The world's local bank Annual Report and Accounts CCF - HSBC

CCF 

Annual Report 

and Accounts 

The world’s local bank

This reference document was registered with the Autorité des Marchés Financiers on 14 June 2004 in accordance with 

Regulation no. 98-01 / no. 95-01. It may be used in support of a financial transaction when supplemented by a 

Transaction Note that has received approval from the Autorité des Marchés Financiers.


Annual Report and Accounts 2003 

Contents 

3 Report of the Board of Directors to the Annual General Meeting of shareholders 

10 Executive Management Committee and General Managers 

13 Corporate Governance 

21 Chairman’s Report on corporate governance and internal control procedures 

33 Corporate social responsibility policy 

34 Risk management 

43 International Financial Reporting Standards (IFRS) 

44 Financial highlights 

48 Consolidated financial statements 

51 Notes to the consolidated financial statements 

90 Parent company financial statements 

104 Summary of business activities of CCF’s principal subsidiaries 

110 Investment policy 

113 CCF group offices 

114 Other legal documents relating to the Annual General Meeting of shareholders 

123 Annual General Meeting of 12 May 2004 – Resolutions adopted 

127 Information on CCF and its share capital 

132 Employees, remuneration, share offering and incentive schemes 

141 Recent developments and outlook 

143 Persons responsible for the reference document and for auditing the financial statements 

146 Cross-Reference Table 

147 Network of offices 

1


CCF joined the HSBC Group in July 2000. 

Headquartered in London, the HSBC Group is one of the largest banking and financial services 

organisations in the world. HSBC’s international network comprises over 9,500 offices worldwide in 79 

countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. 

With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in 

the Group’s parent company, HSBC Holdings plc, are held by around 200,000 shareholders in some 

100 countries and territories. 

In 2003, HSBC’s profit before tax (after goodwill amortisation–reported earnings) was US$12,816 million 

and profit attributable was US$8,774 million. Total assets amounted to US$1,034 billion. 

Geographical breakdown of profit before tax: 

Year ended 31 December 2003 

US$m % 

Europe 4,862 33.7 

Hong Kong 3,730 25.9 

Rest of Asia-Pacific 1,426 9.9 

North America 4,257 29.6 

South America 126 0.9 

Profit before tax–excluding goodwill amortisation 14,401 100.0 

Goodwill amortisation (1,585) 

Profit before tax (after goodwill amortisation–reported earnings) 12,816 

2


Report of the Board of Directors to the Annual General Meeting of shareholders 

Once again, CCF has delivered a robust performance 

amid a persistently difficult economic climate. Drawing 

on the talent of our own teams and on synergies with the 

HSBC Group, we continue to pursue our strategy of 

growth in our target markets and have succeeded in 

achieving some very ambitious commercial goals. 

CCF’s integration within the HSBC Group is now 

complete. The benefits can been seen in the commercial 

and financial performance achieved by the company’s 

core businesses. CCF has continued to develop its 

business activities and rationalise its organisational 

structure to improve efficiency and productivity. Its goal 

is to become one of France’s leading banks in its target 

markets, drawing on the resources of the one of the world’s 

leading banking and financial services organisations. 

CCF’s development within the HSBC Group 

Two restructuring projects took place in 2003: 

– In employee savings, CCF bought out the minority 

interests in Élysées Fonds, which was then merged 

with Élysées Gestion to create HSBC CCF Épargne 

Entreprise on 1 January 2004. HSBC CCF 

Épargne Entreprise is drawing on HSBC Asset 

Management Europe’s expertise in asset 

management for employee savings plans. The aim 

of this new subsidiary is to be a leading player 

in the employee savings market and to offer a comprehensive 

range of products and services. 

– In private banking, CCF combined its four specialist 

subsidiaries – HSBC Republic, CCF Banque Privée 

Internationale, Banque Eurofin and Banque du 

Louvre – to create HSBC Private Bank France on 

1 October 2003. After the capital reduction in 

January 2004 HSBC Private Bank France’s capital is 

94.0% held by CCF group (66.8% are held by its 

British subsidiary Charterhouse Management 

Services Limited). This capital reduction concerned 

principally CCF Holding Suisse which sold its 

whole participation in the new company. Thanks 

to an internationally recognised brand name, the 

new bank will continue with all the business 

activities previously conducted by the four subsidiaries, 

combining their expertise and generating major 

synergies within the business area. 

CCF Holding Suisse sold also its participation 

in Financière Groupe Dewaay to Charterhouse 

Management Services Limited in December 2003. So 

CCF Holding Suisse does not hold any more operational 

participations. 

Finally the simplification of Charterhouse’s 

structures has been finished with the liquidation of 

European Corporate Finance Holding in Luxembourg 

in 2003. 

The retail banking business continued to expand 

and improve its efficiency. During the year, it acquired 

two additional Banque Worms branches following the 

11 acquired in 2002, and combined all back-offices 

services for the CCF branch network in the Paris 

region. 

Lastly, CCF has embarked on a radical upgrade of 

its information systems and databases. Preparations 

were made for CCF’s migration to HUB, the HSBC 

Group’s universal banking system, which will be rolled 

out gradually from the end of 2004. In time, the new 

system will lead to large cost savings and revenue 

synergies within the HSBC Group. The consolidation 

of data processing centres has also begun (combination 

of IT centers, mutualisation of servers). 

CCF has also developed a financial data warehouse 

for all units, which will facilitate reporting. 

Lastly, significant financial investment and human 

resources are being devoted to the continued implementation 

of regulatory requirements concerning high 

security transport and the prevention of money 

laundering and terrorism financing, and to the IAS and 

Basel II projects. CCF complied fully with the timetables 

set for these various projects in 2003. To gain maximum 

benefit from its commitment, CCF intends to use certain 

mechanisms developed as part of the Basel II project in 

other areas, for example by improving its rating system 

to boost productivity in the lending business. 

CCF’s financial results in 2003 

CCF made a net attributable profit (excluding goodwill 

amortisation) of €692 million in 2003, an increase of 

14.9 per cent compared with 2002. On a reported basis, 

the net attributable profit for 2003 was €627 million, an 

increase of 11.7 per cent on 2002 1 . 

In a relatively difficult economic environment, operating 

income from CCF’s core businesses rose by 3.7 

per cent to €2,306 million. Including the sharp decline 

1 Changes in scope have not been restated in the reported figures as they are limited (disposal of Loxxia and HSIL in 2002 and acquisition 

of HSBC Republic France in 2003) and have no significant impact: 

– impact of changes in scope of business on operating income: €(15) million; 

– impact of changes in scope of business on operating profit before provisions: €(6) million; 

– excluding changes in scope of business, operating income would have increased by 1.0 per cent and operating profit by 1.0 per cent. 

3


Report of the Board of Directors to the Annual General Meeting of shareholders (continued) 

in private equity revenues, total operating income rose 

by 0.4 per cent to €2,345 million. 

Operating costs were kept well under control at 

€1,614 million 1 , an increase of just 0.4 per cent after 

1.5 per cent in 2002. This was despite the cost of 

restructuring the private banking business. 

Operating profit before provisions from core businesses 

increased by 11.3 per cent and the cost:income 

ratio fell from 71.8 per cent to 69.8 per cent. After 

taking into account private equity activity, operating 

profit before provisions increased by 0.2 per cent to 

€731 million. 

Below operating profit before provisions, an 

exceptionally low tax charge following settlement of 

prior year items, together with a reduction in the reserve 

for general banking risks, more than offset the movement 

in the charge for provisions against two deteriorating 

industries and the decrease of intra-group capital gains. 

Shareholders’ funds amounted to €3.4 billion after 

the year’s transfer to retained earnings and accruing 

for a payout ratio of 74.2 per cent. The tier one capital 

ratio remained high at 8.8 per cent. Return on equity, 

calculated on the basis of average shareholders’ funds 

after the year’s transfer to retained earnings, stood at 

18.1 per cent including the write-back from the reserve 

for general banking risks, and at 15.7 per cent excluding 

this write-back. 

Business segment results 

Retail and commercial banking 

Retail and commercial banking accounts for 66.8 per 

cent of CCF’s operating income. Once again, this 

business produced good results in 2003, with 4.6 per 

cent growth in operating income to €1,566 million and 

a decrease of 0.6 per cent in operating costs to €1,058 

million, leading to a 17.3 per cent increase in operating 

profit before provisions to €508 million. 

Both the CCF retail network (operating profit 

before provisions up 19.9 per cent) and the regional 

banking subsidiaries (operating profit before provisions 

up 15.6 per cent) contributed to this growth. The 

cost:income ratio improved by more than 3.5 percentage 

points to 67.6 per cent. This performance reflects a 

dynamic commercial approach, supported by the 

implementation of effective customer relations 

management (CRM) tools. The total number of retail 

customers increased by 6.0 per cent during the year. 

Net interest income was the main driver of growth 

in operating income, reflecting an increase during the 

year in both customer assets and customer loans, 

particularly in the personal segment. Another contributory 

factor was an improvement in interest spreads. 

Total loans and advances to customers increased 

by 2.2 per cent, although this figure masks some 

contrasting trends: loans and advances to personal 

customers progressed by 7.6 per cent, with 11.0 per 

cent growth in outstanding mortgage loans and 25.0 

per cent growth in new mortgage lending. By contrast, 

demand for business loans (mainly on short-term 

loans) decreased by 1.3 per cent due to poor economic 

conditions, although medium and long-term business 

loans rose by 3.9 per cent. 

Sight deposits were up by 3.1 per cent in both the 

personal and commercial segments. Special regulated 

savings accounts rose by 15.5 per cent and €350 million 

were collected by guaranteed funds developed by 

Sinopia, reflecting the willingness of personal customers 

to protect their investments against stock market 

fluctuations. 

Furthermore, the success of guaranteed funds 

and asset management products with personal and 

commercial customers led to an increase in banking 

commissions and a recovery in financial commissions, 

in particular in the second half of the year. 

Personal customers now have access to HSBC’s Visa 

Infinite card, which is aimed at a highly selective 

customer base, as well as HSBC Premier International 

Services, designed for the bank’s most valuable 

international customers. HSBC Premier was successful 

and covers more than 33,000 customers at end 2003, 

an increase of 27% over the year. 

A dynamic commercial approach, particularly in 

the mid-corporate market, led to an increase in this 

segment and in banking commissions. Furthermore, 

the successful launch of new structured products partly 

offset the decrease in equity-related financial 

commissions. International business services such as 

trade services, cash management and the regional 

treasury centres are an important differentiation element 

from French competitors and make a strong contribution 

to winning new customers in this market. 

1 2002 costs have been restated in order to integrate a change in accounting methodology on two items. These items were previously included 

in “exceptional results” and are now included in operating expenses: cost of stock options (€17 million) and contribution towards the 

banking system stabilisation mechanism (€2 million). 

4

400 customers are now authorised to deal with the 

four Regional Treasury Centres (RTCs). These RTCs 

led to a strong growth in financial fees, particularly 

through the development of derivatives products. The 

Trade Services activity also met significative results 

despite a relatively poor economic climate. Concerning 

Payments and Cash Management, CCF won 170 tenders 

in 2003, compared to 130 in 2002. 

Fund managers dedicated to the corporate market 

were appointed in the wealth management centres. A 

range of products offering varied investment opportunities, 

as structured products with capital protection 

tailored to commercial customers, has been developed. 

These events have led a sharp increase in new inflows, 

in particular in asset management. 

The business cards increased of 20%, higher than 

the 12% increase of Visa Business market in 2003. 

The e-banking products dedicated to commercial 

customers also rose significantly through the development 

of Elys PC services (Elys Info Mail, direct alert 

service), e-bills of exchange and RIB management 

(account detail forms). The electronic certification 

also increased strongly by 125%. 

Multi-channel banking continues to develop, with 

the establishment of a call centre with staff 75% of 

whom are drawn from the CCF branch networks and 

so who are able to provide customers with immediate 

advice. This branch deals with outgoing marketing 

calls as well as incoming calls. The number of customers 

using CCF’s e-banking facilities has increased by 37.0 

per cent, with more than six million log-ins during 

2003. The penetration rate reached 25% of all CCF 

retail network customers. 

In November 2003, and for the first time since 2001, 

CCF launched an advertising campaign on TV and in 

newspapers. This campaign shows that CCF is close 

to its customers while belonging to a worldwide Group. 

Corporate, investment banking and markets 

Corporate, investment banking and markets reported 

an excellent performance, with 9.8 per cent growth in 

operating income to €473 million and a 4.0 per cent 

decrease in operating costs to €243 million. Operating 

profit before provisions rose by 29.3 per cent to 

€230 million and the cost:income ratio improved by 

almost 8 percentage points to 51.3 per cent. 

Corporate banking continued to grow, with 

operating profit before provisions up by 10.5 per cent 

to €123 million. This performance was driven principally 

by structured finance and syndicated finance. In 

this latter segment, CCF ranks fourth in the French 

issuers market, according to Loanware Dealogic. 

International project finance was affected by a weaker 

dollar and a decline in the number of large contracts 

due to difficulties experienced by some major exporters. 

However, HSBC CCF Trade services reaped the benefits 

of its role as HSBC Group’s centre of expertise in structured 

trade finance. 

Property lending was down slightly compared with 

2002, a year in which CCF completed several large 

deals. 

Fixed income and forex capital market activities 

reported strong growth of 87.6 per cent in operating 

profit before provisions to €102 million. CCF continued 

to win new major clients in both the corporate and 

institutional segments, particularly in fixed income 

derivatives in Europe and Asia, and in origination 

business for clients in the eurozone. HSBC CCF has 

continued to rise in the league tables and now ranks 

second in euro corporate bonds and third for corporates 

and financial institutions combined. This illustrates the 

continued synergies brought by integration with the 

HSBC Group. HSBC CCF has also strengthened its 

government bond trading capability, helping increase 

market share among the HSBC Group’s institutional 

clients. HSBC CCF took part to the first 30-year bond 

issue for a French company (Michelin). Furthermore, 

three euro issues (Altadis, Auchan and Veolia) received 

awards from ‘Financial News’. 

Investment banking continued to suffer in persistently 

volatile markets, reporting a 45.8 per cent 

decrease in operating profit before provisions to €8 million. 

Mergers and acquisitions remained active in a 

weak market thanks to cross-border deals. HSBC CCF 

ranked 14th in the 2003 M&A league tables compiled 

by Les Echos and F&A magazine, up two places 

compared with 2002. CCF now ranks second in the 

French leveraged buy-out market (according to 

Mergermarket). 

HSBC CCF was in particular the advisor of 

Montagu Private Equity for the acquisition of Actaris 

and the advisor of Altadis for the acquisition of 80% 

of Régie des Tabacs du Maroc (Moroccan tobacco). 

The Altadis operation has shown CCF’s global 

strategy and the close collaboration between the different 

business to be able to propose to customers the 

whole range of products necessary to achieve such an 

5



operation (credits, bond issues, forex risk management, 

international guarantees…). 

The volatile stockmarkets continued to put pressure 

on the equities business. In addition, CCF’s performance 

in 2002 was bolstered by the HSBC Group’s participation 

in Europe’s largest initial public offering for the 

year, for Autoroutes du Sud de la France (ASF). In 

2003, the most important operation is HSBC CCF’s 

participation in France Telecom’s capital increase of 

€15 billion, as advisor of ERAP and as joint-lead 

manager of the banking syndicate which guaranteed 

the non-subscribed part of the capital increase. 

Major investment has been made in the equity 

derivatives business and CCF has become the centre 

of expertise in this activity for the HSBC Group. 

Asset management and private banking 

Asset management achieved a strong performance. 

Funds under management increased by 28.9 per cent 

to €47.3 billion. Operating income rose by 12.1 per 

cent to €115 million and operating costs by 7.8 per cent 

to €96 million leading to 41.3 per cent growth in 

operating profit before provisions of €19 million. 

The achievement of the reorganisation which 

began in 2002 led to a clearer and more efficient structure 

: qualitative asset management by HSBC Asset 

Management Europe, quantitative asset management 

by Sinopia, distribution of employee benefits products 

by HSBC CCF Epargne Entreprise and Insurance by 

Erisa and Erisa Iard. 

HSBC Asset Management Europe consolidated its 

presence in the institutional segment with a number of 

major commercial successes. Funds under management 

increased by 17.3 per cent to €31.1 billion. This growth 

was achieved through an influx of new corporate 

clients and the distribution in Europe of two equity 

products new to the region, HGIF Chinese Equity and 

HGIF Indian Equity. This is another example of the 

benefits of integration with the HSBC Group. HSBC 

AME also won several awards for its investment 

performance. The HSBC GIF Pan European Equity 

fund was awarded best five-year performance by 

La Tribune/S&P and was ranked third by the Journal 

des Finances. 

Sinopia enjoyed considerable success in Hong Kong 

and the United Kingdom with its capital protected 

investment funds, bringing in more than €5.7 billion 

of new business. Funds under management increased 

by 68.4 per cent to €14.1 billion. This success is an 

excellent illustration of CCF’s role as a specialist for 

the HSBC Group in certain businesses, including 

quantitative investment management. 

In private banking, CCF combined its four specialist 

subsidiaries to create HSBC Private Bank France, a 

leading player in the French market. Funds under 

management grew by 7.2 per cent to €16.3 billion 

despite a continued volatile environment. The business 

produced a positive result before provisions despite 

merger-related costs of restructuring, and for employee 

stock options contracts. Results are expected to recover 

sharply in 2004, driven by revenue and cost synergies 

generated by the merger. Finally, several funds managed 

by Louvre Gestion, a subsidiary of the new bank, won 

awards. In particular, the Integral Valor fund won the 

awards from La Tribune/S&P for one-year, three-year 

and five-year best performance. 

Eurozone 

Group branches in the eurozone 1 managed by CCF 

reported a 9.3 per cent increase in banking revenues, 

following a series of prime lending transactions to 

major corporates in Italy, Spain, France and Belgium. 

A further contributory factor was a 4.6 per cent 

decrease in operating costs, principally due to disposal 

of the private banking business in Italy. Operating 

profit before provisions was up 40.0 per cent. 

Equity portfolio operations 

Private equity and equity investment operations made 

a contrasting contribution to results. In 2003, 

Charterhouse’s private equity portfolio did not generate 

the significant capital gains it did in 2002. 

Operating profit before provisions therefore amounted 

to only €34 million in 2003 compared with €103 million 

in 2002, a decrease of €70 million which depressed 

growth in CCF’s overall operating results. However, 

following the recovery of the stockmarkets during 2003, 

capital gains were realised on the listed portfolio which 

had been affected last year by substantial write-downs. 

Net profit amounted to €47 million in 2003 compared 

with €29 million the previous year, a rise of €18 million. 

At 31 December 2003, CCF’s equity investment 

portfolio was valued at €887 million, based on latest 

prices for listed equities and most recent valuations for 

unlisted equities, generating unrealised capital gains of 

€253 million. 

1 CCF’s published figures only include the results of HSBC branches in Belgium and Greece, which are legally owned by CCF. HSBC 

branches in Italy, Spain, France and the Netherlands are managed by CCF but are legally owned by HSBC Bank plc. 

6

In light of these results, the Board is proposing 

a dividend of €6.25 per share. The total dividend 

payment will be €465 million, representing a payout of 

74.2 per cent. 

At its meeting of 24 February 2004, the Board of 

Directors appointed Mr. Charles-Henri Filippi as 

Chairman of CCF with effect from 1 March 2004. 

By resolution of the shareholders at their annual 

general meeting of 8 April 2002, the company made a 

number of changes to its Articles of Association to 

bring them into line with the provisions of France’s 

“New Economic Regulations” Act no. 2001-420 of 

15 May 2001. After the AGM, the Board of Directors 

met and decided that it would not split the offices of 

Chairman and Chief Executive Officer and that the 

Chairman would therefore remain in office as 

Chief Executive Officer for the remainder of his term 

as Chairman of the Board. 

Pursuant to Article 15 of the Articles of Association 

and in accordance with Article 148 of decree no. 67-236 

of 23 March 1967, at its meeting of 24 February 2004, 

the Board renewed its decision not to split the offices of 

Chairman and Chief Executive Officer. Consequently, 

the Chairman of the Board, Mr. Charles-Henri Filippi, 

will also take up the office of Chief Executive Officer. 

At the proposal of Mr. Charles-Henri Filippi, 

the Board has appointed Mr. Gilles Denoyel and 

Mr. Patrick Careil as Deputy Chief Executive Officers. 

The Board has also co-opted them as Directors to 

replace Mr. Charles de Croisset and Mr. Dominique 

Léger, from 1 st March 2004. 

The Board of Directors will put the following 

resolutions to the vote at the annual general meeting 

of 12 May 2004. 

Proposed resolutions 

Ordinary business 

The purpose of the first resolution is to seek approval 

of the Company’s annual financial statements for the 

year ended 31 December 2003, after hearing the reports 

of the Directors and the Auditors, and the Chairman’s 

report on corporate governance and internal control. 

The second resolution concerns the allocation 

of the year’s net profit. The Board is proposing to 

pay €464,687,912.50 in dividends and to transfer 

€220,984,308.87 to retained profits. The dividend will 

be payable on 12 May 2004, after deduction of the 

interim dividend of €3 per share (plus a tax credit of 

€1.50) voted by the Board of Directors at its meeting 

of 25 July 2003 and paid in respect of shares in issue 

as of that date. 

The third resolution seeks approval of the consolidated 

financial statements for the year ended 31 December 

2003, as required under Article L. 225-100 of the Code de 

Commerce. 

The fourth resolution seeks approval of agreements 

governed by Article L.225-38 of the Code de 

Commerce, after hearing the Auditors’ report on those 

agreements. 

In the fifth resolution, we are seeking ratification 

of the Board’s co-option on 24 February 2004 of 

Mr. Patrick Careil to replace Mr. Charles de Croisset, 

who has resigned, for the remainder of Mr. de Croisset’s 

term of office. As Mr. de Croisset was due to retire by 

rotation at this Annual General Meeting, we are also 

seeking the re-election of Mr. Patrick Careil for a further 

term of four years. 

In the sixth resolution, we are seeking ratification 

of the Board’s co-option on 24 February 2004 of Mr. Gilles 

Denoyel as Director to replace Mr. Dominique Léger, 

who has resigned. 

In the seventh resolution, we are proposing the 

election of Mr. Michael Geoghegan for a term of four 

years to replace Mr. William Dalton, who is due to 

retire by rotation at this year’s Annual General Meeting 

and is not standing for re-election. 

In the eighth, ninth and tenth resolutions, we are 

proposing the re-election of Messrs. Charles-Henri 

Filippi, Philippe Houzé and Igor Landau for a further 

term of four years ending at the conclusion of the 

Annual General Meeting held to approve the financial 

statements for the year ending 31 December 2007. 

In the eleventh resolution, we are seeking official 

acknowledgement that Mr. Jean-Antoine Chabannes, 

due to retire by rotation at this year’s Annual General 

Meeting, is not standing for re-election. 

In the twelfth resolution, we are proposing to 

appoint RSM Salustro Reydel as statutory auditors 

and Mr. Benoît Lebrun as alternate auditor for the 

remainder of their predecessor’s term of office, that is 

until the conclusion of the Annual General Meeting 

held to approve the financial statements for the year 

ending 31 December 2005. 

7



In accordance to the provisions of Article L. 225-228 

of the Code de Commerce, you are informed in this 

resolution of the business transfers or mergers 

concerning CCF or companies it controls within the 

meaning of paragraphs I and II of Article L. 233-16 

of the Code de Commerce over the past two years that 

Mr. Benoît Lebrun, a partner in the firm proposed as 

statutory auditors, who has been proposed as alternate 

auditor, was responsible for verifying. 

The thirteenth resolution seeks five-year authority 

for the Board to issue bonds, which will cancel and 

supersede the authority granted at the Annual General 

Meeting of 29 March 2001. The Board will be empowered 

to issue bonds on one or more occasions in all 

markets up to a maximum amount of €20 billion or 

the equivalent thereof in any other currency or composite 

monetary unit. 

The fourteenth resolution seeks approval of amendments 

to the agreement governing the participating 

notes issued by CCF, providing for early retirement of 

all the notes should the Board deem it appropriate. 

The following issues were made by CCF: 

– 4 June 1984: 800,000 participating notes each with 

a nominal value of FRF1,000; 

– 22 July 1985: 120,000 perpetual subordinated notes 

with warrants to subscribe for participating notes. 

A total of 453,098 participating notes were issued 

in 1987 and 1988 upon the exercise of warrants exercisable 

in 1987 (A warrants) and 1988 (B warrants). 

In 1990, CCF made a public offer to exchange the 

participating notes for CCF shares on the basis of 

11 CCF shares for 2 participating notes. Those notes 

tendered to the offer were cancelled, leaving the 

following notes in issue: 

– 34,256 1984 participating notes (4.28% of the total 

issued in 1984); 

– 7,280 1987/1988 participating notes (1.6% of the total 

issued in 1987 and 1988 upon exercise of warrants 

attached to the 1985 perpetual subordinated notes). 

Given the small number of notes still in issue and 

their lack of liquidity, the proposed amendment to the 

issue agreement gives CCF the option of retiring these 

notes before maturity. In addition, the participating 

notes were issued when CCF was still nationalised, and 

they represent a class of securities available only 

to state-owned companies and the cooperative 

sector. They are therefore no longer appropriate to the 

company’s current circumstances. 

CCF wishes to offer all holders the opportunity of 

achieving a fair return on their investment should the 

notes be retired early. It has therefore examined the 

terms and conditions of an offer open to all holders, 

and has calculated the intrinsic value of the participating 

notes. 

The interest rate payable on the notes is still equal 

to its maximum, given CCF’s published results. The 

net present value of the participating notes (P), being 

the sum (∑) of the discounted coupon payments, is 

therefore computed as follows: 

∞ 

130% x TMO 

P = ∑ n x N 

. 

1 (1 + TZ n + S) n 

Where: 

– TMO n = TEC10 n + 0.25% (following Euronext’s 

notice dated 11 October 2001) or any other rate 

which would substitute; 

– N is the nominal value, i.e. €152.45 (FRF1,000); 

– TZ n is the zero coupon n years rate based on the 

swap yield to Euribor curve, or any other rate which 

would substitute; 

– S is the spread representative of a perpetual note 

issued by CCF at market conditions at time t; 

– TZ n + S is the discount rate. 

The Board of Directors is proposing to improve 

the redemption terms by increasing the value of the 

participating notes by 5%, computed as follows: 

∞ 

V = 105% x ∑ 130% x TMO n x N 

1 (1 + TZ n + S) n . 

However, the price may not be less than 105% of 

the nominal value of the participating notes. 

This formula has been validated by an independent 

expert. In addition, when the remaining participating 

notes are redeemed, an independent expert will verify 

that the formula has been properly applied. 

To ensure that holders have adequate time to obtain 

full information, CCF may only retire the participating 

notes on 4 June each year, which is the coupon 

payment date, and not before 4 June 2005. 

These amendments will also be proposed to the 

class meeting of participating notes holders which will 

take place on 11 May 2004. 

8

Special business 

Pursuant to the provisions of Article L. 225-129 VII, 

every three years the shareholders are required to 

consider a resolution granting the Board authority to 

allot shares to members of the company’s employee 

share ownership plan in accordance with the provisions 

of Article L. 443-5 of the Code du Travail. Any 

resolutions passed in breach of this provision will be 

null and void. 

The last time we proposed such a resolution was 

at the Annual General Meeting of 8 April 2002. 

Accordingly, in this year’s fifteenth resolution, we are 

seeking authority to make employee share offerings in 

order to comply with legal requirements. 

However, the Board of Directors does not intend 

to make such share offerings as the employees 

concerned may purchase HSBC shares under their 

employee share ownership plan. We therefore recommend 

that you reject this resolution. 

The sixteenth resolution seeks approval to amend 

the company’s Articles of Association to bring them 

into line with the new Financial Security Act no. 2003-706 

of 1 August 2003. 

Powers (seventeenth resolution) 

This resolution simply seeks empowerment to complete 

the requisite filing and legal formalities with respect to 

this annual general meeting. 

We trust that the proposed resolutions will meet 

with your approval. 

9


Executive Management Committee and General Managers * 

* 

The Board of Directors of CCF met on 24 February 2004 to approve the financial statements for 2003 and has 

appointed Charles-Henri Filippi as Chairman and Chief Executive Officer of CCF, with effect from 1 March 2004. 

At the proposal of Charles-Henri Filippi, the Board appointed Gilles Denoyel and Patrick Careil as Deputy Chief 

Executive Officers. 

CCF’s Executive Management Committee has been reorganised, referring to the HSBC Group’s organisation in 

5 Customer Groups: 

– Personal Financial Services, 

– Consumer Finance, 

– Commercial Banking, 

– Corporate, Investment Banking and Markets, 

– Private Banking. 

Executive Management Committee 

Charles-Henri Filippi Chairman and Chief Executive Officer. A Group Managing Director, a Director of 

HSBC Bank plc. 

Age 51. Joined CCF in 1987 having previously held senior appointments in the French civil 

service. Appointed a Group General Manager in 2001 as Global Head of Corporate and 

Institutional Banking. From 1 March 2004, also Responsible for co-ordinating HSBC’s strategy 

in the Eurozone. 

Patrick Careil Deputy Chief Executive Officer, in charge of Retail Banking and Personal Financial Service’s 

customer group. 

Age 56. Having previously held senior appointments in the French Civil Service and as Adviser 

to several Ministers, appointed Chairman and CEO of Banque Hervet in 1989. Chairman of 

Société Marseillaise de Crédit (SMC) 1997-1998. 

Gilles Denoyel Deputy Chief Executive Officer, in charge of Support Services and Finance. 

Age 49. Joined CCF in 1996 as Finance Director, then Company Secretary in charge of Strategy 

and Operations and from 2000, Senior Corporate Vice President, Finance. Has previously 

held senior appointments in the French Ministry of Finance. 

Samir Assaf Senior Corporate Vice President, in charge of Global Markets and co-head of Corporate, Investment 

Banking and Markets’s customer group. 

Age 43. Joined CCF in 1994. He held several posts as Head of Treasury and Forex, and 

Capital Markets. From 1988 to 1994, he held several managerial positions in the Financial 

Department of Total Group. 

Christophe de Backer Senior Corporate Vice President, in charge of Asset Management, Insurance and Wealth 

Management Co-ordination. 

Age 41. Joined CCF’s Brokerage Company Securities in 1991 and appointed Chairman and 

CEO of CCF Securities in 1998. In charge of Asset Management and Insurance from January 

2001. 

10

Peter Boyles Senior Corporate Vice President, in charge of Transactional Banking, Corporate, Investment 

Banking and Markets support functions and Commercial Banking’s customer group. 

Age 48. With CCF since 2000. Joined HSBC Group in 1975 as an International Manager. 

He held senior appointments in the Middle East, the Hong Kong SAR and Malaysia. 

Henri des Déserts Senior Corporate Vice President, in charge of Private Banking, Chairman of the Supervisory 

Board of HSBC Private Bank France until 11 May. 

Age 56. Joined CCF in 1981. Head of Private Banking activities since 1993. 

Michel Wohrer Senior Corporate Vice President, in charge of Strategy, Organisation and IT. 

Age 49. Joined CCF in 1988. Between 1988 and 2000 held positions in Merger and 

Acquisitions, headed CCF’s Brokerage Company before being named Head of Fixed Income 

and Capital Markets. General Secretary until 2001. Having previously held senior appointments 

in the French Ministry of Finance. 

Jean Beunardeau Executive Vice President, in charge of Corporate and Institutional Banking and co-head of 

Corporate, Investment Banking and Markets’s customer group. 

Age 42. Joined CCF in 1997, Corporate Finance. Appointed Head of Corporate Banking in 

January 2004. Having previously held senior appointments in the French civil service. 

11


Executive Management Committee and General Managers (continued) 

General Managers 

Bernard Azoulay 

Emmanuel Barthélémy 

Gérard de Bartillat 

Jean Baudoin 

Jalil Berrada 

Raymond Bert 

(appointed 25 March) 

Jacques-Emmanuel Blanchet 

Loïc Bonnat 

Rémi Bourette 

Catherine Bussery 

Alain Cadiou 

Patrick Cazalaa 

Johnny Crichton 

Didier Descamps 

Joëlle Durieux 

Jérôme J Ferracci 

Dominique Feutry 

Bernard Francisoud 

Sylvie François 

Monique Frugier 

Philippe Goimard 

Eric Groven 

Philippe Henry 

Pierre Jammes 


Pierre Jolain (until 30 April) 

Jean-Pierre Leclerc 


Gilberte Lombard 

François Mallet 

Olivier Méric 

Yves Meynial 

François Morlat 


Chantal Nedjib 

Corinne Orémus 

(appointed in March) 

Dominique Paulhac 

Joseph Perez 

Marc de Lapérouse 

(appointed 2 April) 

Tony Rhodes (until March) 

Thierry Roland 

Thibaud de Roux 

Pierre Ruhlman (appointed 4 May) 

Pierre Sorbets 

Head of Asset and Liability Management 

Chief Operating Officer, Société Marseillaise de Crédit (from 1 March), 

previously General Manager 

Chairman of the Management Board, HSBC Private Bank France 

Head of Credit and Market Risk Management 

Head of Information Technology 

Head of the Consumer Finance’s customer group, 

Co-ordination of the regional banks 

Chief Operating Officer, CCF Retail Bank 

Chief Operating Officer, Corporate, Investment Banking and Markets 

Head of Market and Risks 

Head of Compliance 

Head of Group Eurozone Audit 

Co-Head of Corporate Finance 

Deputy Head of Credit Risk Management 

Chief Operating Officer, Markets 

Chief Executive Officer, Erisa 

Head of Equity Derivatives 

Head of Operations 

Chairman of the Executive Board, Crédit Commercial du Sud Ouest 

Head of Human Resources 

Head of Management Accounting and Chief Accountant 

Chief Executive Officer, Sinopia Asset Management 

Development Manager, CCF Retail Bank 

Head of Debt Finance & Advisory 

Chairman and Chief Executive Officer, Union de Banques à Paris 

Head of Professional Ethics 

Chief Operating Officer, Retail Banking, Branch Network 

Company Secretary, Head of Financial Operations 

Head of Cash Equity activities 

CCF Retail Bank, Head of Marketing 

Head of Eurozone Management Offices 

Chairman and Chief Executive Officer, Banque Hervet 

Head of Corporate Communication 

Deputy Head of Commercial Banking, Retail Banking 

Head of Real Estate 

Chairman, Société Marseillaise de Crédit (from 1 March), previously 

Chairman and Chief Executive Officer 

Head of Legal Department 

Co-Head Debt Finance and Advisory, Global Head of Syndicated 

Finance and European Head of Debt Finance 

Head of Treasury 

Head of Fixed Income and Derivatives 

Head of Strategic Planning 

Head of Financial Institutions 

12


Corporate Governance 

Composition of the Board of Directors as of 1 March 2004 

Charles-Henri Filippi Born in 1952 

Holds 1 CCF share. Year of first appointment: 1998. Year of last re-election: 2004. Year in which current mandate 

will expire: 2008. 

Principal position: 

Chairman and CEO, CCF since 1 March 2004. Group Managing Director, HSBC Holdings plc. since 1 March 

2004. 

Other functions 1 : 

Member of the Group Management Board, HSBC Holdings plc. Director, HSBC Bank plc. Director, Seita (permanent 

representative of CCF). Director and member of the Executive Commission, Altadis. 

Resume: 

Graduate of the Ecole Nationale d’Administration. Inspecteur des Finances. After several years working in the civil 

service and as an adviser to government ministers, he joined the Banque Stern Group before moving to CCF in 

September 1987, as special adviser to the Managing Director. He was appointed Deputy Chief Executive Officer 

in 1995 and Managing Director and Head of Corporate and Investment Banking in 1998. He became Global 

Head of Corporate and Institutional Banking for the entire HSBC Group in November 2001, and at the same 

time, Group General Manager and member of the Group Executive Committee for the HSBC Group. 

Gilles Denoyel Born in 1954 

Holds 1 CCF share. Year of first appointment: 2004. Year in which current mandate will expire: 2006. 


Deputy CEO, CCF. 


Director, Banque Hervet. Director, HSBC CCF Asset Management Holding. Director, Société Marseillaise de 

Crédit. Member of the Supervisory Board, HSBC Private Bank France. Chairman, CCF Charterhouse Ltd. 

Resume: 

Graduate of the Ecole des Mines and the Ecole Nationale d’Administration. Inspecteur des Finances. In 1985, he 

joined the French Treasury where he held a series of positions. He joined CCF in 1996 as Senior Vice President 

of Finance, becoming Company Secretary and Head of Strategy and Operations in 1998. He has been Chief 

Financial Officer since 2000. 

Patrick Careil Born in 1947 



Deputy CEO, CCF. 


Director, Banque Hervet. Director, Banque de Baecque Beau. Director, UBP. Director, Copari. Chairman of the 

Supervisory Board, Crédit Commercial du Sud-Ouest. Member of the Supervisory Board, Banque Pelletier. 

Directorships expired in 2004 : Director, Banque Alcyon; Chairman and CEO, Banque Hervet. 

Resume: 

Graduate of the Ecole Nationale d’Administration. Inspecteur des Finances. After several years working in the civil 

service and as an adviser to government ministers, in 1989 he joined Banque Hervet, which became a subsidiary 

of CCF in 2001, as Chairman and Chief Executive Officer. From 1997 to 1998, he was Chairman and Chief 

Executive Officer of Société Marseillaise de Crédit, which was then nationalised. In 2001, he was also appointed 

to CCF’s senior management team as co-ordinator of the regional banking subsidiaries. 

1 For the most part, appointments held in companies which do not belong to the group in which the Directors have their principal position. 

13


Corporate Governance (continued) 

Patricia Bizien-Legay Born in 1954 


Director elected by employees. 


Subsidiaries’ books (CCF Financial Operations Department). 

Resume: 

Joined CCF in 1975. 

Martin Bouygues Born in 1952 


Independent Director. 


Chairman and CEO, Bouygues. 


Director, TF1. Director, Société de Distribution d’Eau de la Côte d’Ivoire (SODECI). Director, Compagnie 

Ivoirienne d’Electricité (CIE). Chairman, SCDM. Directorship expired in 2003: Director, Actiby. 

Resume: 

He joined the Bouygues Group in 1974 as works foreman. In 1978, he created Maison Bouygues and became 

Chairman and Chief Executive Officer in 1984. He is Chairman and Chief Executive Officer of Bouygues 

since 1989. 

Evelyn Cesari Born in 1949 




Head of SCPI Management Team (CCF Real Estate Department). 

Resume: 


Jean-Antoine Chabannes Born in 1938 


will expire: 2004 2 . 

Independent Director. Member of the CCF Audit Committee. 


Honorary Chairman, Swiss Life (France) since 1 September 2003. 


Chairman, Erisa. Chairman, Erisa Iard. Director, Creserfi. Director, Rema. Director and member of the Executive 

Committee, Altadis. Directorships expired in 2003: Chairman, Groupe Société Suisse (France); Director, Scor; 

Director, Chambre de Commerce Suisse en France. 

Resume: 

He joined Société Suisse in May 1965 as legal adviser, and was appointed Chairman in 1979. 


2 Mandate expired at the Annual General Meeting held on 12 May 2004. 

14

William P. Dalton Born in 1943 


will expire: 2004 1 . 


Executive Director, HSBC Holdings plc. 

Other functions 2 :: 

Vice-President, The Chartered Institute of Bankers.. Director, Household International Inc. (since 31 March 

2003). Director, Centre for the Study of Financial Innovation. Director, Crimestoppers Trust. Director, HRH 

The Duke of Edinburgh’s Commonwealth Study Conferences. Director, MasterCard International Inc.. Director, 

MasterCard Incorporated. Directorships expired in 2003: Chief Executive Officer, HSBC Bank plc; Vice-President, 

British Bankers’ Association; Chairman, Young Enterprise (15 January 2004). 

Resume: 

Canadian and Irish nationality. Director and Chief Operating Officer (1987-1991) then Director and Chief Executive 

Officer (1992-1997) of HSBC Bank, Canada. Director and Chief Executive Officer of HSBC Bank plc (1998- 

2003). Executive Director of HSBC Holdings plc since 1998. 

Jean-Claude Decaux Born in 1937 




Chairman and CEO, JC Decaux Holding. 


Chairman of the Supervisory Board, JC Decaux SA. Chairman, Sopact. Manager, SCI Troisjean. Manager, SCI 

Le Clos de la Chaîne. Manager, SCI Lyonnaise d’Entrepôt. Directorships expired in 2003: CEO, Sopact; Chairman, 

Gommage Graffitis. 

Resume: 

Founder of JC Decaux in 1964, a billboard, street furniture and public transport advertising company. 

Paul Dubrule Born in 1934 



Independent Director. Chairman of the CCF Nomination and Remuneration Committee since 2002. 


Founding Co-Chairman, Member of the Management Board, Accor. 

Resume: 

Chairman and founder of Novotel (1963). Co-Chairman of Accor (1983-1997). Senator of Seine-et-Marne 

Department since 1999. 

