Annual report 2006 - Dexia.com

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GROUP PRESENTATION HISTORY OF THE GROUP MANAGEMENT REPORT COMPTES CONSOLIDÉS COMPTES SOCIAUX 1860 Creation of Crédit Communal de Belgique. 1987 Creation of Crédit local de France. 1991 First listing of Crédit local de France on the Paris Stock Exchange. Crédit Communal de Belgique becomes majority shareholder of Banque Internationale à Luxembourg (BIL), the oldest established bank in Luxembourg (1856). 1996 Creation of Dexia, through a business alliance between Crédit Communal de Belgique and Crédit local de France. The two partners begin operating as a Group under a structure organized around two holding companies; Dexia Belgium, listed on the Brussels Stock Exchange (BEL20-index), and Dexia France listed on the Paris Stock Exchange (CAC 40-index). 1997 Acquisition of a 40% stake in Crediop, a leading player in the Italian local public finance market. 1999 April: buyout of BIL’s minority shareholders. June: Dexia becomes majority shareholder of Crediop (60%). June: acquisition in Belgium of Elvia Assurances, renamed Dexia Insurance. November: Dexia becomes shareholder of Otzar Hashilton Hamekomi (Israel). December: creation of a single holding company, Dexia SA, by means of a public offer by Dexia Belgium on Dexia France shares. Dexia is quoted in Brussels, Paris and Luxembourg. A unified management structure is established for the entire Group. 2000 Dexia acquires FSA, a leading company in credit enhancement for municipal bond issuers in the US, and Bank Labouchere in the Netherlands. 2001 July: Dexia acquires Artesia Banking Corporation in Belgium through a capital increase reserved to Arcofin, Artesia BC’s shareholder. July: Dexia acquires Kempen & Co through a public tender bid. December: increase of the equity interest in Dexia Crediop from 60% to 70%. 2002 January: Dexiam and Cordius Asset Management, Artesia BC’s subsidiary, merge to form Dexia Asset Management. April: Dexia Bank, Artesia Banking Corporation, BACOB and Artesia Services merge under the name Dexia Bank Belgium. May: increase of the equity interest in DVV Insurance, from 82% to 99%. 2003 July: Dexia sells its monitory stake in Landbouwkrediet NV (Crédit agricole de Belgique). September: Dexia takes over the stake of the minority shareholders in its German subsidiary Dexia HypothekenBank Berlin (now Dexia Kommunalbank Deutschland), active in local public finance. 2004 November: Dexia sells its shares in Kempen & Co. November: acquisition of FMS Hoche, a specialist fund-administration company based in France. 2005 June: Dexia and Royal Bank of Canada announce the combination of their institutional investor services business in an equally-owned joint venture named RBC Dexia Investor Services (effective since January 1, 2006). June: DVV Insurance and Dexia Insurance merge to form a new insurance company named Dexia Insurance Belgium. October: Dexia sells its subsidiary Eural SA. December: Dexia has been granted a banking license in Canada and in Mexico. 2006 May: Dexia acquires a controlling interest (75%) in DenizBank, the sixth largest privately-owned bank in Turkey. September: Dexia announces the successful completion of a EUR 1.2 billion capital increase through an accelerated book build offering, with a view to financing part of the acquisition of DenizBank. October: Dexia opens Dexia Public Finance (Switzerland), a “foreign bank representation in Switzerland” specializing in public finance. November: Dexia has been granted a banking license in Japan. December: Dexia sells its subsidiary Banque Artesia Nederland. December: Following a successful mandatory tender offer, the shareholding of Dexia in DenizBank stands at 99.74%. 12 | Dexia / Annual Report 2006
GROUP PRESENTATION STRATEGY A development strategy aligned to the Group’s two pillars: Universal Banking in Europe and Public/Project Finance worldwide. BUILDING ON TWO PILLARS That growth will be well sustained by demographic evolutions which will deeply influence the volumes and the nature of banking services to be provided to individual clients, both as a Retail Bank and as a Private Bank. Benefiting from its position as leader on these rich markets, in Belgium and in Luxembourg, and from a key position in Turkey, Dexia is uniquely positioned to continue its development by exploiting its know-how and its skills in this growing market. Since 1996, Dexia has developed a Universal Banking activity deeply anchored in Belgium, Luxembourg, Slovakia and Turkey, combined with a world leadership in Public/Project Finance. A pioneer in European cross-border consolidation and working to the maxim “no achievement without commitment”, during the first half year 2006 Dexia carried out a strategic review which allowed to elaborate a development plan for the next ten years. That plan was approved by the Board of Directors on September 5, 2006, and the main themes of this strategy were published on September 26, 2006. Dexia’s future will be built on the two pillars of its current activity: • the development of its Universal Banking activity beyond its traditional markets, so that it becomes a leading European operator. This strategic direction will not only enable the most to be made of the significant growth potential specific to this activity, but also greater advantage to be taken of the opportunities which exist in the field of Public/Project Finance; • the anchoring and constant strengthening of its world leadership in public/project finance, through continuing geographic