In 2005, CIC won more than 160,000 new individual,

Transcription

1 2005 Annual Report

2 President s Statement 3 In 2005, CIC won more than 160,000 new individual, self-employed professional and corporate clients. New loan business continued apace, with growth of more than 23%. Home loans were particularly buoyant, with figures up 32% year-on-year and CIC currently accounting for 6% of new mortgages in France, as against 3% in Consumer loans were also strong, rising 13%, and investment and capital asset loans to self-employed professional and corporate customers soared by upwards of 30%. The group saw the fruit of its reorganization initiatives: the expansion of the network was instrumental in enabling it to increase net income desite the sale of the risks on its structured products portfolio. The growth also bears out the group s enduring commitment to employee training and technological progress as means of providing customers with the best products and services to match their needs. The major projects implemented on the back of privatization are now in the completion stages and also showing results. The regional banks, organized into five regional divisions, achieved economies of scale and renewed growth thanks to their first full year s access to the group-wide IT system. Other projects have gone forward: the CIC brand is now established throughout the group and shared resources have been streamlined; over the past six years 1,940 branches (over half the network), have been renovated and some 286 new branches have been opened. The global and cross-sectional businesses have been restructured in a similar vein to the segment-specific subsidiaries. This is already the case for private banking and private equity and the other businesses are due to come on board in the course of These sea changes have been backed up by a substantial employee training program, which equips staff for value-enhanced positions in a constantly changing professional environment. CIC s success in developing activities upstream and downstream of retail banking activities can be seen in its strong foothold in the private equity market a direct result of the sound reputation it has built up in the corporate world. While further changes remain to be implemented, the group is already in good working order. Its financial strength has been confirmed by the rating agencies, with its long-term rating maintained by Standard and Poor s (A+ with a positive outlook) and Moody s (A1). Fitch has upgraded its rating to AA-. Strengthened by the advances that have been made, CIC and its majority shareholder, Crédit Mutuel Centre Est Europe, are now ready to move ahead with all initiatives that will ensure the achievement of its strategic targets. Michel Lucas President of the Executive Board

3 CONTENTS 5 CIC group profile 6 Key consolidated figures 7 REVIEW OF OPERATIONS 8 CIC group simplified organization chart 10 Retail banking 20 Financing and capital markets 26 Private banking 30 Private equity 32 Regional and international directory 35 CORPORATE GOVERNANCE 36 Management team 38 Report of the Chairman of the Supervisory Board on the preparation and organization of the Board s work 39 Executive Board and Supervisory Board members 45 SUSTAINABLE DEVELOPMENT 46 Ethics and compliance 46 Internal control 46 Report of the Chairman of the Supervisory Board on internal control procedures 50 Risk management 58 Human resources 59 Technological capabilities 61 Client relations 62 Shareholder relations 63 FINANCIAL INFORMATION 64 Consolidated financial statements 118 Financial statements of the bank (extracts) 133 LEGAL INFORMATION 134 Shareholders Meeting of May 11, Additional information 150 General information 152 Person responsible for the registration document (document de référence) and Statutory Auditors 153 Cross-reference table

4 CIC group profile 5 CIC, the group holding company and network bank serving the Paris region, comprises eight regional banks and specialist entities covering all areas of finance both in France and abroad and insurance. 3,627,922 clients, including: 2,985,849 individuals 500,845 self-employed professionals 138,468 corporates 23,265 employees 1,940 agencies in France 3 foreign branches and 37 foreign representation offices CIC has been part of Crédit Mutuel since 1998 and together they have become France s: Fourth-largest banking group Second-largest retail bank Leader in bancassurance Number two player in electronic payment systems Figures as at December 31, 2005

5 6 Key consolidated figures Net banking income 3,265 3,374 Operating income Net income Cost/income ratio 77% 71.7%

6 7 Review of operations 8 CIC group simplified organization chart 10 Retail banking 20 Financing and capital markets 26 Private banking 30 Private equity 32 Regional and international directory

7 8 REVIEW OF OPERATIONS

8 CIC GROUP SIMPLIFIED ORGANIZATION CHART 9 The CIC group is made up of: CIC (Crédit Industriel et Commercial), the holding company and head of the CIC group s bank network. It is also the network s bank serving the Paris region and houses the group s investment, financing and capital markets activities; eight regional banks, each of which services a clearly-defined region; specialist entities and service companies that serve the whole group. On December 31, 2005, CIC s ownership structure was as follows: - BFCM (Banque Fédérative du Crédit Mutuel): 70.81% and Ventadour Investissement: 22.06%, representing a total interest of 92.87% for Crédit Mutuel Centre Est Europe; - Caisse Centrale de Crédit Mutuel: 0.99%; - Crédit Mutuel Nord Europe: 0.87%; - Compagnie Financière de Crédit Mutuel: 0.75%; - Crédit Mutuel Maine-Anjou, Basse-Normandie: 0.69%; - Crédit Mutuel Océan: 0.69%; - Crédit Mutuel Centre: 0.57%; - Crédit Mutuel Loire-Atlantique Centre-Ouest: 0.35%; - Crédit Mutuel de Normandie: 0.07%; - Employees: 0.58%. The remaining 1.56% of shares are held by the public.

9 10 REVIEW OF OPERATIONS Retail banking Retail banking activities registered significant growth in 2005, and profits were up sharply. In France, demand for home loans gradually subsided over the year, while still remaining high. This relative decline was counterbalanced by rising demand for consumer loans and signs of an upturn in the financing needs of SMEs. Key figures Retail banking (in millions) Net banking income General operating expenses Operating income before provisions Provisions Income before tax Net income 2005 Change 2005/2004 2,685) + 3.0% (1,974) + 2.8% 711) + 3.5% (116) % 660) % 448) % In 2005, CIC passed a new milestone in terms of group-wide harmonization of pricing practices, which will facilitate sales efforts and the implementation of a nationwide multimedia plan. Retail banking operations were bolstered by continued expansion of the client base, particularly in personal banking (+5%), and by a new surge in home loans despite the slowdown in the market. CIC now accounts for about 6% of new home loans in France compared to 3% in Over this same period, the market grew by 172% (new loans excluding renegotiations). Other important developments were the increased take-up of risk insurance policies (new personal risk insurance was up 57%) and online banking; the success of Acti-trésorerie, the new automated cash management service for SMEs; and the strong demand in service contracts for individual customers (218,000 new Contrats Personnels signed), spurred by the popularity of the Starts Jeunes Actifs offering launched at the beginning of the summer. The significant increase in business linked to the growth in fees and a new drop in loss provisions resulted in an improvement in retail banking income. Network Network development 1,940 branches In 2005, 50 new branches were opened, bringing the total to 1,940. Through this ongoing extension of its local network, CIC continued to develop its capacity to serve retail customers, selfemployed professionals and businesses. 2,014 ATMs and 387 automatic deposit machines With the addition of 115 ATMs over the year, 2,014 units are now available to cardholders. New technological advances have been incorporated into the ATMs. These machines were originally limited to cash withdrawals alone but CIC clients can now use them for a variety of account management operations. In addition, non-banking services are now offered, such as reloading SFR prepaid telephone cards. In the same spirit of client service, ATMs in the Paris area can reload Navigo passes following an agreement signed with RATP, the Paris public transport agency. CIC also installed 387 automatic deposit machines which clients can use to deposit checks and cash without having to go to the bank counter. This is also possible with 40% of the CM-CIC ATMs. Source: 2005 consolidated financial statements: IFRS 2004: pro forma IFRS excluding IAS and IFRS 4

10 RETAIL BANKING 11 Filbanque connections soar Demand for online banking, offered through Filbanque Particuliers, Filbanque Professionnel and Filbanque Entreprises, surged, with more than 800,000 new subscribers (+17%) and nearly 63 million logins (+22%). On average, each subscriber made nearly 80 clicks per year to view account balances and carry out transactions. CIC continued to improve its tools by harmonizing configurations for transfers, tightening identification procedures, etc. Certain functions are now accessible on mobile phones through WAP and i-mode technologies. A new contract, Filibanque connexion, comprising all the management and pay-per-use functions, was launched to meet the needs of occasional users. Personal banking clients CIC won 145,000 new personal banking clients in 2005, bringing the total number of personal banking clients to 2,986,000 (+5%). This increase was attributable to: a vigorous client acquisition drive through real estate loans, savings products and property/casualty insurance; ongoing branch network expansion, with 50 new openings; a sustained focus on young people through the Starts Jeunes Actifs line geared to the market segment of the under-28 population entering working life, which won 30,000 subscribers. Growth in client deposits Demand deposits grew by 13% as a result of the policy of winning new clients and systematically offering bancassurance services. In addition, passbook savings accounts increased by 6.8% and the line of stepped-rate term deposits by 8.8%. Amounts in PEL home savings plan accounts stagnated, however, due to their reduced attractiveness as a result of regulatory changes. The rise in interest rates in the last quarter led to an appreciable increase in spreads. Managed savings Despite a strong performance in marketing guaranteed funds, FIP local investment funds and FCPI innovation funds, the total amount invested in CIC group mutual funds did not increase significantly. Life insurance sales, on the other hand, continued to grow, up 27.5% to 2.3 billion. HIGHLIGHTS: Number of clients: 3,627,922 (+5%) Demand deposits: 18,382 million (+8%) Property/casualty (comprehensive homeowner and automobile insurance policies): 478,582 (+34%) New home loans: 10,953 million (+32%)

11 12 REVIEW OF OPERATIONS Lending New home loans reached 8.9 billion, bringing total outstandings to 23 billion (+29%). A tool for running mortgage loan simulations and preparing applications was launched on the cic.fr website. In the sphere of consumer loans, the Crédits Maîtrisés advertising campaigns were coupled with a sales drive, helping to take total outstandings to 2.8 billion (+8%). Thanks to the increase in outstanding loans, net interest income rose, despite increasing competition, particularly in real estate loans. Service contracts Marketing efforts were particularly directed at new accounts or those with little activity. The result was the signing of 147,000 new Contrats Personnels - an increase of more than 50%. Online banking 97,000 additional clients took up the Filbanque particuliers service, bringing the total number of subscribers to 674,000. The number of logins increased by 22%, with a ten-fold increase in WAP use in two years. Property/casualty and personal risk insurance With 163,000 new automobile and homeowner insurance policies, the total number of policies in each category increased by 30% and 20% respectively. Personal risk insurance has found its place as a natural component of the offering, with 85,000 new policies written, taking the total number of policies in force to 344,000. Telephony At the end of 2005, the marketing of mobile telephony in partnership with NRJ Mobile met with considerable success, particularly among young people. Over two months, sales totaled 15,000. Commissions and charges The increase in client take-up, combined with the vigor of financial markets, resulted in a nearly 14% increase in commissions from services. Self-employed professionals In 2005, the CIC group continued to pursue a two-pronged strategy with, on the one hand, a global approach to this market, providing clients with one-stop business and personal services through a network of more than 1,500 dedicated relationship managers and a program of promotional activities; and, on the other, a segment-based approach separately targeting selfemployed professionals, retailers, tradespeople, micro-businesses and even specific professions. The year saw the winning of new clients through targeted or hightech offerings and the take-up of services by existing clients thanks to structured marketing programs integrating the group s business centers. Services and commissions Of particular note was the deployment of the Contrat Professionnel, a comprehensive package of products, services and flat-rate commissions that yielded more than 18,000 signed contracts and 17,705 new clients. Online banking continued to develop with the signing of 15,738 new multimedia contracts integrating business and personal account management and transactions. CIC maintained its lead in electronic payment systems by incorporating into its line an electronic payment terminal using DSL connections and a specific offering for the restaurant and catering sector. The number of active payment terminals rose 5.5% to 107,000 by the end of the year, with net commissions from this activity up 9.7% Lending Investment loans climbed 30% to over 1.8 billion. Lease financing picked up in 2005 with 330 million in new business, in particular through a range of vehicle financing products including Autoconfort Pro, a finance lease with a built-in maintenance contract developed by CM-CIC Bail. The self-employed professionals market accounted for 1.9 billion in new home loans, i.e., 18% of total new home loans for the CIC group. Insurance In 2005 personal risk insurance took off with nearly 12,000 new policies written. Savings inflows Thanks in particular to the Epargne Evolutive campaign, new funds invested in life insurance and endowment policies topped 340 million.

12 RETAIL BANKING 13 Segment-based marketing In 2005 an agreement was signed with CSOEC, the French accounting regulatory body, clearing the way for CIC s remote transmission of clients bank statements to their accountants via the Jedeclare.com portal. Several promotional initiatives from previous years were repeated, such as taking part in the national convention of certified public accountants, as well as that of dentists, to promote a lease finance offering. CIC also took part in the convention organized by the French national bar association, highlighting its strong relationships with CARPAs (treasury and accounting organizations for French lawyers) - of which nearly one in three is a client of the group. Measures to increase penetration in the micro-business segment were also maintained. An offering aimed at business start-ups, CreaCIC, was launched along with the revamping of the Entrepreneur s Guide. For associations, 2005 saw the rollout of a dedicated offering and the establishment of further national partnerships. The agreement with private Catholic schools and Catholic education governing bodies was renewed and extended. An agreement was signed with UNEP, the French association of landscaping professionals, in conjunction with an employee savings plan agreement signed by CIC Epargne Salariale. Last but not least, marketing efforts targeting farmers were continued, with a dedicated product range and specialist sales force, that were represented for the first time at the agricultural equipment fair. Corporates The sales organization is closely attuned to companies needs. In each region, corporate clients benefit from all the skills and resources of the group s national and international business centers. In addition to the services of a dedicated relationship manager, they have access to experts in lease financing, cash management, international development, factoring, employment and retirement savings plans, and financial engineering. Winning new clients At the end of 2005, the corporate client base totaled 138,468, a 1.9% increase year on year. The bank s approach to business development focuses on qualified companies with growth potential, as demonstrated by its relationships with 30% of all A-rated French companies. Corporate treasury management Deposits rose 5.1% overall. Demand for the automated cash management tool CIC Actitrésorerie, which tracks companies surplus balances on a dayto-day basis, has increased sharply since 2004, with a 60% rise in the number of contracts in force compared to end-2003, while over the same period demand deposits grew 2%. The stepped-rate term deposit account is very popular with companies that are looking to earn a guaranteed and increasing return on sustained cash surpluses. Total amounts deposited in such accounts rose 62% in 2005.

13 14 REVIEW OF OPERATIONS Lending Total outstanding loans rose 7% (+ 1,350 million). As part of the process of providing a comprehensive solution to companies need for financing throughout their operating cycle, Factocic, the group s specialized factoring subsidiary, has developed a range of innovative and high-performance tools that include imaged promissory notes, flash transfers and e-médiat transactions. As for investment financing, 3.9 billion (+33%) in capital asset loans were granted. New equipment lease financing amounted to 1 billion. In 2005, the corporates segment made a significantly larger contribution to the real estate lease financing activity of the CM-CIC Lease specialized business center, registering 19 transactions totaling 32.8 million compared to 18 transactions totaling 20.6 million (+59%). Cash management A variety of developments were introduced to meet clients needs for streamlining and simplifying cash management operations, while optimizing processing security. The CIC Cash offering was enhanced through the implementation of a single operating process for all banks and countries. New features that facilitate reporting and the transmission of cash management orders were incorporated into Filibanque Entreprises, CIC s online banking service. This enhancement also made it possible to exchange files through the website without having to install or use bank interchange software, which greatly contributed to the 6.8% increase in client subscribers, to 46,000. Card-based security solutions were also made available to clients for their online transactions, such as a personal keys card and a banking authentication card. Additional security features were added to the Vcom product (closed list management in particular) and it is now operational for euro transactions in Europe. In order to facilitate online payment, especially following the lowering of the sales threshold beyond which companies are required to file VAT returns online, an additional agreement was entered into with a second certification authority. The number of payment cards held by client companies rose 17% to reach 47,300. Employee savings plans and pension solutions A holistic approach to employee savings and pension benefits was implemented through the launch of the unique bilan salarial offering, developed with CIC Epargne Salariale and Assurances du Crédit Mutuel (ACM). CIC Epargne Salariale established 408 new relationships representing 36 million in new funds and ACM-CIC Assurances wrote 462 new statutory retirement bonus policies, which brought in 11 million in new funds. International operations Fifty-three per cent of CIC client companies do business abroad. Aidexport, the group s specialized subsidiary, offers services to assist companies with international development. The company has attracted extensive media attention, with favorable coverage that underscored CIC s commitment to supporting its clients in foreign markets.

14 RETAIL BANKING 15 Support services Insurance All CIC Assurances activities life insurance, personal insurance and property/casualty insurance grew in 2005, generating 188 million in commissions paid to CIC group banks. Life insurance Life premium income climbed 27.5% to 2,309 million, of which 53% was from non-unit-linked policies. In response to client demand, the line comprises two major products the non-unit-linked Livret Assurance Retraite policy and the unit-linked Plan Assur Horizons policy. The offering is rounded out by the PERP Plan Retraite Revenus pension savings vehicle and the Capital Croissance endowment policy. The highnet-worth client segment was offered a unit-linked product called Plan Patrimonio. An intensive drive to market pension solutions to self-employed professionals involved offering both the Plan Assur Horizons policy (which lies outside the scope of the Madelin Act), and its new version, Plan Assur Horizons Pro, which meets Madelin Act conditions. Personal insurance offerings The personal risk insurance product range was overhauled to make it more client-friendly. From bank account protection for the youngest clients to specific products for senior citizens, a full range of solutions is offered. The Plans Prévoyance policy, for example, can guarantee payment, depending on the client s needs, of a lump sum in case of death or total disability, daily benefits in case of unfitness for work and a pension in case of disability. Another new feature is a rente éducation educational annuity policy that can be taken out separately or to top up Plans Prévoyance guarantees. Personal risk insurance activity grew sharply in 2005, with over 85,000 new policies (up 53% compared to 2004) bringing the total number of policies in force to 344,400. In parallel, Sécurépargne strengthened the offer in banking risk insurance. This basic product offers a performance guarantee for most types of accrual savings vehicles, such as PEL home savings plans, PEA personal equity plans or life insurance. Three policies Santé CIC, Santé Senior and Santé Parcours J comprise the supplementary health insurance range. These products include high-quality customer service through their helpful call centers: TelSanté provides information on insurance coverage and benefits; TelSanté Conseils advises clients on their dental and eye care prescriptions, and provides contact information for a network of partner service providers offering preferential rates to CIC policyholders. Since 2005, policyholders using the Avance Santé payment card for healthcare expenses can avoid paying out of pocket for medication or doctor and dentist visits.

15 16 REVIEW OF OPERATIONS Property/casualty offerings More than 163,000 new automobile and home insurance policies were written, bringing the total number of policies in force to 440,600. A complete marketing package was rolled out to support the network during the busy autumn insurance period. For two months, in addition to posters, mail shots and other standard media, a video raising awareness of the offering was posted on the website. CIC Assurances also sponsored the weather report, and call center employees phoned clients to remind them to renew their coverage. Two new options rounded out automobile insurance coverage - Automobile Club and Assistance Tracking. Targeting high-end vehicles, Assistance Tracking provides a system for locating the vehicle in the event of theft as well as specific assistance services. These guarantees will be maintained in the new policy to be launched in spring 2006 at the same time as a new home insurance policy. Investment funds In 2005 CM-CIC AM won recognition as one of the major French asset managers. The new company, the result of the merger of Crédit Mutuel Finance and CIC Asset Management, boasts a team of 183 including 60 managers and management assistants. It ranks sixth by managed assets, with 49,149 million invested in nearly 850 funds. These assets include 3,637 million in employee savings funds and 7,603 million in mutual funds for which bookkeeping has been subcontracted to CM-CIC AM. The 44,792 million in public and dedicated mutual funds are split between the following fund categories: equity and diversified funds: 7,283 million; guaranteed funds: 2,292 million; money market funds: 30,023 million; bond funds: 2,391 million; dedicated funds: 2,803 million. As in 2004, net new money taken in excluding employee savings plans mainly went into money market funds (nearly 1,500 million) and structured funds ( 300 million). Despite the recovery in stock market indexes, the public s lack of interest in traditional equity mutual funds persisted. CM-CIC AM accordingly focused its efforts on products that come to grips with savers low appetite for risk: guaranteed funds indexed to stock exchanges (CIC Optimum Monde); these straightforward products that varied little from one campaign to the next were regularly promoted without excluding market conditions permitting more opportunistic and sophisticated products such as CIC Tonus avril 2011 intended for more knowledgeable clients; this expanded offering served to recycle structured funds that had come to maturity and build market share in this asset class; for high-net-worth individuals, the absolute performance fund Union Réactif Valorisation, which doubled its assets thanks in part to highly respectable results; its features (4%-6% annual return regardless of market conditions, controlled volatility) clearly provided many investors with the risk/return combination they were seeking. To win back savers who had come in for rough treatment during previous stock market bubbles, a new line of funds, Stratigestion (dynamic, balanced, moderate) was rolled out. These profiled funds are intended to provide clients with services tailored to their needs, including the detailed reporting they expect. In 2005, the CM-CIC AM teams once again received market recognition by winning for the third straight year the Lauriers d or FCP award from Investir magazine for top-quality investment funds and by the excellent ranking in the Edhec Alpha League, thus confirming CM-CIC AM s ability to generate steady and significant added value through its management activity.

16 RETAIL BANKING 17 Employee savings management After the migration in 2004 to a new accounting software system, a second major improvement was launched in 2005: electronic document management. This innovation optimizes processing procedures with greater speed and security while increasing the reliability of transactions. For the time being, it is used in notifications of fund allocation options and should be extended to withdrawals in The imaging of documents naturally meets the Afnor Z standard which certifies that the digital document corresponds to the original. Marketing efforts met with success as witnessed by the 51 million in new money and 2,620 new client companies such as Sylis, Rexel, UNEP, Heppner and Nature et Découverte. This sales growth will be reinforced through the interfacing of employee savings management tools with the IT systems of the regional banks. Data and performance analysis tools will thus be fully integrated into employee savings management, strengthening branch teams knowledge of savings products and their ability to sell them. The PEE savings plan kit and the PERCOI intercorporate collective pension savings plan kit (launched in September 2004) have already benefited from these advances; the kit for SMEs should also be positively impacted in These three kits were awarded Dossiers de l épargne magazine s Label of Excellence for the quality of information provided to clients as well as for their competitiveness. The year also brought with it the bilan salarial tool which is exclusive to CIC Epargne Salariale and highlights the potential payroll tax savings. The company can thus clearly and immediately see the effects of proposed solutions as part of a medium- to long-term remuneration policy. In 2005, the Breton Act, which aims to promote and clarify certain employee savings provisions, extended the benefits of employee profit-sharing to company owners and their spouses. Measures to promote employee stock ownership plans in non-listed companies have also been adopted. Factoring In a high-growth market, Factocic reached a volume of 6.9 billion in receivables purchased in 2005, up 10.4% compared to With an 11% rise in the number of active clients, Factocic now works with over one in ten companies using factoring services. The factoring offering for international transactions both import and export was bolstered and met with clear success, as evidenced by the 63% expansion in Factexport s business volumes. The Orféo product, which provides tailored receivables financing and management solutions to medium- and largesized companies, also saw sharp 28% volume growth. Factocic has established itself as a strategic center of expertise for CIC and offers the group s corporate and self-employed professional clients a complete range of factoring solutions. The sales push, coupled with the expansion of Crédit Mutuel Factor s business with the Crédit Mutuel networks, delivered 1.85 billion in revenues from new contracts during The year also saw the operational rollout of highly competitive products for the imaging of invoices and payments and the enhancement of the Internet service offering. Satisfaction surveys carried out with clients and business referral partners confirmed that service quality is deemed to be very high. Despite pressure on margins, the factoring business generated operating revenues of 58 million in Net income rose 3.3% to 14.1 million.

17 18 REVIEW OF OPERATIONS Receivables purchasing CM-CIC Laviolette Financement, the group s specialized center of expertise for purchasing of assigned business receivables, continued its expansion in 2005 and passed the symbolic 1 billion mark in sales processed. In addition, four new partnerships were begun with CIC Banque CIO, the Fédérations du Crédit Mutuel Centre-Est Europe and Savoie-Mont Blanc and Banque Commerciale du Marché Nord Europe. The year s achievements are reflected in: a 12% increase in assignments, with the processing of 208,000 invoices representing inflows of 1,051 million; a 15% increase in banking income before payments to the regional banks, to 16.2 million; 8% growth in overall profitability to 8 million before payment of fees to partner banks; a 27 % rise in fees paid to partner banks to 6.6 million, i.e., 82% of overall profitability. Net income was 0.9 million compared to 0.6 million in 2004.

18 RETAIL BANKING 19 Real estate financing CM-CIC real estate interests Working with real estate developers through the acquisition of interests in SCI (non-trading real estate company) consortia for the financing of residential real estate, in 2005 CM-CIC Soparim invested 4.3 million in 19 new projects (roughly 1,150 housing units), with a market value for the SCIs of 213 million. Net income was 1.6 million. CM-CIC realty CM-CIC Afedim, which is licensed to do business as a realtor under the Hoguet Act, sells new residential properties on behalf of the Crédit Mutuel and CIC networks. Its primary targets are investors who are clients of the regional banks, but it also sells to first-time buyers. The programs put on the market are approved in advance by a committee composed of representatives of the banks lending, asset management and sales teams. In 2005, 3,070 homes were sold, representing a total of 483 million and generating 20 million in fees before taxes. CM-CIC Lease For the third year in a row, total new real estate lease financing in France exceeded 4 billion, with a total of 4.6 billion in officially recorded contracts. CM-CIC Lease is one of the five largest players in the sector and handles transactions averaging 1.5 million. In 2005, its business volume grew 10% to reach 344 million in new real estate lease financing ( 328 million in signed contracts). During the year, CM-CIC Lease fully integrated into its management platform all of the contracts resulting from the mergers at the end of 2004 (Lorbail, Solybail, Sofebail and CIAL Finance). The volume of outstanding real estate lease financing doubled in less than a year and overheads were reduced. In November, the migration to a single IT platform for the CM-CIC group enabled the company to act fully as the group s specialist real estate financing arm and greatly facilitated daily management of the contracts. The composition of the leasing portfolio is quite stable, consisting of 55% industrial premises and warehouses, 23% retail premises, 12% offices and 10% miscellaneous properties. Shareholders equity stands at 84.8 million. Equipment leasing After two years marked by far-reaching changes IT migrations to bring the management of all operations onto the same software and the merger of the group s various lease financing structures 2005 was devoted to consolidating and organizing CM-CIC Bail, as well as developing new tools, improving productivity and embarking on the strategies provided for in the medium-term plan. Due to increasing demand, two new staff members were taken on to strengthen the team in charge of equipment manufacturer relations. In addition, to support marketing efforts, experts in leasing techniques now work with the sales team in putting together complex deals, and they also contribute to the creation of new tools and test and put in place new offerings and new distribution channels. Bail marine, a new boat financing offering which is managed and distributed from the Nantes office, was made available to the networks. It was promoted during nautical shows in La Rochellle and Paris. CM-CIC Bail won 41,000 new leasing contracts amounting to 1.7 billion, a 16% increase in a market that grew 7.6% (over the 12-month period ending September 30). The fleet of vehicles managed in connection with Auto confort increased by 50% and an additional staff member was taken on to handle the extra work. Thanks to the increase in new leasing and productivity gains, a total of 30 million was paid out to the business referral networks. Lastly, CM-CIC Bail received approval to market its services in Luxembourg and has applied for authorization in Belgium.

19 20 REVIEW OF OPERATIONS Large corporates and institutional investors Financing and capital markets One of the main events of 2005 was CIC s sale of risks on its structured equities portfolio (see page 21). At the same time, CIC remained focused on pursuing a strategy of sector diversification and selectivity, particularly with regard to large risks, and support for its clients international operations. Key figures Financing and capital markets (in millions) Net banking income General operating expenses Operating income/(loss) before provisions Provisions Income/(loss) before tax Net income/(loss) 2005 Change 2005/ ) n.m. (273) n.m. (256) n.m. 24) n.m. (232) n.m. (148) n.m. In 2005, lackluster business conditions led many companies to rebuild their cash position and limit their use of credit. Total CIC commitments to large corporates and institutional investors averaged 16 billion over the year, including 3.7 billion in balance sheet loans (down slightly from 2004) and 12.3 billion in off balance sheet commitments in the form of undrawn credit lines, guarantees and other signature commitments (up slightly from 2004). These commitments tended to increase towards the end of the year, reaching 16.7 billion in December, including 4.2 billion in balance sheet loans and 12.5 billion in off balance sheet commitments, providing a tangible sign of a slight upturn in overall economic conditions. Commitments remained spread across a wide range of sectors, as shown by the breakdown at December 31, 2005: construction/ services to local government: 14.2%; transport/construction materials: 10.1%; retail/apparel: 9.3%; automobile/auto parts: 8.9%; IT/mechanical engineering: 7.2%; institutional: 6.5%; aerospace: 6%; energy/engineering: 5.6%; luxury goods/healthcare: 4.6%; steel/chemical: 4.4%; media: 4.2%; telecommunications: 3.6%; hotel management/tourism: 2.6%; other: 12.8%. Selectivity remained CIC s watchword, making counterparty quality a central concern. All borrowers are given an internal credit rating between A+ and E. At December 31, 2005, counterparties rated from A+ to C- accounted for 90.5% of total commitments (A+: 2.5%; A-: 8.5%; B+: 28%; B-: 21.6%; C+: 12%; C-: 17.9%). This approach made it possible to further reduce the amount of provisions booked in 2005 compared to the previous year. New provisions were below reversals, yielding a net balance of 8 million. Provisions on commitments to large corporates and institutional investors had already been reduced to 0.1% of commitments in Because of the vast amounts of liquidity available in the various markets, pressure on margins remained high, and in some cases increased. As a result, net banking income (excluding crossselling) declined to million from million in 2004 and operating income before provisions decreased to 82 million from 97.3 million. The bank bolstered its presence in corporate loan syndications, participating in 77 major deals during the year (up from 68 in 2004 and 39 in 2003), as a mandated lead arranger in 18 of those cases. The dedicated technical and sales team of the cash management services business worked on 26 large-scale calls for tender and won seven of its bids. Two CMS products, Vcom and swiftnet, were set up as part of partnership agreements with clients. A number of prestigious French and non-french groups were added to the high-quality client roster in 2005, further contributing to its richness and diversity, including AEM spa, KLM, Whirlpool, Böhler Uddeholm, Voith, RAG, Trader Classified Media, neuf cegetel, EDF-Energies Nouvelles, Fondation Foch and Hôpital Foch, Magenta Participation, Sofiproteol and La Chaîne Française d Information Internationale. Source: 2005 consolidated financial statements: IFRS 2004: pro forma IFRS excluding IAS and IFRS 4

20 FINANCING AND CAPITAL MARKETS 21 Capital markets There two main developments in 2005 for capital markets operations: a large-scale restructuring of trading room operations and processes, including the sale of risks related to the structured equity derivatives portfolio, which resulted in the posting of an after-tax loss of 320 million for the full year; setting up a single trading room for the Crédit Mutuel Centre- Est Europe - CIC group, by bringing together into a single operating department the trading room teams of CIC, CIC Banque CIAL and BFCM. The new entity, called CM-CIC Marchés, will serve both as a vehicle for group refinancing of its own business development and as a trading room serving the various client segments, including large corporates, other companies, local governments, as well as private banking and institutional clients interested in the innovative capital markets products developed by CIC proprietary trading teams. Business development The trading room markets its products to French and European clients through a 70-strong sales force. The domestic sales teams are based in Paris and in regional centers, while European sales are conducted from Frankfurt and London as well as Paris. Networks In close cooperation with relationship managers at the group s regional banks, the sales platforms of Paris, Lyon, Lille, Strasbourg, Nancy, Bordeaux and Nantes market interest-rate and forex hedging products as well as investment offerings. Large corporates The trading room plays a leading role in intermediation for domestic and European money market securities. The sales team for Europe was particularly active in 2005 in supporting group corporate banking teams working with German, Swiss and Scandinavian clients. Bond origination On the primary market, CM-CIC Origination, the group business in charge of bond origination and syndication for CMCEE-CIC, developed advisory services and responded to calls for tender from large corporates, branches, local government bodies and financial institutions. The group was involved in about fifteen major transactions on senior and junior debt. CM-CIC Origination was on two occasions appointed joint lead manager by Caisse de Refinancement de l Habitat (AAA/AAA), and was named senior co-lead manager for the Tier II issue of Crédit Logement (AA2/ AA) the French leader in mortgage loan guarantees and was also co-lead for a government-guaranteed issue by Unedic, the French unemployment insurance agency, in addition to handling the debt issues of several major corporate clients among them Bouygues, LVMH, Cap Gemini, Daimler, Alstom and Valeo. Refinancing CIC treasury teams are now fully integrated with BFCM staff within the refinancing business, which handles funding for the entire CMCEE-CIC group. The Treasury department continued to diversify its sources of financing, both by market and by type of investor. Proprietary trading Proprietary operations were thoroughly revamped in 2005 to harmonize operating procedures between CIC Banque CIAL and CIC trading teams, the aim being to implement an effective strategy, within a strict risk control framework, using the best available knowhow and making it serve the needs of group clients. Traders have been divided into the ten specific areas of index arbitrage, event-driven trading, long-short equities, hybrid arbitrage, fixed-income arbitrage, credit arbitrage, asset-backed securities arbitrage, correlation arbitrage, global macro and short-term trends, and proprietary distribution. Performance and risks are carefully monitored for each area. The proprietary distribution business aims to develop, throughout the CMCEE-CIC group, a range of alternative and structured investment products, as CIC Banque CIAL did over the past few years with its Libre Arbitre range. It is worth noting that, with the exception of the structured equity products portfolio, on which all associated risks were sold during the year, the business posted good results in 2005 and that this bodes well for the future of the new organization currently being established. Net banking income for the year ended December 31, 2005 from operations other than structured equities was 211 million. The overall net banking result for capital market operations over the period was a net loss of 273 million, down from net banking income of 126 million for the year ended December 31, The 2005 net loss was due to the one-time charge of 484 million recognized in the financial statements for the six months ended June 30, 2005, corresponding to the sale of all risks related to the structured equities portfolio. The structured products business had recorded a net banking loss of 156 million for the year ended December 31, 2004 (see management report, p. 67).

21 22 REVIEW OF OPERATIONS Brokerage Acting as a broker-dealer, clearing agent and custodian, CM-CIC Securities meets all the needs of institutional investors, private asset management companies and issuers. Its net banking income for the year ended December 31, 2005 was 66.1 million and its income before tax came to 3.6 million. As a member of ESN LLP, a multi-local network of 11 brokers operating in European equity markets (Germany, Netherlands, Belgium, United Kingdom, Ireland, Italy, Spain, Finland, Portugal, Greece and France), CM-CIC Securities is able to trade on the German, Dutch, Italian and Spanish cash markets from its Paris dealing room. Organized into 29 sectors and covering 800 European companies, the research team comprises 130 analysts and strategists, 25 of whom are based in Paris. The equity sales force consists of 137 salespeople, including 49 in Paris and four in New York (employed by ESN North America Inc, a 65% subsidiary of CM-CIC Securities). The Paris sales force is split into three teams: European large caps, European mid-caps and generalist. Development of value research and SRI (socially responsible investment) continued during the year, leading CM-CIC Securities to obtain the label of Mid-cap Specialist, recently created by Euronext. CM-CIC Securities is a non-clearing member of Euronext Liffe SA, a direct clearing member of Eurex and a broker-dealer and clearing member of Monep SA. Its index and equity derivatives sales team is composed of nine persons. In traditional and convertible bonds, the marketing team comprises eight salespeople and dealers. CM-CIC Securities organizes over 250 events a year, including company presentations, roadshows and seminars in France and abroad. The most widely attended are: Perspective, at which the research team presents its selection of the best investment ideas for the coming year; La Bourse rencontre l informatique, which focuses on IT and software companies; European Small & Mid Cap in London, bringing together twice a year ESN s selection of 40 quality mid-cap companies from 11 European countries. CM-CIC Securities also promotes the Horizon Stratégie, Horizon Value, Horizon Ethique and Horizon Emetteur discussion fora, at which experts debate issues of topical interest. As custodian, CM-CIC Securities serves 80 asset management companies, including six new mandates won in It administers approximately 40,000 personal investor accounts and 155 mutual funds. In 2005, CM-CIC Securities finalized its structuring of CM-CIC Emetteur, a dedicated unit for listed clients and companies contemplating IPOs, that offers a fully integrated range of services that includes financial administration services, securities middle-office services, primary market transactions (IPO and subsequent), liquidity contracts and financial communications. Financial transactions The CM-CIC group enhanced its competitiveness and performance in the field of financial transactions by leveraging synergies among its various entities specialized in equity financing (CIC Banque de Vizille, CIC Finance, IPO) and brokerage (CM-CIC Securities) and adding to the strength of its branch network. CM-CIC was instrumental in the successful privatizations of Sanef, GDF and EDF as co-lead manager for placement to individual investors, thanks to strong support from the branch network and, through CM-CIC Securities, as co-manager for placement to institutional investors throughout Europe using the multi-local ESN network. CM-CIC Securities was also a listing sponsor for Sidetrade on Alternext, making a private placement that was one of the very first IPOs for this new segment of the French market. In addition, CM-CIC Securities carried out Capelli s transfer onto Eurolist and launched Atland s takeover bid for Tanneries de France.

22 FINANCING AND CAPITAL MARKETS 23 Among the other major transactions of the year, CM-CIC Securities was co-manager for Latécoère s stock issue (carried out with CIC Société Bordelaise) and the IPO of Nextradiotv (with CIC Ile-de-France), and was in charge of the placement of stock issues for Naturex and GL Events as well as of the IPO of Akka Technologies (all three operations were managed jointly with CIC Banque de Vizille). Specialized financing In 2005, outstanding loans remained on par with the prior year, despite numerous early repayments, as decreases in mainland France were offset by expansion in foreign branches. Revenue growth also remained on the same track as in 2004, thanks to stable overheads. No new provisions for doubtful loans needed to be booked, and a number of existing provisions were reversed, bringing total provisions at December 31, 2005 down to 5.4 million. Income before tax amounted to 34.7 million, compared with 31.2 million in Acquisition financing Business volume and performance continued to rise, buoyed by growth in buyouts involving investment funds as well as industrial and family-owned groups. Operating income before provisions was stable, and income before tax climbed to 21.4 million in 2005 from 17 million in Provisions remained under control. The market has become more complex due to the increasing number of banks involved in this segment and to the role of specialized funds that now take up a substantial share of senior debt issues. The subsidiary specialized in mezzanine financing for SMEs enjoyed brisk business and had its first repayments of loans on which it netted significant gains. In addition, the regional banks were heavily involved in acquisitionsrelated bond issues. The acquisition financing unit, which provides a uniform offering to CM-CIC clients throughout France, acted as lead arranger or co-lead arranger for some 50 deals in this area in Asset financing In 2005, CIC confirmed that is a major player in shipping finance deals, winning several arranger mandates with French ship owners. CIC was also the co-arranger in a highly innovative scheme to finance a shipping fleet through securitization. Business remained strong in aircraft financing, particularly for the New York branch. The new dedicated asset financing office at the Singapore branch handled both ship and aircraft financing in Income before tax was 5 million in 2005, compared with 6.8 million in Project financing The project financing business enjoyed a satisfactory year overall, as new deals outpaced early repayments. Its operations are now clearly segmented by region, with surging business in continental Europe Germany included, firm results in the Middle East and Asia, but little new investment in North America. In Europe, the project management team, which now acts as both arranger and underwriter, won several mandates in the wind power sector. In the area of infrastructure, the project finance team works with large corporate clients and the regional banks on calls for tender related to outsourced public services and public/private partnerships (PPP). A meeting on PPP financing was organized among staff from the various networks, with the aim of bolstering the group s capabilities in this domestic market. A similar meeting will soon be held on renewable energy projects. Average new provisions remained low, at 1.6 million, and a substantial amount of provisions in the cable television and power industries were reversed. Income before tax amounted to 8.2 million, up from 7.6 million in 2004.

23 24 REVIEW OF OPERATIONS The group s logistics and branch network were reorganized with a view to marketing these services more effectively: transactions are processed by a single business unit composed of five regional centers that, alongside the corporate banking branches, provide specialized services close to home; the group strengthened its international network by opening a representation office in Romania; the group is better able to support its clients abroad as a result of strategic partnerships established in China with the Bank of East Asia, in North Africa with Banque Marocaine du Commerce Extérieur and Banque de Tunisie, and in Italy with Banca Popolare di Milano. International operations The main focus of CIC s international strategy in 2005 remained to support clients in their international development, with diverse offerings that the group is constantly tailoring to companies changing needs. Through CIC Développement International, CIC provides a wide variety of cutting-edge services to assist SMEs aiming to expand outside the domestic market, such as conducting market surveys, organizing visits to target countries to test local reactions to clients products and services, or sounding out potential local partners and the viability of greenfield operations. These services are delivered with the backing of the group s specialist international consulting subsidiary Aidexport, and of the group s foreign branches and representation offices. They are promoted on an ongoing basis by the branch network and at special events such as one-day seminars and country-specific discussion fora. CIC provides its investment clients with a research service that analyzes the credit risk of major French and international bond issuers and the main sectors of the European and global economies. In the area of import and export financing, documentary credit and guarantees, continued improvement in country risks and the soaring oil revenues of many emerging countries caused demand for bank loans to shrink and the number of early repayments to rise. A significant rise in demand was nonetheless observed in Asia, Eastern and Southern Europe, the Persian Gulf states and Iran. CIC s offerings have been tailored to this geographical shift in the global development of French firms. Having finalized agreements with partner banks, CIC rounded out its offerings in the area of international transaction processing, particularly cash management, opening accounts and obtaining financing abroad. CIC also makes available a varied mix of services to its clientele of French and foreign banks. International branches and representation offices spanning the globe London In a market awash with liquidity, the demand for financing of acquisitions and corporate development remained strong. Major transactions were completed with the UK-based subsidiaries of large corporate clients of CIC and relationships with British companies investing in France were strengthened. SME clients aiming to gain a foothold in the British market were able to rely on the support of the London branch through the CIC Développement International offer. The branch policy of strict risk selection and management helped drive solid financial performance. Provisions booked in 2005 amounted to 6.1 million, compared with 4 million in The branch coped effectively with difficult conditions in capital markets and the group was able to raise large amounts of capital on the London market. Net income generated by the branch in 2005 came to 7.5 million. New York Although market conditions were challenging in many respects, US economic growth did provide impetus to most of the business lines represented at the New York branch. Business volume remained high in the areas of specialized and corporate financing. The branch continues to boast a high-quality portfolio as a result of its cautious approach to risk selection and management. In the area of cash management, the branch managed its portfolios carefully and diversified its operations. Income before tax amounted to 36.8 million, compared with 43 million in 2005.

