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1 Annual report 2008

2 ANNUAL REPORT 2008

3 Sommaire 2008 Chairman's message 3 GROUP PROFILE 4 General presentation 7 Board of Directors of Confédération nationale du Crédit Mutuel 8 CRÉDIT MUTUEL, THE MUTUAL BANK 10 A decentralised structure 14 Membership structure and governance 16 Fondation du Crédit Mutuel 20 Banking for all members of society 24 RESULTS AND KEY FIGURES 26 BANKINSURANCE 34 France's second-largest retail bank 38 A major retail bank 40 The leading bank for non-profit associations 44 Number two for SMEs 46 The challenger in the farming sector 48 A technological lead 49 Retail banking subsidiaries 52 Insurance 54 OTHER ACTIVITIES 58 Corporate and investment banking 60 Asset management and private banking 62 Technological services 65 FINANCIAL REPORT 68 Board of Directors' management report 72 Financial statements 100 Independent Auditor s report 162

4 Chairman s Message A year to remember The year 2008, which marked a watershed for the world s economic and financial system, saw Crédit Mutuel move forward yet further with its development strategy. Against the backdrop of a crisis of unprecedented scale, which inevitably had a strong impact on the year s results, the group once again showed dynamism, responsiveness and resilience. An expert bankinsurer for 30 years now, it consolidated its position as France s second largest retail bank. Always attentive and responsive to its customer members, it continues to innovate to cater to their needs with tailored products and services. One such service is its mobile telephony offer, designed in preparation for the major changes on the horizon for this technology, and a first in the banking sector. With 25 billion in shareholders equity and a solvency ratio and ratings that place it among the most highly ranked institutions, it can count on the trust of its customer members. According to a recent Bearing Point TNS Sofres survey, which ranked Crédit Mutuel as one of the leading banks for customer relations, it enjoys the absolute confidence of 94% of its customers. New interfederation partnerships and shared tools have enabled it to enhance its range of products and services while keeping its costs under control. In 2008, the group acquired both Citibank Deutschland with a network of 340 branches and 3.3 million clients in Germany and Cofidis, the 3 Suisses subsidiary with operations in around ten European countries, as well as expanding its insurance activity abroad, particularly in Spain. Ten years after the acquisition of CIC, these developments pave the way for a new period of growth for the group by diversifying its businesses and positioning it on new, upcoming markets. By constantly adapting and growing, Crédit Mutuel remains true to its mission of serving its customer members and to its distinctive economic and social model. Today s demand for commitment, transparency and responsible solidarity is met through a local presence based on the group s dense network of 5,600 points of sale, local mutual banks and CIC branches, as well as through remote banking services. Other strengths include customer members effective participation in shareholder meetings, the democratic governance ensured by their election of the bank s directors, and the ongoing commitment to mutualist values, ethics and compliance. It is during periods of crisis that mutualist values come into their own, and there is no better upholder of these values than Crédit Mutuel. Etienne Pflimlin Rapport annuel

5 Group profile The Crédit Mutuel group, which is France's second-largest retail bank, comprises the Crédit Mutuel network and its subsidiaries, including CIC. The group offers a comprehensive range of financial expertise to its 18.7 million customers, including 17.1 million retail customers. Its overriding priority, and the key to its success, is the quality of its customer relationships and services. Its strategy is aimed at achieving controlled growth centred on high-street retail banking, bankinsurance and technological excellence The group focuses on strong neighbourhood customer relationships, combining the strengths of Crédit Mutuel a cooperative, mutual bank with strong regional and local ties - with those of CIC, a commercial bank taken over by Crédit Mutuel Centre Est Europe through Banque Fédérative du Crédit Mutuel in Along with the outlets of 2008 acquisitions Citibank Deutschland and CIC Iberbanco, Crédit Mutuel and CIC have a network of more than 5,600 points of sale. Crédit Mutuel is composed of local mutual banks organised into 18 regional federations, which in turn belong to Conféderation nationale du Crédit Mutuel, the central body that heads the network. The Crédit Mutuel Group comprises the Crédit Mutuel network and subsidiaries, including CIC CIC operates a branch network in the Paris region and is the holding company for a group of five regional banks, insurance subsidiaries and specialised financial subsidiaries in France and abroad. 4 Crédit Mutuel

6 A high street retail bank With a strong presence in retail banking and insurance, Crédit Mutuel plays a key role in financing the economy, providing a comprehensive range of financial services to retail customers, local professionals and businesses of all sizes. In France, it has a 12.1% market share in deposits and 16.9% share in bank loans. It is the leading French bank in non-life insurance and fourth in life insurance. Its insurance subsidiaries manage 26.6 million contracts comprising life savings products, as well as motor, home, health, personal and retirement insurance, for nearly 11 million policyholders. It is number two in France in home loans and Europe s fourth-largest consumer credit provider. It is the leading bank for non-profit associations, the second largest for the farming sector and provides banking services to one out of every three self-employed professionals. Its customer base includes more than fifty of the top one hundred French businesses. Leading the way in banking technology The branch network is supported by a comprehensive multi-channel banking offer featuring cutting-edge functionalities. In 2008, remote banking clocked up 370 million contacts, 90% of them via the Internet. A 12.1% market share in deposits A 16.9% market share in bank loans The group is gaining prominence in upcoming fields such as mobile telephony, which provides another channel for bankinsurance, services and electronic payments. This new strategic direction broadens the group s know-how and expertise, adding highly innovative services that confirm its leadership position. It ranks number two in France in electronic payments, with a 20.7% share of the overall market and a share of more than 26.5% among retailers Annual Report 5

7 A solid, highly rated bank The crisis has not affected the group s solidity, and its 9.8% Tier 1 ratio makes it one of the best-performing French banking groups. While the average bank rating has fallen to A+, the group continues to be rated as a high-quality issuer. Crédit Mutuel and CIC are rated A-1/A+ with a stable outlook by Standard & Poor s, while Banque Fédérative du Crédit Mutuel (holding company for the Centre Est Europe group and a direct shareholder of CIC) has an Aa3 rating from Moody s and AA- from Fitch. A bank with an international presence Crédit Mutuel has international operations, mainly in financing, insurance and electronic payments, enabling it to serve its customers wherever they happen to be. The group is present, notably, in Europe (Germany, Belgium, United Kingdom, Luxembourg and Switzerland), North Africa (Morocco and Tunisia), the United States (New York) and Asia (Hong Kong and Singapore). CIC's three foreign branches in London, New York and Singapore and representative offices have strengthened Crédit Mutuel's international network by around 40 outlets. The group has strategic partnerships in Italy with Banca Popolare di Milano, in North Africa with Banque Marocaine du Commerce Extérieur and Banque de Tunisie, and in China with Bank of East Asia. An expanding bank In 2008, Crédit Mutuel realised a number of major strategic goals in France and abroad. In acquiring Citibank Deutschland, it affirmed its European development strategy in the various retail banking fields consumer credit in particular and in insurance and international financial services. The group s acquisition of a controlling interest in Cofidis gives it a firm foothold in the European consumer credit market, where it now ranks fourth. The creation of RACC Seguros, a joint holding of Assurances du Crédit Mutuel (ACM) and Royal Automobile Club de Catalogne, has strengthened the group s Spanish insurance division. Crédit Mutuel also acquired Banco Popular Español s French subsidiary, renamed CIC Iberbanco, and is negotiating a commercial cooperation agreement with this group. Ten years after the takeover of CIC, this controlled development opens up new avenues of growth for the group and confirms its position as a major player in the banking market both in France and elsewhere in Europe Crédit Mutuel

8 Business profile 2008 Net banking income: 8.4 billion Net profit, group share: 440 million Shareholders equity: 24.7 billion Tier 1 ratio: 9.8% 5,169 points of sale* 65,545 employees 18.7 million customers Customers' deposits amounting to billion Loans amounting to billion The no. 2 retail bank in France 16.9% market share in loans 12.1% market share in deposits No. 1 bankinsurer in non-life No. 1 bank for non-profit associations and works councils No. 2 bank in housing loans No. 2 bank for the SME sector No. 2 bank in electronic banking No. 2 bank for the farming sector No. 4 bankinsurer in life insurance No. 5 bank in bank factoring No. 4 in European consumer credit A high-quality issuer Standard & Poor s : A-1/A+ with a stable outlook for both Crédit Mutuel and CIC Fitch : AA- /F1+ with a stable outlook for BFCM and CIC Moody s : Aa3/P-1 with a positive outlook for BFCM and CIC * The figures relating to points of sale, employees, customers, customer deposits and loans take account of Citibank Deutschland and Banco Popular France, which was renamed CIC Iberbanco in Annual Report 7

9 Board of Directors of Confédération Nationale du Crédit Mutuel at 30 June 2009 Bureau Chairman Etienne Pflimlin, Chairman of Crédit Mutuel Centre Est Europe Deputy Chairman Georges Coudray, Honorary chairman of Crédit Mutuel Bretagne Vice-Chairman Christian Péron, Chairman of Crédit Mutuel Agricole et Rural Chief Financial Officer Philippe Vasseur, Chairman of Crédit Mutuel Nord Europe Group Secretary Pierre Filliger, Chairman of Crédit Mutuel Méditerranéen Other members of the bureau Pierre Arrivé, Representative of Crédit Mutuel Océan Michel Bokarius, Director of Crédit Mutuel Centre Est Europe Gérard Bontoux, Chairman of Crédit Mutuel Midi-Atlantique Jean-Pierre Denis Chairman of Crédit Mutuel Bretagne François Duret, Chairman of Crédit Mutuel Centre Alain Fradin, Deputy General Manager of Caisse Fédérale Centre Est Europe Alain Têtedoie, Chairman of Crédit Mutuel Loire-Atlantique et Centre-Ouest 8 Crédit Mutuel

10 Bureau: François Duret (1), Philippe Vasseur (2), Christian Péron (3), Alain Têtedoie (4), Pierre Filliger (5), Alain Fradin (6), Michel Bokarius (7), Gérard Bontoux (8), Etienne Pflimlin (9), Georges Coudray (10), Pierre Arrivé (11). Not pictured: Jean-Pierre Denis Other directors Philippe Andru, Vice-Chairman of Crédit Mutuel Bretagne Jean-Louis Boisson, Vice-Chairman of Crédit Mutuel Centre Est Europe Eric Charpentier, General Manager of Crédit Mutuel Nord Europe Jacques Chombart, Vice-Chairman of Crédit Mutuel Agricole et Rural Gérard Cormorèche, Chairman of Crédit Mutuel Sud-Est Louis Crusol, Chairman of Crédit Mutuel Antilles-Guyane Roger Danguel, Director of Crédit Mutuel Centre Est Europe Jean-François Devaux, Chairman of Crédit Mutuel Massif Central Bernard Flouriot, Chairman of Crédit Mutuel Anjou Jean-Louis Girodot, Chairman of Crédit Mutuel Ile-de-France André Halipré, Vice-Chairman of Crédit Mutuel Nord Europe Ronan Le Moal General Manager of Crédit Mutuel Arkéa Daniel Leroyer, Chairman of Crédit Mutuel Maine-Anjou, Basse-Normandie Jean-Luc Menet General Manager of Crédit Mutuel Océan Albert Peccoux, Chairman of Crédit Mutuel Savoie-Mont Blanc Jean-Noël Roul, Vice-Chairman of Crédit Mutuel Loire-Atlantique et Centre-Ouest Denis Schitz Vice-Chairman of Crédit Mutuel Centre Est Europe Jean-Pierre Schneider, General Manager of Crédit Mutuel Maine-Anjou, Basse-Normandie Eckart Thomä, Chairman of Crédit Mutuel Normandie Christian Touzalin, Chairman of Crédit Mutuel Sud-Ouest Michel Vieux, Chairman of Crédit Mutuel Dauphiné-Vivarais Christine Zanetti, Chief Executive Officer of Crédit Mutuel Loire-Atlantique et Centre-Ouest The following also sit on the Board Michel Lucas, Chief Executive Officer Thierry Brichant, Deputy Chief Executive Officer Gilles Le Noc, Corporate Secretary 2008 Annual Report 9

11 THE mutual banking group The Group's main entity, Crédit Mutuel, is a cooperative bank under the 10 September 1947 Act governing French cooperatives. It is owned solely by its members, who hold member shares ('A' shares). Members are each entitled to one vote at general meetings, where their powers include, in particular, the election of directors of the local mutual banks. As a mutual bank, Crédit Mutuel places its member customers at the heart of all its decisions. It considers its values responsibility, solidarity and social commitment as having the same strategic importance as service quality Annual Report 11

12 THE banque mutualiste To serve its customers and society, Crédit Mutuel's strategy combines sustainable development* and solidarity. Historically, the bank has played a key social role, notably through its action in favour of the most vulnerable members of society. THE CRÉDIT MUTUEL NETWORK 3,168 branches, including 2,017 local mutual banks 11.2 million customers, including 10.2 million private individuals Crédit Mutuel runs an innovative corporate sponsorship programme through its regional and national foundations under the aegis of the new Fondation du Crédit Mutuel, which was created in 2009 and oversees the various strands of the group s patronage initiatives at national level: - promotion of reading and of the French language in all its forms through Fondation du Crédit Mutuel pour la Lecture, - solidarity and research-based initiatives, - implementation of independent, sustainable banking networks in developing countries through Centre International du Crédit Mutuel (CICM). These initiatives demonstrate the group s ongoing commitment to solidarity on the ground. In 2008, the number of Crédit Mutuel s members increased by 164,000 to 7.2 million, while customer numbers were up 190,500 to 11.2 million. Each year, 20,000 board meetings and 2,000 general meetings are held - with an overall attendance target of 10% - ensuring a genuinely democratic base for the group's corporate governance. In terms of gender equality, the Group has exceeded its initial target of 20% of board seats held by women, who now represent nearly 25% of the 24,000 elected directors. This percentage exceeds 30% in more than half of the Federations, and the group's new target is to bring the overall proportion of women directors up to 30%. The group comprises more than 2,000 local mutual banks, of which more than half are located in rural areas. They are organised into 18 regional federations which in turn belong to the Confédération Nationale. These three levels of organisation (local, regional and national) operate on a decentralised basis in accordance with the principle of subsidiarity, with the local mutual banks which are closest to members and customers carrying out all the key functions of bank branch offices, and the other two levels exercising only those for which the local entities are not equipped. This organisation favours direct responsibility at each level, which in turn encourages deeper involvement, leading to greater responsiveness and higher standards of customer service. The resultant simple decision-making structure optimises risk spreading and quality control. Crédit Mutuel, a non-listed company, is concerned first and foremost with serving its members to the best of its ability through a strategy of sustainable development unconstrained by demand for short-term profits. *Crédit Mutuel's Social Responsibility report is available on 12 Crédit Mutuel

