives are therefore todefineandupdatemethodology the role ofproviding supportforthe audit line.Itsobjec- established withinDexiaSAandtheoperatingentities,has The AuditProcess ManagementandOrganizationunit, reporting. andexternal validates internal results ofthemonitoringperformancelineand defines thetrainingpolicyforauditteams,analyzes terms ofmeanstheauditline,methodologyandtools, of theaudittasks,proposes thedevelopmentsnecessaryin Group’s globalauditplan,seestotheoptimumplanning risk mapprepared byeachsegment head,proposes the scope oftheauditandregularly updatesit,validates the Planning, Tools andReporting).Thiscommitteedefinesthe of AuditProcess ManagementandOrganization(formerly Luxembourg andthefivesegmentheadsaswellhead àDexia CréditLocalandBanqueInternationale chairman, theGeneralAuditorsofDexiaBankBelgium, The IAECconsistsoftheGeneralAuditorDexiaSA,its ment heads. defines themeans,segmentsandappointsseg- in theDexiaGroup, drawsuptheGroup’s globalauditplan, auditapplicable IAMC definesthemethodologyofinternal àLuxembourg,the Local andDexiaBanqueInternationale and theGeneralAuditorsofDexiaBankBelgium,Crédit Composed oftheGeneralAuditorDexiaSA,itschairman line. Committee (IAEC),provide strategicsupervisionofthe audit AuditExecutivement Committee(IAMC)andtheInternal integrated line,twostructures,AuditManage- theInternal In order toensure themanagementandguidanceofthis auditors remain employeesoftheirrespective entities. the humanmeansnecessarytoperformaudittasksas with guidingtheDexiaGroup auditline,andthey provide their subsidiariesandbranches.Theyare alsoassociated risks generatedbytheactivitiesoftheirrespective entities, ulators. Theycontinuetoensure theadequatecoverofall vital role aslocalinterfacewithmanagementandreg- à LuxembourgandDexiaCréditLocalcontinuetoplaya Dexia SA,BankBelgium,BanqueInternationale view ofrisksperentity. Indeed,theGeneralAuditorsof on thepre-existing one,byentities,soastoretain theglobal This organization,bytransversalsegments,issuperimposed the wayinwhichitisorganized. versal taskswhichgiveGroup managementabetterviewof This singleauditplanalsofacilitatestheestablishmentoftrans- mendations madeare effectively implemented. the objectofregular monitoring,soastoensure thattherecom- importance, totheManagementBoard ofDexiaSA,and makes Board andreported, oftheentityconcerned depending uponits audit system.Eachactionplanwasapproved bytheManagement of plansforthecorrection ofweaknessesdetectedinthe internal The audittasksperformedin2008gaverisetotheestablishment subsidiaries. with theauditorsofDenizBank,inthatentityandsomeits the operatingentities,were allocatedtotasksperformed jointly Moreover, asin2007,almost400man-days,from DexiaSAand the 2008auditplan. a seriesoftasksoutsidetheplanwhichwere therefore addedto Dexia Group resulted inthedemandbyDexiamanagementfor Finally, thefinancialcrisisanddifficultiesencountered bythe plan. subject toregular tasksundertheongoingyear-on-year audit (accounting, managementcontrol, IT, humanresources) are of activitytheprincipalbusinesslines.Supportfunctions and control mechanismsproviding theframeworkforlines Other transversaltasksrelate toorganization,riskmanagement Générale inFrance. sion ofdealingrooms followingthefrauddiscovered atSociété systems tomarketactivitiesandinparticularthecorrect supervi- control ous subjectsassociatedwiththeadequacyofinternal A goodproportion ofthesetaskshavebeendedicatedtovari- aries/branches, dependinguponthesubjectstackled. Luxembourg andDenizBank,aswellincertainoftheirsubsidi- à Crédit Local,DexiaBankBelgium,BanqueInternationale neously atDexiaSAandintheGroup’s operatingentities:Dexia the formof“transversaltasks”,namelytaskscarriedoutsimulta- A majorpartoftheauditplanforDexiaGroup wasrealized in 2008 tasks Directors. The Policy, asamended,mustbe validatedbytheBoard of of theDexiaGroup ledtotheupdatingofthisPolicyin2008. tions, thedevelopmentofbestpracticesandevolution in theCompliancePolicy. Theappearanceofnewregula- adopted byDexiawithregard tocompliance are included undyingtheapproachwell astheprinciplesofgovernance The role andfieldscovered bytheCompliance Functionas its impartialityandobjectivity. ence orrestriction likelytoaffect itsindependence, itsintegrity, activity. Itcarriesonitsactivitieswithoutinfluence,interfer- The ComplianceFunctionisanindependentandobjective COMPLIANCE point ofcontactwiththeregulators. legislationandregulations.and international Itisalsoafirst activities. Itensures thecorrect interpretation ofnational anticipate andtoassesspossibleconsequencesonDexia failure. audit committeesonitsactivitiesand thestatusofanymajor tent authorityaboutanysuspectincident ortransaction. municates withthefinancialregulators oranyothercompe- lar takingaccountofrisksincurred. of standards, procedures andlinesofconduct. ate complianceculture andanawareness andunderstanding adapted totheneedsofbusinesslines,promoting anappropri- documents. tion aswelltheobservanceoftheseprocedures andother order toensure thecorrect interpretation andimplementa- of conductandpracticalguides.Itassistsadvisesin codes documents, forexamplecompliancemanuals,internal and implementationofcomplianceprocedures andother - anynewgeographicperimeter. - newentities; - newproducts/segmentations; - newactivities/services; - existingactivitiesandproducts; products, inparticular: reputation riskswhichmightarisefrom activitiesandfinancial tion performsthefollowingtasks. In thefieldsofcompetencelistedabove,ComplianceFunc- Board ofDirectors. the applicablelaw); poses oftaxevasionasprovided, ifsuchshouldbethe case,by at preventing specificmechanismsputinplacefor the pur- terrorism; s s s s s s s s s s s s s s s s s s The compliancefieldsare asfollows: It reports regularly totherespective managementboards and To theextentthatitis required bylocalregulations, itcom- It checksthefulfillmentofcomplianceobligations,inparticu- It developsandprovides compliancetrainingprograms, It provides assistancetobusinesslinesinthedevelopment It identifies,analyzesandmeasures non-compliancerisks and any otherfieldindicatedbytheManagementBoard or the prevention withregard tospecificmechanisms(policyaimed whistleblowing; the independenceofauditors; mandates; external prevention ofconflictsinterest; data protection andprofessional secrecy; integrity towards clientsinallDexiaactivities; the integrityofmarketsinfinancialinstruments; market abuseandpersonaltransactions; the fightagainstmoneylaunderingandfinancingof It analyzeslegalandregulatory developmentsinorder to Board ofhisentity. level directly aboveandtotheChairmanofManagement or branch–oftheentity)toHeadCompliancefor ally orhierarchically (dependinguponthestatus–subsidiary Each HeadofComplianceanentityreports eitheroperation- Dexia SA, in reported tothememberofExecutiveCommittee of that Board. SinceNovember14,2008,Compliancehas been Management Board andreports directly totheChairmanof The Group HeadofComplianceisresponsible vis-à-visthe ance projects relating toMiFIDtopics. Finally, thisunitmanages(implementsandmonitors)Compli- procedures relating toCompliancefields. of Professional Ethics)anddrawsupimplements policies/ mental documents(suchasCompliancePolicyandtheCode for membersofstaff ofDexiaSA.Thisdivisionreviews funda- of transactionsonDexiaandnon-Dexiafinancialinstruments charge ofpreventing marketabuse,includingthemonitoring inherent intheTreasury andFinancialMarketsactivityisin dination oftheprevention andmonitoringofCompliance risks team in2008. A DataProtection andProfessional Secrecy Officerjoinedthis Group intotheComplianceline. It isresponsible forthegradualintegrationofDenizBank laundering andthefinancingofterrorism. the policies/procedures andtoolsnecessarytocountermoney charge, fortheComplianceline,ofdefiningandimplementing to theAuditCommittee. diary. Aconsolidatedreport isthendrawnupandsubmitted Furthermore, there isperiodicreporting byeachGroup subsi- within Dexia. Its compositionreflects alltheactivitiesand/orbusinesslines within businesslinesandcompetencecenters; action plans,Complianceriskmaps). for monitoring/guidingthelinemanagement(activityreports, future integratedriskmanagementtool).Itprepares documents manages thetoolsnecessaryforitsoperation(e-Roomand methodological supporttotheentire line,andimplements and s s sub-departments. The CompliancedepartmentatDexiaSAisdividedintothree Organization andpositioning s s which are: The DexiaGroup hasaComplianceCommitteethetasksof Guiding s The ALM andCTFDataConfidentialityNewEntities to ensure anintegrated approach isadopted. to distributecompetenceswithintheGroup incompliance TFM andMarketIntegrity Reporting, Tools andMethodologies charge ofLegal,Tax andCompliancefunctions. is responsible fortransversalcoor- divisionprovides Dexia Corporate governance Annual report 2008 isin 45
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 46 Corporate governance Dexia Annual report 2008 Measures takenin2008 as follows. that end,ariskmapwasmadeontheprincipalMiFIDthemes, Directive wasdrawnupinlinewitharisk-basedapproach. To A monitoringprogram onthethemesintroduced bytheMiFID business line…; provide aviewofalltherecommendations madeperentity, actors through theimplementationofanintegrated toolto from them); (linkbetweenrecommendationscerned andactionsarising the DexiaGroup ontheexercise ofitsactivities; retained are: in2008andtheobjectsofsolution ity linesconcerned A coordinated project wasimplementedbythedifferent activ- recommendations, recovering incidents,KeyRiskIndicators… ing toolsreplaced) formanagingrisks,monitoringaction plansand ment haveexpressed thedesire tobegiventools(orhaveexist- Several activitylinesoftheDexiaGroup involvedinrisk manage- definition oftheComplianceactionplanfor2009. results andconclusionsofthismappingwillserveasthe basisfor entities oftheGroup, businesslinesandlocalmanagement. The hand, andcomplianceontheother. Theexercise involves allthe adapt themethodologytoevolutionsofGroup on theone aim istoupdatetheresults ofthemapmadein2006 andto Moreover, anexercise waslaunchedtomapcompliancerisks.Its lowing ratifyingphasesare inprogress. by theExecutiveCommitteeofDexiaSAinJuly2008.Thefol- The newdraftCompliancePolicywaspresented toandratified sional Ethicswere reviewed. thiscontext,CompliancePolicyandtheCodeofProfes- Within ment, LegalandTax Audit). andInternal Controlof theInternal mechanismDexia(RiskManage- tion wassubjecttoadetailedreview inconcertwithkeyactors During 2008,thefieldofinterventionComplianceFunc- s s s s reporting adaptabletotherecipient concerned. improving transversalcollaborationbetweenthesedifferent improving theguidanceofallrisksbydepartments con- optimizing theglobalprocess formanagingtherisks facing s s s Shareholders’ MeetinginMay2011. for atermofthree years,closingattheendof Ordinary Auditors,mandatedtoreplace theprevious auditors, Statutory represented byMessrsB.DeMeulemeesterandF. Verhaegen, Deloitte –Reviseursd’entreprises SCs.f.d.SCRL,acompany financial statementsofDexiaSAhasbeenperformedby Since January1,2008,thefunctionoflegalaudit of Directors. maximum ofthree yearsontherecommendation oftheBoard tors whoare appointedbytheshareholders’ meetingfora annual financialstatementsisentrustedtooneormore audi- Dexia SA,theauditofcompany’s financialsituationand In accordance withArticle14ofthearticlesassociation of Statutory Auditor Dexia. with theconsiderableinvolvementofComplianceteamsfrom action planwasprogressively implementedbylocalteamsand As forguidanceofthenetworksubsidiaries,DenizBank hoc reporting. actions”) thusobtainedwillbeconsolidatedfrom 2009inad The results (includingthosefrom monitoring“personaltrans- organization/systems/processes. year inthelightofpossiblechangesoccurring It isagreed thatthemethodologywillbereviewed each financial andcommercial promotion. classification, investmentprofile. XENLCONTROL EXTERNAL Policy ofbestexecution/bestselection. Inform yourcustomer Know yourcustomer: appropriate character, adequacy, client : managementmandatecontracts, structure oftheDexiaGroup. Thisprotocol, whichcontains protocol withDexiaSAin2001relating totheprudential The Banking,FinanceandInsuranceCommissionsigneda surveillance dusecteurfinancier(Luxembourg). entreprises d’investissement(France)andtheCommission de in concertwiththeComitédesétablissementsdecréditet exercised bytheBanking,FinanceandInsuranceCommission, cial companywhichistheparent company. Thatsupervision is Group isexercised onthereported basisoftheDexiaSAfinan- banking coordination, theprudentialsupervisionof Dexia In accordance withtheprovisions ofEuropean Directives on of theDexiaGroup Protocol ontheprudentialstructure (1) ThisamountincludesEUR1,056,310infeesrelatingtoadditionalnon-budgetedtasks. of thewholeGroup. This tablegivesasummaryofthecompensationpaidtoStatutoryAuditorforitsservicesin2008atDexiaSAandle Compensation oftheStatutoryAuditor )Adt ftefiaca ttmns10007,530,961 180,000 a) Auditsofthefinancialstatements TOTAL )Ohrwr ntcricto)-524,258 355,227 - 297,200 e) Otherwork(notcertification) d) Duediligence c) Tax advice b) Certificationwork (in EUR) DELOITTE the Dexiawebsite( col, whichwasslightlymodifiedin2003,isalsoavailableon from thecompany’s corporateoffices.Thetextoftheproto- the DexiaGroup. Acopyoftheprotocol maybeobtained Dexia SAManagementBoard, andconsolidatedcontrol of Dexia SAshareholders, thejointnature andauthorityofthe of conflictsinterest, loanstoexecutives),thequality of executives (honestyandprofessional experience,treatment dealsinparticularwiththestatusofcompany governance, Insurance CommissionandDexiaSAintermsofcorporate important agreements betweentheBanking,Finance and Services rendered to DexiaSA 571,700 450180,382 94,500 www.dexia.com 12,650 - ). (consolidated amounts) to theDexiaGroup Services rendered Dexia Corporate governance 8,603,478 Annual report 2008 vel (1) 47
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 48 Dexia Annual report 2008 53.8%. TheDexiashare lostmore than80%in2008. 2008 downalmost64%,theCAC4042.7%andBEL20 Against thisnegativebackground, theEuroStoxx Banksclosed liquidity situationparticularlydamagingtotheDexiashare. establishments disappeared from theboard, creating ariskand In fact,overthesecondhalfofSeptember, severalfinancial market valuationofbondportfoliosandfrom sector events. performances ofFSA,thenegativeeffect ofthe mark-to- Over thesecondhalf-year, theshare suffered from thepoor unprecedented levels. accentuated thephenomenonwithdailyexchangesreaching managersregardingalternative thefuture ofFSA.Short-selling the share alsosuffered from thenegativeanalysisofcertain estate, startedtoarouse doubtsamonginvestors.From June 2008, affected bythefirstFSAlossesonUSresidential real the well-received 2007results. Theresults forthefirstquarter outperforming thesectoruntilmid-June,inpartasaresult of For theDexiashare, 2008beganratherwell,withtheshare (-38.5%). market, posteditsworstannualperformancesince1931 The S&P500,theindexmostrepresentative oftheUSstock 2008 willgodowninstockmarketannalsasaverybadyear. information Shareholder (1) Average closingpricesonEuronextBrusselsand Paris. TC AKTEOUININ2008 STOCK MARKETEVOLUTION Share price hr rc so e.3,20 i U)3203.200 17.21 18.86/2.275 4,762 54.603 18.86/2.261 3.200 17.23 67.004 5,712 Average dailytradingvolume(inthousandsofshares) Average dailytradingvolume(inmillionsofEUR) Highest price/Lowestprice(inEUR) Share priceasofDec.31,2008(inEUR) Share priceasofDec.31,2007(inEUR) DEXIA’S STOCKMARKETPERFORMANCE STOCK MARKETDATA tc aktcptlzto i iloso U)2,9 5,640 20,295 Stock marketcapitalization(inmillionsofEUR) (1) (nER 72 3.200 17.22 (inEUR) The singleorder bookintroduces theconceptofa“mar- markets. ties listedonitsAmsterdam, BrusselsandPariscash concentrated ononesingletradinglineforallsecuri- order book.Asaconsequence,theliquiditywillbe On January14,2009,Euronext introduced thesingle The singleorder book alters Dexia’s positionintheCAC40index. and ontheLuxembourgStockExchange.Thisinnoway share isstilllistedonEuronext Brussels,Euronext Paris Dexia share becameEuronext Brussels.Howeverthe Following thisreform, themarketofreference forthe pler asthemarketsare harmonized. In addition,cross-border tradingwillbeeasierandsim- increase intheefficiency, sizeandliquidityofthemarket. issuers andcustomersare expectedtoresult from an The mainbenefitsofasingleorder bookforinvestors, umes andpricespublishedinthenationalpress. qualify forinclusioninlocalindicesorhavetradingvol- Euronext marketplaceinorder toenhancetheirvisibility, issuers maystillchoosetobelistedonmore thanone of reference. Althoughthere willonlybeasingleline, place onasingletradingline,thedesignatedmarket multiple listingwithinthesemarkets,tradingwilltake approved byRegulators.Inthecaseofsecuritieswith a criteria were developedinconsultationwithissuersand ket ofreference” foreachsecurity, forwhichobjective eebr3,20 December31,2008 December 31,2007 rsesParis Brussels EUR 0 EUR 10 EUR 0 EUR 10 EUR 5 EUR 15 EUR 20 EUR 25 EUR 5 EUR 15 EUR 20 EUR 25 FO OEBR19 OTEENDOFDECEMBER2008) NOVEMBER1996TOTHE (FROM ANDTRADINGVOLUMES PERFORMANCEINBRUSSELS STOCKMARKET DEXIA’S ENDOFDECEMBER2008) NOVEMBER1996TOTHE (FROM EXCHANGED ANDTRADING VOLUMES PERFORMANCEINPARIS STOCKMARKET DEXIA’S ENDOFDECEMBER2008) NOVEMBER1996TOTHE PERFORMANCE(FROM STOCKMARKET DEXIA’S EUR15 EUR 12 EUR 18 EUR 3 U 6 EUR 9 EUR EUR 24 EUR 27 EUR 21
20/11/96 20/11/96 20/11/96 20/03/97 20/03/97 20/03/97 otl rdn oueCAC40 Monthly tradingvolume 20/07/97 BEL20 Monthly tradingvolume 20/07/97 20/07/97 EuroStoxx50 EuroStoxxBanks Average Dexia 20/11/97 20/11/97 20/11/97 20/03/98 20/03/98 20/03/98 20/07/98 20/07/98 20/07/98 20/11/98 20/11/98 20/11/98 20/03/99 20/03/99 20/03/99 20/07/99 20/07/99 20/07/99 20/11/99 20/11/99 20/11/99 20/03/00 20/03/00 20/03/00 20/07/00 20/07/00 20/07/00 20/11/00 20/11/00 Dexia Dexia 20/11/00 20/03/01 20/03/01 20/03/01 20/07/01 20/07/01 20/07/01 20/11/01 20/11/01 20/11/01 20/03/02 20/03/02 20/03/02 20/07/02 20/07/02 20/07/02 20/11/02 20/11/02 20/11/02 20/03/03 20/03/03 20/03/03 20/07/03 20/07/03 20/07/03 20/11/03 20/11/03 20/11/03 20/03/04 20/03/04 20/03/04 20/07/04 20/07/04 20/07/04 20/11/04 20/11/04 20/11/04 20/03/05 20/03/05 20/03/05 20/07/05 20/07/05 20/07/05 20/11/05 20/11/05 20/11/05 20/03/06 20/03/06 20/03/06 20/07/06 20/07/06 20/07/06 20/11/06 20/11/06 20/11/06 20/03/07 20/03/07 20/03/07 20/07/07 20/07/07
Dexia 20/07/07 Shareholder information 20/11/07 20/11/07 20/11/07 20/03/08 20/03/08 Annual report 2008 20/03/08 20/07/08 20/07/08 20/07/08 31/12/08 31/12/08 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 0 0 31/12/08 49
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 50 Shareholder information Dexia Annual report 2008 (11) Afterdeductionofa15%Belgianwithholding tax(asthedeductionisreducedto15%forsecuritieswithaVVPRstrip). (10) Afterdeductionofa25%Belgianwithholding tax. (9) TheBoardofDirectorsdecidedtopropose totheShareholders’MeetingonMay13,2009thatexceptionallynodividendbepa 1,2005. (8) AsofJanuary andcumulative translationadjustments. AFS,CFHreserve (7) With andcumulative translationadjustments. AFS,CFHreserve (6) Without (5) IncludingGBRRGroupshare. (4) Theratiobetweentheshareholders’equityandnumberofshares(afterdeduction ofownshares)attheendperio (3) Excludingownshares. (2) TheratiobetweenthenetincomeGroupshareandaverageweighteddiluted numberofshares. (1) TheratiobetweenthenetincomeGroupshareandweightedaveragenumber ofshares. (1) Formoredetails,referto“LegalInformation”onwww.dexia.com. (1) Calculatedonthefreefloat. BEL20 with aVVPRstrip Net dividendforshares Net dividend - relatedtocoreshareholders’equity - underDexiaGAAP - basic Average weightednumberofshares DATA PERSHARE EVOLUTION OFTHENUMBERSHARES OFDECEMBER 31,2008) DEXIA’S POSITIONINTHEMAINEUROPEANINDICES(AS CAC 40 Dow JonesEuroStoxxBanks FTSE EuroTop 100 Euronext 100 fwihonsae 000952,5,2 9,0 ,3,3 293,570 8,932,736 71,787,214 490,607 62,817,843 1,762,478,783 58,697,872 1,178,576,763 20,550,020 1,163,184,325 55,903,030 40,050,935 1,107,469,030 1,145,261,366 50,684,800 future shares Total numberofcurrent/potential Subscription rights(warrants) of whichownshares Number ofshares rs iied06 .108 .1- 0.91 0.81 0.71 0.62 Gross dividend Dividend (inEUR) relatedtototalshareholders’ - - dilutedunderEUGAAP Net assetspershare (inEUR) - diluted - basicunderDexiaGAAP pershareEarnings –EPS(inEUR) - basicunderEUGAAP equity (1) (3) (1) (7) (3) (10) and subscriptionrights (11) (5) (1) (2) (1) (4) (1) (6) ,2,5,7 ,0,1,6 ,2,9,8 ,7,2,3 1,309,993,150 1,309,993,150 1,179,329,735 1,162,666,262 1,120,893,987 1,104,950,054 1,103,413,861 1,091,316,100 1,124,050,279 1,118,723,767 ,9,4,6 ,6,7,6 ,2,8,9 ,4,9,0 1,834,559,567 1,241,394,606 1,221,882,197 1,163,372,060 1,195,946,166 11/043/220 11/063/220 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004 31/12/2004 10.32 .705 .106 - 0.68 9.92 0.61 12.87 0.53 11.60 0.53 2.15 0.47 2.18 9.86 2.45 2.49 8.87 9.95 1.85 1.87 1.62 1.63 1.58 (8) (8) 11/053/220 11/0731/12/2008 31/12/2007 31/12/2006 31/12/2005 22 32 15 2.22 11.51 13.21 12.25 .006 0.77 0.69 0.60 egtn nidxPosition Weighting inindex 0.70% 0.14% 0.30% 0.31% 3.8% id for2008. d. (2.54) (2.54) - 24 96 73 40 (9) (9) (9) 9 (5) TheratiobetweenthegrossdividendpershareandaveragepriceasofDecember31. from 2005). (4) TheratiobetweentheaveragesharepriceasofDecember31andnetassetsper(relatedtocore (3) TheBoardofDirectorsdecidedtoproposetheShareholders’MeetingonMay13,2009thatexceptionallynodividendbepa (2) TheratiobetweentheaveragesharepriceasofDecember31andearningsperforyear. (1) TheratiobetweenthetotaldividendandnetincomeGroupshare. Shareholders’ calendar in2009 ance inthisannualreport (seepages14-15). Dexia isattentivetothequalityofitsrelations withitsshareholders. Theserelations are describedinthechapterCorporat RELATIONS WITHSHAREHOLDERS audyNvme 1Prs–Pli e ogè Actionariaconvention UnderthechairmanshipofPierreMariani Paris–PalaisdesCongrès Paris–EspaceGrande Arche November21 Saturday November20– Friday May14 Thursday STOCK MARKETRATIOS PRINCIPAL DEXIASHAREHOLDERS ne UGA 763. 4342.0 34.3 Wednesday May13 37.9 37.6 38.7 Price tobookratio Price-earnings ratio - underEUGAAP - underDexiaGAAP te ntttoa n niiulsaeodr 26.86% 2.87% Other institutionalandindividualshareholders Employee shareholding Brussels -CapitalRegion Walloon Region Toekomstfonds Flemish RegionthroughVlaams CNP Assurances Group Ethias Government Federal Belgian Government French Group Arco Communal Holding Caisse desdépôtsetconsignations nulyed(n%) Annual yield(in a-u ai i %) Pay-out ratio(in (4) (2) (5) (1) Brussels 07 04 .x79 n.a. 7.9x 8.3x 10.4x 10.7x 0420 0620 2008 2007 2006 2005 2004 .x20 .x13 0.3x 1.3x 1.8x 2.0x 1.7x . . . . - 5.3 3.9 3.6 3.7 Meetings Ordinary andExtraordinaryShareholders’ Percentage ofexistingsharesheld as ofDecember31,2008 id for2008. shareholders’equityas Dexia Shareholder information Annual report 2008 e govern- 13.92% 14.34% 17.61% 2.06% 0.86% 2.01% 2.97% 5.04% 5.73% 5.73% (3) (3) - 51
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 52 Dexia Annual report 2008 transformation ofDexiaandtolimittheimpactsonteamsas All competenceswillbemobilizedin2009tosucceedthe will transformDexia. with management,toprepare thefundamentalactionswhich In thesecondplace,HumanResources teamswere mobilized, and ofregularly informingsocialpartnersofthesituation. porting commercial teamsintheirexchangeswithour clients, ers toanswerquestionsfrom thosemembersofstaff, ofsup- by uncertainty, ofproviding thesupportandmeansto manag- had thetaskofreassuring membersofstaff whowere racked Against thatbackground, forthefirsttimeHumanResources traumatic. inafewweeks,wasextremelyand changingitsgovernance just afewdays,beingrecapitalized asamatterof urgency fact thatitfounditselfinasituationalmostofinsolvency difficulties andabletoovercome thesurrounding crisis.The bers ofstaff believedthecompanywasprotected from the The impactofthefinancialcrisisonDexiawassudden.Mem- plan intendedtoadaptDexiaitsnewenvironment. members ofstaff andontheconstructionofatransformation Teams haveconcentratedmuchoftheiractiononassisting Group. and prioritiesoftheHumanResources teamsoftheDexia The consequencesofthefinancialcrisishavealtered thetasks Human resources HUMAN RESOURCES AND THE FINANCIAL CRISIS THEFINANCIALCRISIS AND RESOURCES HUMAN RBC DexiaInvestorServices. (1) Includingindependentnetworksand 2,708 4,113 as ofDecember31,2008 MEMBERS OFSTAFF 6,850 Other countries France Luxembourg Turkey Belgium 8,044 (1) 15,045 s s Investor ServicesandtheindependentnetworksinBelgium). 85 different nationalities,in40countries(includingRBCDexia At theendof2008,Dexiahad36,760membersstaff, of and inlinewithDexia’s PrinciplesofSocialManagement. much aspossible.Solutionswillbesoughtviasocialdialogue s s s s age is38. age is39formenand36women,whiletheoverallaver- less than35and59.6%40yearsofage.Theaverage ice ofGroup membersofstaff is10.5years. Group lessthantenyearsagoandtheaveragelength ofserv- member ofstaff is1.8peryear. time. respectively. men andwomeniswellbalanced,at51.1%48.9% KEY FIGURES Age –Group membersofstaff are young:intotal,43.1%are Seniority –More than63%ofmembersstaff joinedthe Training days–Theaveragenumberoftrainingper Part-time –14.4%ofGroup membersofstaff workpart Turnover –9.1%ofworkforce onindefinite-termcontracts. Men/women –Theoveralldivisionofworkforce between 51.1% GENDER BREAKDOWN Male Female 48.9% 11-15 16-20 21-25 26-30 31-35 36-40 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 6-10 > 40 < 20 > 59 0-5 HR integrationofDenizBank ment Program. the localimplementationof gration withDexiawasstrengthened inparticularwith and almost3,500peoplechanging postsin2008.Inte- almost 70%ofmanagersbeing promoted internally promotioncance isgiventointernal andmobilitywith than 8,000employeesattheendof2008.Great signifi- 2008 withastructure counting400branchesandmore The developmentofDenizBankwaswellsustainedin 0 0 0 0 10% 20% 30% 40% 50% 20% 5 0 %0 %1%1%20% 15% 10% 5% 0% 5% 10% 15% SENIORITY PYRAMID AGE PYRAMID Female Female %50% 0% 10% Performance Develop- Male Male 20% 30% 40% center, trainingprograms, coaching,mentoringetc.). vidualized monitoringoftheirpersonalevolution(assessment tives tookpartinadevelopmentcenterprogram, with indi- To promotion assistininternal andmobility, almost100execu- vidual desires andskillstotheneedsofcompany. of staff) inorder toachievethebestpossiblealignmentofindi- Review (detectingtheperformancesandpotentialofmembers agement teamsrelying onmappingtoolssuchasthe Talent Group. Thatmonitoringtaskwasperformedbycareer man- management andmonitoringofthekeycompetences This evolutionofthesituationincreased theneedforprecise entities. even tosuspendrecruitment intheGroup’s mainoperating financial situation,Dexiarapidlytookthedecisiontoslowor 2008 andthedeteriorationofGroup’s economicand Considering theparticularcontextofbankingworldin change. to core businessline programs andtheaccompanimentof of theDexiaCorporateUniversityare beingalignedexclusively principles embodiedinthetransformation plan,theactivities At theendof2008andinlinewithgeneralcost-saving coaching. to theneedsofmanagersintermsindividualandteam coacheswhoseaimistorespondlished ateamofinternal in whichDexiafindsitself.Asacomplement,hasestab- staff fullytocopewiththeperiodofuncertaintyandchange to enableHumanResources teamstoassistGroup membersof tainty andChangeManagementtrainingwere alsodeveloped As from October2008,specificprograms suchasCrisis,Uncer- sessions organizedbytheDexiaCorporateUniversityin2008. In all,there were 2,450participantsinatleastoneofthe151 phases inthecareers ofmembersstaff. common totheGroup asawholeandadaptedto major main entities,theDexiaPersonalTraining Pathwasdefined, In closecollaborationwiththetrainingdepartmentsof apprenticeship offer commontotheentire DexiaGroup. the DexiaCorporateUniversityinimplementationofan The year2008wasmarkedbytheconsolidationofrole of N MOBILITY AND MANAGEMENT TALENT RECRUITMENT, TRAINING Dexia Annual report 2008 Human resources 53
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 54 Human resources Dexia Annual report 2008 nance ofemployabilitythroughout theprofessional career, The principallinesofactionin2008were: beliefs ordisability. develop theircompetenceswhatevergender, nationality, individual togivethebestofthemselves,optimizeand by Dexiainmattersofdiversitywere aimedatenablingeach that commitmentwasreaffirmed in2008.Theactionstaken Dexia hasalwaysattributedgreat importancetodiversity, and ing vehicles. efit tomovetowards more ecologically soundandlesspollut- introduced toencouragemembersofstaff receiving thisben- policy withregard tocompanycars.Several provisions were fields, particularlyintheorientationofamore responsible Finally, Dexiaalsoevolveditsremuneration policyinvarious support functions. respond tothedemandsofvariousbusinesslinesand mobility inlinewiththeDexiaPassport(mobilitycharter)to In additiontothesematters,Dexiacontinuedorganize questions theywere asking. 2008 plan,wasalsoincreased inorder torespond tothemany Information tomembersofstaff, regarding exitfrom the2003- with theappropriate information. visory Board wasorganizedinorder toprovide socialpartners staff forthesaidoffer. Anextraordinary meetingoftheSuper- and deferred toalaterdateafterreservation bymembersof price oftheDexiashare, theshareholding planwassuspended working methods.Indeed,consideringthefallofmarket The crisisforced Dexiatoalteritsapproach andtoreview shareholding planandsoon. holding plan,thestockoptionexitfrom the2003-2008 was markedbythelaunchofworkstoprepare the2008share- has beensaidaboutthefinancialcrisis,beginningof2008 spread throughout theyear. Asaconsequenceandgivenwhat managing compensationpoliciesare forthemostpart projects The tasksassumedbythePeopleReward teamin terms of s s s executive functions, s DIVERSITY COMPENSATION the integrationandpromotion ofpeoplefrom diversenationalities. the integrationandpromotion ofpeoplewithdisabilities, the promotion ofwomeninthecompanyandtheirplace the managementofseniorsandmore broadly themainte- the year2009willevolve. both atGroup andatentitylevel,markingthewayin which will leadtonumerous socialconsultationsandnegotiations The transformationplanbeingimplementedbymanagement 77% inthesocialelectionsentities. with astaff representation structure andaparticipationrateof 36 collectiveagreements oraccords concludedwithinentities throughout theyearinvariousentitiesofGroup, with At alocallevel,socialdialogueremained extremely active tion planbeingconsidered bymanagement. the endofyeartohearaboutlinestransforma- talization ofDexiawithsocialpartners.Thisbodymetagainat recapi-ized onSeptember30,2008todiscussthegovernment Indeed, anExtraordinary European Works Councilwasorgan- tion wasevolving. regular informationtostaff representatives onhowthesitua- EWC, 11meetingsoftheECWBoard inparticular)toprovide and numerous meetingswere organized(7meetingsofthe Considering whathashappened,theyearwasparticularlyfull ment anymajorquestionofatransnationalnature. Group. Thissocialbodyiscompetenttodiscusswithmanage- of 30permanentmembersfrom 13different entitiesofthe The European Works Council(EWC)atDexiaiscomposed SOCIAL DIALOGUE tive support, available on its internet siteat tive support,availableonitsinternet ment report, adoptinganexclusivelynon-materialand interac- away withallpaperprintingofthe2008sustainabledevelop- Eager tolimititsdirect environmental impact,Dexiahasdone change. its clientsaswellthoseinvolvedinthefightagainstclimate emphasis inparticularontheactionsdevelopedbyDexiawith oriented toathematicandtransverseapproach, placing the been revised topresent more ofthisinformation.Ithasbeen From thisperspective,thestructure ofthe2008report has members. commercial activitieswasoneofthemainwishes panel information availableontheimpactsassociatedwithDexia’s Among thepointsraisedforimprovement, anincrease ofthe opment report. exchange inparticularonthecontentofitssustainabledevel- tions andextra-financialratingagenciesinJune2008foran organiza- the subject,Dexiametapanelofnon-government manner inwhichthebankcommunicatestostakeholderson In order todiscussitssustainabledevelopmentpolicyandthe development report 2008 The Dexiasustainable Sustainable development RETTO FTHE2008REPORT OF ORIENTATION www.dexia.com. - Providing globalsolutionstoourclients Developingproducts responding toourclients’specific - To more: learn - Effectively managingclientrelations Implementingapolicyoftransparency ofinformation - - Towards carbonneutrality - Measuringtheimpactsofourfinancing - Accompanyingourclientsintheirprocesses - Integratingsustainabledevelopmentinourbusinesslines Associatingmembersofstaff withconsidered consumables - - Encouraginginnovation development s s Key issues Identity andstrategy s s s Measure ofourperformance s s Highlights 2008 Fightagainstclimatechange Involvingmembersofstaff insustainable RNIA THEMES PRINCIPAL expectations Promoting accessibilitytoservices Auditors’ report Performance indicators Reporting process Adopting atransparent approach www.dexia.com Dexia Annual report 2008 55
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 56 Sustainable development Dexia Annual report 2008 These guidelinesimposefinancingcriteriarevolving around: atmosphere toamaximumof450partspermillion. To learnmoreabouttheseguidelines:www.dexia.com. electricity andheatfrom thermal,hydraulicornuclear sources, andthetransmissiondistributionofelectricity. tion ofbiodiversity; s s intensity tion oftheseguidelines,Dexiabecomesthefirstbankinworldtosetitselfaquantitativetargetrelation tothecarbo The textplacesparticularemphasisontheclimaticimpactofprojects financedintheenergyfield.Thankstoadop- project finance,aswellthefinancialguaranteesrelating totheloansgrantedforproject finance. The guidelinesapplytoproject financeactivitiesand“corporate”finance,theobjectofwhichisknownalliedto regarding thefinancingsgrantedbyGroup fortheconstructionofinfrastructures intheenergyfield. In linewiththeobjectivesofitssustainabledevelopmentactionplan,onNovember4,2008Dexiaadoptednewguidelines Defining theguidelinesforenergysector (1) QuantityofCO per annum,from its2005level(or0.6tonneofCO recommends areduction ofthecarbonintensityglobalportfolioelectricityandheatproduction projects of3.5% The bankundertakesthatthiswillbe30%lessthantherecommendationsEnergyAgency, oftheInternational which The provisionsEnergyAgencyhavetheaimby2030ofcuttingconcentrationCO oftheInternational specific criteriaforeachofthefollowingsubsectors:oilandgas,biofuels,transformationfossilfuels,production of general principlesapplicabletoallprojects intheenergy sectorwithregard torespect forhumanrightsandthepreserva- (1) ofitsproject financeportfoliofortheenergysector. 2 emittedintheproductionofoneunitenergy. 2 perMWh). 2 inthe n one ofthethree essentialBaselIIcontrol functions,which are Risk hassetuptheQualityControl function.Thisfunctionis cess assignmentandthequalityof theratingassigned,Credit To ensure thequalityandconsistencyofoverallratingpro- credit conversionfactor foroff-balance-sheet commitments. terpart (aftertakingaccountofcredit riskmitigants)–anda losses Dexiamightfaceincaseof default bytherelated coun- given defaultparameter, representing anestimationofthe probability ofdefault,eachtransactionisattributedaloss In additiontothiscounterpartratingwhichdeterminesits qualifying itasadefaultcounterpart. placing thecounterpartonawatchlistor, whennecessary, Group’s guidelines.Thismonitoringincludesthepossibilityof Ratings are reviewed onayearlybasis in accordance withthe terpart isestablished. part takesaccountoftheriskcountryinwhichcoun- justifiedexception,theratingassignedtoacounter-Without rating scale. the risklevelofcounterpart,expressed through aninternal all counterparts.Eachratingcorresponds toanassessment of Credit riskanalystsare responsible forassigningaratingto tems inlinewiththeBaselIIframework. The DexiaGroupratingsys- hasimplementedasetofinternal limits canbefrozen atanytimebyRiskManagement. In order totakethemostrecent eventsintoaccount,specific Group level. ing oflimitsalthoughreporting toDexiaRiskManagement at Operating entitiesare inchargeoftheday-to-day monitor- tion, limitsbyeconomicsectorandproduct limitsmay beset. are thenconsequentlysetwithinthistheoretical limit.Inaddi- sure Dexiaiswillingtoacceptonacounterpart.Effective limits The theoretical limitrepresents themaximumcredit riskexpo- counterpart inlinewithinthecredit riskpolicies. and limitconcentration.Atheoretical limitisassigned toeach Credit risklimitsare definedtomanagethegeneralriskprofile exposure surveillancefunctions. work, andtosupervisetheanalysis/ratingprocesses and the guidelines, includingthecredit decisionanddelegation frame- committees. Itsrole istoestablishthecredit riskpoliciesand supervision oftheManagementBoard andofspecialist risk Dexia RiskManagementoverseesDexia’s credit risksunderthe written bytheGroup. by measuring,controlling andoptimizingthecredit riskunder- of thesolvencyacounterpart.Dexiamanagesitscredit risk default ofpayment)Dexiamayincurduetothedeterioration Credit riskisthepotentialloss(decrease ofassetvalueor Credit risks Risk management AAEETO H RISK THE OF MANAGEMENT Committee approves transactionsnot delegatedtobusiness through acascade of The decision-takingprocess fortransactionsisorganized rules, whichare documented inthecredit riskpolicies. ing positionsare monitored onaquarterly basis. Investments inassetbacked-securitieswere frozen andexist- rating levelsfollowingthesedowngrades. relating totheseratingmigrationsprovided thestillacceptable ereign names.However, Dexiahasnomajorareas ofconcern Spain) andthestressCentralEuropean ontheEastern Sov- the turmoilinbankingindustry(mainlyUSAand Rating migrationsintheloanportfolioswere muchrelated to over thenextyears. considered asthemostsensitiveloanlossesmight increase Collective impairmentswere postedforloanportfolios being portfolios. were performedfurtherassessingthequalityof credit In thisperspective,anumberofsectorialandportfolioreviews with afocusonthemostsensitiveeconomicsectors. consequence ofthecurrent financialcrisisispartofthis review possible. Theassessmentofpotentialliquidityproblems asa and exposures more closelymonitored andreduced where Borrowers presenting alowerfinancialprofile were identified financial instruments. including lowerlendinglimitsandguidelinesforanumberof Dexia appliesmore stringentunderwritingcriteriaand policies a downsizingofcredit activitiestoinstitutionalcounterparts. tial restriction oflendingactivitiesoutsidethecore marketsand Measures were takentoreduce credit riskincludingasubstan- observed uptonowintheothercredit portfolios. On theotherhand,nosignificantcredit deteriorationhas been this report. results isgiveninthechapterFinancialresults onpage71of A globaloverviewofthefinancialcrisisimpactsonDexia’s cant defaultsonUSandIcelandicbanks. ments. Inthisperspective,Dexiawashitbyanumberofsignifi- and thesetting-upofdramaticrescue plansbythegovern- near collapseofthefinancialsectorinUSAandEurope The 2008financialyearhasbeenextremely difficultwiththe function reports totheRatingCommittees. that theaudittrailismaintainedinratingprocess. This appropriately used,thattheyare operationallyeffective and objectives are toensureratingsystemsare thattheinternal Validation, ModelManagementandQualityControl. Itsmain The at Group level. mittees dealingwithcredit riskmanagementare operational In additiontotheManagementBoard, severalspecialistcom- RAIAINANDCONTROL ORGANIZATION Risk PolicyCommittee Credit Committees approves thecredit riskassignment . TheGroup Credit Dexia Annual report 2008 57
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 58 Dexia Annual report 2008 credit exposure. was excludedfrom the scopeofsale,isincludedinDexia’s include FSA’s exposure. TheFinancialProducts portfolio,which in November2008,Dexia’s credit exposure doesnolonger with Assured Guarantyregarding thesaleofFSAHoldings Since Dexiaentered intoasaleandpurchase agreement Investor Services. ies ofDexiaGroup and50%ofthejointventure RBCDexia Credit riskexposure includesthefully-consolidated subsidiar- weight, thesubstitutionprincipleisapplied. risk exposure isguaranteedbyathird partywithalowerrisk to payfortheguaranteesgrantedthird parties.Whencredit liquidity facilitiesorthemaximumamountDexiaiscommitted ments. Thefullcommitmentiseithertheundrawnportionof derivative contracts the specificprovision); derivative contracts(i.e.accountingvalueafterdeductionof The tive assets. The taker forlargefilesorcredit fileswithanincreased credit risk. The ment department. contains anindependentanalysisissuedbytheriskmanage- is strictlydefined.Eachfilepresented toacredit committee sector, commercial teamsalsohaveadelegationpowerthat tor withgenerallylowercredit riskascompared totheprivate deal withcredit delegations.Furthermore, inthepublicsec- within theGroup (theentities,subsidiariesandbranches)to and thecredit riskexposure. Subcommitteeshavebeensetup egation rules,consideringthetypeofcounterpart,ratinglevels lines orentities.Credit delegationsare basedonspecificdel- s s s The credit riskexposure is: The rules prevailing withinDexia. counterparts indefaultaccording toBaselIIbyapplication of specific typesofcounterparts(bank,insurance). The is appropriate andaccuratelyapplied. Rating Systemsare properly appliedandthattheratingprocess EI’ RDTRS EXPOSURE RISK DEXIA’S CREDIT the fullcommittedamountforoff-balance-sheet commit- the netcarryingamount(i.e.mark-to-marketvalue)for the netcarryingamountforbalance-sheetassetsotherthan Group andEntityDefaultCommittees Group andEntityRatingCommittees Management CreditCommittee Group andEntityWatch-List Committees Credit LinesCommittee (1) . assignsandmonitorslimitsfor istheultimatedecision- ensure thatInternal defineandmonitor monitorsensi- of theexposure isonthelocalpublicsector. The mixofcounterpartinDexia’s portfolioisverystable.Half lion asofDecember31,2008. The Group’s totalexposure 2 Excluding FSA insuranceactivities. (2) requirements. exposure relatingtoderivativeproductsisdefinedincompliancewithIFRS7 amountincreasedbyanadd-onfactor.carrying Asfrom2008,creditrisk The2007exposureforderivativeproductswasbasedonthenet (1) BY CATEGORYOFCOUNTERPART 2.6% 7.9% 6.9% DEXIA GROUPEXPOSURE 2.2% as ofDecember31,2008 Other Financial institutions Individuals, SMEsandself-employed Project finance ABS/MBS Monolines Corporate Public sectorentities Central governments 8.7% 14.3% (2) 0.2% amountedtoEUR660,011mil- 11.9% 45.3% (2) (1) ExcludingFSAinsuranceactivities. Grade (NIG). was ratedAAAorAA.Only5.6%NonInvestment As ofDecember31,2008,more ofhalfDexia’s exposure exposure leftthescope. 31, 2008,muchlowerthanayearearlierasFSAInsurance’s Canada represented 16.1%oftotalexposure asofDecember Belgium (17.6%).Group’s exposure intheUnitedStatesand lion atyear-end 2008),particularlyinFrance(17.0%)and concentrated intheEuropean Union(71.1%,EUR471.7bil- As ofDecember31,2008,theGroup’s exposure wasmainly BY GEOGRAPHICALREGION 2.3% 2.3% 16.1% 14.4% DEXIA GROUPEXPOSURE DEXIA GROUPEXPOSURE 0.6% 18.6% asofDecember31,2008 Luxembourg Italy Germany France Belgium Turkey Rest ofEurope Other EUcountries 0.9% as ofDecember31,2008 AAA BBB A AA 19.9% BY RATINGCLASS 5.6% 0.3% 3.3% 1.9% 5.7% 3.1% 9.8% 17.6% United StatesandCanada Other Japan Southeast Asia South andCentralAmerica 6.5% 26.2% 27.9% (1) 17.0% (1) for approval toaDexiaextraordinary shareholders’ meeting. or profit sharingcertificates.Thismechanismwillbe submitted lion, theStateswillbeentitledtoreceive Dexiaordinary shares lective impairmentonUSRMBS).IfthelossesexceedUSD4.5bil- lion ontheFinancialProducts portfolioandaUSD420million col- already beenreserved asofDecember31,2008(aboutUSD1.5bil- billionhas USD 4.5billionofwhichanamountabout2 13, 2009andprovides thatDexiawillcoverthefirst lossof antee wasapproved bytheEuropean CommissiononMarch provide aguaranteeontheFinancialProducts assets.Thisguar- billion in2009).TheBelgianandFrench Stateshaveagreed to 5 billionfacilitysetupin2008hasbeenincreased by USD3 sibility ofDexia,whichalready provides itsliquidity(theUSD of thetransactionandbeputintorun-off, underthe respon- the saleofFSAHoldings.Thisactivitywillthusbecarvedout est marginofGlobalFunding,isexcludedfrom the scope of guaranteed investmentcontractbusinessandthenetinter- The FinancialProducts portfolio,whichprimarilycomprisesthe of FSAHoldings. chase agreement withAssured GuarantyLtdrelative tothesale On November14,2008,Dexiaentered intoasaleandpur- FSA riskmanagement all transactionsunderwrittenmust beatleastinvestment- revenue stream foressentialpublicservices.More generally, requires apledgeoftaxrevenues oraclaimondedicated file. Before insuring amunicipalrevenue bond,FSAtypically The Municipalportfoliohasamuch lowercredit riskpro- activity ofinsuringABStransactions wasstoppedin2008. and stillbenefitattheendof2008from anAAArating.The these transactionswere structured at a highattachmentlevel nomic recession andupcomingcorporatedefaults.Mostof at thisstageevenifdowngradesmightoccurduetotheeco- non-performing transaction,nosignificantlossesare expected As regards PooledCorporateexposures, exceptforonemain this RMBSportfolio. credit) portfolioandexpectspotentiallossesinallsegmentsof FSA hadtopayclaimsonitsHELOC(homeequitylinesof rise indelinquenciesandseverityrates. the depreciation oftheUSreal estate market, thecontinuous idential mortgage-backedsecurities)portfolioin2008dueto FSA experiencedasignificantdeteriorationofitsUSRMBS(res- Even thoughitwasnotexposedtothemosttoxictypesofABS, securities (ABS)portfolio. The mostsignificantcredit riskisrelated totheasset-backed MOTN NOTICE IMPORTANT RDTRISK CREDIT Dexia Annual report 2008 Risk management 59
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 60 Dexia Annual report 2008 granularity andismainlyinvestedinUSmunicipalbonds. ance activityare investedthrough thisportfolio)showsahigh The Investmentportfolio(insurancepremiums from FSAinsur- been provisioned. Further credit lossesare expectedonthisportfolioandhave suffered from thecurrent mortgagecrisisintheUnitedStates. centrated onUSRMBS(nearly70%ofthetotalportfolio)and In theFinancialProducts portfolio,theassetsare highlycon- requirements andfitwithinsingleaggregate risklimits. grade qualityatinception,meetingFSA’s legalandstructuring schedule formeetingthemwasstrictly respected. were thefocusof special attentionthroughout theyear. The That authorizationwassubsequent torecommendations, which operational level. to usethatverydemandingmethodbothatconceptualand 18, 2007,DexiawasthefirstBelgianbanktobeauthorized ing, FinanceandInsuranceCommissiondecisionofDecember and itssolvencyratios.Indeed,according totheBelgianBank- to calculateitsrequirements interms of capitalandreserves RatingBasedApproachAIRBA –AdvancedInternal method Since January1,2008,theDexiaGroup hasbeenusingthe The BaselIIframework is verylowandmonitored through sensitivitylimits. risk are hedgedwithderivatives.Theresidual interest raterisk Products portfolio.Assetsandliabilitiesbearinganinterest rate Market riskislimitedandmainlytobefoundintheFinancial acceleration forFSA. policy holdersonlyatthetimelosseventoccurs,without is lessexposedtoliquidityasFSAhasgenerallypaylosses recourse toaliquiditylinefrom Dexia.TheInsuranceportfolio and ismitigatedbymaintainingacushionofliquidassets closely monitored byDexiaandFSAriskmanagement teams higher collateralrequirement from GICproviders. Thisriskis Investment Contracts(GICs)ontheliabilitysideorincaseof This riskarisesincaseofearlyterminationtheGuaranteed FSA’s liquidityriskismainlyintheFinancialProducts portfolio. AKTRISK MARKET RISK LIQUIDITY that future authority andtheEuropean CentralBank. pean levelandthatcloselinksshould beestablishedbetween should bestrengthened bygivingitmandatorypowersatEuro- the role oftheCommittee ofEuropean BankingSupervisors tional contactshouldbemaintainedwithlocalregulators, that supervision. Dexiasupportsthisreform andbelievesthatopera- reform onlargeexposure andthereinforcement ofEuropean Capital Requirement Directive, inparticular withrespect tothe levelontheamendmentsto at nationalandinternational Lastly, Dexiaiscloselyinvolvedintheconsultationsbeingheld 2008. communicationsince level. IthasbeenpartofDexiaSAexternal mation tobegiventhemarket,appliesonlyatconsolidated Pillar 3,whichdefinesthequalitativeandquantitativeinfor- informed ofthedevelopmentsrelated toPillar2. and ManagementBoard ofDexiaSAhavebeenkeptclosely constitutes oneofitsmajorconstraints.TheBoard of Directors for 2009isthusfoundedonthenotionofriskappetitewhich commercial strategyandfinancialplans).Thebudgeting process larly inthedecision-takingprocess onrisks,thereporting, the is integratedinthemanagementofbank(andmore particu- accordance withtheschedulelaiddown.ThePillar2 approach to theBelgianBanking,FinanceandInsuranceCommissionin required byCircular PPB-2007-15-CPB-CPA hasbeensubmitted with Pillar2requirements. Apreliminary Pillar2applicationfile An inter-Group project teamwassetuptoensure compliance among eachoftheleadingentitiesandtheirsubsidiaries. the advantagesofdiversification,thattotalhasbeenallocated Capital itrequires fortheGroup asawhole.Taking accountof measuring themandhascalculatedtheamountofEconomic types ofrisksitencounters,hasdevelopedamethodologyfor Adequacy AssessmentProcess). Dexiahasthusidentified allthe Capital needs intermsofeconomiccapital(ICAAP–Internal their risksandbecapableofproviding avalidestimate oftheir systemsforcalculatingandmanaging have establishedinternal quate capital.Thismeansthattheymust,amongotherthings, process whichensures thattheirriskprofile ismatchedbyade- their regulators thattheyhaveputinplaceacapital adequacy from December31,2008,requires thebankstodemonstrate tional risk,sincePillar2,whichhasbeenapplicableinBelgium statutory capitalinrelation tocredit risk,marketriskandopera- The BaselIIreform isnotrestricted tothecalculationof harmonization isseenasamajornewchallenge. further shorteningofthosedeadlinestoconformEuropean ing thedatawere graduallyreduced overtheyear;howevera by thewidevarietyofnationalformats.Deadlinesforproduc- quality andtechnicalresources thatismadeevenmore difficult and isahighlycomplexpainstakingprocess intermsofdata close collaborationbetweenthevariousentitiesofGroup The newCOREP(CommonReporting)isproduced thanksto the Dexiatransformationplan,thisportfolioisinrun-off. to VaR limits,givenitsdifferent investmenthorizon.Following The credit spread portfolioonthebanking booksisnotsubject and Greeks andscenarioanalysis). inal, maturityandauthorizedmarketlimits,sensitivitylimits ity tograsptherisksrelated tothedifferent activitylines(nom- applies awidesetofotherriskmeasures basedontheircapac- As acomplementtoVaR riskmeasures andtriggers,Dexia positions tomarketvolatilities. ter apprehension andmeasurement ofthesensitivitythose cific andhistoricalVaR methodologies,withaviewtobet- moreover measured bymeansofahistoricalVaR approach. parametric VaR approach. s s s different portfolios. ability accuratelytomeasure themarketriskinherent inthe developed multipleVaR approaches whichare basedontheir fidence levelandforaholdingperiodof10days.Dexiahas the potentiallossthatcanbeexperiencedwitha99%con- as oneoftheleadingriskindicators.TheVaR isameasure of The DexiaGroup adoptedtheVaR measurement methodology much lower. positions inequity, exchangeandotherriskfactorsremains credit markets,whileitsmarketexposure arisingfrom trading specific interest rate(spread) riskreflecting today’s volatilityin (VaR) termsmainlystemsfrom generalinterest rateriskand Dexia’s exposure tomarketriskasmeasured inValue atRisk hedged. rule, themarketrisksgeneratedbyotherbusinessesare Treasury andFinancialMarket(TFM)activities.Asageneral exchange rates,share pricesandothers)stemsfrom its ments inmarketprices(generalandspecificinterest rates, Market riskcomprisestheGroup’s exposure toadversemove- Market risks AAEETO H RISK THE OF MANAGEMENT Nonlinear andparticularrisksare measured through spe- Specific interest rateriskintradingbooksandequity are General interest rateandforex risksare measured through a methodology. and standardsgovernance orriskconceptsandmeasurement new product approval proposals, guidelinediscussion,risk ing riskandtriggerreporting, limitdefinitionandreview, market risk.Itsagendacoversawiderangeoftopicsinclud- on amonthlybasisanddealswithallthetopicsrelated to The MarketRiskandGuidelinesCommitteemeetsatleast Group. consistency andthequalityofriskcontrol withinthe entire coordinated andconsolidatedatGroup leveltoensure overall local supervisoryandregulatory bodies.Theentire process is aries included).Theseteamsare alsoinchargeofreporting to risk managementteamsofthemajorGroup entities (subsidi- limits andthebreach oftriggers)isattributedtothe local putation oftheriskindicators,control oftherespect of market riskmanagementandfollow-up(suchasthecom- Day-to-day responsibility forimplementingsoundand robust income andriskmeasurement. methods tobeappliedatGroup levelastostatement of The RiskManagementdepartmentdefinesthecalculation entities. guidelines andprocedures atthelevelofdifferent Group These decisionsare consequentlytranslatedinto policies, processes). ological choices,organizationofreporting andofthe decision of marketriskmanagement(overallappetite,method- Dexia’s ManagementBoard determinesthestrategicdirection and fiveexceptionsforcredit spread risk. for interest rate&forex risks,fourexceptionsforequityrisk given themarketvolatility, resulting in2008sixexceptions The backtestingresults bymajorriskfactorremained good, Commission. been introduced totheBanking,FinanceandInsurance modelapprovalAn additionalinternal forequityriskhas interest rateriskwithinthetradingscope. requirement calculusonforeign exchangeriskandgeneral VaRDexia usesitsinternal modelfortheregulatory capital RAIAINANDCONTROL ORGANIZATION Dexia Annual report 2008 Risk management 61
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 62 Dexia Annual report 2008 Value atRisk both intermsofVaR andstatementofincome. allowed areduction ofthevolatilitysomeextrading books, Reclassification underIAS39,appliedasofOctober1,2008 tant limitreductions havebeenimplemented. However, inlinewiththeDexiastrategicreorientation, impor- the financialmarketsinallmajorriskfactors. EUR 66.5millionin2007),reflecting theincreased volatilityon DenizBank) amountedtoEUR126.6million(ascompared to is disclosedinthetablebelow. Average Value atRisk(including The detailedVaR usageofTreasury andFinancialMarkets(TFM) (5) EQT: equity. AssetsandLiabilitiesManagement(ALM)Non-Delegated,DynamicEquity.(4) Without (3) FX:Forex. (2) IR:interestrate. (1) DenizBankincluded. related bodies.Average ratingwasAasofDecember31,2008. tion). Mainassetclassesare localauthoritiesandpublic sector lion accountedinLoansandReceivablesfollowingreclassifica- EUR 88.1billionasofDecember31,2008(ofwhich57.3bil- Public financebondexposure (bankingbook)amounted to ABS. Average ratingwasAA-asofDecember31,2008. tion). Mainassetclassesare banks,covered bonds,MBSand lion accountedinLoansandReceivablesfollowingreclassifica- 77.3billionasofDecember31,2008(ofwhichEUR29.1bil- EUR Dexia managesacredit spread portfolioamountingto exposure (bankingbook) and thepublicfinancebonddenominated Sensitivity ofthecredit spread portfolio lblAg66.5 Avg Global (in millionsofEUR) AT RISK TFM’S VALUE niiulAg3. 7.0 34.1 Avg Individual ure a 98127.5 142.0 99.8 Limit VaR Quarter End Max a 8016.0 58.0 Max 99%) (10 days, VaR Banking) (1) IR (Trading (2) &FX and (4) (3) Trading EQT (5) 0. 179.1 100.3 072008 2007 Trading Spread 57.4 25.2 commodities) (Inflation, prices abovetheJune30,2008situation. market pricesare cappedlinebyinorder nottoshowany on thetypeofassetclassandmarketsector. Theseadjusted ket pricemethodologywithdifferent parametersdepending notes tothefinancialstatementsisbasedonanadjustedmar- used forLoansandReceivablesinFrench localGAAP and IFRS used forAFSreserve calculation.HowevertheMarkto Model The amortizedAFSreserve basedonSeptember30, 2008is Bonds reclassified inLoansandReceivables 2008. of mark-to-modelvaluationswasperformedforend-of-year ity ofprices/spreads inthevaluationprocess, adevelopment Given theilliquidityofmarketsandreduced observabil- Banking PortfolioValuation the (banking)publicfinancebonddenominatedexposure. the (banking)credit spread portfolioandEUR-83.0millionfor basis pointspread increase amountedtoEUR-38.5millionfor As ofDecember31,2008thesensitivityinfairvalueaftera Credit spread sensitivity ited asinterest rateriskishedged. The interest rateriskoftheCredit Spread Portfolioisverylim- Interest ratesensitivity Other CO . 0614.4 90.6 2.8 . 367.3 43.6 0.4 2 , Banking) IR (Trading (2) &FX and (4) (3) 178 (end2008:130) Trading EQT 126.6 (5) Trading Spread 1. 5.9 116.0 332.3 73.3 commodities) (Inflation, Other CO 2 , sure tofirstandsecondorder sensitivity andbehavioralrisk. liabilities. Sensitivityriskmeasures reflect thebalance-sheetexpo- results from thestructuralimbalancebetween Dexia’s assetsand ing termsisprimarilyonlong-terminterest ratesinEurope and regime. Theriskexposure asmeasured ineconomicandaccount- ble adversechangeininterest ratesunderIFRShedgeaccounting pleted bymeasuringthesensitivityofDexia’s toapossi- earnings positions isusedasthemainALMindicator. Thisindicatoriscom- A calculationofthesensitivitynetpresent valueoftheALM Group’s variousentities. Measurement ofbalance-sheetrisksisharmonizedamong the of theALCOGroup (ALMCommittee)meetingonamonthly basis. gers, sensitivitylimits,dailyfollow-up...); market riskmanagementdrivenapproach (VaR limitsandtrig- currencies) andCashLiquidityManagementcaptured bya accounting lossunder different scenariocalculations. Test measures thatprovide anindicationofthemaximum andStress-management frameworkincludes Earnings-at-Risk prices, volatilityorcorrelation. Amongothers,themarketrisk the portfolio’s vulnerability toadversechangesinequity The Value atRiskmeasurement approach isappliedtoassess Equity s s categories: The ALMinterest rateriskmanagementissplitinto two Interest rate Management function(ALM). managed andsupervisedbytheGroup’s AssetandLiability Structural interest rate,equity, forex andliquidityrisksare Management (ALM) Asset andLiability obtain theFairValue AFS. Prices are calculatedasusual(basedonmarketprices)to Bonds classifiedinAFSandvaluedfairvalue 2008 situation. line inorder nottoshowanypricesabovetheSeptember30, plus aliquiditycost.Thesevaluationpricesare cappedlineby on stressed BaselIIprobability ofdefaultandlossgiven The credit spreads providing theMark-to-ModelAFSare based Bonds classifiedinAFSandvaluedbymodel AAEETO H RISK THE OF MANAGEMENT long-term ALM falls under the direct decision and control authority long-term ALMfallsunderthedirect decisionandcontrol authority short-term ALM(upto2yearsandlongeronsomedelegated methodology. are calculatedonthebasisofaspecificbutharmonized risk risk factorsare reported totheGroup ALCO.Riskindicators are inplaceatbothlevels.Interest rate,inflationandequity are presented totheALCO.Ad-hocprocesses andcommittees Specific reports oninsurancecompaniesandpension funds Insurance companiesandpensionfunds participation investmentsinforeign currencies. opportunity tohedgeallorpartofthecurrency riskrelating to ing theforeign currency risks.Furthermore, Dexiaanalyzesthe currencies (e.g.USD,CAD,TRY). TheALCOdecidesonhedg- liabilities, incomeandexpenseare alsodenominatedinother Although Dexia’s reporting currency istheeuro, itsassets, (Structural) Forex and pensionfunds. lion asofDecember31,2007),excludinginsurancecompanies EUR -198millionasofDecember31,2008(against-116mil- curve. DexiaGroup’s ALMlong-termsensitivityamountedto economic valueifinterest ratesraiseby1%across theentire The sensitivitiesmeasure thechangeinbalance-sheetnet on amonthlybasis. authority oftheALCOGroup (ALMCommittee),whichmeets Long-term ALMfallsunderthedirect decisionandcontrol (ALM sensitivity) Long-term ALMinterest rateriskexposure local entities(interest, forex, equities). transfer pricingmechanisms)andoninvestmentstrategiesin bly ontheinvestmentofshareholders’ equityandon internal the methodologiesandriskmeasurement guidelines (nota- Group’s AssetandLiabilityManagementprocess, decideson The ALMCommitteemonitorstheoverallconsistencyof Committee. ALM risksare globallymanagedbytheDexiaGroup ALM L EXPOSURE ALM ANDCONTROL ORGANIZATION Dexia Annual report 2008 Risk management 63
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 64 Dexia Annual report 2008 Brothers debacle. the 2007-2008financialturmoil,particularly aftertheLehman Dexia’s liquiditymanagement wasseriouslychallengedduring Liquidity crisis hedged bymeansofacollarstrategyattheinsuranceside. 60% ofthedown-sideriskonquotedequityexposure is recorded inaccountingresults ifthere isadeclineinvalue. or whenthere isalastingdeclineinthefairvaluethatcouldbe ket valuefallsbeneath75%oftheinitialpurchase priceand/ Dexia’s impairmentprocedure isactivatedwheneverthemar- 99% andforaholdingperiodof10days. tial lossthatcanbeexperiencedwithalevelofconfidence The equityVaR calculated by Dexiaisameasure ofthepoten- materializes. measures theimpactinstatementofincomeif the VaR in marketvalue,whereasatRisk(EaR) theequityEarnings The equityValue atRisk(VaR) measures thepotentialchange sensitivity) ALM equityexposure (listedshares and insuredperson)throughprofitsharing. (1) %VaR/MV representsthepercentagelossthatcanbeexperiencedonmarketvalue,notconsideringriskmitigation(risk (2) %VaR/MV representsthepercentagelossthatcanbeexperiencedonmarketvalue. (1) DenizBanknotincluded. December 31,2007 eebr3,20 9 66 96 76 94 97 396 822 599 895 1,105 December 31,2008 September 30,2008 June 30,2008 March 31,2008 December 31,2007 (in millionsofEUR) PORTFOLIO COMPANIES SENSITIVITY–BANKING SHARES LISTED (in millionsofEUR) PORTFOLIO COMPANIES SENSITIVITY–INSURANCE SHARES LISTED March 31,2008 June 30,2008 September 30,2008 December 31,2008 LIQUIDITY aktvleVaR Market value aktvleVaR Market value ,5 7 .%(36) 6.9% 170 2,451 ,3 3 .%(153) 9.0% 237 2,635 ,9 0 .%(369) 8.6% 205 2,397 ,8 9 .%(440) 9.6% 190 1,985 ,0 2 41 (307) 14.1% 225 1,601 access tofunding marketsandthestabilizationof deposit EUR 8.5billioninthefirstquarter2009 andhasfacilitatedthe to issuethree public transactionsforatotalamountof mentioned Statesguarantee.This supportallowedDexia late SeptemberandearlyOctober 2008thankstotheabove gradually improved from thedifficultsituationprevailing In astillchallengingenvironment, theGroup’s liquidityhas renewed betweenOctober9,2008,and31,2009. before October31,2011andhavebeencontracted,issuedor provided thattheseliabilities,bondsorsecuritiesfalldue and otherdebtsecuritiesissuedforthesamecounterparts, institutions andinstitutionalcounterparts,aswellbonds to EUR59billion)andcoversDexia’s liabilitiestowards credit 31, 2008,theoutstandingofguaranteedfundingamounted total maximumamountofEUR150billion(asDecember on manyofitsfundingsources. Thisguaranteerelates toa guarantee oftheStatesBelgium,FranceandLuxembourg Since October9,2008,Dexiahasbenefitedfrom thecombined come thissevere liquiditysqueeze. stantial reserves ofhigh-qualityassets,Dexiawasable toover- Belgian, French andLuxembourgStatesaswellto itssub- not spare Dexia.However, thankstothejointsupport ofthe against high-qualitycollateral)attheoutsetofcrisisdid (both unsecured andsecured, withtheexceptionofrepos The severe drying-upofwholesalemoneyandcapital markets (1) VaR/MV % VaR/MV % 67 (69) (129) (94) (57) 16.7% 12.7% 11.7% 10.5% shared byinsurancecompany 8.7% (1) (11) (2) EaR EaR networks); Foncières orDexiaKommunalbank Deutschland’s s s liquidity risk.Dexia’s most importantfundingsources are: The diversityofDexia’s fundingsources isakeymitigantofits is testedonaregular basis. A globalliquiditycontingencyplanispartoftheguidelinesand straints intoconsideration. agement framework,Dexiatakesalllocalregulatory con- liquidityriskman- On topoftheconstraintssetbyitsinternal mendations andbestpractices. which makesitcompliantwiththelatestregulatory recom- This frameworkisback-testedandupdatedonaregular basis nial financialplan. management isattheheartofdefinitionDexia’s trien- supervised onamonthlybasis.More generally, liquidityrisk a dailybasis.Longer-term fundingneeds(upto3years)are This surveillanceofshort-termfundingneedsisperformedon nation ofboth. including bank-specificandmarketstresses orevena combi- scenario aswellunderavarietyofsevere stress scenarios with itssecured fundingcapacityistestedunderan ongoing current crisis.TheadequacyofDexia’s future liquidityneeds tively; takingintoconsiderationtheverylastlessonsfrom the tions. Itssecured fundingcapacityisdeterminedconserva- from itscurrent andfuture onandoff-balance-sheet transac- hensively, takingintoconsiderationtheliquidityneedsarising Its future fundingneedsare assesseddynamicallyandcompre- exceed itsproven secured fundingcapacity. sis. Overallpolicyisthatitsfuture fundingneedsshould never reviewed inthelightofcurrent financialandliquiditycri- Dexia’s approach toliquidityriskmanagementhasbeen Liquidity RiskManagementframework antee oftheStatesBelgium,FranceandLuxembourg. markets and/orthecontinuedsupportofcombinedguar- depends onthereopening ofthewholesalemoneyand capital As manyotherfinancialinstitutions,Dexia’s liquidityposition ness planssoastoreduce itsfundingneedssubstantially. thorough review ofitscurrent balancesheetandfuture busi- liquidity riskmanagementframeworkandbyenteringintoa agement. Dexiaresponded tothesechangesbyamendingits This crisisshooktheveryfoundationsofliquidityriskman- lived andneverjeopardized ouroverallliquidityposition. its atthebeginningofOctober2008butthistrend wasshort- Some limitedoutflowswere witnessedonDexia’s retail depos- opportunities tolengthenthematurityofitsfundingsource. US. Goingforward, Dexiawilltakeadvantageofallmarket and byadecrease ofthedrawsoncommittedlinesin reduction innewloanproduction outsidethecore markets base. Thisimprovement wasalsopossibleduetoanintended covered bonds(mainly DexiaMunicipalAgency’s Obligations unsecured bonds(of whichbondsdistributedviaitsown Pfandbriefe ); s Control Self-Assessment. coordinate thecollection ofriskeventdataandtheRisk appoint anoperationalriskcorrespondent whoserole isto the operationalriskmanagement.Fortheiractivityfieldthey The Security andInsurance. ing BusinessContinuityandCrisisManagement,Information a consistentGroup-wide operationalriskframeworkintegrat- Head ofGroup OperationalRisk,ensures thedevelopmentof The the operationalriskeventsandrelated analysis. lines adaptedtobusinessactivities,andtransversallyreviews Group ChiefRiskOfficer, detailstheapproved policiesinguide- The wide policies. resentatives oftheManagementBoard, approves theGroup- The required decisions. the riskprofile ofthedifferent Group’s activitiesandtakesthe The ManagementBoard regularly reviews theevolutionof responsibilities funding capacities. order toachieveasoundbalancebetweenthelending andthe at providing therightincentivetovariousbusiness linesin cost ofitsmainfundingsources more clearly. Thischangeaims pricing systemin2008order toreflect therapidlychanging throughout theGroup. Dexiaalsorevisitedtransfer itsinternal ity activitylineensures thatacommonstrategyis applied ferent entitiesoftheDexiaGroup, Dexia’s cashandliquid- Although thelocalliquiditypositionsare managedby thedif- Dexia’s liquidityriskismanagedusingacentralizedapproach. the Statesguarantee. and non-bankdepositsofwhichseveralare benefittingfrom central bankdeposits,CP/CD’s, fiduciarydeposits,interbank Belgium, FranceandLuxembourg; s s s s s the followingelements. The operationalriskmanagementframeworkrelies mainly on Operational risks a varietyofwholesaleshort-termunsecured fundingsources: bilateral andtri-partyrepo transactions; central banktenderoperations; retail deposits(mainlyinBelgium,LuxembourgandTurkey); Clear governance withclearlydefinedrolesClear governance and as from 2009,bondsandCP’s guaranteedbytheStatesof Operational RiskandSecurityCommittee Risk PolicyCommittee Operational RiskGuidelinesCommittee Line Management functionisprimarilyresponsible for , astrategiccommitteewithrep- , chaired bythe Dexia , chaired bythe Annual report 2008 Risk management 65
