Natixis: french symbol of subprime crisis and unrealistic annual reports

· Who is Natixis?
Natixis is one of the biggest financial institutions in France. It was created by the merger between two subsidiaries of Caisse D’Epargne and Banque Populaire about one year ago. The merged group is specialised in five areas of expertise: corporate and investment banking, asset management, private equity and private banking, services and receivables management. Natixis in currently quoted on the Paris Stock Exchange and it belongs to the CAC40.

· First financial report the 30th August 2007

According to the Web site of Natixis
In its first six months of activity,

Natixis achieved solid operating performance. These good results were achieved thanks to strong business momentum across all segments.
Furthermore the group announced strong development potential and resilience to the subprime crisis and depreciation of the American currency. Natixis believed the subprime crisis was limited and under control.
Moreover Natixis believed the merger would create substantial synergies thanks to its integration process. In this first announcement, they emphasised €83m of synergies.
To sum up, this financial report provided a very positive image of Natixis. As a result Natixis’ shares increased sharply the day of this announcement.
Let us have a look now on the community reaction.

Community point of view

Before the announcement, some people within the financial community were really pessimistic regarding the capacity of Natixis to handle the credit crunch. Then this optimistic and positive financial report reassured most of the community in the short run. However most of analysts realized in the followings weeks the extent of the crisis. And the reality was terrible. Thus most of analysts have slashed their opinion regarding Natixis future, by discovering the real impact of the subprime crisis on the financial community. For example, “Credit Suisse” decreased its objective regarding Natixis from 19.70 to 17.50 euros after the financial report.
To conclude the financial community has realized the danger of the subprime too late.

· Very difficult and uncertain position now
In France, Natixis is the bank which suffered the biggest losses due to the credit crunch. Its position is now quite dangerous and its shares are decreasing sharply.
In this difficult context, the future of Natixis is particularly uncertain. Thus different rumours have been created these previous weeks. Maybe there will be a change in the governance of Natixis in order to establish a more efficient management. In the same time, another French bank might be interested in making a bid to Natixis. In fact it appears that Societe Generale is preparing a bid in order to establish a partnership with Natixis. This is a good moment to make a bid, as Natixis shares are very cheap now. Furthermore some analysts even believe Natixis might collapse by the end of the year due to the subprime crisis.


To conclude, the case of Natixis is really interesting and instructive. In fact it emphasizes the unrealistic vision provided by companies’ annual reports. Although Natixis was supposed to be in very comfortable position according to its financial reports, it appears in reality that Natixis has suffered huge losses due to the subprime crisis.