24 FINANCING AND CAPITAL MARKETS 25 Singapore and Hong Kong Growth in the Asia-Pacific region strengthened over the year and sovereign risks eased accordingly. The Singapore branch benefited from the improved conditions, buoyed by a prudent development strategy prioritizing countries with favorable risk profiles and better opportunities: Singapore, Australia, Taiwan and South Korea. In investment banking and specialized financing, outstanding loans continued to grow with a satisfactory profitability, despite sharp pressure on margins and a high level of early repayments. Capital markets operations were broadened in response to the needs of private, corporate and institutional clients. Newly reinforced private banking sales teams now market their operations under the CIC Banque Privée banner. In addition, the Singapore office of Banque Transatlantique offers a full range of banking products and services to its client base of French expatriates. Net income totaled 5.3 million.

25 26 REVIEW OF OPERATIONS For the new CIC Banque Privée business set up in 2004, 2005 was the first full year of operation. Its results exceeded objectives, in terms of new clients, new money invested by clients and earnings from investments. Private banking operations outside France continued to develop, through Banque de Luxembourg, CIC Banque CIAL Suisse, CIC Private Banking-Banque Pasche (Geneva) and the CIC branch in Singapore. Development potential is especially strong in Asia. The launch of BT Belgium, a dedicated wealth management subsidiary, further extended the group s international presence. The private banking business draws on: Private banking Sérénis Vie life insurance polices tailored to the needs of high-net-worth clients, and, where necessary, additional policies taken out with outside partners; asset management which uses both CM-CIC mutual funds and multimanagement opportunities based on open architecture, benefiting from the expert selections of Fund Market, a specialized Banque de Luxembourg subsidiary; real estate offerings for high-net-worth individuals, currently being launched by Afedim, a CM-CIC subsidiary. Private banking, one of CIC s core businesses, mainly targets high-networth and wealthy business owners and individuals that are seeking a long-term advisory relationship. Its services are provided nationally and internationally, through the regional networks and the branches established in countries with strong potential for wealth. Key figures Private banking (in millions) Net banking income General operating expenses Operating income before provisions Provisions Income before tax Net income 2005 Change 2005/ ) + 5.8% (207) + 2% 124) % (4) % 119) % 71)) % Source: 2005 consolidated financial statements: IFRS 2004: pro forma IFRS excluding IAS and FRS 4

26 PRIVATE BANKING 27 The private banking business at CIC A key priority for CIC Banque Privée is winning new clients. Corporate divestments and successions are the main drivers of this business, which calls for a structured approach based on highly creative and effective financial engineering and asset management, bringing to bear investment and service offerings that are practically made to measure for each client. Because a private banker s outlook cannot be anything less than global, CIC clients have access to the entire international network of CIC Banque Privée. CIC Banque Privée in France CIC Banque Privée comprises 53 private asset management branches, integrated into the group s regional networks and covering the whole of France. These branches report to six regional offices and to a national head office. Throughout the country, unified processes have been defined in relation to the approach to clients and prospects, business development, products and services, activities and management methods. In this way, clients can be sure that the advice, investment products and services they are offered will be of the same high level of quality and effectiveness, irrespective of their place of residence in France. This business line is designed to provide long-term satisfaction to clients and prospects with a potential net worth of at least one million euros. These clients are offered the most reactive and results-focused financial engineering solutions, taking into account all financial, tax, legal and family considerations to produce an individually designed wealth management strategy. Two publications, Le cahier de CIC Banque Privée and the Patrimoine et Stratégies newsletter, provide CIC clients with a ready source of information and advice. Specialized entities France CIC Banque Transatlantique In 2005, the bank continued to refocus its operations on personal banking clients and to redesign its processes in three key directions: implementing cross-selling synergies with the various group entities; developing the pooling of resources with group support functions in the areas of organization, training, payroll management, accounting, security and other back-office roles; further raising the headcount and quality of its sales teams and specialized functions. Net banking income amounted to 48.2 million, down 7.3% ( 52 million in 2004). However, excluding the impact of the transfer at the end of 2004 of its Corporates arm, CIC Banque Transatlantique recorded 4% growth in net banking income. A tight rein on overheads and very low loan loss provisions allowed net income to reach 9.2 million, representing a year-on-year leap of 48.7%. Revenues of the wholly-owned subsidiary BLC Gestion climbed 39% to 3.8 million, while income before tax and non-recurring items surged 55% to 1 million, yielding net income of 0.6 million. MBL, a joint subsidiary of CIC Banque Transatlantique and the Crédit Mutuel group, had 2005 net banking income of nearly 5 million, while its net income soared 64% to 1.6 million. Business development The bank offers a comprehensive range of services in the areas of personalized asset allocation, asset management and financing of family projects. Private asset management Positioned at the top end of the market, the wealth management business boasts extremely skilled teams that apply the highest professional standards. Its clientele grew by 9% in 2005 and assets under management expanded by more than 20%. Offering the same range of options as in portfolio management, the private asset management business includes discretionary management, advisory management services and direct management through a Web-based service. By developing multimanagement based on an open architecture, establishing partnerships both inside and outside the group, and relying on its team of legal and tax-planning specialists, it is able to offer comprehensive services and unrivalled financial performance and security. Several additions to the prestigious client roster, mainly business owners selling their companies, confirmed the significance of this business for the bank s development. The expatriate market This rapidly growing business covers different markets, serving a high-profile international client base made up of diplomats, international civil servants, French expatriate executives, French business owners living abroad, and non-french managers working in France for major multinationals. The business has expanded its teams and launched two new products. The first, Transat Expat Santé, covers healthcare expenses outside France. The second, Cap Transat, includes international account management, advisory services and assistance with tax planning, opening bank accounts abroad and managing the non-banking issues caused by distance. Any expatriate group client can sign up for either product without having to switch to another branch. The business has also gained a number of high-net-worth French resident clients as a result of boosting its prospecting resources in the Paris area and strengthening its expertise in the areas of tax planning for real estate projects and financial engineering. Transaction volumes were also high in stock options management operations, on the back of bullish trends in European stock markets and of favorable movements in dollar-to-euro exchange rates. The bank processed a record number of transactions on the exercise of stock options and expanded its assets held in custody. Stock-option holders are offered financing that matches their needs, as well as expertise in hedging securities positions using options. In 2005, the bank won new mandates from French and foreign blue-chip issuers to administer stock option plans and advise grantees.

27 28 REVIEW OF OPERATIONS Subsidiaries A new subsidiary was created in Belgium, broadening the scope of operations. CIC Banque Transatlantique also has representation offices in Washington, London and Singapore. Banque Transatlantique Belgium Based in Brussels, it targets both French expatriates and an affluent Belgian clientele. It is positioned as a family bank, able to provide a full range of services in wealth engineering, discretionary management, family office services and loans. BLC Gestion This company specializing in discretionary management and advisory management services draws most of its income from equity brokerage. Management of mutual funds, especially the Brongniart range, accounted for nearly a third of its net banking income in 2005 and services to third parties in the form of advisory management services to CIC and Crédit Mutuel Ile-de- France clients are developing in a promising way. Mutual Bank Luxembourg (MBL) This bank enjoyed sustained demand for its asset management and financing services in BT Jersey Limited The business volumes and results of this entity remained merely symbolic. Dubly-Douilhet Dubly-Douilhet, an investment company providing discretionary management services to high-net-worth individuals in northern and eastern France, saw significant growth in Managed assets reached nearly 789 million and net income was 1.5 million. The bank s balance sheet is healthy, with 9 million of equity. CIC Private Banking network Banque de Luxembourg Banque de Luxembourg s brisk sales growth in 2005 delivered a 40% increase in cash assets and securities deposited by clients, to 50.3 billion. Net income was up 16.5%, to 60 million. These results are attributable to a management style that favors asset protection and consistent yields over the long term. The best illustration of this philosophy at work is to be found in the performance of its range of mutual funds, which was recognized for the third consecutive year as Best Fund Manager at the European Fund Awards organized by the Lipper rating agency.

28 PRIVATE BANKING 29 In its discretionary management of individual portfolios, the bank emphasizes a multimanagement approach that combines its own funds with a selection of the best international funds. The bank s know-how in this field is derived from its specialized subsidiary Fund Market, a provider of investment fund advice and the CM- CIC group s source of expertise in the selection of third-party funds and multimanager opportunities. Banque de Luxembourg also meets the specific tax and succession planning needs of non-resident clients. In addition, following Luxembourg s abolition of the wealth tax which came into effect on January 1, 2006, the bank also provided advisory assistance to a certain number of high-net-worth investors. The bank has continued to share its know-how with the professional investment management community through a comprehensive range of services, mainly in the areas of custodian banking, investment funds and the engineering and distribution of financial products and solutions. In 2005, it also honed its expertise in terms of structured products, dedicated investment funds, hedge funds, private equity and venture capital. CIC Banque CIAL Suisse The bank, which has been established for nearly a century at six sites in Switzerland, continued to develop its services to corporate and individual clients in Cash assets and securities deposited by clients reached a total of CHF 7.3 billion at December 31, 2005, while outstanding client loans increased 12% to CHF 1.7 billion. This growth in lending led to a 13% rise in net interest income for 2005, to CHF 31 million. Riding on buoyant trends in stock markets, commission income climbed 7% year-on-year, to CHF 46.2 million. Capital markets operations generated net banking income of CHF 11.3 million in 2005, 18% more than in Net income, totaling CHF 14.8 million, was up 22% on 2004, despite new operational risks that required provisioning. In its private banking operations, CIC Banque CIAL Suisse offers individually tailored investment advice and discretionary portfolio management services. Among the bank s key strengths are the building of stable relationships over time between clients and managers, a policy of cautious management matching the needs of each client, the ability to select appropriate products and packages, as well as access to leading-edge technical resources. CIC Banque CIAL Suisse also works with companies based in Switzerland, granting them operating or investment loans, providing mortgage loans, handling forex transactions or issuing documentary credit. CIC Private Banking Banque Pasche CIC Private Banking - Banque Pasche continued its expansion in 2005, based on a long-term strategy of increasing market share. Over the past five years the bank has tripled its assets under management. It offers its international clientele for the most part from Asia, Africa and the Middle East a full range of valueadded services, rooted in the concept of the family office. In the context of a relocation, clients can find high-level asset management and succession planning expertise, help in purchasing property, or an analytical and comparative review of their portfolios carried out by independent experts. In 2005, net banking income was up nearly 6%, operating income before provisions jumped 20.4% and net income rose 10.4% to CHF 6.2 million (compared with CHF 5.6 million in 2004). These results confirmed the place of CIC Private Banking Banque Pasche as one of the CM-CIC group s key players in private banking. CIC Branch Singapore and Hong Kong It was in 2002 that CIC launched private banking operations in Asia, from its Singapore branch. Sales teams in Hong Kong and Singapore advise Asian clients from Hong Kong, Taiwan, China, Indonesia, Malaysia and Thailand. Assets under management have now crossed the billion-dollar mark. In June 2005, Asian private banking was brought under the CIC Banque Privée banner, with support from the group s other private banking entities. The development of private banking in the city-state and the government s efforts to support the process are turning Singapore into one of the world s key financial centers. The group is thus aiming to establish itself as a significant presence in Asian private banking, initially by leveraging its European experience and later on by rounding out the advisory services offered in Europe with the contributions of an Asian hub.

29 30 REVIEW OF OPERATIONS Paris and Northeastern France CIC Finance Private equity For the private equity business, now organized into three regional segments covering all of France, 2005 was a year of vigorous activity and strong profitability. Investments totaled more than 256 million and disposals generated substantial gains. The total portfolio of managed equity holdings was worth nearly 1.1 billion at December 31, To support the development of the Crédit Mutuel-CIC group client base, CIC Finance provides both private equity and M&A advisory services. The bank carries out proprietary investments through its subsidiary CIC Capital-Développement. Third-party investments are made through the funds managed by CM-CIC Capital Privé (seven FCPI innovation funds and 5 investment funds) and CIC LBO Partners (a management company dedicated to majority LBOs). Managed portfolios registered significant growth in 2005, with an estimated 522 million in net assets at December 31, of which 209 million were third-party investments. CM-CIC Capital Privé has become one of the leading players in France for FCPI innovation funds and FIP investment funds. With over 100 equity interests, CIC Finance is active in every segment of the investment business, including venture capital, private equity, LBOs and funds of funds. New investments in 2005 e.g., in Club Sagem, Saur, and Carré Blanc exceeded 118 million. Disposals, which included Maisons du Monde, Sandinvest and Mistergooddeal, came to 97 million and netted capital gains of 38 million. The recently strengthened mergers and acquisitions teams also had a strong year, carrying out an assignment for Sagem in its merger with Snecma, that resulted in the creation of the Safran group, and another for Eurazeo in its acquisition of B&B. The consolidated net income of CIC Finance rose sharply to 37 million for the year ended December 31, Based on IFRS rules, which came into effect on January 1, 2005 and require that changes in the fair value of the portfolio over the year be included in earnings, net income amounted to 63 million. Shareholders equity totaled 213 million. Key figures Private equity (in millions) Net banking income General operating expenses Operating income before provisions Provisions Income before tax Net income 2005 Change 2005/ ) n.m. (26) n.m. 221) n.m. 1) n.m. 222) n.m. 213) n.m. Source: 2005 consolidated financial statements: IFRS 2004: pro forma IFRS excluding IAS and IFRS 4

30 PRIVATE EQUITY 31 Western France IPO IPO, a 76.6%-owned subsidiary of CIC, has been present in the Loire, Brittany, Normandy, Central France and Poitou-Charentes regions for 25 years, and has recently extended its coverage to Southwestern France. Its 12-strong team based in Nantes manages a portfolio worth million, which is invested in the capital of 126 regional corporate groups. IPO had a very active year in 2005, investing 42 million in 19 projects involving 20 companies. Disposals and redemptions, totaling 34.1 million, generated 18.1 million in gains and redemption premiums. Net income came to 32.5 million based on IFRS (and 21.2 million based on French GAAP). IPO is a long-term investor and therefore frequently partners its clients through several stages of their corporate lives, from development to changes in ownership structure and succession. This was the case in 2005 with QFD (hardware and tools), Abaque Finance (polishing disks for optical lenses), Forteam (training), the Vendôme group (carpentry), Office Log (office supplies) and Le Normandy (physical medicine and rehabilitation). IPO also formed new partnerships, for example with Sofibo (furniture), Altawest (mechanical and thermal engineering), ORTEC Expansion (industrial services), Fouchard (climate control engineering), Norac (baked goods and catering), Trésor du patrimoine (mailorder sales of collectible coins and medals), Emeraude Participations (thermal lacquering), Vitalitec (surgical devices) and Maison du Monde (home decoration). As from January 1, 2006, IPO Ingénierie will also be in charge of discretionary management of the portfolios of Financière Ar Men and Financière Voltaire, in preparation for winding up these two subsidiaries of CIC Banque CIO. At December 31, 2005, these two portfolios included 55 companies and were valued at 31 million. Disposals from the two portfolios in 2005 totaled 11.6 million and generated gains of 5.5 million. Financière Ar Men invested 3.2 million in four companies over the course of the year. Southern France CIC Banque de Vizille In 2005, CIC Banque de Vizille delivered a string of strong performances that confirmed its place as a major player in the investment banking sector In 2005, the bank invested 101 million in 35 major projects spanning all segments of the investment business venture capital, minority-stake partnerships and majority-stake LBOs. This level of investment, which has now been maintained for three years, reflects the close synergies established with all group businesses, particularly private banking and structured finance. The new investments, half of which involved minimum contributions of under 3 million a sure sign of the bank s deep roots in local economic life included the following companies: Courtepaille (restaurant chain), GL Events (events management), Plastic Omnium (plastics), as well as ORTEC, NORAC and Office Log (in partnership with IPO). The total value of divestments, at cost, was 46 million, and they generated an average return on investment (ROI) of 22.7%. CIC Vizille Capital-Finance s advisory services arm also turned in a satisfactory year, billing a total of 2.3 million. In mergers and acquisitions, four mandates came to a successful outcome. The capital markets engineering teams carried out France s first IPO on the Eurolist (with Akka), conducted two debt issues and finalized the delisting of Paul Prédault on behalf of William Saurin. The bank posted impressive results for 2005, with net banking income surging to 56.1 million from 29.9 million in 2004 and consolidated net income (including Lyonnaise de Participations) of 62.8 million. Unrealized gains from the total portfolio of managed investments came to 64.4 million at December 31, In this respect, the switch to IFRS will make a significant difference, by allowing genuine comparisons in the annual performances of all market players (including managed funds). Thanks to the ongoing renewal in its portfolio of managed holdings, currently valued at 401 million, CIC Banque de Vizille is expected to be a major source of value creation in the coming years.

31 32 REVIEW OF OPERATIONS Regional and international directory Contact details for CIC s regional banks CIC 6 avenue de Provence Paris Tel: +33 (0) Chairman of the Supervisory Board: Etienne Pflimlin President of the Executive Board: Michel Lucas Vice-President of the Executive Board: Alain Fradin Members of the Executive Board: Bernard Bartelmann, Jean Huet, Jean-Jacques Tamburini, Philippe Vidal, Rémy Weber CIC Banque Scalbert Dupont 33 avenue Le Corbusier Lille Tel: +33 (0) [email protected] Chairman and Chief Executive Officer: Gérard Romedenne Chief Operating Officer: Stelli Prémaor CIC Banque CIN 15 place de la Pucelle Rouen Tel: +33 (0) [email protected] Chairman and Chief Executive Officer: Gérard Romedenne Chief Operating Officer: Stelli Prémaor CIC Lyonnaise de Banque 8 rue de la République Lyon Tel: +33 (0) Chairman and Chief Executive Officer: Rémy Weber Deputy Chief Operating Officers: Michel Bodoy, Isabelle Bourgade, Yves Manet CIC Banque CIAL 31 rue Jean Wenger-Valentin Strasbourg Tel: +33 (0) Chairman and Chief Executive Officer: Philippe Vidal Chief Operating Officer: Pierre Jachez CIC Banque SNVB 4 place André Maginot Nancy Tel: +33 (0) Chairman: Philippe Vidal Chief Executive Officer: Luc Dymarski Chief Operating Officer: Thierry Marois CIC Société Bordelaise Cité Mondiale 20 quai des Chartrons Bordeaux Cedex Tel: +33 (0) Chairman and Chief Executive Officer: Jean-Jacques Tamburini Chief Operating Officer: Jean-Philippe Brinet CIC Banque CIO 2 avenue Jean-Claude Bonduelle Nantes Tel: +33 (0) Chairman and Chief Executive Officer: Michel Michenko Chief Operating Officer: Gérard Goulet CIC Banque BRO 7 rue Gallois Blois Tel: +33 (0) Chairman and Chief Executive Officer: Michel Michenko Chief Operating Officer: Jean-Pierre Bichon

32 REGIONAL AND INTERNATIONAL DIRECTORY 33 International network and specialist network Contact details for the CIC group s international network Europe Germany Wilhelm-Leuschner Strasse 9-11 D Frankfurt am Main Tel: [email protected] André Wurtz Belgium and the Netherlands 41 avenue A. Milcamps 1030 Brussels Tel: [email protected] Yolande van der Bruggen C.E.I. 9, k.2a Kutuzovskiy prospekt Moscow Russian Federation Tel: [email protected] Jean-Jacques Vrignaud Spain Calle Marquès de la Ensenada no Madrid Tel: /82 [email protected] Rafael Gonzalez-Ubeda United Kingdom Veritas House 125 Finsbury Pavement London EC2A IHX Tel: Telex: (051) CIC LDN G Ubaldo Bezoari Greece Vassileos Alexandrou Athens Tel: /541 [email protected] Georges Anagnostopoulos Hungary Budapesti képviseleti Iroda Fö ucta 10 H-1011 Budapest Tel: [email protected] Kalman Marton Italy Corso di Porta Vittoria Milan Tel: [email protected] Hubert de Saint Paul Poland Ul Stawki 2 Warsaw Tel: /02/03 [email protected] Krzysztof Potocki Portugal Avenida de Berna no. 30, 3 A Lisbon Tel: /44 [email protected] Henrique Real Romania Ste. Cpt. Av. Gheorghe Marasoiu no. 3 Sector Bucharest Tel: [email protected] Adela Bota Czech Republic Mala Stepanska Prague CZ Tel: [email protected] Alexandre Berthier Sweden Grev Magnigatan 6 SE Stockholm Tel: [email protected] Martine Wahlström Switzerland 29, Avenue de Champel 1211 Geneva 12 Tel: [email protected] Nadine Johnson Turkey INONU Cad. Miralay Sefik Bey Sok. no Gumussuyu Istanbul Tel: [email protected] Mehmet Bazyar Africa South Africa Portofino , 9th Street Killarney 2193 Johannesburg Tel: /47 [email protected] Philippe Uzac Algeria 36 rue des Frères Benali Hydra Algiers Tel: [email protected] Ahmed Mostefaoui Egypt 28, rue Cherif Cairo Tel: [email protected] Hussein M. Lotfy Morocco 12 boulevard Brahim Roudani Résidence Zeïna 1 er étage appartement Casablanca Tel: / [email protected] Mahmoud Belhoucine Tunisia Immeuble Carthage Center Rue du Lac de Constance 2045 Les Berges du Lac - Tunis Tel: / [email protected] Emna Ben Amor Dimassi Middle East Israel Y.S. Consulting Beit Hatasiya (Industry House) 29, Hamered Street, Suite 1028 POB Tel Aviv Tel: [email protected] Jacob Shtofman Lebanon Achrafieh Rue de La Sagesse Sagesse Building e étage Beirut Tel: [email protected] Blanche Ammoun The Americas Argentina Av. Callao Piso Buenos Aires Tel: cicbuenosaires@mriod elaplata.com.ar Miguel de Larminat Brazil Avenida Paulista 2073 Horsa I 11 Andar-cj Sao Paulo SP Tel: [email protected] Luiz Mendes de Almeida Chile Edificio World Trade Center Santiago Av. Nueva Tajamar 481 Torre Norte - Oficina 1401 Las Condes - Santiago de Chile Tel: [email protected] Sylvie Le Ny United States CIC 520 Madison Avenue New York, N.Y Tel: Telex: (023) CIC NY [email protected] Serge Bellanger

33 34 REVIEW OF OPERATIONS Mexico World Trade Center Montecito no. 38 piso 8 - oficina 24 Col. Napoles C.P Mexico D.F. Tel: /95 [email protected] Santiago de Leon Trevino Korea Samsug Marchen House 601 Jang-han-Dong 752 IL-SAN South Korea Tel: [email protected] Isabelle Hahn India Vietnam c/o Openasia Group 6B Ton Duc Thang Street 1st Floor District 1 Ho Chi Minh City Tel: [email protected] Daitu Doan Viet Switzerland Private banking CIC Banque CIAL Suisse place du Marché 4001 Basel Tel: [email protected] Paul Maibach Henri Fauche Venezuela Centro Plaza - Torre A - Piso 12 Oficina 1 Avenida Francisco de Miranda Caracas Postal Address: Apartado Postal Caracas 1060 Tel: / [email protected] Pierre Roger Asia North China/Beijing Room 310, Tower 1, Bright China Chang An Building No. 7 Jianguomennei Dajie Dong Cheng District Beijing P.R. Tel: /68 [email protected] Wenlong Bian South China/Hong Kong 290 A, 29/F, One Exchange Square 8 Connaught Place Central Hong Kong Tel: [email protected] David Ting East China/Shanghai Room 1105 Shanghai Overseas Chinese Mansion No. 129 Yan An Xi Road (w) Shanghai Tel: / [email protected] Shan Hu A-58 Nizamuddin East New Delhi Tel: /10/20 [email protected] Francis Wacziarg Japan D.F. Building 7F Minami Aoyama Minato-Ku Tokyo Tel: Telex: (072) NORBANK J [email protected] Frédéric Laurent Singapore 63 Market Street #15-01 Singapore Tel: Telex: RS CIC SGP [email protected] Website: Jean-Luc Anglada Taiwan 380 Linshen North Road 10 F (101 room) Taipei Tel: /63 [email protected] Henri Wen Thailand 622, Emporium Tower 14th floor Sukhumvit 24 Road Klongton, Klongtoey Bangkok Tel: [email protected] Abhawadee Devakula Specialist network France Private banking CIC Banque Transatlantique 26 avenue Franklin D. Roosevelt Paris Tel: +33 (0) banquetransatlantique.com Chairman and Chief Executive Officer: Bruno Julien-Laferrière Chief Operating Officer: Christine Zanetti Private equity CIC Finance 4 rue Gaillon Paris Cedex 02 Tel: +33 (0) [email protected] Sidney Cabessa CIC Banque de Vizille Espace Cordeliers 2 rue Président Carnot Lyon Tel: +33 (0) [email protected] Antoine Jarmak IPO 32 avenue Camus Nantes Tel: +33 (0) [email protected] Pierre Tiers Luxembourg Private banking Banque de Luxembourg 14 boulevard Royal L 2449 Luxembourg Tel: [email protected] CIC Private Banking- Banque Pasche 10 rue de Hollande Case Postale Geneva 11 Tel: [email protected] Christophe Mazurier Hong Kong Private banking CIC Investor Services Ltd 2904A-7 One Exchange Square 8 Connaught Place Central Hong Kong Tel: [email protected] Timothy Lo Singapore CM-CIC Asset Management Singapore Ltd 63 Market Street #15-01 Singapore Tel: [email protected] Website: Pierre Guyonvarch Private banking CIC Banque Transatlantique 63 Market Street #15-01 Singapore Tel: [email protected] Website: Yves Conan Robert Reckinger Pierre Ahlborn

34 35 Corporate governance 36 Management team 38 Report of the Chairman of the Supervisory Board on the preparation and organization of the Board s work 39 Executive Board and Supervisory Board members

35 36 CORPORATE GOVERNANCE Management team Supervisory Board Members of the Supervisory Board elected at the AGM: Etienne Pflimlin Chairman Gérard Cormorèche Vice-Chairman Chairman of Confédération Nationale du Crédit Mutuel, Crédit Mutuel Centre-Est Europe, and Banque Fédérative du Crédit Mutuel Chairman of Crédit Mutuel du Sud-Est Banque Fédérative du Crédit Mutuel Gérard Bontoux Luc Chambaud Maurice Corgini Bernard Daurensan Pierre Filliger Jean-Louis Girodot Daniel Leroyer Roberto Mazzotta André Meyer Bernard Morisseau Paul Schwartz Roland Truche Philippe Vasseur Jean-Claude Martinez represented by Christian Klein - Director Chairman of Crédit Mutuel Midi-Atlantique CEO of Crédit Mutuel de Normandie Director of BFCM CEO of Crédit Mutuel Océan Chairman of Crédit Mutuel Méditerranéen Chairman of Crédit Mutuel Ile-de-France Chairman of Crédit Mutuel Maine-Anjou, Basse-Normandie Chairman of Banco Popolare di Milano Director of Crédit Mutuel Centre Est Europe Chairman of Crédit Mutuel Loire-Atlantique Centre-Ouest Vice-Chairman of Banque Fédérative du Crédit Mutuel CEO of Crédit Mutuel du Centre Chairman of Crédit Mutuel Nord Europe Employee of CIC Banque CIAL, representing employee-shareholders Members of the Supervisory Board elected by employees: Michel Cornu Jean-Marc Crosnier Patrick Demblans Manager, CIC Banque Scalbert Dupont Employee, CIC Banque Scalbert Dupont Account Manager, CIC Société Bordelaise The following persons also attend Supervisory Board meetings: Stéphane Marché François de Lacoste Lareymondie Representing CIC s Works Council CIC Company Secretary, Secretary to the Supervisory Board Members of the Supervisory Board are elected for a period of 5 years. Members elected by the shareholders were elected at the AGM of May 15, 2003, except for the employee-shareholders representative who was elected at the AGM of April 28, Members of the Supervisory Board elected by employees were elected in September Daniel Leroyer was appointed by the Supervisory Board at its meeting of May 19, 2005 to replace Jean-Pierre Schneider, who had resigned. No fees were paid to the members of the Supervisory Board in 2005.

36 MANAGEMENT TEAM 37 Executive Board From left to right: Michel Lucas, President - Alain Fradin, Vice-President Bernard Bartelmann - Jean Huet - Philippe Vidal - Rémy Weber - Jean-Jacques Tamburini The Executive Board is responsible for determining the CIC group s overall business strategy (Article 17 of Act no of January 24, 1984 governing the activities and supervision of credit institutions). Michel Michenko and Gérard Romedenne also attend the Executive Board meetings in their capacity as managing executives of significant subsidiaries of the group, CIC Banque CIO and CIC Banque BRO in the first case, CIC Banque Scalbert Dupont and CIC Banque CIN in the second. As such, they are a part of the group s management. The Executive Board meets in principle twice a month. CIC s Company Secretary acts as secretary to the Executive Board.

37 38 CORPORATE GOVERNANCE Report of the Chairman of the Supervisory Board on the preparation and organization of the Board s work (Article L of the French Commercial Code (Code de commerce), arising from Article 117 of the French Financial Security Act of August 1, 2003) The Supervisory Board meets every quarter, in accordance with legal requirements, based on a predefined schedule that allows it to examine the Executive Board s report and focus its discussions on one or more previously-determined subjects: two meetings are devoted to reviewing CIC s financial statements: in February for the annual financial statements and in September for the half-yearly financial statements. The Statutory Auditors attend these two meetings in order to report to the Board on their audits and, if applicable, present the issues raised in the course of the closing process; one meeting is held in December, dealing with the budget and with medium-term forecasts; during the meeting of the Supervisory Board in May, the head of group internal audit reports to the Board on internal control, risk measurement and monitoring, and compliance with the code of ethics, for both CIC and CIC group activities. An interim report is given at the December meeting. Information packs are prepared and sent to the members of the Supervisory Board in advance of each meeting, containing all necessary information about matters on the agenda. Detailed minutes of each meeting are drawn up, recording the decisions and votes of each member present. The Supervisory Board has set up a three-member Remunerations Committee (Etienne Pflimlin, André Meyer and Paul Schwartz), which meets at least once a year to review the situation and compensation of the members of the Executive Board and make any relevant recommendations. Etienne Pflimlin Chairman of the Supervisory Board

38 EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS 39 Executive Board and Supervisory Board members To the best of CIC s knowledge, there are no conflicts of interest between the obligations towards CIC of the members of the Executive Board and their personal interests or other obligations. Apart from regulated agreements, no arrangements or agreements have been entered into with the main shareholders, clients, suppliers or others pursuant to which a member of the Executive Board has been selected. No service agreement exists binding the members of the Executive Board to one of the group s companies. Executive Board Members Michel Lucas President of the Executive Board Born May 4, 1939 in Lorient, France Other directorships and positions held: Chief Executive Officer of Confédération Nationale du Crédit Mutuel Caisse Centrale du Crédit Mutuel. Chairman of the Board of Directors of Groupe des Assurances du Crédit Mutuel Assurances du Crédit Mutuel Vie et IARD SA Assurance du Crédit Mutuel Vie SFM Banque du Crédit Mutuel Ile-de-France. Chairman of Crédit Mutuel Cartes de Paiements. Chairman of the Supervisory Board of Euro Information Production - Groupement Informatique CM-CIC. Vice-Chairman of Europay France Mastercard Europe (Brussels) Banque de Luxembourg (Luxembourg). Member of the Board of Directors and CEO of Fédération du Crédit Mutuel Centre Est Europe Caisse Fédérale du Crédit Mutuel Centre Est Europe Banque Fédérative du Crédit Mutuel. Member of the Board of Directors of ACMN IARD Assurances Générales des Caisses Desjardins (Québec) Banque de Tunisie (Tunis) CIC Banque BRO CIC Banque Transatlantique Banque Transatlantique Belgium Caisse de Crédit Mutuel Cronenbourg Crédit Mutuel Paiements Électroniques CIC Capital Développement CIC Information CIC Finance Eurocard Holding CIC Lyonnaise de Banque NC Inc (New York) CIC Banque SNVB SOFEDIS SURAVENIR. Member of the Supervisory Board of Fonds de Garantie des Dépôts Banque de l Économie du Commerce et de la Monétique CM-CIC AM Société Alsacienne de Publications L Alsace GIE CIC Production Manufacture Beauvillé SAFRAN. Member of the Management Committee of Euro Information. Alain Fradin Vice-President of the Executive Board Born May 16, 1947 in Alençon, France Other directorships and positions held: Chairman and Chief Executive Officer of CM-CIC Bail CIC Migrations. Chief Executive Officer of Fédération du Crédit Mutuel Antilles- Guyane Caisse Fédérale du Crédit Mutuel Antilles-Guyane Fédération des Caisses du Crédit Mutuel du Sud-Est Caisse de Crédit Mutuel du Sud-Est. Chief Operating Officer of Fédération du Crédit Mutuel Centre Est Europe CFCMCEE (Caisse Fédérale du Crédit Mutuel Centre Est Europe). Member of the Board of Directors of Boréal Confédération Nationale du Crédit Mutuel CM-CIC Titres Groupe Sofémo Banque du Crédit Mutuel Ile-de-France. Member of the Management Committee of Bischenberg. Permanent representative of CFCMCEE (Vice-Chairman of Caisse Centrale du Crédit Mutuel) CIC (Director of CIC Information) CIC Participations (Director of CIC Banque Scalbert Dupont, CIC Banque CIO, CIC Banque CIN) Groupement des Assurances du Crédit Mutuel (Director of Télévie). Bernard Bartelmann Member of the Executive Board Born April 12, 1944 in Strasbourg, France Other directorships and positions held: President of the Executive Board of Banque de l Économie du Commerce et de la Monétique. Chairman of the Supervisory Board of CM-CIC Lease. Member of the Supervisory Board of Caisse de Crédit Mutuel Esplanade. Permanent representative of BFCM (Director of L Alsace - Société Française d Édition de Journaux et d Imprimés Commerciaux), member of the Board of Directors of CIC Banque de Vizille, Soderec. Legal manager of SNC Foncière du Crédit Mutuel.

39 40 CORPORATE GOVERNANCE Jean Huet Member of the Executive Board Born October 29, 1941 in Saint-Jeanvrin, France Other directorships and positions held: Chairman and Chief Executive Officer of Gesteurop SAS. Chairman of the Supervisory Board of Compagnie de Finance pour l Industrie. Chairman of the Board of Directors of AEE Ile-de-France. Member of the Management Committee of Dynavente Plus. Permanent representative of CIC (Director of CM-CIC Bail, Paris Capitale Economique, Matignon Investissement et Gestion, Vice-Chairman of Union pour la Valorisation du Patrimoine) Gesteurop (Director of Factocic) EFSA (Director of CIC Banque Transatlantique). Director of Fondation de France. Jean-Jacques Tamburini Member of the Executive Board Born December 9, 1947 in Chambéry, France Other directorships and positions held: Chairman and Chief Executive Officer of CIC Société Bordelaise CIC Participations SAS Adepi SAS. Chairman of the Supervisory Board of CM-CIC AM. Director of CIC Capital Développement CIC Finance Banca Populare di Milano (Milan) Banca di Legnano (Milan) IPO (Institut de Participation de l Ouest). Member of the Audit Committee of Banque marocaine du commerce extérieur (Casablanca). Permanent representative of CIC (Director of Banque de Tunisie and CIC Banque de Vizille) CIC Participations (Director of CIC Banque BRO, CIC Banque CIAL, CIC Epargne Salariale, CIC Lyonnaise de Banque, CIC Banque SNVB) BFCM (Director of ACM IARD SA) CIC Société Bordelaise (Director of SFAP). Philippe Vidal Member of the Executive Board Born August 26, 1954 in Millau, France Other directorships and positions held: Chairman and Chief Executive Officer of CIC Banque CIAL. Chairman of the Board of Directors of CIC Banque SNVB CIAL Invest. Chairman of Fund Market France SAS. Vice-Chairman of the Board of Directors of CM-CIC Bail Banque de Luxembourg (Luxembourg). Director of Saint-Gobain PAM Bank CIAL Schweiz (Basel) Cigogne Management (Luxembourg) Banque Transatlantique Belgium CM-CIC Titres SNVB Financements. Member of the Supervisory Board of Foncière des Régions Est Gestion. Member of the Management Committee of SNVB Participations SAS Finances et Stratégies SAS. Permanent representative of CIC Banque SNVB (member of the Management Committee of CIC Information SAS) CIC Banque CIAL (member of the Supervisory Board of CM-CIC AM) CIAL Invest (Director of CIAL Equipement) CIC (Director of Dubly-Douilhet) ADEPI (Director of ACM Vie). Rémy Weber Member of the Executive Board Born November 18, 1957 in Strasbourg, France Other directorships and positions held: Chairman and Chief Executive Officer of CIC Lyonnaise de Banque. Chairman of the Supervisory Board of CIC Banque de Vizille. Vice-Chairman of CIC Private Banking - Banque Pasche (Geneva). Director of Euro Information SAS Euro P3C. Member of the Supervisory Board of GIE CIC Production. Member of the Executive Committee of Danifos SAS. Permanent representative of CIC Lyonnaise de Banque (Director of CIC Bonnasse Lyonnaise de Banque, CIC Information SAS, Union pour la Valorisation du Patrimoine (association) Sérénis (Director of Télévie) CIC Banque de Vizille (Director of Descours et Cabaud) CIC (Director of Sofemo, CM-CIC AM) Groupe des ACM (Director of ACM IARD SA).

40 EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS 41 The Supervisory Board Etienne Pflimlin Chairman of the Supervisory Board Born October 16, 1941 in Thonon-Les-Bains, France Other directorships and positions held: Chairman of the Board of Directors of Confédération Nationale du Crédit Mutuel Caisse Centrale du Crédit Mutuel Fédération du Crédit Mutuel Centre Est Europe Caisse Fédérale du Crédit Mutuel Centre Est Europe Banque Fédérative du Crédit Mutuel Caisse de Crédit Mutuel Esplanade Le Monde Entreprises. Chairman of the Supervisory Board of Banque de l Économie du Commerce et de la Monétique Editions Coprur Soderec (Société d Etudes et de Réalisation pour les Équipements Collectifs) Société Alsacienne de Publications L Alsace. Director of Groupe des Assurances du Crédit Mutuel L Alsace (Société Française d Édition de Journaux et d Imprimés Commerciaux). Member of the Supervisory Board of Le Monde Le Monde et partenaires associés Société éditrice du Monde. Permanent representative of Caisse Centrale du Crédit Mutuel (member of the Supervisory Board of CM-CIC AM, Management Committee of Euro Information) CIC (Director of CIC Banque CIAL, CIC Banque Scalbert Dupont, CIC Banque CIO, CIC Banque CIN, CIC Société Bordelaise). Non-voting director of Fimalac. Gérard Cormorèche Vice-Chairman and member of the Supervisory Board Born July 3, 1957 in Lyon, France Other directorships and positions held: Chairman of Fédération du Crédit Mutuel du Sud-Est Caisse de Crédit Mutuel du Sud-Est CECAMUSE Caisse Agricole du Crédit Mutuel Caisse de Crédit Mutuel de Neuville-sur-Saône. Member of the Board of Directors of Confédération Nationale du Crédit Mutuel Banque Fédérative du Crédit Mutuel Caisse Fédérale du Crédit Mutuel Centre Est Europe Société des Agriculteurs de France. Legal manager of SCEA Cormorèche Jean-Gérard SARL Cormorèche. Permanent representative of Caisse de Crédit Mutuel du Sud- Est (Director of ACM Vie). Banque Fédérative du Crédit Mutuel Member of the Supervisory Board Other directorships and positions held: Chairman of Bischenberg CM-CIC Agence Immobilière Devest 8. Vice-Chairman of Crédit Mutuel Paiements Electroniques. Director of Assurances du Crédit Mutuel SFM, Assurances du Crédit Mutuel Vie et IARD SA Batigère Boréal Caisse Centrale du Crédit Mutuel CM-CIC Securities CM-CIC Participations Immobilières CM-CIC SCPI Gestion Crédit Mutuel Cartes de Paiements Crédit Mutuel Habitat Gestion Crédit Mutuel Participations Critel Euro Information Direct Service Financière du Crédit Mutuel Forêts Gestion Groupe des Assurances du Crédit Mutuel Groupe Sofémo Institut Lorrain de Participations Parcus Sarest SEM Action 70 SEM CAEB- Bischheim SEM CALEO - Guebwiller SEM Destination 70 SEM Euro Moselle Développement SEM Micropolis SEM Nautiland SEM Patinoire Les Pins SEM pour la promotion de la ZAC Forbach Sud SEM Semibi Biesheim SEM TRACE SEMDEA SEM Mulhouse SIBAR Société Fermière de la Maison de L Alsace L Alsace (Société Française d Édition de Journaux et d Imprimés Commerciaux) SOFEDIS UES PACT ARIM Ventadour Investissement. Member of the Management Committee of Euro Information Euro Protection Surveillance Euro TVS. Member of the Supervisory Board of CIC Banque de Vizille CM-CIC AM SAEM Mulhouse Expo SCPI Crédit Mutuel Habitat 2 SCPI Crédit Mutuel Habitat 3 SCPI Crédit Mutuel Habitat 4 SCPI Crédit Mutuel Immobilier 1 SCPI Finance Habitat 1 SCPI Finance Habitat 2 Soderec STET Systèmes Technologiques d Échanges et de Traitement. Non-voting director of SEM E Puissance 3. Christian Klein Member of the Supervisory Board, representing Banque Fédérative du Crédit Mutuel Born January 9, 1951 in Metz, France Other directorships and positions held: Member of the Board of Directors of Cigogne Management SA (Luxembourg) Sicav Gestion 365 ESN North America (New York) Investessor. Permanent representative of Banque Fédérative du Crédit Mutuel (Director of CM-CIC Securities, Sarest, Groupe Sofémo, Boréal, member of the Supervisory Board of CM-CIC AM) Sofinaction (Director of CM-CIC Bail, CM-CIC Lease) Cicoval (Director of CIC Lyonnaise de Banque). Gérard Bontoux Member of the Supervisory Board Born March 7, 1950 in Toulouse, France Other directorships and positions held: Chairman of Fédération du Crédit Mutuel Midi-Atlantique Caisse Fédérale du Crédit Mutuel Midi-Atlantique. Director of Confédération Nationale du Crédit Mutuel Caisse Centrale du Crédit Mutuel Groupe des Assurances du Crédit Mutuel.