13 2008 Annual Report 13

14 THE banque mutualiste A decentralised structure 2,017 Local mutual banks The first level of organisation is made up of Local mutual banks or Caisses locales, which have the legal status of cooperative companies with variable capital (sociétés coopératives à capital variable). These are credit institutions governed by French banking law, with the capital owned by their members, who are both shareholders and customers. Financially autonomous, the local mutual banks collect savings, distribute loans and provide a full range of banking services. Most decisions concerning customers are taken at this level. Each Local mutual bank is governed by a board of voluntary directors and/or a supervisory board, made up of members elected by members at General Meeting on a one person, one vote basis. In all, there are more than 2,000 Local mutual banks, whose 24,000 directors represent 7.2 million members. 18 regional groups At the next level up, there are 18 regional groups, each of which comprises a Regional Federation and a Federal Caisse (or, in some cases a Interfederal Caisse, such as those which encompass, respectively, the Centre-Est-Europe, Ile-de-France, Sud-Est and Savoie-Mont Blanc and Midi-Atlantique Federations; the Bretagne, Massif Central and Sud-Ouest Federations; and the Crédit Mutuel Méditerranéen and Dauphiné- Vivarais Federations)1. The Local mutual banks and the Federal Caisse, of which they are shareholders, are members of a Regional Federation. The Regional Federation is responsible for strategy and supervision, and represents Crédit Mutuel in its region. The Federal Caisse is responsible for functions such as cash management and providing technical and IT services. The Federation and Federal Caisse are governed by boards elected by the local mutual banks. In addition to the 18 Regional Federations, there is a federation with nationwide scope in the farming sector Crédit Mutuel Agricole et Rural (CMAR). 14 Crédit Mutuel

15 7.2 million Ile-de-France members 11.2 million customers 3,168 outlets ans including 2,017 local mutual banks National confederation and Central caisse These bodies make up the third and top level of organisation. The National confederation, which has the legal status of a non-profit organisation, is the central body governing the network under the Banking Act of The 19 Federations and the Central caisse du Crédit Mutuel are affiliates of the National confederation, which represents Crédit Mutuel vis-à-vis the authorities and is responsible for defending and promoting its interests. The National confederation also oversees the proper operation of its member establishments, supervises the regional groups and ensures the overall cohesion of the network, as well as co-ordinating business development and providing shared services. 18 regional Groups (Federations and Federal Caisse) 1 farming Federation (CMAR) Clermont- Ferrand ra National confederation Central caisse Massif Central The Central caisse, which is the central financing body, manages treasury for regional groups and organises the pooling of Crédit Mutuel's financial resources. Its capital is jointly owned by the Federal Caisse. Rapport annuel

16 THE banque mutualiste Membership and governance 7.2 million members 24,000 directors 37,308 employees Coming together More than 2,000 Local mutual bank general meetings every year. As a cooperative bank, Crédit Mutuel receives capital contributions through subscriptions to member shares (1) that earn interest at a fixed rate set by the General Meeting of member shareholders, who are associates and co-owners of the local mutual bank. Reserves are not distributable, but serve to back the shared obligations of members and as security for deposits. They are also used to finance long-term development. At the end of 2008, Crédit Mutuel member shares represented a total of 6.4 billion, up 2.4% compared with the previous year, while dividends paid to members had risen by 19.3% to 226 million, representing nearly 36% of the net earnings of the core cooperative business carried out by the local mutual banks and Caisses Fédérales. Participation and democracy are the basis for Crédit Mutuel s operation as a cooperative. (1) 'A' shares are those shares initially subscribed to by persons wishing to become members of a local mutual bank and to acquire the right to vote at general meetings on a one person, one vote basis. 'B' shares represent additional amounts paid in by members. These earn interest but carry no voting rights. 16 Crédit Mutuel

17 Participation and democracy Participation and democracy are the basis for Crédit Mutuel s operation as a cooperative. The 7.2 million Crédit Mutuel members supervise the management of the local mutual banks and elect the directors at general meetings, ensuring genuinely democratic governance. The 24,000 voluntary directors present at all three levels of the organisation - local, regional and national - are responsible for the group s management and supervision. Attentive to the needs and aspirations of the members they represent, these directors are themselves committed, active members and participate in the administration of the local mutual banks alongside the employees. As members of the local communities, they also exemplify the values that Crédit Mutuel stands for, and help to ensure their implementation. The 37,308 Crédit Mutuel staff members, of whom 36% are executives or supervisors and 53% are women, are responsible for implementing the strategy and operating the business under the supervision of the elected directors. Business operation The decentralised structure with decision-making processes at regional level favours entrepreneurship, a sense of personal responsibility and team spirit. The ties between the local mutual banks and the Regional Federations and Federal Caisses ensure the cohesion of the various entities into regional groups that operate as fully-fledged credit institutions within the framework of French banking regulations. The regional groups cooperate freely to rationalise resources and costs through technical partnerships, notably in areas such as information technology and financing. Other avenues for cooperation are provided by the Interfederal Caisses serving more than one regional Federation and by joint subsidiaries in insurance, leasing, factoring, corporate banking, investment banking, asset management and private banking. Regional groups membership of the National confederation and the central Caisse ensures cohesion and shared responsibility at national level. As the central body for the Crédit Mutuel group as a whole, the National confederation approves appointments to management positions and regional audit teams, and takes all necessary steps to ensure the group s proper operation, with responsibility for overall control and for the coherence of business development. Jointly with Internal Control committees at the levels of Regional Federations, National confederation reviews audit reports and reports its findings to the boards concerned. The National confederation s Board of Directors comprises representatives of all the regional Federations, elected by the General Meeting of National confederation shareholders. The General Meeting also elects the Chairman and Deputy Chairman for five years. Mutual members are thus represented at all three levels of the organisation through the directors they elect. ONE PERSON, ONE VOTE The annual general meetings that members and customers of the local mutual banks are invited to attend each year are the basis of Crédit Mutuel's democratic structure. General meetings provide members with a special opportunity to learn more about the business and express their own views. They also offer a forum for suggestions and discussion of ways to enhance services, reflecting the values that distinguish Crédit Mutuel from other banks. Required items on the agenda include a report on the management and activities of the mutual and on its specific action as a cooperative bank, leading up to approval of the financial statements and the election of directors on the basis of one person, one vote. A second part of the meeting is devoted to the presentation and discussion of current themes and events. Several hundred thousand members attend the regional and local annual meetings held between February and May. Rapport annuel

18 THE banque mutualiste A pro-active human resources policy To keep pace with its robust growth and anticipate future needs, Crédit Mutuel recruited 1,655 people in 2008 (excluding CIC) ,655 new hires 700 training contracts 5.7% of payroll allocated to training The vast majority of these new hires concerned newly-qualified students in branch-based commercial posts. The campaign involved providing vocational training contracts to nearly 700 young people with a level of Bac to Bac +2, enabling them to move rapidly to account manager posts for retail or professional customers. In 2008, the workforce averaged 37,308 employees, 2% more than in Crédit Mutuel provides staff members with training opportunities throughout their careers, a fact that was reflected in a training budget equivalent to 5.7% of the payroll in More than 1,100 training courses, ranging in length from several weeks to several months, were provided to long-standing staff wishing to train in new posts, notably as advisors to retail or professional customers. The group has set up a permanent internal labour statistics database. This will notably contain company-wide job stratification data and comparative data relating to the number of men and women employed, in application of the gender equality agreement signed by the Crédit Mutuel division in March Gender equality at recruitment level Vocational training Equal pay 18 Crédit Mutuel

19 Crédit Mutuel division: a framework agreement for the employment of people with disabilities Signed at the beginning of 2008 by all of the unions representing this division, the agreement expresses a shared determination to improve the integration and employment situation for disabled workers within the division and to encourage the Federations and entities of Crédit Mutuel to initiate a pro-active strategy to employ more people with disabilities. Valid indefinitely and applicable to all employees of the regional Federations, Federal Caisse, Interfederal Caisses, CNCM and CCCM, it prioritises action in a number of areas: promoting hiring, integration, training and initiatives to keep disabled people in work and help them adapt to technological changes as well as to adapt work stations to their specific needs. The Crédit Mutuel Federations and other affiliated organisations will organise communication and awareness-raising campaigns about their objectives and initiatives for training institutes, universities, schools, associations and specialist local organisations. The agreement also provides for people with disabilities to be taken on for any type of job and/or at any hierarchical level that is compatible with their professional abilities and skills. It also recommends making special reception arrangements to facilitate integration into, or resumption of, a position for the employees in question, particularly to help them develop relationships with their colleagues, their managers, the HR department, company doctors and employee representatives. Rapport annuel

20 THE banque mutualiste Fondation du Crédit Mutuel, a new framework for broader corporate sponsorship Under the aegis of Fondation de France, Fondation du Crédit Mutuel which was created at the beginning of 2009 oversees the Confédération Nationale s various corporate sponsorship initiatives. It works to combat economic and social exclusion through social economy and social assistance projects, to support cooperatives and research initiatives, to promote reading and the French language in all its forms in France and, where appropriate, abroad, and to encourage the implementation and support of independent, sustainable banking networks in developing countries, in particular through its financial support of the CICM association. Research, social assistance initiatives and promotion of cooperatives Part of Fondation du Crédit Mutuel s remit is to forge partnerships with research organisations, or think tanks, and to invest in research into economics and finance. In this role it works alongside such entities as Institut français des relations internationales (IFRI), Confrontations Europe, Fondation Robert Schuman, Semaines sociales de France, the European League for Economic Cooperation, the French European Movement, Centre interprofessionnel de recherche en droit bancaire de l université de Lyon 3 (Lyon University interprofessional banking law research centre), Centre des professions financières and Institut de l Entreprise. The Fondation is also dedicated to supporting work in the social economy and cooperative fields. In this area it supports Réseau national des Juniors Associations, France générosité and Semaine de la coopération. Likewise, it provides funding for initiatives in connection with its partnerships with Adie, for publications such as Revue des études coopératives, mutualistes et associatives (Recma) and for Fondation de France projects and initiatives linked to specific organisations such as Groupement national de la coopération and Finansol. By supporting these research groups through the financing of specialised studies, Crédit Mutuel helps raise awareness concerning banking, cooperative ventures and social aid. 20 Crédit Mutuel

21 An innovative sponsorship initiative with Fondation du Crédit Mutuel pour la Lecture (Crédit Mutuel Foundation for Reading) An active promoter of access to knowledge and of social integration, reading and French literature, Fondation du Crédit Mutuel pour la Lecture has been involved for some 20 years in an innovative campaign combining social and cultural commitment and focusing on local action. In 2008, the Foundation sponsored almost 90 projects encouraging reading in all its forms and facilitating access to knowledge for members of the least privileged sections of society, regardless of age. Priority is given to long-term initiatives drawing support from people in every part of Crédit Mutuel. This means that the Foundation s budget is supplemented by contributions from the 18 Crédit Mutuel federations and any local mutual banks whether general or teacher-focused1 that choose to support local initiatives by associations in their areas. The first project outside France is due to be launched in It will take place in Madagascar in coordination with the association Trait d union. (Combating illiteracy) This is where the Fondation is most active, with support given to 42 programmes in Ranging from childcare establishments, hospitals and medical teaching institutes to prison workshops and mobile libraries, the channels through which the Fondation supports reading are as diverse as its initiatives are innovative. Its long-term commitment to reducing illiteracy is reflected in its training courses designed to give people with limited knowledge of French a better chance of finding employment. In 2008, the Fondation reaffirmed and strengthened its commitment to promoting cooperation between the various stakeholders and pressure groups working to facilitate access to knowledge. By supporting the Quand les livres relient ( The binding power of books ) network, it is reasserting its commitment to channelling energies and fostering discussion and interaction. Vaincre l'illettrisme (Reading the Town) This programme features reading and writing activities encompassing all subjects in the school curriculum, and involves more than 4,000 primary and secondary schoolchildren every year. Lire la Ville s success derives from the wealth of players that it brings together: the town s school pupils, teachers, writers, historians, architects and cultural experts all share their experience of literature, each contributing their own angle of insight. At the end of the school year, pupils present the work they have done through exhibitions, film shows, plays, etc. (The Voice of Literature) Through this initiative, the Fondation provides people from all walks of life - children in particular - with the opportunity to participate in France s literary culture. The aim is to stimulate literary creation and the desire to read. In 2008, the Fondation took part in eight literary contests, including the Prix des Incorruptibles, the first prize in France voted for exclusively by young readers. Literature always anticipates life. Oscar Wilde Rapport annuel

22 THE banque mutualiste PA first initiative abroad In 2009, Fondation du Crédit Mutuel pour la Lecture will, in partnership with the Alliance Française, assist the Trait d union France Madagascar association by funding training programmes for librarians and coordinators from Madagascan reading, information and cultural centres, known as CLICs. The association has been working since 2000 to supply new books to organisations already set up in Madagascar in order to disseminate French language and culture. In this venture, it relies, notably, on help from the Alliance Française and other French networks. Today it is active in the libraries of 21 CLIC centres in rural villages with the capacity to cater for nearly 250,000 children, adolescents and young adults every year. 22 Crédit Mutuel