1 Mandate expired at the Annual General Meeting held on 12 May 2004. 


15



Yves Fontaine Born in 1945 





Central Administration Department – Head of the Paris-Élysées business centre. 


Director, CCF Change since 24 June 2003. 

Resume: 


Stephen Green Born in 1948 



Member of the CCF Nomination and Remuneration Committee. Member of the CCF Audit Committee until 10 

December 2003. 


Director and Group Chief Executive, HSBC Holdings plc since May 2003. 


Director, Friends of the Archbishop of Canterbury’s Anglican Communion Fund Inc. Director, Grupo Financiero 

HSBC, S.A. de C.V. (since 7 July 2003). Directorships expired in 2003: Director, Poplar Housing and Regeneration 

Community Association Ltd; Director, St Paul’s Cathedral Foundation. 

Resume: 

British nationality. HSBC Group Treasurer 1992-1998. Executive Director, Corporate, Investment Banking and 

Markets, HSBC Holdings plc 1998-2003. HSBC Group Chief Executive since May 2003. 

Philippe Houzé Born in 1947 



Independent Director. Member of the CCF Nomination and Remuneration Committee. 


Co-Chairman of the Management Board, Galeries Lafayette. 


Chairman and CEO, Monoprix SA. Member of the Supervisory Board, Casino Guichard-Perrachon. 

Resume: 

Director of Galeries Lafayette since 1974. Chairman of Monoprix since 1994. Vice-President of the Conseil 

National du Commerce since 1991. 


16

Jean-Claude Jolain Born in 1943 



Independent Director. Chairman of the CCF Audit Committee. 


Chairman and CEO, Sagi. 


Chairman and CEO, Ville Service Plus. Chairman, UESL. Director, Unibail. 

Resume: 

From 1968 to 1986, he held a number of ministerial positions, and in the Paris Town Hall. From 1968 to 1998, he 

was Chairman of the insurance group La Mutuelle Générale Française, which after its privatisation in 1987 became 

the Mutuelle du Mans Group. In 1993 he was appointed Chairman and Chief Executive Officer of Sagi. 

Igor Landau Born in 1944 





Chairman of the Management Board, Aventis. 


Director, Fisons Limited (since 11 March 2003). Director, Insead. Director, Essilor. Director, IDI (Institut de 

Développement Industriel). Director, Thomson. Member of the Advisory Committee, Banque de France (since 

13 March 2003). Member of the Supervisory Board, Dresdner Bank AG (since 8 April 2003). Directorships expired 

in 2003: Chairman, Insead; Chairman of the Supervisory Board, Aventis Pharma AG; Director, Rhône Poulenc 

Rorer Inc.; Director, Hoechst AG. 

Resume: 

After a few years with McKinsey, he joined Rhône Poulenc in 1975 as assistant to the Health Division’s General 

Manager. In 1987, he was appointed member of Rhône-Poulenc Group’s Executive Committee and General 

Manager of the Health Division. 

Jean-Charles Naouri Born in 1949 





Chairman, Groupe Euris. 


Chairman and CEO, Rallye. Chairman, Casino, Guichard-Perrachon (since 4 September 2003). Chairman, Finatis. 

Member of the Supervisory Board, Groupe Marc de Lacharrière. Managing Partner, Rothschild et Compagnie 

Banque. Manager, SCI Penthièvre (since 7 January 2003). Censor, Fimalac. Censor, Caisse Nationale des Caisses 

d’Epargne (since 1 January 2004). Directorships expired in 2003: Member of the Supervisory Board, Casino 

Guichard-Perrachon. 

Resume: 

Inspecteur des Finances. After almost ten years as an adviser to government ministers, he became Managing Partner 

of Rothschild et Cie Banque in 1987. The same year he created Euris, an investment company. He was appointed 

Chairman of the Management Board of Euris in 1987, then Chairman and Chief Executive Officer in 1990. 


17



Marcel Roulet Born in 1933 



Independent Director. Member of the CCF Audit Committee since 14 May 2003. 


Chairman of the Supervisory Board, Gimar Finances. Member of the Supervisory Board, Eurazeo. Director, 

Thomson. Director,Thales, permanent representative of Thomson. Director, France Telecom (since 25 February 

2003). 

Resume: 

Ingénieur général des télécommunications. Honorary Chairman of France Telecom. Chairman of France Telecom 

from 1991 to 1995. Chairman and Chief Executive Officer of Thomson from 1996 to 1997 and Thomson CSF 

(now Thales) from 1996 to 1998. 

Gérard Turc Born in 1962 




Reception Supervisor of the CCF Menton branch. 

Resume: 


Rémi Vermeiren Born in 1940 





Director, San Paolo IMI. Directorships expired in 2003 : Director delegate and Chairman of the Executive 

Management Committee, KBC Bancassurance Holding SA; Director delegate and Chairman of the Executive 

Management Committee, KBC Bank SA; Chairman of the Board, CSOB. 

Resume: 

Belgian nationality. Over 43 years with KBC and KBC Bancassurance Holding. 

Director nominated for election at the Annual General Meeting of 12 May 2004 

Michael Geoghegan Born in 1953 



Executive Director, HSBC Holdings plc since 1 March 2004. Chief Executive Officer, HSBC Bank plc since January 

2004. 


Non-Executive Director: Young Enterprise (since 15 January 2004). 

Resume: 

British nationality. Joined HSBC in 1973. Chairman of HSBC Bank Brasil S.A. – Banco Múltiplo from 1997 to 

2003 and head of HSBC’s South American operations from 2000 to 2003. 


18


Corporate governance 

Remuneration of Directors and Senior 

Management 

Remuneration of Directors 

Executive Directors’ remuneration policy 

The remuneration of Executive Directors is agreed 

each year by the Board of Directors at the proposal of 

the Nomination and Remuneration Committee. It 

includes a fixed component and a variable component. 

The fixed component is determined by reference to 

market data supported by the advice of specialist consultants. 

The variable component is equal to a percentage 

of the fixed component, agreed by the Board 

of Directors each year once the financial statements 

have been approved. The percentage agreed is based 

on performance in terms of operating profit before 

provisions, earnings per share and return on equity, 

taking account of the economic climate and a comparison 

against the budget and prior year results. The 

Executive Directors and Senior Corporate Vice- 

Presidents have a defined benefits supplementary pension 

scheme and the Executive Directors also have a 

company car. 

2003 remuneration 

The following table shows the total emoluments, including 

all benefits in kind, payable to each Executive 

Director in respect of 2003 by CCF, the companies it 

controls and the companies which control it (the HSBC 

Group). 

(in €) Charles de Croisset Dominique Léger 

Fixed 

Component 541,660 481,706 

Variable 

Component 1 374,287 275,000 

Benefits in kind 11,161 6,388 

Directors’ fees 49,700 18,294 

Total 976,808 781,388 

The total amount of direct and indirect remuneration 

received in 2003 by members of the Executive 

Committee in office at 31 December 2003, including 

the Executive Directors, amounted to €3,489,688 for 

the fixed component and €2,822,037 for the variable 

component. 

Directors’ fees 

At the Annual General Meeting of 7 April 1999, the 

maximum amount of Directors’ fees payable each year 

was fixed at €426,850. At its meeting of the same date, 

the Board of Directors decided to allocate these fees 

as follows: 

– All Directors receive an annual flat fee of €18,294 

at the conclusion of the Annual General Meeting. 

– Those Directors who sit on the Audit Committee 

or Nomination and Remuneration Committee also 

receive an annual flat fee of €9,147. 

Within the HSBC Group, it is customary for 

Directors representing HSBC on the Board of several 

different Group companies to receive Directors’ fees 

from only one of them. Following the Board’s 

decision of 20 February 2001, this rule applies to four 

CCF Directors, Messrs de Croisset, Dalton, Filippi 

and Green, who will not receive Directors’ fees in 

respect of their directorship of CCF with effect from 

the date of their co-optation onto the Board of another 

HSBC Group company. 

Total Directors’ fees paid in May 2003 in respect of 

2002 amounted to €0.288 million against €0.284 million 

the previous year. 

The individual amount of Directors’ fees for 2003 

remains unchanged. The total amount of Directors’ 

fees which will be paid at the conclusion of the Annual 

General Meeting of 12 May 2004 amounts to €308,710. 

1 Bonus payable in respect of 2003 and paid in 2004. 

19


Corporate governance (continued) 

The following table shows the total emoluments paid to each Director in respect of 2003 by CCF, the companies 

it controls and the companies which control it (the HSBC Group). 

Salary and 

Directors’ other fixed Variable Benefits 

fees remuneration remuneration in kind Total 

Executive Directors of the HSBC Group 1 

William R. P. Dalton 2 . . . . . . . . . . . . . . . . . . . . £35,000 £582,320 – 3 £14,301 £631,621 

Charles-Henri Filippi 2 . . . . . . . . . . . . . . . . . . . . £25,000 £206,745 £400,000 4 5 £149,663 6 £781,408 

Stephen K. Green 2 . . . . . . . . . . . . . . . . . . . . . . £35,000 £551,477 £650,000 4 £1,098 £1,237,575 

Employee representatives 7 

Patricia Bizien-Legay . . . . . . . . . . . . . . . . . . . . €18,294 8 – – – €18,294 8 

Evelyn Césari . . . . . . . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Yves Fontaine . . . . . . . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Gérard Turc . . . . . . . . . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Independent Directors 

Martin Bouygues . . . . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Jean-Antoine Chabannes . . . . . . . . . . . . . . . . €27,441 – – – €27,441 

Jean-Claude Decaux . . . . . . . . . . . . . . . . . . . . €13,720 – – – €13,720 

Paul Dubrule . . . . . . . . . . . . . . . . . . . . . . . . . . . €27,441 – – – €27,441 

Philippe Houzé . . . . . . . . . . . . . . . . . . . . . . . . . €27,441 – – – €27,441 

Jean-Claude Jolain . . . . . . . . . . . . . . . . . . . . . €27,441 – – – €27,441 

Igor Landau . . . . . . . . . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Jean-Charles Naouri . . . . . . . . . . . . . . . . . . . . €18,294 – – – €18,294 

Marcel Roulet . . . . . . . . . . . . . . . . . . . . . . . . . . €25,154 – – – €25,154 

Rémi Vermeiren . . . . . . . . . . . . . . . . . . . . . . . . €13,720 – – – €13,720 

1 Excluding Charles de Croisset and Dominique Léger, whose total emoluments including Directors’ fees are shown on page 19. 

2 Emoluments shown are those paid by other HSBC Group companies in respect of their executive functions within the Group. 

3 In exchange for the prior waiver of bonus, the employer contribution into the pension scheme has been increased by the amount of £1,250,000 which would 

otherwise have been paid. 

4 Amounts payable in respect of 2003, to be paid in 2004. 

5 In return for the prior waiver of part of the bonus, the employer contribution into the pension scheme has been increased by the amount of £400,000 which 

would otherwise have been paid. 

6 It comprises £143,000 paid by the Group for the cost of accommodation in the UK. 

7 Total gross remuneration other than Directors’ fees for the employee representatives who have an employment contract with the company amounted to 

€228,778.62 for 2003. 

8 Directors’ fees paid to a trade union organisation. 

Auditors’ fees paid in 2003 by the CCF group 

Audit 

Other 

(in € thousands) assignments assignments Total % 

KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,821 673 3,494 74.7 

Cabinet Laîné . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 – 72 1.5 

Deloitte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 398 611 13.1 

Ernst & Young . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – 

PricewaterhouseCoopers . . . . . . . . . . . . . . . . . . . . . . . . . . 166 – 166 3.5 

Salustro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 – 56 1.2 

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 – 281 6.0 

Total inclusive of recoverable VAT . . . . . . . . . . . . . . . . . . . 3,609 1,071 4,680 100.0 

Audit fees paid to KPMG were €2,466,000 excluding VAT. They include the sum of €170,000 inclusive of 

recoverable VAT (or €147,000 excluding VAT) in respect of services provided in the previous year. 

For regulatory reasons specific to HSBC, non-audit fees include the sum €328,000 inclusive of recoverable VAT 

(or approximately €284,000 excluding VAT) paid to KPMG in respect of interim review fees. 

Total fees paid by the CCF group to KPMG in respect of the 2003 financial statements, within the meaning of 

French law, therefore amount to: €2,466,000 + €284,000 - €147,000 = €2,603,000. 

20


Chairman’s report on corporate governance and internal control procedures 

Under the August 2003 law on financial security, the 

Chairman of the Board of Directors of a French société 

anonyme is now required to report to shareholders annually 

on the company’s corporate governance, internal control 

procedures and any restrictions on the powers of the 

Chief Executive Officer. I am pleased to present my first 

report in this respect for the year ended 31 December 2003. 

Management is responsible for defining and implementing 

adequate and effective internal controls, with 

oversight by the Board of Directors. The Chairman is 

required to report on how the Board of Directors prepares 

and organises its work and on the internal control 

procedures implemented by the company. 

This is the first time the provisions of the new law 

have been applied. We have been unable to provide some 

of the information in this initial report due to the 

extremely tight timing between the law’s publication on 

1 August 2003 and its date of effect. This is notably the 

case with respect to assessment of the adequacy of internal 

controls relative to the stated objectives, their proper 

application and effectiveness. 

The report has been drawn up on the basis of guidance 

issued by Medef on 17 December 2003 and the 

Autorité des Marchés Financiers (AMF) on 23 January 

2004. The report is intended to be part of a dynamic 

process, which in time will lead to a better assessment of 

the adequacy and effectiveness of internal controls 

through the implementation and development of more 

appropriate procedures and tools. 

CHAIRMAN’S REPORT ON CORPORATE 

GOVERNANCE 

Since 1995, CCF has applied the standards of corporate 

governance as recommended successively in the Viénot 

reports I and II, the Bouton report and lastly the amalgamated 

report on corporate governance published by 

Afep and Medef. In 2003, CCF incorporated the provisions 

of the new French law on Financial Security. 

CCF’s integration into the HSBC Group has not 

resulted in any changes to its corporate governance 

practices as this area has always been a key priority 

within the Group. However, some tasks of the 

Nomination and Remuneration Committee have been 

amended slightly to reflect the fact that CCF is no 

longer an independently quoted company. The Board 

of Directors of CCF is no longer responsible for devising 

share option plans, as employees of the CCF group 

are now awarded HSBC options. 

The composition of CCF’s Board still complies with 

the recommendations of the Bouton report in terms 

of independent directors, as half of all Board members 

are independent Directors having no special relationship 

with the company. 

Lastly, the Board’s method of operation has been 

governed by a set of internal rules adopted in 1996, 

which were amended in 2001 and 2003 to include new 

recommendations on corporate governance. 

Board of Directors 

At 31 December 2003, the Board of Directors had 

19 members, including: 

– 2 Executive Directors within the meaning of the 

French Banking Act; 

– 3 Directors representing the HSBC Group, which 

owns 99.9 per cent of CCF; 

– 10 independent Directors according to the criteria 

set out in the Bouton report. Two of these 

Directors, Jean-Claude Jolain and Jean-Antoine 

Chabannes, have been in office for more than twelve 

years. However, the Nomination and Remuneration 

Committee does not believe this affects their 

freedom of judgement with respect to the company. 

– 4 Directors elected by the employees in 2000 for 

a term of four years, in accordance with the 

provisions of the French law of 21 October 1986. 

Three Directors are non-French nationals. 

During 2003, there was one change in the composition 

of the Board. Jean-Claude Decaux was elected by 

the shareholders at their AGM of 14 May 2003 at the proposal 

of the Nomination and Remuneration Committee, 

which had obtained assurance that Mr. Decaux had no 

particular relationship with the company. 

The Directors’ term of office was reduced from six 

to four years at the AGM of 12 April 2000 and the 

Articles of Association amended accordingly. 

Board of Directors’ Internal Rules 

The Board of Directors first established its internal 

rules in 1996. These rules set out the principal duties 

of the Board, which are to appoint the Executive 

Directors responsible for managing the company, to set 

strategic guidelines for the company on a regular basis 

and to ensure the reliability of financial information 

provided to shareholders and the markets. 

21


Chairman’s report on corporate governance and internal control procedures (continued) 

They also set out the procedures for conducting 

Board meetings and, in accordance with HSBC rules, 

the duties, powers and responsibilities of the Audit 

Committee and the Nomination and Remuneration 

Committee (see below). 

At its meeting of 25 July 2003, the Board decided 

to incorporate a code of conduct in its internal rules, 

which requires Directors of CCF to comply with the 

same rules as restricted employees of the HSBC Group. 

Directors must now seek prior authorisation from the 

Secretary of the Board of HSBC Holdings plc before 

dealing in HSBC Group listed securities and may not 

deal in these securities during the close periods immediately 

preceding the publication of results or if they 

are privy to price-sensitive information which has not 

yet been made public. 

Preparation and organisation of the Board’s work 

in 2003 

Before each Board meeting, Directors receive an agenda 

together with the draft minutes of the previous Board 

meeting. In the week prior to the meeting, they also 

receive background information on agenda items and, 

a few days ahead of the meeting, a summary of key 

financial indicators. In the case of highly confidential 

issues, which cannot be disclosed in advance, the information 

is provided during the meeting itself. 

The Board of Directors met four times during 2003: 

– 25 February 2003 (72.2 per cent attendance rate); 

– 14 May 2003 (79 per cent attendance rate); 

– 25 July 2003 (84.2 per cent attendance rate); 

– 10 December 2003 (89.5 per cent attendance rate). 

The Board of Directors reviewed the Group’s 

quarterly, half-yearly and annual financial statements. 

In its first meeting of the year, it approved the budget 

for 2003. 

As part of the continuing process of rationalising 

CCF’s business structures, the Board approved the 

buyout of the minority interests in its subsidiary Elysées 

Fonds, to be followed by a merger with another 

subsidiary Elysées Gestion, both of which specialise in 

employee savings schemes. The Board also decided to 

combine CCF’s four private banking subsidiaries into a 

single entity called HSBC Private Bank France. 

The Board discussed the strategic guidelines 

for CCF’s retail banking business and the project to 

upgrade its information systems and migrate to HUB, 

the HSBC Group’s universal banking system. It was 

kept informed of CCF’s work on preparations for 

theintroduction of international financial reporting 

(IFRS) standards and the new “Basel II” capital 

accord. 

Lastly, the Board examined CCF’s action plan for 

incorporating the new requirements of the French 

Banking Commission on money laundering controls, 

as set out in regulations issued by the French Banking 

Regulations Committee (CRBF). 

The Board considered and discussed the detailed 

reports submitted by its special committees, particularly 

with regard to the future of C F W de Croisset, 

Chairman and Chief Executive Officer, and Dominique 

Léger, Executive Director. 

At its meeting of 14 May 2003, the Board appointed 

Marcel Roulet to the Audit Committee and, at its 

meeting of 10 December 2003, took note of S K Green’s 

decision to step down from the Audit Committee. 

Apart from these major issues, the Board also discussed 

various other issues which are legally its responsibility. 

Self-assessment 

The Board decided to implement the Afep/Medef 

recommendations on self-assessment without delay. 

Responsibility for this has been delegated to the 

Chairman of the Nomination and Remuneration 

Committee. The first assessment will take place in the 

first few months of 2004. 

22

Special committees 

Nomination and Remuneration Committee 

Composition: 

Chairman: 

– Paul Dubrule Appointed 1999 

(independent) 

and 2002 as Chairman 

Members : 

– Philippe Houzé Appointed 1999 

(independent) 

– Stephen Green Appointed 2000 

The Nomination and Remuneration Committee’s 

principal duties are to make recommendations to the 

Board regarding the nomination of candidates to fill 

vacancies on the Board of Directors, key succession 

planning, and Executive Directors’ remuneration, pension, 

health and other benefits. Its recommendations 

about Director’s remuneration are first approved by 

the Remuneration Committee of HSBC Holdings plc. 

The Committee met three times during 2003, with 

an average attendance rate of 89 per cent. 

Its work encompassed: 

– proposals for the fixed and performance-related 

components of the Executive Directors’ remuneration; 

– proposals regarding the appointment of a new 

Director; 

– proposals concerning the terms of departure of 

C F W de Croisset, Chairman and Chief Executive 

Officer, and Dominique Léger, Executive Director. 

The Chairman of the Committee reported to 

the Board on its work at the Board meetings of 

26 February 2003, 25 July 2003 and 10 December 2003. 

Audit Committee 

Composition: 

Chairman: 

– Jean-Claude Jolain Appointed 1992 

(independent) 

Members: 

– Jean-Antoine Chabannes Appointed 1992 

(independent) 

– Marcel Roulet Appointed 2003 

(independent) 

The Audit Committee’s main duties are defined in 

the Board’s internal rules. These duties are: 

– to examine the quarterly, half-yearly and annual 

financial statements submitted to the Board of 

Directors to ensure that the data and information 

provided by management gives a true and fair picture 

of the company’s operations and position; 

– to discuss with the external auditors the scope of 

business audited, restatements made, compliance 

with accounting principles, market rules and legal 

requirements, and the impact of any changes in 

accounting policies; 

– to express an opinion on the appointment or 

re-appointment of the external auditors, their fees 

and any other issues concerning their duties; 

– to review the external auditors’ management letter 

together with any responses to it; 

– to review the company’s report on internal control 

systems; 

– to review the internal audit system and internal 

audit programme and resources; 

– to ensure that the company’s compliance reports 

and money laundering prevention measures comply 

with directives issued by the supervisory authorities 

and other regulations governing CCF and its 

subsidiaries; 

– to review the significant risks and litigations 

arising from CCF’s business operations. 

As required under HSBC Group rules, once the 

Audit Committee has verified the accounting procedures 

used to prepare the financial statements, the Chairman 

of the Committee sends a letter of confirmation to the 

Chairman of the Audit Committee of HSBC Bank plc, 

CCF’s direct shareholder. 

In 2003, the Audit Committee met four times 

on 24 February, 13 May, 24 July and 5 December, in 

the presence of the external auditors and those CCF 

managers responsible for the issues discussed. All three 

members of the Committee attended all four meetings. 

At least one of CCF’s Executive Directors attended 

each meeting to answer questions. 

The Committee reviewed the parent company and 

consolidated financial statements, analysed the impact 

of changes in scope of consolidation on group earnings, 

and examined earnings restated for businesses 

managed by CCF. It also discussed the accounting 

policies used to prepare the financial statements, 

23



assisted by the external auditors who commented on 

their management letter in the meetings devoted to the 

annual accounts for 2002 and the interim accounts for 

2003. A key point of concern was to verify the adequacy 

of provisions for identified risks and the level 

of provisions taken against the bank’s equity book. 

The Committee also verified the quarterly accounting 

certificates produced at the request of the HSBC 

Group. 

At each meeting, the Committee reviewed the 

bank’s significant risks assisted by the person responsible 

for internal control in each case: 

– credit risk, with an individual review of major 

exposures; 

– market risk and trends compared with limits; 

– legal and litigation risk; 

– operational and information technology risk. 

The Committee regularly reviewed the company’s 

internal audit work and monitored changes in 

the group’s internal control teams. At its meeting of 

13 May 2003, it conducted a detailed review of the 

annual internal control report required under the 

CRBF’s regulations no. 97-02 and 2001-01. 

The Committee devoted much time in 2003 to 

compliance work and particularly to reviewing the 

action plan implemented by CCF to improve its money 

laundering prevention systems, in accordance with the 

French Banking Commission’s directives. It examined 

the annual report submitted to the Conseil des Marchés 

Financiers (CMF) on the organisation and operation 

of internal control systems for investment services, a 

specific report on the control of margin provision for 

stock market transactions, and the annual report on 

cheque controls as required by the CRBF’s regulation 

no. 2002-01. Quarterly compliance certificates, which 

list the key shortcomings, are discussed at each meeting. 

The Chairman of the Audit Committee reported 

in detail on the Committee’s work at the Board 

meetings held on 25 February, 14 May, 30 July and 

10 December 2003. 

Restrictions on the Chief Executive Officer’s 

powers 

The Articles of Association were amended in 2002 

to incorporate the provisions of law no. 2001-420 of 

15 May 2001, as approved at the AGM of 8 April 2002. 

At its meeting the same day, the Board of Directors 

decided not to split the functions of Chairman and 

Chief Executive Officer and that Mr. de Croisset would 

therefore continue in office as Chief Executive Officer 

for the remainder of his term as Chairman of the 

Board. The Chairman and Chief Executive Officer 

has widest powers to represent the company in all circumstances 

within the limits of its corporate objects. 

At its meeting of 24 February 2004, the Board of 

Director appointed Mr. Charles-Henri Filippi as 

Chairman of CCF with effect from 1 March 2004. The 

Board renewed also at this meeting its decision not to 

split the offices of Chairman and Chief Executive Officer. 

Mr. Charles-Henri Filippi, Chairman of the Board, also 

takes up the office of Chief Executive Officer. 

CHAIRMAN’S REPORT ON INTERNAL 

CONTROL PROCEDURES 

Internal Control objectives 

The purpose of the internal control procedures implemented 

by CCF is to ensure that: 

– management, operations and personal conduct 

comply with the guidance issued by the company’s 

governing bodies, with applicable laws and regulations 

and with the company’s own values, standards 

and internal rules; 

– accounting, financial and management information 

reported to the company’s governing bodies gives 

a true and fair picture of the company’s operations 

and position. 

CCF’s internal control system follows the guidance 

set out in the CRBF’s regulation no. 97-02 and in the 

HSBC Group Standards Manual (GSM). 

One of the key objectives of the internal control 

system is to prevent and manage risk arising from the 

company’s business operations and the risk of error or 

fraud, particularly in the areas of accounting and 

finance. No control system can provide absolute 

assurance that all risk will be eliminated. 

Description of internal control procedures 

General internal control environment 

Organisation 

The Group has established a structured system of internal 

controls as required by the CRBF’s regulation no. 97-02, 

supplemented and amended by regulation no. 2001-01. 

All the control objectives are described in internal 

circulars issued by CCF’s senior executives. Accounting 

24

controls are documented in the Accounting Controls 

Manual and in the CCF Group Manual. The HSBC 

Group Standards Manual (GSM) has been translated 

into French and circulated to all CCF group business 

units. All business unit heads have acknowledged 

receipt and confirmed that they have read and circulated 

the GSM to their key managers. 

The internal control structure is decentralised 

to business unit level and provides permanent and 

periodic controls in order to ensure the integrity and 

reliability of transactions. Senior management is 

responsible for establishing controls for all transactions 

and for ensuring their effectiveness. The quality and 

effectiveness of the internal control system is monitored 

at top level by the Audit Committee. 

The internal control system has a three-tier structure. 

First line controls are described in the procedures 

and are performed by staff as an integral part of their 

job. Second line controls are the responsibility of the 

business unit or subsidiary’s management and third 

line controls are the responsibility of the internal audit 

team. 

CCF also has specific control objectives, covering 

all business operations. These include: 

– issuing directives, rules and procedures for conducting 

operations through circulars and departmental 

procedures manuals; 

– establishing comprehensive limits, procedures, and 

committees to manage ALM, market risk, credit 

risk, legal and tax risk; 

– establishing sound financial controls, authorised 

expenditure limits, budgets and plans, and monitoring 

performance against budget on a monthly 

basis; 

– establishing procedures and committees to identify 

and manage operational risk. 

Reference manuals 

HSBC Group Manuals 

The GSM sets out the policies, procedures, standards 

and other general conditions which govern the HSBC 

Group’s business operations. All Group units without 

exception are required to comply with the GSM, 

regardless of the nature of their business or their 

geographical location. 

The HSBC Group believes that formal written 

policies and procedures at all levels are essential to 

effective risk management. The Functional Instruction 

Manuals (FIM) and the Business Instruction Manuals 

(BIM) therefore contain detailed policies and procedures 

for each specific function or business activity. 

All subsidiaries exercising a particular function or 

business activity are required to comply with the 

relevant manual. 

Code of Conduct and Handbook 

The Code of Conduct, which is incorporated in CCF’s 

general Handbook, applies to all staff and requires 

respect for the highest standards of integrity and professionalism. 

Employees in sensitive positions are required to 

obtain authorisation for their personal share dealings 

and to confirm in writing that they will respect the 

Code of Conduct. They are also required to sign a 

confidentiality agreement. In addition, “Chinese 

Walls” have been established to prevent leakage of 

sensitive or confidential information. 

Money laundering prevention Intranet site 

The money laundering prevention Intranet site, 

developed by CCF Group Compliance, has been 

operational since December 2003. It gives all members 

of staff easy access to CCF’s money laundering 

prevention procedures. 

Accounting controls manual 

The CCF Group Finance Department has developed 

an Accounting Controls Manual to improve the effectiveness 

and quality of internal accounting controls 

throughout the CCF group. This manual provides a 

methodology and sets out a number of daily, monthly, 

periodic and specific controls to be performed by each 

business unit’s accounts department. The manual is 

updated regularly and complies with French accounting 

standards. 

In addition to specific accounting and financial 

publications, internal circulars are sent regularly to 

accountants throughout the CCF group in order to 

maintain a good level of knowledge and understanding 

of new accounting standards. 

Internal circulars 

The key vehicle for communicating policies to management 

and staff is internal circulars, which are categorised 

by nature, type and distribution list. Annual plans and 

budgets are sent to all business heads after approval by 

CCF Group Finance and the Board of Directors. 

25



Persons responsible for control activities and their role 

Internal control 

a 

Risk committees 

CCF has a centralised risk control system. Each 

type of risk, with its related limits and rules, is monitored 

by a specific committee headed by the 

Chairman and Chief Executive Officer. Committee 

members are those senior executives responsible for 

the businesses or functions concerned by each type 

of risk. The specific risk committees are: 

– Audit, Internal Control and Compliance 

Committee, which meets monthly to review all 

significant internal audit reports and compliance 

matters, particularly issues relating to 

money laundering controls. The committee is 

regularly advised of any developments in internal 

control systems and of any fraud or 

attempted fraud. It reviews all potential risks 

which are not already the responsibility of 

another special committee. These may be operational 

risks, information technology risks, 

accounting risks, legal risks, security risks or 

regulatory change related risks. 

– Credit Committee, which meets monthly to 

review all credit risk. It is also responsible for 

the Group’s overall lending strategy, and particularly 

its policy with regard to exposure to 

certain types of counterparty or certain types 

of financing. 

– Legal and Tax Committee, which reviews positions 

of principle on legal and fiscal issues 

liable to affect the drafting and management 

of contracts. 

– Asset and Liability Committee, which monitors 

structural risks relating to interest rates, 

ALM and risk weighted assets. 

– Market Risk Committee, which is responsible 

for counterparty and proprietary trading risks. 

– Structured Transactions Committee, which 

reviews all legal, accounting, tax and finance 

risks connected with complex structured transactions. 

– Non-Performing Assets Committee, which 

reviews the need for provisions against nonperforming 

assets (loans, securities books) on 

a consolidated basis. 

b 

c 

Internal control teams 

The group’s main operational divisions and subsidiaries 

each have their own internal control team 

who assist the management in its mission to maintain 

a coherent internal control system. 

Their objectives are: 

– to ensure consistent, effective internal controls 

and their compliance with group rules; 

– to oversee implementation of recommendations 

made by Group Eurozone Audit; 

– to ensure compliance with HSBC Group 

standards. 

The second line internal control structure within 

the CCF retail network has been significantly 

strengthened following a recommendation by the 

French Banking Commission and as part of the 

group’s drive for continuing progress in the prevention 

of money laundering, which is one of its 

key priorities. A separate unit, forming part of the 

second line internal control team, has been established 

to control the quality of the retail network’s 

money laundering prevention system. 

CCF Group Compliance Department 

CCF Group Compliance is responsible for efforts 

to combat money laundering and terrorism 

financing, and for ensuring that the group’s 

activities comply with rules, regulations and good 

professional practice in these fields. The structure 

of CCF Group Compliance is based on that of the 

HSBC Group’s compliance function. It has a 

compliance officer responsible for each of the 

Group’s core businesses (Retail Banking, Private 

Banking, Corporate, Investment Banking 

& Markets, and Asset Management) and is 

supported by a network of Local Compliance 

Officers (LCOs) and Money Laundering 

Compliance Officers (MLCOs) in each business unit. 

In association with the Training Department, 

CCF Group Compliance organises refresher courses 

on current regulations and workshops on specific 

regulatory issues. 

It is also responsible for ensuring respect for rules 

of conduct throughout the group and for control 

over investment services. It draws up and circulates 

appropriate compliance rules for the Group’s 

different business activities and runs many training 

sessions, particularly for the LCOs and retail 

network compliance officers. Annual appraisals are 

26

d 

e 

performed to assess compliance with rules, professional 

behaviour and integrity. 

CCF Group Finance Department 

CCF Group Finance is responsible for the proper 

application of the group’s accounting principles and 

accounting control procedures. It defines the procedures 

and controls to be applied under its responsibility 

by the accounting departments of the group’s 

business units, and more particularly accounting 

and reconciliation procedures designed to verify the 

existence and validity of general ledger accounts. 

These procedures and controls are communicated 

via internal circulars. 

All business units have a finance department 

which reports monthly to CCF Group Finance. 

These departments are responsible for drawing up 

budgets and action plans in line with guidance given 

by senior management. 

CCF Group Finance organises an annual 

seminar to keep all finance departments and senior 

accountants abreast of current accounting rules 

and practices. Technical training in specific topics 

is provided for accounting staff as required, as well 

as a full range of more general training courses. 

Operational Risk Managers (ORM) 

Each business unit has its own Operational Risk 

Manager (ORM), who is responsible for identifying 

operational risks liable to affect their business. 

In conjunction with the business head 

concerned, they analyse and quantify the risks of 

loss in terms of frequency, severity and exposure 

(exposure also takes account of the impact on risk 

relating to existing procedures). The ORMs are 

required to document risk exposure at known 

control points. 

An action plan is drawn up to mitigate risks 

classified as material in light of these three criteria. 

The ORMs are responsible for monitoring the 

action plans (rollout, planning, budget control, 

etc.) and more generally for measuring their 

business’s exposure and its trends, particularly 

through exposure indicators. 

They report regularly to their business unit head 

and to CCF Group Risk Management on trends in 

exposure, including an analysis of historical loss 

(or gain) experience. 

From 2004, a Risk Committee will review business 

segment risks regularly, together with trends 

in risk exposure measurement indicators. 

CCF plans to introduce an annual review of 

operational risks concerning all business segments, 

together with a quarterly review of trends in exposure 

and the impact of measures taken to limit or 

eliminate material risks identified by the ORMs. 

External control 

a 

Group Eurozone Audit 

Group Eurozone Audit (GEA) covers all operations 

and business units (both domestic and abroad) 

and certain HSBC Group branches and subsidiaries 

operating within the Eurozone. Its duties are to 

verify the quality of internal control systems and 

to make recommendations for improvement. GEA 

reports to the Chairman and Chief Executive 

Officer of CCF and has a functional reporting line 

to the HSBC Group’s Internal Audit Department. 

GEA has adopted HSBC Group Audit Standards. 

The frequency of audits is determined by a risk 

matrix set out in the HSBC Group Audit Standards 

Manual. GEA has taken over the internal audit 

teams at Banque Hervet, UBP, Picardie and 

Pelletier, together with some of the internal controllers 

in the retail banking business. Regional 

audit teams are currently being established and 

GEA aims to introduce greater staff specialisation 

and task automation during 2004 with a view to 

improving productivity. 

HSBC Group Financial Services Audit (GFA), 

which is based in London and has worldwide 

expertise, controls some of CCF’s specialist businesses, 

principally fixed-income and foreign 

exchange trading, CCF Securities, Erisa Vie and 

Banque Dewaay. 

Internal audit reports including a detailed risk 

assessment are sent to audited unit’s management, 

together with a letter indicating the risk rating 

assigned to the audit. Senior management is 

responsible for implementing recommendations 

made by GEA, those made in external audit reports 

and the external auditors’ management letters, and 

in reports issued by the supervisory authorities. 

GEA oversees the implementation of recommendations, 

which is subject to a strict monitoring 

process. It also keeps a centralised register of any 

dispensations from Group standards. 

27



b 

c 

Audits performed during 2003 revealed a big 

improvement in the application of HSBC’s GSM, 

FIM and BIM in many business segments, and 

particularly the central support functions of the 

regional banks. Audit conclusions were therefore 

broadly more favourable than before. 

Significant progress has also been made in 

implementing HSBC standards in information technology. 

CCF must continue its efforts to improve 

information systems security. 

Audit Committee 

The Audit Committee is key to the CCF group’s 

internal control system. Its duties and composition 

are set out in the section of this report on corporate 

governance. 

Supervisory authorities and external auditors 

The supervisory authorities and external auditors 

may make recommendations on CCF’s internal control 

procedures. In this case, the divisions concerned 

are responsible for drawing up action plans for their 

implementation. 

Description of internal control procedures 

Control environment and oversight 

Management is responsible for creating a sound overarching 

control environment. This involves establishing, 

implementing and ensuring the effectiveness of 

first line controls. Oversight of the control environment 

is also a key means of verifying whether internal 

controls are appropriate and have been adapted to take 

account of changing circumstances. 

GEA checks and tests the quality of the overall 

internal control system. It performed almost 160 audit 

assignments in 2003, covering all business activities. 

Implementation of its recommendations is monitored 

closely. 

CCF is required to draw up an annual report on its 

internal control systems under the provisions of the 

CRBF’s regulation no. 97-02, supplemented and 

amended by regulation no. 2001-01. The report is 

meant to take a critical look at internal control procedures, 

including a description of any significant 

improvements made, the results of and follow up to 

surveys carried out and specific control measures for 

foreign branches. CCF therefore undertakes a regular 

detailed review of its internal control systems. 

CCF, like all HSBC Group subsidiaries, is also 

required to complete an annual Internal Control 

Questionnaire (ICQ), also known as the Cadbury questionnaire. 

This information is reported to the Financial 

Services Authority (FSA) in London. 

Procedures for controlling compliance with laws 

and regulations 

As indicated on page 26, CCF established a Group 

Compliance Department in 2001, which is responsible 

for ensuring compliance with laws and 

regulations (certain more specialised laws remain the 

responsibilities of other departments, such as Human 

Resources, Legal and Tax Affairs, etc.). 

A chart of compliance risks by type of business, 

based on the HSBC Group model, has been established 

and distributed to assist LCOs in performing their advisory 

and control tasks. The LCOs have a functional 

reporting line to CCF Group Compliance, which gives 

them the independence they require to carry out their 

duties effectively. Their operational reporting line is 

to the local business head. 

The LCOs submit a quarterly report on compliance 

with laws and regulations to the head of CCF Group 

Compliance. The business head concerned is required 

to co-sign these reports on a half-yearly basis. They 

also describe the measures taken (procedures, training, 

etc.) to ensure compliance with laws and regulations. 

In addition, a quarterly consolidated report for the 

CCF group is prepared based on the information contained 

in the LCOs’ quarterly reports and the comments 

of the head of CCF Group Compliance. The 

report is co-signed half-yearly by the head of CCF 

Group Compliance and the Chairman and Chief 

Executive Officer. 

The head of CCF Group Compliance reports quarterly 

to the Audit Committee on any issues raised in 

these reports and any other material matters. An 

annual report, validated by the Audit Committee is 

sent to the Autorité des Marchés Financiers (AMF). 

Control procedures to limit risk of financial loss 

and fraud 

CCF has established comprehensive procedures for 

limiting the risk of financial loss and fraud. These 

include segregation of key duties in branches and the 

processing/payment departments. Strict rules are in 

place for the protection, receipt, storage and archiving 

of documents, and for the storage of cash, assets, safe 

keys, etc. 

With regard to the prevention of money laundering 

and other fraud/security related issues, 

28

CCF regularly issues internal circulars and procedures, 

which were enhanced and updated in 2003. An intranet 

site dedicated to combating money laundering is 

accessible to all employees of the CCF group. The 

LCOs are responsible for staff training. In 2003, over 

900 CCF employees received training in money 

laundering controls. 

In respect of money laundering information systems, 

CCF has introduced a system for communication 

between the retail network LCOs and the branches 

themselves, which enables the relationship managers 

to specifically follow up and ensure centralised reporting 

for sensitive client accounts. The system for ex 

post control over payments has been upgraded to 

improve detection of suspicious transactions. 

Finally, in June 2003, a system which blocks inward 

and outward international payments was introduced 

as part of the group’s efforts to combat terrorism 

financing. The system filters payments for CCF and 

four regional banks (Banque Hervet, CCSO, UBP and 

Picardie), while the remaining regional banks have their 

own specific systems. 

Authorisation limits and approval procedures 

Tiered structures of approval and expenditure limits 

are in place in all CCF group businesses. Detailed control 

procedures are contained in the procedures manuals. 

Credit risk 

The Chairman and Chief Executive Officer has delegated 

his lending authority to the head of CCF Group 

Credit. Credit proposals exceeding these limits are 

referred to the HSBC Group’s Credit Department. 

All business units receive delegated limits from the 

head of CCF Group Credit. Subsidiaries receive 

delegated limits from their respective Boards within 

general guidelines laid down by the head of CCF 

Group Credit. Within this framework, each account 

manager receives a personal lending limit which varies 

according to experience, expertise and business needs. 

