Annual report 2009 - Dexia.com

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Notes to the annual fi nancial statementsManagement reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationpay the permanent establishment their contribution to the taxconsolidation group’s payment of corporation tax. For the year2009, payments made in advance by subsidiaries exceed theestimated tax due from them to the head of the Group, so on31 December 2009 the permanent establishment had a debt ofEUR 3.9 million to subsidiary companies involved In French taxconsolidation.The debt due to the French and Belgian governments ascommission on the guarantee granted to Dexia SA (cf. note4.4.6.) for the period from 30 June to 30 December 2009 isEUR 58 million.The balance of dividends remaining to be paid for previousfinancial years is EUR 101.3 million.The remaining balance of EUR 0.8 million is related to othervarious liabilities, including EUR 0.7 million due to otherGroup companies.4.3.8. ACCRUED CHARGES AND DEFERREDINCOMEThis item is composed exclusively of expenses to be accruedas follows:• financial charges on a currency and interest swap(EUR 3.1 million);• financial charges linked to loans due with Group companies(EUR 8.7 million);• pro rata operating expenditures attributable to the 2009fiscal year (EUR 1.4 million).4.4. Off-balance-sheet items –commitmentsDexia SA has significant commitments that are recorded offbalancesheet:4.4.1. On 2 November 2006, Dexia SA issued a subordinatedguarantee within the context of a subordinated“hybrid Tier 1” issue by Dexia Funding Luxembourg SA(DFL), a 100% subsidiary of Dexia SA (perpetual noncumulativesecurities at a guaranteed fixed/floating rate,for a global amount of EUR 500 million). This subordinatedguarantee was issued in favour of the security holders whosubscribed to the said securities and cover the payment byDFL of (i) any coupon which has not been waived in accordancewith the issue conditions and (ii) the redemptionprice in the case of the liquidation or insolvency of DFL (orsimilar situations) or (iii) the redemption price in the caseof redemption in accordance with the issue conditions.4.4.2. The acquisition of the American group FinancialSecurity Assurance was partly financed through a currencyand interest rate swap contract signed with Dexia CréditLocal in the amount of USD 134.2 million (EUR 93.2 millionas at 31 December 2009) against EUR 141.2 million. The riskassociated with that swap was hedged by a reverse contractproviding for the purchase of USD 134.2 million forward foran amount of EUR 97.8 million.4.4.3. As at 31 December 2009, the number of stockoptions granted and not yet exercised stood at 71,242,718.On the basis of the strike prices, this operation results in anoff-balance-sheet commitment of EUR 1,142 million.4.4.4. On 18 May 2005, Dexia SA purchased 100% of theshares of Dexia Nederland Holding NV from Dexia Financière SAon the basis of a valuation made of these at EUR 93 millionsubject to a return to better fortune clause granted to DexiaBIL and Dexia Bank, also shareholders of Dexia Financière,for the case where the value of Dexia Nederland Holding,including the DBnl holding, should be revised upwards as aconsequence of decisions in favour of DBnl.4.4.5. On 5 December 2002, Dexia SA undertook vis-à-vis itssubsidiary Dexia Bank Nederland NV and each of the entitieswhich will result from the demerger of Dexia Bank Nederland,excluding any other entity, to ensure that Dexia Bank Nederlandor the entities are at any time in a position to fulfil theircommitments vis-à-vis third parties and to continue their activities,including the maintenance of their relations with accountholders and other clients; in particular, the aim of this undertakingwas to prevent third parties being prejudiced by thedemerger of Dexia Bank Nederland. The amendment or withdrawalof this undertaking was subject to prior agreement fromDNB (De Nederlandsche Bank). The sale of Kempen & Co NVto a group of financial investors and management was finalisedon 15 November 2004. Within the context of this sale,Dexia SA reconfirmed by letter dated the same day its undertakingvis-à-vis Dexia Bank Nederland, which remains a 100%subsidiary of Dexia to the exclusion of any other entity. Inaddition to the usual guarantees given to purchasers to whichDexia SA is also bound, Dexia SA will indemnify Kempen &Co against the risks relating to share leasing contracts sold byDexia Bank Nederland NV, formerly Labouchere, and undertakesto compensate Kempen & Co for damage resulting froma limited and identified number of elements.4.4.6. TRANSACTIONS WITH THE BELGIANAND FRENCH STATES3 October 2008 capital increase and resultingshareholdingsOn 3 October 2008, the Belgian federal State, the Flemishand Walloon Regions, the Brussels-Capital Region and theFrench State, together with the historical reference shareholders(Holding Communal, Arcofin, Ethias, the Caisse desDépôts et Consignations and CNP Assurances), subscribed fora capital increase of Dexia in an amount of EUR 6 billion.The capital increase was subscribed for in the followingproportion:• the Belgian federal State, through the Federal Holding andInvestment Company, invested EUR 1 billion;• the three Belgian Regions invested a total amount ofEUR 1 billion (EUR 500 million by the Flemish Region, EUR350 million by the Walloon Region, and EUR 150 million bythe Brussels-Capital Region);• the French State, through the Société de Prise de Participationde l’Etat, invested EUR 1 billion;• the Caisse des Dépôts et Consignations and CNP Assurancesinvested EUR 2 billion; and224Dexia Annual report 2009
Notes to the annual fi nancial statements• the other reference shareholders invested a total amountof EUR 1 billion (EUR 500 million by the Holding Communal,EUR 350 million by Arcofin, and EUR 150 million by Ethias).This capital increase resulted in a shareholding of 5.73% forthe Belgian federal State, 5.73% for the French State, 2.87%for the Flemish Region, 2.01% for the Walloon Region and0.86% for the Brussels-Capital Region. (the total participationof the three regions amounts to 5.73%).Guarantee mechanism in favour of Dexia’sfinancingOn 9 December 2008, the French, Belgian and LuxembourgStates and Dexia entered into a First Demand GuaranteeAgreement implementing the principles set forth in the Protocolof 9 October 2008 between the three States and Dexia.Pursuant to this guarantee agreement, the three States guaranteeseverally, but not jointly, the performance by DexiaSA, Dexia Banque Internationale à Luxembourg, Dexia BankBelgium and Dexia Crédit Local (including certain of theirbranches and issuance vehicles) of