23 Development aid through Centre International du Crédit Mutuel (CICM) Active for some 30 years in building banking networks in developing countries, Centre International du Crédit Mutuel (CICM) stands at the intersection of microfinance and development aid. It works in several areas: extending banking services to communities as a means of improving their welfare, helping to develop the local socio-economic fabric, disseminating the cooperative model and its democratic values, and promulgating professional savings and credit management. This non-profit association, to which the 18 Regional Federations contribute, works to set up independent, sustainable cooperative networks in countries where individuals cannot always access existing banking services. Its aim is to help local populations to take charge of their own development, either by enabling them to create their own cooperative networks for savings and credit, or by providing technical assistance to existing mutual organisations. CICM's approach is based on Crédit Mutuel's guiding principles: the responsibility of its members, the use of voluntary directors and a community approach that gives priority to local banking services. In often unstable political and economic environments, the CICM networks enable local people to protect their assets, build up personal savings and fund work projects. Through micro-credit and the provision of banking services, these cooperative networks make a major contribution to the development of local economies by fostering social cohesion and the settlement of nomads. CICM's operations are financed by the Federations with contributions from external sponsors. CREDIT MUTUEL IN SENEGAL: THE COUNTRY S FIRST INDEPENDENT BANKING NETWORK In 2008, the 340,000 or so members of Crédit Mutuel du Sénégal decided to dispense in future with CICM s support. The 106 CMS local mutual banks, with their 540 employees, now operate entirely independently. Given that the independence of governing and operating bodies is the CICM s primary objective, Crédit Mutuel is delighted with this development. NEW SHARED TOOLS TO ASSIST THE NETWORKS 2009 will see the launch of the CICM network s new information system enabling centralised transaction management. A real-time management control application will follow. Project Afric@rte will also be launched in the Mucodec banks this year. Initially, the card will replace the account book and serve as a means of identifying members who visit the bank. It will then be incorporated into the group s long-term project to improve access to banking services via the installation of ATMs in CICM branches. THE CICM IS ACTIVE IN SIX AFRICAN AND ASIAN COUNTRIES : Central African Republic through Crédit Mutuel de Centrafrique, Cameroon through Mutuelle de développement et d investissement du Cameroun (MdiC) Republic of the Congo through Mutuelles congolaises d épargne et de crédit (Mucodec), Niger through Crédit Mutuel du Niger (CMN), The Philippines through Mutual saving and credit cooperative of Philippines (MsccP), Cambodia through the Crédit Mutuel savings and credit network (CMsc). THE CICM NETWORK IN local mutual banks 557 employees 570,000 active members 588 elected directors 190 million in deposits 40 million in outstanding loans 2008 Annual Report 23

24 THE banque mutualiste Banking for all members of society Following on from the tradition of the social pioneers of the 19 th and 20 th centuries, Crédit Mutuel was one of the first banks to offer an economic response to issues of social exclusion. The group's determined commitment to providing banking services to those sections of the population usually denied access to the conventional banking system is reflected in the development of micro-credit in close collaboration with non-profit associations. Social micro-credit Crédit Mutuel assists the most vulnerable sections of the population by extending micro-credit within the framework of partnerships. Seventy experimental projects are underway throughout France through regional or local partnerships with social aid organisations such as Secours Catholique, Coorace (Comité des Organismes d Aide aux Chômeurs par l Emploi), Unhaj (Union nationale par l habitat des jeunes), Udaf and a number of other family-oriented social aid networks such as Admr, Familles Rurales, Emmaüs and Restos du Cœur, together with neighbourhood agencies, local employment agencies, community social aid centres and local social integration organisations. The goal is to develop a joint approach to helping people in difficulty who wish to implement a project that will enable them to find a job. By opening accounts for them and extending loans that are partly guaranteed by the Fonds de Cohésion Sociale (French social aid fund), Crédit Mutuel enables them to regain access to the banking system and to become normal bank customers once again. Crédit Mutuel assumes 50% of the risk on these loans. The Fonds de Cohésion Sociale (and Secours Catholique for its own network) covers the remaining risk under an agreement signed in January 2006 with Caisse des Dépôts et Consignations. These loans, for amounts ranging between 500 and 3,000, are granted to people who do not have a chequebook, have little or no access to credit, have no stable employment or are living on social welfare but are actively trying to regain a place in society. Professional micro-credit In 2008, the group financed 145 million in loans through three networks: Association pour le Droit à l Initiative Economique (Adie), France Active and France Initiative. Crédit Mutuel has been a partner of Adie, the pioneer of micro-lending in France, ever since it was set up and, in 2008, it financed 10% of all lending by this organisation, which granted 1,500 loans averaging 2,700, representing a total of 3.6 million. 24 Crédit Mutuel

25 For over 20 years, the group has been working with France Initiative, a network of associations set up to promote local economic development that handles 15% of bank-financed business start-ups in France. The group is actively involved with over 60% of its local initiative platforms and a member of its "Entreprises" collegial body of partner companies. In 2008, it lent 132 million via the network, representing over 20% of its overall financing volume. Crédit Mutuel also works alongside the France Active network, which offers grants and loans to initiatives oriented to economically-driven social integration. It sits on half of the organisation s financing committees, and in 2008 backed 23% of the guarantees extended, representing a commitment of 10 million. A SOCIALLY SUPPORTIVE BANK MEMBERS IN FINANCIAL DIFFICULTY: SPECIFIC ASSISTANCE PROGRAMMES Crédit Mutuel s social assistance converts words into action. Through its Regional Federations, the group runs a number of initiatives of which several are listed below. They offer a daily reminder of the group s commitment to its most vulnerable members. Since 1986, the Association de gestion du fond d entraide du Crédit Mutuel de Bretagne (CMB) has been providing aid to members faced with loan repayment difficulties resulting from unforeseen circumstances. The association covers up to 75% of the instalments for a period of up to 12 consecutive months, with a maximum of 16,000 available per borrower or per household. Operational since January 2006 in Lille, Caisse Solidaire du Crédit Mutuel Nord Europe was created to enable people to re-enter the system after being excluded from it, and to provide basic financial services to people with little money or who are encountering temporary difficulties due to their professional situation or to health or other problems. It grants micro-loans of 500 to 2,000, repayable over six to 24 months, at market conditions and can in some cases finance the purchase of subsidised housing. This entity works in partnership with a number of aid organisations, some of which have a seat on its Board of Directors. At the end of 2007, Crédit Mutuel Maine-Anjou Basse-Normandie set up Crédit Mutuel Solidaire (CMS), which acts both as a social aid fund and a micro-lending organisation. Its primary aim is to assist members in difficulty who have personal recovery projects by helping them to obtain aid from the specialised associations and bodies with which CMS has partnership agreements. CMS works closely with the local mutual banks, which are responsible for identifying the potential partner associations and handling relations with these partners with help from CMS. Repayments on loans granted, which amount to between 500 and 4,000 over six to 48 months, cannot exceed 100 per month. In early 2008, the Nantes federation set up Créavenir Budget, a special initiative to help customers with payment difficulties. Aimed at federation members only, this association is a vehicle for the group s individual solidarity micro-credit programme, and aims to support those in financial difficulty by providing budget management advice and help with certain administrative procedures. In doing this, the group while not seeking to act as social security substitute shows its commitment to seeking solutions that require input from its directors and employees. Créavenir Budget relies on two voluntary directors for each area, with one employee per area acting in a consulting role. The Economic and Social Action task force (Aes) is responsible for coordinating the scheme. Crédit Mutuel helps develop socially beneficial savings schemes through two Finansol*- accredited products: Livret d épargne pour les autres (Lea) and Crédit Mutuel France Emploi. Launched in 2006, the Lea operates like a traditional savings account but with an interest -sharing component whereby the saver donates 50%, 75% or 100% of the interest on deposits to one or more social aid associations in France or abroad. Crédit Mutuel France Emploi is a mutual fund (Fcp) allowing holders to donate half of the interest income they earn to the France Active association. The association uses these funds to grant loans to business start-ups by unemployed people or to inject working capital into social enterprises, such as integration initiatives and intermediation and residential services companies. * This professional association, of which Crédit Mutuel is a founder member, is a federation of organisations that provide finance for social aid initiatives. Its aims are to support and promote the principle of socially beneficial saving and financing, to coordinate the collection and investment of related funds and to guarantee the social usefulness and the transparency of accredited financial investments Annual Report 25

26 2008 results The financial and economic crisis affected Crédit Mutuel s results, underlined its responsiveness and demonstrated its resilience in equal measure. Its net profit group share, taking into account CIC, came to 440 million, compared with 2,730 million in Rapport annuel

27 2008 results Net banking income ( billions) Operating expenses ( billions) 2008 Despite the economic turmoil, Crédit Mutuel strengthened its core retail banking business, expanded its coverage and won market share. It also embarked on a new stage of its growth strategy with the acquisition of Citibank Deutschland and Cofidis. The group s financial structure remains strong: with 9.8% in Tier 1 capital, Crédit Mutuel has one of the highest solvency ratios of all French banks and continues to rank among the euro zone s most highly-rated banking groups. With sustained network activity, a high level of deposit-taking and constant provision of support in all areas of the economy in 2008, Crédit Mutuel one of France s leading banks with a 15% market share once again showed remarkable development potential Cost-to-income ratio retail banking (%) Firm resistance in an unusual yeare Like many credit institutions in France and abroad, the group suffered collateral damage from the US-born crisis and the ensuing collapse in investor confidence. Net banking income came to 8,424 million, representing a 20.3% decrease. This decline largely reflected a fall in income for the corporate and investment banking division (from 1,234 million in 2007 to a loss of 64 million in 2008), which bore the brunt of the crisis with, in particular, the depreciation of its financial instruments portfolio. The retail banking division s net banking income rose 1.9% to 7,485 million, or 83% of total net banking income, confirming that the group s core business is in good shape. The negative market trend also weighed on the insurance business, which saw its net banking income fall 31.1% to 995 million. This division nevertheless generated 11% of total net banking income. Income from asset management and private banking was marginally down (3.3%) at 549 million IFRS 2007 IFRS 28 Crédit Mutuel

28 2008 Key figures at 31 December* /2007 millions IFRS IFRS Total assets 553, , % Shareholders equity (after appropriation of income) 26,864 25, % - of which attributable to group 26,442 24, % Customers' deposits 482, , % o/w Deposits 171, , % (9.5% excluding Citibank) - Debt securities issued 230, , % - Insurance-linked savings 80,195 81, % Outstanding loans 258, , % (9.7% excluding Citibank) Net banking income 10,568 8, % Operating expenses 6,511 6, % Gross operating profit 4,057 1, % Cost of risk 186 1,405 ns Net operating profit 3, % Net profit 2, % Net profit, group share 2, % MAIN RATIOS /2007 IFRS IFRS IFRS Cost-to-income ratio (retail banking) 71.4% 72.2% 0.8% Fees and commissions / Net banking income 25.5% 31.0% 5.5% Tier 1 solvency ratio (Basel II) 9.6% 9.8% 0.2% Including Citibank Points of sale 5,206 5,262 5,619 Customers (millions) Workforce 59,455 60,075 65,545 *Taking all of Citibank Deutschland s assets and liabilities into account. In terms of impact on results, on the other hand, these figures reflect only the post-acquisition period (from 5 to 31 December 2008). Rapport annuel

29 Les 2008 résultats results du groupe en 2006 Operating expenses increased by a moderate 2.5% to 6,677 million, a smaller rise than in 2007, despite a 1% growth in the workforce (excluding Citibank* and Banco Popular) and ongoing investment in network expansion. Gross operating profit came to 1,747 million, a decrease of 56.9%. The cost of risk rose from 186 million to 1,405 million, reflecting the initial impact of the economic crisis and exceptional events during the year - mainly the Lehman Brothers exposure. Discounting these exceptional items, the cost would have risen 499 million, to reach 685 million. Strong sales and increased market share Sales growth continued at a sustained pace. The efforts of the Crédit Mutuel and CIC networks and its competitive products and services offer enabled the group to open 245,000 new current accounts and win 350,000 new customers, bringing the total number of customers to 15.3 million. Of these, 13.7 million are retail (up 304,000). In all, 56 new branches were opened, bringing the total number of outlets to 5,260. Alongside the network s development there was increased sharing of tools between the groups. Further interfederal partnerships developed around the Caisses Interfédérales, subsidiaries and work platforms. Crédit Mutuel Midi-Atlantique joined the Caisse Interfédérale comprising the Centre Est Europe, Ile-de-France, Sud-Est and Savoie-Mont Blanc federations, and a partnership agreement was signed between these five federations and the Marseille and Valence groups. Operational development work to increase CM-CIC Services production and logistics capacity also gathered pace. These developments allowed the group to become more competitive, enhance product and service quality, control its costs and profitability and strengthen and optimise its equity capital. Crédit Mutuel-CIC gained further market share to 16.9% (up 0.3 points) in loans and 12.1% in deposits (up 0.6 points). Customers deposits with the group totalled billion in 2007 (down 0.9%). While deposits remained upbeat, with a 14.9% increase to billion, the financial crisis took its toll on the securities segment, which contracted by 13.4% to billion, and on life insurance, which gained just 1.2% to 81.2 billion. The crisis combined with the rise in regulated rates led savers to shift their cash towards liquid, risk-free savings products. Accordingly, deposits taken amounted to 25.6 billion, compared with 15.1 billion in 2007, representing a 14.9% increase in the overall deposit base to billion. Deposits were particularly substantial for the livret bleu savings account, where the savings rate doubled from the previous year, while standard savings book accounts and term deposits also did well. The collapse in demand for lending in the second half of the year, accentuated at year-end, led to a contraction of 16.1% in loans granted, to 62.6 billion, which is nevertheless a healthy level. Outstandings came to billion at year-end, up 14.3%, or 9.7% excluding Citibank, for which outstandings came to 11.8 billion. * Taking all of Citibank Deutschland s assets and liabilities into account. In terms of impact on results, on the other hand, these figures reflect only the post-acquisition period (from 5 to 31 December 2008). 30 Crédit Mutuel

30 Credit risk (IFRS) as a % Operating profit (IFRS) in billion Net profit, group share (IFRS) in million ,946 2, * Impaired loans Coverage rate *excluding Citibank Deutschland Gross operating profit Cost of risk Operating profit Shareholders' equity, group share (IFRS) in million 23, ,676 26, Solvency ratio, of which Tier 1 as a % Tier one 10.0 Tier one (IFRS) (inc. floor) 9.5 Tier one (IFRS) (excl. floor) 12.3 Tier one (IFRS) As from 2007, figures have been calculated in accordance with the decree of 20 February 2007 relating to Basel II capital adequacy requirements. Net banking income in million 8,971 8,424 Breakdown by activity Net profit, group share in million , (547) 1, (64) (335) Retail banking Insurance Other Total (736) Retail banking Asset management and private banking Corporate and investment banking Intra-group elimination Insurance Other Asset management and private banking Consolidated Corporate and investment banking Total Consolidated Rapport annuel

