A STRONG BANK THAT KEEPS CLOSE TO ITS MEMBERS AND CUSTOMERS - THAT'S WHAT MAKES CREDIT MUTUEL STAND OUT

Transcription

1 GROUPE CRÉDIT MUTUEL ANNUAL REPORT 2010 A STRONG BANK THAT KEEPS CLOSE TO ITS MEMBERS AND CUSTOMERS - THAT'S WHAT MAKES CREDIT MUTUEL STAND OUT

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3 ANNUAL REPORT 2010

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5 SOMMAIRE Chairman's message 5 GROUP PROFILE 6 Business profile 11 Board of Directors of Confédération Nationale du Crédit Mutuel 12 Highlights 14 CREDIT MUTUEL, THE MUTUAL BANK 16 A decentralised structure 20 Governance and membership 22 A human resources policy geared towards training and gender equality 24 An innovative corporate sponsorship approach 26 Banking for all members of society 30 RESULTS AND KEY FIGURES 34 BANKINSURANCE 44 One of France's leading retail banks 48 The preferred bank of private individuals 50 The leading bank for non-profit associations 56 Number three for SMEs 58 The challenger in the farming sector 60 Leading the field in technology 62 Retail banking subsidiaries 64 Insurance 66 OTHER ACTIVITIES 72 Corporate and investment banking 74 Asset management and private banking 78 Technological services 82 FINANCIAL REPORT 86 CNCM Board of Directors' management report 90 Financial statements 113 Notes to the financial statements 120 Independent Auditor s report 174 Annual report

6 CHAIRMAN'S MESSAGE

7 Crédit Mutuel s net profit for the year ended 31 December 2010 came to more than 3 billion, a 61% increase from All of the group's business activities improved their performance thanks to the know-how and skills of its 76,000 employees and 24,000 directors and their responsiveness towards and service of the group s 29 million-plus members and customers. The healthy rise in sales, increased productivity and effective management of overheads enabled the group to improve its cost-to-income ratio to 60.8%. With a 9% rise in the group share of shareholders equity to 32.3 billion, Crédit Mutuel saw its Tier 1 solvency ratio increase to 11.5%. This financial solidity is a key element as it ensures the institution s durability and provides security for its members and customers. Crédit Mutuel is the only French bank whose credit rating has not been downgraded by the international rating agencies in the last three years. This vital solidity is underpinned by a strong sales momentum based on: the quality, motivation and ongoing training of our staff; the use of powerful, permanently available tools; and a strategy built on closeness and trust. This positioning is integral to Crédit Mutuel s identity as a bank with a difference: in 2010, it was named French bank of the year by the economic and financial magazine The Banker, joint leading bank for customer relations with its CIC subsidiary in the Bearing Point TNS-Sofres customer relations awards, and France s preferred bank in the Posternak-Ipsos image barometer. The practices that the group applies - prioritising the service of its members and customers, supporting job-creating businesses throughout France and actively helping to finance the economy - reflect the strength of its business model, a model which evolves every year to embrace democratic management and the implementation of mutualist values. Within the bank itself, greater sharing of tools and strengthened organisational systems blend naturally with an unshakeably democratic political operating method which, in accordance with the group s articles of association and internal rules, is the foundation of each regional federation. Lastly, I would like to highlight the Confederation s change of chairman in 2010, with Etienne Pflimlin electing to pass on the flame in early September. I would to like to thank him sincerely for his committed defence of the interests of Crédit Mutuel and its members and customers over a great number of years. Michel Lucas

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9 GROUP PROFILE CRÉDIT MUTUEL S STRENGTH LIES IN CONTROLLED GROWTH Annual report

10 GROUP PROFILE GROUP PROFILE The Crédit Mutuel group, which is one of France's leading bankinsurers, comprises the Crédit Mutuel branch network and all the bank s subsidiaries. The group offers a comprehensive range of financial expertise to nearly 30 million customers, including more than 27 million retail customers. Its overriding priority, and the key to its development, is the quality of its customer relationships and services. Its strategy is one of controlled growth centred on local retail banking, bankinsurance and technological excellence. The group focuses on closeness to the customer, combining the strengths of Crédit Mutuel - a cooperative, mutual bank with extensive regional and local ties - with those of CIC, a commercial bank of which Crédit Mutuel Centre Est Europe took control in 1998 via Banque Federative du Crédit Mutuel. Combined with 2008 acquisitions Targobank (formerly Citibank Deutschland) and CIC Iberbanco and 2009 acquisition Cofidis, Crédit Mutuel and CIC (the group s two leading brands) have a network of almost 6,000 points of sale. Crédit Mutuel is composed of local mutual banks organised into 18 regional federations, which in turn form the Conféderation Nationale du Crédit Mutuel, the central body that heads the network. CIC operates a branch network in the Paris region and is the holding company for a group of five regional divisions, along with subsidiaries specialised in all areas of finance and insurance. The group now carries out nearly a fifth of all its business abroad. 8 Crédit Mutuel