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 66 Dexia Annual report 2008 latory capitalforoperationalriskin2008. Dexia appliesthestandardized approach tocalculatetheregu- reporting produced forallactivities. lowed regularly. Thisfollow-upisincludedinthe quarterly risks identifiedare definedbytheLineManagement, andfol- Corrective actionslinkedtomajoreventsdetectedor tokey gation across theGroup. have beenissuedinorder toensure thesamelevelofriskmiti- of InformationRiskandBusinessContinuity, Group guidelines are updatedonaregular basis.Furthermore, withinthearea of mitigatingactions.Theseriskandcontrol self-assesments of themainrisksandcontrols, whichcanleadtothedefinition Dexia activities,andfocusontheidentificationassessment The riskandcontrol self-assessmentexercises coverallmajor by theOperationalRiskfunction. the LineManagementare reported totheManagementBoard cant eventsincludingariskmitigationactionplandefinedby operational riskeventsinacentraldatabase.Themostsignifi- The DexiaGroup hascontinuedforthefifthyeartogather s more thanthehalfofeconomiccapitaluse. Credit riskincludessolvencyandspread riskandrepresents 13,746millionattheendof2008. EUR Dexia’s economiccapital(excludingFSA)amounted to year). ment isperformedatahighseveritylevel(99.97%,one- The economiccapitalframeworkcoversallriskfactors.Assess- Economic capital s s s OA 5,8 2,1 2,7 2,0 152,837 129,400 121,670 120,113 159,383 TOTAL egtdoeainlrss ..90690690610,269 9,096 9,096 9,096 n.a. Weighted operational risks egtdmre ik 5895935605743,073 5,724 5,690 5,923 5,879 Weighted market risks WEIGHTED RISKS egtdcei ik 5,0 0,9 0,8 1,8 139,495 114,580 106,884 105,094 153,504 Weighted credit risks (in millionsofEUR) Calculationofregulatory capitalrequirements Definitionandfollow-upofactionplans Risk andcontrol self-assessment Operational riskeventdatacollection e.3,20 ac 1 08Jn 0 08Sp.3,20 Dec.31,2008 Sept.30,2008 June30,2008 March 31, 2008 Dec. 31,2007 ae I Basel year-end 2008. reclassification offinancialassetswhichwasperformedat banking book(EUR+24.5billion)inthefourthquarter. the inclusionofFSA’s FinancialProducts portfoliointoDexia’s tion ofDenizBanktoBaselIIinthethird quarterof2008 and asset qualityandratings Weighted risks,capitaladequacy, losses ofextreme severities. nomic capitalneededbythebusinesslinestocoverunexpected Available financialresources remain inexcessofthetotaleco- Services activities. tors toeconomiccapital,followedbythePersonalFinancial Public andWholesaleBankingactivitiesare themaincontribu- factor. Operating risk(businessandoperationalrisk)isthethird risk risk, currency riskandpricerisk. Market riskisthesecondfactorandincludesinterest rate s s s consequence ofthefollowingelements: The increase observedinthesecondpartofyear isthe for aEUR42billionweightedriskrelief. of 2007.TheswitchtoBaselIIasJanuary1,2008allowed 152.8billionascompared toEUR159.4billionattheend EUR At year-end, Dexia’s totalweightedrisksamountedto the section“TheBaselIIframework”ofthischapter. to publishitssolvencyratios.More informationisavailable in work tocalculatethecapitalrequirements forcredit risksand From January1,2008onwards, DexiausestheBaselIIframe- the lastthree years). standard method(basedontheaveragerecurrent revenues of II 31, 2008asaresult ofthecalculationmodeunderBasel EGTDRISKS WEIGHTED an increase of an increase of a decrease of weighted operationalrisks weighted marketrisks weighted credit risks ae II Basel followingthemigra- , duetotheIAS39 asofDecember (3) Theratiobetweentheportfolioimpairmentsandimpairedloans. (2) Theratiobetweentheimpairedloansandgrossoutstandingloans. (1) Doesnotincludethecollectiveimpairmentsetasidetocoverpotentialriskonshare-leasing products. capital. regulatory For thecalculationofsolvencyratiosin2007,treatmentqualifiedparticipationsbankingandinsuranceinstituti the containmentofFinancialProducts portfoliowere taken from theongoingsaleofinsuranceactivities FSA and lion. Inthefourthquarterof2008,regulatory treatment 6.0bil- of September2008ascapitalwasreinforced withEUR 10.6% asofDecember31,2008withapeakat14.5%theend 1ratioincreased fromThe Tier 9.1%attheendof2007to statements publishedinthisannualreport. accounting principlesandrulesoftheconsolidatedfinancial 1equityifnegative.Thisisexplainedinthe deducted from Tier on shares 2equity. are addedtoTier Theywouldhavebeen not partoftheregulatory equity. ThepositiveAFS reserves The AFSreserves onbondsandcash-flowhedgereserves are equity. the LuxembourgStateisnotyetincludedincore shareholders’ 1capitalcontributionby distress. AnotherEUR0.4billionTier business andofthemarketenvironment andtothefinancial capital wasinjectedduetoasignificantdeteriorationofthe of October3,2008tempered bythenetlossofyear. The lion, a11%increase duetotheEUR6.0billioncapitalincrease 1capitalamountedtoEUR16,126mil- At theendof2008,Tier Assets qualityratio Coverage ratio ir1rto91 12 14 45 10.6% 11.8% 14.5% 16,126 152,837 15.3% 11.4% 18,077 18,741 129,400 12.3% 11.2% 19,747 121,670 13,843 12.1% 14,997 120,113 9.1% 13,483 9.6% 14,533 159,383 14,549 15,345 Capital adequacyratio Tier 1ratio Weighted risks Total regulatorycapital Tier 1capital (in millionsofEUR,exceptwhere indicated) Portfolio impairments Impaired loanstocustomers (in millionsofEUR,exceptwhere indicated) QUALITY OFRISKS ADEQUACY CAPITAL AIA ADEQUACY CAPITAL (3) (2) (1) e.3,20 ac 1 08Jn 0 08Sp.3,20 Dec.31,2008 Sept.30,2008 June30,2008 March 31, 2008 Dec. 31,2007 e.3,20 ac 1 08Jn 0 08Sp.3,20 Dec.31,2008 Sept.30,2008 June30,2008 March31,2008 Dec. 31,2007 ae I Basel 72 74 60 42 58.9% 0.99% 64.2% 0.38% 66.0% 0.47% 67.4% 0.48% 67.2% 0.50% ,1 ,7 ,2 ,2 3,535 1,329 1,227 1,170 1,218 1 8 1 5 2,083 853 810 789 818 0.99% and58.9%attheendofyear. As aresult, assetqualityandcoverageratiosare respectively Receivables. cial Products portfoliowhichwasfullytransferred inLoansand impairments are impactedbytheimpaired assetsoftheFinan- nificantly inthefourthquarterof2008.Inaddition,portfolio (application ofIAS39amendment),impaired loans rose sig- ing duetothereclassification ofassetsasOctober 1, 2008 Further totheincrease oftheLoansandReceivablesoutstand- These ratiosare abovetheregulatory requirements. amounted to9.6%atthesamedate. the endof2008wasrelatively 1 low(i.e.9%).TheCore Tier 1ratioat The contributionofhybridinstrumentstotheTier points onthesolvencyratio. Products portfolio).Thishadanegativeimpactof350basis FSA andEUR24.5billionweightedriskslinkedtotheFinancial into account(i.e.aEUR1.7billionlossrelated tothesaleof ASSET QUALITY ae II Basel ons isthedeductionoftotal Dexia Annual report 2008 Risk management 67
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Risk management 68 Dexia Annual report 2008 look byMoody’s (January19,2009),Awithstableoutlookby outlook byFitch(September30,2008),A1withnegativeout- Dexia CréditLocalandBIL–are ratedAA-withstable Belgium, The Group’s principalbankingentities–DexiaBank RATINGS Fitch ei akBlimA-Sal ulo F1+ Stableoutlook AA- Dexia BankBelgium ei rdtLcl A tbeotokF1+ Stableoutlook AA- CréditLocal Dexia ei aqeItrainl uebugA-Sal ulo F1+ Stableoutlook AA- Dexia BanqueInternationaleàLuxembourg ei uiia gnyAA- AAA MunicipalAgency Dexia Moody’s ei akBlimA eaieotokP-1 Negativeoutlook A1 Dexia BankBelgium ei rdtLcl 1Ngtv ulo P-1 Negativeoutlook A1 CréditLocal Dexia ei aqeItrainl uebugA eaieotokP-1 Negativeoutlook A1 Dexia BanqueInternationaleàLuxembourg ei uiia gnyAa- Aaa MunicipalAgency Dexia Standard &Poor’s ei akBlimASal ulo A-1 Stableoutlook A Dexia BankBelgium ei rdtLcl tbeotokA-1 Stableoutlook A CréditLocal Dexia ei aqeItrainl uebugASal ulo A-1 Stableoutlook A Dexia BanqueInternationaleàLuxembourg ei uiia gnyAA- AAA MunicipalAgency Dexia DBRS ei akBlimA lw eaietedR-1(middle) Negativetrend AA(low) Dexia BankBelgium ei rdtLcl A(o)Ngtv rn R-1(middle) Negativetrend AA(low) CréditLocal Dexia ei aqeItrainl uebugA lw eaietedR-1(middle) Negativetrend AA(low) Dexia BanqueInternationaleàLuxembourg RATINGS Standard &Poor’s (October7,2008). by Fitch(October1,2008),Moody’s (January23,2009)and The triple-AratingofDexiaMunicipalAgencywasaffirmed negative trend byDBRS(November17,2008). Standard &Poor’s (December19,2008)andAA(low)with ogtr ulo Short-term Outlook Long-term sale ofFSAinthefourthquarter2008. has recorded alltheaccountingandprudentialimpactsof the saleofFSAinsuranceactivitiestoAssured Guaranty. Dexia 2009 theUSanti-trustauthoritiesgavetheirauthorizationfor excluded from thescopeoftransaction.OnJanuary 20, on theNewYork StockExchange.FinancialProducts activityis sell FSAHoldingstoAssured GuarantyLtd,abondinsurer listed ously 51%ownedbyDexia). took fullownershipofDexiaKommunalkredit BankAG (previ- nalkredit AustriaAG(previously 49%ownedbyDexia)and In 2008 quarter of2007. covered bonds. and intheEuropean EconomicArea through theissuanceof Group’s publicsectorfinancingbusinessinOECDcountries principal activityistherefinancing ofassetsgenerated bythe consolidated asfrom July1,2007.DexiaLdGBanque SA’s àLuxembourg,isfully sidiary ofDexiaBanqueInternationale solidated asfrom April1,2007. ing oftheirsale. Assurances SAleftthescopeofGroup followingtheclos- s s s s s s In 2007 consolidation Changes inthescopeof Financial results IACA STATEMENTS FINANCIAL CONSOLIDATED PRELIMINARY NOTESTOTHE On November14,2008Dexiasignedabindingagreement to As from thefourthquarter, Dexiaexitedfrom Kommu- The consumercredit companyFidexiswassoldinthe fourth Dexia Lettre deGage(LdG)BanqueSA,a100%-owned sub- Deniz HayatSigortaAS,aTurkish insurancecompany, iscon- As ofJune30,2007DexiaBanquePrivéeFranceandBelstar ing costs. transfer priceswhichdonotproperly reflect increasing fund- include thePublicFinanceBondPortfolioandare based on reporting. Theresults ofPublicandWholesaleBankingstill within theGroup wasmaintainedforthepurposeoffull-year The scopeofthevariousbusinesslinesandtransferprices lower byEUR3million). million;taxes 4 by EUR15million;costofrisklower million;costslower 20 EUR +2million(incomelowerby reported andpro forma2007netincomeGroup share is very limited.Inabsolutefigures, thedifference betweenthe The impactsofthechangesinscopeconsolidationwere Analytical treatment sentation isavailableonDexia’s website: year 2008presentation foranalystsandinvestors”. This pre- financial crisisisprovided withinthe“Fourthquarterand full- An in-depthreview oftherisksrelated totheimpactsof Impact ofthefinancialcrisis EUR 1.3billionlowerattheendofDecember2008. have beenlimitedandtheAFSreserve wouldhave been impairments onfullyear2008statementofincomewould not beenmade,thenetimpactfrom valuemovements and with effect from October1,2008.Ifthesereclassifications had (AFS) andtradingassetsforatotalamountofEUR100billion, tions are met.Dexiareclassified partofitsAvailable-For-Sale some non-derivativeassetscanbetransferred ifspecific condi- reclassification amendmentstoIAS39andIFRS7whereby dance withallIFRSsasadoptedbytheEU.Dexiaused The consolidatedfinancialstatementsare prepared inaccor- IAS 39reclassification www.dexia.com. Dexia Annual report 2008 69
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 70 Financial results Dexia Annual report 2008 sale ofFSAInsurance,announcedonNovember14,2008. also bookedalltheaccountingconsequencesofongoing fair valueadjustments,impairmentsorlosses.In2008,Dexia Against thisbackground, Dexiawashitinvariouswaysthrough fourth quarterof2008only. of theEuroStoxx 50by44%forthefullyearand19% nificantly. Thedeclineofequitymarketsacceleratedwithafall the fourthquarterof2008financialcrisisworsenedsig- securities marketsandspecificRMBSbankcredit risks.In crisis creating majordisruptionstooverallmarketliquidity, 2008 wascharacterizedbyanexceptionallysevere financial (1) Income=interests,feesandcommissions,tradingotherincome;alsomentioned asrevenues. Income (in millionsofEUR) INCOME OF STATEMENT CONSOLIDATED e noe266(,4)n.s. n.s. -24.3% (2.54) (78) (3,248) 629 2.18 2,636 (103) (256) Earnings pershare(inEUR) Net income–Group share Minority interests Net income Tax expense oto ik(6)(,9)x20.2 +7.4% x3.1 n.s. (3,292) (4,119) (163) (22) (563) (3,834) (7) 3,062 Pretax income Impairment on(in)tangibleassets Cost ofrisk Gross operating income Expenses OSLDTDSAEETO INCOME STATEMENT OF CONSOLIDATED fwihIpc nnilcii 38 588 x16.4 -12.1% (5,868) 2,543 (358) 2,894 of whichNetincomeexcl.financialcrisis of whichImpactfinancialcrisis (1) in Treasury andFinancialMarkets. ment; EUR81millioninInvestorServicesand715 Personal FinancialServices;EUR69millioninAssetManage- (excluding FSA);EUR338millionforFSA;581in tive results: EUR1,126millioninPublicandWholesale Banking Excluding crisisallthecommercial businesslinespostedposi- EUR 2,543million,down12.1%compared to2007. ing crisisimpacts,thenetincomeGroup share amountedto purely related toFSAamountedEUR3,139million.Exclud- results withachargeofEUR5,868million,whichimpacts all, thefinancialcrisissignificantlyimpactedGroup’s 2008 lion againstanetprofit ofEUR2,533millionin2007.Over- During theyear2008Dexiareported anetlossofEUR3,326mil- Net incomeGroup share ,3 336 n.a. (3,326) 2,533 ,9 (3,877) -48.4% 2,892 3,556 6,896 0720 Variation 2008 2007 n.s. Impact ofthefinancialcrisisin2008 EUR 174milliononIcelandicbanks;57Washing- Largest componentswere: EUR473milliononLehman Brothers; million,mainlybookedinthethird quarterof2008. 810 EUR ties andinvestmentsforatotalamount,aftertax,of value deteriorationandlossesinsomebankcounterpar- -594million,aftertax. of thefinancialcrisisisEUR ing realized gainsandlossesintoaccount,theestimated impact million.Tak- 597 and shares, foratotalamountaftertaxofEUR impairments oninvestmentportfolios,mainlyfinancialbonds and withtheaimofmaintainingacautiousapproach. light ofthecontinueddeteriorationUSmortgagemarket lective impairment(notaximpact)ontheUSRMBSsector, inthe Financial Products crisisimpactincludesaEUR300million col- on HELOC,Alt-A,SubprimeandOptionARMsexposures). FSA’s their exposure toresidential mortgage-backedsecurities(mainly gage andmarketcrisis.Bothrealized substantialimpairments on EUR 810million)were bothdirectly affected bytheUSmort- EUR 676million)andFSAInsurance(foranamountaftertaxof value adjustments. tax assetsandthepartialreversal ofowncredit riskpositive also anumberofrelated effects likethewrite-downofdeferred EUR -1,655million.Theyincludenotonlythecapitallossbut fourth quarterof2008foratotalamount,aftertax, ance operationstoAssured Guarantywere bookedinthe (1) Excludingbankingcounterpartswithin insurance activities. s s s s ments orlosses: Dexia washitinvariouswaysbyfairvalueadjustments,impair- te 40 28 (604) (320) (228) (98) (386) (91) (420) - (500) (381) (169) - Own creditrisk(excl.FSA) Other Other valueadjustments Monolines Collective impairments TOTAL S nuac 42 84 (810) (3,139) (1,655) (2,729) (676) (594) (884) (1,665) (442) (1,187) (339) - (2,060) (452) (2,114) (1,264) (344) (649) Impairments &losses–bankingcounterparts Impairments &losses–insuranceactivities Impairments andother Insurance Sale ofFSA Insurance FSA FinancialProducts FSA FSA (in millionsofEUR) IN2008 CRISIS FINANCIAL THE OF IMPACT Dexia’s investmentportfolioswere affected bythe In itsownInsuranceoperations,Dexiabookedanumberof FSA’s FinancialProducts (foranamountaftertaxof All consequencesoftheongoingsaleFSAInsur- (1) ing books. ing books. of fairvaluemovementsonotherexposures withinDexia’s trad- rate foreachmonoline. at theendof2008afterconsideringadifferentiated recovery anteed bymonolines)amountedtoEUR472million(before tax) ments onDexia’s exposure (mainlyindirect through assetsguar- EUR 320million,aftertax.Impairmentsandcredit valueadjust- approach. and adversecredit riskfactorsledDexiatoadoptacautious total amountofEUR386million,aftertax.Reducedvisibility U 159million,aftertax. EUR as adirect consequenceofthisexceptionalfinancial crisisfor anumberofsmallernegativeimpactswere alsoidentified - EUR 86million; impairmentsonMadoff exposure foranaftertaximpactof - impairmentsonfundsforEUR101million,aftertax; - Slovakian subsidiary; aclient-related forex lossofEUR59millionviatheGroup’s - takes fullownershipofDexiaKommunalkredit Bank; tion bywhichDexiaexitsfrom Kommunalkredit AustriaAGand achargeaftertaxofEUR199millionrelated tothetransac- - EUR 604million.Themaincomponentsare: items related tothefinancialcrisisforatotalamount of s s s s EUR 60millionand30respectively, aftertax. 1subordinatedon bankshares bondsamountedto andTier ton Mutual.Inadditiontosmalleritems,impairmentsandlosses “Other value adjustments” (EUR 98 million) includes a number “Other valueadjustments”(EUR98million)includesanumber Impairments onDexia’s exposure tomonolinesamounted Dexia bookedcollectiveimpairments,forcredit risks,fora The “Other” category includes a number of atypical The “Other”categoryincludesanumberofatypical (before tax) Revenues 413 282 (5,868) (2,852) (4,173) 63 38 (810) (368) (613) 1 83 - 118 (before tax) Cost ofrisk Dexia Net income Annual report 2008 Financial results 71
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 72 Financial results Dexia Annual report 2008 savings products were underpressure. savings depositvolumesandmargins,feesgeneratedon (excluding crisisimpacts)decreased by1%year-on-year as ing commitments.AtPersonalFinancialServices,revenues Wholesale Bankingwere upby14%,duetohigheroutstand- Excluding crisisimpactsandFSA,revenues atPublic and Excluding financialcrisis,revenues rose by3.9%year-on-year. lion); lion); lion) andinDexia’s investmentportfolios(EUR613million); EUR 2,114millionprincipallycamefrom: EUR 2,060millionwere directly linkedtoFSA.Theremaining tively impactedforanamountofEUR4,173millionwhich the consequencesoffinancialcrisis.Revenueswere nega- almost halved(-48.4%)againsttheprevious period,dueto Total incomein2008amountedtoEUR3,556million,and Income lion (-0.3%versus2007). impacts, gross operatingincomestabilizedatEUR3,611mil- lion in2008versusEUR3,062million2007.Excludingcrisis quences ofthefinancialcrisis.ItamountedtoEUR-563mil- Gross operatingincomewasheavilyaffected bytheconse- Gross operatingincome was 50.3%in2008against51.3%2007. related toDexia’s transformationplan,thecost-incomeratio 2007. Excludingthefinancialcrisisandexceptionalcharges income ratiowas115.8%in2008,compared to55.6% in Due totheimpactoffinancialcrisisonrevenues, the cost- charges, costswere upby2%year-on-year. (before tax)explainmostof2008costgrowth. Excludingthese related toDexia’s transformationplanofEUR229million +285millioncompared to2007.Exceptionalcharges EUR Expenses stoodatEUR4,119millionin2008,up7%or Costs s s s s impairments onfunds(EUR127million). charges related tothesituationinCentralEurope (EUR177mil- impairments onDexia’s exposure tomonolines(EUR381mil- impairments andlossesininsuranceactivities(EUR649mil- s (EUR 368million); s stems mainlyfrom: taining acautiousapproach. Theremaining EUR1,187million tion oftheUSmortgagemarketandwithaimmain- the USRMBSportfolio,inlightofcontinueddeteriora- amount includesaEUR300millioncollectiveimpairmenton sis, ofwhichEUR1,665millionwere directly linkedtoFSA.This EUR 2,852million(before tax)were related tothefinancialcri- pared toEUR163milliononeyearearlier. costofrisk, Within millionin2008,com- 3,292 The costofriskamountedtoEUR Cost ofrisk sions andfairvalueadjustments. essentially duetothebookingofdeferred taxassetson provi- EUR 629millionwasrecognized inthestatementof income amounted toEUR-3,877millionin2008.Anettaxprofit of As aconsequenceofthefinancialcrisispretax result Taxes s s lion); stood at10basispointsin2008. a percentage onaveragecustomerloans)forbankingactivities Nederland (EUR110million)thecostofriskratio(netchargeas Excluding financialcrisis,FSAandthecostofriskatDexiaBank million. 439 Excluding financialcrisis,thecostofriskwasEUR adopt acautiousapproach andbuildthisadditionalreserve. Reduced visibilityandadversecredit riskfactorsledDexiato impairmentsandlossesonDexia’s investmentportfolios impairments onDexia’s exposure tomonolines(EUR91mil- a collectiveimpairmentforcredit risks(EUR500million). impairments ontheMadoff exposure (EUR122million); dividend shouldbepaidforthefinancialyear2008. Shareholders’ MeetingofMay13,2009thatexceptionallyno The Board ofDirectors hasdecidedto propose totheGeneral Proposed dividend pershareDiluted earnings for2008stoodatEUR-2.54. the basisof1,310millionshares (averageweightednumber). pershareEarnings for2008(EUR-2.54)were calculated on pershareEarnings Luxembourg whichwasannouncedonSeptember30,2008. EUR 0.4billioncapitalcontributionfromof thegovernment 1ratioattheendofDecember2008didnotinclude The Tier tected againstpotentialfurtherFinancialProducts losses. mission onMarch 13,2009,Dexia’s solvencyratiosare pro- on FinancialProducts assets,approved bytheEuropean Com- theguaranteefrom theBelgianandFrenchWith governments announced onNovember14,2008. together, hadanegativeimpactofaround 350basis pointsas consolidation ofFSA’s FinancialProducts activitieswhich, from theongoingsaleofFSAInsuranceandprudential 1ratioof9.6%.Itincludedallconsequences ing acore Tier Dexia’s 1ratioreached 10.6%attheendof2008,includ- Tier by Dexia’s mainshareholders. 2008 andunderwrittenbytheBelgianFrench States and EUR 6.0billioncapitalincrease announcedonSeptember 30, Dexia’s capitalsituationbenefitedin2008from the decreased by1%duringthefourthquarterof2008. (FP) intoDexia’s bankingbook.ExcludingFP, weightedrisks due totheinclusionofFSA’s FinancialProducts portfolio (EUR +24.5billion)duringthefourthquarterof2008mainly relief. Weighted risksattheendof2008increased by18% ary 1,2008allowedforaEUR42billionweightedrisk lion attheendof2007.TheswitchtoBaselIIasJanu- amounted toEUR152.8billionascompared toEUR159.4bil- lish itssolvencyratios.Atyear-end, Dexia’s totalweightedrisks to calculatethecapitalrequirements forcredit risksandtopub- From January1,2008onwards, DexiausestheBaselIIframework Solvency (1) BaselIappliedasofDec.2007;II appliedasofSept.andDec.2008. SOLVENCY Tier 1capital(inmillionsofEUR) Tier 1ratio Total weightedrisks(inmillions ofEUR) (1) (1) (1) e.3,20 et 0 08Dec.31,2008 Sept.30,2008 Dec. 31,2007 5,8 2,0 5,3 +18.1% 152,837 129,400 159,383 4591,4 616-14.0% 16,126 18,741 14,549 .%1.%10.6% 14.5% 9.1% flow hedgederivativesandthetranslationreserve, cameinat of theAvailable-For-Sale (AFS)portfolio,thefairvalueofcash- The othercomprehensive income,whichincludesthefairvalue (EUR -1.1billion); shareholders; gian andFrenchaswellbytheexistingmain governments income. able forsaleontheassetsside).Ithasalimitedimpactnet sides) andthehedgeditems(beingcustomerloansavail- revaluation ofportfoliohedges(bothonassetsand liabilities ing totheincrease ofthefairvaluederivatives, of interest ratesincomparisonwithDecember31,2007lead- The overallbalancesheetincrease ispartlyduetothedecrease changes, Dexiahedgesitsassetsandliabilitieswithderivatives. As thepolicyofDexiaistolimitexposure tointerest rates to December31,2007. December 31,2008,upEUR46.4billionor+7.7%compared The consolidatedbalancesheettotalwasEUR651billionasof s s s s billion.Thisistheresult of: 17.5 EUR Core shareholders’ equity but onOtherComprehensive Income. cial instruments,withnoimpactonthestatementofincome net incomeandhadadirect impactonthefairvalue of finan- adjustments, impairmentsandlosseswhichburdened 2008 lion decrease. Thefinancialcrisisledtoanumberoffair value 2007,i.e.aEUR10.6bil- 31, billionasofDecember 14.5 EUR 2008compared to billionasofDecember31, 3.9 to EUR Total shareholders’ equity Comprehensive Income). losses notrecognized inthestatementofincome(or Other the yearbefore allocationlesstreasury shares) andgains equity (capital,additionalpaid-incapital,reserves, result for Total shareholders’ equityiscomposedofcore shareholders’ Total equity theacquisitionoftreasury shares (EUR -0.2billion); thepaymentofdividendrelated tothe2007results theEUR6billioncapitalincrease subscribedbythe Bel- OSLDTDBLNESHEET CONSOLIDATED BALANCE h e osfrtepro ER-. billion). -3.3 the netlossforperiod(EUR oftheDexiaGroup amounted increased by1.4billionto Dexia Variation in 3 months Annual report 2008 Financial results 73
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 74 Financial results Dexia Annual report 2008 assets whichhadreached anegativeamount. December 31,2008duetothedeclineinfairvalueof Discretionary ParticipationFeatures cameouttozero asof Minority interests exchange ratefluctuations. assets nowaccountedforinLoansandReceivables. the fairvalueofderivativeswhicheconomicallyhedge non-reclassified AFSassets. fourth quarterof2008,modelswere appliedtovalue certain Moreover assomemarketsbecameilliquidandinactive inthe the remaining lifeofthebonds,withoutanyimpactonresults. been frozen atreclassification dateandwillbeamortizedon ber 1,2008.TheAFSreserve ofthesereclassified bondshas the LoansandReceivablescategory, witheffects from Octo- IAS 39andIFRS7reclassified partofitsAFSportfolioto In thisrespect, Dexiadecidedtoapplytheamendment of credit marketspreads andthefallofstockmarkets. s ance isexplainedby: 12billion.Thisnegativevari- -13.6billion,i.e.downEUR EUR ance activitiesasLiabilitiesheldforsale. item wasalsoimpactedbythereclassification ofFSA’s insur- 188.2billion.This Debt securitieswere down7.8%toEUR EUR 6.3billion. end of2008.Reverserepurchase agreements increased by in acontextofdecreasing short-terminterest ratesbythe ucts towards long-terminterest rate-basedsavingsproducts of thearbitragemovementfrom short-termrate-based prod- decreased byEUR9.1billionand8.3partly because of 9.4%.Demanddepositsandtermrespectively billion, adecrease 114.7 Customer depositsamountedtoEUR total amountedto47%. 31, 2008(i.e.-8.4%).Theirrelative share inthebalance-sheet 303billionasofDecember tificates andbonds)stoodatEUR Customer depositsanddebtsecurities(savingsbonds,cer- Liabilities s s EUR -0.4billionoftranslationreserve duetoUSDand TRY EUR -1.2billionincash-flowhedgereserve, mainly due to EUR -10.4billioninAFSreserve resulting from thewidening rmie tbea U 1.7billion. remained stableatEUR s s and were markedbyanincreased recourse tocentralbanks. Interbank liabilitiesincreased by19.3%toEUR213.2 billion Subordinated debtscameinatEUR4.4billion,down 9.8%. declined inlinewiththeevolutionoffinancialmarkets. designated atfairvalue); (mainly DexiaFundingNetherlandsnewissueswhichare now of eurobonds fortheretail andprivatebankingcustomers EUR -30millionasofDecember31,2007); s generated atotalamountofEUR-474million(against variations: nearly stableevolution(EUR+0.7billion)includingcontrasted Financial liabilitiesatfairvaluecameinEUR19.0billion,a increase ofthepublicfinanceoutstandingin2008. tion mentionedabove.Thebalancecomesmainlyfrom the which 77%(orEUR97billion)isexplainedbythereclassifica- 2008,a52%riseorEUR+126billionof as ofDecember31, 369billion Loans andadvancestocustomersreached EUR the announcedsaleofFSA’s insurance activities. transferred tonon-current assetsheldfor salemainlyfollowing other accountinglines.Inaddition,EUR4billionofassetswere of EUR-88billionnettransfersfrom theAFSportfolio to billionattheendof2008mainlyasaconsequence 125 EUR As aresult, financialinvestmentsdeclinedby43.2% to cial statements. limited. Thisisexplainedinnote7.7totheconsolidatedfinan- of December2008andtheimpactonresults wouldhave been AFS reserve wouldhavebeenEUR1.3billionlowerat theend receivables. Ifthesereclassifications hadnotbeenmade,the EUR 91billionofAFSassetswere reclassified asLoansand (EUR 3billion)andLoansreceivables (EUR7billion) while EUR 10billionoftradingassetswere transferred toAFS assets were reclassified foratotalamountofEUR100billion: of October1,2008.Available-For-Sale (AFS)andtrading the applicationofamendmenttoIAS39andIFRS7as The significantchangeswithinassetcategoriesresult from Assets liabilities atfairvaluecomingfrom unit-linkedproducts liabilities designatedatfairvalueincreased duetonewissues the owncredit riskondebtsecuritiesatfairvalueoption oa hrhles qiy1,2 3,916 17,488 14,525 16,112 16,739 (13,572) 114,728 651,006 15,071 (1,587) 126,680 18,952 604,564 Total shareholders’equity Gains andlossesnotrecognizedinthestatementofincome 18,301 Core shareholders’equity Total equity Technical provisionsofinsurancecompanies Subordinated debts Debt securities Derivatives Financial liabilitiesmeasuredatfairvaluethroughprofitorloss Customer borrowingsanddeposits Due tobanks of which Total liabilities LIABILITIESANDEQUITY TOTAL netet nascae 6 682 2,193 125,029 861 3,938 2,524 368,845 220,290 61,864 2,448 (185) 242,619 16,044 54,776 8,835 37,565 Intangible assetsandgoodwill Tangible fixedassets Investments inassociates Fair valuerevaluationofportfoliohedge Derivatives Financial investments Financial assetsmeasuredatfairvaluethroughprofitorloss Loans andadvancestocustomers Loans andadvancesduefrombanks Cash andbalanceswithcentralbanks of which TOTAL ASSETS (in millionsofEUR) SIMPLIFIED CONSOLIDATED BALANCESHEET e.3,20 Dec.31,2008 Dec. 31,2007 0,1 188,120 204,013 0,6 651,006 604,564 7,8 213,192 645,388 178,681 588,170 6345,618 75,834 16,394 31,365 92855,213 29,218 ,8 4,407 4,885 ,5 2,353 2,257 Dexia Annual report 2008 Financial results 75
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT Activity and results of the business lines
Public and Wholesale Banking...... 77 Personal Financial Services...... 81 Asset Management ...... 84 Investor Services ...... 86 Treasury and Financial Markets...... 88 Relevant regional trends are detailedhereafter. well asatargetedandproactive commercial approach. regained attheendof theyearthankstoStates’guaranteeas was observedinthethird quarter. Halfofthisnegativeoutflowwas products. Aftertwoquarters ofgrowth, aEUR1.6billionfund-drop EUR 42.0billion,outofwhich 28.5 billionofbalance-sheet slightly downin2008by0.6%,from EUR42.2billionto Deposit-taking servicesandinvestmentproducts compared to2007. high levelofnearEUR30billion,althoughitdecreased by7% by clientneedstohedgetheirriskexposure –remained ata engineering overall washalvedin2008,toEUR11.4billion.The the secondarymarketwasstoppedatendofyear, and per seremained generallybenign. the financialcrisisandliquidityshortage,whilecredit risk Over thisperiod,credit spreads increased asaconsequenceof The decrease wasparticularlymarkedin“non-core” markets. fourth quarter, whenproduction fellby73%,toEUR 8billion. half toreduce itsnewproduction drastically, especiallyinthe billiontoEUR66.7billion.Dexia choseinthesecond 80.9 EUR decreased by18%in2008compared to2007,from Long-term production ofloansandothercommitments stem mainlyfrom averydynamicfirsthalfoftheyear. billion.Aspreviously mentioned,theseincreases to EUR20.7 billion.Theincrease ofcorporateactivitywas 30%, 42.1 EUR rate. Inproject finance,commitmentsincreased by28%,to commitments recorded a7%riseonconstantexchange 2008 afterthestrategicreorientations. Inpublic banking, 362.6billion,andhavestabilizedsinceSeptember EUR Long-term commitments decreasing production. refocus oncore markets.Overall,theoutcomeissignificantly its production againstabackground ofscarce liquidityandto sidering theeventsmentionedabove,Dexiahadtostrictlylimit of assetsinmanycountries.Inthesecondhalf2008,con- In thefirsthalfofyear, Dexiahadoriginatedlargevolumes affected themarketvalueofGroup’s bondportfolios; basis pushedtheGroup intoasevere liquiditycrisis; long-term commitmentportfoliorefinanced onashort-term s s s ing PublicandWholesaleBankingbusinessmodel: October 2008.Indeed,three crisesaffected seriouslytheexist- liquidity crisisthatledtotherecapitalization oftheGroup in 2008 wasmarkedbyaradicalchangeofstrategydriventhe Public andWholesaleBanking ACTIVITY the collapseofUScredit markethurtFSAbadly. the wideningofcredit spreads across allassetcategoriesseverely in thecontextofliquidityshortage,portionDexia’s activity linked to loan outstanding – mainly driven activity linkedtoloanoutstanding–mainlydriven were upby10%in2008,to Investment inbonds financial financial were were on on year (-51%inthe fourthquarter),inacontextofreduction of up 19%.Activitywassharplyreduced inthelastmonthsof billion. 65 23% onaconstantexchangerate, toEUR Long-term commitmentsattheend oftheyear2008were up following thecollapseofAuction RateSecuritiesmarket. guarantees toprovide USmunicipalitieswithfundingsolutions Dexia issuedlargeamountsofletterscredit andliquidity the activityoutburstobservedinfirsthalfof2008,when was EUR16.2billion,up22%in2008,afigure reflecting 11.6billion,down12%. to EUR term commitmentsattheendofDecember2008amounted ect financeproduction increased by7% year-on-year. Long- drastic reduction ofactivityinthesecondpartyear. Proj- by 58%in2008,toEUR2.7billion,notablyasaresult ofa end of2008,upby4%year-on-year. mitments. Long-termcommitmentswere EUR78billion atthe for atotalamountofEUR700million,linkedtopre-crisis com- arranged ninePPPtransactionsasMandatedLeadArranger Activity wasstrong inproject finance,where Dexianotably French localauthoritieswhileotherbankswere retrenching. difficulties, Dexiaremained oneofthemostactivelenders to local elections.Inthesecondhalfofyear, despiteitsown owing tosluggishactivityinthefirsthalfofyearfollowing to EUR9.8billion.PublicFinanceactivitywasdownby36%, December 2008were EUR43.6billion,upby13%. and increased margins.Long-termcommitmentsattheendof of +44%.Dexiamaintaineditsmarketshare in2008(76%), able tothepublicfinancesegment,whichsawannualgrowth +8% year-on-year, toEUR8.4billion,atrend mainlyattribut- commitments were up5%attheendofDecember2008. by anincrease intaxresources forlocalauthorities.Long-term in 2008,followingacontractionoftheGermanmarketcaused EUR 38.8billion,downby3%. Long-term commitmentsattheendofDecember2008were a negativeimpactonvolumesbutallowedmarginstoimprove. decision tofocusonpure commercial transactions,whichhad andoftheGroup’son localauthoritiesbycentralgovernment in publicfinance,withstrictbalance-sheetrestrictions imposed year 2008,asaresult bothofthedifficultconditionsprevailing were EUR15.6billion,upby46%. ect finance.Long-termcommitmentsattheendofDecember pared totheprevious year, bothinpublicfinanceandproj- s s Core markets s s s s Other markets s s Long-term production in In Long-term production in Long-term production inthe Long-term production in Long-term production inthe Long-term production in In Spain Belgium and , long-termproduction wassustainedin2008: Portugal in2008,originationsdoubledcom- France Italy Japan Germany decreased by38%forthefull ntdStatesandCanada United United Kingdom wasEUR5.6billionin2008, decreased by27%in2008, posteda31%decrease Dexia decreased Annual report 2008 77
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 78 Public andWholesaleBanking Dexia Annual report 2008 geographical rebalancing: profitable growth. Thisconsiderationleadstothefollowing chises, accesstolocallong-termfundingandapotentialfor activity onmarketswhere theGroup hasreal commercial fran- plan aimedatrefocusing thePublicandWholesaleBanking of production, withtheimplementationoftransformation The year2009shouldbecharacterizedbyastrong reduction (-78%), alsoduetothedrasticreduction ofbondactivity. headquarterswereInternational significantlyreduced in2008 s at theendofyear. billion 13.5 margins area. Long-termcommitmentswere EUR the bondportfolioandafocusoncore marketsandthehigh (3) “Internationalheadquarters”referstothe transactionscarriedoutbytheheadofficeincountrieswhereGrouphasnod (2) To beintegratedintoRetailand Commercialbankingactivitiesfrom2009. (1) Theseamountsarestatedatcurrentexchange rate. Turkey Switzerland International headquarters International Sweden Luxembourg United StatesandCanada Mexico Italy Iberia (Spain&Portugal) Japan Israel Germany France Australia usd uoe5,3 134+68 9542,9 +18.1% 23,097 19,564 +36.8% 81,304 59,435 Europe Outside Central andEasternEurope Belgium United Kingdom ul osldtdsbiire 2,1 6,8 1.%8,3 661-17.7% 66,651 80,938 +10.4% 362,583 328,518 Fully consolidatedsubsidiaries uoe24802915+.%4,0 078-15.9% 40,708 48,404 +6.1% 249,155 234,850 Europe (in millionsofEUR) LONG-TERM COMMITMENTSANDORIGINATIONS Production ofloansandothercommitmentsbookedin fwihcroaebnig1,4 070+77 ,0 ,6 -27.0% 7,165 9,809 +27.7% 20,740 16,245 of whichcorporatebanking fwihpoetfiac 3334,7 2.%1,3 016-17.7% 10,156 12,335 +26.0% 42,070 33,383 of whichprojectfinance fwihpbi etr28802973+.%5,9 930-16.1% 49,330 58,794 +7.5% 299,773 278,890 of whichpublicsector (2) (3) December 31, 0086,6 2.%1,5 622+22.4% 16,222 13,251 +29.0% 64,566 50,048 9843,0 26 ,4 ,7 -38.3% 3,173 5,144 -2.6% 38,805 39,834 0611,1 4.%255533x2.1 5,333 2,585 +46.3% 15,614 10,671 6613,4 47 ,6 ,8 -31.1% 4,384 6,366 +4.7% 38,341 36,621 4977,0 36 347984-26.8% 9,834 13,427 +3.6% 77,602 74,927 3251,0 1.%639261-57.6% 2,681 6,319 -12.4% 11,600 13,245 8784,3 1.%771838+8.2% 8,388 7,751 +12.5% 43,636 38,788 4233,2 62 2902,846 12,970 -6.2% 32,123 34,233 ,3 ,5 1.%13245-68.8% 425 1,362 +15.5% 5,355 4,637 ,5 ,1 37 0 ,3 +28.2% 1,032 805 -3.7% 3,614 3,754 ,7 ,6 37 9 3 -13.3% 430 496 +3.7% 2,464 2,376 ,0 ,9 83 0 6 -7.8% 467 507 -8.3% 1,196 1,305 ,5 341x. ,7 ,8 +19.3% 5,583 4,678 x2.2 13,481 6,252 ,1 ,6 40 4 3 -32.1% 639 942 +4.0% 1,267 1,218 ,2 ,7 1.%178200+15.9% 2,050 1,768 +15.6% 7,779 6,727 ,7 ,4 3.%231298+25.1% 2,978 2,381 +32.8% 4,345 3,271 Long-term commitments 2007 1 9 2.%1615-0.1% 185 186 +29.8% 794 612 December 31, 2008 s s and intheIberianPeninsula. franchise: France,BelgiumandLuxembourg,aswellItaly spectrum incountrieswhere Dexiaenjoysastrong commercial North America; cial development; s s particular theGerman lishments toretain platformsforaccesstofundingsources, in after consultationoftheregulatory authoritiesconcerned; dinavia. Theseactivitieswillbesoldorcarriedouttopartners (excluding DexiabankaSlovensko),Mexico,IndiaandScan- strengthening ofactivityandenlargementtheproduct significant reduction ofactivitiesintheUnitedKingdomand in Japan,GermanyandSwitzerland,maintenanceofestab- Europediscontinuation ofactivitiesinAustralia,Eastern (1) aito 0720 Variation 2008 2007 Variation Pfandbriefe Long-term originations , butwithoutanycommer- irect presence. (1) -78.1% the secondhalfofyear. nonewproduction million.Virtually wasrealized in 83 USD market, causinga78%declineofgross PVpremiums, to ABS activity:DexiaandFSAdecidedin2008toexitthe market position. ing onreview forpossibledowngrade,whichweakened FSA’s ers tochooseissuebondsontheirownratings. uncertainties onthemaincredit enhancers,causingmany issu- (from 47%in2007to17%2008)acontextof growing exposures). FSA’s FinancialProducts crisis impactincludesa ties (mainlyonHELOC,Alt-A,Subprime andOptionARM on theirexposure toresidential mortgage-backedsecuri- gage andmarketcrisis.Bothrealized substantialimpairments of EUR810million)bothdirectly affected bytheUSmort- EUR 676million)andFSAInsurance (foranamountaftertax FSA withFSA’s FinancialProducts (foranamountaftertaxof ments. Thefinancialcrisisalsohadasubstantialimpacton the partialreversal ofowncredit risk positive valueadjust- related effects likethewrite-downofdeferred taxassetsand They includenotonlythecapitallossbutalsoanumberof of 2008foratotalamount,aftertax,EUR-1,655million. tions toAssured Guarantywere booked inthefourthquarter consequences oftheongoingsaleFSA’s insuranceopera- related lossesforatotalamountofEUR2,767million.All EUR 1,025millionin2007,aftertakingintoaccountFSA’s share amountedtoEUR-1,924millionin2008,compared to The PublicandWholesaleBankingreported netincomeGroup s s 2007. Thisdecrease isdueto: millionin2008,down28%compared to 582 mium ofUSD Municipal activity:FSAbookedgross present value(PV)pre- business ofFSAtoAssured GuarantyLtd. Dexia announcedabindingagreement toselltheinsurance of thecredit enhancementmarket.OnNovember14, 2008 Activity atFSAmustbeanalyzedinthecontextofcollapse RESULTS FSA OA 2244,8 -0.6% +6.5% 41,980 -12.8% 28,500 13,480 42,224 26,767 15,457 TOTAL Off-balance sheet Balance sheet (in millionsofEUR) (INCLUDING OFF-BALANCE-SHEETPRODUCTS) DEPOSIT-TAKING AND INVESTMENTPRODUCTS SERVICES Moody’s decisiononJuly21,2008toplaceFSA’s Aaarat- a sharpdeclineofthecredit enhancementpenetration rate eebr3,20 eebr3,20 Variation December31,2008 December 31,2007 11% increase compared to2007. the financialcrisisforfullyear 2008,andrepresented an Tax expense of riskwasEUR168million. for credit risks.Excludingtheimpactoffinancialcrisis,cost is dueinparticulartoEUR152millioncollectiveimpairments millionagainstEUR58in2007.Thisincrease 391 EUR Cost ofrisk lion, upby18%compared to2007. crisis impact,thegross operatingincomewasEUR1,695mil- 1,583million,upby10%year-on-year. financial Without EUR income Gross operating already ledtoadecrease incostsduring thefourthquarter. 2008. Thechangeinstrategydecidedattheendofyear discontinued, whichoccurred duringthefirstninemonthsof lion. Thegrowthdevelopments,now isduetointernational Expenses the endofyear. sustained levelofactivityduringthefirsthalf2008; year. Revenuesbenefitedfrom: financial crisis,incomewouldhaveincreased by14% year-on- lion, upby9%compared to2007.Excludingimpact from the Total pared to2007. impact, thenetincomeGroup share sawa9%increase com- nalkredit BanktransactioninCentralEurope; s s s s s s post-tax, mainlyrelated to: financial crisisforatotalnegativeamountofEUR283million lion, down19%year-on-year. Itincludedtheimpactof Excluding FSA, RMBSsector. US 300millioncollectiveimpairment(notaximpact)onthe EUR draws onhigh-marginliquiditylinesintheUnitedStatesat relatively stablemargins; strong volumeswithoutstandingup10%,partlydue toa financialcrisis collective impairmentsforcredit risks.Without impairments ontheinsuranceactivityinvestmentportfolio; losses related totheKommunalkredit Austria/DexiaKommu- income withoutFSAincreased by7%,toEUR869mil- i 08wtotFAaone oER242mil- 2,452 in2008withoutFSAamountedtoEUR wasEUR336millionwithoutFSA and impactof withoutFSAincreased significantly, to net incomeGroup share withoutFSAin2008cameat Public andWholesaleBanking wasEUR843mil- Dexia Annual report 2008 79
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 80 Public andWholesaleBanking Dexia Annual report 2008 (1) Proforma. Net income egtdrss–BslI 74,462 - +15.0% 35.5% - 54 5,077 90,654 36.2% 3,620 47 Weighted risks–BaselII Weighted risks–BaselI Total allocatedequity(average) Cost-income ratio Net incomeGroup share Minority interests a xes 27 26 -3.7% (286) (297) Tax expense Pretax income oto ik(8 31 x6.7 (391) (58) Cost ofrisk Gross operatingincome Expenses Income i iloso U,ecp hr niae)2007 (in millionsofEUR,exceptwhereindicated) FSA) STATEMENT OFINCOME(EXCLUDING fwihipc nnilcii 23 n.s. +9.0% (283) 1,126 8 1,033 of whichnetincomeexcl.financialcrisis of whichimpactfinancialcrisis 1,088 1,041 1,385 1,443 2,259 (816) (1) ,8 -14.5% 1,184 ,8 +9.7% 1,583 ,5 +8.5% 2,452 08Variation 2008 89 +6.6% (869) 9 -17.5% 898 4 -19.0% 843 EUR 25 billion at the end of 2008. EUR 25billionatthe endof2008. deposits decreased in thefourthquarterandcamebackto resilience wasparticularly observedinBelgium. billion.This was backtothelevelofSeptember 2008, toEUR24 end of2008.EndDecember, savings accountsoutstanding represented more thanEUR3.3billionoftheoutstanding atthe ings accountinBelgium,offering ahighremuneration, which sav- ing waslimited(-6%)thankstothesuccessfulnewinternet the fourthquarterof2008. (to EUR12billion)compared tolastyearanda8%growth in More precisely, rate-based savingsproducts (likebondsissuedbytheGroup). savings bondsandtermdeposits)towards long-terminterest arbitrage movementfrom short-termrate-basedproducts (like ing short-terminterest ratesinthefourthquartertriggered an oped anincreasing riskaversionduringtheyearanddecreas- observed insavingsandinvestmentflowsascustomersdevel- 2007 (atEUR69billion).Nevertheless,considerableshiftswere deposits den lackofliquiditystartingattheendSeptember2008,total Despite theunfortunateconfidencecrisisresulting from thesud- ucts andmeetcustomerdemandin2009. to developthemultichannelapproach, topromote credit prod- Dexia willalsocontinuetoexpandfurtherthenetworkinTurkey, Dexia’s transformationplanlaunchedinNovember2008. s s s s s s of RetailandCommercial Bankingin2009are: Commercial Bankingbusinessline.Thekeystrategic directions Investor ServicesactivitieswillbeincludedinthenewRetailand and Slovakia.TheseactivitiesaswellAssetManagement commercial bankingfranchisesinBelgium,Luxembourg, Turkey In 2009Dexiawillkeepdevelopingattractiveretail, private and ber 2008). sis levels(+1%betweenendofSeptemberandDecem- resilient anddepositsattheendofyearwere backtopre-cri- which markedtheyear2008.InBelgiumfranchiseproved questions arisingfrom theexceptionallysevere financialcrisis customer communicationwasorganizedtocopewiththemany lion. InBelgium,LuxembourgandSlovakiaregular andadhoc year-on-year andloanswere up10%year-on-year atEUR42bil- billion 69 liquidity oftheGroup. Total depositswere stableatEUR throughout thecrisisandcontributedsteadilytooverall Personal FinancialServicesactivitiesproved theirrobustness Personal FinancialServices ACTIVITY After nine months of sharp rise, savings bonds and term After ninemonthsofsharprise, savings bondsandterm The year-on-year decrease ofthesavingsaccountsoutstand- structured bondsissuedbytheGroup recorded a20%increase further exploitingexistingnetworkpotential,inlinewith improving therelative costposition; increasing thecustomeranddepositbase; attheendof2008were stablecompared toDecember operation. 2009. ITandmarketingefforts sustainedthesuccessof shift totheeuro-currency whichoccurred asofJanuary 1, In ance sheetandrisks. long-term growth platform whilecarefully monitoringitsbal- both retail andSMEagriculture loans. Turkey remains a billion).Thisexcellentperformancecamefrom 3.7 2008 (EUR on-year) andoutstandingreached TRY 7.8billionattheendof increase year-on-year. Loangrowth wasstrong (+43% year- customer assetsreached TRY 9.3billion(EUR4.3billion),a28% renown isconstantlygrowing. Atthe endofDecember2008, DenizBank nowhasmore than3millioncustomersandits at theendofyear)anda21%riseinnumberATMs. branches opening of80newbranches(bringingthetotalto400 In individuals. end ofOctober2008,cateringforEuropean highnetworth banking activitiesasitopenedanewbranchinMonacoatthe market effect. Dexiahowevercontinuedtoinvestin its private tomer assetsandportfolioswere markedbyastrong negative crisis becauseofitsexposure toprivatebankingactivities. Cus- Luxembourg high value-addedservices. branch environment fullydedicatedtocustomeradvice and the classicbankcounterdisappears.Thisenablesanopenspace concentrated intheself-servicebankingarea ofthebranch and Teller Machines)whichallowcashdeposits.Cashhandlingis ment inanewgenerationofcashrecycling ATMs (Automated from 2009.Thisconceptbecamefeasiblethrough theinvest- branchesas outlets andwillbegeneralizedthrough the959 vative openbranchconceptwasintroduced inanumber ofpilot specialization inorder tomeetcustomerneedsbetter. Theinno- model. Themodelfocusesonrelationship management and approach andprepared forthelaunchofitsnewdistribution In Belgium wasthemaincontributortothisgrowth. and +10%formortgagesyear-on-year). Inabsoluteamounts, rapid pace(+15%forbusinessloans,+7%consumerloans compared tolastyear. Allsegmentscontinuedtoexpand ata 10% increase (toEUR42billion)attheendofDecember 2008 Double-digit growth wasrecorded in of off-balance-sheet assets. December 2008,an11%reduction mainlyduetothedecrease Total customerassets offers, suchastermdepositsandstructured bondproducts. assets ispartlyexplainedbythesuccessofattractivealternative -0.2% versus2007).Theoveralldeclineinoff-balance-sheet ance technicalreserves EUR 52billion,including-34%formutualfunds. assets Affected byastrong negativemarketeffect, Belgium Slovakia Turkey, (includinglifeinsuranceproducts) declined22%to DenizBank’s expansioncontinuedin2008withthe , Dexia Bank confirmed its multichannel distribution , DexiaBankconfirmeditsmultichanneldistribution , DexiabankaSlovenskoprepared in2008forthe asafinancialcenterwasmore affected bythe stood at EUR 121 billion at the end of stoodatEUR121billiontheendof were stableatEUR16billion(or customer loans off-balance-sheet Dexia Life insur- Annual report 2008 with a witha 81
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 82 Personal FinancialServices Dexia Annual report 2008 portfolios; Luxembourg; bourg subsequenttotheinsolvency ofIcelandicbanksin à LuxembourgtotheDepositGuarantee AssociationLuxem- s s particular becauseof: The crisisreducedbyEUR723millionin2008, netearnings investment portfolio. mainly duetotheimpairmentsandlossesoninsurance the fullyear2008,a put pressure onPersonalFinancialServices performance.For From afinancialperspective,themarketenvironment clearly (1) Customerfinancialassets(suchasshares,bondsandcooperators’shares)heldundercustodybythebank. RESULTS oa utmrast 3. 2. -11.0% 121.0 -6.5% 136.0 162.6 173.8 Off-balance sheet assets Deposits Total customerassets TOTAL CUSTOMERASSETSANDLOANS i iloso U)Dc 1 07Dc 1 08Variation Dec.31,2008 Dec.31,2007 (in billionsofEUR) CUSTOMER ASSETSANDLOANS ses4. 13-15.4% +9.6% -8.5% 41.3 36.7 +2.6% 79.7 +15.0% -13.2% 48.9 +7.1% 5.2 +9.8% 33.5 87.2 10.1 46.1 +9.9% 2.6 23.6 5.1 8.8 41.5 -0.2% 53.1 2.4 21.5 15.9 37.8 Loans 15.9 Assets Private customerassetsandloans Loans Assets Retail andSMEcustomerassetsloans Other loans Business loans Consumer loans Mortgage loans Total customerloans Life insurancetechnicalreserves EUR 504millionlossesandimpairmentsintheinsurance EUR 33 million contribution of Dexia Banque Internationale EUR 33millioncontributionofDexia BanqueInternationale Direct securities Mutual funds Bonds issuedbytheGroup Savings bonds&termdeposits Savings accounts Sight accounts net loss (1) ofEUR143millionwasrecorded, if restated without one-off itemsandcrisiseffects). EUR 581millionattheendof2008, downby20%(or15% Excluding crisiseffects, netincomeGroup share amounted to finance operations. lion aftertaxrelated tothedownsizingofRussianconsumer mil- 7 tribution modelasmentionedabove,andcostsofEUR 33millionafter taxatDexiaBankBelgiumforitsnewdis- EUR s s s included inthe2008results: arestructuring chargeof Moreover someone-off itemsnotlinked tothecrisisare Slovensko; accumulated bysomeprofessional clientsatDexiabanka U 86millionimpairmentsonMadoff exposure. EUR EUR 30millionlinkedtotheexcessivecurrency exposure millioncollectiveimpairmentforcredit risks; EUR 56 2. 1. -3.5% 116.5 120.6 093. -28.7% 36.3 -0.5% 68.9 50.9 69.3 242. -34.2% -0.7% -5.7% 21.3 25.1 24.2 32.4 25.3 25.7 841. -18.9% 15.0 18.4 . 17+19.9% -7.9% 11.7 7.9 9.8 8.5 . . +11.9% 4.8 4.3 Reported (1) Proforma. o t e distributionmodel.TheLuxembourgcostbasewas for itsnew thepreviously mentionedrestructuring charges diture linkedto Luxembourg. Theincrease ofcostsinBelgiumreflects expen- to Russia),a3%riseinBelgiumandanincrease of 8%in sion andactivitygrowth (italsoincludesone-off costsrelated of a16%increase inTurkey mainlyduetonetwork expan- compared tolastyear. Thelatterpercentage iscomposed Expenses as bylowerfees. were impactedbylowdepositvolumesandmarginsaswell decrease inLuxembourg.Inthosetwocountries,revenues sions) more thanoffset bya4%declineinBelgiumand10% ued highgrowth inloananddepositvolumescommis- 1%. Thismasks25%growth atDenizBank(thankstocontin- millionexcludingfinancialcrisiseffects, downby 2,795 EUR i iloso U,ecp hr niae)2007 (in millionsofEUR,exceptwhereindicated) STATEMENT OFINCOME Expenses Income oto ik(2 38 x6.0 (368) (62) Cost ofrisk Gross operating income ioiyitrss5(9 n.s. n.s. (19) 19 5 (132) Net incomeGroup share Minority interests Net income Tax expense Pretax income oticm ai 70 90.9% 67.0% Cost-income ratio oa loae qiy(vrg)2,243 Total allocatedequity(average) egtdrss–BslI3,2 - 30,525 Weighted risks–BaselI egtdrss–BslI 18,463 - Weighted risks–BaselII fwihipc nnilcii 0 728 of whichnetincomeexcl.financialcrisis of whichimpactfinancialcrisis amountedtoEUR1,997million,a6%rise income wasEUR2,197millionin2008and lion in2007. mil- 866 lion orEUR672millionwithoutcrisisimpact,versus As aresult, the deteriorationoflocalrisks. millionincrease) followingloanvolumegrowth and 35 EUR an increase ofEUR52millionmainlyattributabletoTurkey (a financial crisisimpact,costofriskwasEUR114millionin2008, the lossexperiencedatDexiabankaSlovensko.Excluding to alowerextentbythegeneralprovision forcredit risksand largely inflatedbytheimpairmentsonMadoff exposure and Cost ofrisk compared to67%in2007. described above,thecost-incomeratiostoodat71%in2008 Excluding thefinancialcrisisimpactsandone-off items in 2008. influenced bythedevelopmentofprivatebankingoperations (1,889) 2,820 931 728 733 866 pretax income amountedtoEUR368millionattheendof2008, (1) i 08cm na U 10mil- in2008cameatEUR-180 197 +5.7% (1,997) ,9 -22.1% 2,197 2,580 73 n.s. n.s. n.s. n.s. (723) (143) (162) (180) 08Variation 2008 0 -78.5% 200 8 -20.3% 581 Personal FinancialServices Dexia Annual report 2008 83
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 84 Dexia Annual report 2008 Asset Management (1) AssetsunderthemanagementofDexiaAssetManagement.countedtwice included. were atEUR32.2billion. year, totalassetsmanagedinretail fundsandprivate mandates a negativemarketeffect ofEUR7.8billion.Attheend ofthe ment fundsandprivatemandates,whichwere alsoaffected by translated intoEUR9.2billionofnetoutflowsinretail invest- Under thesecircumstances, clients’increasing riskaversion lion, mainlyinretail andinstitutionalfunds. bil- 16.1 of thedecrease) whilenetoutflowsamountedtoEUR billion(or47% negative marketeffect accountedforEUR14.3 which EUR14.4billioninthefourthquarter. Year-on-year the to EUR79.3billion,down30.4billion(or-27.7%),of end ofDecember2008,assetsundermanagementamounted disruption whichoccurred inthelastquarterofyear. Atthe ment in2008,particularlyaftertheexceptionallysevere market The assetmanagementindustryfacedachallengingenviron- ACTIVITY (in billionsofEUR) ASSETS UNDERMANAGEMENT OA 0. 93-27.7% 79.3 109.7 TOTAL uulfns6. 48-35.5% 44.8 69.5 Mutual funds By typeofmanagement rvt adts5533-40.2% 3.3 5.5 Private mandates ntttoa adts3. 13-10.2% 31.3 34.8 Institutional mandates qiyfns1. . -52.7% 6.8 14.3 Equity funds By typeofmutualfund odfns1. 29-29.2% 12.9 18.3 Bond funds oe aktfns1. 18-4.9% 11.8 12.4 Money marketfunds lentv ud . . -59.9% 3.1 7.8 Alternative funds lblblne ud 2981-37.4% 8.1 12.9 Global balancedfunds tutrdpout . . -33.5% 2.0 3.0 Structured products Other ntttoa ud 571. -38.3% 15.9 25.7 Institutional funds ealfns4. 89-33.9% 28.9 43.7 Retail funds (1) assets comingfrom retail andprivatebankingclients. of totalassetsundermanagement,theremaining (41%) being As ofDecember31,2008institutionalassetsrepresented 59% of thetotalassets. Socially ResponsibleInvestment(SRI)fundsrepresented 20% andstructuredglobal balancedfunds,7%inalternative funds. 31% inbondfunds,15%moneymarket33% between thedifferent assetclasses:14%inequityfunds, Total assetsundermanagementremained wellbalanced mandates). and moneymarketfunds(particularlyduetothelossoftwo recorded inthelastquarterofyearfixedincome ative marketeffect andEUR6.9billionnetoutflowsmainly billion.ThiswasexplainedbyaEUR6.4billionneg- 47.2 EUR billion(or-22%)from thebeginningofyear, to 13.3 Institutional investmentfundsandmandatesdecreased by e.3,20 e.3,20 Variation Dec.31,2008 Dec. 31,2007 . . -89.9% 0.1 0.8 (1) Proforma. down 23%asaresult ofdecliningmanagementfees(-20%) out one-off commercial actions,incomewasEUR218million, Total decrease compared to2007duelowerfees. net incomeGroup share amountedtoEUR69million,a40% crisis bookedinthesecondhalfofyear(EUR57million), Excluding one-off commercial actionsrelated tothefinancial Net incomeGroup share RESULTS i iloso U,ecp hr niae)2007 (in millionsofEUR,exceptwhereindicated) STATEMENT OFINCOME Income Pretax income Gross operating income Expenses oto ik00- 0 0 Cost ofrisk Net incomeGroup share a xes 7 2 -76.5% (2) (7) Net income Tax expense ioiyitrss45+12.5% 5 4 Minority interests egtdrss–BslI4 - 88.8% 79 46 55.8% 70 Weighted risks–BaselI Total allocatedequity(average) Cost-income ratio egtdrss–BslI 410 - Weighted risks–BaselII fwihipc nnilcii 5)n.s. -39.8% (57) 69 0 114 of whichnetincomeexcl.financialcrisis of whichimpactfinancialcrisis income amountedtoEUR161millionin2008.With- wasEUR11millionin2008. mercial actions. cost-income ratiowas65%in2008excludingone-off com- cial actions.Thiscompares withEUR125millionin2007.The million,orEUR75millionexcludingone-off commer- 18 EUR Gross operatingincome larly staff costs,ITandmarketingexpenses. by virtueoftheactivemanagementcostsandmore particu- Expenses negative marketeffect onfundsaswellbynetoutflows. and performancefees(-42%),whichwere affected bythe (158) 284 125 125 114 118 felltoEUR143million(-10%compared tolastyear) (1) fortheyearamountedto 08Variation 2008 13 -9.9% (143) 6 -43.4% 161 8-85.7% 18 8-85.7% 18 1-90.1% 11 6-86.2% 16 Dexia Asset Management Annual report 2008 85
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 86 Dexia Annual report 2008 (1) i.e.assetsundercustody, administrationandtransferagent. denominated inthosecurrencies. given thesignificantproportion ofassetsunderadministration (+23.4%) andtheEUR(+5.1%)alsocontributedtofall, appreciation oftheend-of-periodUSDversus CAD is largelyduetothenegativemarketvalueeffect. Thestrong were USD1,896billion,down34%year-on-year. Thedecrease Investor Services As ofDecember31,2008, sharp declineinglobalmarketindices2008. RBC DexiaInvestorServicesvolumeswere impactedbythe ACTIVITY ubro hrhle consi rnfraet(ntosns ,4 ,2 +6.3% 8,125 7,645 Number ofshareholderaccountsintransferagent(inthousands) Assets underadministration ubro ud ne diitain514608+17.0% 6,008 5,134 Number offundsunderadministration NETRSERVICES INVESTOR assets underadministration (1) (nblin fUD ,8 ,9 -34.2% 1,896 2,882 (inbillionsofUSD) fer agencyservicestothecompanyforits160funds. Dexia InvestorServicestoprovide fundaccountingand trans- Luxembourg-based funds.AegonCanadaalsoselectedRBC transfer agencyforthecompany’s EUR16billionassetsof investor servicesincludingcustody, fundadministration,and DexiaInvestorServicesasprovider forafullrangeof RBC Among thekeymandateswonin2008,Swisscantochose December 2008. 6% from 7.6to8.1millionunitsbetweenDecember2007and The existing clients. was drivenbynewly-acquired clientsandorganicgrowth from (+874 portfolios)compared toDecember2007.Thisgrowth The number oftransferagentaccounts number offundsunderadministration 0720 Variation 2008 2007 alsoincreased, by rose by17% At EUR81million,2008 for CAD,andbytheoveralldeteriorationoffinancialmarkets. cost growth wascurbed. ture. Attheendofyear, andwithrevenues underpressure, increase instaff expenses,inadditiontoincreasing ITexpendi- large-sized newmandateswonduringtheyeargeneratedan the previous year, and7%onaconstantexchangerate. The Expenses ated inthefourthquarterofyear. and decreasing securitieslendingvolumes.Thistrend acceler- to assetvalues,lowerforeign exchangetransaction volumes second halfof2008impactedrevenues vialowerfees related The difficultenvironment prevailing infinancialmarketsthe year, andremained unchangedusingconstantexchangerates. Total 16% year-on-year. 19% on2007.Onaconstantexchangerate,thedecrease was (2) Proforma. (1) Dexia’s partofRBCDexiaInvestorServices. ciation oftheaverageUSDagainstEUR Net results for2008were impactedbya6.6%currency depre- RESULTS (in millionsofEUR,exceptwhereindicated) STATEMENT OFINCOME xess(8)(9)+4.4% (297) (285) Expenses Income oticm ai 68 72.7% (1) 66.8% -21.2% 0 112 142 Cost-income ratio Cost ofrisk Gross operating income egtdrss–BslI 2,941 - -28.9% 178 - (27) 2,361 111 176 (38) 140 Weighted risks–BaselII Weighted risks–BaselI Total allocatedequity(average) Tax expense Pretax income ioiyitrss22-10.5% -18.3% -18.5% 2 83 81 102 2 100 Net incomeGroup share Minority interests Net income fwihnticm xl nnilcii 0 1-18.5% 81 100 of whichnetincomeexcl.financialcrisis fwihipc nnilcii n.s. 0 0 of whichimpactfinancialcrisis income in2008were EUR297million,up4%compared to ofEUR409milliondecreased by4%year-on- net incomeGroup share (1) (1) , andasimilartrend wasdown s s s from: millionin2007.Thereduction oftaxchargesresulted 38 EUR Tax expense rate. year, adecrease of21%and18%onaconstantexchange Gross operatingincome the averageUSDversusEURdepreciatedby-6.6%. appreciated by+5.1%betweenDecember2007and2008, basis, whileonanaveragebasisforresults.In2008,USDspotversusEUR (1) Exchangeratesforactivityarecalculatedonaspot(end-of-the-year) a decrease intheCanadianstatutorytaxrate. a one-off taxadjustmentofEUR6million; a lowerleveloftaxableincome; 2007 2 0 -4.1% 409 426 amounted toEUR27million,compared to (2) wasEUR112millionforthefull 08Variation 2008 Dexia -21.2% Annual report 2008 x2.3 Investor Services 87
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 88 Dexia Annual report 2008 remained limited. kets. Inthe coped withtheongoingsignificant volatilityincredit mar- The Brothers bankruptcy. the globalliquiditycrisisandaftermathofLehman markets includingthecovered bondmarketssuffered from Throughout thesecondpartofyear, wholesalefunding from -1.5basispointin2007to+11.7points2008. age fundingcostagainsttheEuribor3monthsincreased Agency andDexiaKommunalbankDeutschland.Theaver- of theGroup’s covered bondsissuers–DexiaMunicipal 2007. Roughly60%ofnewissueswere madethrough two term resources in2008,compared toEUR26.4billionin tions sinceSeptember. DexiaraisedEUR27.1billionlong- active althoughtheyhavefacedmore challengingcondi- Trading This compares with EUR74.9billionasofDecember2007. folio whichtotaledEUR71.3billion asofDecember31,2008. In 2008,theGroup’s funding sources. of allmarketopportunitiestolengthenthematurityits lines intheUS.Goingforward, Dexiawilltakeadvantage production andbyadecrease ofthedrawsoncommitted also possiblethankstotheintendedreduction ofnew loan ter of2009.Theimprovement intheGroup’s liquiditywas billioninthefirstquar- 8.5 tions foratotalamountofEUR In addition,Dexiaissuedthree guaranteedpublictransac- has alsofacilitatedrenewed accesstoshort-termfunding. bined withthefullallotmentstrategyofcentralbanks,it support facilitatedastabilizationofthedepositbase.Com- 9,2008helpedtoimprove thesituation.This on October with theguaranteegrantedonnewunsecured borrowing tainties aboutDexia’s future. Promptsupport, government severely damagedbythecrisisaswellspecific uncer- In earlyOctober2008,theGroup’s accessto activities. discontinued. Value atRisklimitswere halvedonothertrading reduction ofitsriskappetite.Proprietary tradingactivitieswere fourth quarterof2008,thebusinesslineinitiatedasubstantial activities were significantlyaffected. Inthebeginningof Treasury andFinancialMarkets Against thisbackground, and otherfinancialinstitutions. dislocation ofmarketsmeantfurtherdifficultiesformonolines intheeconomy,turn particularlyintheUS,andaccelerated securities marketsandspecificbankcredit risks.Thedown- crisis creating majordisruptionsonoverallmarketliquidity, 2008 wascharacterizedbyanexceptionallysevere financial ACTIVITY ie Income Fixed activities,forwhichrisklimitswere reduced in2008, Securitization segmentmanagestheCredit Spread Port- Long-Term Funding businessline,opportunities Treasury andFinancialMarkets activitieswere liquidity was impact ofhighvolatilityonitstradingoperations. had achallengingendoftheyear, dueinparticulartothe adverse marketconditions. fundsforretailof equitiesandexternal clientssuffered from which hadanegativeimpactonmargins.Brokerage activities ers favored plainvanillaproducts inthesecondpartof2008, robust throughout thefirsthalfofyearalthoughcustom- ties. In manages interest rate,foreign exchangeandequityactivi- private bankingclientsandtopublicsectorclients.Italso competence inthesupplyofstructured products toretail/ EngineeringandTrading Market cuts towards theendof2008. interest rates.Moreover, results were boostedbyinterest rate efit from highspreadsandthree-month betweenovernight reported strong results in 2008,asDexiawasstillabletoben- Within the Within s s s total netamountofEUR1,504million. number ofatypicalelementslinkedtothefinancialcrisis,fora 317millionin2007.Thelossfortheyearincludesa of EUR share Treasury andFinancialMarketsreported a adjustment onasecuritization related CDS. portfolios. Thesenegativeitemswere partlyoffset byapositive market adjustmentsonTreasury andFinancialMarketstrading spreads ledtonegativemark-to- turbulence. Widening trading bookswere affected bytheunprecedented market income byanoverallnetamount of EUR201million.Dexia’s 2008. the secondpartof risks related tomonolinesledhigherlosses,particularlyin rising protection costsontheunderlyingbondsandhigher limited impactonDexia’s accounts,thecombinedeffect of to thisactivity(discontinuedatthebeginningof2008)had specific bonds.Whilstsofarcredit valueadjustmentsrelated insurers andthird-party bankstosell credit protections on value adjustmentsonintermediationdealsbetweenmonoline Dexia’s assetsguaranteedbymonolines.Italsoincluded credit exposures tomonolineinsurers. Itincluded impairmentson was chargedinthe2008accountswithrespect totheGroup’s Washington MutualandEUR7milliononHypoRealEstate. Brothers; EUR174milliononIcelandicbanks;57 breaks downintothefollowing:EUR473milliononLehman replacement costsofderivativecontracts.Thisaftertaxamount party, theseadjustmentscoverlossesonbonds, loansandthe EUR 750million,aftertax.Foreachproblematic counter- bond investmentportfoliosledtoimpairmentsamounting ing counterpartieswithinTreasury andFinancial Markets’ RESULTS Various valueadjustmentsreduced thebusiness line’s net A totalofEUR320millioninnegativeadjustmentsaftertax The deteriorationinthecreditworthiness ofsome bank- ofEUR789millionin2008,compared toanetprofit Personal Financial Services Engineering Personal FinancialServices Treasury segment, Public FinanceMarketEngineering Cash &LiquidityManagement bringstogetherthebank’s net lossGroup , volumeswere s The activity linewithinthe a positivecontributionoftheCashandLiquidityManagement 775millionin2007.Thismainlystemsfrom compared toEUR ments, incomewouldhavebeenEUR1,189millionin2008 lion in2007.Excludingtheabove-mentionedatypicalele- Income in 2008againstEUR472million2007. 715million net incomeGroup share wouldhavebeenEUR If theseatypicalitemsrelated tothefinancialcrisiswere excluded, client-related forex lossatDexiabankaSlovensko. EUR 114million,aftertax.Itincludedinparticularapartof a direct consequenceofthefinancialcrisisforanamount s (1) Proforma. related tothefinancialcrisis. bution, mainlyduetothesignificantimpactofatypicalitems egtdrss–BslI 23,710 - 741.4% - 1,795 31,078 37.0% 1,775 Weighted risks–BaselII Weighted risks–BaselI Total allocatedequity(average) Cost-income ratio Net incomeGroup share ioiyitrss30n.s. 0 3 Minority interests Net income a xes 3)10n.s. 140 (37) Tax expense oto ik()(716) (9) Pretax income Cost ofrisk Gross operating income Expenses i iloso U,ecp hr niae)2007 (in millionsofEUR,exceptwhereindicated) STATEMENT OFINCOME Income A numberofsmallernegativeimpactswere alsoidentifiedas A EUR177millioncollectiveimpairmentforcredit risks. fwihipc nnilcii 15 154 x9.4 +51.4% (1,504) 715 (155) 472 of whichnetincomeexcl.financialcrisis of whichimpactfinancialcrisis Fixed Income i 08wsER3 ilo oprdt U 8 mil- in2008wasEUR33millioncompared toEUR581 segment madeanegativeincomecontri- Treasury segment. impacts ofatypicalitemslinkedtothefinancialcrisis. Tax expense Slovensko. line insurers andtheclient-related forex lossatDexiabanka loans toIcelandicbanks,partoftheimpairmentsonmono- tives contractswithLehman,aswellimpairmentson financial crisis.Theyincludereplacement costsof deriva- (against EUR9millionin2007),virtuallyallrelated tothe EUR 716millionof compared toEUR+366millionin2007. Gross operatingincome on Treasury andFinancialMarketsactivities. A third oftheincrease isattributabletoarestructuring charge Expenses tutional customers. to highervolumesoflendingandassociatedservicesinsti- 115millionin2007toEUR1472008,thanks EUR Market EngineeringandTrading (215) 317 320 357 366 581 were upby14%toEUR245millionin2008. waspositive(EUR140million)duetothevarious (1) impairments wasnegativeatEUR-212million 79 n.s. (789) 70 n.s. (790) 90 n.s. (930) 22 n.s. (212) 25 +14.0% (245) 08Variation 2008 revenues increased from 3-94.3% 33 were bookedin2008 Treasury andFinancialMarkets Dexia Annual report 2008 x79.5 89