31 Les 2008 résultats results du groupe en million customers (excluding Citibank) including 13.7 million retail customers 350,000 new customers 56 new branches No. 1 bank in non-life insurance No. 2 in home loans No. 4 in European consumer credit No. 2 in France for electronic payments STRATEGIC DEVELOPMENT In 2008, ten years after the acquisition of CIC and against the backdrop of a major crisis, Crédit Mutuel entered a new phase of strategic development. Thanks to its acquisition of Citibank Deutschland, Germany's leading consumer credit provider with a network comprising 300 branches and 3.4 million customers, and of its controlling interest in Cofidis, the 3 Suisses International consumer credit subsidiary with 11.5 million customers that posts 40% of its sales in nine European countries, the group has strengthened both its international presence and its positioning in consumer credit, where it is now Europe s fourth largest provider. In early 2008 the group acquired the 18 branches and offices that made up Banco Popular Español's French network. It thereby strengthened its network in three areas earmarked for development Ile-de-France, the south-east and the south-west and diversified into a new category of customers. As a result it is also working on extensive commercial agreements with Banco Popular Español, Spain s third-largest bank. The group has a number of development projects under way, notably in insurance, where it has created RACC Seguros, a joint venture between Assurances du Crédit Mutuel (ACM) and Royal Automobile Club de Catalogne, and in IT, where it has investment agreements in Spain, Morocco and Tunisia. The group remains the second-largest lender in home loans with a market share of nearly 20% for new loans. New housing loans decreased by 24.6% to 31.6 billion in a wait-and-see market. Outstanding housing loans increased by 9.3% to billion. The integration of Citibank Deutschland, whose loan book consists essentially of consumer loans, multiplied outstandings in this lending category by 1.8, bringing them to 27.3 billion. At constant scope, new loans decreased 4.2% to 9 billion. Outstanding loans to businesses and self-employed professionals for equipment and operating requirements increased by 12.6% to 80.1 billion, while leases grew by 9.3% to 9 billion. However, new loans and leases combined shrank by 5.8% under the impact of investment freezing in some areas. The group reinforced its position as the leading bankinsurance player in non-life insurance with a 6.5% increase in premiums to 2.3 billion, while life insurance sales dipped in line with the market, with premium income down 18.5% to 8 billion. The insurance subsidiaries generated total premium income of 10.2 billion, a 14% decrease. Overall they had 26.6 million contracts under management an increase of 4.4% of which 22.5 million are in non-life, reflecting a 5% increase in that category. At 31 December 2008, they catered for 10.7 million policyholders, a rise of 6% year-on-year. The group is a leading player in breakthrough areas such as mobile banking, which is a major new sector for diversification. It continues to hold second place in electronic payments in France with 20.7% of the market. 32 Crédit Mutuel

32 Customers millions (excl. Citibank) 18.7 (incl. Citibank) Average workforce 59,455 58,720 36,570 35, ,075 37,310 (excl. Citibank) ,545 (incl. Citibank) Outlets 5,065 3,075 5,206 3, ,260 (excl. Citibank) 3, ,620 (incl. Citibank) Customers o/w retail customers Total number of employees o/w Crédit Mutuel Outlets o/w Crédit Mutuel Market share over 3 years (France) % 12.1% point 16.9% point 11.5% 16.6% 11.4% 16.2% Deposits Loans Breakdown of customer deposits: 478 billion in 2008 Breakdown of new loans: 62.6 billion in 2008 Breakdown of outstanding loans: billion in % 41.2% 36% 50% 11.3% 8% 52.7% 41,.8% Deposits Securities issued Insurance-linked savings 14% Home loans Consumer credit Equipment and cash 18.8% 9.2% Home loans Consumer credit Equipment + leasing Operating loans Other loans 2008 Annual Report 33

33 Bankinsurance Bankinsurance, the group's core business, covers retail banking and life and non-life insurance activities. In 2008, it generated net banking income of 8.5 billion and net profit group share of 1.4 billion. The group assists its customers in all their projects, providing solutions in the areas of investment and borrowing, electronic payments and technology, life and non-life insurance, real estate, residential services and wealth management Annual Report 35

34 Bankinsurance Bankinsurance France's second-largest retail bank and leading bankinsurer, the Crédit Mutuel group has 13.7 million retail customers of whom more than 11 million have taken out insurance cover. Indeed, it is precisely in order to better address their needs that Crédit Mutuel developed bankinsurance activities, i.e. the sale of insurance products through its bank branches, in the 1970s. It was this same commitment that led it to become the leader in home video surveillance, with 29% of the market. KEY FIGURES 15.3 million customers of which 13.7 million retail customers 10.7 million policyholders and 26.6 million insurance contracts 5,262 outlets 7,558 ATMs 367 million remote banking contacts To stay close to its customers, the group has increased its coverage with an appropriate balance between physical networks and remote banking technology. It opened 56 outlets in 2008, mainly in large and medium-sized cities, where it has traditionally had a less satisfactory presence. It is France's second-largest retail banking network(1), with 5,262 branches and almost 7,600 ATMs. It thus offers a truly local banking service backed up by state-of-the-art multi-channel technology: remote banking services alone recorded close to 367 million contacts in 2007, 90% of them via Internet. The group is a leader in breakthrough areas such as mobile banking, which is a major new area for diversification. (1) Excluding the French post office bank, La Banque Postale 36 Crédit Mutuel

35 Livret bleu: higher savings and increasing numbers of account holders Regulated savings accounts (Livret A/Livret Bleu) have been distributed by all banks since 1 January This reform, which was implemented at the request of the European Commission, in no way changes the group s philosophy. As a traditional distributor of Livret Bleu savings books, Crédit Mutuel will continue to distribute this popular savings product, frequently the first rung on the savings ladder for retail customers. The generalised distribution will not modify the characteristics of this savings product, and Livret Bleu account holders be they individuals or associations will still be free to manage their accounts either as pure savings products or as quasi-ondemand deposit accounts. This flexibility is particularly useful for lower-income customers wishing to carry out day-to-day transactions. The Livret Bleu continues to be what it has always been: a popular basic savings product offering availability and reliability, and Crédit Mutuel will continue to distribute this product, sharing costs between large and small savings accounts, which is another form of solidarity. In 2008, deposits with the bank doubled to 4.8 billion, helped by an attractive rate of interest and the branches marketing and sales campaigns. This brought total savings held to 25.3 billion, a rise of 23.6%. The number of savings accounts under management continued to rise, reaching 6 million by the end of 2008, a trend which remained undented when the market opened up earlier this year. CREDIT MUTUEL, NUMBER 1 BANK FOR CUSTOMER RELATIONSHIPS IN 2009 The customer relationship is seen as the key to successful development, and Crédit Mutuel was once again rewarded for the quality and efficiency of its customer relationships in For the second consecutive year, Crédit Mutuel came first in BearingPoint TNS Sofres s customer relationship survey (1). These awards differ from others in that they are judged, not by panels of experts and professionals, but by consumers themselves. (1) Survey carried out in France in April 2009 on a sample of 4,000 customers and users of more than 100 businesses and bodies in 11 sectors: insurance, automobile, banking, specialised retail, services companies, mass retail, public services, landline telephony/internet access providers, mobile telephony, tourism and transport Annual Report 37

36 Bankinsurance France's second-largest retail bank Retail banking, the group's main business, encompasses the offers of Crédit Mutuel s18 Regional Federations and CIC's five regional banks. It also covers the specialised products and services marketed through the network, notably leasing, factoring, fund management and real estate. KEY FIGURES FOR RETAIL BANKING In millions Net banking income: 7,485 Gross operating profit: 2,081 Net profit, group share: 1, ,000 new customers Number two in home loans Number four in European consumer credit Retail banking generated net banking income of 7.5 billion in 2008 (83% of the group total) a rise of 1.9% underlining the dynamic nature of this division. As the day-to-day banking partner for 13.7 million retail customers, the group is thriving, as witness the 304,000 new customers attracted in Together with CIC, it has a 12.1% share of the market for deposits and a 16.9% share of the bank loans market. It has continued to diversify its offer so as to meet all the needs from the simplest to the most sophisticated of its retail customers and, more generally, of its various customer segments, i.e. young people, who constitute one of its priority areas of development, but also associations, farmers, self-employed professionals and very small to medium-sized businesses. For the more vulnerable segments of its customer base, notably those without access to a chequebook, the Crédit Mutuel group offers a full range of services for withdrawing cash and making payments in all circumstances: Facil accès at Crédit Mutuel and Service Accueil at CIC. As the number two in housing loans with a 20% share of new loans granted, the group is a key player in the financing of programmes to facilitate home ownership among the less well-off sections of society, particularly through the distribution of interest-free home loans. Following the acquisition in 2008 of Citibank Deutschland, Germany's leading consumer credit provider, and Cofidis, which has 11.5 million customers across Europe, the group is now Europe s fourth largest player in this sector. I Savings: Strong deposit inflow, and decline in securities subscriptions Although boosted by deposits, the savings business was hampered by the fall in securities subscriptions and a disaffection for life insurance products, in keeping with the general market trend, causing savings to fall marginally by 0.9% to billion. The crisis and the rise in regulated rates led savers to shift their cash towards short-term, fixed-rate bank savings products. 38 Crédit Mutuel

37 Deposits naturally benefited from this situation, with the total rising considerably by 14.9% to billion, and deposits collected increasing to 25.6 billion from 15.1 billion in The deposit inflow was particularly robust for: Savings accounts, for which overall deposits increased by 18.7% to 62.8 billion thanks largely to campaigns designed to win new customers and retain existing ones for the livret bleu account and for related investments such as the Fidélité savings accounts and term deposits. Negotiated deposits, with a 28.7% increase to 49.6 billion, boosted by term deposits. Residential savings, and in particular the PEL residential savings plan, which did not benefit from the successive rises in regulated interest rates, lost further ground to 26.3 billion, a decline of 6.1%. It is expected that the maintenance of the PEL rate in a context of falling savings books regulated rates will make PEL plans more attractive again. The financial crisis and market turmoil led to a wholesale decline in securities-related savings, with both the custody business and mutual funds affected. Total deposits fell 13.4% to billion. Life insurance suffered as a result of customers preference for interest-bearing deposits, which were marketed more aggressively by the networks. Despite a reduced inflow of 8 billion (down 18.5%), total funds rose slightly by 1.2% to 81.2 billion Annual Report 39

38 Bankinsurance ANNUAL BANK CHARGES STATEMENT: CLEARER THAN EVER In accordance with current regulations applicable to all banks, customers receive a yearly statement summarising the charges they have incurred for banking products and services provided in connection with their current accounts. This statement provides an overview of the charges levied over the past year, and reflects Crédit Mutuel s ongoing commitment, made some years ago, to providing clear, useful advice and enhanced access to information. The annual charges statement provided the bank s branches with a fresh opportunity to approach its members and customers to help them rationalise their use of banking services by adjusting their consumption and the related costs to reflect their real needs more closely. A leading retail banks Crédit Mutuel endeavours to anticipate, and respond to, customers needs with an appropriate and particularly innovative offer of products and services. In line with this, it has strengthened its financing offer for energy-saving home improvements and renewable energy installations and has been offering interest-free eco-loans (Eco-prêts) since spring This scheme, which resulted from the Grenelle Environment Round Table process, targets individual owner-occupiers and landlords of properties including those in co-owned buildings built before 1 January 1990 and used as main residences. Similarly, Crédit Mutuel has gained a genuine lead concerning the quality and performance of new technological services provided to customers in the areas of remote banking, home video surveillance, electronic payments and mobile telephone services. This positioning is integral to the group s strategy of diversifying through new activities in recent years. Residential services are another facet of Crédit Mutuel s offer. These are paid for using universal service vouchers (chèque emploi service universel - CESU) issued by Crédit Mutuel under a partnership with Chèque Domicile, the leader in this area, a scheme that offers retail customers cheaper access to home services and provides companies with a new instrument for their human resources policies. Tranquil ADOM, which puts customers in touch with residential services providers, is bundled into the bank s Eurocompte Confort et Sérénité offer and the Assurances du Crédit Mutuel home insurance packages, and can be subscribed to by telephone or online, exclusively via the CyberMUT site. This initiative met with emphatic approval on the part of the customers. FOSTERING RENEWABLE ENERGY The partnership concluded with EDF ENR in April 2008 has resulted in a financing package for the installation of solar panels on individual homes. The aim is to foster the development of renewable energy in France. The package entitles retail customers building a detached house to borrow money for up to 20 years at an attractive rate. The solutions offered by participating local mutual banks* and by all the CIC branches form part of the solar panels offer developed by EDF s Bleu Ciel division. Alongside CIC s sustainable development loan and Crédit Mutuel s Crédinergie package, this latest offer is an additional differentiating factor for the group. * Crédit Mutuel Centre Est Europe, Savoie-Mont Blanc, Ile-de-France, Sud-Est and Loire-Atlantique et Centre-Ouest 40 Crédit Mutuel

39 Home loans: a major player I Number two in home loans Falling demand was compounded at the end of the year by the combined effect of a crisis in confidence and the shelving of investment plans. This led to a market-wide drop in the number of home loans granted by banks. Despite a 24.6% fall in new loans to 31.6 billion, the group remained France s second biggest lender for this segment, with 20% of the market. At 31 December, home loans outstandings stood at billion, up 9.3%. The group also plays a key role in subsidised home purchases and the distribution of interest-free home loans with 20% of the market. I An active partner in subsidised housing Crédit Mutuel has a longstanding relationship with the bodies involved in the so-called 1% logement subsidised housing scheme, traditionally active in the rental sector for low-income households and now involved in subsidised acquisition schemes. It has begun to set up schemes for separating the purchase of land from that of the actual buildings. It is committed to working alongside the main bodies involved in collecting the 1% logement contribution, by providing financing in conjunction with the local authorities contributions (aid in addition to interestfree loans, reduced VAT rate of 5.5% and carrying of cost of the land by the CIL cross-sector housing committees thanks to the Pass-Foncier scheme). In 2009, this activity has benefited from measures to stimulate new-builds (raising of the interest-free loan ceiling to twice its former level since 15 January and gradual roll-out of the legal and tax arrangements for using the Pass-Foncier for multi-occupancy housing). The group is an active player in several regions, with a range of activities: it has capital stakes in around 40 subsidised housing bodies (Entreprises sociales de l habitat - Esh) to which it offers intermediary rental loans (Pls, Psla and Pli). It also contributes its know-how in the sale of social housing (HLM) through subsidised homebuyer loans; it is a close partner of social housing cooperatives for construction programmes under subsidised homebuyer schemes, which it finances through interest-free loans or tenant home purchase schemes; it has extended its direct presence through partnership agreements with social housing bodies (Opac and Ophlm), which manage more than half of France s existing subsidised housing and have projects for priority zones designated in the government's urban development policy. As a traditional partner of the French agency for housing improvement (Agence nationale pour l amélioration de l habitat - Anah), the group aims to work more closely with social housing bodies in sensitive urban areas covered by French urban renovation agency (Agence nationale pour la rénovation urbaine - Anru) programmes. MEDIATION: MORE THAN 1,700 OPINIONS ISSUED IN 2008 IMPROVED INTEREST- FREE LOANS: THE GROUP AN ACTIVE PLAYER IN SENSITIVE URBAN AREAS Crédit Mutuel favours greater local involvement in aid schemes and was the first entity to bring its engineering skills to bear on improved interest-free loan packages for the most disadvantaged urban areas. In 2008, it handled two fifths of the Prêts-Logement 92 interest-free loans in the Hauts-de-Seine department and more than a quarter of the Prêts Paris-Logement loans in neighbouring Paris. Created by the Murcef Act, bank mediation has become an integral part of the customer relationship. Initially linked to retail deposit accounts, the scope was extended in January 2008 to cover disputes linked to financial instruments, savings products, loans and investment services, insofar as these concern a contract s execution rather than its negotiation. Crédit Mutuel's ombudsman received more than 2,810 requests in 2008, a rise of 11.6% from More than half of these (62%) fell within his ambit, and 79% of the requests received a response within a month. The ombudsman issued 1,753 opinions in 2008, 56% of which were partly or totally in the customer s favour. Although the ombudsman's opinion is not binding for the network, its position has been followed in all cases by Crédit Mutuel s Regional Federations and CIC's regional banks Annual Report 41