11 FINANCIAL STRUCTURE ISO method (in billions) 10.7% 11% 10.7% 11.5% 11.2% +0.5pt +0.5pt 9.4% % A RETAIL BANK WITH A LOCAL FOCUS Crédit Mutuel offers a comprehensive range of financial services to customers comprising private individuals, locally based professionals and companies of all sizes. It has a 14.2% share of the French deposits market and 17% of the bank-distributed loan market. It is France s number one non-life bankinsurer and number four for life insurance. Its insurance subsidiaries manage some 27.5 million savings, auto, home, health, personal protection and retirement policies on behalf of more than 11 million policyholders. The group is a major player in the home loans market and France s number three for consumer credit. It is the country s biggest bank for non-profit associations, the second-largest for farmers and banker to one out of every three selfemployed professionals. More than half of France s 100 largest companies bank with Crédit Mutuel. LEADING THE WAY IN BANKING TECHNOLOGY The branch network is supported by a comprehensive multi-channel banking offer based on cutting edge technology. In 2010, its remote banking service clocked up over a billion contacts, more than half of them online. The group is gaining prominence in upcoming fields such as mobile telephony, which provides another channel for bankinsurance, banking services and electronic payments, which are key European markets. This new strategic direction broadens the group s know-how and expertise, adding highly innovative services that bolster its leadership position. It ranks number two in France in electronic payments, with a nearly 20% share of the overall market and a 33.3% share among retailers, it being the foremost provider of card payment services to this segment Tier 1 ratio Core Tier 1 ratio Ratio Core Tier One Annual report

12 GROUP PROFILE A SOLID, HIGHLY RATED BANK In 2010, the group boosted its financial solidity by raising its Tier 1 capital by 8.4% to 27.6 billion, bringing its Tier 1 solvency ratio (including floor) to 11.5% (up 0.5 points). Crédit Mutuel is one of only a handful of French banks not to have suffered a ratings downgrade as a result of the financial crisis. Its strong ratings were maintained in 2010: A+/A-1 rating and stable outlook from Standard & Poor s, which in a recent study described Crédit Mutuel as the best capitalised bank in France; Fitch rated BFCM and CIC AA-/F1+ with a stable outlook while the Moody s rating was Aa3/P1 with a stable outlook for BFCM and CIC. AN INTERNATIONAL BANK Whether in financing, insurance or electronic payments and wherever in the world they are based, Crédit Mutuel is always there for its customers. In 2010, the group continued to beef up its international operations, which have seen significant expansion over the last two years. In addition to its growth in the insurance sector in Spain and in IT, Crédit Mutuel has recently made two major acquisitions: Targobank in 2008 and Cofidis (France and international) in 2009, as well as raising its BFCM-held stake in Banque Marocaine du Commerce Extérieur (BMCE), Morocco s second largest private bank, to 25%. 10 Crédit Mutuel

13 CRÉDIT MUTUEL GROUP BUSINESS PROFILE, 2010 Net banking income: 14.7 billion Net profit: 3,026 million Net profit, group share: 2,916 million Shareholders equity, group share: 32,289 million Tier 1 ratio: 11.5% 5,875 points of sale* 75,805 employees 29.2 million customers Customer deposits amounting to billion Loans amounting to billion A leading retail bankinsurance player in France 17% market share in bank loans 14.2% market share in deposits No. 1 bankinsurer in non-life insurance No. 1 bank for non-profit associations and works councils No. 2 bank in electronic banking No. 2 bank for the farming sector No. 2 bank for social and professional micro-credits In 2008, the group acquired the 18 French branches and offices of Banco Popular France (renamed CIC Iberbanco), and in 2010 it strengthened its cooperation with Banco Popular. This strategic alliance gives it, jointly with Banco Popular, control over a new Spanish bank comprising 123 branches. With this new partnership, the portion of Crédit Mutuel s business conducted abroad rose to 18% in 2010 and, following its expansion into Germany, a new domestic market is now open to it, offering broader distribution for its products and services. This controlled development opens up a much broader avenue of growth for the group and strengthens its position as a major bank both in France and elsewhere in Europe. No. 3 bank in housing loans No. 3 bank for the SME sector No. 3 for consumer credit No. 4 bankinsurer for life insurance A top grade issuer A+/A-1 Standard & Poor's with a stable outlook for Crédit Mutuel * of which 5,369 in France AA-/F1+ Fitch with a stable outlook for BFCM and CIC Aa3/P1 Moody's with a stable outlook for BFCM and CIC Annual report

14 BOARD OF DIRECTORS OF CONFÉDÉRATION NATIONALE DU CRÉDIT MUTUEL AT 31 MAY 2011 Bureau Chairman 1 - Michel Lucas, Chairman of Crédit Mutuel Centre Est Europe Chief Financial Officer 2 - Philippe Vasseur, Chairman of Crédit Mutuel Nord Europe Group Secretary 3 - Pierre Filliger, Chairman of Crédit Mutuel Méditerranéen Other members of the Bureau 4 - Michel Bokarius, Director of Crédit Mutuel Centre Est Europe 5 - Gérard Bontoux, Chairman of Crédit Mutuel Midi-Atlantique 6 - Alain Delserieys, Chief Executive Officer of Crédit Mutuel Antilles-Guyane and Deputy Chief Executive Officer of Crédit Mutuel Centre Est Europe 7 - François Duret, Chairman of Crédit Mutuel Centre 8 - Daniel Leroyer, Chairman of Crédit Mutuel Maine-Anjou, Basse-Normandie 9 - Alain Têtedoie, Chairman of Crédit Mutuel Loire-Atlantique et du Centre-Ouest 12 Crédit Mutuel

