NATIXIS will go off the coast

NATIXIS will go off the coast
NATIXIS will go off the coast

(AOF) – BPCE today crossed the threshold of 90% of the capital and voting rights of Natixis, which will allow it to request the implementation of a squeeze-out procedure. The final results of the public offer will be the subject of a notice published by the AMF after its closing scheduled for July 9, 2021 and the squeeze-out request will be made immediately.

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Key points

– Bank created in 2005, a subsidiary of the Banques Populaires-Caisses d’Épargne group;

– Group of € 9.2 billion in net banking income organized into 4 business lines – asset and wealth management for 41%, large client banking for 35%, insurance for 9% and payments for 5% ;

– Income split between Europe for 50%, North America for 43% and Asia-Pacific for 5% and drawn from commissions for 51%, trading for 23% and insurance for 17%;

– Changes in governance, with the arrival of a new Chief Executive Officer, Nicolas Namias, Laurent Mignon, Chairman of the Board of Directors of 16 members, representing the main shareholder BPCE (Banques Populaires-Caisses d’Epargne) holding 71% of capital. ;

– CET 1 equity ratio of 11.7% at the end of September, and liquidity reinforced by the sale of 30% of Coface’s capital.

Stakes

– Strategic plan for “sustainable value creation”:

– growth driver in asset management through the finalization of the LBP AM and Ostrum merger, generating € 1,100 billion in assets under management,

– reduction of risks in banking for large customers by the decline in derivative activity,

– business transformation: € 350 million in cost reduction by 2024,

– financing of the ecological transition: reduction of investments in oil & gas,

– capital management with a tier 1 ratio above regulatory requirements;

– Extended innovation strategy:

– 89C3R: digital factory for APIs, UX / UI, chatboxes, artificial intelligence, blockchain and agile methods,

– Support for start-ups: Big Factory incubator, and support for Euratechnologies

– Natixis Foundation to support mathematical research;

– Environmental strategy orienting towards the low carbon economy:

– climatic risks linked to the activity assessed by the “Green Weighting Factor” tool: halving of the financing of the coal sector since 2015,

– financing of the energy transition: in 2019, launch of 43 sustainable loans, and financing of 26 renewable energy projects,

– integration of ESG criteria in financing and investments: at least 10% of annual investments in “green” assets (3% of green assets in the portfolio in 2019), Mirova being the management company dedicated to SRI;

– Impacts of the progress made in 2019: association with LBPAM to become No. 1 in France in insurance management and launch of the Green Weighting Factor.

Challenges

– Bank valuation from 7 points: liquidity positions, the ability to meet the so-called “Basel 3” solvency ratio, control of investment banking commitments, centralization of derivative clearing, decisions of central banks – American Fed and European ECB, the cost of risk and, finally, the return on equity or ROE;

– Monitor the net assets per share, of € 3.89, to be compared with the stock market price;

– Impact of the pandemic: return to profitability at the end of September;

– Response to the pandemic: cost reductions (100 M € asset management);

– 2020 objectives: growth in income from payments and insurance but increase in the cost of risk in large client banks and pressure on assets under management;

– Towards a recovery of the dividend at 1is quarter 2021.

Cascading downsizing

In the United States and Europe, investment banks had put their workforce reduction plans on hold. However, faced with a surge in the cost of unpaid debts, these establishments will have to reduce their staff. Even if, in the year 2020, some analysts estimate that the revenues of the twelve major global investment banks should jump 25% to more than 188 billion dollars. S&P Global Ratings considers 2021 to be even tougher than 2009.

European banks are the most active in terms of workforce reduction. In the third quarter, front office staff fell by 5% in Europe. The equity trades were the most affected.

Commerzbank, which posted losses of 162 million euros between January and September following provisions to deal with the crisis and restructuring charges, could cut around 10,000 jobs. This is almost as much as its rival, Deutsche Bank, which will reduce its workforce from 87,000 to 74,000 jobs by 2022.

 
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