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 90 Dexia Annual report 2008 the shareholding plantoalaterdate. Dexia’s Board ofDirectors decidedtodeferimplementationof meeting onOctober20,2008,consideringmarketconditions, subscription rightinfavorofGroup membersofstaff. Atits ing plan,withawithdrawaloftheshareholders’ preferential nominal value,intheframeworkof2008Dexiasharehold- decided toissueamaximum16,000,000newshares, without unanimously decidedonacapitalincrease withinthe author- warrants, 10,559,805havebeeneffectively issued. beneficiaries ofthatplan.Ofthismaximum10,664,000 subscription rightinfavorofGroup membersofstaff whoare 2008”), withawithdrawaloftheshareholders’ preferential the contextof2008Dexiastockoptionplan(“ESOP decided toissueamaximumof10,664,000warrantswithin Code) 608oftheCompany (Article 1. Authorizedcapital General information 2. Acquisitionofownshares (Article624oftheCompanyCode) s s s capital onthree occasions. cial year, theBoard ofDirectors madeuseoftheauthorized sion cameintoforce onJune2,2006.Duringthe2008 finan- 4,887,500,000(excludingissuepremium), andthedeci- EUR for afurtherperiodoffiveyearsanduptomaximum Extraordinary Shareholders’ MeetingheldonMay10,2006 The authorizedcapitalwasrenewed byresolution ofthe ftepro ,7,7,6 ,3,3 .92.9 .4 0.76% 0.04% 20.199 4.59 8,932,736 of theperiod 1,178,576,763 Situation attheclose Issues overtheperiod Transfers overtheperiod Cancellations overtheperiod Acquisitions overtheperiod of theperiod Situation atthestart to Dec.31,2008 Period fromDec.31,2007 SUMMARY OFOWNSHARE TRANSACTIONS At itsmeetingonMay14,2008,theBoard ofDirectors At itsmeetingonOctober3,2008,theBoard ofDirectors At itsmeetingonMay14,2008,theBoard ofDirectors ,6,7,8 9,7 .995407%0.02% 0.76% 9.544 4.59 293,570 1,762,478,783 +606,160,256 of shares in of sharesin (subscribed (subscribed circulation circulation Number Number capital) +13,631,370 -22,258,236 own shares Number of -12,300 Own shares(DexiaSAanddirectsubsidiaries) the heading“LegalInformation”. copies ofwhicharesiteunder availableontheDexiaInternet in thespecialreports oftheBoard ofDirectors ofDexia, of theconditionsandconsequencestheseissuesisincluded 1,618,019,243atthecloseofthesetransactions.Details EUR the availablebalanceofauthorizedcapitalwastakento 4.59pershare, Considering anaccountingparofEUR and theBrussels-CapitalRegion. VlaamsToekomstfonds,Government), theWalloon Region Sociétédepriseparticipationl’État(FrenchGovernment), fédérale departicipationsetd’investissement(Belgianfederal des dépôtsetconsignations,Ethias,CNPAssurances,Société the following:Arcofin SCRL,HoldingCommunalSA,Caisse was removed, thenewshares beingreserved exclusivelyfor The preferential subscriptionrightofexistingshareholders as existingshares butwithoutVVPRstrips,allfullypaidup. tion ofnominalvalue,bearingthesamerightsandobligations ER3,218,442,250.74)toanon-available“Issuepremium”account. (EUR forty-two thousandtwohundredandfiftyeurosseventyfourcents of threebilliontwohundredandeighteenmillionfour (EUR 2,781,557,748.66)tothe“Capitalaccount”,andupanamount seven thousandhundredandforty-eighteurossixty-sixcents billion sevenhundredandeightyonemillionfivefifty- The proceedsofthepayingupwereallocatedtoanamounttwo 9.90). (1) Thesubscriptionpricepersharewasnineeurosninetycents(EUR creation of606,060,606registered shares ized capitalinanamountofEUR2,781,557,748.66bythe Accoun- ting par (EUR) 4.59 4.59 4.59 Countervalue per share 835ns 1.89% 1.16% n.s. 0.74% 18.305 16.869 26000%0.00% 0.01% 12.680 (EUR) as ofDec.31, 2007 % incapital (1) , withoutindica- as of Dec. 31, as ofDec.31, 2008 (Luxembourg); Security AssuranceHoldingsLtd(UnitedStates); à LuxembourgSA; bourg), whichholds42.23%ofDexiaBanqueInternationale bourg SA(Luxembourg); s s s s s s s s s s s are asfollows: The 13direct holdingsofDexiaSAasDecember31, 2008 of December31,2008 holdings ofDexiaSAas 3. Overviewofthedirect exercise ofthoseoptions. of ownsharetransactions cated under“Transfers overtheperiod”intable put inplacebythatsubsidiary1999.Themovementsindi- 627, §1oftheCompanyCode),aspartshare option plan Dexia CréditLocal(direct subsidiaryofDexiaSAunder Article 2008 corresponds tothenumberofDexiashares stillheldby The balanceoftheportfolioownshares asofDecember 31, reserve havingbeenestablishedtothatend). held onMay9,2008,withoutacapitalreduction (an available the companyandthusdestroyed the22,258,236own shares own shares anddecidedtocancelalltheownshares heldby renewed theauthorizationsforacquisitionanddisposal of The Extraordinary Shareholders’ MeetingheldonMay14,2008 April 11,2008. chased 13,631,370ownshares betweenJanuary4,2008and As partofthisprogram topurchase ownshares, DexiaSApur- ary basisonthepurchases tobemade. which, abidingbythebudgetprovided, decidesonadiscretion- implementation ofwhichwasentrustedtoDexiaBankBelgium August 30,2007aprogram forthepurchase ofownshares, the Meeting onMay9,2007,theBoard ofDirectors launchedon posal ofownshares decidedbytheExtraordinary Shareholders’ On thebasisofauthorizationsforacquisitionanddis- 99.53% inAssociatedDexia Technology ServicesSA 95.39% inDexiaParticipationBelgique SA; 100% inDexiaFundingLuxembourg SA(Luxembourg); 100% inDexiaNederlandHolding NV(theNetherlands); 10% inDexiaHoldingsInc.,theparent companyofFinancial 99.99% inDexiaParticipationLuxembourgSA(Luxem- 100% inDexiaEmployeeBenefitsSA(Belgium); 100% inDexiaManagementServicesLtd(UnitedKingdom); 57.68% interestàLuxem- inDexiaBanqueInternationale 100% interest inDexiaCréditLocalSA(France); 100% inDexiaBankSA(Belgium); ontheprevious pageresult from the Summary Summary in Luxembourg. Dexia SAhastwopermanentoffices,oneinFranceand DenizBank ASand16.38%byDenizFactoringAS. DenizBank AS; 4. Litigations s s may be needed in a number of cases. may beneededinanumberofcases. period willbedeterminedcaseby case,additionalprovisions ter hasbeenreceived induetime.However, astheprescription covers allfilesforwhichitisestablished thatthenullificationlet- this issuehasbeenrecorded inthe2008results. Theprovision of thecontractclient.Aprovision ofEUR32millionfor Duisenberg Arrangement),canindeedinvokethenullification and whodidnotacceptasettlement(liketheDexiaOffer orthe moment thespousewasaware oftheexistencecontract, letter withintheprescription periodofthree yearsasfrom the tract. Therefore, spouseswhosentDBnl aso-callednullification ten consenttohisorherpartnerforenteringintosuchacon- which meansthatthespouseofclienthadtogivewrit- plan fallingwithinarticle1:88oftheNetherlandsCivilCode, securities leasingcontractisaformofhire purchase instalment called spouseconsentmatter. According tothisjudgment,a a judgment,dismissingtheappealofDBnlinrespect oftheso- On March 28,2008,theNetherlandsSupreme Courtrendered to thedetaileddisclosure intheDexiaAnnualReport 2007. Reference (especiallyfortheDuisenbergArrangement) ismade Specific litigations year 2008,whichare availableon 102 to104)andintheFinancialReportspublishedduring contained intheDexiaAnnualReport2007(especiallyonpages tially hopedfor. Reference ismadetothedetaileddisclosures, as potentially endingwitharesidual debtinsteadofthe gainini- DBnl proved insufficientinalargenumberofcontracts, thus the securitiesusedascollateralagainstloansgrantedby fall oftheAmsterdam stockmarketinlate2001.The valueof referred toasDBnl)appeared atthetimeoffastandsevere Bank Labouchere (nowDexiaBankNederlandNV; hereinafter The difficultieslinkedtotheshare-leasing activitiesofthe former Background ..DEXIABANKNEDERLAND 4.1. 72 shares inDenizLeasingAS,83.62%beingheldby 1 share inDenizFaktoringAS,99.99%beingheldby www.dexia.com Dexia . General information Annual report 2008 91
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 92 General information Dexia Annual report 2008 expected afterthejudgmentofSupreme Court. and willcontinuetodecrease in2009becauseofsettlements The numberofclientsinproceedings decreased rapidlyin2008 the vastmajorityofthesecourtcaseshavebeensuspended. civil courtcases,involvingmore than3,000clients.However, On December31,2008,DBnlisstillinvolvedinover2,800 this respect. decision, there isnoneedtochangetheprovisions ofDBnlin 2003, isavalidsettlement-agreement indeed.Asaresult ofthis that theso-calledDexiaOffer, asettlementsignedby clientsin On October14,2008,theAmsterdam CourtofAppeal ruled of theAmsterdam Sub-DistrictCourt. Duisenberg Arrangementandnotonthe“standard decisions” 2009. Theprovisions ofDBnlare basedonthecostsof Court whichare expectedtoberendered inthefirsthalfof age, willbepartofjudgmentsbytheNetherlandsSupreme of care issues,includingthecorrect definitionofrelevant dam- also decidedtosuspendallsimilarequityleaseprocedures. Duty more, mostoftheotherSub-DistrictCourtsinNetherlands equity leaseprocedures involvingdutyofcare issues.Further- 2008, theAmsterdam Sub-DistrictCourtdecidedtosuspendall respect totheCourtsofAppeal.However, onNovember25, damage. Therefore, DBnlcontinuedtoissuemore appealsinthis decisions” ofApril2007,usingabroader definitionofrelevant Amsterdam Sub-DistrictCourtcontinuedtoapplythe“standard not beconsidered aspartofthedamageclient,but andDenBoschhavedecidedthatinterest Arnhem paidshould In severaljudgments,theCourtsofAppealAmsterdam, ing agreements inconnectionwithsecurities deposit(“Depot of approximately 5,500 clientswhoentered intoshare-leas- The DuisenbergArrangementisnot applicabletothegroup Depot Lease under considerationbytheDSIAppeals Committee. eration bytheDSIGrievanceCommittee,andonlyonecase At theendof2008,onlytwentycaseswere stillunderconsid- Dutch SecuritiesInstitute(DSI) proceedings againstDBnl. any settlementsincethen,are stillentitledtostartorcontinue out statementbefore August1,2007,anddidnotenterinto approximately 20,000clientsthathavefiledaso-calledopt- reports andfinancialreports. Generally speaking,onlythe the nature ofthesedisputes,Dexiarefers toitsearlierannual with respect toshare-leasing products. Especiallyinrespect of A numberofdisputeshavearisenbetweenDBnlanditsclients Litigations ingeneral judgments. the share-leasing contracts,byclientbehaviorand future by thefluctuationsinvalueofunderlyingstock Provisions are updatedeveryquarterandmaybeinfluenced Provisions asofDecember31,2008 have beenmade. to settleaconsiderablenumberofthem.Adequateprovisions of courtcaseswithDepotLeaseclients,butexpectstobeable Lease clientshavebeenreached. DBnlfacesalimitednumber Lease”). Attheendof2008,settlementswithnearlyallDepot is estimatedataround USD1,200,000. on aportfolioofsecuritiesowned by LHIC,thevalueofwhich As partofthesecurityforitsclaim, Dexia Bankstillhasapledge has beenrecorded fortheremaining claim. interests. AnimpairmentintheamountofEUR43,959,626.92 to EUR52,240,144.08–ofwhich6,919,585.09reserved &Hauspie InvestmentCompany(LHIC)amounted on Lernout As ofDecember31,2008,theDexiaBank’s outstanding claim Company Investment &Hauspie ClaimonLernout 4.2.2. any dividendfrom theBelgianliquidationofLHSP. Bank andtheotherunsecured creditors are unlikelytoreceive According totheLHSPBelgianbankruptcyreceivers, Dexia ings inBelgiumandtheUnitedStates. The liquidationofLHSP’s assetsissubjecttoseparateproceed- USD50,000,000. share amountedto USDtoLHSPonMay5,2000.ArtesiaBank’s 430,000,000 taken bytheformerArtesiaBankinsyndicatedloanof 24,092,917.71.Thisclaimoriginatesintheshare for EUR interests –,forwhichanimpairmenthasbeenrecorded rate USD/EUR1.3971)–ofwhichEUR182,354.31reserved of LHSPforaprincipalsumEUR28,963,083.03(exchange Dexia BankhasaclaiminUSDchargeabletothebankruptcy Products &HauspieSpeech ClaimonLernout 4.2.1. have occurred. 2007 annualreports. Sincethen,thefollowingrelevant events quences thereof. Thiswasdescribedindetailthe2006 and &HauspieSpeechProductsLernout (LHSP)andtheconse- invariouswayswiththebankruptcyof Dexia isconcerned ..LERNOUT&HAUSPIE 4.2. discussion. and thedatefrom which itshouldbecalculatedare stillunder which interest must beadded.Theamountoftheinterest All theabove-mentionedamounts are principalamountsto 7,259,107.06. EUR substantial reduction intheclaimbyreceivers ofLHSP. bank, thatduplicationisunlikelytobesuchasleada of otherparties.Inthepresent stateoftheanalysisby 744,128,638.37.Partofthisclaimduplicatestheclaims EUR around EUR315,000,000. holders represented byDeminorand Spaarverlies) whoclaim s s s s listed below): ing relevant claimsfordamages(onlythemostimportantare On December31,2008,DexiaBankwasaware ofthe follow- until thelastdayoftrial. ecuted offences canmakeaclaiminthecriminalproceedings Parties allegingtohavesuffered lossesinrelation tothepros- brought againstit. underlines itsinnocenceinthismatterandconteststhecharges will deliveritsdecisionduringthecourseof2009.DexiaBank deliberated onthecriminalcaseJanuary30,2009and were closedonDecember19,2008.TheCourtof Appeal The oralpleadingsregarding thecriminalaspectofcase charges. Dexia Bankconsidersithasseriousgrounds forcontesting the amount ofapproximately EUR29,000,000. the PublicProsecutor demandstheseizure ofproperties inan these fundsforimproper revenue recognition. Furthermore, allegedly knewthatthemanagementofLHSPwouldutilize whilstABC HauspieandWillaert, lion loantoMessrs.Lernout, the creation offictitiousrevenue, bygrantingaUSD20mil- ing Corporation(hereafter ABC)aidedandabetted LHSP in The PublicProsecutor allegesinsubstancethatArtesia Bank- ( ( ( en écritures financial statementsofLHSP( prosecuted asanallegedaccessorytothefalsificationof in Ghent.According tothewritofsummons,DexiaBankis 20 otherparties,toappearbefore thecriminalCourtofAppeal On May4,2007,DexiaBankwassummoned,togetherwith 4.2.3. Prosecution ofDexiaBankinBelgium koersmanipulatie/manipulation decours emissiebedrog/délit d’émission valsheid ingeschriften/fauxenécritures The receivers of The Learning Kernel whoareThe receiversKernel claiming ofTheLearning Mercator &Noordstar whichisclaiming EUR17,662,724. The Belgianreceivers ofLHSPwhoare claiming Around 15,000individualshareholders (includingtheshare- ) andotherrelated offences amongwhichforgery valsheid indejaarrekening/faux ) andmarketmanipulation ). ), securitiesfraud sion rateare stillunderdiscussion; 4.2.1. above). syndicated credit facilitydatedMay5,2000(seeparagraph 28,963,083.03 owedtoitbyLHSPunderaUSD430million still holding437,000LHSPshares) andtoanamount ofEUR tion tothelossessuffered onitsLHSPportfolio(DexiaBankis a provisional amountofEUR2.DexiaBank’s claimisinrela- the companyLHSPinOctober2007,claimingdamagesfor andBastiaensagainst Hauspie,Willaert Messrs. Lernout, madeaclaimascivilpartyagainst Dexia Bank,initsturn, indefinitely. case; theCourthasdeferred thehandlingofcivil aspects decided toseparatethecriminalfrom thecivilaspects ofthe It shouldbenotedthattheCourtofAppealinGhenthas complicated matter. tors andtheallegedwrong committedbyArtesiaBank isavery s s s s ficult todeterminethereal extentofthedamagesclaimed: For thefollowingreasons –amongothersitremains verydif- mean date. on whichLHSPwasdeclared bankruptinOctober2001)ora the dateonwhichLHSPshares were bought,orthedate whether itshouldbeaparticulardate(e.g.November9,2000, be calculated,thecivilpartiesdiffer intheirapproach asto regardWith tothestartingdatefrom whichtheinterest isto rate ofinterest whichiscurrently 7%. In theworstcase,interest ratetobeappliedisthestatutory The claimants seek damages for their losses, which have not The claimantsseek damagesfortheirlosses,which havenot main claimwasfiledbyDeminoron behalfof4,941investors. LHSP shares against variousparties,includingDexiaBank.The Certain civilclaimshavebeenfiled bygroups ofinvestorsin Claimsbyindividuals 4.2.4.2. because oftheprinciple“ development untilaftertheendofcriminalproceedings duced inthecriminalproceedings, isnotlikelytohaveany This claim,toalargeextentduplicativeoftheclaimsintro- the claimwouldamounttoapproximately EUR439million. According tothereceivers’ provisional assessmentoftheclaim, against thenetliabilitiesofLHSPinbankruptcy. twenty-one parties,includingDexiaBank,foranindemnity In July2005theBelgianreceivers ofLHSPfiledanactionagainst LHSPreceivers’ claim 4.2.4.1. in Belgium Civilproceedings againstDexiaBank 4.2.4. the finalnumberofcivilpartiesisstillunknown; the rateofinterest tobeappliedandtheUSD/EURconver- a numberofpartiesare claimingprovisional amounts; proving thelinkbetweendamagesuffered bytheinves- le crimineltientcivilenétat Dexia General information Annual report 2008 ”. 93
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 94 General information Dexia Annual report 2008 en état proceedings becauseoftheprinciple“ likely tohaveanydevelopmentuntilaftertheendofcriminal of theclaimsintroduced inthecriminalproceedings, are not yet beenassessed.Theseclaims,toalargeextentduplicative paid bythepurchaser. LHSP matterforBAN,cappedatan amountequaltotheprice that DexiaBankwillbearthefinancial consequencesofthe the contextofthisoperation,ithas beenagreed, inessence, Banque ArtesiaNederland(BAN) to GeneralElectric(GE).In In October2006,DexiaBanksold itsaffiliatedcompany Nederland 4.2.7. BanqueArtesia LHSP (ofaround 12,000,000shares) which isnowworthless. bank, provisionally estimatedatEUR1,fortheparticipationin receivers ofL&HHoldingare alsoclaiming damagesfrom the For thesakeofcompleteness,itshouldbementionedthat applications. Dexia Bankvigorously conteststhegrounds forthese repayment. Holding, theL&HHoldingbankruptcyreceiver isclaimingits Takingand Willaert. theviewthatthismoneywasduetoL&H Hauspie sonal accountsopenedwithBANbyMessrs.Lernout, The sellingpriceofUSD25millionwascredited tothree per- guarantee infavorofBANforanamountUSD10million. The formerArtesiaBankingCorporation(ABC)issuedabank sition byMr. BastiaensofLHSPshares ownedbyL&HHolding. Mr. BastiaensbyBANinJuly2000forthepurposesofacqui- This isconnectedwithaUSD25millionloangrantedto principal amountofUSD25million. Banque ArtesiaNederland(BAN)andDexiaBank,topaythe alongwith HauspieandWillaert, summoned Messrs.Lernout, On April27,2004,thebankruptcyreceiver ofL&H Holding Holding 4.2.6. L&H could seriouslyharmDexiaBank’s interests. in thecases(otherthanNASDAQ-classaction)sincethis Dexia Bankhasnotrendered publicthesettlementamounts United Stateshavebeenfinallyterminatedinfull. As aresult, allthecasesbrought againstDexiaBankinthe the LitigationTrustee, wasterminatedinSeptember2008. The onlyoutstandingcivilcaseintheUnitedStates,brought by in theUnitedStates Civilproceedings againstDexiaBank 4.2.5. ”. le criminel tient le civil le crimineltientcivil USD 17,538,614.58infavorofBANonOctober30,2007. (see paragraph4.2.6.above).Thisresulted inapaymentof antee ofUSD10,000,000inprincipalissuedfavorBAN Finally, inOctober2007,DexiaBankhonored thebank guar- cassation of AppealinLuxembourgbefore theSupreme Court( BAN haslodgedanappealagainstthedecisionofCourt of thissection). the aforesaid guaranteeinfavorofGE(seethefirstparagraph (USD 30,039,336.54)toBANonJuly9,2007inexecutionof Paribas LuxembourgandDexiaBankreimbursed this amount was obtained,BANpaidthevalueofParvestshares toBNP As noliftingofthevariousattachmentsonParvestshares against anydamagederivingfrom itscondemnation. BAN toindemnifyandholdBNPParibasLuxembourgharmless July 1,2007.TheLuxembourgCourtofAppealcondemned June 30,2007ifthelatterwere notdelivered toCAILprior or topayCAILthecountervalueoftheseParvestshares on ordered todelivertheParvestshares toCAILbyJune30,2007 Luxembourg (CAIL)bywhichBNPParibaswas on July12,2006attherequest ofCréditAgricoleIndosuez In addition,theLuxembourgCourtofAppealissuedadecision attachment inthehandsofBAN. in relation totheseshares andproceeded totheirprovisional criminal case,L&HHoldingandKBCBankhaveallmadeclaims to Mr. Bastiaens.TheinvestigatingmagistrateintheBelgian withtheproceeds ofthesaleLHSPsharesand Willaert taining toParvestshares acquiredHauspie byMessrs.Lernout, In addition,BANisinvolvedinanumberofproceedings per- before thecivilcourt(seeparagraph4.2.6.,above). of a both inthecriminalinvestigationrelating toLHSP(intheform include theclaimintroduced bythereceiver ofL&HHolding by BANtoMr. Bastiaens(seeparagraph4.2.6.,above).They Most ofthependingproceedings relate totheloangranted made againstitinBelgiumforthe followingreasons. Dexia Bankhasnotconstitutedany provisions fortheclaims the difference inviewofthesecuritiesprovided. 68,052,544.63.DexiaBankexpectstobeablerecover EUR &Hauspiefileamounted tosome ments fortheLernout graphs 4.2.1.,4.2.2.and4.2.7.).Onthesamedateimpair- – ofwhichEUR7,104,106.89reserved interests –(seepara- &Hauspie fileamountstosomeEUR81,142,273.06 Lernout outstanding claimsrelating tocredit facilities grantedinthe On December31,2008,theexposure ofDexiaBanktothe 4.2.8. Provisions and impairments burgerlijke partijstelling/constitutiondepartiecivile ), whichwillgiveadecisiononApril2,2009. cour de ) and strong argumentstocontestthechargesbrought againstit. ages. Thelawyersofthebankare oftheopinionthatithas 50% thelikelihoodofacourtdecisionordering ittopaydam- these claims. Dexia strongly challengesthevalidityandmerits ofall American courtswere reversed inthethird quarterof2008. The unusedprovisions constitutedfortheactions inthe missible andatleastunfounded. that mostoftheactionsbrought bythecivilpartiesare inad- not beestimatedforgoodatthemoment. that oftenaprovisional amountisclaimed. (Deminor…) makenomentionofanyprecise amountand investigation, including actions on behalf of various states that investigation, including actionsonbehalfofvarious states that civil litigationrelated tothesubjectmatterofgovernment February 2008.FSAisalsoadefendant inclassactionandother Revenue Service,alsowithregard totheWells Noticereceived in would settlethematterwithDOJ, theSECandInternal the DOJandSECregarding aproposal that,ifagreed to, by theUSDepartmentofJustice(DOJ). FSAisindiscussionswith teed investmentcontracts(GICs)thatisalsobeinginvestigated laws inconnectionwithallegedbidriggingofmunicipalguaran- FSA, allegingviolationsofcertainprovisions oftheUSsecurities authorize commencementofnon-criminalproceedings against ing thattheSECstaff isconsideringrecommending thattheSEC Commission (SEC),commonlycalleda“Wells Notice”,indicat- Ltd (FSA)received aletterfrom theUS SecuritiesandExchange On February4,2008,FinancialSecurityAssuranceHoldings ( This filewillbesubmittedin2009totheCouncilChamber no fundamentaldevelopmentinthisfileduring2008. by theBanking,FinanceandInsuranceCommission.There was have enabledittoabidebythedirectives issuedinthis regard auditandITproceduresconfirms thatthenecessaryinternal inwhomDexiamaintainsitsconfidence.Bank cerned, that accusationdoesnotimplytheguiltofpersonscon- executives were accusedattheendofMarch 2004.However involving inheritancedutiesseemstohaveended.Fourformer apossiblefraud ber 28,1999againstDexiaBankconcerning The enquiryopenedbythejudicialauthoritiesonSeptem- s s s s chambre duconseil/raadkamer (SUBPOENA) ASSURANCE 4.4. FINANCIALSECURITY INHERITANCE DUTIES 4.3. As things stand at the moment, the bank assesses at less than As thingsstandatthemoment,bankassesseslessthan Dexia Bankhasmadeextensivesubmissionsandargued The numberofcivilpartiesandtheamountstheyclaimcan- regardWith tothecivilactions,wenote thatvariousclaims ). and branches. executives ofthecompany, itssubsidiaries,sub-subsidiaries 23, 2002particularlyinfavorofcertainmembersstaff and were issuedbytheBoard ofDirectors ofDexiaSAonMay 11.88(allexceptFrench beneficiaries).Theseoptions EUR warrants were exercised bytheirbeneficiaries atapriceof b) 6,000subscriptionrightsinthecategoryof“ESOP2002” site: May 13,2009inBrusselsare availableontheDexia SA web- Extraordinary Shareholders’ MeetingtobeheldonWednesday The agendasfortheOrdinary Shareholders’ Meetingandthe meetings 5. Agendaoftheshareholders’ litigation bytherespective states. in theglobalsettlementproposal, whichwouldresolve anycivil purchased municipalGICs.Thestatesmayelecttoparticipate (1) Numberandexercise pricebeforethesplitinto10. be exercised atapriceofEUR112.67) of theGroup (issueof100,190“F1998”warrantswhichmay Dexia SAonJuly6,2000infavorofcertainmembersstaff within theauthorizedcapital,byBoard ofDirectors of rants atapriceofEUR11.27.Theseoptionswere issued, a) 67,650subscriptionrightsinthecategoryof“F1998”war- subscription rights: and results from theexercise ofthefollowingcategories strips wasobservedbynotarizeddeeddatedJune30,2008 A capitalincrease bytheissueof94,150newshares withVVPR warrants) “ESOP 2002”,2003”and2004” exercise ofsubscriptionrights(“F1998”, 6.1.1. June30,2008:capitalincrease – The evolutionofcapitalispresented belowinchronological order. 6. Share capital IACA YEAR THE2008 FINANCIAL OVER CAPITAL OF EVOLUTION 6.1. www.dexia.com . (1) . Dexia General information Annual report 2008 95
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 96 General information Dexia Annual report 2008 U 5,307,437,260.42represented by1,156,412,677shares. EUR pany share capitalrose from EUR5,307,005,111.92to As aconsequenceofthatexercise, theamountof com- subsidiaries, sub-subsidiariesandbranches. certain membersofstaff andexecutivesofthecompany, its tors ofDexiaSAonMay12,2004inparticularfavor 13.56.Theseoptionswere issuedbytheBoard ofDirec- EUR warrants were exercised bytheirbeneficiariesatapriceof d) 6,000subscriptionrightsinthecategoryof“ESOP2004” subsidiaries, sub-subsidiariesandbranches. certain membersofstaff andexecutivesofthecompany, its tors ofDexiaSAonMay21,2003inparticularfavor 11.37.Theseoptionswere issuedbytheBoard ofDirec- EUR warrants were exercised bytheirbeneficiariesatapriceof c) 14,500subscriptionrightsinthecategoryof“ESOP2003” The subscriptionpricefortheseshares wasEUR9.90, namely strips, wasobservedbynotarizeddeeddatedOctober3,2008. rights andobligationsasexistingshares, butwithout VVPR shares, withoutindicationofnominalvalue,bearingthe same A capitalincrease bytheissueof606,060,606newregistered October3,2008:capitalincrease 6.1.2. U 8,088,995,009.08,represented by1,762,473,283shares. EUR pany share capitalrose from EUR5,307,437,260.42to As aconsequenceofthatexercise, theamountofcom- ber 30,2008. Euronext Brusselsforthe30calendardayspriortoSeptem- the averageclosingpriceofDexiashare ontheNYSE U 8,089,020,254.08,represented by1,762,478,783shares. EUR share capitalrose from EUR8,088,995,009.08to As aconsequenceofthatexercise, theamountof company and branches. executives ofthecompany, itssubsidiaries,sub-subsidiaries 2003 inparticularfavorofcertainmembersstaff and issued bytheBoard ofDirectors ofDexiaSAonMay21, beneficiaries atapriceofEUR11.37.Theseoptionswere in thecategoryof“ESOP2003”warrantsexercised bytheir 2008 andresulted from theexercise of5,500subscriptionrights strips wasobservedbynotarizeddeeddatedDecember29, A capitalincrease bytheissueof5,500newshares withVVPR warrants) exercise ofsubscriptionrights(“ESOP2003” 6.1.3. December29,2008:capitalincrease – (2) 13.66France/11.88othercountries. (1) Unlessspecificconditions. EO 00 arns 45 Nov. 30,2000 14.58 “ESOP 2000”warrants Warrants grantedin2000 Dnzak 07 e.1,20 e.1,21 3,0 235,000 0 235,000 Dec.14,2016 Dec.15,2009 June30,2010 20.71 23.25 21.25 “ESOP 2007”warrants Warrants grantedin2007 (DenizBank) “ESOP 2006”warrants “Share plan2006”warrants June30,2004 17.86 “ESOP 2002”warrants Warrants grantedin2002 “ESOP 2001”warrants Warrants grantedin2001 EO 08 arns 26 ue3,21 ue2,21 ,6,5 3,466,450 0 3,466,450 June29,2018 June 30, 2012 12.65 “ESOP 2008”warrants 11.37 “ESOP 2003”warrants Warrants grantedin2003 Saepa e 04 arns1.7Ot 0 09Ot 0 0914040184,074 10.09 0 “ESOP 2008”warrants Warrants grantedin2008 June30,2008 184,074 18.03 Oct.30,2009 Oct.30,2009 13.56 15.77 “ESOP 2005”warrants Warrants grantedin2005 “Share plannet2004”warrants “ESOP 2004”warrants Warrants grantedin2004 EO 06 arns 86 June30,2009 18.62 “ESOP 2006”warrants Warrants grantedin2006 A FDECEMBER31,2008) RIGHTS(“WARRANTS”) OF SUBSCRIPTION (AS DEXIA OF TABLE SUMMARY 6.2. Saepa e 05 arns 82 Oct.29,2010 18.20 “Share plannet2005”warrants 13.66/11.88 (inEUR) Exercise 11.88 13.66 price (2) Sept. 30,2006 Sept. 30,2007 Sept. 30,2005 June 30,2011 Oct. 29,2011 rmto from Exercise period (1) (1) (1) (1) (1) (1) (1) (1) ue2,21 7,093,355 June 29,2018 June 29,2015 June 29,2017 June 29,2016 Oct. 29,2010 Dec. 31,2011 Dec. 31,2010 c.2,21 197,748 Oct. 29,2011 July 24,2014 July 24,2013 July 23,2012 (1) (1) (1) (1) (1) (1) (1) (1) Number of 10,322,550 9,918,750 7,752,122 81,250 4,458,943 10,000,000 2,247,878 10,000,000 5,541,057 10,000,000 tion rights ,1,0 ,3,3 3,083,963 5,269,212 115,750 2,715,038 8,100,000 2,831,037 5,915,000 ,6,2 5009,745,225 9,869,850 15,000 110,100 9,760,225 15,000 9,994,950 subscrip- granted 8,7 189,972 0 189,972 exercised scription Number of sub- rights Dexia 0 0 0 General information Number of tion rights Annual report 2008 cancelled subscrip- as void rights before rights before subscription subscription 10,322,550 of residual of residual 3,340,005 1,118,938 7,093,355 Number Number 197,748 transfer 97
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 98 General information Dexia Annual report 2008 sels, Euronext ParisandtheLuxembourgStockExchange. (physical) bearer shares. Theshares are listedonEuronext Brus- shares, 890,221,613dematerializedshares and18,515,315 indication ofnominalvalue,including853,741,855registered 8,089,020,254.08 represented by1,762,478,783shares without As ofDecember31,2008,theshare capitalamountedtoEUR of whichtheyare deemed toconstitute“partiesactingin ances) whichhadconcludedanagreement undertheterms Caisse desdépôtsetconsignations, EthiasandCNPAssur- Dexia SA(namelyArcopar, Arcofin, HoldingCommunal, provisions onOctober9,2008bycertainshareholders of A declarationwasmadeonthebasisofaforementioned threshold of5%thecapitalDexiaSA. the holdingofwhichonOctober3,2008exceeded notification from Sociétédepriseparticipationl’État, thiscontext,onOctober8,2008DexiaSAreceived aWithin aforementioned transactions. Insurance Commissionassoonpossiblepriortoanyofthe ers toinformthecompanyandBanking,Finance onpage 47),DexiaSAhasaskeditslargesharehold-ernance structure oftheDexiaGroup” (seechapter CorporateGov- Moreover, inapplicationofthe“Protocol ontheprudential existing votingrightsinDexiaSAaspublishedonthewebsite. ing thedeclaration.Thedenominatorconsistsoftotal exercise ofsimilarfinancialinstrumentsheldbytheperson mak- by thenumberofvotingrightswhichmaybeacquired onthe ing rightsornotassociatedwithshares, reduced orincreased the numberofvotingrightsattachedtoshares conferring vot- To calculatepercentages ofholdings,thenumeratorconsists tion forOctober31,2008atthelatest. 2008 hasamajorholdinginanissuermustmakedeclara- Interim provisions statethatanypersonwho,onSeptember 1, a threshold of3%,then5%oramultiple5%. and InsuranceCommissiontoDexia,insofarasitreaches ers are obligedtonotifytheirholdingtheBanking,Finance Article 5ofthearticlesassociationDexiaSA,sharehold- came intoforce onSeptember1,2008,andthe basis of Decree executingthatLawdatedFebruary14,2008 which of whichare tradedonaregulated market,andtheRoyal relating tothepublicityofmajorholdingsinissuers shares Under thetermsofLawMay2,2007(the“Law”), DECEMBER 31,2008 OF AS CAPITAL SHARE 6.3. NTRANSPARENCY ON LEGISLATION THE UNDER NOTIFICATIONS 6.4. Transparency Declarations”. Dexia SAwebsiteundertheheading“LegalInformation/ These notificationsare publishedintheirentirety onthe October 3,2008. capital ofDexiaSAwasabovethethreshold of5%as tions etd’investissementgavenoticethatitsholdinginthe On November13,2008,theSociétéfédéraledeparticipa- threshold of55%asOctober3,2008. their jointholdinginthecapitalofDexiaSAexceeded On October9,2008,thosesameshareholders indicatedthat on September1,2008. cert inthecapitalofDexiaSAexceededathreshold of50% (see section6.5.).Theholdingofshareholders actingincon- concert” underBelgianlegislationrelating totenderoffers elements ofwhichare listedhereafter. September 1,2007andAugust 29,2008,theprincipal containing thedetailofshare transactionscarriedoutbetween September 2,2008,DexiaSAreceived severalnotifications the holdingwhichoccurred sinceSeptember1,2007.On parties actinginconcertmustannuallynotifyanychangeof Moreover, inaccordance withArticle 74,§8ofthesaidLaw, been publishedonDexia’s website,are setouthereafter. The principalelementsofthatcommunication,whichhave 2007 relating totenderoffers. in accordance withArticle74,§§6and7oftheLawApril1, ance CommissionandacommunicationwassenttoDexiaSA, This agreement wasnotifiedtotheBanking,FinanceandInsur- Dexia SAexceedsathreshold of50%. The holdingofshareholders actinginconcertthecapitalof meaning oftheLawApril1,2007relating totender offers. deemed toconstitute“partiesactinginconcert”withinthe ances) ofanagreement underthetermsofwhich they are Caisse desdépôtsetconsignations,EthiasandCNPAssur- by certainofitsshareholders (Arcofin, HoldingCommunal, On August30,2007,DexiaSAwasinformedoftheconclusion Commission andacommunicationtothesaidcompany. they sendanotificationtotheBanking,FinanceandInsurance provided inparticularthat,byFebruary21,2008at thelatest, a mandatorytenderoffer fortheshares ofthesaidcompany, gian listedcompany, are notsubjecttotheobligation tolaunch or inconcert,holdmore than30%ofthevotingshares ofaBel- to takeoverbids,partieswho,onSeptember1,2007,individually Under thetermsofArticle74LawApril1,2007relating 6.5.1. “Grandfathering”regime ..NWLGSAINO EDROFFERS TENDER ON LEGISLATION NEW 6.5. of Article3,§2theLawApril1,2007. These companiesare associatedtothepartiesactinginconcertandare therefore deemedtoactinconcertwiththembyvirtue ne rnhLw2,6,4 1.98% 11,695,763 23,064,643 1.00% 15,664,833 2,900,834 1,327,764 11,695,763 41,898,721 1.27% 209,037,791 0.08% 0.07% 0.16% 3.71% 14,752,833 under FrenchLaw 17.57% CNP AssurancesSA,limitedcompany 900,834 811,886 16.35% 1,912,000 under LuxembourgLaw 11.80% 43,204,221 Bel RéSA,limitedcompany 204,751,478 Ethias Accidentsdutravail,insurancefund 190,564,978 Ethias Vie, mutual insuranceassociation 137,504,606 mutual insuranceassociation Ethias DroitCommun, mutual insuranceassociation Ethias Incendie, establishment underFrenchLaw Caisse desdépôtsetconsignations,special Holding CommunalSA Arcopar SCRL Arcofin SCRL than 30%oftheDexiaSAvotingshares on September1,2007,holdingmore Parties actinginconcertand, PARTIES ACTINGINCONCERT aesS 9,1 .2 192,710 669,402 343,039 0.02% 0.04% 267,639 0.02% 192,710 513,363 0.01% 187,000 111,600 1,330,500 0.09% 1,025,000 Nateus SA Auxipar SA Arcosyn SA Arcoplus SCRL Ethias InvestmentRDT-DBI SA acting inconcert Companies associatedwiththeparties COMPANIES ASSOCIATED September 1, voting shares September 1, voting shares Number of Number of held asof held asof 2007 2007 Percentage of Percentage of September 1, voting shares September 1, voting shares held asof held asof 2007 2007 - August29,2008 - August25,2008 - August29,2008 - August25,2008 voting shares voting shares voting shares voting shares Number of Number of held asof Number of Number of held asof (A) (A) (A) (B) (B) (A) (B) (A) (A) (B) (B) (B) (B) (A) (B) - August29,2008 - August25,2008 - August29,2008 - August25,2008 Percentage of Percentage of Percentage of Percentage of voting shares voting shares voting shares voting shares Dexia held as of held asof held asof 18.08% 0.06% 0.03% 0.02% 0.02% 0.12% 0.11% 1.01% 0.25% 3.62% 1.35% General information Annual report 2008 (A) (A) (A) (B) (B) (A) (A) (A) (B) (B) (B) (B) (B) (A) (B) 99
COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT COMPTES SOCIAUX COMPTES CONSOLIDÉS MANAGEMENT REPORT 100 General information Dexia Annual report 2008 authorizations grantedtotheBoard ofDirectors. ers’ MeetingonMay9,2007decidedtorenew thefollowing thiscontext,theExtraordinaryown shares. Sharehold- Within Directors certainpowerstoincrease thecapitalandtopurchase Code, theshareholders’ meetingmaygranttotheBoard of In accordance withArticles607and620oftheCompany of theBoard ofDirectors Informationrelating tothepowers 6.5.2. chains ofcontrol: These notificationsalsoreport thefollowingchangesin Accidents dutravail.” fore controlled byEthiasDroit andEthias Commun,EthiasVie Droit Commun.AsofAugust25,2008,BelRéSAisthere- held byEthiasIncendieinBelRéSAwastransferred toEthias retroactivity toJanuary1,2008),theholdingof12.18% by EthiasDroit CommunonMay23,2008(withaccounting s s by EthiasDroit Commun.” by NateusSAandatransferofshares toEthias Vie tion ofBelstarAssurancesSA(100%controlled byEthias Vie) 80% onDecember27,2007followingthemergerbyabsorp- Droit Communwentfrom 100%asofSeptember1,2007to Ethias Droit Commun,butthecontrolling holdingofEthias “As ofAugust25,2008,NateusSAisstillcontrolled by “Following themergerbyabsorptionofEthiasIncendie the meaningofArticle627,§1CompanyCode). (these authorizationsare alsovalidfordirect subsidiarieswithin of ownshares inorder toavoidserious,imminentprejudice the company’s articlesofassociation,toacquire andtodispose to theBoard ofDirectors referred toinArticle7,§§2and3of renewed foraperiodofthree yearstheauthorizationsgranted The Extraordinary Shareholders’ MeetingonMay9,2007 serious, imminentprejudice Authorization toacquire ownshares inorder toavoid not exceedthebalanceofauthorizedcapital. those capitalincreases (excludingissuancepremium) does of existingshareholders, provided thatthetotalamountof of limitingorwithdrawingthepreferential subscriptionrights means ofcontributionsinkindorcashwiththepossibility a publictakeoverbidontotheshares ofthecompany, by the capitalwithinlimitsofauthorizedduring with legalprovisions, foraperiodofthree years,toincrease expressly authorizedtheBoard ofDirectors, inaccordance The Extraordinary Shareholders’ MeetingonMay9,2007 of theauthorizedcapitalduringapublictakeoverbid Authorization toincrease thecapitalwithinlimits
Consolidated financial statements Consolidated financial statements as of December 31, 2008 Consolidated balance sheet ...... 104 Consolidated statement of income ...... 106 Consolidated statement of change in equity ...... 107 2Consolidated0 cash flow statement ...... 0 1108 Notes to the financial statements ...... 111 Note 1. Accounting principles and rules of consolidated financial statements ...... 111 Note 2. Significant changes in scope of consolidation and list of main subsidiaries and affiliated enterprises of the Dexia Group ...... 130 Note 3. Business and geographic reporting ...... 132 Note 4. Significant items included in the net income ...... 133 Note 5. Post-balance sheet events ...... 133 Note 6. Litigations ...... 134 Note 7. Notes on the assets of the consolidated balance sheet .. 138 Note 8. Notes on the liabilities of the consolidated balance sheet 152 Note 9. Other notes on the consolidated balance sheet ...... 161 Note 10. Notes on the consolidated off-balance sheet items ...... 179 Note 11. Notes on the consolidated statement of income ...... 180 Note 12. Notes on risk exposure ...... 190 Statutory auditor’s report to the shareholders’ meeting on the consolidated financial statements for the year ended December 31, 2008 ...... 215 CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 104 Dexia Annual report 2008 The notesonpages111to214are anintegralpartoftheseconsolidatedfinancialstatements. (1) AnamountofEUR61millionrepresentingoperationaltaxesistranferredfromXI.“Tax assets”toXII.“Otherassets”. Consolidated balancesheet I. XIII. XII. II. III. IV. V. VI. VII. VIII. IX. X. XI. (in millionsofEUR) ASSETS TOTAL ASSETS o urn seshl o ae71.&96 96,260 39 7.12.&9.3. 7.13.&9.6. 2,448 8,835 Non currentassetsheldforsale Other assets 7.2. Cash andbalanceswithcentralbanks on n dacsdefo ak ..5,7 61,864 54,776 7.3. Loans andadvancesduefrombanks on n dacst utmr ..2269368,845 242,619 7.4. Loans andadvancestocustomers Financial assetsmeasuredatfairvaluethroughprofitorloss iaca netet ..2020125,029 220,290 7.6. Financial investments eiaie ..2,1 55,213 29,218 9.1. Derivatives arvlervlaino otoi eg (8)3,938 (185) Fair valuerevaluationofportfoliohedge netet nascae ..81682 861 7.8. Investments inassociates agbefie ast ..2272,353 2,257 7.9. Tangible fixedassets nagbeast n odil71.2542,193 2,524 7.10. Intangible assetsandgoodwill a ses71.&92 1,384 7.11.&9.2. Tax assets oe e.3,20 Dec.31,2008 Dec.31,2007 Notes ..3,6 16,044 37,565 7.5. 0,6 651,006 604,564 4,381 (1) (1) 1,998 4,139 The notesonpages111to214are anintegralpartof theseconsolidatedfinancialstatements. (1) AnamountofEUR147millionrepresentingoperationaltaxesistransferredfrom“Tax liabilities”to“Otherliabilities”. XIV. I. XII. XI. XV. II. XVI. III. XVII. IV. XVIII. V. XIX. VI. XX. VII. XXI. VIII. IX. X. TOTAL LIABILITIES (in millionsofEUR) EQUITY (in millionsofEUR) LIABILITIES OESAEODR’EUT 61217,488 16,112 CORE SHAREHOLDERS’EQUITY OA HRHLES QIY1,2 3,916 14,525 TOTAL SHAREHOLDERS’EQUITY OA IBLTE N QIY6454651,006 604,564 TOTAL LIABILITIESANDEQUITY TOTAL EQUITY u obns ..1861213,192 178,681 8.1. Due tobanks usrbdcptl97 ,0 8,089 5,307 9.7. 7,396 8.8. Subscribed capital 8.9.&9.6. Liabilities includedindisposalgroupsheldforsale Other liabilities diinlpi-ncptl1,9 13,618 10,399 Additional paid-incapital 114,728 126,680 8.2. Customer borrowingsanddeposits Treasury shares profit orloss Financial liabilitiesmeasuredatfairvaluethrough eevsadrtie anns 191 (870) (1,951) 75,834 31,365 Reserves andretainedearnings 9.1. Derivatives e noefrtepro ,3 (3,326) 2,533 Net incomefortheperiod 1,543 (206) Fair valuerevaluationofportfoliohedge )Aalbefrsl eev nscrte 140 (11,866) (1,490) 188,120 b) Otherreserves a) Available forsalereserveonsecurities Gains andlossesnotrecognizedinthestatementofincome 204,013 8.4. Debt securities Minority interests 4,407 4,885 8.5. Subordinated debts fisrnecnrcs93 1 0 115 9.3. of insurancecontracts Discretionary participationfeatures 16,739 15,071 9.3. Technical provisionsofinsurancecompanies rvsosadohrolgtos86 ,5 1,487 1,353 8.6. Provisions andotherobligations a iblte ..&92 631 8.7.&9.2. Tax liabilities oe e.3,20 Dec.31,2008 Dec.31,2007 Notes oe e.3,20 Dec.31,2008 Dec.31,2007 Notes ..1,0 18,952 18,301 8.3. 8,7 645,388 588,170 6345,618 16,394 157 (13,572) (1,587) ,5 1,702 1,754 16 (23) (176) 9)(1,706) (97) 0 (1) (1) Dexia Annual report 2008 4,393 5,691 302 105
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 106 Dexia Annual report 2008 Consolidated statementofincome I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. XIII. XIV. XV. XVI. XVII. XVIII. XIX. XX. (in EUR) The notesonpages111to214are anintegralpartof theseconsolidatedfinancialstatements. (in millionsofEUR) INCOME RS PRTN INCOME OPERATING GROSS EXPENSES E NOEBFR TAX INCOMEBEFORE NET E INCOME NET neeticm 11.1. Interest income neetepne11.1. Interest expense iiedicm 11.2. Dividend income e noefo soits11.3. Net incomefromassociates tfi au hog rfi rls 14 13 (614) (163) 11.4. at fairvaluethroughprofitorloss Net incomefromfinancialinstruments e noeo netet 11.5. Net incomeoninvestments e n omsinicm 11.6. Fee andcommissionincome e n omsinepne11.6. Fee andcommissionexpense ciiis1..&93 ,1 4,577 5,013 11.7.&9.3. activities Premiums andtechnicalincomefrominsurance Technical expensefrominsuranceactivities te e noe11.8. Other netincome tf xes 11.9. Staff expense eea n diitaieepne11.10. General andadministrativeexpense Network costs ercain&aotzto 11.11. Depreciation &amortization Deferred acquisitioncosts imns1.2 13 (3292) (163) 11.12. mitments Impairment onloansandprovisionsforcreditcom- mareto agbeaditnil ses11.13. Impairment ontangibleandintangibleassets mareto odil1.4 4 (12) (4) 11.14. Impairment ongoodwill a xes 11.15. Tax expense Attributable tominorityinterest Attributable toequityholdersoftheparent annsprsae11.16. -basic Earnings pershare -diluted 11.7. &9.3. Notes Dec. 31,2008 100,136 (95,610) (5,007) (1,905) (1,232) (3,834) 1,859 6,896 3,062 2,892 2,636 2,533 (357) (367) (284) (256) 2.18 2.15 147 108 720 103 (46) 50 (3) Dec. 31,2008 (101,786) 107,859 (3,515) (4,513) (2,021) (1,390) (4,119) (3,877) (3,248) (3,326) 1,756 3,556 (2.54) (2.54) (325) (370) (296) (563) 171 (53) (42) (10) 629 78 (1) of changeinequity Consolidated statement aeadcnelto ftesr hrs22 1 (178) (178) 2 1 Sharebasedpayments: - - Dividends - Transfers toreserves - Saleandcancellationoftreasuryshares - Trading activitiesontreasuryshares - Acquisitionoftreasuryshares - Netincomefortheperiod - Othermovements - Variation ofscopeconsolidation The notesonpages111to214are anintegralpartoftheseconsolidatedfinancialstatements. Variation ofscope - - Translation adjustments Netchangeinfairvaluedue - Netchangeinfairvalue - 237 Netchangeinfairvalue - Netchangeinfairvalue - (2) 170 69 - Issuanceofsubscribedcapital CancellationofFVfollowing - SO E.3,20 ,0 039(7)(,5)25316,112 2,533 (1,951) (176) 10,399 5,307 AS OFDEC.31,2007 (in millionsofEUR) INCOME THE STATEMENT OF NOT RECOGNIZEDIN GAINS ANDLOSSES (in millionsofEUR) CORE SHAREHOLDERS’EQUITY Movements oftheperiod Movements oftheperiod SO E.3,20 ,3 029()(,8)27014,433 2,750 (3,783) (1) 10,229 5,238 AS OFDEC.31,2006 AS OFDEC.31,2007 SO E.3,20 11981 5(1)1,866 (118) 15 10 1,958 1 AS OFDEC.31,2006 value ofemployeeservices osldto 1 1313 (26) 3 (26) (3,160) 11 14 (31) (1) consolidation (3,129) Cash Flowhedges to transfersincome– investments – Available forsale due totransfersincome Cash flowhedges through equity– for saleinvestments through equity–Available F ipsl 36 8 (384) (8) (376) AFS disposals Subsidiaries held for Gains andlossesnotrecognizedinthestatementofincome sale 0 Subscribed Securities capital 140 4(4 17 (1,587) (147) (24) 74 (1,490) (AFS) 26(9 9 (29) 6 32 Additional paid-in capital Derivatives Treasury (CFH) shares 181 81 (AFS, CFH) Associates Reserves and Reserves and Earnings retained retained ,5 (2,750) 2,750 92 (942) (942) 1)(10) (10) 535 35 11 Adjustments Adjustments Dexia Cumulative Cumulative translation translation Net income (CTA) Annual report 2008 for the ,3 2,533 2,533 period Total gainsand losses Group shareholders’ shareholders’ equity share Core 0 14 107
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 108 Dexia Annual report 2008 - Netincomefortheperiod - Othermovements - Variation ofscopeconsolidation Sharebasedpayments: - - Dividends - Transfers toreserves - Issuanceofsubscribedcapital custo ftesr hrs(3)(231) (24) 1 (407) (231) (24) 408 - Saleandcancellationoftreasuryshares - Trading activitiesontreasuryshares - Acquisitionoftreasuryshares The notesonpages111to214are anintegralpartof theseconsolidatedfinancialstatements. - Netchangeinfairvaluethroughequity - Others - Variation ofscopeconsolidation - Translation adjustments CancellationofFVfollowingAFSdisposals - - Netincomefortheperiod - Dividends - Increaseofcapital an n ossntrcgie ntesaeeto noeatiual oeut odr fteprn (1,587) Discretionary participationfeaturesofinsurancecontracts Minority interests Gains andlossesnotrecognizedinthestatementofincomeattributabletoequityholdersparent Core shareholders’equity SO E.3,20 ,8 368(3 80 336 17,488 (3,326) (870) (23) 13,618 8,089 AS OFDEC.31,2008 Movements oftheperiod SO E.3,20 ,0 039(7)(,5)25316,112 2,533 (1,951) (176) 10,399 5,307 AS OFDEC.31,2007 (in millionsofEUR) (in millionsofEUR) SO E.3,20 ,2 3174115 1,754 426 33 CORE SHAREHOLDERS’EQUITY 1,721 1,710 EQUITYASOFDEC.31,2007 TOTAL 46 AS OFDEC.31,2007 1,664 Movements oftheperiod AS OFDEC.31,2006 MINORITY INTERESTS au fepoe evcs2 23 23 value ofemployeeservices Subscribed capital ,8 3,219 2,782 equity Core 103 (60) 18 4 (1) (4) Additional in thestatement Gains andlosses paid-in capital not recognized of income Treasury (15) shares 1 1 1 Minority interests Earnings retained ves and Reser- 102 (1,052) (1,052) ,3 (2,533) 2,533 1)(291) (15) (60) 103 18 5 (15) (5) (5) 1 1 1 (6) 6 (6) (6) 4 (4) (4) income for the period DISCRETIONARY 336 (3,326) (3,326) PARTICIPATION FEATURES OF Net CONTRACTS INSURANCE sharehol- 16,394 16,112 equity 5,995 1,754 ders’ Core 115 0 Minority interests of theparent Gains andlossesnotrecognizedinthestatementofincomeattributable toequityholders Core shareholders’equity tes11 4 1 4 (64) 5 15 4 5 (79) 4 - Others Amortizationofnetfairvalueonreclassified - - Variation ofscopeconsolidation - Translation adjustments - Netchangeinfairvalueduetotransfersincome CancellationofFVfollowingAFSdisposals - The notesonpages111to214are anintegralpartoftheseconsolidatedfinancialstatements. iied 6)(62) 97 78 (118) (62) (118) 97 78 - Netchangeinfairvaluethroughequity - Netincomefortheperiod - Dividends - Increaseofcapital Netchangeinfairvaluethroughequity– - Netchangeinfairvaluethroughequity– - Netchangeinfairvalueduetotransfers - Netchangeinfairvalueduetotransfers - aclaino VfloigASdsoas7 79 79 CancellationofFVfollowingAFSdisposals - rnlto dutet 29 2)(9)(649) (398) (22) (229) - Translation adjustments aito fsoeo osldto (1 3 119 4 135 1 (21) Variation ofscopeconsolidation - Amortizationofnetfairvalueonreclassified - SO E.3,20 ,5 5)1720 1,702 (54) 1,756 EQUITYASOFDEC. 31, 2008 TOTAL AS OFDEC.31,2008 (in millionsofEUR) SO E.3,20 ,2 3174115 1,754 33 1,721 Movements oftheperiod AS OFDEC.31,2007 MINORITY INTERESTS (24) 74 (1,490) Movements oftheperiod AS OFDEC.31,2007 (in millionsofEUR) THE STATEMENT OFINCOME NOT RECOGNIZEDIN GAINS ANDLOSSES SO E.3,20 1,6)(,5)(9) (1,156) (11,866) AS OFDEC.31,2008 otoi napiaino A 9aedd33 3 inapplicationofIAS39amended portfolio vial o aeivsmns 1,8)(2)(11,906) (120) (11,786) Available forsaleinvestments ahflwhde 114 (1,194) (1,194) Cash flowhedges oicm vial o aeivsmns1321,352 1,352 to income–Available forsale investments oicm ahFo egs 1)(15) (15) to income–CashFlowhedges otoi napiaino A 9aedd29229 229 portfolio inapplicationofIAS39amended Securities (AFS) Gains andlossesnotrecognized equity Core in thestatementofincome Derivatives the statement recognized in of income Gains and losses not (CFH) (AFS, CFH) Associates Minority interests adjustments Cumulative translation DISCRETIONARY (147) (541) (CTA) PARTICIPATION FEATURES OF CONTRACTS INSURANCE Dexia Group share Total gains and losses (13,572) Annual report 2008 17,488 (13,572) 1,702 5,618 (1,587) (115) 109
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 110 Dexia Annual report 2008 hne noeaigast n iblte 1,8)(9,778) (10,782) 3,980 3,369 Changes inoperatingassetsandliabilities - Otheradjustments - Deferredtaxes - Dividendsfromassociates - Incomefromassociates - Unrealizedgainsorlosses - Chargesforprovisions(mainlyinsuranceprovision) Consolidated cashflowstatement ahflwfo nnigatvte 33 4,413 (573) (302) (5,426) (313) (2) (670) (5,353) The notesonpages111to214are anintegralpartoftheseconsolidatedfinancialstatements. 2008: includesEUR951millionlinkedtoagreement tosellFSAinsurancebusiness. (1) 2007:includesEUR54milliondueto thesaleofBelstarAssurancesSAandEUR59millionduetoDexia BanqueP of consolidationoncashandequivalents Effect ofexchangeratechangesandchangeinscope Cash flowfromfinancingactivities Cash flowfrominvestingactivities Cash flowfromoperatingactivities suneo uodntddbs123318 (703) Interest paid Interest received 1,283 Dividends received (672) Income taxpaid 7 2,520 (15) 212 (2,334) 2,356 (27) (2,854) Dividends paid Sale oftreasuryshares Purchase oftreasuryshares Reimbursement ofsubordinateddebts Issuance ofsubordinateddebts Issuance ofnewshares Sales ofsubsidiariesandbusinessunits Acquisitions ofsubsidiariesandbusinessunits Sales ofunconsolidatedequityshares Acquisitions ofunconsolidatedequityshares Sales offixedassets Purchase offixedassets e noeatricm ae ,3 (3,248) 2,636 Net incomeaftertaxes ercain mriainadohripimn 1 347 3,215 4 315 - Netgainsoninvestments - Impairmentonbonds,equities,loansandotherassets - Depreciation,amortizationandotherimpairment Adjustmentfor: AHADCS QIAET TTEEDO H EID5,0 49,715 51,603 51,603 INFORMATION ADDITIONAL 57,941 CASH ANDEQUIVALENTS AT THEENDOFPERIOD CASH ANDEQUIVALENTS AT THEBEGINNINGOFPERIOD NET CASHPROVIDED NET CASHPROVIDED(USED)BYFINANCINGACTIVITIES ACTIVITIES FINANCING FROM FLOW CASH NET CASHPROVIDED(USED)BYINVESTINGACTIVITIES ACTIVITIES INVESTING FROM FLOW CASH NET CASHPROVIDED(USED)BYOPERATING ACTIVITIES AHFO RMOEAIGACTIVITIES OPERATING FROM FLOW CASH (in millionsofEUR) e.3,20 Dec.31,2008 Dec. 31,2007 0,1 106,193 100,515 9,3)(99,980) (95,539) 102 (1,114) (1,002) 636 (1,315) (6,336) (5,426) (5,353) (630) 15 (883) 1 (169) (135) (108) (101) 48 (119) (498) 4,413 (231) (313) (178) (302) (670) (622) (573) 9 218 191 6,142 254 142 216 522 47 35 44 21 (1) rivée France; 1,040 (1) 1. and stockexchangeregulations. 2008. Additionalaccountingpoliciesanddisclosures mayberequired inorder tocomplywithlocallaws,accountingstandards These financialstatementsincludethedisclosures required bytheEuropean AccountingRegulationpublisheduptoDecember31, statements 1. Notes tothefinancialstatements NOTES TOTHEFINANCIALSTATEMENTS GENERAL INFORMATION ACUTN OIIS112 POLICIES ACCOUNTING .1 agbefie ses120 120 119 119 1.21. Tangible fixedassets 118 Dayoneprofit orloss 1.20. Hedgeoftheinterest rateriskexposure 1.19. 118 1.18. Hedgingderivatives 1.17. Derivatives Loansandsecuritiesavailableforsale 1.16. 115 115 113 Financialassetsorfinancialliabilitiesheld 1.15. 114 Loansandadvancesduefrom banks 1.14. 115 1.13. Deferred acquisition costs 1.12. Networkcosts 112 1.11. Insuranceandreinsurance activities 114 1.10. Feeandcommissionincomeexpense 1.9. Interest income andexpense 114 114 1.8. Impairmentsonfinancialassets Realizedgainsandlossesonsalesoffinancialassets 1.7. 114 Trade dateandsettlementaccounting 1.6. Foreign currency translationandtransactions 1.5. 1.4. Offsetting financial assetsandfinancialliabilities 1.3. Consolidation Changesinaccountingpoliciessincetheprevious 1.2. 1.1. Basisofaccounting Accounting principles and rules of consolidated financial Accounting principlesandrulesofconsolidatedfinancial ulcto htmyipc ei ru 112 publication thatmayimpactDexiaGroup faprflo120 119 118 of aportfolio 118 securities heldtomaturity measured atfairvalue through profit orloss for tradingandfinancialassetsorliabilities and customers 4. 3. 2. SGETRPRIG123 123 REPORTING SEGMENT TRANSACTIONS PARTY RELATED ..Lqiiyrs 128 127 128 125 124 4.5. Capitaladequacy 4.4. Liquidityrisk 4.3. Credit risk 4.2. MarketandALMrisk 4.1. Fairvalueoffinancialinstruments 123 124 Geographicsegments(secondarysegmentreporting) 3.2. 3.1. Businesssegments(primarysegmentreporting) .5 arVle123 123 123 123 123 122 122 121 122 123 121 121 1.35. FairValue pershare1.34. Earnings 121 1.33. Cashandcashequivalents 1.32. Fiduciaryactivities 1.31. Share capital andtreasury shares 1.30. Provisions 1.29. Employeebenefits 1.28. Deferred incometax 1.27. Borrowings Saleandrepurchase agreements andlending 1.26. 1.25. Leases 1.24. Otherassets 1.23. Goodwill 1.22. Intangibleassets N EGN CIIIS124 ACTIVITIES HEDGING AND POLICIES MANAGEMENT RISK fscrte 121 of securities Dexia Annual report 2008 111
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 112 Dexia Annual report 2008 Board ofDirectors onApril1,2009. These financialstatementshavebeenapproved forissuebythe Brussels andalsoontheLuxembourgStockExchange. Dexia islistedontheNYSEEuronext StockExchangeinParisand Place Rogier11–B-1210Brussels(Belgium). The address ofitsregistered officeis: liability companyandisincorporateddomiciledinBelgium. The parent companyoftheGroup isDexiaSA,whichalimited asset managementandinsuranceservices. In Europe, Dexiaoffers retail andprivatebankingservicesbutalso one oftheworld’s largestplayersinPublicandWholesaleBanking. Dexia provides financialservicestothelocalpublicsectorandis ing areas: Judgments andestimatesare principallymadeinthefollow- the differences couldbematerialtothefinancialstatements. estimates, actualresults maydiffer from suchestimates and have considered all availableinformationindevelopingthese affect amountsreported. Whilemanagementbelievesthey ment isrequired tomakeestimates and assumptionsthat In preparing theconsolidatedfinancialstatements,manage- 1.1.2. Accountingestimates otherwise stated. basis. They areconcern statedinmillionofeuro (EUR)unless The consolidatedfinancialstatementsare prepared onagoing sibility tohedgecore deposits. of applicationinterest rateportfoliohedgingandthepos- by theECuptoDecember31,2008,includingconditions accordance withallIFRSsasadoptedbytheEU”andendorsed Dexia’s financialstatementshavetherefore beenprepared “in on accountingstandards. October 15,2008inorder tosimplifyCommunitylegislation all standards andinterpretations asadoptedbytheEUuntil tion EC1126/2008onNovember3,2008,whichencompasses times since2002.TheEuropean Commissionissued Regula- January 1,2005.Thisregulation hasbeenupdated several on July19,2002,requiring listedgroups toapplyIFRSasfrom The European CommissionpublishedRegulationEC1606/2002 accordance withallIFRSsasadoptedbytheEU. The consolidatedfinancialstatementsofDexiaare prepared in 1.1.1. General 1.1. 1. FinancialReportingStandardIFRS: International IFRIC: AccountingStandardsIASB: International Board by theEuropean Union(EU) FinancialReportingStandardsEU GAAP:International asadopted EFRAG: European FinancialReportingAdvisoryGroup ARC: AccountingRegulatoryCommittee The commonusedabbreviations beloware: these consolidatedfinancialstatementsare setoutbelow. The principalaccountingpoliciesadoptedinthepreparation of EEA INFORMATION GENERAL NOTES TOTHEFINANCIALSTATEMENTS ACUTN POLICIES ACCOUNTING BASIS OFACCOUNTING International FinancialReportingInterpretationsInternational Committee s s s s in therecognition ofprovisions. employee benefitsobligationsandplanassets gible assets property, plantandequipment,investmentproperty andintan- struments s s s last one. three firststandards andonorafterJanuary1,2009forthe reporting periodsthatbeginonorafterJuly1,2009 forthe existing standards andwillberespectively effective forannual The IASBpublished interpretations andamendments 1.2.1. NewIFRSstandards, IFRIC 1.2. s s s s s s tled “Costofan Investment inaSubsidiary, Jointly Controlled IAS 27“Consolidatedandseparate financialstatements”,enti- ent obligation. whether ornotacontingentliabilityoftheacquiree is apres- For newacquisitions,ananalysiswillberequired todetermine the “fullgoodwillmethod”. acquired entity, Dexiahasthepossibilitytomakean optionfor For eachnewinvestmentinanon-controlling interest inan profit orloss. adjustments topreviously recognized assetsandliabilitiesin existing associatetofairvaluewithrecognition ofthefair value In caseofastep-acquisition,Dexiawillfirstremeasure the tion-related costsaspartofthecostbusinessacquired. For newacquisitions,Dexiacannolongercapitalizeacquisi- reasons: The revision ofthisstandard impactsDexiaforseveral as issuedin2004. well withoutanymajorimpact. ments andobligations”applicable asfrom January1,2009as a majorimpactonDexia. tions” applicableasfrom January1,2009whichwillnothave standards. The IASBalsoissued communication. ing inlinewithmanagementreportingfinancial andexternal after January1,2009.Itwillallowdisclosingsegmentreport- sede IAS14forannualreporting periodsthatbeginonor 2008 thathasnomajorimpactforDexia.IFRS8willsuper- The IASBissuedarevised IAS14SegmentReportinginJanuary Dexia isnofirsttimeadopteranymore. ing Standards”, whichhasnoimpactatDexialevel, because have noimpactonprofit orlossbutwillimpactequity. Changes inaparent’s controlling ownershipofasubsidiarywill A MATDXAGROUP MAY IMPACT DEXIA THE PREVIOUSANNUALPUBLICATION THAT Amendment to IFRS 1 “First Time Adoption of IFRS” and to AdoptionofIFRS”andto Amendment toIFRS1“FirstTime Estimation ofpresent obligationsresulting from pastevents Actuarial assumptionsrelated tothemeasurement of Measurement ofliabilitiesforinsurancecontracts Determination oftheusefullifeandresidual valueof Determination offairvaluesnon-quotedfinancialin- Estimation oftherecoverable amountofimpaired assets IFRS 3“Businesscombinations”,whichreplaces thestandard Amendment toIAS32and1– “Puttablefinancialinstru- Amendment toIFRS2–“Vesting conditionsandcancella- Revised IAS14“SegmentReporting”. FinancialReport- IFRS 1“FirsttimeAdoptionofInternational IAS 27“Consolidatedandseparatefinancialstatements”. CHANGES INACCOUNTINGPOLICIESSINCE four revised standards five amendmentstotheexisting whichwillreplace A RevisedPresentation”; These interpretations donothaveanimpactonDexia. operation”; of real estate”; 1,2009forthelastone: July ary 1,2009forthetwofirstinterpretations andonorafter tively effective forannualperiodsthatbeginonorafterJanu- The consequence onmeasurement. scope ofIAS16.Impactislimitedtopresentation without any ment property inthescopeofIAS40andnolonger inthe construction anddevelopment”forfuture useasan invest- The IASBpublishedanamendmenttobring“property under after thesale. will retain anon-controlling interest initsformersubsidiary that subsidiaryasheldforsale,regardless ofwhetherDexia a subsidiary, Dexiawillclassifyalltheassetsandliabilitiesof If Dexiaiscommittedtoasaleplaninvolvinglossofcontrol of following ways: The revision ofthesestandards willmainlyimpactDexiainthe although entitiesare permittedtoadoptthemearlier. for annualperiodsbeginningonorafterJanuary1,2009, Unless otherwisespecifiedtheamendmentsare effective mal effect onaccounting. ognition ormeasurement purposes,and The amendmentsissuedare presented intwoparts: ments project. the Board reached onproposals madeinitsannualimprove- dards (IFRSs).Theseamendmentsare theresult ofconclusions FinancialReportingStan- tion ofamendmentstoInternational May 22,2008 AccountingStandardsThe International Board (IASB)issuedon sification offinancialassets. Reclas- ia’s financialstatementsisdisclosedinappendix7.7. and Receivables.TheimpactfurtherinformationonDex- or toLoansandReceivables(ii)Available forSaletoLoans financial assetsoutof(i)HeldforTrading toAvailable forSale Receivables. Dexiaappliedthispossibilitytoreclassify forsome Loans andReceivables(ii)Available forSaleintoLoansand met, outof(i)HeldforTrading intoAvailable forSaleorinto financial assetscanbetransferred, ifspecificconditionsare they sowish,from July1,2008whereby somenon-derivative according toIFRSsusethereclassification amendments,if ments”. TheamendedStandards enablecompaniesreporting sures permittingthereclassification ofsomefinancialinstru- and Measurement” andIFRS7“FinancialInstruments:Disclo- only alimitednumberofhedgetransactions. cable asfrom July1,2009.Thisamendmenthasanimpacton s have beenendorsedbytheEuropean Commission: The followinginterpretations oramendmentstostandards European Commission 1.2.2. IASBandIFRICtexts endorsedbythe s s s s s s s The impactisassessedtobeimmaterial. Entity orAssociate”alsoapplicablefrom January1,2009on. Amendments toIAS1“Presentation ofFinancialStatements: 17“Distribution ofnoncashassetstoowners”. IFRIC 16“Hedges ofanetinvestmentinforeign IFRIC 15“Accounting foragreements fortheconstruction IFRIC Those involvingterminologyoreditorialchangeswithmini- Those thatinvolveaccountingchangesforpresentation, rec- Amendment toIAS39“FinancialInstruments:Recognition Amendment toIAS39“Eligiblehedgeditems”beingappli- IFRIC issued “Improvements 2008toIFRSs” three interpretations , whichwillberespec- —acollec- Disclosures”. tion andmeasurement andIFRS7FinancialInstruments: ditions andCancellations”; mum FundingRequirements andtheirInteraction”; s s s s to “Otherliabilities”(lineXI). “Other assets”(lineXII),and s s reclassified: 2008, operationaltaxesasofDecember31,2007were 31, In theconsolidatedfinancialstatementsasofDecember Reclassification ofoperationaltaxes tion offinancialassets. financial statementsisdisclosedinappendix7.7.Reclassifica- Receivables. TheimpactandfurtherinformationonDexia’s Loans andReceivables(ii)Available forSaletoLoansand assets outof(i)HeldforTrading toAvailable forSaleorto Dexia appliedthepossibilitytoreclassify forsomefinancial Reclassification offinancialassets 1.2.3. Changesinpresentation ensure consistency with thepoliciesadoptedbyDexia. ing policiesofjointlycontrolled entitieshavebeenamendedto for intercompany transactions. Whennecessary, theaccount- The sameconsolidationtreatment, asforsubsidiaries,isapplied basis. the assets,liabilities,incomeandexpensesonaline-by-line joint ventures are integratedbycombination oftheirshare of portionate consolidationmethod.Inthefinancialstatements, to jointcontrol. Jointventures are accountedforviathepro- or more partiesundertakeaneconomicactivitythatissubject A jointventure (JV)isacontractualarrangementwhereby two 1.3.2. Jointlycontrolled entities income respectively. shown separatelyinthebalancesheetandstatementof Equity andnetincomeattributabletominorityinterests are adopted byDexia. have beenamendedtoensure consistencywiththe policies When necessary, theaccountingpoliciesofsubsidiaries requires recognition intheconsolidatedfinancialstatements. eliminated. Intragroup lossesmayindicateanimpairment that losses ontransactionsbetweenDexia’s companieshavebeen Intercompany transactions,balancesandunrealized gainsand solidated asfrom thedateonwhichDexia’s control ceases. tive control istransferred toDexiaandare nolongercon- Subsidiaries are consolidatedfrom thedateonwhicheffec- and operatingpolicies. or indirectly, hasthepowertoexercise control overfinancial Subsidiaries, andSPEare thoseentitiesinwhichDexia, directly ent company, itssubsidiariesandspecialpurposeentities(SPE). The consolidatedfinancialstatementsincludethoseofthepar- 1.3.1. Subsidiaries 1.3. Amendment toIAS39“FinancialInstruments:Recogni- Amendment toIAS23“Borrowing Costs”; Amendment toIFRS2“Share-Based Payment:Vesting Con- IFRIC 14IAS19“TheLimitofaDefinedBenefitAsset,Mini- An amountofEUR147millionfrom “Tax liabilities”(lineX) An amountofEUR61millionfrom “Tax assets”(lineXI)to CONSOLIDATION Dexia Annual report 2008 113
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 114 Dexia Annual report 2008 TRANSACTIONS FINANCIAL LIABILITIES ensure consistencywiththepoliciesadoptedbyDexia. accounting policiesoftheassociateshavebeenamendedto respect oftheassociates’undertakings.Where necessary, the zero, unlessDexiahasincurred orguaranteedobligationsin tinued whenthecarryingamountofinvestmentreaches transferred. Therecognition oflossesfrom associatesisdiscon- the transactionshowsevidenceofanimpairmentasset Dexia’s interest. Unrealized lossesare alsoeliminatedunless “equity methodinvestments”are eliminatedtotheextentof Unrealized gainsontransactionsbetweenDexiaandits reflects itsshare ofthenetassetsincludinggoodwill. investment isrecorded inthebalancesheetatanamountthat for theyearisrecognized asincomefrom associatesandthe 50% ofthevotingrights.Theownershipshare ofnetincome This isusuallythecase,whenDexiaownsbetween20%and Dexia hassignificantinfluence,butdoesnotexercise control. method ofaccounting.Associatesare investmentswhere Investments inassociatesare accountedforusingtheequity 1.3.3. Associates non-monetary items carriedatfairvalue.Historical ratesare period oryear-end exchangeratesformonetaryitemsand in foreign currencies atperiodoryear-end are translatedat date ofthetransaction.Outstanding balancesdenominated accounted forusingtheapproximate exchangerateatthe For individualDexiaentities,foreign currency transactionsare 1.5.2. Foreign currency transactions foreign entityandare translatedatthe closingrate. tion ofaforeign entityare treated asassetsandliabilitiesofthe Goodwill andfairvalueadjustmentsarisingfrom theacquisi- statement ofincomeaspartthegainorlossonsale. eign entity, suchexchangedifferences are recognized inthe adjustment withinshareholders’equity. Ondisposalofafor- of suchinvestments,are recorded asacumulativetranslation rowings andothercurrency instruments designatedashedges investment inforeign subsidiariesandassociatesofbor- Exchange differences arisingfrom thetranslationofnet rates. are translatedatrespective year-end orquarter-end exchange rates fortheyearorperiodandtheirassetsliabilities into Dexia’s presentation currency (EUR)ataverageexchange different from Dexia’s presentation currency are translated statements offoreign entitiesthathaveafunctional currency On consolidation,thestatementsofincomeandcashflow 1.5.1. Foreign currency translation is incorporated. tional andpresentation currency), thecurrency inwhichDexia The consolidatedfinancialstatementsare statedinEUR (func- 1.5. simultaneously. on anetbasis,ortorealize theassetandsettle liability legally enforceable righttooffset andintendseithertosettle sequently, thenetamountisonlyreported) Dexia hasa Financial assetsandfinancialliabilitiesare offset (andcon- 1.4. FOREIGN CURRENCYTRANSLATION AND OFFSETTING FINANCIALASSETSAND accounting treatment asforfairvalueadjustments. carried atfairvalue,theexchangedifferences followthesame consolidated statementofincome;fornon-monetaryitems exchange differences from monetaryitemsare recorded inthe used fornon-monetaryitemscarriedatcost.Theresulting 1.7. relationships orare related toanavailable-for-sale asset. unless thetransactionshavebeenassignedtocashflowhedge gains andlossesare recognized inthestatementofincome contract tofairvalueatthereporting date.Theseunrealized date anyunrealized gainsorlossesarisingfrom revaluing the tion atfairvaluethrough P&L,Dexiarecognizes from thetrade For financialassetsandliabilitiesmeasured atinitialrecogni- at tradedate. instruments heldfortradingare recognized andderecognized which isthedateofdeliverytoorbyDexia.However, financial are recognized andderecognized onthesettlementdate, All “regular way”purchases andsalesoffinancialinstruments 1.6. advances tocustomers” inthefollowingway: within “Loansandadvancesduefrom banks”and“Loans Allowances forimpairmentlosses are recorded onassets any loanandassociatedinterest paymentsdoubtful. client hasdeterioratedtoanextent thatmakesrepayment of should beclassifiedasimpaired ifthecredit worthinessofthe exposure shouldberegarded asimpaired. Loancommitments tainty aboutthecounterparty, where theoff-balance sheet called. However, there maybecircumstances suchasuncer- ments are usuallyconvertedintoon-balancesheetitemswhen guarantees andstandbylettersofcredit) andloancommit- Off-balance sheetexposures suchas credit substitutes(eg: market rateofinterest forasimilarfinancialasset. value ofexpectedfuture cashflowsdiscountedatthecurrent amount ofaninstrumentmeasured atfairvalueisthepresent the contractforvariable-rateinstruments.Therecoverable interest rateorcurrent effective interest ratedeterminedunder flows discountedatthefinancialinstrument’s originaleffective carrying amountandthepresent valueofexpectedfuture cash tized costiscalculatedasthedifference betweentheasset’s The amountoftheimpairmentlossforassetscarriedatamor- amount isgreater thanitsestimatedrecoverable amount. An interest bearingfinancialassetisimpaired ifitscarrying losses ateachbalance-sheetdate. impairments represent themanagement’s bestestimatesof assets isimpaired, inaccordance withIAS39§58-70.The objective evidencethatafinancialassetorgroup of financial Dexia records allowancesforimpairmentlosseswhenthere is 1.8. the costoramortizedofinvestment. between theproceeds received (netoftransactioncosts)and income, realized gainsorlossesondisposalsisthedifference For financialassetsnotrevalued through thestatementof OF FINANCIALASSETS ACCOUNTING REALIZED GAINSANDLOSSESONSALES TRADE DATE ANDSETTLEMENTDATE IMPAIRMENTS ONFINANCIALASSETS s how credit riskismonitored byDexia. We alsorefer to4.3.“Credit Risk”formore informationon provisions forcredit commitment”. in AFSare reported intheheading“Impairments onloansand “Net incomeoninvestments”.Impairmentsloansincluded value adjustmentsare includedinthestatementofincomeas When AFSsecuritiesare impaired, therelated accumulatedfair by-case basisinaccordance withthestandard. Reversal impairmentondebtsecuritiesisaddressed onacase- recovery ofquotedprices. cannot bereversed inthestatementofincomeduetolater tive evidenceofimpairment.Impairmentsonequitysecurities prolonged declineinthefairvaluebelowitscostisalsoobjec- evidence ofimpairmentaccording toIAS39.Asignificantor decision toimpairandassesswhetherthere isanobjective or whenariskisidentifiedbymanagementandtakesthe declined bymore than25%compared totheacquisitionprice the caseofimpairment.Dexiaanalyzesallequitiesthathave statement ofincome”orwithintheincomein through “Gainandlossesonsecuritiesnotrecognized inthe “Available forsale”quotedequitiesare measured atfairvalue impairment. “Available forsale”(AFS)assetsare onlysubjecttospecific for credit commitments”. ment iscredited tothe“Impairmentonloansandprovisions write-down oftheinitialimpairment,release ofthe impair- subsequently decreases duetoaneventoccurring after the for credit commitments”.Iftheamountofimpairment income, intheheading“Impairmentonloansandprovisions and provisions forcredit commitments”inthestatementof sequent recoveries are againsttothe”Impairmentonloans lectable, itiswrittenoff againstitsrelated impairment;sub- When anassetisdeterminedbymanagementasbeinguncol- lective impairment. cial crisisontheratingsandexpectedlosses. recalibrated itsmodeltobetterreflect theimpactoffinan- models. Consideringthestressed marketconditions,Dexia has to regular backtestingandare basedonBaselIIdataandrisk ate defaultprobabilities andlossgivendefaultsthatare subject credit riskmodelsusinganapproach thatcombinesappropri- which theborrowers operate.Dexiadevelopsforthatpurpose rowers andreflecting thecurrent economicenvironment in losses ineachsegment,thecredit ratingsallocatedtothebor- of These havebeenestimatedbaseduponhistoricalpatterns other lendingrelated commitmentsatthebalance-sheetdate. dence thatlossesare present insegmentsoftheportfolioor losses where there isnospecificimpairmentbutobjectiveevi- the portfolioonwhichacollectiveimpairmentiscalculated. will berecognized, theunderlyingassetwillbeexcludedfrom asset isassessedasbeingimpaired, aspecificimpairmentloss istics are generallyaggregated inthismeasurement. Whenan ances (includingretail loans)thatshare similarriskcharacter- interest rateatthetimeofimpairment.Assetswithsmallbal- from guaranteesandcollateral,discountedusingtheeffective value ofexpectedcashflows,includingamountsrecoverable rying amountandtherecoverable amount,beingthepresent specifically identifiedassetsisthedifference betweenthecar- s s Country riskcomponent Collective impairments Specific impairments –Theamountoftheimpairmenton – Lossimpairmentscoverincurred –Includedwithinspecificandcol- expiry ifnoloanisgranted. interest rateiftheloanisgranted,andrecorded asrevenue on Loan commitmentfeesare recognized aspartoftheeffective conditions are met. when theyare definitivelyacquired, i.e.whenallunderlying when theserviceisprovided. Performancefeesare recognized fees. Revenuefrom assetmanagementisrecognized asearned of unittrustandmutualfundmanagementadministration For assetmanagementoperations,revenue consistsprincipally transaction hasbeencompleted. completion oftheunderlyingtransaction,when or saleofbusinesses,are recognized basedonthestageof of loans,equitysecuritiesorotherthepurchase for athird party, suchasthearrangementofacquisition negotiating, orparticipatinginthenegotiationofatransaction For significantactssuchascommissionsandfeesarisingfrom basis overthelifeofunderlyingtransaction. arising from Dexia’s activitiesare recognized onanaccrual IAS 18.According tothisstandard, mostofthecommissions Commissions andfeesare recognized inaccordance with 1.10. amount. discount thefuture cashflowsformeasuringtherecoverable after recognized basedontherateofinterest thatwasusedto to itsestimatedrecoverable amount,interest incomeisthere- Once aninterest bearingfinancialassethasbeenwrittendown financial assetorliabilityinthebalancesheet. Accrued interest isreported inthesamelineasrelated the entityhadnotacquired thefinancialinstrument. incremental costisonethatwouldnothavebeenincurred if are includedthecalculationofeffective interest rate.An utable totheacquisitionofafinancialassetorliabilityand Transaction costsare incremental coststhatare directly attrib- purchase price(includingtransactioncosts). basis usingtheeffective interest ratemethodbasedonthe of incomeforallinterest bearinginstrumentsonanaccrual Interest incomeandexpenseare recognized inthestatement 1.9. insurance riskfrom anotherparty(the policyholder)byagreeing tract underwhichoneparty(the insurer) acceptssignificant gations ceasetoexistorexpire. Aninsurancecontractisacon- contract remains an insurancecontractuntilallrightsandobli- A contractthatcomplieswiththe conditionsofaninsurance tion features (DPF). IFRS 4andinvestmentcontractswith discretionary participa- to evaluatetechnicalprovisions forcontractsthatfallunder Hence, Dexiahaselectedtousethelocalaccountingpolicies under localGAAPiftheyqualifyassuchIFRS4. IFRS 4allowsacompanytoaccountforinsurancecontracts of insuranceproducts underIFRS4. as financialinstrumentstheydonotmeettherequirements products soldbyinsurancecompanieshavebeenrequalified Dexia ismainlyactiveinbankingproducts. Someinsurance 1.11.1. Insurance 1.11. EXPENSE ACTIVITIES INTEREST INCOMEANDEXPENSE FEE ANDCOMMISSIONINCOME INSURANCE ANDREINSURANCE Dexia Annual report 2008 115