15 Other directors 10 - Guy Allain, Director of Crédit Mutuel de Bretagne 11 - Jean-Louis Bazille, Director of Crédit Mutuel Agricole et Rural 12 - Jean-Louis Boisson, Vice-Chairman of Crédit Mutuel Centre Est Europe 13 - Eric Charpentier, Chief Executive Officer of Crédit Mutuel Nord Europe 14 - Jacques Chombart, Vice-Chairman of Crédit Mutuel Agricole et Rural 15 - Gérard Cormorèche, Chairman of Crédit Mutuel Sud-Est 16 - Louis Crusol, Chairman of Crédit Mutuel Antilles-Guyane 17 - Roger Danguel, Director of Crédit Mutuel Centre Est Europe 18 - Pascal Durand, Chief Executive Officer of Crédit Mutuel Maine-Anjou, Basse-Normandie 19 - Jean-Louis Dussouchaud, Vice-Chairman of Crédit Mutuel Sud-Ouest 20 - Jacques Enjalbert, Director of Crédit Mutuel de Bretagne 21 - Bernard Flouriot, Chairman of Crédit Mutuel Anjou 22 - Jean-Louis Girodot, Chairman of Crédit Mutuel Ile-de-France 23 - André Halipré, Vice-Chairman of Crédit Mutuel Nord Europe 24 - Guénhaël Le Huec, Director of Crédit Mutuel de Bretagne 25 - Jean-Luc Le Pache, Director of Crédit Mutuel de Bretagne 26 - Jean-Luc Menet, Chief Executive Officer of Crédit Mutuel Océan 27 - Claude Osier, Vice-Chairman of Crédit Mutuel Massif Central 28 - Albert Peccoux, Chairman of Crédit Mutuel Savoie-Mont Blanc 29 - Jean-Noël Roul, Vice-Chairman of Crédit Mutuel Loire-Atlantique et du Centre-Ouest 30 - Denis Schitz, Vice-Chairman of Crédit Mutuel Centre Est Europe 31 - Eckart Thomä, Chairman of Crédit Mutuel Normandie 32 - Michel Vieux, Chairman of Crédit Mutuel Dauphiné-Vivarais 33 - Joseph Vrignon, Chairman of Crédit Mutuel Océan 34 - Christine Zanetti, Chief Executive Officer of Crédit Mutuel Loire-Atlantique et du Centre-Ouest The following people also sit on the Board: Etienne Pflimlin, Honorary Chairman 35 - Alain Fradin, Chief Executive Officer Daniel Baal, Deputy Chief Executive Officer Gilles Le Noc, Corporate Secretary Annual report

16 GROUP PROFILE 2010 HIGHLIGHTS JANUARY Agreement on the employment of seniors at Crédit Mutuel. Crédit Mutuel s website receives the Net2.0 award (banking and insurance category) for the range and quality of its services, both online and via mobile phone banking. Business tax reform, increasing banking sector overheads. FEBRUARY Together let s rebuild Haiti : Crédit Mutuel mobilises its resources to provide practical help and express its solidarity with the people of Haiti following the earthquake of 12 January. Targobank forges ahead in Germany. Targobank is the new name for Citibank Deutschland, which Crédit Mutuel took over at the end of The name change was accompanied by a media-wide campaign in Germany. Crédit Mutuel-CIC makes its remote banking offer available via any mobile phone. Crédit Mutuel sets the beat for two major pop music events: Victoires de la Musique and the annual Enfoirés concert in aid of Restos du Coeur. MARCH French banking and insurance regulator, Autorité de contrôle prudentiel (ACP), gets up and running, formed from a merger of the Commission Bancaire and the Autorité de contrôle des assurances et des mutuelles (ACAM). APRIL Crédit Mutuel issues the 100,000 th zero-rate eco-loan. Within a year of their launch, the group had accounted for nearly a quarter of all such loans. Crédit Mutuel, the French s favourite bank: in its first time participation in the Posternak-Ipsos image barometer the group is voted number one bank and one of the country s ten most respected companies. Basel III: banks gear up for tough times ahead. Consumer credit: the introduction of a national credit check file is approved. MAY Eurozone turmoil: the European Union draws up an unprecedented rescue plan to stop contagion from the Greek crisis spreading across the eurozone. JUNE The group continues to pool its strengths internally: the Nantes, Caen and Orléans federations decide to join Caisse fédérale du CMCEE, renamed Caisse fédérale de Crédit Mutuel, on 1 January This marks a further step in the building of a more powerful, uniform Crédit Mutuel. The group s identity campaign goes live on screens nationwide. Via radio slots and coverage in the regional daily press in most parts of the country, the campaign promotes the various key values that distinguish mutualist banking. For the fourth time and the third year in a run, Crédit Mutuel wins the best bank prize in the 2010 BearingPoint-TNS Sofres customer relations awards. It shares honours with CIC, making the Crédit Mutuel group the banking sector s leading player for customer relations. Cityzi (Nice): Crédit Mutuel heads up the testing phase for a multi-service contactless payment solution. The consumer credit reform act comes into force. Eurozone finance ministers finalise the technical aspects of the European Financial Stability Facility, a bailout system for member states in financial difficulty. JULY Crédit Mutuel is ranked fourth in France s top 100 of cooperative companies by Groupement National de la Coopération (GNC). Reform of grant system for first-time home buyers. 14 Crédit Mutuel