41 42 CORPORATE GOVERNANCE Luc Chambaud Member of the Supervisory Board Born March 24, 1956 in Angoulême, France Other directorships and positions held: Vice-Chairman of the Board of Directors of NORFI. Chief Executive Officer of Caisse Fédérale du Crédit Mutuel de Normandie Fédération du Crédit Mutuel de Normandie. Director of SA Euro-P3C SAS Cloé. Member of the Supervisory Board of Groupement Technique des Organismes du Crédit Mutuel. Non-voting director of Groupement des Assurances du Crédit Mutuel Assurances du Crédit Mutuel IARD. Permanent representative of Caisse fédérale de Crédit Mutuel de Normandie (Director of Financière du Crédit Mutuel, GIE Cloé Services, Assurances du Crédit Mutuel Vie SA, member of the Management Board of Euro Information SA and CIC Informations SA) SAS Cloé (member of the Management Board of Euro GDS). Maurice Corgini Member of the Supervisory Board Born September 27, 1949 in Beaume-Les-Dames, France Other directorships and positions held: Chairman of the Board of Directors of Caisse de Crédit Mutuel de Baume-Valdahon-Rougemont Caisse de Crédit Mutuel du district de Franche-Comté Sud. Director of Banque Fédérative du Crédit Mutuel Fédération du Crédit Mutuel Centre Est Europe. Legal Manager of Cogit Hommes Franche-Comté. Bernard Daurensan Member of the Supervisory Board Born October 31, 1943 in Lyon, France Other directorships and positions held: Chairman and Chief Executive Officer of Financière du Crédit Mutuel. Chairman of the Supervisory Board of Sodelem. Chairman of Crédit Mutuel Paiements Electroniques. Chief Executive Officer of Caisse Fédérale du Crédit Mutuel Océan (CFCMO) Crédit Mutuel Agricole et Rural Océan. Director of Europay France Holding Eurocard Océan Participations. Permanent representative of CFCMO (Chairman of LLD Participations, Director of ACM IARD, Crédit Mutuel Cartes de Paiements, Caisse Centrale du Crédit Mutuel, member of the Supervisory Board of CM-CIC AM, CMO Gestion; Legal manager of CMO Immobilier, Sodelem Services) CCCM (Director of Factocic). Pierre Filliger Member of the Supervisory Board Born November 27, 1943 in Rixheim, France Other directorships and positions held: Chairman of Caisse Régionale du Crédit Mutuel Méditerranéen Caisse Interfédérale Sud Europe Méditerranée Caisse de Crédit Mutuel Marseille-Prado. Chairman of the Supervisory Board of ACTIMUT SA, CAMEFI Banque. President of the Executive Board of Caisse Méditerranéenne de Financement (CAMEFI). Vice-Chairman of Caisse Fédérale du Crédit Mutuel Agricole et Rural Provence-Languedoc. Director of France Luxembourg Invest Advisory. Jean-Louis Girodot Member of the Supervisory Board Born February 10, 1944 in Saintes, France Other directorships and positions held: Chairman of the Board of Directors of Fédération du Crédit Mutuel Ile-de-France Caisse Régionale de Crédit Mutuel Ile-de- France (CRCMIDF) Caisse de Crédit Mutuel (Paris-Montmartre Grands Boulevards). Chairman and Chief Executive Officer of CODLES. Chairman of Chambre Régionale de l Économie Sociale-CRES Conférence nationale des CRES Syndicat de la Presse d Information Spécialisée (SPMS) Caisses de Crédit Mutuel (Chatou, Fontenay-sous-Bois, Drancy, Paris 13 Grande Bibliothèque, Paris 19 Flandres, Rueil 2000, Versailles St-Louis). Vice-Chairman of Conseil économique et social d Ile-de-France CEGES (Conseil des Entreprises et Groupements de l Économie Sociale). Director of BFCM Caisse Fédérale du Crédit Mutuel Centre Est Europe Confédération Nationale du Crédit Mutuel Messageries lyonnaises de presse Coopérative d information et d édition mutualiste Messageries lyonnaises de presse. Vice-Chairman of the Supervisory Board of Cosmedias. Member of the Supervisory Board of GTOCM. Permanent representative of CRCMIDF (Director of GACM, Commmision paritaire des publications et agences de presse). Member of Conseil National de la Vie Associative-CNVA Comité consultatif de l économie sociale.

42 EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS 43 Daniel Leroyer Member of the Supervisory Board Born April 15, 1951 in Saint-Siméon, France Other directorships and positions held: Chairman of the Board of Directors of Fédération du Crédit Mutuel de Maine-Anjou, Basse-Normandie Caisse Fédérale du Crédit Mutuel Maine-Anjou, Basse-Normandie Caisse Générale de Financement (CAGEFI) Créavenir (Association) Caisse de Crédit Mutuel du Pays Fertois. Member of the Supervisory Board of Société de réassurance Lavalloise (SOCREAL SA). Director of SAS Cloé SAS MABN Participations SAS Assurances du Crédit Mutuel Maine-Anjou-Normandie (ACMAN) Confédération Nationale du Crédit Mutuel. Permanent representative of Fédération du Crédit Mutuel de Maine-Anjou, Basse-Normandie (Director of GIE Cloé Services) Caisse Fédérale du Crédit Mutuel Maine-Anjou, Basse-Normandie (Director of Groupe des Assurances du Crédit Mutuel). Roberto Mazzotta Member of the Supervisory Board Born November 3, 1940 in Milan, Italy Other directorships and positions held: Chairman of Banco Popolare di Milano (Milan). Director of Dexia Banque. Executive Committee of ABI (Italian Banking Association). André Meyer Member of the Supervisory Board Born March 31, 1934 in Stotzheim, France Other directorships and positions held: Honorary Chairman of the Board of Directors of Caisse de Crédit Mutuel de l Ungersberg. Director of Fédération du Crédit Mutuel Centre Est Europe Confédération Nationale du Crédit Mutuel. Member of the Board of Directors and Honorary Chairman of Union des Caisses de Crédit Mutuel du district de Sélestat. Legal manager of SCI Binnweg. Bernard Morisseau Member of the Supervisory Board Born August 7, 1943 in Grand Fougeray, France Other directorships and positions held: Chairman of the Board of Directors of Caisse Fédérale de Crédit Mutuel de Loire-Atlantique Centre-Ouest Fédération du Crédit Mutuel de Loire-Atlantique Centre-Ouest Caisse de Crédit Mutuel de Pornichet Suravenir Assurances. Chairman of Progreffe. Vice-Chairman of the Board of Directors of Confédération Nationale du Crédit Mutuel Suravenir Assurances Holding. Vice-Chairman of the Supervisory Board of BCME Infolis. Director of BFCM. Permanent representative of Caisse Fédérale CMLACO (member of the Supervisory Board of Suravenir and Ataraxia SAS, Director of Groupement des Assurances du Crédit Mutuel) EFSA (Director of CIC Banque CIO) Fédération du CMLACO (Chairman of INESTLACO).

43 44 CORPORATE GOVERNANCE Paul Schwartz Member of the Supervisory Board Born on January 29, 1937 in Bitche, France Other directorships and positions held: Vice-Chairman of the Board of Directors of Banque Fédérative du Crédit Mutuel Fédération du Crédit Mutuel Centre Est Europe. Chairman of Union des Caisses de Crédit Mutuel du district de Sarreguemines. Chairman of the Board of Directors of Caisse de Crédit Mutuel de Bitche. Director of Confédération Nationale du Crédit Mutuel Caisse Centrale du Crédit Mutuel Mutuel Bank Luxembourg. Member of the Supervisory Board of Banque de l Économie du Commerce et de la Monétique. Permanent representative of Banque Fédérative du Crédit Mutuel (Director of Soparim - Société de Participation Immobilière - Sofédim, Caisse Centrale du Crédit Mutuel) Caisse Fédérale Crédit Mutuel Centre Est Europe (Director of Groupe des Assurances du Crédit Mutuel) Groupe des Assurances du Crédit Mutuel (Director of Assurances du Crédit Mutuel Vie et IARD SA). Roland Truche Member of the Supervisory Board Born August 2, 1944 in Aix-les-Bains, France Other directorships and positions held: President of the Executive Board of Caisse Fédérale de Crédit Mutuel du Centre. Chairman of the Supervisory Board of CM-CIC AM. Director of La République du Centre (SA, workers participation) CIC Information (SAS) Cloé (SAS). Permanent representative of Caisse Fédérale CMC (Director of ACM IARD SA, member of the Management Committee of Euro Information SAS, non-voting director of Financière du Crédit Mutuel SA) CICOVAL SAS (member of the Supervisory Board of CM-CIC Lease). Philippe Vasseur Member of the Supervisory Board Born August 31, 1943 in Le Touquet, France Other directorships and positions held: Chairman of Caisse Fédérale du Crédit Mutuel Nord Europe Caisse de Crédit Mutuel Lille Liberté CMNE France (SA) Société de Développement Régional de Normandie (SA) Crédit Mutuel Nord Europe Belgium SA (Belgium) Banque du Brabant (Belgium) Crédit Professionnel Interfédéral (Belgium). Chairman of the Supervisory Board of Banque Commerciale du Marché Nord Europe (SA). Director of Heineken France SA Holder (SAS) Nord Europe Assurances (SAS) Nord Europe Asset Management (SAS) Crédit Professionnel Interfédéral (Belgium) BKCP Securities SA (Belgium) Middenstands Depositoen Kredietkantoor (Belgium) Nord Europe Private Bank (Luxembourg). Non-voting director of Crédit Mutuel Nord Immobilier (SA). Member of the Supervisory Board of Saint Louis Sucre (SA). Permanent representative of CMNE France SA (Director of Groupe des Assurances du Crédit Mutuel) Crédit Mutuel Nord Europe Belgium SA (Vice-Chairman of Federal Kas Voor Het Beroeskrediet). Jean-Claude Martinez Member of the Supervisory Board representing employee-shareholders Born on November 6, 1949 in Oran (Algeria) Other directorships and positions held: Chairman of the Supervisory Board of FCPE ACTICIC. Vice-Chairman of Caisse de Retraite du groupe. Michel Cornu Member of the Supervisory Board representing employee-shareholders Born on July 2, 1947 in Marcq-en-Barœul, France Other directorships and positions held: Director of CIC Banque Scalbert Dupont (representing employees). Jean-Marc Crosnier Member of the Supervisory Board representing employee-shareholders Born on September 30, 1950 in Eragny-sur-Oise, France Other directorships and positions held: Director of CIC Banque Scalbert Dupont (representing employees). Patrick Demblans Member of the Supervisory Board representing employee-shareholders Born on March 30, 1950 in Blagnac, France Other directorships and positions held: Director of CIC Société Bordelaise (representing employees) ASSEDIC Midi-Pyrénées. Co-Legal manager of SCI EMDAMA.

44 45 Sustainable development 46 Ethics and compliance 46 Internal control 46 Report of the Chairman of the Supervisory Board on internal control procedures 50 Risk management 58 Human resources 59 Technological capabilities 61 Client relations 62 Shareholder relations

45 46 SUSTAINABLE DEVELOPMENT Ethics and compliance Internal control Code of ethics The CIC group s code of ethics outlines the rules of good conduct to be adhered to by all employees, especially with respect to client relations. It sets out the following principles: the client s interests must always come first; professional secrecy must be respected at all times; transactions must be handled diligently and fairly; employees must behave with integrity. Specific provisions are also laid down for employees working in sensitive areas who may be faced with a potential conflict of interest or who have access to confidential or privileged information. Appendices to the code of ethics contain explicit guidelines concerning capital markets activities, financial transactions and the management of securities portfolios. Management is responsible for ensuring compliance with these rules, which is verified through regular controls. Combating money laundering and the financing of terrorism The drive to combat money laundering and the financing of terrorism has been considerably stepped up across the group in recent years. Measures have been taken to ensure that the group does not enter into any relationship with a client whose activities are suspect, and to detect and prevent any suspect transactions. Further initiatives taken in 2005 included new tools, regular procedural reviews, and awareness and training programs for all employees throughout the branch network and in head office departments. In 2005, the group maintained its focus on bolstering internal control systems. The development and enhancement of audit and control tools continued in close cooperation with Crédit Mutuel. The internal control portal at the service of the branch network has proved its effectiveness. To facilitate its use, new automated requests have been added. The portal now offers uniform functionalities that are shared throughout the CMCEE-CIC group. The remote-controlled tools used for risk monitoring and administrative control, interfaced with the main information system (as is the portal), were further upgraded during the year. The system also includes an internal control module for use in audit assignments throughout the network. In 2006, the organization of the group s internal control procedures will be adapted to take account of the new regulatory requirements introduced by the French Banking and Financial Regulatory Committee (CRBF 97-02, as amended). Report of the Chairman of the Supervisory Board on internal control procedures As stated in Article L of the French Commercial Code (Code de commerce), The Chairman of the Supervisory Board shall submit to the annual general meeting a report, attached to the report mentioned in the previous paragraph and in Article L , concerning the internal control procedures implemented by the Company. Introduction CIC is responsible for internal control at both group level and for its own operations. The same principles are applied in both cases. Internal control is an integral part of corporate life, carried out in all segments based on documented processes with the aim of going beyond compliance with legal requirements to ensure better risk management, greater operational security and higher performance. This report has been compiled in conjunction with internal control teams based on the procedures deemed useful. A review has been performed of the main internal control work carried out in 2005.

46 REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD ON INTERNAL CONTROL PROCEDURES 47 Group-level internal control process A - A structured internal control process The group has set up an internal control process that meets regulatory requirements and its own standards, ensuring that the organization instituted matches its size, the nature of its operations and the scale of risks to which it is exposed. The group also ensures that its internal control and risk measurement systems completely cover the full range of its operations and those of the companies under its control. These systems must make it possible to identify, assess and track operational and counterparty risks at both Company and group levels, in a consistent manner based on group standards. B - A permanent internal control process One of the key purposes of the organization set up at group level is to verify on an ongoing basis the quality, reliability and completeness of the internal control system. For both CIC and its subsidiaries, the group ensures that the internal control system is underpinned by a set of procedures and operational limits that match regulatory requirements and applicable standards. Its work is based on group methodology and on generally applied rules in the area of internal control audits. The system has been designed in such a way that the full scope of operations for each group entity is regularly monitored at various control levels via the chain of command, ongoing control of the appropriateness and regulatory compliance of operations, and audits for in-depth investigations. The group constantly seeks to strike the appropriate balance between the objectives assigned to internal control and the resources at its disposal. C - An independent internal control process Internal audit teams at the regional banks report to the head of internal audit for CIC and the group, who reports to the President of the Executive Board and enjoys the independence required for the fulfillment of his responsibilities. In accordance with regulatory requirements, the CIC Internal Audit Department issues an annual internal control report for the CIC group and for CIC s banking operations. Both reports contain sections on risk measurement and monitoring. Organization of internal control at CIC This section mentions only the CIC group s in-house oversight bodies, but the bank must also report on its operations to supervisory authorities, such as the Commission bancaire and the Autorité des marchés financiers in France and similar bodies in foreign countries where it is based. These authorities regularly carry out audits at the facilities of the various group entities. A - Control practices at CIC Supervisory Board In accordance with regulatory requirements, internal control reports are submitted to the Supervisory Board twice a year. The annual internal control reports for the group and for CIC include the program of work for the upcoming year. Different levels of control Chain-of-command controls As part of their ongoing operations, bank staff regularly perform controls under the responsibility of management, with the help of purpose-built tools such as the internal control portal used by the branch network to monitor its operations. Departments in charge of ongoing controls The departments in charge of ongoing controls monitor the bank s operations using remote inspection tools. Their main task is to verify compliance with applicable regulations and in-house procedures, particularly as regards risk management standards. They also monitor the implementation of any corrective action recommended. CIC Internal Audit Department Audits within CIC and the regional banks CIC s Internal Audit Department carries out audits throughout the group and within CIC itself. Following on-site controls based on accounting evidence, the internal audit team issues reports to senior management, as well as to the audited entities. The team is responsible for ensuring that the recommendations contained in its reports are implemented. The heads of internal audit for the regional banks regularly report to the group head of internal audit. The migration of the various banks to a shared information system involving the use of identical tools facilitates ongoing, consistent controls and has helped create even stronger links between the various departments involved in the internal control process. Audits within CIC subsidiaries CIC s Internal Audit Department performs audits of the group s businesses that fall within its remit. It verifies the adequacy of their internal control organization on a regular basis and monitors key action taken in this area. The quality of the annual internal control reports produced is also verified.

47 48 SUSTAINABLE DEVELOPMENT B - Internal control framework Guidelines and tools Several documents used by the entire group provide the basis for internal control work. Internal control charter and guidelines The charter defines the core principles on which internal control is based within the group, while the internal control guidelines provide detailed instructions concerning the practical application of those principles. The appendices include a review of the different types of controls to be performed for each of the main business segments. They also describe the key risks to which the bank is exposed in its operations and the systems to be put in place to assess and control them. Compendium of internal control and internal audit tools This reference manual describes the main tools used in internal audit assignments and internal control. The tools draw upon the many opportunities offered by the CMCEE-CIC group information system, providing automated controls and fluid follow-up through very detailed reporting. With many controls now performed remotely, monitoring is continuous and on-site work is more effective. Risk coverage plan This plan, based on detailed risk analysis, allows the Internal Audit Department to plan its work over several years representing a full audit cycle. It is derived from in-house methodologies and is regularly updated to reflect audit findings, as well as changes in operations. The risk coverage plans defined for each of the regional banks are implemented alongside the group-level risk coverage plan. General guidelines Code of ethics The group s code of ethics sets out the principles of conduct that must be respected by each employee. It is divided into a general section and appendices dealing with a certain number of areas that call for specific processes. It also contains the rules applicable to employees working in sensitive areas and the obligations to which those employees are subject. Guidelines for combating money laundering and the financing of terrorism Aside from the general procedure on combating money laundering and the financing of terrorism, which reviews the various tools put in place in this area, these guidelines describe the specific processes applicable to certain specialized businesses and provide regulatory and technical reference documents. Procedures The procedures applicable within the CIC group, particularly with regard to risk control, are posted on the corporate intranet and may be accessed at all times by employees with the help of search engines. Access is facilitated by the tools put in place and links have been created to make it easier to look up and apply the procedures. C - Development of the internal control system Work is in progress at group level to adapt the internal control organization to the new regulatory requirements applicable from 2006 (CRBF 97-02, as amended). Whereas periodic and ongoing controls will be performed by distinct functions, a dedicated compliance unit will have specific responsibility for the application of legal and regulatory provisions, and conformity to professional and internal standards. The standardization of internal control processes within the CMCEE-CIC group will also be pursued. A Control and Compliance Committee will be formed to oversee the quality and efficiency of the organization set up. Accounting data and control at CIC and group levels CIC s group Accounting Department, which is responsible for producing and validating the financial statements, is organized into three sections individual and consolidated accounting data, accounting controls and subsidiaries accounting data. The information used for financial reporting is produced and validated by the group Accounting Department. A - Controls of the financial statements of the bank Accounting system System architecture All CIC banks now use the same chart of accounts and requests for changes are centralized at CIC level. Procedure for data aggregation In accordance with the model defined by CMCEE, CIC s majority shareholder, accounting data are aggregated for the following entities: a group (e.g., the CIC group); a Federation made up of one or more banks or other legal entities; a bank belonging to a Federation. All bank operations (head office and field operations) are broken down into branches, which represent the base unit of the accounting system. Accounting entries are recorded at the level of the branch. Accounting consistency of management accounting data Each branch includes an external section that records financial accounting data and an internal section that records cost accounting data. At the individual branch level, the figures used for management accounting purposes are obtained by combining the internal and external data. Final outputs are derived by adding together the resulting balances for the various branches. Links are established between financial accounting captions and the codes attributed to the products marketed by the bank. Cost accounting data are used to determine the results by business segment that are needed to prepare the consolidated financial statements.

48 REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD ON INTERNAL CONTROL PROCEDURES 49 Control methods Procedures put in place Accounting procedures and templates are documented. The procedures are posted on the intranet of each regional bank. Control levels Daily accounting controls are performed by the appropriate staff within each branch. The Accounting Control Department is also responsible for more general controls, including mandatory controls for regulatory purposes, verification of the supporting evidence for internal accounting data, monitoring of branch -related data, control of the foreign exchange position, control of net banking income by business segment, agreement of accounting procedures and templates with CMCEE, and assurance of the interface between back offices and the auditors for the half-yearly and annual closes. As part of its functions, the Internal Audit Department periodically performs accounting controls. Control practices Automated accounting controls An automated daily control procedure based on the bank s daily balance allows the verification of balance sheet and off balance sheet positions, asset/liability balances by branch and by currency, and the monitoring of technical accounts. This control procedure is also applied to the general ledger at the end of each month. Evidencing of accounts A procedure has been set up for evidencing the internal accounts, using the Accounting Control Department s automated process in a number of areas. The data reported by each of the teams in charge of evidencing the accounts are checked against control findings. B - Controls of the consolidated financial statements IFRS compliance took effect within group entities on January 1, The options and accounting principles adopted and the related quantitative impacts at the beginning of the 2004 and 2005 financial years were disclosed at the time of publication of consolidated net income for the first six months of Accounting principles and methods CIC and CMCEE jointly define the French and international accounting principles and methods (issued by the CNC and IASB respectively) to be applied by all group entities in their statutory financial statements. Foreign subsidiaries use this information to restate their local accounts in accordance with French GAAP and international accounting standards in their consolidation packages and for financial reporting purposes. The accounting managers of the various group entities meet twice a year to prepare the half-yearly and annual closes. The statutory financial statements under international accounting standards (IFRS) are prepared for the entities using the GTOCM central IT platform. The closing process for the IFRS statutory financial statements uses the same organization and team as those for the statutory financial statements under French GAAP (as formulated by the CNC). Reporting and consolidation The consolidation packages of entities using the shared information system are completed automatically. These purposedesigned packages are subject to multiple cross-checks as part of a validation process. Since January 1, 2005, entities have been required to submit a consolidation package under French GAAP (as formulated by the CNC) and a consolidation package under international accounting standards (IFRS). Each accounting department is responsible for the packages sent to the CIC Consolidation Department. The Consolidation Department is responsible for program settings and consolidation adjustments. The consolidation is performed on a software package used by the vast majority of French banks. A tax group set up since 1995 includes virtually all the French entities of CIC. The tax group s tax liability is calculated using a software package and cross-checks are performed between the tax and accounting reporting packages. Analysis of financial and accounting data The consolidated financial statements are analyzed in relation to the previous year, to the budget and to quarterly accounting and financial reporting. Each analysis covers a specific area, such as provisions for loan losses and outstanding loans and deposits. Observed trends are corroborated by the departments concerned, such as the Lending Department and the Management Accounting Department. Each entity s contribution to the consolidated financial statements is also analyzed. The findings of all of the above analyses are submitted to the Executive Board, whose members include the Chairmen of group banks. Conclusion Based on common principles shared by all group entities and using tools developed on a unified information system, CIC s internal control mechanism is designed to permanently monitor all of the bank s operations. We remain committed to reinforcing processes and enhancing internal control efficiency. Further action will be taken in 2006 in connection with the new internal control organization for the entire CMCEE-CIC group. Etienne Pflimlin Chairman of the Supervisory Board

49 50 SUSTAINABLE DEVELOPMENT Risk management Effective risk management is essential to the development of the CIC group. The group s aim is to make sure that all risks are properly assessed and that they are compatible with the group s earnings capacity and capital resources. Four categories of risk have been identified: credit risk; asset-liability management risk; market risk; operational and legal risk. CIC s strategy is to incorporate risk management considerations at all levels of decision-making. In line with this strategy, senior management of both the group and each of the regional banks participate actively in individual decisions and overall risk management through the implementation of standardized systems and procedures. The banks within the group leverage the close ties that they have formed in their respective regional economies to obtain information about existing and prospective customers. Customer segments have been defined and risk-profiled, allowing marketing efforts to be targeted more effectively. Risk assessment is carried out at several stages following formal procedures. All employees receive regular training in this area, including refresher courses. Credit approval processes vary according to the market. They seek to meet the requirements of customers while keeping risks to a minimum, based on: the weighting of products in accordance with the type of risk involved and guarantees offered; customers individual credit ratings; risk studies of business sectors and industries; clearly identified delegations of authority; the principle of dual verification; rules for the setting of maximum discretionary lending limits in proportion to the lending bank s equity. Loans representing large amounts are submitted to the Lending Committee of each bank or to the group for approval. Credit risk Risk management structure The organization of risk management within CIC is as follows: CUSTOMER INFORMATION APPROVAL DISBURSEMENT MONITORING COLLECTION Commitments in the main customer segments are monitored by the banks using advanced risk detection tools, which are based on both external and internal criteria, including account histories. These indicators help identify and deal with potential problem loans before payment incidents arise. Specialized units within the group banks may be called upon to manage and collect problem loans. There are three separate phases in the collection process. Initially, borrowers who are behind with their payments are chased up. The second phase consists of seeking a negotiated settlement. If this fails, legal action is taken. Risk management is organized around each subsidiary s lending department, which reports directly to senior management and is independent of line management. The lending departments have two main responsibilities: ensure the quality of lending decisions, by checking that loan conditions are in line with the risk profile; enhance tools for analyzing, managing and tracking credit risk. Regular risk reviews are carried out to assess changes in the overall quality of the loan book and to ensure that an appropriate spread of risks is maintained by economic sector and business line. Sensitive loans, loans to customers that have banking relations with several group banks and credit authorizations that are at the ceilings set according to subsidiaries respective equity are reviewed by the group Risk Committee. In addition, the Lending Committee sets risk management policies with respect to CIC s major customers. Risk assessment and monitoring systems An in-house, 12-point customer rating system has been defined for both CIC and Crédit Mutuel. CIC also uses a range of different tools to assess the group s consolidated risk exposure. For example, the information system can perform real-time calculations of consolidated exposures by counterparty for all CIC group operations. In addition, the automated process for loan reclassification from performing to non-performing complies with prevailing regulations.

50 RISK MANAGEMENT 51 Customer risks Total customer loans, excluding non-performing loans, provisions for loan losses and repurchase/resale agreements, rose 15.8% to 73.9 billion in The breakdown by type of loan is as follows: Customer loans by type (in billions) Outstanding balance at December 31, 2005 Change 2005/2004 Weighting Short-term loans % 30.0% Customer accounts in debit % 5.6% Commercial loans % 5.8% Treasury facilities % 18.2% Export credit 0.3 n.m. 0.4% Medium- and long-term loans % 70.0% Capital asset financing % 15.6% Home loans % 41.9% Finance leases % 7.6% Other 3.6 n.m. 4.9% Total customer loans (excluding non-performing loans, provisions for loan losses and repurchase/resale agreements) % 100% Customer loans based on Banque de France ratings (loans drawn down) Banque de France rating % 49% 3 15% 13% 4 16% 17% 5 12% 14% 6 and 7 3% 3% P 1% 2% Undetermined 2% 2% Industry risks The following business sectors represented over 2% of outstanding corporate loans at December 31, 2005: 2005 Company administration 19.3% Real estate rental 16.2% Wholesaling 5.1% Construction 4.4% Brokerage 4.4% Retailing 4.3% Real estate development/dealing 3.2% Food 3.1% Healthcare and social work 2.1% At December 31, 2005, the total exposure of CIC (excluding Asset Management) to certain specific industries was as follows: Telecommunications Tourism Air transport ,430 million 754 million 706 million

51 52 SUSTAINABLE DEVELOPMENT Real estate risk (in millions) Outstanding loans 1,380 1,197 Off balance sheet commitments 1, Total provisions Commercial real estate Residential real estate 36% 64% 34% 66% Real estate developers Real estate dealers Real estate companies Investors Other 45% 16% 15% 19% 5% 40% 14% 22% 19% 5% Interbank risks CIC and Crédit Mutuel use the same 12-point rating system for interbank risks. The system is used to set exposure limits for each banking group based on its rating, its capital base and that of CIC. Interbank loans by geographic area 2005 North America 23% Western Europe (excluding France) 52% France 19% Other 6% Country risks Countries are rated on an 11-point group scale. Limits are set by country based on a group methodology that takes into account the bank s equity and the country s risk rating. If so recommended by the International Operations and Specialized Financing Committee, CIC s Lending Committee can set more restrictive limits depending on changes in country risks and in the group s exposure level. Breakdown of interbank loans by rating A A- B+ B- C+ C- 6% 49% 31% 11% 1% 0% D+ D- E+ E- F Not rated 0% 0% 0% 0% 0% 2%

52 RISK MANAGEMENT 53 Net additions to provisions for loan losses In 2005, net additions to provisions for loan losses, excluding the collective impairment provision, totaled 102 million. Expressed as a percentage of total outstanding loans before provisions, the relative cost was below that for previous years. (in millions) Net additions to provisions for loan losses (excluding the collective impairment provision) Excluding the collective impairment provision and as a percentage of total loans % 0.42% The collective impairment provision is designed to cover the credit risk on loans that are not individually assessed for impairment, but for which an indication of impairment exists. The amounts set aside, which are deducted from total customer loans, stood at 70 million at January 1, 2005 and 64 million at December 31, Non-performing loans amounted to 3,462 million at December 31, 2005, down 3.4% from 3,585 million at December 31, Total customer loans rose 15.8% year-on-year. Non-performing loans expressed as a percentage of total loans retreated to 4.5% at December 31, 2005 from 5.3% one year earlier. The coverage ratio of non-performing loans (excluding provisions for country risks and the collective impairment provision) was 65.3% at December 31, Control of large exposures Like any banking institution, CIC is required to comply with prudential rules on the diversification of credit risks: total risk-weighted exposure to a group of customers considered as representing a single borrower may not exceed 25% of the group s consolidated capital base; the sum of individual exposures representing over 10% of the group s consolidated capital base may not represent more than 8 times the capital base. CIC complied with regulatory requirements concerning large exposures at December 31, Credit derivatives Credit derivatives are used by two entities within the CIC group: CIC and its foreign branches, and CIC Banque CIAL. Two approaches are applied. The CM-CIC group s trading rooms, which continued to operate through CIC and CIC Banque CIAL in 2005, carry all credit derivatives in their trading portfolios: CIC s trading room in Paris uses credit default swaps (CDS) both to hedge the exposures of its securities portfolios (118 open hedges at end-2005, representing 953 million) and as a vehicle for risk-taking (84 transactions representing 696 million, exclusively concerning investment-grade issuers). The majority of issuers are European and the typical maturity is five years. CIC Banque CIAL hedges its convertible bond portfolio by buying credit default swaps (total hedges representing 420 million, with more than half relating to Asian issuers) or asset-backed securities (ABS, representing 618 million). It also engages in credit arbitrage (credit exposure via bonds, identically hedged by credit default swaps, for an amount of 1,468 million) or equities/cds arbitrage (protection worth 303 million via credit default swaps). In all, protection sold is negligible and exclusively concerns investment-grade issuers. The branches in London (two transactions representing US$20 million and 20 million, maturing in March and July 2006) and Singapore (eight transactions for a total amount of US$60 million) use credit derivatives to a marginal extent for risk-taking and systematically to manage the credit risk on their loan portfolios. Credit default swaps are used as substitutes for standard credit in loan portfolios. Credit derivatives are included in the credit/counterparty risk management and oversight process. Trading rooms are subject to exposure limits by issuer or counterparty for all types of products, including credit default swaps. Outstanding amounts are monitored on a daily basis and exposure limits are reviewed periodically by the Lending Committees and Capital Markets Committees. As they belong to the trading account portfolio, credit default swaps are marked to market. Loan-portfolio credit default swaps undergo the same screening process as standard loans, including credit analysis, credit rating and setting of limits.

53 54 SUSTAINABLE DEVELOPMENT Asset-Liability management (ALM) risk Roles and responsibilities The roles and responsibilities of ALM Departments in each of the regional banks and CIC are clearly defined: Asset-Liability Management is identified as a function completely separate from trading-room operations and has its own budget and teams. Its primary objective is to shelter lending margins from the effects of interest and exchange rate fluctuations and to stabilize income. It is also responsible for ensuring that the banks have sufficient liquidity to meet their funding commitments and weather a crisis. Asset-Liability Management does not operate as a profit center its role is to enhance the bank s profitability and support its strategic development. CIC s Asset-Liability Management teams, which are in constant contact with sales teams throughout the network, contribute actively to defining the bank s sales and marketing policy in terms of lending criteria, rules governing the internal transfer rate and designing new products to meet customer needs. The teams also pool data from the regional banks in order to determine the group s overall position and ensure compliance with regulatory capital ratios. Organization The CIC group has for the past several years opted for a managed decentralization of ALM operations. Standardized ALM agreements and exposure limits are presented in group ALM Risk Guidelines applicable to the whole Crédit Mutuel-CIC group. Interest rate risk Interest rate risks incurred in commercial operations stem from interest rate differentials and differences in benchmark lending and deposit rates. For the purpose of analyzing interest rate risks, account is also taken of the volatility of products with no fixed maturity and embedded options (early repayment, rollover options and options for loans and credit line drawdowns, etc.). Interest rate risks are analyzed on the basis of aggregate positions and general hedges are established for net balance sheet positions. Specific hedges may also be set up for individual highvalue or specially structured transactions. Risk limits are determined in relation to the projected net banking income of the individual banks and the CIC group as a whole. Sensitivity to interest rate risks is expressed as the percentage impact on net interest income based on a national scenario (+/- 1% for short- and long-term rates, +/- 33% for inflation). In 2006, the risk faced by the majority of the group s banks is that of an upward shift in interest rates, leading to a 0.13%-1.5% decrease in net interest income for the year. In the case of CIC Banque Scalbert Dupont, CIC Banque BRO and CIC Banque Transatlantique, the impact on 2006 net interest income is estimated at 0.8%-2.9%. At December 31, 2005, the CIC group s total fixed-rate deposits exceeded total fixed-rate loans (after early repayments) by 2 billion, based on three-year and seven-year time frames. Liquidity risk The CIC group attaches great importance to managing liquidity risks in conjunction with its shareholder BFCM, which handles the group s long-term refinancing. Various regulatory liquidity indicators are monitored: the group s one-month liquidity ratio corresponding to the weighted average ratio of group banks and representing the group s short-term liquidity position stood at 132% at June 30, 2005 and 118% at December 31, 2005, compared with the regulatory requirement of 100%; the weighted own-funds and permanent capital ratio represents the group s medium- and long-term liquidity position. It is calculated by weighting the liquidity ratios of the individual banks by their total average net medium- and long-term loans. At December 31, 2005, the ratio stood at 70%, compared with the regulatory minimum of 60%. In 2005, retail loan originations for the CIC group again grew at a faster pace than customer deposits (+10.7% and +5.9% on average respectively). The group regularly turns to institutional lenders such as the European Investment Bank or Caisse de Refinancement de l Habitat for financing its expansion. It also borrows on the financial markets through BFCM, the group s refinancing arm. Currency risk Customer transactions in foreign currencies are hedged by each of the group s banks. The residual exposure is very limited. CIC does not have any long-term or recurring positions in foreign currencies, except for capital contributions to foreign branches. Equity risk CIC is exposed to various types of equity risks. Equities held in the trading portfolio ( 5,664 million at December 31, 2005 and 6,696 million at January 1, 2005) and the related market risks are discussed in Note 6c to the consolidated financial statements. Equities carried under the fair value option through profit or loss and classified as held for sale concern private equity transactions and various investments in companies, together representing 1,581 million (see Notes 6b and 8a to the consolidated financial statements).

54 RISK MANAGEMENT 55 Market risk General structure Capital markets transactions are carried out by the CIC trading rooms in Paris, London, New York and Singapore, and by CIC Banque CIAL s trading rooms in Strasbourg. The regional banks have a sales role with respect to capital markets operations, channeling customer transactions to CIC s trading rooms. At end-2005, CIC and CIC Banque CIAL together accounted for over 90% of the CIC group s overall market risk, as determined for the purpose of compliance with the requirements of the European Capital Adequacy Directive (CAD). During 2005, the group s capital markets transactions continued to be conducted by CIC and CIC Banque CIAL via their respective trading rooms and transaction-recording and monitoring units. At the same time, the reorganizational measures initiated in 2004 to house operations within a single CIM-CIC trading room (which would also include BFCM s trading room) continued in 2005 to enable the group to attain its objectives with respect to capital markets transactions, as follows: Refinancing of the entire CM-CIC group: in mid-2005, BFCM s and CIC s teams were amalgamated within a single unit, which provides refinancing for retail banking activities and subsidiaries, corporate finance and specialized financing, proprietary trading by the CM-CIC trading room and for the instruments used to meet the group s liquidity needs. These activities will be carried in BFCM s balance sheet. More vigorous promotion of capital markets products to customers: tools and products will be harmonized for all sales teams in Paris and the regions. The emphasis will be on price optimization and the preservation of margins (by reversing positions). These activities will be carried by CIC. Profitability enhancement through high-performance proprietary trading: proprietary trading is conducted in Paris and Strasbourg in the context of about ten activities, mainly arbitrage-related, previously handled in the Paris and/or Strasbourg trading rooms (event-driven operations, index arbitrage, long/short equities, hybrid arbitrage instruments, fixed income arbitrage, credit arbitrage, ABS arbitrage, correlation arbitrage, global macro and short-term strategies, and proprietary distribution). These activities are called upon to create value in a disciplined risk environment and to drive commercial development. In 2005, the decision was taken to cease market-making operations. All of these activities will be transferred to CIC s balance sheet by end Description of internal control structures The role of internal control teams is to ensure that daily and periodic reports are consistently produced in a timely fashion. The reports contain full details of the results and risks relating to the group s various activities. The internal control teams also prepare analyses of the reports for presentation to the management of each business area. The above-mentioned in-depth reorganization of the group s capital markets activities entails a revamp of internal control structures, which began in 2005 and will be completed in 2006: All capital markets activities (front office, control function, back office) are under the responsibility of a member of CIC s Executive Board. The member in question is charged with submitting risk limits and capital allocation for validation by the group s decision-making bodies (CIC Executive Board or BFCM s Board of Directors) and with reporting on activities. The front-office units that execute transactions are segregated from those responsible for the monitoring of risks and results (control function) and from those in charge of transaction validation, settlement and recording (back-office function). Ongoing control is assured by: - two control teams (one at each site), one of which controls risks and results, while the other is tasked with middle-office accounting and regulatory issues; - the Capital Markets Internal Control Department, which operates under the responsibility of another member of the Executive Board and performs continuous second-tier controls for the group s specialized businesses. Periodic checks are carried out by the Internal Audit Department, which performs regular assignments with a specialized audit team. The back office is organized by product line. Teams based in Paris and Strasbourg handle all transaction administration. Capital markets activities are overseen by two committees: - a Risk Committee that meets monthly to monitor strategy, results and risks in relation to the limits prescribed by the Executive Board; - a Steering Committee that meets weekly to coordinate all operational aspects (information system, budget, human resources and procedures).

55 56 SUSTAINABLE DEVELOPMENT Risk management The system used to set exposure limits for market risk is based on: potential loss limits; CIC internal rules and scenarios (including historical VaR, stress tests and CAD ratios), which convert exposures into potential losses. The limits set by the Capital Markets Committee cover various types of market risk (interest rate, currency, equity and counterparty risks). The aggregate limit is broken down into sublimits for each desk. Netting between different types of risk is not permitted. Risks are monitored based on first-tier indicators (sensitivity to various market risk factors), mainly for traders, and also on second-tier indicators (potential losses), which provide an overview of capital markets exposures for the specific attention of decision-makers. Monitoring methodologies within the CM-CIC trading room will be harmonized in Market risk (CAD) by CIC group activity at December 31, 2005 is shown in the following table: M&A and miscellaneous equities: the capital requirement generated by equity risk stood at 268 million at end-2005 and was 75%-attributable to M&A strategies (takeovers and share swaps). Compliance with the CAD is particularly onerous in M&A, the related potential loss being about three times higher than that obtained using the group s in-house measurement approach. The potential exposure represents about 2 billion; Fixed income: positions relate to yield-curve arbitrage, typically with an underlying security. The group has a swap spread position (long position in a security, short position in a swap, with matching amounts and maturities) representing 10 billion, mainly in euro zone countries. There are also arbitrage transactions involving OECD government securities with identical maturities but different issuers, or with the same issuers but with different maturities. CAD risk in millions GRInterest rates SRInterest rates REquities Total Yield curve Credit and hybrid arbitrage M&A and miscellaneous equities Fixed income Treasury/Refinancing Commercial TOTAL The principal trading room risks are as follows: yield curve risks: this relates to the position taken on interest rate movements for the roughly ten main OECD currencies. The above CAD measurement (between 30 million and 40 million) gives a sound indication of average risks on the portfolios concerned. The majority of risks involve the euro and the US dollar, but arbitrage positions on Hungarian and Polish rates are also noteworthy; credit and hybrid arbitrage: these positions correspond to either directional risk-taking or securities/cds arbitrage operations. Credit correlation positions (first-to-default/cds, CDS/equities) are also taken, but the related amounts are not significant. Note that: - underlying securities are bank or corporate bonds (60%), convertible bonds (30%) and ABS (10%), representing net outstandings of roughly 8 billion, - less than 2% of risks (about 120 million, including 15 million relating to issuers rated BB- or below (Japan Airlines only, exclusively in OECD countries) concern non-investment grade issuers and less than 6% (roughly 450 million, including 60 million for Artemis, 28 million for Elior, 44 million for Havas, 70 million for Rallye and just under 100 million for Asian issuers) are not rated by rating agencies.

56 RISK MANAGEMENT 57 European capital adequacy ratio Since January 1, 1996, banks have been required to include market risks corresponding mainly to interest rate, currency, equity and settlement/counterparty risks on trading portfolios in the calculation of their capital adequacy ratio, in accordance with the terms of the European Capital Adequacy Directive (CAD). The overall capital requirement is equal to the sum of the capital required to cover credit risks on total risk-weighted assets, excluding the trading portfolio, and that required to cover market risks on the trading portfolio, plus any additional requirement in respect of large exposures. The CIC group calculates the capital requirement for market risk using the standard regulatory model. The capital requirement is equal to 8% of weighted net risks. (in millions) Credit risk 2005 IFRS 2004 Pro forma IFRS on customer transactions 5,568 4,971 on interbank transactions on other transactions Market risk TOTAL CAPITAL REQUIREMENT 6,834 6,038 Total regulatory capital 8,563 8,087 o/w Tier One capital 5,873 5,419 Capital adequacy ratio (basis 8%) 125% 134% Total capital adequacy ratio* 10% 10.7% Tier One ratio* 6.9% 7.2% * Regulatory capital divided by weighted net risks. Credit risks on customer transactions rose 12%. This rise reflects a 14.7% increase in customer loans, excluding repurchase/resale agreements. Growth in home loans reached 27%. Credit risk on customer transactions accounted for 81.5% of total risks. CAD risks represented 6.6%. Operational risk CIC is continuing to implement a comprehensive management system for its operational risks under the responsibility of senior management. Group-wide guidelines describe the risks concerned and the quantitative evaluation methods to be used to achieve compliance with the new capital adequacy regulations. Overall policy and organization The CM-CIC group s overall policy for operational risk management was approved in 2005 by the group s executive bodies (Executive Board and senior management teams) and deliberative bodies (Supervisory Board and Boards of Directors). This overall policy covers the objectives, responsibilities and organization of the operational risk management function. It also deals with the means of coordinating risk management and monitoring within the group, the principles governing the dedicated information system and the main focuses of the processes for measuring, reducing and financing risks. The group s key objectives in this area are to ensure overall consistent management of operational risks, mitigate losses stemming from operational risks, bolster disaster-recovery plans for mission-critical operations and efficiently meet the challenges of Basel II, in particular by optimizing allocated capital. In keeping with the terms of the new Capital Accord, operational risks include the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. They also include legal risks and the risk of indirect losses. Thus, for all regulatory business lines determined by the Basel Committee, operational risks comprise: damage to property or persons resulting from a technical error, accident, fire, natural disaster, human error or negligence, malicious intent or fraud, subcontracting, etc.; civil or criminal liability incurred in the conduct of an activity (professional liability, operational liability) or attributable to corporate officers (directors and officers liability); loss of revenue following a loss, damage or liability incurred (cessation or significant reduction of activity until the resumption of normal business operations). The operational risk management function The operational risk management function within CIC has been defined, along with its scope of responsibility and relationship with other functions. It comprises: a central group team that coordinates and consolidates the entire process, and liaises with the regional groups operational risk managers; regional correspondents trained in risk management methodologies, who implement the process in accordance with group operational risk management guidelines and with the help of line managers and internal control and quality assurance teams. Risk management information system In 2005, all CM-CIC group entities were equipped with risk management software. The software will initially be used to manage losses, but its use will gradually extend to risk mitigation and financing. The operational risk management system comprises: a complete software package for managing operational risks, embedded in the group s IT architecture and made available to the staff members concerned on standardized, secure workstations; databases containing information on losses and potential risks; the necessary documentary resources, notably in the areas of risk-mapping and disaster-recovery planning; self-training modules covering all package tools.