their repayment obligationsresulting from certain financings provided by centralbanks, credit institutions and other institutional or professionalinvestors, provided that these financings were contractedor issued between 9 October 2008 and 31 October2009 and maturing at the latest on 31 October 2011.The States guarantee the repayment obligations in the followingproportion:(i) 60.5% for the Belgian State;(ii) 36.5% for the French State; and(iii) 3.0% for the Luxembourg State.To supplement the Guarantee Agreement on operational andprocedural aspects, the three States and Dexia have enteredinto an Operational Memorandum. This memorandum provides,among other things, for a monitoring process of the guaranteedfinancings on a daily basis, including a daily publication ofthe aggregate guaranteed amount and, with respect to guaranteedbond issues of Dexia, a system of eligibility certificateswhereby the States issue, on Dexia’s request, certificates confirmingfor each bond issue that it is covered by the GuaranteeAgreement.On 19 November 2008, the European Commission authorisedthis guarantee mechanism for a period of 6 months asfrom 3 October 2008, with an automatic extension until theCommission’s definitive decision, on condition that a restructuringplan be filed with the Commission. In March 2009,the three States confirmed the extension of the guarantee inaccordance with the decision of the European Commission of13 March 2009.By an Addendum to the above-mentioned Guarantee Agreementof 9 December 2008, dated 14 October 2009, the Belgian,French and Luxembourg States and Dexia agreed to renewthe guarantee scheme for a period of one year, covering financingscontracted or issued at the latest on 31 October 2010. Theparties also wished to effect certain changes to the guaranteein order to limit the States’ intervention to a strict minimum andto allow an orderly exit out of the guarantee within a credibletime-horizon. The changes include:(i) the decrease of the maximum of the total amount of guaranteedfinancings from EUR 150 billion to EUR 100 billion, with acommitment by Dexia to undertake its best efforts to limit thisamount to EUR 80 billion;(ii) the extension to 4 years of the maximum duration of thenew financings contracted or issued; and(iii) the waiver by Dexia of the benefit of the guarantee, as from16 October 2009, for all new contracts with a maturity of lessthan one month and all contracts with an indefinite term.The Guarantee Agreements provided for the following remunerationto be paid by Dexia to the States:(i) for financings with a maturity of less than 12 months:50 bps on an annual basis calculated on the average amountguaranteed financings outstanding; and(ii) for financings with a maturity of 12 months or more:50 bps on an annual basis, increased by the lowest of (i) themedian of the Dexia CDS 5 years spread calculated between1 January 2007 and 31 August 2008 or (ii) the median of the5 years CDS spreads of all credit institutions with a long-termcredit rating equivalent to that of Dexia, calculated on theaverage amount guaranteed financings outstanding.The renewal and modifications as provided for in the Addendumof 14 October 2009 have been duly authorised by aninterim decision of the European Commission for a period of4 months as from 30 October 2009 (i.e., until 28 February2010) or until the final decision – if such decision is adoptedprior to 28 February 2010 – of the European Commission inthe context of the State aid procedure opened on 13 March2009.By separate agreement dated 17 March 2010, the Belgian,French and Luxembourg States and Dexia amended and supplementedthe above-mentioned Addendum to the GuaranteeAgreement of 14 October 2009 to reflect the terms ofthe final decision of the European Commission in the contextof the State aid procedure of 26 February 2009.The changes include:(i) advancing the latest issue date for guaranteed financingsto 31 May 2010 (for financings with a maturity of less than12 months) resp. 30 June 2010 (for financings with a maturityof than 12 months);(ii) advancing the expiry date of the guarantee on deposits(and equivalents) to 1 March 2010;(iii) a gradual increase of the remuneration payable by Dexia,pro rata temporis, if the outstanding amount of repaymentobligations guaranteed by the States exceeds certain thresholds(by 50bps if and to the extent the amount exceeds EUR60 billion but not higher than 70 billion, 65bps if and tothe extent the amount exceeds EUR 70 billion but not higherthan 80 billion, and 80 bps above 80 billion).As at 31 December 2009, the total outstanding amount ofrepayment obligations guaranteed by the States was EUR 50 billionand Dexia had paid a total remuneration of EUR 432 millionto the States for this guarantee.All the above mentioned agreements, as well as the total outstandingamount of guaranteed repayment obligations andthe list of securities for which the States have issued eligibilitycertificates are available on the website www.dexia.com.Management reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationAnnual report 2009 Dexia 225
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Group profi leSIMPLIFIED GROUP STRU
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Group profi leQUALITY OF RISKS Dexi
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In accordance with the agreement wi
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2009 and early 2010 highlightsExit
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Corporate governanceIntroduction: t
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Corporate governanceThe European Ad
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Corporate governanceNAMEPIERREMARIA
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Shareholder informationStock market
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Human resourcesAGE PYRAMID> 5955-59
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Sustainable developmentThe 2009 Dex
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Risk managementIntroductionIn 2009,
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Risk managementThe Rating Committee
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Risk managementAsset qualityBy the
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Risk managementBond portfolioDexia
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Risk managementRisk and control sel
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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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Annual report 2009 - Dexia.com

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