17 AUGUST Stress tests are carried out on a selection of 91 European banks representing 65% of European bank assets and 80% of the region s banking market. Four French banking groups took part in the appraisal: Société Générale, BNP Paribas, Crédit Agricole and BPCE. This simulation showed that French banks were more robust than the average European bank for the stress scenario under consideration. SEPTEMBER Etienne Pflimlin resigns as chairman of the bank. Le Revenu s 2010 Trophées banking awards: Crédit Mutuel comes out on top! First: Crédit Mutuel; second: La Banque Postale; third: CIC. The group stood out among the 11 institutions tested in the general rankings. Crédit Mutuel and CIC form a partnership with Casino to sell financial services and products. A busy post-holiday period for French banks: implementation of new consumer credit measures, bank services fee review, 2011 finance bill with new developments expected in the areas of life insurance tax, the banking regulation act, first-time home purchase provisions, etc. OCTOBER Change of hands at the group s helm: Michel Lucas unanimously elected Chairman of Confédération Nationale du Crédit Mutuel. Basel III: a progressive but restrictive reform. Banking services: the recommendations of the Pauget-Constans report are adopted, notably introducing bank charge totals on monthly account statements, simpler account fee guides and the creation of a set of ten standard services making it easier to compare fees between banks. Image-cheques: 11 banks including Crédit Mutuel are found guilty of price fixing and fined nearly 385 million. The banks decide to appeal the decision. Decision to use, as from January 2011, the PTZ+ (second generation interest-free home loan) to replace the three main house buying aid mechanisms, PTZ, Pass Foncier and mortgage interest tax relief. Details of the bank tax emerge: it will be levied on risk-bearing assets and will concern around 20 French banks, credit institutions and investment companies. It will boost the government budget by 504 million in 2011, 555 million in 2012 and 810 million in The banking and financial regulation act is passed. The many provisions of this act, which transposes the decisions of the G20 summit of September 2008 into French law, impact retail, commercial and investment banks alike. NOVEMBER Banco Popular Espanol partnership: having extended this partnership to cover training, payment instruments, cash management and property leasing, the group acquired a 5% stake in what is Spain s third largest bank. This strategic agreement gives the group a sound foothold in the country and a third domestic network in Europe, enabling it to reduce its costs and market its products and services more widely. Crédit Mutuel-CIC/Dexia industrial partnership covering the provision of a commercial banking platform plus related services. This is the first step in a broader collaboration planned between the two banks. Decision to roll out a new property savings plan (PEL) as from March Eurozone crisis flares up again: under pressure from the financial markets, Dublin resolves to ask for 85 billion in aid from Europe to tackle its ballooning public deficit and bank crisis. The country is paying a high price for ten years of unbridled free market policies. Savers see their protection ceiling raised from 70,000 to 100,000. The credit mediation scheme, which was due to end on 31 December 2010, is extended for two years. GNC becomes CoopFR, a name change intended to help make French cooperative banks more accessible. DECEMBER Crédit Mutuel named French bank of the year by the Financial Times group economic and financial magazine, The Banker. Annual report

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19 THE MUTUAL BANK A BANK THAT BELONGS EXCLUSIVELY TO ITS MEMBERS THAT'S WHAT MAKES CRÉDIT MUTUEL STAND OUT Annual report

20 CREDIT MUTUEL - THE MUTUAL BANK The Group's main entity, Crédit Mutuel, is a cooperative bank under the 10 September 1947 Act governing French cooperatives. It belongs exclusively to its members, who own its capital and determine its strategy within a framework of democratic governance. As a mutual bank, Crédit Mutuel places its members at the heart of all its decisions. Its growth is exclusively based on its founding values of solidarity, responsibility, equality, closeness and transparency. These values have the same strategic importance for the bank as service quality. They are the Crédit Mutuel hallmarks, and they testify to the relevance of its business model in modern France. At end-2010, Crédit Mutuel had 7.2 million members in more than 2,000 local mutual banks run by 24,000 member-elected representatives. To serve its customers and society, Crédit Mutuel's strategy combines sustainable development and solidarity. Historically, the bank has played a key social role, notably through its action in support of society s most vulnerable members. Crédit Mutuel is a company based on people rather than capital. It is not listed on the stock exchange. Because it plays an important role in the social economy, its sustainable development strategy is not bound by an all-out quest for short-term profitability. Sound management, crucial to the company s durability, is not geared towards the enrichment of a group of shareholders: rather it serves to ensure growth and first-rate service quality in the most cost effective way. The shares held by members constitute the capital classed as Tier 1 regulatory capital. They can be redeemed only at their face value. Crédit Mutuel's Corporate Social Responsibility (CSR) report is available at 18 Crédit Mutuel

21 THE CREDIT MUTUEL NETWORK 2,065 local mutual banks 3,117 branches 11.2 million customers, including 10,2 million private individuals 7.2 million members 24,000 directors 33,835 employees* * The regulatory headcount of Crédit Mutuel at 31 December 2010 includes the regional federations, the federal and interfederal banks and the local mutuals. As a financial cooperative, Crédit Mutuel is inalienable, meaning it can neither be sold nor taken over; it can be wound up only on the decision of its members. Its decentralised organisation encourages staff to become more involved at every level, be it local, regional or national, thus enhancing the group s responsiveness and service quality. It makes possible a short decision-making process, better risk diversification and a highly effective control system. Every year, 20,000 board of directors and/or supervisory board meetings and 2,000 general meetings take place in the 2,000-plus local mutual banks, of which more than a half are located in rural areas. These meetings aim to assemble 10% of members; they provide a basis for truly democratic corporate governance. The local mutual banks are organised into 18 regional federations, which in turn are part of the national confederation. Crédit Mutuel s three levels operate according to the principle of subsidiarity, the local mutual banks which are closest to members and customers carrying out all the key functions of bank branch offices, and the other two levels exercising only those functions for which the local entities are not equipped. The governing bodies are made up of representatives of the bank's members, from the level of local general meetings where they elected on a one person one vote basis right up to the Board of Directors at national level. With its solid local base, Crédit Mutuel cannot be moved offshore and stands as an independent entity that contributes to job creation and economic vitality in all the areas in which it operates. CRÉDIT MUTUEL IS A COMPANY BASED ON PEOPLE RATHER THAN CAPITAL. IT IS NOT LISTED ON THE STOCK EXCHANGE. Annual report

