Annual report 2010 - Dexia.com

Declaration of corporate governanceManagement reportConsolidatedfinancial statementsAdditional information Annual financial statementsThe new rules on the prevention of insider dealing in Dexiafinancial instruments approved at the end of 2009 weretransposed at the beginning of 2010. These rules define thestatus attributed to members of staff in relation to the accessto inside/sensitive information which they have or are likelyto have in performing their tasks, and fix the restrictions/obligations associated with each status.The Code of Professional Ethics was revised and trainingcourses were organised for members of staff of DexiaSA in order to remind them of key principles in terms ofcompliance. The new Code of Professional Ethics is graduallybeing transposed within the entities of the Group.The definition of a consistent control plan over all Groupentities began in 2010. The aim of the exercise is to ensurethe application of policies, guidelines and procedures, ifnecessary to trace malfunctions and to implement correctiveactions in order to allow better guiding of the support line.The review and finalisation of compliance monitoring controlsat Dexia SA level were performed in consultation with thePermanent Control team.The third edition of the compliance risk map was launchedin 2010. The results of the map will be presented jointly withthe action plans attributed to each major risk. The actionplans will be monitored to check their implementation andsynergy work has begun with Compliance monitoring in orderto identify and deal best with the controls of the monitoringplan corresponding to the major risks of the map.The Legal, Compliance and Tax support line wishes to havea single IT tool allowing centralised guiding as well astransversal management of its processes and activities. Thework of analysis in this direction began at the end of 2009and continued in 2010.The needs of the Compliance support line currently coveredby the e-Room collaborative tool will be included in the newsoftware.The quarterly consolidated MiFID report put in place in 2009continues to be produced. The year 2010 saw the scopeof MiFID monitoring extended gradually into the entitiesconcerned with MiFID.This report contains the indicators and results of testsintended to measure the performance of procedures inrelation to the European MiFID Directive. It is produced byDexia SA on the basis of reports from the different entitiessubject to that Directive as well as on the basis of exchangesand discussions between the Dexia Group and the mainentities. Once validated, the final report is presented by theChief Compliance Officer to the Internal Audit CoordinationCommittee.Concrete actions are put in place gradually in order to improvethe supervision of subsidiaries and branches.Each main entity has the responsibility of organising contactswith its own network of subsidiaries.So Dexia SA Compliance maintains close relations with theentities reporting directly to it and with the main entities.Deployment to the entire Group of the Permanent Controlsupport line, decided by the Internal Control CoordinationCommittee in November 2009 continued in 2010. Thissupport line ensures monitoring of the Group PermanentControl.The global governance structure of that support line revolvesaround three pillars:• the monitoring function within Dexia SA which isresponsible for definition of the methodology, guidelines andreporting, definition of the Group Permanent Control planand its consolidation;• heads of Permanent Control in the Risk, Back Office TFMand IT Security support lines (as well as Compliance) whichsee to the application of Group guidelines in each entity forthe support line;• heads of Permanent Control in the entities which arethe guarantors of application, within their entity, of themethodology, references and procedures of the Group.Permanent Control Managers of the entities report to theGroup Head of Permanent Control and, with a few exceptions,operationally to the Head of Operational Risk of their entity.A statement of progress in deploying the support line ispresented regularly to the Internal Control CoordinationCommittee. The gradual establishment of the team at DexiaSA and entity level gave an assurance of the dissemination ofstandards, implementation of governance of the support lineand entities over which Permanent Control is being deployed.The inventory of controls is currently being established and themonitoring of those controls will be developed over 2011.Characteristics of internal controlwithin the context of producingfinancial informationThe Finance support line has the following five departments,reporting to the Chief Financial Officer, member of theManagement Board:• Financial Management, including transversal services to theFinance Capital & Structuring, Finance Project Management,Finance Control & Finance Prudential Watch support line;• Accounting and Consolidation;• Strategic Planning and Controlling;• Balance Sheet Management (BSM);• Financial Communication.Dexia’s scope of consolidation includes the following directsubsidiaries, also known as the operational entities:• Dexia Bank Belgium SA;• Dexia Crédit local SA;• Dexia Banque Internationale à Luxembourg SA;and the following subsidiaries:• Dexia Holdings Inc. (holding company of Dexia FinancialProducts);• Dexia Participation Belgique SA (holding company holdingDenizBank);• Dexia Nederland BV (result of the merger of Dexia NederlandHolding SA and Dexia Bank Nederland);• Associated Dexia Technology Services SA;• Dexia Management Services Ltd;• Dexia Participation Luxembourg SA;• Dexia Funding Luxembourg SA.58 Dexia Annual report 2010