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 116 Dexia Annual report 2008 out DPF; out DPF; legal and/orcontract conditionstherealization ofgainsonan Dexia Group decided toapplyshadowaccounting,ifunder ized gainsorlossesare recognized directly inequity. assets) shallberecognized inequityif,andonlytheunreal- insurance liability(ordeferred acquisitioncostsorintangible that arealized gain or lossdoes.Therelated adjustmenttothe loss onanassetaffects thosemeasurements inthesameway accounting policiessothatarecognized butunrealized gainor An insurer ispermitted,butnotrequired, tochangeits Shadow accounting contracts thatcontainasignificantinsurancerisk. The nonlifeinsuranceportfoliofeatures includeonlyinsurance investment product withprofit sharing. into thefollowingcategories: Life insuranceproducts are classifiedfollowingBelgianGAAP ances, classificationisdoneontheemployer’s level. Classification isdonepolicybypolicy, whereas forgroup insur- Classification with guaranteedinterest rateandaprobable profit sharing. can switchatalltimes,withoutcosts,toaninvestmentproduct ing (discretionary participationfeature (DPF)); defined employeebenefitplans; accepted reinsurance treaties withexceptionofthein-house 21 investmentproduct withrisk(class23); The Lifeinsuranceportfoliofeatures: provisions forcatastrophes andequalizationsare reversed. cable, iftheyare qualifiedassuchunderIFRS4.However, gian GAAP(RoyalDecree ofNovember17,1994)are appli- group ismainlyconstitutedbyBelgianentities,forwhich Bel- Insurance products ofDISare recorded underlocalGAAP. This DIS activities:lifeandnonlife enhancement ofmunicipalandcorporatebonds. by FinancialSecurityAssurance(FSA)intheUSAforcredit Insurance Services(DIS)forlifeandnonlifeproducts and Insurance activitiesofDexiaare mainlyperformedbyDexia nical provisions, whichare identifiedonaseparateheading. according totheirnature inthebalancesheet,exceptfortech- All otheritemsarisingfrom insuranceactivitiesare classified sion forcredit commitments”. activities, are reported under“Impairmentonloansandprovi- credit enhancementactivities,whichare similartobanking ance activity, whereas lossesandchangesinprovisions for miums andtechnicalincomeorexpensefrom insur- (including nonlifeclaims)are reported respectively underpre- The amountsreceived andpaidrelating toinsuranceproducts components astimepasses. an insurancecontractwhencontainingsignificant A contractcanstartasaninvestmentandbecome event (theinsured event)adverselyaffects thepolicyholder. to compensatethepolicyholderifaspecifieduncertainfuture s s s s s s s s s s Type 7: Type 4:branch23:investmentproducts withrisk–ULproducts; Type 3:branch21:investmentproducts withoutprofit sharing; Type 2:branch21:investmentproducts withprofit sharing; Type 1: Type 6:branch23:investmentproducts convertibletoabranch Type 5:branch23:investmentproducts withoutrisk; Unit-linked (UL)contractsstipulatingthatthepolicyholder Financial instrumentsissuedwithadiscretionary profit shar- Insurance contractsincludingreinsurance contractsand the branch 23: investment products convertible to a branch 21 21 branch 23:investmentproducts convertibletoabranch branch 21:guaranteedinsuranceproducts withorwith- Test) tobeperformedafterallshadowadjustments This requires theliabilityadequacytest(seeLiabilityAdequacy through ashadowpremium deficiencyadjustment. unrealized gainsrecorded inequityandincrease liabilities than totalliabilities,thenthedeficiencyshoulddecrease the return oftheassets.Iflevelliabilitiesrequired ishigher ing current marketinvestmentyieldsratherthantheestimated determines ifadditionalliabilitieswouldberequired, assum- To determinetheneedforashadowlossadjustmentDexia Shadow lossadjustment with discretionary participationfeatures (DPF). some orallofitsinsurancecontractsandinvestment insurer’s assetshaveadirect effect onthemeasurement of benefits: receive, asasupplementtoguaranteedbenefits,additional Discretionary participationfeature isacontractualrightto Discretionary participationfeature (DPF) tional liabilityincrease shouldbechargedtoincome(P/L). equity toaccommodatetheshadowlossadjustment,addi- Should there beinsufficientunrealized capitalgainsleftin insurance liability. However, therequirement inIAS39 does the exercise pricediffers from thecarryingamountof host amount basedonafixedand aninterest rate),evenif to surrender aninsurance contractforafixedamount(oran need separate,andmeasure atfairvalue,apolicyholder’s option As anexceptiontotherequirement inIAS39,Dexiadoesn’t for financialinstrumentswithDPFelements. The requirements forinsurancecontractswithDPFalsoprevail unless theembeddedderivativeisitselfaninsurancecontract. IAS 39appliestoderivativesembeddedinaninsurancecontract Embedded derivatives unbundled. ing fallunderIFRS4(investmentwithDPF)andwillnotbe anteed investmentproduct (branch21)withprofit shar- The unit-linkedproducts thatcanbeconvertedintoaguar- applied forthedepositcomponent. component; accountingpoliciesforfinancialinstrumentsare policies forinsurancecontractsare appliedfortheinsurance tract andadepositcomponentwillbeunbundled.Accounting All unit-linkedproducts thatcontainbothaninsurance con- (unbundling) Insurance contractswithdepositcomponent reserves andbyseparatedmanagementoftheassets. Proportional calculationhappensonthebasisof carried pation features inaseparatelineoftheequity. contracts andinvestmentwithdiscretionary partici- categorized proportionally forthepartrelated totheinsurance ing insurancecontractsandinvestmentwithDPFare All unrealized gainsandlossescomingfrom investmentsback- s s s the issuer;and tual benefits; whose amountortimingiscontractuallyatthediscretion of that are likelytobeasignificantportionofthetotalcontrac- that are contractuallybasedon: issues thecontract. fied poolofassetsheldbytheissuer;or fied typeofcontract;or - - - the profit orlossofthecompany, fundorotherentity that realized and/orunrealized investmentreturnsonaspeci- the performanceofaspecifiedpoolcontractsorspeci- – ifany. of thelastyear). age lossburden ofthe last5yearsandadministrativeexpenses Dexia conductsareasoning thatisbasedonpercentages (aver- For theassessmentoflossburden fortheinsuranceportfolio, dling expenses. forms runoff calculations, usingestimatesfortheclaimshan- Regarding reserves forthefilesalready opened,Dexia per- premium reserves are sufficient. burden forinsuranceportfoliosandexamineiftheunearned second partDexiamakesanestimationoftheexpectedloss reserves forclaimfilesalready opened are sufficient,andina two parts.DuringthefirstpartDexiaexaminesifbuiltup A LAT iscarriedoutforallproducts. Thetestissubdivided into definitively. contractual durationofthecontractstoopenandsettle opened claimfilesandtheclaimsthatwilloccurwithin and claimprovisions are sufficientto settledefinitelythe For nonlifeinsurance,theLAT thatexaminesifthepremium Deltas are thenactualizedtotheLAT-rate. lated betweenthecostsintariff andreal assignedcosts. lapses, deathandexpirationperiodtheannualdeltaisstipu- stipulated byproduct group andare indexed.Considering claims handlingexpensesandcommissions.Thesecostsare mercial surcharges andfixedsums; the bookedcosts; Belgium); backing insuranceliabilities; provided inventorypremiums; s s s s s s respect tothelifebusiness: are basedontheRoyalDecree ofNovember14,2003with For lifeinsurance,LAT usesthefollowingparameters,which ognized inprofit orloss. estimated future cashflows,theentire deficiencyshallberec- and related intangibleassets)isinadequateinthelight ofthe its insuranceliabilities(lessrelated deferred acquisitioncosts ance portfoliosseparately)showsthatthecarryingamountof If thatassessment(basedontheentire lifeandnonlife insur- under itsinsurancecontracts. ties are adequate,usingcurrent estimatesoffuture cashflows each reporting datewhetheritsrecognized insuranceliabili- products andinvestmentcontractswithDPF. Dexiaassessesat An insurer appliesaliabilityadequacytest(LAT) foritsinsurance Tests Adequacy Liability liabilities are adjustedaccordingly. ment ismetandincaseofaninsufficiency, thecorresponding Dexia reviews ateachreporting datewhetherthisminimumrequire- from applyingIAS39totheguaranteedelement. contract shallnotbelessthantheamountthatwouldresult component ofequity, theliabilityrecognized forthewhole If theissuerclassifiespartorthatentire feature asaseparate DPF infinancialinstruments to apartythecontract. ity priceorindex),anon-financialvariablethatisnotspecific the changeinafinancialvariable(suchasanequityorcommod- insurance contractifthesurrender valuevariesinresponse to apply toaputoptionorcashsurrender optionembeddedinan real assignedcoststakeintoaccountmanagementexpenses, tariff coststakeintoaccounttheinventorysurcharges, com- costs: calculationbasedonthelastupdatedtariff costs and mortality table:experiencetableofthecountry(Assuraliafor interest rateforactualizationcashflows:yieldsofthe assets premiums: collectedinventorypremiums pluscontractual par outstandingfor policiesoriginatedinthecurrent periodis protection (e.g.,reinsurance andover-collateralization). Net The generalreserve amountestablishedconsidersalllevelsof claims are expected, aspecificreserve isestablished. erally, whenaninsured credit deterioratestoapointwhere reserves represent Dexia’s estimateofthetotal reserves. Gen- ent initsportfolio.Generalreserves inadditiontospecific Dexia records ageneralreserve toreflect thecredit risksinher- insured obligationatthetimereserve isestablished. counted usingtherisk-free rateappropriate forthetermof The estimatedloss,netofrecovery, onatransactionisdis- anticipated recoveries. sales ofanycollateralsupportingtheobligationandother pated lossadjustmentexpenses;and of theanticipatedshortfallbetween: models thatrepresent Dexia’s estimateofthenetpresent value A specificreserve isdeterminedusingcashfloworsimilar are aspremium nolongerearned revenue. received prospectively, are considered aformofrecovery and premium ininstallments,thosepremiums, ifexpectedtobe for establishingaspecificreserve andthetransaction paysa sheet date.Whenaninsured obligationhasmetthe criteria gation isprobable andreasonably estimableatthebalance opinion, likelihoodofafuture lossonaparticularinsured obli- the estimatedloss,netofrecoveries, when,inmanagement’s Dexia establishesaspecificreserve forthepresent valueof be statisticallyestimated. established toaccountfortheinherent credit lossesthatcan remaining policyrisksintheportfolio,anon-specificreserve is balance sheetdate,aspecificreserve isestablished. Forthe folio. Ifanindividualpolicyriskhasaprobable lossas ofthe liability baseduponidentifiedrisksinherent initsinsured port- process. Dexiacalculatesalossandadjustment expense fees andexpensesassociatedwithadministeringtheclaims the estimatedcostofsettlingclaims,includinglegalandother lishes provisions forlossadjustmentexpenses,consisting of estimate ofspecificandnon-specificlosses.Dexiaalsoestab- Dexia establishesprovisions forlossesliabilitiesbased onits in thefuture onpoliciesinforce. premium thatisapplicabletocoverageofriskbe provided and prepaid reinsurance premiums represent theportionof the expectedperiodofcoverage.Deferred premium revenue inproportionearned totheamountofriskoutstandingover Gross andcededpremiums received inupfront payoutsare ance contractdependingoncertainlegalcharacteristics. basis. Thecontractmaybeconsidered aderivativeoraninsur- ule or, atitsoption,topaysuchamountsonanaccelerated due inaccordance withtheobligation’s originalpaymentsched- generally required topaytheprincipal,interest orotheramounts due. Uponapaymentdefaultonaninsured obligation,Dexiais obligation againstnon-paymentofprincipalandinterest when and irrevocable guarantythatprotects theholderofafinancial Financial guarantyinsurancegenerallyprovides anunconditional IAS 32and39. in order tobeconsistentwithitsdateoffirst-timeadoption under IFRS4.Dexiaisapplying4asfrom January1,2005, insurance companiesare considered asinsurancecontracts Inc. (FSA)locatedintheUS.Someinsuranceproducts soldby asset-backed obligationsthrough FinancialSecurityAssurance Dexia isactiveincredit enhancementofpublicfinanceand General s s FSA activities anticipated cashflowfrom andproceeds tobereceived on expected paymentsontheinsured obligationplusantici- Dexia Annual report 2008 117
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 118 Dexia Annual report 2008 uted credit ratingandtheimpairmentrules. To measure thesolvencyofareinsurer, Dexiarefers toitsattrib- that thecedantwillreceive from thereinsurer. terms ofthecontract;and the cedantmaynotreceive allamountsduetoitunder the occurred afterinitialrecognition ofthereinsurance asset,that ment expenses. expected future installments); the contracts. that are expectedtooccurwithinthecontractualdurationof visions are sufficienttocoveranyopenclaimfilesandclaims ciency testwithinIFRS4thatexaminesifthepremium andpro- For nonlifeinsurance,theLiabilityAdequacyTest isasuffi- its insurancecontracts. adequate, usingcurrent estimatesoffuture cashflowsunder reporting datewhetheritsrecognized insuranceliabilitiesare products, inaccordance withIFRS4.Dexiaassessesateach An insurer appliesaLiabilityAdequacyTest foritsinsurance Liability AdequacyTest calculation. applies anexperiencefactortotheresults ofthestatistical lation, statisticalformatandreliability offuture update.Dexia from S&P. Moody’s ischosenduetoitscredibility, largepopu- rates obtainedfrom Moody’s andseverityfactorsobtained tors usedforcalculationare theproduct ofdefaultfrequency multiplied bylossfrequency andseverityfactors.Thelossfac- s s erability ofdeferred acquisitioncostsisdeterminedby: acquisition costisrecognized intheincomestatement.Recov- of theexpectedperiodcoverage,remaining deferred When aninsured issueisretired ordefeasedpriortotheend within operatingexpense. deferred acquisitioncostsispresented onaseparateheading in whichtherelated premiums are Amortizationof earned. Deferred acquisitioncostsare amortized overtheperiod income onpremiums cededtoreinsurers. certain otherunderwritingexpenses,reduced bycommission ing personnel,certainratingagencyfees,premium taxesand compensation andrelated costsofunderwritingandmarket- business, includingcommissionspaidonreinsurance assumed, and are comprisedofexpensesrelated totheproduction of Deferred acquisitioncostsare onlyapplicabletoFSAactivities 1.13. with customers. ated byexclusivesalesmandateforbringingintransactions This headingrecords commissionpaidtointermediariesassoci- 1.12. s s A reinsurance assetisimpaired if,andonlyif: continue tobeaccountedforinaccordance withlocal GAAP. enough insurancerisktobeclassifiedasancontract Dexia’s reinsurance contractswiththird partiesthatcontain 1.11.2. Reinsurance that eventhasareliably measurableimpactontheamounts there isobjectiveevidence,asaresult ofaneventthat and thepresent value ofanticipatedlossesandlossadjust- considering future revenues (deferred premium revenue and EERDAQIIINCOSTS ACQUISITION DEFERRED NETWORK COSTS date andsettlementaccounting”). tives untilsettlementoccurs(seealsoParagraph1.6.“Trade at tradedate.Othertradingtransactionsare treated asderiva- convention (“regular way”purchases andsales)are recognized ery withinthetimeframeestablishedbyregulation or market All purchases andsalesoftradingsecuritiesthatrequire deliv- Dividends received are includedin“Dividendincome”. holding thetradingassetsisreported as“Interest income”. in “Nettradingincome”.Interestduringtheperiodof earned All related realized andunrealized gainsandlossesare included nized atfairvalueandsubsequentlyre-measured atfairvalue. term profit takingexists.Trading securitiesare initiallyrecog- ofshort- securities includedinaportfoliowhichpattern from short-termfluctuationsinpriceordealer’s margin,orare Trading securitiesare securitiesacquired forgeneratingaprofit rate methodandisrecorded under“Netinterest income”. income”. Interest incomeisaccruedusingtheeffective interest alized gainsandlossesrecorded as“Nettrading inearnings assets heldfortrading”andare carriedatfairvalue,withunre- Loans heldfortradingpurposesare includedin“Financial 1.15.1. Loansandsecuritiesheldfortrading 1.15. or discounts. direct costsonloansandnetofanyunamortizedpremiums ing principalamount,netofanydeferred feesandmaterial and AFS,are carriedatamortizedcost,beingtheoutstand- included withintrading,designatedatfairvaluethrough P/L Loans categorizedas“loansandadvances”,beingthosenot 1.14. s s s tion ofIAS39.Itisused: surement reliability. Thefairvalueoption simplifiestheapplica- doing soresults inmore relevant informationorincreases mea- entity as“atfairvaluethrough profit orloss”,provided that or agroup offinancialinstrumentscanbedesignatedbythe Under thefairvalueoption,afinancialasset,liability loans andsecuritiesheldfortrading. ment ofincomefollowthesameaccountingrulesasthosefor Loans andsecuritiesdesignatedatfairvaluethrough state- value through profit orloss 1.15.3. Loansandsecuritiesmeasured atfair those forloansandsecuritiesheldtrading. Liabilities heldfortradingfollowthesameaccountingrulesas 1.15.2. Liabilitiesheldfortrading VALUE THROUGH PROFITORLOSS ASSETS ORLIABILITIESMEASUREDAT FAIR LIABILITIES HELDFORTRADINGORFINANCIAL BANKS ANDCUSTOMERS which shouldbe made fortheentire financialinstrument,at The useofthefairvalueoptionis an accountingpolicychoice ded derivative. investment strategy; basis, inaccordance withadocumentedriskmanagementor is managedanditsperformance is evaluatedonafairvalue wise arise; measurement orrecognition inconsistency thatwouldother- when aninstrumentcontainsanon-closely related embed- when agroup offinancialassets,liabilitiesorboth when suchdesignationeliminatesorsignificantlyreduces a FINANCIAL ASSETSOR LOANS ANDADVANCES DUEFROM SALE ANDSECURITIESHELDTOMATURITY gains andlossesreported inthestatementofincome. of thehostcontract;and s s are treated asseparatederivativeswhen: Certain derivativesembeddedinotherfinancialinstruments, all elementsrepresenting thefairvalue ofthederivative. revaluation tofairvalueandtheaccruedinterest, thesumof includes thepremium paid/received net ofamortization,the The amountreported ontheselinesofthebalancesheet and asliabilitieswhenfairvalueisnegative. Derivatives are reported asassetswhen fairvalueispositive cash flowmodelsorpricingasappropriate. values are obtainedfrom quotedmarket prices,discounted fair valueandare subsequentlyremeasured atfairvalue.Fair All derivativesare initiallyrecognized in thebalancesheetat rency andinterest rateoptions(bothwritten andpurchased). rate agreements, currency andinterest rateswapsandcur- exchange contracts,currency andinterest ratefutures, forward Derivative financialinstrumentsgenerallyincludeforeign 1.17. impairment. using theeffective interest method,lessanyallowancefor Held-to-maturity investmentsare carriedatamortized cost statement ofincomeas“Netoninvestments”. related accumulatedfairvalueadjustmentsare includedinthe ognized withinequity. Whensecuritiesare disposed of,the value offinancialassetsclassifiedasavailable-for-sale are rec- Unrealized gainsandlossesarisingfrom changesinthefair from valuationmodelsincaseofinactivemarkets. internal derived from availablemarketspreads oramountsderived at fairvaluebasedonquotedbidpricesand/or Available-for-sale financialassetsare subsequentlyremeasured net interest income. on theeffective interest ratemethodandisrecognized within fair valueplustransactioncosts.Interest isrecognized based Securities andloansreceivables are initiallyrecognized at or equityprices,are classifiedasavailable-for-sale (AFS). needs forliquidityorchangesininterest rates,exchangerates an indefiniteperiodoftime,whichmaybesoldinresponse to Securities andloansreceivables intendedtobeheldfor the abilitytoholdassetsmaturity. maturity (HTM)whenmanagementhasboththeintentand Quoted securitieswithfixedmaturityare classifiedasheld-to- ditions financialassetscouldbesubsequentlyreclassified. investments atinitialrecognition. However, undercertaincon- Management determinestheappropriate classificationofits 1.16. the liabilities. The abovecommentsonthefairvalueoptionare alsovalidfor through profit orloss 1.15.4. Liabilitiesmeasured atfairvalue tion are fulfilled. initial recognition andwhencertainconditionsofdocumenta- the hybridcontractisnotcarriedat fairvaluewithunrealized their risksandcharacteristicsare notcloselyrelated tothose DERIVATIVES LOANS ANDSECURITIESAVAILABLE FOR ment orforecast transaction affects thestatementofincome. expense intheperiodsduringwhich thehedgedfirmcommit- ferred tothestatement ofincomeandclassifiedasrevenue or or liability. Otherwise,amounts deferred inequityare trans- included intheinitialmeasurement ofthecostasset previously deferred inequityare transferred from equityand nition ofanon-financialassetorliability, thegainsandlosses of income.Where theforecast transaction results intherecog- the fairvalueofderivativesisrecognized inthestatement holders’ equity”).Thenon-effective portionofthechangesin of income”(see”Consolidatedstatementchangesinshare- equity as“Gainsandlossesnotrecognized inthestatement to thehedgedrisk,are recognized in the hedgingreserve in qualify ascashflowhedgesandare highlyeffective inrelation Changes inthefairvalueofderivativesthatare designatedand through anadjustmentoftheyieldhedgeditem. amortized tonetprofit orlossovertheperiodtomaturity amount ofahedgedinterest-bearing financialinstrumentis ing (fairvaluehedgemodel),theadjustmenttocarrying If thehedgenolongermeetscriteriaforaccount- specific hedgedrisk. of thehedgedassetsorliabilitiesthatisattributableto of income,alongwiththecorresponding changeinfair value tive inrelation tohedgedrisk,are recorded inthestatement qualify asfairvaluehedgesandthatprove tobehighly effec- Changes inthefairvalueofderivativesthatare designated and contract isregarded asthehedginginstrument. totheconsolidatedGroup.external Inthiscase,the nal contractsare offset byderivativecontractswithaparty ing intheconsolidatedfinancialstatementsonlyifinter- within theconsolidatedGroup canqualifyforhedge account- within thesamelegalentityandbetweenseparateentities derivativecontractsbetweenseparatedivisions met. Internal not beoffset withthird parties,thehedgingcriteriaare not contracts are offsetparties.Ifthecontracts can- withexternal hedging) mainlytocovertheirinterest raterisk.Those internal derivativecontracts(internal Entities ofDexiauseinternal risk inthehedgeditemthroughout thereporting period;and changes infairvalueorcashflowsattributabletothehedged highly effective (withinarangeof80%to125%)inoffsetting before hedgeaccountingisapplied; item, hedgingobjective,strategyandrelationship prepared a hedgeincludeinteralia: The criteriaforaderivativeinstrumenttobeaccountedas this way, provided certaincriteriaare met. Hedge accountingmaybeusedforderivativesdesignatedin strategy. to bedeemedheldfortradingorpartofafairvalueoption If aderivativeisnotdesignatedinhedgingrelationship, itis ment hedge). or asset orliabilityaforecasted transaction(cashflowhedge); a firmcommitment(fairvaluehedge);or s s s s s s designate certainderivativesaseither: On thedateaderivativecontractisentered into,Dexiamay 1.18. the hedgeiseffective atinceptionandonanongoing basis. the hedgeisdocumentedshowingthatitexpectedtobe formal documentationofthehedginginstrument,hedged a hedgeofnetinvestmentinforeign entity(netinvest- a hedgeoffuture cashflowattributabletoarecognized a hedgeofthefairvaluerecognized assetorliability HEDGING DERIVATIVES Dexia Annual report 2008 119
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 120 Dexia Annual report 2008 portfolio hedges”. amortized costisincludedintheline“Fairvaluerevaluation of Hedged interest rateriskrevaluation of elementscarriedoutat liabilities. contractual eventsoccurringwithinthecategoriesofassetsor Inefficiency cancomeonlyfrom overhedgingduetonon- tive, i.e.reducing theinterest raterisk exposure, isfulfilled. Effectiveness testsconsistofverifyingthatthehedgingobjec- the statementofincome. interest expenseorincome)withadjustmentsaccounted forin hedging itemsare recognized atitsfairvalue(includingaccrued portfolio ofderivativesmaycontainoffsetting positions. The The hedginginstrumentsare aportfolioofderivatives. Sucha such as“availableforsale”assetsorloanportfolios. fying hedgeditemsdifferent categoriesofassetsorliabilities ing expectedmaturitydate.Theentitymaydesignateasquali- included intheportfoliobasedonbehavioralstudyforestimat- global analysis.Demanddepositsandsavingsaccountsmaybe to classifyintotheportfolioprovided theyare includedinthe The entitymaychoosewhichassetsand/orliabilitiesitwishes in whichtheyhadanimpact. portfolio, theymustberemoved from allthetimebuckets of theportfolio.Hence,whentheyare removed from the are includedonacumulativebasisinallthetimebuckets and liabilitiesenteringintheportfolio.Assets stantly appliesthesamemethodologyforselectingassets the wayandfrequency itperformstests.Theentity con- risk exposure tobehedged,thelengthoftime-bucket, exposure oftheportfolio.Theentitydefinesatinception the liabilities tobeentered intothehedgeofinterest raterisk an activity-by-activitybasis.Theentityselectsassetsand/or stemming from theexcludedactivitiesare monitored on financial marketactivities,provided thattheriskexposure may excludecertaincomponentsoftheexposure, suchas sheet andoff-balance sheetitems.Thisglobalanalysis ing intoaccountalltheexposure comingfrom balance exposure. Itconsistsofassessingfixedrateexposure tak- The entityperformsaglobalanalysisofinterest raterisk assets orliabilitiesdesignatedasthequalifyinghedgeditems. est rateriskexposure stemmingfrom theselectedcategoryof The objectiveofthehedgerelationships istoreduce theinter- because itbetterreflects thewayDexiamanagesitsactivities. Dexia hasdecidedtoapplyIAS39asadoptedbytheEU 1.19. with fairvaluegainsandlossesreported inincome. IFRS andare therefore treated asderivativesheldfortrading not qualifyforhedgeaccountingunderthespecificrulesin nomic hedgesunderDexia’s riskmanagementpositions,do Certain derivativetransactions,whileproviding effective eco- technique whose variablesincludeonlydatafrom observable without modificationorrepackaging) orbasedonavaluation able current market transactionsinthesameinstrument(i.e., instrument isevidencedbycomparison withotherobserv- consideration givenorreceived) unlessthefairvalueofthat recognition isthetransaction price(i.e.,thefairvalueof The bestevidenceofthefairvalue ofaderivativeatinitial 1.20. EXPOSURE OFAPORTFOLIO DAY ONEPROFITOR LOSS HEDGE OFTHEINTERESTRATE RISK in theincomestatement. amount ofthedeferred dayoneprofit orlossistakenentirely able, orwhentheinstrumentisderecognized, theremaining action. Ifsubsequently, theinputsbecomemarketobserv- one profit isamortizedontheremaining lifeofthetrans- consider insettingaprice.Theunrecognized amountofday in afactor(includingtime)thatmarketparticipantswould income statementtotheextentthatitarisesfrom achange exist, dayoneprofit orlossisdeferred andrecognized inthe tion intheincomestatement.Where suchevidencedoesnot recognizes thedayoneprofits orlossesatinitialrecogni- models forwhichallinputsare marketobservable,Dexia Where thefairvalueisdeterminedusingvalidatedvaluation referred toas“Day1Profit orLoss”. the fairvaluebasedonavaluationtechniqueiscommonly markets. Thedifference betweenthetransactionpriceand The mainservicelivesare asfollows: their estimatedusefullives. write downthecostofsuchassetstotheirresidual values over Depreciation iscalculatedusingthestraight-linemethod to accumulated depreciation andimpairments. All property, plantandequipmentare statedatitscostless and investmentproperties. Tangible fixedassetsincludeproperty, plantandequipment 1.21. s s s s s s s s depreciated overtheirusefullives on astraight-linebasis. depreciation andimpairments. Theinvestmentproperties are Investment properties are recorded atitscost lessaccumulated its ownuse. ment property only ifDexiaholdsaninsignificantportionfor portions cannotbesoldseparately, theproperty isaninvest- these portionsare accounted forseparately. Ifthe“ownuse” separately orleasedoutunderfinancelease,then investment properties. Ifthe“ownuse”portionscanbesold or forcapitalappreciation. Dexiamayalsopartlyusecertain Investment properties are thoseproperties rentals heldtoearn assets iscapitalizedandsubsequentlydepreciated. that enhancesorextendsthebenefitsofreal estateorfixed amount andare includedinOthernetincome.Expenditure equipment are determinedbyreference totheircarrying able amount.Gainsandlossesondisposalsofproperty and mated recoverable amount,itiswrittendowntoitsrecover- Where thecarryingamountofanassetisgreater thanitsesti- immediately. to financetheconstructionofqualifyingassetsare expensed asset aswelltheinterest onspecificorgeneralborrowings The exchangelossesonliabilitiesfortheacquisitionofan useful life.Thefollowingpartshasbeendefined: a case,eachpartisdepreciated separatelyoveritsestimated significant partswithindividuallyvaryingusefullives.Insuch An itemofproperty, plantandequipmentcanbecomposed of years; taxes): 20to50years; Fixture andfittings:10to20years. Technical installations:10to20years; Roof, andfrontage: 30years; Structure ofthebuilding:50years; Vehicles: 2to5years. Leasehold improvements, equipmentandfurniture:2 to12 Computer equipment:3to6years; Buildings (includingacquisitioncostsandnondeductible TANGIBLE FIXEDASSETS with IAS19requirements. applicable standard. Planassetsare recognized inaccordance any allowanceforimpairmentif applicable orfollowingthe tions. Theseotherassetsare recorded atamortizedcost less inventories, planassetsrelating toemployeebenefitobliga- insurance premiums receivables, etc.),constructioncontracts, receivable. Theyalso includeinsuranceproducts (reinsurance, related), prepayments, operationaltaxes andotheraccounts Other assetsmainlycompriseaccruedincome(non-interest 1.24. support thecarryingvalue. when therecoverable amountofthebusinessisinsufficientto over thecarryingamount.Itiswrittendownforimpairment circumstances oreventsindicatethatthere maybeuncertainty The carryingamountofgoodwillisreviewed atyear-end when 1.23.2. Impairmentofgoodwill or salepriceisdirectly recorded inequity. ence betweenpurchase orsaleofnetassetandthe purchase place withoutchangeintheconsolidationmethod.Thediffer- ments are made,whenpercentage increases ordecreases take Therefore, neitherfairvalueadjustmentsnorgoodwilladjust- companies are considered astransactionswithshareholders. Variations inpercentage ofownershipinfully-consolidated graphic area andbusinesssegment. a legalentity, ormaybedesignedbasedoncriteriaof,geo- purpose ofimpairmenttesting.Cash-generatingunitsmaybe asset. Goodwillisallocatedtocash-generatingunitsforthe ary 1,2004isreported inthebalancesheetasanintangible acquisition. GoodwillonacquisitionoccurringorafterJanu- acquired subsidiaryorassociatedundertakingatthe dateof over thefairvalueofDexia’s share ofthenetassets Goodwill represents theexcessofcostanacquisition 1.23.1. Positivegoodwill 1.23. quently depreciated. that enhancesorextendsthebenefitsiscapitalizedandsubse- and are includedinNetincomeoninvestments.Expenditure assets are determinedbyreference totheircarryingamount erable amount.Gainsandlossesondisposalsofintangible estimated recoverable amount,itiswrittendowntoitsrecov- Where thecarryingamountofanassetisgreater thanits usually betweenthree andfiveyears. the software isavailableforuse.Thisamortizationperiod the straight-linemethodovertheirusefullivesfrom thetime development costsrecognized asassetsare amortizedusing increase theoriginalcostofsoftware. Computersoftware of computersoftware programs beyondoneyearisusedto However, expenditure thatenhancesorextendsthebenefits puter software programs are recognized asexpenseincurred. acquired software. Costsassociatedwithmaintainingcom- generatedand Intangible assetsmainlyconsistofinternally 1.22. ing leaseare bookedin“Othernetincome”. Depreciation onbuildingsandotherassetsgiveninoperat- OTHER ASSETS GOODWILL INTANGIBLE ASSETS profit orloss”. fair valuein“Financialliabilitiesmeasured atfairvaluethrough profit orloss”andthe obligationtoreturnthemisrecorded at “Net incomefrom financial instrumentsatfairvaluethrough If theyare soldtothird parties,thegain orlossisincludedin statements. Securities borrowed are notrecognized inthefinancial statements. Securities lenttocounterpartsare retained inthefinancial life oftheagreements usingtheeffective interest ratemethod. treated asinterest incomeorexpense and isaccruedoverthe The difference betweenthesaleand repurchase priceis appropriate. items; and stant periodicrateofreturn. the netinvestmentmethod(before tax),whichreflects acon- Lease incomeisrecognized overthetermoflease using of thereceivable isrecognizedfinance income. asunearned difference betweenthegross receivable andthepresent value value oftheleasepaymentsisrecognized asareceivable. The When assetsheldare subjecttoafinancelease,the present 1.25.2. ADexiacompanyisthelessor are recorded usingtheeffective interest ratemethod. gations are recorded as borrowings andinterest payments over itsestimatedusefullife.Thecorresponding rental obli- the minimumleasepaymentsorfairvalueandisdepreciated tion theassetisrecorded atthelowerofpresent valueof a financeleaseandtherelated assetiscapitalized.Atincep- rewards ofownershiptheasset,leaseisrecorded as If theleaseagreement substantiallytransferstheriskand which terminationtakesplace. way ofpenaltyisrecognized asanexpenseintheperiod period hasexpired, anypaymenttobemadethelessorby When anoperatingleaseisterminatedbefore thelease of thelease. statement ofincomeonastraight-linebasisovertheperiod equipment orreal estate.Leaserentals are recognized inthe Dexia principallyentersintooperatingleasesfortherental of operating leaseisaotherthanfinancelease. risks andrewards incidentaltoownershipofanasset.An A financeleaseisathattransferssubstantiallyallthe 1.25.1. ADexiacompanyisthelessee 1.25. s s repos”) are recorded as: Securities purchased underagreements toresell (“reverse in thenotes. and deposits”asappropriate. Theassetisreported aspledged bility isincludedin“Duetobanks”or“Customerborrowings sale orfinancialassetsheldtomaturity. Thecorresponding lia- financial assetsheldfortrading,available (“repos”) remain inthefinancialstatementsrecognized as Securities soldsubjecttoalinkedrepurchase agreement 1.26. AND LENDINGOFSECURITIES “Due tobanks”or“Customerborrowings anddeposits”as an obligationtoreturnsecuritieswithinoff-balance sheet LEASES SALE ANDREPURCHASEAGREEMENTS Dexia Annual report 2008
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COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 122 Dexia Annual report 2008 1.28. form. substance oftheirunderlyingcontractsmore thantheirlegal Debts are includedinthefinancialstatements,basedon using theeffective interest ratemethod. in thestatementofincomeoverperiodborrowings between netproceeds andtheredemption valueisrecognized borrowings are statedatamortizedcostandanydifference issue proceeds netoftransactioncostsincurred. Subsequently Borrowings are recognized initiallyatfairvalue,beingtheir 1.27. by therelevant Dexia companies. plans are generally funded bypaymentsfrom employeesand generally heldinseparateinsurance companies.Thepension tribution plansthroughout theworld,assetsofwhichare Dexia operatesanumberofdefined benefitanddefinedcon- 1.29.1. Pensionobligations conformity withIAS19andIFRS2. ensures thatallcalculationsare harmonized andcalculatedin reviewed actuaryforDexiathat andvalidatedbyanexternal of theseobligations.Allvaluationsassumptionsandresults are actuariescarryoutvaluations andexternal Qualified internal assumptions. and takingintoconsiderationalsoactuarialdemographic maturity approximating tothetermsofrelated liability est ratesofcorporatebondsratedAA,whichhavetermsto ent valueoftheestimatedfuture cashoutflowsusinginter- Employee benefitobligationsare measured atthepres- 1.29. income togetherwiththedeferred gainorloss. to equityandissubsequentlyrecognized inthestatement of or credited directly toequity, isalsocredited orchargeddirectly for-sale investmentsandcashflowhedges,whichare charged Deferred taxrelated tofairvalueremeasurement ofavailable- ence willnotreverse intheforeseeable future. difference canbecontrolled anditisprobable thatthediffer- tures, exceptwhere thetimingofreversal ofthetemporary ing from investmentsinsubsidiaries,associatesandjoint ven- Deferred incometaxisprovided ontemporarydifferences aris- the temporarydifferences canbeutilized. able thatfuture taxableprofit willbeavailableagainstwhich Deferred taxassetsare recognized totheextentthatitisprob- sheet dateare usedtodeterminedeferred incometax. The ratesenactedorsubstantivelyatthebalance- the fairvaluesofnetassetsacquired andtheirtax base. and, inrelation toacquisitions,from thedifference between loan andotherimpairmentstaxlossescarriedforward; for pensionsandotherpostretirement benefits,provisions for assets andliabilitiesincludingderivativecontracts,provisions property, plantandequipment,revaluation ofcertainfinancial The principaltemporarydifferences arisefrom depreciation of financial statements. bases ofassetsandliabilitiestheircarryingamountsinthe method, ontemporarydifferences arisingbetweenthetax Deferred incometaxisprovided infull,usingtheliability EMPLOYEE BENEFITS DEFERRED INCOMETAX BORROWINGS employee. tions thatDexiaagrees topayintothefundonbehalfof they relate. TheobligationofDexiaislimitedtothecontribu- are chargedtothestatementofincomeinyearwhich Dexia’s contributionstodefinedcontributionpensionplans Definedcontributionpensionplans 1.29.1.2. assets. case theassetsare recorded gross intherelated linesofthe liability unlesstheassetsare heldbyaGroup entityinwhich The definedobligationispresented netofplanassetsasa in incomeovertheaverageremaining lifeoftheplan. tion or10%ofthefairvalueanyplanassets)are recognized 10% ofthepresent valueofthegross definedbenefitobliga- actuarial gainsandlossesexceedingthecorridor(greater than the servicelivesofemployees.Netcumulativeunrecognized the statementofincomesoastospread theregular costover Under thismethod,thecostofproviding pensionsischargedto projected unitscredit method. For definedbenefitplans,pensioncostsare assessedusingthe Definedbenefitplans 1.29.1.1. for definedbenefitpensionplans. the periodofemployment,usingamethodologysimilartothat period. Theexpectedcostsofthesebenefitsare accrued over retirement ageandthecompletionofaminimumservice is usuallybasedontheemployeeremaining inservice upto benefits totheirretirees. Theentitlementtothesebenefits Some Dexiacompaniesprovide post-retirement healthcare 1.29.2. Otherpost-retirement obligations the balance-sheetdate. vice leaveasaresult ofservicesrendered byemployeesup to made fortheestimatedliability annualleaveandlong-ser- are recognized whentheyaccruetoemployees. Aprovision is Employee entitlementstoannualleaveandlongservice 1.29.6. Employeeentitlements for acertainperiodoftime. into accountthefactthatthoseequitysecuritiesare blocked for itspersonnel.Thisdiscountistakenintoexpensetaking Dexia alsooffers adiscountforthecapitalincreases reserved based onvaluationtechniquesandmarketdata. on servicesreceived. Thefairvalueoftheoptioniscalculated ees. Thecostoftheoptionisrecognized withinexpensebased Share optionsare grantedtodirectors andtosomeemploy- 1.29.5. Equitycompensationbenefits withdrawal. must haveadetailedformalplanandnorealistic possibility of offer madeinorder toencouragevoluntaryredundancy. Dexia mal dateofretirement orprovide benefitsasaresult ofan is committedtoterminatetheemploymentbefore the nor- A terminationbenefitprovision isonlyrecorded whenDexia 1.29.4. Termination benefits right. be received byemployeeswhentheybecomeentitled tothis This mainlyincludesprovisions forjubileepremiums thatwill 1.29.3. Otherlong-termbenefits feature. contract holders; as inIAS39. for impairmentoffinancialassetsmeasured atamortizedcost tions are appliedthrough thesamemethodologyasapplied For provisions onloanscommitments,theabovepresump- made. nomic benefitswillberequired tosettletheobligation;and result ofpastevents; capacity suchasnominee, trusteeoragent. from thesefinancial statementswhere Dexiaactsinafiduciary undertakings toreturnsuchassets tocustomersare excluded Assets andincomearisingthereon togetherwithrelated 1.32. s s follows: cretionary participationfeature are classifiedbytheGroup as available forsaleandbackinginsurancecontractswithdis- The unrealized gainsandlossesrelating toassetsclassifiedas features 1.31.5. Insurancediscretionary participation charged orcredited tothetreasury share accountinequity. equity. Gainsandlossesonsalesofownequitysecuritiesare income taxesisshownasadeductionfrom totalshareholders’ ation paidincludinganyattributabletransactioncostsnetof or obtainsrightstopurchase itsshare capital,theconsider- Where Dexiaoritssubsidiariespurchase Dexia’s share capital 1.31.4. Treasury shares classified asequity. dividends are declared atthediscretion ofthedirectors, are Preferred shares thatare non-redeemable anduponwhich 1.31.3. Preferred shares sequent eventsnote. declared afterthebalance-sheetdateare disclosedinthesub- at thediscretion oftheentity).Dividendsforyear that are period inwhichtheyare declared (authorizedandnolonger Dividends onordinary shares are recognized inequitythe 1.31.2. Dividendsonordinary shares tax. nation, are deductedfrom equitynetofanyrelated income new equitysecurities,otherthanaspartofabusinesscombi- incrementalExternal costsdirectly attributabletothe issueof 1.31.1. Share issuecosts 1.31. s s s when: Provisions are recognized basedontheirdiscountedvalue ing oramount. According toIAS37,aprovision isaliabilityofuncertaintim- 1.30. as aseparatecomponentofequitytotheextentthat as aliabilitytotheextentofreturnguaranteed a reliable estimateoftheamountobligationcanbe it isprobable thatanoutflowofresources embodyingeco- Dexia hasapresent legalorconstructiveobligationasa FIDUCIARY ACTIVITIES SHARE CAPITAL ANDTREASURY SHARES PROVISIONS REPORTING) would decreasepershare. netearnings derivatives are “inthemoney”andtheirconversion to shares contingent share issuancesare treated asdilutivewhenthe debt andshare optionsgrantedtoemployees.Potentialor sion ofalldilutivepotentialordinary shares, suchasconvertible ber ofordinary shares inissueisadjustedtoassumeconver- pershareFor thedilutedearnings weightedaveragenum- held astreasury shares. the averagenumberofordinary shares purchased byDexiaand number ofordinary shares inissueduringtheyear, excluding available toordinary shareholders bytheweightedaverage pershareBasic earnings iscalculatedbydividingnetincome 1.34. assets ofthefairvalueportfolio. held fortrading,financialassetsavailablesaleand central banks,interbankloansandadvances,financialassets remaining maturityincludedwithincashandbalanceswith cash equivalentscomprisebalanceswithlessthan3months For thepurposesofstatementcashflows,and 1.33. s Dexia isorganizedasfollows: make businessdecisions. organizational structure andare usedbythemanagementto agement approach”. Thesesegmentsreflect Dexia’s internal Dexia’ sreportable segments are definedbyusingthe“man- 3.1. separately. assets are 10percentormore ofallthe segmentsare reported from customersandwhoserevenue, salestoexternal result or other segments.Segmentswithamajorityofrevenue earned subject torisksandreturnsthatare different from thoseof ticular economicenvironment (geographicsegment),whichis segment) orinproviding products or serviceswithinapar- engaged eitherinproviding products orservices(business A segmentisadistinguishablecomponentofDexiathat 3. reported, aswellrelations withthedirectors. in Belgium.Relationswithequity-accountedcompaniesare sions. Theultimateparent oftheGroup isDexia,incorporated over theotherpartyinmakingfinancialoroperationaldeci- ity tocontrol theotherpartyorexercise significantinfluence Parties are considered toberelated ifonepartyhastheabil- 2. of financialinstrumentsisexplainedinsection4.1. The principlesandpoliciesappliedindeterminingthefairvalue 1.35. Public andWholesale Banking; SGETREPORTING SEGMENT TRANSACTIONS PARTY RELATED BUSINESS SEGMENTS(PRIMARY SEGMENT EARNINGS PERSHARE CASH ANDEQUIVALENTS ARVALUE FAIR Dexia Annual report 2008 123
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 124 Dexia Annual report 2008 (SECONDARY SEGMENTREPORTING) the euro zone); described inthesummaryofsignificantaccountingpolicies. The accountingpoliciesofthesegmentsare thesameasthose mercial orfinancialbusinessline. Allocated” exceptwhentheyare directly managedbyacom- and intangibleassets.Therefore, theyare allocatedto“Non The ChiefOperationsOfficer(COO)managesmaintangible ing itemssuchastaxassetsandliabilities. liabilities, beingthemajorityofbalancesheetbutexclud- Segment assetsandliabilitiescompriseoperating business line; economic capitalisusedtomeasure theperformance ofeach purposesandthereturnon to thebusinesslinesforinternal long-term outstanding; equity allocatedtothisactivityonthebasisofmediumand the managementcostsofthistransformationandGroup The results ofeachbusinesslinealsoinclude: mal commercial termsandmarketconditions. byservicelevelagreementstransfers, governed basedonnor- service centersare subjecttoretrocessions and/oranalytical mercial businesslines,financialmarketsandproduction and Relations betweenbusinesslinesandespeciallycom- counterparties. ated activities,bothforGroup businesslinesand external (fourth businessline),coveringalltradingroom andassoci- line). Finally, Dexiahasatreasury andfinancialmarketssector as a“production andservicecenters”function(third business activities (AssetManagementandFundServices)are grouped nature andcommontoallcommercial businesslines.These business lines).Moreover, someactivitiesare transversalby kets are covered byaspecificbusinessline(firstandsecond customers. Alldistributionactivitiesrelated tothesetwomar- Dexia catersfortwotypesofclients:institutionsandindividual not attributabletootherbusinesslines; The “nonallocated”partismainlycomposedof: s s s s s s s s s s s s s follows: wide basis,theyoperateinfourmaingeographicareas as Although Dexia’s businesssegmentsare managedonaworld- 3.2. s s s s rest ofEurope (European countrieswhichdonotbelongto euro zone(countriesusingtheeuro currency); funding cost. interest oneconomiccapital:capitalisallocated fromthe earnings commercial transformation,including items nonattributabletoothersegments. share leasingactivitiesintheNetherlands; building property, othertangibleandintangiblefixedassets exceeding share capital; equities portfolionotattributabletoothersegments; Non allocated–centralassets. Treasury andFinancialMarkets; Investor Services; Asset Management; Personal FinancialServices; rest oftheworld. USA; GEOGRAPHIC SEGMENTS s s s mary risksassociatedwithitsuseoffinancialinstruments: and itsmanagementcontrol ofrisks,inparticularthepri- This sectionpresents informationaboutDexia’s exposure to, 4. action thatisnotaforced liquidationorforced sales. received bytheholder ofthefinancialassetinanorderly trans- normal businessconsiderations,i.e. thepricethatwouldbe measurement date in anarm’s lengthexchangemotivatedby reflects whatthetransaction pricewouldhavebeenonthe recourse isprovided byvaluationmodels.Amodel If afinancialinstrumentisnottradedonanactivemarket, discount rates. ing boththeamountsandtimingoffuture cashflowsandthe cantly affected bytheunderlyingassumptionsmadeconcern- The valuesderivedfrom applyingthesetechniquesare signifi- market conditionsexistingatbalance-sheetdates. tion modelsortechniques(hereafter calledmodels)basedon assumptions, i.e.present valueorotherestimationandvalua- estimated usingthebank’s proper valuationmodelandmarket no suchquotedpricesare available,thefairvalueshavebeen or issuedbyDexia.Therefore, forfinancial instrumentswhere significant numberofthefinancialassetsandliabilitiesheld instrument. Quotedpricesare not,however, available fora value, asitisthebestevidenceoffairvalueafinancial market (suchasarecognized stockexchange)are usedasfair in anarm’s-length transaction.Quotedpricesonanactive or aliabilitysettled,betweenknowledgeable,willingparties Fair valueistheamountforwhichanassetcouldbeexchanged, 4.1. EGN ACTIVITIES HEDGING This sectionalsopresents Group’s regulatory capitalposition. another. not necessarilybecompared from onefinancialinstitutionto ferent methodsandassumptions,fairvaluedisclosures can- liabilities. However, becauseotherinstitutionsmayusedif- a consistentmeasurement offairvalueforDexia’s assetsand Assumptions andtechniqueshavebeendevelopedtoprovide and liabilitiescanfluctuatesignificantly. and, thustheaggregate fairvaluesofderivativefinancial assets the extenttowhichinstrumentsare favorableorunfavorable notional amountofderivativefinancialinstrumentsonhand, credit risksrelative totheirterms.Theaggregate contractualor tions oftheunderlyinginterest, foreign exchange,equityor able (assets)orunfavorable(liabilities)asaresult of fluctua- credit orpricerisks.Thederivativeinstrumentsbecomefavor- instruments and,therefore, donotindicateDexia’s exposure to of future cashflowsinvolvedorthecurrent fairvalueofthe the balancesheetbutdonotnecessarilyindicateamounts provide abasisforcomparisonwithinstrumentsrecognized on The notionalamountsofcertaintypesfinancialinstruments able pricetofundactualorproposed commitments. market onanunsecured, orevensecured basisatanaccept- its paymentwhendue,ortobeunable,borrow fundsinthe in allforms,includingsettlementrisk; part defaultorratingmigrationsandarisesoncredit exposure as interest rates,exchangeequitypricesandspreads; Funding andliquidityriskistheofbeingunabletomeet Credit riskistheoflossresulting from clientorcounter- Market riskisexposure toobservablemarketvariablessuch RS AAEETPLCE AND POLICIES MANAGEMENT RISK FAIR VALUE OFFINANCIALINSTRUMENTS the expectedremaining lifeoftheunderlyingfinancialassets. and willbeamortizedviaaneweffective interest ratebasedon The AFSreserve has beenfrozen asofSeptember30,2008 L&R onOctober1,2008 Value AFS. prices derivedfrom availablemarketspreads toobtaintheFair Prices are calculatedbasedonquotedbidpricesand/or an activemarket September 30,2008. value cannotresult inhighervaluethanthequotedpriceper fair valueperSeptember30,2008.Byconsequence,the a caphasbeenappliedtothefairvaluelevelof the fairvalueforfinancialassetclassifiedasAFS.However, The combinedcredit spread andliquidity costsprovide inputto willing tobuytheasset. (if available)orofagenericmarketparticipantthatwouldbe ing costforthesecuritydependingoneligibilityofrefinancing CDS indices.Theliquidityspread isabestestimateofthe fund- Basel IIdata,factoringingeneralmarketmovementsbasedon credit spread isestimatedstartingfrom thesecurityspecific spread thatincorporatesbothcredit andliquidityrisk.The Dexia usedadiscountedcashflowmodel,basedondiscount recent credit spreads availableforcalculatingthefairvalue. spread changesoverthetime.Forthose,weincluded most rience, itisnotedthatinanumberofportfoliosthecredit remains stableoverthelifetime.However, based on expe- ing thefairvalueofloansandreceivables; granted withcurrent marketratesoffered onsimilarloans; mated bycomparingmarketinterest rateswhentheloans were receivables: could bemaderegarding thefairvalueofloansand In additiontotheaboveassumptions,followingremarks to beapproximated bytheircarryingamounts. 12 monthscanbeassumedtoapproximate totheirfair value; s s s s s s s s simplifying hypothesesare applied: For unquotedandimmaterialnon-derivativepositions,some quality ofthefinancialinstrumentsandmarketliquidity. at thecalculationdateaswellchangesincredit els trytoreflect asprecisely aspossiblethemarketconditions AFS forwhichquotedpricesare notavailable,thepricingmod- Financial instrumentsclassifiedasatfairvaluethrough P/Lor is equaltothecarryingamountfortheseitems. either observableand/orunobservablemarketdata.Fairvalue on thebasisofpricingmodels,ordiscountedcashflowsusing market pricesare notavailable,thenfairvaluesare estimated reference toquotedmarketpriceswhenavailable.If able forsaleandderivativesare measured atfairvalueby assets orliabilitiesdesignatedatfairvaluethrough P/L,avail- Financial instrumentsclassifiedastradingassetsorliabilities, incorporated intothemodel. extent thatobservableinputsare available,theyshouldbe requires considerationofcurrent marketconditions.To the the asset.Measuringfair-value ofafinancialinstrument factors thatmarketparticipantswouldconsiderwhenpricing The valuationmodelshouldattempttotakeintoaccountall For financialassetsreclassified from Trading orAFSto For bondsclassifiedintradingorAFSstillquotedon For bondsclassifiedinAFSmeasured viaamodel for mostoftheloansandreceivables thecredit spread cap, floorandprepayment optionsare includedindetermin- the fairvalueoffixed-rateloansandmortgagesare esti- the fairvalueofvariable-ratefinancialinstrumentsisassumed the carryingamountoffinancialinstrumentsmaturingwithin during theyear. to reflect theevolutionofilliquidityinthatspecificmarket dates weightedbasedonownassumptionsdevelopedinorder available marketinformationobservedatdifferent valuation disclosed aremodeltakingintoaccount basedonaninternal the unavailabilityofobservablemarketdata,fairvalues tion isnotpossibleduetotheilliquidityofmarketsand assets toLoansandReceivables.SinceLevel12valua- ket were nolongeravailable,Dexiadecidedtoreclassify these Asforsomefinancialassetsquotedpricesinanactivemar- Group inchargeof“Treasury andFinancialMarkets” “Risk posed ofthemembersManagement Board ofthe The MarketRiskandGuidelines Committee, whichiscom- the riskandP/L-dataperactivityline intoGroup-wide figures. basis. Inafinalstage,RiskManagement Group consolidates ing ofrisksandresults oftheiractivitylineonaGroup-wide transversally responsible fortheanalysis,follow-upandreport- nized byspecializedCompetenceCenters(CC).TheCCare beginning of2006,marketriskmanagementhasbeenorga- each activitylinebytheRiskCompetenceCenter. Sincethe As anextstep,riskindicatorsare consolidatedatthelevelof within theentire Group. level toensure thecoherence andthe qualityofriskcontrol to localauthorities.Theentire process is coordinated atGroup ties (subsidiariesincluded),fortheirmonitoringandreporting Each entityisresponsible forthefollow-upofitsmarketactivi- (computation oftheriskindicators,control ofthelimits...). ket riskmanagementandfollow-uplieswithintheentities Day-to-day responsibility forensuringsoundandrobust mar- applied atGroup levelastoP/Landriskmeasurement. in chargeofdefiningthecalculationmethodsthatare tobe cedures andtooverseetheireffective application.RMGisalso decisions intoprecise andwrittenpolicies,guidelines and pro- agement teamsofthedifferent entities,totranslatethese It isthetaskofRMG,incollaborationwithRiskMan- and ofthedecisionprocesses). appetite, methodologicalchoices,organizationofreporting gic direction ofMarket&ALMRiskManagement(overall risk Group (RMG),retains ultimateresponsibility tosetthestrate- Dexia’s ManagementBoard, advisedbyRiskManagement rules. entity hasitsownriskunitapplyingoperationallyGroup risk market risks,credit risksandoperationalrisks.EachDexia main and controls andactsasanindependentriskcontrol unitfor Group RiskManagement(GRM)definesriskrules,framework facilitation ofcustomerbusiness. much lesserextent,inotherbusinesslinesprimarilyfrom the capital managementactivities.Marketrisksarise,buttoa term andlong-term(alltheAFSportfolios)balancesheet TFM assumesnon-tradingriskpositionsthatarisefrom short- ucts andforeign exchange. and ownpositionsinequities,spread andinterest rateprod- ness line(TFM).Itarisesfrom marketmaking,clientfacilitation which are centered intheTreasury andFinancialMarketsbusi- Market riskisincurred inDexiathrough tradingactivities, tors suchasinflationandCO rates andequitypricesspreads plussomeminorriskfac- observable marketvariablessuchasinterest rates,exchange Market riskistheoflossarisingfrom movementsin Structure4.2.1. MarketRiskGovernance 4.2. AKTADAMRISK MARKET ANDALM 2 . Dexia Annual report 2008 125
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 126 Dexia Annual report 2008 liquidity. be takenintermsofinterest rates,exchange,equitiesand tors forDexiaandbyentityrepresented ontheCommittee); ment ofequitycapitalavailableintheGroup; income overtheyear; breakdown byentity; measurement; to Group interest rateexpectations,liquiditymanagement; tions onALMriskmanagementovertimeinrelation particularly tion ofALMriskswithintheDexiaGroup, issuesrecommenda- The committee’s role maybesummarizedasfollows: Audit. Risk &ALMand,asapermanentinvitee,theDirector of Group Management, theHeadofFront ALM,theHeadsof Market their CFOs,theDirectors ofBusinessLines,theDirector ofRisk principal localManagementBoards (DBB,DBILandDCL) and bers oftheGroup ManagementBoard, theChairmenof The Committeemeetsmonthly. Thosetakingpartare: mem- investment ofequitycapitalavailableintheGroup. whole. Finally, itensures theconsistencyofframeworks forthe be madeandhedgestoimplementedfortheGroup asa interest rateexpectationsanddecidesontheinvestments to risk managementovertimeinrelation particularlyto Group risks withintheDexiaGroup, issuesrecommendations onALM enable thedefinition,measurement andlimitation of ALM The Group ALMCommitteesetsthevariousruleswhich that scope. The risksof“financialmarkets”activitiesare excludedfrom Pension Fundsincluded. Exchange, Equity, EquityCapital,Liquidity); s following fields: The Group ALMCommittee’s scopeofinterventioncoversthe ALM managementwithintheDexiaGroup iscentralized. the ALMsensitivity&VaR limits. have beenapproved bothinthefieldofTFMunderVaR and of Dexia,followingitsstrategicreorientation: limitreductions decided onanimportantreduction ofthemarketriskprofile The RPC(RiskPolicyCommittee)dd.November7,2008 more frequently ifnecessary. any changeintheriskprofile atleasteverythree monthsor Moreover, theRiskPolicyCommitteeisinformedbyRMGof monthly anddealswithallthetopicsrelated tomarketrisk. Heads ofMarketRiskManagementandALMmeetsatleast Management”, theActivityLineHeadsandGroup andLocal from adversemarket movements assumingaspecified time tests. VaR expresses thepotentiallossoncurrent portfolio value atrisk(VaR), sensitivity(basispointvalue)andstress The principalriskmeasures andcontrols onmarketriskare nature andorientation oftherisksengaged. framework thatiscommensurate withthesize,complexity, activity linesiscaptured withinamarket riskmanagement The businessactivityundertakenbythevariousTFMorALM 4.2.2. MarketRiskMeasures s s s s s s s s s to decideonallinvestmentsbemadeandactions to defineandmonitorliquidityindicatorsatGroup level; to coordinate ALMrisks(settingceilingsforriskindica- to examinetheconsistencyofframeworksforinvest- to examinetheutilizationoflimitsandevolutionALM to setthelimitsofALMpositionforGroup and their to validatemethodologiesretained todefineALM risk to setrulesenablingthedefinition,measurement and limita- Management decisionsfortheentire Group, Insurancesand the supervisionandmonitoringofALMrisks(Interest Rates, securities ofindividualissuers. as individualinterest orexchangerates,andpositionsinthe controls onexposure toindividualmarketriskvariables,such price volatilityandmarketdepthliquidity. Theyinclude vent undueconcentrations,takingintoaccountvariationsin mentary controls are alsoapplied,where appropriate, topre- in marketvariables,whichare regularly reviewed. Comple- against asetofforward-looking scenariosusingstress moves based onhistoricalmarketchanges.Stress testsare assessed days), andmeasured toaspecifiedlevelofconfidence(99%), horizon before positionscanbeadjusted(holdingperiodof10 principally constrainedby: theDexiaframework,ALMrisksare department (ALM).Within ing interest rateriskismanagedintheassetsand liabilities market risklimitsdescribedin4.2.2.Thelong-termnon-trad- ness line–where itismanagedwithintheVAR andsensitivity Management) unitoftheTreasury andFinancialMarkets busi- ment unitbeingtheALMdelegate–CLM(CashandLiability the pointofbusinessoriginationandtransferred toa manage- Most short-termnon-tradinginterest rateriskiscaptured at tive instruments. tractual maturityorre-pricing ofassets,liabilitiesand deriva- arises from factorssuchasdifferences intimingbetweencon- Interest rateriskisinherent inmanyofDexia’s businessesand Non-trading rate sensitivityisoneoftheinputstoVaR model. of aonebasispoint(0.01%)changeininterest rates.Interest subject toaccrualaccounting,astheimpactontheirfairvalues interest ratesensitivepositions,whethermarkedtomarketor ture. Exposure tointerest ratemovementsisexpressed forall interest rates.Itiscontrolled primarilythrough thelimitstruc- Interest rateriskistheoflossresulting from changesin 4.2.3. Interest raterisk s s s expected outflows). accounts (e.g.rationalprepayment orquickerthan patterns specific products like mortgages,savingsaccountsandsight Dexia modelsthepotentialbehavior ofthecustomerwith behavior, andare reviewed periodically. accordance withlong-termobservationsofmarketandclient structure andparametersofthereplication portfoliosare setin estimate theiraveragecashflowandrepricing behavior. The business lineorALMdepartmentatmarketratesdesignedto originating businessunitandTreasury andFinancialMarkets portfolios –ofrevolving transactionsbetweenthe risk istransferred onapooledbasisthrough “replication” maturity dateordirectly market-linkedrate.Theirinterest rate ing businessunits.Manyclientproducts havenocontractual are subjecttoadditionalanalysisandcontrol by, theoriginat- The marginrisksembeddedinretail products remain with,and Committee. Measurement isreported systematicallytotheGroup ALM CMO floaters,MBSDKK); ucts managedontheLongTerm ALMperimeter(swaptions, the bankingbook”; in accordance withthePillar2ofBasleII“Interest rateriskin centre ofa100bpinterest ratevariation.Thislimithasbeenset measurement oftheimpacton“value”ALM profit a VaR (horizon10days,intervalofconfidence99%). a specificlimitinvalueat+/-1% fornegativeconvexityprod- a sensitivitylimitofNetAssetValue (NAV), whichenables ing andlendingtransactions. forwards, swapsand options,andrepo andsecuritiesborrow- credit –andintraded products –derivativecontractssuchas commitments andothercontingent liabilities,suchaslettersof It isinherent intraditional bankingproducts –loans,lending client orcounterpartfailedtomeet itscontractualobligations. Credit riskrepresents theloss,whichDexiawouldsuffer ifa 4.3. limits. and sensitivitymeasures, stress-tests and otherconcentration of comprehensive limitframeworkcomposedofVAR-measures Spread riskincurred bytradingactivities iscaptured bymeans line are subjecttospread risk,bothin banking andtrading. Treasury unitsoftheTreasury andFinancial Marketsbusiness The FixedIncomeandtoaminorextenttheMETGroup without anymodificationinitsratingorcredit profile. For instance,itistheriskthatspread onabond changes not resulting from ratingmigrationordefaultrisk(credit risk). els offixedincomeassets,duetochangesinthecredit spreads Spread riskistheoflossresulting from changesinthelev- 4.2.6. Spread risk tion limits. All theseexposures are subjecttoVaR, stress andconcentra- Group. units containAFSportfoliosinequities,followedbyALCO Moreover, theALMportfoliosofbankingand insurance activities intrading. player inmajorequitymarketsandcarriesriskfrom its of theTreasury andFinancialMarketsbusinesslineis aminor of equityindicesandvaluesindividualshares. TheMET unit Equity riskistheoflossresulting from changesinthelevels 4.2.5. Equityrisk with theinstructionsofDexiaManagementBoard. foreign currency(mainlyinUSD)accordance earnings/costs from timetotime,proactively hedgessignificantexpected Dexia’s from earnings changesinexchangerates.Dexiaalso, translated ateachclosingdateintoeuros, reducing volatilityin significant amountsinUSD.Reportedprofits orlosses are income andexpenseare denominatedinmanycurrencies with Dexia’s reporting currency istheeuro butitsassets,liabilities, Non-trading sures are subjecttoVaR, stress andconcentrationlimits. sury andFinancialMarketsbusinessline.Thesetradingexpo- in theMET(MarketEngineeringandTrading) unitoftheTrea- currency riskfrom thesetradingactivities,conductedprimarily Dexia isanactiveparticipantincurrency marketsandcarries Trading exchange rates. Currency riskistheoflossresulting from changesin 4.2.4. Currency risk members oftheGroup ALMCommittee. measures inthereporting sentbyRiskManagementtothe Behavioral riskisreported through sensitivityandconvexity statistical measures andscenarioanalysis... mittee onthebasisofoutcomesmodelwhichmixes The interest ratepositionisthenmanagedbytheALMCom- RDTRISK CREDIT of Dexia’s accounting policies. measured, werefer to1.8.“Impairmentsonfinancialassets” cial assetsisrecognized aswellonhowimpairmentlossesare For detailedaccountingpolicieson whenimpairmentonfinan- likely severityofthelossshoulddefault occur. rent andlikelyfuture exposure tothecounterpartyand the probability ofdefault(givenbythecounterpartyrating),cur- from positionsthatbecomeimpaired, and isafunctionofthe reflect theannualcoststhatwillarise,onaverage,overtime, Expected lossisastatisticallybasedmeasurement intendedto the conceptof“expectedloss”formanagementpurposes. order toaccountforaveragecredit loss overtime,Dexiauses to transactionsentered intoinprevious accountingperiods.In in bothtimingandamountthosethatariseusuallyrelate sionary terms.Theoccurrence ofactualcredit lossesiserratic commenced orobligationshavebeenrestructured onconces- by more than90daysorwheninsolvencyproceedings have ing where paymentofinterest, principal orfeesisoverdue where available.Loansare furtherclassifiedasnonperform- example onguarantees,andincludingliquidationofcollateral scheduled principalrepayments, orotherpayments due, for ally expectedinfuture periods–loaninterest paymentsand receivable exceedsthepresent valueofthecashflowsactu- Dexia classifiesareceivable asimpaired ifthebookvalueof each portfolio. and assetvalues,takingintoaccountriskconcentrationsin applied toassesstheimpactofvariationsinbankruptcyrates political orotherconditions.Stress measures are therefore gations wouldbesimilarlyaffected bychangesineconomic, characteristics suchthattheirabilitytomeetcontractualobli- in thesamegeographicregion orhavecomparableeconomic exist ifclientsare engagedinsimilaractivities,orare located ments withmarketparticipants.Concentrationsofcredit risk market trends, hasalsoentered intobilateralcollateralagree- possible initsOTCderivativestradingand,linewithgeneral Dexia alsomakesuseofmasternettingagreements where credit riskinbankingandtradedproducts. ments. Dexiaisanactiveuserofcredit derivativesto hedge tions are represented bytheamountsofforward commit- received from counterpartieswhilerepo/reverse repo transac- balance sheetbythevaluesofcashcollateralplacedwithor borrowing andlendingtransactionsare represented onthe maturity), andcredit limitsare appliedonthisbasis.Securities in replacement value(basedonanadd-onbyproduct typeand ment valueofcontractsbutalsoonpotentialfuture changes nal riskcontrol purposesbasednotonlyonthecurrent replace- For alltradedproducts, credit exposure ismeasured forinter- products asthefacevalueamount. and counterpartygroups. Exposure ismeasured forbanking limits onitscredit exposure tobothindividualcounterparties ties andgroups andtoindustriescountries.Dexiasets ever theyare identified,inparticulartoindividualcounterpar- Dexia managesandcontrols concentrationsofcredit riskwher- is ultimatelyexercised bycredit committeesatGroup level. authority toestablishallowancesandprovisions forcredit loss, ings andcredit riskassessment.Credit riskauthority, including risk control functions.Theyare responsible forcounterpartrat- all entitieswithmaterialcredit riskhaveindependentcredit and unifiedapproach, withappropriate checksandbalances, gations are considered asmarketrisk.To ensure aconsistent resulting from changesinthecredit qualityofindividualobli- ties andotherobligationsintradableformheldfortrading) Reductions inthemarketvaluesoftradableassets(securi- Dexia Annual report 2008 127