Limits are advised in writing. They are allocated 

to individuals by name and not position. The limits 

given to branch managers reflect the business characteristics 

and size of the branch. 

All excesses over authorised limits must be referred 

upwards to the relevant level of authority. All credit 

facilities are subject to periodic review on at least an 

annual basis, in accordance with HSBC Group standards. 

Market risk 

Limits, authorisations and control processes for market 

risks are set out in a CCF group procedure. 

Risks limits are set for all business activities by the 

Market Risk Committee, which meets monthly and is 

headed by the Chairman and Chief Executive Officer. 

Committee members include the heads of businesses 

involved in market activities and heads of central functions 

in charge of risk management. 

CCF Group Market Risk Management is responsible 

for overseeing group market risk exposures, 

control processes and limits monitoring. The head of 

CCF Group Market Risk Management sets the agenda 

for Market Risk Committee meetings. 

Each dealing room has a control team specifically 

in charge of daily control and limits monitoring. 

Market risks are measured and risk limits fixed using 

a Value at Risk (VaR) model. CCF has developed its 

own internal VaR model which was approved by the 

authorities in 1998. 

Each trading desk has a risk limit which is revised 

at least once a year by the Market Risk Committee 

and may be amended on an ad hoc basis. 

Specific exposure limits (FX position, IR sensitivities, 

equity volumes, etc.) are fixed at trading book 

level, taking account of VaR limits. They are authorised 

by the Operational Limits Committee, which 

meets on an ad hoc basis under the chairmanship of 

the head of CCF Group Market Risk Management. 

Following CCF’s integration with the HSBC 

Group, global VaR and exposure limits for CCF group 

have been set for each risk type (FX, IR and equities). 

Global risk and exposure is reported daily. 

Procedures for ensuring reliability of data processing 

Information system developments 

Information system developments comply with the 

methodology recommended by the HSBC Group, from 

the early design stage until the system goes live. 

Milestones are defined to ensure that each stage of 

development is completed and approved as planned. 

More specifically, the functional specifications are formally 

validated by users before any development takes 

place. In addition, CCF Group Information Systems 

has created an Architecture Committee and a IT 

Validation Committee to ensure that projects comply 

with its architecture rules as defined in accordance with 

29



HSBC Group Standards. These methodologies are 

used for new development projects, not for maintenance 

of existing systems. They are completed by a 

set of documents known as “Quasar”. Quasar comprises 

a set of checklists to be used for each project 

throughout the development process and which must 

be completed before the system can go live. 

Testing 

Testing is conducted throughout the development life 

cycle. There are three different types of test: 

– unit testing at the programming level; 

– integration testing at functional level; once these 

tests are completed, approval is required from the 

business manager before the process can continue; 

– production testing, designed to ensure that the new 

application operates properly in a live environment. 

System implementation control 

All releases of applications are controlled by a “configuration 

control tool”, either on mainframe or on 

distributed environment. These tools ensure the completeness 

of programs upon installation and serve as 

a back-up in case of system failure. 

In addition to these back-up plans, CCF is currently 

working on a high-level Business Recovery Plan to 

ensure that the bank’s key functions can become reoperational 

without delay, principally through the use 

of independent back-up sites in different geographical 

locations. 

System access control 

Password controls are set for any person accessing 

mainframe applications. Program libraries and system 

libraries are also protected by appropriate user lists. 

Access rights are centrally controlled by a special 

team forming part of the Security department of CCF 

Group Information Systems. 

Change control 

CCF has a change control system which has been 

reinforced by the establishment of a Change Control 

Committee responsible for examining and approving 

all material changes and monitoring progress on a 

monthly basis. 

Operations control 

Computer equipment is installed in a secured 

computer centre, with round-the-clock security. All 

mainframe operations are recorded in a log file. Most 

transactions executed by CCF branches are recorded 

in log files, depending on the application. 

Control procedures for producing and processing financial 

and accounting information 

Production of financial and accounting information 

a 

b 

Persons involved 

– Decentralised accounting departments, which 

are responsible for controlling and monitoring 

one or more accounting centres and foreign 

CCF branches. They produce monthly reports 

which are sent to the General Accounting 

department of CCF Group Finance and the 

business line’s Financial Control analysts. 

– CCF Group Finance – General Accounting. 

The General Accounting department centralises 

all CCF parent company accounting data in GL 

Expert. It produces parent company financial 

statements on a monthly basis and completes 

the consolidation package. It also produces 

most regulatory ratios. 

– CCF Group Finance – Consolidation. On a 

monthly basis, the Consolidation team collects 

the reporting package from all companies in the 

group (approximately 70), produces the financial 

statements using French GAAP and makes 

the restatements required to convert to UK 

GAAP before sending the package to HSBC in 

London. 

Method of producing financial data 

– Frequency and content: 

There are three types of monthly financial 

reporting both on a parent company and consolidated 

basis: 

• Regulatory reporting: 

BAFI (Base des Agents Financiers), ECB 

(European Central Bank) and EMI 

(European Monetary Institute) reports, 

liquidity and solvency ratios, balance of 

payments, Bank of France central risk and 

major exposures reports. 

• CCF senior management reporting: 

A table is produced showing the Group’s 

consolidated results by business line 

together with activity indicators. 

30

c 

• HSBC reporting: 

This principally comprises the monthly 

reporting package produced by Hyperion. 

A list of specific reports has also been 

established by HSBC and gradually implemented 

in accordance with the HSBC 

format and accounting standards. 

– Accounting standards and principles: 

The main accounting principles are summarised 

in the Accounting Controls Manual which is 

available to all Group accountants on the CCF 

intranet. These principles are essentially those 

set out in the French Code du Commerce and 

the 4th European Directive. 

As CCF is part of the HSBC Group, it produces 

financial statements using both French 

and UK GAAP. 

A questionnaire on accounting principles 

and valuation methods is sent to subsidiaries 

and the parent company at the time of the year 

end consolidation, to ensure that the principles 

used are consistent throughout the group. 

The forthcoming introduction of IASC 

standards will undoubtedly have an impact both 

on the method of producing the financial 

statements and their content. 

Financial statement production process 

CCF parent company’s accounting architecture is 

based on functional operating systems in which 

transactions are entered. At the end of the day, an 

accounting interpreter converts the events into journal 

entries. 

The operating systems are specialised applications 

devoted to a particular activity (loans, credit, 

securities transactions, foreign exchange transactions, 

etc.). 

Some transactions, which are not managed by 

these systems or which are not ordinary events 

(taxes, provisions, etc.) are recorded in the accounting 

system under Sundry Transactions. 

CCF’s subsidiaries have their own accounting 

systems, which may be similar to those of CCF, or 

else they use integrated software suites. 

In preparation for migration to the HSBC Group’s 

universal banking system, HUB, CCF has embarked 

d 

on a systems convergence plan to standardise 

accounting systems throughout the CCF group. 

CCF uses Hyperion consolidation software to 

meet regulatory and financial reporting requirements 

and to produce consolidated financial statements 

using UK GAAP for HSBC reporting purposes. 

Information systems 

CCF’s banking operations are heavily automated 

(less than 5 per cent of data entries are manual) 

using internally and externally developed software 

systems to provide consistent, accurate and timely 

management information. Systems are tested by 

the developers before user acceptance tests. Specific 

internal training programs are designed to ensure 

that users fully understand the new process and its 

consequences. 

The development of a financial data warehouse 

will facilitate reconciliation and consistency between 

reporting for accounting, financial, regulatory and 

management purposes. 

Internal control over accounting information production 

a 

First and second line accounting controls 

CCF’s financial control environment includes routine 

controls such as reconciliations, audit trails and 

spot checks by financial control staff. Management 

controls over the accuracy of data entry and transaction 

allocation, including editing, audit trails and 

reconciliations, form an integral part of the control 

environment. CCF draws up a monthly certificate 

of accounting reconciliations which is sent to the 

HSBC Group Finance Division. Each general 

ledger account is assigned to a specific person who 

is responsible for its reconciliation. Any anomalies 

identified by the reconciliations certificate is used as 

a basis for corrective action by the business units 

concerned, with the establishment of an action plan. 

Documents containing accounting information 

are prepared directly by the operational units. Each 

business head examines and validates the information 

before submitting it to the head of CCF Group 

Finance. Financial reports are submitted to a group 

financial controller and CCF’s Executive Committee 

before being sent to HSBC Group Finance Division 

for presentation to the Group Management Board 

and the HSBC Bank Executive Committee and 

prior to publication. 

31



b 

Accounting and financial controls 

Financial control is decentralised at business unit 

and subsidiary level. The business units and subsidiaries 

report to senior management and to CCF 

Group Finance on a monthly basis. 

The Chief Financial Officer holds a monthly 

meeting with each core business division to examine 

its results, and particularly any variances 

against budget. The CFO presents the results to 

the Executive Committee each month and reports 

to the Board of Directors at each Board meeting. 

All these procedures form the backbone of CCF’s 

internal control system. They are updated and improved 

regularly. The ongoing development and implementation 

of more appropriate tools will, in time, lead to better 

assessment of the adequacy and effectiveness of internal 

controls. 

32


Corporate social responsibility policy 

Continuously improving our social and 

environmental impacts 

The HSBC Group, of which CCF is a principal 

member, has made corporate social responsibility 

(CSR) a key pillar of its business strategy. It has underlined 

this commitment publicly through its support for 

the United Nations Global Compact, designed to 

encourage companies to comply with and promote a 

set of CSR principles. HSBC is also a member of two 

ethical indices: Dow Jones Sustainability Index and 

FTSE4Good. 

Like its parent company, CCF is keenly aware of 

its duties in a world that has ever higher expectations 

of businesses. Its approach to CSR is one of continuous 

improvement. The direction is set by a CSR 

Committee, headed by the Chief Executive Officer and 

with a cross-functional representation including lending, 

human resources, asset management, purchasing, 

real estate, finance and communications. The committee 

is responsible for setting guidelines and identifying 

areas of potential progress in terms of ethics, 

human resources, community and the environment. 

CCF publishes an annual CSR report 1 ,which 

describes its commitments and practices, provides social 

and environmental data, and reviews the CSR work 

carried out by its subsidiaries. 

Promoting socially responsible financing 

The HSBC Group, including CCF, recognises that it 

has a responsibility for the social, ethical and environmental 

impacts that result from the activities of 

those organisations to which it lends money. The HSBC 

Group has had in place, for a long time, the safeguards 

needed to ensure that the finance it provides is made 

in a socially and environmentally responsible manner. 

However, as the world has changed, and the impacts 

of industrial development have multiplied, it has been 

necessary for the HSBC Group to take steps to ensure 

that it keeps up to date with the requirements of 

responsible lending. To facilitate this, the HSBC Group 

has expressed its support for a number of international 

codes of conduct which enshrine the values it seeks to 

uphold. These codes include the Universal Declaration 

of Human Rights, the UN Global Compact and the 

Global Sullivan Principles. 

The HSBC Group also makes its lending decisions 

in line with the Equator Principles, a set of guidelines 

that helps banks to assess the social and environmental 

impacts of financing major infrastructure projects. 

These codes augment the HSBC Group own internal 

standards and those which are higher always apply. 

Promoting socially responsible investment 

There is an increasing demand from institutions 

and individual customers for financial products that 

have been screened using social, ethical and environmental 

criteria. These socially responsible investment 

products invest only in those companies that have 

adopted acceptable practices, which support human 

development in a sustainable manner. Of course, the 

standard business and financial performance criteria 

also apply. 

Through its subsidiary, HSBC Asset Management 

(Europe) SA, CCF has developed significant experience 

in socially responsible investment products and 

services. 

1 The 2002 and 2003 reports are available on request from CCF’s Corporate Communications. 

33


Risk management 1 

Credit risk 

Credit risk management within the CCF group is the 

responsibility of the Credit and Market Risk Division 

(CMRD). The CMRD reports directly to Senior 

Management and is completely independent from the 

operational units which present applications for credit 

facilities. 

The CMRD is responsible for credit approvals, risk 

supervision and credit systems development. 

The credit approval process is based on a system of 

designated limits. All credit applications which exceed 

an operational unit’s designated limit must be presented 

to the CMRD for assessment and approval. All applications 

above certain limits ($50 million for new deals 

and $100 million for renewals) approved by the CMRD 

are sent to HSBC Holdings plc for confirmation. 

The CMRD has been responsible for all credit 

approvals since April 2003, when the Credit Committee 

previously in charge of large exposures was disbanded. 

An ALCO-Credit Committee was also created at that 

time. It meets monthly to formulate credit policies in 

line with HSBC Group lending guidelines and to review 

all major credit decisions taken during the month, 

together with existing large exposures and trends in 

risk profile. 

As regards credit derivatives, CCF only purchases 

these instruments on an occasional basis to hedge its 

exposure. The amounts concerned are not material. 

The CMRD is also responsible for risk supervision 

and control over designated limits. 

Lastly, the CMRD has established a project management 

team in charge of credit systems development. 

This team is involved in implementing the new 

Basel capital accord, in association with the 

Information Systems division. The “Basel II project”, 

which is broken down into a number of sub-projects, 

is headed by a Steering Committee, comprising members 

of Senior Management, supported by a number 

of Project Committees. It has the tools and systems 

required for effective project progress monitoring. 

In 2004, in line with the Basel II timetable, CCF is 

adopting a ratings-based approach, and has begun to 

deploy rating systems for its various customer segments 

in those divisions concerned (users include account managers, 

management, Risk Management Division, etc.). 

Market risk 

Structural interest rate, exchange rate and 

liquidity exposure (excluding trading exposures) 

General policy 

The objective is to manage all structural risks arising 

from the differing repricing characteristics of commercial 

assets and liabilities. This does not include 

market positions which are run deliberately as part of 

a trading activity, and which are subject to limits, oversight 

and management in accordance with the provisions 

set out in next section “Market risk 

management”. 

The three main structural risks are: 

– structural foreign exchange exposure, which is managed 

through a general policy of financing all 

assets in their currency of origin, a policy which is 

applied through all administrative procedures; 

– structural liquidity exposure, which is monitored 

through an analysis of each of the CCF group’s 

commitments and active management of its longterm 

sources of funds; 

– structural interest rate exposure, which is measured 

accurately by appropriate instruments and hedged 

on a monthly basis. 

All rules and assumptions have been reviewed and 

validated by the HSBC Group. 

Management and control systems 

Foreign exchange exposure 

The CCF group’s policy with regard to structural 

foreign exchange exposure is highly conservative. 

It has set a zero limit for non-trading exposure and 

all operating procedures are determined accordingly. 

Structural foreign exchange exposure is monitored 

by the financial control and internal control functions. 

Liquidity management 

The CCF group’s Treasury and ALM departments, 

which report to the CCF group Finance Division, are 

responsible for monitoring the group’s liquidity position 

and for making recommendations to the Asset and 

Liability Management Committee (ALCO). Various 

stress tests are conducted to ensure that the group can 

weather even the most severe liquidity crisis. 

1 Cf. Chairman’s report on internal control which also deals largely with risk issues and more particularly, the role of the various risk 

management committees is described on page 26. 

34

Due to its robust financial structure, the CCF group 

has ready access to the capital markets and commands 

excellent financing terms. 

Interest rate exposure 

The ALM department is responsible for monitoring 

and hedging the CCF group’s structural interest rate 

and liquidity exposure. 

Each month, the ALM department uses a powerful 

system to collect the information required to measure 

the structural position of each unit with a material 

exposure. It also measures exposure on a consolidated 

basis in accordance with regulatory requirements. 

The ALM department recommends the appropriate 

maturity mismatching policy to the Asset and 

Liability Management Committee (ALCO). This 

prudent policy is further reflected in different sets 

of management rules for each balance sheet item, 

depending on their commercial and financial characteristics. 

The units concerned are then responsible for hedging 

their exposure so as to comply with the guidelines 

set by the parent company. 

Asset and Liability Management Committee 

The ALCO meets once a month to determine the CCF 

group’s asset and liability management policy (maturity 

mismatching, liquidity, etc.), to review indicators 

and take decisions on risk management issues. It is 

chaired by a member of Senior Management and 

includes other Senior Management members, the heads 

of the business units directly concerned, the head 

of Capital Markets, the head of Accounting and 

Management Control and the head of the Finance 

Division, who also acts as secretary to the Committee. 

Where issues discussed require the advice of specialists, 

a Technical Committee (TALCO) meets to prepare 

the groundwork for the ALCO’s decisions. 

Market risk management 

Risk management procedures 

Market risk management for trading exposures is the 

responsibility of the Market Risks and Modelling 

Department. Responsibility may be delegated to the 

operating units provided they have the requisite human, 

technical and control resources, within a framework 

of limits set by a Senior Management sub-committee 

known as the “Market Risks Committee”. 

The Market Risks Committee, following guidelines 

set by the Market Risks and Modelling Division, determines 

the methodology used to measure the market 

risk and also sets market risk policy. One of the 

Division’s responsibilities is to examine requests submitted 

by operating units and to set limits in the light 

of risks taken, quality of supervision, and future 

prospects in terms of growth, returns and profits. 

The Market Risks and Modelling Division reports 

to Senior Management and is also responsible for 

consolidating risks. The Division monitors the CCF 

group’s large exposures on a daily basis. It oversees 

compliance with CCF group risk policy, and in particular 

compliance with operating limits, either using 

its own resources or through its correspondents in the 

various operating units. The Division also works in 

conjunction with the CCF group’s Internal Audit 

department to verify procedures used to calculate and 

report the relevant information. 

In accordance with HSBC rules, overall limits per 

type of risk have been set and are monitored and 

reported to London on a daily basis. 

Each time they meet, the Board of Directors and 

Audit Committee are advised of any changes to 

the CCF group’s risk policy or its major exposures, 

together with any material information pertaining to 

market risks and market risk management. 

The Market Risks and Modelling Division translates 

approvals granted by the Market Risks Committee 

into operational limits (nominal amounts, number of 

contracts, sensitivity, stop-loss). Its controllers monitor 

exposures on a daily basis and consolidate risks. 

Risk measurement methodology 

The internal market risk measurement model was 

introduced in 1998 for general interest rate exposure 

and foreign exchange exposure. It was extended to 

include equities exposure in July 1999, covering both 

general and specific risk, where each equity is treated 

as an independent risk factor. 

The model is used to calculate Value at Risk (VaR) 

on these positions on a daily basis. It has been validated 

by the French Banking Commission for calculating 

regulatory capital requirements. At 31 December 

2003, the model covered almost 95% of these exposures 

for the CCF group as a whole. 

A VaR model for specific interest rate risks has also 

been developed, but has not yet been submitted to the 

Banking Commission for validation. 

35


Risk management (continued) 

Exposures not yet covered by the internal VaR 

model are measured using the standardised approach 

recommended by the Bank for International 

Settlements. 

“Profil”, the internal risk measurement model 

Profil calculates three types of risk measurement for 

all positions or books monitored: 

– sensitivity to key risk factors to ensure that exposures 

do not breach the operational limits set; 

– VaR for each entity (at all levels: book, activity, 

Group); 

– stress test outcomes. 

From a functional standpoint, the system comprises 

three main components, namely: 

– a database that stores, updates, imports and exports 

input data (instrument, position, market price) and 

results of calculations; 

– a calculation engine; 

– a database of the historical data required for VaR 

models which use simulations. 

Market risk measurement using Profil and 

the standardised method 

Value at Risk (VaR) 

Value at Risk (VaR) is an estimation of the maximum 

potential loss that could arise over a given time horizon 

and to a given level of confidence. In accordance 

with regulations, CCF group calculates VaR on a tenday 

time horizon and a 99 per cent confidence interval, 

which means that the maximum loss in any one 

ten-day period should not exceed the estimated VaR 

more than once in one hundred times. 

The methods used are: 

– historical VaR for all equities exposure, using 

equally-weighted three-year historical data; 

– historical VaR for interest rate and currency options, 

using equally-weighted three-year historical data; 

– parametric VaR for all other exposure, using 

equally-weighted eighteen-month variance and 

covariance matrices. 

the key features of which are: 

– Interest-rate exposure: 

– directional shock of 1 per cent for short-term 

rates (1-year maturity) to 0.6 per cent for longterm 

rates (10-year maturity); 

– breakdown into bands and zones to determine 

spread and yield curve risk. 

– Currency exposure: 

– 8 per cent of the greater of total foreign currency 

assets or total foreign currency liabilities. 

– Equities exposure: 

– 8 per cent of general market risk, plus specific 

risks ranging from 4 per cent (liquid securities, 

diversified positions) to 8 per cent. 

Results of the internal model 

The results of the internal model are presented below: 

Value at risk (VaR) 

The chart below shows historical VaR for exposures 

covered, calculated in accordance with the criteria 

described in paragraph “Value at risk” above, for the 

period 1 January 2003 – 31 December 2003. 

The maximum, minimum and average values over 

that period were as follows: 

– average VaR: €21.7 million, 

– minimum VaR: €13.4 million, 

– maximum VaR: €30.8 million. 

Standardised approach 

Market risks for entities which do not yet use Profil 

are measured using the BIS standardised approach, 

36

Back testing 

The chart below presents our back testing results over 

the period 1 January 2003 to 31 December 2003. This 

ex post control procedure is based on 99 per cent, oneday 

VaR, compared with daily “pro forma” results calculated 

on the basis of actual changes in market prices 

on identical positions. 

During the year, our back testing revealed that estimated 

VaR was exceeded on our positions on 25 June 

based on changes in market data between 25 and 

26 June. This was caused by sharp upward movements 

in interest rates in the euro, US dollar and sterling. 

(in case of crisis or in response to the size of a given 

position). 

The Market Risks Committee also sets loss alert 

thresholds in stress situations. 

At 31 December 2003, CCF group’s main exposures 

resulting from these stress tests were as follows: 

– Interest-rate exposure: 

High overall sensitivity to a rise in euro interest 

rates, predominantly on short and medium-term maturities: 

Euro: 300 bp rise in short rates: €(81) million; 

300 bp rise in medium rates: €(67) million. 

Exposure to movements in swaps/Treasury spreads: 

French Treasury: 40 bp rise in swap spreads: 

€(20) million. 

German Treasury: 40 bp rise in swap spreads: 


Italian Treasury: 40 bp fall in swap spreads: 


The following charts show movements during the 

year in main exposures under various stress scenarios. 

Stress testing 

Profil conducts continuous stress tests to monitor 

potential losses. In addition, a monthly control is performed 

on the CCF group as a whole. Specific simulations 

are also performed at appropriate intervals in 

all units which are undergoing crisis or serious stress. 

The Market Risks Committee determines which 

stress tests are to be used at the proposal of a group 

of specialists comprising heads of trading and controllers. 

Three different stress scenario are tested: 

– Permanent scenarios covering all major risk factors 

and corresponding to shocks of 1-day duration 

with consequences lasting 50 years on average. 

These scenarios cover either isolated risk factors 

or combinations of several risk factors. 

– Temporary scenarios attributable to currency, 

economic or political events. These are reviewed 

regularly in the light of current events. 

– Local scenarios connected with a given market or 

type of instrument are applied when the need arises 

37



The table below shows a breakdown of capital 

requirements for market risks (€ million): 

31.12.2003 31.12.2002 

BIS CAD BIS CAD 

Internal model: . . 72.1 72.1 102.4 102.4 

Foreign exchange 

risk . . . . . . . . . . . 3.2 3.2 3.0 3.0 

General interest 

rate risk . . . . . . . 69.3 69.3 86.6 86.6 

General equities 

risk . . . . . . . . . . . 16.9 16.9 18.8 18.8 

Netting effect (17.3) (17.3) (6.0) (6.0) 

All-in risks: . . . . . . 41.3 40.8 30.0 29.0 

Foreign exchange 

risk . . . . . . . . . . . 0.04 0.04 0.01 0.01 


rate risk . . . . . . . 0.9 0.8 1.2 0.6 

Specific interest 

rate risk . . . . . . . 38.8 * 38.8 * 27.5 * 27.5 * 


rate risk . . . . . . . 0.8 0.8 0.6 0.6 

Specific equities 

risk . . . . . . . . . . . 0.9 0.4 0.7 0.3 

113.4 112.9 132.4 131.4 

* Capital requirements for specific interest rate risk measured using 

VaR (see paragraph “Risk measurement methodology” on page 35) 

amounted to €30.7 million. 

Capital adequacy reporting 

The Banking Commission has audited the Profil internal 

model and authorised the CCF group to use it for 

reporting capital requirements for market risks and 

specific equity exposures. On completion of its audit 

and in light of the results of the back testing model 

(which tests the internal model’s predictive capability), 

the Banking Commission has recommended applying 

the following multipliers: 

– 3.5 in respect of the quality of the model for 

general risks; 

– 4.5 in respect of the quality of the model for specific 

risks; 

– 0 in respect of the back testing model (see paragraph 

“Back Testing” page 37). 

Note that the minimum multipliers set by the BIS 

are 3 for general risks and 4 for specific risks (as part 

of an intermediary model). 

VaRs used to calculate capital requirements are 

the averages recorded over the past 60 days. For instruments 

not covered by Profil, the standardised CAD 

and BIS approaches are used in accordance with 

regulations. 

Risk cover and regulatory ratios 

Large exposures 

The CCF group complies with the French Banking 

Commission’s rules, which require the following: 

– exposure to a group of clients deemed to have the 

same beneficial owner is limited to 25 per cent of 

net capital; 

– the aggregate of individual exposures exceeding 

10 per cent of net capital is limited to 8 times net 

capital. Twelve groups had individual exposures 

exceeding 10 per cent of net capital at the end of 

2002. 

Loan loss provisions 

At 31 December 2003, loan loss provisions represented 

62.5 per cent (74.4 per cent including free RGBR) of 

the CCF group’s total doubtful and non-performing 

exposure. 

Liquidity ratio 

The CCF group’s regulatory ratios reflect its good 

liquidity risk cover. The regulatory liquidity ratio, 

which measures the potential one month liquidity gap, 

averaged 126.5 per cent in 2003. 

38

International solvency ratio (BIS ratio) 

The CCF group’s international solvency ratio (BIS 

ratio) was 9.1 per cent at 31 December 2003, compared 

with a minimum requirement of 8 per cent. The CCF 

group’s Tier One capital ratio was 8.8 per cent compared 

with a minimum requirement of 4 per cent. 

Under the BIS definition, total CCF group capital 

amounted to €3.2 billion as at 31 December 2003, of 

which €3.1 billion in Tier One capital. 

The corresponding risk-weighted assets totalled 

€34.8 billion, broken down as follows: 

(In € billion) 

Credit risks, not including 

trading book 32.3 

Trading book credit risks 1.5 

Market risks 1.0 

Breakdown of risks 

Operational risk 

Operational risk is the risk of loss arising from the 

inefficiency or failure of procedures, people and internal 

systems, or from external events. It includes information 

systems security risks, legal and regulatory risks, 

environmental risks and reputational risk. 

Identification and management of operational risks 

An operational risk management system was established 

in 2003 based on actual reported losses by all 

CCF group business units in 2002. In addition to a 

small central operational risk management team, each 

business unit has its own Operational Risk Manager 

(ORM), responsible for identifying operational risks 

liable to affect their business. 

In conjunction with the business head concerned, 

they analyse and quantify the risk of loss in terms of 

frequency, severity and exposure (exposure takes 

account of the effectiveness of existing procedures), 

using a grading system similar to that recommended 

by the HSBC Group 1 . 

During 2004, action plans will be drawn up for all 

risks identified by the system as significant, after review 

by an Operational Risk Management Committee. The 

ORMs are responsible for monitoring these action 

plans and more generally for measuring trends in their 

business unit’s exposure to risk. 

The Operational Risk Management Committee 

will review risks by business segment on a regular basis, 

focusing initially on those identified as significant, 

together with trends in exposure indicators. 

CCF plans to introduce an annual review of operational 

risks for all business segments, together with 

a quarterly review of trends in exposure and the impact 

of measures taken to mitigate risks identified as 

significant. 

Legal risks and litigation 

The Legal and Tax Division (DAJF) assists CCF’s 

operating units in preventing legal risks, and is responsible 

for litigation. 

– Prevention of legal risks: 

1 The role of the ORM is described in more detail in the Chairman’s report on internal control, page 27. 

The DAJF manages the Legal and Tax Risks 

Committee, which may be consulted on situations 

likely to generate specific substantive legal and tax 

risks. It is also represented on the Structured 

39



Transactions Committee, which reviews the legal, 

accounting, tax and financial risks connected with 

complex structured transactions, and on the Non- 

Performing Assets Committee, which reviews the 

need on a consolidated basis for provisions against 

all non-performing assets (loans, securities). 

The DAJF is responsible for managing risks 

directly or indirectly connected with all contentious 

matters. It is also involved in handling large exposures 

at risk or doubtful debts, and monitors all other 

risks which may have legal or tax implications. 

– Litigation: 

The CCF group is currently involved in legal actions 

taking place in the United States, relating to banking 

operations and fiduciary loans. At this stage, 

it is impossible to evaluate the outcome, but CCF 

believes it has a strong defence case. 

To the company’s knowledge, there are no other 

exceptional events, lawsuits or arbitration proceedings 

likely to have a material impact on the CCF 

group’s assets, financial position or results. 

Business recovery plan 

During 2003, CCF established a system for analysing 

and validating the needs of various business units in 

the event of material damage to one of its central 

premises, with the aim of drawing up a Business 

Recovery Plan (BRP). 

At the end of 2003, the Management Committee 

approved the strategy and concrete solutions proposed. 

Back-up sites will be established and main detailed 

plans drawn up in the second half of 2004. 

Dependency 

CCF is not dependent on any patents, licences or industrial, 

commercial and financial supply contracts. 

Environmental risks 1 

As a services company, the CCF group is less concerned 

by environmental issues than an industrial company. 

It nonetheless takes an active approach towards 

the environment and sustainable development. These 

matters are the responsibility of the Corporate Social 

Responsibility (CSR) Committee, chaired by the 

Managing Director of CCF and comprising a team 

drawn from different disciplines 2 . 

Insurance and risk coverage 

Insurance strategy 

As a wholly-owned subsidiary of the HSBC Group, 

the CCF group is covered by the world public liability 

and fraud insurance programme taken out by HSBC 

Holdings plc. 

CCF and its subsidiaries are also covered under 

HSBC’s master international insurance programme for 

property damage (buildings, contents and information 

systems) and loss of income, via a policy written in 

France and tailored to the risks specific to the CCF 

group. 

CCF and its subsidiaries have taken out insurance 

policies against the risks inherent in their various business 

activities and/or any specific insurance required 

by French law. 

Insurance and reinsurance providers are selected in 

accordance with a strict selection and solvency supervision 

policy, established and controlled by HSBC 

Insurance Holdings. 

Description of insurance cover for material risks 

at the year end: protection of assets and 

operations 

CCF determines the appropriate levels of insurance 

cover, retentions and excesses, together with the appropriate 

contractual conditions, based on the value of its 

assets, risks and potential losses, its risk management 

systems, procedures and controls, the Group’s prevention 

and back-up plans, and the potential impact 

on CCF’s and HSBC’s balance sheets. They are in line 

with market conditions, industry practice and legislation. 

Existing insurance programmes are likely to be 

renewed upon expiry, providing market conditions are 

appropriate. 

The total amount of insurance premiums paid 

by the CCF group for 2003 represented 0.42% of net 

operating income. 

1 Further information on sustainable development can be found on page 33. 

2 The 2002 and 2003 reports are available on request from CCF’s Communications Department. 

40

Compliance and money laundering 

The Group Compliance division was established in 

September 2001 and compliance officers appointed for 

each business segment during 2002. Its resources were 

further strengthened during 2003, with the number of 

employees rising from 88 to almost 100. 

Every business unit now has its own local compliance 

officer (LCO) and the compliance teams are adequately 

staffed to guarantee optimum management of 

regulatory risk. With three or four exceptions (where 

the size of business unit does not permit) the LCOs 

are dedicated entirely to the compliance function. 

Alongside centralisation of the internal audit function 

within Group Eurozone Audit (GEA), employees in 

the regional banking subsidiaries who previously doubled 

up as both internal auditors and compliance officers 

are now dedicated entirely to compliance. 

In 2003, the compliance function’s principal focus 

was to strengthen the group’s money laundering and 

terrorism financing prevention systems and to fully 

update the compliance manual. 

Prevention of money laundering and terrorism 

financing 

French and European regulations on money laundering 

and terrorism financing have been tightened up 

considerably over the past few years. In April 2002, 

the French Banking Regulations Committee (CRBF) 

issued Regulation no. 2002-01, which places more stringent 

obligations on banks in terms of monitoring and 

controlling domestic and international cheques. Recent 

European legislation on terrorism financing requires 

banks to take specific measures to prevent the flow of 

funds to or from suspected terrorists, and to report all 

suspicious accounts and transactions to the relevant 

authorities. 

CCF pursued its action in three key areas during 

2003 – procedures, information systems and control – 

to ensure that it complies fully with the new provisions 

and to further strengthen its money laundering prevention 

systems. 

Procedures 

In 2003, CCF launched a dedicated anti-money laundering 

intranet site. It is accessible to all group employees 

and contains the entire set of relevant procedures, 

which are updated regularly to take account of regulatory 

developments. Employees therefore have online 

access to all the information they need to fulfil their 

duties in terms of ‘know your customer”, vigilance and 

reporting. The site also contains concrete examples 

and general information obtained from the websites 

of organisations such as the Financial Action Task 

Force (FATF), Transparency International, a nongovernmental 

anti-corruption organisation, and the 

Wolfsberg Group, of which HSBC has been a member 

for several years. 

Information systems 

At the end of 2002, a new database was created to 

comply with the requirements of regulation CRBF 

2002-01. The database creates a link between the relationship 

managers and the Compliance department, 

grouping together all sensitive accounts which warrant 

special attention from a money laundering perspective, 

particularly in terms of cheques issued and received. 

The Compliance department defines the criteria for 

identifying sensitive accounts and manages the database. 

Sensitive accounts include customers who have 

received funds from abroad from an anonymous principle, 

customers in countries on the FATF’s black list, 

accounts which have been subject to legal investigation 

or reported to Tracfin but not yet closed, and accounts 

which warrant special attention due to the nature of 

transactions (e.g. large amounts of cash paid in 

followed by the issue of cheques). 

The database’s functionalities were enriched during 

2003 and it now provides a highly effective system for 

flagging potentially sensitive accounts from a money 

laundering perspective, and more particularly ensures 

full control over cheques as required under regulation 

CRBF 2002-01. The alert criteria have been substantially 

upgraded to broaden the base of customers warranting 

special care or vigilance. 

A new payment filtering system was also installed 

in June 2003. It filters inward and outward payments 

made by or to persons appearing on the European 

authorities’ black list. It is fully operational in terms 

of practical use, accounting treatment, freezing transactions 

and if necessary reporting them to the competent 

authorities. During 2003, three transactions 

were frozen and reported by the system. 

Control 

Control systems were substantially strengthened during 

2003. A team of controllers has been appointed to deal 

exclusively with the prevention of money laundering 

in the CCF branch network. The network’s local com- 

41



pliance teams have also been reinforced to place a 

greater focus on identifying accounts which should be 

reported to Tracfin as suspicious. 

Staff training 

To support these anti-money laundering measures, the 

major training campaign launched in 2002 was stepped 

up in 2003 with over 4,500 employees receiving training. 

The programme will continue throughout 2004 

and the training package developed by a professional 

consultancy in conjunction with Tracfin and the French 

Banking Commission will be adapted to CCF’s various 

business segments. 

Compliance 

2002 saw some major developments in the code of conduct 

governing financial research. During 2003, the 

Commission des Opérations des Bourse tightened up its 

compliance regulations governing the asset management 

business, most of which will come into force in 

2004. Consequently, CCF took measures to integrate 

these new procedures and upgrade its information systems 

to comply with the new regulations. 

Meanwhile, CCF has also substantially modified 

its internal code of conduct. The code sets out the precautions 

to be taken by all employees in terms of the 

vigilance and reporting duties imposed by law on the 

banking industry to help prevent terrorism financing 

and money laundering. The definition of price sensitive 

information and the risks involved in its use or disclosure, 

notably in terms of criminal and civil penalties, 

have also been supplemented and clarified. 

The definition of “hypersensitive” employees, who 

are subject to specific compliance rules, particularly in 

terms of personal share dealings, has been extended 

following the absorption of HSBC Investment Bank 

by CCF in 2002. Specific provisions covering salesmen 

and traders, asset managers and wealth managers have 

also been incorporated into the internal code of conduct. 

Their main aim is to protect the client’s interests 

and uphold market integrity. 

In accordance with developments in HSBC Group 

rules, only hypersensitive employees are now subject 

to a closed period for dealing in HSBC shares from 

1 January or 30 June until the date of publication of 

the Group’s results. 

42


International Financial Reporting Standards (IFRS) 

In line with European regulation no. 1606/2002 of 

19 July 2002, the CCF group will adopt international 

financial reporting standards (IFRS) as of 2005. 

CCF has embarked on a project to examine the implications 

of this change and to ensure that its information 

and consolidation systems can handle the new financial 

reporting standards as of 2005. It forms part of a similar 

project being conducted by the HSBC Group. 

CCF has created a dedicated project team whose 

members are drawn from the accounting and information 

systems functions. The first stage of the project – 

analysis of the new standards and identification of 

their impact – was completed place during 2002 and 

early 2003. The project has now entered the detailed 

specification and implementation stage. 

A project committee headed jointly by the accounting 

project manager and the information systems project 

manager meets twice monthly to review progress 

and risk issues. An operational monitoring committee, 

headed by a member of senior management and 

comprising the heads of the main business lines and 

support functions taking part in the project work, meets 

twice monthly to monitor progress, budget and risks, 

and to validate proposals made by the project committee. 

A steering committee meets every six weeks, 

and comprises representatives of all business lines, support 

functions and other CCF group business units. 

To date, the project group has taken the majority 

of decisions on the new accounting treatment to be 

adopted and on information systems developments, 

drawn up the systems specifications and begun the 

upgrade work. All systems are due to be operational 

by the end of 2004. The group has also introduced a 

major training programme which will ultimately involve 

about 850 people. 

The CCF group currently prepares its financial 

statements using French generally accepted accounting 

principles, as set out in regulations 99-07 and 2000-04 

of the Comité de la Réglementation Comptable. The 

main differences identified between French GAAP and 

the IFRS standards adopted by the European 

Accounting Regulatory Committee on 16 July 2003 

are listed below. The list does not include IAS 39 and 

IAS 32 on financial instruments nor the exposure drafts 

to be published in 2004 by the IASB. 

The main identified differences likely to have a 

material impact on the CCF group’s financial statements 

are: 

– Reserve for general banking risks: the reserve for 

general banking risks does not qualify for recognition 

as provisions under IAS 37 on provisions, 

contingent liabilities and contingent assets. The 

corresponding amounts will therefore be added to 

shareholders’ equity. 

– Tangible fixed assets: CCF has, like the HSBC 

Group, opted to revalue its tangible fixed assets, 

but will not use the fair value as of 1 January 2004 

as the historical cost by convention. 

– Fees and commissions: the requirement to defer 

certain fees and commissions received or paid will 

lead to the reversal of revenue and expense booked 

at the time the loans were granted under current 

rules, and their recognition at the effective interest 

rate of the loans in accordance with IAS 18. 

– Staff benefits: the valuation methods and broader 

scope of application required under IAS 19 will 

lead to a revaluation of the provisions booked by 

the Group under current rules. 

43


Financial highlights 

2003 2002 % change 

CCF group 

Figures in € billion 

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.2 66.3 +7.4% 

Shareholders’ funds, group share 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 3.3 +4.7% 

Customers accounts 2 3 (including accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.6 24.9 +6.9% 

Loans and advances to customers 2 (including accrued interest) . . . . . . . . . . . . . . . . . . . . . 28.2 28.6 -1,5% 

Figures in € million 

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,345.1 2,336.8 +0.4% 

Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731.4 749.4 -2.4% 

Profit on ordinary activities before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642.5 769.7 -16.5% 

Attributable net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627.1 561.6 +11.7% 

Earnings per share 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €8.46 €7.50 +12.8% 

2003 2002 % change 

CCF SA 

Figures in € billion 

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.2 54.2 +11.0% 

Share capital 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.4 +0.3% 

Shareholders’ funds 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 2.6 +0.7% 

Figures in € million 

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,374.7 1,486.8 -7.5% 

Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549.0 688.9 -20.3% 

Profit on ordinary activitie before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434.0 640.9 -32.3% 

Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466.6 620.2 -24.8% 

1 After appropriation of net profit for the financial year, excluding the reserve for general banking risks. 

2 At 31 December each year. 

3 Excluding certificates of deposit, medium-term notes and interest-bearing notes. 

4 Figures calculated on the basis of the average number of shares outstanding (excluding own shares held), i.e. 74,928,199 in 2002 and 74,129,833 in 2003. 

Main changes in scope of consolidation from 2002 

Consolidated for the first time in 2003 

– Neuilly Saint Paul and Excofipar 

– Sinopia AM Luxembourg, Sinopia Greater China Limited, Sinopia International Ltd, Sinopia T&D AM Co. 