40 Bankinsurance CRÉDIT MUTUEL ENSEIGNANT: A SPECIAL RELATIONSHIP Union nationale du Crédit Mutuel Enseignant (UNCME) now has more than 40 mutuals throughout France*. It offers a service combining clear conditions, quality products and mutualist values to civil servants employed by the departments of education, research, youth and sports and culture. Since 2008, CME have been able to extend membership to teachers and non-teaching staff in the private education sector within the framework of a partnership with the State. In all areas - package for young teachers, loans, savings, banking and insurance - CME promotes the mutualist values that have made it such a success with its members and customers. * Nearly four million young customers In 2008, the Crédit Mutuel group invested further in developing its offer for people under the age of 26, who represent nearly a quarter of its customer base. Teaching young people how to use basic banking services, encouraging savings from an early age and assisting young people along the road to independence: these are the main lines of the bank s offer comprising two products: Pop Corn and VIP for a customer segment that is central to its development strategy.  Pop Corn covers the period from birth to 11 years: savings book, life insurance, organisation of birth-related schemes, Christmas gifts, birthday gifts, etc., while  VIP caters for the age bracket in three major areas: day-to-day banking needs, notably through Eurocompte VIP, a service package enabling customers to manage their budgets; accommodation, with Clic-Clac, a package for young people comprising a loan to finance the guarantee deposit, a bank guarantee for the landlord and a home insurance policy. These products can be subscribed to separately if required; projects: computer loans, the 1 per day driving licence scheme, and flexible student loans, including, since the end of 2008, the new Oséo government-backed student loan, which enables the student to borrow up to 15,000 over a two- to ten-year period and comes with a government guarantee of 70% for the unpaid portion of capital. This loan is specifically tailored for young people without a parental guarantee. The VIP offer is mainly marketed through Crédit Mutuel s advertising on educational material handed out to students throughout their school years and at key moments in their academic and career paths. As well as Parcours J, CIC offers the Starts Jeunes Actifs package, which provides all of the bank's services at half price. As well as these specific products, the group offers intergenerational savings products that can be subscribed by the parents or grandparents in their own names or directly in that of the child. 42 Crédit Mutuel

41 THE BANK FOR MUSIC Allowing our customers to express themselves is the basis of our relationship. Sponsoring their music is one way of thanking them for the trust they place in us. Crédit Mutuel therefore gives its support to some of the leading music events and programmes on television and radio, such as the NRJ Music Awards on TF1 and NRJ, the Victoires de la Musique on France 2 and France Inter, Taratata and N'oubliez pas les paroles. In 2007, it concluded a partnership with Radio France to support music programmes and discussions on France Inter, France Info and Le Mouv, as well as the France Bleu talent showcase night. Crédit Mutuel is also involved in major music events such as NRJ concerts, the Printemps de Bourges festival, the Francofolies de la Rochelle and the Fête de la Musique. In addition, it promotes numerous regional events. With a view to bringing live music to as many people as possible, Crédit Mutuel is associated with Jeunesses Musicales de France, and with the 2,000 concerts they give each year in primary and secondary schools, as well as with Confédération Musicale de France which groups some 700,000 musicians in 6,000 music schools, orchestras and choirs. Since 2008, Crédit Mutuel has been making its voice heard over the Internet, notably with Goomradio, through which it broadcasts two exclusively digital radio programmes targeting young people: Pop Corn radio for 8-to-12 year olds and VIP radio for 12-to-18 year olds. Again through music, Crédit Mutuel works for sick children by supporting the Tout le monde chante cancer prevention and support endeavour. HELPING YOUNG TALENT EMERGE WITH CERCLE PASSEPORT TÉLÉCOMS Since 2007, Crédit Mutuel has been a partner in the Cercle Passeport Télécoms initiative, which enables scholarship students from disadvantaged areas to go to engineering or business schools by eliminating all financial discrimination. Crédit Mutuel offers student loans requiring no parental guarantee, with the possibility of deferring repayment until the recipient has finished his/her studies. In conjunction the Cercle, it also runs educational workshops on the subject of budget management in the schools concerned. This equal opportunity partnership reflects Crédit Mutuel's goal of becoming the bank for young talent in areas targeted for development by the government's urban policy plan, by providing material help for young people to enter top-level professional careers. In 2009, Cercle Passeport Télécoms was one of the winners in the 26th Admical Oscars corporate patronage awards. CIC also supports young performers through its patronage, since 2003, of the classical music awards, Victoires de la Musique Classique. This event, which enables young classical musicians to build a name, helps to promote classical music to an increasingly wide audience throughout France. Channelling energies, being attentive and developing individual talents and goals are just some of the values to be found in music and which justify the group's commitment to this form of expression Annual Report 43

42 Bankinsurance CREDIT MUTUEL LAUNCHES ASSOCIATHEQUE On 1 September 2009, Crédit Mutuel launched Associathèque, a public information and services website designed to consolidate the group s position in the non-profit associations market. Designed for everyday use by voluntary workers and current and future association directors, Associathèque provides a wealth of information (legal, tax, accounting, community and events news, along with handy guides, downloadable information sheets and templates, Partenaire Associations and other newsletters, etc.). It also offers numerous online services to help manage and promote an association, such as a directory, an association profiling tool, small ads, legal and tax advice from a partner law firm and data upload to the local CM-CIC branch. Associathèque is regularly updated and enhanced by our partner companies*. It is a free service with a subscriber area reserved for customer associations with a remote banking contract or a Eurocompte account (subject to region-specific terms and conditions). The public part of the site offers various useful features, such as a guide on how to launch an association. As well as providing assistance to associations, Associathèque is a means for Crédit Mutuel to win new customers, secure the loyalty of existing ones, and burnish its image. The leading bank for associations With nearly 400,000 associations in its customer base, Crédit Mutuel is the active partner of at least one out of three associations and one out of two works councils. It responds to the needs of this sector which plays a key role in reinforcing social cohesion and creating new community ties. I A specifically targeted banking offer At end-2008, the group managed 11.6 billion in deposits and 1.7 billion in loans for non-profit associations. A specifically targeted offering and close relationships with associations and their federations at national and regional level have helped to make Crédit Mutuel their natural partner. These close relationships, built as much on the group's values as on its professional efficiency, have created a climate of trust: CNRS-Matisse s survey, which was launched in 2005 and introduces new evaluation criteria every year, ranks Crédit Mutuel as the leading bank for medium-sized and large associations, with a third of the market. Crédit Mutuel manages 22% of the funds of all the associations in France: it is their leading banking partner in the areas of healthcare, social work, education, training, social integration and humanitarian aid, and the second largest bank for associations in the areas of sport, culture, human rights, charities, local economic and development initiatives, and campaign groups. I Renewed support In 2009, Crédit Mutuel renewed its partnership with the Familles Rurales (rural families) association. For the fifth year in a row, this partnership provides financial support for humanitarian, ecological, cultural and social projects handled by young people aged under the Trophées J.Pass competition. The Group has partnered the Réseau National des Juniors Associations (Rnja) ever since its creation in This association enables young people under eighteen to organise initiatives and carry out projects within an association framework. During the 2007/2008 school year there were over 800 Junior Associations working with some 8,000 under-18s handling projects. As one of RNJA s leading banking partners, Crédit Mutuel also contributes to the financing of the guides it publishes. In 2008, it helped fund a study of the impact of involvement in voluntary work on the career paths of young people. Go to: * Editions Juris Associations (an Editions Dalloz company), In Extenso, an accounting firm belonging to the Deloitte group, and Service 1901, a consultancy specialised in the associations sector. 44 Crédit Mutuel

43 Crédit Mutuel has been a partner to Coorace for more than ten years, and renewed its ties with this national federation for socially cohesive economic development in Coorace s purpose is to assist people who are temporarily out of work and to contribute to developing employment at national level. It notably helps its 450 members to implement quality certification procedures (Cedre and Afnor Services) to heighten their professionalism and capacity to create jobs and produce quality goods and services. Crédit Mutuel financed the 2009 First Prize for Innovation designed to stimulate and encourage the ingenuity of Coorace s members in the area of social inclusion. A COMMITTED BANK Children, young people, the elderly and social aid: Crédit Mutuel supports numerous networks within the framework of long-term agreements, including: Union Nationale pour l Habitat des Jeunes (Unhaj), a housing scheme formerly known as Foyers de jeunes travailleurs. The bank provides financial support and communication tools to ensure more publicity for its action and notably for its development programme aimed at building 10,500 new housing units and renovating another 3,500. Association des Directeurs au Service des Personnes Agées (AD-PA, formerly Adepa - care for the elderly). Crédit Mutuel is providing financial support over three years for communication, the organisation of events and the development of relations between retirement homes, home care services and families. Fédération nationale des jardins familiales, which focuses on nature conservation and the environment, sustainable development and the enhancement of the living environment. Crédit Mutuel contributes to the development of this association on the basis of shared values. Ashoka (business development aid), which Crédit Mutuel helps by its part-financing of the Impact competition. Entries are selected based on the criteria of social impact, development strategy feasibility and creative fund-raising, and this year s finalists received their prizes in February at the Salon des Entrepreneurs in Paris. Fédération sportive et culturelle de France. This sporting and cultural association is present in 74 departments throughout France and comprises more than 3,700 associations and sub-associations with 500,000 members, of which half are under 17, and 40,000 voluntary supervisors. Union nationale interfédérale des oeuvres et organismes privés sanitaires et sociaux (Uniopss), a national federation of private healthcare and social work organisations. As a member of its Club des partenaires (partners club), Crédit Mutuel provides financial support for a number of projects and is well represented at the federation s conventions and annual meetings Annual Report 45

44 Bankinsurance Number 2 in the small and medium-sized business sector Crédit Mutuel plays an active role alongside all those involved in the regional economy, whether independent professionals, very small enterprises or small and medium-sized businesses. It ranked as the number two bank for the sector in 2008 with nearly 68 billion in outstanding loans to very small, small and medium-sized enterprises. I Specialised subsidiaries Business financing activities are carried out by the network and by specialised subsidiaries: Banque de l Economie du Commerce et de la Monétique (BECM), a subsidiary of Crédit Mutuel Centre Est Europe; Banque Commerciale pour le Marché de l Entreprise (BCME), a subsidiary of Crédit Mutuel Arkéa and Crédit Mutuel de Loire-Atlantique et du Centre-Ouest; Banque Commerciale du Marché Nord Europe (BCMNE), holding company for the business banking division of Crédit Mutuel Nord Europe the majority shareholder in SA Crédit Professionnel, the central body for Crédit Professionnel Belge; CAMEFI Banque, a jointly-owned subsidiary of Crédit Mutuel Arkéa and Crédit Mutuel Méditerranéen. For its part, CIC has put in place a system ensuring the local presence of account managers and rapid response through a short decision-making structure. MEDIATION: A LOWER RATE THAN THE NATIONAL AVERAGE At the end of October 2008, the French government put in place a business mediation facility as one of a number of measures to support the economy. The facility is designed in particular to help businesses facing cash flow or financing difficulties. The mediaton unit works directly with the various players responsible for financing businesses. Out of a portfolio of 850,000 corporate customers, at end-march 2009 the group was handling fewer than 1,800 cases, and had a mediation rate of 45% compared with a national average of 65%, an achievement made possible thanks to the mediation scheme1. The group s mediation rate highlights the network s in-depth approach to referrals and its excellent level of local knowledge, as well as the higher percentage number of companies experiencing structural difficulties, which can be partly attributed to a surge of applications on the facility s introduction. A great number of companies, notably very small businesses, applied to the mediator, which invariably approved the Crédit Mutuel and CIC s decisions. The mediation remit is being gradually broadened, and now covers credit insurance, with the introduction of the Complément d Assurance Crédit Public scheme, the revitalisation of depressed job markets and the bolstering of companies share capital by private equity firms. As part of a charter signed with the mediator, the country s socioprofessional networks have made a commitment to coordinate their actions at ground level to provide advice to companies and, where necessary, to help them prepare mediation applications. 46 Crédit Mutuel

45 The group also plays a major role among independent professionals and tradesmen with almost 650,000 customers and a 23.5% penetration rate. It is also strongly positioned among business start-ups, notably through the assistance provided to business creators and through the distribution of business start-up loans (Prêts à la création d cntreprise Pce) in which it holds third place with a market share of 22% for start-up financing. In 2006, the long-standing partnership with Oseo was strengthened through a nationwide agreement. This agreement was implemented by the regional banks in This agreement significantly accelerates procedures, with Oseo delegating loan guarantee decisions for very small business customers to Crédit Mutuel and CIC's regional banks; in return, the group undertakes to ensure a rapid response from examination of the financing application through to implementation. The Group is also a long-standing partner of the Adie, France Initiative, France Active and Boutiques de Gestion business development networks. It has worked for more than 20 years with France Initiative, the largest business creation aid network in France. The group is a member of the France Initiative "Entreprises" collegial body. It is actively involved with more than 60% of the local initiative platforms, with Crédit Mutuel covering 141 and CIC 128. In 2008 it distributed 2,270 loans totalling nearly 132 million and accounting for more than 20% of total bank financing. The group is also involved in France Active, a network that aids and finances social inclusion through economic initiatives. As founder of six of the 38 local funds, Crédit Mutuel is present on nearly half of the loan acceptance committees and accounts for 23% of the guarantees given in In January 2009, Crédit Mutuel formed a partnership with Réseau des Boutiques de Gestion, a nonprofit association and the leading independent network for business start-up aid. Through the partnership it helps businesses from the ideas stage through to their third anniversary. The Boutiques de Gestion initiate and manage a variety of schemes (business workshops, experimental business incubators, financial engineering for projects, enterprise zones and entrepreneur networks) to encourage job creation, initiative-taking, wealth creation and social cohesion. With nationwide coverage provided by 401 local branches, the network contributed to the creation of 16,000 businesses and 19,500 jobs in SPECIALISED MUTUALS FOR THE HEALTHCARE SECTOR CMPS, which was created more than 30 years ago, is a network of branches dedicated exclusively to professionals working in the healthcare sector*. Representatives from all segments of the medical and related healthcare sectors sit on the boards and supervisory bodies of these mutuals. These mutuals assist practitioners with their strategic and financial decisions, whether professional or private. In each case they offer personalised solutions, from bankinsurance, electronic payments and financing packages for individual projects to wealth management from a savings strategy perspective, retirement planning and tax planning. In addition to banking expertise, the CMPS have developed active partnerships with professional associations, unions, specialised management associations, professional guilds and regional and national institutional bodies. * Annual Report 47