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 128 Dexia Annual report 2008 antee oftheStatesBelgium,FranceandLuxemburg. markets and/orthecontinuedsupportofcombinedguar- depends onthereopening ofthewholesalemoneyandcapital many otherfinancialinstitutions,Dexia’s liquidityposition ness planssoastoreduce itsfundingneedssubstantially. As thorough review ofitscurrent balancesheetandfuture busi- liquidity riskmanagementframeworkandbyenteringintoa agement. Dexiaresponded tothesechangesbyamending its This crisisshooktheveryfoundationsofliquidityriskman- and neverjeopardized ouroverallliquidityposition. its atthebeginningofOctoberbutthistrend wasshort-lived Some limitedoutflowswere witnessedonDexia’s retail depos- maturity ofitsfundingsources. will takeadvantageofallmarketopportunitiestolengthenthe the drawsoncommittedlinesinUS.Goingforward, Dexia loan production outsidethecore marketsandbyadecrease of ment wasalsopossibleduetoanintendedreduction innew markets andthestabilizationofdepositbase.Thisimprove- in thefirstquarterandhasfacilitatedaccesstofunding three publictransactionsforatotalamountofEUR8.5 billion tioned Statesguarantee.ThissupportallowedDexiatoissue September andearlyOctober2008thankstotheabovemen- gradually improved from thedifficultsituationprevailing late In astillchallengingenvironment, theGroup’s liquidityhas October 31,2009. contracted, issuedorrenewed betweenOctober9,2008 and or securitiesfallduebefore October31,2011andhave been the samecounterparts,provided thattheseliabilities,bonds parts, aswellbondsandotherdebtsecuritiesissuedfor liabilities towards credit institutionsandinstitutionalcounter- anteed fundingamountedtoEUR59billion)andcoversDexia’s 150 billion(asofDecember31,2008,theoutstandingguar- on manyofitsfundingsources foratotalallowanceofEUR guarantee oftheStatesBelgium,FranceandLuxembourg Since October9,2008Dexiahasbenefitedfrom thecombined come thissevere liquiditysqueeze. stantial reserves ofhigh-qualityassets,Dexiawasabletoover- Belgian, French andLuxembourgStatesaswelltoitssub- not spare Dexia.However, thankstothejointsupportof against high-qualitycollateral)attheoutsetofcrisisdid (both unsecured andsecured, withtheexceptionofrepos The severe drying-upofwholesalemoneyandcapitalmarkets Brothers debacle. the 2007-2008financialturmoil,particularlyafterLehman Dexia’s liquiditymanagementwasseriouslychallengedduring 4.4.1. Liquiditycrisis 4.4. specific andmarketstresses orevenacombinationofboth. well asunderavarietyofsevere stress scenariosincludingbank- secured fundingcapacity istestedunderanongoingscenarioas crisis. TheadequacyofDexia’s future liquidityneedswithits taking intoconsiderationtheverylast lessonsfrom thecurrent tions. Itssecured funding capacityisdeterminedconservatively; from itscurrent andfuture onandoff-balance-sheet transac- hensively, takingintoconsiderationtheliquidityneedsarising Its future fundingneedsare assesseddynamically andcompre- exceed itsproven secured fundingcapacity. sis. Overallpolicyisthatitsfuture fundingneedsshouldnever reviewed inthelightofcurrent financial andliquiditycri- Dexia’s approach toliquidityriskmanagementhasbeen 4.4.2. LiquidityRiskManagementframework LIQUIDITY s s s s s s s capacities. achieve asoundbalancebetweenthelendingandfunding the rightincentivetovariousbusinesslinesinorder to funding sources more clearly. Thischangeaimsatproviding 2008 inorder toreflect therapidlychangingcostofitsmain Dexia alsorevisitedtransferpricingsystemin itsinternal throughout theGroup. ity activitylineensures thatacommonstrategyis applied ferent entitiesoftheDexiaGroup, Dexia’s cashandliquid- Although thelocalliquiditypositionsare managedby thedif- Dexia’s liquidityriskismanagedusingacentralizedapproach. the Statesguarantee. and non-bankdeposits,ofwhichseveralare benefitting from central bankdeposits,CP/CD’s, fiduciarydeposits,interbank Belgium, FranceandLuxembourg; networks); Pfandbriefe); gations Foncières orDexiaKommunalbankDeutschland’s liquidity risk.Dexia’s mostimportantfundingsources are: The diversityofDexia’s fundingsources isakeymitigantofits is testedonaregular basis. A globalliquiditycontingencyplanispartoftheguidelinesand straints intoconsideration. agement framework,Dexiatakesalllocalregulatory con- liquidityriskman- On topoftheconstraintssetbyitsinternal mendations andbestpractices. which makesitcompliantwiththelatestregulatory recom- This frameworkisback-testedandupdatedonaregular basis is attheheartofdefinitionDexia’s triennialfinancialplan. vised onamonthlybasis.More generally, liquidityriskmanagement daily basis.Longer-term fundingneeds(upto3years)are super- This surveillanceofshort-termfundingneedsisperformedona s BIS eligiblecapitalconsistsoftwo parts: 4.5.1. BISeligiblecapital ods reported. Dexia hascompliedwithallregulatory capitalrulesforallperi- conglomerates. ing thebankingprudentialrulesandof the capitalrequirements underpinning Dexia’s businessfollow- to theCBFA (Banking,Financial andInsuranceCommission) reports itscapitalratiosunderBISrules,italsohastoreport of Risk-Weighted Assets(RWAs). WhileDexiamonitorsand the amountofeligiblecapital(inTotal 1)withthetotal andTier Settlements(BIS)compareratios oftheBankInternational Committee onBankingSupervision(“BISrules/ratios”).The other measures, therulesandratiosestablishedby Basel The adequacyofDexia’s capitalismonitored using,among 4.5. and goodwill; ble assets,accrueddividends,netlong positionsinownshares foreign currency translationandminorityinterests, lessintangi- retained includingcurrent earnings yearprofit, hybridcapital, a varietyofwholesaleshort-termunsecured fundingsources: bilateral andtri-partyrepo transactions; central banktenderoperations; retail deposits(mainlyinBelgium,LuxembourgandTurkey); as from 2009,bondsandCP’s guaranteedbytheStatesof unsecured bonds(ofwhichdistributedviaitsown covered bonds(mainlyDexiaMunicipalAgency’s Obli- Tier 1capitalwhichcomprisesshare capital,shareTier premium, CAPITAL ADEQUACY s on thetradingbooks are appliedonall entitiesofDexiaGroup: modelsfor marketrisk Since December31,2007theinternal people, andsystems,orfrom events. external loss resulting from processes, inadequateorfailedinternal Operational risk prices, commoditypricesandliquidity. est rates(generalandspecific),foreign exchangerates,equity ity (impliedvolatility)andpricecorrelation intoaccount:inter- in theleveloffollowingparameters,takingpricevolatil- tions betweeninstruments.Marketriskdealswithchanges in thevolatilityofmarketprices,orchangescorrela- of marketprices,changesastoinstrumentliquidity, changes Market risk elements: risk related toasinglecounterpart,Dexiaconsidersthree of thecredit qualityofacounterpart.Whenassessingcredit default ofpayment)Dexiamayincurduetothedeterioration Credit risk and operationalrisk–eachofwhichisdescribedbelow. Three elementsmakeuptotalRWAs –credit risk,marketrisk calculated consequently. according toBaselIIregulation anditsregulatory capitalwillbe As from January1,2008,Dexiacalculatesitscapitaladequacy participations from totalregulatory capital. its ratiosbasedontheformerrule,whichalloweddeducting (Basel II).UntilDecember31,2007,Dexiacontinuedtopublish the bankhasjustbeguntousenewmethodsofcalculation that thepublicationobligations(pillarIII)are notapplied when flexibility allowedbytheDirective andtheCBFA intheway However, aboutthesolvencyratiopublication,Dexiaused from 2012. companies, thenewdeductionrulewillbeimplementedas regulatory capital.Fortheseelementsdealingwithinsurance 1capitalandfor50%fromdeducted for50%from total Tier ordinated loansissuedbysuchafinancialcompany) willbe equity method,participationsinfinancialcompaniesorsub- from thetotalregulatory capital(banksaccountedforbythe impacting Dexia,isthattheelementswhichwere deducted definition oftheregulatory capital.Themostimportant point lation (CapitalRequirement Directive), theCBFA adaptedits Moreover, sinceJanuary1,2007,according totheCRDregu- based onCBFA requirements. tics ofabsorptionlossthoseinstruments; interests anddebtsmustbereversed toreflect thecharacteris- with ahaircut, 1equityifnegative; ordeductedfrom Tier part ofequity; capital atleast8%ofRWAs. 1capitalisrequiredTier tobeatleast 4%andTotal eligible financial institutions. long-term debt,lesssubordinated debtfrom andequitiesin s s s s s s s main followingadjustmentsapplicableforDexia: required calculatingtheratiobasedonIFRSamounts,with statements underIFRSsasadoptedbytheEU.TheCBFA has As from January1,2005Dexiaispublishingitsfinancial 4.5.2. BISrisk-weightedassets(RWAs) Loss GivenDefault(LGD). Exposure atDefault(EAD); Probability ofDefault(PD); other elements(SPV, deferred taxes,etc.)are alsoadjusted some IFRSadjustmentsonsubordinated debts,minority AFS reserves onshares 2equityifpositive, are addedtoTier AFS reserves onbondsandcashflowhedgereserves are not 2capitalwhichincludeseligiblepartofsubordinated Tier isthepotentialloss(decrease ofassetvalueand istheriskoflossesduetochangesinlevels istheriskofdirect andsignificantindirect tion ofassetreturns. historical assetreturns.Itdoesnotassumeanormaldistribu- consists inrunningtheactualportfolioacross atime series of for specificinterest raterisk(spread risk).Thismethodology tive booksandIRderivativesrisksonvega,forequityrisk consideration. where theconvexityisimportantandneedstobetakeninto and usesalsodeltagammaparametricalVaR fortheassets follow anormaldistribution.DexiacalculatesdeltaVaR RiskMetrics methodology. Themainassumptionisthatreturns risk factorsandtheentire frameworkismainlybasedonthe ology consistsincomputingvariancesandcorrelations forall risk) andFXrisk(excludingderivativesbooks).Thismethod- putation ofVaR ongeneralinterest raterisks(excludingvega tivities. Bothmeasures are basedontheuseof250scenarios. VaR withfullvaluation. s s s s each sub-portfolioare thefollowing: The maincharacteristicsoftheVaR calculationmodelsusedfor indicators. surement methodologyasoneoftheleadingmarketrisk As said,DexiaGroup hasadoptedtheValue-at-risk mea- calculation methodtoequityrisk. tors toenlargetheriskscoveredmodelcapital bytheinternal books. Demandsforextensionhavebeensubmittedtoregula- àLuxembourgonIRandFXrisksthetrading Internationale Dexia BankBelgium,CréditLocalandBanque The historicalVaR methodology:isperformedforFXderiva- The parametricmethodology:isimplementedforthecom- The spread risk:iscovered bythehistoricalVaR usingsensi- The general&specificequityrisk:iscovered bythehistorical Dexia Annual report 2008 129
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 130 Dexia Annual report 2008 FCONSOLIDATION OF The consumercredit companyFidexiswassoldin4Q2007. of covered bonds. tries andintheEuropean EconomicArea through theissuance Dexia Group’s publicsectorfinancingbusinessinOECDcoun- principal activityistherefinancing ofassetsgeneratedbythe fully consolidatedasfrom July1,2007.DexiaLdGBanqueSA’s Dexia LdGBanqueSA,a100%-ownedsubsidiaryofBIL,is solidated asfrom April1,2007. Deniz HayatSigortaAS,aTurkish insurancecompany, iscon- ing oftheirsale. Assurances SAleftthescopeofGroup followingtheclos- As ofJune30,2007DexiaBanquePrivéeFranceandBelstar As ofDecember31,2007 2.1. subsidiaries andaffiliatedenterprisesoftheDexiaGroup 2. (1) Completelistavailable onrequest. 2.2. Services SA(ADTS) Associated DexiaTechnology ei mlyeBnfisS Avenue Livingstone6 Dexia EmployeeBenefitsSA ei udn uebugS 180,ruedesAubépines Dexia FundingLuxembourgSA ei aaeetSrie t ShackletonHouse Dexia ManagementServicesLtd ei eeln odn VPietHeinkade55 Dexia NederlandHoldingNV ei atcptosBliu APlaceRogier11 Dexia ParticipationsBelgiqueSA Dexia ParticipationsLuxembourgSA ru eiBn SBüyükdereCad.No:106 Group DenizBankAS Group DexiaBankNederlandNV Crédit duNordSA ei uoLaeN PlaceRogier11 Dexia AutoLeaseNV ei akBlimS BoulevardPachéco44 BelgiumSA Bank Dexia ei omrilFnnePlaceRogier11 Dexia CommercialFinance ei rdt oeetS BoulevardPachéco44 Dexia CréditsLogementSA ei prn eso 79,ruedelaVictoire Dexia EpargnePension ei udn ehrad VStrawinskylaan3105 Dexia FundingNetherlandsNV ei nuac egu AAvenue Livingstone6 Dexia InsuranceBelgiumSA Dexia InsuranceBelgiumInvestSA aeHa fc %ofcapital HeadOffice OFDEXIASA PARTICIPATIONS DIRECT Name EI AKBLIMS:MI USDAISADAFFILIATES AND SUBSIDIARIES DEXIA BANKBELGIUMSA:MAIN Significant changesinscopeofconsolidationandlistmain ANSBIIRE N FIITDETRRSSO H RU DEXIA MAIN SUBSIDIARIESANDAFFILIATED ENTERPRISESOFTHEGROUP SCOPE IN CHANGES SIGNIFICANT -00Bertrange L-8070 23, AtriumBusinessParkz.a.Bourmicht -00Bruxelles B-1000 L-1145 Luxembourg UK-London SE12RB BridgeLane Battle 4 NL-1019 GMAmsterdam -20Bruxelles B-1210 L-2953 Luxembourg 69, routed’Esch T-34394 Esentepe/Istanbul NL-1019 GMAmsterdam Piet Heinkade55 F-75008 Paris 59, boulevardHaussmann -20Bruxelles B-1210 -00Bruxelles B-1000 -20Bruxelles B-1210 -00Bruxelles B-1000 F-75009 Paris NL-1077 ZXAmsterdam -00Bruxelles B-1000 -00Bruxelles B-1000 Rue JosephII96 dential impactsofthesaleFSAinfourthquarter2008. Assured Guaranty. Dexiahasrecorded alltheaccountingandpru- gave theirauthorizationforthesaleofFSAInsuranceactivitiesto of thetransaction.OnJanuary20,2009anti-trustauthorities Exchange. FinancialProducts activityisexcludedfrom thescope Assured GuarantyLtd,abondinsurer listedontheNYStock Dexia hassignedabindingagreement tosellFSAHoldings munalkredit BankAG(DKB;previously 51%-ownedbyDexia). 49%-owned byDexia)andtakesfullownershipofDexiaKom- Dexia exitsfrom Kommunalkredit AustriaAG(KA;previously As ofDecember31,2008 98 fully 99.85 97 fully 99.79 held 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0equitymethod 10 (1) consolidation method (1) 49%byDexiaBank Belgium,51%byDexiaBanqueInternationale àLuxembourg. Dexia InvestmentCompanySA à Luxembourg BanqueInternationale Dexia Dexia InvestmentsIrelandSA ei d aqeS 69,routed’Esch Dexia LdGBanqueSA ei es egu PlaceRogier11 Dexia LeaseBelgium Services Ltd RBC DexiaInvestor ei es evcsS PlaceRogier11 Dexia LeaseServicesSA evcsBankSA Services RBC DexiaInvestor ei ieadPnin A2,rueNicolasBové Dexia LifeandPensionsSA Services Trust Ltd RBC DexiaInvestor DIS FinanceSA Crédit duNordSA afia A180,ruedesAubépines Parfipar SA Dexia CLFBanque Luxembourg SA Dexia AssetManagement ei rdo p Via Venti Settembre30 Dexia CrediopSpa ei rdo rln 6George’s Dock Dexia CrediopIreland Dexia CréditLocalSA Dexia DelawareLLC ei odnsIc 1West 52ndstreet 31 Dexia HoldingsInc. Deutschland AG Kommunalbank Dexia ei omnlrdtBn GTürkenstrasse9 BankAG Kommunalkredit Dexia Dexia MunicipalAgencySA Dexia SabadellBancoLocal Dexia Sofaxis Holdings Ltd Financial SecurityAssurance ILS 180,ruedesAubépines SISL SA aeHa fc %ofcapital HeadOffice Name EI RDTLCLS:MI USDAISADAFFILIATES AND SUBSIDIARIES DEXIA CRÉDITLOCALSA:MAIN EI AQEITRAINL UEBUGS:MI USDAISADAFFILIATES AND SUBSIDIARIES BANQUEINTERNATIONALE ÀLUXEMBOURGSA:MAIN DEXIA (1) L-1150 Luxembourg 136, routed’Arlon -00Bruxelles B-1000 Boulevard Pachéco44 L-2953 Luxembourg 69, routed’Esch IRL-IFSC Dublin1 6 George’s Dock L-2953 Luxembourg -20Bruxelles B-1210 UK-London EC4N4AY 77 QueenVictoria Street -20Bruxelles B-1210 L-4360 Esch-sur-Alzette 14, ruePortedeFrance L-1253 Luxembourg Toronto, ON,CanadaM5W-1P9 Royal Trust Tower, 35thfloor KingStreetWest 77 L-1253 Luxembourg 2, rueNicolasBové F-75008 Paris 59, boulevardHaussmann L-1145 Luxembourg F-92919 LaDéfenseCedex(Paris) 1, passerelledesRefletsTour Dexia-laDéfense2 I-00187 Roma IRL-IFSC Dublin1 F-92919 LaDéfenseCedex(Paris) 1, passerelledesRefletsTour Dexia-laDéfense2 19901 USA Dover – Delaware 1991 15 EastNorthStreet New York NY10019–USA -06 Berlin D-10969 Charlottenstrasse 82 -02Wien A-1092 2 F-92919 LaDéfenseCedex(Paris) 1, passerelledesRefletsTour Dexia-laDéfense E-28042 Madrid Campo delasNaciones Paseo delas12Estrellas4 F-18110 Vasselay Route deCréton New York, NY10019– USA West 52ndstreet 31 L-1145 Luxembourg
99 fully 99.95 93 fully 99.34 held 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0 fully 100 0proportionally 50 0proportionally 50 0proportionally 50 0equitymethod 10 0fully 80 0fully 70 0fully 60 Dexia consolidation method Annual report 2008 131
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 132 Dexia Annual report 2008 Subtotal assets Assets Subtotal assets Assets Impairments Impairments e noebfr a 216 10 19(2)(7)(3,877) (771) (929) 129 (180) (2,126) Net incomebeforetax 1,356 Net incomebeforetax Depreciation andamortization Subtotal liabilities Liabilities ercainadaotzto 8 (38) (8) Depreciation andamortization Subtotal liabilities Liabilities Other noncashexpenses of whichNetincomefromassociates fwihNticm rmascae 5)41 (58) of whichNetincomefromassociates fwihivsmnsi soits 7 5800 861 8 0 0 578 Capital expenditures 275 Other segmentinformation of whichinvestmentsinassociates aia xedtrs(130) 553 97 Capital expenditures Other segmentinformation of whichinvestmentsinassociates Other noncashexpenses historical data. tained forthepurposeof4Q2008andFYreporting. Astheywillchangeinthenearfuture, wewill disclosepro-forma Foreword businessreporting: concerning thescopeofvariousdivisionsaswelltransferpriceswithin theGroup were mai 3. of assets. (4) IncludesIFRS2costs,netallowancestoprovisionsforrestructuring toprovisionsrelatedIAS19, Impairments ongoodwill. (3) IncludesImpairmentsontangibleandotherintangibleassets,securities, Impairmentsonloansandprovision (2) IncludesDuetobanks,Customerborrowingsanddeposits,Debtsecurities,Technical provisionsofinsurancecompanies. in associates,Otherassetsspecifictoinsurancecompanies. (1) IncludesDuefrombanks,Loansandadvancestocustomers,securities heldfortrading,Loansandsecuritiesavail Enhancement” issimplifiedin”PublicandWholesaleBanking”. 2008,thenameof”Public/Project Fi about thesemodificationshavebeenpublishedonApril18,2008www.dexia.com. Asfrom 3Q To enablecomparisons,figures asofDecember31,2007were restated followingchangesinthesegmentreporting asofJanuary1, noe2342,855 2,374 Income noe 9 ,9 50 3(3)3,556 (239) 33 570 2,197 995 Income AS OFDEC.31,2008 (in millionsofEUR) REPORTING BUSINESS AS OFDEC.31,2007 (in millionsofEUR) REPORTING BUSINESS Businessandgeographicreporting (3) (3) (1) (1) (2) (2) (4) (4) Wholesale Wholesale Public and Public and 7,4 1761,8 5,0 ,6 524,445 1,461 548,302 254,201 5,946 10,089 196,100 8,923 81,746 176,948 57,524 279,809 5,6 8018602531241532,779 2,421 565,483 295,351 4,116 8,660 231,455 68,081 5,665 158,266 55,819 268,428 Banking Banking 315 90 1 138 39 (5,833) (389) (1,358) (1) (900) (3,185) 13 0 0 0 (123) 1)(4 2 28 (284) (228) 0 (2) (44) (10) 6)(4 2 (2) (2) (64) (69) 2 6 1 108 19 0 0 65 24 8 7 5 3 3)(56) (33) (3) (5) (7) (8) 0 Financial Financial Personal Personal Services Services 84 6 266 267 884 4)() 4)(92) (44) 1 (5) (44) 000 Management Management and Investor and Investor Services Services Asset Asset 71486 711 0 00 00 Treasury and Treasury and Financial Financial Markets Markets 1 29 (296) (249) (1) allocated – allocated – capitallossesonexchange s forcreditcommitments, able forsale,Investments Central Central Assets Assets 26 (376) (246) (280) 192,892 119 406,896 470 Non Non 1 (1) 16 3 682 32 (6) 2008.Thedetails nance andCredit Dexia Dexia (403) (143) n- ments. Thefinancial consequencesofthisfinaljudgment for spouse consentismandatorytoenter intoshare-leasing agree- risk hasincreased substantially. tive impairmentfordifferent classesofassetswhere thecredit nomic situation,additionalamounts were recorded incollec- As aconsequenceofthedeterioration ofthegeneraleco- on LehmanBrothers, Washington Mutual,IcelandicBanks. EUR 1,404millionwasrecognized. Themainlosseswere booked loans andguarantees.Duetothefinancialcrisis,anetlossof on investmentsifrelated tobondsorincostofriskifrelated to account theincrease offundingcosts. on theseliabilitieswithembeddedderivatives.Thistakesinto EUR 118millionwasrecognized asowncredit riskadjustment designated atfairvaluehasdecreased, apositiveamountof ties, Dexiarecorded alossofEUR1.7billion in4Qresult. As aconsequenceofthedecisiontosaleFSAInsuranceactivi- risk deterioration. million wasrecorded onFSA’s liabilitiesduetoitsowncredit its insuranceactivity. Moreover, apositiveamount of EUR308 bonds andrecorded anetprovision ofEUR1,403millionfor ment inUSA,FSArecognized EUR996millionimpairment on Due tothecontinuousdeteriorationofmortgageenviron- amount ofEUR493million. ing inanegativemark-to-marketoftheCDSFSAforgross long-term outstanding; equity allocatedtothisactivityonthebasisofmediumand the managementcostsofthistransformationandGroup s s s s and notonlylargetransactions. Reported amountsare significantandunusualtransactions in thestatementofincome 4. customers. Geographic reporting isdonebasedonbookingcenters,beingthecountryofcompanyhavingrecorded thetransaction,andno (2) IncludingTurkey asfromreporting2Q2008,figuresofDecember31,2007havethereforebeenrestated. (1) Countriesusingtheeurocurrency. s each businesslinealsoinclude: mal commercial termsandmarketconditions.Theresults of byservicelevelagreementstransfers, governed basedonnor- service centersare subjecttoretrocessions and/oranalytical mercial businesslines,financialmarketsandproduction and Relations betweenbusinesslines,andespeciallycom- e noebfr a 2,252 Net incomebeforetax oa ses54582,6 69,657 24,360 554,508 Total assets Capital expenditures e noebfr a (788) Net incomebeforetax oa ses58832,8 83,885 26,088 588,893 Total assets aia xedtrs(327) Capital expenditures (in millionsofEUR) REPORTING GEOGRAPHIC AS OFDEC.31,2007 AS OFDEC.31,2008 The DutchSupreme CourthasruledonMarch 28,2008that Capital lossesandimpairmentswere recorded innetincome As theratingofsomebanksGroup havingliabilities The financialcrisisleadstoanincrease incredit spread result- fromThe earnings commercial transformation,including Significantitemsincluded Eurozone 30 3)()(0 (403) (10) (4) (39) (350) (1) Europe Rest of 343 206 (39) (2) commercial orfinancialbusinessline. - CentralAssets”exceptwhentheyare directly managedbya Tangible andintangibleassetsare allocatedto”Non business line; economic capitalisusedtomeasure theperformanceofeach purposesandthereturnon to thebusinesslinesforinternal transaction leadtoanetlossofEUR105million. full ownershipofDexiaKommunalkredit BankAG(DKB). The one-off taxcredit ofEUR68million. to-market gross amountofEUR431million. leadtoapositivemark- securitizations DublinOakandWise s s s s s was provided forin1Q2008. Dexia are expectedtoamountaboutEUR32million which its raised by Dexia SA, Dexia Banque internationale àLuxem- its raisedbyDexia SA,DexiaBanqueinternationale securities andfinancialinstruments aswellinterbankdepos- Instruments covered bytheguaranteeare seniorunsecured Belgium, FranceandLuxembourg and DexiaSA. guarantee agreement of signedbetweenthegovernments gium, Aa+/Aa1,todebtsecurities tobeissuedunderthe assigned inJanuary2009therating oftheKingdomBel- After Standard &PoorsandFitchinDecember2008,Moody’s for theassetsinFinancialProducts PortfolioofFSA. guarantee from theBelgianandFrenchgranted governments The European Commissionhasapproved onMarch 13,2009the Dexia isstillworkingtowards aclosinginSpring2009. HSR clearance,thetransactionismovingaheadasplanned. the Holdings Ltd(“FSA”)expired onJanuary20,2009.With anty Ltd’s proposed acquisitionofFinancialSecurityAssurance Antitrust Improvements Actof1976(“HSR”)forAssured Guar- waiting periodundertheUnitedStatesHart-Scott-Rodino On January21,2009Dexiaannouncedthatthemandatory 5. (3,076) Funding cost. Interest oneconomiccapital:capitalisallocated Dexia exitsfrom Kommunalkredit AustriaAG(KA)andtakes Dexia Crediop bookedafavorabletaximpactthanks toa The CDSpurchased withintheframeworkofsynthetic 174 USA Post-balancesheetevents (2) the world Rest of 618(019 604,564 (70,159) 26,198 639(419 651,006 (84,179) 36,319 29 (3,877) (219) 132,892 123 8 (376) (8) Intra geographical zone transactions t thecountryof Dexia Annual report 2008 Dexia 133
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 134 Dexia Annual report 2008 and nobonuspaidtomanagementinrespect of2008. cial year, loweringofthecompensationtoDirectors for 2009 proposal tocanceldividendsexceptionallyforthe2008finan- 2009; in reduction ofthenumberfulltimepositionsbyabout900 workforce numberstothenewactivityperimeterthrough a submitted tothesocialpartnersaplanforadaptationof activities); ance activitiesofFSAandin-depthrestructuring oftrading s s s the transformationplani.e.: On January30,2009Dexiaannouncedtheimplementationof scope oftheguarantee. debts, hybridsandsecured instrumentsare excludedfrom the total aggregate commitmentofEUR150billion.Subordinated maturing atthelatestonOctober31,2011andthis,uptoa issued betweenOctober9,2008and31,2009 issuance vehiclesunderBelgian,French andLuxembourgLaw, bourg, DexiaBankBelgium,andCréditLocaltheir been received indue time.However, astheprescription period files forwhichitisestablishedthat thenullificationletterhas has beenrecorded inthe2008results. Theprovision coversall millionforthisissue contract oftheclient.Aprovision ofEUR32 berg Arrangement),canindeedinvoke thenullificationof did notacceptasettlement(likethe DexiaOffer ortheDuisen- the spousewasaware oftheexistencecontract,andwho within theprescription periodofthree years asfrom themoment Therefore, spouseswhosentDBnlaso-called nullificationletter consent tohisorherpartnerforenteringintosuchacontract. which meansthatthespouseofclienthadtogivewritten plan fallingwithinarticle1:88oftheNetherlandsCivilCode, securities leasingcontractisaformofhire purchase instalment called spouseconsentmatter. According tothisjudgment,a a judgment,dismissingtheappealofDBnlinrespect oftheso- On March 28,2008,theNetherlandsSupreme Courtrendered to thedetaileddisclosure intheDexiaAnnualReport2007. Reference (especiallyfortheDuisenbergArrangement)ismade 6.1.2. Specificlitigations www.dexia.com. published duringtheyear2008,whichare available on (especially onpages102to104)andintheFinancialReports disclosures, ascontainedintheDexiaAnnualReport 2007 the gaininitiallyhopedfor. Reference ismadetothe detailed tracts, thuspotentiallyendingwitharesidual debtinstead of granted byDBnlproved insufficientinalargenumber ofcon- The valueofthesecuritiesusedascollateralagainstloans and severe falloftheAmsterdam stockmarketinlate2001. inafter referred toasDBnl)appeared atthetimeoffast mer BankLabouchere (nowDexiaBankNederlandNV; here- The difficultieslinkedtotheshare-leasing activitiesof thefor- 6.1.1. Background 6.1. 6. Litigations s efforts shared byshareholders, managementandemployees: savings ofEUR200millionfrom 2009;inthiscontextDexia acceleration oftherefocusing ofpublicfinanceactivities; improvement oftheGroup’s riskprofile (saleofinsur- DEXIA BANKNEDERLAND expected afterthejudgmentofSupreme Court. and willcontinuetodecrease in2009becauseofsettlements number ofclientsinproceedings decreased rapidlyin2008 vast majorityofthesecourtcaseshavebeensuspended.The court cases,involvingmore than3,000clients.However, the On December31,2008,DBnlisstillinvolvedinover2,800civil DBnl inthisrespect. of thisdecision,there isnoneedtochangetheprovisions of in 2003,isavalidsettlement-agreement indeed.As aresult that theso-calledDexiaOffer, asettlementsignedby clients On October14,2008,theAmsterdam CourtofAppealruled Court. on the“standard decisions”oftheAmsterdam Sub-District based onthecostsofDuisenbergArrangementandnot rendered inthefirsthalfof2009.Theprovisions ofDBnlare by theNetherlandsSupreme Courtwhichare expectedtobe rect definitionofrelevant damage,willbepartofjudgments equity leaseprocedures. Dutyofcare issues,includingthecor- Courts intheNetherlandsalsodecidedtosuspendallsimilar of care issues.Furthermore, mostoftheotherSub-District decided tosuspendallequityleaseprocedures involvingduty on November25,2008,theAmsterdam Sub-DistrictCourt more appealsinthisrespect totheCourtsofAppeal.However, tion ofrelevant damage.Therefore, DBnlcontinuedtoissue “standard decisions”ofApril2007,usingabroader defini- the Amsterdam Sub-DistrictCourtcontinuedtoapplythe not beconsidered aspartofthedamageclient,but andDenBoschhavedecidedthatinterestArnhem paidshould In severaljudgments,theCourtsofAppealAmsterdam, needed inanumberofcases. will bedeterminedcasebycase,additionalprovisions maybe judgments. the share-leasing contracts, byclientbehaviorandfuture by thefluctuationsinvalue of theunderlyingstock Provisions are updatedeveryquarterandmaybeinfluenced 6.1.6. Provisions asofDecember31,2008 have beenmade. to settleaconsiderablenumberofthem.Adequateprovisions of courtcaseswithDepotLeaseclients,butexpectstobeable Lease clientshavebeenreached. DBnlfacesalimitednumber Lease”). Attheendof2008,settlementswithnearlyallDepot ing agreements inconnectionwithsecuritiesdeposit(“Depot of approximately 5,500clientswhoentered intoshare-leas- The DuisenbergArrangementisnotapplicabletothegroup 6.1.5. DepotLease under considerationbytheDSIAppealsCommittee. eration bytheDSIGrievanceCommittee,andonlyonecase At theendof2008,only20caseswere stillunder consid- 6.1.4. DutchSecuritiesInstitute(DSI) proceedings againstDBnl. any settlementsincethen,are stillentitledtostartor continue out statementbefore August1,2007,anddidnotenter into approximately 20,000clientsthathavefiledaso-called opt- reports andfinancialreports. Generallyspeaking,onlythe the nature ofthesedisputes,Dexiarefers toitsearlierannual with respect toshare-leasing products. Especiallyinrespect of A numberofdisputeshavearisenbetweenDBnlanditsclients 6.1.3. Litigationsingeneral until thelastday of thetrial. ecuted offences can makeaclaiminthecriminalproceedings Parties allegingtohavesuffered lossesinrelation tothepros- brought againstit. underlines itsinnocenceinthismatter andconteststhecharges will deliveritsdecisionduringthe course of2009.DexiaBank deliberated onthecriminalcase on January30,2009and were closedonDecember19,2008.TheCourtofAppeal The oralpleadingsregarding thecriminal aspectofthecase charges. Dexia Bankconsidersithasseriousgrounds forcontestingthe amount ofapproximately EUR29,000,000. the PublicProsecutor demandstheseizure ofproperties inan these fundsforimproper revenue recognition. Furthermore, allegedly knewthatthemanagementofLHSPwouldutilize whilstABC HauspieandWillaert, lion loantoMessrs.Lernout, the creation offictitiousrevenue, bygranting aUSD20mil- ing Corporation(hereafter ABC)aidedandabettedLHSPin The PublicProsecutor allegesinsubstancethatArtesiaBank- ( ( ery ( en écritures) andotherrelated offences amongwhichforg- financial statementsofLHSP(valsheidindejaarrekening/faux prosecuted asanallegedaccessorytothefalsification ofthe in Ghent.According tothewritofsummons,Dexia Bankis 20 otherparties,toappearbefore thecriminalCourtof Appeal On May4,2007,DexiaBankwassummoned,togetherwith 6.2.3. Prosecution ofDexiaBankinBelgium is estimatedataround USD1,200,000. on aportfolioofsecuritiesownedbyLHIC,thevaluewhich As partofthesecurityforitsclaim,DexiaBankstillhasapledge recorded fortheremaining claim. interests. AnimpairmentforEUR43,959,626.92has been 6,919,585.09reserved to EUR52,240,144.08–ofwhich &HauspieInvestmentCompany(LHIC)amounted on Lernout As ofDecember31,2008,theDexiaBank’s outstandingclaim Investment Company &Hauspie 6.2.2. ClaimonLernout any dividendfrom theBelgianliquidationofLHSP. Bank andtheotherunsecured creditors are unlikelytoreceive According totheLHSPBelgianbankruptcyreceivers, Dexia ings inBelgiumandtheUnitedStates. The liquidationofLHSP’s assetsissubjecttoseparateproceed- amounted toUSD50,000,000. toLHSPonMay5,2000.ArtesiaBank’s share 430,000,000 by theformerArtesiaBankinsyndicatedloanofUSD EUR 24,092,917.71.Thisclaimoriginatesintheshare taken interests –,forwhichanimpairmenthasbeenrecorded for 182,354.31reserved rate USD/EUR1.3971)–ofwhichEUR of LHSPforaprincipalsumEUR28,963,083.03(exchange Dexia BankhasaclaiminUSDchargeabletothebankruptcy Products &Hauspie Speech 6.2.1. ClaimonLernout have occurred. 2007 annualreports. Sincethen,thefollowingrelevant events quences thereof. Thiswasdescribedindetailthe2006and &HauspieSpeechProductsLernout (LHSP)andtheconse- invariouswayswiththebankruptcyof Dexia isconcerned 6.2. koersmanipulatie/manipulation decours emissiebedrog/délit d’émission valsheid ingeschriften/fauxenécritures LERNOUT &HAUSPIE ) andmarketmanipulation ). ), securitiesfraud ficult todeterminethereal extentofthedamagesclaimed: For thefollowingreasons –amongothersitremains verydif- mean date. on whichLHSPwasdeclared bankruptinOctober2001) ora the dateonwhichLHSPshares were bought,orthedate whether itshouldbeaparticulardate(e.g.November9,2000, be calculated,thecivilpartiesdiffer intheirapproach asto regardWith tothestartingdatefrom whichtheinterest isto rate ofinterest whichiscurrently 7%. In theworstcase,interest ratetobeappliedisthestatutory discussion. and thedatefrom whichitshouldbecalculatedare stillunder which interest mustbeadded.Theamountoftheinterest All theabove-mentionedamountsare principalamountsto 7,259,107.06. EUR substantial reduction intheclaimbyreceivers ofLHSP. bank, thatduplicationisunlikelytobesuchasleada of otherparties.Inthepresent stateoftheanalysisby 744,128,638.37.Partofthisclaimduplicatestheclaims EUR around EUR315,000,000. holders represented byDeminorandSpaarverlies)whoclaim graph 6.2.1above). lion syndicatedcredit facilitydatedMay5,2000.(Seepara- mil- 28,963,083.03owedtoitbyLHSPunderaUSD430 EUR is stillholding437,000LHSPshares) andtoanamount of tion tothelossessuffered onitsLHSPportfolio(DexiaBank 2.DexiaBank’s claimisinrela- a provisional amountofEUR the companyLHSPinOctober2007,claimingdamagesfor andBastiaensagainst Hauspie,Willaert Messrs. Lernout, madeaclaimascivilpartyagainst Dexia Bank,initsturn, indefinitely. case; theCourthasdeferred thehandlingofcivil aspects decided toseparatethecriminalfrom thecivilaspects ofthe It shouldbenotedthattheCourtofAppealinGhenthas complicated matter. tors andtheallegedwrong committedbyArtesiaBank isavery sion rateare stillunderdiscussion; s s s s s s s s listed below): ing relevant claimsfordamages(onlythemostimportantare On December31,2008,DexiaBankwasaware ofthefollow- because oftheprinciple development untilaftertheendof thecriminalproceedings duced inthecriminalproceedings, isnotlikelytohaveany This claim,toalargeextentduplicative oftheclaimsintro- million. 439 the claimwouldamounttoapproximately EUR According tothereceivers’ provisional assessmentoftheclaim, against thenetliabilitiesofLHSPinbankruptcy. twenty-one parties,includingDexiaBank,foranindemnity In July2005theBelgianreceivers ofLHSPfiledanactionagainst LHSPreceivers’ claim 6.2.4.1. in Belgium 6.2.4. Civilproceedings againstDexiaBank The receivers of The Learning Kernel whoareThe receiversKernel claiming ofTheLearning Mercator &Noordstar whichisclaimingEUR17,662,724. The Belgianreceivers ofLHSPwhoare claiming Around 15,000individualshareholders (includingtheshare- proving thelinkbetweendamagesuffered bytheinves- the finalnumberofcivilpartiesisstillunknown; the rateofinterest tobeappliedandtheUSD/EURconver- a numberofpartiesare claimingprovisional amounts; le crimineltientcivilenétat Dexia Annual report 2008 . 135
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 136 Dexia Annual report 2008 could seriouslyharmDexiaBank’s interests. in thecases(otherthanNASDAQ-classaction)sincethis Dexia Bankhasnotrendered publicthesettlementamounts United Stateshavebeenfinallyterminatedinfull. As aresult, allthecasesboughtagainstDexiaBankin the LitigationTrustee, wasterminatedinSeptember2008. The onlyoutstandingcivilcaseintheUnitedStates,brought by in theUnitedStates 6.2.5. Civilproceedings againstDexiaBank civil enétat nal proceedings becauseoftheprinciple likely tohaveanydevelopmentuntilaftertheendofcrimi- of theclaimsintroduced inthecriminalproceedings, are not yet beenassessed.Theseclaims,toalargeextentduplicative The claimantsseekdamagesfortheirlosses,whichhavenot main claimwasfiledbyDeminoronbehalfof4,941investors. LHSP shares againstvariousparties,includingDexiaBank.The Certain civilclaimshavebeenfiledbygroups ofinvestorsin 6.2.4.2. Claimsbyindividuals attachment inthe handsofBAN. in relation tothese shares andproceeded totheirprovisional criminal case,L&HHoldingandKBC Bankhaveallmadeclaims to Mr. Bastiaens.Theinvestigating magistrateintheBelgian withtheproceeds ofthesaleLHSPsharesand Willaert taining toParvestshares acquiredHauspie byMessrs.Lernout, In addition,BANisinvolvedinanumber ofproceedings per- before thecivilcourt(seeparagraph6.2.6.,above). of aburgerlijkepartijstelling/constitutiondepartiecivile)and both inthecriminalinvestigationrelating toLHSP(intheform include theclaimintroduced bythereceiver ofL&HHolding by BANtoMr. Bastiaens(seeparagraph6.2.6.,above).They Most ofthependingproceedings relate totheloangranted paid bythepurchaser. LHSP matterforBAN,cappedatanamountequaltotheprice that DexiaBankwillbearthefinancialconsequencesof the contextofthisoperation,ithasbeenagreed, inessence, Banque ArtesiaNederland(BAN)toGeneralElectric(GE).In In October2006,DexiaBanksolditsaffiliatedcompany 6.2.7. BanqueArtesiaNederland worthless. tion inLHSP(ofaround 12,000,000shares) whichisnow the Bank,provisionally estimatedatEUR1,fortheparticipa- the receivers ofL&HHoldingare alsoclaimingdamagesfrom For thesakeofcompleteness,itshouldbementionedthat applications. Dexia Bankvigorously conteststhegrounds forthese repayment. Holding, theL&HHoldingbankruptcyreceiver isclaiming its Takingand Willaert. theviewthatthismoneywasduetoL&H Hauspie sonal accountsopenedwithBANbyMessrs.Lernout, millionwascredited tothree per- 25 The sellingpriceofUSD million. 10 guarantee infavorofBANforanamountUSD The formerArtesiaBankingCorporation(ABC)issuedabank sition byMr. BastiaensofLHSPshares ownedbyL&H holding. BastiaensbyBANinJuly2000forthepurposesofacqui- Mr. This isconnectedwithaUSD25millionloangrantedto principal amountofUSD25million. Banque ArtesiaNederland(BAN)andDexiaBank,topaythe alongwith HauspieandWillaert, summoned Messrs.Lernout, On April27,2004,thebankruptcyreceiver ofL&H Holding 6.2.6. L&HHolding . le crimineltient S 758645 infavorofBANonOctober30,2007. 17,538,614.58 USD (see paragraph,6.2.6above).Thisresulted inapaymentof inprincipalissuedfavorofBAN antee ofUSD10,000,000 Finally, inOctober2007,DexiaBankhonored thebankguar- cassation), whichwillgiveadecisiononApril2,2009. of AppealinLuxembourgbefore theSupreme Court(courde BAN haslodgedanappealagainstthedecisionofCourt of thissection). the aforesaid guaranteeinfavorofGE(seethefirstparagraph 2007inexecutionof (USD 30,039,336.54)toBANonJuly9, Paribas LuxembourgandDexiaBankreimbursed thisamount was obtained,BANpaidthevalueofParvestshares toBNP As noliftingofthevariousattachmentsonParvestshares against anydamagederivingfrom itscondemnation. BAN toindemnifyandholdBNPParibasLuxembourgharmless 1,2007.TheLuxembourgCourtofAppealcondemned July 30,2007ifthelatterwere notdelivered toCAILprior June or topayCAILthecountervalueoftheseParvestshares on ordered todelivertheParvestshares toCAILbyJune30,2007 Luxembourg (CAIL)bywhichBNPParibaswas on July12,2006attherequest ofCréditAgricoleIndosuez In addition,theLuxembourgCourtofAppealissuedadecision claims madeagainstitinBelgiumforthefollowingreasons. Dexia BankBelgiumhasnotconstitutedanyprovisions forthe the difference inviewofthesecuritiesprovided. 68,052,544.63.DexiaBankexpectstobeablerecover EUR &Hauspiefileamountedtosome ments fortheLernout graphs 6.2.1.,6.2.2.and6.2.7.).Onthesamedateimpair- 7,104,106.89reserved interests –(seepara- – ofwhichEUR 81,142,273.06 &HauspiefileamountstosomeEUR Lernout outstanding claimsrelating tocredit facilitiesgrantedinthe On December31,2008,theexposure ofDexiaBank tothe 6.2.8. Provisions andimpairments no fundamentaldevelopmentinthis fileduring2008. by theBanking,FinanceandInsurance Commission.There was have enabledittoabidebythedirectives issuedinthisregard auditandIT proceduresconfirms thatthenecessaryinternal inwhomDexiamaintainsitsconfidence. DexiaBank cerned, that accusationdoesnotimplythe guiltofthepersonscon- executives were accusedattheendofMarch 2004.However involving inheritancedutiesseemstohaveended.Fourformer apossiblefraud ber 28,1999againstDexiaBankconcerning The enquiryopenedbythejudicialauthoritiesonSeptem- 6.3. s s s s these claims. Dexia strongly challengesthevalidityandmeritsofall can courtswere reversed inthethird quarterof2008. The unusedprovisions constitutedfortheactionsinAmeri- missible andatleastunfounded. that mostoftheactionsbrought bythecivilpartiesare inad- not beestimatedforgoodatthemoment. often aprovisional amountisclaimed. (Deminor…) makenomentionofanyprecise amount and that it. strong argumentstocontestthechargesbrought against damages. Thelawyersofthebankare oftheopinionthat ithas than 50%thelikelihoodofacourtdecisionordering it topay Dexia Bankhasmadeextensivesubmissionsandargued The numberofcivilpartiesandtheamountstheyclaimcan- regardWith tothecivilactions,wenotethatvariousclaims As thingsstandatthemoment,Bankassessesless INHERITANCE DUTIES (SUBPOENA) FSA, allegingviolationsofcertainprovisions oftheUSsecurities authorize commencementofnon-criminalproceedings against ing thattheSECstaff isconsideringrecommending thattheSEC Commission (SEC),commonlycalleda“Wells Notice”,indicat- Ltd (FSA)received aletterfrom theUSSecuritiesandExchange On February4,2008,FinancialSecurityAssuranceHoldings 6.4. (chambre duconseil/raadkamer). This filewillbesubmittedin2009totheCouncilChamber IACA EUIYASSURANCE SECURITY FINANCIAL litigation bytherespective states. in theglobalsettlementproposal, whichwouldresolve anycivil purchased municipalGICs.Thestatesmayelecttoparticipate investigation, includingactionsonbehalfofvariousstatesthat civil litigationrelated tothesubjectmatterofgovernment February 2008.FSAisalsoadefendantinclassactionandother Revenue Service,alsowithregard totheWells Noticereceived in would settlethematterwithDOJ,SECandInternal the DOJandSECregarding aproposal that,ifagreed to, by theUSDepartmentofJustice(DOJ).FSAisindiscussionswith teed investmentcontracts(GICs)thatisalsobeinginvestigated laws inconnectionwithallegedbidriggingofmunicipalguaran- Dexia Annual report 2008 137
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 138 Dexia Annual report 2008 (in millionsofEUR) A. Analysisbynature 7.3. Analysis bynature 7.2. (1) FiguresasofDec.31,2007havebeen restated. A. Analysisbynature remaining duration: For thepurposeofcashflowstatement,andequivalentscomprisesfollowingbalanceswithlessthan90days 7.1. 7. (2) FiguresasofDec.31,2007havebeenrestated. depositscreditinstitutionsmusthavewiththeEuropean CentralBankorwithothercen minimumreserve reserves: (1) Mandatory B. Ofwhichrestricted cash fwihicue ncs n aheuvlns3,6 43,700 37,064 of whichincludedincashand equivalents pcfi mareto mardlaso marddb ntuet (98) 0 Collective impairment Specific impairmentonimpairedloans orimpaireddebtinstruments Less: Impaired debtinstruments Impaired loans ees eucaeareet 4159,387 31,447 24,165 11,474 Loans andotheradvances Reverse repurchaseagreements Nostro accountsandcashcollaterals Debt instruments fwihicue ncs n aheuvlns8892,438 8,819 of whichincludedincashandequivalents Other Cash Collaterals aacswt eta ak te hnmnaoyrsredpst 9 768 694 Mandatory reservedeposits Balances withcentralbanksotherthanmandatoryreservedeposits Cash inhand Mandatory reserves ahadblne ihcnrlbns8892,438 8,819 Cash andbalanceswithcentralbanks on n dacsdefo ak 70443,700 37,064 Loans andadvancesduefrombanks Available forsalefinancialassets iaca seshl o rdn 1 378 211 Financial assetsheldfortrading iaca sesdsgae tfi au 14 31 Financial assetsdesignatedatfairvalue TOTAL TOTAL TOTAL TOTAL CASHANDEQUIVALENTS Notes ontheassetsofconsolidatedbalancesheet LOANS ANDADVANCES DUEFROMBANKS BANKS CENTRAL CASH ANDBALANCESWITH (2) (1) (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 47661,864 54,776 88915,210 18,819 37127,380 13,781 16349,715 51,603 ,3 2,448 8,835 ,6 966 7,562 ,3 26,421 957 6,232 7,547 ,7 3,195 5,478 1 5,863 318 7 714 579 (65) 111 0 09 0 22 tral banks. Collective impairment Specific impairmentonimpairedloansordebtinstruments Less: Impaired debtinstruments Impaired loans Other Public sector See note7.7. F. Reclassification offinancialassets(IAS39amended) See note12.1. E. Analysisofthefairvalue See notes12.4.,12.5.and12.6. D. Analysisbymaturityandinterest rate See note7.15.Qualityoffinancialassets. C. Analysisofquality Dec. 31,2008:ofwhichEUR76millionrelatingtoshareleasingDBnland316 relatingtoFinancialProductsact (2) Dec.31,2007:ofwhichEUR32millionrelatingtoshareleasingDBnl; Dec. 31,2008:ofwhichEUR78millionrelatingtoshareleasingDBnland1,059 million relatingtoFinancialProductsa (1) Dec.31,2007:ofwhichEUR107millionrelatingtoshareleasingDBnl; B. Analysisbynature Dec. 31,2008:ofwhichEUR76millionrelatingtoshareleasingDBnland316FinancialProductsact (2) Dec.31,2007:ofwhichEUR32millionrelatingtoshareleasingDBnl; Dec. 31,2008:ofwhichEUR78millionrelatingtoshareleasingDBnland1,059FinancialProductsa (1) Dec.31,2007:ofwhichEUR107millionrelatingtoshareleasingDBnl; A. Analysisbycounterpart 7.4. See note7.7. E. Reclassificationoffinancialassets(IAS39amended) See note12.1. D. Analysisofthefairvalue See notes12.4.,12.5.and12.6. C. Analysisbymaturityandinterest rate See note7.15.Qualityoffinancialassets. B. Analysisofquality Specific impairmentonimpairedloansordebtinstruments Less: Collective impairment fwihicue nfiac es 4305,002 4,320 of whichincludedinfinancelease ees eucaeareet 2274,690 12,287 Impaired debtinstruments Impaired loans Debt instruments Loans andotheradvances Reverse repurchaseagreements fwihicue nfiac es 4305,002 4,320 of whichincludedinfinancelease TOTAL TOTAL LOANS ANDADVANCES TOCUSTOMERS (2) (2) (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 1,0 172,426 196,409 114,500 128,137 4,1 368,845 242,619 ivities ofFSA. ivities ofFSA. ctivities ofFSA. ctivities ofFSA. 4,1 368,845 242,619 2,9 262,691 226,497 ,1 1,623 1,219 49 (1,441) (2,083) (419) (818) ,1 1,623 101,454 1,219 3,853 49 (1,441) (2,083) (419) (818) 1,911 0 0 Dexia Annual report 2008 1,911 139
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 140 Dexia Annual report 2008 fwihicue ncs n aheuvlns21378 211 of whichincludedincashandequivalents Other Banks Public sector See note7.7. G. Reclassificationoffinancialassets(IAS39amended) See note12.1. F. Analysisofthefairvalue See notes12.4.,12.5.and12.6. E. Analysisbymaturityandinterest rate D. Securitiespledgedunderrepurchase agreements withotherbanks C. Treasury billsandothereligibleforrefinancing tothecentralbanks B. Analysisbynature A. Analysisbycounterpart Financial assetsheldfortrading 7.5. nlddi od sudb ulcbde 36 907 63 561 Included inotherbondsandfixed-incomeinstruments Included inbondsissuedbypublicbodies iaca seshl o rdn 04110,836 5,208 30,411 7,154 Financial assetsdesignatedatfairvalue Financial assetsheldfortrading od sudb ulcbde ,5 842 157 9,834 1,357 397 28,234 Equity andvariable-incomeinstruments Other bondsandfixed-incomeinstruments Bonds issuedbypublicbodies Loans rauyblsadohreiil il o ennigt h eta ak 7423 47 Treasury billsandothereligibleforrefinancingtothecentralbanks TOTAL TOTAL TOTAL FINANCIAL ASSETSMEASUREDAT FAIR VALUE THROUGHPROFITORLOSS e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 Dec. 31,2007 Market value 75516,044 37,565 04110,836 30,411 1748,277 21,764 04110,836 30,411 ,6 1,257 1,302 5,266 3,381 2 3 423 Dec. 31,2008 Market value Treasury billsandothereligibleforrefinancingtothecentralbanks the hedgeaccountingrequirements will notbemet. volatility inprofit orlosswhen,atinception,there isariskthat methodinorder2) theFVOisusedasanalternative toreduce (unit-linked products); linked totheinvestmentinaspecificpoolofinsurer’s assets closely related embeddedderivativewhereby thereturnis 1) bytheinsurancebusinesswhere liabilitiescontainanot- in thefollowingsituations: The FairValue Option(FVO)forfinancialassetsismainlyused See note12.1. F. Analysisofthefairvalue See notes12.4.,12.5.and12.6. E. Analysisbymaturityandinterest rate D. Securitiespledgedunderrepurchase agreements withotherbanks C. Treasury billsandothereligibleforrefinancing tothecentralbanks B. Analysisbynature A. Analysisbycounterpart Financial assetsdesignatedatfairvalue ntlne rdcsIsrne6004,522 39 6,040 396 44 517 Unit linkedproductsInsurance Equity andvariable-incomeinstruments Other bondsandfixed-incomeinstruments Bonds issuedbypublicbodies Loans Other Banks Public sector fwihicue ncs n aheuvlns3 4 31 of whichincludedincashandequivalents nlddi te od n xdicm ntuet 01 10 Included inotherbondsandfixed-incomeinstruments TOTAL TOTAL with asimilarcredit rating. available marketratesapplicableforsimilarandissuers net present valueisdeterminedbyaninterest ratebasedon The pricingtoolisadiscountedcashflowmodelwhereby the Management. used andprocedures followedare determinatedbyGroup Risk ments classifiedunderthefairvalueoption,pricingtools To determinethefairvaluefornon-listedfinancialinstru- e.3,20 Dec.31,2008 Dec. 31,2007 Dec. 31,2007 Market value e.3,20 Dec.31,2008 Dec. 31,2007 Dec.31,2008 Dec. 31,2007 ,6 4,506 512 4,869 2,020 ,5 5,208 7,154 5,208 7,154 1 184 67 216 337 190 265 030 30 Dexia Dec. 31,2008 Market value Annual report 2008 141
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 142 Dexia Annual report 2008 on 5 6002646 256 0 0 46 256 Bonds issuedbypublicbodies Loans aibeicm ntuet ,0 ,2 ,0 4,622 5,701 74,581 0 145,144 820 0 925 4,622 73,761 5,701 144,219 variable-income instruments Equity and fixed-income instruments Other bondsand Impact onequityrelatedtothetransferheldmaturityportfolio Securities transferredfromtheAFStoHTMportfolioduringyear fwihicue ncs n aheuvlns5483,195 5,478 of whichincludedincashandequivalents Specific andcollectiveimpairmentonimpairedfinancialinvestments Less: A. Analysisbycounterpart 7.6. See note7.7. H. Reclassificationoffinancialassets(IAS39amended) See note12.1. G. Analysisofthefairvalue (1) relatingtoareclassificationofTurkish governmentbondsbyDenizBank. F. Transfers betweenportfolios Nil. (position greater thanEUR50million) E. Convertiblebondsincludedintheavailable-for-sale portfolio D. Analysisbynature (Financialinvestmentsbefore impairments) See notes12.4.,12.5.and12.6. C. Analysisbymaturityandinterest rate See note7.15.Qualityoffinancialassets. B. Analysisofquality (1)Severalspecificimpairmentswererecordedin2008,mainlyonLehmanBrothers,IcelandicbanksandWashington Mutual. Impaired financialinvestments Others Banks Public sector OA IACA NETET EOEIPIMN 2,8 126,690 220,481 TOTAL TOTAL FINANCIALINVESTMENTSBEFORE IMPAIRMENT OA 1,6 2,2 ,1 ,6 2,8 126,690 220,481 1,967 1,915 124,723 218,566 TOTAL FINANCIAL INVESTMENTS e.3,20 e.3,20 e.3,20 e.3,20 e.3,20 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec. 31,2007 vial o aeHeldtomaturity Available forsale 8304,9 9 ,4 93047,441 69,380 1,147 990 46,294 68,390 (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 2,9 125,029 220,290 56914,842 55,876 53,359 75,649 65,935 78,298 (191) 599 (1) (304) 0 0 Total (1,661) 2,613 intention andability toholdfortheforeseeable future were on activemarket were availableand forwhichDexiahasthe Only notimpaired financial assetsforwhichnoquotedprices small shiftsinspreads. long maturity, resulting insignificantchangevaluefollowing Dexia hasaparticularAvailable forSaleportfoliowithavery Receivables (L&R) Transfer from Available forSale (AFS)toLoansand future. Impactsare mentionedinthetable above. that ithastheintentionandabilitytoholdforforeseeable bonds thatitnolongerholdsforsellingintheneartermand and inactivemarkets,Dexiareclassified highcredit quality market, lackofavailability“representative marketprices” Due torare circumstances describedabove, illiquidityinthe Trading” asDexiaintendedtotradethemwithinashortterm. These financialassetswere initiallyrecognized as“Heldfor Available for Sale and Transfer from HeldforTrading toLoansandReceivables sifications havebeenmadeonOctober1,2008. hold thesefinancialassetsfortheforeseeable future. Reclas- reclassification toL&Rreflects Dexia’s intentionandabilityto assets from AFStoL&R(provided thedefinitionismet).The following itschangeinintent,Dexiareclassified also certain they are nolongerheldforsaleinthenearterm.Moreover, Receivables –L&R”(provided thedefinitionismet) because “Held forTrading” to“Available forSale–AFS”or“Loans and rare circumstance, Dexiaoptedtoreclassify certainassetsfrom but distressed pricesorindicativebroker’s prices.Giventhat for somefinancialassetsdidnolongerrepresent “fairvalue”, Brothers andthesubsequentfinancialcrisis,observable prices ticular, Dexiaconsidered thatafterthebankruptcyof Lehman – ReclassificationofFinancialAssetsforsomeassets.Inpar- Dexia decidedtoapplytheamendmentofIAS39&IFRS7 Some amountsmaynotaddduetoroundings. 7.7. u orcasfiaintwrsLasadRcials (42) 9 and lossduetoreclassificationtowardsLoansReceivables. Tax impactoncollectiveimpairmentsetupduringthequarterviaprofit due toreclassificationtowardsLoansandReceivables. Collective impairmentsetupduringthequarterthroughprofitandloss mutnttkni F eev 3 u orcasfiainna ..(2,123) n.a. n.a. P/D amortizationinAFSReserveduringtheyear Tax impact Amount nottakeninAFSReserve(3)duetoreclassification mriaino rmu/icuti & uigteya B 81 n.a. 93,399 12 95,522 2,651 90,784 2,655 2,704 6,298 28 6,342 6,591 Amortization ofpremium/discountinP&Lduringtheyear(B) not beenreclassified(A) Fair valueadjustmentthatwouldhavebeenrecognizediftheassethad Fair valueofreclassifiedassetsatDec.31,2008 Carrying amountofreclassifiedassetsatDec.31,2008 Carrying amountofassetsreclassifiedatOct.1,2008 OCTOBER 1,2008 DATE OFRECLASSIFICATON NET AMOUNT AMOUNT NOTTAKEN ININCOME(1)&(2) DUETORECLASSIFICATION (A)–(B) RECLASSIFICATION OFFINANCIALASSETS(IAS39AMENDED) 2008 onthesetransferred assets. 2008. Nospecificimpairmentlosseswere recognized in4Q were recorded onL&R,includingreclassified bonds,during4Q transferred toLoansandReceivables.Collectiveimpairments interest rateendof2008. Therefore, theirvalueincrease duetothelargedecrease of against interest rate riskviafairvaluehedges. at reclassification date (90.8billion)astheL&Rare hedged ber 31,2008(95.5billion)ishigher thancarryingamount The carryingamountofreclassified AFSassetsasofDecem- depend from theevolution ofshortterminterest rate. is partoftheALMsensitivity. Expectedcash-flowswilltherefore hedged, theinterest rateriskismainlyafloatingwhich the interest rateriskofreclassified trading portfolioswasalso as theinterest rateriskofreclassified AFS bondswashedgedand effective interest ratevaryingfrom 0.48%to47.7%),however bonds topaying12.5%nominalcouponandwithan Reclassified bondsincludefixed-rate(from zero coupon prices were available. ity onthedifferent marketsasnomore representative market valuation modelstakingintoaccounttheevolutionofliquid- the reclassification hadnottakenplaceiscalculatedbasedon The changeofAFSreserve thatwouldhavebeenrecorded if lion mil- -59 impact onresults wouldhavebeenUSD-90million,or to USD441milliononreclassified amounts.Therefore, thetotal 4Q 2008forwhichtheFSAAssetManagementpartamounts a collectiveimpairmentonUSRMBSwasrecorded byDexiain lion, insteadofUSD57millionrecorded in4Q2008.However, place, thespecificimpairmentwouldhavebeenUSD588mil- sified from AFStoL&R.Ifthereclassification hadnottaken ucts activitykeptbyDexia)where impaired bondswere reclas- The onlyexceptionisFSAAssetManagement(FinancialProd- net oftax(EUR-40million). From Trading to Loansand Receivables ..n.a. n.a. 3)()(1,344) n.a. (3) (4) (30) (44) 1)7(2,123) 7 (16) (1) 41779 1 14 to Available for Sale Portfolio From Trading (2) Dexia From Available Receivables (3) Dec. 31,2008 Portfolio to Loans and Annual report 2008 for Sale 293 143
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 144 Dexia Annual report 2008 - Other - Impairment:booked - Translation adjustments - Shareofgainsandlossesnotrecognizedintheincomestatement - Changesingoodwill(seebelow) - Dividendpaid - Shareoftax - Shareofresultbeforetax - Changeinscopeofconsolidation(out) - Disposals - Acquisitions B. Positivegoodwillincludedincarryingvalue (1) MainlyKommunalkreditAustriaAG. rdtd od508 Crédit duNord A. Carryingvalue 7.8. previous periodscanbeestimatedtoEUR547million. coming from amortizationofthenegativemark-to-market expected positiveimpactontheinterest marginforfuture years For assetstransferred from tradingtoAFSandL&R,the frozen AFSreserve,so thatthenetimpactonresult iszero. discount onthebondiscompensatedbyamortizationof For assetstransferred from AFStoL&R,theamortizationof Impact onfuture interest margin L iacsS 64 45 169 Popular BancaPrivada SLF FinancesSA Kommunalkredit Austria C. Listofmajorassociates (1) MainlyKommunalkreditAustriaAG - Changeinscopeofconsolidation(out) - Booked - Changeinscopeofconsolidation(out) CUSTO OTA FDC 1()29210 229 229 229 (41) (46) (46) (46) ACCUMULATED DEPRECIATION ANDACCUMULATED IMPAIRMENT ASOFDEC.31(B) ACCUMULATED DEPRECIATION ANDACCUMULATED IMPAIRMENT ASOFJAN.1 COSTASOFDEC.31(A) ACQUISITION COSTASOFJAN.1 ACQUISITION CARRYING VALUE ASOFDEC.31 CARRYING VALUE ASOFJAN.1 E CARRYING AMOUNTASOFDEC.31(A)+(B) NET OA 786 TOTAL ASSOCIATES INVESTMENTS INASSOCIATES okvleFairvalue Book value 2007 (1) (1) (1) of investment 1,337 2007 820 397 56 64 lion in2009andEUR107million2010. bonds transferred. Expectedinterest marginsare EUR140mil- This amountwillbeamortizedontheremaining lifeofthe okvleFairvalue Book value 2008 507 1 822 617 46 64 of investment 2008 700 58 64 www.groupe-credit-du-nord.com www.popularbancaprivada.es 072008 2007 072008 2007 8 169 183 4 31 147 6 682 861 861 826 4)(121) (47) (20) (41) (44) (39) www.kommunalkredit.at 034 10 (12) 0 017 (19) 0 (12) (1) 21 0 02 (41) 0 0 (5) 0 www.slf.be Website rnlto dutet 2 3 (5) 0 0 (3) (2) 0 0 - Translation adjustments rnfr n aclain 3)12 816 28 0 0 23 1 (36) - Transfers andcancellations osldto ot)0030003 0 0 0 3 0 0 consolidation (out) - Changeinscopeof rt-ak1 3 255 5 4 0 234 0 12 - Write-back okd(1 6)(0 1)(1 (179) (21) (11) (10) (66) 0 (71) - Booked rnlto dutet 9 0 0 5 1 0 3 - Translation adjustments rnfr n aclain 4 2)010(23) 0 1 0 (28) (4) 8 - Transfers andcancellations osldto ot)00()000(4) 0 0 0 (4) 0 0 consolidation (out) - Changeinscopeof osldto i)1000001 0 0 0 0 0 1 consolidation (in) - Changeinscopeof ipsl 18 23 7 1)(438) (10) (7) 0 (233) 0 (188) - Disposals usqetepniue 400001 31 17 0 0 0 0 14 - Subsequentexpenditures custos240191 12 403 28 31 11 119 0 214 - Acquisitions A. Netbookvalue 7.9. FDC 1 07()()1453292 7462,257 406 57 27 289 3 1,475 DEC.31,2007(A)+(B) OF BOOKVALUE AS NET AS OFDEC. 31,2007(B) AND IMPAIRMENT ACCUMULATED DEPRECIATION AS OFJAN.1, AND IMPAIRMENT ACCUMULATED DEPRECIATION FDC 1 07()19431146 8994,217 929 88 69 1,134 3 1,994 DEC.31,2007(A) OF COSTAS ACQUISITION FJN ,20 ,4 ,7 36 9 4,238 894 63 53 1,279 7 1,942 JAN.1,2007 OF COSTAS ACQUISITION TANGIBLE FIXEDASSETS 2007 Own use Owner adadbidnsOfiefriueadohreupetInvestment Officefurnitureandotherequipment Land andbuildings 59 85 4)(1 53 (1,960) (523) (31) (42) (845) 0 (519) 44 1 107 2)(4 55 (2,050) (535) (24) (29) (1,037) (1) (424) Own use Finance Lease Own use Owner Own use Finance Lease Operating lease Dexia Property Annual report 2008 Total 145
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 146 -Tasainajsmns10690016 0 0 9 6 0 1 -Translation adjustments -Tasesadcneltos606 993 19 0 0 68 0 6 -Transfers andcancellations -Dsoas101 34 8 7 0 18 0 1 -Disposals -Boe 7)0(9 8 1)(8 (194) (18) (17) (8) (79) 0 (72) -Booked rnlto dutet 4 1)(5 (34) 0 0 (15) (15) 0 (4) - Translation adjustments rnfr n aclain 8)0()(5 (111) (25) (1) 0 (85) 0 0 - Transfers andcancellations fcnoiain(u 1)00000(15) 0 0 0 0 0 (15) of consolidation(out) - Changeinscope ipsl 13 2)0(2 1)(172) (15) (12) 0 (22) 0 (123) - Disposals usqetepniue 100009 103 92 0 0 0 0 11 - Subsequentexpenditures custos130161 97376 7 49 11 126 0 183 - Acquisitions Nil. D. Contractualobligationsrelating toInvestmentproperty attheendofperiod C. Expenditures B. Fairvalue TOTAL xedtrscptlzdfrtecntuto fpoet,pat&eupet4 51 509 43 446 Expenditures capitalizedfortheconstructionofproperty, plant&equipment Fair valuenotsubjecttoanindependentvaluation Fair valuesubjecttoanindependentvaluation FDC 1 08()()1433362 3442,353 474 83 24 306 3 1,463 DEC.31,2008(A)+(B) OF BOOKVALUE AS NET FDC 1 08()(8)0(3)(1 4)(1)(2,011) (514) (41) (41) (832) 0 (583) DEC.31,2008(B) OF AND IMPAIRMENT AS ACCUMULATED DEPRECIATION FJAN.1,2008 OF AND IMPAIRMENT AS ACCUMULATED DEPRECIATION FDC 1 08()20631186 2 8 4,364 988 124 65 1,138 3 2,046 DEC.31,2008(A) OF COSTAS ACQUISITION SO A.1 0819431146 8994,217 929 88 69 1,134 3 1,994 AS OFJAN.1,2008 COST ACQUISITION Dexia Annual report 2008 Own use Owner adadbidnsOfiefriueadohreupetInvestment Officefurnitureandotherequipment Land andbuildings 59 85 4)(1 53 (1,960) (523) (31) (42) (845) 0 (519) Own use Finance Lease Own use Owner Own use Finance Lease Operating lease e.3,20 Dec.31,2008 Dec. 31,2007 Dec.31,2008 Dec. 31,2007 Property 4 509 449 30 Total 7.10. (1) OtherintangibleassetsincludepurchasedsoftwaresandidentifiedinthepurchaseofDenizBankgroup. rnlto dutet 1 3 (4) 18 (3) 16 3 0 136 2 3 (25) (1) 22 0 1 (25) 0 (7) 0 0 (7) 1 0 114 0 0 0 0 0 - Translation adjustments - Transfers andcancellations - Disposals - Changeinscopeofconsolidation(in) - Booked - Translation adjustments - Transfers andcancellations - Changeinscopeofconsolidation(out) - Changeinscopeofconsolidation(in) - Disposals - Acquisitions CUSTO OTA FJN ,20 ,5 3 1 3,306 612 536 2,158 COSTASOFJAN.1,2007 ACQUISITION E OKVLEA FDC 1 07()()20016382,524 (998) 308 (309) 166 (463) 2,050 3,522 (226) 617 (913) 629 (287) BOOKVALUE ASOFDEC.31,2007(A)+(B) NET 2,276 AND IMPAIRMENT ASOFDEC.31,2007(B) (405) ACCUMULATED DEPRECIATION (221) ACCUMULATED DEPRECIATION ANDIMPAIRMENT ASOFJAN.1,2007 COSTASOFDEC.31,2007(A) ACQUISITION INTANGIBLE ASSETSANDGOODWILL Goodwill Positive 4 6)(2 (136) (72) (60) (4) 434 34 0 (41) 152 0 (38) 52 (3) 96 0 4 developed Internally software Dexia intangible assets Other Annual report 2008 (1) Total 147
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 148 Dexia Annual report 2008 -Translation adjustments -Transfers andcancellations -Booked -Translation adjustments -Transfers andcancellations -Disposals -Acquisitions 2007: anamountofEUR61millionrepresenting operationaltaxesistranferred to”Otherassets”. 7.11. (1) OtherintangibleassetsincludepurchasedsoftwaresandidentifiedinthepurchaseofDenizBankgroup. U 0.2billion. EUR on bondsandbyDTA oncashflowhedgesreserves for 3.1billionbyDTA comingfrom negativeAFSreserves EUR Deferred taxassets(DTA) are constitutedforanamountof Current taxes eerdtxast sent .. ,9 3,979 1,090 Deferred taxassets(seenote9.2.) N MARETA FJN ,20 26 43 39 (998) (309) 3,262 612 (463) (226) 714 1,936 2,276 AND IMPAIRMENT ASOFJAN.1,2008 ACCUMULATED DEPRECIATION COSTASOFDEC.31,2008(A) ACQUISITION COSTASOFJAN.1,2008 ACQUISITION N MARETA FDC 1 08()(8)(2)(6)(1,069) (361) (522) (186) BOOK VALUE ASOFDEC. NET AND IMPAIRMENT ASOFDEC.31,2008(B) ACCUMULATED DEPRECIATION TOTAL TAX ASSETS 31, 2008(A)+(B) able taxlossesandprovisions. Apart from this,itrelates tootherelementsincludingrecover- Goodwill Positive ,5 9 5 2,193 251 192 1,750 20 1 5)(348) (57) (1) (290) 1)(2 7)(148) (74) (58) (62) (5) (12) (3) (50) 03659 6 3 50 618 16 0 (3) 149 2 (1) 58 (2) 91 0 0 developed Internally software 2 617 629 e.3,20 Dec.31,2008 Dec. 31,2007 ,8 4,139 1,384 9 160 294 intangible assets Other (1) 3,522 Total Deferred acquisitioncosts Premiums stilltobeissued Receivables resultingfromdirectinsurancetransactions Share ofthereinsurersintechnicalreserves Plan assets Other accountsreceivables Deferred expenses Accrued income Specific impairment Less: Impaired insuranceassets Other assets Operational taxes Inventories Long-term constructioncontracts Other insuranceassets Other assetsspecifictoinsurancecompanies Other assets Other assets Tangible andintangibleassetsheldforsale Assets ofsubsidiariesheldforsale (1) Seenote9.6.C.“Analysisofgroupheldforsale”. 7.13. (1) Decreasein2008duetoclassificationoftheassetsinsuranceactivityFSAHoldingsnoncurrentheldfo B. Otherassetsspecifictoinsurancecompanies (1) Seenote8.6.i. A. Otherassets (2) Decreasein2008duetoclassificationoftheassetsinsuranceactivityFSAHoldingsnon-currentheldfo (1) FiguresasofDecember2007wererestated,theynowincludeoperationaltaxes. 7.12. TOTAL TOTAL nlssb aue(custo ot n hr frisrr)Dc 1 07Dec.31,2008 Dec.31,2007 Analysis bynature(acquisitioncostsandshareofreinsurers) Analysis bynature TOTAL TOTAL O CURRENTASSETSHELDFORSALE NON OTHER ASSETS (1) (1) (1) (1) (1) (2) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 r sale. r sale. ,6 194 1,260 ,9 1,232 2,197 ,8 1,998 4,381 ,2 1,804 3,121 ,2 1,804 1,260 3,121 9 106 199 8 273 584 851 236 (1) 91 81 89 59 182 17 61 16 833 38 39 1 1 44 11 12 0 Dexia Annual report 2008 6,260 6,225 194 64 87 42 (1) 1 1 149