Ltd and E.M.I Advisory Company SA 

– Finanpar 17 

– CCF Change 

No longer consolidated in 2003 

– SFI (sold) 

– Finance et Participation (sold) 

44

Discussion of the main items 

of the consolidated balance sheet 

(after appropriation of net profit) 

(in € billion) 2003 2002 

Assets 

Loans and advances 

to banks . . . . . . . . . . . . . . . . 10.9 12.0 

Treasury bills and other 

negotiable instruments . . . . 14.0 9.8 

Loans and advances 

to customers . . . . . . . . . . . . . 28.2 28.6 

Prepayments, receivables 

from banks and other . . . . . 7.4 5.8 

Equity shares 

and debt securities . . . . . . . . 7.4 6.6 

Fixed assets . . . . . . . . . . . . . . . 3.3 3.5 

Total . . . . . . . . . . . . . . . . . . . . . 71.2 66.3 

Liabilities 

Deposits by banks . . . . . . . . . . 16.8 16.4 

Customer deposits . . . . . . . . . 26.6 24.9 

Accruals, payables to banks 

and other . . . . . . . . . . . . . . . 13.0 12.1 

Debt securities in issue . . . . . 10.1 8.1 

Subordinated liabilities . . . . . 1.0 1.1 

Reserve for general 

banking risks . . . . . . . . . . . . 0.3 0.4 

Shareholders’ funds 

– group . . . . . . . . . . . . . . . . . . . 3.4 3.3 

– Minority interests . . . . . . . . . – – 

On the liabilities side, deposits by banks amounted 

to €16.8 billion, an increase of €0.4 billion compared 

with the previous year, reflecting a rise in DMTC repos 

offset by a decrease in deposits by foreign banks. 

Total customer deposits were up €1.7 billion to 

€26.6 billion from €24.9 billion at the end of 2002. This 

growth was driven by an increase of €1.1 billion in 

demand deposits and €0.8 billion in special regulated 

savings accounts. 

Debt securities in issue increased by €2.0 billion to 

€10.1 billion. 

Group shareholders’ funds, after appropriation of 

net profit for the year, stood at €3.4 billion (see comments 

below). 

Loans and advances to customers 

Gross customer loans, including reverse repo transactions, 

amounted to €28.2 billion compared with 

€28.6 billion at the end of 2002. 

Total . . . . . . . . . . . . . . . . . . . . . 71.2 66.3 

Consolidated balance sheet 

(after appropriation of net profit for the year) 

Total consolidated assets amounted to €71.2 billion as 

at 31 December 2003, compared with €66.3 billion as 

at 31 December 2002, an increase of 7.4% or €4.9 billion. 

The increase was principally due to sustained 

growth in DMTC trading activities, particularly in the 

euro bond market. 

On the assets side, short-term funds and loans to 

banks decreased by €1.1 billion, with growth in DMTC 

trading activities offset by a decrease in interbank lending. 

Treasury bills and other negotiable instruments 

increased by €4.2 billion, driven by DMTC trading 

activities. 

Loans and advances to customers decreased by €0.4 

billion to €28.2 billion. This small change masks contrasting 

trends, with a significant increase in loans and 

advances to personal customers (particularly mortgage 

loans) and a decrease in business loans. 

Equity shares and debt securities increased by €0.8 

billion to €7.4 billion. 

45


Financial highlights (continued) 

Based on the average principal outstanding in the 

year, customer loans granted by CCF’s branch networks 

in France rose by 1.1 per cent, due to sustained 

activity in the retail market. 

Retail loans increased by 7.6 per cent to €7.0 billion. 

Based on the average principal outstanding in the 

year, demand deposits taken by CCF’s branch networks 

rose by 3.1 per cent in total. Business deposits rose by 

3.4 per cent and retail deposits by 2.8 per cent. 

Shareholders’ funds 

(after appropriation of net profit for the year) 

Customer deposits 

Customer deposits including repo transactions 

amounted to €26.6 billion compared with €24.9 billion 

at the end of 2002. 

Excluding repo transactions, customer accounts 

were up 2.5 per cent to €24.3 billion, compared with 

€23.7 billion at the end of 2002. 

Group shareholders’ funds, after appropriation of net 

profit for the year, amounted to €3.4 billion compared 

with €3.3 billion at the end of 2002. 

The increase was principally due to the transfer of 

part of the net profit for the year to retained earnings 

(dividend payout of 74.2 per cent). 

46

Consolidated profit and loss account 

31.12.2003 31.12.2002 % change 

(in € million) 

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,345.1 2,336.8 +0.4% 

Operating expenses and depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,613.6) (1,587.4) +1.7% 

Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731.4 749.4 -2.4% 

Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137.6) 33.8 – 

Operating profit after provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593.8 783.1 -24.2% 

Share in operating profit of associates . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.3 – 

Gains or losses on asset disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.5 (29.7) – 

Profit on ordinary activities before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642.5 769.7 -16.5% 

Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 67.7 – 

Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44.2) (212.9) – 

Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64.6) (40.2) – 

Net change in reserve for general banking risk . . . . . . . . . . . . . . . . . . . 84.9 (18.1) – 

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.7) (4.5) – 

Attributable net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

ddddddd 

627.1 

ddddddd 

561.6 

ddddddd 

+11.7% 

ffffffff ffffffff ffffffff 

47


Consolidated financial statements 

Consolidated balance sheets 2003 - 2002 - 2001 

ASSETS 

(in € thousands) Notes 2003 2002 2001 

dddddddd dddddddd dddddddd 

Cash and balances at central banks . . . . . . . . . . . . . . . . . 659,533 1,757,541 1,226,946 

Treasury bills and other eligible bills . . . . . . . . . . . . . . . . 6 14,045,098 9,847,801 6,296,101 

Loans and advances to banks . . . . . . . . . . . . . . . . . . . . . . 4 10,263,377 10,197,390 10,809,256 

Loans and advances to customers . . . . . . . . . . . . . . . . . . . 5 28,176,607 28,607,297 31,458,402 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4,063,678 3,631,489 6,602,719 

Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3,330,769 3,001,979 2,686,550 

Other participating interests and long-term securities . . . 7 1,943,926 2,090,202 1,836,986 

Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,716 98,850 533,227 

Intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 106,083 101,488 96,806 

Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 587,407 634,178 829,890 

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5,400,220 4,145,531 2,533,438 

Prepayments and accrued income . . . . . . . . . . . . . . . . . . 12 1,972,656 1,589,783 1,843,439 

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 537,719 581,643 649,154 

ddddddddd ddddddddd ddddddddd 

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,190,789 66,285,172 67,402,914 

ffffffffff ffffffffff ffffffffff 

MEMORANDUM ITEMS 

Financing commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 26 10,643,696 7,822,691 6,187,544 

Guarantees and endorsements . . . . . . . . . . . . . . . . . . . . . 26 6,586,316 6,640,090 7,658,386 

Securities commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 26 3,546,702 2,600,681 1,284,787 

– Financial instruments and other . . . . . . . . . . . . . . . . . . 27 821,371,941 657,353,382 748,300,280 

Numbers in the notes column refer to the accompanying notes, which form an integral part of these consolidated 

financial statements. 

48

Consolidated balance sheets 2003 - 2002 - 2001 (continued) 

LIABILITIES 2003 2002 2001 

(in € thousands) 

ddddddddddddddddd dddddddd dddddddd 

Before After After After 

Notes appropriation appropriation appropriation appropriation 

ddddddddd ddddddddd ddddddddd ddddddddd 

Deposits by banks . . . . . . . . . . . . . . . . . . . 14 16,828,071 16,828,071 16,352,439 20,664,232 

Customer accounts . . . . . . . . . . . . . . . . . . 15 26,646,035 26,646,035 24,929,105 24,514,250 

Debt securities in issue . . . . . . . . . . . . . . . 16 10,144,108 10,144,108 8,096,595 8,125,455 

Other liabilities . . . . . . . . . . . . . . . . . . . . . 18 10,855,052 11,097,112 9,319,420 6,338,562 

Accruals and deferred income . . . . . . . . . . 19 1,143,840 1,143,840 2,128,366 1,838,990 

Negative goodwill . . . . . . . . . . . . . . . . . . . 13 1,336 1,336 1,365 1,627 

Provisions for liabilities and charges . . . . 17 657,191 657,191 706,967 775,066 

Reserve for general banking risks . . . . . . . 21 294,535 294,535 378,620 360,361 

Subordinated liabilities . . . . . . . . . . . . . . . 20 955,852 955,852 1,101,766 1,255,320 

Called up share capital . . . . . . . . . . . . . . . 22 371,748 371,748 370,585 377,048 

Share premium account . . . . . . . . . . . . . . 23 1,063,618 1,063,618 1,050,800 1,144,332 

Consolidated reserves, 

revaluation reserve, 

translation difference . . . . . . . . . . . . . . 23 1,600,552 1,987,343 1,849,144 2,007,671 

Group share . . . . . . . . . . . . . . . . . . . . . 1,828,073 1,990,521 1,836,515 1,979,744 

Of wich interim dividend deducted 

from reserves 1 . . . . . . . . . . . . . . . . . (222,628) – – – 

Minority interests . . . . . . . . . . . . . . . . (4,893) (3,178) 12,629 27,927 

Net profit for the year . . . . . . . . . . . . . . . . 628,851 – – – 

Group share . . . . . . . . . . . . . . . . . . . . . 627,136 – – – 

Minority interests . . . . . . . . . . . . . . . . 1,715 – – – 


TOTAL LIABILITIES . . . . . . . . . . . . . . 71,190,789 71,190,789 66,285,172 67,402,914 

ffffffffff ffffffffff ffffffffff ffffffffff 


Financing commitments . . . . . . . . . . . . . . 26 178,706 178,706 105,107 424,342 

Guarantees and endorsements . . . . . . . . . 26 2,458,839 2,458,839 1,774,459 2,657,491 

Securities commitments . . . . . . . . . . . . . . 26 3,571,623 3,571,623 2,255,191 1,739,555 



1 Of which 219,000 € thousands deducted from consolidated reserves and 3,628 € thousands deducted from net profit. 

49


Consolidated financial statements (continued) 

Consolidated profit and loss accounts 2003 - 2002 - 2001 (continued) 

Expenses in brackets 

(in € thousands) Notes 2003 2002 2001 


Interest and similar income . . . . . . . . . . . . . . . . . . . . . 28 2,344,077 2,808,427 4,579,446 

Interest and similar expense . . . . . . . . . . . . . . . . . . . . 28 (1,333,721) (1,833,253) (3,715,509) 

Income from equity shares . . . . . . . . . . . . . . . . . . . . . 29 111,506 119,091 78,493 

Fees and commissions received . . . . . . . . . . . . . . . . . . 30 1,071,302 1,072,782 1,217,845 

Fees and commissions paid . . . . . . . . . . . . . . . . . . . . . 30 (171,339) (138,882) (196,802) 

Dealing profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 164,482 146,526 208,166 

Gains or losses on available-for-sale securities . . . . . . 32 78,942 65,087 174,390 

Other operating income . . . . . . . . . . . . . . . . . . . . . . . 147,361 166,608 204,957 

Other operating expense . . . . . . . . . . . . . . . . . . . . . . . (67,531) (69,617) (95,005) 


NET OPERATING INCOME . . . . . . . . . . . . . . . . . . . . 2,345,079 2,336,769 2,455,981 


General operating expenses . . . . . . . . . . . . . . . . . . . . 33 (1,510,430) 1 (1,483,567) (1,523,558) 

Depreciation and amortisation . . . . . . . . . . . . . . . . . . 34 (103,208) (103,829) (103,558) 


OPERATING PROFIT BEFORE PROVISIONS . . . . 731,441 749,373 828,865 


Provisions for bad and doubtful debts . . . . . . . . . . . . 10 (137,595) 33,776 786 


OPERATING PROFIT AFTER PROVISIONS . . . . . 593,846 783,149 829,651 


Share of operating profit in associates . . . . . . . . . . . . 16,212 16,258 41,594 

Gains or losses on asset disposals . . . . . . . . . . . . . . . . 36 32,471 (29,692) (1,905) 


PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 642,529 769,715 869,340 


Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 10,244 1 67,650 114,508 

Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 (44,194) (212,936) (233,805) 

Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . . 34 (64,599) (40,150) (37,953) 

Reserve for general banking risks . . . . . . . . . . . . . . . . 84,871 (18,088) (174,951) 

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,715) (4,543) (20,102) 


NET ATTRIBUTABLE PROFIT . . . . . . . . . . . . . . . . . 627,136 561,648 517,037 




1 After reclassification of provisions for stock option commitments and expenses connected with the deposit protection mechanism from 

exceptional items to operating expenses. 

50


Notes to the consolidated financial statements 

Group consolidation and accounting policies 

1 Principal consolidation policies 

The consolidated financial statements of the CCF group, whose parent company is a financial institution, are 

prepared in accordance with the current regulations of the French Accounting Regulations Committee (CRC), 

the opinions of the French National Accounting Board and the instructions of the French Banking Commission. 

Effective 1 st January 2001, the CCF group has applied CRC Regulation number 00-04 governing the presentation 

of financial statements for banks and effective 1 st January 2002, the CCF group has applied CRC Regulation number 

2000-06 governing liabilities. 

The annual financial statements of consolidated foreign subsidiaries prepared in accordance with local accounting 

principals are restated for purposes of comparability, prior to consolidation to comply with group accounting policies. 

1.1 Consolidation criteria (see note 40) 

Under CRC Regulation 99-07 governing consolidation of financial statements of French banks and financial 

institutions, the consolidated financial statements of CCF SA include those of its principal banking and nonbanking 

subsidiaries whose total assets exceed €15 million. 

a Fully-consolidated companies 

Banks and financial institutions in which CCF SA directly or indirectly owns more than 50% are fully 

consolidated. Full consolidation consists of aggregating in all assets and liabilities carried by the consolidated 

companies after elimination of intercompany items and profits, and of determining the value 

of the minority interests in net assets and earnings. 

b Companies accounted for under the equity method 

Companies in which CCF SA exercises significant influence are accounted for under the equity method. 

Significant influence is deemed to exist when CCF SA directly or indirectly owns 20-50 percent of the 

capital. The equity method consists of accounting for the group’s interest in the underlying net assets 

and results of the companies concerned, rather than the book value of their assets and liabilities and 

any dividends received. 

c Companies consolidated by the proportional method 

Companies that are jointly controlled by CCF SA are consolidated under the proportional method. 

Proportional consolidation consists of integrating in the CCF group’s financial statements the balance sheet 

and income statement of the subsidiary prorated to the percentage of capital held by the parent company. 

d Non-consolidated companies 

Companies which meet the above criteria but which are not considered to be long-term investments are 

not consolidated. This is particularly the case for equity investments held with the intention of their 

subsequent divestment under structured financing arrangements. 

Economic interest groupings and other special purpose entities created specifically to manage transactions 

on behalf of a company through the provision of assets, goods, services or capital, are not consolidated, 

provided that the financing granted to them is carried as an asset in the financial statements 

and this accounting treatment better reflects the substance of the transaction and the risks involved. 

Finov, a special purpose securitisation vehicle, has not been consolidated as permitted by the interim 

measures set forth in Art. 51 (see note 25). 

1.2 Year-end 

All group companies are consolidated on the basis of their financial statements as at 31 December. 

For companies which do not have a 31 December year-end, interim financial statements are drawn up as 

of that date. 

51


Notes to the consolidated financial statements (continued) 

1 Principal consolidation policies (continued) 

1.3 Accounting for acquisitions 

Any difference between the acquisition cost of shares in a consolidated company and the net book value 

of the assets acquired is allocated as far as possible to identifiable assets and liabilities of the investee company, 

in order to reflect their fair value. 

As permitted under the terms of opinion no. 97B of the French National Accounting Board’s Urgent Issues 

Task Force, the fair values of recently acquired assets and liabilities may be revised, following detailed 

analysis, until the end of the first financial year after their acquisition. Any change in fair values entails 

a corresponding re-estimation of goodwill. 

Any residual balance is recognised as goodwill or negative goodwill. Goodwill is amortised over a period 

of no more than 20 years and negative goodwill is written back to income over a period of 10 years. 

The amortisation period may be modified if a deterioration in the investee company’s financial position 

warrants an accelerated depreciation method. 

1.4 Translation of foreign subsidiaries’ assets and liabilities 

Assets and liabilities denominated in foreign currencies are translated into euros at the year-end exchange 

rate. 

Profit and loss items are translated at the average rate for the period (defined as the arithmetic average of 

month-end rates). 

Equity accounts are maintained at the historical rates. Any translation differences are allocated to reserves. 

1.5 Capital gains on internal disposals 

Capital gains and losses arising on transactions between consolidated companies are eliminated as appropriate. 

However, property assets that have been revalued as a result of mergers or similar operations between 

consolidated companies are treated in accordance with French Banking Commission instructions applicable 

at the time of the operation. They are therefore carried at their revised value and a revaluation reserve 

has been established. 

1.6 Restatement and reclassification of loan loss provisions 

Flat-rate provisions made by foreign subsidiaries as a result of local fiscal or regulatory requirements are 

written back in the consolidated income statement account provided they are not intended to cover some 

specific risk. 

The group may also make provisions in the consolidated income statement account to cover exposure of 

foreign subsidiaries where they are unable to make such provisions in their own financial statements due 

to local restrictions. 

1.7 Deferred tax 

The deferred taxes resulting from timing differences between the book value of an asset or a liability and 

the tax value coming from consolidation restatements are carried on the consolidated balance sheet and 

income statement. The deferred tax asset arising on tax loss carryforwards is not recognised unless there 

is a strong probability of its recovery in the future. 

Deferred tax is calculated on 100% of the lease equalisation reserve. 

All deferred tax items recognised in prior years are adjusted if there is a change in the applicable statutory 

tax rates. 

52

2 Group accounting policies and valuation methods 

2.1 Group accounting policies 

The consolidated financial statements are prepared in accordance with the principles set forth by the French 

Banking Regulations Committee and the French Accounting Regulations Committee, the opinions of the 

French National Accounting Board and the instructions of the French Banking Commission. Any transactions 

which are not covered by these principles are treated in accordance with French generally accepted 

accounting principles. 

2.1.1 Fixed assets 

Fixed assets are valued at cost less accumulated depreciation or amortisation, except where such value is 

revised as a result of legal asset revaluations or, in the case of property assets, as a result of mergers between 

consolidated companies. 

a Depreciation and amortisation 

Land is not depreciated. Acquisition-related expenses on buildings are expensed in the year in which 

they occur, as are preliminary costs. 

Fixed and intangible assets are depreciated or amortised over their estimated useful lives on a straightline 

basis or, in the case of certain items of equipment, on an accelerated basis. Depreciation or amortisation 

periods are as follows: 

– Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 to 75 years 

– Fixtures and fittings . . . . . . . . . . . . . . . . . . . . . . . . 10 years 

– Furniture and equipment . . . . . . . . . . . . . . . . . . . . 5 to 10 years 

– Purchased goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 10 years 

– Software purchased . . . . . . . . . . . . . . . . . . . . . . . . . 3 to 5 years 

b Buildings acquired under loan guarantees 

Buildings acquired by CCF as a result of loan foreclosures are valued according to CCF’s intent as to 

their continuing ownership. 

– Buildings which the bank intends to sell in the short term are considered to be stock. Accordingly, 

they are not depreciated, but a provision for impairment may be established if necessary. They are 

posted to “other assets”, and any provision is recorded under the heading “miscellaneous provisions”. 

– Buildings which the bank intends to hold on a long term basis and which have been let are treated as 

fixed assets and depreciated over the same period as other similar buildings used by the bank for its 

own operations. Pursuant to instructions issued by the French supervisory authorities, provisions 

have been established in cases where the market value of such assets is lower than their net book value. 

The provisions of regulation CRC 2002-10 on asset depreciation and impairment, as amended by regulation 

CRC 2003-07, will become compulsory as of 1 January 2005. In accordance with the transitional measures 

provided for under regulation CRC 2003-07, CCF has decided not to opt for early adoption of component 

accounting. Furthermore, CCF does not carry any material items on its balance sheet liable to meet the 

definition of expenditure on medium or long term major repair and renovation programmes. 

2.1.2 Equity shares and debt securities 

Pursuant to the provisions of CRC Regulation 00-02, equity shares and debt securities are classified into 

the following categories: 

– trading securities 

– available-for-sale securities 

– held-to-maturity securities 

– portfolio securities 

– other long term securities 

– interests in associates and other participating interests. 

53



2 Group accounting policies and valuation methods (continued) 

Specific accounting methods apply to each of these categories: 

– Trading securities: 

These are securities traded on a liquid market, which are bought or sold with the intention of reselling 

or repurchasing them in the near future. They may not be held for more than six months, except where 

the bank is acting as a market maker. 

Trading securities are carried at cost (including accrued interest in the case of fixed interest securities). 

They are marked to market at the year-end and any unrealised gains or losses are recognised in income 

statement. 

– Available-for-sale securities: 

Securities acquired for their yield, but held principally with the intention of reselling them in the 

relatively short term are considered to be available-for-sale. 

On the acquisition date, they are recorded at cost (less accrued interest at the time of purchase in 

the case of fixed interest securities). At the year-end, they are valued on a line-by-line basis at the lower 

of cost or market value. In the case of equities, market value is the price on 31 December for listed 

securities and the anticipated resale price for unlisted securities. In the case of fixed interest securities, 

market value is the price quoted on the last working day of the year. 

Actual or unrealised gains or losses on hedging instruments are recognised on a line-by-line basis, and 

a provision for impairment made where necessary. 

– Held-to-maturity securities: 

These are fixed interest securities acquired with the intention of holding them over the long term, in 

principle, until maturity. 

They are carried at cost and any premium or discount is amortised over their residual life. A provision 

for impairment may be taken to cover counterparty risk. 

Securities purchased for their yield or held for regulatory reasons by certain foreign subsidiaries or 

branches are classified as held-to-maturity securities. 

– Portfolio securities: 

Portfolio securities comprise investments purchased with the intention of realising a medium term 

capital gain, but with no intention of investing in the business on a long-term basis. This is notably the 

case for securities held as part of a venture capital business. 

Portfolio securities are carried at the lower of cost or fair value, determined by taking account of the 

issuer’s general prospects and the forecast holding period. The methods of determining fair value are 

described below. 

– Other long term securities: 

Other long term securities comprise equities and similar securities acquired with the intention of achieving 

a satisfactory return in the relatively long term by building an ongoing business relationship with the 

issuing company, but with no influence over its management. 

These securities are accounted for on a line-by-line basis and they are carried at the lower of cost or 

fair value. 

– Interests in related parties and other participating interests: 

The category “interests in associates and other participating interests” regroups the securities held 

with a long-term intention (participating interests) and the securities of non-consolidated subsidiaries 

(interests in associates). They are valued at the lower of cost or fair value, determined as described 

below. 

54


Fair value for portfolio securities, other long-term securities and other participating interests is determined 

on a multi-criteria approach, as follows: 

– economic and financial appraisal of the company, based primarily on net asset value; 

– market appraisal based on financial analysts’ reports; 

– share price performance for listed companies, taking account of any specific relationships existing 

between CCF and each of the companies concerned. 

Gains or losses: 

Gains or losses on disposal and movements in provisions are recorded on the income statement under 

“net gains on asset disposals”, except for gains realised as part of restructuring operations, which are 

booked as exceptional items, and gains on the disposal of interests in associates, which are booked as 


Presentation of securities in reported financial statements: 

European Directive 86/635 concerning the standardisation of financial statement presentation of financial 

institutions in the European Union does not recognise the concept of intention as a basis for classifying 

securities. Classification of securities on the European Directive basis is reported in note 6. 

Securities are classified in the balance sheet according to their legal category: 

– treasury bills and other negotiable instruments: all negotiable securities issued by central governments 

(T-bills and notes, bonds, etc.); 

– bonds and other fixed revenue securities: all securities issued by private or public sector issuers, which 

are not eligible for central bank refinancing in their country of issue; 

– shares and other variable revenue securities, including portfolio securities; 

– participating interests other and long-term securities; 

– interests in related parties; 

– interests in associates. 

Securities bought or sold under repurchase agreements: 

Repurchase agreements recorded off balance sheet of individual companies result in securities being 

derecognised (in the case of sale) or recognised (in the case of purchase), and the resulting liability being 

recognised under contingent liabilities and commitments. However, insofar as the repurchase option 

is almost always exercised: 

– capital gains or losses on disposal are eliminated, except in the case of trading securities; 

– provisions are made in the same way as if the repurchase transaction had not taken place; 

– consideration for repurchase agreements is recorded on an accruals basis, as is accrued interest. 

“Buy and sell back” transactions are treated similarly. 

“Delivered securities” repo transactions: 

Temporary sales or purchases of securities governed by the regulations of Act no. 93-1444 of 31 December 

1993, as amended by ordinance no. 2000-1223, known as “delivered securities” repos, have no impact 

on the composition and valuation of the securities portfolio. From an accounting perspective, and in 

accordance with Article 5 of Regulation 89-07, as amended by regulation 94-05, the securities are treated 

as financing operations, the cash movement is matched either by a receivable or a debt. Revenues 

received or expenses incurred by the seller or buyer are booked as interest income or expense. 

Securities bought or sold under repurchase agreements: 

Repurchase transactions which do not fall within the provisions of Act no. 93-1444 are classified as 

securities bought or sold under repurchase agreements on the balance sheet. Their accounting treatment 

is the same as for the delivered securities repo transactions described above. 

55




Securities borrowed or loaned against cash: 

Securities borrowed or loaned against cash are treated in the same way as delivered securities repos 

transactions. 

2.1.3 Provisions for bad and doubtful debts 

Provisions for bad and doubtful debts recognised in the income statement are determined by the Group each 

year in light of estimated potential losses and are based on an individual analysis of each loan concerned. 

All loans are classified as bad and doubtful debts, even if secured by a guarantee, where there is a probability 

or certainty of total or partial non-recovery, or where amounts have been in arrears for more than 

three months in the case of most loans and operating leases, or more than six months in the case of property 

loans or leasing, or more than nine months in the case of local authority loans. Loans are also deemed 

to be at risk where legal proceedings are already in progress (e.g. receivership, court-ordered liquidation, 

personal bankruptcy, etc.), or where it is likely that the borrower will be unable to meet their obligations. 

Loans to property developers are assessed on a case-by-case basis utilising various criteria, including the 

likely outcome of the project, the capacity of partners to contribute the necessary equity as well as their 

solvability. In this context, all interest on doubtful property loans booked as operating income is fully provided. 

Moreover, provisions are made against the principal outstanding are also based on a case-by-case 

assessment using various criteria, including the credibility of the project’s intended sale price, its rental 

income potential, the soundness of the investor pool and the value of any guarantees received. 

Pursuant to regulation CRC 2002-03 on the accounting treatment of credit risk by companies governed 

by the French Banking and Financial Regulations Committee, CCF has established specific provisions for 

restructured loans and bad debts. 

Loans restructured on off-market terms are identified separately and a discount recognised representing 

the difference between the new interest rate and the lower of the original interest rate of the loan and the 

market rate prevailing at the time of restructuring, applied to future expected cash flows. This discount is 

booked as a provision for bad and doubtful debts and written back to net interest income over the remaining 

term of the loan. 

Bad debts include debts which have become accelerated as a result of certain events, restructured debts 

which are in default, and debts classified as doubtful for more than one year, where they are in arrears and 

not accompanied by guarantees covering virtually the entire amount. Interest on bad debts is not booked 

to profit and loss until actually received. 

As the impact of this change is not material, the 2001 and 2002 figures relating to doubtful debts and provisions 

have not been restated. 

In compliance with standard banking practice, the bank establishes country risk provisions against exposure 

in certain countries generally considered by the banking industry as involving a high degree of risk. 

In the income statement, provisions made or recovered, losses on unrecoverable debts and recoveries against 

debts written off are all recorded under the heading “provisions”. 

2.1.4 Provisions for pension and other post-retirement benefits 

In France, retirement and pension payments are made on a pay-as-you-go basis by outside agencies to 

which the group contributes. Contributions are expensed as incurred. 

Provisions for future expenses relating to employees no longer in active service are made in the income 

statement. Provisions are also made for future expenses relating to end-of-career bonuses and length of 

service awards for employees in active service. 

2.1.5 Reserve for general banking risks 

Pursuant to the provisions of regulations 90-02 and 91-01 of the French Banking Regulations Committee, 

CCF has constituted a reserve designed to cover general banking risks, and notably any potential addi- 

56


tional contributions which may be required in the future under the terms of the AFB-AGIRC-ARRCO 

agreement of 13 September 1993 relating to the pension regimes of banking personnel. 

In addition to these pension commitments, a charge may be made from time to time in the income statement 

to cover general banking risks related to the group’s various activities. 

2.1.6 Foreign exchange positions 

With the exception of structural positions, which are valued at historical cost, all foreign currency positions are 

revalued at the year-end rate, and any resulting gains or losses are recognised as operating income or expense. 

2.1.7 Forward currency transactions 

Forward currency transactions outstanding at the year-end which are hedged by spot transactions are revalued 

at year-end spot rates. Premiums or discounts calculated when the transaction is entered into are booked 

the income statement on an accrual basis. Unhedged forward transactions and transactions hedged by 

futures are revalued at the forward rate prevailing for the remaining term. 

2.1.8 Leasing 

The results of leasing and rental companies are restated to take account the lease equalisation reserve, 

which corresponds to the difference between amortisation recognised for tax and accounting purposes. 

Deferred tax is calculated on the full amount of the lease equalisation reserve. 

Property transactions in which the CCF group is lessee are restated. The leased assets are capitalised as 

fixed assets and depreciated, and the corresponding liability is recognised. 

2.1.9 Financial instruments 

The CCF group trades actively in all new financial instruments, either on behalf of its customers or to 

hedge balance sheet items or for arbitrage purposes. 

Accounting principles used differ depending on the instrument and whether the transaction was originated 

for hedging or trading purposes. However, certain general rules apply to all market positions, while others 

are specific to certain categories of instrument. 

a 

Foreign currency and interest-rate options: 

Options are two party contracts which grant the buyer the right to acquire or sell an asset or other 

financial instrument known as the “underlying” within a pre-determined period of time and at a price 

determined at the time the contract is originated. The buyer pays the seller a premium for the option. 

CCF trades in interest-rate and foreign currency options. The accounting treatment for these instruments 

is identical. 

At the origination of the options contract, the notional amount of the underlying is recognised as an 

off-balance sheet item. 

For income and expenses, a distinction is made between hedging transactions and trading or arbitrage 

transactions: 

– income and expense items related to hedging transactions are recognised symmetrically with those 

arising on the hedged item; 

– in the case of trading transactions, positions are marked to market at the year-end. For transactions 

on an organised market or an equivalent market defined in Regulation CRB 88-02, changes 

in the value of the position are booked to the income statement either by means of margin calls or, 

in the case of unlisted options, directly by means of a mathematical calculation. 

57




b Index and equity options 

Index and equity options are entered into for trading purposes. Changes in the value of options 

outstanding at the year-end are booked directly to the income statement. 

c Interest-rate futures 

The accounting treatment is identical to that which is described above for options, and is in accordance 

with the French Banking Commission’s instruction 94-04, as amended by instruction 2003-03. 

d 

Currency and/or interest-rate swaps (swaps, FRAs) 

Pursuant to CRB Regulation 90-15, as amended by CRB Regulations 92-04 and 2002-01, the accounting 

treatment for foreign currency and interest-rate swaps is dependant upon their purpose. These contracts 

are accounted for differently if their purpose is: 

– to maintain isolated open positions in order to benefit from changes in interest rates, if and when 

they occur; 

– to hedge interest-rate risk on a specific item or homogeneous group of items, defined as such at 

the outset pursuant to Article 4 of CRB Regulation 88-02; 

– to hedge and manage the bank’s structural interest-rate risk on all its assets, liabilities and off-balance 

sheet items, except for those transactions referred to in paragraphs 2 and 4; 

– to allow for specialised management of a trading book. 

Accounting treatments differ depending on whether the transaction is entered into for hedging or trading 

purposes. 

Gains or losses on instruments designed to hedge assets or liabilities are booked to the income statement 

on an accrual basis, unless the hedged items are themselves marked to market in the balance sheet. This 

applies in particular to swaps traded for Asset and Liability Management purposes. 

Gains or losses on positions managed as part of a swap trading book are booked to the income statement 

at their present value, after deducting a percentage for counterparty risk and future management costs. 

Trading transactions are marked to market on the day of the trade. The corresponding liability is 

recorded as an off-balance sheet item from the date of the trade to the value date. The value date 

generally corresponds to the date on which an exchange of monetary flows takes place that is normally 

booked to the balance sheet. 

Notional amounts are recorded off balance sheet whether they are actually swapped or simply used as 

a benchmark. 

Currency swaps which are not hedged by spot transactions are valued at the forward rate prevailing for 

the remainder of their term. 

2.1.10 Recognition of income and expense 

All income and expense is booked on an accrual basis, with the exception of dividend income and 

commissions, which are booked on a cash basis. 

Long and short trading positions are generally valued at the mid-market price as listed on organised 

exchanges or by a market-making panel of banks. Certain highly specific derivatives, generally resulting 

from a combination of different plain-vanilla products, are valued by means of models which use market 

data but also take account of their reduced liquidity, the specific characteristics of which are unlikely to 

command mid-market prices. 

Accrued interest is booked according to the legal rules applicable to each instrument. For instance, fixedincome 

securities are marked to market excluding accrued interest at the transaction date. Interest is 

booked for the period during which the bank holds the securities, i.e. from the date of delivery upon purchase 

to the date of delivery upon sale. In the Paris marketplace, three days elapse between the trade date 

and the delivery date for this type of instrument. 

58


2.1.11 Exceptional items 

All income and expenses which do not arise in the normal course of the group’s ongoing ordinary 

activities are treated as exceptional items. 

Accordingly, gains or losses arising from restructuring operations following CCF’s integration with the 

HSBC Group are booked as exceptional items. Gains or losses on other disposals of subsidiaries or equity 

interests are booked within Group operating profit before tax. 

2.2 Analysis by line of business 

Key income statement aggregates are presented by line of business for analysis. In order to make 

meaningful comparisons from one year to the next, these figures are restated as described in note 3. 

Ratios are also calculated by line of business, and in particular the cost:income ratio (operating expenses 

as a percentage of net operating income) and return on allocated capital (line of business net profit as a 

percentage of capital allocated to that line of business). 

2.2.1 Lines of business: 

The presentation of results by line of business is based on the group’s consolidated results. 

The group’s four key lines of business are: 

1 Banking and distribution networks which encompasses three sub sections: 

– the CCF network; 

– the regional banking subsidiaries; 

– distribution which includes the specialised French subsidiaries (Elysées Factor, Netvalor, etc.). 

2 Corporate and investment banking, which comprises three sub sections: 

– corporate and institutional banking; 

– capital markets; 

– equity and corporate finance. 

3 Asset management and private banking, which comprises: 

– management of mutual funds and corporate employee savings plans in France and abroad; 

– private banking in France and abroad. 

Other activities principally comprise own investments (Nobel, centralised management of CCF’s subsidiaries 

and associated companies). 

2.2.2 Determination of the key income statement aggregates: 

These are presented according the following rules: 

a Operating income 

– CCF parent company profit centres. 

Value added over capital takes account of internal refinancing of capital according to the following rules: 

– in order to manage interest-rate risk, the Finance Division enters into hedging transactions in 

accordance with policies set by the Asset and Liability Management Committee; these hedging 

transactions are charged in full to the profit centres concerned by means of internal contracts; 

– each profit centre’s treasury position, which is not already hedged by these internal contracts, is 

calculated daily and valued at the overnight money-market rate (plus a charge to cover the cost 

of liquidity). 

59




Return on allocated equity, calculated using the internal model (see c below), is included in 


Commission income is attributed to the profit centres in charge of the customer relationship and 

responsible for providing the service billed to the customer. 

– Subsidiaries 

The contribution of subsidiaries is calculated on the basis of the company’s operating income, less 

dividends received from other consolidated companies, the return on their own capital and the cost 

of funding investments in consolidated subsidiaries, but adding return on allocated equity using the 

internal model. 

b 

c 

d 

Operating expenses and depreciation 

Expenses for each line of business include all costs attributable to it, and in particular: 

– the full cost of processing customer transactions; 

– a percentage of general overheads. 

Return on allocated capital 

This item is included in operating income, operating profit before provisions and attributable net profit 

for each line of business, using the following internal allocation method: 

– For counterparty risks, regulatory capital requirements are used as a basis for calculating weighted 

assets. However, actual allocation rates are generally higher than regulatory requirements (for Tier 

1 capital), except where actual loss rates and customer loan quality justify the adoption of lower 

rates. Allocation rates take account of the following: 

– customer type (corporate, personal, etc.); 

– geographical location (capital allocation are over-weighted for credits granted in zones considered 

to be at risk); 

– loan type. 

– For market risks, an internal model validated by the French Banking Commission is used, with the 

intention of covering 8% of total capital (Tier 1, 2 and 3), three quarters of this amount being treated 

as Tier 1 capital for internal allocation purposes. 

– For certain activities (notably advisory services, structured financing, mutual fund and securities 

management, and private banking), capital is allocated to cover operational risk, based on a 

multi-criteria approach established in conjunction with the lines of business concerned. 

– Finally, capital is allocated to business segments involved in proprietary equity trading in order to 

cover any potential fall in value. 

Attributable net profit 

Attributable net profit is calculated for each line of business, taking account of the above factors and 

assuming a theoretical tax charge at a normalised local rate for all restatements, specifically with the 

respect to capital. 

60

3 Presentation of financial statements 

Main changes in the scope of consolidation in 2003 

Reported figures 

The main changes in the scope of consolidation during 2003 were as follows: 

Consolidated for the first time: 

– Neuilly Saint Paul, Excofipar, Finanpar, CCF Change, Sinopia AM Luxembourg, Sinopia Greater China 

Limited, Sinopia International Ltd, Sinopia T&D AM Co. Ltd and EMI Adisory Company SA. 

No longer consolidated: 

– SFI Suisse. 

Application of the new accounting presentation rules to the profit and loss account 

The Conseil National de la Comptabilité has introduced the following changes of accounting treatment, applicable 

as of 1 January 2001. 

The CCF group has applied the provisions of CRC Regulation 00-04 since 1 January 2001. 

The main changes are as follows: 

– capital gains or losses on securities are identified separately as “gains or losses on asset disposals”, providing 

they are not part of an ongoing, ordinary business activity, 

– miscellaneous provisions are reclassified according to their purpose under the various P&L headings (operating 

income, operating expenses, exceptional items and corporation tax). 

– security held as part of a venture capital business are reclassified as portfolio securities. 

