Annual report 2010 - Dexia.com

Financial resultsPreliminary notes to the consolidatedfinancial statementsChanges in scope of consolidationIn 2009As from 1 April 2009, Dexia no longer consolidates theactivities of Financial Security Assurance Holdings Ltd, soldto Assured Guaranty Ltd. FSA Insurance’s result for the firstquarter 2009 is consolidated on a line-by-line basis and thenet result is offset in “Net income on investments”. The salewas completed on 1 July 2009.As from the fourth quarter 2009, Crédit du Nord is no longerincluded in Dexia’s consolidated financial statements pursuantto the agreement under which Société Générale buys Dexia’s20% stake in Crédit du Nord. The first nine-month result forCrédit du Nord is considered in Dexia’s annual result 2009.Simultaneously to this transaction Dexia purchased Crédit duNord’s 20% stake in Dexia Crédit Local de France Banque.As a result of this acquisition, Dexia controls 100% of DexiaCrédit Local de France Banque.On 9 December 2009, Dexia signed an agreement relating tothe sale of Dexia Épargne Pension to BNP Paribas Assurance.Following the signing of the agreement, Dexia ÉpargnePension was recorded in “Non current assets held for sale”and in “Liabilities included in disposal groups held for sale”as at 31 December 2009.In 2010Following its sale in April 2010, Dexia Épargne Pension left thescope of consolidation. Its results for the first three months of2010 have been consolidated.Dexia sold its 51% stake in AdInfo. AdInfo’s results for thefirst six months of 2010 have been consolidated.Analytical treatmentUnder the new segment reporting, introduced on 1 January2010, Dexia’s business was split into two divisions:• The Core Division, composed of the following businesslines:- Retail and Commercial Banking (segment 1);- Public and Wholesale Banking (segment 2);- Asset Management and Services, comprising the activities ofAsset Management (segment 3), Investor Services (segment 4)and Insurance (segment 5);- Group Center (segment 6).• The Legacy Portfolio Management Division (segment 7),which gathers the contributions of the bond portfolios in runoff(including the Financial Products portfolio) and the PWBrun-off commitments.Those segments can be defined as being components of Dexiathat engage in business activities from which the Group mayearn income and incur expenses. They are regularly reviewedin order to assess performance and to make resourceallocationdecisions.They are defined by using the management approach, whichmeans that they reflect Dexia’s internal organizational structureand are used by management to make business decisions.The Legacy Portfolio Management Division remains on thebalance sheet in a separate (non-core) unit with clearlyidentifiable and allocated funding. The State-guaranteedfunding is allocated to this division.Interests allocated from the Group Center to the otherbusiness lines and to the Legacy Division are now related tothe allocated equity which is:• the economic equity in the core business lines;• the normative equity (12.5% of the weighted risks) in theLegacy Division.“Return on allocated equity” measures the performance ofthe core business lines.“Tangible and intangible assets” are allocated to theGroup Center except when they are directly managed by acommercial or financial business line.Relations between business lines and especially betweencommercial business lines, the financial markets division and“production and service centre” departments are subject toanalytical transfers, governed by service level agreementsbased on normal commercial terms and market conditions.The results of each business line also include:• the commercial margin;• interest on economic capital: economic capital is allocatedto the business lines for internal purposes and the return oneconomic capital is used to measure the performance of eachbusiness line.Although Dexia’s business segments are managed on acentralized basis, geographical segments with an income(in absolute terms) above 10% have been defined forcompliance purposes. Geographic information is based onbooking centres, being the country of the company recordingthe transaction and not the country of the customers.More information on segment reporting is given in the note 3to the consolidated statements on page 144.Management reportConsolidatedfinancial statementsAdditional information Annual financial statementsAnnual report 2010 Dexia99