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 150 Dexia Annual report 2008 A. Financelease Dexiaaslessor 1. 7.14. B. Operatinglease Amounts involvedareimmaterial.Seenote7.9. A. Financelease Dexiaaslessee 2. B. Operatinglease Later than5years Later than1yearandnotlater5years Not laterthan1year Amount ofcontingentrentsrecognizedinstatementincomeduringtheperiod o onlse tteedo h eid831 4,780 4,145 8 Accumulated allowanceforuncollectibleminimumleasepaymentsreceivable Estimated fairvalueoffinancelease for loanlossesattheendofperiod Amount ofuncollectiblefinanceleasereceivablesincludedintheprovision ne o-aclbesbessa h aac he ae 10 6 - subleasepayments - minimumleasepayments Lease andsubleasepaymentsrecognized asanexpenseduringtheperiod: under non-cancelablesubleasesatthebalancesheetdate: Amount offutureminimumsubleasepaymentsexpectedtobereceived ae hn1ya n o ae hn5yas2142,308 2,124 Later than5years Later than1yearandnotlater5years Not laterthan1year ae hn1ya n o ae hn5yas1861,949 1,846 Later than5years Later than1yearandnotlater5years Not laterthan1year Later than5years Later than1yearandnotlater5years Not laterthan1year TOTAL TOTAL TOTAL 4,994 4,304 Dec.31,2008 Dec.31,2007 TOTAL The netinvestmentinfinanceleasesmaybeanalyzedasfollows: NET INVESTMENTINFINANCELEASES(A)-(B) UNEARNED FUTUREFINANCEINCOMEONLEASES(B) SUBTOTAL (A) Gross investmentinfinanceleases: prtn essaea olw:Dc 1 07Dec.31,2008 Dec.31,2007 Future netminimumleasepaymentsundernon-cancelableoperating leasesareasfollows: operating leasesareasfollows: Future netminimumleasereceivablesundernon-cancelable LEASING e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31, 2008 Dec. 31,2007 ,0 4,994 4,304 5,956 2,615 5,032 2,036 ,1 2,197 1,719 2 159 124 872 2 152 124 686 673 185 187 848 739 962 728 8 273 314 282 308 855 94 36 68 88 31 399 83 01 419 (7) 0 1,033 olcieipimn nntipie on - 49 156 49 (1,506) (419) 0 0 (1,506) (419) Collective impairmentonnotimpairedloans(-) te ses54350()54354 584 (1) 0 355 584 Other assets te consadrcials219147()(8)2171,154 2,197 (283) (2) 1,437 2,199 Other accountsandreceivables mardohrast 1 0 0 (1) 0 1 0 Impaired otherassets sesfo nuac ciiis12115()()120194 1,260 (1) (1) 195 1,261 Assets frominsuranceactivities mardohracut n eevbe 2 2 23 45 2 (283) (2) 328 4 Impaired otheraccountsandreceivables mardast rmisrneatvte 1 1 0 0 (1) (1) 1 1 Impaired assetsfrominsuranceactivities vial-o-aefiaca ses28561473(9)(,6)2835123,062 218,375 (1,661) (191) 124,723 218,566 Available-for-sale financialassets edt-auiyivsmns195197001951,967 1,915 0 0 1,967 1,915 Held-to-maturity investments mardaalbefrsl nnilast 9 ,1 11 161 0 952 408 (1,661) (191) 2,613 599 Impaired available-for-sale financialassets on n dacst utmr 4,5 7,6 88 203 4,3 370,286 243,038 (2,083) (818) 372,369 243,856 Loans andadvancestocustomers mardlasadavne ocsoes129354(1)(,8)411,451 401 (2,083) (818) 3,534 1,219 Impaired loansandadvancestocustomers on n dacsdefo ak 5,7 2070(8 47661,929 54,776 (98) 0 62,027 54,776 Loans andadvancesduefrombanks mardlasadavne u rmbns0100(8 22 0 (98) 0 120 0 Impaired loansandadvancesduefrombanks Collective impairmentonnotspecificallyimpairedloans(-) Normal otherassets Normal otheraccountsandreceivables 7.15. Normal assetsfrominsuranceactivities Normal available-for-sale financialassets Normal held-to-maturityinvestments Normal loansandadvancestocustomers Normal loansandadvancesduefrombanks ANALYSIS OFNORMALLOANSANDSECURITIES OML+IPIE Grossamount NORMAL +IMPAIRED ANALYSIS OFIMPAIRED LOANSANDSECURITIES OA 2,3 6,6 102 417 2,2 557,440 521,726 (4,127) (1,012) 561,567 522,738 TOTAL OA ,2 ,9 102 417 1 2,470 811 (4,127) (1,012) 6,597 1,823 TOTAL TOTAL fwiheut ntuet 3 ,8 17 84 8 644 380 (844) (157) 1,488 537 - ofwhichequityinstruments fwihfie-noeisrmns6 ,2 3)(1)2 308 28 (817) (34) 1,125 62 - ofwhichfixed-incomeinstruments fwiheut ntuet ,0 ,2 17 84 ,4 3,778 5,544 (844) (157) 4,622 5,701 - ofwhichequityinstruments fwihfie-noeisrmns22851011(4 87 1,3 119,284 212,831 (817) (34) 120,101 212,865 - ofwhichfixed-incomeinstruments - ofwhichequityinstruments - ofwhichfixed-incomeinstruments QUALITY OFFINANCIALASSETS e.3,20 e.3,20 e.3,20 e.3,20 e.3,20 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec. 31,2007 e.3,20 e.3,20 e.3,20 e.3,20 e.3,20 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec.31,2007 Dec.31,2008 Dec. 31,2007 Gross amount (A)+(B) (B) Specific loanloss Specific loanloss allowance (C) allowance (C) e.3,20 Dec.31,2008 Dec. 31,2007 Dexia 2,1 554,970 520,915 1,6 122,110 368,835 217,967 242,637 1,0 118,976 212,803 Gross amount(A) 47661,907 54,776 Annual report 2008 ,9 1,109 2,195 1,260 1,967 1,915 ,6 3,134 5,164 (419) 8 354 584 (A)+(B)+(C) (B)+(C) Total Total (1,506) 194 151
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 152 Dexia Annual report 2008 (in millionsofEUR) Other borrowings Repurchase activity Other customerdeposits Term deposits Savings deposits Demand deposits A. Analysisbynature 8.1. 8. See note12.1. C. Analysisofthefairvalue See notes12.4.,12.5.and12.6. B. Analysisbymaturityandinterest rate A. Analysisbynature 8.2. See note12.1. C. Analysisofthefairvalue See notes12.4.,12.5.and12.6. B. Analysisbymaturityandinterest rate Other borrowings Central banks Repurchase activity Term On demand TOTAL OA UTMRBORROWINGS CUSTOMER TOTAL OA UTMRDEPOSITS CUSTOMER TOTAL TOTAL Notesontheliabilitiesofconsolidatedbalancesheet CUSTOMERBORROWINGSANDDEPOSITS DUE TOBANKS e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 2,8 114,728 126,680 2,9 102,340 120,493 7,8 213,192 178,681 09442,587 26,072 30,874 50,924 26,845 39,994 80831,712 120,559 35,331 38,008 12,393 12,414 13,197 35,755 76,133 16,371 ,8 12,388 3,074 9,314 6,187 3,193 2,994 ,3 2,807 2,730 Equity instruments Other bonds Bonds issuedbypublicbodies Unit-linked products Subordinated liabilities Non subordinatedliabilities 18,679 1,995 16,306 Financial liabilitiesdesignatedatfairvalue Financial liabilitiesheldfortrading (1) Listavailableonrequest. A. Analysisbynature Financial liabilitiesdesignatedatfairvalue See note12.1. C. Analysisofthefairvalue See notes12.4.,12.5.and12.6. B. Analysisbymaturityandinterest rate A. Analysisbynature Financial liabilitiesheldfortrading 8.3. TOTAL TOTAL TOTAL FINANCIAL LIABILITIESMEASUREDAT FAIR VALUE THROUGHPROFITORLOSS (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 63618,679 16,306 83118,952 18,301 20715,135 12,007 ,9 3,197 4,299 1,995 1,911 650 7 46 38 347 0 Dexia Annual report 2008 273 273 216 153
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 154 Dexia Annual report 2008 Non-convertible bonds Convertible debts Customer savingscertificates Certificates ofdeposit See note12.1. C. Analysisofthefairvalue See notes12.4.,12.5.and12.6. B. Analysisbymaturityandinterest rate The listofconvertibledebtsisavailableonrequest. the FVOclassification: The followingtypesofliabilitiesincurred byFSAare subjectto inorderused asanalternative toreduce volatilityinprofit orloss. are notmetorthere isariskthattheywillnotbemet,theFVO 2) byFSAforliabilitieswhere thehedgeaccountingrequirements (branch 23)atfairvaluethrough thestatementofincome. designated theassetsandliabilitiesofunit-linkedcontracts In order toavoidvolatilityinitsequityandresults, Dexiahas (Unit-linked contracts). linked totheinvestmentinaspecifiedpoolofinsurer’s assets not-closely related embeddedderivativewhereby thereturnis 1) bytheinsurancebusinesswhere financialliabilitiescontaina mainly usedinthefollowingsituations: The “FairValue Option”(FVO),where financialliabilitiesis See note12.1. C. Analysisofthefairvalue See notes12.4,12.5and12.6. B. Analysisbymaturityandinterest rate A. Analysisbynature 8.4. TOTAL b) Globalfundingfixedrateliabilities. investor. ing contractsthatare tailored tothespecificneedsof a) Fixedrateliabilitiesthatare highlycustomizedfund- DEBT SECURITIES the increase ofcostfunding. recorded totakeintoaccountthedowngradeofratingand has decreased in2008,anincomeofEUR118millionwas some banksoftheGroup, havingrecorded liabilitiesinFVO, taking intoaccountourowncredit rating.Astheratingof on availablemarketratesapplicableforsimilarsecuritiesand the netpresent valueisdeterminedbyaninterest ratebased The pricingtoolisadiscountedcashflowmodelwhereby Management. sified underthefairvalueoption,are setupbyGroup Risk mine thefairvaluefornon-listedfinancialinstrumentsclas- The pricingtoolsusedandtheprocedures followedtodeter- 3) bycompaniesissuingdebtwithembeddedderivatives. an increase ofowncredit riskofEUR-323million. cost continuedtoincrease, leadingtotherecognition of In 2008,FSAInc.ratingwasdowngradedandtheliquidity in liquidityspreads. Inc. andprevious yearchangesonlyreflected thechanges and highlycustomized.Thosedebtsare guaranteedbyFSA was limitedasliabilitieswere AAA-rateduntilendof2007 For bothtypesofliabilities,thechangecredit spread e.3,20 Dec.31,2008 Dec. 31,2007 0,1 188,120 204,013 5,9 166,640 158,091 05716,466 40,587 ,3 5,011 5,332 33 Hybrid capitalandredeemablepreferenceshares See note12.1. D. Analysisofthefairvalue See notes12.4.,12.5.and12.6. C. Analysisbymaturityandinterest rate Nil. B. Analysisofsubordinated debtconvertibleinDexiashares BIL hasissuedanhybridcapitalinstrument:perpetualofEUR225millionattherate6.821%,refunding onlypossibleannual List availableonrequest A. Analysisbynature 8.5. Other Loan capitalperpetualsubordinatednotes TOTAL Non-convertible subordinateddebt SUBORDINATED DEBTS e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 ly asfrom July6,2011. ,5 4,175 4,653 ,8 3,352 3,881 3 232 232 7 823 772 Dexia Annual report 2008 155
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 156 Dexia Annual report 2008 rnfr 500(2 (66) 0 (72) 0 0 65 Transfers tlzddrn h er(5 3)(0 7)()(30) (7) (72) (60) (32) (55) Utilized duringtheyear nsdaonsrvre 18 2 1)()()(4) (2) (1) (19) (2) (108) Unused amountsreversed diinlpoiin 1 112183 88 35 158 112 91 113 Additional provisions xhnedfeec 1 1 2 1 0 (2) (1) (1) 5 Exchange difference rnfr 1 (5) 1 0 (1) 0 3 Transfers of consolidation(out) Changes inscope tlzddrn h er(0)(1 6)(9 8 (41) (8) (59) (64) (31) (109) Utilized duringtheyear nsdaonsrvre 5)()(9 9 2 (15) (2) (9) (19) (3) (51) Unused amountsreversed diinlpoiin 29164 663 26 44 126 9 42 Additional provisions xhnedfeec 9 1 1 0 (1) 0 0 (9) Exchange difference Litigation claims te ogtr mlyebnfis4 36 42 Other Provisions(noninsurance) Onerous contracts Provision foroff-balance-sheet creditcommitments Other long-termemployeebenefits Other postretirementobligations Long-term definedbenefitplans Restructuring A. Analysisbynature 8.6. See note12.6. C. Analysisbymaturity B. Analysisofmovements (4) Claimswithmajorrisksareanalyzedindetailnote6.“Litigations”. (3) TheOtherProvisionsmainlycontain:provisionstorestoreproperty, plantandequipmenttotheiroriginalstateanumb (2) OfwhichEUR99millionand81relatingtoDexiaBankNederland(LegioLeaseProvision)for20072008respe (1) Provisionsforlitigations,includeprovisionsrelatingtostaff,taxes,administrativeandotherclaims. SO E.3,20 4 8 6 2 4119 54 121 764 181 248 AS OFDEC.31,2008 SO A.1 08281572102 130 28 110 732 125 228 AS OFJAN.1,2008 SO E.3,20 2 2 3 1 8130 28 110 732 125 228 AS OFDEC.31,2007 SO A.1 07321063151 127 11 135 693 150 352 AS OFJAN.1,2007 TOTAL PROVISIONS ANDOTHEROBLIGATIONS (4) (1) (3) Litigation Litigation claims claims 3 0 0 0 (3) 0 0 etutrn Pensions Restructuring etutrn Pensions Restructuring (2) and other and other employee employee benefits benefits commitments commitments Provision for Provision for off-balance- off-balance- sheet credit sheet credit er of provisions for non-material events. er ofprovisionsfornon-materialevents. e.3,20 Dec.31,2008 Dec. 31,2007 contracts contracts Onerous Onerous ,5 1,487 1,353 3 119 121 130 676 110 181 248 639 125 228 ctively. 854 52 28 51 provisions provisions Other Other this insurancecontractwasnottakenoutinfavourofthepensioner, butinfavourofthetrustee.Consequently, thereremains contract, thesinglepremiumwasstatedasapayment,alongwithreductionofliabilities.Thisisnotfullycompliantwi to payannuitiespensioners.Inthepast,theseinsurancecontractsusedbeprocessedasfollows:attimeofconc (1) Therehasbeenatransferofassetsandliabilitiesforthesameamount.Itinvolvesallocationinsurancecontracts D. Provisions forpensionsandotherlong-termbenefits 15. 14. 13. 12. 12. 11. 10. 11. 10. 13. b. Amounts inthebalancesheet 3. 2. 1. 8. 7. 6. 5. 4. 3. 2. 1. 9. Taxes paid 8. Expensespaid 7. 6. 5. 4. 3. 2. Fairvalueofplanassetsasbeginningyear 1. 9. 8. 7. 6. 5. 4. 3. 2. 1. a. c. NET LIABILITY/(ASSET) Assets Liabilities NET LIABILITY/(ASSET) Effect ofparagraph58(b)limit Unrecognized pastservice(cost)/benefit Unrecognized netactuarialgains/(losses) rsn au ffne biain ,0 1,357 1,408 Present valueofunfundedobligations Deficit/(surplus) forfundedplans Fair valueofplanassets Present valueoffundedobligations Amounts recognized inthebalancesheet EEI BIAINA FEDO ER1,948 BENEFIT OBLIGATION ASOFENDYEAR Exchange ratechanges Plan settlements Plan curtailments Exchange ratechanges Acquisitions/divestitures Plan settlements Premiums paid Benefits paid Member contributions Employer contributions Actuarial gains/(losses)onplanassets Expected returnonplanassets eetolgto tbgnigo er2221,948 2,282 Acquisitions/divestitures Premiums paid Taxes paid Expenses paid Benefits paid Actuarial (gains)/losses Amendments Plan participants’contributions Interest cost Current servicecost Benefit obligationatbeginningofyear Change inplanassets Change inbenefitobligation ARVLEO LNAST SO N FYA 1,380 FAIR VALUE OFPLANASSETSASENDYEAR (1) e.3,20 Dec.31,2007 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 which apensionfundconcluded th theIAS19principles,because aliabilityonbehalfofDexia. ,8 1,287 1,380 ,8 1,380 1,483 15 (118) (105) 15 (118) (140) (105) (309) 1 747 764 714 730 714 4 130 140 4 540 540 1)(17) (16) 9)0 0 (99) (14) 9)0 (98) (141) (44) 870 28 783 79 77 65 5103 88 95 91 2 18 (2) 1 (7) (1) 1 (7) 9 (4) (1) (1) (3) 3 (4) (3) 67 00 76 00 00 00 00 62 77 lusion oftheinsurance Dexia Annual report 2008 1,287 1,897 747 157
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 158 Dexia Annual report 2008 (1) Includesqualifyinginsurancepolicies. 10. d. .Historyofexperiencegainsandlosses g. culrtr nribreetast 0 0 Actual returnonreimbursementassets Actual returnonplanassets Amounts recognized instatementofincome Actual returnonassets 8. 7. 6. 5. 4. 3. 2. 1. e. 9. 8. 7. 6. 5. 4. 9. 3. 2. 1. 2. 1. 4. 3. 2. 1. Asset category f. Exchange rateadjustment-(gain)/loss Net transferin/(out)(includingtheeffect ofanybusinesscombinations/divestitures) Credit toreimbursements Benefits paiddirectlybycompanyinthefinancialyear Employer contributionsmadeinthefinancialyear Amounts recognizedinSORIEthefinancialyear Pension expenserecognizedinincomestatementthefinancialyear Balance sheetliability/(asset)asofbeginningyear Balance sheetreconciliation OA ESO OTRCGIE NTESAEETO NOE120 TOTAL PENSIONCOSTRECOGNIZEDINTHE STATEMENT OFINCOME Settlement (gain)/lossrecognized Curtailment (gain)/lossrecognized Effect ofparagraph58(b)limit Amortization ofnet(gain)/lossincl.§58(a) Amortization ofpastservicecostincl.§58(a) Expected returnonreimbursementassets BALANCE SHEETLIABILITY/(ASSET)ASOFENDYEAR(1)+(2)+(3)-(4)-(5)+(6)+(7)+(8) Expected returnonplanassets Interest cost Current servicecost .Aon 3(31) 93 (28) 54 -2% -1% 3% 4% b. Percentageofpresentvalueplanliabilities a. Amount Experience gains(-)andlossesonplanliabilities b. Percentageofplanassets a. Amount return onplanassets Difference betweentheactualandexpected Other Real estate Debt securities Equity securities Plan assets Components ofpensioncost (1) e.3,20 e.3,20 e.3,20 Dec.31,2008 Dec.31,2007 Dec.31, 2006 Dec. 31,2005 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 Percentage ofPlanassets 37%85.07% 13.03% 83.73% 15.42% .0 1.56% 0.60% .5 0.34% 0.25% -3% -3% 2 106 120 7 714 676 1 747 714 5)(5) (53) (141) (44) 1)0 (13) 6)(79) (65) 121 62 21 56 1(62) 21 5103 88 95 91 6 9 (6) 5 (10) (5) 11 00 00 60 61 53 00 -11% 106 0% The expectedreturnonassetsisbasedthemixofbondsandshares oftheportfolio. onsharesReturn takesintoaccountariskpremium. As ageneralprinciple,discountrateisequaltoreturnonbondsinplanassets. Comment onassumptions: For 2007and2008,theamountrecognized asanexpensefordefinedcontributionplans isEUR30million. Contributions tolegalpensionsare notincludedintheamounts. E. Definedcontributionplan plan assetswouldincrease/decrease by 4.7/4.7%andthetotalnetpensioncostwoulddecrease/increase in2009by6.6/5.7%. The servicecostfortheyear2009woulddecrease/increase by2.7/3%,interest costwould increase/decrease by1.6/1.7%andthe unchanged astheactuarial“gainsandlosses”wouldabsorbdifferences. The BenefitObligationasofendtheyear2008woulddecrease/increase by2.3/2.5%buttheamountreported in«provision» wou An increase/decrease of25bpinterest ratewouldleadtothefollowingconsequenceson 2008amounts: Sensibility tochangesofinterest rates (2) Seenote7.12.A. (1) Seenote8.6.A. Outstanding liabilityrelatingtootherlong-termemployeebenefits Outstanding liabilityrelatingtootherpostretirementobligations Outstanding liabilityrelatingtodefinedbenefitplans as ofDecember31,2008. The fairvalueoftheplanassetsamountstorespectivelyEUR1,024 millionasofDecember31,2007andEUR954 Some oftheDexia’s planassetsareinsurancepoliciesissuedbyEthias. Outstanding assetreportedinthefinancialstatements uoe44%-55%25%38%-58%35%-55%65%-85%2.50%-5.50% 6.50%-8.50% 3.50%-5.50% 3.80%-5.80% 2.50% 4.42%-5.50% Europe wteln .5 .0 .5 .5 .5 2.50% 6.25% 3.25% 3.25% 1.20% 3.25% Switzerland ntdKndm58%33%76%58%88%4.80% 8.80% 5.80% 7.69% 3.30% 5.80% United Kingdom uoe50%-57%22%50%-56%50%-57%80%-87%2.25%-5.25% 8.00%-8.75% 5.00%-5.75% 5.00%-5.60% 2.25% 5.00%-5.75% Europe wteln .5 .0 .5 .5 .5 2.50% 6.25% 3.25% 3.75% 1.30% 3.25% Switzerland ntdKndm64%32%67%60%81%4.70% 8.10% 6.00% 6.78% 3.20% 6.40% United Kingdom Long-Term Obligations TOTAL OUTSTANDING LIABILITYREPORTED INTHEFINANCIALSTATEMENTS TOTAL ASSETSRELATING TOINSIGNIFICANTPLANS TOTAL ASSETSANALYSED BYACTUARIALS TOTAL LIABILTIY RELATING TOINSIGNIFICANTPLANS CALCULATED BYACTUARIALS TOTAL LIABILITY .Rangeofassumptionstodeterminepensionexpense h. .Reconciliationwithfinancialstatements i. .Concentrationrisk j. icutRt nainExpectedreturn Inflation Discount Rate Discount Rate nainExpectedreturn Inflation (2) on assets on assets Dec. 31,2007 Dec. 31,2008 (1) Expected return Expected return on bonds on bonds Expected return Expected return on shares on shares Dexia 072008 2007 Annual report 2008 3 676 639 3 764 730 3 764 732 236 52 42 51 617 16 617 16 00 20 Salary Increase Salary Increase returnon ld remain Rate Rate 159
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 160 Dexia Annual report 2008 Deferred taxliabilities(seenote9.2.) Current incometax Other liabilitiesspecifictoinsuranceactivities Other insuranceliabilities Debts resultingfromreinsurancetransactions Other liabilities Operational taxes Shareholder dividendspayable Salaries andsocialcharges(payable) Other grantedamountsreceived Other accountspayable Subsidies Deferred income Accrued costs Other liabilities(exceptrelatingtoinsurancecompanies) Debts resultingfromdirectinsurancetransactions Debts fordepositsfromassignees 8.8. 2007: anamountofEUR147millionrepresenting operationaltaxesistransferred to“Otherliabilities”. 8.7. (1) Seenote9.6.C.“Analysisofgroupheld forsale”. 8.9. (1) Decreasein2008duetoclassificationoftheliabilitiesinsuranceactivity FSAHoldingsin“Liabilitiesincluded B. Liabilitiesspecifictoinsuranceactivities A. Otherliabilities (2) Decreasein2008duetoclassificationoftheliabilitiesinsuranceactivityFSAHoldings“Liabilitiesincluded (1) 2007:anamountofEUR147millionrepresentingoperationaltaxesistransferredfrom“Tax liabilities”. Liabilities ofsubsidiariesheldforsale TOTAL TOTAL Analysis bynature TOTAL TOTAL TOTAL OTHER LIABILITIES TAX LIABILITIES LIABILITIES INCLUDEDINDISPOSALGROUPSHELDFOR SALE (1) (2) (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 indisposalgroupsheldforsale”. indisposalgroupsheldforsale”. ,1 4,230 5,210 ,1 4,230 2,186 5,210 2,092 ,1 2,369 3,417 ,9 4,393 7,396 2,186 0 71 231 405 226 3 302 631 1 637 159 316 612 147 547 311 238 135 178 620 56 8115 84 88 86 532 35 0 0 30 01 5,691 5,691 163 111 163 omdt eiaie 2 2 907 11 1 15 71 71 0 49 123 123 Commodity derivatives omdt eiaie 26 32 24 8 6 46 62 24 23 62 62 Commodity derivatives rdtdrvtvs5 0304 803 0 48 45 0 3 50 50 Credit derivatives rdtdrvtvs4,4 30696572,6 9363961,416 3,976 19,316 28,367 517 986 83,016 47,142 Credit derivatives qiydrvtvs1,6 34655571,6 14222450 272 11,442 10,669 527 575 13,416 12,467 Equity derivatives qiydrvtvs1,4 2211381671,3 2122742,869 2,754 12,152 13,937 1,607 1,308 12,201 12,144 Equity derivatives nfrinette 21 9 0 in foreignentities Derivatives designatedashedgeofanetinvestment eiaie fprflohde5345835288,627 5,238 5,833 5,364 Derivatives ofportfoliohedge neetrt eiaie 8,7 8,3 ,0 ,7 0,9 0,7 ,9 18,055 1,897 200,874 201,291 5,775 3,809 186,938 188,477 Interest ratederivatives neetrt eiaie 2,1 2,0 ,4 5 2,4 2,5 8 2,193 784 126,050 126,146 955 1,041 125,605 125,611 Interest ratederivatives neetrt eiaie 7,6 7,5 2821,3 1,4 2,1 52335,586 35,263 928,812 917,943 12,437 12,852 877,257 875,060 Interest ratederivatives eiaie eintda ahflw egs ,4 ,2 ,3 2,508 1,332 1,022 1,541 Derivatives designatedascashflowhedges eiaie eintda arvlehde 56291732422,605 3,214 9,147 5,602 Derivatives designatedasfairvaluehedges oeg xhnedrvtvs4,5 7301162854,8 7561004,096 1,030 47,596 45,383 2,845 1,166 47,300 45,658 Foreign exchangederivatives oeg xhnedrvtvs254217506 ,7 ,2 4 315 548 2,824 3,170 67 500 2,107 2,584 Foreign exchangederivatives oeg xhnedrvtvs9,2 882152798,8 3363492,215 3,409 83,366 83,489 769 1,542 98,802 98,626 Foreign exchangederivatives eiaie edfrtaig1,1 5344,0 42,094 45,408 15,354 16,711 Derivatives heldfortrading B. Detailofderivativesheldfortrading A. Analysisbynature 9.1. 9. C. Detailofderivativesdesignatedasfairvaluehedges D. Detailofderivativesdesignatedascashflowhedges OA 4,7 4,2 ,0 ,4 5,5 6,3 ,1 22,605 3,214 260,031 257,459 9,147 5,602 247,827 246,775 TOTAL OA ,3,3 ,7,3 6711,5 ,4,9 ,4,9 54842,094 45,408 1,043,692 1,043,798 15,354 16,711 1,071,338 1,033,034 TOTAL OA 9283,6 52375,834 55,213 31,365 29,218 TOTAL OA 2,9 2,1 ,4 ,2 2,1 2,7 ,3 2,508 1,332 128,874 129,316 1,022 1,541 127,712 128,195 TOTAL Other notesontheconsolidatedbalancesheet(inmillionsofEUR) DERIVATIVES orcieT eie orcieTo deliver To receive To deliver To receive orcieT eie orcieTo deliver To receive To deliver To receive orcieT eie orcieTo deliver To receive To deliver To receive Notional Amount Notional Amount Notional Amount e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 sesLiabilities Assets sesLiabilities Assets sesLiabilities Assets sesLaiiisAssets Liabilities Assets e.3,20 Dec.31,2008 Dec. 31,2007 Notional Amount Notional Amount Notional Amount Assets Assets sesLiabilities Assets Dexia Liabilities Liabilities Liabilities Annual report 2008 0 161
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 162 Dexia Annual report 2008 Interest ratederivatives derivatives Foreign exchange Unrecognized deferredtaxassets Deferred incometaxassets Deferred incometaxliabilities of which: (1) In2008,themostsignificantamountisduetotransferofinsuranceactivity ofFSAHoldingstodisposalgroupheld F. Detailofderivativesdesignatedashedgeanetinvestmentinforeign entities E. Detailofderivativesportfoliohedge B. Mouvements A. Analysis 9.2. not hedged. FSA’s equityheldwashedgedagainsttheUSDfluctuationbyaforeign exchangetransaction,thepartrelated tothegoodwillwas Dexia financedthemajorpartofpurchase ofFSA in2001byissuingdebtseuros. Thepartofthedebtsequivalentto - Othermovements - Exchangedifferences - Effect ofchangeintaxrates–equity - Effect ofchangeintaxrates–statementincome - Itemsdirectlycomputedbyequity - Statementofincomecharge/credit Movements oftheyear: oeg xhnedrvtvs31340 331 Foreign exchangederivatives OA 6,3 5,8 ,6 ,3 5,7 6,5 ,3 8,627 5,238 462,450 459,572 5,833 5,364 559,185 564,331 TOTAL E EERDICM A SES(IBLTE)653,908 AS OFDEC.31 685 AS OFJAN.1 NET DEFERREDINCOMETAX ASSETS/(LIABILITIES) DEFERRED TAXES (1) orcieT eie orcieTo deliver To receive To deliver To receive orcieT eie orcieTo deliver To receive To deliver To receive Notional Amount 6,3 5,8 ,5 ,0 5,8 6,7 ,3 8,448 5,236 461,579 458,580 5,700 5,359 557,985 563,135 Notional Amount ,9 ,0 3 9 7 179 2 871 992 133 5 1,200 1,196 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 sesLiabilities Assets sesLiabilities Assets 0 5 3 10 21 335 356 9 Notional Amount Notional Amount e.3,20 Dec.31,2008 Dec. 31,2007 ,9 4,550 1,194 072008 2007 48 685 (418) 14 (571) (71) (104) (405) 6 2,806 890 960 114 8 3,908 685 2)66 (20) forsale. 3(528) 23 1(6) 21 (5) 5 Assets sesLiabilities Assets Liabilities
Tax lossescarriedforward C. Expirydateofunrecognized deferred taxassets Temporary difference Other Entities withspecialtaxstatus Legal taxfreeprovisions Tax creditcarriedforward Tax lossescarriedforward Other assetsandliabilitiesspecifictoinsurancecompanies Pensions Provisions Borrowings, depositsandissuanceofdebtsecurities Derivatives Other Other assetsandliabilitiesspecifictoinsurancecompanies Tangible andintangiblefixedassets Derivatives Securities Cash, loansandloanlossprovisions OA 51 (571) (571) 0 0 0 TOTAL Nature TOTAL Dec.31,2008 Dec.31,2007 Dec.31,2008 Deferred taxcomingfromliabilitiesofthebalancesheet Dec.31,2007 TOTAL Deferred taxcomingfromassetsofthebalancesheet Less than 1 year 00 00 Between 1 to 5years 5 years Over 17 (107) (107) 0 44 (464) (464) 0 Undetermined 21 (177) (1,772) (211) (415) 13 (161) (111) (173) (414) 1,159 (265) 7)1 (74) 4 1,702 (2,061) 545 216 0 124 1,080 203 114 287 4,507 122 975 3 6,780 739 1)6 (11) 3)(35) (39) 0(2,301) 50 maturity 997 39 46 Dexia Annual report 2008 Total 163
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION Share ofreinsurers Transferred claimsreserves lisrsrea tDc 1(8 5 3)0(36) 0 (34) (5) (18) Claims reserveasatDec.31 to variationofscope Variation inopeningdue reserves (UPR) Change ingrossunearnedpremium Premiums cededtoreinsurers Claims reserveasatJan.1 RMU INCOME PREMIUM Incomeandexpenses A.1. A. Lifecontracts 9.3. Gross premiumswritten Gross claimspaid EXPENSES CLAIMS ParticipationFeatures. (1) Discretionary E LISICRE 29 14 35 9)(9)(0)(,1)(19) (1,215) (105) (192) (97) (345) (114) (269) NET CLAIMSINCURRED ENUAC 8 6 ,4 7432627353 2,753 256 413 87 3,049 262 480 REINSURANCE NET PREMIUMAFTER 164 INSURANCE CONTRACTS Dexia Annual report 2008 niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual (137) (126) Insurance Insurance contracts contracts 8 2 ,5 8413327353 2,753 313 421 88 3,050 321 486 12 2 2 0 0 0 (2) 0 0 0 (2) 4 5)()()()(7 0 0 (57) (6) (1) (1) (59) (4) 0 0 e.3,20 Dec.31,2008 Dec. 31,2007 (133) 19 14 (9) 0 2007 Investment contracts Investment contracts 45 9)(7)(1)(,2)(19) (1,227) (115) (176) (97) (455) 3 600 0 16 3 0 136 with DPF with DPF 00 00 00 00 1 1 0 0 (1) (1) 0 0 018580 340 (1) Insurance contracts Insurance contracts (10) 2008 Investment contracts Investment contracts 2)0 (22) with DPF with DPF (1) insurance reserve Share ofreinsurersintransferredlife reserve asatDec.31 Share ofreinsurersinlifeinsurance rnfre ieisrnersre(1 200(8 3)00 0 (33) (58) 0 0 22 of scope (31) to conversionrateandvariation Variation inopeningdue reserve asatJan.1 Share ofreinsurersinlifeinsurance Transferred lifeinsurancereserve adpotsae11000000 0 0 0 0 0 1 1 Paid profitshare ieisrnersrea tDc 1(,7)(1)(,5)(0)(,5)(0)(209 (269) (12,059) (808) (2,755) (306) (9,450) (911) (3,974) Life insurancereserveasatDec.31 of scope to conversionrateandvariation Variation inopeningdue rfi hrn eev sa e.3 1)(3 9)()(3 6 9 (1) (9) (6) (13) (2) (91) (13) (10) Profit sharingreserveasatDec.31 .Changeinlifeinsurancereserve 1. TECHNICALRESERVES IN CHANGES ieisrnersrea tJn ,6 4 ,0 2 ,7 1 ,5 306 9,450 911 3,974 228 8,006 741 2,367 Life insurancereserveasatJan.1 rfi hrn eev sa a.1584 01 12 91 13 10 0 48 8 5 Profit sharingreserveasatJan.1 Nil. FROMLIABILITYADEQUACYTEST(LAT) LOSSES RESULTING Changeinprofit sharingreserve 2. EEV 165 17 145 7)95(9 268 (29) (2,698) (99) 935 (78) (1,445) (147) (1,635) RESERVE NET CHANGEINLIFEINSURANCE HRN EEV 4 4 4)()()78 1 82 7 (3) (2) (43) (4) (4) SHARING RESERVE NET CHANGEINPROFIT niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual Insurance Insurance contracts contracts 1)()()0(2 7 0 0 (7) (12) 0 (1) (5) (10) 127 133 00 00 1 1 0 0 0 (1) 0 0 (1) 1 00 400 24 00 00 28 19 8)(66) (89) (169) (228) 0 0 0 0 072008 2007 2007 Investment contracts Investment contracts with DPF with DPF Insurance Insurance contracts contracts Dexia 2008 Annual report 2008 Investment contracts Investment contracts with DPF with DPF 165
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION Other technicalreserves (UPR) Gross unearnedpremiumreserves Claims reserves adjustments Reserves duetoshadowaccounting hr frisrr ncam eevs20002000 0 0 2 0 0 0 2 Share ofreinsurersinclaimsreserves GROSS RESERVES Assetsandliabilities A.2. ieisrnersrelclGA ,4 4 ,6 4 ,5 0 209269 12,059 808 2,755 240 9,362 742 3,746 Life insurancereservelocalGAAP eev 03001 0 0 3 13 0 0 3 limited totwoproducts. Theiramountsare notsignificant. Insurance orinvestmentcontractswithDPFthathaveembeddedderivatives thatneedtobeseparatedandfairvaluedthrough pro 10 Net discretionaryparticipationfeatureincludedinequity EQUITY IN INCLUDED FEATURE DISCRETIONARY PARTICIPATION reserve Share ofreinsurersinlifeinsurance OFREINSURERS SHARE OA RS EEVS3737194620285861,9 271 12,091 826 2,805 240 9,456 761 3,773 TOTAL GROSSRESERVES OA HR FRISRR 1 5300 0 3 15 0 0 3 12 TOTAL SHAREOFREINSURERS OA IEISRNERSRE3737493228275891,5 269 12,059 809 2,755 238 9,332 744 3,743 TOTAL LIFEINSURANCERESERVE 166 Dexia Annual report 2008 niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual niiulGopIdvda ru niiulGopIdvda Group Individual Group Individual Group Individual Group Individual Insurance contracts Insurance contracts 21 021 1 9 7 13 2 90 13 12 843 61 31 23 10 36 0 34 4 18 3 3)()0100 0 1 0 (2) (30) 2 (3) 00 000 10 00 00 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 Investment contracts Investment contracts niiulGroup Individual ihDFInsurancecontracts with DPF ihDFInsurancecontracts with DPF 0 315000 0 0 115 13 102 otat ihDFContractswithDPF Contracts withDPF e.3,20 Dec.31,2008 Dec. 31,2007 Total niiulGroup Individual Investment contracts Investment contracts with DPF with DPF fit andlossare Total hr frisrr nohrnnieisrnersre sa e.3 1 1 Share ofreinsurersinothernonlifeinsurancereservesasatDec.31 te hne 2()8 53 (533) 0 (3) 633 (533) (128) 4 0 (3) 86 (3) 637 (131) (4) 411 (540) (77) 82 (7) 3 (2) (547) (79) 414 Variation ofconsolidationscope Other changes Attribution oftechnicalinterest Results ondeathandlife hr frisrr nohrnnieisrnersre sa a.1()(1) (1) Share ofreinsurersinothernonlifeinsurancereservesasatJan.1 diinlrsre u osao dutet 6)0(2 4034 (677) 3,275 0 (16) 20 (693) 34 3,295 (62) 3,545 0 22 (62) 3,567 Claims paid Additional reservesduetoshadowadjustments Net paymentsreceived/premiumsreceivable Other nonlifeinsurancereservesasatDec.31 Other nonlifeinsurancereservesasatJan.1 EOCLAINO HNE NLF INSURANCERESERVE LIFE IN CHANGES OF RECONCILIATION LISEXPENSES CLAIMS RMU INCOME PREMIUM Incomeandexpenses B.1. B. Nonlifecontracts Nil. FROM LIABILITYADEQUACYTEST(LAT) LOSSES RESULTING INSURANCERESERVES NONLIFE OTHER IN CHANGE Share ofreinsurers Claims reserveasatDec.31 Claims reserveasatJan.1 Gross claimspaid hnei rs nandPeimRsre UR 5 (9) 1 (5) 1 Share ofreinsurersinchangeUnearnedPremiumReserve(UPR) Change ingrossUnearnedPremiumReserves(UPR) Premiums cededtoreinsurer Gross premiumswritten IEISRNERSREA TDC 11,5 31,4 5821 15,876 16 15,892 14,044 13 14,057 LIFE INSURANCERESERVE ASAT DEC.31 NET CHANGESININSURANCELIABILITIES IEISRNERSREA TJN 1351 1381,5 314,044 13 14,057 11,358 17 11,375 LIFE INSURANCERESERVE ASAT JAN.1 NET CLAIMSINCURRED HNEI E NANDPEIMRSRE(P)()()(8) (4) PREMIUMRESERVE (UPR)(B) UNEARNED NET IN CHANGE AFTERREINSURANCE(A) PREMIUMS NET TOTAL NETEARNEDPREMIUMS(A)+(B) amount Gross Reinsurance amount 072008 2007 e mutGross Net amount amount (1,464) e.3,20 Dec.31,2008 Dec. 31,2007 Dexia Reinsurance amount Annual report 2008 5 384 417 353 381 4 376 349 072008 2007 072008 2007 2)(33) (28) 60 (631) (217) (600) (199) 21 (234) (221) 7 600 571 1)(19) (19) 819 18 1 0 (1) 714 (18) Net amount (1,446) 167
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION iblte ncam urn er15312133 143 30 173 152 3 155 Liabilities onclaimscurrentyear 08174 07 4 285 145 77 60 48 187 2008 hnei li hre npeiu er 3)()(4 2)(2 (7) (22) (29) (34) (4) (38) Change inclaimchargesonpreviousyears 07225 513267 133 75 56 222 2007 lispi npeiu er 8)()(5 13 5 (108) (5) (113) (85) (2) (87) Claims paidonpreviousyears 06266 2 237 129 68 266 2006 053618240 118 227 316 399 2005 2004 Share ofreinsurersinUPR Share ofreinsurersinothertechnicalreserves Share ofreinsurersinclaimsreserves eevsfrcam nurdBtNtRpre IN)3 36 31 39 29 Unearned PremiumReserve(UPR) Other technicalreserves Reserves forclaimsIncurredButNotReported(IBNR) Reserves UnallocatedLossAdjustmentExpenses(ULAE) Claims reserves HR OFREINSURERS SHARE GROSS RESERVES Assetsandliabilities B.2. EOCLAINO HNE NCLAIMSRESERVES IN CHANGES OF RECONCILIATION Runoff triangletotalcosts(gross figures) DEVELOPMENT CLAIMS LISRSRE SA E.3 606 3 3 6565 66 631 537 63 600 CLAIMS RESERVES ASAT DEC.31 LISRSRE SA A.1506 0 0 3537 63 600 504 66 570 CLAIMS RESERVES ASAT JAN.1 LIQUIDATION YEAR HR FRISRR NTTLCAM EEV 365 63 CLAIMSRESERVE TOTAL IN OFREINSURERS SHARE TOTAL SHAREOFREINSURERS OA CLAIMSRESERVES TOTAL TOTAL GROSSRESERVES 168 Dexia Annual report 2008 amount rvos20 0520 072008 2007 2006 2005 2004 Previous Gross Reinsurance 072008 2007 amount e mutGross Net amount Occurrence year amount e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 Reinsurance amount 0 631 600 3 564 532 0 746 707 365 63 669 66 896 19 88 19 23 11 Net amount Share-based payments Termination benefits Other long-termbenefits Post-employment benefits Short-term benefits This informationisreported onpage47oftheannualreport. C. CompensationoftheAuditor Share-based paymentsincludethecostofstockoptions andthediscountgivenoncapitalincrease allowedtothekeymanagement Post-employment benefits:servicecostcalculatedinaccordance withIAS19. Short-term benefitsincludethesalaries,bonusesandotheradvantages. Details perpersonarereportedonpage B. Keymanagementcompensations Dexia Group entered noinvestmenttransactionsexceedingEUR25millionwithrelated parties. No provisions were recorded onloansgiventorelated parties. (4) Unusedlinesgranted. (3) Transactions withrelatedpartiesareconcludedatgeneralmarketconditions. Dexia didnotdisclosetransactionsconcludedwiththeStatesforfollowingreasons: (2) We referheretothemainshareholdersofDexia(2007-2008):Arcofin,HoldingCommunal,Caissedesdépôtsetconsignations. (1) KeymanagementincludestheBoardofDirectorsandManagingCommittee. A. Relatedpartiestransactions 9.4. yteGop006657018324941 15 16 4 (135) 2,489 (123) 1,853 0 (7) (10) 507 0 606 0 0 0 (32) (23) by theGroup 0 commitments received Guarantees and 0 Interest expense neeticm 95 21 3 2 12 42 0 0 52 29 0 0 Interest income e omsin000100()4(4 (11) (14) 4 (3) 0 0 1 0 0 0 Net commission Deposits Loans the Group provided by and commitments Guarantees issued b) intheExposureDraftIAS24ofDecember2008,Statesarenolongerconsideredasrelatedparties. a) transactionsareconcludedatmarketrate; RELATED PARTIES TRANSACTIONS (3) (3) (4) Key management Dec. 31, Dec. 31, 2007 0 4 ,2 41391,737 1,379 44 2,676 1,227 64 3,093 0 81 304 0 234 1,684 2,650 6 347 6 108 2 2 0 1,744 347 0 1,777 914 3 0 9 5 41 oftheannualreport. Dec. 31, Dec. 31, 2008 (1) control orsignificant influence overthe Entities withjoint Dec. 31, Dec. 31, 2007 entity (2) Dec. 31, Dec. 31, 2008 Dec. 31, Dec. 31, usdre soitsJointventures Associates Subsidaries 2007 Dec. 31, Dec. 31, 2008 Dec. 31, Dec. 31, 2007 Dexia e.3,20 Dec.31,2008 Dec. 31,2007 Dec. 31, Dec. 31, 2008 Annual report 2008 in whichtheentityis 19 11 32 00 00 23 Dec. 31, Dec. 31, a venturer 2007 . Dec. 31, Dec. 31, 169 2008
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 170 Dexia Annual report 2008 inpbi niis l h on r 0%gaate by 100% guaranteed are publicentities. Alltheloans gian loansgrantedtoBel- NV) isasecuritizationtransaction of ringfencedcompartmentofDSFB second DSFB-2 (usingthe A/A1/AA-. million outstandingandthenotes havecurrently aratingof interest onthenotes. AsatDecember31,2008there is1,632 Bank Belgiumhasguaranteedthe paymentofprincipaland at closingbyresp. S&P, Moody’s andFitch,wasissued.Dexia 2007. Onetrancheoffloatingratenotes,ratedAA/Aa1/AA+ ties. ThisEUR1.7billiontransactionwaslaunchedonJune28, entities inBelgiumor100%guaranteedbysuchpublicenti- DSFB-1 isasecuritizationtransactionofloansgrantedtopublic with activity. Belgian law)withcurrently sixcompartments,ofwhichthree zation vehicle( Dexia Secured FundingBelgiumNV(DSFB)isaBelgiansecuriti- (currently ratedAa1/AAbyMoody’s andFitch). Aaa/AAA byMoody’s andFitch)3.7millionunder class B There is29.8millionoutstandingunderclassA3(still rated December 31,2008there isstillEUR33.5millionoutstanding. (called classBandratedA3/AbyMoody’s andFitch).Asat and ratedAaa/AAAbyMoody’s andFitch)onejuniorclass were issued,three seniorclasses(calledclassA1through A3 November 25,1998.Fourfloating-ratetranchesofobligations outstanding amountofEUR272.7million,waslaunchedat tial mortgageloans.Thetransaction,whichhadanoriginal MBS-4 isasecuritizationtransactionofBelgianresiden- MBS hassixcompartments,ofwhichonewithactivity. lion isstilloutstandingunderclassA2. mil- 73.6 Aa2, currently Aaa).AsatDecember31,2008EUR dy’s (initially ratingequaltothatoftheFlemishgovernment rate noteswere issuedonJune19,1997,bothcarrying aMoo- of thetransactionwasEUR129.3million.Two classesoffixed- was transferred tothespecialpurposevehicle.Theoriginal size by theFlemishRegion.TheguaranteeofRegion gium andDomusFlandriaNV(theborrower) andguaranteed pursuant toalongtermcredit facilitybetweenDexiaBank Bel- Atrium-2 isasecuritizationtransactionofsocialhousingloans under classA2whileA1hasbeenrepaid. As atDecember31,2008EUR99.3millionisstilloutstanding (initiallyAa2,currentlyto thatoftheFlemishgovernment Aaa). issued onApril30,1996,bothcarryingaMoody’s ratingequal tion wasEUR188million.Two classesoffixed-ratenoteswere was transferred totheSPV. Theoriginalsizeofthetransac- by theFlemishRegion.TheguaranteeofRegion gium andDomusFlandriaNV(theborrower) andguaranteed pursuant toalongtermcredit facilitybetweenDexiaBankBel- Atrium-1 isasecuritizationtransactionofsocialhousingloans December 31,2008. lion asatDecember31,2007andEUR16,100million The totalassetsofthesecompaniesamounttoEUR1,926mil- Atrium-2, MBS,DexiaSecured FundingBelgiumandPenates. Dexia BankBelgiumhasfivesecuritizationvehicles:Atrium-1, statements. The assetsare includedintheconsolidatedfinancial vehicles. Dexia BankBelgiumandDenizBankhavesecuritization 9.5. SECURITIZATION société d’investissementencréances(SIC) under s 2010 whichwere disposed onJuly3,2007; The three tranches are: tranches ofseriesandboughtthe Diversified PaymentRights. The SPC“DFSFundingCorporationCayman”issuedthree EUR, USDandGBPcurrencies. orders received primarlythrough foreign depositorybanksin The banksecuritizesitsSWIFTMT100categorypayment tion: the“DPR(DiversifiedPaymentRights)Securitization“. In June2005,DenizBankcompletedasecuritizationtransac- entities. The PenatestransactionshavebeenfullysubscribedbyGroup’s initial outstandingnominalamountsinceclosingdate. due 2041(NR).AsatDecember31,2008allnotesare attheir and EUR36millionSubordinated ClassEFloatingRateNote BBB) D Mortgage-BackedFloatingRateNotesdue2041(Fitch 72millionClass Floating RateNotesdue2041(FitchA);EUR due 2041(FitchAA);EUR72millionClassCMortgage-Backed EUR 72millionClassBMortgage-BackedFloatingRateNotes Backed FloatingRateNotesdue2041(FitchAAA/S&PAAA); issued 5classesofnotes:EUR3,384millionClassAMortgage- gian residential mortgageloansoriginatedbyDexiaBank and acting through itscompartmentPenates-2,securitized Bel- lion RMBSsecuritizationtransaction.TheSPV, PenatesFunding On December15,2008,DexiaBankclosedaEUR3,636mil- tial outstandingnominalamountsinceclosing. 2041 (NR).AsatDecember31,2008allnotesare at their ini- EUR 80millionSubordinated ClassEFloatingRateNote due BBB)and tgage-Backed FloatingRateNotesdue2041(Fitch aeNtsde24(ic ) U 2 ilo ls DMor- 120millionClass Rate Notesdue2041(FitchA);EUR CMortgage-BackedFloating (Fitch AA);EUR120millionClass million ClassBMortgage-BackedFloatingRateNotesdue2041 Floating RateNotesdue2041(FitchAAA/S&PAAA);EUR160 5 classesofnotes:EUR7,600millionClassAMortgage-Backed residential mortgageloansoriginatedbyDexiaBankand issued acting through itscompartmentPenates-1,securitized Belgian lion RMBSsecuritizationtransaction.TheSPV, PenatesFunding On October27,2008,DexiaBankclosedaEUR8,080mil- activated. with currently three compartments,ofwhichtwohavebeen Penates FundingNVisaBelgiansecuritizationvehicle(SIC) entities. The DSFBtransactionshavebeenfullysubscribedbyGroup’s havearatingofA. the notes outstandingand are still December 31,2008,EUR928million and timelypaymentofprincipalinterest onthenotes.At full (S&P).DexiaBankBelgiumhasguaranteedthe agency asinglerating by A+atclosing issuancewasrated rate notes floating Thisonetranche October9,2008. was launchedon milliontransaction 928 public andsocialentities.ThisEUR loansgrantedtoBelgian NV) isasecuritizationtransactionof (usingthethird ringfencedcompartmentofDSFB DSFB-3 havearatingofA/A1/AA-. outstandingandthenotes still millionare December31,2008,EUR1,611 At on thenotes. fullandtimelypaymentofprincipalinterest ranteed the Moody’s andFitch,wasissued.DexiaBankBelgiumhasgua- atclosingAA/Aa1/AA+byrespectively S&P, rate notes,rated April28,2008.Onetrancheoffloating tion waslaunchedon milliontransac- Belgianregions. ThisEUR1,621 one ofthe3 USD 150millionSeries2005-A Floating RateNotesDue rcesfo ae(ncs)7 7 7 5 0 178 (14) 70 (31) (5) Less: cashandequivalentsinthesubsidiarysold Proceeds fromsale(incash) s outstanding. As ofDecember31,2008there isstillUSD94.1million USD 29.1millionasofDecember31,2008. has beenpartiallyreimbursed everythree monthsandbecame USD 65millionasatDecember31,2008; has beenpartiallyreimbursed everythree monthsandbecame The assetsandliabilitiesdisposedare asfollows: In June2008,theGroup soldOmega8/10,ownerof the buildingOmegaCourt. Year 2008 Fidexis wassoldonDecember21,2007. The group DexiaBanquePrivéeFrancewassoldonMay 2,2007. Belstar AssurancesSAwassoldonMay15,2007. Year 2007 B. Maindisposals There were nosignificantacquisitionsin2007nor2008. A. Mainacquisitions 9.6. s contracts. participationfe (1) Belstar:includingEUR9milliongains andlossesnotrecognizedintheincomestatementdiscretionary eiaie 1 0 0 (1) 0 (22) 0 0 13 0 (8) 0 (22) (1) (56) 1 10 0 0 0 (182) (19) 0 0 0 24 5 (400) 0 0 0 0 0 0 (35) 9 0 9 290 (305) 56 14 (558) 181 0 (33) 559 31 284 266 Other liabilities 5 Technical provisionsofinsurancecompanies 65 Debt securities Derivatives 24 and loss Financial liabilitiesmeasuredatfairvaluethroughprofit Customer borrowingsanddeposits Due tobanks Other assets Derivatives Financial investments and loss Financial assetsmeasuredatfairvaluethroughprofit Loans andadvancestocustomers Loans andadvancesduefrombanks Cash andcashequivalents E AHIFO NSL 517()7 (9) 147 65 NET CASHINFLOWONSALE NET ASSETS USD 70millionSeries2005-CFixedRateNotesDue2010, USD 80millionSeries2005-BFixedRateNotesDue2012, ACQUISITIONS ANDDISPOSALSOFCONSOLIDATED COMPANIES (1) Assurances outstanding. As ofDecember31,2008there isUSD350million partially subscribedbyGroup’s entities. fully subscribedbyGroup’s entities; s s tion: the“DPR(DiversifiedPaymentRights)Securitization”: In June2007,DenizBankcompletedasecuritizationtransac- Belstar USD 150millionSeries2007-CFixedRateNotesDue2015; USD 200millionSeries2007-BFixedRateNotesDue2015; 5)000 0 0 (56) 61624 2 116 26 Dexia Banque rveFac iei Omega8-10 Fidexis Privée France 072008 2007 atures ofinsurance Dexia Annual report 2008 171
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 172 Dexia Annual report 2008 a xes 1 555 816 Tax expense mareto on n rvsosfrcei omtet 201 131 66 (460) (676) (1,381) (2,031) Impairment onloansandprovisionsforcreditcommitments eerdaqiiincss(1 4)(3 (9) (13) (41) (61) Deferred acquisitioncosts ercain&aotzto ()()3 22 33 (2) (3) Depreciation &amortization eea n diitaieepne(5 3)(3 (29) (43) (31) (45) General andadministrativeexpense tf xes 3)(6 1)(12) (18) (26) (38) Staff expense te e noe2 711 1 17 25 Other netincome ehia xes rmisrneatvte 16 10 5)(35) (52) (120) (176) Technical expensefrominsuranceactivities rmusadtcnclicm rmisrneatvte 2 9 8 126 186 491 722 Premiums andtechnicalincomefrominsuranceactivities e n omsinepne()()()(1) (1) (3) (4) Fee andcommissionexpense e n omsinicm 0 0 1 1 Fee andcommissionincome e noeo netet 8 5 1)(8) (12) (5) (8) Net incomeoninvestments hog rfi rls 68 45 30 (204) (300) (475) (698) through profitorloss Net incomefromfinancialinstrumentsatfairvalue iiedicm 0 0 1 2 Dividend income neetepne(1 4)(4 (10) (14) (41) (61) Interest expense neeticm 7 8 846 68 189 278 Interest income 11.4/share. Thecontractissubjecttodifferent regulatory and As ofDecember31,2008,theAssured GuarantypricewasUSD accounting purposes. are uncertain,thesigningvalueofUSD8.1hasbeenusedfor As thenumberofshares andthevalueofshares atclosing per share forupto22.3millionofthe44.6shares. Assured GuarantyhastheoptiontosubstituteUSD8.1incash Assured Guarantyshare priceatthedateofsigning).Atclosing, (stock portionbeing44.6millionshares atapriceofUSD8.1,the of signingbothcashandstockportionequalledUSD361million (USD 361 million) and stock (44.6 million shares) . At the date million)andstock (44.6millionshares) .Atthedate 361 (USD lates apurchase priceconsistingofa50/50paymentincash The Share Purchase Agreement withAssured Guarantystipu- 2008 (signedonNovember14). has beenrecorded asagroup heldforsaleasfrom October1, As required byIFRS5,theInsuranceactivityofFSAHoldings groups heldforsale C. Assetsandliabilitiesincludedindisposal Some amountsmaynotaddduetoroundings. E INCOME NET E NOEBFR TAX BEFORE INCOME NET XESS(4)(0)(1 (28) (41) (113) (165) (100) (45) (147) (66) INCOME OPERATING GROSS EXPENSES NOE8 5(2)(85) (124) 55 81 INCOME STATEMENT OFINCOME
2008, exceptinsomeexceptionalconditions. Guaranty, but theeconomicresult asfrom October1,2008isforAssured previous quarters,asDexiastillhasacontrol onthisactivity, The 4Q2008result hasbeenconsolidatedlinebyline,asin income oninvestments”. the soldequityandsale’s pricehasbeenrecorded in“Net the assets,liabilitiesaswell,anddifference between The assetsofthisactivityhavebeensummarizedinoneline nued activity. activities, ithastherefore notbeenconsidered asadisconti- FSA Insuranceactivitiesdonotrepresent asegmentofDexia decision toconsiderFSAInsuranceactivitiesasforsale. “Post closingevents“–confirmtheManagementviewsonits Information received afterDecember31,2008–seenote5. ded thatthetransactionishighlyprobable. other conditions,however, theManagementBoard hasconclu- Y20 – FY 2008 (1,281) 207 (1,426) (2,097) as thepriceisbasedonequityatSeptember30, USD Y20 – FY 2008 81 58 (354) (518) (871) EUR Q20 – 4Q 2008 81 (573) (841) USD 2 220 323 Q20 – 4Q 2008 EUR Cash andcashequivalents on n dacsdefo ak 4 100 140 Other assets Tax assets Derivatives (assets) Financial investments Loans andadvancestocustomers Loans andadvancesduefrombanks By categoryofshare 9.7. Some amountsmaynotaddduetoroundings. es uuaieTasainAjsmn osldto dutet(201) (1,080) (1,509) Less: CumulativeTranslation Adjustment–consolidationadjustment Less: costofthetransaction Expected proceedsfromsale Other liabilities Technical provisionsofinsurancecompanies Debt securities Derivatives (liabilities) ubro hrsise n o ul ad 0 0 Number ofsharescanceled Number ofsharesissued Outstanding asofJan.1 Value pershare Number ofsharesissuedandnotfullypaid Number ofsharesissuedandfullypaid Number ofsharesauthorizedandnotissued of share Number ofsharesreservedforissueunderstockoptionsandcontractsthesale Number oftreasuryshares on thedistributionofdividendsandrepaymentcapital Rights, preferencesandrestrictions,includingrestrictions Outstanding asofDec.31 NTICM NIVSMNS 94 (906) (984) INVESTMENTS” ON INCOME “NET IN INCLUDED SALE ON EXPECTED–LOSS NET RESULT ASSETS NET O AEAEA FOLLOWS: AS ARE SALE FOR LIABILITIESINCLUDEDINTHEGROUPHELD AND ASSETS THE EQUITY ,6,8,2 1,178,576,763 1,163,184,325 1,762,478,783 352,542,645 1,178,576,763 1,004,339,582 ,7,7,6 1,762,478,783 1,178,576,763 no nominal 53248606,160,256 15,392,438 ,6,1 293,570 8,967,312 0,7 293,570 305,870 322 (2,349) (3,282) (1,069) (1,494) value 072008 2007 ,9 1,210 1,690 1,212 4,169 1,694 5,824 77 (513) (717) S EUR USD 2 517 722 562 158 786 221 1)(11) (16) 619 26 0 21 Dexia (22,258,236) no nominal Annual report 2008 value 173
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 23.25 00 ,9,5 9.50 - 7,093,355 - - - 11.88 -13.66 10.97 -11.37 10.09 18.03 -18.20 17.23 -17.86 15.17 -15.88 13.81 -14.58 18.62 -21.25 Exercised duringtheperiod Forfeited duringtheperiod Granted duringtheperiod Outstanding atbeginningofperiod (2) Theweightedaverageexercisepricefor2007and2008wasrespectivelyEUR13.5911.60pershare. (1) OutstandingoptionsalsoincludethecallgrantedtoDexiaCréditLocal’s employeesin1999. 174 9.8. eteetDxasae ei hrsDxasae Dexiashares Dexiashares (1) PerformanceshareplanofFSA.In2008, duetothefallfoDexiashares,provisionconstitutedinpasthasbeenrev Dexiashares Dexiashares (3) ForthestockoptionplanofferedtowardsDexia’s employeesDexiausedthefairvalueobtainedfromanon-relatedthirdpar (2) Immediatelyvestedatgrantdate. (1) Thevestingconditionsarethefollowing:40%isvestedimmediately, 20% isyearlyvestedoverthenext3years. Settlement iblte o ragmnswt eteetatraie 0 0 Liabilities forarrangementswith settlement alternatives Arrangements withsettlementalternatives Liabilities forcash-settledarrangement Cash-settled arrangements Equity-settled arrangements Exercisable attheendofperiod Outstanding attheendofperiod Expired duringtheperiod tgatdt .517 .03.62 0.90 1.72 3.65 at grantdate Fair valuepergrantedinstrument rn ae2//073//083//0823/9/2008 30/6/2008 30/6/2008 29/6/2007 Grant Date Valuation Model ubro ntuet rne 1,2,0 ,4,5 ,6,5 147,905 3,466,450 6,945,450 10,322,500 Number ofinstrumentsgranted xriepie2.51.91.510.09 12.65 10.09 23.25 Exercise price hr rc ttedt fgat2.51.81.810.2 10.28 10.28 23.35 Share priceatthedateofgrant otata ie(er)1 er 0yas1 er 10years 10years 10years 10years Contractual life(years) Vesting conditions TOTAL LIABILITIES TOTAL EXPENSES (EUR) PRICES EXERCISE OF RANGE NDXASHARES IN DEXIA SETTLED STOCK OPTIONPLANS NDXASHARES IN DEXIA SETTLED STOCK OPTIONPLANS Dexia HR-AE PAYMENTS SHARE-BASED Annual report 2008 outstanding Number of 10,322,550 14,696,319 10,169,922 10,177,973 (1) 7,861,772 5,384,962 1,127,332 3,083,963 (2) options (1) average options exercise price e.3,20 Dec.31,2008 Dec. 31,2007 Weighted- Dexia’s employees Stock optionplan (EUR) 11.37 13.18 51 0.79 17.86 15.17 14.58 Plan 2007 - 7,41 - - Weighted-average 3 3 3 (3) (2) (3) (1) (3) (1) (3) (1) contractual life remaining Dexia’s employees Stock optionplan (year) .010,322,550 9.50 .210,177,973 8.42 .17,752,122 5.51 .05,269,212 3,083,963 4.00 17,844,143 3.00 5.84 Plan 2008 outstanding Number of 10,059,822 184,074 options Dexia’s employees Stock optionplan ersed. average options ty. exercise price Plan 2008 Weighted- e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31, 2008 Dec. 31,2007 (EUR) 13 4.56 11.37 78 3.00 2.00 5.90 17.86 14.58 13.18 80 6.41 18.03 8882262,824,793 10,322,550 58,878,292 1871840,352,840 31,867,198 62,824,793 of Options 62305 (106,600) (6,293,095) Number (15,510) 6,4)(1,490,784) (67,444) 8.50 - 7.42 - 0,83 - Weighted-average 521 35 60 (16) 76 19 60 5 76 54 Dexia’s employees Stock optionplan 00 1 (1) (1) contractual life 10,599,805 71,787,214 of Options remaining Plan 2008 Number (year) 0 Performance sharesgrantedbyFSA - Other - Variation ofscopeconsolidation - Netincomefortheperiod - Dividends - Increaseofcapital - theundatedsubordinatednon-cumulativeNotesforEUR500million,issuedbyDexia FundingLuxembourgandbookedforEUR498 and 2008respectively; - theundateddeeplysubordinatednon-cumulativeNotesforEUR700million,issued byDCLandbookedforEUR700millionEU (1) Thisamountincludes: 9.9. specified three-year performancecyclesislessthan7%,anda adjusted bookvalueandperoutstandingshare over folio. Nopayoutoccursifthecompoundannualgrowth rateof of unrealized gainsandlossesontheGeneralInvestmentPort- January 1,2005donotoffer theoptiontoincludeimpact General InvestmentPortfolio.Performanceshares issuedafter ding orexcludingrealized andunrealized gainsandlossesonthe the participanttoelect,attimeofaward, growth ratesinclu- Performance shares issuedpriortoJanuary1,2005permitted period. adjusted bookvalueperoutstandingshare overathree-year share dependsontheattainmentofcertaingrowth ratesof foreachperformance to keyemployees.Theamountearned of performanceshares bytheHumanResources Committee Equity ParticipationPlanauthorizesthediscretionary grant Equity ParticipationPlan(the“1993Plan”).The1993 Until 2004,performanceshares were awarded underthe1993 2007 - Variation ofscopeconsolidation - Netincomefortheperiod - Dividends - Increaseofcapital 2008 AS OFDEC.31,2008 AS OFJAN.1,2008 AS OFDEC.31,2007 AS OFJAN.1,2007 SHARES FSA MINORITY INTERESTS–COREEQUITY at beginning Outstanding (1) ,1,9 0,6 3450 3,5)11462145.61 1,114,602 (37,550) (364,510) 306,368 1,210,294 ,1,0 1,4 3953 1091 7,1 156.99 977,413 (100,901) (349,533) 313,245 1,114,602 of period (1) Granted during the period Earned during the period vesting periods. amounts are beingamortizedtoexpenseovertheemployees’ lity forUSD3.8millionand4.7million,respectively. These 2007, FSApurchased shares toeconomicallydefeaseitsliabi- zed over2.5-yearand3.5-yearvestingperiods.In2008 the Companypurchases Dexiashares, whichcostisamorti- The Dexiarestricted stockcomponentisafixedplan,where described above)and10%ofshares ofDexiarestricted stock. performance overspecifiedthree-year performancecyclesas res (whichprovide forpaymentbasedupontheCompany’s performance share unitscomprised90%ofperformancesha- Equity ParticipationPlan.The2004Planprovides for sation program formerlyprovided undertheCompany’s 1993 “2004 EquityPlan”),whichcontinuestheincentivecompen- In 2004,FSAadoptedthe2004EquityParticipationPlan(the pound annualgrowth ratesbetween7%and19%. 19% orgreater. Payoutpercentages are interpolatedforcom- 200% payoutoccursifthecompoundannualgrowth rateis during the Forfaited period Outstanding at end ofperiod R 698millionfor2007 million. Dexia Share priceat date ofgrant (in USD) Annual report 2008 1,756 1,721 1,721 1,664 103 (79) (62) (60) 78 97 18 (4) 1 175
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION Figures asofDec.31,2007havebeenrestated. (1) DexiaInsuranceBelgiumSAandDenizHayatSigortaAS. 9.10. 176 I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. XIII. OA SES53251,3 255645461931,5 239651,006 22,329 16,754 611,923 604,564 22,585 18,734 563,245 I. TOTAL ASSETS II. III. V. IV. VI. VII. VIII. IX. X. XI. XII. OA IBLTE 5,7 7752,0 8,7 0,2 8142,6 645,388 20,860 18,104 606,424 588,170 20,203 17,795 550,172 TOTAL LIABILITIES Dexia CONTRIBUTION BYACTIVITY eta ak 88500885248002,448 0 0 2,448 8,835 0 0 8,835 central banks Cash andbalanceswith rmbns5,8 3 25,7 18505 61,864 59 0 61,805 54,776 52 139 54,585 from banks Loans andadvancesdue ocsoes22392 5 4,1 5,9 ,4 ,0 368,845 1,804 7,543 359,498 242,619 253 27 242,339 to customers Loans andadvances rls 142136003,6 152045216,044 4,522 0 11,522 37,565 6,040 113 31,412 or loss at fairvaluethroughprofit Financial assetsmeasured iaca netet 8,2 6491,8 2,9 0,6 ,1 505125,029 15,055 1,711 108,263 220,290 15,681 16,489 188,120 Financial investments eiaie 888391 9285,9 1 55,213 5 217 54,991 29,218 11 369 28,838 Derivatives fprflohde 15 15 ,3 3,938 0 0 3,938 (185) 0 0 (185) of portfoliohedge Fair valuerevaluation netet nascae 3 0816203 682 30 0 652 861 30 0 831 Investments inassociates agbefie ses2131 52272140292,353 209 0 2,144 2,257 45 19 2,193 Tangible fixedassets odil2358112542011112,193 131 1 2,061 2,524 131 8 2,385 goodwill Intangible assetsand a ses93347 ,8 ,3 ,4 5 4,139 253 1,047 2,839 1,384 77 384 923 Tax assets te ses ,3 ,8 6 ,8 ,2 0211,998 261 10 1,727 4,381 265 1,186 2,930 Other assets o ae3 93 ,2 6,260 0 6,225 35 39 0 0 39 for sale Non currentassetsheld u obns 7,7 7,8 1,7 67 213,192 72 46 213,074 178,681 6 1 178,674 Due tobanks eois1847784291660181163423114,728 203 6,344 108,181 126,680 289 7,894 118,497 deposits Customer borrowingsand rls ,7 ,9 ,2 83196861731718,952 3,197 6,147 9,608 18,301 4,326 6,696 7,279 or loss at fairvaluethroughprofit Financial liabilitiesmeasured fprflohde(0)00(0)153001,543 0 75,834 1 0 (196) 1,543 76,029 (206) 31,365 0 1 0 301 (206) 31,063 of portfoliohedge Fair valuerevaluation Derivatives etscrte 23564702403181000188,120 0 0 188,120 204,013 0 487 203,526 Debt securities uodntddbs48804 ,8 ,6 74,407 47 0 4,360 4,885 47 0 4,838 Subordinated debts nuac opne 3 4951,7 67616,739 16,736 0 3 15,071 14,935 134 2 insurance companies Technical provisionsof biain ,0 5 ,5 ,9 9 1,487 290 0 1,197 1,353 251 0 1,102 obligations Provisions andother a iblte 0 9612402 302 28 0 274 631 29 0 602 Tax liabilities te iblte ,9 ,8 1 ,9 ,3 2264,393 286 72 4,035 7,396 319 2,282 4,795 Other liabilities ipslgop edfrsl ,9 5,691 0 5,691 0 0 0 0 0 disposal groupsheldforsale Liabilities includedin Annual report 2008 activities Banking other and e.3,20 Dec.31,2008 Dec. 31,2007 S Other FSA insurance activities (1) oa Banking Total activities other and S Other FSA insurance activities (1) Total fteprn ,4 1 8 ,3 12 277 47 (3,326) (427) (2,767) (132) 2,533 188 (1) 2,346 of theparent Attributable toequityholders trbtbet ioiyitrs 0 0 6(8 78 0 (18) 96 103 3 0 100 Attributable tominorityinterest a xes 38 93(5)4 3 7629 57 532 40 (256) 3 59 (318) Tax expense E NOEBFR A ,6 6)18282(6 337 44 (3,877) (484) (3,317) (76) 2,892 188 (60) 2,764 NETINCOMEBEFORETAX mareto odil()00()()()0(12) 0 (7) (5) (4) 0 0 (4) Impairment ongoodwill ses()00()(0 (10) 0 0 (10) (3) 0 0 (3) assets Impairment ontangibleandintangible o rdtcmimns(4)(3 13 159 173 (3,292) 0 (1,703) (1,589) (163) 0 (23) (140) for creditcommitments Impairment onloansandprovisions eerdaqiiincss0(6 4)0(2 (42) 0 (42) 0 (46) 0 (46) 0 Deferred acquisitioncosts ercain&aotzto (7)()()(8)(8)()()(296) (9) (2) (285) (284) (8) (2) (274) Depreciation &amortization ewr ot 38 5)(6)(0)0(1 (370) (61) 0 (309) (367) (59) 0 (308) Network costs eea n diitaieepne(,3)(6 7)(,3)(,2)(5 8)(1,390) (84) (85) (1,221) (1,232) (71) (26) (1,135) General andadministrativeexpense tf xes 177 6)(0)(,0)(,9)(6 15 (2,021) (105) (26) (1,890) (1,905) (102) (66) (1,737) Staff expense te e noe4 0(1 71(53) 1 17 (71) 50 1 3 46 Other netincome ciiis2(7)(,3)(,0)1(2)(,9)(4,513) (4,394) (120) 1 (5,007) (4,830) (179) 2 activities Technical expensefrominsurance nuac ciiis4464535034494144,577 4,114 459 4 5,013 4,523 486 4 insurance activities Premiums andtechnicalincomefrom e esadcmisos144()4 ,0 ,0 4 31,431 33 (4) 1,402 1,502 41 (3) 1,464 Net feesandcommissions e noeo netet 5 5 2 88 190 77 (3,515) (707) (1,910) (898) 720 155 7 558 Net incomeoninvestments tfi au hog rfi rls 5 49 13 43 19 2 (614) (2) (119) (493) (163) 2 (419) 254 at fairvaluethroughprofitorloss Net incomefromfinancialinstruments e noefo soits160218()00(1) 0 0 (1) 108 2 0 106 Net incomefromassociates iiedicm 036 4 9111171 111 1 59 147 64 3 80 Dividend income neetmri ,5 0 7 ,2 ,3 2 1 6,073 619 224 5,230 4,526 470 205 3,851 Interest margin GAAP. does notcorrespond tothepublishedfinancialstatementsofFSA,whichisunderUSGAAP, northoseofDIB,published The contributiontofinancialstatementsispresented underIFRSaftereliminationofintercompany balancesandtransactions,an (1) DexiaInsuranceBelgiumSAandDenizHayatSigortaAS. E NOE246()11266(6 275 47 (3,248) (427) (2,785) (36) 2,636 191 (1) 2,446 INCOME NET RS PRTN NOE291(7 8 ,6 ,2 167 44 (563) (484) (1,607) 1,528 3,062 188 (37) 2,911 INCOME OPERATING GROSS XESS(,5)(4)(4)(,3)(,0)(5)(5)(4,119) (259) (155) (3,705) (3,834) (240) (140) (3,454) EXPENSES NOE6351348686523(,5)(2)3,556 (225) (1,452) 5,233 6,896 428 103 6,365 INCOME Companies Banking e.3,20 Dec.31,2008 Dec. 31,2007 S Other FSA insurance activities (1) oa Banking Total Companies Dexia S Other FSA Annual report 2008 insurance activities (1) under Belgian d therefore Total 177
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 178 Dexia Annual report 2008 Expenses Income Total liabilities Total assets trbtbet qiyhleso h aet1292 112 Attributable toequityholdersoftheparent Attributable tominorityinterest Net income 9.11. 9.12. e uks iaTY176 .79213 1.9053 2.0689 9.6779 2.1332 2.0913 5.2337 2.0130 8.2804 10.8841 151.4854 16.3725 1.7719 2.4253 5.2880 2.0697 9.7371 126.6890 250.3233 9.2636 1.0000 19.3270 1.7060 0.8018 265.2744 162.0907 1.8628 5.6338 2.1186 11.4473 8.0113 9.4219 1.0000 7.4553 15.0657 1.5787 0.9535 164.9005 251.3037 1.8995 10.8275 5.6635 7.9643 TRY 16.0587 7.4488 1.0000 1.5655 SGD 252.6639 SEK 1.4861 0.6874 25.0188 1.7506 10.7598 JPY 1.0000 7.4518 NZD 1.6943 ILS MXN NOK 26.8551 1.6462 0.7336 New Turkish Lira 11.4774 2.0305 HUF Singapore Dollar 7.4575 Swedish Krona 1.4676 27.7016 EUR 1.6552 New ZealandDollar 1.6359 Norwegian Krone HKD GBP Mexican Peso 1.4439 26.5940 Yen DKK 1.6749 Shekel CHF Forint Hong KongDollar CZK CAD Pound Sterling Euro AUD Danish Krone Koruna (Czechrepublic) Swiss Franc Canadian Dollar Australian Dollar SDla S .78139 .911.4707 1.3971 1.3794 1.4718 USD US Dollar RS PRTN INCOME OPERATING GROSS EXCHANGE RATES CONTRIBUTION OFJOINTVENTURESINTHEFINANCIALSTATEMENTS lsn aeAeaert lsn aeAverage rate Closingrate Average rate Closing rate e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 0629,279 9,586 10,622 10,842 24 (299) (284) 4 428 443 1 95 129 115 159 33 Banking activity–Commitmentsreceived nuac ciiy–Cmimnsrcie 38731 6 93,807 394,276 Banking activity–Commitmentsgiven Insurance activity–Commitmentsreceived Insurance activity–Commitmentsgiven and havebeenexcludedfromthisdisclosure. (1) FiguresasofDecember31,2007havebeenrestatedsinceassetsundercustody (entrusted toandfromthirdparties)arenot 10.4. an amountofEUR25,685million. (1) FiguresasofDec.31,2007havebeenrestated.“Standbybondspurchaseagreements”reclassifiedfromguaranteest 10.3. an amountofEUR25,685million. (1) FiguresasofDec.31,2007havebeenrestated.“Standbybondspurchaseagreements”reclassifiedfromguaranteest 10.2. 10.1. (in millionsofEUR) 10. nsdlnsgatdt rdtisiuin ,3 957 1,339 Unused linesgrantedtocustomers Unused linesgrantedtocreditinstitutions nsdlnsotie rmcsoes2 5 9,649 23 1,775 Unused linesobtainedfromcustomers Unused linesobtainedfromcreditinstitutions urnesrcie rmteSae 59,345 49,551 0 1,149 36,399 1,047 Guarantees receivedfromtheStates Guarantees receivedfromcustomers Guarantees receivedfromcreditinstitutions urnesgvnt rdtisiuin 2 2,868 523 Guarantees giventocustomers Guarantees giventocreditinstitutions orwnst ercie n ae fast 34017,707 7,129 23,470 14,283 Borrowings tobereceivedandsalesofassets Loans tobedeliveredandpurchasesofassets Notesontheconsolidatedoff-balance sheetitems TE COMMITMENTS OTHER COMMITMENTS LOAN GUARANTEES REGULAR WAY TRADE (1) (1) (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 0,6 97,144 223,170 102,064 111,640 26714,236 12,617 40386,206 94,083 consideredascommitment o loancommitmentsfor o loancommitmentsfor Dexia Annual report 2008 179
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 180 Dexia Annual report 2008 eiaie sdfrhdig3,7 33,826 44,802 60 1,224 33,670 40,933 79,912 1,419 97 9,245 13,804 4,412 210 76,119 9,354 11,205 3,032 27,947 205 24,017 Derivatives usedforhedging Derivatives held-for-trading Financial assetsdesignatedatfairvalue Financial assetsheldfortrading b) interest incomeofassetsatfairvalue Other Interest onimpairedassets Held-to-maturity investments Available-for-sale financialassets Loans andadvancestocustomers Loans andadvancesduefrombanks Cash andbalanceswithcentralbanks a) interest incomeofassetsnotatfairvalue 11.1. (in millionsofEUR) 11. 11.2. (22,119) at fairvalue”to“Interestpaidoncustomerborrowingsanddeposits”. (1) FiguresasofDecember31,2007havebeenrestated:anamountEUR252millionhasrestatedfrom“Interestpaidonfi (21,053) Customer borrowingsanddeposits Due tobanks a) interest expense ofliabilitiesnotatfairvalue eiaie sdfrhdig(343 (34,163) (44,936) (33,463) (40,707) Derivatives usedforhedging Derivatives held-for-trading iaca iblte edfrtaig(9 (8) (15) (19) (79,667) (15) (36) (74,557) 0 Financial liabilitiesdesignatedatfairvalue Financial liabilitiesheld-for-trading b) interest expense ofliabilitiesatfairvalue Other Expenses linkedtotheamountsguaranteedbyStates Preferred sharesandhybridcapital Subordinated debts Debt securities iaca sesdsgae tfi au 11 166 1 143 Financial assetsdesignatedatfairvalue Financial assetsheldfortrading Available-for-sale financialassets INTEREST EXPENSE INTEREST INCOME NET INTERESTINCOME TOTAL DIVIDEND INCOME INTEREST INCOME–EXPENSE Notes ontheconsolidatedstatementofincome (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 0,3 107,859 100,136 9,1)(101,786) (95,610) 826 (7,283) (8,266) 802 (8,330) (5,989) (8,022) (4,487) ,2 6,073 4,526 38 (560) (368) 27 (441) (247) 0 106 109 4 171 147 1)(25) (16) 6115 55 76 36 34 nancial liabilitiesdesignated mut eoddi neetmri 915 19 amounts recordedininterestmargin Discontinuation ofcashflowhedgeaccounting(cashflowsstillexpectedtooccur)– Cs osn ogrepce oocr 43 Portfolio hedge (Cash flowsnolongerexpectedtooccur) Discontinuation ofcashflowhedgeaccounting Cash flowhedges Fair valuehedges oe ciiyadecag ifrne 8 (183) 288 Forex activityandexchangedifferences Change inowncreditrisk and resultfromtherelatedderivatives Net resultoffinancialinstrumentsdesignatedatfairvaluethroughprofitorloss Net resultofhedgeaccounting Net tradingincome Result ofhedgeaccounting 11.4. (1) KommunalkreditAustriaAG. 11.3. noefo soitsbfr a 4 31 147 Impairment ongoodwill Share oftax Income fromassociatesbeforetax TOTAL TOTAL TOTAL (1) Amongwhichtradingderivativesincludedinafairvalueoptionstrategy arvlecag ftehdigdrvtvs251(14,861) 3 2,581 0 14,943 Fair valuechangeofthehedgingderivatives (2,570) Fair valuechangeofthehedgeditem Fair valuechangeofthehedgingderivatives–ineffective portion Fair valuechangeofthehedgingderivatives Fair valuechangeofthehedgeditemattributabletorisk NET INCOMEFROMFINANCIALINSTRUMENTSAT FAIR VALUE THROUGHPROFITANDLOSS NET INCOMEFROMASSOCIATES (1) (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 50 (1,015) (570) 13 (614) (163) 76 3,171 (706) 0 (1) 108 1 (3,089) 717 3)(20) (39) 4 576 344 5168 65 3426 33 1(10) 21 5168 65 182 11 182 11 (12) 0 03 Dexia Annual report 2008 1 181
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 182 Dexia Annual report 2008 euiisaalbefrsl 3)5 27 59 (32) Securities availableforsale As ofDecember31,2007 osso nagbefie ses()0 0 (1) (1) Losses onliabilities Losses onassetsandliabilitiesheldforsale Losses onintangiblefixedassets Losses ontangiblefixedassets an nast n iblte edfrsl 312 619 13 883 Other gains Gains onliabilities Gains onassetsandliabilitiesheldforsale Gains ontangiblefixedassets Gains onavailable-for-sale financialassets Gains onloansandadvances 11.5. Impairment onsecurities (1) Seenote9.6.C.“Analysisofgroupheldforsale”. euiisaalbefrsl 262 3(2,519) 93 (2,612) Securities availableforsale As ofDecember31,2008 Losses onavailable-for-sale financialassets Losses onloansandadvances TOTAL TOTAL LOSSES TOTAL GAINS TOTAL E IMPAIRMENT NET TOTAL NET INCOMEONINVESTMENTS (1) loacsWrite-backs Allowances (2,612) pcfi Risk Specific 3)5 27 59 (32) e.3,20 Dec.31,2008 Dec. 31,2007 28 (1,705) (238) 25 (1,927) (265) 5 931 958 720 1)(9) (12) 127 8 265 21 12 27 7(2,519) 27 93 4 (8) (4) 9 (205) (9) 20 (3,515) (2,519) Total te 0 1)9 3 2)117 (22) 139 93 (16) 109 Other euiislnig8 3)5 4(8 46 (28) 74 50 (34) 84 Securities lending laigadstlmn 1)()8(2 (4) (12) 8 (7) (15) 8 Clearing andsettlement rvt akn 6()3 1(0 21 (10) 31 31 (5) 36 Private banking evcn eso euiiain1()()101 0 1 (1) (2) 1 Servicing feesofsecuritization susadpaeet fscrte 3()1 4()20 (4) 24 19 (4) 23 Issues andplacementsofsecurities utd 2 4)1615(4 151 (44) 195 176 (48) 224 Custody evcso euiisohrta aeepn 6()3 8()30 (8) 38 37 (9) 46 Services onsecuritiesotherthansafekeeping iaca niern 303 8()32 (6) 38 33 0 33 Financial engineering omsin ontecuieboes2 1)1 6(9 7 (19) 26 14 (11) 25 Commissions tonotexclusivebrokers amn evcs29(5 4 5 8)172 (81) 253 144 (75) 219 Payment services ucaeadsl fui rssadmta ud 7(0 73 9 26 (9) 35 47 (10) 57 Purchase andsaleofunittrustsmutualfunds ucaeadsl fscrte 1 3)8 0 2)84 (22) 106 84 (32) 116 Purchase andsaleofsecurities rdtatvt 4 3)1919(1 168 (21) 189 109 (31) 140 Credit activity nuac ciiy7 5 27 5 69 (5) 74 72 (5) 77 Insurance activity diitaino nttut n uulfns13(9 3 3 1)123 (15) 138 134 (19) 153 Administration ofunittrustsandmutualfunds aaeeto nttut n uulfns58(1 6 8 1)368 (19) 387 467 (41) 508 Management ofunittrustsandmutualfunds 11.6. Technical expensefrom insuranceactivities Premiums andtechnicalincomefrom insurance activities 11.7. materiality. Fees andcommissionsrelated tofinancialassetsand liabilitieswhichare notatfairvaluethrough profit orlossare lisicre ato enues2 30 7 4,416 28 4,812 (1) Other technicalincome Changes intechnicalreserves–partofreinsurers Claims incurred–partofreinsurers Premiums andcontributionsreceived rmusadcnrbtospi 10 (170) (160) Other technicalexpenses Changes intechnicalreserves Claims incurred Premiums andcontributionspaid Premiums receivedtransferredtoreinsurers OA ,5 37 ,0 ,5 35 1,431 (325) 1,756 1,502 (357) 1,859 TOTAL EXPENSES INCOME FEE ANDCOMMISSIONINCOMEEXPENSE TECHNICAL MARGINOFINSURANCEACTIVITIES noeEpneNtIcm xes Net Expense Income Net Expense Income e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 507 (4,513) (5,007) 349 (1,864) (1,754) (3,429) (1,010) ,1 4,577 5,013 16 (509) (216) (136) (272) 7 124 174 Dexia Annual report 2008 below 183
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 184 Dexia Annual report 2008 11.8. (1) Seenote9.8. 11.9. te noeo te ciiis29287 299 the currentfinancialyear Repair andmaintenanceoninvestmentpropertiesthatgeneratedincomeduring Exploitation taxes Other incomeonotheractivities Other bankingincome Rental income Exploitation taxes Long-term employeebenefits te xes nohratvte 20 (299) (250) Other expenseonotheractivities Other bankingexpenses eso ot-endbnfi ln 066 90 Stock compensationexpense Other postretirementbenefits Pension costs-definedcontributionplans Pension costs-definedbenefitplans Social securityandinsurancecosts Wages andsalaries Other expenses Restructuring expenses TE EXPENSE OTHER TOTAL TOTAL TE INCOME OTHER STAFF EXPENSE OTHER NETINCOME (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 ,0 2,021 1,905 ,2 1,445 1,322 21 (391) (291) 4 338 341 1 352 316 1 115 113 3)(42) (31) 1)13 (19) 743 37 030 30 54 1 (1) (1) 9 (49) (9) 2 (6) (2) 0(53) 50 25 33 11 5 Other mlye 9,310 Employees eirEeuie 308 Senior Executives Figures asof2007havebeenrestated. mlye 9,268 291 Other Employees Senior Executives te 024 2244 2 500 42 24 27,555 2,663 42 476 2 24,892 26,415 529 2,376 28 40 24,039 501 Other Employees Senior Executives OA ,2 ,9 ,0 ,9 ,8 4 ,4 26,986 1,449 649 2,381 7,392 3,102 2,390 9,623 TOTAL OA ,6 ,5 ,8 ,5 2,472 8,058 3,281 2,556 9,563 TOTAL as ofDec.31,2008 (AVERAGE FTE) as ofDec.31,2007 (AVERAGE FTE) TOTAL (AVERAGE FTE) consolidated 4502462,8 54026928,099 2,689 25,410 26,986 2,406 24,580 Fully e.3,20 Dec.31,2008 Dec. 31,2007 Proportionally consolidated egu rneLxmor Turkey Luxembourg France Belgium egu rneLxmor Turkey Luxembourg France Belgium 1 914 0 0 544412 511 ,0 ,0 8,035 3,207 2,506 ,4 ,2 7,372 3,025 2,341 87 23 74 38 oa Fully Total 87 20 77 38 consolidated 00 Europe Europe Other Other 2,420 2,345 43 28 812 42 6 Proportionally consolidated USA S te Total Other USA 626 9 ,2 27,554 1,521 597 1 ,0 26,415 1,403 619 51 501 17 15 84 529 40 18 Dexia Other ,4 28,099 1,543 Annual report 2008 Total Total 185