4 Loans and advances to banks 

(in € million) 2003 2002 2001 


Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 884.7 1,573.2 1,456.0 

Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,368.3 8,593.5 9,322.1 

3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,938.3 6,450.4 6,158.0 

1 year or less but over 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . 915.2 1,415.9 2,429.6 

5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362.0 572.6 679.1 

Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.8 154.6 55.4 

Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . (19.6) (24.3) 

(45.8) 

Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.0 55.0 77.0 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,263.4 10,197.4 10,809.3 


Of which repo transactions (excluding accrued interest) . . . . . . . . . . 7,348.9 5,758.1 5,125.0 

Of which subordinated advances (excluding accrued interest) . . . . . 85.5 69.4 83.1 

61



5 Loans and advances to customers 

ANALYSIS BY LOAN TYPE 

(in € million) 2003 2002 2001 


Loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,430.3 27,998.4 29,263.5 

Commercial loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . 790.1 875.3 1,064.4 

Current accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,616.4 3,707.3 4,080.1 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,023.8 23,415.8 24,119.0 

Leasing transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 746.3 608.9 2,194.9 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,176.6 28,607.3 31,458.4 


Loans and advances to personal customers . . . . . . . . . . . . . . . . . . . . 7,404.7 6,782.1 5,689.7 

Loans and advances to non-bank financial institutions . . . . . . . . . . 526.5 488.1 674.5 

Loans and advances to other corporate customers . . . . . . . . . . . . . . 17,906.0 20,434.3 23,516.9 

Repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,198.7 722.9 1,346.6 

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140.7 179.9 230.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,176.6 28,607.3 31,458.4 


Of which gross doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615.2 1,175.0 1,491.6 

Of which gross bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844.0 – – 

Of which subordinated loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139.4 143.2 125.0 

SEGMENTAL ANALYSIS 

(in € million) 2003 2002 2001 


Personal customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,410.6 6,791.5 5,689.7 

Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,079.4 7,291.8 8,017.2 

Commerce and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,272.3 6,220.6 5,493.8 

Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,857.9 3,516.6 3,324.9 

Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,767.9 1,294.5 3,961.8 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,788.5 3,492.3 4,971.0 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,176.6 28,607.3 31,458.4 


ANALYSIS BY REMAINING MATURITY 

(in € million) 2003 2002 2001 


Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,271.1 4,762.6 4,557.6 

Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,703.1 24,576.6 27,639.5 

3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,057.8 8,591.2 11,090.0 

1 year or less but over 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,062.1 4,121.1 4,296.9 

5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,619.4 6,465.4 6,500.0 

Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,963.8 5,398.9 5,752.6 

Provisions for doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (255.4) (911.8) (969.4) 

Provisions for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (682.9) – – 

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140.7 179.9 230.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,176.6 28,607.3 31,458.4 


62

6 Treasury bills, debt securities and equity shares 

ANALYSIS BY TYPE OF SECURITY 2003 2002 2001 


Net Net Net 

(in € million) book value book value book value 


Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . . 14,045.1 9,847.8 6,296.1 

– Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,758.5 8,737.3 5,386.0 

– Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 225.8 948.2 754.3 

– Held-to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,990.0 141.6 142.1 

– Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70.8 20.7 13.7 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,063.7 3,631.5 6,602.7 

Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,454.0 2,074.0 2,910.0 

– Bonds and other listed securities . . . . . . . . . . . . . . . . . . . . . . . 1,794.8 1,253.1 1,821.2 

– Unlisted bonds, interbank market instruments 

and negotiable debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . 659.2 820.9 1,088.8 

Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929.4 785.0 2,768.0 

– Bonds and other listed securities . . . . . . . . . . . . . . . . . . . . . . . 827.0 409.3 938.9 

– Unlisted bonds, money market instruments 

and negotiable debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . 102.4 375.7 1,829.1 

Held-to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650.1 739.2 840.2 

– Listed bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321.2 355.6 642.3 

– Unlisted bonds, money market instruments 

and negotiable debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . 328.9 383.6 197.9 

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.2 33.3 84.5 

Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,330.7 3,002.0 2,686.5 

Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,853.5 1,526.1 1,259.2 

– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,845.0 1,526.1 1,255.8 

– Unlisted and other variable-income securities . . . . . . . . . . . . 8.5 – 3.4 

Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 923.6 893.1 776.6 

– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.0 41.9 140.7 

– Unlisted and other variable-income securities . . . . . . . . . . . . 850.6 851.2 635.9 

Portfolio securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553.4 582.4 650.3 

– Unlisted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239.0 268.0 340.7 

– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314.4 314.4 309.6 

Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.4 0.4 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,439.5 16,481.3 15,585.3 


63



6 Treasury bills, debt securities and equity shares (continued) 

Analysis of treasury bills, other eligible bills and debt securities by remaining maturity 

TYPE OF SECURITY 

(in € million) 2003 2002 2001 


Treasury bills and other eligible bills 

1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,451.4 2,914.2 2,002.4 


Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,014.2 1,755.7 1,531.4 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,045.1 9,847.8 6,296.1 


Debt securities 

1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,356.4 1,937.2 3,481.5 

5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,836.2 984.6 1,997.2 

Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840.9 676.4 1,040.8 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,063.7 3,631.5 6,602.7 


Estimated value of available-for-sale securities and portfolio securities 

TYPE OF SECURITY 

(in € million) 2003 2002 2001 


Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . 232.5 950.5 755.9 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958.1 785.8 2,768.2 

Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,709.2 1,629.5 1,672.0 


Total available-for-sale securities 

(excluding accrued income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,899.8 3,365.8 5,196.1 


Additional information on securities provided under article 16 of regulation 90-01 of the French Banking Regulations 

Committee (CRBF 90-01) 

Securities reclassified as at 31 December 2003 

Available-for-sale securities reclassified as held-to-maturity securities: €915 million. 

Held-to-maturity securities sold as at 31 December 2002 

Disposals amounted to €217.3 million in 2003. 

Unamortised difference between acquisition price and redemption price of held-to-maturity securities 

The difference is equal to €82.9 million. 

64

7 Long term securities and other participating interests 

a 

Analysis by issuer type 

(in € million) 2003 2002 2001 

dddddddddddddddddd dddddddddddddddddd dddddddddddddddddd 

Estimated Estimated Estimated 

Net book fair value Net book fair value Net book fair value 

ISSUER TYPE value (unaudited) value (unaudited) value (unaudited) 

dddddddd dddddddd dddddddd dddddddd dddddddd dddddddd 

– Listed securities . . 145.9 182.7 185.4 233.9 266.5 281.9 

Banks . . . . . . . . . . 52.6 76.2 68.7 105.8 34.5 44.3 

Other . . . . . . . . . . 93.3 106.5 116.7 128.1 232.0 237.6 

– Unlisted securities . 1,787.8 1,821.9 1,895.8 1,932.3 1,559.4 1,586.9 

Banks . . . . . . . . . . 728.3 730.8 776.5 777.0 797.0 810.2 

Other . . . . . . . . . . 1,059.5 1,091.1 1,119.3 1,155.3 762.4 776.7 

– Advances to property 

companies and 

accrued interest . . . 10.2 10.2 9.0 9.0 11.1 11.1 


TOTAL....................... 1,943.9 2,014.8 2,090.2 2,175.2 1,837.0 1,879.9 

ffffffff ffffffff ffffffff ffffffff ffffffff ffffffff 

b 

Movements in other participating interests and long-term securities 

(in € million) 2003 

dddddddd 

Cost at January 1 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,242.0 

Movements during the year: 

Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400.0 

Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (388.9) 

Impact of translation differences and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (172.8) 

Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.4) 

ddddddddd 

Cost at December 31 (excluding advances and accrued interest) 2,076.9 

ffffffffff 

Provisions at January 1 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . . (160.8) 

Movements during the year 

Provisions for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.3) 

Recovery of provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.5 

Impact of translation differences and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 

Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.9) 

ddddddddd 

Provisions at December 31 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . (143.2) 

Advances to property companies and accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 

ddddddddd 

Net book value including advances and accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943.9 

ffffffffff 

65



7 Long term securities and other participating interests (continued) 

c 

Companies in which the Group’s interest exceeded €30 million as of 31 December 2003 (net book value) 

Consolidated 

shareholders’ Consolidated Net book 

Registered funds net profit value % 

(in million of currency units) office 2002 2002 2003 holding 

dddddddd dddddddd dddddddd dddddddd dddddddd 

– Merck Boringuen Holding 1 . . . . . . . Wilmington US $18,200.5 US $7,149.5 US $300.0 5.0 

– Swiss Life Holding . . . . . . . . . . . . . . . Zurich CHF4,170.0 (CHF1,694.0) CHF89.4 1.8 

– HSBC Private Banking Switzerland 

(Suisse) SA . . . . . . . . . . . . . . . . . . . . Geneva CHF3,621.4 CHF232.4 CHF995.9 13.4 

– HSBC Guyerzeller Bank AG . . . . . . Geneva CHF449.6 CHF26.3 CHF72.9 10.0 

– Banian Investment UK 2 . . . . . . . . . . St Helier CHF16,686.0 (CHF91.0) GBP300.0 19.0 

(Jersey) 

– VEA Limited 3 . . . . . . . . . . . . . . . . . . . St Peter Port GBP2,660.2 GBP187.4 GBP199.8 19.0 

(Guernsey) 

1 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Merck & Co. 

2 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Swiss Ré. 

3 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Hanson plc. 

The interest in VEA Limited was made during 2003. 

8 Intangible fixed assets 

(in € million) 2003 2002 2001 


Cost at 1 st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275.2 249.3 211.9 


Change in scope of consolidation, disposals, retirements 

and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (10.8) (9.3) 

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.3 36.7 46.7 


Cost at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315.7 275.2 249.3 


Amortisation and provisions at 1 st January . . . . . . . . . . . . . . . . . . . . . 173.7 152.5 117.9 


Change in scope of consolidation, disposals, retirements 

and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 (12.8) (0.7) 

Amortisation and provisions for the year . . . . . . . . . . . . . . . . . . . . . 35.6 34.0 35.3 


Amortisation and provisions at 31 December . . . . . . . . . . . . . . . . . . . 209.6 173.7 152.5 


Net book value at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.1 101.5 96.8 


66

9 Tangible fixed assets 

(in € million) 2003 2002 2001 


Cost at 1 st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327.2 1,504.6 1,439.9 


Change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 (161.3) 38.8 

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.3 61.6 144.3 

Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (98.4) (71.1) (77.4) 

Retirements and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.7) (6.6) (41.0) 


Cost at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,310.3 1,327.2 1,504.6 


Depreciation at 1 st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693.0 674.7 602.6 


Change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.9) (16.1) 13.5 

Depreciation and provisions for the year . . . . . . . . . . . . . . . . . . . . . . 68.5 74.6 93.4 

Disposals, retirements and other movements . . . . . . . . . . . . . . . . . . (34.7) (40.2) (34.8) 


Depreciation at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722.9 693.0 674.7 




Land and buildings used by the group for operating purposes . . . . . 363.2 419.8 405.8 

Other land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 23.9 1 190.7 

Other tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201.1 190.5 233.4 




1 Change due to the disposal of HSIL: £99.9 million (€163.6 million). 

67



10 Provisions 

At Amounts Other At 

(in € million) 31.12.2002 Additions Recoveries written off movements 1 31.12.2003 


Provisions deducted 

directly from assets 

– Provisions against 

advances to banks 

and customers 

(excluding doubtful 

interest) . . . . . . . . 915.9 235.3 (66.3) (116.9) (26.2) 941.8 

– Provisions for 

country risk . . . . . 42.3 1.3 – (8.2) (0.1) 35.3 


counterparty risk 

on securities held . . 3.6 24.5 – – – 28.1 

Provisions recognised 

as liabilities 


contingent liabilities 

and litigation . . . . 237.6 93.9 (3.6) (84.5) (1.7) 241.7 


TOTAL PROVISIONS . . 1,199.4 355.0 (69.9) (209.6) (28.0) 1,246.9 


1 “Other movements” include the impact of consolidation changes and exchange movements. 

Net charge to profit and loss 2003 

dddddddd 

Net provisions for the year 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (145.4) 

– Provisions against advances to banks and customers (excluding doubtful interest) . . . . . . . . . . (118.4) 

– Country risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 

– Counterparty risk on securities held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24.5) 

– Provisions for contingent liabilities and litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.4) 

Recoveries of amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 

ddddddddd 

NET CREDIT TO PROFIT AND LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137.6) 

1 Including losses not covered by provisions. 

11 Other assets 

ffffffffff 

(in € million) 2003 2002 2001 


Securities transaction settlement accounts . . . . . . . . . . . . . . . . . . . . . 2,043.5 707.5 901.9 

Deferred taxation (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 3.1 32.0 

Sundry debtors and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,352.1 3,434.9 1,599.5 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400.2 4,145.5 2,533.4 


68

12 Prepayments and accrued income 

(in € million) 2003 2002 2001 


Items in the course of collection from other banks . . . . . . . . . . . . . . 461.7 592.2 808.8 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,511.0 997.6 1,034.6 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,972.7 1,589.8 1,843.4 


13 Goodwill 

GOODWILL (ASSETS) 

Analysis by company 

(in millions of currency units) 2003 2002 2001 


Gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €832.4 €823.0 €856.6 


Main companies 

– HSBC Private Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €80.5 €63.4 – 

– Lixxbail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – €45.1 

– Sinopia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €48.0 €48.0 €49.3 

– Banque Hervet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €285.4 €285.4 €281.4 

– Framlington Group 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GBP64.8 GBP64.8 GBP64.8 

– CCF Suisse Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHF50.4 CHF50.4 CHF50.4 

– Nobel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €21.9 €21.9 €21.9 

– Union de Banques à Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €11.1 €11.1 €11.1 

– Banque Chaix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €10.2 €10.2 €10.2 

– ECFH - Charterhouse Group holding company . . . . . . . . . . . . . GBP23.5 GBP23.5 GBP23.5 

– Dewaay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHF40.3 CHF40.3 CHF40.3 

– SMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €9.5 €9.5 €9.5 

– Dewaay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €60.2 €60.2 €60.2 


Accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €294.7 2 €241.4 €207.4 

Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 


€537.7 €581.6 €649.2 


Analysis by amortisation period 

(in € million) 2003 2002 2001 


Goodwill written down over 10 years . . . . . . . . . . . . . . . . . . . . . . . . 32.2 37.3 38.4 

Goodwill written down over 20 years . . . . . . . . . . . . . . . . . . . . . . . . 505.5 544.3 610.8 


Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537.7 581.6 649.2 


NEGATIVE GOODWILL (LIABILITIES) 

(in € million) 2003 2002 2001 


Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.4 1.6 

1 The figure of GBP64.8 million corresponds to 100 per cent of the goodwill arising on the Framlington Group, CCF Group’s share being 

51 per cent. 

2 Exceptional writedown of €23.9 million against goodwill arising on ECFH, the Charterhouse Group holding company. 

69



14 Deposits by banks 

Deposits by central banks and credit institutions 

(in € million) 2003 2002 2001 


Central banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 0.1 

Credit institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,799.0 16,290.2 20,541.9 


Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,597.9 14,547.0 18,592.3 

3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,221.8 10,727.2 13,582.7 

1 year or less but over 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . 778.0 2,887.4 3,118.6 

5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350.4 501.6 1,306.4 

Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247.7 430.8 584.6 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,828.1 16,352.4 20,664.2 


Including repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,348.0 3,000.6 3,783.7 

15 Customer accounts 

Analysis by account type 

(in € million) 2003 2002 2001 


– Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,219.3 13,074.9 13,111.4 

– Special regulated demand accounts . . . . . . . . . . . . . . . . . . . . . . . 3,610.3 2,784.4 2,372.1 

– Special regulated savings accounts . . . . . . . . . . . . . . . . . . . . . . . . 2,494.0 2,480.8 2,450.7 

– Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,951.8 5,324.2 4,351.6 

– Interest-bearing notes and saving certificates 1 . . . . . . . . . . . . . . 45.5 58.5 118.5 


TOTAL DEPOSITS 

(excluding repo transactions, including interest-bearing notes 

and saving certificates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,320.9 23,722.8 22,404.3 

Total deposits (excluding interest-bearing notes 


and saving certificates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,275.4 23,664.3 22,285.8 

Repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,184.8 1,046.8 2,000.8 



TOTAL CUSTOMER ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . 26,646.0 24,929.1 24,514.2 


1 Interest-bearing notes are booked under “debt securities in issue”. 

Analysis by remaining maturity 2003 2002 2001 



Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,630.6 8,851.8 8,803.0 

3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,502.3 7,605.5 6,679.8 

1 year or less but over 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . 458.6 563.5 1,014.0 

5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630.7 639.0 968.9 

Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.0 43.8 140.3 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,646.0 24,929.1 24,514.2 


70

16 Debt securities in issue 

(in € million) 2003 2002 2001 


Interest-bearing notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.5 58.5 118.5 

Money market instruments and negotiable debt securities . . . . . . . . . 4,607.0 3,703.5 5,368.7 

Other debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 6.0 83.6 

Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,316.1 4,082.7 2,314.2 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,144.1 8,096.6 8,125.5 


Analysis of debt securities in issue by remaining maturity 2003 2002 2001 


Debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,973.3 7,850.7 7,885.0 

1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,741.7 3,915.6 4,887.0 


Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 778.8 315.8 443.0 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,144.1 8,096.6 8,125.5 


17 Provisions for liabilities and charges 

(in € million) 2003 2002 2001 


Provisions for contingent liabilities and litigation . . . . . . . . . . . . . . . 241.6 237.5 246.1 

Provisions for employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129.9 138.7 166.4 

Provisions for deferred taxation liabilities . . . . . . . . . . . . . . . . . . . . . 63.8 117.0 130.2 

Other provisions for liabilities and charges . . . . . . . . . . . . . . . . . . . . 221.9 213.8 232.4 


TOTAL PROVISIONS FOR LIABILITIES AND CHARGES . . . . . 657.2 707.0 775.1 



dddddddddddddddddddddddddd 

Amount as at Other Amount as at 

(in € million) 1 st Jan. 2003 Charge Reversal movements 31 Dec. 2003 


Provisions for contingent 

liabilities and litigation . . . . . . . 237.5 93.9 (88.2) (1.6) 241.6 

Provisions for employee benefits . . . 138.7 (5.5) (2.6) (0.7) 129.9 

Provisions for deferred 

taxation liabilities . . . . . . . . . . . 117.0 (47.6) – (5.6) 63.8 

Other provisions for liabilities 

and charges . . . . . . . . . . . . . . . . 213.8 (41.5) 40.6 9.0 221.9 

ddddddddd ddddddddd ddddddddd ddddddddd ddddddddd 

TOTAL PROVISIONS 

FOR LIABILITIES 

AND CHARGES . . . . . . . . . . . . 707.0 (0.7) (50.2) 1.1 657.2 

ffffffffff ffffffffff ffffffffff ffffffffff ffffffffff 

71



17 Provisions for liabilities and charges (continued) 

Provisions for deferred taxation 


dddddddddddddddddddddddddd 

Amount as at Net Other Amount as at 

(in € million) 1 st Jan. 2003 Charge 2 Reversal movements 31 Dec. 2003 


– Deferred taxation liabilities 1 . . . 117.0 (47.6) – (5.6) 63.8 

– Deferred taxation benefits 

(see note 11) . . . . . . . . . . . . . . (3.1) (1.8) – 0.3 (4.6) 

ddddddddd ddddddddd ddddddddd ddddddddd ddddddddd 

Net deferred taxation provision . . . 113.9 (49.4) 0 (5.3) 59.2 

ffffffffff ffffffffff ffffffffff ffffffffff ffffffffff 

Analysis of net deferred taxation 

provision 

Timing differences . . . . . . . . . . . . . 24.0 

Lease equalisation reserve . . . . . . . 35.4 

Other items . . . . . . . . . . . . . . . . . . (0.2) 

ddddddddd 

59.2 

ffffffffff 

1 Included in provisions for liabilities and charges. 

2 Excluding losses on deferred taxation covered by provisions. 

18 Other liabilities 

2003 2002 2001 


Before After After 

appropriation appropration appropration 

(in € million) of net profit of net profit of net profit 


Securities transaction settlement accounts . . . . . . . . . . . . . . . . . . . . . 1,436.3 1,028.3 1,050.5 

Liabilities in respect of securities borrowed . . . . . . . . . . . . . . . . . . . . 624.4 1,270.1 308.7 

Sundry creditors and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,218.2 2,801.3 1,915.8 

Short positions in securities and securities received 

under repo transactions sold firm . . . . . . . . . . . . . . . . . . . . . . . . . 5,576.1 4,219.7 3,063.6 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,855.0 9,319.4 6,338.6 


19 Accruals and deferred income 

(in € million) 2003 2002 2001 


Items in course of transmission to other banks . . . . . . . . . . . . . . . . . 245.1 494.2 579.3 

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898.7 1,634.2 1,259.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,143.8 2,128.4 1,839.0 


72

20 Subordinated liabilities 

(in € million) 2003 2002 2001 


Dated subordinated loan capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 809.4 916.0 1,044.7 

of which 

– Issued by CCF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 760.3 866.0 984.7 

– Issued by subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.1 50.0 60.0 

Participating notes and undated subordinated loan capital . . . . . . . . . 141.4 172.8 192.1 

of which 

– Issued by CCF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134.8 166.1 175.6 

– Issued by subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.7 16.5 



TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955.8 1,101.8 1,255.3 


SUBORDINATED BONDS AND NOTES ISSUED BY CCF 

Subordinated notes issued by CCF in French francs or other currencies are redeemable, in the event of liquidation, 

only after waiver of all claims by other creditors, but before payment to holders of participating notes or equity shares. 

Details of the main subordinated bonds and notes issued are provided below: 

Dated subordinated notes 


Maturity Interest rate 

Date of issue date type Currency 2003 2002 2001 

ddddddddd dddddddd dddddddd dddddddd dddddddd dddddddd dddddddd 

Other issues 1 Fixed rate BEF – 86.9 184.3 

12.08.1993 12.08.2005 Floating rate USD 63.9 76.9 91.5 

18.03.1994 18.03.2004 Floating rate USD 29.0 34.9 41.6 

25.03.1998 25.03.2008 Floating rate FRF 152.4 152.4 152.4 

15.12.2000 15.12.2015 Floating rate EUR 15.0 14.9 14.9 

19.12.2001 19.12.2011 Floating rate EUR 500.0 500.0 500.0 

Accrued interest 2.2 8.7 13.0 

TOTAL CCF FRANCE ISSUES (including accrued interest) . . . . . . 


762.5 874.7 997.7 


1 Six issues were made between 1992 and 1993 with maturities staggered between February 2002 and March 2003. 

73



20 Subordinated liabilities (continued) 

Participating notes, undated subordinated notes and bonds issued by CCF 


Reference 

Date of issue Type of issue date Currency 2003 2002 2001 

ddddddddd dddddddddddddd dddddddd dddddddd dddddddd dddddddd dddddddd 

04.06.1984 Participating notes 1 130% TMO FRF 6.4 6.4 6.4 

22.07.1985 Undated subordinated 

notes 2 TMO - 0.25 FRF 17.4 18.0 18.0 

29.01.1993 Subordinated bonds TF 3 NLG – 14.5 14.5 



22.09.1993 Subordinated step-up 

floating rate notes 4 YEN 74.0 80.1 86.5 

19.11.1993 Subordinated step-up 

floating rate notes 4 YEN 37.0 40.2 43.3 

Accrued interest 0.9 2.2 1.0 

TOTAL CCF FRANCE ISSUES (including accrued interest) . . . . . . . 


135.7 168.3 176.6 


1 Following the 1990 share exchange offer and partial repurchase in 1999, the total amount of participating notes outstanding is €6.4 million. 

Moreover, these notes have reached their maximum remuneration of 130% of TMO since 1990, in accordance with their terms of issue. 

2 These undated subordinated notes were partially retired following a cancellation in 1995. The amount outstanding fell from €91.4 million 

to €18 million. 

3 Fixed rate subject to revision over time, based on 5-year Government bond yields. 

4 Initially fixed rate then floating rate (Libor) plus a margin increasing over time. 

21 Reserve for general banking risks 

(in € million) 2003 2002 20001 


Risks arising from the AFB-AGIRC-ARRCO agreement 

of 13 September 1993 relating to the pension regimes 

of banking personnel 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99.2 99.7 102.7 

Other general banking risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.3 278.9 257.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294.5 378.6 360.4 


1 The annual write-back covers contributions paid to the CRPB. 

22 Called up share capital 

2003 2002 2001 

dddddddddddddddddd dddddddddddddddddd dddddddddddddddddd 

Number Amount Number Amount Number Amount 

(Nominal value of shares (in € of shares (in € of shares (in € 

of shares: €5) outstanding thousands) outstanding thousands) outstanding thousands) 


Amount at 1 st January . . 74,117,066 370,585 75,409,701 377,048 74,888,902 374,445 

– Exercise of share 

options . . . . . . . 233,000 1,163 229,066 1,145 520,799 2,603 

– Capital reduction . . – – (1,521,701) (7,608) – – 


Amount at 31 December 74,350,066 371,748 74,117,066 370,585 75,409,701 377,048 


Share options: 

The exercise of all outstanding share options granted to executives, directors and officers of the company would lead to the issuance of 

2,615,660 new shares, raising the total number of shares in issue to 76,965,726. 

Voting rights: 

The total number of voting rights at 31 December 2003 was 74,350,066. There have no longer been any shares in issue carrying double 

voting rights since the cash offer and compulsory purchase made by HSBC Holdings plc. 

74

23 Consolidated shareholders’ funds 


Group interest 

dddddddddddddddddddddddddddddddddddddddd 

Minority 

Other Group interests in Total 

Share consoli- share- consoli- group 

Share premium Translation dated holders’ dated and 

capital account difference reserves funds reserves minorities 

dddddd dddddd dddddd dddddd dddddd dddddd dddddd 

Balance at 

31 December 2002 

before appropriation 

of net profit . . . . . . . . . . . 370.5 1,050.8 (27.6) 1,839.9 3,233.6 8.1 3,241.7 

Appropriation of 2002 

net profit . . . . . . . . . . . . . – – – – – – – 

2002 net profit . . . . . . . . . . . – – – 561.6 561.6 4.5 566.1 

2002 dividend . . . . . . . . . . . – – – (537.4) (537.4) (4.2) (541.6) 

Balance at 


after appropriation 

of net profit . . . . . . . . . . . 370.5 1,050.8 (27.6) 1,864.1 3,257.8 8.4 3,266.2 

Employee share offering . . . 1.2 12.8 – – 14.0 – 14.0 

Translation difference . . . . – – (5.8) – (5.8) – (5.8) 

Change in minority 

interests . . . . . . . . . . . . . . – – – – – (13.3) (13.3) 

Impact of private banking 

merger . . . . . . . . . . . . . . – – – (2.6) (2.6) – (2.6) 

Interim dividend 1 . . . . . . . . – – – (222.6) (222.6) – (222.6) 

Balance at 


before appropriation 

of net profit . . . . . . . . . . . 371.7 1,063.6 (33.4) 1,638.9 3,040.8 (4.9) 3,035.9 

2003 net profit . . . . . . . . . . . – – – 627.1 627.1 1.7 628.8 

Shareholders’ funds . . . . . . . 371.7 1,063.6 (33.4) 2,266.0 3,667.9 (3.2) 3,664.7 

1 Of which €219.0 million deducted from consolidated reserves and €3.6 million deducted from net profit. 

Legal reserve 

At least one twentieth of the net profit for the year must be transferred to the legal reserve each year until it is 

equal to one tenth of the issued share capital. The legal reserve is not available for distribution. 

Special long-term capital gains reserve 

Distribution of this reserve would lead to an additional tax liability equal to the difference between taxation at the 

standard rate and taxation at the reduced rate. 

Revaluation reserve (1976 legal revaluation of assets) 

This reserve may be capitalised but may not be distributed or used to offset losses. 

Other reserves 

Amounts posted to reserves more than five years ago would be liable to tax if distributed. 

75



24 Pension and other post-retirement benefits 

(in € million) 2003 2002 2001 


Pension commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.4 173.6 204.9 

– Reserve for general banking risks . . . . . . . . . . . . . . . . . . . . . . . . . 99.2 99.7 102.7 

– Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.2 73.9 1 102.2 

End-of-career bonuses and long-service awards . . . . . . . . . . . . . . . . 71.6 64.8 64.2 

– Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.6 64.8 64.2 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229.0 238.4 269.1 


1 The decrease in provisions is principally due to the disposal of HSBC Specialist Investment Limited. 

a 

b 

Pension commitments 

Membership of AGIRC and ARRCO 

An agreement entered into on 13 September 1993 by the AFB (Association of French Banks), ARRCO and 

AGIRC (French state pension schemes for employees and executives) set out the terms and conditions 

governing the French banks’ membership of AGIRC and strengthening their membership of ARRCO. 

The potential liabilities arising from the agreement are included in the reserve for general banking risks set up 

in 1993, for CCF and its subsidiaries, with the exception of Société Marseillaise de Crédit and Banque Hervet, 

which have specific provisions in their own books. 

Other pension commitments 

In France, the CCF group’s commitments in respect of end-of career bonuses and early retirement commitments 

are provided for in full. 

End-of-career bonuses and long-service awards 

In France, the group’s liability in respect of end-of-career bonuses and long-service awards amounted to 

€71.6 million at the end of December 2003. Future expenses in respect of this liability have been provided for 

in full since 2000. 

76

25 Sovereign risks 

In 1989, CCF securitised a substantial portion of its sovereign risks, transferring a pool of loans with a face value 

of USD 1 billion to a special purpose vehicle called Financial Overseas Holding (Finov). 

As part of the transaction, CCF granted Finov a 25-year loan of USD1 billion, with the principal and part of the 

interest secured by investment-grade assets. 

Country risk has improved substantially since the transaction took place, leading to a significant increase in Finov’s 

net asset value. Finov therefore repaid three quarters of the loan, i.e. USD750 million, well ahead of schedule, 

on 31 August 1992. CCF’s exposure to Finov has therefore fallen to USD250 million. 

Pursuant to the provisions of Article 51 of Regulation 99.07, CCF has undertaken to liquidate Finov within 

a maximum term of 5 years, and for reasons of prudence, has made a provision for the terminal loss based on 

the fair market value of assets and liabilities existing as of 31 December 2003. 

26 Memorandum items 

(in € million) 2003 2002 2001 


FINANCING COMMITMENTS 

Commitments given 

– Financing commitments given to banks . . . . . . . . . . . . . . . . . . . 259.1 540.4 445.9 

– Financing commitments given to customers . . . . . . . . . . . . . . . . 10,384.6 7,282.3 5,741.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,643.7 7,822.7 6,187.6 


Commitments received 

– Financing commitments received from banks . . . . . . . . . . . . . . . 178.7 105.1 424.3 

GUARANTEE COMMITMENTS 

Commitments given 

– Guarantees and endorsements given on behalf of banks . . . . . . 332.4 704.7 1,375.7 

– Guarantees and endorsements given on behalf of customers . . . 6,253.9 5,935.4 6,282.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,586.3 6,640.1 7,658.4 


Commitments received 

– Guarantees and endorsements received from banks . . . . . . . . . . 2,458.8 1,774.4 2,657.5 

SECURITIES COMMITMENTS 

Commitments given: securities to be delivered 

– New issue settlement accounts and other guarantees 

on the monthly settlement market and others . . . . . . . . . . . . . 3,571.6 2,255.2 1,739.6 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,571.6 2,255.2 1,739.6 


Commitments received: securities receivable 

– New issue settlement accounts and other guarantees 

on the monthly settlement market and others . . . . . . . . . . . . . 3,546.7 2,600.7 1,284.8 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,546.7 2,600.7 1,284.8 


77



27 Financial instruments 

a 

Forwards, futures and options 

2003 2002 

(in € billion) 

dddddddddddddddddddddddddddd dddddddddddddddddddddddddddd 

Hedging Trading Total Hedging Trading Total 


Forwards and futures . . 17.2 664.7 681.9 25.5 545.8 571.3 

Transactions on 

organised markets . . – 62.0 62.0 – 48.7 48.7 

– fixed-income 

contracts . . . . . . – 60.6 60.6 – 47.6 47.6 

– currency contracts – – – – – – 

– stock indices 

and equities . . . – 1.4 1.4 – 1.1 1.1 

Over-the-counter 

transactions . . . . . . 17.2 602.7 619.9 25.5 497.1 522.6 

– interest rate futures . – – – – – – 

– interest rate swaps . . 11.1 554.2 565.37 20.8 454.9 475.7 

– currency swaps . . . 6.1 48.4 54.5 4.7 41.9 46.6 

– others . . . . . . . . . . – 0.1 0.1 – 0.3 0.3 

Options . . . . . . . . . . . . 1.5 138.0 139.5 0.5 85.5 86.0 

Transactions on 

recognised exchanges – 25.0 25.0 – 10.0 10.0 

Interest rate options . . – 17.3 17.3 – 5.9 5.9 

Currency options . . . . – 1.6 1.6 – 0.9 0.9 

Other options . . . . . . . – 6.1 6.1 – 3.2 3.2 

Over-the-counter 

transactions . . . . . . 1.5 113.0 114.5 0.5 75.5 76.0 

Caps and floors . . . . . 1.0 3.0 4.0 0.5 0.5 1.0 

Swaptions and options 0.5 110.0 110.5 – 75.0 75.0 


TOTAL . . . . . . . . . . . 18.7 802.7 821.4 26.0 631.3 657.3 


b Additional information concerning outstanding fixed-income contracts 

(in € billion) 2003 2002 2001 


Specific hedging contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 17.4 21.8 

Macro hedging contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 3.4 2.3 

Specialised management of a trading book . . . . . . . . . . . . . . . . . . . . 553.6 454.2 522.9 

Specific trading transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 0.6 – 

c 

Financial instruments: residual maturity 

TOTAL 2003 

dddddddddddddddddddddddddddddddd 

Under 1 to Over 

(in € billion) 1 year 5 years 5 years 


Financial instruments: 

Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.3 7.8 1.7 

Fixed-income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330.5 262.9 160.4 

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 1.7 – 

78

27 Financial instruments (continued) 

d Credit risk associated with financial instruments 

(in € million) 2003 2002 

dddddddd dddddddd 

A – Contracts negotiated within the framework of master 

agreements and eligible for netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,234.6 2,123.6 

a) Transactions with banks in OECD countries . . . . . . . . . . . . . . . . . . . . . . . . . 2,482.5 1,619.3 

b) Transactions with customers and with banks outside the OECD . . . . . . . . . 752.1 504.3 

B – Other contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506.4 685.7 

a) Transactions with banks in OECD countries . . . . . . . . . . . . . . . . . . . . . . . . . 323.8 270.0 

– Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.2 189.0 

– Currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.7 66.0 

– Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.8 15.0 

– Commodities contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.1 – 

b) Transactions with customers and with banks outside the OECD . . . . . . . . . 182.6 415.7 

– Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.5 137.7 

– Currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.8 143.0 

– Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.3 135.0 

ddddddddd 

ddddddddd 

TOTAL CREDIT RISK ASSOCIATED WITH FINANCIAL INSTRUMENTS . . . 3,741.0 2,809.3 

ffffffff ffffffff 

Representing a weighted credit risk equivalent of: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,028.6 838.1 

FINANCIAL INSTRUMENTS – ACCRUED INTEREST RECORDED 

IN THE BALANCE SHEET 

– Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423.1 327.0 

– Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129.6 93.6 

28 Interest rate spread 

(in € million) 2003 2002 2001 


Interest and similar income 

– Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376.3 744.4 947.1 

– Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,520.9 1,688.3 1,966.2 

– Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.3 39.5 1 971.9 

– Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385.5 335.1 691.0 

– Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 1.1 3.2 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,344.1 2,808.4 4,579.4 


Interest and similar expense 

– Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (440.7) (776.3) (1,412.5) 

– Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (532.2) (629.1) (927.8) 

– Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33.8) (15.0) 1 (848.1) 

– Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (324.7) (408.0) (526.3) 

– Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.3) (4.9) (0.8) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,333.7) (1,833.3) (3,715.5) 


1 Impact of disposal of Lixxbail. 

79



29 Analysis of income from equity shares 

(in € million) 2003 2002 2001 


– Available-for-sale and portfolio securities . . . . . . . . . . . . . . . . . . 8.4 25.2 16.8 

– Other participating interests and long-term securities . . . . . . . . . 103.1 93.9 61.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.5 119.1 78.5 


30 Analysis of fee income and commissions 

(in € million) 2003 2002 2001 


INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,071.3 1,072.8 1,217.8 

Fees and commissions received from banking services . . . . . . . . . . . . . 446.1 425.5 440.5 

Customer accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192.7 181.3 230.3 

Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.4 92.1 42.2 

Securities transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.2 35.3 35.9 

Bank cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.4 83.2 79.5 

Import/export operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 11.3 5.7 

Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6 22.3 46.9 

Fees and commissions received from financial transactions . . . . . . . . . 550.6 578.4 709.9 

Securities commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.4 31.5 34.5 

Brokerage activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.6 112.0 172.1 

Custody services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.8 25.9 40.8 

Assets under management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315.8 340.1 379.2 

Corporate finance business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.2 38.7 35.6 

Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.8 30.2 47.7 

Fees and commissions received from insurance business . . . . . . . . . . . 74.6 68.9 67.4 

Insurance brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.7 67.4 67.4 

Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 1.5 - 

EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (171.3) (138.9) (196.8) 

Fees and commissions paid on banking services . . . . . . . . . . . . . . . . . . (109.8) (96.0) (55.2) 

Maintenance and rentals 

Brokerage business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49.3) (39.3) (10.5) 

Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60.5) (56.7) (44.7) 

Fees and commissions paid on financial transactions . . . . . . . . . . . . . (61.5) (42.9) (141.6) 

Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61.5) (42.9) (141.6) 


TOTAL FEES AND COMMISSIONS . . . . . . . . . . . . . . . . . . . . . . 900.0 933.9 1,021.0 


80

31 Dealing profits 

(in € million) 2003 2002 2001 


Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (157.0) 66.6 64.6 

Foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46.4) 47.7 25.1 

Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367.9 32.2 118.5 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164.5 146.5 208.2 


32 Gains and losses on available-for-sale securities 

(in € million) 2003 2002 2001 


Gains or losses on available-for-sale securities 

Capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9 (12.2) 9.6 

Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 0.5 2.3 

Gains or losses on portfolio securities 

Capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.4 104.9 148.8 

Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 (28.1) 13.7 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.9 65.1 174.4 


33 Analysis of general operating expenses 

(in € million) 2003 2002 2001 


Personnel expenses 

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (900.9) 1 (882.0) 1 (911.4) 

Employee profit-sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32.2) (31.6) (23.0) 

Incentive plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14.6) (14.1) (11.5) 


Sub-total personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (947.7) (927.7) (945.9) 


Other administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (562.7) 2 (555.9) 2 (577.7) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,510.4) (1,483.6) (1,523.6) 


1 The provisions for stock option, previously booked as exceptional items, are now booked as personnel expenses. At constant accounting 

methods, the 2002 figure for salaries and wages would have been €899.0 million. 

2 Expenses connected with the deposit protection mechanism, previously booked as exceptional items, are now booked as other administrative 

expenses. At constant accounting methods, the 2002 figure for other administrative expenses would have been €558.0 million. 

81



34 Depreciation and amortisation 

(in € million) 2003 2002 2001 


Tangible and intangible fixed assets, excluding goodwill . . . . . . . . . . 103.2 103.8 103.6 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.2 103.8 103.6 

Goodwill amortisation and movements in provisions . . . . . . . . . . . . 


64.6 1 40.2 38.0 


1 Including an exceptional writedown of €23.9 million against goodwill arising on ECFH, the Charterhouse Group holding company. 

35 Segmental data 

(in € million) 2003 2002 

Change 

dddddddddddddddddd 

Amount % 

dddddddd dddddddd dddddddd dddddddd 

Operating income 

Retail and commercial banking . . . . . . . . . . . . . . . . . 1,566.1 1,496.9 69.2 4.6 

Corporate and investment banking . . . . . . . . . . . . . . 472.6 430.5 42.1 9.8 

Asset management and private banking . . . . . . . . . . 239.4 228.7 10.7 4.7 

Other activities and miscellaneous . . . . . . . . . . . . . . . . 28.5 67.7 (39.2) NS 


Total activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,306.6 2,223.8 82.8 3.7 

ffffffff ffffffff ffffffff ffffffff 

Equity investment portfolio . . . . . . . . . . . . . . . . . . . . 38.5 113.0 (74.5) (65.9) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,345.1 2,336.8 8.3 0.4 


Operating profit before provisions 

Retail and commercial banking . . . . . . . . . . . . . . . . . 508.0 432.9 75.1 17.3 

Corporate and investment banking . . . . . . . . . . . . . . 230.1 178.0 52.1 29.3 

Asset management and private banking . . . . . . . . . . 20.3 21.9 (1.6) (7.4) 

Other activities and miscellaneous . . . . . . . . . . . . . . . . (61.0) (6.1) (54.9) NS 


Total activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697.4 626.7 70.7 11.3 


Equity investment portfolio . . . . . . . . . . . . . . . . . . . . 34.0 103.5 (69.5) (67.2) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731.4 730.2 1.2 0.2 


36 Gains or losses on asset disposals 

(in € million) 2003 2002 2001 


Gains or losses on held-to-maturity securities . . . . . . . . . . . . . . . . . . 0.1 (0.9) (0.6) 

Gains or losses on tangible and intangible fixed assets . . . . . . . . . . . (1.1) (2.3) 0.4 

Gains or losses on other participating interests 

and long-term securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.5 (26.5) (1.7) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.5 (29.7) (1.9) 


82

37 Exceptional items 

(in € million) 2003 2002 2001 


Deposit protection mechanism 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (2.1) (5.2) 

Net restructuring effect 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 92.1 161.4 

Other 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 (22.4) (41.7) 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 67.6 114.5 


1 The net restructuring effect includes capital gains or losses on the disposal of subsidiaries and expenses incurred in closing or restructuring 

certain branches or offices in connection with CCF’s integration into HSBC. Gains or losses not connected with integration are 

booked as ordinary items. 

2 From 2003, provisions for stock option and expenses connected with the deposit protection mechanism are booked as operating expenses 

(see Note 33). 

38 Corporation tax 

(in € million) 2003 2002 2001 


Current year tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.6 179.6 173.0 

Standard rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.2 169.2 159.5 

Reduced rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 10.4 13.5 

Deferred taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49.4) 33.3 60.8 


TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.2 212.9 233.8 


The method used to calculate deferred taxation is described in paragraph 1.7. of note 1 to the consolidated financial 

statements. 

Analysis of the effective tax rate 2003 

dddddddd 

Standard rate tax in France (including temporary surcharges) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.43% 

Impact of disposals (reduced rate and consolidation restatements) . . . . . . . . . . . . . . . . . . . . . . . . . (0.83%) 

Results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.85%) 

Difference in standard tax rates applicable to foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . (4.52%) 

Permanent differences and other items 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22.66%) 

dddddddd 

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.57% 

1 Of which: 

Reversal of unused ECFH tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.57%) 

Benefit from group tax relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.22%) 

39 Litigation 

The CCF group is currently involved in legal actions taking place in the United States, relating to banking 

operations and fiduciary loans. 

At this stage, it is impossible to evaluate the outcome, but CCF believes it has a strong defence case. 