57 58 SUSTAINABLE DEVELOPMENT Identification and control of risks Data on historical loss experience have been collected since 2001, based on group guidelines. Since 2002, they include not only losses for the year, but also provisions booked for detected risks. Since 2005, the data have been managed on the group s risk management software. Risk experience showed a slight improvement in The annual cost of operational risks for the CIC group was approximately 40 million, corresponding to recognized losses and the change in provisions relative to 2004*. The cost of potential risks is being finalized using the advanced methods set out in Basel II. In the sphere of risk-mapping, the first complete set of risk maps by outside experts was completed in The probability-based models culled from the work of outside experts permit assessment of capital requirements pursuant to the Advanced Measurement Approach (AMA) prescribed in Basel II. Risk-reducing preventive action identified during the mapping process is implemented directly by line employees and by internal control and quality assurance teams. Human resources Staff levels In 2005 as in prior years, CIC aimed both to support business growth through new branch creations and expansions of existing sites, and to control growth in staff numbers. As a result, total headcount in France remained on a par with 2004 a decrease in headquarters staff offsetting growth in branch network employee numbers. Due to further increases in the number of long-term absences, particularly from employees in pre-retirement schemes, the number of actually employed workers declined 1.26%. Safeguards have emphasized disaster-recovery, logistics and IT solutions for all mission-critical operations. Disaster-recovery planning for the business lines got under way in 2004 and the most urgent plans should be completed in A holistic and consistent crisis-management process, linked to the French Banking Federation s system for interbank operations, has been rolled out. For the financing of the net residual risk, the insurance program has been renewed in its basic form. Self-insurance has been stepped up for losses that are below the deductibles of external insurers. As risks are mapped, existing financing plans are reassessed against risk levels and adjusted as required. Action is also being taken to reflect the risk-mitigating impact of insurance in the amount of regulatory capital held for operational risk, as allowed under Basel II. The cumulative insured value for all types of coverage (including auto insurance) under the group insurance program stands at nearly 300 million. Total annual insurance premiums paid to external insurers amount to 6.3 million. Training * Full-time equivalent CIC makes training a priority for its employees, to ensure that they not only maintain but expand their skill sets and continually develop a better command of software tools. Training is also essential for the redeployment of headquarters functions to the branch network. Training expenditure represented over 5% of payroll in Reporting and general oversight Loss summaries were initiated in 2001 and their content will be extended in 2006 to potential risks and compliance monitoring with respect to the general risk management policy. Operational risks are monitored on a regular basis by the executive and deliberative bodies of the group and of the regional entities. The Internal Audit Department is currently assessing the risk measurement and reduction mechanism, which satisfies the qualifying criteria for Basel II s AMA. * The annual cost includes 27.3 million corresponding to people-related risks: - fraud and theft: 14.7 million; - employee relations: 2.4 million; - errors (human, procedural) 10.2 million. It also includes legal risks amounting to 11.8 million: - liability suits: 13 million; - tax reassessments: 1.4 million; - supplier disputes: 0.2 million.

58 TECHNOLOGICAL CAPABILITIES 59 The main focus was on strengthening capabilities within each of the businesses, with special emphasis on selling insurance products. Three of the banks continued to hold courses on mastering the theoretical and practical aspects of development tools. These courses will be further rolled out to the other banks in 2006 and will eventually be offered to every group employee. Employee relations As in prior years, a wage agreement was negotiated for 2006, and signed by all trade unions. Other, non-recurring agreements were reached, on conditions governing retirement at the employer s initiative, on the inclusion of a number of subsidiaries in the employee profit-sharing scheme, on the length of employee representatives terms of office and on harmonizing rates for contributions to supplementary retirement savings accounts. Finally, negotiations have also started on harmonizing conditions applicable to employee representative bodies across the various companies. Employee profit sharing and incentive bonuses More than 82 million, representing slightly more than 10% of payroll, was distributed to employees in 2005 in the form of profit-sharing payouts and incentive bonuses. The group-level agreement on incentive bonuses will be applicable for the first time in 2006, in respect of 2005 results, and will involve three-quarters of group employees. The companies accounting for the remaining 25% of staff will be applying their previous agreement for one final year. Thanks to these two group-level agreements on profit-sharing and incentive bonuses, all employees will be able to share more equitably in the fruits of the group s positive performance, regardless of which company employs them. In 2006, the amounts distributed are expected to represent slightly less than 10% of payroll. No management or employee stock option plans have been established. Technological capabilities Euro Information Production sites continued to be brought together in 2005, with the Mulhouse data processing teams transferring to Strasbourg and Valence personnel joining the Lyon and Nantes facilities. The aim is to bring the total number of sites to six, including one backup site, to reduce costs, streamline operations, boost productivity and raise customer satisfaction. Efforts to enhance quality in data processing have yielded sustained results, as shown by strong quality indicators and the award of ISO 9001 certification to all production sites. Among the continuing upgrades, the Strasbourg central desk that oversees the running of all other sites over the weekend shifted to 24/7 operation in January New developments New products or services: completion of the roll-out of Vire, a single-input system for processing wire transfers; deployment of IDC Pro, a management tool for business loans; continued investment in remote bancassurance; changes in group-level document production to keep postal costs down and improve communication with customers; decentralized input of employee savings account agreements. Insurance: posting on the Intranet of insurance client profiles and of an overview of insurance operations; gradual roll-out of electronic document management (EDM) to all insurance segments; ramp-up of the Locass project aimed at decentralizing to regional sites the management of life and term life insurance policies. Changes in regulations: commencement of live IFRS processing in June 2005; upgrades as part of the Basel II compliance project, including the use of specific ratings, management of provisions and data mining tools.

59 60 SUSTAINABLE DEVELOPMENT Production In response to rising transaction volumes and the need for greater processing capability, the central sites have upped their technical resources as follows: installed capacity across all sites totaled 25,000 MIPS (million instructions per second) at December 31, 2005, 23% more than a year earlier. A new state-of-the-art computer came on stream in Strasbourg to process insurance and securities operations; disk storage capacity rose 125% year-on-year, to 602 terabytes (602,000 billion characters). The share of continuous printing also continued to grow, to 240 million pages out of the 537 million pages printed annually. The pilot project on remote asynchronous disk mirroring for data backup between Strasbourg and Metz was completed in Initiatives The new ATM technology was used for the first time for payment operations involving SFR and NRJ Mobile mobile-phone services, the Navigo passes on the Paris subway and bus network, and the reloading of Monéo electronic-wallet cards. Network resources based on the IP (Internet Protocol) standard were broadened, to include telephony, alarms, multipurpose photocopiers, video surveillance, video conferencing and more. Reinforced identification systems were developed and implemented to enhance the protection of remotely managed accounts and, for optimum security, deployment of the safe site toolbar that authenticates the CM-CIC websites. Further optimization of the information system was carried out. Outsourced IT management contracts were signed to run IT and hot-line operations for NRJ Mobile and the IT department of AXXES. The benefits of Crédit Mutuel and CIC IT Department employees were harmonized based on the CMCEE collective-bargaining agreement, plus other agreements dealing specifically with IT operations. Preparations were made for the January 1, 2006, implementation of the plan to gather all IT staff into three organizations Euro Information, Euro Information Production, Euro Information Développements. Key directions The major overhaul of credit operations will continue, with two key focuses: transferring to Intranet-based technology the processing of home loans; redesigning the engine for managing installment loans and revolving loans. In the area of Electronic Document Management, the project on back-office streamlining and paperless management will be launched, to bring simpler procedures to branches and do away with and/or digitize paper records. As regards online purchases of products, following the completion of an initial stage focused on running simulations, specific tools will be developed, beginning with credit and savings offerings. All further efforts will help advance the international compatibility of the information system, by making the newly defined rules and standards part of the basic platform of any new developments. GIE CT6 This subsidiary s operations continued to grow in 2005, against the backdrop of the establishment of the Single Euro Payment Area (SEPA). With over 116,000 retailer contracts and 14.2 billion in sales (up 5.7%), CIC maintained its market share. End-of-year volumes were particularly high, as each Saturday in December beat the previous record for the number of authorizations processed. The group managed 1,852,000 cards at December 31, 2005, thanks to 5.4% year-on-year growth which is once again in line with the market average. Highlights of the year included: migration to the new EMV global standard for smart cards had been carried out for 1,216,000 cards and 67,000 terminals by December 31, 2005; it is due to be completed in the first half of 2006; fraudulent use of cards outside France fell significantly, reversing the trend of the past three years, thanks to the EMV deployment and to prevention tools such as DIANE; new sales offerings included the DSL credit-card terminal that speeds up processing time for retailers and a gift card that will be marketed in March 2006; group tools, including ICARS, GESICA, DIANE, OTOCAR and the EDM project, continued to be rolled out.

60 CLIENT RELATIONS 61 Client relations Quality and client relations In 2005, CIC regional banks took further steps to enhance their facilities and optimize the services made available to clients, aiming for excellence in operations and high-quality client service. Quality assurance action plans developed around the new application for managing and monitoring client complaints have led to a simplifying and harmonization of procedures. The steps taken are based on two core principles: minimizing the distance between clients and the processing of their transactions; employee accountability at all levels in the company. Several operational applications of electronic document management (EDM) implemented in 2005, such as insurance claims management, employee savings payments or loan data archiving, confirmed the benefits of EDM for greater responsiveness to client needs, higher-quality processing and increased automation of processes. These successes were the forerunners of a program of administrative streamlining and paperless management in all branches. The drive for operational excellence among the business centers serving the entire group led to the certification of all IT production sites. And the following steps were taken to enhance client relations by providing convenient and locally available services: opening 50 new sales outlets; major renovations, transfers and enlargements for 134 branches; setting up self-serve areas within branches, open from 7:00 am to 10:00 pm; intensive use of remote banking channels, including the Internet, secure and call centers, which together receive 68 million client contacts annually. Ombudsman An ombudsman, who was appointed at the end of 2002, can be called upon by clients to examine any problems that fall within his remit. Any opinions issued by the ombudsman are considered binding by the group. This resource is in addition to processes set up within each of the group s banks to ensure attention to client needs.

61 62 SUSTAINABLE DEVELOPMENT Shareholder relations Financial communications The Executive Board of CIC is scheduled to meet on September 7, 2006 to approve the financial statements for the first six months of 2006 and submit them for approval to the Supervisory Board. A press release will be published at that time in the financial press. The financial statements for the year ended December 31, 2006 are due to be approved in February The Executive Board of CIC organizes regular meetings with the press and financial analysts specializing in the banking sector in order to present the CIC group s results and answer their questions. This ensures coverage of the CIC group s results in specialized publications and in the main national daily newspapers. CIC publishes a shareholders letter every six months, keeping investors informed about the group s results and the latest developments. Over 30,000 copies are distributed to individual shareholders and employee shareholders, including those who have elected to place their shares in a company mutual fund. The shareholders letter is also available on request by calling +33 (0) CIC shareholders are thus kept regularly informed of the company s results and of key events. The CIC website, contains press releases and the group s annual report. The annual report is also available online on the Autorité des marchés financiers website ( by accessing the Decisions and Financial Information page and clicking on the various search links. Stock market performance Over the 12 months to December 31, 2005, the CIC share price declined to 156, from The year began on an upward trend, with a high of 190 in March, after which the price fell to 169 in June, following CIC s decision to dispose of its portfolio of structured products. The share price remained on a downward trend, ending the year at 156, 12% lower than a year earlier. In the course of the year, 148,779 CIC shares were traded on the Paris Bourse, representing 25.4 million. Regular listing and constant liquidity meant that shareholders were always able to find a buyer on the market.

62 63 Financial information 64 CONSOLIDATED FINANCIAL STATEMENTS 64 Executive Board report on the consolidated financial statements 68 Recent developments and outlook 69 Executive remuneration 70 Financial statements 118 FINANCIAL STATEMENTS OF THE BANK (extract) 119 Executive Board report on the accounts of CIC 120 Financial statements

63 64 CONSOLIDATED FINANCIAL STATEMENTS Executive Board report on the consolidated financial statements Consolidated financial statements Worldwide growth picked up pace in the third quarter of 2005 after a slack spring, underlining the global economy s resilience in the face of a generally tight market. After the strong performances registered in 2003 and 2004 for the first time since the explosion of the internet bubble, at the beginning of 2005 activity slowed, only to level out and even gain in momentum through the summer and autumn. According to the IMF, world growth came in at 4.3% in 2005 compared with 5.1% in 2004, with OECD countries registering growth of 2.7%. Set against the almost year-long upward spiral in oil prices, with prices for crude oil doubling in the last twelve months, these growth figures paint a positive picture. The oil price situation almost hit boiling point at the end of the summer, when oil reached US$ 70 a barrel, and the markets feared a serious recession due to expected shortages also witnessed continuing high levels of credit. Long-term yields held firm, even with the yield on 10-year French government bonds close to 3.40% below the thresholds observed at the beginning of the year, when they peaked at 3.85% in March. The world economy in 2005 therefore held up well to a series of starkly different events: spiraling energy and raw material costs; global competition and a cut-back in industrial prices in an international arena marked by the increasing importance of emerging industrial countries with low labor costs, which succeeded in attracting investment and production spend (outsourcing, offshoring). The good news, surprisingly, stemmed from the stock markets, which performed far better than expected, with unhoped-for strong showings from Japan and Europe in particular. The Nikkei gained more than 35%, and the CAC 40 index more than 22%, breaking the 4,600-point barrier for the first time since spring 2002, and ending the year above 4,700 points. The Dax gained more than 24% in Germany. And while the Dow Jones registered a gain of under 1% in the US, the Nasdaq performed better (+4.4%), against a backdrop of moderate economic sentiment and a rising dollar. The upturn in the stock markets reflects: better-than-expected profits and an upswing in growth at the end of the year; low yields, causing investors to turn increasingly to the stock market; strong pace of restructuring operations, mergers and acquisitions, and flotations, which drove the momentum in the European markets in particular. The rise in the dollar also boosted markets in Europe to the detriment of the US, despite some strong intrinsic performances.

64 EXECUTIVE BOARD REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 65 Although these upbeat trends have also been a feature of the early part of 2006, certain risks nevertheless remain: households have yet to bear the energy costs of the past winter and their reaction to a cut in purchasing power is uncertain. Energy prices remain sensitive to the larger geopolitical arena, such as for example the situation in Iran or Russia; monetary policies will need to be able to contain inflationary tendencies without hindering growth; they will also have an impact on exchange rates and hence on trade in different geographical areas; in Europe, where domestic demand is still soft, a dependency on exports and the lack of any room for manoeuver on budgets for the majority of member states (including the economically wealthiest) have prompted major structural reforms in an attempt to avoid seeing the nascent downward trend in unemployment figures peter out. The political context is also sensitive due to the imminence of elections in Europe. Companies remain cautious and appear determined to clean their accounts and scale back debt, while capital spending commitments have not been in tune with profits. However, a continuation of the upbeat trend in growth figures throughout 2006 depends on maintaining strong corporate momentum. GROUP BUSINESS PERFORMANCE AND RESULTS The consolidated financial statements at December 31, 2005 are presented in accordance with European regulation 1606/2002 on international accounting standards. The group has applied International Financial Reporting Standards (IFRS) as adopted by the European Union at December 31, The published consolidated financial statements for 2004 were prepared in accordance with French generally accepted accounting standards (French GAAP). The 2004 consolidated financial statements ( IFRS excluding IAS ) that are presented with the 2005 consolidated financial statements were prepared in accordance with the IFRSs applicable in 2004, which do not include IAS 32, IAS 39 and IFRS 4; these standards are applied with effect from January 1, 2005, as allowed by IFRS 1. The impacts of the first-time adoption of IFRS are detailed in Note 1 to the consolidated financial statements. IFRS accounting principles are described in Note 2. Details of companies consolidated for the first time in 2005 are provided below: at the beginning of 2005, CIC raised its interest in Banque de Tunisie to 20%; this entity has been accounted for by the equity method since January 1, 2005; Atout SA, a Luxembourg-based subsidiary of Banque de Luxembourg, has been fully consolidated; Banque Transatlantique Belgium has been fully consolidated; Cigogne Management, the Luxembourg-based fund manager and Cigogne Fund, the investment fund in which the group holds a majority stake, have been fully consolidated; a number of entities holding convertible bonds issued by Banca Popolare di Milano (BPM) have also been fully consolidated for the first time. CIC is fully consolidated by Banque Fédérative du Crédit Mutuel (BFCM), which directly and indirectly holds 92.87% of CIC s capital. Particularly noteworthy in 2005 was the sale by CIC of the risks on its structured products portfolio in the first half of the year. Analysis of the consolidated balance sheet The main changes in balance sheet items can be analyzed as follows: Customer loans, including lease financing and excluding resale agreements, amounted to 75.6 billion at December 31, 2005, up 14.7% on the year-earlier figure. This increase reflects a 27% growth in home loans, and a more modest increase in corporate loans (particularly to large corporates), due to the group s more selective approach to new lending; Customer deposits (excluding repurchase agreements) advanced by 5% to 55 billion, and customer funds invested in savings products reached billion. Tier 1 capital used to calculate the capital adequacy ratio totaled 5.9 billion, up 9.3% on the 5.4 billion recorded at December 31, Including Tier 2 capital, the group s total regulatory capital came to 8.5 billion at December 31, 2005, representing a European capital adequacy ratio of 10%. Tier 1 capital represented 6.9% of the total. Analysis of the consolidated income statement In 2005, the CIC group reported a 5.1% rise in net income for the year, from 550 million to 578 million, thanks to a positive contribution from all business lines, with the exception of the capital markets activity. Net banking income fell 3.2% to 3,265 million. This mainly reflects a 388 million drop in 2005 net banking income from the capital markets activity due to the sale of the risks on the structured products portfolio in the first half of the year. General operating expenses rose 4%, to 2,515 million. Net additions to provisions for detected risks declined 0.42% to 0.13% of total outstanding loans, or 102 million, compared with 287 million in The coverage ratio of non-performing and litigious loans was 65% at end Income before tax came in at 724 million, compared with 809 million in Return on equity came in at 10.8% and earnings per share at for 2005.

65 66 CONSOLIDATED FINANCIAL STATEMENTS BUSINESS PERFORMANCE Description of business segments The CIC group s reportable business segments reflect its organization structure (see chart on page 8). Retail banking comprises the regional bank network, the CIC network in the greater Paris region and all specialist activities whose products are distributed via the network. These include life insurance and property-casualty insurance, equipment leasing, real estate leasing, factoring, fund management, employee savings plans and real estate. Financing and capital markets encompasses: credit facilities for large corporates and institutional clients, specialized financing (project and asset financing, export financing, etc.), international operations and foreign branches; capital markets operations in general, spanning customer and proprietary transactions involving interest rate instruments, foreign currencies and equities, including brokerage services. Private banking encompasses all banks engaged in wealth management, both in France (CIC Banque Transatlantique, Dubly- Douilhet SA, BLC Gestion) and internationally (Banque de Luxembourg, CIC Banque CIAL Suisse, Mutuel Bank Luxembourg, CIC Private Banking-Banque Pasche). Private equity, conducted on a proprietary basis, is a major contributor to group earnings. The business has a three-pronged structure organized around CIC Finance, CIC Banque de Vizille and IPO. Headquarters and holding company services encompass all unallocated activities and units that provide solely logistical support, whose expenses are billed in their entirety to user entities. They include intermediate holding companies, business premises held by specific companies and in-house IT companies that serve the group s various businesses. RESULTS BY BUSINESS SEGMENT R e t a i l b a n k i n g (in millions) Change 2005/2004 Net banking income 2,685 2, % Operating income before provisions % Income before tax % Net income % In recent years, the retail banking business has steadily expanded its client base. The business had 3.63 million customers at the end of 2005, compared to 3.46 million at end Underpinning this growth was a proactive policy based on refurbishing, expanding, relocating and creating branches: 50 branches were opened in New installment loans in 2005 totaled 18,706 million, a 23% increase on Savings deposits also grew, driven by a 8% rise in demand deposits, and a 3% expansion in special savings accounts was another successful year for bancassurance operations, with new comprehensive home and motor insurance business up 38% and life insurance revenues advancing 27%. Retail banking net banking income which accounts for 82% of group net banking income rose 3%. Operating income before provisions climbed 3.5%. Income before tax increased 36.1% from 485 million to 660 million. Net income for the year came in at 448 million, representing 77.5% of group net income.

66 EXECUTIVE BOARD REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 67 F i n a n c i n g a n d c a p i t a l m a r k e t s (in millions) Change 2005/2004 Net banking income 17) 431 n.m. Operating income/(loss) before provisions (256) 197 n.m. Income/(loss) before tax (232) 253 n.m. Net income/(loss) (148) 166 n.m. Net banking income from the financing and capital markets segment contracted to 17 million in 2005 from 431 million a year earlier. This mainly reflects the June 30, 2005 sale of the risks on the structured equity products portfolio. The sale of the portfolio risks did not result in material costs in the second half of the year. Excluding structured equity products, the business posted good financial results in Net banking income from other capital markets operations came in at 211 million for the year to December 31, The capital markets and brokerage business reported a net banking loss of 207 million in 2005, compared to net banking income of 181 million in This figure includes a charge of 484 million corresponding to the sale of the risks on the structured equity portfolio reflected in the financial statements at June 30, The structured products business had recorded a net banking loss of 156 million for the year ended December 31, Extracts from the press release for the six months to June 30, 2005 The structured products portfolio, representing almost 400 contracts worth 17 billion, chiefly consisted of structured equities, multi-underlyings and barrier options. The portfolio s risk exposure was highly concentrated on certain maturities and stocks that could have led to significant losses. The group decided to sell substantially all of the risks associated with the portfolio in June The portfolio currently contains a residual amount of 2.5 billion, for which a 24 million provision was set aside in the interim 2005 financial statments. The provision was based on an external assessment of the corresponding risks. Capital losses generated on the sale amounted to 597 million. The management loss for the first half of the year is 46 million ( 156 million in 2004). After taking into account the positive 183 million impact of IFRS (day one profit and loss and bid/ask), net banking income generated by the structured products business for first-half 2005 came in at a negative 484 million. The negative impact, net of tax, on 2005 net income is 320 million. For large corporates and specialized financing, net banking income declined from 181 million in 2004 to 156 million in Foreign branches reported an increase of 3 million in net income due to reduced risk. The financing and capital markets business reported a net loss of 148 million for P r i v a t e b a n k i n g (in millions) Change 2005/2004 Net banking income % Operating income before provisions % Income before tax % Net income % Net banking income from the private banking business (representing 10% of group net banking income) advanced 5.8% to 331 million, while operating income before provisions climbed 12.7% to 124 million from 110 million. Net income reported by the private banking business came in at 71 million, accounting for 12.3% of the group total.

67 68 CONSOLIDATED FINANCIAL STATEMENTS P r i v a t e e q u i t y (in millions) Change 2005/2004 Net banking income n.m. Operating income before provisions n.m. Income before tax n.m. Net income n.m. Net banking income from this business segment (representing 8% of the group total) came in 3.5 times higher thanks to a strong business momentum and the impact of IFRS (classification of investments in non-controlled companies at fair value). Net income for 2005 jumped five-fold to 213 million. H e a d q u a r t e r s a n d h o l d i n g c o m p a n y (in millions) Change 2005/2004 Net banking loss (14) (49) % Operating loss before provisions (48) (82) % Loss before tax (45) (77) % Net loss (6) (41) % The contribution of headquarters and holding company services to the group s overall performance is not material and the same applies to year-on-year comparisons. The amounts reported for this segment include costs that cannot be billed to other entities, the cost of allocating economic capital and the favorable impact of group tax relief which cannot be allocated to a specific business. Recent developments and outlook Recent developments To optimize management of market risks, give coherence to the businesses and help develop a consistent commercial policy, all French capital markets activities have been grouped within a single trading room used by CIC, BFCM and CIC Banque CIAL, and based in Paris and Strasbourg. The trading room has been placed under the authortity of a joint management team and is organized around three key business lines: Treasury and refinancing, which will act as the CM-CIC group s interface with the market; Sales, geared towards the group s customers, from corporates and institutions to government agencies; Proprietary activities comprising arbitrage, book management and alternative fund management. After-market units (such as the back-office and risk management) will be common to all group entities. Outlook for 2006 With signs of an economic recovery and a stock market upturn, CIC expects to meet its objectives and targets for 2006, including: expanding the business base of its network; bolstering and streamlining its specialized businesses; broadening product and service offerings in all of the group s markets.

68 EXECUTIVE REMUNERATION 69 Executive remuneration Remuneration received by the group s key executives is detailed in the table below. Part of the remuneration received by some of the group s key executives relates to their duties as employees or corporate officers of Crédit Mutuel. Remuneration accruing to other executives relates exclusively to their activities within the CIC group. Executive remuneration is set by the Supervisory Board based on recommendations made by a special three-member committee (see page 38). Remuneration comprises a fixed and variable component. The fixed portion is determined in the light of market rates of pay for positions carrying equivalent responsibilities. The variable portion is determined based on a specific percentage and approved by the meeting of the Supervisory Board following the Shareholders Meeting called to approve the financial statements for the year in respect of which the variable remuneration is paid. The group s key executives are also entitled to the same welfare and top-up pension benefits as all employees, in respect of either Crédit Mutuel (for those carrying out part of their activities therein) or in respect of CIC. However, the group s key executives do not have any specific benefits. They have not been awarded any CIC shares or share equivalents. They are entitled to attendance fees in consideration for their functions within the group, but not for the offices they hold within group companies or other entities. The group s key executives may have been granted credit notes or loans by group banks, subject to the same terms and conditions as those offered to all of the group s employees. The oustanding principal on loans taken out by the group s key executives amounted to 516,260 at December 31, R e m u n e r a t i o n p a i d t o t h e g r o u p s k e y e x e c u t i v e s i n ( a ) In respect of Crédit Mutuel In respect of CIC Fixed Variable Benefits-in-kind (b) Michel Lucas 426, , , ,986 Alain Fradin 247, ,000 5, ,649 Bernard Bartelmann 347, ,716 Jean Huet 230, ,000 3, ,226 Jean-Jacques Tamburini 230, ,000 3, ,805 Philippe Vidal 231, , ,125 Rémy Weber 230, ,000 3, ,351 Michel Michenko 200, ,000 11, ,589 Gérard Romedenne 216, ,000 9, ,649 (a) Gross amount (before tax). (b) Company cars only, except in the case of Gérard Romedenne, who benefits solely from a company apartment and Michel Michenko, who benefits from both a company car and apartment. Total

69 70 CONSOLIDATED FINANCIAL STATEMENTS Financial statements CONSOLIDATED BALANCE SHEET ASSETS (in millions) Notes Dec. 31, 2005 IFRS Jan. 1, 2005 IFRS Cash and amounts due from central banks and post office banks 5 2,622 1,588 Financial assets at fair value through profit or loss 6 58,318 52,745 Derivatives used for hedging purposes Available-for-sale financial assets 8 12,982 14,174 Loans and receivables due from credit institutions 5 28,970 23,253 Loans and receivables due from customers 9 75,558 65,862 Remeasurement adjustment on interest rate risk hedged portfolios Held-to-maturity financial assets 11 1,106 1,170 Current tax assets Deferred tax assets Accruals and other assets 14 12,901 10,945 Investments in associates Investment property Property and equipment and finance leases (lessee accounting) 17 1,362 1,310 Intangible assets Goodwill TOTAL ASSETS 195, ,653

70 FINANCIAL STATEMENTS 71 LIABILITIES AND SHAREHOLDERS EQUITY (in millions) Notes Dec. 31, 2005 IFRS Jan. 1, 2005 IFRS Due to central banks and post office banks Financial liabilities at fair value through profit or loss 21 32,378 31,140 Derivatives used for hedging purposes 7 1, Due to credit institutions 20 64,160 48,904 Due to customers 22 55,065 52,448 Debt securities 23 19,809 18,559 Remeasurement adjustment on interest rate risk hedged portfolios Current tax liabilities Deferred tax liabilities Accruals and other liabilities 24 12,838 10,961 Provisions for contingencies and charges Subordinated debt 26 2,683 2,782 Shareholders equity 6,475 5,797 Attributable to equity holders of the parent 6,079 5,439 - Capital stock Additional paid-in capital Reserves 3,936 3,452 - Unrealized or deferred gains and losses Net income Minority interests TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 195, ,653

71 72 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME (in millions) Notes 2005 IFRS 2004 IFRS excl. IAS Interest income 30b 7,784) 9,196) Interest expense 30b (7,121) (8,328) Commission income 31b 1,736) 1,674) Commission expense 31b (453) (420) Net gains on financial transactions 1,308) 1,219) Net gain/(loss) on financial instruments at fair value through profit or loss 32b 1,221) 884) Net gain/(loss) on available-for-sale financial assets 33b 87) 335) Income from other activities 34b 58) 56) Expense on other activities 34b (47) (23) Net banking income 3,265) 3,374) Payroll costs 35a (1,547) (1,473) Other general operating expenses 35c (799) (770) Depreciation and amortization 36b (169) (176) Operating income before provisions 750) 955) Net additions to provisions for loan losses 37b (95) (195) Operating income after provisions 655) 760) Share of income/(loss) of associates 15b 59) 45) Net gain/(loss) on disposals of other assets 38b 10) 4) Income before tax 724) 809) Corporate income tax 39b (89) (226) Net income before minority interests 635) 583) Minority interests 57) 33) NET INCOME 578) 550) Earnings per share (in )* 16.42) 15.62) * Diluted earnings per share are identical to basic earnings per share.

72 FINANCIAL STATEMENTS 73 CONSOLIDATED STATEMENT OF CASH FLOWS (in millions) 2005 IFRS 2004 IFRS excl. IAS Income before tax 724) 809) Net depreciation/amortization expense on property and equipment and intangible assets 170) 177) Impairment of goodwill and other non-current assets ) ) Net additions to provisions (70) (78) Share of income/loss of associates (59) (45) Net loss/gain from investing activities (12) (20) Income/expense from financing activities ) ) Other movements (478) 577) Non-monetary items included in income before tax and other adjustments 275) 1,420) Cash flows relating to interbank transactions (a) 7,058) 1,326) Cash flows relating to customer transactions (b) (6,805) 151) Cash flows relating to other transactions affecting financial assets or liabilities (c) (1,021) (2,632) Cash flows relating to other transactions affecting non-financial assets or liabilties 276) 161) Taxes paid (41) (208) Net decrease/(increase) in assets and liabilities from operating activities (533) (1,202) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES (A) (258) 218) Cash flows relating to financial assets and investments (d) (95) (797) Cash flows relating to investment property (e) 2) 1) Cash flows relating to property and equipment and intangible assets (f) (211) (234) CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (B) (304) (1,030) Cash flows relating to transactions with shareholders (g) (158) (67) Other net cash flows relating to financing activities (h) (567) (293) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (C) (725) (360) IMPACT OF MOVEMENTS IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (D) (21) Net increase/(decrease) in cash and cash equivalents (A + B+ C + D) (1,288) (1,193) Net cash flows from (used in) operating activities (A) (259) 218) Net cash flows from (used in) investing activities (B) (304) (1,030) Net cash flows from (used in) financing activities (C) (725) (360) Impact of movements in exchange rates on cash and cash equivalents (D) ) (21) Cash and cash equivalents at beginning of year 3,635) 4,828) Cash accounts and accounts with central banks and post office banks 1,528) 3,178) Demand loans and deposits credit institutions 2,107) 1,650) Cash and cash equivalents at end of year 2,347) 3,635) Cash accounts and accounts with central banks and post office banks 2,621) 1,528) Demand loans and deposits credit institutions (274) 2,107) CHANGE IN CASH AND CASH EQUIVALENTS (1,288) (1,193)

73 74 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Equity at Jan. 1, 2004 (as published) Impact of the adoption of IFRS Equity at Jan. 1, 2004 (pro forma) Consolidated income for the year Appropriation of prior year earnings Capital stock Equity attributable to equity holders of the parent Additional paid-in capital Reserves (1) Cumulative translation adjustment Unrealized or deferred gains and losses on AFS financial on hedging assets (3) instruments Income for the year Total Minority interests General banking risks reserve ,490) (19) 462) 4,232) 227) 689) 640) 19) 659) 10) (689) ,130) 462) 4,891) 237) 462) (462) 550) 550) 33) Dividends paid (115) (115) (11) Translation adjustments (11) (11) Restructuring and internal asset sales Impact of changes in group structure (1) (1) Other movements 7) 7) Equity at Dec. 31, 2004 (2) ,483) (11) 550) 5,321) 345) Equity at Jan. 1, 2005 (pro forma) Impact of the adoption of IFRS Equity at Jan. 1, 2005 (pro forma) Consolidated income for the year Appropriation of prior year earnings ,483) (11) 550) 5,321) 345) 86) (20) 142 (5) 117) 13) ,463) (11) 142 (5) 550) 5,438) 358) 550) (550) 578) 578) 57) Dividends paid (133) (133) (32) Translation adjustments 30) 30) Impact of remeasurement (2) (2) Change in fair value of AFS financial assets (3) 127 2) 129) 1) Restructuring and internal asset sales Impact of changes in group structure (1) (1) 41 41) 13) Other movements (1) (1) (1) Equity at Dec. 31, ,917 19) 269 (3) 578) 6,079) 396) (1) At December 31, 2005, reserves comprised the legal reserve for 56 million, the special long-term capital gains reserve for 287 million, unappropriated retained earnings for 840 million, other CIC reserves for 268 million and post-acquisition retained earnings of subsidiaries for 2,466 million. CIC s capital stock was made up of 35,208,166 common shares with a par value of 16. (2) Equity at December 31, 2004 (as published) amounted to 4,979 million, including minority interests for 335 million but not including the general banking risks reserve. (3) AFS: available for sale. At the Shareholders Meeting, shareholders were asked to approve a payout of 4.1 per share, representing a total dividend of 144 million.

74 FINANCIAL STATEMENTS 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The notes are presented in millions of euros ( m). Note 1 - Impacts of the adoption of International Financial Reporting Standards (IFRS) on the consolidated financial statements Pursuant to European regulation 1606/2002 on international accounting standards, the consolidated financial statements for the year ended December 31, 2005 have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted for use in the European Union at that date. The International Financial Reporting Standards that were applied by the group to prepare its consolidated financial statements include International Accounting Standards (IAS) and IFRS 1 5, as well as the related interpretations adopted for use in the European Union at December 31, The 2004 consolidated financial statements as published were prepared in accordance with French generally accepted accounting standards (French GAAP). The 2004 consolidated financial statements ( IFRS excluding IAS ) which are presented with the 2005 consolidated financial statements were prepared in accordance with the IFRSs applicable in 2004, which do not include IAS 32, IAS 39 and IFRS 4; these standards are applied with effect from January 1, 2005, as allowed by IFRS 1. Main options and exemptions applied upon first-time adoption of IFRS IFRS have been applied for the first time in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards. Under IFRS 1, changes in accounting policies should be applied retrospectively and adjusted through opening shareholders equity at January 1, IFRS 1 also offers a number of mandatory and optional exemptions. CIC has chosen to apply the following: business combinations carried out prior to January 1, 2004 have not been restated; property and equipment continue to be recorded at cost, rather than remeasured at fair value; as allowed by IFRS 1, at January 1, 2004 cumulative translation adjustments have been recognized in full in shareholders equity and the balance reset to zero; IAS 32/39 and IFRS 4 have been applied with effect from January 1, The 2004 consolidated financial statements and in particular the opening balance sheet at January 1, 2004 have not been restated; several reclassifications and measurement adjustments are reflected in the opening balance sheet at January 1, 2005; hedge accounting rules as set out in IAS 39 and amended by the European Union have been applied with effect from January 1, Instruments designated as hedges under French GAAP but that do not meet the criteria for hedge accounting in IFRS or for which CIC decided, where appropriate, not to reflect the hedging relationship, are shown in the opening balance sheet under assets and liabilities at fair value through profit or loss. Instruments that qualify as hedges under IFRS or that the group was able to reallocate to identifiable assets and liabilities (operations classified as macro-hedges under previous GAAP) have been recognized as such in the opening IFRS balance sheet; margins generated on transactions involving structured products that are not traded on an active market and which are measured on the basis of internal models and non-observable parameters are restated retrospectively. The recognition of this margin in income is based on the specific nature of the structured product; all securities in the private equity portfolio are measured at fair value through profit or loss. 1-1 Impact of the change in accounting policies on shareholders equity Overview Under IFRS 1, changes in accounting methods should be applied retrospectively subject to a limited number of exceptions as if the new policies had always been applied. The impact of the first-time adoption of IFRS is recognized in shareholders equity in the opening balance sheet at January 1, In order to permit meaningful comparisons with 2005 data, the consolidated financial statements for 2004 have been restated to reflect these policy changes. Exceptionally, IFRS 1 allows entities to postpone first-time adoption of IAS 32 and IAS 39 (financial instruments) and IFRS 4 (insurance contracts) to January 1, Consolidated financial data for 2004 is not required to be restated. Impact of the change in accounting policies on shareholders equity Total equity (in m) Consolidated shareholders equity under CNC rules (French GAAP) at January 1, 2004 before minority interests 4,459) Depreciation of non-current assets using the components approach: property assets are split into components based on their estimated useful lives and depreciated over this period. Property assets continue to be carried at historical cost. Leasehold rights are no longer amortized but tested for impairment. 26) Capital gains generated on leaseback transactions are recognized over the life of the finance lease agreement. (34) Deferred taxes on the afore-mentioned adjustments. (5) Reclassification of the general banking risks reserve as a component of equity. 689) Negative goodwill is recognized immediately in equity. 1) Accumulated impact of changes in accounting methods in ) Consolidated shareholders equity under IFRS (excl. IAS and IFRS 4) at January 1, ,127) (9)

75 76 CONSOLIDATED FINANCIAL STATEMENTS Consolidated shareholders equity under IFRS (excl. IAS and IFRS 4) at January 1, ,665) Commission Commission treated as an additional component of interest and hence an integral part of the effective interest rate is recognized over the life of the corresponding loans. This item mainly comprises handling charges and syndication fees on corporate loans, or specialized financing arrangements. (68) Term deposits Term deposits subject to a stepped rate are recognized based on a constant effective rate of interest. (6) Provisions for individual impairment of loans Provisions for detected risks are now calculated based on the difference between the initial contractual payments, less payments already received, and forecast future payments discounted at the interest rate applicable to the loan agreement. Net additions to provisions for loan losses includes movements in the provision for individual impairment, except those relating to the unwinding of the discount recognized in interest received (net banking income). Provisions for collective impairment of loans Under IFRS, loans that are not individually impaired may be impaired on a collective basis, by grouping together loans with similar characteristics, should a loss event occur. The collective provision for impairment is based on outstanding loans that have not been individually impaired. The provision for collective impairment of loans is calculated based on data obtained from work carried out in respect of Basel II, or on external information. The general provision for credit risks included in the parent company financial statements has been eliminated, as it is not compatible with IFRS. Movements in provisions for collective impairment are included in net additions to provisions for loan losses. Provisions for risks arising from commitments on home savings accounts and plans Provisions are set aside for commitments regarding loan entitlement that are unfavorable to the bank, and for the obligation to pay interest at higher-than-market rates. Available-for-sale financial assets Provisions for impairment of available-for-sale financial assets recognized in the French GAAP financial statements which do not classify as provisions for lasting impairment under IFRS have been reclassified in a specific equity account, Unrealized or deferred gains and losses. These include provisions for interest rate risk on debt instruments and provisions for impairment of equities that are not deemed to cover a long-term impairment risk. The adjustment arising from the remeasurement of these assets at fair value and the recognition of unrealized capital gains and losses is recorded directly in the specific equity account, Unrealized or deferred gains and losses, net of the deferred tax effect. Financial assets at fair value through profit or loss These include: - interbank loans and borrowings relating to market arbitrage activities (fair value option); - derivatives in isolated open positions classified as trading securities in IFRS; - specifically-hedged assets and liabilities that do not meet the criteria for hedge accounting in IFRS and accounted for under the fair value option; - hedging derivatives not recognized as such under IFRS. These adjustments result in a positive impact of 5 million. Securities held in the private equity portfolio All securities in the private equity portfolio are carried at fair value through profit or loss, resulting in a positive impact of 129 million. Hedge accounting under IFRS Fair value hedges have no impact on equity as the measurement of the derivative instrument at fair value is offset by changes in the fair value of the interest rate component of the hedged item. Derivatives classified as hedges in accordance with CNC standards (French GAAP) that do not qualify for hedge accounting under IFRS have been classified as trading securities. The impact of measuring these items at fair value is reflected in trading activities. Changes in the fair value of derivatives used in a cash flow hedge had a negative impact of 5 million on equity. Derivatives structured products Retrospective application of rules regarding day one profit: gains/losses generated on the sale of structured products are recognized in income over a specific period based on the products concerned, leading to a negative impact of 183 million (including the bid/ask on structured products). Bid/ask Long positions are measured at the bid price and short positions at the ask price, leading to a negative impact of 26 million excluding structured products. Provisions for future management expenses are reversed. Other (pensions and other employee benefit commitments) Deferred taxes The impacts of first-time application are presented before the tax effect. The tax effect resulting from these changes in accounting method is reflected under Deferred taxes. Only available-for-sale financial asset reserves and cash flow hedging reserves are presented directly net of the tax effect. (88) (70) 288) (118) 69) 145) (80) (6) 65) Accumulated impact of changes in accounting methods in ) Consolidated shareholders equity under IFRS (including IAS and IFRS 4 ) at January 1, ,796)