22 CREDIT MUTUEL - THE MUTUAL BANK A DECENTRALISED STRUCTURE 2,065 LOCAL MUTUAL BANKS The first level of organisation is made up of local mutual banks, or caisses locales, which have the legal status of cooperative companies with variable capital (sociétés coopératives à capital variable). These are credit institutions governed by French banking law, with the capital owned by their members, who are both shareholders and customers. Financially independent, the local mutual banks take deposits, distribute loans and provide a full range of banking services. Most decisions concerning customers are taken at this level. Each local mutual bank is governed by a board of directors and/or a supervisory board, made up of unpaid members elected at general meetings on a one person, one vote basis. In all, there are more than 2,000 local mutual banks, whose 24,000 directors represent 7.2 million members. 18 REGIONAL GROUPS At the next level up, there are 18 regional groups, each of which comprises a regional federation and a federal bank or caisse fédérale (or an interfederal bank or caisse interfédérale, as is the case for the Centre Est Europe, Ile-de-France, Sud-Est, Savoie-Mont Blanc and Midi-Atlantique federations; the Bretagne, Massif Central and Sud-Ouest federations; and, since 1 January 2011, the Loire-Atlantique and Centre-Ouest, Normandie, Centre, Dauphiné-Vivarais and Méditerranéen federations). The local mutual banks and the federal bank, of which they are shareholders, are members of a regional federation. The regional federation is responsible for strategy and supervision, and represents Crédit Mutuel in its region. The federal bank is responsible for functions such as cash management and providing technical and IT services. The federation and the federal bank are governed by boards elected by the local mutual banks. In addition to the 18 regional federations, there is a federation with nationwide scope specifically for the farming sector Crédit Mutuel Agricole et Rural (CMAR). 20 Crédit Mutuel

23 THE 18 CRÉDIT MUTUEL REGIONAL FEDERATIONS Lille Caen NORMANDIE NORD EUROPE Paris Brest MAINE-ANJOU, BASSE-NORMANDIE BRETAGNE Laval al ANJOU Nantes CENTRE Angers ILE-DE-FRANCE Orléans Strasbourg CENTRE EST EUROPE THE NATIONAL CONFEDERATION AND THE CENTRAL FINANCING BANK These bodies make up the third and top level of organisation. The Conféderation Nationale or national confederation, which has the legal status of a non-profit organisation, is the central body governing the network in accordance with the provisions of the French monetary and financial code (Code monétaire et financier). The 19 Fédérations and the Caisse Centrale du Crédit Mutuel are affiliates of the Conféderation Nationale, which represents Crédit Mutuel vis-à-vis the authorities and is responsible for defending and promoting its interests. The Conféderation Nationale also oversees the proper operation of its member establishments, supervises the regional groups and ensures the overall cohesion of the network, as well as co-ordinating business development and providing shared services. The Caisse Centrale, or central financing bank, manages treasury for the regional groups and organises the pooling of Crédit Mutuel's financial resources. Its capital is jointly owned by the Caisses Fédérales. CRÉDIT MUTUEL S CUSTOMERS (millions) % +1.3% OCÉAN Bordeaux 7.2 million members 11.2 million customers 18 regional federations + 1 farming federation (CMAR) LOIRE-ATLANTIQUE E ET CENTRE-OUEST T SUD-OUEST MIDI-ATLANTIQUE Toulouse MASSIF CENTRAL SUD-EST Lyon Valence e Annecy DAUPHINÉ-VIVARAIS MÉDITERRANÉEN 3,117 branches including 2,065 local mutual banks Confédération nationale Caisse centrale Marseille La Rochesur-Yon Clermont- Ferrand Fort-de-- France ANTILLES-GUYANE SAVOIE- MONT BLANC Customers Members Annual report

24 CREDIT MUTUEL - THE MUTUAL BANK GOVERNANCE AND MEMBERSHIP As a mutual bank, Crédit Mutuel receives capital contributions through subscriptions to member shares (1) that earn interest at a fixed rate set by the general meeting of member shareholders, who are associates and co-owners of their local mutual bank. Reserves serve to back the shared obligations of members and as security for deposits. They are also used to finance long-term development. At the end of 2010, Crédit Mutuel member shares represented a total of 8.7 billion, up 3.9% from the previous year, while 259 million was paid to members in dividends, representing nearly 26% of the net earnings of the core cooperative business carried out by the local mutual banks and federal banks. DECISIONAL POWER AT CRÉDIT MUTUEL IS DETERMINED NOT BY THE NUMBER OF SHARES OWNED BUT BY SIMPLE MEMBERSHIP AS AN ACTIVE MEMBER, I TAKE PART IN THE AGM 2011 (1) 'A' shares are those shares initially subscribed to by persons wishing to become members of a local mutual bank and to acquire the right to vote at general meetings on a one person, one vote basis. 'B' shares represent additional amounts paid in by members. They earn dividends but carry no voting rights. 22 Crédit Mutuel