83



40 List of consolidated companies 

CCF group interest 

ddddddddddddd 

Consolidation 

Consolidated companies 

dddddddddddddddd 

Country 

dddddddd 

method* 

ddddd 

Main line of business 

ddddddddddd 

2003 

ddd 

2002 

ddd 

2001 

ddd 

RETAIL AND COMMERCIAL BANKING 

Banque Alcyon . . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque Chaix . . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque de Baecque Beau . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque de Picardie . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque de Savoie . . . . . . . . . . . . . . . . France FC Bank 99.9% 98.2% 98.2% 

Banque Dupuy, de Parseval . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque Hervet . . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque Marze . . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Banque Pelletier . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

CCF Change . . . . . . . . . . . . . . . . . . . France FC Service company 100.0% – – 

Compagnie Financière Iles-du-Rhône . France FC Holding company 100.0% 100.0% 100.0% 

Compagnie Interbancaire de 

Développement (CID) . . . . . . . . . France FC Service company 100.0% 100.0% 100.0% 

Crédit Commercial du Sud-Ouest . . . France FC Bank 100.0% 100.0% 100.0% 

Elysées Factor . . . . . . . . . . . . . . . . . . France FC Financial company 66.0% 66.0% 66.0% 

Financière d’Uzès . . . . . . . . . . . . . . . France EM Financial company 34.0% 34.0% 34.0% 

Financo . . . . . . . . . . . . . . . . . . . . . . . France EM Financial company – – 25.0% 

Hervet Mathurins . . . . . . . . . . . . . . . France FC Property company 100.0% 100.0% 100.0% 

Lixxbail . . . . . . . . . . . . . . . . . . . . . . . France FC Leasing company – – 50.0% 

Marly Courtage . . . . . . . . . . . . . . . . . France FC Broker 100.0% 100.0% 100.0% 

Marly Gestion . . . . . . . . . . . . . . . . . . France FC Investment company 100.0% 100.0% 100.0% 

Netvalor . . . . . . . . . . . . . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

Société Anonyme Professionnelle 

de Crédit . . . . . . . . . . . . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

Société Immobilière et 

Foncière Savoisienne . . . . . . . . . . . France FC Property company 98.2% 98.2% 98.2% 

Société Marseillaise de Crédit (Group) France FC Bank 100.0% 100.0% 100.0% 

Sofimurs . . . . . . . . . . . . . . . . . . . . . . . France FC Property leasing company 100.0% 100.0% 100.0% 

Sté Immobilière de la Région 

Rhône-Alpes . . . . . . . . . . . . . . . . . France FC Service company 98.2% 98.2% 98.2% 

Union de Banques à Paris . . . . . . . . . France FC Bank 100.0% 100.0% 100.0% 

84

40 List of consolidated companies (continued) 


ddddddddddddd 

Consolidation 



Country 

dddddddd 

method* 

ddddd 


ddddddddddd 

2003 

ddd 

2002 

ddd 

2001 

ddd 

CORPORATE AND INVESTMENT BANKING 

Auxilia . . . . . . . . . . . . . . . . . . . . . . . . France FC Service company 100.0% 100.0% 100.0% 

Excofipar . . . . . . . . . . . . . . . . . . . . . . France FC Property company 100.0% – – 

Finance et participation . . . . . . . . . . . Luxembourg FC Service company – 100.0% 100.0% 

Foncière Elysées . . . . . . . . . . . . . . . . . France FC Property company 100.0% 100.0% 100.0% 

Hôtelière Haussmann . . . . . . . . . . . . France FC Property company 100.0% 100.0% 100.0% 

HSBC CCF Financial Products . . . . France FC Financial company 100.0% 100.0% 100.0% 

HSBC CCF Investment Bank . . . . . . France FC Bank – – 100.0% 

HSBC CCF Leasing . . . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

HSBC CCF Securities . . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

Immobiliaria Jose Abascal 45, SA . . Spain FC Service company – – 100.0% 

Immobilier Elybail . . . . . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

Immobilière Bauchard . . . . . . . . . . . . France FC Property company 100.0% 100.0% – 

Neuilly Saint Paul . . . . . . . . . . . . . . . France FC Investment company 100.0% – – 

Société Financière et Mobilière . . . . . France FC Financial company 100.0% 100.0% 100.0% 

Société Immobilière 

Malesherbes-Anjou . . . . . . . . . . . . France FC Property company 100.0% 100.0% 100.0% 

ASSET MANAGEMENT AND INSURANCE 

CCF Holdings Ltd . . . . . . . . . . . . . . United Kingdom FC Financial company 100.0% 100.0% 100.0% 

CCF & Partners Asset 

Management Ltd . . . . . . . . . . . . . . United Kingdom FC Financial company 100.0% 100.0% 100.0% 

CCF Capital Management Europe . . France FC Asset management 100.0% 100.0% 100.0% 

CCF Capital Management FCP 1 . . . France FC Asset management – – 100.0% 

CCF Capital Management FCP 2 . . . France FC Asset management – – 100.0% 

CCF Capital Management Monde . . France FC Asset management 100.0% 100.0% 100.0% 

HSBC CCF Epargne Entreprise 

(ex-Elysées Gestion) . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

Elysées-Fonds 1 . . . . . . . . . . . . . . . . . . France FC Service company – 51.0% 51.0% 

EMI Advisory Company . . . . . . . . . . Luxembourg EM Asset management 33.3% – – 

Erisa . . . . . . . . . . . . . . . . . . . . . . . . . . France EM Insurance company 50.0% 50.0% 50.0% 

Erisa Iard . . . . . . . . . . . . . . . . . . . . . . France EM Insurance company 50.0% 50.0% – 

Exatis Financial Adviser 

Europe (EFAE) . . . . . . . . . . . . . . . France FC Asset management 100.0% 100.0% 100.0% 

Framlington Group PLC . . . . . . . . . . United Kingdom FC Financial company 51.0% 51.0% 51.0% 

Framlington Holdings Ltd . . . . . . . . United Kingdom FC Financial company 51.0% 51.0% 51.0% 

HSBC AME France (FCP) . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

HSBC Asset Management Europe . . France FC Asset management 100.0% 100.0% 100.0% 

HSBC CCF Management Holding 

(ex-HSBC CCF Asset Management) . . France FC Financial company 100.0% 100.0% 100.0% 

IDF 10 . . . . . . . . . . . . . . . . . . . . . . . . France FC Asset management 100.0% 100.0% 100.0% 

IDF 9 . . . . . . . . . . . . . . . . . . . . . . . . . France FC Financial company – – 100.0% 

Sinopia AM Luxembourg . . . . . . . . . Luxembourg FC Asset management 99.9% – – 

Sinopia Asset Management . . . . . . . France FC Financial company 99.9% 99.9% 99.9% 

Sinopia Financial Services . . . . . . . . . France FC Financial company 100.0% 99.9% 99.9% 

Sinopia Greater China Limited . . . . . Hong Kong FC Asset management 100.0% – – 

Sinopia International Limited . . . . . . United Kingdom FC Service company 100.0% – – 

Sinopia Société de Gestion . . . . . . . . France FC Service company 99.9% 99.9% 99.9% 

Sinopia T&D . . . . . . . . . . . . . . . . . . . Japan EM Asset management 49.0% – – 

Vernet Valor . . . . . . . . . . . . . . . . . . . France FC Financial company 100.0% 100.0% 100.0% 

85





ddddddddddddd 

Consolidation 



Country 

dddddddd 

method* 

ddddd 


ddddddddddd 

2003 

ddd 

2002 

ddd 

2001 

ddd 

PRIVATE BANKING 

Banque du Louvre (Groupe) 2 . . . . . . France FC Bank – 100.0% 88.9% 

Banque Eurofin 2 . . . . . . . . . . . . . . . . France FC Bank – 68.0% 68.0% 

Banque Privée Internationale 2 . . . . . . France FC Bank – 100.0% 100.0% 

CCF Holding Suisse . . . . . . . . . . . . Switzerland FC Financial company 100.0% 100.0% 100.0% 

CCF Immos . . . . . . . . . . . . . . . . . . . . Switzerland FC Mortgage bank – – 100.0% 

Compagnie de Gestion du Patrimoine . France FC Bank 100.0% 100.0% 100.0% 

Delosfin SA 3 . . . . . . . . . . . . . . . . . . . France FC Investment company 96.8% 67.9% 67.9% 

Eurofin Capital Partners (ECP) 3 . . . . France FC Investment company 96.4% 67.5% 67.5% 

Eurofin Assurance SA 3 . . . . . . . . . . . France FC Insurance broker 96.8% 67.9% 67.9% 

Eurofin Gestion SA 3 . . . . . . . . . . . . . France FC Asset management 96.9% 68.0% 68.0% 

Groupe Dewaay . . . . . . . . . . . . . . . . . Belgium FC Bank 100.0% 100.0% 100.0% 

Groupe PrimeCorp . . . . . . . . . . . . . . France FC Financial company – – 100.0% 

HSBC Private Bank France 

(ex-HSBC Bank France SA) 2 4 . . . . France FC Bank 97.0% 100.0% – 

SCI Triangle d’or 3 . . . . . . . . . . . . . . . France FC Property company 97.0% 68.0% 68.0% 

Société de Financement International 

du CCF SA . . . . . . . . . . . . . . . . . . Switzerland FC Financial company – 100.0% 100.0% 

Société des Cadres de la Banque 

Eurofin . . . . . . . . . . . . . . . . . . . . . France FC Financial company 100.0% – – 

HSBC Republic Assurance SARL 4 . . France FC Insurance broker 97.0% – – 

HSBC Finance France SA 4 . . . . . . . . France FC Financial company 97.0% – – 

(investment fund) 

Louvre Gestion 5 . . . . . . . . . . . . . . . . . France FC Financial company 97.0% – – 

Octogone Immobilier 5 . . . . . . . . . . . . France FC Property company 97.0% – – 

Byron Equilibre 5 . . . . . . . . . . . . . . . . France FC Insurance broker 97.0% – – 

B.D.L Gestion 5 . . . . . . . . . . . . . . . . . France FC Financial company 

(UCITS) 97.0% – – 

L.G.I. 5 . . . . . . . . . . . . . . . . . . . . . . . . Luxembourg FC Wealth management 97.0% – – 

* FC: Full consolidation; EM: Equity method. 

1 Buyout of minority interests and merger with Elysées Gestion. 

2 Merger of private banking subsidiaries. 

3 Change in percentage due to the merger of private banking subsidiaries. 

4 Demerger of HSBC Bank France sub-group. 

5 Demerger of Banque du Louvre sub-group. 

86



ddddddddddddd 

Consolidation 



Country 

dddddddd 

method* 

ddddd 


ddddddddddd 

2003 

ddd 

2002 

ddd 

2001 

ddd 

OTHERS 

Charterhouse (ECFH Group) . . . . . . United Kingdom FC Financial company – 100.0% 100.0% 

Charterhouse Management 

Service Limited . . . . . . . . . . . . . . . England FC Investment company 100.0% 100.0% – 

Finanpar 17 . . . . . . . . . . . . . . . . . . . . France FC Investment company 100.0% – – 

Finimmo . . . . . . . . . . . . . . . . . . . . . . . France FC Investment company – 100.0% 100.0% 

Nobel . . . . . . . . . . . . . . . . . . . . . . . . . France FC Investment company 100.0% 100.0% 100.0% 

Participaciones y Financiacion, SA . . Spain FC Service company 100.0% 100.0% 100.0% 

SAGP . . . . . . . . . . . . . . . . . . . . . . . . . France FC Investment company 100.0% – – 

Société Parisienne de Participations . France FC Investment company 100.0% 100.0% 100.0% 

Société Française et Suisse (SFS) . . . France FC Investment company 100.0% 100.0% 100.0% 

Cedarstead . . . . . . . . . . . . . . . . . . . . . United States EM Investment company – – 59.2% 

Equity Finance . . . . . . . . . . . . . . . . . . France EM Venture capital company 32.5% 36.0% 40.6% 

Financo . . . . . . . . . . . . . . . . . . . . . . . France EM Financial company – – 25.0% 

Lombard Bank Malta Plc . . . . . . . . . Malta EM Bank – – 21.7% 

Myriade . . . . . . . . . . . . . . . . . . . . . . . France EM Investment company – – 49.0% 

Pennel Finance . . . . . . . . . . . . . . . . . . France EM Financial company – – 40.2% 

* FC: Full consolidation; EM: Equity method. 

87




Additions 

Year 

ddddddddddddddddddddddddddddddddddd ddd 

Alcyon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Banque de Baecque Beau . . . . . . . . . . . . . . 2001 

Banque Hervet . . . . . . . . . . . . . . . . . . . . . . . 2001 

CCF Immos . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Compagnie de Gestion du Patrimoine . . . . 2001 

Erisa Iard . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Hervet Mathurins . . . . . . . . . . . . . . . . . . . . 2001 

HSBC CCF Financial Products . . . . . . . . . 2001 

Marly Courtage . . . . . . . . . . . . . . . . . . . . . . 2001 

Marly Gestion . . . . . . . . . . . . . . . . . . . . . . . 2001 

Myriade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Sofimurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Charterhouse Management Services Limited . 2002 

HSBC Bank France SA . . . . . . . . . . . . . . . . 2002 

Immobilière Bauchard . . . . . . . . . . . . . . . . . 2002 

11 Bank Worms agencies . . . . . . . . . . . . . . . 2002 

HSIL, consolidated in the accounts 

of Charterhouse UK (ECFH) in 

February 2002, has no longer been 

consolidated since June 2002 . . . . 2002 

Société des Cadres de la Banque Eurofin . . 2003 

Neuilly Saint Paul . . . . . . . . . . . . . . . . . . . . 2003 

Excofipar . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 

CCF Change . . . . . . . . . . . . . . . . . . . . . . . . 2003 

SAGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 

Finanpar 17 . . . . . . . . . . . . . . . . . . . . . . . . . 2003 

Sinopia International Limited . . . . . . . . . . . 2003 

Sinopia Greater China Limited . . . . . . . . . . 2003 

Sinopia T&D . . . . . . . . . . . . . . . . . . . . . . . . 2003 

Sinopia AM Luxembourg . . . . . . . . . . . . . . 2003 

EMI Advisory Company . . . . . . . . . . . . . . . 2003 

Exits 

ddddddddddddddddddddddddddddddddddd 

Year 

ddd 

Auxim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Brésil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

CCF Finance Moyen-Orient . . . . . . . . . . . . 2001 

CCF Holding Liban . . . . . . . . . . . . . . . . . . 2001 

CCF Luxembourg . . . . . . . . . . . . . . . . . . . . 2001 

CCF Monaco . . . . . . . . . . . . . . . . . . . . . . . . 2001 

CCF Suisse . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Cie Le Caire . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Compagnie Financière de la Garonne 

et de l’Adour . . . . . . . . . . . . . . . . . . . . . . 2001 

Credival Latinsul . . . . . . . . . . . . . . . . . . . . . 2001 

Elyfact Participations . . . . . . . . . . . . . . . . . 2001 

Elymans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Finanzaria Francial . . . . . . . . . . . . . . . . . . . 2001 

Handelsfinanz CCF Bank . . . . . . . . . . . . . . 2001 

Handelsfinanz International Ltd . . . . . . . . 2001 

Pennel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Quilter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 

Teaside Business . . . . . . . . . . . . . . . . . . . . . 2001 

CCF Immos . . . . . . . . . . . . . . . . . . . . . . . . . 2002 

Lombard Bank . . . . . . . . . . . . . . . . . . . . . . 2002 

Financo . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 

Myriade . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 

Cedarstead . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 

Loxxia Slibail . . . . . . . . . . . . . . . . . . . . . . . . 2002 

HSIL, consolidated in the accounts 

of Charterhouse UK (ECFH) in 

February 2002, has no longer been 

consolidated since June 2002 . . . . . . . . . . 2002 

SFI Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 

ECFH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 

Finance et Participation . . . . . . . . . . . . . . . 2003 

88

Change in consolidation method: 

None. 

Merger: 

Elysées Gestion absorbed Elysées Fonds 

HSBC Bank France SA absorbed: 

BPI, Banque du Louvre, Banque Eurofin. 

Change of name: 

HSBC CCF Asset Management renamed HSBC CCF Asset Management Holding, 

Elysées Gestion renamed HSBC CCF Epargne Entreprise, 

HSBC Bank France SA renamed HSBC Private Bank France. 

Transfer of assets: 

Finimmo to Nobel. 

Wound up: 

Finance et Participation, 

ECFH. 

89


Parent company financial statements 

Balance sheets 2003 - 2002 - 2001 

ASSETS 

(in € thousands) 2003 2002 2001 


Cash and balances at central banks . . . . . . . . . . . . . . . . . . . . . . . . . . 398,983 1,461,587 893,894 

Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . 14,031,216 9,462,795 5,752,772 

Loans and advances to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,225,146 10,568,045 12,401,253 

Loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,868,680 21,256,865 22,240,685 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,676,922 3,177,991 6,247,286 

Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,484 118,108 125,667 

Other participating interests and long-term securities . . . . . . . . . . . . 1,047,526 1,137,110 164,131 

Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,722,993 2,925,975 2,940,245 

Intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,392 71,339 61,757 

Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,638 333,444 368,049 

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,203,528 2,569,351 1,584,747 

Prepayments and accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,486,019 1,131,508 1,021,450 

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

60,162,527 

dddddd 

54,214,118 

dddddd 

53,801,936 

ffffff ffffff ffffff 


Financing commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,056,956 6,865,703 5,347,706 

Guarantees and endorsements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,410,360 6,501,558 7,609,117 

Securities commitments (other commitments received) . . . . . . . . . . . 3,514,151 2,481,795 1,121,509 

Financial instruments and other (notional principal) . . . . . . . . . . . . 841,769,086 688,453,914 750,936,473 

dddddd dddddd dddddd 

90

Balance sheets 2003 - 2002 - 2001 (continued) 

LIABILITIES 2003 2002 2001 

dddddddddddd 

Before After 

dddddd 

After 

ddddddd 

After 

(in € thousands) appropriation appropriation 1 appropriation appropriation 

dddddd dddddd dddddd dddddd 

Deposits by banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,881,771 19,881,771 19,151,791 22,042,771 

Customer accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,431,720 16,431,720 14,776,770 14,620,007 

Debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . . 9,839,848 9,839,848 7,866,342 7,545,411 

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,102,065 9,344,125 6,656,587 4,414,743 

Accruals and deferred income . . . . . . . . . . . . . . . . . . 809,149 809,149 1,815,659 1,123,727 

Provisions for liabilities and charges . . . . . . . . . . . . . 234,026 234,026 198,981 165,139 

Reserve for general banking risks . . . . . . . . . . . . . . . . 74,700 74,700 74,700 74,700 

Subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . . 898,195 898,195 1,043,023 1,174,438 

Called up share capital . . . . . . . . . . . . . . . . . . . . . . . . 371,750 371,750 370,585 377,048 

Share premium account . . . . . . . . . . . . . . . . . . . . . . . 1,063,618 1,063,618 1,050,800 1,144,333 

Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 954,334 954,334 957,966 956,126 

Special tax-allowable reserves . . . . . . . . . . . . . . . . . . . 38,307 38,307 31,879 27,322 

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,035 220,984 219,035 136,171 

Interim dividend deducted from retained earnings . . (219,000) – – – 

Net profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . 466,637 – – – 

Interim dividend deducted from net result . . . . . . . . . (3,628) – – – 

TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

60,162,527 

dddddd 

60,162,527 

dddddd 

54,214,118 

dddddd 

53,801,936 

ffffff ffffff ffffff ffffff 


Financing commitments . . . . . . . . . . . . . . . . . . . . . . . 709,914 709,914 879,622 1,046,494 

Guarantees and endorsements . . . . . . . . . . . . . . . . . . 1,851,328 1,851,328 1,631,805 4,385,010 

Securities commitments . . . . . . . . . . . . . . . . . . . . . . . 3,521,339 3,521,339 2,144,926 1,566,376 


1 Proposed appropriation. 

91


Parent company financial statements (continued) 

Profit and loss accounts 2003 - 2002 - 2001 (continued) 

EXPENSES IN BRACKETS 

(in € thousands) 2003 2002 2001 


Interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,664,331 2,129,754 2,898,144 

Interest and similar expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,198,293) (1,678,756) (2,473,219) 

Income from equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365,064 520,370 279,802 

Fees and commissions received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488,840 473,527 412,825 

Fees and commissions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102,242) (75,336) (64,526) 

Dealing profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,045 76,636 112,057 

Gains or losses on available-for-sale securities . . . . . . . . . . . . . . . . . . 25,096 (3,876) (12,254) 

Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,641 56,151 24,691 

Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,765) (11,707) (15,268) 

NET OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

1,374,717 

dddddd 

1,486,763 

dddddd 

1,162,252 

General operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

(761,508) 

dddddd 

(735,639) 

dddddd 

(670,128) 

Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,206) (62,273) (59,486) 

OPERATING PROFIT BEFORE PROVISIONS . . . . . . . . . . . . . . 

dddddd 

549,003 

dddddd 

688,851 

dddddd 

432,638 

Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

(124,337) 

dddddd 

(1,583) 

dddddd 

(10,656) 

OPERATING PROFIT AFTER PROVISIONS . . . . . . . . . . . . . . . 

dddddd 

424,666 

dddddd 

687,268 

dddddd 

421,982 

Gains or losses on disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

9,366 

dddddd 

(46,322) 

dddddd 

13,579 

PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 

dddddd 

434,032 

dddddd 

640,946 

dddddd 

435,561 


Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,251 (2,753) 165,597 

Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,779 (13,425) (36,068) 

Net recovery from the reserve for general banking risks . . . . . . . . . . (6,425) (4,555) (22,439) 

NET ATTRIBUTABLE PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

466,637 

dddddd 

620,213 

dddddd 

542,651 


92

Statement of reported net profit and movements in shareholders’ funds and the reserve 

for general banking risks 

(Commission des Opérations de Bourse Recommendation - Bulletin no. 79, February 1979) 

(in € thousands) 31.12.2003 31.12.2002 31.12.2001 


NET PROFIT FOR THE YEAR 

– Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,637.3 620,212.8 542,651.3 

– Per share (in euros) 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.28 8.37 7.20 

(based on number of shares outstanding at year end, excluding 

own shares held) 

MOVEMENTS IN SHAREHOLDERS’ FUNDS AND 

THE RESERVE FOR GENERAL BANKING RISKS 

(after appropriation of 2001 and 2002 net profit and proposed 

appropriation for 2003 net profit) 

– Change in revaluation difference . . . . . . . . . . . . . . . . . . . . . . . . . . . (64.4) (112.0) (100.7) 

– Transfer to reserves and change in retained earnings . . . . . . . . . . . 1,949.4 82,864.1 120,356.9 

– Change in revaluation reserve and special tax-allowable reserves . . . 2,860.1 6,132.2 9,860.3 

– New shares issued upon exercise of stock options . . . . . . . . . . . . . 13,983.1 8,845.4 18,547.5 

– Capital reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (255,037.1) – 

– Integration of Charterhouse, Webroker and Selectbourse . . . . . . . – 146,569.8 – 

CHANGE IN SHAREHOLDERS’ FUNDS . . . . . . . . . . . . . . . . . . . 18,728.2 (10,737.6) 148,664.0 

– Per share (in euros) 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 (0.2) 2.0 

(based on number of shares outstanding at year end, excluding 

own shares held) 

PROPOSED DIVIDEND 

– Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464,687.9 537,348.7 422,294.3 

– Per share (in euros) 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.25 7.25 5.60 

1 Number of shares outstanding at year end (excluding own shares held): 74,350,066 in 2003, 74,117,066 in 2002, and 75,409,701 

in 2001. 

2 Based on the weighted average number of shares outstanding (excluding own shares held), net earnings per share amounts to €6.29 

in 2003 (74,129,833 shares), €8.28 in 2002 (74,928,199 shares), €7.23 in 2001 (75,019,102 shares). 

93



Appropriation of net profit 

(article 295 of Decree no. 67-236, 23 March 1967) 

(in € thousands) 31.12.2003 31.12.2002 31.12.2001 


Sums available for distribution 

– Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,035 136,171 16,074 

Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,035 136,171 16,074 

– Net profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,637 620,213 542,651 

TOTAL (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

685,672 

dddddd 

756,384 

dddddd 

558,725 


Appropriation of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

– Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464,688 537,349 422,294 

– Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 260 

TOTAL (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

464,688 

dddddd 

537,349 

dddddd 

422,554 

RETAINED EARNINGS (a - b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

ffffff 

220,984 

ffffff 

219,035 

ffffff 

136,171 


94

Five-year highlights 

(articles 133 and 148 of the decree of 23 March 1967 on commercial companies) 

(in € thousands) 2003 2002 2001 2000 1999 

dddddd dddddd dddddd dddddd dddddd 

Share capital at year end 

Called up share capital . . . . . . . . . . . . 371,750 b 370,585 a 377,048 b 374,445 b 369,344 c 

Number of shares outstanding . . . . . . 74,350,066 74,117,066 75,409,701 74,888,902 73,868,858 

Nominal value of shares in euros . . . . 5 5 5 5 5 


Results of operations for the year 

Gross operating income . . . . . . . . . . . 3,076,321 3,727,332 3,748,256 4,708,415 4,583,748 

Profit before tax, depreciation 

and provisions . . . . . . . . . . . . . . . . . 633,284 729,661 659,241 358,957 485,425 

Profit after tax, depreciation 

and provisions . . . . . . . . . . . . . . . . . 466,637 620,213 542,651 287,302 237,589 


Per share data 

(in €) 

Profit after tax, but before depreciation 

and provisions . . . . . . . . . . . . . . . . . €9.3 €10.0 €8.3 €4.2 €6.0 

Profit after tax, depreciation 

and provisions . . . . . . . . . . . . . . . . . €6.3 €8.4 €7.2 €3.8 €3.2 

Dividend paid per ordinary share, 

eligible as of 1 st January . . . . . . . . . €6.25 €7.25 €5.6 €4.1 €2.2 


Employees (France) 

Number of employees d . . . . . . . . . . . 6,997 6,742 g 6,313 6,282 f 5,998 

Average number of employees 

(excluding employees available) . . . 6,847 e 6,651 e – – – 

Salaries and wages . . . . . . . . . . . . . . . 288,738 269,528 236,672 224,556 215,374 

Employee benefits . . . . . . . . . . . . . . . . 123,398 112,008 104,433 98,006 98,413 

Payroll and other taxes . . . . . . . . . . . . 34,711 30,923 22,176 20,838 19,888 

Incentive schemes and/or employee 

profit-sharing plan h . . . . . . . . . . . . 19,619 22,396 17,369 20,199 12,135 


a Capital reduction of €7.6 million pursuant to cancellation of own shares and capital increase of €1.1 million pursuant to the exercise of 

share options. 

b Capital increases pursuant to the exercise of share options. 

c The share capital was converted on the basis of a nominal value of €5 per share. The impact of adjusting the nominal value of the shares 

to €5 was deducted from reserves. Other capital increases pursuant to the exercise of share options and employee share offerings, and a 

capital reduction pursuant to cancellation of own shares. 

d Banking status’ employees, registered as at 31 December of each year. 

e Of which 3,689 executives and 3,158 non executives in 2003. Of which 3,263 executives and 3,388 non executives in 2002. 

f Figures for 2000 are not comparable with those of 1999, due to the disposal of the electronic payments systems business and the 

integration of HSBC Bank plc Paris Branch employees. 

g Figures for 2002 are not comparable with those of 2001, due to the integration within CCF of HSBC Investment Bank, Selectbourse, 

Webroker and eleven Banque Worms branches. 

h Based on previous year’s profits. 

95



List of equity shares and debt securities held at 31 December 2003 

Held-to maturity, available-for-sale and trading securities 


A – Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,462,849 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,462,849 

Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,297 

Other public sector securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,638,212 

Money market instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Negotiable medium-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Bonds and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399,823 

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,517 

B – Available-for-sale and trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173,739 

Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087,255 

Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Other public sector securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,781 

Money market instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,449 

Negotiable medium-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,351 

Bonds and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835,861 

Negotiable medium-term notes issued by banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,813 

Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,484 

Equity shares and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,228 

Mutual fund units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,256 

TOTAL HELD-TO-MATURITY, AVAILABLE-FOR-SALE AND TRADING SECURITIES 

dddddd 

4,636,588 

ffffff 

96

List of equity shares and debt securities held at 31 December 2003 (continued) 

Interests in associates, other participating interests and long-term securities 


A – Other participating interests and long-term securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,047,526 

Securities listed on a recognised French exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,797 

Unlisted French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,265 

Foreign securities listed on a recognised French exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,476 

Foreign securities listed elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,002 

Unlisted foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953,986 

Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

B – Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,722,993 

Listed French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Unlisted French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,618,754 

Listed foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 

Unlisted foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,104,234 

Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

TOTAL INTERESTS IN ASSOCIATES, OTHER PARTICIPATING INTERESTS 

AND LONG-TERM SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

3,770,519 

ffffff 

97



Interests in subsidiaries and associates at 31 December 2003 

(as required under articles 247 and 295 of the 23 March 1967 decree on commercial companies) 

Reserves 

+ retained 

earnings 

before Ownership 

Share appropriation interest 

Companies Business capital of net profit % 


(In thousand of currency units) 

A – Companies whose book value at cost 

exceeds 1% of CCF’s share capital 

1 – Subsidiaries (over 50%) 

Banque Hervet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank €16,805 €163,440 97.90 

1, place de la Sous-Préfecture - 18000 Bourges (France) 

CCF Holding (Suisse) . . . . . . . . . . . . . . . . . . . . . . . . . Financial co. CHF186,041 CHF266,718 100.00 

1, place Longemalle - Geneva (Switzerland) 

Crédit Commercial du Sud-Ouest . . . . . . . . . . . . . . . Bank €11,849 €35,978 99.50 

17, allée James Watt - Parc Chemin-Long 

33700 Mérignac (France) 

Société Française et Suisse . . . . . . . . . . . . . . . . . . . . . Investment €45,658 €(45,674) 100.00 

64, rue Galilée - 75008 Paris (France) company 

Société Parisienne de Participations . . . . . . . . . . . . . . Investment €72,282 €92,814 100.00 


Banque de Savoie . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank €6,611 €33,214 99,96 

6, bd du Théâtre - 73000 Chambéry (France) 

Banque de Picardie . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank €6,007 €17,303 100.00 

3, rue de la Sous-Préfecture - 60200 Compiègne (France) 

Union des Banques à Paris . . . . . . . . . . . . . . . . . . . . . Bank €51,709 €40,284 99.44 

22, place de la Madeleine - 75008 Paris (France) 

HSBC CCF Asset Management Holding . . . . . . . . . Investment €47,990 €112,396 97.92 

4, place de la Pyramide - 92800 Puteaux (France) company 

Participationes y Financiacions S.A. . . . . . . . . . . . . . Service €23,571 €(1,600) 100.00 

Paseo de la Castellana, Madrid (Spain) 

company 

Nobel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment €128,468 €162,301 100.00 


HSBC CCF Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . Finance €13,050 €9,448 100.00 

39, rue Bassano - 75008 Paris (France) company 

1 Loans, advances and guarantees granted outside the framework of normal banking business. 

2 Net operating income in the case of banks. 

98

Dividends 

Book value Loan and received by 

of securities held advances Guarantees Prior-year CCF in the 

dddddddddddddd granted by given by Prior-year net profit last financial 

Cost Net CCF 1 CCF 1 sales 2 or loss year Comments 

dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd 

€518,001 €518,001 – – €169,873 €53,367 €44,440 – 

€590,421 €590,421 – – CHF57,123 CHF117,487 €25,979 – 

€14,539 €14,539 – – €56,006 €11,976 €7,588 – 

€48,380 – €26,00 – €1,696 €(3,558) – – 

CHF 89,353 

€82,727 €82,727 – – €3,633 €5,913 – – 

€26,847 €26,847 – – €44,357 €10,901 – – 

€18,939 €18,939 – – €22,190 €5,747 €4,565 – 

€105,123 €105,123 – – €150,704 €35,835 €27,316 – 

€126,172 €126,172 – – €32,257 €25,336 €7,930 Interim 

€19,090 dividend 

€22,320 €22,320 – – – €439 – – 

€207,647 €207,647 – – €16,709 €17,676 €5,620 – 

€13,046 €13,046 – – €(9,056) €(4,659) – – 

99



Reserves 

+ retained 

earnings 






Société Financière et Mobilière . . . . . . . . . . . . . . . . . Finance €40,000 €49,906 100.00 

103, avenue des Champs-Elysées - 75008 Paris (France) company 

Cie Financière des Iles-du-Rhône . . . . . . . . . . . . . . . Investment €15,494 €121,938 99.49 


Foncière Elysées SA . . . . . . . . . . . . . . . . . . . . . . . . . . Property €14,403 €26,400 100.00 


HSBC CCF Securities . . . . . . . . . . . . . . . . . . . . . . . . Finance €12,626 €22,906 100.00 


Vernet Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment €5,955 €5,255 100.00 

14, rue Vernet - 75008 Paris (France) company 

Société Immobilière Malesherbes Anjou . . . . . . . . . . Property €13,412 €4,752 100.00 


Charterhouse Management Services Ltd . . . . . . . . . . Investment GBP325,711 GBP19,668 100.00 

8, Canada Square - London (United Kingdom) company 

Elyfinance Corporation BV . . . . . . . . . . . . . . . . . . . . Investment €9,076 €(8,783) 100.00 

P.O. Box 2838-1077 - Amsterdam (Netherlands) company 

SAGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment €190 €2,849 100.00 


Eurimob . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Service €8,362 €(13,928) 100.00 


* Not available 



100

Dividends 






€84,053 €84,053 – – €8,319 €263 – – 

€119,108 €119,108 – – €42,250 €7,390 €16,570 Interim 

€34,681 dividend 

€44,476 €41,743 – – €4,074 €2,973 – – 

€55,988 €55,988 – – €19,641 €(8,024) – 

€6,018 €5,421 – – €1 €(16) – – 

€49,386 €49,386 €1.021 – €10,205 €1,012 – – 

€489,543 €489,543 – – – GBP29,911 GBP44,333 – 

€9,076 €293 – – €5 €(11) – as at 

24.12.03 prior 

to liquidation 

€10,054 €10,054 – – €1,281 €9,036 – – 

€8,362 – – – N/A* N/A* – Sold on 

5.02.04 

101



Reserves 

+ retained 

earnings 






2 – Associated companies (10-50%) 

Immobilier Elybail . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance €14,550 €2,747 50.00 


Erisa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance €65,000 €158,213 33.85 


Erisa Iard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance €7,500 €(1,254) 49.98 


HSBC Private Bank France . . . . . . . . . . . . . . . . . . . . Bank €47,993 €174,183 24.52 

20, place Vendôme - 75001 Paris (France) 

Aurel Leven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – €10,085 €12,248 14.68 

29, rue de Berri - 75008 Paris (France) 

Banian Invesments UK . . . . . . . . . . . . . . . . . . . . . . . . – GBP900 GBP899,137 19.00 

22, Grenville Street, St Helier, 

Jersey JE4 8PX, Channel Islands 

V.E.A. Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – GBP2,450 GBP352,800 19.00 

Ground Floor, Lancaster Court, Forest Lane 

St Peter Port, Guernsey, Channel Island 

Inter Pacific Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank N/A* N/A* 12.14 

Wisma Metropolitan II 8 and 9 floor 

Jalan jenderal Surdiman 

12920 Jakarta (Indonesia) 

B – Aggregate data concerning companies 

whose book value at cost does not exceed 1% 

of CCF’s share capital 

1 – Subsidiaries not included in paragraph 1 

a) French subsidiaries (aggregated) . . . . . . . . .... – – – – 

b) Foreign subsidiaries (aggregated) . . . . . . ..... – – – – 

2 – Associated companies not included in paragraph 2 

a) French companies (aggregated) . . . . . . . . . . . . – – – – 

b) Foreign companies (aggregated) . . . . . . . . . . . . – – – – 

* Not available 



102

Dividends 






€7,273 €7,273 – – €4,265 €1,780 – – 

€18,883 €18,883 – – €1,202,744 €19,810 €339 – 

€3,727 €3,090 – – €21,292 €68 – – 

€107,213 €107,213 – – €81,161 €11,541 – – 

€4,131 – – – N/A* €(239) – – 

€425,653 €425,653 – – – GBP 478 €19,659 – 

€283,485 €283,485 – – – GBP 415 €12,288 – 

€16,101 €396 – – N/A* N/A* – Sold 

on 5.2.04 

€5,509 €3,218 €662 – – – – 

€1,899 €1,655 – – – – €58,501 – 

€72,996 €59,925 – – – – €1,578 – 

€283,218 €278,090 – – – – €30,921 – 

103


Summary of business activities of CCF’s principal subsidiaries 

COMPANIES COMMENTS (In € thousands) Total assets 

Retail and commercial banking 


2003 2002 

dddddd 

dddddd 

Banque Hervet Banque Hervet is principally involved in retail banking for personal and business 3,873,447 4,647,083 

customers, with a network of 85 branches, chiefly in Paris and the Centre region of 

France. In 2003, net operating income rose by 4.9 per cent to €208.8 million. Net 

operating income from business customers rose by 5.5 per cent, driven by strong 

growth in fee income from banking services, buoyant commissions on mutual funds 

sales and growth in non-interest bearing deposits. Net operating income from personal 

customers rose by 3.2 per cent, with a very strong second half driven by sharp 

growth in mortgage lending and a satisfactory increase in fee income from banking 

services, despite a decline in financial commissions. 

Due to tight cost control, operating costs were down by 2.9 per cent. The cost-income 

ratio therefore fell to 61.0 per cent, an improvement of 4.9 percentage points on the 

previous year. Excluding exceptional items, operating costs were down 0.8 per cent. 

Net profit was up 10.9 per cent to €56.9 million. 

Société SMC delivered further good results in 2003. Total customer assets increased by 7 per 3,287,671 3,407,762 

Marseillaise cent and customer loans and advances by 5.4 per cent, driven by 23.8 per cent growth 

de Crédit in new lending compared with 2002. However, net operating income was up by only 

1.9 per cent, due to the competition between banks over lending margins. Operating 

costs were down by 1.8 per cent, leading to a 9.1 per cent increase in operating 

profit before provisions. The cost:income ratio fell by almost two percentage points 

to 65 per cent. SMC continued to focus on recruitment and investment in training 

and commercial tools, which will underpin its growth in future years. 

UBP 2003 was affected by the sharp slowdown in business activity among middle market 1,870,885 1,890,317 

and small business customers in the Paris region, especially during the second half 

of the year. Consequently, demand for short-term credit was down sharply and 

payment volumes slumped. Activity in personal banking was buoyant, driven by 

positive trends in the mortgage market. Mortgage lending increased for the third 

consecutive year. 

Earnings growth slowed in this challenging climate. Net banking income increased 

by 1.1 per cent and operating profit before provisions by 3.8 per cent, excluding 

changes in the classification and provisioning of doubtful debts. Taking account of 

these legal changes, net banking income fell by 1.3 per cent and operating profit 

before provisions by 2.3 per cent. The loss rate increased due to difficulties encountered 

by one major branch. Net profit increased by 3.1 per cent, after a write-back of 

€5.5 million from the provision for sector risks and €6.9 million from the available 

reserve for general banking risks. 

CCSO Despite the slack financial markets, which had an adverse impact on fee income, net 689,018 728,337 

operating income nonetheless increased by 8.15 per cent, driven by sharp growth in 

customer loans and advances. Operating profit before provisions rose by 11.8 per 

cent, despite a rise in operating costs following the initial expenses connected with 

migration of its information systems facilities management. Combined with a relatively 

low provision charge, these factors resulted in a 25.9 per cent increase in net 

profit to €11.98 million. 

Banque Banque de Picardie had an excellent year in 2003, delivering 21 per cent growth in 254,891 232,752 

de Picardie net profit despite the challenging regional economic conditions. Net operating 

income increased by 10.9 per cent, driven by a strong commercial performance. 

Coupled with a decrease in operating costs, this led to growth of 31.6 per cent in 

operating profit before provisions. 

Banque Banque de Savoie turned in an excellent performance in 2003, comfortably ahead of 756,005 753,868 

de Savoie** its targets. As a result of strong growth in both deposits and loans, net operating 

income increased by 12.70 per cent to €44.36 million. Tight cost control led to a 

further improvement in the cost:income ratio, to 58.5 per cent, while operating 

profit before provisions rose by 31.2 per cent to €18.21 million. 

Banque Chaix Despite the poor economic and financial climate, Banque Chaix posted 14.7 per cent 1,072,259 1,029,108 

growth in net operating income to €75 million. Customer loans rose by 6.4 per cent 

to €593.3 million, due principally to business lending. Deposits were up 8.5 per cent 

to €912.3 million. This good commercial performance was driven by new product 

launches, the introduction of account agreements for personal customers, and 

recruitment of new staff in high potential areas. Tight cost control led to a 26.2 per 

cent increase in operating profit before provisions, to €41.6 million. Net profit 

amounted to €24.7 million, an increase of 36 per cent over 2002. 

