Annual report 2006 - Dexia.com

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SUSTAINABLE DEVELOPMENT SUSTAINABLE DEVELOPMENT Our commitments and our achievements • Our shareholders: performance and responsibility • Our clients: innovation and quality relations • Our members of staff: personal support and development • Society: citizen commitment and transparency MANAGEMENT REPORT Appendices • 2007 Calendar of Dexia Group sustainable development actions • Reporting indicators • Application of the Global Reporting Initiative and the New Economic Regulations (France) • Application of the principles of the Global Compact and the Unep-Fi • Questions frequently asked by society • External audit opinion • Glossary • Continuing dialogue • Legal information and contacts COMPTES CONSOLIDÉS COMPTES SOCIAUX THE DEXIA SUSTAINABLE DEVELOPMENT REPORT 2006 A new format for the report Within the context of its “corporate environmental responsibility” action plan, the Dexia Group has undertaken to reduce the global consumption of paper per Group member of staff by 2010 compared to their consumption in 2006. For its 2006 report, Dexia has chosen to limit paper copies and to favor an on-line version on its website www.dexia.com. The 2006 Dexia sustainable development report is also available on CD-ROM. Main subjects dealt with in the Sustainable Development Report 2006 Dexia: one group, one strategy, one culture • Our vision • Our missions and our values • Our commitments Sustainable development: a process integrated into the Group’s strategy • The integration of sustainable development into the Group’s organization • Our actions in 2006 • The Sustainable Development Report 2006 The fight against climate change at the heart of the Dexia Group sustainable development strategy To ensure that its direct environmental impacts are managed responsibly, the Dexia Group has set the fight against climate change at the heart of its sustainable development strategy. An original strategy of carbon neutrality In 2007 the Dexia Group will follow a carbon neutral policy combining the reduction and offsetting of its CO 2 emissions. • The Group strategy is aimed at neutralizing the majority of its 2006 emissions associated with energy consumption and professional journeys undertaken by members of staff, or approximately 35,000 tons of CO 2 . • This revolves around two projects linked to Dexia activity in the two countries in which it is historically established, namely France and Belgium. – Reduction of CO 2 emissions: investment in a renewable energy project and the acquisition of green electricity. – Offsetting the non-reducible emissions quota. To learn more about the Group’s offsetting policy and the projects retained: www.dexia.com. 62 | Dexia / Annual Report 2006
RISK MANAGEMENT RISK MANAGEMENT MAJOR PROJECTS IN 2006 The main achievement of the year 2006 was the continuation of the effort allowing to implement the required methodologies and procedure in relation to the advanced approach of Basel II, leading the Group at the end of 2006 to present the regulators with a complete application file for the advanced approach. After validation by the regulators, this should allow Dexia to implement the full internal rating-based approach (IRBA) approach from January 1, 2008. CREDIT RISKS ORGANIZATION Risk Management Group (RMG) oversees Dexia’s risk policy under the guidance of Dexia’s Management Board or specialized risk committees. It sets Group guidelines on limits and delegations, sets and manages the risk surveillance function and decision processes and implements Group-wide risk assessment methods for each of Dexia’s activities and operating entities (Dexia Crédit Local, Dexia Bank Belgium, Dexia Banque Internationale à Luxembourg, DenizBank). The organization of all risk committees has been completely reviewed in 2006, in particular to reflect the new Group governance and to adjust to Basel II requirements. Several specialized committees dealing with risk management exist at Group level. The two main ones are: • the Risk Policy Committee which defines the Group’s risk profile and risk guidelines; • the Management Credit Committee which rules on questions that are beyond the scope of the delegations granted to business lines or entities. In general, all limits are set directly by the Management Board, but delegations are also given to specific committees to oversee the risks of specialized portfolios (i.e. Credit Spread Portfolio...). DEXIA’S CONSOLIDATED EXPOSURE AS OF DECEMBER 31, 2006 The credit exposure evaluation rules are in point 4.2. of the note 1 “Accounting principles and rules of the consolidated financial statements“ on page 134. Exposure by category of counterpart The Group’s total exposure increased to EUR 794.3 billion as of December 31, 2006, against EUR 742 billion one year earlier (increase of 7.0%). The mix of counterpart in Dexia’s portfolio is very stable. Half of the exposure is on the local public sector (EUR 396.4 billion, up 5.6% compared to year-end 2005). G F E D C H I A BREAKDOWN OF DEXIA EXPOSURE BY CATEGORY OF COUNTERPART (AS OF DECEMBER 31, 2006) CONSOLIDATED EXPOSURE: EUR 794.3 BILLION B MANAGEMENT REPORT COMPTES CONSOLIDÉS COMPTES SOCIAUX A CENTRAL GOVERNMENTS 7.1% B LOCAL PUBLIC SECTOR 49.9% C CORPORATE 4.6% D MONOLINE 2.2% E ABS/MBS 16.2% F PROJECT FINANCE 2.5% G INDIVIDUALS, PROFESSIONALS, SELF-EMPLOYED, SMEs 4.6% H FINANCIAL INSTITUTIONS 12.4% I OTHER 0.5% Dexia / Annual Report 2006 | 63
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no achievement without commitment
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FINANCIAL HIGHLIGHTS 4 MESSAGE FROM
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FINANCIAL HIGHLIGHTS FINANCIAL HIGH
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MESSAGE FROM THE CHAIRMEN MESSAGE F
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MESSAGE FROM THE CHAIRMEN MESSAGE F
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GROUP PRESENTATION GROUP PRESENTATI
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Page 28 and 29: CORPORATE GOVERNANCE Dexia’s comp
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Page 58 and 59: HUMAN RESOURCES HUMAN RESOURCES Dex
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Page 72 and 73: FINANCIAL RESULTS MANAGEMENT REPORT
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Page 112 and 113: 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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