25 PARTICIPATION AND DEMOCRACY Participation and democracy are the cornerstone of Crédit Mutuel s operation as a mutual bank. The 7.2 million Crédit Mutuel members supervise the management of the local mutual banks and elect the directors at general meetings, ensuring genuinely democratic governance. The 24,000 elected voluntary directors present at all three levels of the organisation - local, regional and national - are responsible for the group s management and supervision. Attentive to the needs and aspirations of the members they represent, these directors are themselves committed, active members and participate in the administration of the local mutual banks alongside the employees. As members of the local communities, they also exemplify the values that Crédit Mutuel stands for, and help to ensure their implementation. Some 29,000 Crédit Mutuel staff members are responsible for implementing company strategy and operating the business under the supervision of the elected directors. BUSINESS OPERATION The decentralised structure with decisionmaking processes at regional and local level favours entrepreneurship, a sense of personal responsibility and team spirit. The ties between the local mutual banks and the regional federations and banks ensure the cohesion of the various entities as regional groups that operate as fully-fledged credit institutions within the framework of French banking regulations. The regional groups cooperate freely to rationalise resources and costs through technical partnerships, notably in areas such as information technology and financing. Other avenues for cooperation are provided by the Caisses Interfédérales serving more than one regional bank and by joint subsidiaries in insurance, leasing, factoring, corporate banking, investment banking, asset management and private banking. DEPOSITOR SHAREHOLDERS PLAY AN ACTIVE ROLE AT GENERAL MEETINGS The Annual General Meetings that members and customers of the local mutual banks are invited to attend each year are the basis of Crédit Mutuel's democratic structure. General meetings provide members with a special opportunity to meet the bank s directors and employees and learn more about the business and express their own views. They also offer a forum for suggestions and discussion of ways to enhance services, reflecting the values that distinguish Crédit Mutuel from other banks. Regional groups membership of the Confédération Nationale and the Caisse Centrale ensures cohesion and shared responsibility at national level. As the central body for the whole Crédit Mutuel group, the Confédération Nationale approves appointments to management positions and regional audit teams in the regional federations, and takes all necessary steps to ensure the group s proper operation, with responsibility for overall control and the coherence of business development. Jointly with Internal Control committees at regional federation level, the Confédération Nationale reviews audit reports and reports its findings to the boards concerned. The Confédération Nationale's Board of Directors comprises representatives of all the regional federations, elected by the general meeting of Confédération Nationale shareholders. This general meeting also elects the Chairman for five years. Mutual members are thus represented at all three levels of the organisation through the directors they elect. Required items on the agenda include a report on the entity s management and activities and on its specific action as a mutual bank, leading up to approval of the financial statements and the election of directors on the basis of one person, one vote. A second part of the meeting is devoted to the presentation and discussion of current themes and events. Some 500,000 members and customers attend the regional and local annual meetings held between February and May. Annual report

26 CREDIT MUTUEL - THE MUTUAL BANK A HUMAN RESOURCES POLICY GEARED TOWARDS TRAINING AND GENDER EQUALITY The rise in the number of Crédit Mutuel group employees (up by 4.6%, to 75,805) mainly reflects recent acquisitions. The headcount for Crédit Mutuel alone stood at 33,835 (1) at 31 December More than 1,300 professional training initiatives were carried out in 2010, including vocational contracts enabling over 500 young people at Bac to Bac +2 level to move rapidly to account manager posts for retail or professional customers, and just under 800 ongoing programmes to help experienced staff train in new disciplines. Crédit Mutuel provides staff members with training opportunities throughout their careers, reflected by a training budget equivalent in 2010 to almost 5% of the payroll. The increasing proportion of women in management positions is a long-term trend. Within the network, the proportion of women in point-of-sale and corporate account management positions increased by 14% and 10% respectively between 2004 and A similar pattern is also emerging at the highest management level, where the bank now has three woman chief executive officers. This movement is consistent with the Crédit Mutuel fair pay framework agreement signed in 2007, which instigated the principle that gender equality at job and grade level is a source of workforce cohesion and economic efficiency. (1) The regulatory headcount of Crédit Mutuel at 31 December 2010 includes the regional federations, the federal and interfederal banks and the local mutuals. 24 Crédit Mutuel

27 Following the signing in 2008 of a framework agreement for the employment of people with disabilities and an equivalent agreement for seniors at the end of 2009, the group has recently signed two more major agreements. Faced with the emergence over recent years of new forms of employee-directed aggression, in April 2010 the group signed a framework agreement on managing workplace incivility and antisocial behaviour with the aim of obtaining quantitative and qualitative indicators helping it to limit and reduce this problem at source and mitigate its repercussions for employees. This will enable it to implement various types of initiative to meet three broad objectives: firstly, data collection and monitoring, followed by prevention and, lastly, support for employees who have been the victim of incivility or aggression. The initiative targets incivility and verbal, psychological or physical violence committed by customers on employees during the course of a business relationship, whether directly in face to face situations or indirectly, over the telephone or in correspondence. The Crédit Mutuel interfederal mobility agreement signed in early 2011 aims to facilitate interfederal mobility between the regional federations and other organisations covered by Crédit Mutuel s sector bargaining agreement. This agreement relates notably to job markets and the legal framework applicable to transfers between federations, where contracts are switched over automatically, probationary periods become discretionary and all length of service rights are maintained. The agreement is designed to meet the need to adapt jobs to reflect changes in business lines and in employees aspirations. Internal mobility management is part of Crédit Mutuel's global jobs and training policy, which aims to preserve jobs while retaining and developing skills in-house. This global policy also seeks to prioritise job applications by equally well-qualified internal candidates from within the bank s federations and other entities over external applications. Annual report