76 FINANCIAL STATEMENTS 77 Summary of changes in accounting methods presented at the time of the publication of the interim accounts for the six months ended June 30, 2005 The positive impacts of the first-time adoption of IFRS totaled 131 million at January 1, 2005 and 668 million at January 1, The positive impacts of applying IFRS presented at the time of the publication of the interim financial statements for the six months ended June 30, 2005 were 100 million at January 1, 2005 and 668 million at January 1, 2004 (amount unchanged). The 31 million difference at January 1, 2005 has only a minor 5,665 million impact on shareholders equity at January 1, 2005, and results from the following: the methods used to calculate fees and commissions, provisions for individual and collective impairment of loans, and provisions for risks arising from commitments on home savings accounts and plans were fine-tuned for the December 31 closing, leading to a change in the figures presented in the initial IFRS information; securities held in the private equity portfolio are measured at fair value through profit or loss at December 31, 2005, whereas securities in the portfolio that were less than 20%-owned were classified as available-for-sale at June 30, This led to a reclassification within equity of the impacts of first-time adoption, from Unrealized or deferred gains and losses on available-for-sale financial assets to reserves; other minor adjustments were made to financial instruments; the negative 6 million impact of first-time adoption on pensions and other employee benefit commitments results from a change in presentation. 1-2 Impact of the change in accounting policies on income Impacts on 2004 net income (in millions of euros) 2004 Net income before minority interests under French GAAP 565 Depreciation of property assets using the components approach and cancellation of amortization of leasehold rights 3.0 Deferred tax effect Recognition of the gain relating to leaseback transactions over the life of the lease agreement, net of the tax effect 5.2 Cancellation of goodwill amortization 10.5 Net income before minority interests under IFRS, excluding IAS and IFRS 4 583

77 78 CONSOLIDATED FINANCIAL STATEMENTS 1-3 Reconciliation of the presentation of income under CNC recommendations and under IFRS The IFRS financial statements have been prepared in accordance with the presentation rules set out in CNC recommendation 2004-R.03. To permit meaningful comparisons with the 2005 IFRS income statement, the income statement for 2004 prepared in accordance with IFRS excluding IAS is also presented according to the IFRS format. In the 2004 financial statements prepared in accordance with IFRS as applicable in 2004: financial instruments at fair value through profit or loss include only instruments from the trading book; available-for-sale financial assets include securities in the heldfor-sale and private equity portfolios, investments in subsidiaries and affiliates and other long-term investments. In 2004, these instruments continued to be accounted for in accordance with French GAAP as applicable at December 31, Changes in the presentation of the income statement with respect to 2004 led to: 1. Reclassification of income from variable-income securities, and other banking income and expense, which is grouped together; 2. Reclassification of net gains on financial transactions from net gains on disposals of fixed assets (under French GAAP) to available-for-sale assets (IFRS); 3. Other reclassifications include: income from securities lending and borrowing transactions, which was reclassified to net gains on financial transactions; amortization of premiums on debt securities, which was reclassified from income to expenses INCOME STATEMENT UNDER IFRS (EXCLUDING IAS 32-39) CNC (in millions) format IFRS format Interest income 9,280) (84) 9,196) Interest expense (8,334) 6) (8,328) Income from variable-income securities 53) (53) Commission income 1,674) 1,674) Commission expense (420) (420) Net gains on financial transactions 1,057) 53) 31) 77) 1,219) Net gains on trading account securities 794) Net gains on held-for-sale securities 263) Other banking income 56) 56) Other banking expense (23) (23) Net banking income 3,343) 31) 3,374) Net gains on disposals of fixed assets 34) (31) 4) Income before non-recurring items 809) 809)

78 FINANCIAL STATEMENTS Pro forma balance sheet at December 31, 2004 and pro forma income statement for the year then ended, prepared in accordance with IFRS The balance sheet and income statement set out below include figures calculated in accordance with IFRS as applicable in 2004 (excluding IAS and IFRS 4), presented under the CNC format used for the published 2004 financial statements FINANCIAL STATEMENTS RESTATED IN ACCORDANCE WITH IFRS EXCLUDING IAS French GAAP format (CRC standards and ) BALANCE SHEET ASSETS (in millions) Dec. 31, 2004 As published Dec. 31, 2004 Pro forma IFRS excl. IAS Jan. 1, 2004 As published Jan. 1, 2004 Pro forma IFRS excl. IAS Interbank transactions 31,417 31,417 29,003 29,003 Government securities 23,087 23,087 21,455 21,455 Customer transactions 61,033 61,033 56,868 56,868 Lease financing 5,329 5,329 4,967 4,967 Bonds, equities and other fixed- and variable-income securities 32,638 32,638 28,820 28,820 - Bonds and other fixed-income securities 24,648 24,648 18,461 18,461 - Equities and other variable-income securities 7,990 7,990 10,359 10,359 Investments in non-consolidated companies and other long-term investments 1,140 1, Intangible assets, property and equipment 1,432 1,423 1,387 1,370 Goodwill Accruals and other assets 14,993 14,999 12,423 12,429 Total assets 171, , , ,827 LIABILITIES AND SHAREHOLDERS EQUITY (in millions) Dec. 31, 2004 As published Dec. 31, 2004 Pro forma IFRS excl. IAS Jan. 1, 2004 As published Jan. 1, 2004 Pro forma IFRS excl. IAS Interbank transactions 57,973 57,974 53,218 53,218 Customer transactions 55,215 55,215 50,518 50,518 Debt securities 20,746 20,746 19,559 19,559 Accruals and other liabilities 27,947 27,959 23,654 23,665 Negative goodwill 1 Provisions for contingencies and charges Subordinated debt 2,782 2,782 2,770 2,770 General banking risks reserve Minority interests Shareholders equity 4,644 5,320 4,232 4,891 - Capital stock Additional paid-in capital Reserves 2,813 3,471 2,471 3,130 - Net income Total liabilities and shareholders equity 171, , , ,827

79 80 CONSOLIDATED FINANCIAL STATEMENTS INCOME STATEMENT (in millions) 2004 As published 2004 Pro forma IFRS excl. IAS Interest income 9,280) 9,280) Interest expense (8,334) (8,334) Income from variable-income securities 53) 53) Commission income 1,674) 1,674) Commission expense (420) (420) Net gains on trading account securities 794) 794) Net gains on held-for-sale securities 263) 263) Other banking income 56) 56) Other banking expense (23) (23) Gross margin from insurance operations Net banking income 3,343) 3,343) Payroll costs (1,473) (1,473) Other general operating expenses (770) (770) Depreciation and amortization (179) (176) General operating expenses (2,422) (2,419) Operating income before provisions 921) 924) Net additions to provisions for loan losses (195) (195) Operating income after provisions 726) 729) Income from companies accounted for by the equity method 46) 45) Net gains on disposals of fixed assets 29) 34) Income before non-recurring items 801) 809) Net non-recurring income/(expense) Corporate income tax (225) (226) Amortization of goodwill (11) Net allocation to general banking risks reserve Net income before minority interests 565) 583) Minority interests 33) 33) Net income 532) 550) Note 2 - Summary of significant accounting policies and presentation methods applied with effect from January 1, 2005 IFRS are effective January 1, 2004, except for IAS 32, IAS 39 and IFRS 4 which are applicable with effect from January 1, The accounting principles and policies described in this note that have been applied since January 1, 2004 are marked with an asterisk (*). Accounting principles and policies not marked with an asterisk are applicable with effect from January 1, Presentation of financial statements The financial statements prepared under IFRS are presented in accordance with CNC recommendation 2004-R.03. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables include credit granted directly by the group or its share in syndicated loans, purchased loans and unlisted debt instruments. Loans and receivables are initially measured at fair value which is usually the net amount disbursed at inception and subsequently carried at amortized cost using the effective interest rate method. Commissions directly related to setting up the loan and treated as an additional component of interest are recognized over the life of the loan using the effective interest method and are shown under interest items in the income statement.

80 FINANCIAL STATEMENTS 81 Provisions for impairment of loans and receivables, and financing and guarantee commitments Provision for individual impairment of loans Impairment is recognized when there is objective evidence of a measurable decrease in value as a result of an event occurring after inception of a loan or group of loans, and which may lead to a loss. Loans are tested for impairment on an individual basis at each balance sheet date. The amount of impairment is equal to the difference between the carrying amount and the present value of the estimated future cash flows associated with the loan, discounted at the original effective interest rate. For variablerate loans, the last known contractual interest rate is used. Loans on which one or more installments are more than three months past due (six months in the case of real estate loans and nine months for local authority loans) are deemed to represent objective evidence of impairment. Likewise, an impairment loss is recognized when it is probable that the borrower will not be able to repay the full amount due, when an event of default has occurred, or where the borrower is subject to court-ordered liquidation. The impairment loss is recognized in the form of a provision. Any movements in the provision are included in net additions to provisions for loan losses, except those relating to the unwinding of the discount, which are recognized in net banking income under interest income. Provisions for individual impairment of loans are deducted from assets, while impairment losses on financing and guarantee commitments are included in liabilities under provisions for risks arising on financing and guarantee commitments. Provisions for collective impairment of loans Customer loans that are not individually impaired are riskassessed on the basis of loans with similar characteristics. This assessment draw upon internal and external rating systems, the estimated probability of default, the loss rate, and the amount of loans outstanding. Financial guarantees given Financial guarantees that meet the definition of a derivative are recognized in accordance with IAS 39 (financial instruments). Financial guarantees not meeting this definition are accounted for in accordance with IFRS 4 on insurance contracts and a provision is set aside in accordance with IAS 37 dealing with liabilities. Purchased securities Securities held by the group are classified in one of the three categories provided by IAS 39: financial instruments at fair value through profit or loss, held-to-maturity financial assets, and available-for-sale financial assets. Held-to-maturity financial assets Classification Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity that the group has the positive intention and ability to hold to maturity, other than those that the group designated at fair value through profit or loss or as available for sale. The positive intention and ability to hold to maturity are assessed at each balance sheet date. Basis for recognition and measurement of related income and expenses Held-to-maturity investments are recognized at fair value upon acquisition. Transaction costs are deferred and included in the calculation of the effective interest rate except when they are not material, in which case they are taken to income at inception. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest rate method, which builds in amortization of premium and discount (corresponding to the difference between the purchase price and redemption value of the asset). Income earned from this category of investments is included in Interest income in the income statement. Should a credit risk arise, impairment on held-to-maturity financial assets is calculated in the same way as for loans and receivables. Available-for-sale financial assets Classification Available-for-sale financial assets are assets that are designated as available for sale or have not been classified as loans and receivables, held-to-maturity financial assets or financial assets at fair value through profit or loss. Basis for recognition and measurement of related income and expenses Available-for-sale financial assets are carried at fair value until disposal. Changes in fair value are shown on the Unrealized or deferred gains and losses line within a specific equity account. On disposal or recognition of a lasting impairment in value, the unrealized gains and losses recorded in equity are transferred to the income statement. Income derived from fixed-income available-for-sale securities is recognized in the income statement under Interest income, using the effective interest method. Dividend income relating to variable-income available-for-sale securities is taken to income under Net gain/(loss) on available-for-sale financial assets. Impairment of available-for-sale financial assets An impairment loss is recognized on available-for-sale financial assets when there is a lasting and/or material decline in their fair value in relation to their cost. Impairment losses on available-forsale financial assets comprising equity or similar instruments recognized in the income statement may not be reversed while the instruments are carried on the balance sheet. They are recorded in Net gain/(loss) on available-for-sale financial assets. Impairment losses on bonds classified in this category may be reversed and are recognized in Net additions to provisions for loan losses when they concern credit risk. Financial instruments at fair value through profit or loss Classification Financial instruments at fair value through profit or loss comprise: a) Financial instruments classified as held for trading, including mainly instruments: - acquired or incurred principally for the purpose of selling or repurchasing them in the near term, or which are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking, or derivatives (except for a derivative that is designated an effective hedging instrument).

81 82 CONSOLIDATED FINANCIAL STATEMENTS b) Financial instruments designated at inception at fair value through profit or loss in accordance with the option provided by IAS 39, for which application guidance was provided in the amendment published in June The fair value option is designed to help entities produce more relevant information, by enabling: - certain hybrid (combined) financial instruments to be measured at fair value without separating out embedded derivatives which could not be measured with a sufficient degree of reliability; a significant reduction in accounting mismatches regarding certain assets and liabilities; and a group of financial assets and/or liabilities to be managed in accordance with a documented risk management or investment strategy. This category mainly includes securities held in the private equity portfolio and balance sheet items associated with capital markets activities. Basis for recognition and measurement of related income and expenses Financial instruments included in this category are recognized in the balance sheet at fair value up to the date of their disposal. Changes in fair value are taken to the income statement under Net gain/(loss) on financial instruments at fair value through profit or loss. Income earned on fixed-income securities in this category is included in the income statement under Interest income. Purchases and sales of securities at fair value through profit or loss are recognized on the settlement date. Any changes in fair value between the transaction date and settlement date are taken to income. Fair value also incorporates an assessment of counterparty risk on these securities. Fair value Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm s length transaction. The fair value of an instrument upon initial recognition is generally its transaction price. If the instrument is traded in an active market, the best estimate of fair value is the quoted price or market value. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price, and for an asset to be acquired or liability held, the asking price. When the bank has assets and liabilities with offsetting market risks, the net position is valued at the bid price for a net asset held or a net liability to be issued and at the ask price for a net asset to be acquired or liability held. A market is deemed to be active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm s length basis. If the market for a financial instrument is not active, fair value is established using a valuation technique. Derivatives are remeasured based on available observable market data such as yield curves to which the bid/ask price is then applied. A multi-criteria approach is adopted to determine the value of securities held in the private equity portfolio, backed by historical experience of valuing unlisted companies. Financial instruments at fair value through profit or loss derivatives A derivative is a financial instrument: a) whose fair value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, credit rating or credit index, or other variable sometimes called the underlying ); b) which requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; c) which is settled at a future date. Derivatives are classified as financial instruments held for trading except when they are part of a designated hedging relationship. Derivatives are recorded on the balance sheet under financial instruments at fair value through profit or loss. Changes in fair value and interest accrued or payable are recognized in net gains and losses on financial instruments at fair value through profit or loss. Derivatives qualifying for hedge accounting in accordance with IAS 39 are classified as fair value hedges or cash flow hedges, as appropriate. All other derivatives are classified as trading items, even if they were contracted for the purpose of hedging one or more risks. Embedded derivatives An embedded derivative should be separated from the host contract and accounted for as a derivative if, and only if, the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. If the host contract is not valued at fair value through profit or loss, the embedded derivative(s) is (are) separated from the host contract and accounted for separately as a derivative. Financial instruments at fair value through profit or loss structured products Structured products are products created by bundling basic instruments generally options to exactly meet client needs. CIC offers various categories of structured products based on traditional options, binary options, barrier options, Asian options, look-back options, options on several assets and index swaps. There are three main methods of valuing these products: methods consisting of solving a partial differential equation, discrete time tree methods and Monte Carlo methods. CIC uses the first and third methods. The analytical methods used are those applied by the market to model the underlyings. The valuation parameters applied correspond to observed values or values determined using a standard observed values model at the balance sheet date. If the instruments are not traded on an organized market, they are valued by reference to the values quoted by the most active dealers in the corresponding products or by extrapolating quoted values. All parameters are based on historical data. The parameters applied to measure the value of unquoted forward financial instruments are determined using a system that provides a snapshot of market prices. Every afternoon, at a fixed time, the bid and offer prices quoted by several market players, as displayed on the market screens, are recorded in the system. A single price is fixed for each relevant market parameter.

82 FINANCIAL STATEMENTS 83 Certain complex financial instruments mainly customized equity barrier options with single or multiple underlyings presenting low levels of liquidity and long maturities are measured using internal models and valuation inputs such as long volatilities, correlations, and expected dividends payable where no observable data can be obtained from active markets. Upon initial recognition, these complex financial instruments are recorded in the balance sheet at their transaction price, which is deemed to be the best indication of fair value even though the result of the model-based valuation may differ. The difference between the price at which a complex instrument is traded and the value obtained from internal models, which generally represents a gain, is known as day one profit. IFRS prohibit the recognition of a margin on products valued using models and parameters that are not observable on active markets. The margin is therefore deferred. The margin realized on options with a single underlying and no barrier is recognized over the life of the instrument. The margin on products with barrier options is recognized upon maturity of the structured product, due to the specific risks associated with the management of these barriers. Hedge accounting IAS 39 describes three types of hedging relationship, which are designated on the basis of the type of risk being hedged. A fair value hedge is a hedge of the exposure to changes in fair value of a financial asset or liability. CIC uses fair value hedges to hedge the interest rate risk on fixed-rate assets and demand deposits, as permitted by the European Union. A cash flow hedge is a hedge of the exposure to variability in cash flows relating to a financial asset or liability, firm commitment or highly probable forecast transaction. Cash flow hedges are used in particular to hedge interest rate risk on adjustable-rate assets and liabilities, including rollovers, and foreign exchange risk on highly probable foreign currency revenues. Hedges of a net investment in a foreign operation are a special type of cash flow hedge. At the inception of the hedge, the group documents the hedging relationship. This documentation describes the hedging strategy, as well as the type of risk covered, the hedged item and hedging instrument, and the methods used to assess the effectiveness of the hedging relationship. Hedge effectiveness is assessed at the inception of the hedge and subsequently at least at each balance sheet date. The ineffective portion of the hedge is recognized in the income statement under Net gain/(loss) on financial instruments at fair value through profit or loss. Fair value hedges In a fair value hedge, changes in the fair value of the derivative instrument are taken to income under Interest income/expense derivatives designated as hedges symmetrically with the change in interest income/expense relating to the hedged item. In a fair value hedging relationship, the derivative instrument is measured at fair value through profit or loss under Net gain/ (loss) on financial instruments at fair value through profit or loss symmetrically with the remeasurement of the hedged item to reflect the hedged risk. This rule applies when the hedged item is recognized at amortized cost or is classified as available-forsale. If the hedging relationship is fully effective, any changes in the fair value of the hedging instrument will offset changes in the fair value of the item hedged. Hedges must be highly effective to qualify for hedge accounting. Changes in the fair value or cash flows of the hedging instrument must offset changes in the fair value or cash flows of the item hedged within a range of 80%-125%. If the hedging relationship no longer fulfils the hedge effectiveness criteria, hedge accounting is discontinued on a prospective basis. The related derivatives are transferred to the trading book and accounted for using the treatment applied to this asset category. The carrying amount of the hedged item in the balance sheet is no longer adjusted to reflect changes in fair value and the cumulative adjustment recorded in respect of the transactions is amortized over the remaining life of the item hedged. If the hedged item no longer appears in the balance sheet, in particular due to prepayments, the cumulative adjustment is taken immediately to income.

83 84 CONSOLIDATED FINANCIAL STATEMENTS Fair value hedge accounting for a portfolio hedge of interest rate risk In October 2004, the European Union amended IAS 39 to allow demand deposits to be included in portfolios of liabilities contracted at fixed rates. At each balance sheet date, CIC verifies that the hedging contracted for each portfolio of assets and liabilities is not excessive. The fixed-rate liability portfolio comprises demand deposits whose maturities are modeled by Asset-Liability management. Changes in fair value of a portfolio hedge of interest rate risk are recognized on a specific line of the balance sheet, under Remeasurement adjustment on interest rate risk hedged portfolios, with the offsetting entry in income. Cash flow hedges In the case of cash flow hedges, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in equity under Unrealized or deferred gains and losses on cash flow hedges, while the ineffective portion is included in Net gain/(loss) on financial instruments at fair value through profit or loss. The amounts recognized in equity are reclassified into profit and loss under Interest income/expense in the same period or periods during which the cash flows attributable to the hedged item affect profit or loss. The hedged items continue to be accounted for using the treatment applicable to the asset category to which they belong. If the hedging relationship no longer fulfils the hedge effectiveness criteria, hedge accounting is discontinued on a prospective basis. The cumulative amounts recognized in shareholders equity as a result of the remeasurement of the hedging instrument remain in equity until the hedged transaction itself impacts income, or until the transaction is no longer expected to occur, at which point they are transferred to the income statement. Regulated savings Home savings accounts (comptes épargne logement - CEL ) and home savings plans (plans épargne logement PEL ) are government-regulated retail products sold in France. Account holders receive interest on amounts paid into these accounts over a certain period (initial savings phase), at the end of which they are entitled to a mortgage loan (secondary borrowing phase). Home savings products generate two types of obligation for the bank: an obligation to pay interest on paid-in amounts at a fixed rate (in the case of PEL accounts only, as interest accruing on CEL accounts is regularly revised on the basis of an indexation formula and is therefore treated as a variable rate); an obligation to lend to customers at their request, at a rate set on inception of the contract (both PEL and CEL products). The cost represented by these obligations has been estimated on the basis of behavioral statistics and market data. A provision is recognized in liabilities to cover the future costs relating to the risk that future loans will be granted at conditions unfavorable to the bank, i.e., where the bank has offered higher interest rates than those paid on similar non-regulated savings products. This approach is managed based on groups of regulated PEL savings products with similar characteristics. The impacts on income are included in interest paid to customers. Debt securities Debt securities are initially recognized at fair value which is generally the net amount received and subsequently measured at amortized cost using the effective interest method. Certain structured debt instruments may contain embedded derivatives. Embedded derivatives are separated from the host contract when they meet the criteria for separate recognition and can be measured reliably. The host contract is subsequently measured at amortized cost. Fair value is based on quoted market prices or valuation models. Conversion of assets and liabilities denominated in foreign currency (*) Assets and liabilities denominated in a currency other than the local currency are converted at the year-end exchange rate. The resulting foreign currency gains and losses on monetary financial assets and liabilities are recognized in income under Net gain/(loss) on financial instruments at fair value through profit or loss. Foreign currency gains and losses arising on the translation of non-monetary financial assets and liabilities are recognized in income if the items are classified at fair value through profit or loss under Net gain/(loss) on financial instruments at fair value through profit or loss, or under Unrealized or deferred gains and losses if they are classified as available-for-sale. When consolidated foreign currency investments are financed by a loan taken out in the same currency, the loan concerned is covered by a cash flow hedge. Property and equipment and intangible assets (*) Property and equipment and intangible assets shown in the balance sheet comprise assets used in operations and investment property. Assets used in operations are those used in the provision of services or for administrative purposes. They include assets other than those held under operating leases. Investment property comprises property assets held to earn rentals or for capital appreciation, or both. Investment property is accounted for at cost, in the same way as assets used in operations. Assets are carried at acquisition cost plus any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs incurred in the construction or adaptation of property assets are not capitalized. Subsequent to initial recognition, property and equipment and intangible assets are measured at amortized cost, which represents cost less accumulated depreciation, amortization and any accumulated impairment losses. The depreciable amount of an asset is its cost less its residual value net of costs to sell. Property and equipment and intangible assets are not presumed to have a residual value as their useful life is generally the same as their economic life. Depreciation amortization is calculated on a straight-line basis over the estimated useful life of the assets, based on the manner in which the economic benefits embodied in the assets are expected to be consumed by the entity. Assets that have an indefinite useful life are not amortized. Depreciation and amortization on property and equipment and intangible assets is recognized in Depreciation, amortization and impairment in the income statement.

84 FINANCIAL STATEMENTS 85 Where an asset consists of a number of components that may require replacement at regular intervals, or that have different uses or different patterns of consumption of economic benefits, each component is recognized separately and depreciated using a method appropriate to that component. CIC has adopted the components approach for property used in operations and investment property. These items are depreciated over the following useful lives: years for the shell; years for structural components; years for equipment; 10 years for fixtures and fittings. Leasehold rights paid are not amortized but are tested for impairment. New occupancy fees paid to the owner are amortized over the life of the lease as additional rent. Other intangible items are amortized over a period of 10 years (acquired customer contract portfolios). Depreciable and amortizable assets are tested for impairment when evidence exists at the balance sheet date that the items may be impaired. Non-depreciable and non-amortizable assets are tested for impairment at least annually. If there is an indication of impairment, the recoverable amount of the asset is compared with its carrying amount. If the asset is found to be impaired, an impairment loss is recognized in income, and the depreciable amount is adjusted prospectively. This loss is reversed in the event of a change in the estimated recoverable amount or if there is no longer an indication of impairment. Impairment is recognized under Depreciation, amortization and impairment in the income statement. Gains and losses on disposals of assets used in operations are recognized in the income statement in Net gain/(loss) on disposals of other assets. Gains and losses on disposals of investment property are shown in the income statement under Income from other activities or Expense on other activities. Provisions for contingencies (*) A provision is recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation arising from a past event, and a reliable estimate can be made of the amount of the obligation. The amount of such obligations is discounted in order to determine the amount of the provision. Movements in provisions for contingencies are classified by type under the corresponding income/expense caption. Pension and other employee benefit commitments (*) Provisions are recorded for these commitments and movements are taken to income. The assumptions used to calculate commitments for pensions and other employee benefits in 2005 were a discount rate determined by reference to the market yield on long-term government bonds (TEC 10) at the balance sheet date. The rate of future salary increases is measured based on a longterm estimation of inflation and actual rises in salaries. Post-employment benefits covered by defined benefit plans (*) The projected unit credit method is used to determine the present value of the group s defined benefit obligations and the related service cost, based on actuarial assumptions. The effect of changes in these assumptions and experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) give rise to actuarial gains and losses. Plan assets are measured at fair value and the expected return on these assets is recognized in the income statement. The difference between the expected return on plan assets and the actual return is an actuarial gain or loss. The group defers recognition of some actuarial gains and losses, inasmuch as it only recognizes the portion of net cumulative actuarial gains and losses that exceeds the greater of the present value of the defined benefit obligation and 10% of the fair value of any plan assets (corridor method). This portion is accounted for in the income statement by way of a provision. Gains or losses on the curtailment or settlement of a defined benefit plan are recognized in the income statement when the curtailment or settlement occurs. Supplementary pensions covered by pension funds Under the terms of the AFB transitional agreement dated September 13, 1993, the banking industry pension schemes were discontinued and bank employees joined the governmentsponsored Arrco and Agirc schemes effective from January 1, The four pension funds to which CIC group banks contributed still exist and pay the various benefits not covered by the transitional agreement. In the event that fund assets are not sufficient to cover these benefit obligations, the banks are required to make additional contributions. The average contribution rate for the next ten years is capped at 4% of the payroll. A detailed actuarial valuation of the pension funds commitments is performed every two years, with the last one performed at the end of Other post-employment benefits covered by defined benefit plans Provisions are made in the financial statements of the individual group companies for commitments in relation to retirement bonuses and supplementary pensions (including special retirement regimes). The amount of these commitments corresponds to the discounted present value of the vested benefit entitlements of active employees. Staff turnover rates taken into account in the calculation correspond to the rates observed in each individual group entity. Account is also taken of projected future salary levels and the related payroll taxes. At least 60% of the commitments of the group s French banks relating to retirement bonuses are covered by insurance taken out with ACM Vie, a Crédit Mutuel Centre Est Europe insurance company which is consolidated by CIC by the equity method. Defined contribution post-employment benefits Bank employees are eligible for a group-funded money purchase pension scheme. Other long-term benefits Employees receive long-service awards after 20, 30, 35 and 40 years of service. Commitments in relation to long-service awards are valued in the same way as for retirement bonuses.

85 86 CONSOLIDATED FINANCIAL STATEMENTS Early retirement plan A framework agreement for the implementation of a CATS earlyretirement plan within the CIC group was signed on June 27, CIC and most of the regional banks have implemented this agreement. Under this plan, beneficiaries may retire two to three years early and receive benefits of between 57.5% and 65% of their salary. The plan is open until March 31, The future benefit obligation is estimated over the entire life of the commitment. A provision is set aside for this expense on a straightline basis between the date on which the framework agreement came into force (on approval by the French Labor Ministry) and the date from which the employee(s) is (are) entitled to take early retirement. In view of the limited duration of the agreement, future cash flows have not been discounted and future salary increases have not been taken into account. The number of potential beneficiaries who retire early under the plan has been estimated on an entity-by-entity basis. Insurance contracts and financial contracts of insurance companies Assets and liabilities generated by insurance contracts and financial contracts written by insurance companies are accounted for in accordance with IFRS 4. Assets relating to unit-linked business are carried at fair value through profit or loss. The remeasurement of assets generated by insurance contracts and financial contracts represents the source of the discretionary participation feature. The accounting treatment of technical provisions of insurance companies under IFRS is in line with their treatment under French GAAP, except for a portion of the claims equalization provision which is restated. The capitalization reserve set up in the individual financial statements is part of shareholders equity after deduction of the deferred tax effect. Other assets and liabilities of insurance companies are accounted for in accordance with the policies generally applied throughout the group. Basis of consolidation (*) Goodwill In accordance with IFRS 3, assets, liabilities and contingent liabilities relating to an entity in which the group has acquired a controlling interest, are measured at fair value at the acquisition date. Goodwill corresponds to the difference between the cost of shares in consolidated subsidiaries and the group s equity in the underlying assets, liabilities and contingent liabilities at the date of acquisition after fair value adjustments. Goodwill is recognized in assets, while negative goodwill is included immediately in income under Goodwill fair value adjustments. Goodwill may be adjusted in the 12 months following the acquisition in the case of any adjustments to the fair value of the net assets of the acquired entity, made as a result of factors not directly related to the acquisition. Goodwill representing amounts of less than 1 million is written down immediately. Goodwill is presented on a separate line of the balance sheet, even when it relates to an equityaccounted company. The group tests goodwill for impairment at least annually, to ensure that there is no evidence of a lasting decline in value. If the recoverable amount of the cash generating unit (CGU) to which goodwill has been allocated is less than its carrying amount, an impairment loss is recognized for the amount of the difference. Impairment losses on goodwill which are taken to income are not reversed. The group s CGUs are based on its business lines. Fair value adjustments At the date of acquisition of a new entity, assets, liabilities and contingent liabilities used in operations are measured at fair value. Fair value adjustments corresponding to the difference between the carrying amount and fair value are recognized in the consolidated financial statements. Intercompany transactions and balances Intercompany transactions and balances and gains on intercompany sales of assets are eliminated in all cases where the amounts involved are material. Intercompany receivables, payables, commitments, income and expenses between fully or proportionally consolidated companies are also eliminated. Foreign currency translation The balance sheets of foreign subsidiaries are translated into euros at the official year-end exchange rate. Differences arising from the retranslation at the year-end rate of opening capital stock, reserves and retained earnings are recorded as a separate component of shareholders equity, under Cumulative translation adjustment. The income statements of foreign subsidiaries are translated into euros at the average exchange rate for the year. Differences arising on translation are also recorded under Cumulative translation adjustment. On liquidation or disposal of some or all of the interests held in a foreign entity, these amounts are reclassified to income. As allowed by IFRS 1, the balance of cumulative translation adjustments was reset to zero in the opening balance sheet at January 1, Adjustments In the interests of consistency, the financial statements of consolidated entities are adjusted, where necessary, to comply with the group s accounting principles. Organization expense Share issuance costs incurred by the consolidating entity are charged against related premiums for their amount net of tax. All other share issuance costs are charged to the income statement. Finance leases Group as lessor In accordance with IAS 17, lease financing operations are included in the consolidated balance sheet in an amount corresponding to the net investment in the lease. The difference between accumulated book depreciation of the leased assets and accumulated amortization of the net investment in the lease is recorded in shareholders equity, net of deferred taxes calculated on the total difference.

86 FINANCIAL STATEMENTS 87 Finance leases Group as lessee In accordance with IAS 17, assets acquired under finance leases are included in property and equipment and an obligation in the same amount is recorded as a liability. Lease payments are broken down between principal repayments and interest. Leaseback transactions In accordance with IAS 17, the proceeds on the disposal of a previously owned property asset to a leasing company in order to be leased back to the buyer, is recognized over the life of the lease agreement. Deferred taxes In accordance with IAS 12, deferred taxes are recognized for temporary differences between the carrying amount of assets and liabilities and their tax basis, except for goodwill and fair value adjustments on intangible assets that cannot be sold separately from the acquired business. Deferred taxes are calculated by the liability method, based on the latest enacted tax rate. Net deferred tax assets are recognized only in cases where their recovery is considered probable. This is deemed to be the case for companies in the CIC tax group. The recoverability of net deferred tax assets of other group entities is reviewed each year. If recovery is determined to be probable, only net deferred tax assets arising from temporary differences are recognized; otherwise, deferred tax assets are recognized only to the extent that they are matched by deferred tax liabilities expected to reverse in the same period. Non-recoverable taxes payable on probable or certain dividend payments by consolidated companies are taken into account. Current and deferred taxes are recognized as tax income or expense, except deferred taxes relating to unrealized or deferred gains and losses, which are taken directly to equity. Basis and scope of consolidation (*) All material companies that are controlled exclusively by CIC are fully consolidated. Exclusive control is considered as being exercised in cases where the group holds a majority of the shares, directly or indirectly, and either the majority of the voting rights or the power to appoint the majority of members of the Board of Directors, Management Board or Supervisory Board, or where the group exercises controlling influence. A special purpose entity is consolidated if it meets the conditions for consolidation set out in SIC 12 (i.e., the activities of the SPE are being conducted on behalf of the group according to its specific business needs; the group has the decision-making powers to obtain the majority of the benefits of the activities of the SPE; the group has rights to obtain the majority of benefits; the group retains the majority of the residual or ownership risks related to the SPE or to its assets in order to obtain benefits from its activities). Entities controlled exclusively by the group are included in the scope of consolidation when their full consolidation individually affects at least 1% of the main consolidated balance sheet and income statement items. Subsidiaries that are not consolidated represent less than 5% of the main consolidated balance sheet and income statement items. However, smaller entities may be included in the consolidated group if (i) CIC considers they represent a strategic investment; (ii) one of their core businesses is the same as that of the group; or (iii) when they hold shares in consolidated companies. Companies over which the group exercises significant influence are accounted for by the equity method. Significant influence is considered as being exercised in cases where CIC holds at least 20% of the voting rights, directly or indirectly. Companies that are 20%-50% owned by the group s private equity businesses are excluded from the scope of consolidation and accounted for under the fair value option. Use of estimates Preparation of the financial statements requires the use of assumptions and estimates that are reflected in the measurement of income and expense in the income statement and of assets and liabilities in the balance sheet, and in the disclosure of information in the notes to the financial statements. This requires managers to draw upon their own experience, exercise their judgment and make use of information available at the date of the preparation of the financial statements when making their estimates. This applies in particular to: impairment losses recorded in respect of credit risks; the use of internally developed models to measure positions in financial instruments that are not quoted in organized markets; calculations of the fair value of unquoted financial instruments classified in Available-for-sale financial assets, Financial assets at fair value through profit or loss or Financial liabilities at fair value through profit or loss, and more generally, calculations of the fair value of financial instruments subject to a fair value disclosure requirement; impairment tests performed on intangible assets; calculations of provisions for contingencies and charges. Summary of significant accounting policies and presentation methods applied in preparing the consolidated financial statements at December 31, 2004 The 2004 consolidated financial statements are prepared in accordance with CRC standard issued by the Comité de la Réglementation Comptable (French accounting standards committee CRC) and presented in accordance with CRC standard As IAS and IFRS 4 are applicable with effect from January 1, 2005, the following main items continued to be accounted for using French generally accepted accounting principles (French GAAP). Lending Loans are recorded in the balance sheet at nominal value. Loans are classified as non-performing when one or more installments are more than three months past due (six months in the case of real estate loans and nine months for local authority loans) or when it is probable that the borrower will not be able to repay the full amount due. Loans classified as irrecoverable include loans where an event of default has occurred and the total amount due is repayable immediately; loans classified as non-performing for more than 12 months, or loans where the debtor is subject to court-ordered liquidation. Where a non-performing loan is restructured at below market rates and reclassified as sound, a discount is recorded as an expense and is taken into account in the lending margin over the term of the loan.

87 88 CONSOLIDATED FINANCIAL STATEMENTS Securities portfolio Securities are recognized in accordance with Comité de la Réglementation Bancaire (CRB) standard 90-01, as amended by CRB standard 95-04, as well as CRC standard , and Commission Bancaire (CB) instruction 94-07, as amended by instruction CB In accordance with these standards, government securities, bonds and other fixed-income securities such as interbank instruments, money market securities and other marketable securities are allocated to the trading, held for sale or investment portfolios; equities and other variable-income securities are classified as trading, held for sale or portfolio securities, or as investments in non-consolidated companies, investments in affiliates or other long-term investments. Trading securities Trading securities are securities purchased with the intention of selling them within six months. They are stated at cost, including accrued interest. At each period-end, trading securities are marked to market, based on the market price quoted on the last trading day of the year. Mark-to-market gains and losses are netted off and the net gain or loss is recorded in the income statement. Securities held for sale These are securities purchased with the intention of holding them for over six months but not to maturity. They are stated at cost, excluding transaction expenses. Premiums and discounts are amortized over the remaining life of the securities. Provisions for impairment in value are determined separately at each period-end for each line of securities or, in the case of bonds, for each group of securities with similar characteristics. Unrealized gains are not recognized or netted off against unrealized losses. The probable realizable value is the average price for the last month of the period in the case of equities quoted on the Paris Bourse, and the most recent price in the last month of the period in the case of equities quoted on international markets and bonds. Investment securities Investment securities are securities acquired with the intention of holding them to maturity. They are stated at cost, excluding transaction expenses. Premiums and discounts corresponding to the difference between the cost of the securities and their redemption price are amortized over the remaining life of the securities. Investment securities are either match-funded or hedged against interest rate risks. Provisions are booked only in cases where the issuer s financial position is such that there is a risk of the securities not being redeemed at maturity. Portfolio securities Portfolio securities are securities acquired with the sole aim of selling them at a profit in the medium-term, without investing in the business over the long term or taking part in managing its operations. Investments are made on an ongoing basis and in material amounts by dedicated structures whose profits are essentially derived from disposal gains. These securities are stated at cost. Provisions for impairment in value are determined separately for each line of securities, at each period-end. Unrealized gains are not recognized. Fair value is determined based on the issuer s general business outlook over the planned holding period. For quoted securities, the average stock market price over a sufficiently long period may be used. Other long-term investments, investments in nonconsolidated companies and investments in affiliates Other long-term investments, investments in non-consolidated companies and investments in affiliates are securities purchased with the aim of promoting the development of long-term business relations with the issuer, but without influencing the management of its operations. Investments in non-consolidated companies represent investments that the group intends to hold on a longterm basis because they are useful in connection with its business, particularly because they allow the group to exercise influence or control over the issuer. They are stated at cost, or revalued cost in the case of investments held at the time of the 1976 legal revaluation or acquired through a merger or equivalent transaction. Provisions for impairment in value are determined separately for each line of securities, at each period-end. Unrealized gains are not recognized. Fair value represents the amount that the entity would be willing to pay to purchase the securities if they were not already held, taking into account the purpose of holding them. Various valuation criteria are applied, including the group s equity in the underlying net assets or revalued net assets, the issuer s earnings potential or average stock market prices of the preceding months. Securities sold under collateralized repurchase agreements Securities sold under collateralized repurchased agreements continue to be recorded in assets, with a matching entry in liabilities representing the obligation to the purchaser. The valuation and revenue recognition principles are the same as those applied to the portfolio from which the securities have been taken. Interest rate and currency futures The CIC group conducts proprietary transactions on various organized and over-the-counter forwards, futures and options markets, as part of its strategy to manage risks associated with interest rate and currency positions on assets and liabilities. Transactions on organized markets Futures and options traded on organized markets are valued in accordance with Comité de la Réglementation Bancaire standards. At each period-end, they are marked to market and the resulting unrealized gain or loss is recorded in the income statement. Over-the-counter transactions CRB standard is applied to all over-the-counter interest rate instruments including interest and currency swaps, FRAs, caps and floors. In accordance with CRB standard 90-15, the instruments are allocated at the outset to the relevant portfolio (open positions, specific hedges, balance sheet and off balance sheet management positions, specialist management). Instruments recorded in the open positions portfolio are stated at the lower of cost and market.

88 FINANCIAL STATEMENTS 89 Income and expenses on instruments recorded in the specific hedges portfolio are recorded in the income statement on a symmetrical basis with the expenses and income on the hedged items. Income and expenses on instruments recorded in the balance sheet and off balance sheet management positions portfolio are recognized in the income statement on an accruals basis. Instruments recorded in the specialist management portfolio are marked to market. Mark-to-market gains and losses are recorded in the income statement after adjustment for counterparty risks and future management expenses. Structured products Structured products are products created by bundling basic instruments generally options to exactly meet client needs. CIC offers various categories of structured products based on traditional options, binary options, barrier options, Asian options, look-back options, options on several assets and index swaps. There are three main methods of valuing these products: methods consisting of solving a partial differential equation, discrete time tree methods and Monte-Carlo methods. CIC uses the first and the third methods. The analytical methods used are those applied by the market to model the underlyings. The products are marked to market. The valuation parameters applied correspond to observed values or values determined using a standard observed values model at the balance sheet date. If the instruments are not traded on an organized market, they are valued by reference to the values quoted by the most active dealers in the corresponding products or by extrapolating quoted values. All parameters are based on historical data. Where instruments are valued using complex models, the market parameters used for the valuation are adjusted on a conservative basis to take into account market liquidity and the relevance of market data over long maturities. Unquoted forward financial instruments The parameters applied to measure the value of unquoted forward financial instruments are determined using a system that provides a snapshot of market prices. Every afternoon, at a fixed time, the bid and offer prices quoted by several market players, as displayed on the market screens, are recorded in the system. A single price is fixed for each relevant market parameter. Accruals and other assets Up to December 31, 1999, debt issuance costs were amortized in the year of issue. Costs related to debt issues carried out since that date are amortized over the life of the related debt. Bond call premiums are amortized on a straight-line basis over the life of the bonds Provisions Provisions are recorded for probable losses on non-performing loans based on estimates of the amounts recoverable. Interest payments that are more than three months past due (six months in the case of real estate loans and nine months in that of local authority loans) are credited to the income statement and provided for in full. Movements in provisions to cover the principal of non-performing loans are recorded under Net additions to provisions for loan losses, while provisions concerning accrued interest on these loans are deducted from interest income. Movements in provisions for contingencies and charges are classified by type under the corresponding expense caption. Provisions are deducted from the carrying value of the loans concerned which are shown in the balance sheet at net book value. Provisions for off balance sheet items are included in provisions for contingencies and charges. Provisions for sovereign and emerging market risks are determined based on the economic situation of the borrower country. Specific provisions are deducted from the carrying value of the related loans. General provisions for credit risks Since 2000, CIC has set up general provisions for credit risks, designed to cover incurred but undetected risks on performing loans and commitments given on behalf of customers. These provisions are determined as follows: for lending transactions other than specialized financing, based on estimated average losses over the long term, corresponding to 0.5% of sound loans; for specialized financing transactions and for branches outside France, based on estimated average losses determined according to the rating attributed to the loans. This method takes into account any reduction in risk dispersion or any increase in the size of individual loans producing higher volatility. These general provisions for credit risks will be reversed following the occurrence of any of the events they are designed to cover. They may also include a general provision to cover major group risks. General banking risks reserve In accordance with Article 3 of CRB standard 90-02, as a measure of prudence, a general banking risks reserve has been set up, corresponding to reserves that are not allocated to precise, identifiable risks. Allocations and reversals of these reserves are decided by management and are debited or credited to the income statement. Interest and commissions Interest is recorded in the income statement on an accruals basis. Commissions are recognized on a cash basis, except for commissions on financial transactions which are recognized at the close of the issue period or when they are billed. Since 2003, interest on irrecoverable loans is no longer recorded in income. Commissions comprise banking revenues for services provided to third parties, with the exception of revenues that are equivalent to interest and are calculated based on the duration and amount of the loan or commitment provided.