104

Shareholders’ funds* Attributable net profit CCF group’s percentage holding 


2003 2002 


2003 2002 


2003 2002 

dddddd dddddd dddddd dddddd dddddd dddddd 

260,165 255,103 56,873 51,306 97.9 100.0 

254,328 225,078 86,777 49,334 100.0 100.0 

101,153 101,809 35,835 33,741 100.0 100.0 

61,627 56,092 11,976 9,515 100.0 100.0 

24,272 24,102 5,748 4,749 100.0 100.0 

49,424 39,321 10,901 10,251 100.0 98.2 

71,407 73,473 24,746 18,181 100.0 100.0 

105


Summary of business activities of CCF’s principal subsidiaries (continued) 

COMPANIES COMMENTS (In € thousands) Total assets Shareholders’ funds* 


Retail and commercial banking (continued) 2003 2002 

dddddd 

dddddd 

Banque Marze 2003 was a good year for Banque Marze. Deposits rose by 5.4 per cent, long-term 156,057 145,707 

savings by 4.3 per cent, and loans by 6 per cent. Net operating income therefore 

increased by 9.3 per cent despite a 2 per cent fall in fee income. The cost:income 

ratio improved from 58.2 per cent to 51 per cent. However, net profit decreased 

sharply to €1.58 million due to an increase in provisions. 

Banque Banque Pelletier is a regional bank based in Dax in south west France, with branches 207,14 189,373 

Pelletier in the triangle between Bordeaux, Pau and Bayonne. Customer loans and advances 

rose sharply, driven by a 19 per cent increase in medium and long-term lending. 

Sight deposits increased by 5 per cent and special regulated savings accounts by 

7.2 per cent. Consequently, net operating income rose by 14.2 per cent to €12.4 million. 

Banque Dupuy, 2003 was a good year, driven by a relatively strong regional economy. Deposits 471,226 431,730 

de Parseval increased by 9.6 per cent and total customer assets managed by 6.9 per cent. Net 

operating income was up 9.7 per cent and by 13.42 per cent excluding non-recurring 

items. As a result of tight control over operating costs (up 1.4 per cent) and provisions, 

net profit rose by 42.9 per cent and 27 per cent excluding exceptional items. 

Netvalor Netvalor is CCF’s consumer finance subsidiary, created in April 2000. It continued 231,848 173,287 

to grow rapidly in 2003 both in online credit, with 123crédit.com, which is the leader 

in its sector, and through numerous partnerships. Netvalor now has 50,000 customers, 

a rise of 67 per cent on the previous year. Net operating income doubled compared 

with 2002, to over €14 million. Strict control over costs pushed the cost:income ratio 

down to 68 per cent, which, coupled with a reduction in provisions, contained 

the net loss to €6 million. A continuation of these trends should lead to a further 

significant improvement in results in 2004. 

Elysées Factor CCF’s factoring specialist reported 4.5 per cent growth in business in 2003 in a fairly 167,613 153,400 

slack market. Net operating income amounted to €9 million while net operating 

profit increased by 9 per cent to €1.2 million due to a decrease in provisions. 

A strong commercial drive should ensure robust business growth in 2004. 

Corporate and Investment banking and markets 

HSBC CCF Supported by improved market conditions, HSBC CCF Securities consolidated on 120,835 1,586,034 

Securities its positions in the equity markets. Growth in its pan-European products accelerated 

France (SA) sharply. The equity derivatives business proved relatively robust in difficult market 

conditions. It also continued its integration with the HSBC Group, becoming the 

Group’s European trading platform. 

Asset management and Private banking 

HSBC Asset HSBC AM Europe SA is one of HSBC AM’s major world business units, covering 83,834 71,855 

Management the whole of continental Europe. Business continued to expand, with new local 

(Europe) SA operations opening in Italy and Sweden. HSBC AM Europe SA has refocused 

its offering and extended its capability to include HSBC AM’s expertise, both by 

enriching the range offered by the world umbrella fund HSBC GIF in April 2003, 

and through the creation of new high-performance funds geared to corporate 

investors. It has also developed expertise in socially responsible investment, which 

proved highly popular with first-class institutional investors. Assets managed and 

distributed amounted to €31.1 billion, an increase of 14.72 per cent over the year. 

Net operating income rose by 4 per cent, from €53.83 million to €55.950 million, 

while operating profit before provisions increased by 10.65 per cent. 

Framlington 2003 was an eventful year for both the world’s stock markets and for Framlington. 63,770 51,188 

Group** Stock markets plunged to their lows in March before staging a substantial and 

consistent recovery. Framlington remained profitable throughout the year, which is 

testimony to the strength of cost control within the group. The rebound in the stock 

market and some excellent fund performance meant that Framlington achieved a 

pre-tax profit of GBP 6 million for the year. 

Sinopia** In 2003, Sinopia ranked among the leading quantitative investment specialists in 256,759 280,619 

Europe. Its offering is particularly well suited to the current climate of risk aversion, 

through its broad array of capital guaranteed and structured products, low volatility 

alternative funds and inflation-linked bond products. Sinopia’s equity offering 

stands out for its currency-hedged products and products which provide attractive 

opportunities for investment diversification, such as sector funds and European 

growth and value funds. Sinopia’s strategies and products also made a major breakthrough 

within the HSBC Group during 2003. All in all, it was a year of strong 

growth with an increase of over 70 per cent in assets under management. 

106

Attributable net profitCCF group’s percentage holding 


2003 2002 


2003 2002 


2003 2002 


9,839 9,833 1,582 2,359 100.0 100.0 

11,831 9,403 1,582 2,588 100.0 100.0 

21,371 20,177 9,286 6,498 100.0 100.0 

17,293 16,111 (6,078) (6,819) 100.0 100.0 

6,269 5,568 719 701 66.0 66.0 

35,532 40,209 8,024 (4,677) 100.0 100.0 

56,841 39,799 8,748 7,577 100.0 100.0 

34,918 29,728 6,037 9,461 51.0 51.0 

43,637 46,004 4,563 3,925 99.9 99.9 

107


Summary of business activities of CCF’s principal subsidiaries (continued) 

COMPANIES COMMENTS (In € thousands) Total assets 

Asset management and private banking (continued) 


2003 2002 

dddddd 

dddddd 

Erisa Premium income increased by 4 per cent to €1.2 billion. Assets under management 9,106,160 8,269,221 

rose by 9 per cent to €8.6 billion at end 2003, compared with €7.8 billion one year 

earlier, driven by growth in business and an improvement in the stock markets. As 

a result of these much improved conditions, coupled with a reduction in provisions 

against equity investments, net profit amounted to €19.8 million compared with 

€10.5 million in 2002. 

HSBC CCF The CCF group has reorganised its employee savings business. On 1 st January 2004, 56,040 50,495 

Epargne HSBC CCF Epargne Entreprise became the group’s wholly-owned subsidiary and 

Entreprise specialist in employee savings, drawing on the expertise of HSBC Asset Management 

(Europe) SA for its asset management needs. It has 7,500 corporate clients and 

manages 825,000 employee savings accounts. Assets under management increased 

by 15 per cent to €2.8 billion in 2003. The CCF group has also combined the 

business development teams of Erisa and HSBC CCF Epargne Entreprise, with the 

aim of promoting a global offering covering all employee savings products, and 

particularly group retirement plans. 

HSBC During 2003, the CCF group combined its four private banking subsidiaries (Banque 1,662,734 560,562 

Private Bank Eurofin, Banque du Louvre, HSBC Bank France and CCF Banque Privée Internationale) 

France to create HSBC Private Bank France, a powerful new player in the French private 

banking market. It is one the first private banking unit in the HSBC Group to operate 

under the HSBC Private Bank brand. It has three target customer groups: resident 

clients, international non-resident clients and institutional clients. Its offering covers 

all aspects of private and business wealth management in France and abroad, with 

tailored proposals for institutional clients. HSBC Private Bank France draws on the 

expertise of its subsidiary, Louvre Gestion, which is acknowledged in the market 

for its expertise in fund selection, fund management and multi-manager funds. 

HSBC Despite a difficult economic climate, HSBC Dewaay’s private banking business continued 309,118 325,423 

Dewaay SA to grow, with an increase of more than 7 per cent in assets under management. The 

bank adopted the name HSBC Dewaay SA on 1 st January 2004 to underline its 

membership of the HSBC Group. 

Own investment 

SFS The composition of SFS’s portfolio remained unchanged in 2003. But the net book 84,618 107,955 

value has been reduced by a small provision, related to the negative trend of equity 

markets. 

Foncière In 2003, Foncière Elysées reported growth in net profit, despite impairment provisions 51,913 50,141 

Elysées SA for certain assets. Operating results were satisfactory. This performance reflects the 

Group’s overall policy in the property market, which consists of developing its 

property leasing activities with major customers, and maintaining and developing 

its property management services. 

Immobilier This company provides property leasing for the Group’s large corporate customers. 475,064 409,686 

Elybail First founded in 2000, growth has continued apace since then. Cumulative new 

lending to 31 December 2003 amounted to €540 million. Net profit was down on 

the previous year due to the postponement to 2004 of certain contracts originally 

scheduled for 2003 and the absence of fee income on arrangement deals. In the 

coming years, Immobilier Elybail will expand its business in the eurozone and 

strengthen its equity base. 

Nobel Nobel is a holding company for the Group’s own investments. Its investment strategy 405,978 303,196 

focuses principally on mid caps and private equity funds. 

The extremely volatile stock market conditions in 2003 provided the opportunity to 

acquire some major holdings in listed companies at very attractive prices, principally 

in the technology sector. Nobel also maintains close relationships with several private 

equity funds. The year’s results were good, supported by a highly selective investment 

approach. 

* Comprising share capital + reserves + RGBR. 

** Consolidated data. 

108

Shareholders’ funds* Attributable net profit CCF group’s percentage holding 


2003 2002 


2003 2002 


2003 2002 


223,213 213,259 19,810 10,499 50.0 50.0 

19,151 9,146 (1,316) 2,696 100.0 100.0 

230,122 101,250 11,541 17,026 94.8 100.0 

30,593 32,485 (279) 9,037 100.0 100.0 

(15) 40,241 (3,558) (40,256) 100.0 100.0 

37,470 36,838 2,973 1,802 100.0 100.0 

15,517 13,194 1,780 2,051 100.0 100.0 

290,768 217,876 17,676 17,830 100.0 100.0 

109


Investment policy 

1999 

– Acquisition of 23 per cent of Banque de Picardie 

via a cash offer followed by a squeeze-out made by 

CSF, a subsidiary of CCF. Banque de Picardie is 

now a wholly-owned subsidiary of CCF. 

Cost: FFr65 million. 

– Acquisition of MMA’s 45 per cent holding in 

Elymans, giving CCF a 96 per cent interest in 

Loxxia via Elymans and SPP. 

Cost: FFr183.8 million. 

– Creation of Netvalor, wholly-owned by SPP. 

Cost: FFr56 million via a partial call on capital. 

– Creation of WeBroker, wholly-owned by CCF. 


– Creation of Selectbourse, 80 per cent-owned by 

CCF Securities. 

Cost: FFr15 million (first investment tranche). 

– Acquisition of BNE’s shares in Crédit International 

d’Egypte, raising CCF’s holding to 75 per cent. 


– Acquisition by CCF Charterhouse plc of 95 per 

cent of Themis Investment Mgt Ltd. 

– Acquisition by CCF Holding Suisse of 33 per cent 

of Gesconsult. 

– Increase in CCF’s holding in Banque Eurofin to 74 

per cent via CCF Banque Privée International, in 

exchange for the transfer of CCF-BPI’s “resident” 

customer portfolio. 


– Acquisition of 1 per cent of Crédit Lyonnais on 

the occasion of its privatisation. 


– Disposal of CCF’s holding in BHF Bank on the 

occasion of the cash offer made by ING. 

Proceeds: FFr515 million. 

– Acquisition by CSF of 2 per cent of Rentenanstalt 

from UBS. 

Cost: CHF227 million. 

– Acquisition of 3 per cent of Crédit Logement. 


– Tender of Seita shares under the share exchange 

offer and reinvestment in Altadis shares, giving 

CCF a 1 per cent holding. 

Net additional cost: FFr328 million. 

2000 

– Acquisition of Banque Pelletier by Compagnie 

Financière de la Garonne et de l’Adour. 

Cost: €18.3 million. 

– Rights issue made by Compagnie Financière de la 

Garonne et de l’Adour to recapitalise Banque 

Pelletier. 


– Rights issue made by Compagnie Financière des 

Iles du Rhône, a holding company owning 98 per 

cent of SMC, to pay the French government the 

additional acquisition price for SMC. 

Cost in 2000: €58.4 million. 

– Pooling of the leasing activities of CCF and Crédit 

Lyonnais through a merger of their respective subsidiaries 

Loxxia and Slibail. CCF owns 50 per cent 

of the new group via Elymans and Société 

Parisienne de Participations. 

– Rights issue made by WeBroker, a subsidiary 

of CCF. 


– Capital increase made by Netvalor following a final 

call on unpaid capital. 


– Disposal of Charterhouse Securities in London to 

ING as part of CCF’s integration into the HSBC 

Group. 

Proceeds: GBP127.4 million. 

– Increase in CCF’s holding in Banque du Louvre 

from 50.8 per cent to 83.3 per cent via three subsidiaries, 

CCF Holding (Suisse) SA, CCF Partners 

Asset Management and CCF Charterhouse 

European Holding. 

Cost in 2000: €40.4 million. 

– Creation of Compagnie de Gestion de Patrimoine 

(CGP), owned by CCF Holding Suisse SA. 

Cost: €15 million. 

– Creation of Be-Partner, wholly-owned by HSBC 

CCF Asset Management Group. 


– Creation of a joint venture called CCF-SEI 

Investments by HSBC CCF Asset Management 

Group, a subsidiary of the CCF group, and SEI. 


110

– Disposal of CCF’s 33.4 per cent holding in Banque 

Harwanne. 

Proceeds: €17 million. 

– Disposal of CCF’s 26.5 per cent holding in Accord. 

Proceeds: €13.6 million. 

– Disposal of CCF’s 44.9 per cent holding in Sofidep. 


2001 

– Acquisition of 97.9 per cent of Banque Hervet. 


– Transfer of Crédival Latinsul to HSBC Latin 

America BV. 


– Disposal of CCF’s 93.3 per cent holding in Crédit 

International d’Egypte to Crédit Agricole Indosuez. 


– Disposal of CCF’s 33.3 per cent holding in 

Gesconsult and 2.6 per cent holding in Finconsult 

to their respective partners. 


– Acquisition of HSBC Securities (France) SA. 


– Transfer of CCF Italy’s corporate finance, treasury 

and private banking activities to HSBC 

Republic Italy. 


– Acquisition by CCF Holding Suisse of the remaining 

42.76 per cent minority interests in Primecorp. 


– Acquisition by CCF of the remaining 25.1 per cent 

minority interests in Banque Dewaay. 


– Disposal to the KBL group of Teaside Business 

SA, which owned a building in the Principality of 

Monaco. 


– Transfer of CCF’s private banking activities in 

Switzerland (Handelsfinanz Geneva and CCF 

Switzerland), Monaco and Luxembourg, together 

with Handelsfinanz Nassau, to HSBC Private 

Banking Holdings (Switzerland) SA (PBSU), in 

exchange for shares in PBSU, and acquisition of 8 

per cent of HSBC Guyerzeller Bank SA (HGZB). 

Cost: €364 million (excluding PBSU shares received). 

– Disposal of the 20.3 per cent holding in Quilter 

Holdings Group owned by CCF Holdings (UK) 

to Morgan Stanley. 


– Acquisition by HSBC CCF AMG of the shares in 

Sinopia owned by KBC Group, BBVA Group and 

Mellon Group, raising its holding from 60.4 per 

cent to 76.7 per cent, launch of a simplified cash 

offer and squeeze-out for the remaining shares still 

owned by the general public. 


– Acquisition of shares issued by Euroclear Holding 

on the occasion of the merger between Euroclear 

and Sicovam. 


– Subscription to the rights issue made by the Lafarge 

group on the occasion of its bid for Blue Circle and 

payment of a scrip dividend. 


– Acquisition by Malesherbes Anjou of the Avenue II 

property complex located in Nanterre. 


– Acquisition by CCF Partners Asset Management Ltd. 

and CCF Charterhouse European Holding Ltd. of 

the shares in Banque du Louvre owned by the 

employees, raising CCF’s holding to 86.5 per cent. 


2002 

– Disposal of 50 per cent stake in Lixxbail (formerly 

Loxxia) to Crédit Lyonnais. 

Proceeds: €160 million. 

– Disposal of 25 per cent stake in Financo to Crédit 

Mutuel de Bretagne. 


– Subscription to the rights issue made by Netvalor 


– Disposal of HSIL, a subsidiary specialising in 

the management of property assets, property 

funds and privatisation funds, to HSBC Asset 

Management. 


– Disposal of 21.74 per cent stake in Lombard Bank. 


111


Investment policy (continued) 

– Disposal of CCF Immo, a mortgage lending subsidiary. 

Proceeds: CHF5 million. 

– Disposal of 49 per cent stake in Myriade, an investment 

company. 

Proceeds: CAD22 million. 

– Subscription to rights issue made by Erisa IARD. 


– Disposal of Cedel International shares to Deutsche 

Börse. 


– Acquisition of HSBC Republic Bank France SA 

by CSML. 


– Disposal of CCF SEI Investment to SEI 

Investment Company. 


– Subscription to capital increase made by 

Immobilier Elybail following a call for the remaining 

unpaid capital. 


– Disposal of CCF Eurozone Italy (8 Italian 

branches) to Banca Immobiliare. 


– Subscription by SFS to rights issue made by Swiss 

Life. 


2003 

– Acquisition by Elysées Gestion of the part of the 

capital of Elysées Fonds held by Médéric and 

Malakoff (49 per cent) and disposal by Elysées 

Fonds to Médéric of a part of its activity. 

Cost : €14 million. 

Disposal : €2 million. 

– Acquisition of 3 per cent of Société Marseillaise 

de Crédit. 

Cost : €13.1 million. 

– Acquisition of Société des Cadres de la Banque 

Eurofin and of other minority interests of Banque 

Eurofin. 


– Subscription to capital increases made by Netvalor. 


– Subscription by HSBC CCF Asset Management 

Holding to capital increase made by HSBC CCF 

Epargne Entreprise. 


– Disposal of Altadis shares. 

Disposal : €29.5 million. 

– Disposal by HSBC CCF Securities of a stake in 

Euronext. 


– Disposal of HSBC CCF Asset Management 

Holding of HSBC Multimanager subsidiaries to 

HSBC Multimanager Ltd. 


– Disposal of 40 per cent of group CCF’s stake in 

Société de la Tour Eiffel. 


– Disposal of Crédit Lyonnais shares. 

Disposal : €45 million. 

– Subscription to capital increases made by Crédit 

Logement. 


112


CCF group offices 

CCF’s main offices are located on the Champs-Elysées, the “Ile-de-France”, “Coeur Défense” and “Collines Sud” 

sites at La Défense, the “Avenue II” and “Crystal” sites at Nanterre and the information processing centre at Lognes. 

CCF also has a network of 218 branches and offices throughout France, including 102 in Paris and the suburbs. 

The group’s principal regional banks in France are: 

Banque Chaix (south east France): 66 branches 

Banque Dupuy, de Parseval (south east France): 46 branches 

Banque Hervet (Paris region and central France): 85 branches 

Banque de Baecque Beau : 1 branch 

Banque Marze (south east France): 10 branches 

Banque Pelletier (south west France): 11 branches 

Banque de Picardie (northern France): 16 branches 

Banque de Savoie (Rhône-Alpes region): 55 branches 

Crédit Commercial du Sud-Ouest (south west France): 54 branches 

Société Marseillaise de Crédit: 157 branches 

Union de Banques à Paris (Paris region): 55 branches 

113


Other legal documents relating to the Annual General Meeting of shareholders 

Agreements governed by Article L. 225-38 of the Code of Commerce 

Article L. 235-38 of the French Commercial Code requires that any agreement entered into directly or indirectly 

between a company and one of its Directors or senior executives, or between a company and one of its shareholders 

owning at least 10% of the voting rights, or, in the case of a corporate shareholder, the company which controls 

it, must first be authorised by the Board of Directors and subsequently approved at the annual general meeting of 

shareholders. It also prohibits certain types of agreement between those parties, such as loans or guarantees. 

Agreements entered into during 2003 

The following agreements subject to the provisions of Article L. 235-38 of the French Commercial Code were submitted 

to the Board of Directors for approval during 2003: 

– Acquisition by CCF of the business developed by Selectbourse, which is subject to a special agreement with 

HSBC CCF Securities concerning account holding, custody and order execution on behalf of Selectbourse 

clients. The value assigned to this business is €50,000. 

– Agreement with HSBC Holdings plc for the provision of central support services. Amounts invoiced during 

2001 and 2002 totalled USD5.3 million. An agreement was entered into under the terms of which HSBC 

Holdings plc will provide CCF with central support services. The Directors concerned are Charles de Croisset 

and Stephen Green. 

– Agreement with HSBC Bank for the provision of services for the CCF group’s markets activities. Amounts 

invoiced during 2002 and 2003 totalled £0.97 million. An agreement was entered into under the terms of which 

HSBC Bank will provide CCF with services for all its markets activities for the sum of €0.58 million a year. 

The Directors concerned are Charles de Croisset, Stephen Green, William Dalton and Charles-Henri Filippi. 

– Development costs of the HUB project: service agreement under the terms of which HSBC Bank plc Paris 

Branch will assume the refinancing costs of the HUB project in the sum of €149 million spread over five years 

from 2003. Amounts paid by HSBC Bank plc Paris Branch under the agreement totalled €25 million in respect 

of 2003. Charles de Croisset, Chairman of CCF, is head of HSBC Bank Paris Branch. 

– Agreement with HSBC Bank for use of the Opsco system, software developed by HSBC Bank for forex and 

derivative products. The total cost of access to the system and participation in research work is estimated at 

USD 13 million. The Directors concerned are Charles de Croisset, Stephen Green, William Dalton and Charles- 

Henri Filippi. 

Agreements entered into in prior years and still in full force and effect during 2003 

In addition, three agreements governed by Article 225-38 of the French Commercial Code entered into during 

2001 by CCF and its direct 99.99 per cent shareholder, HSBC Bank plc Paris Branch, remained in full force and 

effect during 2003. These were a pooling of resources agreement designed to provide the parties with various services 

relating to their activities at cost, an agreement for the provision of services covering various activities and a group 

tax relief agreement. 

114

Statutory auditors’ report on the financial statements 

For the year ended 31 December 2003 

Dear Shareholders, 

In compliance with the assignment entrusted to us by the Annual General Meeting, we hereby report to you, for 

the year ended 31 December 2003, on: 

– the audit of the accompanying financial statements of CCF; 

– the justification of our assessments; 

– the specific verifications and information required by law. 

These financial statements have been approved by the Board of Directors. Our role is to express an opinion on 

these financial statements based on our audit. 

I - Opinion on the financial statements 

We conducted our audit in accordance with professional standards applicable in France. Those standards require 

that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial 

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting 

the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles 

used and significant estimates made by the management, as well as evaluating the overall financial statements 

presentation. We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the financial statements give a true and fair view of the Company’s financial position and its 

assets and liabilities, as of 31 December 2003, and of the results of its operations for the year then ended in accordance 

with the accounting rules and principles applicable in France. 

Without qualifying our opinion, we draw your attention to Note 1 to the financial statements, which outlines 

the changes in accounting policies resulting from the application of the regulation CRC no. 2002-03, relating to the 

accounting treatment of credit risk, as well as from the application of the regulation CRC no. 2002-10 relating to 

assets amortization and depreciation. 

II - Justification of our assessments 

In accordance with the requirements of Article L. 225-235 of the Commercial Code relating to the justification of 

our assessments, introduced by the Financial Security Act of 1 st August 2003 and which came into effect for the 

first time this year, we bring to your attention the following matters: 

As detailed on Note 1.3 to the financial statements, your company records provisions to cover the credit risks 

inherent to its activities. We have reviewed the procedures implemented by the Management for identifying and 

assessing these risks and determining the amount of provisions considered as necessary. 

As detailed on Note 1.8 to the financial statements, your company records and values its financial instruments 

in accordance with the applicable accounting policies, and uses internal models to value some of them. We have 

reviewed the control procedures implemented by the Management for ensuring that the accounting policies are 

regularly applied. We have also reviewed the control procedures dedicated to the determination of the parameters 

used for the implementation of internal models. 

On this basis, we have assessed whether the accounting policies were properly applied and whether the estimates 

used were reasonable. 

The assessments were made in the context of our audit of the financial statements, taken as a whole, and therefore 

contributed to the formation of the unqualified opinion expressed in the first part of this report. 

115


Other legal documents relating to the Annual General Meeting of shareholders (continued) 

III - Specific verifications and information 

We have also performed the specific verifications required by law in accordance with professional standards applicable 

in France. 

We have no matters to report regarding the fair presentation and the conformity with the financial statements 

of the information given in the management report of the Board of Directors, and in the documents addressed to 

the shareholders with respect to the financial position and the financial statements. 

As required by law, we verified that the statutory disclosures regarding holdings and voting rights have been 

made in the management report of the Board of Directors. 

Paris La Défense and Paris, 26 February 2004 

The Statutory Auditors 

Cabinet Alain Lainé 

Represented by Alain Lainé 

KPMG Audit 

Department of KPMG SA 

Represented by Fabrice Odent 

116

Statutory auditors’ report on the consolidated financial statements 

For the year ended 31 December 2003 

Dear Shareholders, 

In compliance with the assignment entrusted to us by the Annual General Meeting, we have audited the accompanying 

consolidated financial statements of CCF for the year ended 31 December 2003. 

The consolidated financial statements have been approved by the Board of Directors. Our role is to express an 

opinion on these financial statements based on our audit. 

I - Opinion on the consolidated financial statements 

We conducted our audit in accordance with professional standards applicable in France. Those standards require 

that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial 

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting 

the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles 

used and significant estimates made by the management, as well as evaluating the overall financial statements 

presentation. We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements give a true and fair view of the assets, liabilities, financial 

position and results of the consolidated group of companies in accordance with the accounting rules and principles 

applicable in France. Without qualifying our opinion, we draw your attention to Note 2A to the consolidated financial 

statements, which outlines the changes in accounting policies resulting from the application of the regulation 

CRC n° 2002-03, relating to the accounting treatment of credit risk, as well as from the application of the regulation 

CRC n° 2002-10 relating to assets amortization and depreciation. 

II - Justification of our assessments 

In accordance with the requirements of Article L. 225-235 of the Commercial Code relating to the justification of 

our assessments, introduced by the Financial Security Act of 1 st August 2003 and which came into effect for the 

first time this year, we bring to your attention the following matters: 

As detailed on Note 2.A.3 to the consolidated financial statements, your company records provisions to cover 

the credit risks inherent to its activities. We have reviewed the procedures implemented by the Management for 

identifying and assessing these risks and determining the amount of provisions considered as necessary. 

As detailed on Note 2.A.9 to the consolidated financial statements, your company records and values its financial 

instruments in accordance with the applicable accounting policies, and uses internal models to value some of 

them. We have reviewed the control procedures implemented by the Management for ensuring that the accounting 

policies are regularly applied. We have also reviewed the control procedures dedicated to the determination of the 

parameters used for the implementation of internal models. 

On this basis, we have assessed whether the accounting policies were properly applied and whether the estimates 

used were reasonable. 

The assessments were made in the context of our audit of the consolidated financial statements, taken as a whole, 

and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report. 

117



III - Specific verification 

In accordance with professional standards applicable in France, we have also verified the information given in the 

group management report. We have no matters to report regarding its fair presentation and conformity with the 

consolidated financial statements. 





KPMG Audit 



118

Statutory auditor’s report, prepared in accordance with the last paragraph of Article L. 225-235 

of the French Company Law (Code de Commerce), on the report prepared by the Chairman 

of the Board of Directors of CCF, on the internal control procedures relating to the preparation 

and processing of financial and accounting information. 

Year ended 31 December, 2003 

To the Shareholders of CCF, 

In our capacity as statutory auditors of CCF, and in accordance with the last paragraph of Article L. 225-235 of 

the French Company Law (Code de Commerce), we report to you on the report prepared by the Chairman of the 

Board of Directors of your company in accordance with Article L. 225-37 of the French Company Law for the 

year ended 31 December 2003. 

Under the responsibility of the Board of Directors, the company’s management has to determine and implement 

appropriate and effective internal control procedures. The Chairman has to provide information in his report 

regarding the preparation and the organization of the Board of Directors as well as regarding the internal control 

procedures in place within the company. 

It is our responsibility to report to you our observations on the information and assertions set out in the report 

of the Chairman of the Board of Directors with respect to the internal control procedures relating to the preparation 

and processing of financial and accounting information. 

We conducted our procedures in accordance with the professional guidelines applicable in France which requires 

the implementation of procedures destined to assess the fairness of the information set out in the report of the Chairman 

on the procedures on internal control relating to the preparation and processing of financial and accounting information. 

Our procedures consist in : 

– obtaining an understanding of the objectives and general organization of the internal control process, as well 

as the internal control procedures relating to the preparation and processing of financial and accounting information, 

as set out in the report of the Chairman of the Board of Directors; 

– understanding the works underlying the information set out in the report. 

On the basis of these procedures, we have no matters to report in connection with the information and assertions 

given on the internal control procedures relating to the preparation and processing of financial and accounting 

information, contained in the report of the Chairman of the Board of Directors, prepared in accordance with 

Article L. 225-37 of the French Company Law. 





KPMG Audit 



119



Auditor’s special report on regulated party agreements 

Year ended 31 December 2003 

To the Shareholders of CCF, 

As statutory auditors of CCF, we present below our special report on regulated related party transactions. 

Agreements authorised during the year 

In accordance with article L. 225-40 of the French Commercial Code (Code du commerce), we have been advised 

of the transactions previously authorised by your Board of Directors. 

We have no obligation to perform any specific procedures aimed at identifying other transactions that may exist. 

Our only obligation is to present to you the main characteristics and provisions of the transactions of which we 

have been informed, without commenting as to their usefulness or appropriateness. For the purpose of approving 

these transactions, it is your responsibility, in accordance with Article 92 of the Decree of 23 March 1967, to assess 

the benefits arising from these transactions. 

With HSBC CCF Securities 

Under the terms of an agreement between CCF and its wholly-owned subsidiary HSBC CCF Securities, CCF 

acquired the goodwill developed by Selectbourse. This goodwill is subject to a specific agreement with HSBC 

Securities for account management, and for the custodian function and execution of orders for Selectbourse clients. 

The assessed value of this goodwill is €50,000. 

With HSBC Holdings plc 

An agreement has been entered into by CCF and HSBC Holdings, company which controls a shareholding firm 

holding over 10% of the voting stock. CCF and HSBC Holdings have Directors in common, Mr. de Croisset and 

Mr. Green. 

Under the terms of this agreement, services provided by central departments of HSBC Holdings are invoiced 

to CCF. Invoices amounting to USD11.5 million (VAT recoverable excluded) were sent to CCF in 2003 with respect 

to this agreement. 

With HSBC Bank plc 

Two agreements have been entered into with HSBC Bank, direct shareholder of over 10 per cent of the voting 

stock. CCF and HSBC Bank plc have Directors in common, Mr. de Croisset, Mr. Filippi, Mr. Green, and Mr. 

Dalton. 

– Service level agreement for all market activities of CCF group. Invoices amounting to GPB0.59 million (VAT 

recoverable excluded) were sent to CCF in 2003 with respect to this agreement. 

– Agreement in order to use the system Opsco, software developed by HSBC Bank for foreign exchange and 

derivative products. The access costs to the system Opsco and the participation in the research work are valued 

at a total of USD13 million. Invoices amounting to USD3.45 million (VAT recoverable excluded) were sent to 

CCF in 2003 with respect to this agreement. 

An agreement has been entered into with HSBC Bank plc Paris Branch, direct shareholder of over 10 per cent of 

the voting stock. CCF and HSBC Bank plc Paris Branch have an Executive in common, Mr. de Croisset, Chairman 

of CCF, and executive of HSBC Bank plc Paris Branch and Directors in common, Mr. de Croisset, Mr. Filippi, 

Mr. Green, and Mr. Dalton. 

Service level contract for the HUB project, the funding costs of the project are paid by HSBC Bank plc Paris 

Branch, amounting to €149 million for the next 5 years starting 2003. The services paid for by HSBC Bank plc 

Paris Branch amounted to €23 million in 2003. 

120

Agreements approved in prior years which remain in full force and effect 

In accordance with the provisions of the Decree of 23 March 1967, we have been advised that the following agreements, 

which were approved in prior financial years, remained in full force and effect during 2003. 

With HSBC Bank plc Paris Branch 

Three agreements have been entered into by CCF and its direct shareholder of over 10 per cent of the voting stock, 

remained in full force and effecting 2003. 

– A groupwide service agreement for the purpose of rendering services to its members at cost concerning diverse 

activities of the two entities: back-office payments, back-office treasury, credit risk management, and euro zone 

management. The agreement amounted to €1.5 million in 2003. 

– Service level agreement issued by CCF to HSBC Bank plc Paris Branch concerning: 

– Services related to back-office payment processing activities, 

– Services related to back-office treasury activities, 

– Some services related to information technology. 

Payment for the services rendered is equal to the cost incurred by CCF in providing the services. The agreement 

is valid for an indeterminate period. No invoice was made to this respect in 2003. 

– Tax integration agreement between HSBC Bank plc Paris Branch, the Company at the head of the group tax 

integration, and CCF: this agreement allows for the tax savings realised each year by the tax integration group, 

that are not used by the member companies in deficit, to be available for CCF after deducting the amounts 

already paid by HSBC Bank plc Paris Branch to other members of the Group. The net amount paid to CCF 

in 2003 amounted to €66 million. This amount includes adjustments on prior years, representing a cost of 

€4.5 million for CCF in 2003. 

With Société Française et Suisse 

The agreement entered into in 2002 by CCF and its wholly-owned subsidiary Société Française et Suisse (“SFS”) 

remained in full force and effect in 2003. 

Under the terms of this agreement, CCF has granted SFS a financial subsidy of €62.9 million to restore it to 

financial health. The subsidy is subject to a “better fortunes” clause, which requires SFS to repay CCF a sum equal 

to 50 per cent of its net profits, if any, in the financial years 2003 and 2004. 

No payment was made to this respect in 2003. 

Agreements entered into during the year and not previously authorised 

In accordance with Article L. 225-42 of the French Commercial Code (Code du Commerce), we present our special 

report on these agreements. 

In accordance with Article L. 225-240 of the French Commercial Code, we advise you that, following an omission, 

these agreements have not been previously authorised by your Board of Directors. 

It is our obligation to present to you the main characteristics and provisions of the transactions of which we 

have been informed, as well as the reason for which the authorization procedure has not been respected, without 

commenting as to their usefulness or appropriateness. For the purpose of approving these transactions, it is your 

responsibility, in accordance with Article 92 of the Decree of 23 March 1967, to assess the benefits arising from 

these transactions. 

With Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque Beau 

Three agreements have been entered into by CCF and its subsidiaries Union de Banques à Paris (UBP), Banque 

Hervet, and Banque de Baecque Beau. 

121



The agreements entered into with Banque Hervet and Banque de Baecque Beau have had a retroactive effect as at 

April 1 2002. 

Under the terms of the agreement, Union de Banques à Paris (UBP), Banque Hervet and Banque de Baecque 

Beau undertake to direct their clients to CCF (although reserving the right to deal directly with some clients) whenever 

they seek advice or have a project concerning the skills of CCF in SME advisory services, or when searching 

partners and counterparts in the following fields: 

– mergers and acquisitions, including equity research, 

– financing acquisitions, particularly LBO and MB, 

– debt syndication, 

– structured financial products. 

Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque Beau also undertake to give 

priority to CCF when in need of a third party to prepare loan files concerning the CCF skill field defined above. 

By applying these agreements, 

– CCF pays respectively Union de Banques à Paris (UBP), Banque Hervet, and Banque Baecque de Beau a commission 

equal to 50 per cent of the fees and commissions net of tax collected for services rendered, increased by VAT. 

– CCF receives respectively from Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque 

Beau a sum equal to 50 per cent of the commissions inherent to the installment of loans and 50 per cent of the 

interest margin on the 12 first month of these loans, installed by Union de Banques à Paris (UBP), Banque 

Hervet and Banque Baecque de Beau, and for which CCF performed the administrative work prior to their 

installment. 

We conducted our work in accordance with professional standards in France; those standards require that we 

perform procedure to verify that the information provided to us has been accurately derived from related underlying 

documents. 





KPMG Audit 



122


Annual General Meeting of 12 May 2004 – Resolutions adopted 

Ordinary business 

First resolution 

Having heard and considered the report of the 

Directors, the general report of the Auditors for the 

year ended 31 December 2003, and the Chairman’s 

report on corporate governance and internal control, 

and voting under the quorum and majority conditions 

required to transact ordinary business, the shareholders 

hereby approve the Company’s financial statements 

for that year as presented, together with the business 

operations reflected therein and summarised in the 

reports. 

Second resolution 

Voting under the quorum and majority conditions 


hereby approve the following proposed distribution of 

net profit for the year: 

Net profit for the year . . . . . . . €466,637,338.33 

Plus retained profits . . . . . . . . . €219,034,883.04 

ddddddddd 

Total sum available 

for distribution . . . . . . . . . . . . . €685,672,221.37 

fffffffff 

To be distributed as follows: 

Dividend of €6.25 per share 

to be paid to the shareholders . €464,687,912.50 

Retained profits . . . . . . . . . . . . €220,984,308.87 

The dividend will be paid on 12 May 2004, after 

deduction of the interim dividend of €3 per share (plus 

a tax credit of €1.50) voted by the Board of Directors 

at its meeting of 25 July 2003 and paid in respect of 

shares in issue as of that date. 

The shareholders duly note that dividends paid in 

respect of the three previous financial years were as 

follows: 

Net dividend 

Year per share Tax credit 

dddddd dddddd 

2000 . . . . . . . . . . . . . . €4.10 €2.05 * 

2001 . . . . . . . . . . . . . . €5.60 €2.80 ** 

2002 . . . . . . . . . . . . . . €7.25 €3.625 *** 

2003 . . . . . . . . . . . . . . €6.25 €3.125 **** 

* The 2001 French Finance Act provides that, in certain 

cases, the tax credit used in 2001 is equal to 25 per cent 

of the dividend paid rather than 50 per cent. 

** The 2002 French Finance Act provides that, in certain 



*** The 2003 French Finance Act provides that, in certain 



**** The 2003 French Finance Act provides that, in certain 



Third resolution 


Directors and the general report of the Auditors for 

the year ended 31 December 2003, and voting under 

the quorum and majority conditions required to transact 

ordinary business, the shareholders hereby approve 

the consolidated financial statements for that year as 

presented. 

Fourth resolution 

Having heard and considered the special report of the 

Auditors on agreements governed by Article L. 225-38 

of the Code of Commerce, and voting under the 

quorum and majority conditions required to transact 

ordinary business, the shareholders hereby approve the 

agreements described therein under the conditions 

referred to in Article L. 225-40 of said Code. 

Fifth resolution 



hereby ratify the Board’s co-option on 24 February 

2004 of Mr Patrick Careil as Director to replace 

Mr. Charles de Croisset, who has resigned, for the 

remainder of the term of office of his predecessor. 

Noting that Mr de Croisset was due to retire by rotation 

at the conclusion of this Annual General Meeting, 

the shareholders hereby re-elect Mr. Careil for a term 

of four years ending at the conclusion of Annual 

General Meeting held to approve the financial statements 

for the year ending 31 December 2007. 

Sixth resolution 



hereby ratify the Board’s co-option on 24 February 

2004 of Mr. Gilles Denoyel as Director to replace 

Mr. Dominique Léger, who has resigned. Mr. Denoyel’s 

term of office will run for the remainder of the term 

of his predecessor, that is until the conclusion of the 



123


Annual General Meeting of 12 May 2004 – Resolutions adopted (continued) 

Seventh resolution 



hereby elect Mr. Michael Geoghegan as Director for 

a term of four years ending at the conclusion of 



Mr. Geoghegan replaces Mr. William Dalton, who is 

retiring by rotation and not standing for re-election. 

Eighth resolution 



hereby re-elect Mr. Charles-Henri Filippi, who is retiring 

by rotation, as Director for a further term of four years 

ending at the conclusion of the Annual General 

Meeting held to approve the financial statements for 

the year ending 31 December 2007. 

Ninth resolution 



hereby re-elect Mr. Philippe Houzé, who is retiring by 

rotation, as Director for a further term of four years 




Tenth resolution 



hereby re-elect Mr. Igor Landau, who is retiring by 

rotation, as Director for a further term of four years 




Eleventh resolution 



duly note that Mr. Jean-Antoine Chabannes, who is 

retiring by rotation, is not standing for re-election. 