expansion, based on an innovative and varied range of products. The Group’s ambition is therefore to give even greater power to its two principal growth drivers. The simultaneous strengthening of these two pillars gives the Group a balanced portfolio of activities, enlarges its sources of finance, enables optimum use to be made of capital, increases the client base and opens up even better development prospects. Dexia will continue to develop its business lines in an energetic but balanced manner, maintaining its founding values with regard to risk and financial soundness, and acting with the long term in view. Dexia’s strength will continue to rest in its ability to combine long-term commitment to its clients, financial stature, knowhow, reputation and historical local presence. A WIDE AND PROMISING HORIZON Dexia’s business lines give extremely good visibility of market growth and client needs. The strategic review carried out by Dexia demonstrates that its environment abounds with opportunities. Extending Universal Banking activities in Europe Continuing to develop services in Public/Project Finance The world market for local public debt is estimated at USD 5,000 billion at present, and this should grow by USD 1,500 billion (in constant currency) over the next ten years, a new business volume equal to or more than three times the current Dexia Group commitments in this field. In the developed regions of the world, demographic evolutions will result in the need for major infrastructure projects (hospitals, education, energy etc.). In the developing regions there will be requirements to construct or to update essential infrastructures (water, waste treatment, transport, energy etc.). The volumes involved will be considerable, and the sophistication of financial solutions will increase constantly. A world leader in this market, Dexia is already strongly positioned and, by virtue of its size and its innovation skills, it will be able to grasp the many opportunities which are sure to arise. Furthermore, Dexia has a particularly good knowledge of its clients, especially of their solvency and their future needs. As a consequence it has an unmatched ability on this market to design and to distribute savings and long-term investment products, relying on underlying assets of extremely high quality, in relation to the local public sector and essential infrastructures. Expertise in the service of growth As for Treasury and Financial Markets, a huge opportunity for Dexia in coming years will be grasped by combining its financial market expertise with its know-how in providing financial services to the public sector. This new field of opportunities, as well as the development of the sales force and institutional client base, will enable the Group even further to improve on its current strengths and to sustain its growth. New growth opportunities in Asset Management will be aligned principally to new institutional client segments, new pension products for the private and institutional markets and widening distribution via third parties outside Dexia’s own distribution networks. For Investor Services, the acceleration of growth on existing and recently-penetrated markets, and the enlargement of its range of products are all part of the strategy Dexia will follow in order to strengthen this flourishing sector of activity. MANAGEMENT REPORT COMPTES CONSOLIDÉS COMPTES SOCIAUX In the field of Universal Banking, the growth of European markets will be robust, as a result of the convergence of equipment rates, banking penetration rates, the effects of scale and synergies in the consolidation of the banking sector, hailed both by the European Commission and by consumers. Dexia / Annual Report 2006 | 13
Page 1: no achievement without commitment
Page 4 and 5: FINANCIAL HIGHLIGHTS 4 MESSAGE FROM
Page 6 and 7: FINANCIAL HIGHLIGHTS FINANCIAL HIGH
Page 8 and 9: MESSAGE FROM THE CHAIRMEN MESSAGE F
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Page 12 and 13: GROUP PRESENTATION GROUP PRESENTATI
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Page 20 and 21: GROUP PRESENTATION GROUP ORGANIZATI
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Page 24 and 25: GROUP PRESENTATION MAIN ACTIVITIES
Page 26 and 27: GROUP PRESENTATION December Opening
Page 28 and 29: CORPORATE GOVERNANCE Dexia’s comp
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Page 54 and 55: THE DEXIA SHARE MANAGEMENT REPORT C
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Page 58 and 59: HUMAN RESOURCES HUMAN RESOURCES Dex
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SUSTAINABLE DEVELOPMENT SUSTAINABLE
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RISK MANAGEMENT MANAGEMENT REPORT C
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FINANCIAL RESULTS MANAGEMENT REPORT
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FINANCIAL RESULTS to business devel
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FINANCIAL RESULTS ANALYSIS OF THE
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PUBLIC/PROJECT FINANCE MANAGEMENT R
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PUBLIC/PROJECT FINANCE WORLD LEADE
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PERSONAL FINANCIAL SERVICES MANAGEM
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ASSET MANAGEMENT MANAGEMENT REPORT
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INSURANCE SERVICES INSURANCE SERVIC
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INSURANCE SERVICES MANAGEMENT REPOR