89 90 CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Analysis of assets, liabilities and income by business segment and geographic area The bank carries out the following activities: Retail banking, which comprises the regional bank network, the CIC network in the greater Paris region and all specialist activities whose products are distributed via the network. These include equipment leasing, real estate leasing, factoring, fund management, employee savings plans and real estate. The insurance business which is consolidated by the equity method is included in this business segment. Financing and capital markets, which includes: a) credit facilities for large corporates and institutional clients, specialized financing, international operations and foreign branches; b) capital markets operations in general, spanning customer and proprietary transactions involving interest rate instruments, foreign currencies and equities, including brokerage services. Private banking, which encompasses all banks engaged in wealth management, both in France and internationally. Private equity, which conducts proprietary transactions and includes financial engineering services. Headquarters and holding company services, which encompass all unallocated activities and units that provide logistical support. They include intermediate holding companies, business premises held by specific companies and in-house IT entities. Each consolidated company is included in only one business segment, corresponding to its core business in terms of contribution to CIC group results. The only two exceptions are CIC, due to the wide range of businesses conducted by the bank, and CIC Banque CIAL, as regards its capital markets business. Analysis of assets and liabilities by business segment ASSETS at Dec. 31, 2005 Cash and amounts due from central banks and post office banks Financial assets at fair value through profit or loss Retail banking Financing and capital markets Private banking Private equity HQ and holding company services Total 684 1, , , , ,318 Derivatives used for hedging purposes Available-for-sale financial assets 482 1,536 10, ,982 Loans and receivables due from credit institutions 2,318 25,244 1, ,970 Loans and receivables due from customers 64,111 7,751 3, ,558 Held-to-maturity financial assets ,106 Investments in associates LIABILITIES AND SHAREHOLDERS EQUITY at Dec. 31, 2005 Due to central banks and post office banks Financial liabilities at fair value through profit or loss Retail banking Financing and capital markets Private banking Private equity HQ and holding company services Total , ,378 Derivatives used for hedging purposes ,203 Due to credit institutions 19,515 40,928 3, ,160 Due to customers 40,853 3,614 10, ,065 Debt securities 4,245 15, ,809

90 FINANCIAL STATEMENTS 91 Breakdown of income by business segment 2005 IFRS Retail banking Financing and capital markets Private banking Private equity HQ and holding company services Net banking income 2,685) 17) 330) 247) (14) 3,265) General operating expenses (1,974) (273) (208) (26) (34) (2,515) Operating income before provisions 711) (256) 122) 221) (48) 750) Net additions to provisions for loan losses (116) 24) (4) 1) (95) Net gains on disposals of other assets* 65) 4) 69) Income before tax 660) (232) 118) 222) (44) 724) Total 2004 IFRS excl. IAS Retail banking Financing and capital markets Private banking Private equity HQ and holding company services Net banking income 2,608) 431) 313) 70) (48) 3,374) General operating expenses (1,921) (234) (203) (27) (34) (2,419) Operating income before provisions 687) 197) 110) 43) (82) 955) Net additions to provisions for loan losses (243) 55) (7) (195) Net gains on disposals of other assets* 41) 1) 2) 5) 49) Income before tax 485) 253) 103) 45) (77) 809) Total Presentation under the IFRS format (CNC recommendation 2004-R.03). Breakdown of assets and liabilities by geographic area ASSETS Cash and amounts due from central banks and post office banks Financial assets at fair value through profit or loss France Dec. 31, IFRS excl. IAS Europe Europe excluding Other excluding Other France countries* Total France France countries* Total 2, ,622 1, ,588 51,959 3,299 3,060 58,318 47,953 1,685 2,274 51,912 Derivatives used for hedging purposes Available-for-sale financial assets 1,272 10,430 1,280 12,982 2,524 9,978 1,672 14,174 Loans and receivables due from credit institutions 22,662 5,100 1,208 28,970 18,789 3, ,253 Loans and receivables due from customers 70,074 3,594 1,890 75,558 60,801 3,431 1,630 65,862 Held-to-maturity financial assets ,106 1, ,003 Investments in associates LIABILITIES AND SHAREHOLDERS EQUITY France Dec. 31, 2005 Dec. 31, IFRS excl. IAS Europe Europe excluding Other excluding Other France countries* Total France France countries* Total Due to central banks and post office banks 60) 60 Financial liabilities at fair value through profit or loss 27,669 4, ,378 27,772 3,365) 3) 31,140 Derivatives used for hedging purposes , ) (1) 702 Due to credit institutions 57,391 3,945 2,824 64,160 42,537 4,532) 1,835) 48,904 Due to customers 44,423 10, ,065 41,978 10,060) 410) 52,448 Debt securities 13,208 2,663 3,938 19,809 15,227 (690) 4,022) 18,559 * United States, Singapore and Tunisia.

91 92 CONSOLIDATED FINANCIAL STATEMENTS Breakdown of income by geographic area France 2005 Dec. 31, IFRS excl. IAS Europe Europe excluding Other excluding Other France countries** Total France France countries** Total Net banking income 2,903) 284) 78) 3,265) 3,021) 269) 84) 3,374) General operating expenses (2,307) (168) (40) (2,515) (2,219) (160) (40) (2,419) Operating income before provisions 596) 116) 38) 750) 802) 109) 44) 955) Net additions to provisions for loan losses (110) 11) 4) (95) (204) 4) 5) (195) Net gains on disposals of other assets* 67) 2) 69) 49) 49) Income before tax 553) 127) 44) 724) 647) 113) 49) 809) ** United States, Singapore and Tunisia. Note 4 - Basis and scope of consolidation Changes in the scope of consolidation during 2005 were as follows: Newly consolidated companies: Banque de Tunisie, 20%-owned and accounted for by the equity method; Atout SA, a Luxembourgbased joint stock corporation (société anonyme) 100%-owned by the Banque de Luxembourg and fully consolidated; Banque Transatlantique Belgium, 100%-owned and fully consolidated; Luxembourg-based Cigogne Management and Cigogne Fund and several holding companies all fully consolidated; Deconsolidated companies: Compagnie de Finance pour l Industrie (CFI) and CIC Développement, due to the discontinuance of business operations. Mergers: SCI Champ de Mars with CIC Banque CIO; UBR with CIC. Company Currency Consolidating company: CIC (Crédit Industriel et Commercial) A. Commercial banks Dec. 31, 2005 Dec. 31, 2004 Percent Method Percent Method Voting Voting rights Interest * rights Interest * CIC Banque CIAL Suisse CHF FC FC Banque de Luxembourg FC FC CIC Private Banking - Banque Pasche CHF FC FC Banque Pasche Monaco FC FC CIC Banque BRO (i) FC FC CIC Banque Scalbert Dupont (i) FC FC CIC Banque Transatlantique (i) FC FC Banque Transatlantique Belgium FC NC Banque Transatlantique Jersey GBP FC FC Banque de Tunisie TND EM NC CIC Bonnasse Lyonnaise de Banque (i) FC FC CIC Crédit Fécampois FC FC CIC Banque CIAL (i) FC FC CIC Banque CIN (i) FC FC CIC Banque CIO (i) FC FC CIC Lyonnaise de Banque (i) FC FC Mutuel Bank Luxembourg FC FC CIC Société Bordelaise (i) FC FC CIC Banque SNVB (i) FC FC Union de Banques Régionales (i) M FC * Method: FC = full consolidation; EM = equity method; NC = not consolidated; M = merged. ** Based on the consolidated financial statements. (i) = members of the tax consolidation group set up by CIC.

92 FINANCIAL STATEMENTS 93 Company B. Specialist credit institutions Bail Ouest (i) FC FC CIAL Equipement (i) FC FC CIAL Finance (i) FC FC CM-CIC Bail (i) FC FC CM-CIC Lease FC FC Factocic FC FC CM-CIC Laviolette Financement (i) FC FC SNVB Financements (i) FC FC C. Other companies Currency Dec. 31, 2005 Dec. 31, 2004 Percent Method Percent Method Voting Voting rights Interest * rights Interest * Adepi (i) FC FC Atout SA FC NC BLC gestion (i) FC FC CIC Capital-Développement FC FC CIC Développement NC FC CIC Epargne salariale (i) FC FC CIC Finance (i) FC FC CIC Information FC FC CIC Lyonnaise de Participations FC FC CIC Migrations (i) FC NC CIC Nord Ouest gestion (i) FC FC CIC Participations (i) FC NC CIC Production GIE FC FC CIC Régions Expansion FC FC Cicor (i) FC NC Cicoval FC NC Cigogne Fund FC NC Cigogne Management FC NC CM-CIC Securities (i) FC FC CM-CIC Asset Management EM EM CM-CIC Mezzanine FC NC Compagnie de Finance pour l Industrie NC FC Dubly-Douilhet FC FC Efsa FC NC Finances et Stratégies (i) FC FC Financière Ar Men FC FC Financière Voltaire (i) FC FC Gesteurop (i) FC FC Gestunion FC NC Imofinance (i) FC FC Impex Finance FC NC IPO FC FC Marsovalor FC NC Pargestion FC NC Placinvest (i) FC NC

93 94 CONSOLIDATED FINANCIAL STATEMENTS Company Saint-Pierre SNC (i) FC FC SCI Champs de Mars M FC SNVB Participations FC FC Sofiholding FC NC Sofim (i) FC FC Sofinaction FC NC Sud Est Gestion (i) FC FC Sudinnova FC FC Transatlantique Finance (i) FC FC Ufigestion FC NC Ugépar Service FC NC Valimar FC NC CIC Banque de Vizille FC FC Vizille Capital Finance FC FC Vizille Capital Innovation FC FC VTP1 (i) FC NC VTP FC NC D - Insurance companies Groupe des Assurances du Crédit Mutuel (GACM)** Currency Dec. 31, 2005 Dec. 31, 2004 Percent Method Percent Method Voting Voting rights Interest * rights Interest * EM EM NOTES TO THE BALANCE SHEET ASSETS Note 5 - Cash and amounts due from central banks and post office banks Loans and receivables due from credit institutions Cash and amounts due from central banks and post office banks Dec. 31, 2005 Jan. 1, 2005 Central banks 2,351) 1,340) Of which statutory reserves 573) 450) Cash and amounts due from post office banks 271) 248) TOTAL 2,622) 1,588) Loans and receivables due from credit institutions Current accounts in debit 2,473) 3,333) Loans 8,521) 4,478) Other receivables 917) 738) Securities not quoted in an active market 249) 203) Resale agreements 16,672) 14,424) Individually-impaired loans and receivables 29) 20) Accrued interest 123) 74) Provisions (14) (17) TOTAL 28,970) 23,253) including non-voting loan stock 225) 195) including subordinated loans 9) 6)

94 FINANCIAL STATEMENTS 95 Note 6 - Financial assets at fair value through profit or loss Dec. 31, 2005 Jan. 1, 2005 Financial assets accounted for under the fair value option 14,904 20,235 Financial assets held for trading 43,414 32,510 TOTAL 58,318 52,745 Note 6a - Financial assets accounted for under the fair value option Dec. 31, 2005 Jan. 1, 2005 Securities Government securities 2,039 7,903 Bonds and other fixed-income securities - Quoted 2,906 3,594 - Not quoted Equities and other variable-income securities (1) - Quoted Not quoted Other financial assets - Resale agreements 5,998 6,170 - Other loans and term deposits 2,199 1,280 TOTAL 14,904 20,235 (1) This item relates mainly to investments held by the private equity business. Note 6b - Financial assets held for trading (1) Dec. 31, 2005 Jan. 1, 2005 Securities Government securities 20,848 14,568 Bonds and other fixed-income securities - Quoted 12,114 7,598 - Not quoted 2 Equities and other variable-income securities - Quoted 5,664 6,696 - Not quoted Derivatives held for trading 4,786 3,648 TOTAL 43,414 32,510 (1) Comprising financial assets held by the capital markets business.

95 96 CONSOLIDATED FINANCIAL STATEMENTS Note 6c - Analysis of derivative instruments Derivatives held for trading Interest rate derivatives Dec. 31, 2005 Jan. 1, 2005 Notional amount Assets Liabilities Notional amount Assets Liabilities Swaps 523,047 1, ,864 1, Futures and forward contracts 58, , Options 3, , Foreign currency derivatives Swaps Futures and forward contracts Options 43, , Other derivatives Swaps 34, , Futures and forward contracts 27,642 37,828 1 Options 66,249 2,920 3,272 54,066 1,728 2,325 Sub-total 757,515 4,786 4, ,304 3,648 3,858 Derivatives used for hedging purposes Derivatives designated as fair value hedges Swaps 3, ,191 4, Futures and forward contracts Options 47 Derivatives designated as cash flow hedges Swaps Futures and forward contracts Options 2 2 Sub-total 3, ,203 4, TOTAL 760,822 5,508 5, ,705 3,970 4,560 Note 7 - Derivatives used for hedging purposes Dec. 31, 2005 Jan. 1, 2005 Assets Liabilities Assets Liabilities Derivatives designated as cash flow hedges Of which changes in value recognized in equity Of which changes in value recognized in income Derivatives designated as fair value hedges 719 1, TOTAL 722 1,

96 FINANCIAL STATEMENTS 97 Note 8 - Available-for-sale financial assets Dec. 31, 2005 Jan. 1, 2005 Government securities 18 3 Bonds and other fixed-income securities - Quoted 11,492 11,557 - Not quoted Equities and other variable-income securities - Quoted Not quoted Long-term investments - Investments in non-consolidated companies Other long-term investments Investments in affiliates Translation adjustments Accrued interest TOTAL 12,982 14,174 Of which unrealized gains/losses recognized directly in equity Of which provisions for impairment recognized in income (2) (6) Of which listed investments in non-consolidated companies Note 8a - List of main investments in non-consolidated companies % held Shareholders equity Total assets Net banking income or sales Net income Veolia Listed < 5% 3,563 36,265 24, Crédit logement Unlisted < 5% 1,372 6, Banca Popolare di Milano Listed < 5% 2,630 34,669 Not available 128 Figures (excluding those for the percent interest held) relate to financial year 2004.

97 98 CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Loans and receivables due from customers Dec. 31, 2005 Jan. 1, 2005 Sound loans Commercial loans 4,258) 3,750) Of which factoring accounts 1,409) 1,241) Other loans and receivables - Home loans 30,901) 24,324) - Other loans and miscellaneous receivables including resale agreements 33,499) 30,945) Accrued interest 155) 137) Securities not quoted in an active market 235) 270) Individually-impaired loans and receivables 3,343) 3,456) Provisions for individual impairment (2,195) (2,279) Provisions for collective impairment (64) (70) Sub-total 70,132) 60,533) Finance leases (net investment) Equipment 3,401) 3,317) Real estate 1,987) 1,965) Individually-impaired finance lease receivables 119) 129) Provisions for individual impairment of finance lease receivables (81) (82) Sub-total 5,426) 5,329) TOTAL 75,558) 65,862) of which non-voting loan stock of which subordinated loans 91) 100) Finance lease transactions Jan. 1, 2005 Acquisitions Disposals Other Dec. 31, 2005 Gross 5,652) 487) (186) (180) 5,773) Impairment of non-recoverable rent (323) (80) 50) 6) (347) Net 5,329) 407) (136) (174) 5,426) Note 10 - Remeasurement adjustment on interest rate risk hedged portfolios Description of hedged assets and liabilities and hedging instruments Dec. 31, 2005 Jan. 1, 2005 Assets Liabilities Assets Liabilities Change in fair value Fair value of portfolio interest rate risk (4) (95) Note 11 - Held-to-maturity financial assets Dec. 31, 2005 Jan. 1, 2005 Securities Government securities 701) 758) Bonds and other fixed-income securities 396) 392) Accrued interest 12) 23) TOTAL GROSS 1,109) 1,173) Provisions for impairment (3) (3) TOTAL NET 1,106) 1,170)

98 FINANCIAL STATEMENTS 99 Note 11a - Movements in provisions Jan. 1, 2005 Additions Reversals Other Dec. 31, 2005 Loans and receivables due from credit institutions (17) 1 2) (14) Loans and receivables due from customers (2,431) (612) 714 (11) (2,340) Available-for-sale securities (156) (7) 13 82) (68) Held-to-maturity securities (3) (3) TOTAL (2,607) (619) ) (2,425) Note 12 - Current or payable taxes Dec. 31, 2005 Jan. 1, 2005 Assets Liabilities Note 13 - Deferred taxes Dec. 31, 2005 Jan. 1, 2005 Deferred tax assets dealt with though income Deferred tax assets dealt with through equity 2 2 Deferred tax liabilities dealt with through income Deferred tax liabilities dealt with through equity Note 14 - Accruals and other assets Dec. 31, 2005 Jan. 1, 2005 Accruals Collection accounts 5,729 3,808 Currency adjustment accounts Accrued income Other accruals 1,361 2,258 Sub-total 7,648 6,704 Other assets Securities settlement accounts 1, Miscellaneous receivables 4,101 3,693 Inventories and other 1 Other 4 5 Sub-total 5,253 4,240 TOTAL 12,901 10,944

99 100 CONSOLIDATED FINANCIAL STATEMENTS Note 15 - Investments in associates Share of net income/(loss) of associates Shareholding Reserves Income Shareholding Reserves Income ACM group Not quoted 20.52% % 506) 42 Banque de Tunisie Quoted 20.00% 32 2 CM-CIC Asset Management Not quoted 23.52% % 6) 1 IPO Quoted (1) (2) 2 TOTAL GROSS ) 45 (1) Accounted for by the equity method until June 30, 2004 and fully consolidated thereafter. CIC recognized a fair value adjustment on the first-time consolidation of the ACM group under the equity method at June 30, The adjustment is amortized based on the associated future net cash flows as estimated at the date of consolidation, and amounted to 105 million at January 1, 2005 and 99 million at December 31, The fair value of Banque de Tunisie at December 31, 2005 was 60 million. Note 16 - Investment property Jan. 1, 2005 Increases Decreases Other movements Dec. 31, 2005 Historical cost 30) 1) (4) 1 28) Depreciation and impairment (15) (1) 2) (14) Net 15) ) (2) 1 14) The fair value of investment property carried at amortized cost is comparable to its carrying amount. Note 17 - Property and equipment Historical cost Jan. 1, 2005 Increases Decreases Other movements Dec. 31, 2005 Land used in operations 289) 2) 1) 1) 293) Buildings used in operations 1,439) 134) (52) (24) 1,497) Other property and equipment 865) 139) (113) 20) 911) TOTAL 2,593) 275) (164) (3) 2,701) Depreciation and impairment Land used in operations Buildings used in operations (687) (81) 38) 22) (708) Other property and equipment (596) (85) 57) (7) (631) TOTAL (1,283) (166) 95) 15) (1,339) Net 1,310) 109) (69) 12) 1,362) Of which property held under finance leases Land used in operations Buildings used in operations 51 (2) 49 TOTAL 96 (2) 94

100 FINANCIAL STATEMENTS 101 Note 18 - Intangible assets Historical cost Internally developed intangible assets Jan. 1, 2005 Increases Decreases Other movements Dec. 31, 2005 Purchased intangible assets 196) 15) (20) (17) 174) - Software 1) 1) - Other 196) 15) (20) (18) 173) TOTAL 196) 15) (20) (17) 174) Amortization and impairment Internally developed intangible assets Purchased intangible assets (100) (2) 18) 18) (66) - Software (1) (1) - Other (100) (2) 18) 19) (65) TOTAL (100) (2) 18) 18) (66) Net 96) 13) (2) 1) 108) Note 19 - Goodwill Jan. 1, 2005 Increases Decreases Other movements Dec. 31, 2005 Gross value 132) (6) 126) Impairment (46) 4) (42) Carrying amount 86) (2) 84) Of which relating to ACM group (net amount) 54) 54) NOTES TO THE BALANCE SHEET LIABILITIES Note 20 - Due to central banks and post office banks Due to credit institutions Due to central banks and post office banks Dec. 31, 2005 Jan. 1, 2005 Central banks 59 Post office banks TOTAL 59 Due to credit institutions Other current accounts in debit 1,935 Loans 1,174 1,060 Other borrowings 30,938 16,207 Repurchase agreements 31,660 29,433 Accrued interest TOTAL 64,160 48,904

101 102 CONSOLIDATED FINANCIAL STATEMENTS Note 21 - Financial liabilities at fair value through profit or loss Dec. 31, 2005 Jan. 1, 2005 Financial liabilties held for trading 20,840 17,179 Financial liabilities accounted for under the fair value option 11,538 13,961 TOTAL 32,378 31,140 Note 21a - Financial liabilities held for trading (1) Dec. 31, 2005 Jan. 1, 2005 Short sales of securities 15,678 12,838 - Government securities 12,758 - Bonds and other fixed-income securities 13, Equities and other variable-income securities 2, Securities given under repurchase agreements Derivatives held for trading 4,759 3,858 Other financial liabilities held for trading Debts in respect of borrowed securities TOTAL 20,840 17,179 (1) Liabilities held by the capital markets business. Note 21b - Financial liabilities accounted for under the fair value option Securities issued - Bonds - Certificates of deposit Carrying amount Dec. 31, 2005 Jan. 1, 2005 Amount due at maturity Difference Carrying amount - Other, of which interbank securities 2,223 2,224 (1) 2,161 Debts in respect of securities given under repurchase agremeents 9,314 9,325 (11) 11,666 Subordinated debt Payables - Interbank items - Due to customers Other liabilities accounted for under the fair value option TOTAL 11,538 11,550 (12) 13,961

102 FINANCIAL STATEMENTS 103 Note 22 - Due to customers Dec. 31, 2005 Jan. 1, 2005 Special savings accounts - Demand 11,787 11,197 - Term 8,667 8,686 Accrued interest Sub-total 20,491 19,928 Current accounts in debit 22,672 19,933 Term deposits and borrowings 10,329 10,879 Repurchase agreements 1,527 1,662 Payable to reinsurance companies Accrued interest Sub-total 34,574 32,520 TOTAL 55,065 52,448 Note 23 - Debt securities Dec. 31, 2005 Jan. 1, 2005 Retail certificates of deposit Interbank instruments and money market securities 19,133 17,375 Bonds Accrued interest TOTAL 19,809 18,559 Note 24 - Accruals and other liabilities Dec. 31, 2005 Jan. 1, 2005 Accruals Accounts unavailable due to recovery procedures 5,922 4,995 Currency adjustment accounts Accrued expenses Other accruals 1,259 2,085 Sub-total 7,963 7,925 Other liabilities Securities settlement accounts 1, Oustanding amounts payable on securities Miscellaneous creditors 3,070 2,239 Sub-total 4,875 3,035 TOTAL 12,838 10,960

103 104 CONSOLIDATED FINANCIAL STATEMENTS Note 25 - Provisions for contingencies Provisions for counterparty risks Jan. 1, 2005 Additions Reversals (utilized provisions) Reversals (surplus provisions) Other movements On signature commitments (9) (32) 1) 83 On financing and guarantee commitments 12 2 (2) (6) 6 On country risks 2 1 (1) 2 Provisions for risks on miscellaneous receivables (3) (24) 7) 64 Other provisions for counterparty risks 5 (2) 2) 5 Other provisions (excluding counterparty risk) Provisions for pension costs (13) (20) (1) 205 Provisions for claims and litigation (2) (2) (8) 22 Provisions for home savings accounts and plans 118 (1) (25) 92 Provisions for taxes (9) 5) 74 Other contingency provisions (14) (17) 1) 79 Other 56) (56) TOTAL ) (190) 1) 632 Dec. 31, 2005 Note 25a - Pension and other employee benefit commitments Defined benefit plans not covered by pension funds (excluding retirement bonuses) Jan. 1, 2005 Additions Reversals Other movements Retirement bonuses (7) (2) 52 Top-up payments 55 2 (1) (4) 52 Commitments for long-service awards (other long-term benefits) 33 2 (1) 34 Total commitments recognized (8) (7) 138 Supplementary defined benefit pensions covered by group pension funds Commitments to serving and retired employees 42 1 (4) (0) 39 Total commitments recognized 42 1 (4) (0) 39 Commitments relating to early retirement plans Commitments 36 7 (1) (14) 28 Total commitments recognized 36 7 (1) (14) 28 Dec. 31, 2005 The discount rate used to calculate pension and other employee benefit commitments is determined by reference to the market yield on long-term government bonds (TEC 10). The difference between the discount rate and the rate of estimated future salary increases is 1.1%. This rate was 1.4% in Assumptions regarding the estimated retirement age of employees are revised on an annual basis in light of regulatory conditions in the countries in which the group operates. The AFB agreement dated March 29, 2005 is also covered by this review.

104 FINANCIAL STATEMENTS 105 Pension fund shortfalls Jan. 1, 2005 Discounting impact Interest income Change in accounting method Partial settlement Actuarial gains and losses Payments made to beneficiaries Subsidies received Commitments 140) 5 (8) (7) 130 Fund assets 100) 4) 9) (7) 3) 109 Dec. 31, 2005 Deferred actuarial gains and losses (5) 17) 12 Provision 35) 5 (4) (3) 33 Foreign subsidiaries 7) (1) 6 TOTAL 42) 5 (5) (3) 39 Fund assets include 35,000 CIC shares. Note 25b - Provisions for risks arising from commitments on home savings accounts and plans Dec. 31, 2005 Jan. 1, 2005 Provisions for risks arising from commitments on home savings accounts Balance of home savings accounts giving rise to provisions for risks Provisions for risks arising on home savings loans 9 12 Balance of home savings loans giving rise to provisions for risks Maturity of home savings plans 0-4 years 4-10 years More than 10 years Dec. 31, 2005 Jan. 1, 2005 Provisions for risks arising from commitments on home savings plans Amounts outstanding under home savings plans 2, ,871 6,684 Note 26 - Subordinated debt Dec. 31, 2005 Jan. 1, 2005 Subordinated notes 1,204 1,337 Non-voting loan stock Perpetual subordinated debt Other debt Accrued interest TOTAL 2,683 2,782 Subordinated debt representing more than 10% of total subordinated debt at December 31, 2005 Main subordinated debt issues Date of issue Amounts Currency Rate Maturity Subordinated notes July 19, million EUR * July 19, 2013 Subordinated notes Sept. 30, 2003 USD 350 million USD ** Sept. 30, 2015 Non-voting loan stock May 28, million EUR *** **** Perpetual subordinated notes June 11, million EUR ***** TOTAL Early redemption feature Early redemption conditions * 3-month Euribor basis points. ** 6-month USD Libor +55 basis points. *** Minimum 85% (TAM+TMO)/2, Maximum 130% (TAM+TMO)/2. **** Repayable at borrower s discretion as from May 28, 1997 at 130% of the face value incremented at the rate of 1.5% for the following years. ***** 6.60% fixed rate up to 2007, then 3-month Euribor %.

105 106 CONSOLIDATED FINANCIAL STATEMENTS Note 27 - Unrealized or deferred gains and losses Dec. 31, 2005 Jan. 1, 2005 Unrealized or deferred gains and losses* relating to: Available-for-sale financial assets 269) 142) Derivatives designated as cash flows hedges (3) (5) Property assets (IAS 16) Other TOTAL 266) 137) * Amounts net of tax. Note 28 - Analysis of assets and liabilities by residual maturity Less than 3 months and demand 3 months to 1 year 1 to 5 years Over 5 years Perpetual Accrued interest Total Assets Loans and receivables due from credit institutions (1) 33,094 4,032 1, ,316 Loans and receivables due from customers (1) 16,139 6,176 21,590 24, ,975 Bonds and other fixed-income securities (3) 474 1,207 7,638 5, ,510 Liabilities Due to credit institutions (2) 41,693 16,932 8,719 5, ,470 Customer deposits (2) 49,288 2,364 2, ,063 Debt securities (2) - Retail certificates of deposit Interbank instruments and money market securities 13,982 3,733 1,228 1, ,697 - Bonds Subordinated debt , ,683 - Other Balance sheet items are presented by contractual maturity date. Excluding accrued interest, non-performing loans and provisions for impairment in value. (1) Carried at amortized cost and fair value. (2) Carried at amortized cost and fair value. (3) Only securities classified as available-for-sale, at fair value through profit or loss, held-to-maturity or securities not quoted on an active market.

106 FINANCIAL STATEMENTS 107 Note 29 - Commitments given and received Commitments and guarantees given Dec. 31, 2005 Jan. 1, 2005 Financing commitments Commitments given to banks 1,544 1,358 Commitments given to customers 19,669 19,233 Guarantees given Guarantees given to banks Guarantees given on behalf of customers 8,447 8,327 Commitments and guarantees received Dec. 31, 2005 Jan. 1, 2005 Financing commitments received Financing commitments received from banks Guarantees received Guarantees received from banks 12,118 6,899 NOTES TO THE INCOME STATEMENT Data relating to 2004 were prepared in accordance with IFRS excluding IAS and IFRS 4. Accordingly, no meaningful comparison can be made of data presented in notes 30 to 34 in respect of financial years 2004 and Note 30 - Interest income and expense Income Expense Income Expense Credit institutions and central banks 996 (2,292) 2,018 (2,997) Customers 4,821 (2,546) 4,504 (2,476) Of which finance leases 1,878 (1,644) 1,790 (1,551) Financial assets/liabilities designated at fair value under the fair value option Derivatives used for hedging purposes 1,398 (1,534) 1,710 (2,210) Available-for-sale financial assets Held-to-maturity financial assets Debt securities (731) (625) Subordinated debt (18) (20) TOTAL 7,784 (7,121) 9,196 (8,328)

107 108 CONSOLIDATED FINANCIAL STATEMENTS Note 31 - Commissions Income Expense Income Expense Credit institutions 6 (4) 7 (6) Customers 531 (5) 544 (6) Securities transactions 455 (15) 422 (16) Derivative instruments 14 (27) 15 (32) Currency transactions 24 (12) 20 (11) Financing and guarantee commitments 2 (3) 3 (3) Provision of services 704 (387) 663 (346) TOTAL 1,736 (453) 1,674 (420) Note 32 - Net gain/(loss) on financial instruments at fair value through profit or loss Derivatives held for trading 862) 862) Instruments designated at fair value under the fair value option 382) Ineffective portion of hedges (33) Foreign exchange gain/(loss) 9) 22) TOTAL CHANGES IN FAIR VALUE 1,221) 884) Of which derivatives held for trading (1,244) (1,229) The structured products portfolio held by the capital markets business (representing 400 contracts for an outstanding amount of 17 billion) was composed mainly of equity barrier options with multiple underlyings. In 2005, CIC sold its exposure on this portfolio, which had generated a net banking loss of 484 million and 156 million in 2005 and 2004, respectively. Note 33 - Net gain/(loss) on available-for-sale financial assets Dividends Gain/loss realized Impairment Total Dividends Gain/loss realized Impairment Total Government securities, bonds and other fixed-income securities Equities and other variable-income securities 19) 1) 20) ) 1) 42) (20) 161 Long-term investments 25 3) (3) 25) ) 46 Other 3 3 TOTAL 33 55) (1) 87) (5) 335

108 FINANCIAL STATEMENTS 109 Note 34 - Income/expense on other activities Income from other activities Investment property 1) 1) Other income 57) 55) Sub-total 58) 56) Expense on other activities Investment property (1) (1) Other expense (46) (22) Sub-total (47) (23) NET INCOME/EXPENSE ON OTHER ACTIVITIES 11) 33) Note 35 - General operating expenses Payroll costs Other expenses TOTAL (1,547) (1,473) (799) (770) (2,346) (2,243) Note 35a - Payroll costs Wages and salaries (934) (923) Payroll taxes (443) (414) Of which funded pension plan (25) (22) Employee profit-sharing and incentive bonuses (86) (89) Payroll-based taxes (87) (82) Other 3) 35) TOTAL (1,547) (1,473) Note 35b - Average number of employees Banking staff 14,744 15,068 Management 8,645 8,894 TOTAL 23,389 23,962 Note 35c - Other operating expenses Other taxes and duties (105) (98) External services (719) (709) Rebilling of expenses 29) 38) Other miscellaneous expenses (4) (1) TOTAL (799) (770)

109 110 CONSOLIDATED FINANCIAL STATEMENTS Note 36 - Movements in depreciation, amortization and provisions for impairment of property and equipment and intangible assets Depreciation and amortization Property and equipment Intangible assets Impairment Property and equipment (166) (172) (3) (4) Intangible assets ) TOTAL (169) (176) Intangible assets mainly include leasehold rights. Accordingly, they are not amortized but are tested for impairment in the same way as other non-current assets. Note 37 - Net additions to provisions for loan losses Additions Reversals Loan losses covered by provisions Loan losses not covered by provisions Recovery of loans written off in prior years Total 2004 Credit institutions 3 (1) 2) 2) Customers - Finance leases (6) 11 (4) (5) 1 (3) 1) - Other customer items (581) 680 (204) (19) 24 (100) (279) Sub-total (587) 694 (209) (24) 25 (101) (276) Held-to-maturity financial assets Available-for-sale financial assets (1) 1 (2) Other, including financing and guarantee commitments (68) ) 83) TOTAL (656) 767 (209) (24) 27 (95) (195) Note 38 - Net gain/(loss) on disposals of other assets Property and equipment and intangible assets 10) 4) - Losses on disposals (9) (7) - Gains on disposals 19) 11) Gains and losses on disposals of investments in consolidated companies TOTAL 10) 4) Note 39 - Corporate income tax Current taxes (145) (165) Deferred tax income and expense 50) (64) Adjustments in respect of prior periods 6) 3) TOTAL (89) (226) The deferred tax rate is calculated based on the expected timing of reversal. For French companies, this rate is 34.43%.

110 FINANCIAL STATEMENTS 111 Reconciliation between corporate income tax recorded in the accounts and the theoretical tax charge 2005 Theoretical tax rate 34.9% Impact of preferential SCR and Sicomi rates % Impact of reduced rate on long-term capital gains - 3.5% Impact of different tax rates paid by foreign subsidiaries - 1.0% Permanent differences Tax credits Other Effective tax rate 13.4% Taxable income * 665 Tax charge (89) * Pre-tax income of fully consolidated companies. CIC has set up a tax group with its main subsidiaries (more than 95%-owned) and the regional banks. Each regional bank that is part of the overall tax group forms a sub-group that includes its own subsidiaries. The companies included in the tax group are shown with an (i) in front of their name in the list of consolidated companies. For 2005, group relief generated a tax benefit of 227 million % - 3.7% - 1.3% 2005 Breakdown of main deferred taxes by type Assets Liabilities Temporary differences on: 309) (235) Provisions 130) Leasing provisions (difference between book depreciation and amortization of net investment) (45) Income from flow-through entities 5) (27) Other temporary differences 174) (163) Netting (87) 87) Total deferred tax assets and liabilities 222) (148) Deferred taxes are calculated using the liability method. The deferred tax rate for French companies is 34.43%. Note 40 - Earnings per share Net income Number of shares at beginning of year 35,208,166 35,208,166 Number of shares at end of year 35,208,166 35,208,166 Weighted average number of shares 35,208,166 35,208,166 Basic earnings per share Weighted average number of shares assuming full dilution 0) 0 Diluted earnings per share

111 112 CONSOLIDATED FINANCIAL STATEMENTS Note 41 - Credit risk on financial instruments Credit risk is the risk of incurring a loss as a result of failure by a borrower to fulfill a contractual obligation. Credit risk arises on loans and debt securities held, and encompasses counterparty risk on capital markets transactions. Credit risk management CIC s strategy is to incorporate risk management considerations at all levels of decision-making. In line with this strategy, senior management of both the group and each of the regional divisions participate actively in individual decisions and overall risk management through the implementation of standardized systems and procedures. The organization of risk management within CIC is set up as follows: Customer knowledge The banks within the group leverage the close ties they have formed in their respective regional economies to obtain information about existing and prospective customers. Customer segments have been defined and risk-profiled, allowing marketing efforts to be targeted more effectively. An industry risk assessment is also available for sensitive business segments. All counterparties are graded using a system developed in line with the new capital requirements framework (Basel II). The internal ratings system is used throughout the CMCEE-CIC group. Decision-making The decision-making framework is based on a series of authorization procedures for the retail banking business, and a series of committees for the financing and investment banking business. The Lending Department is responsible for providing risk oversight, and is tasked with monitoring the risk process and ensuring that the decision-making party or committee has access to adequate information on all aspects of a particular file (counterparty, market, transaction, etc.). The lending powers granted vary in accordance with the experience of the authorized person, the relative risk-weighting of the counterparty and the type of transaction or product involved. Computerizing the process for delegating powers enhances the security of the procedure. The CMCEE-CIC committee deals with major risks and comprises three members of CIC s Executive Board, as well as managers of major companies and the Head of Lending. CIC has also set up specialized committees for each activity: for example, the group Risk Committee is chiefly responsible for ensuring that each group entity s risk division is effectively organized. Monitoring The risk organization implemented by CIC enables the bank to monitor both individual counterparties and portfolios, for example in terms of outstanding loans and new loan grants. In order to monitor individual counterparties, details of the bank s commitments in respect of a counterparty for a given scope can be obtained from databases. Information can be obtained on all appropriate issues, such as products, geographic location, borrowers, etc.). For financing and investment banking, counterparties are subject to a regular review. A procedure has been set up in the retail banking business to detect emerging risks. Commitments in the main customer segments are monitored using advanced risk detection tools, which are based both on external and internal criteria, including account histories. These indicators help to identify and deal with potential problem loans before payment incidents arise. In the case of loan portfolios, data can be obtained from information systems that allow the bank to monitor and carry out both static and dynamic analyses of portfolios classified by main type of activity. These analyses look at outstanding loans, and the volume and quality of new loans granted, and are managed by teams involved in risk management activities as well as the client manager and his or her superior. The Executive Board and different committees receive the information they require to track portfolios of commitments made by the bank. Recovery and collection The system for detecting problem loans and downgrading loans to doubtful is in line with current regulations. Specialized units may be called upon for managing and collecting problem loans. There are three separate phases in the collection process: settlement in the ordinary course of business, out-ofcourt settlement, and court-ordered settlement. Exposure Dec. 31, 2005 Jan. 1, 2005 Loans and receivables Credit institutions 28,984 23,270) Customers 77,817 68,211) Gross exposure 106,801 91,481) Provisions for impairment Credit institutions (14) (17) Customers (2,259) (2,349) Net exposure 104,528 89,115)

112 FINANCIAL STATEMENTS 113 Exposure Dec. 31, 2005 Jan. 1, 2005 Financing commitments given Credit institutions 1,544 1,358 Customers 19,669 19,233 Guarantee commitments given Credit institutions Customers 8,447 8,327 Provision for risks arising on commitments given Debt securities Dec. 31, 2005 Jan. 1, 2005 Carrying amount Carrying amount Government securities 22,823) 22,401) Bonds 27,522) 24,624) Derivative instruments 5,508) 3,970) Repurchase agreements and securities lending 5,998) 6,170) Gross exposure 61,851) 57,165) Provisions for impairment of securities (5) (9) Net exposure 61,846) 57,156) Dec. 31, 2005 Interbank loans by rating in % AAA and AA+ 6 AA and AA- 49 A+ and A 31 A- and BBB+ 11 BBB and below 3 Dec. 31, 2005 Jan. 1, 2005 Interbank loans by geographic area in % in % France Other Eurozone countries 8 12 Other European countries 3 4 North America 3 5 Rest of the World 3 6 Credit risks on customer items Dec. 31, 2005 Jan. 1, 2005 Breakdown of loans by customer type in % in % Public (individuals and self-employed professionals) Corporates Large corporates 7 8 Other (of which specialized financing and local authorities) 7 6

113 114 CONSOLIDATED FINANCIAL STATEMENTS Dec. 31, 2005 Jan. 1, 2005 Geographic breakdown of risks on customer items in % in % France Other Eurozone countries 4 4 North America 2 2 Other OECD countries 2 2 Rest of the World 2 2 Concentration of customer risk Dec. 31, 2005 Jan. 1, 2005 Commitments exceeding 300 million Number Loans in million 1,811 1,067 Financing and guarantee commitments in million 6,586 5,401 Securities in million Commitments exceeding 100 million Number Loans in million 2,936 2,284 Financing and guarantee commitments in million 9,196 7,958 Securities in million Risk quality Dec. 31, 2005 Jan. 1, 2005 Individually-impaired loans and receivables 3,462) 3,585) Provisions for individual and collective impairment (2,259) (2,349) Coverage ratio 65.3% 65.5% Dec. 31, 2005 Jan. 1, 2005 Breakdown of industry risks in % in % Commerce 9 9 Manufacturing Agriculture, hunting, forestry 1 1 Company administration 2 2 Leasing and business services Real estate development and other Other real estate 2 2 Healthcare 2 2 Hotels and catering 2 2 Transport and communications 4 4 Private individuals (households) Other 8 8 Note 42 - Note on interest rate, liquidity, and foreign currency risks relating to financial instruments Asset-Liability Management risk Roles and responsibilities The roles and responsibilities of ALM Departments in each of CIC s regional banks are clearly defined: Asset/Liability Management is identified as a function completely separate from trading room operations and has its own budget and teams. Its primary objective is to shelter lending margins from the effects of interest and exchange rate fluctuations and to stabilize income.

114 FINANCIAL STATEMENTS 115 It is also responsible for ensuring that the bank concerned can meet its funding commitments and has sufficient liquidity to weather a crisis. Asset/Liability Management does not operate as a profit center its role is to enhance the bank s profitability and support its strategic development. CIC s Asset/Liability Management teams, which are in constant contact with sales teams throughout the network, contribute actively to defining the bank s sales and marketing policy, in terms of lending criteria, rules governing the internal transfer rate, and designing new products to meet customer needs. The CIC group has for the past several years opted for a managed decentralization of ALM operations. Standardized ALM agreements and exposure limits are presented in group ALM Risk Guidelines applicable to the whole Crédit Mutuel-CIC group. Interest rate risk Interest rate risk incurred in commercial operations stems from interest rate differentials and differences in benchmark lending and deposit rates. For the purpose of analyzing interest rate risk, account is also taken of the volatility of products with no fixed maturity and embedded options (early repayment and rollover options for loans and credit line drawdown options, etc.). Interest rate risk is analyzed on the basis of aggregate positions and general hedges are established for net balance sheet positions. Specific hedges may also be set up for individual high-value or specially structured transactions. Risk limits are determined in relation to projected net banking income of the individual banks and the CIC group as a whole. The risk-sensitiveness of net banking income (expressed as a percentage) is based on assumptions specific to France. Liquidity risk The CIC group attaches great importance to managing liquidity risk in conjunction with its shareholder BFCM, which handles the group s long-term refinancing. Various regulatory liquidity indicators are monitored: the group s one-month liquidity ratio corresponding to the weighted average ratios of group banks and representing the group s short-term liquidity position; the weighted own funds and permanent capital ratio representing the group s medium- and long-term liquidity position, which is calculated by weighting the liquidity ratios of the individual banks by their total average net medium- and long-term loans. The group regularly turns to institutional lenders such as the European Investment Bank or Caisse de Refinancement de l Habitat for financing its expansion. It also borrows on the financial markets, either from clients or through BFCM. Currency risk Customer transactions in foreign currency are hedged by the trading rooms in the various group banks. The residual exposure is very limited. CIC does not have any long-term or recurring positions in foreign currency, except for capital contributions to foreign branches. Accounting treatment of interest rate hedges Designation of hedged risk and hedging relationships CIC takes out hedges to protect its balance sheet against fluctuations in interest rates. The interest rate risk relating to capital markets activities is managed directly by the trading rooms and is not part of the ALM s remit. All such transactions are accounted for in accordance with the principles of IAS 39 (AG114-AG132: portfolio hedge of interest rate risk as set out in the October 2004 document issued by the European Commission (IAS 39 carve-out ). Several hedging relationships are defined: a hedge of fixed-rate deposits by receive-fixed, pay-variable interest rate swaps; a hedge of fixed-rate loans by receive-variable, pay-fixed interest rate swaps. Designation of hedged items 1/ Fixed-rate liability portfolio: demand deposits The hedged items are customer deposits hedged by receivefixed, pay-variable swaps. 2/ Fixed-rate asset portfolio: loans The hedged items are fixed-rate loans hedged by pay-fixed, receive-variable swaps. Expected maturities factor in prepayment risk but do not reflect assumptions regarding new loan issues. Consequently, over time, the hedged portfolios will reduce to reflect the installment payments and early repayments made. Hedging instruments The hedging instruments are swaps initiated and/or monitored by Asset/Liability Management and classified in the individual financial statements as specific or general hedges. These swaps are allocated to one of the two portfolios indicated above. Effectiveness tests justifying the hedging relationship Effectiveness tests are carried out at the inception of the hedge and at the end of each quarter. In the event of under-hedging, the hedge is deemed to be fully effective.