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 186 Dexia Annual report 2008 rdtehneet(pcfi eev)(4 1(8 (51) 0 (18) 21 (54) Credit enhancement(specificreserve) rdtehneet(olciersre 72 3)0(37) 0 (37) 27 27 0 Credit enhancement(collectivereserve) Other receivables omtet 7)2 (46) 0 0 24 (70) Commitments on n dacst utmr 18 5 7 (30) 6 (7) 159 (188) Loans andadvancestocustomers on 11 8(3 119 8(1,111) 58 (1,169) (63) 58 (121) Loans (1) IspublishedinheadingXII.oftheAssets. 11.10. 11.12. 11.11. mriaino nagbeast 2 129 88 79 128 78 78 Amortization ofintangibleassets Depreciation onothertangibleassets Depreciation onlandandbuildings rnpraino aladvlal 958 351 19 45 15 59 274 25 (2) 16 77 123 123 62 117 114 Other generalandadministrativeexpense Operational taxes Transportation ofmailandvaluable Insurance (exceptrelatedtopension) Restructuring costsotherthanstaff Repair andmaintenanceexpenses Software costsandresearchdevelopment Technology andsystemcosts Marketing advertisingandpublicrelations Professional fees Operating leases(excepttechnologyandsystemcosts) Occupancy OA (313) TOTAL TOTAL PCFCIMPAIRMENT SPECIFIC TOTAL OLCIEIMPAIRMENT COLLECTIVE TOTAL IPIMN NLASADPOIIN O RDTCOMMITMENTS IMPAIRMENT ONLOANSANDPROVISIONSFORCREDIT GENERAL ANDADMINISTRATIVE EXPENSE DEPRECIATION ANDAMORTIZATION (1) loacsRvra oa loacsRvra Total Reversal Allowances Total Reversal Allowances (121) e.3,20 Dec.31,2008 Dec. 31,2007 loacsRvra ossRcvre Total Recoveries Losses Reversal Allowances 1 0 0 0 1 (1) 85 3)(1,206) (36) 0 2)6(127) 6 (25) 205 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 ,3 1,390 1,232 8 296 284 8 195 208 188 194 6103 96 79 83 58 (1,148) Credit enhancement(specificreserve) Other receivables omtet 13 (155) 0 0 8 (163) Commitments on n dacst utmr 41 6(1 (337) 9 (11) 86 (421) Loans andadvancestocustomers te ses 1 (1) 0 0 0 (1) Other assets on n dacsdefo ak 9)0(1 (109) 0 (11) 0 (98) Loans andadvancesduefrombanks DenizBank results are stillinlinewithbudgetsandplans,result ofJanuary2009isoverbudgetandinterest rateshavesharp The goodwillonDenizBankhasbeentestedendof2008andnotfoundimpaired. The goodwillonDexiaBankDenmarkA/SandtheFSAHoldingsLtdhavebeenreviewed andfoundimpaired in2008. The goodwillonoursubsidiaryinJerseyhasbeenreviewed andfoundimpaired in2007. 11.14. at leastonceayear. Iftheexpectedlossonsaleislowerthanexistingimpairment,areversal ofimpairmentisrecorded. Impairments are recorded whenthecriteriaare met.Areview ofthemarketandsale’s conditionsare performedonaregular bas 11.13. (2) RelatestoFSAInc. (1) IspublishedinheadingXII.oftheAssets. mareto nagbeast 1 (6) (4) (1) (2) Impairment onintangibleassets Impairment onassetsheldforsale Impairment ongoodwill OA 188 104 (1,828) TOTAL PCFCIMPAIRMENT SPECIFIC TOTAL IMPAIRMENT ONGOODWILL IMPAIRMENTS ONTANGIBLE ANDINTANGIBLE ASSETS (1) (2) loacsRvrasLse eoeisTotal Recoveries Losses Reversals Allowances 82 47 (1,261) (281) 0 0 (407) 0 8 2 (862) (283) Dec. 31,2008 49 9 (429) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 ly declinedendof2008. 3 (10) (3) 4 (12) (4) Dexia Annual report 2008 (2,144) is, 187
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 188 Dexia Annual report 2008 Income taxoncurrentyear eerdtxso rvosya 7(33) 917 17 118 Provision fortaxlitigations Deferred taxesonpreviousyear Income taxonpreviousyear Deferred taxesoncurrentyear The difference betweenthestandard andtheeffective taxratecanbeanalyzed asfollows: Dexia effective taxratewasrespectively 13.0%and15.3for20072008. The standard taxrateapplicableinBelgium2007and2008was33.99% Effective corporateincometaxcharge Effective taxrate Tax base a feto hnei a ae 2)4 (51) (21) 665 (70) 454 (5) 137 43 0 Other increase(decrease)instatutorytaxcharge Items taxedatareducedrate Tax effect ofchangeintaxrates Tax effect fromreassessmentofunrecognizeddeferredtaxassets Tax effect ontaxbenefitnotpreviouslyrecognizedinprofitorloss Tax effect ofutilizationpreviouslyunrecognizedtaxlosses Tax effect ofnontaxdeductibleexpenses 11.15. (1) Mainlynon-taxablegainsonsalesofequityshares. noeadlse rmcmaisacutdfrb h qiymto 0 (1) 108 Statutory taxrate Impairment ongoodwill Income andlossesfromcompaniesaccountedforbytheequitymethod a feto ae nohrjrsitos(2)21 (121) Tax effect ofnontaxablerevenues Tax effect ofratesinotherjurisdictions A NCURRENTYEARRESULT ON TAX A BASE TAX TAX BEFORE INCOME NET A XES SN STATUTORY RATE USING EXPENSE TAX A NCRETYA EUT()(6)589 (361) EXPENSE(B) TAX OTHER CURRENTYEARRESULT (A) ON TAX TOTAL (A)+(B) TAX EXPENSE (1) e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 39%33.99% 33.99% 30 15.3% 13.0% ,8 (3,864) 2,788 ,8 (3,864) (3,877) 2,788 2,892 55 (308) (545) 49 (328) (479) 26 629 (256) 361 947 0 40 105 05 68 10 78 6 (56) 0 (6) (3) 4 (12) (4) (1,313) (589) in Dexiashares. No adjustmentismadetonetincomeattributableequityholdersoftheparent astheyare nofinancialinstrumentsconvertibl share. They are antidilutiveandnottakenintoaccountwhen theirconversiontoordinary ordinary shares woulddecrease lossper would decreasepershare. earnings The potentialordinary shares calculatedasaboveare treated asdilutivewhen, andonlywhen,theirconversiontoordinary sha exercise oftheshares options. The numberofshares calculatedasaboveiscompared withthenumberofshares thatwouldhavebeenissuedassumingthe rights attachedtooutstandingshare options. mined astheaverageshare priceofthecompany’s shares forthefinancialyear)basedonmonetaryvalueofsubscription For theshare options,acalculationisdonetodeterminethenumberofshares thatcouldhavebeenacquired atfairvalue(det conversion ofalldilutivepotentialordinary shares resulting from share optionsgrantedtoemployees. pershareDiluted earnings are calculatedbyadjustingtheweightedaveragenumberofordinary shares outstandingtoassume DILUTED company andheldastreasury shares. average numberofordinary shares inissueduringtheyear, excludingtheaveragenumberofordinary shares purchased bythe pershareBasic earnings are calculatedbydividingthenetincomeattributabletoequityholdersofparent bytheweighted BASIC 11.16. ai annsprsae(xrse nERprsae .8(2.54) 1,310 (3,326) 2.18 1,163 2,533 Basic earningspershare(expressedinEURshare) Weighted averagenumberofordinaryshares(millions) Net incomeattributabletoequityholdersoftheparent dutetfrsaeotos(ilos 60 (2.54) 16 1,310 2.15 (3,326) 1,163 2,533 Diluted earningspershare(expressedinEURshare) per share(millions) Weighted averagenumberofordinarysharesfordilutedearnings Adjustment forshareoptions(millions) Weighted averagenumberofordinaryshares(millions) Net incomeattributabletoequityholdersoftheparent EARNINGS PERSHARE e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 ,7 1,310 1,179 Dexia Annual report 2008 res er- e
189
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 190 Dexia Annualreport 2008 Other assets netet nascae 6 ,1 5 8 8 205 887 682 551 1,412 861 Investments inassociates arvlervlaino otoi eg 15 15 ,3 ,3 0 3,938 3,938 0 (185) (185) Fair valuerevaluationofportfoliohedge eiaie 9282,1 5235,1 0 55,213 55,213 0 29,218 29,218 Derivatives edt auiyivsmns1952091419720942 2,009 1,967 174 2,089 1,915 Held tomaturityinvestments vial-o-aefiaca ses283528350130213020 123,062 123,062 0 218,375 218,375 Available-for-sale financialassets iaca sesdsgae tfi au ,5 ,5 ,0 ,0 0 5,208 5,208 0 7,154 7,154 Financial assetsdesignatedatfairvalue iaca seshl o rdn 0413,1 0861,3 0 10,836 10,836 0 30,411 30,411 Financial assetsheldfortrading on n dacst utmr 4,1 4,8 ,7 6,4 7,0 2,361 (2,314) 59,550 371,206 368,845 61,864 1,570 (17) 244,189 242,619 54,759 54,776 Loans andadvancestocustomers Loans andadvancesduefrombanks o urn seshl o ae3 72 ,6 ,8 25 6,285 6,260 28 67 39 Non currentassetsheldforsale ahadblne ihcnrlbns88588502482480 2,448 2,448 0 8,835 8,835 Cash andbalanceswithcentralbanks A.1. Breakdown offairvalueassets In accordance withourvaluationrules,fairvalueisequaltoaccountingforsomekindsofitems. A. Breakdown offairvalue 12.1. As requested byIFRS7§34,disclosures areprovided basedoninformationinternally tokeymanagement. (in millionsofEUR) 12. advances tocustomers”. covered byportfoliohedges.Theseassetsare includedinthelines“Loansandadvancesduefrom banks”and“Loans The line“Fairvaluerevaluation ofportfoliohedges” corresponds totheremeasurement oftheinterest rateriskonassets (1) IncludesTangible fixedassets,Intangibleassetsandgoodwill,Tax assetsandOtherassets. TOTAL FAIR VALUE Notes onriskexposure (1) Carrying amount 0,6 0,7 ,0 5,0 5,2 319 651,325 651,006 2,306 606,870 604,564 0561,4 0631,8 0 10,683 10,683 0 10,546 10,546 so e.3,20 AsofDec.31,2008 As ofDec.31,2007 value Fair ifrneCarrying Difference amount value Fair Difference arvlervlaino otoi eg 15 15 ,3 3,938 0 3,938 0 (185) 0 (185) 0 Fair valuerevaluationofportfoliohedge eiaie 7 847692,1 3 4334555,213 495 54,383 335 29,218 639 28,407 172 Derivatives edt auiyivsmns14564020956119342,009 354 1,149 506 2,089 0 614 1,475 Held tomaturityinvestments vial-o-aefiaca ses 4,5 1674128353,9 4311,6 123,062 19,664 64,301 39,097 218,375 481 71,637 146,257 Available-for-sale financialassets iaca sesdsgae tfi au ,5 0 ,5 ,0 8 55,208 25 380 4,803 7,154 0 701 6,453 Financial assetsdesignatedatfairvalue Other liabilities iaca seshl o rdn 59744403,1 ,9 ,0 ,3 10,836 1,735 2,409 6,692 30,411 0 4,444 25,967 Financial assetsheldfortrading uodntddbs4854850447438(29) 4,378 4,407 (3,378) 184,742 188,120 0 (394) 4,885 203,619 4,885 204,013 Subordinated debts Debt securities arvlervlaino otoi eg 26 26 ,4 ,4 0 1,543 1,543 0 (206) (206) Fair valuerevaluationofportfoliohedge eiaie 1353,6 5847,3 0 75,834 75,834 0 31,365 31,365 Derivatives on n dacst utmr 7112708024197025241522371,206 105,202 265,294 710 244,189 0 237,018 7,171 Loans andadvancestocustomers iaca iblte eintda arvle1,0 63601,7 8690 18,679 18,679 0 16,306 16,306 Financial liabilitiesdesignatedatfairvalue Financial liabilitiesheldfor iblte nlddi ipslgop edfrsl 0 0 0 Liabilities includedindisposalgroupsheldforsale u obns18611804(5)23122069(2,523) 210,669 213,192 161 (657) 114,889 178,024 114,728 178,681 18 126,698 126,680 Customer borrowingsanddeposits Due tobanks on n dacsdefo ak 0 41405,5 2 29864459,550 6,474 52,948 128 54,759 0 54,154 605 Loans andadvancesduefrombanks A.2. Breakdown offairvalueliabilities ..Assets B.1. B. Analysisoffairvaluefinancialinstruments “Debt securities”. ered byportfoliohedges.Theseliabilitiesare includedinthelines“Duetobanks”,“Customerborrowings anddeposits” The line“Fairvaluerevaluation ofportfoliohedge”corresponds totheremeasurement oftheinterest rateriskonliabilities unchanged inthedeterminationoffairvalue. Except forliabilities“Heldtrading”and“Designatedatfairvalue”,theowncredit spread onliabilitieshasbeenconside (1) Includes“Technical provisionsfrominsurancecompanies,“Provisionsandotherobligations”,“Tax liabilities”and“Otherl (3) Fairvaluebasedonpricingmodelsforwhichsomekeymarketdataareunobservable. marketdata. (2) Fairvaluebasedonobservable (1) Fairvaluebasedonmarketpricesquotedinactivemarket. TOTAL TOTAL (1) trading 8,0 9,9 ,2 8,1 22144821399631,022 133,949 444,802 52,271 586,010 1,120 396,790 188,100 Level 1 (1) Carrying so e.3,20 AsofDec.31,2008 As ofDec.31,2007 amount 8,7 8,3 103 4,8 3,1 (5,769) 639,619 645,388 (1,033) 587,137 588,170 4412,5 2912,2 0 22,921 22,921 0 24,451 24,451 ,9 ,9 7 7 0 273 273 0 1,995 1,995 Level so e.3,20 AsofDec.31,2008 As ofDec.31,2007 2 (2) value Level Fair 3 (3) ifrneCarrying Difference Total Level 1 (1) amount ,9 ,9 0 5,691 5,691 iabilities”. Level 2 (2) value Fair Level Dexia 3 (3) Difference Annualreport 2008 Total red as cov- 191
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 192 Dexia Annualreport 2008 uodntddbs04850485043804,378 0 4,378 0 4,885 0 4,885 0 Subordinated debts etscrte 485187402369674174256184,742 506 177,462 6,774 203,619 0 198,754 4,865 Debt securities eg 26 26 ,3 1,543 0 1,536 7 (206) 0 (206) 0 hedge Fair valuerevaluationofportfolio eiaie 6 9931013,6 9 44410375,834 1,073 74,464 297 31,365 1,041 29,963 361 Derivatives tfi au ,0 ,0 ,9 63638586761718,679 6,147 8,667 3,865 16,306 6,697 5,109 4,500 at fairvalue Financial liabilitiesdesignated iaca iblte edfrtaig195001952120273 0 2 271 1,995 0 0 1,995 Financial liabilitiesheldfortrading utmrbroig n eois54811200166809,1 960114,889 19,670 95,219 0 126,698 0 121,250 5,448 Customer borrowingsanddeposits 2008. Theamountsare recognized inNettradingincome(Seedisclosure 11.4.) Day oneprofit takenup-front amountsrespectively toEUR79millionand45asofDec.31,2007 Deferred DOPistherefore immaterial. parameters. backed toback,thedayoneprofit isrecognized up-front. Onlyfewtransactions,ofunsignificantamountshavenonobservable As Dexiasellssimpleproducts, likeInterest RateSwaps(IRS)orcomplexproducts (likestructured transactions)thatare perf No significantamountsare recognized asdeferred DayOneProfit (DOP)asof Dec.31,2007norasof2008. (deferred DayOneProfit) C. Disclosure ofdifference betweentransactionpricesandmodeledvalues (3) Fairvaluebasedonpricingmodelsforwhichsomekeymarketdataareunobservable. marketdata. (2) Fairvaluebasedonobservable (1) Fairvaluebasedonmarketpricesquotedinactivemarket. ..Liabilities B.2. u obns134166001804018562,5 210,669 22,153 188,516 0 178,024 0 176,680 1,344 Due tobanks TOTAL 853564577852661,1 5,4 959611,007 49,549 550,244 11,214 562,686 7,738 536,435 18,513 Level 1 (1) so e.3,20 AsofDec.31,2008 As ofDec.31,2007 Level 2 (2) Level 3 (3) oa Level Total 1 (1) Level 2 (2) Level 3 (3) Total ectly held forsalewasEUR660.0billion,ahigheramountthanlast The DexiaGroup credit exposure excludingtheFSAexposures closed seperately. and investmentportfolio)wasEUR297.1billion.Theyare dis- Credit riskexposure oftheongoingsaleFSA(insured assets dedicated toFSAcredit riskexposure. ever, theparcededtoreinsurers isdisclosedunderthefigures s THE NET PAR OUTSTANDING FOR &3!S CREDIT RISK EXPOSURE HOW parties; committed topayfortheguaranteesithasgrantedthird part ofliquidityfacilitiesorthemaximumamountDexiais ments. Thefullcommitmentamountiseithertheundrawn s THE FULL COMMITMENT AMOUNT FOR OFF BALANCE SHEET COMMIT s THE MARK TO MARKET VALUE FOR DERIVATIVES CONTRACTS specific impairment); derivative contracts(i.e.accountingvalueafterdeductionof s THE NET CARRYING AMOUNT FOR BALANCE SHEET ASSETS OTHER THAN the Managementandis: Credit riskexposure isdisclosedinthesamewayasreported to A. AnalysisoftotalDexiaGroup exposure 12.2. (1) ForFSAInc.,theparcededtoreinsurers wasEUR93.8billionasofDec.31,2007and86.72008 (2) ForFSAInc.,theparcededtoreinsurerswasEUR93.8billionasofDec.31,2007 andEUR86.7billionasofDec.31,2008 (1) Includessupranationalentities,likeEuropeanCentralBank. te ,4 ,6 1,137 68,106 6,891 1,168 1,137 13,652 4,508 0 2,743 52,213 200,660 16,986 94,375 1,007 14,766 57,095 135,137 19,377 45,619 119,744 20,677 58,663 298,989 78,800 42,288 429,021 74,856 Other Financial institutions Individuals, SME,self-employed Project finance ABS/MBS Monoline Corporate Local publicsector Central governments aa 2092,1 1,057 55 276 21,610 194 609 1,482 35 768 6,084 266,149 12,089 15,480 1,583 17,435 10 64,799 8,476 15,419 4,115 14,803 12,780 106,255 42,741 122,876 112,391 67,427 14,870 3,526 116,081 16,684 334,592 46,866 145,137 109,411 103,958 Other Japan Southeast Asia South andCentralAmerica United StatesandCanada Turkey Rest ofEurope Other EUcountries Luxembourg Italy Germany France Belgium TOTAL XOUEB AEOYO ONEPR e.3,20 e.3,20 FSAInc.Dec.31,2008 Dec.31,2008 Dec.31,2007 COUNTERPART EXPOSURE BYCATEGORY OF FSAInc.Dec.31,2008 Dec.31,2008 Dec.31,2007 EXPOSURE BYGEOGRAPHICALREGION TOTAL (1) CREDIT RISKSEXPOSURE (1) (2) - - Some amountsmaynotaddduetoroundings. 2007 were notrestated fortheevolutionofmethodology. potential future credit riskexposure. Figures asatDecember also includedanadd-onrepresenting anestimationofthe derivative contractsisthemark-to-marketvalue.In2007,it As from 2008onwards, thecredit riskexposure related to Comparative informationinrespect ofprevious period 50% ofthejointventure RBCDexiaInvestorServices. fully-consolidated subsidiariesofDexiaGroup andincludes Credit riskexposure isbasedonascopethatencompassesthe region andactivitysector. GEOGRAPHICAL GUARANTORS THE TO REPORTED THEN IS EXPOSURE mentation) islowerthantheoneofdirect borrower, the anteed byathird-part whoseweightedrisk(forBaselregle- obtained. Thismeansthatwhencredit riskexposure isguar- and bycounterparttakingintoaccounttheguarantees Credit riskexposure isbroken downbygeographicalregion part asfrom 2008). already takenintoaccount(i.e.FSAisconsidered asacounter- year mainlybecauseoftheongoingsaleFSAwhichwas 0,0 6,1 297,097 660,011 902,506 0,0 6,1 297,097 660,011 902,506 4671,7 7,446 19,379 24,667 . . Dexia Annualreport 2008 193
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 194 Dexia Annualreport 2008 etscrte 239,630 261,874 381,667 19,335 Off balance-sheetexposure Other financialinstruments Loans andadvances Debt securities B.1. Breakdown bysectorialcategory(netparoutstanding) Net paroftheFSAportfolio(InsuranceandFinancialProducts Portfolio) B. FSAinsured portfolio Debt securitiesclassifiedinavailable forsalerepresent 86%oftotaldebt securities. onwards. Figures asofDec.31,2007were notrestated. Dexia decidedtoprovide amore detailed breakdown ofitscredit riskexposure byfinancialinstrumentcategoryasfrom 2008 C. Credit riskexposure byclassoffinancialinstruments Rating(netparoutstanding) B2. (2) TheparcededtoreinsurersamountedrespectivelyEUR93.8billionand86.7asofDec.31,2007 (1) AsofDec.31,2008,theamountrepresentsexposureremaininginDexiaGroup,itFinancialProductsandGlob B 17112030,205 102,188 93,428 56,425 10,603 849 1,210 2,559 3,548 1,617 31,751 86,735 80,685 86,862 2,803 Non investmentgrade BBB A AA AAA nentoa 14216,498 21,492 International eieta otae 34812,226 13,458 Residential mortgages eea biain 76989,516 77,609 General obligations osmrrcials7834,323 7,863 Consumer receivables a-upre o eea biain 38539,695 33,875 Tax-supported nongeneralobligations oldcroae4,2 39,298 40,229 Pooled corporate uiia tlt eeu 01936,032 30,129 Revenue Utility Municipal te se-akd1431,164 1,423 Other asset-backed elhaervne9508,722 9,510 Healthcare revenue Financial products osn eeu ,0 5,321 5,207 Housing revenue rnprainrvne1,2 15,249 11,827 Transportation revenue dcto ,0 5,656 3,708 Education te ulcfiac ,4 1,561 1,645 Other publicfinance nentoa 85717,588 18,587 International OA 8,3 ,8 292,849 9,783 288,836 TOTAL OA 902,506 TOTAL B 67997373,509 9,783 96,739 ABS TOTAL UIIA 9,9 219,340 192,097 MUNICIPAL (2) (1) Dec. 31,2007 e.3,07Dc 120 FSAInc.Dec.31,2008 Dec.31,2008 Dec. 31,2007 e.3,07Dc 120 FSAInc.Dec.31,2008 Dec.31,2008 Dec. 31,2007 8,3 ,8 292,849 9,783 288,836 2249730 9,783 12,274 31, 2008. al Fundingexposure. portfolio risks. However, oftheinternalscoringsDenizBankandcreditriskmonitoringsystemsallowedtokeepacom thepreservation reports thecreditqualityofDenizBankinaseparatecolumn. As DexiaratingmethodologyisnotyetfullyimplementedinDenizBank’s organization,andasfewexternalratingsareavailable the reportingsandstartingharmonizationofinternalratingswiththosedevelopedbyDexiafollowingintroductionB (1) Inthecourseof2007,creditrisksDenizBankweregraduallyintegratedintoGroup’s generalscopebyredefining credit qualityoffinancialassetsneitherpastduenorimpaired. As ofDec.31,2007figures presented credit qualityoffinancialassetsneitherimpaired whileasfrom 2008onwards, theypresen Figures asofDec.31,2007were notrestated. Dexia decidedtoprovide adetailedbreakdown ofitscredit riskexposure byfinancial instrumentcategoryasfrom 2008onwards. D. Credit qualityoffinancialassetsneitherpastduenorimpaired commitments. Basel IIanddirectly heldbyDexiaare considered. CollateralheldmainlycoversLoansandAdvancesOff-balance-sheet mercial real estateandpledgesonvariousotherassets(receivables, businessgoodwill).Onlyfinancialcollateraleligibleund bonds (AAA-AAsovereigns orbankingissuers).Physicalcollateralismainlycomposedofmortgagesonresidential orsmallcom- The bulkofthefinancialcollateraliscomposedcashcollateralsandtermdeposits,toalesserextent,investmentgr Dexia holdsfinancialcollateralandphysicalcollateral. eiaie ,4 ,6 6 9 111,194 21 2,056 196 799 1,906 81,599 458 114 50,227 1,826 5,164 962 0 2,915 107 594 10,972 2,842 9 3,866 4,023 0 29 1,932 5,546 20 377,170 22,351 543 8,134 11,502 119,426 111 404 835 13 51,851 23 28,787 12,164 22 821 23,627 699 3,048 Guarantee commitmentsgranted 598 323 138,196 Loan commitmentsgranted 7,349 Other financialinstruments 195,050 Derivatives 138 Held tomaturityinvestments 46,634 Loans andadvances(atamortized cost) (excluding variableincomesecurities) 71,091 Financial assetsheldfortrading (excluding variableincomesecurities) Financial assetsdesignatedatfairvalue (excluding variableincomesecurities) Available forsalefinancialassets te nnilisrmns1,8 ,2 3 719,327 239,609 260,618 77 1,581 381,581 8,654 4,572 6,478 836 28,856 15,707 64,749 87,872 5,528 145,789 166,801 135,236 215,513 12,886 Off balance-sheet exposure Other financialinstruments Loans andadvances Debt securities vial o aefiaca ses(xldn aibeicm euiis 1,9 13,020 119,592 Available forsalefinancialassets (excludingvariableincomesecurities) edt auiyivsmns1,906 381,373 10,976 594 Derivatives Held tomaturityinvestments Loans andadvances(atamortizedcost) Financial assetsheldfortrading(excludingvariableincomesecurities) Financial assetsdesignatedatfairvalue(excludingvariableincomesecurities) urne omtet rne 035284,078 81,672 2,056 50,355 Guarantee commitmentsgranted Loan commitmentsgranted Other financialinstruments TOTAL TOTAL TOTAL A oA-A+toBBB- AAA toAA- 3,3 0,3 1871,8 901,135 14,884 51,877 303,938 530,436 6,4 2,7 1262,0 449655,143 14,499 22,005 31,216 226,776 360,647 AAA to AA- +t B-gaeNoninvestment A+ toBBB-grade grade Non investment Dec. 31,2008 grade orunrated Dec. 31,2007 grade e.3,20 FSAInc.Dec.31,2008 Dec. 31,2008 6,1 297,097 660,011 nae eiBn Total DenizBank Unrated 11,488 DenizBank the organization,integrating asel II. onTurkish exposures,Dexia plete viewonDenizBank’s Dexia (1) Annualreport 2008 Total ade er t
195
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 196 Dexia Annualreport 2008 AND BASED ON THE SELECTION MADE BY $EXIA 'ROUPS #REDIT #OM stable (LC). ish Sovereign,ratedBB-stable(FC)/BB+ whichisinternally Credit qualityofthemainfinancialassets: investment grade. $ENIZ"ANKS lNANCIAL ASSETS ARE THEREFORE IN THE CATEGORY NON BB- Foreign Currency (FC)/BB+LocalCurrency (LC)).Mostof LATED TO 4URKISH 'OVERNMENTS #OUNTRY 2ATING INTERNAL RATING assets (more than90%)whichare defactostrongly corre- ASSETS lNANCIAL $ENIZ"ANKS OF is closelylinkedtotheveryhighpredominance of Turkish QUALITY CREDIT AVERAGE 4HE Credit RiskTeams. validated atGroup levelormonitored bytherelevant Group financial assetsare eitherratedthroughRatingSystems Internal !S OF $EC AND DUE TO THE INTEGRATION $ENIZ"ANKS used toassessthecredit qualityoftheassets. reportings ratingsmodels andharmonizationoftheinternal redefinitions organization,integrationofthe oftheinternal FURTHER THROUGH SCOPE GENERAL 'ROUPS $EXIA WITHIN GRATED During 2008,thecredit risksofDenizBankwere furtherinte- Credit qualityofDenizBank’s financialassets forming theinBaselIIStandard method. DenizBank, forwhichcredit riskexposure iscalculatedcon- DARD 0OORS OR -OODYS AND PART OF ITS PORTFOLIO MOSTLY ings basedapproachratings(Fitch,Stan- basedonexternal ABS positionsforwhichcredit riskiscalculatedwithintherat- credit riskwithinthecontextofPillarIBaselII.Exceptfor Approach) forthecalculationofcapitalrequirements for RatingsBased Dexia appliestheAIRBA(AdvancedInternal ones.Indeed, Ratings indicatedareorexternal eitherinternal s s Local PublicSector:duetothecharacteristicsoftheseassets Exposures are onCentralGovernment onlylinkedto Turk- - these modelsis1H2009). (including agriculture) sides(expectedtimingofcompletion Default) modelsare beingdevelopedforbothRetailandSME Specific PD(Probability ofDefault)andLGD(LossGiven included intheQuarterlyRiskReportingofthisactivity. MONITORED BY $EXIA 'ROUPS 2ETAIL #OMPETENCE #ENTER AND IS s s s and B+. calibrated onthebasisofanaveragePDsituatedbetweenBB- This system,targetedtobecomeBaselIIcompliant,hasbeen designed forTurkish counterparts. being assessedthroughRatingSystemspecifically anInternal the evolutionofTurkish economyandthecredit qualityis The credit riskofthisportfolioistherefore closelyrelated to by Turkish counterpartsorrelated. portfolio. Banks intheBBrange,represent more orless40%oftotal while SpeculativeGradeBanks,whichare nearlyonly Turkish are banks, mainlymadeofInvestmentgradeInternational situated intheBtoBB-range. take exposures,ratingsonthisclassofassetsis theinternal mittees ofthecounterpartsonwhichDenizBankisallowedto should bepast-dueorimpaired with renegociated termsthatotherwise E. Carryingamountoffinancialassets mainly activeinthepublicsector. bythispointasDexiais No majoroperationisconcerned The Corporate&Commercials portfolioisentirely composed $ENIZ"ANKS ASSETS ON &INANCIAL )NSTITUTIONS AS OF 1 The credit riskprofile ofRetail&SMEportfolioisbeing noescrte)1001150 1,125 0 0 1 (at amortizedcost) Loans andadvances income securities) assets (excludingvariable Available forsalefinancial te nnilisrmns2 2 0 329 9 5 21 Other financialinstruments repo withEuroclear. Cash represents collateralsobtainedforderivativesEUR85millionwhile anotherEUR109millionwasobtainedforatri-pa were obtainedinthe frameworkofatri-partiterepo agreement withEuroclear. )N CASH AND DEBT INSTRUMENTS ARE COLLATERALS OBTAINED IN thereon specifictoeach countryforseizure ofproperty and forseizure ofgoods. Dexia doesnotintendtokeepthecollateralandconvertsintocash thecollateralsobtained,respecting thelegalprocedures G. Collateralandothercredit enhancementsobtainedbytakingpossession ofcollateralhold “LoansandReceivables”. instruments accountedforinthecategory amountofindividually impairedfinancialassets,beforedeductinganyimpairmentloss,includesanamountofE (1) Thecarrying made invaluationrules1.8. Past dueoutstandingsare mainlyretail andcorporate.Financialassetsare determinedasimpaired accordingly tothedescripti assets (receivables, businessgoodwill). Collaterals heldare mainlycomposedofmortgagesonresidential orsmallcommercial real estateandpledgesonvariousother As anexample,ifacounterpartfailstopaytherequired interests atduedate,theentire loanisconsidered aspastdue. contract. A financialassetispastduewhenthecounterpartyhasfailedtomakeapaymentcontractuallydue.Thisconsidered by F. Informationonpast-dueorimpaired financialassets Other Property plantandequipment Loans andadvances Debt instruments Cash etscrte 20 357 62 1,219 0 44 0 161 0 762 Loans andadvances Debt securities TOTAL TOTAL by takingpossessionofacollateral Nature oftheassetsobtainedduringperiod OA 6 6 44 161 762 TOTAL (1) b b 9 as>90days 90days 0dy 90days > 90 days 1,504 ,8 9 8 ,5 1,301 3,653 382 398 1,482 Past-due butnotimpaired Past-due butnotimpaired financial assets financial assets b b 180days 180 days 0 391 403
THE FRAMEWORK OF ,EHMAN "ROTHERS BANKRUPTCY $EBT INSTRUMENTS 180days > > 180days Dec. 31,2008 Dec. 31,2007 of individuallyimpaired of individuallyimpaired before deductingany before deductingany Carrying amount Carrying amount impairment loss impairment loss financial assets, financial assets, e.3,20 Dec.31,2008 Dec. 31,2007 ,0 1,301 5,107 1,281 Carrying amount 726 17 39 1,391 203 84 11 4 9 UR 1,919millionfordebt impaired loansand impaired loansand Collateral received Collateral received debt instruments debt instruments Dexia on pastdueor on pastdueor Annualreport 2008 1,625 357 rtite on 197
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION te consadrcials201()02 1 0 0 (1) 0 1 0 0 0 2 1 Other accountsandreceivables Assets frominsuranceactivities te ses001001 0 0 1 283 1 0 0 0 (2) 0 0 283 0 0 0 2 1 Other assets Other accountsandreceivables Assets frominsuranceactivities vial-o-aefiaca ses232 942 Available-for-sale financialassets Loans andadvancestocustomers rmbns 8009 (11) 0 98 0 0 98 0 0 817 Available-for-sale financialassets Loans andadvancestocustomers from banks Loans andadvancesdue 198 H. Allowancesmovementsforcredit losses advances tocustomers”,duetheapplication ofIAS39amended. (1) AnamountofspecificallowancesforindividuallyassessedfinancialassetsEUR 1,045millionwasreclassifiedfrom“Availa SESDFNNILAST 419 ASSETS FINANCIAL ASSESSED OA ,3 19 ,8 29 3)5631 (22) 10 5,633 (34) (239) 4,584 (109) 1,431 TOTAL IACA ASSETS FINANCIAL ASSESSED COLLECTIVELY FOR ALLOWANCES SPECIFIC AND ASSETS FINANCIAL ON LOSSES NOTREPORTED BUT INCURRED FOR ALLOWANCES OA ,3 17 3 21 2)1416(7) 6 1,431 (21) (271) 336 (147) 1,534 TOTAL LOACSFORCOLLECTIVELY ALLOWANCES ANDSPECIFIC ASSETS FINANCIAL ON LOSSES NOTREPORTED BUT INCURRED FOR ALLOWANCES IACA ASSETS FINANCIAL INDIVIDUALLY ASSESSED FOR ALLOWANCES SPECIFIC IACA SES102(8 ,1 11 2)4171 (22) 10 4,127 (21) (181) 3,415 (98) 1,012 ASSETS FINANCIAL ASSESSED INDIVIDUALLY FOR ALLOWANCES SPECIFIC of whichequityinstruments fwiheut ntuet 5 2)81(5 3 844 (3) (85) 801 (26) 157 of whichequityinstruments ntuet 7022 0 27 instruments of whichfixedincome ntuet 5()181()(,1)817 (1,019) (8) 1,811 (2) 35 instruments of whichfixedincome Dexia Annualreport 2008 a.1,2008 Jan. a.1,2007 Jan. ,7 14 1 23 2)1026(7) 6 1,012 (23) (213) 215 (144) 1,177 As of As of 5 3 2 5)2419 2 (58) 157 121 13 (3) (42) 357 4 (23) 205 9 2)262(3 102 1,661 (1,022) (93) 2,612 (28) 192 tlzto Amountsset Utilization Utilization 11 8 19 3)876(7) 6 817 (33) (159) 188 (121) 1)119(8 1)1,506 (13) (58) 1,169 (11) 2)2 5)1 192 10 (53) 26 (23) 7)41(6 ,0 ,8 0(11) 10 2,083 1,001 (86) 421 (70) Amounts set loan losses loan losses estimated estimated estimated probable probable probable aside for aside for aside for loan losses loan losses estimated estimated probable Amounts probable Amounts reversed reversed 1)()35 (3) (11) for for
Other te Asof Other (1) e.31,2007 Dec. e.31,2008 Dec. As of ble forsalefinancialassets”to“Loansand recognized in recognized in profit orloss profit orloss Recoveries Recoveries directly directly recognized in recognized in profit orloss profit orloss Charge-offs Charge-offs directly directly
“Financial liabilitiesmeasured atfairvaluethrough profit or loss–Financialliabilitiesdesignatedatfairvalue”). 8.3. àLuxembourgwasrecordedby DexiaBankBelgiumandBanqueInternationale forEUR118million(Seealsonote split liquidityandcredit risk.Inaddition,anamountrepresenting owncredit riskvariationonstructured nonlistedliabili own credit riskofEUR356million,whichisconsidered intotalaschangethecredit riskof theliability, duetothediffi In 2008,FSAInc.ratingwasdowngradedandtheliquiditycostcontinued toincrease, leadingtotherecognition ofanincrease (1) Thisamountincludesthepremium/discountandaccumulatedchangein market value. As ofDec.31,2008 to changesincreditworthiness oftheliabilitybutcristallized theimpactofgeneralliquiditycrisisoncredit spreads. AS OF $EC AN ADJUSTMENT OF %52 MILLION OF THE FA )N NO CHANGE IN THE FAIR VALUE OF $EXIAS lNANCIAL LIABIL (1) Thisamountincludesthepremium/discountandchangeinmarketvalue. As ofDec.31,2007 J. Credit riskinformationaboutfinancialliabilitiesdesignatedatfairvalue through profit orloss The changeincredit spread isnotsignificantandcredit riskisnothedged. payments toapresent valueatadiscountratethatreflects theuncertaintyassociatedwiththosepayments. Dexia estimatesthefairvalueofloansbycalculatingamountfuture cashflowsfrom theassets anddiscountingthe No credit derivativeisheldtomitigatethemaximumexposure tocredit risk. As ofDec.31,2008 As ofDec.31,2007 I. Credit riskinformationforloansdesignatedatfairvaluethrough profit orloss ARIGAMOUNT CARRYING AMOUNT CARRYING CREDIT RISK TO EXPOSURE MAXIMUM CREDIT RISK TO EXPOSURE MAXIMUM 63500220 0 0 16,305 869(7)(7)215 (474) (474) 18,679 6 5 5 361 700 0 67 Amount ofchangeinthefairvalue Amount ofchangeinthefairvalue of theperiod of theperiod attributable tochangesinthe attributable tochangesinthe Change Change credit riskoftheliability credit riskoftheliability ITIES WAS ATTRIBUTABLE TO CHANGES IN THE CREDIT RISK OF THE LIA hneo h eidCumulativeamount Change oftheperiod Cumulativeamount Change oftheperiod Amount ofchangeintheloansatfairvaluethroughprofit Amount ofchangeintheloansatfairvaluethroughprofit IR VALUE OF &3!S LIABILITIES HAS BEEN BOOKED 4HIS WAS NOT ATT Cumulative Cumulative and lossattributabletochangesinthecreditrisk and lossattributabletochangesinthecreditrisk amount amount Difference between carryingamount Difference between carryingamount and contractuallyamountrequired and contractuallyamountrequired to bepaidatmaturity to bepaidatmaturity Dexia BILITY (OWEVER ties issued Annualreport 2008 RIBUTABLE culty to (1) (1) of 199
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 200 Dexia Annualreport 2008 A. Assetsreceived ascollateralifthiscanbesoldorrepledged 12.3. eucaeareet emusmn mutwsER3 ilo so e.3,20 n U 4blina fDc 31,2008. Repurchase agreements reimbursement amountwasEUR39billionasofDec.31,2007and44 Carrying amountisnotlimitedtotheeffectively borrowed. Figures asofDec.31,2007were therefore restated. Assets are mainlypledgedtocollateralizerepurchase agreements anddebtsto CentralbanksandtotheEuropean CentralBank. B. Informationonfinancialassetspledgedascollateral amended bythelegaldepartmentoroneswrittendepartment.Repledgeisausualmarketpractice. Contracts whichdeterminetheconditionsofrepledge are eitherOverseasSecuritiesLendingAgreement (OSLA)–possibly Collaterals are obtainedwithintheframeworkofrepurchase agreement activitiesandofbondlendingactivities. on n dacs4205890 0 10,658 5,819 1,100 22,377 0 0 25,057 422 71 27,005 Loans andadvances Debt instruments Equity instrument COLLATERAL AS ASSETS RECEIVED TOTAL NOMTO BU COLLATERALS INFORMATION ABOUT Carrying amountoffinancialassetspledged o iblte o otnetlaiiisfrlaiiisforcontingentliabilities forliabilities forcontingentliabilities for liabilities as collateralofDec.31,2007 211015870 195,897 0 72,191 oltrlrcie so e.3,20 CollateralreceivedasofDec.31,2008 Collateral receivedasofDec.31,2007 collateral held Fair valuesof 7482,5 92610,658 29,296 25,057 27,498 sold/repledge Fair valueof collateral Carrying amountoffinancialassetspledged as collateralofDec.31,2008 of collateralheld Fair values sold/repledge Fair valueof collateral Derivatives netet 1 5 3 7 2001,915 0 0 42 0 672 733 255 211 2 of portfoliohedge Fair valuerevaluation investments Held tomaturity netet nascae 6 861 861 218,375 (191) (2,121) 2,689 3,263 88,707 27,560 18,886 78,085 Tax assets 1,497 will Intangible assetsandgood- Tangible fixedassets Investments inassociates assets Available-for-sale financial arvle162012271864361 7,154 0 6 11 4,396 1,886 267 192 270 126 fair value Financial assetsdesignatedat rdn 5 2811551104881721(0)030,411 0 (905) 251 147 4,818 1,180 1,595 22,871 454 trading Financial assetsheldfor ocsoes1,4 2914,9 1958,2 5 ,9 47 128 242,619 (1,238) (467) 2,297 656 88,327 41,975 48,498 42,931 19,640 to customers Loans andadvances sale Non currentassetsheldfor u rmbns1,6 4689644073461 2 9 54,776 0 291 427 15 3,416 4,097 9,654 24,608 12,268 due frombanks Loans andadvances ihcnrlbns8286000001 8,835 0 0 17 0 0 0 0 610 8,208 with centralbanks Cash andbalances REFIXING INTERESTRATE (1) AnamountofEUR61millionrepresentingoperationaltaxesistransferredfrom“Tax assets”to“Otherassets”. note12.5.). point, ratherthanonassumptionsbasedobservedbehavioraldata.Thislatterapproach isrealized inthe ALMsensitivity(s below takesintoaccounttheremaining maturityuntilthenextdateatwhichinterest ratesare reset from anaccountingstand- Current accountsandsavingsdepositsare presented inthecolumn”Atsightandondemand”asinformationpresented 12.4. Other assets OA 37810277,2 61718261,5 3071,5 158 604,564 (1,538) 18,550 13,037 16,851 188,256 76,177 79,226 170,207 43,798 TOTAL As ofDec.31,2007 ASSETS NEETRT ERCN IK RADW BYREMAININGMATURITY UNTILNEXT INTEREST RATE REPRICINGRISK:BREAKDOWN (1) (1) demand At sight and on ,0 2 4 6 3 ,0 6()4,381 (3) 16 0 1,203 430 365 146 621 1,603 months 3 Up to months 3 to 1year More than years 5 More than 1 to years 5 Over Undeter- maturity mined ,2 2,524 2,257 2,524 2,257 ,8 13 1,384 (103) 1,487 200()39 (3) 0 0 42 Accrued interest ,0 195029,218 0 21,915 7,303 Dexia adjustment Fair value Annualreport 2008 15 (185) 0 (185) Impair- ee ment Total 201
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION tfi au ,9 9 ,4 ,2 ,2 2 0 16,306 300 129 1,995 178,681 4,324 (1) 163 3,622 6,041 38 636 790 145 46 126,680 (289) 1,093 455 6 7 940 2,178 6,532 473 48 994 91,333 2,286 77,239 7,829 398 6,323 41 33,629 Derivatives at fairvalue 75,914 Financial liabilitiesdesignated Financial liabilitiesheldfortrading Customer borrowingsanddeposits Due tobanks (1) AnamountofEUR147millionrepresentingoperationaltaxesistransferredfrom“Tax liabilities”to“Othersliabilities”. Balance sheetsensitivitygapishedgedthrough derivatives. nblnesetsniiiygp(1,8)(949 8941,1 3,6 (6,591) 134,068 18,016 28,964 (39,499) (113,682) On balancesheetsensitivitygap Other liabilities hedge Fair valuerevaluationofportfolio uodntddbs7179131371334 1 84,885 48 116 204,013 (1,081) 42 2,769 1,303 159 1,387 183 45,494 39,247 35,111 1,799 80,422 7 1,892 companies Technical provisionofinsurance Subordinated debts Debt securities rvsosadohrolgtos1331,353 1,353 Provisions andotherobligations Tax liabilities 202 OA 5,8 0,0 0225,6 4182,4 2832,6 588,170 22,068 12,863 23,442 54,188 58,161 50,262 209,706 157,480 TOTAL As ofDec.31,2007 LIABILITIES As ofDec.31,2007 POSITION NET Dexia Annualreport 2008 (1) (1) demand At sight and on At sightand ,8 ,3 2 ,0 ,2 ,2 7,396 0 4 1,623 1,022 1,006 329 1,032 2,380 on demand months 3 Up to months 3 months 3 to 1year Up to More than otst year months to1 years 5 More than More than3 1 to years 5 Over to5years 1 More than Undeter- maturity 50115,071 15,071 mined 3 631 631 Accrued Dexia interest vr5yas Undetermined Over 5years ,3 31431,365 23,134 8,231 AnnualReport 2008 adjustment Fair value 26 (206) (206) maturity Total 202 tfi au 8 8 0124569(2 5,208 0 (52) 9 4,566 132 2,448 10,836 0 70 0 189 123,062 0 (1,661) (2,505) 90 (1,281) 285 61,864 1,849 10 (162) 158 3,343 9 368,845 756 0 (3,524) 55,671 2,405 403 19,532 13,608 3,551 1,051 10,460 0 0 1,870 665 34,464 0 7,761 685 155,767 2,915 57,690 58,376 6 3,719 0 Available-for-sale financialassets 63,211 5,072 at fairvalue 19,501 35,186 Financial assetsdesignated 245 Financial assetsheldfortrading 13,975 Loans andadvancestocustomers 2,193 Loans andadvancesduefrombanks Cash andbalanceswithcentralbanks o urn seshl o ae62000(0 6,260 1,998 2,193 (10) (285) 0 15 0 0 6,270 1,031 159 2,193 1,967 51 0 84 0 554 52 389 0 670 491 249 Non currentassetsheldforsale Other assets 505 Tax assets Intangible assetsandgoodwill 0 Tangible fixedassets Investments inassociates hedge Fair valuerevaluationofportfolio Derivatives Held tomaturityinvestments As ofDec.31,2008 ASSETS OA 67812217,0 26427792,7 4676,2 623 651,006 (6,213) 61,029 14,627 25,971 217,719 82,604 76,300 142,211 36,758 TOTAL demand At sight and on months 3 Up to months 3 to 1year More than years 5 More than 1 to years 5 Over Undeter- maturity mined ,1 51 4,139 2,353 (571) 4,710 2,353 8 682 682 Accrued interest ,6 650055,213 0 46,550 8,663 Dexia adjust- ,3 3,938 0 3,938 value ment Annualreport 2008 Fair Impair- ment 203 Total
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION nblnesetsniiiygp(0,2)(631 5622,0 5,4 (1,951) 155,840 27,605 25,642 (76,361) (109,120) On balancesheetsensitivitygap uodntddbs08398911301713154,407 135 103 188,120 18,679 2,064 366 137 273 2,884 210 (3) 1,370 0 911 213,192 3,198 185 908 5 50,381 3,641 45,181 3,369 550 31,035 843 12 4,844 56,270 114,728 0 0 (28) 3,016 305 146 35 4,128 61 943 2,153 5,900 45 56 121,837 4 2,032 78,439 companies 3,257 Technical provisionofinsurance 7,798 Subordinated debts 3 Debt securities 35,607 Fair valuerevaluationofportfoliohedge Derivatives 65,063 at fairvalue Financial liabilitiesdesignated Financial liabilitiesheldfortrading Customer borrowingsanddeposits Due tobanks Balance sheetsensitivitygapishedgedthrough derivatives. Provisions andotherobligations Tax liabilities te iblte ,3 9 2 71195404,393 0 4 985 181 67 128 995 2,033 for sale Liabilities includedindisposalgroupsheld Other liabilities As ofDec.31,2008 LIABILITIES As ofDec.31,2008 POSITION NET TOTAL 204 Dexia Annualreport 2008 demand At sight 4,7 1,7 0685,9 1892,2 4667,8 645,388 70,784 14,696 27,922 61,879 54,999 50,658 218,572 145,878 and on At sightand on demand months 3 Up to months 3 months 3 to 1year Up to More than otst year monthsto1 3 years 5 More than 1 to More than years 5 Over Undeter- maturity 67916,739 16,739 1 to5years mined More than ,8 1,487 1,487 ,0 8 5,691 685 0 5,006 0 302 302 Accrued interest ,9 58775,834 65,837 9,997 5 years Over adjustment Fair value Fair value ,4 1,543 1,543 Undetermined maturity Total TFM registered aVaR useofEUR127.5millionatyear-end versusareduced limitofEUR130million. (5) Otherrisks:inflation,commodities&CO (4) EQT: equities. (3) IR&Fx:withoutALMLT (local&directional). (2) FX:forex. (1) IR:interestrate. (6) Otherrisks:inflation,commodities&CO (5) EQT: equities. (4) IR&Fx:withoutALMLT (local&directional). (3) FX:forex. (2) IR:interestrate. (1) FiguresasofDec.31,2007wererestatedtoincludeDenizBank. C. ALMequityexposure –Listedshares sensitivity &3!S SENSIVITIVITY - LongtermALMsensitivityandValue atRisk B. ALMinterest raterisk Spread sensitivityforcredit spread portfolio(Credit Spread - Value atRisk(includingCashandLiquidityManagement - A. Treasury FinancialMarketactivities -ARKET RISKSS MEASURES ARE PRESENTED AS FOLLOWS 12.5. lblAeae126.6 Average Global Value atRisk(inmillionsofEUR) historical credit spread VaR. based onhistoricalmethodand–onlyfortradingdesks–,an based onparametricalmethod(99%,10days),anEquityVaR Dexia Group calculatedanInterest RateandFXVaR mainly Value atRisk–99%,10days(inmillionsofEUR) a. factor By risk factor By risk lblAeae66.5 Average Global (in millionsofEUR) VaR (10d,99%) (in millionsofEUR) VaR (10d,99%) Portfolio) andPublicFinanceBonddenominatedexposure (CLM)/Asset andLiabilitiesManagement(ALM)delegated) MARKET RISK&ALM vrg 004. 846. . . . . 007. 807. . . . 3.7 2.4 1.3 1.8 75.9 78.0 79.4 60.0 7.7 7.5 7.7 6.5 62.7 38.4 43.6 30.0 Average 0,7 0,2 0,0 0,0 50.1 32.1 8.6 9.9 6.9 9.8 6.1 5.2 27.3 18.2 41.7 49.0 Average aiu 715. 809. 441. 131. 8491.1 78.4 11.9 11.3 12.2 14.4 90.6 48.0 52.1 37.1 Maximum 2.8 0,2 0,0 0,0 57.4 55.9 9.6 15.5 10.4 16.0 10.5 10.9 38.3 21.3 58.0 56.5 Maximum IR IR Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q n Banking) and Banking) and (1) (2) &FX & FX 2 2 . . (2) (3) (Trading (Trading (3) (4) EQT EQT (5) (4) TaigSra rdn Otherrisks SpreadTrading Trading TaigSra rdn Otherrisk SpreadTrading Trading for thebankingpart(seehereunder). Bond denominatedexposure whichare followedinsensitivity &INANCE 0UBLIC THE AND #30 PORTFOLIOS THE INCLUDE DOESNT )T below. The detailedVaR usageofDexiaGroup isdisclosedinthetable Finance Bondportfolios,whichhavebeenputinrun-off. TFM alsomanagesCredit Spread Portfolios(CSP)andPublic risk intrading. reduce VaR limitsofTFM,especiallyinthefieldcredit spread the RiskPolicyCommitteeasofNovember7,2008decidedto agement activities.Followingreorientation ofTFMactivities, tions thatarisefrom short-termbalancesheetandcapitalman- TFM assumestradingactivitiesaswellnon-tradingriskposi- mainly orientedasasupportfunctionfortheGroup. Treasury andFinancialMarkets(TFM)activitiesofDexiaare Treasury andFinancialMarketactivities A. aiu 100.3 Maximum aiu 179.1 Maximum ii 142 Limit ii 3Q:1784Q:130 Limit 2007 2008 (1) 116.0 112.7 . . . 5.9 3.0 2.4 3.5 Dexia Annualreport 2008 (5) (6) 205
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 206 Dexia Annualreport 2008 (5) Sensisto1bpshift. (4) Sensisto1%shift. FSAandFinancialProducts. (3) Without (2) ALMdelegatedandCLMexcluded. (1) FiguresasofDec.31,2007wererestatedtoincludeDenizBank. a. Bankingandinsurancecompanies,exceptFSApensionfunds on theobservedbehaviorofcustomersandnotlegalrepayment date(seenote12.4.). For thesensitivitycalculation,residual maturityofthe portfoliountilnextrefixing interest ratedateisdefinedusingassum The sensitivitymeasures thechangeinbalancesheet neteconomicvalueifinterest ratesriseby1%across theentire curv monthly basis. Long Term ALMfallsunderthedirect decisionandcontrol authorityoftheALCOGroup (ALMCommittee),whichmeetsona B. ALMinterest raterisk It estimates,inmillionsofEUR,thesensitivityfairvalueafterabasispointspread increase. Credit spreadsensitivity its purposeisthecredit spread. Therefore, ithasaverylimitedsensitivitytochange ofinterest rate. The interest rateriskoftheCredit Spread PortfolioandofthePublicfinancebonddenominatedexposure portfolioishedged,a Interest ratesensitivity Average rating subsidiaries. The increase inexposure isexplainedbythere-classification ofex-tradingportfoliosandbythescopeextensiontosomesmall (2) AsatDec.31,2008EUR57.3billionaredisclosedinLoansandReceivablesfollowingreclassificationaccordingtoIAS39a (1) AsatDec.31,2008EUR29.1billionaredisclosedinLoansandReceivablesfollowingreclassificationaccordingtoIAS39a Exposure (inbillionsofEUR) b. Credit spread portfolioandPublicfinancebonddenominatedexposure (bankingbookonly) ulcfiac oddnmntdepsr (01 (83.0) (38.5) (60.1) (41.4) Public financebonddenominatedexposure Credit SpreadPortfolio(CSP-bankingbook) rdtSra otoi CPbnigbo)A-AA- AA- Credit SpreadPortfolio(CSP-bankingbook) Credit SpreadPortfolio(CSP-bankingbook) Public financebonddenominatedexposure ulcfiac oddnmntdepsr A A AA- Public financebonddenominatedexposure Banking companiesALM Insurance (In millionsofEUR) (3) (2) estvt 0896 9 8 10 Sensitivity Sensitivity a 0 9 0 0 4 170 144 106 104 VaR 10d99% a 0 9 4 35 8139 1 97 117 92 103 58 52 73 148 VaR 10d99% (1) (2) 48 15 16 (131) (136) (155) (468) Q2 Q4 Q2 Q4 Q2 Q4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Interest rate (4) 2007 qiyCreditspread Equity (1) 072008 2007 072008 2007 072008 2007 8188.1 77.3 78.1 70.8 mended. mended. 1)(6 1)(15) (15) (16) (16) (5) ptions e. s
through profitandlossinaccordancewithIAS39. (3) Changesinthefairvalueofliabilityportfolioarerecordedresultiftheydesignatedashedgesforaccounting (2) Recordedinresult. (1) Principallyclassifiedas“LoansandReceivables”in2008“Available-for-sale” in2007. WAS 0ORTFOLIO )NVESTMENT invested infixedincomesecuritiesatDec.31,2008. 'ENERAL &3!S THE OF /VER aFinancialProduct (FP)SegmentInvestmentPortfolio,that - aGeneralInvestmentPortfolio,whichispartoftheactivi- - FSA holdstwomaininvestmentportfolios: b.1. Sensitivitytointerestraterisk munication ofFSA. This alsoallowsaneasierreconciliation withthefinancialcom- USD. ation from themarketsensitivity, allamountsare givenin In order toisolatetheUSDimpactofexchangeratefluctu- b. FSA’s sensitivity (4) Sensisto1bpshift. (3) Sensisto1%shift. FSAandFinancialProducts. (2) Without (1) ALMdelegatedandCLMexcluded. Change infairvalueofderivativeshedgingliabilities Change infairvalueofliabilities Change infairvalueofassets Insurance Change infairvalueofderivativeshedgingassets ALM Banking companies (in millionsofUSD) (in millionsofEUR) E HNE NFI AU (.)68.1 (1.5) CHANGESINFAIR VALUE NET GIC liabilities(GuaranteedInvestmentContracts). as ofDec.31,2008(USD19billionin2007),whichsupports will bekeptinDexiaaccounts,amountingtoUSD13.4billion 2007); and billion asofDec.31,2008(USD5.2 ties tobesoldAssured Guaranty, amountingto USD 5.9 (1) (2) (1) a 0 9 3 0 9 225 190 205 237 66 8 76 8 96 94 5 9 161 111 125 68 VaR 10d99% Sensitivity VaR 10d99% Sensitivity (3) (2) 15 ( (185) (2) Q2 Q4 Q2 Q4 Q2 Q4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Interest rate 8)(177) 282) following after-tax effect: A hypotheticalincrease ininterest ratesof1% wouldhavethe use ofderivatives. of assetsandliabilitiesare economicallyhedged,without the hedged usinginterest rateswapsorfutures. Certaincategories The assetsandliabilitiessupportingtheFPGICbusinessare mize risk-adjustedreturns. a stablenetinterest margin,tomaintainliquidityand toopti- primary objectivesinmanagingthisportfolioare togenerate securitiesandmortgagebackedsecurities.The government dollardenominatedassetbackedsecurities,USagencyand OF US PRIMARILY CONSISTS 0ORTFOLIO )NVESTMENT 3EGMENT &0 &3!S recorded intheAFSreserve. millionin2007), tax decrease ofUSD291.7million(USD150.9 across theentire yieldcurvewouldresult inanestimatedafter Sensitivity toahypotheticalincrease ininterest ratesof1.0% (3) (197) qiyCreditspread Equity 2008 purposesordesignatedatfairvalue (2.)(340.1) (225.2) 192 (116.2) (129.2) 4. 371.9 152.5 245.9 107.0 072008 2007 1)(5 1)(16) (15) (15) (16) Dexia Annualreport 2008 (4) 207
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 208 Dexia Annualreport 2008 eebr3,20 ,0 2 41 37 (597) (307) 14.1% 225 1,601 December 31,2008 eebr3,20 9 61.%(9 (90) (69) 16.7% 66 396 December 31,2008 etme 0 081951096 40 (796) (440) 9.6% 190 1,985 September 30,2008 etme 0 08597 27 19 (163) (129) 12.7% 76 599 September 30,2008 ue3,20 2 61.%(4 (155) (94) 11.7% 96 822 June 30,2008 ue3,20 ,9 0 .%(6)(763) (369) 8.6% 205 2,397 June 30,2008 ac 1 08859 05 5)(106) (57) 10.5% 94 895 March 31,2008 eebr3,20 ,0 787 1)(56) (11) 8.7% 97 1,105 December 31,2007 ac 1 082652790 13 (628) (153) 9.0% 237 2,635 March 31,2008 etme 0 071581775 1)(75) (11) 7.5% 117 1,558 September 30,2007 ue3,20 ,9 262 1 (17) (1) 6.2% 92 1,490 June 30,2007 eebr3,20 ,5 7 .%(6 (248) (36) 6.9% 170 2,451 December 31,2007 etme 0 072261464 2)(19) (23) 6.4% 144 2,236 September 30,2007 ac 1 071411370 (11) 0 7.0% 103 1,471 March 31,2007 ue3,20 ,3 0 .%()(91) (3) 5.2% 106 2,030 June 30,2007 ac 1 071771460 1 (37) (1) 6.0% 104 1,727 March 31,2007 (USD 30.9millionin2007). increase ofonebasispointincredit spreads isUSD24.6million &3!S OF VALUE FAIR portfolio ofinsured CDScontractsthatwouldresult THE from an IN REDUCTION PRE TAX ESTIMATED 4HE value fluctuationsare reflected intheresults. however, becausetheyare considered derivatives,theirfair FSA intendstoholdeachofthesecontractsitsmaturity; on marketindicestoestimatefairvalue. has developedaseriesofassetcredit spread algorithmsbased Because theportfolioofFSA-insured CDSisnottraded,FSA due tochangesincredit spreads. Changes infairvalueofinsured CDScontractsare generally Assured Guaranty. dates andotherterms.ThoseCDSare partofsoldactivitiesto are definedbytheunderlyingassets,credit rating,maturity anteed byFSAandisorganizedintovariouscategories,which consists primarilyofsyntheticstructured credit derivativesguar- &3!S PORTFOLIO OF INSURED #REDIT $EFAULT 3WAPS #$3 CONTRACTS b.2. Sensitivitytocreditspreadandmarketrisk .ISRNECMAISPRFLOMre au a a a -25% EaR VaR % VaR Marketvalue -25% EaR PORTFOLIO B. INSURANCECOMPANIES VaR % VaR Marketvalue BANKINGCOMPANIES (ALMPORTFOLIO) A. December 31,2007). is USD4.2millionintheAFSreserve (USD8.3millionasof one basispointofcredit spread wideningbytypeofsecurity FP SegmentInvestmentPortfolio(activitykeptbyDexia)for The estimatedpre-tax reduction inthefairvalueof shares bytheDefaultCommittee. 25% andifastructuralimpairmentispronounced onthese recorded inaccountingresults ifthere isadeclineinvalueof The -25%columnrepresents theimpairmentthatcouldbe 99% andforaholdingperiodof10days. tial lossthatcanbeexperiencedwithalevelofconfidence The EquityVaR calculatedbyDexiaisameasure ofthepoten- materializes. measures theimpactinaccountingresult iftheVaR in marketvalue,whereasatRisk(EaR) theEquityEarnings The EquityValue atRisk(VaR) measures thepotentialchange sensitivity ALMequityexposure –Listedshares C. Other assets repayment date. Current accountsandsavingsdepositsare includedinthecolumn“Atsightandondemand”eventhough theyhavenofixed We refer topoint4.4.inAccountingpolicies. policy isthatitsfuture fundingneedsshouldneverexceeditsproven secured fundingcapacity. $EXIAS APPROACH TO LIQUIDITY RISK MANAGEMENT HAS BEEN REVIEWED 12.6. (1) AnamountofEUR61millionrepresentingoperationaltaxesistransferredfrom“Tax assets”to“Otherassets”. ihcnrlbns ,0 61 8,208 with centralbanks Cash andbalances held forsale Non currentassets u rmbns1,4 4038595474271 2 9 54,776 0 291 427 16 4,297 5,407 8,519 24,073 11,746 due frombanks Loans andadvances utmr 4711,6 0605,3 3,3 9 ,9 47 128 242,619 (1,238) (467) 2,297 490 138,537 50,838 20,650 16,761 14,751 customers Loans andadvancesto o rdn 1 ,3 ,4 0554121(0)030,411 0 (905) 251 401 20,565 8,249 1,638 212 0 for trading Financial assetsheld au 419432144371 7,154 0 6 11 4,397 2,144 453 109 34 0 value designated atfair Financial assets nnilast 6 ,2 3554,1 4,0 ,9 ,8 211 11 218,373 (191) (2,121) 2,689 3,297 145,809 49,712 13,585 5,127 466 financial assets Available-for-sale netet 4 9 5 8 2001,917 0 0 42 0 786 750 196 141 2 investments Held tomaturity agbefie ses2272,257 2,257 Tax assets goodwill Intangible assetsand Tangible fixedassets in associates Investments of portfoliohedge Fair valuerevaluation Derivatives As ofDec.31,2007 ASSETS OA 6764,9 485157432691,6 3071,5 158 604,564 (1,538) 18,550 13,037 16,968 312,609 115,774 44,845 47,593 36,726 TOTAL IUDT IK RADW BYRESIDUALMATURITY LIQUIDITY RISK:BREAKDOWN (1) (1) demand At sight and on ,5 3 4 6 7 ,9 6()4,381 (3) 16 0 1,196 471 365 148 635 1,553 Breakdown ofgrossamountandpremium/discount months 3 Up to 0000017 00 More than More than 3 months months 3 to 1year than 1to years 5 More IN THE LIGHT OF THE CURRENT lNANCIAL AND LIQUIDITY CRISIS /VE years 5 Over Undeter- maturity mined ,8 13 1,384 (103) 1,487 ,2 2,524 2,524 6 861 861 200()39 (3) 0 0 42 Accrued interest ,0 195029,218 0 21,915 7,303 adjustment Fair value Fair value Dexia 15 (185) 0 (185) Annualreport 2008 Impair- RALL ment 8,835 Total 209
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 210 Dexia Tax liabilities obligations Provisions andother necmais515493491,6 5 15,071 159 10,864 3,449 459 135 5 ance companies Technical provisionofinsur- uodntddbs7181912426657164 4,885 48 116 527 2,696 1,224 119 148 7 Subordinated debts etscrte 1363,4 0856,0 8020279(,8)204,013 (1,081) 2,769 0 68,032 64,306 30,895 37,746 1,346 Debt securities portfolio hedge Fair valuerevaluationof Derivatives eintda arvle045124618366434193016,306 300 129 4,324 3,636 6,168 1,294 455 0 designated atfairvalue Financial liabilities rdn 9 9 0 54 8()1,995 (1) 38 45 15 500 999 398 1 trading Financial liabilitiesheldfor eois7,4 0905568684764 4 29 126,680 (289) 940 47 4,766 8,638 5,596 30,940 76,042 deposits Customer borrowingsand u obns7,6 186600539751146613178,681 163 636 144 7,571 5,379 6,040 81,886 76,862 Due tobanks Other liabilities sold orrefinanced withcentralbanksincaseofneed of liquidity. This tabledoesnottakeintoaccounttheliquiditynoreligibilitytorefinancing theasset;somelistedlong-termassetsm (1) AnamountofEUR147millionrepresentingoperationaltaxesistransferredfrom“Tax liabilities”to“Otherliabilities”. e iudt a 1019 1526 82 51324078,473 214,007 25,103 (892) (105,266) (120,149) Net liquiditygap OA 5,7 5,5 5779,7 8628451,6 208588,170 22,068 12,863 8,495 98,602 90,671 45,737 152,859 156,875 TOTAL As ofDec.31,2007 As ofDec.31,2007 LIABILITIES Annualreport 2008 (1) (1) demand At sight and on ,1 ,5 3 ,0 ,2 ,6 7,396 0 4 1,265 1,022 1,007 335 1,151 2,612 Breakdown ofgrossamountandpremium/discount months 3 Up to At sightand on demand More than More than 3 months months 3 to 1year months 3 than 1to Up to years 5 More monthsto 3 More than years 5 Over 1 year Undeter- maturity mined ,5 1,353 1,353 More than1 3 631 631 to 5years Accrued interest ,3 31431,365 23,134 8,231 26 (206) (206) 0 years 5 adjustment Fair value Fair value Over ay be Undeter- maturity mined Total au 131294569(2 5,208 0 (52) 9 10,836 0 123,062 4,566 (1,661) 2,448 (1,281) (2,505) 269 0 1,849 90 321 0 3,686 61,864 368,845 158 91 (162) (3,524) 74,062 13,608 756 10 35,178 6,667 4 3,551 8,034 4,361 0 403 665 3,065 0 1,687 69 130 216,450 0 376 82,486 6,881 2 25,790 0 6,076 15,434 financial assets Available-for-sale 14,385 4,142 value 0 designated atfair 29,503 Financial assets for trading 14,196 245 Financial assetsheld customers 2,193 Loans andadvancesto due frombanks Loans andadvances with centralbanks Cash andbalances agbefie ses2332,353 1,998 (285) 15 0 1,967 1,049 0 2,353 166 0 51 52 86 0 568 348 795 767 held forsale Non currentassets 183 Other assets Tax assets 170 and goodwill Intangible assets Tangible fixedassets 0 in associates Investments portfolio hedge revaluation of Fair value Derivatives investments Held tomaturity As ofDec.31,2008 ASSETS OA 1244,6 003192035202,0 4676,2 623 651,006 (6,213) 61,029 14,627 26,401 305,290 129,240 40,013 49,365 31,254 TOTAL demand At sight and on Breakdown ofgrossamountandpremium/discount months 3 Up to More than More than 3 months months 3 to 1year than 1to years 5 More years 5 Over Undeter- maturity mined mined ,7 1)6,260 (10) 2,193 4,139 0 (571) 0 0 6,270 4,710 2,193 8 682 682 Accrued interest ,6 650055,213 0 46,550 8,663 adjustment Fair value Fair value Dexia ,3 3,938 0 3,938 Annualreport 2008 Impair- ment Total 211
COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 212 Dexia Annualreport 2008 etscrte 213,7 9506,9 3890284204188,120 2,064 2,884 0 63,869 68,197 19,560 31,275 271 Debt securities nuac opne 928793991,5 016,739 4,407 135 103 50 955 2,332 11,754 3,959 689 719 165 238 28 19 0 insurance companies Technical provisionof Subordinated debts te iblte ,5 ,2 0 711106404,393 0 4 1,056 181 67 106 1,025 1,954 sale disposal groupsheldfor Liabilities includedin Other liabilities Tax liabilities obligations Provisions andother portfolio hedge Fair valuerevaluationof Derivatives e iudt a 1804 1475 ,5 098256114,279 205,671 40,948 3,556 (134,745) (108,054) Net liquiditygap o rdn 56 4 25()273 (3) 5 12 18,679 366 147 114,728 210 (28) 61 213,192 3,198 943 185 45 7,244 56 550 4,661 0 4 6,836 2,284 6,153 7,256 716 2 8,554 4,505 0 27,685 5,024 64,529 123,139 designated atfairvalue Financial liabilities 72,533 for trading Financial liabilitiesheld and deposits Customer borrowings Due tobanks sold orrefinanced withcentralbanksincaseofneed of liquidity. This tabledoesnottakeintoaccounttheliquiditynoreligibilitytorefinancing theasset;somelistedlong-termassetsm OA 3,0 8,1 6478,9 9691,2 4667,8 645,388 70,784 14,696 12,122 99,619 88,292 36,457 184,110 139,308 TOTAL As ofDec.31,2008 As ofDec.31,2008 LIABILITIES demand At sight and on Breakdown ofgrossamountandpremium/discount At sightand months 3 on demand Up to More than More than 3 months months 3 to 1year months 3 Up to than 1to 5 years More monthsto 3 More than Undeter- maturity 1 year mined to5years 1 More than Accrued interest ,0 8 5,691 685 0 1,487 5,006 1,487 0 302 302 adjust- ,9 58775,834 65,837 9,997 value ment years 5 Fair Over ,4 1,543 1,543 0 la juste ment à Ajuste- valeur Undetermined maturity Total ay be a claimondedicatedstream ofrevenue from essentialpublic ing amunicipalbond,FSAobtainspledgeoftaxrevenues or first-loss protections (seeratingsinnote12.2.B.).Before insur- because ofovercollaterization, cashreserves, deductiblesor backed issues,whichhavelowdefaultandhighrecovery rates FSA generallyinsures onlythemostseniortranchesof asset- FSA risksare mainlycredit risksandare analyzedinnote12.2.B. DIB Group (DIS)(seeAccountingprinciplespoint1.11.). Insurance activitiesare performedinDexiaGroup byFSAand 12.8. The balancepositionishedgedbyderivatives,sothatnearlyallforeign exchangepositionsare closed. 12.7. oa ses49073,5 0,6 549651,006 55,459 651,006 107,465 38,692 39,055 604,564 134,424 49,933 449,027 24,478 604,564 84,214 38,766 453,412 40,202 113,149 430,215 38,406 414,243 Total liabilitiesandequity Total assets Total liabilitiesandequity Total assets As ofDec.31,2008 As ofDec.31,2007 E AAC OIIN(,8)1,7 2,5)16,767 (26,959) 14,577 11,167 (4,385) (28,935) 1,796 15,972 BALANCEPOSITION NET BALANCEPOSITION NET CURRENCYRISK INSURANCE RISKS U OtherEU EUR OtherEU EUR SIGNIlCANT IMPACT ON $EXIAS lNANCIAL POSITION Dexia Group, changeofinsurancevariableswillnot havea DIS activitiesincomparisonwithtotalandrisksof activities, thereinsurance ofaparttherisksand sizeof Some oftherisksare reinsured (seenote9.3.).Becauseofits and nonlifeactivitieshasnomajorconcentrationofrisks. DIS isactiveinlife(more than89%ofgross premium written) loss reinsurance from highlyratedreinsurers. the riskprofile, FSAalsomakesuseofquotashare andlayered ers, geography, industriesandtypesofcollaterals.To manage service. Theinsured portfolioisdiversifiedwithrespect ofissu- currencies currencies S te Total Other USD Total Other USD Dexia Annualreport 2008 0 0
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COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS CONSOLIDATED COMPTES SOCIAUX FINANCIAL STATEMENTS RAPPORT DE GESTION 214 Dexia Annualreport 2008 iceinr atcpto etrso nuac otat 1 0 0 0 115 Discretionary participationfeaturesofinsurancecontracts for regulatory requirements A. Comparisontotalequity(financialstatements)andascalculated 12.9. o8%. to Dexia hascompliedwithallregulatory capitalrulesfortheperiodsreported. Capitaladequacyratiomustbeatleastequal million,issuedbyDexiaFundingLuxembourgandbookedinMinorityintere undatedsubordinatednon-cumulativeNotesforEUR500 - milli million,issuedbyDexiaCréditLocalandbookedforEUR698 - undateddeeplysubordinatednon-cumulativeNotesforEUR700 (2) Thisamountistheresultofthreeoperations: included inminorityinterests’coreequity. millioneligibleashybridregul millionandEUR1,196 As ofDecember31,2007andas2008respectivelyEUR1,198 Tier1capitalarepre approach,the amountsbookedinminorityinterestsandeligibleashybridregulatory (1) Onaregulatory B. Regulatorycapital,totalweightedrisksandsolvencyratios relate toinsurancecompanies. Therefore, minorityinterests differ from thosepublishedintheFinancialStatements.Discretionary ParticipationFeatures onl For regulatory purposes,insurancecompaniesare accountedforbytheequitymethod. Comments onregulatory requirements are describedinnote4.5.ofAccountingRules. yrdcptlise yDxaBLo uy6 01fra muto U 2 millionbearinganinterestof6.821%andbookedin hybridcapitalissuedbyDexiaBILonJuly6,2001foranamountofEUR225 - uuaietasainajsmns–Gop(4)(540) (147) Minority interests(eligibleinTier 1) Cumulative translationadjustments–Group Core shareholders’equity Capital AdequacyRatio Tier 1ratio Operational risk Market risk Credit risk eutosadpueta les(,5)(2,800) (3,356) Hybrid regulatoryTier 1capital Deductions andprudentialfilters eutosadpueta les(,2)(1,659) (3,024) Deductions andprudentialfilters Subordinated liabilities Perpetuals ioiyitrss1741791721,694 1,702 3,916 1,749 3,916 1,754 14,525 14,525 Minority interests Total shareholders’equity U 9 million; 498 EUR the financialstatements. OA QIY1,9 6245685,610 5,618 16,274 16,394 TOTAL EQUITY ADDITIONAL OWNFUNDS OVNYRATIOS SOLVENCY RISKS WEIGHTED 18,077 15,345 TIER 1CAPITAL TOTAL REGULATORY CAPITAL (AFTERPROFITAPPROPRIATION) fwihCr qiy1711711771,749 1,757 1,711 1,721 statement ofincome of whichGainsandLossesnotrecognizedinthe of whichCoreequity SOLVENCY (2) (1) statements Financial e.3,20 Dec.31,2008 Dec. 31,2007 33 5)(55) (55) 38 33 Regulatory purposes e.3,20 Dec.31,2008 Dec. 31,2007 statements Financial sented separately. 5,8 152,837 159,383 5,0 139,495 153,504 61217,488 16,126 16,112 14,549 ae Basel II Basel I ,7 3,073 5,879 ,5 2,795 3,053 ,2 1,421 1,423 .%11.8% 10.6% 9.6% 9.1% on inMinorityinterests; ..10,269 n.a. 1 557 517 6 815 1,951 767 796 Subordinateddebtsin atory Tier1capitalare atory Regulatory purposes sts for y solidated financial statementsinorder todesignauditproce- TO THE 'ROUPS PREPARATION AND FAIR PRESENTATION OF THE CON risk assessments,wehaveconsidered control internal relevant statements, whetherduetofraud orerror. Inmakingthose the risksofmaterialmisstatement theconsolidatedfinancial selected dependonourjudgment, includingtheassessmentof sures intheconsolidated financialstatements.Theprocedures dures toobtainaudit evidenceabouttheamountsanddisclo- In accordance withthesestandards, we haveperformedproce- ments are free from materialmisstatement. reasonable assurancewhethertheconsolidatedfinancialstate- standards require thatweplanandperformtheaudittoobtain 4HOSE "EDRIJFSREVISORENv DER D%NTREPRISES)NSTITUUT 2EVISEURS standards applicableinBelgium,asissuedbythe“Institutdes our auditinaccordance withlegalrequirements andauditing dated financialstatementsbasedonouraudit.We conducted Our responsibility istoexpress anopinion ontheseconsoli- reasonable inthecircumstances. accounting policies,andmakingestimatesthatare due tofraudorerror, selectingandapplyingappropriate statements thatare free from materialmisstatement,whether preparation andfairpresentation ofconsolidatedfinancial controlmenting andmaintaininginternal relevant tothe responsibility includesamongotherthings:designing, imple- preparation oftheconsolidatedfinancialstatements. This The Board ofDirectors ofthecompanyisresponsible forthe the yearthenendedofEUR3,326million. income statementshowsaconsolidatedloss(Group share) for shows totalassetsofEUR651,006millionandtheconsolidated and otherexplanatorynotes.Theconsolidatedbalancesheet ended, aswellthesummaryofsignificantaccountingpolicies equity andtheconsolidatedcashflowstatementforyearthen income statement,theconsolidatedstatementofchangesin dated balancesheetasatDecember31,2008,theconsolidated Those consolidatedfinancialstatementscomprisetheconsoli- with thelegalandregulatory requirements applicableinBelgium. cial ReportingStandards asadoptedbytheEuropean Unionand “the Group”), prepared inaccordanceFinan- withInternational ments ofDexiaSA(“thecompany”)anditssubsidiaries(jointly We haveauditedtheaccompanyingconsolidatedfinancial state- required additionalcomment. on theconsolidatedfinancialstatementstogetherwith you haveentrustedtous.Thisreport includesouropinion we are pleasedtoreport toyouontheauditassignmentwhich !S REQUIRED BY LAW AND THE COMPANYS ARTICLES OF ASSOCIATION To theshareholders for theyearendedDecember31,2008 the consolidatedfinancialstatements THE SHAREHOLDERS MEETING ON 3TATUTORY AUDITORS REPORT TO Dexia SA WITH EXPLANATORY PARAGRAPH CONSOLIDATED FINANCIALSTATEMENTS, THE UNQUALIFIED AUDITOPINIONON - any informationobtainedinthecontextofourappointment. that theinformationgivenisnotinobviouscontradictionwith tors onitsfuture development.We can, nevertheless,confirm status, future evolution,orsignificantinfluenceofcertainfac- cipal risksanduncertaintiesconfronting theGroup, oronthe are unabletoexpress anopiniononthe descriptionoftheprin- ment withtheconsolidatedfinancialstatements.However, we ments includestheinformationrequired bylawandisinagree- of thesalesagreement oftheinsuranceactivitiesFSA. on theliquiditypositionofDexiaandaccountingtreatment financial statementsrelating totheimpactoffinancial crisis and theinformationincludedinnotestoconsolidated attention tothecommentsincludedinmanagementreport amendingourunqualifiedopinion,wedrawthe Without and regulatory requirements applicableinBelgium. Reporting Standards asadoptedbytheEUandwith the legal the yearthenended,inaccordanceFinancial withInternational OF AS POSITION December 31,2008,andofitsresults anditscashflows for lNANCIAL 'ROUPS THE OF VIEW FAIR AND TRUE A In ouropinion,theconsolidatedfinancialstatementsgive vides areasonable basisforouropinion. tion. We believethattheauditevidencewehaveobtainedpro- have replied toallourrequests forexplanationsandinforma- the Board ofDirectors andresponsible officersofthecompany consolidated financialstatements,takenasawhole.Finally, estimates madebythecompanyandpresentation ofthe accounting policiesused,thereasonableness ofaccounting THE OF BASIS THE ASSESSED HAVE 7E CONTROL INTERNAL 'ROUPS purpose ofexpressing anopinionontheeffectiveness ofthe dures thatare appropriate inthecircumstances butnotforthe s opinion ontheconsolidatedfinancialstatements: tional commentwhichdoesnotchangethescopeofouraudit Our responsibility istoincludeinourreport thefollowingaddi- statements are theresponsibility oftheBoard ofDirectors. BE INCLUDED IN THE $IRECTORS REPORT ON THE CONSOLIDATED lNANCI The preparation andtheassessmentofinformation that should DIINLCOMMENT ADDITIONAL H $RCOS RPR O TE OSLDTD NNIL STATE lNANCIAL CONSOLIDATED THE ON REPORT $IRECTORS 4HE rn ehee Bernard DeMeulemeester Frank Verhaegen $%,/)44% "EDRIJFSREVISOREN 2EVISEURS D%NTREPRISES BV o.v.v.e. CVBA/SCs.f.d.SCRL Antwerp, April2,2009 The statutoryauditor Represented by Dexia Annualreport 2008 AL -
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COMPTES SOCIAUX CONSOLIDATED RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION as ofDecember31,2008 Financial statements statements Annual financial
2 tttr uio’ eotfrteya ne eebr3,20 .....240 ...... Statutory auditor’s reportfortheyear endedDecember31,2008 221 ...... Notes totheannualfinancialstatements 220 ...... Statement ofincome 219 ...... Off-balance sheetitems 218 Balance sheet......