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INVESTOR SERVICES MANAGEMENT REPORT
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TREASURY AND FINANCIAL MARKETS MANA
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GENERAL INFORMATION MANAGEMENT REPO
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CONSOLIDATED BALANCE SHEET 112 CONS
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CONSOLIDATED BALANCE SHEET ASSETS (
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CONSOLIDATED STATEMENT OF INCOME (i
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MINORITY INTERESTS Core Gains and l
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CONSOLIDATED CASH FLOW STATEMENT (i
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RAPPORT DE GESTION CONSOLIDATED FIN
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4.1.3. Currency risk 4.2. CREDIT RI
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Name Head Office % of Consolidation
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GEOGRAPHIC Eurozone (1) Rest of USA
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PORTFOLIO Number Loan Collateral Ex
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7. NOTES ON THE ASSETS OF THE CONSO
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B. Analysis of quality See note 7.1
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C. Treasury bills and other eligibl
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7.8. SECURITIES HELD TO MATURITY De
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7.10. TANGIBLE FIXED ASSETS A. Net
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7.11. INTANGIBLE ASSETS AND GOODWIL
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A. Other assets Analysis by nature
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Present value of finance lease liab
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8. NOTES ON THE LIABILITIES OF THE
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B. Analysis by maturity and interes
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Convertible non-subordinated debt D
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D. Provisions for pensions and othe
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H. Range of assumptions to determin
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9. OTHER NOTES ON THE CONSOLIDATED
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Deferred tax coming from assets of
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2. Change in profit sharing reserve
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B. Nonlife contracts B.1. Income an
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9.4. RELATED PARTIES TRANSACTIONS A
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The assets and liabilities disposed
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9.8. SHARE-BASED PAYMENTS STOCK OPT
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9.9. MINORITY INTERESTS - CORE EQUI
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Dec. 31, 2005 Dec. 31, 2006 Banking
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10. NOTES ON THE CONSOLIDATED OFF-B
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11.3. NET INCOME FROM ASSOCIATES De
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11.6. COMMISSION INCOME AND EXPENSE
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(AVERAGE FTE) France Belgium Luxemb
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11.14. IMPAIRMENT ON GOODWILL Nil.
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12. NOTES ON RISK EXPOSURE (IN MILL
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12.2. CREDIT RISKS EXPOSURE A. Anal
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12.3. INTEREST RATE REPRICING RISK:
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12.6. LIQUIDITY RISK: BREAKDOWN BY
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12.7. CURRENCY RISK As of Dec. 31,
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BALANCE SHEET 216 OFF-BALANCE SHEET
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BALANCE SHEET (before income approp
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STATEMENT OF INCOME (in thousands o
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3.2.5. Amounts receivable after mor
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4.2.6. Amounts receivable within on
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RAPPORT DE GESTION COMPTES CONSOLID
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4.6. STATEMENT OF FORMATION EXPENSE
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4.10. SHARE IN THE CAPITAL AND OTHE
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D. Commitments to issue shares Amou
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4.19. OTHER TAXES AND TAXES BORNE B
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6. SOCIAL REPORT 6.1. STATEMENT OF
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6.3. STATEMENT CONCERNING THE IMPLE
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• there have been no transactions
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DEXIA IN THE WORLD RAPPORT DE GESTI
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RAPPORT DE GESTION Kommunalkredit D
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Dexia’s Annual Report 2006 has be
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SDXI 0109-5 03-07
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Annual report 2006 - Dexia.com

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