28 CREDIT MUTUEL - THE MUTUAL BANK AN INNOVATIVE CORPORATE SPONSORSHIP APPROACH Through its regional foundations and the national Fondation du Crédit Mutuel, the bank runs a corporate sponsorship programme inspired directly by its founding values. The related initiatives demonstrate the group s ongoing commitment to ground-level social solidarity, through a three-strand approach: - promoting the reading of French through the Fondation du Crédit Mutuel pour la Lecture, - combating economic and social exclusion, - implementing independent, sustainable banking networks in developing countries with the Centre International du Crédit Mutuel (CICM). A UNIQUE CORPORATE PATRONAGE INITIATIVE IN FRANCE: LA FONDATION DU CREDIT MUTUEL POUR LA LECTURE La Fondation pour la Lecture has been working at ground level since 1992 to help people access the pleasure and skills of reading. Its action is oriented around three programmes: Combating illiteracy, by federating the energy and initiatives of anti-illiteracy organisations, running the Quand les livres relient ( the binding power of books ) national network, and, via mobile library visits, helping people at ground level in childcare establishments and hospitals, on street corners and in prison workshops and rural areas. Lire la Ville ( reading the town ): this programme, run in coordination with around ten French regional educational authorities (Strasbourg, Rouen, Clermont- Ferrand, Limoges, Lille, Paris, Bordeaux, Nice and Marseille), enables primary and secondary schoolchildren to read their respective towns like a book, through their architecture, layout and infrastructure. It brings the children together with many other stakeholders, including teachers, writers, historians, architects and other key players in the towns' cultural life. Mock-ups, plays, 3D exhibitions, alphabet charts and photo stories are just some of the fruits of this programme, which has also given rise to a Lire le Théâtre ( reading the theatre ) initiative. The power of literature: by participating in national and regional festivals, the 26 Crédit Mutuel

29 Foundation gives people everywhere - children in particular the chance to become involved in France s literary life. In particular, it supports the flagship Incorruptibles awards, in which 200,000 pupils from nearly 3,000 schools across France read books selected according to their respective reading levels before voting for their favourite title. RESEARCH, SOCIAL ASSISTANCE INITIATIVES AND PROMOTION OF COOPERATIVES Part of Fondation du Crédit Mutuel s remit is to forge partnerships with research organisations, or think tanks, and to invest in research into economics and finance. In this role it works alongside Institut français des relations internationales (IFRI), Confrontations Europe, the Robert Schuman Foundation, the French European Movement and many other organisations. The foundation is dedicated to supporting work in the social economy and cooperative fields, and with this in mind it supports various awards such as the Prix de la recherche coopérative (cooperative research award) and the Reader s Digest Solidarity Award, publications such as Revue des études coopératives, mutualistes et associatives (RECMA) and social economy organisations such as Centre des jeunes dirigeants de l économie sociale (CJDES) and Conseil National des CRES (Chambres régionales de l économie sociale) as well as non-profit associations such as Passeport Avenir, which help fund the schooling of students from underprivileged backgrounds. By supporting these research groups through contributing to the financing of specialised studies, Crédit Mutuel helps raise awareness concerning banking, cooperative ventures and social aid. DEVELOPMENT AID WITH CENTRE INTERNATIONAL DU CREDIT MUTUEL (CICM) Active for some 30 years in building mutual banking networks in developing countries, Centre International du Crédit Mutuel (CICM) continues to work to promote access to banking services for all. CICM's approach is based on Crédit Mutuel s founding principles: members responsibility, unpaid directorship and clearly defined catchment areas for branches to ensure that they provide a locally-oriented service. Annual report

30 CREDIT MUTUEL - THE MUTUAL BANK THE CICM IS ACTIVE IN SEVEN AFRICAN AND ASIAN COUNTRIES Central African Republic through Crédit Mutuel de Centrafrique, Cameroon through Mutuelles camerounaises d épargne et de crédit (MUCADEC), Republic of the Congo through Mutuelles congolaises d épargne et de crédit (MUCODEC), Niger through Crédit Mutuel du Niger (CMN), Burkina Faso through Crédit Mutuel du Burkina Faso (CMBF), a new project which aims to sign up 7,500 members over the next five years, The Philippines through the Mutual Saving and Credit Cooperative of Philippines (MSCCP), and Cambodia through Crédit Mutuel Kampuchea (CMK). In often unstable political and economic environments, the CICM networks enable local people to protect their assets, build up personal savings and fund work projects. CICM works in several areas: extending banking services to communities as a means of improving their welfare, helping to develop the local socio-economic fabric, disseminating the cooperative model and its democratic values, and promulgating professional savings and credit management. This non-profit association, to which the 18 Crédit Mutuel regional federations contribute, works to set up independent, sustainable cooperative networks in countries where individuals cannot always access existing banking services. Through the provision of tailored banking services, these cooperative networks make a major contribution to the development of local economies by fostering social cohesion and the settlement of nomadic populations. CICM's operations are financed by the federations with contributions from external sponsors. HAITI: CRÉDIT MUTUEL S PLANS TAKE SHAPE More than a year after the earthquake of 12 January 2010 in which more than 200,000 people lost their lives, the rebuilding effort in Haiti has barely begun. Despite very difficult conditions, the operations funded by Crédit Mutuel are nonetheless under way. With the Ensemble reconstruisons Haïti ( Together let s rebuild Haiti ) operation, for which it had collected nearly 2.5 million as at 1 January 2011, the group aims to cater for the local 28 Crédit Mutuel

31 HELPING YOUNG TALENT WITH PASSEPORT AVENIR The Passeport Avenir initiative enables young people from disadvantaged backgrounds in marginal urban areas to attend engineering or business schools (right from preparatory year to final degree) by eliminating all financial discrimination. This association s work is supported by three government departments and 14 corporate partners*, including Crédit Mutuel, which has been involved in the project since 2007 through the provision of student loans requiring no parental guarantee and the joint running of educational workshops in the partner schools to give students advice on how to manage a budget and introduce them to financing solutions. The National Education Ministry, the Ministry for Higher Education and Research and the Secretary of State for Urban Policy are also partners. This public-private partnership has almost 100 member schools and is growing fast. By providing concrete help to youngsters wishing to access high-powered careers, it promotes Crédit Mutuel s aim to be the bank of choice for young talent in urban areas covered by government development programmes. (*) Ministère de l Education nationale, Ministère de l Enseignement supérieur et de la Recherche, Secrétariat d Etat à la Politique de la Ville / Accenture, Alcatel-Lucent, Atos Origin, Capgemini, Devoteam, Ericsson, Gemalto, Hôtel F1, Nokia Siemens Network, Orange, Qualcomm, Sagemcom and SFR. population s basic needs through two major programmes: - short-term repair work and logistical assistance at the French hospital in Port-au-Prince; and - help with longer-term town planning work and the construction of 154 housing units in Lafiteau, ten kilometres from the capital. These two ongoing initiatives were started in 2010, involving notably paying the salaries of the hospital s staff throughout the year. Working under the aegis of Fondation de France, Fondation du Crédit Mutuel centralises donations from group entities and members via its website, which also gives constantly updated information on how the collected funds are used. Annual report