46 Bankinsurance The challenger in the farming sector Crédit Mutuel is the number two bank for the farming sector with 13.1% of subsidised loans and 11.8% of the medium- and long-term loan market. Medium- and long-term loans increased by 10.9% to 1.3 billion in Taking all loan categories into account, outstandings came to 4.6 billion, up 9.1%. Through Fédération du Crédit Mutuel Agricole et Rural (FCMAR), a specific national structure with elected members of the farming community, and its own specialised advisors, Crédit Mutuel is particularly attentive to trends in the sector all the more so as more than half its local mutual banks are located in rural areas. It provides farmers with loans, savings products and insurance and ensures that its offer remains simple and suited to the specific needs and hazards of farming. Actimat is a farm machinery financing offer distributed directly through farm machinery dealers in the form of conventional credit or through operating leases. Dealers have direct access to enabling them to make simulations, input data, and file and monitor loan requests online. Préviris offers online access to grain futures markets, with an internal control system ensuring the security of orders. Agridispo provides farmers with a new range of short-term cash facilities to enable them to respond rapidly to sudden financing needs. 48 Crédit Mutuel

47 Technology: at the cutting edge Using its technological skills to serve its customers remains a central element of the group's development strategy. The latest developments confirm its position as a leading provider of innovative technological services. Since the end of 2006, Crédit Mutuel has been testing secure contact-free payments at merchants in Strasbourg with NRJ and SFR mobile telephony customers, and since January 2008 with Orange and Bouygues customers. This service breaks new ground by its simplicity and ease of use, and its interoperability will rapidly set a standard for mobile phone payments. Crédit Mutuel has also been experimenting with contactless cards compatible with mobile-phone payment equipment, whose key advantage is rapid payment of amounts of less than 20. There are already 4,500 CM-CIC customers using these cards. The group's priority has always been to serve customers better and offer innovative products and services that respond to their needs. Remote home and business surveillance are just two examples that reflect this priority, and the group is now the leader in this activity with 29% of the market and 160,000 subscribers. New roaming services are regularly being added to these surveillance solutions, such as SMS alerts to inform parents of their children s return from school and mobile phone activation of alarm systems. Close to customers at all times, the group provides a full range of remote banking channels. As in previous years, there were significant developments as regards the Internet: the bank s provision of ten-years free storage of statements in electronic rather than paper form has triggered real interest among customers and also contributes to sustainable development. The number of customers using this service doubled in 2008 to reach 220,000 at year-end, with 6.5 million documents stored; in order to facilitate the use of ATMs and save time, customers can now use the Internet to specify favourite parameters for withdrawals from group ATMs, thus reducing the amount of time spent taking money out. This service is a good illustration of how remote banking channels can complement each other, with a functionality set up using the Internet for use via another channel; customers interest in online operations is growing steadily, with a doubling of online savings account subscriptions from 10,000 to 20,000 over the year and over 100 requests per day for instant quotes, or 40,000 for the year as a whole. Internet services now also represent a major means of sourcing information for customers, with over 400,000 requests logged in Lastly, the new online consumer credit application service has got off to an extremely promising start. Remote banking continued to gather steam in 2008 with a 27% increase in contacts to 367 million. The Internet accounted for 354 million of these contacts, representing a 29% rise Annual Report 49

48 Bankinsurance NRJ MOBILE THE BEST MOBILE TELEPHONY SERVICES Crédit Mutuel s partnership with NRJ Mobile in the area of telephone services provides a new channel for bankinsurance and services and constitutes a new approach to payments. In October 2008, NRJ Mobile showed once again its ability to innovate by being the first mobile virtual network operator (MVNO) to offer services via two physical networks (SFR and Orange). An Internet simulation enables customers to find the mobile phone offer best suited to their needs by answering key questions. Services, which include unlimited talk time offers, are marketed under the "NRJ Mobile", "Crédit Mutuel Mobile" and "CIC Mobile" brands and allow the Group to provide its members and customers with the best in mobile telephony. Crédit Mutuel also added new features and services to the other channels of its remote banking offer: In integrating s into the information system and linking them to sales data, the MailTiers system represents a major step forward in managing our remote relationships with members and customers. This innovate solution accounted for over 3.5 million contacts in 2008 and comes with a secure messaging system integrated into CyberMut. Another new service allows customers to transfer funds via mobile phone or ATM to a beneficiary created online using CyberMut. In 2008, 2.1 million connections were made to our mobile Internet service, an increase of 41%. In 2009 we introduced a new platform equipped to handle all current mobile phones, from the traditional WAP devices to the more sophisticated Apple iphone and Google Android. The Top Infos and Filbanque Alert services delivered 24% more alerts than in 2007, with a total of over 5 million, of which 95% were via SMS and the rest via . The special SMS+ services, which enable customers to request their account balances by SMS, recorded nearly 70,000 connections in Following its mobile phone video call back offer, Crédit Mutuel inaugurated the first ever video call back banking service via Skype for CyberMUT customers; the group s remote offer now includes videophone via PC and mobile telephone. There were also new developments in the area of e-commerce transaction security: CM-CIC has provided effective protection for its remote banking customers since 2005 thanks to a secure identification process and the bank s bar code. Protection is now even greater thanks to the recent introduction of 3D Secure, the Visa and MasterCard authentication technology used to offer added security for web purchases; At end-2008 the CyberMUT P@iement and P@iement CIC brands merged to become CM-CIC P@iement. The renewal of our Payment Card Industry Data Security Standard (PCI-DSS) certification confirms the high standard of security offered by our Visa/MasterCard payment solution. Setting up and managing a SWIFTNet connection to process inter-company banking transactions is a complex process: the group has developed three customised offers to facilitate secure international data transmission between companies and SWIFTaffiliated banks: WEB CM-CIC services for small businesses; CM-CIC s SWIFTNet Plug & Play for medium-sized and large businesses; Service Bureau SWIFTNet for major corporates. Lastly, Crédit Mutuel supplies State-appointed legal guardians throughout France with a ward management software called Gestutel. This software is the most comprehensive in the market catering to the special needs of guardians, whether in the public or private sector. Gestutel is currently used to manage 26,500 adult Wards of the State. 50 Crédit Mutuel

49 LEADING THE WAY IN ELECTRONIC PAYMENTS Crédit Mutuel ranks second in France in electronic payments with a 20.7% share of the overall market and a 26.5% share of card payments at merchants. It is also number two in bankcard issuance with 9.4 million cardholders, and in ATM networks with 7,558 ATMs and over 230 million ATM withdrawals. In 2008, 1.7 billion card payments were made at 222,500 acquired merchants. In addition to a range of ordinary banking transactions (account balances, transfers, deposits, requests for new cheque books, etc.), customers can use the ATM network to carry out an ever increasing range of reload transactions for mobile phones, electronic purses, travel cards (Monéo, Navigo, etc.). Crédit Mutuel-CIC strengthened its leadership in public sector purchasing cards in These cards simplify administrative procedures and reduce processing costs while giving greater responsibility to the cardholder by delegating purchases within allocated budget limits. The group has been selected by over 80 large and medium-sized public bodies in various parts of France: ministries, regional governments (Poitou-Charentes), departments (Aude, Côte d Or, Ille-et-Vilaine, etc.), metropolitan authorities (Mulhouse, Nancy, etc.) and municipal authorities (Le Havre, Orléans, Toulouse, etc.), as well as universities (Angers and Paris), hospitals and public institutions. The group's expertise in electronic payments allows it to handle 34% of international payments made by French companies with sales of 50 million to 500 million. In 2008, it signed major electronic payment processing contracts with distribution groups Carrefour and Leclerc (through the latter s banking subsidiary, Edel). These contracts strengthen its position as Europe s second largest acquirer of electronic payments, an acquirer being the intermediary between a transaction s remitting bank and that of the associated supplier. Crédit Mutuel s technical know-how has enabled the group to break into the Moroccan market with the creation of EurAfric Information, a joint venture between Euro Information and Banque Marocaine du Commerce Extérieur (BMCE), which will handle the BMCE s IT requirements and any other business opportunities that arise in Africa Annual Report 51

50 Bankinsurance Retail banking subsidiaries I Factoring FactoCIC, the group's factoring subsidiary, is the fifth-largest bank factor in France. It has a market share of 7.5% in terms of volume of receivables purchases, 2,849 active contracts, turnover of over 10 billion up 12.7% - and total outstandings of 1.99 billion, up by 9.4%. New production was centred on new contracts representing a potential volume of 3.9 billion, up 50%, thanks to strong growth in the corporate segment. Implementation of a new sales and marketing coordination throughout the network, growth in the export activity and development of the Crédit Mutuel Factor product within the federations contributed to earnings. Net profit rose by 35% to 23.2 million. I Consumer credit A number of specialised entities round off the consumer credit offering marketed through the network: Financo, a subsidiary of Crédit Mutuel Arkéa and six other Crédit Mutuel groups; Sofemo, a subsidiary jointly owned by Crédit Mutuel Centre Est Europe and CIC; and Créfidis, a subsidiary jointly owned by Crédit Mutuel Nord Europe and Cofidis. Total production was 9 billion (down 4.2%), of which the subsidiaries accounted for 1.4 billion (up 9%). The acquisition in mid-2008 of Citibank Deutschland, Germany's leading consumer credit provider, and in Q of a controlling stake in Cofidis, the 3 Suisses International consumer credit subsidiary with operations in around ten European countries, has enabled the group to enter a new phase of strategic development: it is now Europe s fourth largest consumer credit provider, with outstandings of 27.3 billion. I Real Estate The Crédit Mutuel group is active in all areas of the property market from property sales and promotion through to property development and facilities management. The main subsidiaries are Ataraxia (Crédit Mutuel de Loire-Atlantique et du Centre-Ouest and Crédit Mutuel de Bretagne) which is active in all segments, UFG (Crédit Mutuel Nord Europe), CM-CIC Agence Immobilière (Crédit Mutuel Centre Est Europe) and Soderec. The property crisis took its toll on business in 2008, a year characterised by lengthening placement times, a 25% contraction in sales for existing properties and a 40% fall in investment in new-build sales, which had, for some years, been buoyed by tax breaks. Taken all together, the subsidiaries made more than 3,400 property sales (down 7.3%) in 2008, mainly in new property, for a total amount of 601 million, corresponding to a drop of 1%. Ataraxia, the only subsidiary to operate in property management, manages more than 5,800 individually owned and 19,500 collectively owned properties. The market downturn led to the disposal in October 2008 of the Avis Immobilier franchise and a restructuring of this business. CM-CIC Agence Immobilière, CM-CIC Participations Immobilières, Sarest and Sofedim make up Centre Est Europe-CIC's property division. CM-CIC Agence Immobilière (formerly Afedim) markets new property developments on behalf of the Crédit Mutuel-Centre Est Europe and CIC networks including CIC private banking to investors 52 Crédit Mutuel

51 and homebuyers. In 2008, 1,869 residential units were marketed, representing total sales of nearly 321 million. CM-CIC Participations Immobilières (formerly Soparim) supports property developers by helping finance non-trading property companies (Société Civile Immobilier SCI) used for residential property development programmes throughout France. In 2008, CM-CIC Soparim was involved in nine new transactions representing around 470 residential units for a total amount of 95 million. While Sofedim operates as a property broker Sarest, a property developer, made significant progress with the projects set up through the newly opened branches in Lyon, Lille and Paris, with nearly 450 units under development. It sold 189 lots, mainly in Alsace- Lorraine, and secured reservations for a further 126, generating sales of 23 million and net profit of nearly 600,000. UFG REM is the property management company of the UFG group (Crédit Mutuel Nord Europe). The French leader in property investment funds with managed funds of 5.2 billion, or almost 30% of total French capitalisation, UFG REM manages a wide range of property investment funds: SCPI, SCI and OPCI. In early 2009 it launched the first OPCI dedicated to socially responsible investment, a product of UFG s partnership, via UFG REM, with Banque Sarrasin. UFG REM offers expertise in all areas of property management, from product innovation, asset management, investments and sales to transaction processing, marketing, and the maintenance and development of portfolio properties. It markets properties to three broad customer categories including retail (through the UFG Partenaires-developed sales network), institutional (through a dedicated institutional sales team) and customers introduced through the Crédit Mutuel Nord Europe networks. Soderec, a nationwide Crédit Mutuel subsidiary, operates in the field of public works projects, where it acts as an agent or site manager on behalf of the State, local authorities or affiliated bodies. It also undertakes private contracting work for these clients. Business was satisfactory in 2008, when revenues from service provision came to 5.7 million with net profit of 1 million. Soderec won several tenders for new projects such as medical research centres, the redevelopment of the Thionville psychiatric hospital, and extensions to hospitals in Saint-Cloud and Pontarlier. It also completed a number of major contracts in 2008, including the Zénith music venue in Saint- Etienne, the Saint-Louis secondary school, the offices of the Seine-Saint-Denis department s headquarters for public safety, the emergency ward of the Nantes teaching hospital and, under tenancy scheduling agreements, three police stations in Alsace. I Equipment leasing For the fifth year running, CM-CIC Bail (Crédit Mutuel Centre Est Europe) recorded sustained growth in 2008 with an 8.6% increase in sales to 2.6 billion, taking its total outstandings to 4.8 billion (up 12.7%). Following the creation in 2007 of CM-CIC Belgium, a Brussels-based subsidiary, a second European subsidiary was set up in Frankfurt. CM-CIC Bail, Bail Actéa (Crédit Mutuel Nord Europe) and Sodelem (a subsidiary owned jointly by several Crédit Mutuel groups in the west of France) manage 202,000 contracts representing a total of 6.2 billion, corresponding to an increase of 11% in Aggregate production on 81,000 contracts came to more than 3 billion, giving the group a 12.1% share of the overall market (up 0.4 points). I Property leasing As well as medium and long-term loan financing, business customers are offered specialised property leasing products, through CM-CIC Lease (jointly owned by Crédit Mutuel Centre Est Europe and CIC), Bail Entreprises (Crédit Mutuel Arkéa), Bail Immo Nord and Batiroc Normandie (Crédit Mutuel Nord Europe). Production grew by 9.4% to 623 million, i.e. 12% of the market (0.5 points up on 2007), while managed outstandings increased 5.9% to 2.6 billion. Europe s number 4 consumer credit network 2008 Annual Report 53