0 0 8
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 218 Dexia Annual report 2008 (before incomeappropriation) Balance sheet (in EUR) ASSETS FIXED ASSETS I. II. III. IV. CURRENT ASSETS V. VII. VIII. IX. X. TOTAL ASSETS omto xess682958,760,308 6,862,955 Formation expenses nagbeast ,5,0 3,214,898 1,757,908 Intangible assets .Friueadvhce ,4,7 2,028,424 2,645,878 C. Furnitureandvehicles agbeast ,8,9 2,442,275 296,841 2,885,895 110,939 117,010 129,078 E. Othertangiblefixedassets B. Plant,machineryandequipment Tangible assets .Ohrfiaca ses 5,1 790,580 757,018 3,470,893,995 28,354,110,230 790,580 3,378,983,557 24,882,425,655 28,353,319,650 22,331,770,117 18,952,029,542 22,331,013,099 757,018 2.Amountsreceivableandcashguarantees C. Otherfinancialassets 2.Amountsreceivable 1.Participatinginterests Affiliatedenterprises A. Financial assets .Ohraonsrcial 3,4,5 44,235,576 34,048,252 44,235,576 34,048,252 B. Otheramountsreceivable Amounts receivableaftermorethanoneyear .Taedbos154023,385,163 1,534,032 24,145,150 71,002,782 27,530,313 72,536,814 B. Otheramountsreceivable Trade debtors A. Amounts receivablewithinoneyear urn netet 7,5,7 182,529 177,476,946 182,529 177,659,475 182,529 B. Otherinvestmentsanddeposits A. Ownshares Investments Current aha akadi ad4,2,9 24,359,941 48,924,494 Cash atbankandinhand eerdcagsadacudicm 9430247,964,044 49,453,002 Deferred chargesandaccruedincome 233268528,368,527,711 22,343,276,875 275889228,512,800,114 22,725,898,912 e.3,20 Dec.31,2008 Dec. 31,2007 8,2,3 144,272,403 382,622,037 0 Off-balance sheetitems (1) Seenote1tothefinancialstatements. elgaate ie nonast 1,1 16,093 17,019 1,142,895,058 96,078,863 141,168,500 39,300 1,055,272,927 141,168,500 91,202,460 214,730,513 32,550 PM 500,000,000 203,832,042 500,000,000 - Commitmenttowards DexiaBankNederlandNV - - CommitmenttowardsFinancialSecurity AssuranceHoldingsLTD (“FSA”) - Commitmentstoissueshareslinked tostockoptions - Foreigncurrencytransactionsamounts tobedelivered - Foreigncurrencytransactionsamounts receivable Realguaranteesgiven onownassets - - PersonalguaranteesgivenonbehalfofDexiaFundingLuxSA - Personalguaranteesgivenonbehalfofthirdparties Temporary guaranteesgivenbytheFrench,BelgianandLuxembourgstates - Miscellaneous rightsandcommitments (in EUR) (in EUR) ANDSHAREHOLDERS’EQUITY LIABILITIES RVSOSADDFRE AE 2714821,212,877 22,751,448 DEFERREDTAXES PROVISIONS AND EQUITY VIII. VII. MUT AAL ,2,1,1 4,026,806,315 3,624,513,619 PAYABLE AMOUNTS I. IX. II. X. IV. OA IBLTE 2,2,9,1 28,512,800,114 22,725,898,912 TOTAL LIABILITIES V. . . s i b V. 5 te on 0,0,0 200,000,000 200,000,000 200,000,000 200,000,000 19,430,427 200,000,000 19,611,293 200,000,000 21,212,877 22,751,448 5.Otherloans A. Financialliabilities Amounts payableaftermorethanoneyear 4.Otherliabilitiesandcharges 2.Taxation A. Provisionsforliabilitiesandcharges .Ise aia ,0,0,1 8,089,020,254 5,307,005,112 Issuedcapital A. Capital .Ohraonspybe189229115,216,720 61,382,635 128,992,289 39,729,166 24,717,554 3,593,022,030 3,593,022,030 16,375,366 25,285,479 3,192,037,751 3,192,037,751 16,573,599 3,794,906,864 3,377,332,805 F. Otheramountspayable 2.Remunerationandsocialsecurity 1.Taxes Taxes, remunerationandsocialsecurity E. 1.Suppliers Trade debts C. 1.Creditinstitutions B. Financialliabilities Amounts payablewithinoneyear hr rmu con 038500013,617,667,343 10,398,540,030 Share premiumaccount cre hre n eerdicm 7108431,899,451 47,180,814 Accrued chargesanddeferredincome .Aalbersre 0,4,8 970,046,172 806,341,984 177,476,946 177,476,946 Available reserves D. 1.Inrespectofownsharesheld Unavailablereserves B. .Lglrsre537394530,700,511 523,773,914 A. Legalreserve Reserves rfi are owr 8,7,3 412,661,386 783,974,433 Profit carriedforward Net incomefortheyear (1) 908638524,464,780,922 19,078,633,845 ,8,2,2 844,685,256 1,081,521,426 ,0,0,1 8,089,020,254 5,307,005,112 ,0,9,4 1,500,746,683 1,507,592,844 e.3,20 Dec.31,2008 Dec. 31,2007 e.3,20 Dec.31,2008 Dec. 31,2007 9791661,382,635 39,729,166 ,4,5 1,782,450 3,140,155 1823567,925 198,233 MPM PM Dexia Annual report 2008 0 0 219
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 220 Dexia Annual report 2008 Statement ofincome I. EUR) (in II. III. IV. V. VI. VII. VIII. IX. X. XI. XIII. RFTT EAPORAE ,6,9,5 1,257,346,642 1,865,495,859 PROFIT TOBEAPPROPRIATED prtn noe168572,678,323 1,688,547 Operating income .Ohroeaigicm ,8,4 2,678,323 1,688,547 D. Otheroperatingincome prtn hre 166812 (205,760,229) (150,908,175) (146,688,172) (107,287,735) (48,728,103) 180,866 (48,781,949) 14,573,781 F. Increase(-);decrease(+)inprovisionsforliabilitiesandcharges intangible andtangiblefixedassets D. Depreciationofandamountswrittenoff onformationexpenses, Remuneration,socialsecuritycostsandpensions C. B. Servicesandothergoods Operating charges .Ohroeaigcags(0,7)(485,986) (205,872) G. Otheroperatingcharges prtn os(4,9,2)(203,081,906) (144,999,625) Operating loss iaca noe13630441,435,928,155 1,376,320,424 Financial income .Icm rmfiaca xdast ,6,3,1 1,361,054,516 1,360,836,110 Incomefromfinancialfixedassets A. .Icm rmcretast 1766161,376,214 11,746,641 Incomefromcurrentassets B. .Ohrfiaca noe3776313,497,425 3,737,673 C. Otherfinancialincome .Db hre 187002 (164,734,184) (4,181,098) (168,915,282) (178,790,062) (203,605,493) (24,815,431) C. Otherfinancialcharges A. Debtcharges Financial charges urn rfi eoetxs10775361,063,930,967 1,027,715,306 Current profitbeforetaxes xetoa noe 0,5 20,000 606,358 Exceptional income off onintangible andtangiblefixedassets Adjustmentstodepreciationofandotheramounts written A. .Ipimn nfiaca ses572,191 Impairmentonfinancialassets B. D. Gainsondisposaloffixedassets .Amountswrittenoff onfinancialfixedassets B. Exceptional charges rfi o h eidbfr ae ,2,2,6 779,804,834 1,028,321,664 Profit fortheperiodbeforetaxes Income taxes .Icm ae 31019 (1,785,058) (3,140,169) 66,665,480 56,339,931 Adjustmentofincometaxesandwrite-back oftaxprovisions B. Incometaxes A. rfi o h eid1015146844,685,256 1,081,521,426 Profit fortheperiod rfi ob prpitd1015146844,685,256 1,081,521,426 Profit tobeappropriated rfi ruh owr ftepeiu eid739443412,661,386 783,974,433 Profit broughtforwardofthepreviousperiod rfi o h eidt eaporae ,8,2,2 844,685,256 1,081,521,426 Profit fortheperiodtobeappropriated e.3,20 Dec.31,2008 Dec. 31,2007 3197264,880,422 53,199,762 49637 (5,818,831) (4,986,397) 3,6 0 34,167 0 0 0 (284,146,133) (284,146,133) 20,000 0 and chartofaccounts forward. the result oftheyear2008; of whethersuchawaiverhasbeenapplied. accounting policieshereafter shallmentiontheoptionchosen If legislationallowsoptionsorauthorizesawaiver, the January 30,2001,inapplicationoftheBelgianCompanyCode. Accounting policiesare inconformitywiththeRoyalDecree of 3.1.1. Legislation 3.1. 3. The financialstatementsare presented ineuros. apply toDexiahavebeenexcluded. The itemsprovided forintheaccountingplanthat donot amended bytheRoyalDecree ofAugust4,1996. 12,1983, ing planprescribed intheRoyalDecree ofSeptember The accountingplanispresented inaccordance withtheaccount- dated January30,2001. by theBelgianCompanyCodeanditsdecree ofapplication obligation topublishyearlyfinancialstatementsasprescribed a regulated Belgianmarket,anditistherefore subjecttothe law whosefinancialinstrumentsare authorizedfortrading in byBelgian Dexia SA,afinancialfirm,iscompanygoverned 2. s s The proposal toappropriate theprofit is: 1,257.3 million. 412.6 million,makingatotalprofit forappropriation ofEUR The profit carriedforward from theprevious yearstandsatEUR million. 844.7 The profit forthe2008financialyearamountstoEUR Dexia SApresents itsfinancialstatementsbefore appropriation. statements 1. Notes totheannualfinancialstatements with thebalancetobetransferred totheprofit carried to thelegalreserve up:EUR42.2millionrepresenting 5%of Accountingpolicies Presentation ofthefinancial Financial statements EEA POLICIES GENERAL year inwhichtheyare exposed. software andthewebsiteare entirely chargedinthefinancial Furthermore, costsrelated theinternal todevelopment of over amaximumoffiveyears. Intangible fixedassetsrecorded intheassetsare depreciated 495.79. EUR 495.79eachbutthetotal deliveryisatleast less thanEUR delivery isbroken downintopartialshipmentsrepresenting tion priceisatleastequaltoEUR495.79peritem,orwhen are recorded asintangiblefixedassetswhentheacquisi- tion andtothedevelopmentofwebsiteDexiaGroup costslinkedtosoftwareLicense acquisitions,external defini- Intangiblefixed assets(itemII.) 3.2.2. a straight-linebasisattherateofleast20%peryear. Formation expensesare recorded asanassetandamortizedon 3.2.1. Formationexpenses(itemI.) 3.2. of income. which theincomeorexpenseisrecognized inthestatement euros attheexchangeraterulingineffect onthedate Foreign currency incomeandexpenseare translatedinto rate rulingineffect onthetransactiondate. Non-monetary itemsare translatedintoeuros attheexchange day averageyear-end exchangerate. nated inforeign currencies are translatedintoeuros atthelast Monetary assets,liabilities,rightsandcommitmentsdenomi- 3.1.2. Foreign currency translationintoeuros lasting surplusinrelation totheirbookvalue. basis oftheirutilitytothecompany, presents acertainand it istherefore required thattheirvalue,determinedonthe Participating interests andshares may also berevalued. Inthis shares and/orequityinterests are held. position, profitability andprospects of thecompanyinwhich depreciation. Theyare determinedbyreference tothefinancial Impairments are recorded inthecaseofcapitallossesorlasting directly inthestatementofincome. or contributioncost.Relatedtransactioncostsare recorded Participating interests andshares are statedatacquisitioncost 3.2.4. Financialassets(itemIV.) justified. Exceptional depreciations are reversed iftheyare nolonger of economicortechnologicalcircumstances. the companytotakeintoaccounttheiralterationorchanges the accountingvalueoffixedassetstotheirutilizationfor If necessary, exceptionaldepreciations willberecorded toalign Tangible fixedassets(itemIII.) 3.2.3. ASSETS Dexia Annual report 2008 221
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 222 Dexia Annual report 2008 the agreement oftheShareholders’ Meeting. are valuatedatcostastheymayonlybedestroyed furtherto Nevertheless, ownshares acquired withaviewtocancellation or theactivitiesconducted. or therisksinherent inthenature oftheproducts concerned to reflect eitherachangeintheirrealization ormarketvalue, Additional impairmentsare recorded ontheseassetsinorder lower thantheirbookvalue. term investmentsandliquidassetsiftheirrealization valueis At balancesheetdate,impairmentsare recorded onshort- which theyare incurred. costs are recorded inthe statementofincomeintheyear Securities are statedatacquisitioncost,whiletheaccessorial Cash isstatedatnominalvalue. cash assets(itemsVIII.andIX.) Short-terminvestmentsand 3.2.6. booked tocoveranyriskofnon-recovery. Receivables are statedattheirnominalvalue.Allowancesare year andwithinone(itemsV. andVII.) 3.2.5. Amountsreceivable aftermore thanone up tooneyear. ing tothesameprinciplesasdebtsatmore thanoneyearand Debts appearingunderfinancialfixedassetsare valuedaccord- for theirassessedvalue. the rightsandcommitmentsmentioned intheagreement or Off-balance sheetitemsare recorded forthenominalvalueof 3.4. Debts are statedinthebalancesheetfortheirnominalvalue. one year(itemsVIII.andIX.) Debtsofoveroneyearandup to 3.3.3. reviewed andreversed iftheynolonger serveapurpose. Provisions relating toprevious financialyearsare regularly years. have occurred duringthefinancialyearorprevious financial built upinorder tocoverallpossiblerisksorlossesthat might dence, sincerityandgoodfaith,examinestheprovisions tobe At balancesheetdate,theBoard ofDirectors, actingwithpru- (item VII.) 3.3.2. Provisions forliabilitiesandcharges capital. realization ortheirinclusioninthe oftheassetsconcerned Revaluation surplusesare maintainedinthisheading until the pared withtheirbookvalue. permanent increase intheirfairvalueforthecompany com- term investmentsmayberevaluated inthecaseofa certain, Shares andparticipatinginterests thatare recorded aslong- Revaluation surpluses(itemIII.) 3.3.1. 3.3. F-AAC HE ITEMS SHEET OFF-BALANCE LIABILITIES is active. the Group inthedifferent countriesinwhichtheDexiaGroup ership plansofprevious yearsaimedatallmembersof staff of capital increases andexpenditure inimplementingshare own- Formation expensesincludethefeesdirectly associated with million. 8.8 EUR The netbookvalueofformationexpensesamountsto a periodoffiveyears. in theassetsas‘Formationexpenses’andare amortized over All theexpensesrelated tothecapitalincreases are recorded 4.2.1. Formationexpenses 4.2. 2007, oranincrease of25%. ber 31,2008,againstEUR22,726millionasofDecember The balancesheettotalwasEUR28,513millionasofDecem- 4.1. the permanentestablishmentsinParisandLuxembourg. the accountsofBrussels,DexiaSAheadoffice,andthose ing pointofview, thefinancialstatementsofDexiaSAinclude nent establishmentsinParisandLuxembourg.From anaccount- Dexia SAisacross-border holdingcompanywhichhastwoperma- financial statements 4. period oftheleasecontracts. of EUR0.5million)depreciated onastraight-linebasisoverthe the installationofpremises rented (gross acquisitionvalue Other tangiblefixedassetsreach EUR0.3millionandinclude five years. millionare depreciated on astraight-linebasisover 0.1 EUR rate of25%whilstvehicleswithagross acquisitionvalueof of EUR4.6million,depreciated onastraight-linebasisat Office andITequipmentrepresented agross investment basis overaperiodoftenyears. value ofEUR3.7millionandare depreciated onastraight-line Property, plantandequipmentcontributeagross acquisition million. 8.9 lion haveagross acquisitionvalueofEUR mil- 2.4 Tangible fixedassetswhichhaveanetbookvalueofEUR Tangible fixedassets 4.2.3. basis overaperiodofthree years. These intangiblefixedassetsare depreciated onastraight-line costsrelatedexternal tothedevelopmentofDexiawebsite. the acquisitionanddevelopmentofsoftware as wellas Intangible fixedassetstotaledEUR3.2millionandconcerned Intangiblefixed assets 4.2.2. BFR NOEAPPROPRIATION) INCOME (BEFORE IE ASSETS FIXED Notestotheannual ASSETS TOTAL SHEET BALANCE THE economic background. terms ofprofitability againstthecurrent particularlydifficult cial situationofDexiaHoldingsInc. anditsfuture prospects in 10%ofDexiaHoldingsInc.inNew EUR 284.1million.Thisvaluationtakesaccountofthefinan- appeared intheassetsatitshistoricalcostcorresponding to on theparticipatinginterest heldinDexiaHoldingsInc.,which It wasdecidedtoregister animpairmentofEUR284.1million PM: million: EUR 1.5 million: EUR 1.5 million: EUR 93.0 million: EUR 1,279.2 million: EUR 1,751.8 million: EUR 2,644.4 million: EUR 8,997.0 million: EUR 10,114.0 It includesthefollowingequityinterests: of December31,2008. million asofDecember31,2007wasEUR24,882.4 The item“Participatinginterests” representing EUR18,952 Participating interests inaffiliatedcompanies 4.2.4. Financialfixedassets Security AssuranceHoldingsLtd. which owns99.34%ofFinancial York, USA,aholdingcompany Luxembourg Technology ServicesSA(ADTS), 99.53% ofAssociatedDexia SA, Brussels,Belgium. 100% ofDexiaEmployeeBenefits NV, Amsterdam, TheNetherlands. 100% ofDexiaNederlandHolding owns 42.23%ofDexiaBIL. embourg SA,Luxembourg,which 99.99% ofDexiaParticipationLux- BIL), Luxembourg. tionale àLuxembourgSA(Dexia 57.68% ofDexiaBanqueInterna- representing EUR217.5million. SA byincorporationoftwodebts sidiary DexiaParticipationBelgique increased theshare capitalofitssub- On August1,2008,DexiaSA gique SA,Brussels,Belgium. 95.39% ofDexiaParticipationBel- contribution ofEUR2,500million. sidiary DexiaBankSAthrough acash an increase ofthecapitalitssub- 2008 DexiaSAalsoproceeded with ing shareholders, onDecember29, andexist- Luxembourg governments 30, 2008bytheFrench, Belgianand Dexia Group decidedonSeptember Following therecapitalization ofthe Brussels, Belgium. 100% ofDexiaBankBelgiumSA, 2008. cash contributiononDecember22, millionthrough a 3,500 SA byEUR tal ofitssubsidiaryDexiaCréditLocal ceeded withanincrease ofthecapi- existing shareholders, DexiaSApro- and and Luxembourggovernments 30, 2008bytheFrench, Belgian Dexia Group decidedonSeptember Following therecapitalization ofthe Paris, France. SA, 100% ofDexiaCréditLocal amounted toEUR44.2millionasof December31,2008. ment withcontractualmaturity after December31,2009 Tax deferred advancesgrantedbythepermanentestablish- “tax deferred advances”. it possibletorealize thesetaxsavingsthrough advancescalled be lenttothetaxconsolidationGroup’s subsidiariesthatmade the resources produced bythepermanentestablishmentwill lishment, tolockintemporarytaxsavings,itwasagreed that and itssubsidiariesallowDexia,through itspermanentestab- Because thecommitmentssubscribedbyDexiaCréditLocal December 31,2008includedthefollowingcompanies: headed thetaxconsolidationgroup inFrance,which asof Since 2002,DexiaSA’s permanentestablishmentinParishas Other receivables Receivablesafter more thanoneyear 4.2.5. the newpremises locatedintheDexiaTower –CBX. Dexia SApaidEUR0.8millionbywayofrental guaranteefor Other financialassets ties foratotalofEUR3,470.9million. 0.01%ofDenizFinansalKiralama, This itemincludessubordinated loansgrantedtoGroup enti- Receivables onaffiliatedcompanies 0.01%ofDenizFaktoring,Istanbul, SA on30April2008. 100%ofDexiaFundingLuxem- Dexia HabitatSA,Paris,FrancewassoldtoCréditLocal The participatinginterest ofEUR3millionheldbyDexiaSAin 100%ofDexiaManagementSer- PM: PM: PM: PM: s s s s s s s s s s s s s s s s s s s s s s s s URN ASSETS CURRENT Guide pratiquedelaDécentralisation. Genebus Lease(previously DexiaCLFEnergia) Floral Dexint Développement Dexia Sofaxis Dexia MunicipalAgency Dexia Flobail Dexia Finance Dexia Habitat Dexia ÉtablissementStableParis Dexia ÉditionsLocalesdeFrance Dexia CréditLocal Dexia CLFOrganisation Dexia CLFImmo Dexia CLFEnergy Dexia CLFDéveloppement Dexia CLFAvenir Dexia CBXIA2 Dexia CBXIA1 Dexia Bail Dexia Assuréco Compagnie pourleFoncieretl’Habitat CLF Marne-la-Vallée Participation CBX Gestion(previously Europrojet Développement) Istanbul, Turkey. Turkey. bourg SA,Luxembourg. vices Ltd,London,UnitedKingdom. Dexia Annual report 2008 223
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 224 Dexia Annual report 2008 represent aclaimofEUR0.9millionas ofDecember31,2008. The workrulesstatethatsalaryistobepaidinadvance.These to berecovered forthefinancialyears 2007 and2008. authorities corresponding toEUR0.2millionwithholdingtax For itspart,theheadofficehasataxclaimtoBelgianfiscal of theconsolidatedtaxresult. responds tothetaxduefrom thosecompanies ontheirshare taking partinthetaxconsolidationLuxembourg,whichcor- establishment hadaclaimofEUR1milliononthecompanies As ofDecember31,2008,thepermanentLuxembourg in Luxembourgare: The companiesformingpartoftheGroup fiscallyintegrated mercial taxongroup companiesintegratedinLuxembourg. sequence, italoneisliableforcorporationtaxandlocalcom- within thescopeoftaxintegrationinLuxembourg.Asacon- lishment ofDexiaSAinLuxembourgistheheadGroup Furthermore, asfrom January1,2007,thepermanentestab- manent establishmentamountedtoEUR2.2million. amount duefrom subsidiariesbywayoftaxowedto the per- the fiscalintegrationgroup. AsofDecember31,2008, the ment theircontributiontothetaxpaymentoncompaniesin iary companiesmusttherefore paytothepermanentestablish- have beeninifthere hadbeennointegration.Infact, subsid- neutral impactinrelation tothetaxsituationwhichtheywould For subsidiaries,belongingtoafiscalintegrationgroup hasa million. 19.8 EUR head ofthetaxconsolidationgroup inFranceamountedto establishment inParistotheFrench taxauthoritiesasthe On December31,2008,thetaxreceivable ofthepermanent consolidation mustbepaidtothepermanentestablishment. that taxesduefrom companieswhichformpartofthefiscal due from theGroup inrelation toitsfiscalintegration,given French withholdingtaxandthelump-sumannualtaxation in France.Inthisregard itissolelyliableforcorporationtax, Dexia SAinParisistheheadoftaxconsolidationgroup As already specifiedabove,thepermanentestablishmentof Other receivables paid tosuppliers(EUR0.2million). lion), nonGroup receivables (EUR0.4million)andadvances services rendered tosubsidiariesoftheGroup (EUR2.8mil- The item“Trade debtors”relates tocommercial receivables for Trade debtors 4.2.6. Amountsreceivable withinoneyear ing onMay14,2008. which wasapproved bytheExtraordinary Shareholders’ Meet- tions fixedbytheLawandwitha viewtotheircancellation, These ownshares were acquired inaccordance withthecondi- million. 407.4 EUR ownshares foratotalamountof chase 22,258,236 2007 DexiaSAuntilApril11,2008 proceeded torepur- Shareholders’ Meeting onMay9,2007,asfrom August31, Following theauthorizationgivenbyExtraordinary Own shares Investments 4.2.7. s s s s s s Société LuxembourgeoisedeLeasingBILLease Experta CorporateandTrust ServicesSA Dexia ParticipationLuxembourgSA Dexia SA,Luxembourgbranch àLuxembourgSA Dexia BanqueInternationale Bil RéSA ing items. totaled EUR24,464.8millionandiscomposedofthefollow- equity including2008netincomebefore profit appropriation As ofDecember31,2008,theholdingcompany’s shareholder 4.3. of theGroup (EUR0.3million). tax (EUR0.2million)andtoservicesrendered tootherentities to availablevalues(EUR0.1million),advancesondeferred to acurrency swapwithDexiaCréditLocal(EUR1.7million), subordinated loansgrantedtoGroup entities(EUR44million), Among accruedincomeare thepro ratasofinterest relating to was EUR46.3million. Deferred chargestotaledEUR1.7millionandaccruedincome Deferred chargesandaccruedincome 4.2.9. Available cashinaccountstotaledEUR24.4million. 4.2.8. Cashatbankandinhand million. 0.2 This headingincludesVVPRDexiastripsworthEUR Other investments were recorded immediately asexpenses. The ancillarycostsassociatedwiththepurchase ofownshares (EUR -203.1million). after deductionof theholdingcompany’s operatingexpenses million)andnettax income(EUR+64.9million) -284.1 (EUR +69.9million),exceptionalresults financial results (EUR from Dexia’s operatingentities(EUR+1,197.1million), million. Thisresult iscomposedofthedividendsreceived As ofDecember31,2008,net income totaledEUR844.7 Netincomeoftheyear 4.3.4. fromRetained earnings 2007amountedEUR412.7million. 970million. lion) andanavailablereserve amountingtoEUR mil- 530.7 The heading‘Reserves’includesthelegalreserve (EUR Reservesandretained earnings 4.3.3. ber 31,2008. capital, whichtotaledEUR13,617.7millionasofDecem- Each capitalincrease isaccompaniedbyadditionalpaid-in 4.3.2. Additionalpaid-incapital 684,333,504. istered shares. ThetotalnumberofDexiaVVPRstripswas 890,221,613 dematerializedshares and853,741,855 reg- 1,762,478,783 shares ofwhich18,515,315bearer shares, As ofDecember31,2008,thecapitalissorepresented by amount ofEUR0.4million. 2. Theexercise ofwarrantsgrantedtoemployees foran and theCaissedesdépôtsetconsignations. Communal SA,Arcofin SCandEthias,theFrench government Belgian authorities,institutionalshareholders Holding 1. Thecapitalincrease ofEUR2,781.6millionsubscribed bythe operations: This increase ofEUR2,782millionresulted from thefollowing 2007. 31, 2008compared withEUR5,307millionasofDecember 31, Subscribed capitaltotaledEUR8,089millionasofDecember 4.3.1. Capital HRHLES EQUITY SHAREHOLDERS’ LIABILITIES ER32million); 3.2 (EUR ous liabilities. The remaining balance(EUR0.1million)isrelated toothervari- previous financialyearsisEUR81.8million. amount toEUR33.3millionwhilstthebalanceofdividendsfor Dividends relating tothe2007financialyearstillbepaid Other amountspayable butions (EUR24.7million). s as follows: This itemiscomposedexclusively of expensestobeaccrued 4.3.9. Accruedchargesand deferred income s s s This itemincludes: Taxes, remuneration andsocialsecurity invoices tobereceived EUR48.2million. Suppliers’ invoicesnotyetpaidamounttoEUR13.2millionand Trade liabilities overdrafts onsightaccountsuptoEUR6.1million. Group companiesforanamountofEUR3,586.9million and These liabilitiesrelate toshort-termfinancingconcluded with Financial liabilities 4.3.8. Amountspayablewithinoneyear EUR 200million. to loanscontractedwithGroup companiesforanamount of Financial liabilitiespayableaftermore thanoneyear related than oneyear 4.3.7. Amountspayableaftermore millionasofDecember31,2007. 19.6 EUR December 31,2008amountstoEUR19.4millionagainst The balanceofprovisions forotherrisksandcharges asof 2007 byfiscalleveragetransactions. recorded withregard tothetaxsavingsachievedforyear sions forrisksandchargesintheorder ofEUR0.6millionwas In addition,duringthe2008financialyear, areversal ofprovi- tax”, andinanallowancethesameamount. 65.8 millionmentionedinthenote4.5.4.“Corporateincome million (immediatecashsavings)includedintheamountofEUR financial year, theseoperationsresulted intaxsavingsofEUR0.4 France withtheapproval ofFrench taxauthorities.Forthe2008 within thecontextofataxleverageoperationcarriedoutin group commitmentsinitiallysubscribedbyDexiaCréditLocal ment, assumedvis-à-vistheformerheadoftaxconsolidation tion group inFrance,Dexia,through itspermanentestablish- Succeeding DexiaCréditLocalattheheadoftaxconsolida- and charges 4.3.6. Provisions forotherliabilities (see note4.5.4.“Corporateincometax”). take intoaccountapotentialregularization onthetaxbasis A provision fortaxchargesofEUR1.8millionwasmadeto 4.3.5. Provision fortaxcharges LIABILITIES TAXES DEFERRED AND PROVISIONS financial chargesonacurrency andinterest swap professional withholdingtax(EUR0.2million); VAT tobepaid(EUR0.4million); liabilities corresponding tocompensationandsocialcontri- cal year(EUR4.3million). (EUR 24.4million); s s conditions. price inthecaseofredemption inaccordance withtheissue insolvency ofDFL(orsimilarsituations)or(iii)theredemption and (ii)theredemption priceinthecaseofliquidation or has notbeenwaivedinaccordance withtheissueconditions ties andcoverthepaymentbyDFLof(i)anycouponwhich favor ofthesecurityholderswhosubscribedtosaidsecuri- EUR 500million).Thissubordinated guaranteewasissuedin at aguaranteedfixed/floatingrate,forglobalamountof subsidiary ofDexiaSA(perpetualnon-cumulativesecurities 1”issuebyDexiaFundingLuxembourgSA(DFL),a100% Tier nated guaranteewithinthecontextofasubordinated “hybrid is plannedforthe springof2009. Security AssuranceHoldingsLtd.(‘FSA’), ofwhichfinalization the contextofitsacquisition under-subsidiary Financial ment willbeassumedbyAssured GuarantyLimitedwithin The commitmentofDexiaSAunder thiscontributionagree- debt. approximately to10 yearsofcompoundinterest onthehybrid agreement islimitedtoUSD300million,whichcorresponds years. Inanycase,DexiaSA’s obligation underthecontribution capital tofinancethatdeferred interest duringaperiodoffive interest onthesaiddebtandif(ii)FSAcannotgathersufficient debt inthecasewhere (i)FSAoptstodeferthepaymentof vide FSAwiththefundstopaydeferred interest onthehybrid tribution agreement provides thatDexia SAundertakestopro- 1”loanofUSD300millionbyFSA.Thiscon- of a“hybridTier Assurance HoldingsLtd(FSA)withinthecontextofissue bution agreement withitsunder-subsidiary FinancialSecurity quence ofdecisionsinfavorDBnl. ing theDBnlholding,shouldberevised upwards asaconse- the casewhere thevalueofDexiaNederlandHolding, includ- BIL andDexiaBank,alsoshareholders ofDexiaFinancière, for subject toareturnbetterfortuneclausegrantedDexia SA onthebasisofavaluationmadetheseatEUR93million shares ofDexiaNederlandHoldingNVfrom DexiaFinancière sheet commitmentofEUR1,142.9million. basis ofthestrikeprices,thisoperationresults inanoff-balance granted andnotyetexercised stoodat71,787,214. Onthe against EUR141.20million. USD 134.2million(EUR96.1asofDecember31,2008) swap contractsignedwithDexiaCréditLocalintheamountof Assurance waspartlyfinancedthrough acurrency interest rate COMMITMENTS 4.4.1. balance sheet: Dexia SAhassignificantcommitmentsthatare recorded off- 4.4. 4.4.5. 4.4.4. 4.4.3. 4.4.2. pro rataoperatingexpenditures attributabletothe2008fis- financial chargeslinkedtoloansduewithGroup companies F-AAC HE ITEMS– SHEET OFF-BALANCE OnNovember2,2006,DexiaSAissuedasubordi- OnNovember22,2006,DexiaSAconcludedacontri- OnMay18,2005,DexiaSApurchased 100%ofthe AsofDecember31,2008,thenumberstockoptions TheacquisitionoftheAmericangroup FinancialSecurity Dexia Annual report 2008 225
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 226 Dexia Annual report 2008 of elements. for damageresulting from alimitedandidentifiednumber Labouchere, andundertakestocompensateKempen &Co leasing contractssoldbyDexiaBankNederlandNV, formerly indemnify Kempen&Coagainsttherisksrelating toshare to purchasers towhichDexiaSAisalsobound,will of anyotherentity. Inadditiontotheusualguaranteesgiven which remains a100%subsidiaryofDexiatotheexclusion the samedayitsundertakingvis-à-visDexiaBankNederland, SAreconfirmed byletterdated the contextofthissale,Dexia management wasfinalizedonNovember15,2004.Within CoNVtoagroup offinancialinvestorsand & sale ofKempen to prioragreement from DNB amendment orwithdrawalofthisundertakingwassubject prejudiced bythedemergerofDexiaBankNederland.The aim ofthisundertakingwastoprevent third partiesbeing tions withaccountholdersandotherclients;inparticular, the tinue theiractivities,includingthemaintenanceofrela- to fulfilltheircommitmentsvis-à-visthird partiesandtocon- Bank Nederlandortheentitiesare atanytimeinaposition Nederland, excludinganyotherentity, toensure thatDexia entities whichwillresult from thedemergerofDexiaBank vis itssubsidiaryDexiaBankNederlandNVandeachofthe (chambre duconseil/raadkamer) This filewillbesubmittedin2009 totheCouncilChamber this fileduring2008. Commission. There wasnofundamentaldevelopmentin issued inthisregard bytheBanking,FinanceandInsurance and ITprocedures haveenabledittoabide bythedirectives auditdence. DexiaBankconfirmsthatthenecessaryinternal inwhomDexiamaintainsitsconfi- the personsconcerned, 2004. Howeverthataccusationdoesnotimplytheguiltof Four formerexecutiveswere accusedattheendofMarch fraud involvinginheritancedutiesseemstohaveended. apossible 28,1999againstDexiaBankconcerning ber The enquiryopenedbythejudicialauthoritiesonSeptem- Inheritanceduties 4.4.8. scope oftheguarantee. as hybridandsecuritizedinstrumentsare excludedfrom the exceed aceilingofEUR150billion.Subordinated debts aswell 2011.Theoverallguaranteedliabilitymaynot 31, October on 31,2009andmature atthelatest 2008andOctober 9, ber Octo- bourg law. Theseinstrumentsmustbeissuedbetween and theirissuevehiclesunderBelgian,French and Luxem- tionale àLuxembourg,DexiaBankBelgium,CréditLocal interbank depositsraisedbyDexiaSA,BanqueInterna- ties andfinancialinstrumentsnotaccompaniedbycollateralor The instrumentscovered bytheguaranteeare seniorsecuri- 2008 9, signed onDecember menting arrangementsforthetemporaryguaranteeplanwas 19,2008,anagreement withDexiasettingoutimple- vember No- Following theEuropean Commissionauthorization on bourg andDexiaCréditLocal. àLuxem- Dexia BankBelgium,BanqueInternationale establishing aguaranteemechanisminfavorofDexiaSA, concludedheadsofagreementgovernments withaviewto 2008,theFrench, BelgianandLuxembourg October9, On Belgian andLuxembourgStates Temporary guaranteeoftheFrench, 4.4.7. 4.4.6. On December5,2002,DexiaSAundertookvis-à- (De NederlandscheBank) . . The ery en écritures financial statementsofLHSP( prosecuted asanallegedaccessorytothefalsification ofthe in Ghent.According tothewritofsummons,Dexia Bankis 20 otherparties,toappearbefore thecriminalCourtof Appeal On May4,2007,DexiaBankwassummoned,togetherwith BankinBelgium Prosecution ofDexia 4.4.9.3. is estimatedataround USD1,200,000. on aportfolioofsecuritiesownedbyLHIC,thevaluewhich As partofthesecurityforitsclaim,DexiaBankstillhasapledge recorded fortheremaining claim. interests. AnimpairmentforEUR43,959,626.92has been to EUR52,240,144.08–ofwhich6,919,585.09reserved &HauspieInvestmentCompany(LHIC)amounted on Lernout As ofDecember31,2008,theDexiaBank’s outstandingclaim Company &HauspieInvestment ClaimonLernout 4.4.9.2. any dividendfrom theBelgianliquidationofLHSP. Bank andtheotherunsecured creditors are unlikelytoreceive According totheLHSPBelgianbankruptcyreceivers, Dexia ings inBelgiumandtheUnitedStates. The liquidationofLHSP’s assetsissubjecttoseparateproceed- share amountedto50,000,000USD. USDtoLHSPonMay5,2000.ArtesiaBank’s 430,000,000 taken bytheformerArtesiaBankinsyndicatedloanof 24,092,917.71.Thisclaimoriginatesintheshare for EUR interests –,forwhichanimpairmenthasbeenrecorded rate USD/EUR1.3971)–ofwhichEUR182,354.31reserved of LHSPforaprincipalsumEUR28,963,083.03(exchange Dexia BankhasaclaiminUSDchargeabletothebankruptcy Products &HauspieSpeech ClaimonLernout 4.4.9.1. have occurred. 2007 annualreports. Sincethen,thefollowingrelevant events quences thereof. Thiswasdescribedindetailthe2006and &HauspieSpeechProductsLernout (LHSP)andtheconse- invariouswayswiththebankruptcyof Dexia isconcerned &Hauspie 4.4.9. Lernout until thelastdayoftrial. ecuted offences can makeaclaiminthecriminalproceedings Parties allegingtohavesuffered lossesinrelation tothepros- brought againstit. underlines itsinnocenceinthismatter andconteststhecharges will deliveritsdecisionduringthecourseof2009.DexiaBank deliberated onthecriminalcaseJanuary30,2009and were closedonDecember19,2008.TheCourtofAppeal The oralpleadingsregarding thecriminal aspectofthecase charges. Dexia Bankconsidersithasseriousgrounds forcontestingthe amount ofapproximately EUR29,000,000. the PublicProsecutor demandstheseizure ofproperties inan these fundsforimproper revenue recognition. Furthermore, allegedly knewthatthemanagementofLHSPwouldutilize whilstABC HauspieandWillaert, lion loantoMessrs.Lernout, the creation offictitiousrevenue, by granting aUSD20mil- ing Corporation(hereafter ABC)aidedandabetted LHSP in The PublicProsecutor allegesinsubstancethatArtesia Bank- (koersmanipulatie/manipulation decours) (emissiebedrog/délit d’émission) (valsheid ingeschriften/fauxenécritures) ) andotherrelated offences amongwhichforg- valsheid indejaarrekening/faux andmarketmanipulation . , securitiesfraud ....CvlpoednsaantDxaBankinBelgium Civilproceedings againstDexia 4.4.9.4. graph 4.4.9.1.,above). lion syndicatedcredit facilitydatedMay5,2000.(Seepara- mil- 28,963,083.03 owedtoitbyLHSPunderaUSD430 EUR is stillholding437,000LHSPshares) andtoanamountof tion tothelossessuffered onitsLHSPportfolio(DexiaBank a provisional amountofEUR2.DexiaBank’s claimisinrela- the companyLHSPinOctober2007,claimingdamagesfor andBastiaensagainst Hauspie,Willaert Messrs. Lernout, madeaclaimascivilpartyagainst Dexia Bank,initsturn, indefinitely. case; theCourthasdeferred thehandlingofcivil aspects decided toseparatethecriminalfrom thecivilaspects ofthe It shouldbenotedthattheCourtofAppealinGhenthas complicated matter. tors andtheallegedwrong committedbyArtesiaBank isavery sion rateare stillunderdiscussion; ficult todeterminethereal extentofthedamagesclaimed: For thefollowingreasons –amongothersitremains verydif- mean date. on whichLHSPwasdeclared bankruptinOctober2001) ora the dateonwhichLHSPshares were bought,orthedate whether itshouldbeaparticulardate(e.g.November9,2000, be calculated,thecivilpartiesdiffer intheirapproach asto regardWith tothestartingdatefrom whichtheinterest isto rate ofinterest whichiscurrently 7%. In theworstcase,interest ratetobeappliedisthestatutory discussion. and thedatefrom whichitshouldbecalculatedare stillunder which interest mustbeadded.Theamountoftheinterest All theabove-mentionedamountsare principalamountsto 7,259,107.06. EUR substantial reduction intheclaimbyreceivers ofLHSP. bank, thatduplicationisunlikelytobesuchasleada of otherparties.Inthepresent stateoftheanalysisby 744,128,638.37.Partofthisclaimduplicatestheclaims EUR around EUR315,000,000. holders represented byDeminorandSpaarverlies)whoclaim shares againstvariousparties,including DexiaBank.Themain Certain civilclaimshavebeenfiledby groups ofinvestorsinLHSP 4.4.9.4.2. Claimsbyindividuals because oftheprinciple development untilaftertheendof thecriminalproceedings duced inthecriminalproceedings, isnotlikelytohaveany This claim,toalargeextentduplicative oftheclaimsintro- the claimwouldamounttoapproximately EUR439million. According tothereceivers’ provisional assessmentoftheclaim, against thenetliabilitiesofLHSPinbankruptcy. twenty-one parties,includingDexiaBank,foranindemnity In July2005theBelgianreceivers ofLHSPfiledanactionagainst 4.4.9.4.1. LHSPreceivers’claim s s s s s s s s listed below): ing relevant claimsfordamages(onlythemostimportantare On December31,2008DexiaBankwasaware ofthefollow- proving thelinkbetweendamagesuffered bytheinves- the finalnumberofcivilpartiesisstillunknown; the rateofinterest tobeappliedandtheUSD/EURconver- a numberofpartiesare claimingprovisional amounts; whoareThe receiversKernel claiming ofTheLearning Mercator &Noordstar whichisclaimingEUR17,662,724. The Belgianreceivers ofLHSPwhoare claiming Around 15,000individualshareholders (includingtheshare- “le crimineltientlecivilenétat” . or topayCAIL thecountervalueoftheseParvest shares on ordered todelivertheParvestshares toCAILbyJune30,2007 Luxembourg (CAIL)bywhichBNP ParibasLuxembourgwas on July12,2006attherequest ofCréditAgricoleIndosuez In addition,theLuxembourgCourt ofAppealissuedadecision attachment inthehandsofBAN. in relation tothese shares andproceeded totheirprovisional criminal case,L&HHoldingandKBCBankhaveallmadeclaims to Mr. Bastiaens.TheinvestigatingmagistrateintheBelgian withtheproceeds ofthesaleLHSP sharesand Willaert taining toParvestshares acquiredHauspie byMessrs. Lernout, In addition,BANisinvolvedinanumberofproceedings per- before thecivilcourt(seeparagraph4.4.9.6.,above). of a both inthecriminalinvestigationrelating toLHSP(intheform include theclaimintroduced bythereceiver ofL&HHolding by BANtoMr. Bastiaens(seeparagraph4.4.9.6.,above).They Most ofthependingproceedings relate totheloangranted paid bythepurchaser. LHSP matterforBAN,cappedatanamountequaltotheprice that DexiaBankwillbearthefinancialconsequencesof the contextofthisoperation,ithasbeenagreed, in essence, Banque ArtesiaNederland(BAN)toGeneralElectric(GE).In In October2006,DexiaBanksolditsaffiliatedcompany Nederland Artesia Banque 4.4.9.7. LHSP (ofaround 12,000,000shares) whichisnowworthless. Bank, provisionally estimatedatEUR1,fortheparticipation in receivers ofL&HHoldingare alsoclaimingdamagesfrom Dexia For thesakeofcompleteness,itshouldbementionedthat applications. Dexia Bankvigorously conteststhegrounds forthese repayment. Holding, theL&HHoldingbankruptcyreceiver isclaiming its Takingand Willaert. theviewthatthismoneywasduetoL&H Hauspie sonal accountsopenedwithBANbyMessrs.Lernout, The sellingpriceofUSD25millionwascredited tothree per- million. 10 guarantee infavorofBANforanamountUSD The formerArtesiaBankingCorporation(ABC)issuedabank tion byMr. BastiaensofLHSPshares ownedbyL&H holding. tiaens byBANinJuly2000forthepurposesofacquisi- Bas- This isconnectedwithaUSD25millionloangrantedtoMr. principal amountofUSD25million. Banque ArtesiaNederland(BAN)andDexiaBank,topaythe alongwith HauspieandWillaert, summoned Messrs.Lernout, On April27,2004,thebankruptcyreceiver ofL&HHolding L&HHolding 4.4.9.6. could seriouslyharmDexiaBank’s interests. in thecases(otherthanNASDAQ-classaction)sincethis Dexia Bankhasnotrendered publicthesettlementamounts United Stateshavebeenfinallyterminatedinfull. As aresult, allthecasesboughtagainstDexiaBankin the LitigationTrustee, wasterminatedinSeptember2008. The onlyoutstandingcivilcaseintheUnitedStates,brought by States in theUnited Bank Civilproceedings againstDexia 4.4.9.5. because oftheprinciple any developmentuntilaftertheendofcriminalproceedings introduced inthecriminalproceedings, are notlikelytohave assessed. Theseclaims,toalargeextentduplicativeoftheclaims claimants seekdamagesfortheirlosses,whichhavenotyetbeen claim wasfiledbyDeminoronbehalfof4,941investors.The burgerlijke partijstelling/constitutiondepartiecivile “le crimineltientlecivilenétat” Dexia Annual report 2008 . ) and 227
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 228 Dexia Annual report 2008 togagmnst ots h hre ruh gis it. strong argumentstocontestthechargesbrought against damages. Thelawyersofthebankare oftheopinionthat ithas than 50%thelikelihoodofacourtdecisionordering it topay not beestimatedforgoodatthemoment. these claims. Dexia strongly challengesthevalidityandmerits ofall can courtswere reversed inthethird quarterof2008. The unusedprovisions constitutedfortheactionsin Ameri- missible andatleastunfounded. that mostoftheactionsbrought bythecivilpartiesare inad- claims madeagainstitinBelgiumforthefollowingreasons. Dexia BankBelgiumhasnotconstitutedanyprovisions forthe the difference inviewofthesecuritiesprovided. EUR 68,052,544.63.DexiaBankexpectstobeablerecover &Hauspiefileamountedtosome impairments fortheLernout graphs 4.4.9.1.,4.4.9.2.and4.4.9.7.).Onthesamedate – ofwhichEUR7,104,106.89reserved interests –(seepara- &HauspiefileamountstosomeEUR81,142,273.06 Lernout outstanding claimsrelating tocredit facilitiesgrantedinthe On December31,2008,theexposure ofDexiaBanktothe Provisions andimpairments 4.4.9.8. 17,538,614.58 infavorofBANonOctober30,2007. paragraph 4.4.9.6.above).Thisresulted inapaymentofUSD tee ofUSD10,000,000inprincipalissuedfavorBAN(see Finally, inOctober2007,DexiaBankhonored thebankguaran- cassation of AppealinLuxembourgbefore theSupreme Court( BAN haslodgedanappealagainstthedecisionofCourt paragraph ofthissection). cution oftheaforesaid guaranteeinfavorofGE(seethefirst amount (USD30,039,336.54)toBANonJuly9,2007inexe- ParibasLuxembourgandDexiaBankreimbursed this BNP was obtained,BANpaidthevalueofParvestshares to As noliftingofthevariousattachmentsonParvestshares against anydamagederivingfrom itscondemnation. BAN toindemnifyandholdBNPParibasLuxembourgharmless July 1,2007.TheLuxembourgCourtofAppealcondemned June 30,2007ifthelatterwere notdelivered toCAILprior on Reports publishedduringtheyear 2008,whichare available 2007 (especiallyonpages102to 104)andintheFinancial detailed disclosures, ascontainedinthe DexiaAnnualReport instead ofthegaininitiallyhopedfor. Reference ismadetothe ber ofcontracts,thuspotentiallyendingwitharesidual debt the loansgrantedbyDBnlproved insufficientinalargenum- 2001. Thevalueofthesecuritiesusedascollateralagainst fast andsevere falloftheAmsterdam stockmarketinlate hereinafter referred toasDBnl)appeared atthetimeof former BankLabouchere (nowDexiaBankNederlandNV, The difficultieslinkedtotheshare-leasing activitiesofthe Background 4.4.10.1. Nederland Bank Dexia 4.4.10. s s s s to thedetaileddisclosure intheDexia AnnualReport2007. Reference (especiallyfortheDuisenberg Arrangement)ismade Specific litigations 4.4.10.2. often aprovisional amountisclaimed. (Deminor…) makenomentionofanyprecise amount and that The numberofcivilpartiesandtheamountstheyclaimcan- Dexia Bankhasmadeextensivesubmissionsandargued With regardWith tothecivilactions,wenotethatvariousclaims As thingsstandatthemoment,Bankassessesless www.dexia.com ), whichwillgiveadecisiononApril2,2009. . cour de approximately 5,500clientswhoentered intoshare-leasing agree- The DuisenbergArrangement isnotapplicabletothe group of Lease Depot 4.4.10.5. under considerationbytheDSIAppeals Committee. eration bytheDSIGrievanceCommittee, andonlyonecase At theendof2008,only20cases were stillunderconsid- Institute(DSI) Securities Dutch 4.4.10.4 proceedings againstDBnl. any settlementsincethen,are stillentitledtostartorcontinue out statementbefore August1,2007,anddidnotenterinto approximately 20,000clientsthathavefiledaso-calledopt- reports andfinancialreports. Generally speaking,onlythe the nature ofthesedisputes,Dexiarefers toitsearlierannual with respect toshare-leasing products. Especiallyinrespect of A numberofdisputeshavearisenbetweenDBnlanditsclients Litigationsingeneral 4.4.10.3. expected afterthejudgmentofSupreme Court. and willcontinuetodecrease in2009becauseofsettlements number ofclientsinproceedings decreased rapidlyin2008 vast majorityofthesecourtcaseshavebeensuspended.The court cases,involvingmore than3,000clients.However, the On December31,2008,DBnlisstillinvolvedinover2,800civil DBnl inthisrespect. of thisdecision,there isnoneedtochangetheprovisions of in 2003,isavalidsettlement-agreement indeed.As aresult that theso-calledDexiaOffer, asettlementsignedby clients On October14,2008,theAmsterdam CourtofAppeal ruled sions” oftheAmsterdam Sub-DistrictCourt. the DuisenbergArrangementandnoton“standard deci- half of2009.Theprovisions ofDBnlare basedonthecostsof Supreme Courtwhichare expectedtoberendered inthefirst relevant damage,willbepartofjudgmentsbytheNetherlands dures. Dutyofcare issues,includingthecorrect definitionof erlands alsodecidedtosuspendallsimilarequityleaseproce- Furthermore, mostoftheotherSub-DistrictCourtsin the Neth- pend allequityleaseprocedures involvingdutyofcare issues. 25, 2008,theAmsterdam Sub-DistrictCourtdecided tosus- this respect totheCourtsofAppeal.However, on November damage. Therefore, DBnlcontinuedtoissuemore appealsin decisions” ofApril2007,usingabroader definitionof relevant Amsterdam Sub-DistrictCourtcontinuedtoapplythe“standard not beconsidered aspartofthedamageclient,but andDenBoschhavedecidedthatinterest Arnhem paidshould In severaljudgments,theCourtsofAppealAmsterdam, provisions maybeneededinanumberofcases. prescription periodwillbedeterminedcasebycase,additional cation letterhasbeenreceived induetime.However, asthe sion coversallfilesforwhichitisestablishedthatthenullifi- for thisissuehasbeenrecorded inthe2008results. Theprovi- million 32 tion ofthecontractclient.Aprovision ofEUR the DuisenbergArrangement),canindeedinvokenullifica- and whodidnotacceptasettlement(liketheDexiaOffer or moment thespousewasaware oftheexistencecontract, ter withintheprescription periodofthree yearsasfrom the Therefore, spouseswhosentDBnlaso-callednullificationlet- consent tohisorherpartnerforenteringintosuchacontract. which meansthatthespouseofclienthadtogivewritten plan fallingwithinarticle1:88oftheNetherlandsCivilCode, securities leasingcontractisaformofhire purchase instalment so-called spouseconsentmatter. According tothisjudgment,a a judgment,dismissingtheappealofDBnlinrespect ofthe On March 28,2008,theNetherlandsSupreme Courtrendered employed byDexia, whichrose from 242to261. despite thegrowth oftheaveragenumberpeopledirectly The costofremunerations andsocialchargesremained stable amount toEUR4.2million. The compensationspaidtomembers oftheBoard ofDirectors EUR 26.1million. whilst costsassociatedwiththeGroup transformationplanare millionin2007 3.7 were EUR2.9millioncompared toEUR Printing andadvertisingcostslinkedtocorporatepublications growth beinglinkedtotheevolutionofcostliving. 33.9millioncompared withEUR32.8millionin2007,that EUR tions, travel,trainings,membershipsandsupplies)totaled Other operatingcosts(leasingofpremises, telecommunica- Dexia Group, generatedacostofEUR1.7million. top-level trainingprograms formembersofstaff oftheentire The DexiaCorporateUniversity, whichisintendedtodevelop Dexia Group. ance andcontrol tasksperformedbycorporateteamsofthe vided byGroup subsidiaries.Thesefeesare alsodueforguid- increase offeesisprincipallyassociatedwiththeservices pro- to 82.1EURmillionagainst65.1in2007.The and Group subsidiariesfortheirservices,whichamounted This itemincludesfeespaidtoconsultants,experts,auditors milliontoEUR150.9million. 43.6 EUR Miscellaneous servicesandothergoodsincreased by professional withholdingtax(EUR0.1million). 2.6million)aswellstructuralreductions regarding (EUR Other operatingincomerelates totherecovery ofcosts Operatingincome 4.5.1. 4.5. litigation bytherespective states. the globalsettlementproposal, whichwouldresolve anycivil chased municipalGICs.Thestatesmayelecttoparticipatein tion, includingactionsonbehalfofvariousstatesthatpur- related investiga- tothesubjectmatterofgovernment is alsoadefendantinclassactionandothercivillitigation regard totheWells Noticereceived inFebruary2008.FSA RevenueService,alsowith the DOJ,SECandInternal ing aproposal that,ifagreed to,wouldsettlethematterwith (DOJ). FSAisindiscussionswiththeDOJandSECregard- is alsobeinginvestigatedbytheUSDepartmentofJustice of municipalguaranteedinvestmentcontracts(GICs)that the USsecuritieslawsinconnectionwithallegedbidrigging ings againstFSA,allegingviolationsofcertainprovisions of the SECauthorizecommencementofnon-criminalproceed- cating thattheSECstaff isconsideringrecommending that Commission (SEC),commonlycalleda“Wells Notice”,indi- Ltd (FSA)received aletterfrom theUSSecuritiesandExchange On February4,2008,FinancialSecurityAssuranceHoldings (Subpoena) 4.4.11. FinancialSecurityAssurance leasing contracts,byclientbehaviorandfuture judgments. the fluctuationsinvalueofunderlyingstockshare- Provisions are updatedeveryquarterandmaybeinfluencedby Provisions asofDecember31,2008 4.4.10.6. erable numberofthem.Adequateprovisions havebeenmade. with DepotLeaseclients,butexpectstobeablesettleaconsid- have beenreached. DBnlfacesalimitednumberofcourtcases the endof2008,settlementswithnearlyallDepotLeaseclients ments inconnectionwithsecuritiesdeposit(“DepotLease”).At TTMN FINCOME OF STATEMENT and depreciation oftangiblefixedassetsEUR0.5million. lion, amortizationofintangiblefixedassetsEUR1.6million Amortization offormationexpensesrepresented EUR3.7mil- U . million. 0.9 EUR losses inrelation tothedollarhavebeenrecorded for Furthermore, conversiondifferences onlatentexchange charges (EUR0.2million). fees related toownshares (EUR0.1million)andotherfinancial the costoffiduciaryservices(EUR0.5million),purchase which are DexiaBank,BILandCaceis(EUR2.5 million), linked tothepaymentofdividendsbyorganizations, Other financialchargeswere mainlycomposedofcommissions million. 0.2 EUR Local were EUR6.8millionandotherinterest chargeswere relating tothecurrency interest rateswapwithDexiaCrédit Group entitiestotaledEUR157.7million.Financialcharges Interest paidanddueinrelation totheloansgrantedby and EUR10.5millionrespectively. differences onthedollarandTurkish liraofEUR0.9million hedge transactionofEUR2.1millionandpositiveexchange (EUR 52.9million).Theotherfinancialincomeresults from a 1.4million)andincomefrom money-marketinvestments (EUR million),proceeds from taxdeferred advances 7.1 Local (EUR ated bythecurrency swapcontractedwithDexiaCrédit Income from current assetsincludedtheinterest gener- million). 163.9 (EUR as interest receivedforsubordinated andearned loans dends paidbyGroup entities(EUR1,197.2million)aswell Financial incomefrom financialassetsincludesthedivi- 4.5.2. Financialresults Net incomefor2008totaledEUR844.7 million. Netincomefortheyear 4.5.5. and EUR65.8millioninFrance). million in Luxembourg 0.9 sidered asanimmediategain(EUR group are recorded inthesepermanentestablishmentsandcon- tive country. Thetaxsavingsrealized byeachtaxconsolidation are eachheadofthetaxconsolidationgroup intheirrespec- that thepermanentestablishmentsinParisandLuxembourg Proceeds from otherincometaxesare explainedbythefact amended in2009. Subsidiary Directive. Itresults thatthe saidprovision willbe specifies thattheBelgianlegislationcontradictsParents- the European CourtofJustice(ECJ12February2009),which This pointhasinthemeantimebeenobjectofanOrder by under whichthiscouldnotbecarriedforward toalater period. fiscal regulations regarding definitivelytaxedsurplusrevenue, This provision shouldbeviewedinthecontextof Belgian (EUR 1.8million)(seesection4.3.5.“Provision fortaxcharges”). The corporatetaxchargerelates toaprovision fortaxcharges 4.5.4. Corporateincometax ings Inc.(cf.note4.2.4.Financialfixedassets). 284.1millionontheparticipatinginterest inDexiaHold- EUR Other exceptionalchargesrelate tothevaluereduction of Dexia HabitatSAresulted inagainofEUR0.02million. The saletoCréditLocalSAoftheparticipatinginterest heldin Exceptionalincome 4.5.3. Dexia Annual report 2008 229
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 230 Dexia Annual report 2008 4.7 4.6. 4.8 eodd 2,8 5,9 77,891 452,391 20,581 263,793 0 125,005 306,024 (1,016,783) 499,737 5,850,874 8,513 (211,987) 642,807 7,785,993 235,944 568,411 8,496,752 771,885 Recorded - Movements duringtheperiod: DEPRECIATION ASAT DEC.31,2007 ASAT DEC.31,2008 VALUE ACQUISITION - Salesanddisposals Acquisitions - Movements duringtheperiod: VALUE ASAT DEC.31,2007 ACQUISITION 5,576,603 VALUE ASAT DEC.31,2007 ACQUISITION loan issueexpensesandotherformation Detailing: -Expensesofformationorcapitalincrease, NET BOOKVALUE ASAT DEC.31,2008 - Depreciation - Newexpensesincurred&ofcapitalincrease Movements duringtheperiod: NET BOOKVALUE ASAT DEC.31,2007 custos nldn rdcdfie ses3,045,708 (in EUR) NET BOOKVALUE ASAT DEC.31,2008 DEPRECIATION ASAT DEC.31,2008 - Cancelledowingtosalesanddisposals Recorded - Movements duringtheperiod: DEPRECIATION ASAT DEC.31,2007 VALUE ASAT DEC.31,2008 ACQUISITION - Salesanddisposals Acquisitions,includingproducedfixedassets - Movements duringtheperiod: (in EUR) (in EUR) E OKVLEA TDC 1 08 1700 ,2,2 296,841 202,896 2,028,424 5,757,569 117,010 451,401 NET BOOKVALUE ASAT DEC.31,2008 DEPRECIATION ASAT DEC.31,2008 aclddet ae n ipsl (1,8) 5566 0 (545,696) (211,987) - Canceledduetosalesanddisposals STATEMENT OFINTANGIBLE ASSETS(LICENCES) . STATEMENT OF TANGIBLE FIXEDASSETS . TTMN FFORMATION EXPENSES STATEMENT OF machinery and equipment Plant, Furniture vehicles and (3,679,250) 8,760,308 6,862,955 3,214,898 6,350,163 1,588,718 4,797,708 9,565,061 6,555,616 8,760,308 Amounts tangible Amounts (36,263) (36,263) Other assets 2. Amountsreceivable 1. Participatinginterests andshares 4.9 xhnedfeecs 190480 91,910,438 NET BOOKVALUE ASAT DEC.31,2008 Exchangedifferences - Repayments - Additions - Movements duringtheperiod: NET BOOKVALUE ASAT DEC.31,2007 (in EUR) CUSTO AU SA E.3,20 18,952,029,542 AMOUNTS WRITTENDOWNASAT DEC. 31, 2007 VALUE ASAT DEC.31,2008 ACQUISITION - Salesanddisposals Acquisitions - Movements duringtheperiod: VALUE ASAT DEC.31,2007 ACQUISITION (in EUR) MUT RTE ONA TDC 1 08284,146,133 NET BOOKVALUE ASAT DEC.31,2007 AMOUNTS WRITTENDOWNASAT DEC. 31,2008 Recorded - Movements duringtheperiod: TTMN FFNNILFIXEDASSETS FINANCIAL STATEMENT OF . 3,470,893,995 3,378,983,557 .Afiitd2.With Affiliated 1. (1,000) 34,562 0 0 participation link Dexia 25,166,571,788 24,882,425,655 6,217,522,246 284,146,133 (2,980,000) Amounts Annual report 2008 757,018 790,580 0 231
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 232 Dexia Annual report 2008 in theamountofatleast10%capitalissued. List ofenterprisesinwhichtheenterpriseholdsaparticipatinginterest, andotherenterprisesinwhichtheenterpriseholds 4.10. (1) FC:foreigncompany Services SA-FC Associated DexiaTechnology omnsae 0,1 53 .13/220 U 2,768,934,104 EUR 31/12/2008 4.61 95.39 103,515 Luxembourg SA-FC Dexia Participation Common shares BE 0882.068.708 B-1210 Bruxelles Rogier11 Place Dexia ParticipationBelgiqueSA omnsae 11.09.03/220 S 3,449,009,767 USD (40,974) 31/12/2007 90.00 EUR 10.00 31/12/2007 1 Common shares 1,019,530 Amsterdam 0.00 NL-1019 GM Piet Heinkade55 EUR Dexia NederlandHoldingNV-FC 100.00 Common shares 31 UK-London SE12RB 31/12/2007 Shackleton House 4 BattleBridgeLane,2ndfloor 0.00 Services Ltd-FC 2,756,281,600 Management Dexia EUR 100.00 Common shares York, 14,999 NY10019–USA New 31 West 31/12/2007 52ndstreet 1,676,006,981 Dexia HoldingsIncorporated-FC 0.00 EUR Common shares L-1145 Luxembourg 180, ruedesAubépines 100.00 31/12/2007 Luxembourg SA-FC 87,045,743 42.27 Dexia Funding Common shares 345,558,671 BE 0866.161.005 57.68 TRY B-1000 Bruxelles 1,163,720 Avenue Livingstone6 EmployeeBenefitsSA 77,678,299 Dexia 31/12/2008 Common shares TRY F-92913 Paris 99.99 Tour Dexia–LaDéfense2 1, passerelledesReflets 0.01 31/12/2008 1,517,444 Dexia CréditLocalSA-FC 99.99 Common shares 72 L-1470 Luxembourg EUR 69, routed’Esch 0.01 31/12/2007 1 0.47 99.53 1,493 Common shares T-Istanbul Rihtim Caddesi–Karaköy26 Common shares T-Istanbul Rihtim Caddesi–Karaköy26 Deniz Faktoring-FC Common shares L-8070 Bertrange 23, Z.A.Bourmicht number by Belgianlaw, thecompany the enterprisegoverned registered officeandfor Name, fulladdressofthe omnsae 5799.900 11/08ER1,408,358,098 EUR 31/12/2008 0.01 99.99 25,759 Common shares L-1470 Luxembourg 69, routed’Esch omnsae 394269100 .03/220 U 2,980,564,579 EUR 31/12/2007 0.00 100.00 359,412,609 à LuxembourgSA-FC Dexia BanqueInternationale Common shares BE 0403.201.185 B-1000 Bruxelles Boulevard Pachéco44 Dexia BanqueBelgiqueSA Deniz FinansalKiralama-FC SHARE INTHECAPITAL ANDOTHERRIGHTSINCOMPANIES (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) The enterprise ubr%%(+)or(-)(inmonetaryunit) % % Number 000100 .03/220 B 64,835 GBP 31/12/2007 0.00 100.00 10,000 000100 00 11/08ER452,147,000 EUR 31/12/2008 0.00 100.00 50,000 (directly) held by Shares Subsid- iaries statement financial financial Primary Primary Information fromthemostrecentperiod for whichannualaccountsareavailable Mon- etary unit Capital and reserves 147,144,578 319,477,197 202,487,233 793,207,820 127,842,363 (44,116,000) 71,762,223 20,149,721 (1,564,653) Net result 318,129 (10,183) (71,974) 41,718 rights D. Commitmentstoissueshares Ownshares heldby: C. Structure ofthecapital B. Issuedcapital A. 4.13. 4.12. 4.11. ubro usadn usrpinrgt 71,787,214 329,503,312 Maximumnumber of sharestobeissued - Amountofcapitalto beissued - - Numberofoutstandingsubscriptionrights Following theexercising ofsubscriptionrights xrieo arnsfrGopsaf 473399,650 457,393 5,307,005,112 ISSUED CAPITAL ASAT DEC.31,2008 - destructionofownshares - capitalincrease - exerciseofwarrantsforGroupstaff Changes duringtheperiod: ISSUED CAPITAL ASAT DEC.31,2007 Accrued income:Providedservices Accrued income:interest Deferred charges (in EUR) Other investments (in EUR) Shareswithoutindicationofnominalvalue,eachrepresenting - Different categories ofshares - Bearershares Registeredshares - - itsdirectsubsidiaries - thecompanyitself 1/1.762.478.783 oftheissuedcapital STATEMENT OFCAPITAL ANDSHAREHOLDERS’STRUCTURE DEFERRED CHARGESANDACCRUEDINCOMEFROMTHEASSETS INVESTMENTS: OTHERINVESTMENTSANDDEPOSITS Amount ofcapital Amount ofcapital rvospro Period Previous period 8,089,020,254 606,060,606 2,781,557,749 ,8,2,5 1,762,478,783 8,089,020,254 Amounts 8,2 182,529 182,529 13746293,570 1,347,486 Amounts (in EUR) (in EUR) (in EUR) (in EUR) 22,258,236 0 00 Number ofshares Number ofshares Number ofshares Number ofshares Dexia 908,736,928 853,741,855 45,934,194 71,787,214 1,723,850 306,000 Annual report 2008 Period 233
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 234 Dexia Annual report 2008 CNP Insurances:2.97% Ethias Group: 5.04% Société fédéraledeparticipationsetd’investissement(SFPI):5.73% Société dePriseParticipationl’État(SPPE):5.73% Arcofin: 13.92% Holding Communal:14.34% Caisse desdépôtsetconsignations:17.61% as itappearsfrom thestatementreceived bytheenterprise: F. Structure ofshareholdings oftheenterpriseasatannualbalancingbooks, E. Amountofauthorizedcapital,notissued 4.16. Analysis bycurrent portionsofamountsinitiallypayable aftermore thanoneyear 4.15. 4.14. omteta edo sa osldto Fac)19,430,427 Commitment asheadofafiscalconsolidation(France) 5. Otherloans Financial debts )Aonsdet h ainlOfieo oilScrt 0 24,717,554 0 b) Otheramountspayablerelatingtoremunerationandsocialsecurity AmountsduetotheNationalOfficeofSocialSecurity a) Remuneration andsocialsecurity Estimatedtaxespayable c) b) Non-expiredtaxespayable Expiredtaxespayable a) Taxes (in EUR) TOTAL (in EUR) DEBTSITUATION MUT AAL FORTAXES,AMOUNTS PAYABLE REMUNERATION AND SOCIALSECURITY FOROTHERRIKSANDCHARGES PROVISIONS Not morethan one year 0 0 and fiveyears Between one 2000000 200,000,000 2000000 200,000,000 2000000 200,000,000 Over fiveyears 1,618,019,248 Amounts 567,925 (in EUR) Period Period 0 0 4.18. 4.17. 4.19. )Cagst h nepie 1807132,665 3,352 108,047 469,717 3,306 1.9 182,528 892,166 1.9 647,060 367,047 9,468,227 34,101,047 4,266,663 326,355 6,173,063 38,462,616 3,499,210 234.2 d) Chargestotheenterprise c) Numberofactualworkinghours Average numberofemployeesinfull-timeequivalents b) Total numberattheclosingdate a) Temporary personnelandpersonsplacedatthedisposalofenterprise 219.0 Other charges Taxes relatedtooperations Other operatingcharges 4,303,170 Decreases Increases Provisions forliabilities andcharges d) Otherpersonnelcharges Employers’premiumforextrastatutoryinsurance c) Employers’contributionforsocialsecurity b) Remunerationanddirectsocialbenefits a) Personnel charges c) Numberofactualworkinghours Average numberofemployeesinfull-timeequivalents b) Total numberattheclosingdate a) Employees recorded inthepersonnel register inBelgium from publicauthorities Whereof: thetotalamountofsubsidiesandcompensatoryamountsobtained Other operatingincome (in EUR) Accrued charges:generaloperatingexpense Accrued charges:interest (in EUR) hre ikdt h ucaeo w hrs 8,3 114,977 2,112,997 88,739 2,492,757 3,677,225 5,795,502 15,516,340 Charges linkedtothepurchaseofownshares Other financialcharges Conversion differences Exchange differences Impairments attherealizationofcurrentassets Charges linkedtothepaymentofdividends Other financialcharges Other financialincome Income relatedtoaswap Exchange differences Other financialincome (in EUR) FINANCIALRESULTS OPERATING RESULTS ACCRUED CHARGESANDDEFERREDINCOMEINTHELIABILITIES rvospro Period Previous period rvospro Period Previous period 1,1,4 578,309 15,616,340 2847511,001 2,814,745 10259397,443 1,042,559 3,4 687,371 535,149 496874,992 64,956 11,384,428 60,417 33416,269 23,344 16490,949 21,684 29252 239 3 0 31 21 2 Dexia 27,596,281 Annual report 2008 Period 0 235
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 236 Dexia Annual report 2008 4.20. scheme ofwhichthecontributions areinsurancecompany. paidtoanexternal premiums havebeen paidtoagroup insurance.SomemembersoftheManagement Board alsobenefitfrom a supplementary Members ofstaff benefit from asupplementaryretirement andsurvivalpensionschemeforwhichbothemployees andstaff charges. the enterprise,abriefdescription ofsuchplanandthemeasurstakenbyenterprise tocovertheresulting If there isasupplementaryretirement orsurvivor’s pensionplaninfavorofthepersonnelorexecutives 4.22. 4.21. .Pyolwthligtxs 5024214,128,371 30,808 15,062,412 110,137,267 See notesannualreports:note4.4. 2,182 importantlitigationandother commitments Information concerning 93,829,529 - Currenciessold(tobedelivered) - Currenciespurchased(tobereceived) Forwarded transactions by theenterprise Maximum amountforwhichotherdebtsorcommitmentsofthirdpartiesareguaranteed - Whereof: commitments ofthird parties Personal guarantees,provided orirrevocably promised bytheenterprise,assecurityfordebtsand (in EUR) 2. Withholdingtaxesoninvestmentincome 1. Payrollwithholdingtaxes 284,146,133 Amounts retained onbehalfofthird partiesfor: 2. Bytheenterprise To theenterprise(deductible) 1. charged duringtheperiod: 2,608 Total taxesandspecial amountofvalueaddedtax,turnover (in EUR) 1,782,450 -Surplusondepreciations Otherdeferredtaxesrepresentingassets a) Deferredtaxesrepresentingassets Status ofdeferred taxes (148,212) Habitat isfor95%exemptedoftaxinFrance. off onDexiaHoldingsInc.isnottaxdeductibleinBelgiumandthecapitalgainsharesof The exceptionalresultshavenoimpactonthetaxesrelatedtocurrentperiod.amountwritten Impact oftheexceptionalresults inthetaxesonprofit oftheyear Non-deductibility ofthelossonfinancialfixedassets Exempted resultsofthesubsidiaries Definitively taxedincome taxes andtheestimatedtaxableprofit Taxes ofthecurrent periodthatare materiallyaffected bydifferences between theprofit before Additionalchargesforincometaxesestimatedorprovided b) Additionalchargesforincometaxesdueorpaid a) Income taxesonprevious periods Estimatedadditionalchargesforincometaxes c) Excessofincometaxprepaymentsandwithholdingtaxescapitalized b) Taxes andwithholdingtaxesdueorpaid a) Income taxesofthecurrent period (in EUR) RIGHTS ANDCOMMITMENTSNOTACCRUEDINTHEBALANCESHEET OTHER TAXES ANDTAXES BORNEBYTHIRDPARTIES INCOME TAXES rvospro Period Previous period 06669,888 10,616 141,168,500 500,039,300 566,945,935 493,812,751 500,039,300 96,078,863 1,782,450 1,476,636 148,212 2,608 Period Period 0 THEREWITH ENTERPRISES CONTROLLEDBYTHEMENTIONEDPERSONS WITHOUTBEINGASSOCIATED WHO CONTROLTHEENTERPRISEWITHOUTBEINGASSOCIATED THEREWITHOROTHER BY PARTICIPATING INTERESTS 5.3. or mainly, thesituationofasingleidentifiableperson Amount ofremuneration andpensions,includedintheincomestatement,aslongthisdisclosureexclusively doesnotconcern 5.2. 5.1. 5. te nnilcags 146982,364,425 21,466,938 164,731,595 178,761,391 Other financialcharges From interestsonliabilities Other (non-assistance) Tax advise Other tasks Remuneration forexeptionaltasks executedwithintheenterprisebyAuditor Compensation oftheauditor To thedirectors Obained captialgains Within oneyear After oneyear AMOUNTS PAYABLE i EUR) (in AN N OSSO IPSLO IE SES00 0 1,361,054,516 1,360,836,093 214,730,513 203,832,042 FIXEDASSETS GAINS ANDLOSSESONDISPOSALOF 50,249,322 Other financialincome 35,052,654 From currentassets From financialfixedassets FINANCIAL RESULTS 3,470,893,995 OTHER SUBSTANTIAL FINANCIALCOMMITMENTS 22,331,013,099 3,378,983,557 or commitmentsofaffiliatedenterprises Provided orirrevocablypromisesbytheenterprise,asasecurityfordebts PERSONNAL GUARANTEES Amounts receivable Shares CURRENT INVESTMENTS Within oneyear After oneyear AMOUNTS RECEIVABLE Subordinated amountsreceivable Investments FIXEDASSETS FINANCIAL Financial relationships RELATIONSHIPS WITHAFFILIATED AUDITOR MANAGERS,INDIVIDUALSORBODIESCORPORATE RELATIONSHIPS WITHDIRECTORSAND RELATIONSHIPS WITHAFFILIATED ENTERPRISESANDLINKED rvospro Period Previous period 892095224,882,425,655 18,952,029,542 ,5,6,9 3,620,949,561 3,820,949,561 3,252,564,090 3,452,564,090 200000200,000,000 200,000,000 0,0,0 500,000,000 500,000,000 1,4,5 61,374,836 11,741,751 44,235,576 34,048,252 104426,013,746 1,004,402 Affiliated enterprises 020,000 0 00 00 00 00 Dexia 28,353,319,650 4,200,005 Annual report 2008 94,500 297,200 180,000 0 237
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 238 Dexia Annual report 2008 The enterprisehasestablishedandpublishedtheconsolidatedaccountsaconsilidatedfinancialstatement. 7. the volumeofinstruments In thiscaseanestimateofthefairvaluefinancialderivativesnotmeasured atfairvaluewithindicationaboutthenature 6. .Hired temporarystaff andpersonnelplacedattheenterprise’s disposal B. Employeesrecorded inthestaff register inBelgium A. 8.1. 8. .Duringtheperiodandduringprevious 1. 37,421,689 Currency interestrateswap:1contract–Excludingaccruedinterests During theperiod vrg ubro mlye 0. 23242(T)290(FTE) 219.0 (FTE) 234.2 367,047 42.3 12,520 203.9 354,527 Number ofactualworkinghours Average numberofemployees vrg ubro mlye . 0 0 1.9 3,352 Number ofhoursactuallyworked Average numberofemployees esne hre i U)4,4,9 ,3,6 42,183,759 1,438,864 40,744,895 Personnel charges(inEUR) hre fteetrrs i U)12650 132,665 Charges oftheenterprise(inEUR) to wage(inEUR) Advantages ofthebenefitsinaddition .Asattheclosingdateofperiod 2. .Nme fepoesrcre ntepronlrgse 0 4239.3 44 208 Numberofemployeesrecorded inthepersonnelregister a. .According togenderandbylevelofeducation c. Bynature oftheemploymentcontract b. eae 8 694.0 16 82 Female: .Byprofessional category d. period ae 2 8145.3 28 126 Male: otato ent eid101.0 238.3 0 44 1 207 Contract ofdefiniteperiod Contract ofindefiniteperiod mlye 8 7204.0 27 185 23 Employees Management staff Derivatives notmeasured atfairvalue Declaration concerning theconsolidatedaccounts Declaration concerning Social report STATEMENT OFTHEPERSONSEMPLOYEDIN2008 eodr dcto 9.0 0 9 secondary education ihrnnuiest dcto 3214.3 2 13 higher non-universityeducation nvriyeuain142 122.0 26 104 university education eodr dcto 5.8 1 5 secondaryeducation nvriyeuain4 156.9 31.3 11 4 48 29 university education higher non-universityeducation Full-time (period) Part-time ultm attm Total offull-time Part-time Full-time (period) eprr esne Personsplacedat Temporary personnel equivalents (FTE) or totalfull-time Total (T) (period) (T) (T) 17 the disposalof 42,272,673 (previous period) equivalents (FTE) or totalfull-time 326,355 8,5 (T) 587,150 equivalents enterprise Total (T) 35.3 (T) (T) and h eid1 14.7 14.7 1 1 14 14 c. Contractforanindefiniteperiod Bynature oftheemploymentcontract b. theperiod listeddateofterminationthecontractduring Numberofemployeeswithainthestaff register a. imsa 3.7 10.0 1 0 3 10 Otherreason Dismissal .Entries A. 8.2. 8.3. Departures B. Costs fortheenterprise(inEUR) Number oftraininghours Number ofemployeesinvolved -whereof gross costsdirectly associatedwiththecompany (inEUR) Costs fortheenterprise(inEUR) Number oftraininghours Number ofemployeesinvolved otatfra nent eid2 27.9 27.9 1 1 27 27 Contractforanindefiniteperiod Bynature oftheemploymentcontract b. register duringtheperiod Numberofemployeesrecorded onthepersonnel a. for workerspaidbytheemployer Total oflessformalandinformalcontinuingvocationaltraininginitiatives for workerspaidbytheemployer Total offormalcontinuingvocationaltraininginitiatives of theemploymentcontract According tothe reason fortermination eieet101.0 0 1 Retirement on aself-employedbasis render servicestotheenterpriseatleasthalf-time Of which:thenumberofpersonswhocontinueto TABLE OFPERSONNELMOVEMENTSDURINGTHEPERIOD NOMTO NTANN RVDDT MLYE UIGTEFNNILYEAR FINANCIAL INFORMATION ONTRAININGPROVIDEDTOEMPLOYEESDURINGTHE ultm attm Total offull-time Part-time Full-time ultm attm Total offull-time Part-time Full-time 000 5,9 444,965 444,965 550,995 550,995 47882,677 64,738 ,6 2,472 3,061 aeFemale Male Female Male 5 203 159 319 23 53 72 Dexia equivalents equivalents Annual report 2008 239
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS COMPTES CONSOLIDÉS RAPPORT DE GESTION 240 Dexia Annual report 2008 comments andinformation. the financialstatementstogetherwithrequired additional you haveentrustedtous.Thisreport includesouropinionon we are pleasedtoreport toyouontheauditassignmentwhich As required bylawandthecompany’s articlesofassociation, To theshareholders to theshareholders’ meeting the yearendedDecember31,2008 Statutory auditor’s report for Dexia SA company’s preparation andfairpresentation ofthefinan- ments, wehaveconsideredcontrol internal relevant tothe whether duetofraudorerror. Inmakingthoseriskassess- risks ofmaterialmisstatementthefinancialstatements, depend onourjudgment,includingtheassessmentof closures inthefinancialstatements.Theprocedures selected cedures toobtainauditevidenceabouttheamountsanddis- In accordance withthesestandards, we haveperformedpro- material misstatement. able assurancewhetherthefinancialstatementsare free from require thatweplanandperformtheaudit toobtainreason- d’Entreprises/Instituut derBedrijfsrevisoren”. Thosestandards applicable inBelgium,asissuedbythe“InstitutdesReviseurs accordance withlegalrequirements andauditingstandards statements basedonouraudit.We conductedour audit in Our responsibility istoexpress anopiniononthesefinancial ing estimatesthatare reasonable inthecircumstances. applying appropriate accountingpolicies,andmaking account- rial misstatement,whetherduetofraudorerror, selecting and presentation offinancialstatementsthatare free from mate- controlmaintaining internal relevant tothepreparation andfair includes amongotherthings:designing,implementingand preparation ofthefinancialstatements.Thisresponsibility The Board ofDirectors ofthecompanyisresponsible forthe of EUR844,685(000). total assetsofEUR28,512,800(000)andaprofit for the year the accountingprinciplesapplicableinBelgium,whichshow year endedDecember31,2008,prepared inaccordance with We haveauditedthefinancialstatementsofDexiaSA forthe WITH EXPLANATORY PARAGRAPH FINANCIALSTATEMENTS, ON THE UNQUALIFIED AUDITOPINION liquidity positionofDexia. accounts, relating totheimpactoffinancialcrisis onthe of DexiaGroup, whichisattachedtothestatutory annual attention tothecommentsincludedinmanagementreport amendingourunqualifiedopinion,wedrawthe Without accounting principlesapplicableinBelgium. bilities, financialpositionandresults inaccordance withthe 2008 giveatrueandfairviewofthecompany’s assets,lia- In ouropinion,thefinancialstatementsasofDecember31, able basisforouropinion. that theauditevidencewehaveobtainedprovides a reason- our requests forexplanationsandinformation.We believe and responsible officersofthecompanyhavereplied toall statements, takenasawhole.Finally, theBoard ofDirectors made bythecompanyandpresentation ofthefinancial ing policiesused,thereasonableness ofaccountingestimates control.internal We haveassessedthebasisofaccount- expressing anopinionontheeffectiveness ofthecompany’s appropriate inthecircumstances butnotforthepurposeof cial statementsinorder todesignauditprocedures thatare s scope ofourauditopiniononthefinancialstatements: tional commentsandinformationwhichdonotchangethe Our responsibility istoincludeinourreport thefollowingaddi- of Directors. and itsarticlesofassociationare theresponsibility oftheBoard compliance withtherequirements oftheCompanies’Code should beincludedintheDirectors’ report andthecompany’s The preparation andtheassessmentofinformation that appointment. tradiction withanyinformationobtainedinthecontextofour less, confirmthattheinformationgivenisnotinobviouscon- certain factorsonitsfuture development.We can,neverthe- or onthestatus,future evolution,orsignificantinfluenceof the principalrisksanduncertaintiesconfronting thecompany, ever, weare unabletoexpress anopinion onthedescriptionof law andisinagreement withthefinancialstatements.How- ADDITIONAL COMMENTSANDINFORMATION The Directors’ report includestheinformation required by s neration oftherepresentative Director andthePresident ofthe Board ofDirectors ofNovember13,2008relating totheremu- and theformerPresident oftheBoard ofDirectors andofthe ing totheremuneration oftheformerrepresentative Director decisions oftheBoard ofDirectors ofFebruary28,2008relat- are alsorequired toreport toyouonthecapitalimpactsof articles. dance withtherequirements ofthelawandcompany’s tion oftheresults proposed tothegeneralmeetingisinaccor- such aswewouldbeobligedtoreport toyou.Theappropria- violation ofthecompany’s articlesortheCompanies’Code Belgium. with thelegalandregulatory requirements applicablein tance, theaccountingrecords are maintainedinaccordance s s In accordance witharticle523oftheCompanies’Code,we No transactionshavebeenundertakenordecisionstakenin prejudice tocertainformalaspectsofminorimpor-Without capital impactsforthecompanyofthesedecisions. disclosure isadequatetoinformtheshareholders aboutthe the ManagementCommittee.We are oftheopinionthatthis tion relating totheremuneration oftheBoard ofDirectors and decisions isincludedinthemanagementreport withinthesec- of aconflictinterest. Theinformationpertainingtothese Board ofDirectors, inwhichregard wehavebeeninformed rn ehee BernardDeMeulemeester Frank Verhaegen DELOITTE Bedrijfsrevisoren/Reviseurs d’Entreprises BV o.v.v.e. SCs.f.d.SCRL Antwerp, April2,2009 The statutoryauditor Represented by Dexia Annual report 2008 241
ANNUAL COMPTES CONSOLIDÉS RAPPORT DE GESTION FINANCIAL STATEMENTS COMPTES SOCIAUX COMPTES CONSOLIDÉS RAPPORT DE GESTION 242 Dexia Annual report 2008 or civil,administrativetechnicalactivities,aswellalltypes companies orwhichcarryonfinancial,industrial,commercial which operateascredit institutions,insuranceorreinsurance entities, whatevertheirlegalform,existingortobecreated, means, ofallequityinterests incompaniesoranyother legal permanent officeslocatedinFranceandLuxembourg. July 15,1996foranindefiniteperiod.Thecompanyhastwo makes apublicappealforinvestment.Itwasincorporatedon The companyisalimitedunderBelgianlawthat Legal form,incorporation,duration (RPM BrusselsVAT BE0458.548.296). Place Rogier11,1210Brussels The registered officeofthecompanyisinBelgiumat Registered office The companyiscalled“Dexia”. Name Additional Information www.ausbil.com.au Fax: +61292590222 Phone: +61292590200 Australia Sydney NSW2000 207 KentStreet Veritas House–Level23 Ltd Dexia Ausbil Fax: +35245905754 Phone: +35245903093 L-8070 Bertrange 23, ZABourmicht Services Technology Dexia Associated www.adinfo.be Fax: +3222222437 Phone: +3222228174 B-1000 Brussels Boulevard Pachéco44 Adinfo 1. countries, of: “The companyhastheobject,bothinBelgiumandother Article 3oftheArticlesAssociationreads asfollows: Corporate object EEA DATA GENERAL DEXIA INTHEWORLD theacquisition,holding,managementandsale,bywhatever www.denizbank.at Fax: +435051052029 Phone: +435051052020 A-1030 Wien Thomas-Klestil-Platz 1 Austria AG DenizBank www.corona.be Fax: +3222162398 Phone: +3278151415 B-1130 Brussels Avenue delaMétrologie 2 Corona Fax: +331587000 Phone: +3315877 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets CBX.IA 2 corporate objectorlikelytocontributesuchrealization.” real property, related directly orindirectly totherealization ofits acquisition, management,leasingandsaleofallmovable cial, industrial,commercial orciviltransactionsincludingthe form; sion ofloans,advances,guaranteesorsecurities,inwhatever holds adirect orindirect equityinterest, aswelltheprovi- and otherlegalentities,whatevertheirform,inwhichit behalf ofthird partiesandinparticularonbehalfofcompanies and financialservicesaccomplishmentofallresearch on 3. 2. ments ofwhatevernature; of shares, bonds,publicfundsandanyotherfinancialinstru- the dailypress andperiodicals. are publishedonthewebsiteandinfinancialnewspapers, ( thecompanyarenotices concerning publishedonitswebsite published intheAppendixto and resignations ofmemberstheBoard ofDirectors are pany’s registered office.Decisionsinrelation toappointments gium. Thesedocumentsmayalsobeobtainedfrom the com- financial statementsare lodgedwiththeNationalBank ofBel- well astheannualfinancialstatementsandconsolidated and atthecompany’s registered office.Theannualreports as the officeofClerktoCommercial Courtof Brussels The ArticlesofAssociationthecompanyare availableat documents Places where thepublicmayconsult www.dexia.com theconductingofallmovableproperty, real property, finan- theprovision ofassistanceoradministrative,commercial ). Theconvocationstoshareholders’ meetings www.dexia-am.com Fax: +33145633104 Phone: +33153934000 F-75408 ParisCedex08 40, rueWashington ManagementFrance Asset Dexia www.dexia-am.com Fax: +32222207 Phone: +3222225242 B-1000 Brussels Rue Royale180 ManagementBelgium Asset Dexia Phone: +35314406515 IRL-Dublin 2 George’s Dock6 Ltd Dublin Alternative Management Asset Dexia www.denizbank.com Fax: +902122747993 Phone: +902123550800 Turkey 34394 Esentepe/Istanbul Büyükdere Cad.No.106 AS DenizBank Belgian Gazette . Financial uebugSA Luxembourg Management Asset Dexia www.dexia-am.com Fax: +390231828384 Phone: +390231828361 I-20122 Milano Corso Italia1 Succursale italiana SA Luxembourg Management Asset Dexia www.dexia-am.com Fax: +34913609899 Phone: +34913609475 E-28006 Madrid Calle OrtegayGasset,26 Sucursal enEspaña SA Luxembourg Management Asset Dexia www.dexia-am.com Fax: +41227079099 Phone: +41227079000 CH-1207 Genève 2, ruedeJargonnant Succursale deGenève SA Luxembourg Management Asset Dexia www.dexia-am.com Fax: +48225206701 Phone: +48225286682 PL-00-121 Warszawa ul. Sienna,39 Polsce W Oddzial Akcyjna, Spólka SA Luxembourg Management Asset Dexia Phone: +97317566727 Kingdom ofBahrein Manama PO Box75766 King FaisalHighway West HarbourTower, Level23 Financial center Bahrain FinancialHarbourWest, Representative Office East Middle SA Luxembourg Management Asset Dexia Phone: +14169749055 Canada Toronto, Ontario Royal Trust Tower (32ndfloor) 77, KingStreet West Representative Office Canadian SA Luxembourg Management Asset Dexia www.dexia-am.com Fax: +3522542797-4940 Phone: +3522542797-1 L-1150 Luxembourg 136, route d’Arlon www.dexia-am.com Fax: +4684075701 Phone: +4684075780 SE-10393 Stockholm PO Box7573 Engelbrektsplan 2 Svenska Filial SA Luxembourg Management Asset Dexia www.axionweb.be www.dexia.be Fax: +32222240 Phone: +32222211 B-1000 Brussels Boulevard Pachéco44 Dexia BankBelgium Fax: +331587622 Phone: +331588406 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Dexia Bail www.dexia-am.com Fax: +31102045879 Phone: +31102045653 NL-3062 MERotterdam Lichtenauerlaan 102-120 Nederlands bijkantoor Management Asset Dexia www.dexia-am.com Fax: +43120511601008 Phone: +43120511601026 A-1010 Wien Ring5-7 Kärntner Opera Regus Vienna Zweigniederlassung Österreich SA Luxembourg Management Asset Dexia Fax: +496975937301 Phone: +496975938823 D-60422 Frankfurt An derWelle 4 Deutschland Zweigniederlassung SA Luxembourg Management Asset Dexia Fax: +442075562560 Phone: +442075563060 UK-London SE12GZ 4 BattleBridgeLane Shackleton House,Hay’s Galleria London Branch Dexia BankBelgium Fax: +35318291577 Phone: +35316455031 IRL-IFSC Dublin1 6 George’s Dock Dublin Branch Dexia BankBelgium www.dexia-bil.lu Fax: +35245902010 Phone: +35245901 L-2953 Luxembourg 69, route d’Esch Luxembourg à Dexia BanqueInternationale www.dexia.sk Fax: +421415624129 Phone: +421415111101,102 Slovakia 01011, Zilina Hodzova 11 Dexia bankaSlovensko www.dexiabank.nl Fax: +31205237560 Phone: +319003394222 NL-1000 AV Amsterdam Postbus 808 Piet Heinkade55 Dexia BankNederland www.dexia-bank.dk Fax: +4533324201 Phone: +4533461100 DK-1270 KøbenhavnK Grønningen 17 A/S Dexia BankDenmark Fax: +331587622 Phone: +331588406 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia–LaDéfense2 1, passerelle desReflets RégionsBail CLF Dexia Fax: +331588810 Phone: +331588802 F-92919 LaDéfenseCedex TSA 72200 Tour Dexia–LaDéfense2 1, passerelle desReflets CLFBanque Dexia www.dexia-bil.lu Fax: +6565360201 Phone: +6562227622 Singapore 048619 Republic Plaza Raffles Place#29-01 Singapore Branch Dexia BIL www.dexia-privatebank.ch Fax: +4112011471 Phone: +41128692 CH-8022 Zürich Postfach 2192 Beethovenstraße, 48 SA Suisse Dexia BanquePrivée Dexia Annual report 2008 243
COMPTES SOCIAUX COMPTES CONSOLIDÉS RAPPORT DE GESTION COMPTES SOCIAUX COMPTES CONSOLIDÉS RAPPORT DE GESTION 244 Dexia Annual report 2008 www.dexia-creditlocal.fr Fax: +331587000 Phone: +3315877 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Local Crédit Dexia www.dexia-crediop.it Fax: +390647715952 Phone: +390647711 I-00187 Roma VentiVia Settembre, 30 Crediop Dexia www.dexia-factors.be Fax: +3222826699 Phone: +3222826633 B-1210 Brussels Place Rogier11 Fax: +32512321 45 Phone: +3251232111 B-8800 Roeselare s ( #ONSCIENCESTRAAT Fax: +3281460555 Phone: +3281468211 B-5100 Wépion s #HAUSSÏE DE $INANT Operations B-1000 Brussels Boulevard Pachéco44 Headquarters Logement Crédits Dexia Fax: +81362684015 Phone: +81362684000 Japan Tokyo 100-0005 2-1-1 MarunouchiChiyoda-ku, Meiji SeimeiKan5F Tokyo Branch LocalBank Crédit Dexia www.dexia-americas.com Fax: +12127535522 Phone: +12125157000 USA New York, NY10022 445 ParkAvenue New York Branch Local Crédit Dexia Fax: +35316702705 Phone: +35316702700 IRL-IFSC Dublin1 6 George’s Dock Dublin Branch Local Crédit Dexia Fax: +15148681840 Phone: +15148681200 Canada H4Z1E3 CP 201,Montréal(Québec) 800 Square Bureau Victoria, 1620 Canada Branch Local Crédit Dexia ei Commercial Finance Dexia Fax: +331587622 Phone: +331588406 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Dexia Flobail Fax: +33140692858 Phone: +331406928 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Dexia Finance www.dexia-ep.com Fax: +33145263420 Phone: +331555015 F-75009 Paris 75, ruedelaVictoire Pension Épargne Dexia www.dexia-editions.com Fax :+331586820 Phone: +3315878 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Éditions Dexia Fax: +97237604557 Phone: +97237647600 Israel 61200 Tel Aviv PO Box709 19 Ha’arbahaStr. –HatihonBuilding IsraelBankLtd Dexia www.dexia-investments.ie Fax: +35318291577 Phone: +35316455000 IRL-IFSC Dublin1 6 George’s Dock Ireland Investments Dexia Fax: +3222853548 Phone: +3222227194 B-1000 Brussels Boulevard Pachéco44 Company Investment Dexia www.dvvlap.be Fax: +3222867699 Phone: +3222867611 B-1000 Brussels Avenue Livingstone6 InsuranceBelgium Dexia [email protected] Fax: +33236560001 Phone: +332365600 F- 45380ChapelleSt-Mesmin PB 30064 13, rueCroquechâtaigne Sociale Ingénierie Dexia Fax: +3222223713 Phone: +3222223836 B-1000 Brussels Avenue Livingstone6 Services Lease Dexia www.dexialease.be Fax: +3222223713 Phone: +3222223708 B-1000 Brussels Avenue Livingstone6 Operations B-1210 Brussels Place Rogier11 Headquarters LeaseBelgium Dexia Fax: +3524590-2164 Phone: +3524590-3639 L-1470 Luxembourg 69, route d’Esch LdGBanqueSA Dexia www.dexia.de Fax: +493025598-200 Phone: +493025598-0 D-10969 Berlin Charlottenstraße 82 AG Deutschland Dexia Kommunalbank Urugay 11300 Montevideo Torre II Piso20 Avenida LuisA.de Herrera 1248 World Trade Center SA PrivateFinancialServices Dexia www.dexia-privatebank.je Fax: +4415348311 Phone: +4415348300 St Helier, JerseyJE49NE 2-6, Church Street PO Box12 PrivateBankJerseyLtd Dexia Fax: +33170776625 Phone: +3315877 F-92919 LaDéfenseCedex TSA 92202 Tour Dexia-LaDéfense2 1, passerelle desReflets Agency Municipal Dexia www.dexia-lld.fr Fax: +33157696587 Phone: +331576955 F-92564 Rueil-MalmaisonCedex 22, ruedesDeuxGares Durée Longue Location Dexia www.dexia-life.com Fax: +3522625445480 Phone: +3522625441 L-1253 Luxembourg 2, rueNicolasBové Luxembourg Life&Pensions Dexia evcsSAM Services PrivateFinancial Dexia www.domiserve.com Fax: +331559225 Phone: +3381055 F-92320 Châtillon 6, rueAndréGide Domiserve www.dexia-sofaxis.com Fax: +332481011 Phone: +3324810 F-18100 Vasselay Route deCreton Sofaxis Dexia Fax: +33156285280 Phone: +33156285200 F-75116 Paris 112, avenueKléber SecuritiesFrance Dexia www.dexiasabadell.es Fax: +34917213320 Phone: +34917213310 E-28042 Madrid Campo delasNaciones Paseo delasDoceEstrellas 4 Sabadell Dexia www.dexia-cmbs.com Fax: +14253131005 Phone: +14253134600 USA Issaquah, WA 98027 1180 NWMapleStreet Suite202 Markets Capital Estate Real Dexia Fax: +352227347 Phone: +3522273431 L-1253 Luxembourg 2, rueNicolasBové Re Dexia Phone: +41227180120 CH-1207 Genève 2, ruedeJargonnant PublicFinanceSwitzerland Dexia www.uk-dexia.com Fax: +442073787188 Phone: +442073787757 UK-London SE12RB 4, BattleBridgeLane Shackleton House PublicFinanceBank Dexia MC-98000 Monaco 5bis, avenuePrincesseAlice Les Boulingrins www.elantis.be Fax: +3227372927 Phone: +32273212 B-1040 Brussels Boulevard Saint-Michel50 Operations Fax: +3242324501 Phone: +32423245 B-4000 Liège Rue desClarisses38 Headquarters andoperations Elantis www.experta.bs Fax: +12423250911 Phone: +12423250922 Bahamas PO BoxN-10697Nassau Bay Street Trade Building,4thFloor Winds Limited Company(Bahamas) Trust Experta www.experta.lu Fax: +3522692553366 Phone: +3522692551 L-1150 Luxembourg 283, route d’Arlon SA Services CorporateandTrust Experta www.experta.ch Fax: +41612851777 Phone: +416128517 CH-4002 Basel Steinengraben 22 AG Experta (Suisse) Fax: +352227347 Phone: +3522273431 L-1253 Luxembourg 2, rueNicolasBové Eurco SA Phone: +414334350 CH-8002 Zürich Beethovenstraße 49 AG Eurco Rück Fax: +35318290433 Phone: +35318515200 IRL-Dublin 1 6, George’s Dock Ltd Eurco Ltd/Eurco Re www.rbcdexia-is.com Fax: +3317037 8303 Phone: +33170378300 F-75002 Paris 105, rueRéaumur SA Hoche Services Management Funds www.experta.je Fax: +4415348355 Phone: +44153483 St Helier, JerseyJE48YL 2-6, Church Street PO Box300 ServicesJerseyLtd Trust Experta www.rbcdexia-is.com Fax: +35224609500 Phone: +35226051 L-4360 Esch-sur-Alzette 14, PortedeFrance SA Bank Services Investor Dexia RBC Phone: +61282625000 Australia Sydney, NSW2000 2 ParkStreet, Level17 Limited PTY Australia Services Investor Dexia RBC www.popularbancaprivada.com Fax: +34914189350 Phone: +34914189340 E-28006 Madrid José OrtegayGasset29 SA Popular BancaPrivada www.kdam.at Fax: +431316505 Phone: +4313160 A-1092 Wien Türkenstraße 9 AG Management Asset Dexia Kommunalkredit www.rbcdexia-is.com Phone: +35226056761 Grand CaymanKY1-1110 PO Box1586 24 SheddenRoad 4th Floor Royal BankHouse Ltd Cayman Services Investor Dexia RBC www.rbcdexia-is.com Fax: +3222225226 Phone: +3222220601 B-1210 Brussels Place Rogier11 SA Belgium Services Investor Dexia RBC www.rbcdexia-is.com Fax: +41444059752 Phone: +41444059700 CH-8066 Zürich P.O. Box101 Badenerstraße 567 Zürich Branch Esch-sur-Alzette ServicesBankSA Investor Dexia RBC www.rbcdexia-is.com Fax: +33170378303 Phone: +33170378300 F-75002 Paris 105, rueRéaumur SA France ServicesBank Investor Dexia RBC Dexia Annual report 2008 245
COMPTES SOCIAUX COMPTES CONSOLIDÉS RAPPORT DE GESTION COMPTES SOCIAUX COMPTES CONSOLIDÉS RAPPORT DE GESTION 246 Dexia Annual report 2008 www.rbcdexia-is.com Fax: +85228450390 Phone: +85229785656 Wanchai, HongKong 18 HarbourRoad 51/F, CentralPlaza Holding (HongKong)Limited RBC DexiaInvestorServices www.rbcdexia-is.es Fax: +349136099101 Phone: +34913609900 E-28010 Madrid elSanto20 Fernando www.rbcdexia-is.com Fax: +390233623230 Phone: +3902336231 I-20154 Milano Messina38 Via Italia S.p.A RBC DexiaInvestorServices www.rbcdexia-is.com Fax: +35316130401 Phone: +35316130400 IRL-Dublin 2 43 Towsend Street George’s QuayHouse Ireland Ltd RBC DexiaInvestorServices España SA RBC DexiaInvestorServices www.rbcdexia-is.com Phone: +14169556251 Canada Toronto, ONMW1P9 77 KingStreet West Royal Trust Tower, 35thFloor RBC DexiaInvestorServicesTrust www.rbcdexia-is.com Fax: +31203485009 Phone: +31203485005 NL-1019 GMAmsterdam Piet Heinkade55 Netherlands NV RBC DexiaInvestorServices Fax: +60386863500 Phone: +60386863888 Malaysia 63000 Cyberjaya Jalan Teknokrat 6 Prima Avenue, Block3508 (Malaysia) SDN.BHD RBC DexiaInvestorServices www.rbcdexia-is.com Fax: +442072360976 Phone: +442070022700 UK-London EC4V4AY Street77 QueenVictoria Limited RBC DexiaInvestorServices www.dexia-bil.lu Fax: +352227744 Phone: +3522277331 L-1460 Luxembourg 48, rued’Eich de LeasingBILLease Société Luxembourgeoise Fax: +35245904792 Phone: +35245903309 L-1145 Luxembourg 180, ruedesAubépines SISL Fax: +3222847476 Phone: +3222866327 B-1000 Brussels Avenue Livingstone6 Sepia www.rbcdexia-is.com Fax: +6568235118 Phone: +6568235000 Singapore 049705 #28-01 EquityPlaza 20 CecilStreet Singapore Limited RBC DexiaTrust Services
Dexia’s annual report 2008 has been published by the Financial Communication department of Dexia SA. This report is also available in Dutch and French. It just needs to be requested at the Dexia head office in Brussels or in Paris or via the company Website at www.dexia.com
Dexia SA Place Rogier 11 B-1210 Brussels IBAN BE61-0682-1136-2017 BIC GKCCBEBB RPM Brussels VAT BE 0458.548.296
In Paris 1, passerelle des Reflets Tour Dexia – La Défense 2 F-92919 La Défense Cedex
In Luxembourg 69, route d’Esch L-2953 Luxembourg
CONTACTS
Press department E-mail: [email protected] Phone Brussels: + 32 2 213 50 81 Phone Paris: + 33 1 58 58 59 05
Investor Relations E-mail: [email protected] Phone Brussels: + 32 2 213 57 46 Phone Paris: + 33 1 58 58 85 97
Website www.dexia.com
FINANCIAL CALENDAR Ordinary Shareholders’ Meeting for the 2008 financial year May 13, 2009 Results as of March 31, 2009 May 13, 2009 Results as of June 30, 2009 August 27, 2009 Results as of September 30, 2009 November 13, 2009 Results as of December 31, 2009 February 25, 2010 Ordinary Shareholders’ Meeting for the 2009 financial year May 12, 2010 Photographs: Marc Vanderslagmolen – Concept: édit&moi Lay-out: Nord Compo – 7, rue de Fives – BP 123 – F-59653 Villeneuve d’Ascq – Tel. + 33 3 20 41 40 01 – Printed by Imprimerie Massoz – Alleur – Belgium SDXI 0147-5 04-09