32 CREDIT MUTUEL - THE MUTUAL BANK BANKING FOR ALL MEMBERS OF SOCIETY The economic and financial crisis vindicated the group s choices, namely its commitment to strategic development and its decision to operate as a cooperative, mutual bank. Crédit Mutuel leads the way in promoting social cohesion, as can be seen in its responsible initiatives and solidarity-driven goals, implemented directly at ground level. Its initiatives cater for the needs of the most vulnerable members of society: it operates a low-income and business micro-credit activity, for example, both directly and in close cooperation with integration assistance and social aid networks. Crédit Mutuel underwrites 50% of the risk associated with loans granted under such schemes. It also offers a special assistance programme for members facing financial difficulties. Spanning past and present and embodying commitment for the future, the ethic of social responsibility is the cornerstone of the group s actions, the driving force behind a socially supportive, responsible bank. 30 Crédit Mutuel

33 SOCIAL MICRO-CREDIT Crédit Mutuel assists the most vulnerable sections of the population by extending micro-credit within the framework of specific partnerships. It is part of some 150 experimental projects under way throughout France via regional or local partnerships with social and insertion assistance organisations such as Secours Catholique, COORACE, UDAF and a number of other family-oriented social aid networks such as ADMR, Familles Rurales, Emmaüs and Restos du Cœur, together with large numbers of local employment agencies, community social aid centres (CCAS) and local social integration organisations. The goal is to develop a joint approach to help people in financial difficulty implement a project that will enable them to find a job. By opening accounts for them and extending loans that are partly guaranteed by the Fonds de Cohésion Sociale (French social aid fund), Crédit Mutuel enables them to regain access to the banking system and to become regular bank customers once again. Crédit Mutuel assumes 50% of the risk on these loans. The Fonds de Cohésion Sociale (and Secours Catholique for its own network) covers the remaining risk under an agreement signed in January 2006 with Caisse des Dépôts et Consignations. These loans, for amounts ranging between 500 and 3,000, are granted to people who do not have a chequebook, have little or no access to credit, and have no stable employment or are living on social welfare but are actively looking for work. In 2010, Crédit Mutuel granted 9.6% of all micro-credits distributed in France, representing an almost 9% market share in monetary terms. Annual report

34 CREDIT MUTUEL - THE MUTUAL BANK A SOCIALLY SUPPORTIVE BANK Crédit Mutuel encourages and supports initiatives by its members and customers in favour of social cohesion, solidarity and the environment. It offers products with social and environmental added-value based on the new concept of solidarityoriented savings solutions, loans for environmentally beneficial projects and socially responsible investment products distributed by CM-CIC Asset Management, Federal Finance (a Crédit Mutuel Arkéa company) and UFG-LFP (part of Crédit Mutuel Nord Europe). For more information see the annual report on corporate social responsibility (CSR) available at PROFESSIONAL MICRO-CREDIT In 2010, the group financed more than 220 million in loans through three networks: Association pour le Droit à l Initiative Economique (ADIE), France Active and France Initiative. Crédit Mutuel continues to be a partner of Adie, which saw an overall drop in business of around 20% in Through seven regional federations and a CIC regional bank, the Crédit Mutuel group financed 8% of all 2010 lending by this organisation, representing a total of 4.3 million. For over 20 years, the group has been working with France Initiative, the leading network of associations set up to promote local economic development through help for business start-ups and buyouts. The group is actively involved with over 60% of its local initiative platforms (165 for Crédit Mutuel and 126 for CIC) and a member of its "Entreprises" collegial body of partner companies. In 2010, it granted 3,108 loans for more than 190 million via the network, representing nearly 20% of its overall financing volume. Crédit Mutuel also works alongside the France Active network, which offers grants and loans to initiatives aimed at promoting economically driven social integration. It founded six of the organisation s 38 regional funds, sits on half of its financing committees, and in 2010 backed 23% of the guarantees extended, representing a commitment of 29.4 million. MEMBERS IN FINANCIAL DIFFICULTY: SPECIFIC ASSISTANCE PROGRAMMES Crédit Mutuel s social assistance converts words into action. Through its regional federations, the group runs a number of initiatives, of which several are described below. They offer a daily reminder of the group s commitment to its most vulnerable members. Since 1986, the Association de gestion du fond d entraide du Crédit Mutuel de Bretagne (CMB) has been providing aid to members faced with loan repayment difficulties resulting from unforeseen circumstances. The association covers up to 75% of remaining instalments for a period of 12 consecutive months, with a maximum of 16,000 available per borrower or household. Since the second half of 2010, the Ark'ensol association has housed Crédit Mutuel Arkéa s solidarity-oriented initiatives, and it is now the one-stop entity for all the group s social undertakings. There are two specialised sub-associations working under the Ark'ensol banner: Ark ensol Créavenir and Ark ensol Entraide. The first, which is continuing in another form the work done by Créavenir, provides 32 Crédit Mutuel