Annual report 2005 - Dexia.com

DexiaActivity portfolio – Business model – Strategy2005. Dexia is in the sixth highest positionamong the mandated arrangers of GlobalProject Finance loans, and in first positionamong the mandated arrangers of Global“Public/Private” Project finance loans (PPP).• In terms of international development,Dexia’s presence has been dramaticallyenlarged, to a large extent in the United Statesfollowing the acquisition of FSA in 2000,and also through several moves in Europeancountries, and more recently in Canada,Mexico and Japan. The Group has constructedits presence in various ways, either throughbranches, wholly-owned subsidiaries or jointventures.• In Personal Financial Services, Dexia Bankis today one of the four largest universalbanks in Belgium, as is Dexia BIL inLuxembourg, with significant market sharesin asset-gathering activities – particularlywith affluent and private banking customers– and increasing activity in lending products.• In the financial markets, the marriageof the two institutions has given Dexia aconsiderably greater visibility: the Group isone of the largest private issuers of long-termbonds and one of the very large counterpartsin interest rate derivatives. The growingsophistication of the products offered toclients has developed a substantial businessflow and revenue base for the Group.• Initially established to supportthe commercial efforts of Dexia in its twomain markets, some specialist subsidiarieshave been successfully developed in the areasof Asset Management and Insurance Services.Their products show good performancesand are sold both in the proprietarydistribution networks of the Group andthrough third party channels. In the area offund administration, Dexia has constructeda strong franchise in Europe which hasrecently been brought to a joint venture withthe Royal Bank of Canada to form RBC DexiaInvestor Services. This young company holdsa very high position among global institutionsoffering custodian and fund administrationservices.The Dexia business model is today muchlike that of its European peers, with a spreadof contributions from retail networks,institutional clientele, and the capital marketsand specialist activities. Being a bank, Dexiaworks on the strengths of its four millionclient base in Belgium and Luxembourg andenjoys a good market share owing to its “stateof the art” products and services.But Dexia is also a unique player inthe financial services industry, because it is theworld leader in Public/Project Finance. In thisarea, its business model is in fact a combinationof several business models: it can be a “retail”approach – as in Belgium, where the completerange of services is offered to local authorities –it can also be a “wholesale/investment banking”approach – as executed in France, Italy or theUnited States – where only some products orservices, with high added value, are offered toselected segments of the market. This capacityto execute the business in different ways hasgiven Dexia a major competitive advantage inthe deployment of its international strategy.For instance, Dexia has established successfullyin Spain and Austria by establishing a joint,highly specialized, public finance subsidiarywith a local retail bank which operates onthe local market. In other cases, followingan acquisition, Dexia wholly or partly ownsa company conducting specialist activities(e.g. Dexia Crediop in Italy; FSA, a US majorin the credit enhancement of municipalbonds; or Dexia Kommunalbank Deutschland– formerly Dexia Hypothekenbank Berlin18