Annual report 2009 - Dexia.com

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Message from the ChairmenManagement reportConsolidatedfinancial statementsWhen we joined Dexia at the height of the crisis in October 2008, we set ourselves a single objective: to save the Group andto build a sustainable future for it. Together we made clear and precise undertakings, launching an in-depth transformation ofour company. Today our undertakings are essentially on track and, at the price of all the considerable work done by everyone,we are ahead of our initial schedule.We can be proud of what we have achieved. Last February, the progress we had made with our transformation plan wasaknowledged by the European Commission, which validated our restructuring plan.We had to deal with one urgent matter: to re-establish Dexia’s liquidity situation. The task is not yet completed but we haveexceeded our targets. One half of the medium and long-term funding programme, amounting to 46 billion euros in 2009,has been realised without calling on the State guarantee. This is an extremely encouraging sign for the return of the Group’sfunding autonomy, a sign which has led us to accelerate the schedule for exit from the guarantee on our funding. As at31 December 2009, we had disposed of 16.5 billion euros of bonds, with hardly any impact on our accounts. All of these elementsare reflected by a considerable reduction of our reliance on short-term funding.We also undertook with regard to the Board of Directors to reduce our exposure to the United States with the disposal of ourcredit enhancement subsidiary FSA. The task was completed on 1 July last, when we finally disposed of 400 billion dollars ofexposure to the US market. The Financial Products portfolio which we retain after the sale of FSA has been placed in run-offand benefits from a guarantee granted by the Belgian and French States.Within the context of close consultation and with every respect for our social partners, we are continuing to implement thetransformation plan with one guiding thought: our organisation must increase its efficiency, it must be oriented towards theneeds of our clients and it must adapt to fiercer competition on all of our historical markets.We have refocused the activity in our core business lines.Annual financial statementsAdditional informationFirst of all, we focused on Retail and Commercial Banking, which posted an excellent operational performance in 2009. Therevival of deposit collection, which enabled us to collect more than eight billion euros more in 2009, is proof of the dynamismof all teams and the work we do with our clients on a daily basis. We also recorded excellent performances in Turkey.Then we redefined the framework of our Public and Wholesale Banking business line. We refocused our activity on our historicalmarkets and were able to defend our core client franchises whilst containing use of our balance sheet, and that constitutesa real success.So a great deal has been done in 2009, thanks to the commitment and support of everyone, members of staff, shareholdersand clients. And the Group’s renewed profitability over four consecutive quarters is the proof that we are going in theright direction. In 2009 we realised a net profit of 1,010 million euros, compared to a loss of 3,326 million euros in 2008.We want shareholders to benefit from this result by a distribution of new shares for an amount equivalent to approximately350 million euros.However, both the banking system and Dexia will evolve in 2010 in a persistently uncertain and difficult environment. Morethan ever, the transformation will put a strain on each of us. And the momentum we have gained must not only be maintainedbut accelerated, in accordance with the agreement with the European Commission. Relying above all on our own strengths,we will do all in our power to assist our clients without faltering whilst relentlessly improving our operational excellence.These are the conditions that will allow us to build the future of Dexia.Building a sustainable future is first of all a matter of regaining our total funding autonomy. That is our collective challenge:to free ourselves from the guarantee of the French, Belgian and Luxembourg States on all of our funding by the end of June2010.8Dexia Annual report 2009
In accordance with the agreement with the European Commission, we must continue to improve our liquidity profile. Wehave undertaken to reduce the size of our balance sheet by 35 % between 2008 and 2014. We will also reduce our relianceon short-term funding, which will represent approximately 10% of the balance-sheet total in 2014. Finally, our funding willbe longer term, and of better quality, based on deposits and on bonds issued by our three covered bond issuers with wellestablishedfranchises.Market conditions and competition are changing, and we must find the means to adapt to them. In our Retail and CommercialBanking activities, the implementation of the new distribution model remains a priority, to modernise and to give momentumto our network of branches in Belgium. We also want to optimise our wealth management capacities and our client base inLuxembourg, and to capitalise on the strong commercial impetus in Turkey. In our Public and Wholesale Banking activities, asa historical partner to local authorities in France and in Belgium, we will do all we can to accompany our clients in their newinitiatives, whilst protecting the Group’s profitability.In order to ensure even better visibility of our core business lines, we have decided to place our portfolios in run-off (includingthe Financial Products portfolio) as well as certain non-core public sector loans in a specific division. The assets of this “LegacyDivision” will remain on the Group balance sheet but they will benefit from clearly allocated funding.The feeling we shared in October 2008 was that Dexia, refocused on what is essential, had a sustainable future. The path wetook and each milestone we passed over the last year have transformed that feeling into deeply-held belief. The progress wehave made has been acknowledged by the European Commission. Supported by these results and thanks to the mobilisationof everyone, members of staff, shareholders and clients, we will continue to building a better outlook for Dexia.Annual financial statementsManagement reportConsolidatedfinancial statementsJean-Luc DehaeneChairmanof the Board of DirectorsPierre MarianiChief Executive OfficerAdditional informationAnnual report 2009 Dexia 9
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Risk managementAsset qualityBy the
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Risk managementThis good performanc
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Risk managementECONOMIC CAPITALBY T
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Financial resultsPreliminary notes
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Financial resultsSolvency31/12/08 3
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General information3. Overview of t
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Dexia’s annual report 2009 has be
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Annual report 2009 - Dexia.com

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