52 Bankinsurance Insurance KEY FIGURES No. 1 in non-life insurance No. 4 in life insurance 10.7 million policyholders 26.6 million contracts (in millions) Net banking income: 995 Gross operating profit: 535 Net profit, group share: 420 Insurance is the group's second-largest business. In 2008, it generated net banking income of almost 1 billion, i.e. 11% of the total, and net profit, group share of 420 million. In non-life, the group retained its position as the leading non-life bankinsurer with an 6.5% increase in premiums to 2.2 billion. It ranked fourth in life insurance but premiums declined significantly by 18.5% in 2008 to 8 billion, in line with the contraction in the sector. This was caused by lower premium collections and, above all, by the situation in the financial markets. In 2008, the group's insurance subsidiaries posted aggregate premiums of 10.2 billion, down by 14%. Numbers of contracts managed increased by 4.4% to 26.6 million, of which 22.5 million were non-life contracts, while policyholders numbered almost 11 million. The insurance activity is carried out through Groupe des Assurances du Crédit Mutuel (GACM), Suravenir (life), Suravenir Assurances (non-life) and Assurances du Crédit Mutuel Nord (ACMN) (life / non-life). Consolidated net profit contracted by 14% to 473 million. With over a million new contracts subscribed in 2008, the insurance division was managing 20 million contracts, for more than seven million policyholders, by year-end. ACM s range of insurance products is marketed by the 15 Crédit Mutuel federations and all of the CIC regional banks, representing more than 4,500 sales outlets in total. A highlight of 2008 internally was the transfer to ACM s non-life subsidiaries of Suravenir Assurances s non-life portfolio by Fédération du Crédit Mutuel Loire-Atlantique et du Centre-Ouest, which is now responsible for marketing ACM s property and casualty and personal insurance businesses. The company s entire product range was upgraded with improved cover offers and services. Groupe des Assurances du Crédit Mutuel, flagship of the bankinsurance concept invented by Crédit Mutuel in 1970, is 53% owned by Banque Fédérative du Crédit Mutuel, 20.5% by CIC and 26.71% by the Crédit Mutuel federations. In 2008, GACM posted consolidated premiums of 6.7 billion, down by 13.9%, in line with the trend in the French market. Life insurance company premiums totalled 4.8 billion, down by 21%, while premiums for non-life subsidiaries continued to grow steadily, rising 11.1% to 1.9 billion. In property and casualty insurance, home cover was added to notably with a flat- or house-sharing offer and the Dépannage à domicile home assistance service, which was bundled into certain policies. Since 2009, an eco package offering cover for renewable energy-based installations has been available as an option for high-end policies, while the company has broadened the scope of its motor insurance policies with a view to offering optimal cover for drivers and their vehicles. 54 Crédit Mutuel

53 In personal insurance, the Plans Autonomie contract offers comprehensive cover for dependency risk, while the Pack Protection Sociale contract, targeting sole traders and shareholder-managers of small companies, was launched in The Assurance Santé health insurance offer is being gradually adapted to the specific needs of all customer types thanks to a variety of options based on their stated requirements. Réflexe Prévention Santé, the contract dedicated to alternative medicine, was upgraded to offer extra cover. This innovative solution is available to all policyholders as an add-on to their traditional health insurance policy. In life insurance, a number of alternative investment options were made available to multisupport subscribers: Plan Assur Horizons, Plan Assur Horizons Pro, Plan Assur Horizons Agri and Plan Patrimonio. Among the new offers for 2009 is the Livret Assurance, a scheme for encouraging network members to embark on renewed marketing of life insurance products. The CIC network also launched a new collective cover contract. or the third year running, ACM's Plan Assur Horizon received a Label d'excellence from Dossiers de l Epargne. This contract also received La Vie Financière s Etoile de Bronze award and Le Revenu s Trophée d Argent. Plan Patrimonio received a Label d'excellence from Dossiers de l Epargne. For the second consecutive year, the Dossiers de l Epargne panel awarded the Assurance Santé and Assurance Habitation contracts a Label d'excellence. For the fourth year in a row, the Plans Prévoyance, XL Prévoyance and Sécuritys contracts received a Label d'excellence from Dossiers de l Epargne. Since Assurance Auto (auto cover) won a Label d'excellence in 2008, the entire range of ACM products has now earned distinction Annual Report 55

54 Bankinsurance CREDIT MUTUEL ARKEA: MAIN PRIZES AWARDED BY THE FINANCIAL PRESS Life insurance Etoile d Or (gold) in the bank category for Prévi-Options (La Vie Financière). Trophée d Or (gold) for Symphonis-Vie (Le Revenu). Labels d Excellence for Symphonis-Vie, Myrialis and Accord Avenir (Les Dossiers de l Epargne). Laurier d Argent (silver) in the seasoned investor multisupport category for Symphonis-Vie (Investir Magazine). Laurier de Bronze (bronze) in the euro funds category for Symphonis-Vie (Investir Magazine). Palme d Or (gold) in the Internet multisupport category for Suravenir s Symphonis-Vie and Meilleurtaux Vie contracts (Journal des Finances). Personal protection Label d Excellence for the Prévi-Obsèques contract (Les Dossiers de l Epargne). Non-life Labels d Excellence for Suravenir Assurances automobile, motorcycle, camper van, home cover, personal accident and dependency contracts (Les Dossiers de l Epargne). ACM s international expansion was supported by its bankinsurance experience and logistics. Insurance contracts are marketed under the European passport in Germany and Luxembourg, and in Spain, through the savings bank network of Sa Nostra, the Balearic Islands leading financial institution. In Belgium, Partners uses its agency network to market property, casualty and personal insurance. ACM is also present in Tunisia, Morocco and Canada through its shareholdings in a number of companies. In the first half of 2009, Royal Automobile Club de Catalogne (RACC), Spain s largest auto insurance broker with over a million policyholders, used its network of over 200 outlets to roll out ACM s auto and home insurance contracts, specially tailored for the Spanish market. Suravenir continued to expand in life insurance and personal protection, and now manages 3.2 million contracts for more than 2 million customers. In a testing environment, and following an exceptional year in 2007, this Crédit Mutuel Arkéa / Crédit Mutuel de Loire-Atlantique et du Centre-Ouest subsidiary posted a strong performance despite a 25.4% decline in premiums to 2 billion, making a net profit of 86.8 million (down 6% from 2007 but up 35% compared with 2006), and maintaining its sustainable growth trajectory. A blend of innovation and caution enabled the company to weather the storm last year, when it consolidated the numerous partnerships initiated in 2006 and 2007, worked to secure its innovations for long-term use and brought new products and services closer to completion. In parallel, its four distribution channels delivered an enhanced performance. These comprise a banking network channel made up of the Crédit Mutuel shareholder federations Bretagne, Sud-Ouest, Massif Central and Loire-Atlantique et Centre-Ouest, together with Banque Privée Européenne, Financo and Crédit Municipal de Nîmes; a white label channel for online distribution under other brand names (Fortunéo, Fidelity Investments, Accord Avenir, meilleurtaux.com and Linxea); a channel dedicated to independent financial advisers; and a company retirement savings channel for brokers specialised in group insurance. The quality of Suravenir s products and services, which prioritise innovation and customer satisfaction, is regularly singled out for praise by specialist publications. Suravenir Assurances became a wholly-owned subsidiary of Crédit Mutuel Arkéa following the withdrawal of ACM and Crédit Mutuel de Loire- Atlantique et du Centre-Ouest at the end of This company manages 1.4 million contracts (up 8% at constant scope) covering a full range of non-life products. Following the sale of a portfolio of 140,000 customers to ACM, it has almost 354,000 policyholders. In 2008, as well as adding to its products and services offer, Suravenir Assurances focused on restoring its portfolio to full potential, notably by diversifying its distribution networks. With this in mind, it strengthened its brokerage arm and launched a new unit for direct marketing over the Internet under the name "AssurAvenue". Premiums came to 175 million in 2008 with a 12.4% increase in net profit to 23.6 million. 56 Crédit Mutuel

55 Crédit Mutuel Nord Europe manages nearly two million life and non-life contracts through two subsidiaries: ACMN Vie and ACMN Iard. In 2008, against a backdrop of marked economic and financial turbulence, ACMN Vie recorded a 7% rise in sales to 890 million, thanks notably to the development of new distribution networks. The company upgraded a number of its products over the course of the year, and CMNE s flagship product ACMN Avenir was overhauled to adapt it to a fast-changing, more demanding client base. ACMN Vie also launched a number of new products online, which won numerous plaudits from the financial press on account of their innovative nature. Managed funds amounted to 6.5 billion, spread over nearly 282,000 life insurance contracts. AMCN Vie posted net profit of 14 million in 2008, compared with 38 million in 2007, a decline attributable to the financial markets underperformance. ACMN Iard s sales continued to rise in 2008, gaining 4% to 111 million. In a highly competitive environment, new signings increased and existing contracts attracted additional deposits, while the adoption rate and market share both rose. Net profit decreased 42% to 5 million owing to an increase in claims, notably in relation to tornado Haumont. Against a backdrop of intense competition, ACMN Iard continued to adapt its offer to its policyholders requirements and to develop its portfolio, while working hard to secure loyalty among existing customers. With this in mind, it pushed its strongest products, enhanced its day-to-day management and prioritised asset protection initiatives. JOURNAL DES FINANCES LIFE INSURANCE AWARDS (APRIL 2009) ACMN Vie Horizon Patrimoine won bronze in the general profile multisupport category. Abivie also won bronze in the Internet multisupport category LE REVENU AWARDS: CRÉDIT MUTUEL S SUBSIDIARIES WELL PLACED The group received numerous awards at the 32nd edition of Le Revenu* magazine s Trophées life insurance awards. Euro-denominated contracts: - Trophée d Argent (silver) for ACMN Horizon Patrimoine (ACMN Vie), - Trophée de Bronze (bronze) for Livret Avenir (ACM Vie). Active multisupport category, high-potential contracts : ACMN Avenir (ACMN Vie). Diversified multisupport category, attractive contracts : Accord Avenir (Suravenir). Diversified multisupport category, promising contracts : Prévi-Options (Suravenir). Diversified multisupport category, high-potential contracts : Plan Assur Horizons (ACM Vie). Aggressive multisupport category, attractive contracts : ACMN Horizon Patrimoine (ACMN Vie), Hedios Vie (ACMN Vie), MeilleurTaux Vie (Suravenir) and Symphonis-Vie (Fortuneo). Aggressive multisupport category, promising contracts : Plan Patrimonio (ACM Vie). * April Annual Report 57

56 Other main businesses The network draws on the expertise of specialised subsidiaries for the benefit of all its customers. Some activities of group-wide strategic importance, such as corporate and investment banking, asset management and private banking and technical services, are carried out through shared entities such as CM-CIC Asset Management, CM-CIC Securities, CM-CIC Marchés and CM-CIC Epargne Salariale Annual Report 59

57 Other Activities Corporate and investment banking KEY FIGURES (in millions) Net banking income: (64) Gross operating profit: (440) Net profit, group share: (736) The corporate and investment banking arm was the worst hit by the financial crisis, suffering in particular from the depreciation of its financial instruments portfolio. The decline in its net banking income - from 1.2 billion in 2007 to a loss of 64 million in was the sharpest among all the bank s divisions. It also made a negative contribution of 736 million to the group share of net profit. Corporate banking covers all the banking and related services provided to companies with annual sales of more than 50 million. Investment banking covers capital markets, merchant banking, venture capital, development capital, stock market trading and investment positions. Corporate banking, market activities and investment banking are carried out by Banque Fédérative du Crédit Mutuel (BFCM), the holding company for the Crédit Mutuel Centre Est Europe, and by Crédit Mutuel Arkéa. Crédit Mutuel, together with CIC, finances more than half of the 100 largest French companies. There were two distinct periods in 2008: - that running up to the end of summer, when business continued to grow steadily in terms of both new transactions and loans; - that following Lehman Brothers collapse in September, characterised by a very sharp fall in new lending related in particular to the stalling of the syndication market. In a deteriorated economic environment, our major corporate customers concentrated on looking after their own customers financing requirements, which led to a significant rise (around 20%) in loans drawn down. At the end of the year, ebbing growth led to a sharp decline in loan applications. The London, New York, Singapore and Hong Kong branches and CIC's 38 representative offices throughout the world assist the group s major corporate customers in foreign markets. Market activities, on behalf of customers or on the group's own account, are carried out by CM-CIC Marchés, the joint dealing room set up by BFCM and CIC in 2005, which is the main dealing room for the group, and by Crédit Mutuel Arkéa. 60 Crédit Mutuel

58 To facilitate access to the financial markets, BFCM created CM-CIC Covered Bonds in 2007, providing the additional refinancing capacity that is essential to the network s development. Having made two issues in its first year for a total amount of 4.5 billion, CM-CIC Bonds was faced with a particularly depleted debt market in The liquidity crisis that began during the summer of 2007 intensified following the collapse of Lehman Brothers in September Investors withdrew en masse from the credit markets, causing covered bond issues to suffer, despite the guarantees offered. Against this backdrop, in 2008 CM-CIC Covered Bonds cut down on its issuance activity, making a single public issue of 1.5 billion with a two-year term, in June. The transaction benefited from broad international placement and, on top of the portion subscribed by French investors, enjoyed significant participation from Germany, the Nordic countries, Italy, Ireland and Portugal. In addition, the group made internally-placed issues for a total of 8 billion in order to improve liquidity. I Stock market brokerage As an operator, clearing house and custodian/ account keeper, CM-CIC Securities covers all the needs of institutional investors, private asset management companies and security issuers. As a member of ESN LPP, a multilocal network composed of 10 brokers operating in 15 countries in Europe, CM-CIC Securities can trade on its customers behalf in all European and American equity markets. At the end of 2008, CM-CIC Securities was providing services to 90 management companies and managing 38,000 individual customer accounts and 233 mutual funds representing almost 13.7 billion in assets. I Venture capital With an investment portfolio of more than 2 billion at the end of 2008, Crédit Mutuel Centre Est Europe is a major French venture capital player, through three CIC entities that operate individually and jointly to cover the whole of France: Â CIC-Finance, which operates in venture capital and M&A advisory services, covering north-east France; Â IPO, covering the west of France for the past 30 years and the south-west region since The main event of 2008 was its merger by absorption of Ar Men and its takeover of Financière Voltaire, both subsidiaries of CIC Banque CIO-BRO managed by IPO since 2006 under an extinction management mandate; Â Banque de Vizille, which offers a comprehensive range of investment banking services, covering the south of France. These three entities invested 341 million in 2008 in an unfavourable market environment. Crédit Mutuel has several dedicated structures: Sobrepar, Synergie Finance, Océan Participations, Nord Europe Private Equity, CM-CIC Soparim and FCPR CM Arkéa. Their combined net investment portfolios amounted to nearly 170 million at the end of Annual Report 61