115 116 CONSOLIDATED FINANCIAL STATEMENTS Interest rate profiles of financial instruments The table below presents the interest rate profiles of financial instruments excluding those taken out in respect of the capital markets activity, which are monitored separately. The profiles are obtained using ALM assumptions regarding the probable deposit period of demand and regulated savings deposits, and taking into account prepayment assumptions for customer loans. Non-financial instruments and equities are not included. Contracts are deemed to be taken out at a variable rate when they are based on an index subject to revision at least once a year. All other instruments are deemed to be contracted at fixed rates. A net asset position results in a positive gap, while a net liability results in a negative gap. Interest rate profiles of financial instruments Total Less than 3 months 3 months to 1 year 1-5 years More than 5 years Fixed-rate gap 5,243-11,251 4,804 10,497 1,193 Floating-rate gap - 1,625 Fair value of financial instruments carried at amortized cost The estimated fair values presented are calculated based on observable parameters at December 31, 2005, and obtained by computing estimated discounted future cash flows using a yield curve that does not reflect the counterparty risk inherent to the debtor. The financial instruments discussed in this note relate to loans and borrowings. They do not include non-monetary items (e.g. equities), trade accounts payable and other asset accounts, or other liabilities and accruals. Non-financial instruments are not discussed in this section. The fair value of demand and regulated savings deposits equals the amount that may be requested by the customer, i.e., the carrying amount. Certain group entities may also apply assumptions whereby fair value is deemed to equal the carrying amount for those contracts indexed to a floating rate, or whose residual life is equal to or less than one year. Excluding held-to-maturity financial assets, financial instruments carried at amortized cost are not sold or are not intended to be sold prior to maturity. Accordingly, capital gains and losses are not recognized. However, if financial instruments carried at amortized cost were to become the object of a sale transaction, the price of such sale may differ significantly from the fair value calculated at December 31. Carrying amount Fair value Assets Loans and receivables due from credit institutions 28,970 28,988 Loans and receivables due from customers 70,132 71,937 Held-to-maturity financial assets 1,106 1,113 Liabilities Due to credit institutions 64,159 64,029 Due to customers 55,065 55,081 Debt securities 19,808 19,842 Subordinated debt 2,683 2,626 Effective interest rate of financial instruments carried at amortized cost The financial instruments dealt with in this section do not concern those contracted by the capital markets activity. Non-financial instruments and equities are also excluded. For fixed-rate contracts, the effective interest rate is the rate that exactly discounts the future cash flows associated with the instrument to the carrying amount. For variable-rate contracts, the effective interest rate is taken to be the latest available yield curve. Interest rate Assets Loans and receivables due from credit institutions 3.1% Loans and receivables due from customers 4.4% Held-to-maturity financial assets Liabilities Due to credit institutions 3.0% Due to customers 1.8%

116 FINANCIAL STATEMENTS 117 Managing market risks The system used to set exposure limits for market risk is based on internal rules and scenarios including historical VaR, stress tests and CAD ratios), which convert exposures into potential losses. The limits set cover various types of market risk (interest rate, currency, equities and counterparty risks). The aggregate limit is broken down into sub-limits for each desk. Netting between different types of risk is not permitted. Risks are monitored based on first-tier indicators (sensitivity to the various market risk factors), mainly for traders, and also on second-tier indicators (potential losses), to provide an overview of capital markets exposures for decision-makers. Note 43 - Related-party balance sheet items Assets Loans, advances and securities Associates (accounted for by the equity method) Dec. 31, 2005 Jan. 1, 2005 Associates (accounted Parent for by the company equity method) Parent company - Loans and receivables due from credit institutions 6, ,880 - Loans and receivables due from customers Securities Other assets TOTAL 9 6, ,993 Liabilities Deposits - Due to credit institutions 10 22,148 11,173 - Due to customers 10 Debt securities Other liabilities TOTAL 16 22, ,444 Financing and guarantee commitments Financing commitments given 6 Guarantee commitments given Financing commitments received Guarantee commitments received Income statement items related to transactions carried out with related parties Associates Associates (accounted (accounted for by the Parent for by the equity method) company equity method) Parent company Interest received 168) 88) Interest paid (426) (285) Commissions received ) ) Commissions paid (7) (4) Other income and expenses 9 (21) 6 (1) General operating expenses 3 (133) 6 (82) TOTAL 304 (401) 262 (274) The parent company is BFCM, a majority shareholder of CIC, and the entities controlling BFCM (Crédit Mutuel CEE). Transactions carried out with the parent company mainly cover loans and borrowings taken out for the purposes of treasury management, as BFCM is the group s refinancing vehicle, as well as IT services billed with Euro Information companies.

117 118 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) Relations with the group s key executives The seven members of the Executive Board are responsible for determining the CIC group s overall business strategy. Two people also attend Executive Board meetings in their capacity as managers of the group s major subsidiaries and are therefore deemed to be key executives. Part of the remuneration received by some of the group s key executives relates to their status as employees or corporate officers of Crédit Mutuel. Remuneration accruing to the other executives relates exclusively to their activities within the CIC group. Executive remuneration is set by the Supervisory Board based on recommendations made by a special 3-member committee. Remuneration comprises a fixed and variable component. The fixed portion is determined in the light of market rates of pay for positions carrying equivalent responsibilities. The variable portion is determined based on a specific percentage and approved by the meeting of the Supervisory Board following the Shareholders Meeting called to approve the financial statements for the year in respect of which the variable remuneration is paid. The group s key executives are also entitled to the same welfare and top-up pension benefits as all group employees, in respect of either Crédit Mutuel (for those carrying out part of their activities therein) or in respect of CIC. However, the group s key executives do not have any specific benefits. They have not been awarded any CIC shares or share equivalents. Furthermore, they are entitled to attendance fees in consideration for their functions within the group, but not for the offices they hold within group companies or other entities. The group s key executives may have been granted credit notes or loans by group banks, subject to the same terms and conditions as those offered to all of the group s employees. The outstanding principal on loans taken out by the group s key executives amounted to 516 thousand at December 31, Financial statements of the bank (extracts) Total remuneration paid to the group s key executives (7 members of the Executive Board + 2 additional people) In thousands Key executives Fixed salary Variable salary Benefitsin-kind Total 1, ,774 Note 44 - Subsequent events and other information No events occurred between December 31, 2005 and the date of publication of the accounts that would be likely to have a material impact on the financial statements. The consolidated financial statements of CIC for the year ended December 31, 2005 were approved by CIC s Executive Board on February 20, 2006.

118 EXECUTIVE BOARD REPORT ON THE ACCOUNTS OF CIC 119 Executive Board report on the accounts of CIC There were a number of changes in accounting methods in 2005, relating mainly to: standard CRC and standard CRC These standards primarily provide for the breakdown of property into different components based on the expected useful life and the depreciation over this period. The impact of this change in method came to a negative 14.3 million; article 13 of standard CRC Provisions for detected risks are now calculated based on the difference between the initial contractual payments, less payments already received, and forecast future payments discounted at the interest rate applicable to the contract. The impact of this change in method was a negative 21.3million; standard CRC relating to discounts applicable to restructured loans which had a non-material impact. The new accounting methods have been applied retrospectively, as if they had always been applied. The impact of first-time adoption is recognized in shareholders equity at January 1, and adjusts the opening balance sheet. The total impact on retained earnings at January 1, 2005 totaled a negative 64.3 million. A provision for risks relating to the home savings accounts and plans has been recorded this year as authorized by the Conseil National de la Comptabilité in its press release of December 20, This provision covers commitments arising on the obligation to pay a fixed rate of interest on future savings which is set upon inception of the contract for an indefinite period. The provision also covers commitments relating to loans granted at a particular interest rate set upon inception of the loan. Exceptionally, for tax purposes, the impact of the first-time adoption of the property savings provision at January 1, 2005 was recorded as a non-recurring expense of 16.4 million. Significant events of the year In 2005, UBR was merged into CIC. The impact of this transfer of assets and liabilities on the income statement was a negative 1 million. The CIC greater Paris region network CIC continued to expand its network in the greater Paris region, which by the end of the year was made up of 192 personal banking branches and 45 corporate banking branches. The number of clients totaled 576,326, including 479,956 personal banking clients. Outstanding loans rose 16% to 8.9 billion. Home loans were the main growth driver, posting a 26.3% increase. Overall, customer deposits rose 5%, with bank savings accounts climbing 6%. Operating fees and commissions advanced 17% and commissions from financial services climbed 31%. Financing and capital markets Outstanding loans in financing and capital markets contracted in 2005, due to a more selective approach to risk-taking results Net banking income edged up to 1,155 million from 1,011 million. Net commission income slid by 6% to 190 million. Dividends received from subsidiaries and affiliates totaled 472 million (2004: 469 million), the majority of which derived from regional banks. General operating expenses inched up 2.2%. The number of full-time equivalent employees at the year end was 4,611. Operating income before provisions came to 556 million, compared with 426 million a year earlier. The bank recorded net reversals of 9 million in relation to provisions for loan losses. General provisions for credit risks stood at 157 million at December 31, Net gains on disposals of fixed assets amounted to 23 million. Net non-recurring expense includes the loss on the June 2005 sale of risks relating to the structured products portfolio (see the Executive Board report on the consolidated financial statements) in an amount of 681 million. CIC s total tax charge includes corporate income tax payable on CIC s net income and the net benefit from tax consolidation. CIC ended the year with net income of 97 million including a 41.7 million contribution from foreign subsidiaries - compared with 528 million in Shareholders equity, including the general banking risks reserve, amounted to 3,266 million at December 31, Details of executive compensation are provided on page 69 of the Executive Board report on the consolidated financial statements. Information relating to CIC s share ownership structure as well as changes during the year and dividends paid are provided on pages of the legal section of this report under Additional information. The operations of CIC s subsidiaries are described on pages 126 to 132. Outlook for 2006 The restructuring of the CM-CIC group s capital markets business in order to enhance operational risk management in this area will result in the capital markets activities of the various entities being combined into a single balance sheet. The capital markets business of CIC Banque CIAL will also start being merged into CIC during 2006.

119 120 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) Financial statements BALANCE SHEET ASSETS (in millions) Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003 Cash, central banks and postal checking accounts 1, ,738 Government securities 1,416 4,007 4,886 Interbank loans and advances 21,853 20,913 18,528 Customer transactions 16,870 15,233 13,752 Bonds and other fixed-income securities 7,656 6,596 6,701 Equities and other variable-income securities 3,134 5,650 4,858 Shares in subsidiaries and other long-term investments Investments in affiliates 2,273 2,178 2,122 Lease financing Intangible assets Property and equipment Unpaid capital Own shares Other assets 4,676 4,056 2,196 Accruals and other assets 3,719 3,637 3,970 TOTAL ASSETS 64,517 64,307 60,535 OFF BALANCE SHEET ITEMS (in millions) Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003 Commitments and guarantees received Financing commitments received Commitments received from banks Guarantees received Guarantees received from banks 7,875 5,717 3,975 Securities commitments received Optional repurchase agreements Other commitments received

120 FINANCIAL STATEMENTS 121 LIABILITIES AND SHAREHOLDERS EQUITY (in millions) Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003 Central banks and postal checking accounts Interbank loans and deposits 21,516 18,606 22,006 Customer transactions 11,659 14,086 10,551 Debt securities 15,609 12,904 12,618 Other liabilities 6,502 8,501 5,835 Accruals and other liabilities 3,247 4,097 3,701 Provisions for contingencies and charges Subordinated debt 2,335 2,432 2,443 General banking risks reserve Shareholders equity 2,887 2,962 2,550 - Capital stock Additional paid-in capital Reserves Revaluation reserve Untaxed provisions 27 - Retained earnings Net income for the year TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 64,517 64,307 60,535 OFF BALANCE SHEET ITEMS (in millions) Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003 Commitments and guarantees given Financing commitments given Commitments given to banks 1,588 1,366 1,332 Commitments given to customers 10,768 12,529 12,094 Guarantees given Guarantees given on behalf of banks ,109 Guarantees given on behalf of customers 5,342 5,677 5,497 Securities commitments given Optional reselling agreements Other commitments and guarantees given 1,183 1,

121 122 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) INCOME STATEMENT (in millions) Interest income 1,848) 2,884 2,946 Interest expense (1,904) (2,916) (2,812) Income from variable-income securities 472) Commission income 312) Commission expense (122) (124) (114) Net gains on trading account securities 517) Net gains on securities held for sale 23) Other banking income 3) 7 8 Other banking expense 6) (1) (3) Net banking income 1,155) 1,011 1,014 Payroll costs (345) (315) (330) Other general operating expenses (218) (221) (216) Depreciation and amortization (36) (50) (31) General operating expenses (599) (586) (577) Operating income before provisions 556) Net reversals of/(additions to) provisions for loan losses 9) 48 (161) Operating income after provisions 565) Gains and losses on disposals of fixed assets 23) (0) 13 Income before non-recurring items 587) Net non-recurring income/(expense) (716) (3) Corporate income tax 227) Net allocation to general banking risks reserve (80) Net allocation to untaxed provisions (2) NET INCOME 97)

122 FINANCIAL STATEMENTS 123 FIVE YEAR FINANCIAL SUMMARY 1. At December Capital stock (in ) 560,141, ,141, ,330, ,330, ,330,656 Number of shares issued 35,008,836 35,008,836 35,208,166 35,208,166 35,208,166 A series common shares 35,008,836 35,008,836 35,208,166 35,208,166 35,208,166 D series preferred shares Preferred investment certificates Ordinary investment certificates Results of operations (in thousands) Banking income 5,527,658 4,894,268 3,942,663 4,052,927 3,174,371 Net income before tax, employee profit-sharing, depreciation, amortization, provisions and net non-recurring items 408, , , , ,727 Corporate income tax 37,810 5,826 18,132 56, ,268 Employee profit-sharing for the year 5,545 19,732 12,328 13,125 9,439 Net income 228, , , ,795 96,882 Dividends 82,621 95, , , , Earnings per share (in ) Income after tax and employee profit-sharing, but before depreciation, amortization and provisions Net income Dividend per A series share Dividend per D series share and investment certificates Employee information (excluding foreign branches) Number of employees (average full-time equivalents) 4,000 4,131 4,164 4,394 4,460 Total payroll 165,177, ,741, ,709, ,239, ,061,113 Total benefits (Social Security, etc.) 97,794,681 86,856,207 89,652,736 97,182,075 98,960,725

123 124 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) INVESTMENTS IN SUBSIDIARIES AND AFFILIATES AT DECEMBER 31, 2005 Company and address Capital stock Reserves Detailed information about investments in French and foreign companies with a carrying value representing more than 1% of CIC s capital stock A/SUBSIDIARIES (50% to 100%-owned by CIC) A.1 RETAIL BANKS A 1-1 Banking CIC Banque CIAL - 31, rue Jean Wenger-Valentin, Strasbourg - Siren no ,755, ,007,000 CIC Banque CIN - 15, place de la Pucelle, Rouen - Siren no ,000,000 11,398,000 CIC Banque CIO - 2, avenue Jean-Claude Bonduelle, Nantes - Siren no ,432, ,440,000 CIC Banque BRO - 7, rue Gallois, Blois - Siren no ,752,000 49,958,000 CIC Banque Scalbert Dupont - 33, avenue Le Corbusier, Lille - Siren no ,598,272 85,082,000 CIC Banque SNVB - 4, place André Maginot, Nancy - Siren no ,000,000 96,805,000 CIC Banque Transatlantique - 26, avenue Franklin D. Roosevelt, Paris - Siren no ,529,350 47,328,000 CIC Société Bordelaise - Cité Mondiale, 20, quai des Chartrons, Bordeaux - Siren no ,300,000 47,866,000 CIC Lyonnaise de Banque - 8, rue de la République, Lyon - Siren no ,290,262 69,641,000 A.1-2 Equipment leasing CM-CIC Bail - 12, rue Gaillon, Paris - Siren no ,493, ,325,000 A.1-3 Real estate leasing CM-CIC Lease - 48, rue des Petits Champs, Paris - Siren no ,399,232 22,211,000 A.2 INVESTMENT BANKING A.2-1 Stockbroking CM-CIC Securities - 6, avenue de Provence, Paris - Siren no ,778,498 11,073,000 A.2-2 Private equity CIC Finance - 4 et 6, rue Gaillon, Paris - Siren no ,953, ,537,000 Institut de Participations de l Ouest IPO - 32 avenue Camus, Nantes - Siren no ,781,370 64,671,000 A.3 INSURANCE Adepi - 6, rue Gaillon, Paris - Siren no ,892, ,480,000 A.4 HEADQUARTERS AND HOLDING COMPANIES CIC Participations - 4, rue Gaillon, Paris - Siren no ,375,000 18,412,000 CIC Associés - 60, rue de la Victoire, Paris - Siren no ,576,000 2,505,142 CIC Epargne Salariale - 12, rue Gaillon, Paris - Siren no ,932, ,000 B/AFFILIATES (10% to 50%-owned by CIC) Banque Marocaine du Commerce Extérieur avenue Hassan II, Casablanca (Morocco) 1,587,514,000 MAD 3,613,716,000 MAD ( * ) Banque de Tunisie - 2, rue de Turquie, 1001 Tunis (Tunisia) 50,000,000 TND 204,915,000 TND CIC Information - 4, rue de Ventadour, Paris - Siren no ,000,000 17,690,000 Groupe Sofemo - 34, rue du Wacken, Strasbourg - Siren no ,050,000 8,126,501 General information on other subsidiaries and affiliates SUBSIDIARIES French companies Foreign companies AFFILIATES French companies Foreign companies * Figures at December 31, 2004.

124 FINANCIAL STATEMENTS 125 Percent interest Book value of shares At cost Net Loans and advances granted by CIC Guarantees given by CIC Last published net sales Last published net income/ (loss) Dividends received by CIC in ,882, ,882, ,124, ,564,000 90,112, ,170, ,170, ,909,000 7,128,000 13,749, ,020, ,020, ,344,000 48,957,000 45,032, ,340, ,340, ,585,000 7,681,000 11,337, ,267, ,267, ,727,000 20,466,000 24,129, ,519,956 87,519, ,999,000 61,771, , ,315,861 82,315,861 48,206,000 9,216,000 6,238, ,670, ,670, ,920,000 8,315,000 16,142, ,779, ,779, ,913,000 81,888, ,515, ,039,770 79,039,770 11,528,000 (1,148,000) 2,642, ,309,854 22,309,854 34,168,000 18,626,000 5,587, ,899,048 31,899,048 66,080,000 3,563, ,610, ,610,863 27,943,000 18,695,000 7,733, ,878, ,878,816 22,655,000 21,098,000 5,062, ,636, ,636,885 7,235,000 7,226, ,267,900 25,548, ,000 1,560, , ,787,882 19,651, ,946 1,600, ,156,093 10,931,220 13,842,000 (3,724,000) ,948,247 72,948,247 24,873,141,722 4,550,844,100 2,095, ,502,357 31,502,357 84,599,309 21,146,727 1,527, ,090,000 18,090,000 69,000 13,573, ,820,000 7,820,000 18,772,942 2,776, ,500 48,325,354 41,733,454 2,062, ,093,198 9,558,657 1,571,545 88,995,575 88,995, ,065 MAD/ exchange rate at December 31, 2005: TND/ exchange rate at December 31, 2005:

125 126 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) BUSINESS AND RESULTS OF SUBSIDIARIES AND AFFILIATES Regional banks (1) CIC Banque Scalbert Dupont (in millions) Bank CNC Consolidated Bank Consolidated CNC CNC CNC Number of employees at December 31 1,936 1,936 1,943 1,943 Total assets 7,373 7,490 6,341 6,397 Shareholders equity and general banking risks reserve Customer deposits 4,203 4,203 3,883 3,883 Customer loans 5,545 5,538 4,813 4,810 Net income CIC Banque CIN (in millions) Bank CNC Consolidated Bank Consolidated CNC CNC CNC Number of employees at December Total assets 3,883 4,174 3,199 3,434 Shareholders equity and general banking risks reserve Customer deposits 2,025 2,213 1,863 2,037 Customer loans 2,969 3,203 2,455 2,655 Net income CIC Lyonnaise de Banque (in millions) Bank CNC Consolidated Bank Consolidated IFRS CNC Pro forma IFRS Number of employees at December 31 4,102 4,694 4,027 4,591 Total assets 15,950 18,567 13,327 15,294 Shareholders equity and general banking risks reserve Customer deposits 7,428 8,530 7,113 8,236 Customer loans 9,397 13,130 9,397 10,578 Net income (1) Customer deposits do not include certificates of deposit or repurchase agreements. Customer loans include lease financing transactions but exclude resale agreements.

126 FINANCIAL STATEMENTS 127 CIC Banque CIAL (in millions) Bank CNC Consolidated Bank Consolidated IFRS CNC Pro forma IFRS Number of employees at December 31 2,312 3,194 2,410 3,276 Total assets 60,789 77,089 46,128 61,811 Shareholders equity and general banking risks reserve Customer deposits 4,153 12,659 3,989 12,978 Customer loans 5,588 7,885 5,114 7,987 Net income CIC Banque SNVB (in millions) Bank CNC Consolidated Bank Consolidated CNC CNC CNC Number of employees at December 31 2,451 2,451 2,437 2,437 Total assets 8,367 8,529 7,800 7,958 Shareholders equity and general banking risks reserve Customer deposits 4,622 4,622 4,333 4,332 Customer loans 7,209 7,459 6,320 6,320 Net income

127 128 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) CIC Banque CIO (in millions) Bank CNC Consolidated Bank Consolidated CNC CNC CNC Number of employees at December 31 2,533 2,568 2,509 2,588 Total assets 10,352 10,624 9,096 9,377 Shareholders equity and general banking risks reserve Customer deposits 4,973 4,974 4,640 4,634 Customer loans 8,241 8,555 6,955 7,409 Net income CIC Banque BRO (in millions) Bank CNC Bank CNC Number of employees at December Total assets 3,103 2,619 Shareholders equity and general banking risks reserve Customer deposits 1,877 1,726 Customer loans 2,471 2,162 Net income 8 12 CIC Société Bordelaise (in millions) Bank CNC Bank CNC Number of employees at December 31 1,156 1,080 Total assets 4,195 3,290 Shareholders equity and general banking risks reserve Customer deposits 1,997 1,693 Customer loans 3,367 2,670 Net income 8 16

128 FINANCIAL STATEMENTS 129 Specialist subsidiaries Retail banking CIC Epargne Salariale (in millions) Bank CNC Bank CNC Number of employees at December Shareholders equity 8 7 Total assets Assets under management (excluding current bank accounts) 2,965 2,431 Net income/(loss) (3.7) (4.5) CM-CIC Bail (in millions) Bank CNC Bank CNC Number of employees at December Shareholders equity and general banking risks reserve Total assets 2,760 2,252 Outstanding lease financing 2,655 2,183 Net income/(loss) (1.1) 10.4 CM-CIC Laviolette Financement (in millions) Bank CNC Bank CNC Number of employees at December Shareholders equity and general banking risks reserve 5 5 Total assets Net factored receivables 1, Net income

129 130 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) CM-CIC Lease (in millions) Bank CNC Bank CNC Number of employees at December Shareholders equity and general banking risks reserve Total assets 2,064 2,066 Outstanding lease financing 1,978 1,953 Net income Factocic (in millions) Bank CNC Bank CNC Number of employees at December Total assets 1,534 1,373 Shareholders equity and general banking risks reserve Factored receivables 6,912 6,262 Net income Specialist subsidiary - Financing and capital markets CM-CIC Securities (in millions) Bank CNC Bank CNC Number of employees at December Total assets 2,167 1,553 Customer assets in custody 17,253 14,106 Net income Specialist subsidiaries Private banking CIC Banque Transatlantique (1) (in millions) Bank CNC Consolidated Bank Consolidated CNC CNC CNC Number of employees at December Total assets 941 1, ,001 Shareholders equity and general banking risks reserve Customer funds invested in group savings products 3,765 4,978 2,845 3,777 Customer deposits Customer loans Net income (1) Customer deposits do not include certificates of deposit or repurchase agreements. Customer loans include lease financing transactions but exclude resale agreements.

130 FINANCIAL STATEMENTS 131 CIC Banque CIAL Suisse Key figures prepared under local accounting standards (in CHF millions) Bank Bank Number of employees at December Shareholders equity Total assets 2,595 2,541 Assets in custody 5,127 4,982 Net income CIC Private Banking - Banque Pasche Key figures prepared under local accounting standards (in CHF millions) Consolidated* Consolidated* Number of employees at December Total assets Total customer funds (assets in custody and deposits) 1,737 1,630 Net income * Banque Pasche Geneva + Banque Pasche Monaco. Banque de Luxembourg Key figures prepared under local accounting standards (in millions) Bank Bank Number of employees at December Shareholders equity and general banking risks reserve* Total assets 12,799 13,254 Assets in custody 43,281 28,530 Net income * Shareholders equity includes untaxed provisions. Dubly-Douilhet SA (in millions) Bank CNC Bank CNC Number of employees at December Total assets Shareholders equity 9 9 Assets in custody Net income

131 132 FINANCIAL STATEMENTS OF THE BANK (EXTRACTS) Specialist subsidiaries Private equity CIC Banque de Vizille (in millions) Consolidated* IFRS Consolidated* Pro forma IFRS Number of employees at December Shareholders equity Total assets Value of portfolio Net income * Banque de Vizille SA + Vizille Capital Innovation + Vizille Capital Finance + Sudinnova. CIC Capital Développement (in millions) Bank CNC Bank CNC Shareholders equity Total assets Value of portfolio Net income CIC Finance (in millions) Bank CNC Bank CNC Number of employees at December Shareholders equity Total assets Value of portfolio* Net income * including the investments of its subsidiary CIC Capital Développement. IPO (in millions) Bank Bank Number of employees at December Shareholders equity Total assets Value of portfolio Net income

132 133 Legal information 134 Ordinary Shareholders Meeting of May 11, Additional information 150 General information 152 Person responsible for the registration document (document de référence) and Statutory Auditors

133 134 LEGAL INFORMATION Ordinary Shareholders Meeting of May 11, 2006 Executive Board s report to the Ordinary Shareholders Meeting of May 11, 2005 We have called this Ordinary Shareholders Meeting to discuss the matters included on the agenda that are the subject of the resolutions submitted for your approval. The business activities and results of the bank and the CIC group for 2005 are discussed in the Executive Board reports provided with the statutory and consolidated financial statements that have been made available or provided to you. These reports also include details of business developments since the beginning of the year and prospects for the full year. 1. Approval of the financial statements for the fiscal year ended December 31, 2005 (first and second resolutions) The financial statements of Crédit Industriel et Commercial, which were approved by the Executive Board at its February 20, 2006 meeting, show income of 96,881, The Executive Board report provided with the financial statements gives details of the various elements that make up this income. The consolidated financial statements of the CIC group show net income of 578 million. The related Executive Board report shows how this income was generated and how the group s various businesses and entities contributed to such income. You have been given the opportunity to review the reports of the President of the Supervisory Board enclosed with the Executive Board report regarding internal control and the functioning of the Board, the Supervisory Board s report, and the Statutory Auditors reports. We ask you to approve the statutory and consolidated financial statements as presented to you. 2. Appropriation of income (third resolution) Retained earnings as they stood after voting of the 4 th resolution of the Combined Ordinary and Extraordinary Shareholders meeting of May 19, 2005 amounted to 872,519, (after distribution of the dividend for fiscal year 2004). The changes in accounting method that have taken place pursuant to CRC regulations and , as discussed in substance in the Executive Board report and in the notes to the 2005 financial statements, led to a deduction of 64,329, from opening retained earnings. Conversely, opening retained earnings were credited for the amount of the dividend which should have been allocated to the shares not eligible for dividends, and in particular those held within the scope of the liquidity agreement that was the subject of the 9 th resolution. Accordingly, retained earnings amount to 808,194, Income for the fiscal year amounts to 96,881, After incorporation of the retained earnings of 808,194,417.95, the amount to be allocated by the Shareholders Meeting amounts to 905,076, First of all, an amount should be allocated to the special reserve provided for by Article 238 bis AB of the French Tax Code for 146, This involves the tax deduction resulting from the purchase of a musical instrument provided to a musical composer and performer. The Executive Board then suggests that you distribute a dividend calculated by applying the same rate of distribution to consolidated net income as that applied in previous years (25%). The balance should be credited to the retained earnings account to enable CIC to pursue its reserve policy, and thus to increase shareholders equity and its financial strength as shown, in particular, by the group s capital adequacy ratio. The Executive Board therefore suggests that you: distribute a dividend of 144,353, to holders of A series shares in respect of fiscal year 2005; enter the available balance, i.e., 760,576,649.71, in the retained earnings account. Accordingly, each share will carry a dividend of Dividends will be distributed on May 29, As provided under the new tax regime applicable to distributions, it is specified that the entire dividend distributed is eligible for the 40% tax abatement mentioned in point 2 of Article 158 (3) of the French Tax Code. In accordance with the provisions of French law, the Shareholders Meeting is reminded that: for 2004, a dividend of 133,086, was distributed, representing 3.78 per share eligible for the 50% tax abatement mentioned in point 2 of Article 158 (3) of the French Tax Code; for 2003, a dividend of 115,482, was distributed, representing 3.28 per share, plus a tax credit of 1.64 subject to the provisions of the French Tax Code applicable to the particular situation of the beneficiaries; for 2002, a dividend of 95,224, was distributed, representing 2.72 per share, plus a tax credit of 1.36, subject to the provisions of the French Tax Code applicable to the particular situation of the beneficiaries. 3. Agreements referred to in Article L of the French Commercial Code (fourth resolution) In the Statutory Auditors special report, the Auditors list the regulated agreements governed by Article L of the French Commercial Code that were entered into or that remained in effect during 2005 with the Supervisory Board s consent. 4. Ratification of the cooptation of a member of the Supervisory Board (fifth resolution) Pursuant to Article 12 of the bylaws, the Supervisory Board coopted Mr. Daniel Leroyer to replace Mr. Jean-Pierre Schneider, who has resigned, at its May 19, 2005 meeting. Mr. Leroyer s term of office will expire at the end of his predecessor s office, i.e., at the close of the Shareholders Meeting called to approve the financial statements for fiscal year The Executive Board suggests that you ratify this cooptation.

134 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Appointment of a new member of the Supervisory Board (sixth resolution) In view of the fact that Article 12 (I) of the bylaws provides that the Supervisory Board consists of between fifteen and eighteen members appointed by the Shareholders Meeting, without prejudice to the number of employee representatives, the Executive Board suggests that you appoint, in addition to the members appointed on May 15, 2003 and May 19, 2005, an additional member of the Supervisory Board. This member will be Mr. Albert Peccoux, born on November 2, 1939 in Saint-Martin- Bellevue (Haute-Savoie, France), and residing at 162, route de l Eglise, Saint-Martin-Bellevue. Mr. Peccoux s term of office will cover a period of five years and will expire at the close of the Ordinary Shareholders Meeting called to approve the financial statements for fiscal year Appointment of a principal Statutory Auditor and an alternate Statutory Auditor (seventh and eighth resolutions) The appointment of principal Statutory Auditor, currently held by PricewaterhouseCoopers, a firm of auditors registered with the Paris Statutory Auditors Board, will expire at the May 11, 2006 Shareholders Meeting called to approve the financial statements for fiscal year Pursuant to Article L of the French Commercial Code, at its February 23, 2006 meeting, the Supervisory Board suggested that this appointment be renewed for a further period of six years, i.e. until the Shareholders Meeting called to approve the financial statements for fiscal year 2011, because of the knowledge it has gained of CIC and in order to maintain continuity in external auditing within the CIC group. The alternate Statutory Auditor s appointment held by Mr. Pierre Coll will also expire at the May 11, 2006 Shareholders Meeting called to approve the financial statements for fiscal year The Supervisory Board has proposed to appoint Mr. Etienne Boris to replace him for a period of six years, i.e. until the Shareholders Meeting called to approve the financial statements for fiscal year The French Banking Commission, which was previously consulted with regard to these two proposals, approved such appointment in its March 15, 2006 letter to CIC. As a result, the Executive Board submits the appointment of PricewaterhouseCoopers as principal Statutory Auditor (seventh resolution) and the appointment of Mr. Etienne Boris as alternate Statutory Auditor (eighth resolution) for your approval. 7. Authorization for the Executive Board to buy back CIC s A series shares (ninth resolution) We ask you to cancel the authorization previously given to the Executive Board to trade in CIC s A series shares on the stock exchange with immediate effect and to give it a new authorization for this purpose. It must be stressed that the legal framework for this is laid down in Articles L et seq. of the French Commercial Code, and in Title IV of Book II of the general regulations of the Autorité des marchés financiers, and in its implementing instructions. Within this framework, CIC wishes to trade on the stock exchange as follows: shares will be traded in accordance with the liquidity agreement entered into by CIC and BFCM with the CM-CIC Securities firm of stockbrokers, in the capacity of investment service provider, which is the trader; the provisions of this liquidity agreement have been brought into compliance with the AFEI s code of ethics; shares will be traded freely by the firm of stockbrokers with the sole aim of ensuring the liquidity and regular listing of CIC s shares on the Paris stock exchange; bearing in mind that, according to this regulatory framework, it is only necessary to set a maximum purchase price in order to expressly cap the corresponding commitment; the maximum purchase price will be set at 240, i.e. the limit applied for the previous authorization; the shares held by the firm of stockbrokers within this context will not be cancelled; the maximum number of shares that may be purchased within this context remains unchanged at 100,000, i.e. 0.28% of the capital at the beginning of this Shareholders Meeting, it being specified that the maximum commitment that may result from the use of this amount in full, taking into account the price limit set, will amount to 24 million; CIC will provide the AMF with the statistics relating to the trading of these shares every month and with a statement every six months. For information purposes, as of December 31, 2005, the liquidity group set up in connection with the agreement in force held 4,000 A series CIC shares after purchasing 14,203 shares and selling 11,573 shares in As of February 28, 2006, it held 4,879 shares. 8. The tenth resolution concerns powers to be given.

135 136 LEGAL INFORMATION Supervisory Board s report to the Shareholders Meeting of May 11, 2006 The Supervisory Board met at regular intervals as required by French law, and was able to fulfill its duties and responsibilities completely based on the business reports presented by the Executive Board at each meeting. The main business developments in 2005 and details of the components of income are presented in the accounting documents concerning the financial statements of the bank and the consolidated financial statements (balance sheet, income statement, notes to the financial statements and Executive Board report) presented by the Executive Board. At its February 23, 2006 meeting, the Supervisory Board reviewed these documents, verified the accounts to which they relate and heard the observations of the Statutory Auditors. The Supervisory Board has no additional observation to make in this respect. The Supervisory Board notes that the appointment as principal Statutory Auditor held by PricewaterhouseCoopers will expire at the Shareholders Meeting called to approve the financial statements for fiscal year 2005, and suggests that the shareholders renew such appointment. Likewise, the Supervisory Board suggests that Mr. Etienne Boris be appointed as alternate Statutory Auditor to replace Mr. Pierre Coll whose appointment will also expire. An application for authorization from the French Banking Commission was made in respect of both these suggestions. The Supervisory Board recommends that you approve CIC s income and the other resolutions being put to you. The Supervisory Board would particularly like to thank the Executive Board and all the employees of the bank for the progress they have made and the results they have achieved throughout the year in a difficult economic climate, without weakening growth momentum and while continuing to restructure the group. The progress achieved has given the group a more uniform and consistent image throughout its network and specialist subsidiaries, most of which are now shared with Crédit Mutuel. Mobilizing all our employees is required more than ever to allow us to succeed on our chosen path. The Supervisory Board.

136 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Statutory Auditors report on the consolidated financial statements Year ended December 31, 2005 This is a free translation into English of the Statutory Auditors report issued in the French language and is provided solely for the convenience of English speaking readers. The Statutory Auditors report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the consolidated financial statements. This information includes an explanatory paragraph discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. This report, together with the Statutory Auditors report addressing financial and accounting information in the Chairman s report on internal control, should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In accordance with the terms of our appointment at the Annual Shareholders Meeting, we have audited the accompanying consolidated financial statements of CIC for the year ended December 31, These consolidated financial statements have been approved by the Executive Board. Our responsibility is to express an opinion on the financial statements based on our audit. These financial statements have been prepared for the first time in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. They include comparative information in respect of financial year 2004, restated in accordance with the same standards, with the exception of IAS 32, IAS 39 and IFRS 4 which are only applied as from January 1, 2005, as allowed by IFRS. I - Opinion on the consolidated financial statements We conducted our audit in accordance with French generally accepted auditing standards. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made in the preparation of the financial statements, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, and of the financial position of the group at December 31, 2005, as well as of the results of operations for the year then ended in accordance with IFRS as adopted by the European Union. II - Justification of our assessments In accordance with the requirements of Article L of the French Commercial Code relating to the justification of our assessments, we bring to your attention the following matters: the group records provisions to cover the credit risks inherent to its business, as described in Note 2 to the consolidated financial statements. We examined the control systems applicable for the monitoring of credit risk, the methods for setting aside provisions, the assessment of the risk of nonrecovery and the determination of individual and collective impairment provisions to cover these risks; the group uses internal models and methods to value financial instruments that are not traded on active markets, as well as to book certain provisions and assess the appropriateness of the classification of certain transactions as hedges. We examined the control systems applicable to the verification of these models and the determination of the criteria used; the group records provisions for employee benefit commitments, as described in Notes 2 and 25 to the consolidated financial statements. As part of our audit we reviewed the assumptions and calculation methods used. The assessments were made in the context of our audit of the consolidated financial statements, taken as a whole, and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report. III - Specific verification We also examined in accordance with the auditing standards applicable in France the information given in the Executive Board report. We have no comments to make as to the fair presentation of this information and its conformity with the consolidated financial statements. Neuilly-sur-Seine, April 24, 2006 PricewaterhouseCoopers Audit Jacques Lévi Agnès Hussherr The Statutory Auditors Barbier, Frinault & Autres Ernst & Young Richard Olivier Olivier Durand

137 138 LEGAL INFORMATION Statutory Auditors report on the financial statements Year ended December 31, 2005 This is a free translation into English of the Statutory Auditors report issued in the French language and is provided solely for the convenience of English speaking readers. The Statutory Auditors report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the financial statements. This information includes an explanatory paragraph discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the financial statements. This report, together with the Statutory Auditors report addressing financial and accounting information in the Chairman s report on internal control, should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In accordance with the terms of our appointment at the Annual Shareholders Meeting, we present below our report for the year ended December 31, 2005, on: our audit of the accompanying financial statements of CIC; the justification of our assessments; the specific verifications and information required by law. These financial statements have been approved by the Executive Board. Our responsibility is to express an opinion on the financial statements based on our audit. I - Opinion on the financial statements We conducted our audit in accordance with French generally accepted auditing standards. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made in the preparation of the financial statements, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements give a true and fair view of the bank s financial position and its assets and liabilities at December 31, 2005, and of the results of its operations for the year then ended, in accordance with the accounting rules and principles applicable in France. Without qualifying the opinion expressed above, and in accordance with Article L of the French Commercial Code (Code de commerce), we draw your attention to Note 1 to the financial statements which describes the change in accounting method resulting from the first-time application of: CRC standard concerning the depreciation, amortization and impairment of assets, and CRC standard regarding the definition, recognition and measurement of assets; Article 13 of CRC standard concerning the discounting of recoverable amounts to calculate provisions for detected risks; standard CRC relating to discounts on restructured loans; the CNC press release of December 20, 2005, concerning future commitments arising on home savings accounts and plans. II - Justification of our assessments In accordance with the requirements of Article L of the French Commercial Code relating to the justification of our assessments, we bring to your attention the following matters: as part of our assessment of the accounting rules and principles applied by the bank, we obtained assurance about the appropriateness of the change in accounting method set out above and the description provided thereof in the notes to the financial statements; the bank records provisions to cover the credit risks inherent to its business, as described in Note 1 to the financial statements. We examined the control systems applicable for the monitoring of credit risk, the assessment of the risk of non-recovery and the determination of specific and general provisions to cover these risks; the bank uses internal models and methods to value its positions relating to financial instruments which are not listed on organized markets, and to calculate certain provisions, as described in Note 1 to the financial statements. We examined the control systems applicable to the verification of these models and the determination of the criteria used; the group records provisions for pensions and other postemployment benefits, as described in Note 1 to the financial statements. As part of our audit we reviewed the assumptions and calculation methods used. As part of our assessments, we obtained assurance that the resulting estimates were reasonable. The assessments were made in the context of our audit of the financial statements, taken as a whole, and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report. III Specific verifications and information We have also performed the specific verifications required by law, in accordance with the professional standards applicable in France. We have no matters to report regarding the fair presentation and the conformity with the financial statements of the information given in the report of the Executive Board, and in the documents addressed to the shareholders with respect to the financial position and financial statements. In accordance with French law, we draw your attention to the fact that the report of the Executive Board does not provide full disclosure as required under Article L of the French Commercial Code, in relation to the following matters: the disclosure required under said Article relating to management compensation. This information does not include compensation paid to members of the Supervisory Board; human resources data as required by said Article. As required by law, we have verified that the information provided concerning acquisitions of equity interests and the identity of shareholders is disclosed in the report of the Executive Board. Neuilly-sur-Seine, April 24, 2006 PricewaterhouseCoopers Audit Jacques Lévi Agnès Hussherr The Statutory Auditors Barbier, Frinault & Autres Ernst & Young Richard Olivier Olivier Durand

138 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Statutory Auditors special report on regulated agreements Year ended December 31, 2005 This is a free translation into English of the Statutory Auditors special report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In our capacity as Statutory Auditors of CIC, we present below our report on regulated agreements. In application of Article of the French Commercial Code (Code de commerce), we were informed of agreements approved in advance by the CIC Supervisory Board. Our responsibility does not include identifying any undisclosed agreements. We are required to report to shareholders, based on the information provided, about the main terms and conditions of agreements that have been disclosed to us, without commenting on their relevance or substance. Under the provisions of Article 117 of the March 23, 1967 decree, it is the responsibility of shareholders to determine whether the agreements are appropriate and should be approved. I - Agreements entered into during the year We were not informed of any new agreements signed during the year that would be governed by Article of the French Commercial Code. II - Agreements entered into in prior years which remained in effect during the year In application of the March 23, 1967 decree, we were advised of the following agreements approved in prior years, which remained in force during the year. 2.1 Subordinated loans granted by CIC to CIC Banque CIO, CIC Lyonnaise de Banque, and CIC Banque Scalbert Dupont The CIC Supervisory Board approved subordinated loans to CIC Banque Scalbert Dupont on March 7, 2002, to CIC Banque CIO on March 8, 2001 and to CIC Lyonnaise de Banque on May 26, 1999, with a view to financing their development plans. The loans amounted to 50 million, 30.5 million, and 55 million, respectively, and were granted in April 2002 for CIC Banque CIO, July 2001 for CIC Lyonnaise de Banque, and May 1999 for CIC Banque Scalbert Dupont. The life of the loans granted to CIC Banque Scalbert Dupont, CIC Banque CIO and CIC Lyonnaise de Banque is ten years and their amounts were unchanged at December 31, The interest rate of the loans is 1% with a variable rate after the third year indexed on growth of operating income before provisions. In 2005, interest received by CIC from CIC Banque Scalbert Dupont, CIC Banque CIO and CIC Lyonnaise de Banque amounted to 500,000, 675,563 and 2,250,500 respectively. 2.2 Agreement on managing insurance policies of the CIC group This agreement, authorized by the CIC Supervisory Board on May 30, 2002 and signed on January 2, 2002, is aimed at defining internal rules for pooling premiums and for handling claims of the CIC group banks, subsidiaries and business centers. The agreement applies to all losses occurring as from January 1, The agreement does not, however, apply to the following entities: CM-CIC Securities, CIC s branches in London, New York and Singapore, and the foreign subsidiaries of the group banks. As part of its process of updating the group s professional liability insurance program, on September 11, 2003 the Supervisory Board authorized the Executive Board to sign and implement amendments to the management agreement relating to professional liability insurance contracts. CIC paid 13.1 million in connection with the amendments to this agreement in Premiums and claims pooling agreement for CIC group insurance policies All the terms and provisions of the premiums and claims pooling agreement for CIC group insurance policies, signed by the CIC group banks in May 1997 and amended by addendum in December 1998 were replaced effective from January 1, 2000 by an agreement signed on May 10, 2000, which was authorized by the Supervisory Board on March 16, The agreement applies to all losses that occurred prior to January 1, In 2005, the losses pooled under the agreement amounted to 945,724 for the group, leading to a credit of 94,111 for CIC. 2.4 Secondment agreement At its September 12, 2002 meeting, the CIC Supervisory Board authorized the Executive Board to establish an agreement between CIC and Caisse Fédérale du Crédit Mutuel CEE, providing for the full-time secondment of Alain Fradin to CIC in the capacity of Executive Board member. In accordance with this agreement, the compensation paid by Caisse Fédérale du Crédit Mutuel CEE (salary and expenses) to Alain Fradin is repaid in full to Caisse Fédérale du Crédit Mutuel CEE by CIC. In 2005, CIC paid a gross taxable amount of 603,207 to Caisse Fédérale du Crédit Mutuel CEE in connection with this agreement. 2.5 Secondment agreements concerning CIC group bank Chief Executive Officers In accordance with CIC group policy, the Chief Executive Officers of the group s banks are on the payroll of CIC, and are seconded as corporate officers to the various banks. The Supervisory Board authorized the signature of the secondment agreements between CIC and the banks concerned on September 15, 1999, September 12, 2002, and April 28, For 2005, CIC invoiced a total gross taxable amount of 2,166,945 to the entities concerned.

139 140 LEGAL INFORMATION 2.6 Agreement entered into between Factocic and the banks of the CIC group Due to the significant role played by CIC as a referral agent, the shareholders of Factocic have agreed upon a new compensation system. This system offers more incentives for referral agents and is geared to the threefold aim of winning market share, fostering customer loyalty and achieving earnings growth. On May 30, 2001, the CIC Supervisory Board authorized the Executive Board to sign the above agreement. This was carried out on July 4, The agreement provides for performance-related top-up commissions in addition to ordinary commissions, as well as additional loyalty commissions for contracts with a term of more than 12 months. An addendum was attached to this agreement in 2002 concerning the implementation of a specific procedure for any referral business exceeding 15 million. A further addendum was then signed in 2003 relating to the treatment of factoring agreements entered into with major corporate clients. In 2005, CIC received net fees and commissions of 349, Tax consolidation agreements Agreements signed by CIC in its capacity as parent company of the tax group On June 28, 1995 a master tax consolidation agreement was signed between CIC (formerly Compagnie Financière de CIC et de l Union Européenne), parent company of the tax group, and eight regional banks, in their capacity as parent company of the subgroups. Similar agreements were signed with three other regional banks and five common subsidiaries, which joined the tax group as of January 1, Placinvest also joined the tax group on September 22, In 2001 another agreement was signed with CIC Banque Transatlantique, with effect from January 1, Under these agreements, each regional bank and CIC (formerly Compagnie Financière de CIC et de l Union Européenne) forms a sub-group for tax consolidation purposes. Each sub-group retains the benefit of any tax savings arising from tax consolidation and any gains realized at consolidated level are used to strengthen the subsidiaries shareholders equity or finance joint projects. The master tax consolidation agreement has six addenda, two of which (numbers 1 and 3) relate to the payment, within the CIC tax group, of the surtaxes due by companies subject to corporate income tax. Two others concern the withdrawal of CIC Bonnasse Lyonnaise de Banque and Banque Régionale de l Ain, sub-group parent companies, in 1997 and 1999 respectively, due to their joining the CIC Lyonnaise de Banque tax group. A fifth addendum was signed in 2001 for the purpose of deleting Article II-2 of the master agreement, relating to the payment date of taxes arising from the disposal of fixed assets owned by the group. In addition, an agreement specifically concerning joint subsidiaries was signed on December 24, An addendum was attached to this agreement in 1999 relating to the withdrawal of UBR from the tax group. In 2001, a third addendum was signed concerning the withdrawal of Adepi and Fidecic from the tax group and tax consolidation agreements set up with Intersem and Aidexport. In 2002, the CIC Supervisory Board authorized the withdrawal of CIC Epargne Salariale, effective from January 1, It also authorized Est Gestion to join the tax group as from the same date. In 2003, your Supervisory Board authorized the withdrawal of CIC Asset Management, effective from January 1, At its meeting of December 15, 2005, your Supervisory Board authorized the withdrawal of Cicotitres and Gesteurop effective from January 1, 2005, and of CIC Régions-Finances, Est- Gestion, CIC Ouest Gestion and CIC Nord-Ouest Gestion effective from January 1, These companies join the CIC sub-group. Agreement between CIC, as parent company of the sub-group, and its direct subsidiaries CIC (formerly Compagnie Financière de CIC et de l Union Européenne), in its capacity as parent company of the sub-group, signed an agreement on June 30, 1995 with its direct subsidiaries other than regional banks. Two addenda were attached to the agreement in 1996 and in 1998 concerning payment of the surtaxes due by companies subject to corporate income tax. By virtue of the December 31, 1999 merger between Compagnie Financière de CIC et de l Union Européenne and CIC, the CIC tax group was extended to include the entities that were previously members of the CIC Paris tax sub-group. Pursuant to approval by the Supervisory Board on December 19, 2001, a third addendum was attached to the agreement for the purpose of deleting Article I-2 of the master agreement, relating to the payment date of taxes arising from the disposal of fixed assets owned by the group. An addendum related to the withdrawal of BLC from the tax group was authorized by the Supervisory Board on December 17, 2002 and signed on December 18, Also on December 18, 2002, a tax consolidation agreement was signed with CIC Epargne Salariale, effective from January 1, 2002, following authorization received from the Supervisory Board on December 17, On December 18, 2003, the Supervisory Board authorized an addendum related to the tax consolidation of CIC Capital Privé, SNC EL Chapulin 389, SNC EL Chapulin 706, SCI des Succursales and SCI 28 Opéra, effective from January 1, 2004, and of CIC Asset Management, effective from January 1, At its meeting of December 16, 2004, the Supervisory Board authorized the signature of an addendum whereby CIC Nord Ouest Gestion and Sofim became members of the tax group, effective January 1, 2004 and January 1, 2005, respectively. At its meeting of December 15, 2005, the Supervisory Board authorized the signature of agreements whereby the following entities became members of the CIC sub-group: SNC Corentin, Siméon and Louis-Philippe, effective from January 1, 2006; Cicotitires and Gesteurop, effective from January 1, 2005; Finances et Stratégies, CIC Régions Finance, Est Gestion, CIC Ouest Gestion, CIC Nord Ouest Gestion, Sud-Est Gestion and GSO Finance, effective from January 1, 2006.

140 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Agreement concerning the appointment of Jean Huet as Executive Vice President, Banking Activities In accordance with the Board of Directors June 20, 1996 decision, the Chief Operating Officer of CIC Paris, member of the Board of Compagnie Financière de CIC et de l Union Européenne, also held the position of Executive Vice President, Banking Activities. Following the end-1999 merger between Compagnie Financière de CIC et de l Union Européenne and CIC Paris, Jean Huet, member of the Executive Board of CIC, also holds the position of Executive Vice President, Banking Activities in CIC. 2.9 Agreement with CM-CIC Asset Management As part of the pooling of CIC group fund management activities, a marketing agreement was signed on December 20, 2000, amended by addendum on February 14, 2001, between CIC and CIC Asset Management. This agreement specifies the fee to be paid to CIC for marketing CICAM funds to its customer base. Since January 1, 2001, the fee has been set at 85% of net commission income received by CICAM (except for certain funds). Under an addendum to this marketing agreement authorized on April 28, 2004 by the CIC Supervisory Board the fee was set at 95%. CIC received 22.8 million in related net fees and commission in Agreements between CIC and CIC Banque Scalbert Dupont, CIC Banque CIN and CIC Crédit Fécampois Agreements were signed between CIC and CIC Banque Scalbert Dupont on June 1, 2002 and with CIC Banque CIN and CIC Crédit Fécampois (CF) on December 1, These agreements were approved by the CIC Supervisory Board on March 6, Under the terms of the agreements, CIC provides trading services for capital markets transactions carried out on behalf of the clients of CIC Banque Scalbert Dupont, CIC Banque CIN and CIC Crédit Fécampois. The trading orders are forwarded to CIC which executes the trades in its own name on behalf of the banks clients, acting as a del credere commission agent in compliance with Article of the French Commercial Code. CIC guarantees settlement and delivery of the transactions but the banks continue to bear the counterparty risk in respect of their clients. The three regional banks will pay CIC a del credere commission equal to 25% of the net profit on each transaction. CIC received 232,613 in related net fees and commission in We conducted our assignment in accordance with the professional standards applicable in France. Those standards require that we carry out the necessary procedures to verify the consistency of the information disclosed to us with the source documents. Neuilly-sur-Seine, April 24, 2006 PricewaterhouseCoopers Audit Jacques Lévi Agnès Hussherr The Statutory Auditors Barbier, Frinault & Autres Ernst & Young Richard Olivier Olivier Durand

141 142 LEGAL INFORMATION Statutory Auditors report, prepared in accordance with Article L of the French Commercial Code, on the report prepared by the Chairman of the Supervisory Board on the internal control procedures relating to the preparation and processing of financial and accounting information Year ended December 31, 2005 This is a free translation into English of the Statutory Auditors report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In our capacity as Statutory Auditors of CIC, and in accordance with the provisions of Article L of the French Commercial Code (Code de commerce), we report to you on the report prepared by the Chairman of the Supervisory Board in accordance with Article L of the French Commercial Code for the year ended December 31, 2005, on the internal control procedures relating to the preparation and processing of financial and accounting information. It is for the Chairman of the Supervisory Board to give an account, in his report, notably of the conditions in which the work of the Supervisory Board is prepared and organized and the internal control procedures in place within CIC in accordance with the provisions of Article L of the French Monetary and Financial Code. It is our responsibility to report to you our observations on the information set out in the Chairman s report on the internal control procedures relating to the preparation and processing of financial and accounting information. We performed our procedures in accordance with professional guidelines applicable in France. Those guidelines require us to perform procedures to assess the fairness of the information set out in the Chairman s report on the internal control procedures relating to the preparation and processing of financial and accounting information. These procedures notably consisted of: acquiring an understanding of the objectives and general organization of internal control, as well as the internal control procedures relating to the preparation and processing of financial and accounting information, as set out in the Chairman s report; acquiring an understanding of the work performed to support the information given in the report. On the basis of these procedures, we have no matters to report in connection with the information given on the internal control procedures relating to the preparation and processing of financial and accounting information, contained in the report of the Chairman of the Supervisory Board, prepared in accordance with the final paragraph of Article L of the French Commercial Code. Neuilly-sur-Seine, April 24, 2006 PricewaterhouseCoopers Audit Jacques Lévi Agnès Hussherr The Statutory Auditors Barbier, Frinault & Autres Ernst & Young Richard Olivier Olivier Durand

142 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Statutory Auditors report on the data used to determine interest payable on non-voting loan stock Year ended December 31, 2005 This is a free translation into English of the Statutory Auditors report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the holders of CIC non-voting loan stock, In our capacity as Statutory Auditors of CIC, and in application of Article L of the French Commercial Code (Code de commerce), we present below our report on the data used to determine interest payable on non-voting loan stock. On April 24, 2006, we presented our reports on the financial statements of the bank and the consolidated financial statements for the year ended December 31, The interest computation method provided for at the time of issue of non-voting loan stock in May 1985 can be summarized as follows: component equal to 40% of the annual monetary reference rate, or TAM ; component equal to 43% of the TAM rate multiplied by a participation ratio (PR). For the interest due on May 28, 2006, the participation ratio is as follows: 2005 adjusted consolidated net income PR 2006 = PR 2005 x 2004 adjusted consolidated net income The issue agreement sets a cap and a floor on interest payments, as follows: floor: 85% x (TAM + fixed-rate bond index, or TMO )/2; cap: 130% x (TAM + TMO)/2. The agreement further stipulates that the participation ratio (PR) corresponding to the ratio between 2004 and 2005 consolidated net income will be adjusted to take into account changes in shareholders equity, group structure or consolidation methods between the two years. Since 2005, CIC publishes its financial statements under IFRS. In accordance with the resolution submitted for your approval, the calculation of interest is based on consolidated net income for 2004 and 2005, as determined by applying the same accounting procedures and consolidation methods based on a comparable group structure and comparable shareholders equity in accordance with such standards (with the exception of IAS 32, IAS 39 and IFRS 4, which did not apply in 2004), giving a participation ratio (PR) of for 2005 versus for The interest rate obtained by applying the above formula stands at 14.91% before application of the cap. The floor and cap rates are 2.49% and 3.80%, respectively. Therefore, in accordance with the provisions of the issue agreement, the gross interest paid in 2006 will amount to 5.79 per security. We conducted our audit in accordance with French generally accepted auditing standards. Those standards require that we carry out the necessary procedures to verify the conformity and consistency of the data used to calculate the interest due on non-voting loan stock with the issue agreement and the audited financial statements of the bank and the group. We have no matters to report concerning the data used to calculate the interest due on non-voting loan stock. Neuilly-sur-Seine, April 24, 2006 PricewaterhouseCoopers Audit Jacques Lévi Agnès Hussherr The Statutory Auditors Barbier, Frinault & Autres Ernst & Young Richard Olivier Olivier Durand

143 144 LEGAL INFORMATION Draft resolutions First resolution Approval of the financial statements of the bank for the fiscal year ended December 31, 2005 After reviewing the terms of the Executive Board s report to the Shareholders Meeting, its management report, the attached reports of the Chairman of the Supervisory Board regarding internal control and the functioning of the Board, the Supervisory Board s report, the Statutory Auditors report and the annual financial statements for the fiscal year ended December 31, 2005, the Shareholders Meeting approves said annual financial statements as presented to it, which show net after-tax income of 96,881, Second resolution Approval of the consolidated financial statements for the fiscal year ended December 31, 2005 After reviewing the terms of the Executive Board s report to the Shareholders Meeting, its management report, the attached reports of the Chairman of the Supervisory Board regarding internal control and functioning of the Board, the Supervisory Board s report, the Statutory Auditors report and the consolidated financial statements for the fiscal year ended December 31, 2005, the Shareholders Meeting approves said annual financial statements as presented to it, which show net after-tax income of 578 million. Third resolution Appropriation of income The Shareholders Meeting: notes that income for the fiscal year amounts to 96,881,712.36; notes that retained earnings amount to 808,194,417.95; notes that, as a result, distributable income amounts to 905,076,130.31, and decides to allocate this amount as follows: - allocation to the special reserve provided for by Article 238 bis AB of the French Tax Code for 146,000.00, - dividend for A series shares in respect of 2005 in the amount of: 144,353,480.60; - remaining balance to be entered in the retained earnings account in the amount of: 760,576, As a result, the Shareholders Meeting sets the dividend to be paid for each series A share at However, the dividend that should be allocated to shares that are not eligible for dividends under French law will be paid into retained earnings. The dividend will be distributed on May 29, The total dividend distributed is eligible for the 40% tax abatement mentioned in point 2 of Article 158 (3) of the French Tax Code. In accordance with the provisions of French law, the Shareholders Meeting is reminded that: for 2002, a dividend of 95,224, was distributed, representing 2.72 per share, plus a tax credit of 1.36, subject to the provisions of the French Tax Code applicable to the particular situation of the beneficiaries; for 2003, a dividend of 115,482, was distributed, representing 3.28 per share, plus a tax credit of 1.64 subject to the provisions of the French Tax Code applicable to the particular situation of the beneficiaries; for 2004, a dividend of 133,086, was distributed, representing 3.78 per share eligible in full for the 50% tax abatement mentioned in point 2 of Article 158 (3) of the French Tax Code. Fourth resolution Agreements mentioned in Article L of the French Commercial Code After reviewing the terms of the Statutory Auditors special report on the transactions and agreements mentioned in Article L of the French Commercial Code, and deliberating on the basis of this report, the Shareholders Meeting approves the transactions and agreements referred to in said report. Fifth resolution Ratification of the cooptation of a member of the Supervisory Board Pursuant to Article 12 of the bylaws, the Shareholders Meeting ratifies the Supervisory Board s cooptation of Mr. Daniel Leroyer on May 19, 2005 to replace Mr. Jean-Pierre Schneider, who has resigned. Mr. Leroyer s term of office will expire at the close of the Shareholders Meeting called to approve the financial statements for fiscal year Sixth resolution Appointment of a new member of the Supervisory Board The Shareholders Meeting appoints Mr. Albert Peccoux as a member of the Supervisory Board as from the date hereof for a term of five years, to expire at the close of the Shareholders Meeting called to approve the financial statements for fiscal year Seventh resolution Appointment of a principal Statutory Auditor The Shareholders Meeting notes that the appointment as principal Statutory Auditor of Pricewaterhouse Coopers, a firm of auditors registered with the Paris Statutory Auditors Board whose registered office is located at 63, rue de Villiers, Neuillysur-Seine, will expire at the close of this meeting, and, at the Supervisory Board s suggestion and following the favorable opinion of the French Banking Commission, the Shareholders Meeting decides to renew the appointment as principal Statutory Auditor of Pricewaterhouse Coopers for a period of six years, i.e. until the close of the Shareholders Meeting called to approve the financial statements for fiscal year 2011.

144 ORDINARY SHAREHOLDERS MEETING OF MAY 11, Eighth resolution Appointment of an alternate Statutory Auditor The Shareholders Meeting notes that the appointment of Mr. Pierre Coll as alternate Statutory Auditor will expire at the close of this meeting, and, at the Supervisory Board s suggestion and following the favorable opinion of the French Banking Commission, the Shareholders Meeting decides to appoint Mr. Etienne Boris, 63, rue de Villiers, Neuilly-sur-Seine, as alternate Statutory Auditor for a period of six years, i.e., until the close of the Shareholders Meeting called to approve the financial statements for fiscal year Ninth resolution Authorization for the Executive Board to buy back the bank s A series shares After reviewing the terms of the Executive Board s report, the Shareholders Meeting: cancels, with immediate effect, the authorization given to the Executive Board under the ninth resolution of the May 19, 2005 Combined Ordinary and Extraordinary Shareholders Meeting to trade in the bank s A series shares in order to stabilize the market price thereof; within the scope of the provisions of Articles L et seq. of the French Commercial Code, and Title IV of Book II of the general regulations of the Autorité des marchés financiers and its implementing instructions, authorizes the Executive Board, with immediate effect, to trade in the bank s A series shares on the stock exchange under the following conditions: - shares must be purchased and sold pursuant to a liquidity agreement entered into with an investment service provider in accordance with the regulations in force; - these operations will be carried out by the service provider with a view to ensuring the liquidity and proper listing of CIC shares on the Paris stock exchange; - the maximum purchase price is set at 240 per share; - the maximum number of shares that may be purchased is set at 100,000, representing a maximum potential commitment of 24 million; - shares held in connection with the liquidity agreement will not be cancelled. This authorization will remain in effect until October 31, 2007 inclusive. The Shareholders Meeting grants full powers to the Executive Board to enter into all agreements, carry out all formalities, and, in general, take all the necessary steps within the aforementioned framework. Tenth resolution Powers The Shareholders Meeting gives full powers to the bearer of a copy of or excerpt from the minutes of this meeting to carry out all the formalities required by French law or the French authorities and to carry out all filing and publicity formalities required by the laws in force.

145 146 LEGAL INFORMATION Additional information Capital General information about the capital Amount and composition of capital At December 31, 2005, CIC s capital amounted to 563,330,656 divided into 35,208,166 A series common shares with a par value of 16, all fully paid up. As authorized by the Combined Ordinary and Extraordinary Shareholders Meeting of May 26, 1999, the Executive Board converted the bank s capital into euros following its decision of June 19, The par value of each share was changed to 16 from FRF 100, resulting in a capital increase of 26,435, During 2003, Banque Fédérative du Crédit Mutuel transferred to CIC 705,000 shares in Fédébail, representing 94% of that company s capital. This transfer which was approved by the Extraordinary Shareholders Meeting of May 15, 2003 was financed through the issue of 199,330 new CIC shares with a par value of 16 to BFCM. Following this transaction, CIC s capital increased from 560,141,376 to 563,330,656. Authorized capital and expiration date of the authorizations Under its eleventh to fourteenth resolutions, the May 19, 2005 Shareholders Meeting authorized the Executive Board to increase the capital with or without pre-emptive subscription rights or to make a public exchange offer. These authorizations are valid for a twenty-six month period. The maximum limit for the increases in capital under this authorization is set at 150 million; furthermore, if the Executive Board were to issue debt securities granting rights to the capital, the par value of these securities would in turn be capped at one billion six-hundred million euros. On the basis of the price of the CIC share at December 31, 2005, these authorizations would make it possible in theory to create 9,375,000 new shares for a total issue amount of slightly over 1,462 million. None of these authorizations were used in As these authorizations are valid until July 19, 2007, there is no need to renew them in Securities not carrying the right to a stake in equity None Changes in capital Number of shares Amount Number in of shares Amount in At January 1 35,008, ,706,264 35,008, ,141,376 Capital increase in cash o/w additional paid-in capital Share contribution Capital increase by capitalizing reserves TOTAL CAPITAL AT DECEMBER 31 26,435,111 35,008, ,141,376 35,008, ,141,376 Number of shares Amount Number Amount Number in of shares in of shares Amount in At January 1 35,008, ,141,376 35,208, ,330,656 35,208, ,330,656 Capital increase in cash o/w additional paid-in capital Share contribution 199,330 3,189,280 Capital increase by capitalizing reserves TOTAL CAPITAL AT DECEMBER 31 35,208, ,330,656 35,208, ,330,656 35,208, ,330,656

146 ADDITIONAL INFORMATION 147 Ownership structure at December 31, 2005 (shareholders holding more than 0.5% of the capital, or Supervisory Board members) Number of shares % capital Banque Fédérative du Crédit Mutuel 24,931, Ventadour Investissement 7,768, Caisse Centrale de Crédit Mutuel 350, Crédit Mutuel du Nord 304, Cie Financière du Crédit Mutuel 264, Crédit Mutuel Maine-Anjou, Basse-Normandie 242, Crédit Mutuel Océan 242, Current and former employees 203, Crédit Mutuel Centre 202, Crédit Mutuel Loire-Atlantique Centre-Ouest 123, Crédit Mutuel de Normandie 24, Public, other shareholders and liquidity agreement 550, TOTAL 35,208, Details of CIC shares purchased and sold by the bank on the market are given on the next page. The Combined Ordinary and Extraordinary General Meeting of shareholders and holders of voting rights certificates held on June 17, 1998: authorized shareholders to hold their A series common shares in either bearer or registered form; authorized the bank to obtain details of identifiable holders of shares and securities from Sicovam; decided to add an article to the bylaws setting disclosure thresholds in addition to those prescribed by law. There are no double voting rights. The 4,000 shares of treasury stock held by CIC at December 31, 2005 are stripped of voting rights but do not have a material impact on the ownership structure set out opposite or the allocation of voting rights between shareholders. Changes in ownership structure over the past three years At December 31, 2003 At December 31, 2004 At December 31, 2005 Number of Number of Number of shares % shares % shares % Banque Fédérative du Crédit Mutuel 24,810, % 24,892, % 24,931, % Ventadour Investissement 7,768, % 7,768, % 7,768, % Caisse Centrale du Crédit Mutuel 350, % 350, % 350, % Crédit Mutuel Nord 350, % 318, % 304, % Cie Financière du Crédit Mutuel 264, % Crédit Mutuel Maine-Anjou, Basse-Normandie 242, % 242, % 242, % Crédit Mutuel Océan 242, % 242, % 242, % Current and former employees 465, % 358, % 203, % Crédit Mutuel Centre 202, % 202, % 202, % Crédit Mutuel Loire Atlantique Centre-Ouest 123, % 123, % 123, % Crédit Mutuel de Normandie 24, % 24, % 24, % Public, other shareholders and liquidity agreement 629, % 684, % 550, % TOTAL 35,208, % 35,208, % 35,208, % Following the agreements entered into on September 11, 2001 between CIC, BFCM, GAN and Groupama, GAN s 23% stake in CIC was acquired by Ventadour Investissement, a wholly-owned BFCM subsidiary. In accordance with its contractual commitments, BFCM acquired the shares sold by current and former employees of the CIC group who took part in the 1998 privatization. 463,394 CIC shares were sold in July 2003 following the expiration of the 5-year vesting period. BFCM moreover received 199,330 new CIC shares as payment for the transfer of 705,000 Fédébail shares, as approved by the Shareholders Meeting of May 15, 2003.

147 148 LEGAL INFORMATION Controlling shareholders At December 31, 2005, CIC was controlled by Banque Fédérative du Crédit Mutuel which directly held 70.81% of the bank s capital. Together with CIC, Crédit Mutuel is one of the major players in the French banking industry, with a strong presence in retail banking and bancassurance. Crédit Mutuel Centre Est Europe (CMCEE) is the largest of the 18 Crédit Mutuel regional groups. Along with Crédit Mutuel du Sud- Est and Crédit Mutuel Ile-de-France, it has 1,206 local branches in the 30 départements that make up its territory. With consolidated balance sheet assets of billion at December 31, 2005, the CMCEE/SE/IDF-CIC group manages billion worth of customer savings, including 89.7 billion in deposits, billion in bank-type savings products and 41 billion in insurance-type savings products. In 2005, the CMCEE/ CIC group moreover granted loans totaling billion. At December 31, 2005, Banque Fédérative du Crédit Mutuel (BFCM), which is 95%-owned by Caisse Fédérale de Crédit Mutuel Centre Est Europe (CFCMCEE), held 92.87% of the capital of CIC, both directly and through its subsidiary Ventadour Investissement. Banqe Fédérative du Crédit Mutuel, a holding company of the Crédit Mutuel Centre Est Europe group, owns a portfolio of interests in four main business segments: banking and financial services, insurance, real estate and technology. It performs financial management, treasury and refinancing services for the group. It also offers lending, financial engineering, fund flow management and securities dealing services to a clientele of major companies and institutions. Crédit Mutuel Centre Est Europe/Sud-Est/Ile-de-France is pursuing a four-pronged strategy providing for the simultaneous development of retail banking, bancassurance, e-banking and mutual banking services. The strategy is now being implemented jointly with CIC, by leveraging synergies and optimizing technical resources, while maintaining each network s specific identity, market approach and structure. On January 1, 2006, the Fédération du Crédit Mutuel Savoie-Mont Blanc with its network of 60 banks and local branches joined those of CEE-SE-IDF in the scope of the Caisse interfédérale commune (CFCMCEE) and is now fully associated with group policy and development. These inter-federation alliances offer the group new prospects for growth in high-potential regions. 60 points of sale are to be created over the next two years within the group s new scope. Market for CIC shares CIC A series common shares CIC common shares, or A series shares, have been listed on the Paris Bourse since June 18, CIC s bylaws do not contain any clauses restricting the sale of A series shares. However, shareholders that increase or reduce their interest by 0.5% or more of the bank s capital are required to disclose their new interest. The Combined Ordinary and Extraordinary Shareholders Meeting of May 19, 2005, in its ninth resolution, renewed the authorization for the bank to trade in its own A series common shares in order to stabilize the market price. CIC has a 45% stake in a liquidity group which in 2005: purchased 14,203 CIC A series shares at an average price per share of ; sold 11,573 CIC A series shares at an average price per share of At December 31, 2005, the liquidity group held 4,000 CIC A series shares with a par value of 16, purchased at an average price of 156. At the Shareholders Meeting called for May 11, 2006, shareholders will be asked to renew the authorization given to the bank to trade in its own A series common shares in order to stabilize the market price. Market data CIC A series common shares Number of shares traded Average monthly value in millions Share price Low in High in January , February , March , April , May , June , July , August , September , October , November , December , January , February , March , April , May , June , July , August , September , October , November , December , January , February , March ,

148 ADDITIONAL INFORMATION 149 Dividends and dividend policy Outstanding shares and securities Number of A series shares 35,008,836 35,008,836 35,208,166 35,208,166 35,208,166 Net dividend on A series shares (in ) TOTAL DIVIDEND PAYOUT (IN MILLIONS) Consolidated net income (in millions) Payout ratio 25.0% 25.0% 25.0% 25.0% 25.0% Non-voting loan stock The non-voting loan stock issued in 1985 by Compagnie Financière de Crédit Industriel et Commercial, which has since become Crédit Industriel et Commercial, entitles holders to an annual coupon made up of fixed and variable components. Coupons are payable on May 28 of each year. This year s coupon is therefore payable on May 28, The coupon rate cannot be less than 85%, or more than 130%, of the sum of the annual monetary reference rate (TAM) plus the fixed-rate bond index (TMO), divided by 2. The fixed-rate bond index (TMO) is the arithmetic mean of the monthly average yields on the settlement dates for subscriptions of government-guaranteed bonds and equivalents. It is established by France s National Institute of Statistics and Economic Studies (INSEE) for the period from April 1 to March 31 prior to each maturity date. The annual monetary reference rate (TAM) is the compounded yield that would be earned on a monthly investment reinvested each month at the average monthly money market rate calculated by the French Banking Association (AFB) during the twelve months up to March. Since January 1, 1999, this rate has been calculated by compounding the EONIA (Euro Overnight Index Average) instead of the average monthly money market rate. The fixed component of the coupon is 40% of the annual monetary reference rate, as defined above. The variable component is 43% of the annual monetary reference rate, as defined above, multiplied by the participation ratio (PR). The participation ratio used to calculate the variable component of the coupon due in May PR is equal to: 2005 PR x 2005 income as defined in the issue contract 2004 income as defined in the issue contract The contract defines income as consolidated income adjusted for changes in shareholders equity, changes in CIC group structure and changes in consolidation methods. CIC group adjusted consolidated net income for 2005 and 2004, as determined by applying the same accounting procedures and consolidation methods on a comparable group structure basis, amounted to 578,253 thousand and 582,088 thousand respectively income has been calculated on the basis of IFRS, in accordance with the regulations in force income is in fact 2004 pro forma IFRS income excluding IAS & IFRS PR is equal to: 2005 PR x 578,253 thousand 582,088 i.e., x = coupon The coupon rate calculated from the income shown above, including both the fixed and variable components, came to %, which exceeds the cap provided for in the issue contract. Consequently, under the terms of the issue contract, the coupon rate paid to holders of non-voting loan stock in May 2006, will be capped at 130% of the sum of the annual monetary reference rate (TAM) plus the fixed-rate bond index (TMO) divided by 2. The coupon rate will be 3.798%, on the basis of an annual monetary reference rate of % and an average fixed-rate bond index of %. This means that the gross coupon due in May 2006, will amount to 5.79 for each stock with a face value of Coupon payments since 2002 (year paid) PR TAM % TMO % rate % Coupon Gross coupon , Non-voting loan stock price movements since 2001 High Low Close On October 18, 1999, CIC non-voting loan stock with a face value of FRF 1,000 was converted into stock with a face value of

149 150 LEGAL INFORMATION General information Legal information about CIC Name and registered office The company name is: Crédit Industriel et Commercial abbreviated to: CIC This abbreviation can be used on its own. Its registered office is located at: 6, avenue de Provence, Paris Applicable legislation and legal form Bank organized as a French société anonyme (corporation) governed by the Companies Act of July 24, 1966 (Act no ) and the Banking Act of January 24, 1984 (Act no ). The bank has a two-tier management structure, with a Supervisory Board and an Executive Board. Company governed by French law Incorporation date and expiration date The bank was incorporated on May 7, Its term will expire on December 31, 2067, unless it is dissolved or its term is extended before that date. Purpose (summary of Article 5 of the bylaws) The purpose of the bank is to acquire, hold and manage interests in all banking, financial, real estate, industrial and commercial companies in France and abroad. The business of the bank is to carry out all banking operations and to provide all investment services and related services for its own account and for all third parties, as well as insurance broking. Registration number and APE business identifier code PARIS TRADE AND COMPANIES REGISTRY Business identifier code: 651 C. Legal documents relating to the bank The bylaws, minutes of shareholders meetings and reports can be consulted at the registered office located at 6, avenue de Provence, Paris (Corporate Secretary s office). Fiscal year January 1 to December 31. Income appropriation (Article 30 of the bylaws) Income for the year corresponds to total revenues less general operating expenses and other expenses of the bank, including depreciation, amortization and provisions. At least 5% of net income for the year, less any losses brought forward from prior years, is credited to the legal reserve until such time as the legal reserve represents one-tenth of the bank s capital. The balance remaining after effecting all necessary allocations to the long-term capital gains reserves and adding any retained earnings brought forward from prior years, corresponds to income available for appropriation. The Shareholders Meeting may appropriate all or part of this amount to any revenue reserves or to retained earnings. Any balance remaining after these appropriations is distributed to shareholders pro rata to their interests in the bank s capital. Dividends are paid on the date set by the Shareholders Meeting or, failing that, on the date chosen by the Executive Board. The Annual General Meeting may decide to offer each shareholder the option of receiving all or part of the dividend or any interim dividend either in cash or in the form of shares. General Meetings of Shareholders (summary of Articles 20 to 27 of the bylaws) All shareholders are entitled to attend General Meetings. There are no double voting rights. Disclosure requirements (summary of Article 9 of the bylaws) In addition to statutory requirements, the bylaws require disclosure of any changes in ownership that result in shareholdings exceeding or falling below 0.5% of the share capital or any multiple thereof. If a shareholder fails to comply with this requirement, the shares held in excess of the disclosure threshold may be stripped of voting rights on a motion tabled by one or more shareholders holding shares or voting rights at least equal to the smallest proportion of share capital or voting rights requiring disclosure, duly noted in the minutes of the Shareholders Meeting. Dependence The CIC group is not dependent on any patents, licenses or industrial, commercial or financial supply agreements for the conduct of its business.

150 GENERAL INFORMATION 151 Background The bank was founded on May 7, 1859 under the name of Société Générale de Crédit Industriel et Commercial. Since its formation, it has overseen the establishment of regional banks in France s leading cities. It opened its first foreign branch in London in In 1918 and 1927, the bank acquired interests in several regional and local banks, including Banque Dupont, Banque Scalbert, Société Normande de Banque et de Dépôts, Crédit Havrais, Crédit Nantais, Crédit de l Ouest and Banque Régionale de l Ouest. It built up a group of affiliated banks, which was extended further during the economic crisis of the 1930s. In 1968, the CIC group became a member of the Suez-Union des Mines group. In 1982, most of the banks in the CIC and Compagnie Financière de Suez group were nationalized. In 1984, after the French government had given the bank full ownership of Banque de l Union Européenne and enough shares in the regional banks for it to control 51% of their share capital, the banking businesses were spun off into a subsidiary created for this purpose, named CIC Paris. The bank became the parent company for the group and took the name Compagnie Financière de Crédit Industriel et Commercial. In 1985, GAN acquired an interest in Compagnie Financière de CIC. GAN s interest then increased as the interests of the Suez group and the government decreased. In 1987, the government transferred its remaining shares in the regional banks to Compagnie Financière de CIC, which has owned the entire capital of its banking subsidiaries since then. In 1990, Compagnie Financière de CIC merged with Banque de l Union Européenne to form Compagnie Financière de CIC et de l Union Européenne, which operated under the business name of Union Européenne de CIC. On April 27, 1998, GAN sold a 67% interest in Compagnie Financière de CIC et de l Union Européenne to Banque Fédérative du Crédit Mutuel (BFCM), in connection with the privatization of the CIC group launched by the government on August 1, On December 31, 1999, Compagnie Financière de CIC et de l Union Européenne merged with its wholly-owned subsidiary, Crédit Industriel et Commercial. The merger was backdated to January 1, 1999 for legal and accounting purposes and was carried out using the simplified procedure. The merged company took the name Crédit Industriel et Commercial and transferred its head office to 6, avenue de Provence, Paris. Following the agreements signed on September 11, 2001, between CIC, BFCM, GAN and Groupama, GAN s 23% stake in CIC was acquired by Ventadour Investissement, a wholly-owned BFCM subsidiary.

151 152 LEGAL INFORMATION Person responsible for the registration document (document de référence) and Statutory Auditors Person responsible for the registration document Person in overall charge of the registration document Michel Lucas, President of the Executive Board. Declaration by the person responsible for the registration document I declare that, having taken all reasonable care to ensure that such is the case, the information contained in the registration document is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import. Statutory Auditors Principal Statutory Auditors Name: PricewaterhouseCoopers Audit. Address: Crystal Park - 63, rue de Villiers Neuilly-sur-Seine Cedex. Represented by Jacques Lévi and Agnès Hussherr. First appointment began on: May 25, Length of current appointment: 6 fiscal years as from May 31, This appointment expires at the close of the Shareholders Meeting called to approve the financial statements for the fiscal year ended December 31, Name: Barbier, Frinault et Autres, Ernst & Young. Address: 41, rue Ybry Neuilly-sur-Seine Cedex. Represented by Richard Olivier and Olivier Durand. First appointment began on May 26, Length of current appointment: 6 fiscal years as from May 19, This appointment expires at the close of the Shareholders Meeting called to approve the financial statements for the fiscal year ending December 31, Alternate Statutory Auditors Pierre Coll, Pascal Macioce. I obtained a statement from the auditors PricewaterhouseCoopers Audit, Barbier, Frinault et Autres and Ernst & Young at the end of their engagement, in which they state having verified information relating to the financial position and the financial statements set out in this registration document, and having read the whole of the registration document. Paris, April 24, 2006 Michel Lucas President of the Executive Board Fees paid by the group to the Auditors and members of their network PricewaterhouseCoopers Audit Barbier, Frinault et Autres Ernst & Young (in millions) Audit - Statutory audit and contractual audits Other engagements Other services - Legal and tax advisory services Information technology - Internal audit - Other TOTAL

152 153 Cross-reference table Annex 1 of EU regulation no. 809/2004 Pages 1 Persons responsible Statutory Auditors Selected financial information Risk factors / Information about the issuer 65 / Principal activities 5 / 8-32 / / Organizational structure 8 / Property, plant and equipment Operating and financial review / Capital resources / Research and development, patents and licences NA 12 Trend information 68 / Profit forecasts or estimates NA 14 Administrative, management, and supervisory bodies and senior management Remuneration and benefits 36 / 69 / Board practices Employees / Major shareholders Related party transactions Financial information concerning the issuer s assets and liabilities, financial position and profits and losses / Additional information 111 / 146 / Material contracts NA 23 Third party information and statement by experts and declarations of interest NA 24 Documents on display 62 / Information on holdings 100 / In accordance with Article 28 of European regulation No on prospectuses and Article of the general regulations issued by the French Financial Markets Authority (Autorité des marchés financiers - AMF), the following are incorporated by reference: the consolidated financial statements, management report and Statutory Auditors report on the consolidated financial statements for the year ended December 31, 2004, presented on pages 68 to 105 and page 126, respectively, of registration document (document de référence) D filed with the Autorité des marchés financiers on April 26, 2005 ; the consolidated financial statements, management report and Statutory Auditors report on the consolidated financial statements for the year ended December 31, 2003, presented on pages 44 to 98 and page 120, respectively, of registration document (document de référence) D , filed with the Autorité des marchés financiers on April 30, The chapters of registration documents D and D not referred to above are either not relevant for the investor, or are covered elsewhere in this registration document. This registration document was filed with the Autorité des marchés financiers on April 24, 2006, pursuant to Article of the AMF s General Regulations. It may only be used in connection with a financial transaction if it is acompanied by a memorandum approved by the AMF. This document is also available online on the Autorité des marchés financiers website ( by accessing the Decisions and Financial Information page and clicking on the various search links.

153 Website: Persons Responsible for Information Hervé Bressan - Finance Director Tel: +33 (0) Bruno Brouchiquan - Communications Director Tel: +33 (0) Published by CIC External Relations Department Designed and produced by TroisQuatorze Photo credits Caroline Doutre The English-language version of this annual report is a translation of the original French text provided for information purposes only. It is not in any event a binding document. In the event of a conflict of interpretation, reference should be made to the French version which is the authentic text. The Auditors report applies to the French version of the Executive Board Report and the financial statements.

154 CIC Société anonyme with an Executive Board and a Supervisory Board. Capital: 563,330,656 6, avenue de Provence Paris Tel: +33 (0) Fax: +33 (0) Telex: CICP swift cmcifrpp website: Bank governed by Article L of the French Monetary and Financial Code Registered in Paris under no Postal adress: Paris Cedex 09