59 Other Activities CHIFFRES CLÉS (in millions) Net banking income: 549 Gross operating profit: 211 Net profit, group share: 74 Asset management and private banking In 2008, asset management and private banking saw net banking income decline slightly to 549 million owing to a drop in fee income, as very poor trading conditions in financial markets prompted a wait-and-see approach among investors. Against this particularly unfavourable backdrop, net profit, group share remained positive if slightly down at 74 million. I Asset management Asset management covers fund management, employee savings plans, and securities and custodian services when these apply to customers outside the retail network. This activity is carried out through CM-CIC Asset Management, the fund management skill centre that provides the Crédit Mutuel and CIC banking networks with a broad, innovative range of financial products, and through specialised subsidiaries, Federal Finance (Crédit Mutuel Arkéa group) and Groupe UFG, a multi-specialist asset manager serving institutional customers, intermediaries and private individuals for Crédit Mutuel Nord Europe. With net banking income of 549 million and net profit, group share of 74 million, the asset management and private banking division contributed in similar proportions to group net banking income and share of net profit (6.1% and 16.8% respectively). The subsidiaries specialised in employee savings schemes (CM-CIC Epargne Salariale and Federal Finance Banque) manage assets amounting to 4 billion. They offer a variety of products catering for companies of all sizes and notably for very small companies (fewer than 10 employees). The merger of CIC Epargne Salariale and Crédit Mutuel Participation, which took effect on 1 January 2008, 30 BILLION IN ASSETS UNDER MANAGEMENT FOLLOWING THE MERGER OF UFG AND LA FRANCAISE DES PLACEMENTS In April 2009, CMNE s multi-specialist asset management subsidiary UFG and independent third-party asset management company La Française de Placements, announced an agreement to merge their asset management activities to create a joint entity offering a sound reputation, innovation, independence and a solid shareholder structure. The agreement involves UFG s acquisition of a majority stake in La Française de Placements based on the purchase and exchange of holdings. In the second stage of proceedings, UFG and La Française de Placements will merge their asset management activities to give rise to a new entity, UFG-LFP. The combination of the two companies expertise and businesses will create a new group with nearly 30 billion in managed assets, compared with UFG s 21.5 billion under management at 31 March With over 600 investment professionals, it will constitute a major player in the asset management market, covering diversified management, bond management, commercial real estate investment and services, alternative multimanagement, equity management, socially responsible investment and private asset management. 62 Crédit Mutuel

60 TROPHIES AND PERFORMANCE AWARDS FOR CM-CIC AM Awards won at regular intervals, with performance measured by panels of independent experts, are a good indication of recognition of sustained achievement by the specialised press. In 2008 and 2009, CM-CIC AM received numerous awards for all of its investment products, which offer bond, equity and diversified management over periods of one, three, five and ten years. This illustrates the high quality of the service provided to the group's networks by its fixed-income and equity managers. The main awards include: Trophies Le Revenu (performance to 31 March 2009) Trophée d Or (gold) for the best three-year euro-denominated bond range (retail banking) Trophée d Argent (silver) for three-year overall performance (retail banking) Trophée d Argent (silver) for the best three-year diversified fund range (retail banking) Trophies Le Revenu (performance to 31 March 2008) Trophée d Or (gold) for the best overall performance over three years in retail banking (Crédit Mutuel-CIC range) Trophée d Or (gold) for the best three-year sector equities range in retail banking (CM range) Trophée d Or (gold) for the best three-year euro-denominated bond range in retail banking (CIC range) Trophée d Argent (silver) for the Union Obli Moyen Terme ten-year fund (euro-denominated bonds) Corbeilles awards Mieux Vivre Votre Argent Second place in the Corbeilles d or awards for performance over a year in the retail banking category (CM range, performance to 31 March 2008) Second place in the FCPE awards for three-year funds (performance to 30 June 2008) created CM-CIC Epargne Salariale. This new entity, which provides services to both networks, is the French number 5 in custody services and number 6 in terms of managed assets. It has 44,000 customer businesses, 1.6 million employee accounts and 3.7 billion in assets under management. At the end of 2008 total assets under management (1) came to 71.7 billion (down 15.3%), of which 38 billion in mutual funds marketed by the Crédit Mutuel and CIC networks, and 29.7 billion under mandate for private ( 4.4 billion) and institutional ( 25.3 billion) customers. Including the real estate investment funds business ( 5.3 billion mainly managed by UFG REM), the total comes to 77 billion, down 14.5% compared with The group's asset management subsidiaries win awards regularly for their quality and reliable performances. I Private banking Through its network and through specialised subsidiaries in France, Luxembourg and Switzerland, the Crédit Mutuel group offers a comprehensive range of private banking wealth management and advisory services for customers with financial assets in excess of 1 million. The main private banking entities are: CIC Banque Private Banking, the umbrella organisation for Crédit Mutuel-CIC s global private banking activities, which is conducted mainly in Europe (Luxembourg, Switzerland and Belgium) and Asia (Singapore and Hong Kong). Two main banks handle the group s French business: CIC Banque Privée, which provides high-end services to company directors, and CIC Banque Transatlantique, which offers a range of customised solutions, including in private banking, principally to French citizens residing abroad; Federal Finance, a Crédit Mutuel Arkéa subsidiary; Nord Europe Private Bank SA, a Crédit Mutuel Nord Europe subsidiary. The group also offers wealth management services through entities such as Crédit Mutuel Arkéa subsidiaries Banque Privée Européenne, which provides catch-all banking solutions for wealthy clients, and Fortuneo, which is France s secondlargest online brokerage house, offering a wide range of investment vehicles and sophisticated analytical tools. (1) These comprise mutual funds, excluding master funds, assets managed under mandates and company investment funds (employee savings schemes) Annual Report 63

61 Other Activities MORE THAN 200 BILLION IN SECURITIES UNDER CUSTODY CREDIT MUTUEL ARKEA: MAIN AWARDS IN 2008 Investment funds Trophée de Bronze (bronze) for Federal Finance for the performance over three years of its range of diversified funds (Le Revenu). Label d Excellence for Federal Finance for its Eparialis Pee and Pei and its Federal Finance Pee and Perco company savings products (Les Dossiers de l Epargne). Securities accounts Label of Excellence for Fortuneo for its small investors securities account (Les Dossiers de l Epargne). CM-CIC Titres, the group's securities services arm, provides the Caisses Fédérales du Crédit Mutuel, the CIC regional banks and other group subsidiaries such as CM-CIC AM, CM-CIC Securities and the insurance subsidiaries with securities custody/account keeping, fund administration and issuer services. The firm s activity suffered as a result of the financial crisis and its widespread economic repercussions on investors and issuers. It nevertheless maintained a high level of income, experiencing a less acute downward drag than the falling market indices might have suggested. At end 2008, CM-CIC Titres managed billion in securities (up 1.9%), with 1.6 million active securities accounts representing 4.8 million portfolio lines. It carried out 15.6 million securities transactions in 2008, representing a slight 2.9% decrease year-on-year and including 2.1 million stock market orders in France (down by 15%) and five million mutual fund transactions (unchanged from 2007). Among the steps taken by CM-CIC Titres to ward off the effects of the financial crisis were: strengthening of its operating and monitoring systems to counteract deposit risk, counterparty risk, interest payment default risk and securities redemption risk; circulation of information to the network and the heads of control of the group s investment departments concerning the Madoff affair, non-payment of dividends, prohibition of short selling, etc. provision of assistance to the networks. ProCapital, a subsidiary of Crédit Mutuel Arkéa with operations in France and Belgium, is a provider of securities services to financial institutions - fund management companies, private banks, retail banks, insurance companies and online brokers and banks that require flexible solutions ranging from account-keeping and transaction execution services on behalf of customers to the development of transactional websites. Since its creation in 2000, ProCapital has been providing its institutional customers with guaranteed top-quality service thanks to its integrated platform based on cutting edge technology. ProCapital had 15.3 billion in assets under custody and 340,000 active accounts as at 31 December Crédit Mutuel

62 Technological services A wide range of technological services IT, payment-related, telephony, remote surveillance and electronic document management are available to the Crédit Mutuel group and its customers. I Information technology In 2008, net banking income for this division fell considerably, mainly as a result of capital losses and the recognition of long-term impairment on holdings in listed companies. This activity is organised around two information system platforms provided by Euro-Information and Crédit Mutuel Arkéa. Euro-Information, the holding company for Crédit Mutuel Centre Est Europe-CIC's technology subsidiaries, provides financial and technical services that meet the needs of the group s various components: Crédit Mutuel federations, CIC banks, insurance subsidiaries, business line centres and other subsidiaries. In this context, Euro-Information acts as a centralised procurement platform and also manages relations with suppliers, the logistics of leasing and selling equipment and software, payment and remote deposit authorisations and remote banking channels. Euro-Information is supported by dedicated technical structures in charge of operating, developing and maintaining the group's IT resources and of developing telephony-related activities, document dematerialisation and card and cheque processing and personalisation. Euro-Information Production serves as an information system platform for the Crédit Mutuel federations of which there are now 15 since the integration in May 2009 of Crédit Mutuel Anjou and Crédit Mutuel Océan and for all of the CIC banks. The system is plugged into the stock market networks, electronic payment systems, and the Target2 settlement system, as well as data exchange systems such as Stet (Système technique des échanges et des traitements), for Sepa and Eba transactions, and naturally, international systems. It is supported by five interconnected high-security IT centres (Lille, Lyon, Nantes, Paris and Strasbourg), by a help centre, a broadband network and by Euro-Information Développements, a company dedicated to the development and maintenance of the applications used by Crédit Mutuel Centre Est Europe-CIC and the associated federations and subsidiaries. Euro-Information Services and Sicorfé Maintenance install and maintain the equipment and workstations, the Eftpos terminals, ATMs and telephony and video surveillance equipment. The Arkéa platform is shared by the three Crédit Mutuel Arkéa federations (Crédit Mutuel de Bretagne, Crédit Mutuel du Sud-Ouest and Crédit Mutuel du Massif Central). KEY FIGURES (in millions) Net banking income: 6 Gross operating profit: (-640) Net profit, group share: (-335) 2008 Annual Report 65

63 Other Activities I Telephony and electronic payments A partner of NRJ Group since the creation of NRJ Mobile in 2005, Crédit Mutuel raised its stake in NRJ Mobile in May The subsidiary is now 90%- owned by Euro-Information, with the remaining 10% belonging to NRJ Group. The partnership a mobile communications services agreement for future offers concluded in May 2008 between NRJ Mobile and Orange France, enables it to offer even more attractive packages. NRJ Mobile s offer is marketed mainly through the Crédit Mutuel and CIC networks. The group launched two new brands to highlight its positioning in the mobile telephony market by linking the bank s name with the mobile concept: "Crédit Mutuel Mobile" and "CIC Mobile". The innovative C le mobile offer, launched at the end of 2007, was the first to combine a mobile telephony package and remote bankinsurance services. In 2008, new offers were added to target a new, more mobile-oriented, type of customer. The full range comprises essentially: Prepaid packages Subscriptions Various refillable blocked accounts specially intended for young customers and including unlimited text messaging. This MVNO also serves as a platform for testing new technology such as contact-free payment. Euro TVS (Traitement des Valeurs et Services) is number two in France in batch cheque processing. It provides processing services to Crédit Mutuel Centre Est Europe-CIC, large retail groups, institutional customers and, more generally, any large document issuer wishing to dematerialise documentary and financial exchanges. Euro TVS forms part of the project to offer invoice management services to customers. I Residential video surveillance and document management Crédit Mutuel is the French leader in residential video surveillance through Euro-Protection Surveillance (EPS), which provides remote surveillance services to residential customers. At end 2008, it had 160,000 subscribers and an estimated 29% share of the market. Its customer base, which grew by more than 17% in 2008, has doubled over the past four years. Euro Télé Services (ETS) is a 24/7 incoming call centre, providing top-quality service to Centre Est Europe-CIC and its customers (cardholders, merchants and NRJ mobile users). Euro Information Direct Services (EIDS) plans and executes telemarketing campaigns for Crédit Mutuel Centre Est Europe-CIC. These campaigns use outgoing call centres with the aim of winning new customers and boosting the loyalty of existing customers. Payment-related services are managed through Euro P3C, a subsidiary specialised in the personalisation of cheques, cards and other electronic components and which works for Crédit Mutuel and CIC as well as for outside customers and partners. Two production sites enable it to offer permanent back-up. 66 Crédit Mutuel

64 Euro GDS (Gestion de Documents et Services) dematerialised 6.9 million documents in 2008, up from 4.2 million the previous year, representing 17.4 million pages in 2008, compared with 14.3 million in Keynectis has 95% of the electronic certification market and is the only French player with two PSCE (provider of digital certification services) certificates, a benchmark sign of professionalism and quality. I Other services Communication and media Crédit Mutuel Centre Est Europe owns 80% of the capital of printing company Sfejic, the holding company for the L Alsace group. In 2007, Banque Fédérative du Crédit Mutuel (BFCM) acquired 100% of the capital of Républicain Lorrain. Since June 2008, it has held a 51% stake in the Est Republicain group, which in turn owns Ebra (formerly Socpresse's Rhône-Alpes division), among other entities. Travel ACTA Voyages, the leading travel agency network in western France, is jointly owned by Crédit Mutuel Arkéa and Carlson Wagonlit Travel. It specialises in three areas tourism, business travel and business conventions and its services are distributed by Crédit Mutuel de Bretagne Annual Report 67

65 Financial report Annual Report 69