Twelfth resolution 


Directors, and voting under the quorum and majority 

conditions required to transact ordinary business, the 

shareholders duly note the resignation of Cabinet Alain 

Lainé as statutory auditors and of Mr. Jean Autissier 

as alternate auditor, and hereby appoint in their place 

RSM Salustro Reydel of 8, avenue Delcassé, 75008 

Paris, as statutory auditors and Mr. Benoît Lebrun of 

the same address as alternate auditor for the remainder 

of their predecessor’s term of office, that is until 

the conclusion of the Annual General Meeting held 

to approve the financial statements for the year ending 

31 December 2005. 

In accordance with the provisions of Article L. 225-228 

of the Code de Commerce, the shareholders duly note 

that Mr. Benoît Lebrun, a partner in the firm 

appointed as statutory auditors, who has been nominated 

as alternate auditor, was responsible for verifying 

the following business transfers or mergers 

concerning CCF or companies it controls within the 

meaning of paragraphs I and II of Article L. 233-16 

of the Code de Commerce over the past two years: 

– In 2002: 

– absorption of HSBC CCF Investment Bank 

(France) by CCF; 

– absorption of Webroker and Selectbourse by 

CCF. 

– In 2003: 

– absorption of HSBC Multimanager Europe 

and HSBC Multimanager Services by HSBC 

Multimanager Holding; 

– absorption of Banque Eurofin, Banque du 

Louvre and CCF Banque Privée Internationale 

by HSBC Bank France SA; 

– transfer of an entire stand-alone business in the 

financial management of employee savings 

plans from Elysées Fonds to HSBC Asset 

Management (Europe) SA; 

– absorption of Elysées Fonds by Elysées 

Gestion. 

– Early 2004: 

– absorption of HSBC Finance (France) SA and 

Eurofin Gestion by Louvre Gestion. 

124

Thirteenth resolution 


Directors, and voting under the quorum and majority 

conditions required to transact ordinary business, the 

shareholders hereby authorise the Board of Directors 

to issue bonds on one or more occasions in all markets 

up to a maximum amount of €20 billion or the 

equivalent thereof in any other currency or composite 

monetary unit, on the terms and conditions it deems 

appropriate. 

The shareholders grant the Board of Directors 

fullest powers to complete said issues and notably to: 

– stipulate the terms of redemption, which may 

include subordination clauses, redemption at a fixed 

future date or no later than upon winding up of 

the Company, or with a redemption price linked to 

factors to be determined by the Board of Directors; 

– stipulate any bond retirement clauses, more particularly 

early retirement or repurchase by the company; 

– attach warrants to the bonds, which may be 

exchanged for existing securities, used to subscribe 

for new securities or conferring rights of any other 

nature upon the holder, with the exception of rights 

to subscribe for share capital, it being stipulated 

that the par value of any bonds or debt securities 

which may be issued as a result of the exercise of 

such warrants shall be included in the maximum 

limit referred to above; 

– stipulate the attributes of the bonds to be issued 

and the rights to be attached thereto, and more particularly 

the issue or redemption premium and 

coupon rate, which may be fixed, floating or otherwise 

linked to any assets, financial instruments, 

financial products or indices, and may include a 

deferred payment clause in the absence of sums 

available for distribution; 

– take all measures and fulfil all formalities in respect 

of the issuance and financial service of the bonds. 

This authority is valid for a period of five years with 

effect from the date of this meeting. It cancels and 

supersedes the authority granted at the Annual General 

Meeting held on 29 March 2001. 

Any issues already authorised by the Board of 

Directors but not yet fully completed as of the date of 

this meeting shall be deducted from the unused portion 

of the authority granted on 29 March 2001. 

Fourteenth resolution 


Directors, having been appraised of the resolution 

passed on 11 May 2004 at the class meeting of holders 

of participating notes issued by CCF in May 1984 and 

June 1987/1988, and voting under the quorum and 

majority conditions required to transact ordinary business, 

the shareholders hereby approve all the proposed 

amendments to the issue agreement approved at said 

class meeting giving CCF the option at its sole initiative 

to retire all the remaining outstanding participating 

notes issued in 1984 and 1987/1988 on 4 June each 

year with effect from 4 June 2005. 

The shareholders hereby approve the redemption 

price for the participating notes, which will be computed 

as follows: 

Where: 

– TMO n = TEC10 n + 0.25% (following Euronext’s 

notice dated 11 October 2001) or any other rate 

which would substitute; 

– N is the nominal value, i.e. €152.45 (FRF1,000); 

– TZ n is the zero coupon n years rate based on the 

swap yield to Euribor curve, or any other rate which 

would substitute; 

– S is the spread representative of a perpetual note 

issued by CCF at market conditions at time t; 

– TZ n + S is the discount rate. 

∞ 

V = 105% x ∑ 130% x TMO n x N 

1 (1 + TZ n + S) n . 

The price may not be less than 105% of the nominal 

value of the participating notes. 

Special business 

Fifteenth resolution 

Having heard and considered the report of the Board 

of Directors and the special report of the Auditors, 

voting under the quorum and majority conditions 

required to transact special business and acting pursuant 

to the provisions of Article L. 225-129 VII of 

the Code de Commerce, the shareholders hereby authorise 

the Board of Directors to increase the share capital on 

one or more occasions by allotting new shares wholly 

for cash to members of the Company’s employee share 

ownership plan in accordance with the provisions of 

Article L. 443-5 of the Code du Travail. 

125


Annual General Meeting of 12 May 2004 – Resolutions adopted (continued) 

The capital increase arising from such operations 

may not exceed an aggregate sum of ten million euros. 

The shareholders hereby expressly renounce their 

pre-emption rights over the new shares to be allotted 

to members of the Company’s employee share ownership 

plan. 

This authority is valid for a period of two years 

with effect from the date of this meeting. 

The shareholders hereby grant the Board of 

Directors fullest powers to determine all the terms and 

conditions of such new share issues and notably the 

price of the shares, to officially record the increase 

or increases in share capital made pursuant to this 

authority, to alter the Articles of Association accordingly 

and, more generally, to do all things necessary. 

Sixteenth resolution 

Having heard and considered the report of the Board 

of Directors and voting under the quorum and majority 

conditions required to transact special business, 

the shareholders hereby resolve to amend articles 12, 

14 and 18 of the company’s Articles of Association, 

as follows, to bring them into line with the French 

Financial Security Act passed on 1 August 2003: 

Article 12 – Officers of the company 

The second paragraph is amended as follows: 

“The Chairman organises and manages the work 

of the Board of Directors, and reports thereon to the 

shareholders. He is responsible for ensuring that the 

company’s governing bodies function correctly and, 

more particularly, that the Directors are capable of fulfilling 

their duties.” 

Article 14 – Powers of the board of Directors 

The third paragraph is amended as follows: 

“The Board of Directors undertakes all the controls 

and verifications it deems necessary. The 

Chairman or Managing Director of the company shall 

provide the Directors with all the documents and information 

they require to fulfil their duties.” 

Article 18 – Regulated agreements 

The first paragraph is amended as follows: 

“Any agreement entered into either directly or via 

an intermediary between the Company and the 

Managing Director, one of the Deputy Managing 

Directors, one of the Directors or one of the shareholders 

owning more than 10% of the voting rights, 

or, in the case of a corporate shareholder, the company 

which controls it within the meaning of Article L. 233-3 

of the Code de Commerce, must be submitted for prior 

approval by the Board of Directors.” 

Seventeenth resolution 

The shareholders hereby confer full powers on the 

bearer of an original, copy or abstract of the minutes 

of this meeting for the purpose of completing any formalities 

required by law. 

126


Information on CCF and its share capital 

Information on the Company 

Name 

CCF – new name of Crédit Commercial de France 

since 8 April 2002. 

Date of incorporation 

1894. 

Registered office 

103, avenue des Champs-Elysées, 75008 Paris. 

Legal form 

Société Anonyme incorporated under the laws of 

France, governed notably by the commercial code. The 

Company is a credit institution and authorised bank, 

and as such is also governed by the “Code Monétaire 

et Financier”. 

Term 

The Company’s term ends on 30 June 2043, unless previously 

wound up or extended. 

Corporate object (Article 3 of the Articles of 

Association) 

The Company’s corporate object is the transaction in 

all countries of any and all banking, finance, lending, 

guarantee, trading, brokerage or fee-earning business 

together with the provision of any and all investment 

services and related services within the meaning of 

Articles L. 321-1 and L. 321-2 of the Monetary and 

Finance Code, and more generally, to conduct within 

the limits permitted by law any and all commercial, 

industrial or agricultural transactions, whether involving 

property or securities, and to provide any and all 

services directly or indirectly connected with or which 

may facilitate the achievement of the foregoing object. 

Trade and Companies Register and APE code 

775 670 284 RCS Paris - APE 651C. 

Consultation of documents concerning the Company 

109, avenue des Champs-Elysées, 75008 Paris. 

Financial year 

From 1 January to 31 December. 

Distribution of profits 

A minimum of 5 per cent of the net profit for the year, 

less any prior year losses, is transferred to the legal 

reserve until such time as it has reached one tenth of 

the Company’s share capital and at any time after that 

should it fall back below the minimum requirement. 

The balance, plus any retained earnings, less any 

sums which the shareholders deem expedient to transfer 

to new or existing reserves or to retained earnings, 

comprises the profit available for distribution among 

the shareholders. 

However, except in the event of a reduction of the 

Company’s share capital, no distribution may be made 

if total shareholders’ funds are or would as a result 

become lower than the amount of the Company’s share 

capital plus any non-distributable reserves. 

By way of derogation to the provisions of this article, 

sums may be transferred to a special employee 

profit-sharing reserve, as provided for by law. 

Shareholders’ meetings 

Meetings are open to all shareholders. They are convened 

and transact business in accordance with the 

provisions of the law and regulations in force and effect 

from time to time. All shareholders owning at least one 

share are entitled to attend and participate in shareholders’ 

meetings either in person or by proxy. 

Form of shares 

All fully paid up shares are in registered form. They 

are registered on an individual securities account under 

the terms and conditions provided for by law. 

Voting rights 

Each fully paid up share entitles the holder to one vote. 

Transfer of shares 

The shares are freely transferable. 

Custodian and financial service 

CCF. 

Information on the share capital 

At 31 December 2003, the share capital amounted to 

€371,750,330 divided into 74,350,066 fully paid up 

shares, each with a nominal value of €5. 

Authorities to increase the share capital 

With pre-emptive rights 

dddddddddddddd 

Issue of shares for cash 

or by capitalising reserves 

– Date of authority 29 March 2001 1 

– Expiry date 29 March 2006 

– Maximum nominal amount €120 million 

ddddddddddddddddddddddddddd 

1 The Extraordinary General Meeting authority of 29 March 

2001 was reiterated by the Extraordinary General Meeting of 8 

April 2002. 

127


Information on CCF and its share capital (continued) 

Movements in share capital 

2003 2002 

ddddddddddddddddddd ddddddddddddddddddd 

Share Share Share Share 

Number capital premium Number capital premium 

of shares in euros 2 in euros of shares in euros 2 in euros 


At 1 January . . . . . . . . . . . . . . . . . . . . . . . . 74,117,066 370,585,330 – 75,409,701 377,048,505 – 

Issue of shares to employees . . . . . . . . . . . – – – – – – 

Exercise of share options 1 . . . . . . . . . . . . . 233,000 1,165,000 12,818,145 229,066 1,145,330 7,700,064,02 

Reduction of share capital by cancellation 

of own shares held . . . . . . . . . . . . . . . . . – – – 1,521,701 7,608,505 247,428,582.60 

At 31 December . . . . . . . . . . . . . . . . . . . . . 74,350,066 371,750,330 – 74,117,066 370,585,330 – 


1 Of which : 3,000 shares issued at €34.00 4,200 shares issued at €32.78 

7,000 shares issued at €35.52 2,170 shares issued at €34.00 




500 shares issued at €142.50 

2 The share capital was converted into euros on 17 February 1999. 

128

2001 2000 1999 

ddddddddddddddddddd ddddddddddddddddddd ddddddddddddddddddd 

Share Share Share Share Share Share 

Number capital premium Number capital premium Number capital premium 

of shares in euros 2 in euros of shares in euros 2 in euros of shares in euros in euros 

dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd 

74,888,902 374,444,510 nm 73,868,858 369,344,290 nm 72,790,957 363,954,785 nm 

– – – – – – 551,211 2,756,055 35,172,774 

520,799 2,603,995 15,943,471.73 1,017,644 5,088,220 35,793,432.82 695,211 3,476,055 19,448,247.13 

– – – – – – 168,521 842,605 8,600,142.33 

75,409,701 377,048,505 nm 74,888,902 374,444,510 nm 73,868,858 369,344,290 nm 

dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd 

625 shares issued at €33.69 18,000 shares issued at €25.31 (FFr166) 41,600 shares issued at €25.31 (FFr166) 

29,000 shares issued at €34.00 29,150 shares issued at €33.69 (FFr221) 138,605 shares issued at €33.69 (FFr221) 




124,000 shares issued at €37.05 (FFr243) 12,000 shares issued at €37.05 (FFr243) 



129


Information on CCF and its share capital (continued) 

Share options 

Pursuant to the authorities granted on 13 May 1992, 7 May 1997 and 29 April 1998, and the ensuing Board resolutions, 

share options have been granted to managers and Directors of the Company, as follows: 

Options 

outstanding 

on Expiry 

Year Allocation Exercise price 31.12.2003 date 

dd dddddd dddddddddddddd dddddd dddddd 

1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,000 FFr221 €33.69 0 2003 

1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645,000 FFr215 €32.78 10,800 2004 

1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675,000 FFr223 €34.00 53,130 2005 

1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 696,000 FFr233 €35.52 89,500 2006 

1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715,000 FFr243 €37.05 282,630 2007 

1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728,000 FFr482 €73.48 535,400 2008 

1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,000 FFr536 €81.71 788,200 2009 

2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,000 nm €142.50 856,000 2010 

The maximum number of CCF shares that may be issued pursuant to the exercise of share options is 2,615,660, 

which would raise the total number of €5 nominal shares in circulation to 76,965,726. 

Ownership of share capital and voting rights at 31 December 2003 

HSBC Bank plc has owned 99.99 per cent of the share capital and voting rights since 31 October 2000. This percentage 

has not varied since then. HSBC Bank plc is a wholly-owned subsidiary of HSBC Holdings plc, a company 

quoted in London, Hong Kong, New York, Bermuda and Paris. 

130

Changes in ownership of share capital 

1999 

dddddddddddd 

Percentage Percentage 

of voting of share 

rights capital 

dddddd dddddd 

1. Shareholders represented on the Board of Directors 

and the International Consultative Committee 

1.1 Shareholders owning at least 5 per cent 

of the share capital or voting rights: 

– Groupe Société Suisse d’Assurance Générale 

sur la Vie Humaine . . . . . . . . . . . . . . . . . . . . . . . . . 19.6 14.5 

– ING +BHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0 19.1 

– Groupe KBC Bancassurance + KBL . . . . . . . . . . . 16.8 18.8 

– Groupe Mutuelle du Mans Assurance . . . . . . . . . . – – 

– Taiyo Mutual Life Insurance Cy . . . . . . . . . . . . . . . 5.3 3.6 

1.2 Other French shareholders . . . . . . . . . . . . . . . . . . 2.9 1.8 

1.3 Other foreign shareholders . . . . . . . . . . . . . . . . . . – – 

2. Other shareholders closely related 

to the CCF group 

– CCF own shares . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 

– Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.0 

3. Identified French and foreign 

institutional shareholders . . . . . . . . . . . . . . . . . . . . 19.4 23.6 

4. Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.0 15.6 

dddddd dddddd 

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 

ffffff ffffff 

Dividend and payout policy 

2003 2002 2001 2000 1999 


Number of shares at 31 December . . . . . . . . . . . . . 74,350,066 74,117,066 75,409,701 74,888,902 73,868,858 


Average number of shares outstanding 

during the year . . . . . . . . . . . . . . . . . . . . . . . . . 74,129,833 74,928,199 75,019,102 74,365,694 72,917,088 


FFr42.11 

dddddd 

FFr40.42 

EPS 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . €8.46 €7.50 €6.89 €6.42 2 €6.16 

Net dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

€6.25 

dddddd 

€7.25 

dddddd 

€5.60 

dddddd 

€4.10 

dddddd 

€2.20 


FFr40.34 

dddddd 

FFr21.64 

Dividend + tax credit . . . . . . . . . . . . . . . . . . . . . . €9.375 €10.875 €8.40 €6.15 €3.30 

Payout 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

dddddd 

74.10% 

dddddd 

95.60% 

dddddd 

74.70% 

dddddd 

64.30% 

dddddd 

35.70% 


1 Calculated on the weighted average number of shares outstanding after deducting own shares held. 

2 Based on reported figures. On a restated basis and excluding exceptional items, EPS would have been €6.65. 

3 Dividend paid as a percentage of reported earnings. 

At the Annual General Meeting held on 12 May 2004, the Board proposed a net dividend of €6.25 per €5 

nominal share, which corresponds to a gross dividend of €9.375 including the tax credit. 

Dividends which are not claimed within five years of the payment date lapse and become the property of the 

French Treasury. 

131


Employees, remuneration, share offering and incentive schemes 

The following information is provided in compliance with the provisions of Article 1 of the decree 2002-221 of 

20 February 2002, in application of Article L. 225-102-1 of the Code of Commerce inserted by the Law no. 2001-420 

(the “New Economic Regulations” Act). 

Employees at 31 December 

2003 1 2002 1 2001 1 2000 1 1999 1 


Total CCF France (excluding those 

seconded to branches) . . . . . . . . . . . . 6,754 6,669 6,230 6,130 5,825 

ffffff ffffff ffffff ffffff ffffff 

Total foreign branches . . . . . . . . . . . . 70 82 91 227 434 


Total CCF . . . . . . . . . . . . . . . . . . . . . . 6,824 6,751 6,321 6,357 6,259 


Total CCF group . . . . . . . . . . . . . . . . 13,577 

ffffff 

13,797 

ffffff 

14,071 

ffffff 

13,583 

ffffff 

13,429 

ffffff 

1 Full time equivalents. 

2002/2003 employment report 

The figures given below are based on actual staff numbers and are not weighted for part-time employees. 

Increase in headcount for the fourth consecutive year 

– 2003 headcount: 6,997, an increase of 3.3 per cent or 223 employees on 2002. The number of employees with 

management status rose by 12 per cent in 2003. 

– New employees: 478 new permanent employees joined the group in 2003, after three years of heavy recruitment. 

219 new contract staff joined the group in 2003. 

– Departures: resignations accounted for 35 per cent of total departures in 2003. 

Further rise in percentage of management staff 

– Increase in percentage of management staff and women managers 

– Over three years, the number of management grade employees has risen by 31 per cent and the number of 

non-management grade employees has decreased by 7 per cent. 

– Women managers account for 22.4 per cent of the total workforce. 

Employment conditions 

The annual number of working hours is 1,592. This reduction in annual working hours has been effected partly 

through a reduction in weekly working hours and partly through the grant of additional days leave. 

At 31 December 2003, 656 employees worked part-time under the flexible working agreements signed by CCF. 

The targeted number of departures under the early retirement plan was reached in 2003, bringing the total to 

99 at the year end. 

At 31 December 2003, CCF employed 201 disabled workers. 

132

Employee relations and collective bargaining agreements 

The following agreements were signed in 2003: 

– pay agreement; 

– agreement concerning the employment status applicable to former employees of Webroker, SelectBourse and 

Worms transferred to CCF; 

– agreement on equality between the sexes; 

– amendments to CCF’s employee savings scheme and long-term savings scheme; 

– amendment to the company-wide agreement on length of service bonuses; 

– agreement of compensation for exceptional work. 

In 2004, negotiations are taking place on employment of the disabled, support for employees during times of 

organisational change, and the employee incentive scheme and profit-sharing plan. 

Pay 

In 2003, the pay agreement signed by CCF covered the following: 

– minimum increases for the lowest paid employees; 

– performance-related increases awarded on merit; 

– bonuses for achieving or exceeding individual qualitative and quantitative targets. 

The ratio between average management pay and average non-management pay is 2:1. 

Training 

In 2003, CCF provided over 186,000 hours of training for 3,400 employees, representing 4.67 per cent of total payroll 

costs. 

A new training programme was introduced in 2002 to develop managerial skills. During 2003, all managers of 

managers and some of their colleagues took part in the programme, which will continue into 2004. 

In addition, a business development training programme has been established for management staff working 

in the branch network. Its purpose is to familiarise them with new tools designed to develop commercial practices 

and performance. In 2004, assistant branch managers, personal customer advisers, business customer advisers and 

retail/business commercial assistants will take part in the programme. 

Overtime, temporary staff and sub-contracting 

There was a decrease in the number of hours overtime in 2003. Recourse to temporary staff decreased by almost 

a half, while recourse to sub-contracting is still principally due to information systems activities. 

Health and safety 

CCF has established Health & Safety at Work Committees covering all its activities in France. These Committees 

are endowed with resources above the minimum required by law, particularly in terms of inspections of the group’s 

premises. 

During 2002, a risk assessment report was drawn up and presented to CCF’s management and the staff representative 

bodies. It will be updated in 2004. 

133


Employees, remuneration, share offering and incentive schemes (continued) 

Absenteeism 

Absenteeism and the reasons for it (maternity, sickness and occupational accident) remained unchanged from 2002. 

Staff welfare 

The total amount of funds paid to the central and local works councils increased by 11 per cent to €1,920,000. 

The amount of the subsidy paid to the mutual insurance fund increased by 2.8 per cent to €807,000. 

In 2003, CCF devoted more than €5,457,000 to social welfare benefits (housing, new school year allowances, 

travel, child minding, Mothers’ Day, loyalty and CCF medals). 

Employee share offering 

Each year since 1993, CCF has made an employee share offering open to current employees of CCF, former employees 

who are members of the employee share ownership plan and employees of French subsidiaries in which CCF owns 

over 51 per cent. 

In 2003 as in previous years, HSBC maintained the principle of making an annual employee share offering, in 

the same way as CCF has done in the past. The 2003 offering ran from 5 to 24 June 2003, with payment made on 

31 July 2003. The key terms and conditions were as follows: 

– offering of HSBC shares open to current employees of CCF, former employees who are members of the employee 

share ownership plan, and employees of French subsidiaries in which CCF owns over 51 per cent; 

– an offer price of €7.8714 per share, calculated as in the previous year by applying a 20 per cent discount to the 

average HSBC share price quoted during the twenty trading sessions preceding 30 May 2003, the date on which 

the Remuneration Committee of HSBC Holdings plc decided to make the offering. 

CCF employees with at least six months service were offered the opportunity of investing the following sums: 

– their employee profit-sharing entitlement; 

– their incentive scheme entitlement; 

– their own personal funds up to the maximum permitted by law. 

Employees took up, by way of the H Fund, a total of 4,039,937 HSBC shares, representing a total capital 

amount of €31.8 million. The H Fund is a mutual fund forming part of the group or company employee share 

ownership plan, invested in HSBC shares since HSBC’s takeover of CCF in 2000. 

Incentive schemes 

Profit-sharing and incentive plan agreements 

Two profit-sharing and incentive plan agreements were signed on 27 June 2001 for a term of three years covering 

2001, 2002 and 2003. Under the agreements, the profit-sharing entitlement and incentive awards are combined: 

the profit-sharing component is calculated as a function of CCF France’s restated operating profit before provisions 

and the incentive component by reference to growth in CCF France’s restated operating profit before provisions 1 . 

1 Restated operating profit before provisions is restated to deduct items which do not directly concern CCF France’s activities: 

– capital gains or losses on asset disposals and changes in provisions against available-for-sale securities, equity investments and investments 

in consolidated subsidiaries other than those involved in capital markets activities, and excluding income from sales of money 

market funds; 

– results of foreign branches; 

– dividends received from consolidated companies and their cost of financing. 

134

Profit-sharing agreement 

The profit-sharing entitlement is calculated using an alternative method to the standard method applicable under 

ordinary law. It is equal to 8 per cent of the contribution made by CCF’s activities in France, determined as restated 

operating profit before provisions less various provisions and a theoretical tax charge. Under the alternative method, 

the profit-sharing entitlement may not exceed 5 per cent of CCF France’s reported net profit. 

Incentive agreement 

The incentive payment is based on a pre-defined scale, which is a function of the growth rate of CCF France’s 

restated operating profit before provisions. 50 per cent is allocated equally among eligible employees, pro rata to 

the duration of their employment with the Company during the year and, in the case of part-time employees, pro 

rata to their working hours. 50 per cent is allocated among the employees in proportion to their annual gross salary 

during the year, up to a maximum of three times the Social Security ceiling. 

Change from 1999 to 2003 

2003 2002 2001 2000 1999 

(in € millions) dddddd dddddd dddddd dddddd dddddd 

Incentive scheme . . . . . . . . . . . . . . . . . 7.62 5.34 4.57 4.57 8.38 

Profit-sharing . . . . . . . . . . . . . . . . . . . 15.59 14.28 12.49 12.78 11.88 

of which standard method . . . . . . . – – 1.46 1.33 – 

of which alternative method . . . . . . 15.59 14.28 11.03 11.44 11.88 

———— ———— ———— ———— ———— 

Total amount paid . . . . . . . . . . . . . . . 23.21 19.62 17.06 17.35 20.26 


Share option policy 

Pursuant to the authority granted by the shareholders at the Annual General Meeting of 22 July 1987, renewed at 

the Annual General Meetings of 13 May 1992 and 7 May 1997, the Board of Directors established a policy of 

awarding share options each year to the executive Directors and senior managers of CCF. At the proposal of the 

Nomination and Remuneration Committee, the Board gradually extended the share option policy with a view to 

retaining key employees and encouraging value creation. In 2000, the number of beneficiaries was 502 compared 

with 331 in 1999. 

Since 2001, following CCF’s integration into the HSBC Group, CCF no longer awards CCF share options as 

employees can now participate in the share option plan offered by the HSBC Group (part B) in the form of a 

French sub-plan which complies with the legal and fiscal regulations applicable in France. 1,026 employees were 

awarded HSBC share options in 2001, and 1,498 in 2003. 

135



Options awarded: 

dddddddddddddddddddddddddddddddddddddddddddddddddd 

Date of Annual General Meeting authority . . . . . . . . . . 13.5.1992 13.5.1992 13.5.1992 13.5.1992 


Date of Board meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1993 23.6.1994 22.6.1995 9.5.1996 


Total number of options awarded . . . . . . . . . . . . . . . . . . . . . . 541,000 645,000 675,000 696,000 

of which : number of options awarded to members of 

the Management Committee . . . . . . . . . . . . . . . . . . . . . . . . . 214,000 263,000 261,000 297,000 


Total number of beneficiaries . . . . . . . . . . . . . . . . . . . . . 93 116 114 125 


Number of Management Committee beneficiaries . . . . . 24 26 28 29 


First exercise date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1995 23.6.1996 22.6.1997 9.5.1998 


Expiry date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.2003 23.6.2004 22.6.2005 9.5.2006 


Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FFr221 FFr215 FFr223 FFr233 

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (€33.69) (€32.78) (€34.00) (€35.52) 


Discount to average quoted share price . . . . . . . . . . . . . . 5% 5% 5% 5% 


Number of options exercised at 31.12.2003 . . . . . . . . . . 513,200 612,800 597,870 594,500 

Number of options lapsed . . . . . . . . . . . . . . . . . . . . . . . . 27,800 21,400 24,000 12,000 

Number of options outstanding . . . . . . . . . . . . . . . . . . . 0 10,800 53,130 89,500 

* Executive Committee. 

** Discount to HSBC offer price of €150 per share. 

136

dddddddddddddddddddddddddddd 

7.5.1997 7.5.1997 7.5.1997 7.5.1997 


7.5.1997 29.4.1998 7.4.1999 12.4.2000 


715,000 728,000 909,000 909,000 

305,000 321,000 312,000 161,000* 


127 199 331 502 


29 31 29 10* 


7.6.2000 7.6.2000 7.6.2000 1.1.2002 


7.5.2007 29.4.2008 7.4.2009 12.4.2010 


FFr243 FFr482 

(€37.05) (€73.48) €81.71 €142.50** 


5% 5% 5% 5% 


412,370 175,100 108,800 4,500 

20,000 17,500 12,000 48,500 

282,630 535,400 788,200 856,000 

137



Key regulations governing share option plans 

The regulations governing all share option plans still in force and effect were approved by the Board of Directors 

at its meeting of 7 May 1997. 

However, under these regulations, option holders were entitled to exercise all their outstanding share options 

during the period of HSBC’s public offer for CCF in 2000, with the exception of those awarded in 2000, which 

were not exercisable before the close of the Offer. In view of the adverse tax effects – for both beneficiaries and 

CCF – that would have resulted from a breach of the lock-up period required under Article 163 bis C of the French 

General Tax Code, HSBC offered option holders the benefit of a liquidity contract in the CCF shares issued upon 

exercise of their options during the Offer period, subject to two undertakings: 

– not to sell the CCF shares issued upon exercise of their options on terms likely to incur a tax or social security 

cost to CCF; 

– to sell to or exchange with HSBC all CCF shares issued upon exercise of their options at the end of the lockup 

period. 

The liquidity contract set out the terms and conditions on which CCF employees undertook to sell or exchange 

their CCF shares, depending on the year in which the options were awarded. 

– Options awarded before 1996 and from 1997 to 2000: upon expiry of the lock-up period or upon exercise of 

the options if later, beneficiaries will exchange all the CCF shares issued pursuant to the exercise of their options 

for a number of ordinary HSBC shares determined using the ratio applicable to the Offer, adjusted for any 

changes in the share capital of either HSBC or CCF. 

– Options granted in 1996: beneficiaries irrevocably committed to one or other of the following two options: 

– upon expiry of the lock-up period or upon exercise of the options if later, to exchange all the CCF shares 

issued pursuant to the exercise of their options for a number of ordinary HSBC shares determined using the 

ratio applicable to the Offer, being 13 HSBC shares for one CCF share, adjusted for any changes in the share 

capital of either HSBC or CCF; 

– on 28 September 2001, to sell to HSBC all CCF shares issued pursuant to the exercise of their options for a 

price consistent with the Offer price and determined according to a formula which takes account of CCF’s 

average operating profit in the eight consecutive calendar quarters ending in June 2001. 

Special report 

Information required under the “New Economic Regulations” Act on share options awarded in 2003 

Since its integration into the HSBC Group in July 2000, CCF has ceased to award options to employees and 

executive Directors of the CCF group. 


Exercise 

Options price € per Date Expiry 

exercised share of award date 

ddddd ddddd ddddd ddddd 

Options exercised by an Executive Director in 2003 

D. Léger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 37.05 07.05.1997 07.05.2007 

Total options exercised by 10 employees . . . . . . . . . . . . 63,500 57.99 07.05.1997 7.05.2007 

and and 

29.04.1998 29.04.1998 

138

Options granted by subsidiaries to their employees 

Several of CCF’s French subsidiaries have established their own share option plans. However, in order to comply 

with the regulations governing HSBC, CCF decided to cease this practice in 2001, with the exception of two subsidiaries 

which were granted special dispensation. These were therefore the only two subsidiaries to have awarded 

share options during 2001. In 2002, only Banque Eurofin awarded options under the special dispensation granted 

by CCF. In 2003, no subsidiary awarded share options. 

No executive Director of CCF or member of CCF’s Executive Committee holds options in the CCF group’s 

subsidiaries. 


Following the merger between HSBC Bank France, Banque Eurofin, Banque du Louvre and CCF Banque Privée 

Internationale on 1 October 2003, options over Banque Eurofin, Banque du Louvre and CCF Banque Privée 

Internationale shares have been exchanged for options over shares in the merged entity at a parity determined at 

the time of the merger. 

In addition, a liquidity contract has been granted to beneficiaries of HSBC Private Bank France options, which 

sets out the terms and conditions for their exchange against ordinary HSBC Holdings shares on the basis of a 

parity of 1.83, fixed on 1 October 2003. 

No Executive Directors of HSBC Private Bank France exercised any HSBC Private Bank France options between 

1October 2003 and 31 December 2003. 

Exercise 

Options price € per Date of Expiry 

exercised share award date 


Total options exercised by 1 employee . . . . . . . . . . . . 1,125 20.80 15.05.2001 15.05.2011 

Banque Chaix 

Exercise 




Options exercised by Executive Directors in 2003 : 

A. Chaumard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 94.52 10.07.1998 10.10.2003 

J. P. Mannini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 – – – 

J. Perez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,150 – – – 

Total options exercised by eight employees 

or former employees . . . . . . . . . . . . . . . . . . . . . . . . 6,900 – – – 

139



Banque Dupuy, de Parseval 

Exercise 




Options exercised by Executive Directors in 2003: 

A. Gros . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 31.71 01.07.1998 01.10.2003 

Ph. Dupuis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 – – – 

H. Dupuis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 – – – 

Total options exercised by five employees . . . . . . . . . . 2,000 – – – 

Crédit Commercial du Sud-Ouest (CCSO) 

No Executive Directors of CCSO exercised any CCSO options during 2003. 

Exercise 




Total options exercised by five employees . . . . . . . . . 5,625 85.68 07.11.1997 07.11.2003 

and former executive directors of CCSO . . . . . . . . 7,500 90.25 08.07.1998 08.01.2004 

Sinopia 

Exercise 




Options exercised by an Executive Director in 2003: 

P. Goimard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,200 8.61 18.03.1998 18.09.2003 

Total options exercised by seven employees 

and former employees or executive directors . . . . . 83,200 – – – 

140


Recent developments and outlook 

Recent developments 

As announced in January, on 24 February 2004 the Board appointed Charles-Henri Filippi to succeed 

Charles de Croisset as Chairman and Chief Executive Officer of CCF, with effect from 1 March. Mr. Filippi 

will also be responsible for co-ordinating HSBC’s strategy in the Eurozone. 

Dominique Léger also stepped down as Director and Deputy Chief Executive of CCF on 1 March 2004. 

At the proposal of Mr. Filippi, the Board appointed Gilles Denoyel and Patrick Careil as Deputy Chief 

Executive Officers and also co-opted them onto the Board as Executive Directors. Mr. Denoyel will be responsible 

for central support functions and Mr. Careil for the retail banking networks. 

Outlook 

CCF’s challenge for 2004 is to gain market share in target customer groups and improve productivity by drawing 

on leverage from its strategic positioning and membership of one of the world’s leading banking and financial 

services groups. These goals and growth targets form part of HSBC’s new Group strategic plan for 2004-2008, 

Managing For Growth. 

The goal in retail banking is to increase CCF’s penetration rate among target customer groups, i.e. high net 

worth individuals and top Commercial Banking’s, by emphasising its highly differentiated offering compared with 

other domestic banks. Twenty to thirty new branches will also be opened during 2004 to extend CCF’s commercial 

reach. 

The product range will be enriched by drawing on international synergies within the HSBC Group. This includes 

opening an HSBC Premier branch on the Champs-Élysées, the first in continental Europe, and stepping up marketing 

to international customers by promoting HSBC Premier International Services and the new Visa Multinational 

business card. 

Another key priority is to continue developing the multi-channel banking strategy, by increasing call 

centre capacity, enriching the regional banking subsidiaries’ e-banking services, opening up Elys PC to 

companies with turnover of less than €15 million and promoting Elys Certification in response to the need 

for secure e-banking transactions. 

The goal in corporate, investment banking and markets is to increase market share among target customer 

groups by drawing on the strength and reputation of the HSBC Group. 

This involves consolidating CCF’s leading positions in the fixed-interest and forex markets, broadening the 

customer base and offering a growing number of Eurozone clients services in areas where the group already has 

strong expertise, such as cash management and trade services. 

More generally, CCF plans to broaden the client base by strengthening its position in the top Commercial 

Banking segment, supported by the retail banking networks. Lastly, the investment banking business will continue 

to develop as part of the HSBC Group’s growth strategy in this area. 

In asset management, CCF has extended its presence in continental Europe by opening a representative office 

in Switzerland and strengthening its Spanish operation. As a result of France’s new “Fillon” law, 2004 will also 

see further developments in employee savings. CCF will combine its insurance and asset management expertise 

with the distribution capability of its retail banking networks to launch new products tailored to customer needs. 

HSBC Asset Management Europe also intends to simplify and rationalise its range of funds and to develop 

partnerships with well-known national distributors in continental Europe. 

141


Recent developments and outlook (continued) 

Following the merger between CCF’s four private banking units on 1 October 2003 to form HSBC Private Bank 

France, the main goal for 2004 is to complete their operational integration and combine all the teams in a single 

location. HSBC Private Bank France will develop a single product and service offering for its strategic client 

groups, by combining the complementary expertise of the four original private banking units. Further synergies will 

be achieved through the merger of asset management companies Eurofin Gestion and HSBC Finances with Louvre 

Gestion. Louvre Gestion will then become HSBC Private Bank France’s dedicated asset management and 

multi-manager fund specialist. 

This growth strategy aims to make CCF a major French bank in its target customer groups and a leader in 

international banking services, by drawing on leverage from its strategic positioning and membership of one of 

the world’s biggest banking and financial services groups. 

142


Persons responsible for the reference document and for auditing the financial 

statements 

Persons responsible for the reference document 

– Chairman and Chief Executive Officer 

– Statutory Auditors 

Declaration of persons responsible for the reference document 

To the best of our knowledge, the information provided in this document is true and accurate, and contains all the 

facts required for investors to form a judgement on the Company’s assets, operations, financial position, earnings 

and prospects, and contains no omissions of a material nature liable to impair its significance. 

Charles-Henri Filippi, Chairman and Chief Executive Officer 

Dear Shareholder, 

As the statutory auditors of CCF and pursuant to Regulation no. 98-01 of the Commission des Opérations de 

Bourse, we have verified the information relating to the financial statements included in this reference document 

in accordance with the professional standards applied in France. 

This reference document is the responsibility of the Chairman of the Board of Directors. Our role is to express 

an opinion on the fairness of the financial information contained therein. 

We conducted the procedures we considered necessary, in accordance with the professional standards applied 

in France, to assess the fairness of the information related to the financial statements included in the reference 

document and to verify its consistency with the financial statements audited by us. We also verified all other 

information contained in the reference document in order to identify any material inconsistencies with the information 

relating to the financial statements and to report any apparent material misstatement of information that 

we may have uncovered based on the knowledge we have gained of the Company during the course of our 

engagement. The reference document does not include any forward-looking information for which there is a 

specific procedure in place. 

The parent company and consolidated financial statements for the year ended 31 December 2001, approved by 

the Board of Directors, were audited by KPMG Audit and Barbier Frinault et Autres in accordance with the 

professional standards applied in France. They expressed an unqualified opinion on those financial statements. 

Their report contained an emphasis of matter paragraph relative to changes in the presentation of annual and 

consolidated financial statements for banks, and to the amount and nature of consolidated exceptional items. 

The parent company and consolidated financial statements for the year ended 31 December 2002, approved 

by the Board of Directors, were audited by us in accordance with the professional standards applied in France. 

We expressed an unqualified opinion on the financial statements with no emphasis of matter paragraphs. 

The parent company and consolidated financial statements for the year ended 31 December 2003, approved by 

the Board of Directors, were audited by us in accordance with the professional standards applied in France. 

We expressed an unqualified opinion on those financial statements. Our report contained an emphasis of matter 

paragraph relative to changes in accounting methods pursuant to regulation CRC 2002-03 on accounting for credit 

risk and regulation CRC 2002-10 on depreciation and impairment of assets. 

The provisions of Article L. 225-235 of the French Commercial Code, which apply for the first time to the 2003 

financial year, require us to substantiate our opinion. Our reports on the parent company and consolidated financial 

statements for the year ended 31 December 2003 therefore draw your attention to the following matters. 

143


Persons responsible for the reference document and for auditing the financial 

statements (continued) 

As indicated in the notes to the parent company and consolidated financial statements, the Company takes 

provisions to cover the credit risk connected with its business activities. We examined the process established by 

management to identify and evaluate those risks and to determine the requisite provisioning levels. 

As indicated in the notes to the Parent company and consolidated financial statements, the Company books 

and values its financial instruments in accordance with generally accepted accounting principles using internal 

models for certain instruments. We examined the processes put in place by management to ensure that these 

accounting principles are properly applied. We also reviewed the system for control over the parameters used by the 

internal models. 

On this basis, we assessed whether the relevant accounting principles and methods were properly applied and 

the estimates used reasonable. 

Our assessment of these matters formed an integral part of our audit of the consolidated financial statements 

as a whole, and therefore contributed to our unqualified opinion as expressed in the first part of this report. 

Based on our investigations, we have no comments to make as to the fairness of the financial information 

presented in this reference document. 

Paris La Défense and Paris, 13 May 2004 



Partner 

KPMG Audit 

Department of KPMG S.A. 


Partner 

144

Names and addresses of Statutory Auditors Date first Date Date 

appointed reappointed term ends 


Incumbents 

Cabinet Alain Lainé 1 


2, rue du Colonel Moll 

75017 Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 – 2006 

KPMG 


1, cours Valmy 

92923 Paris La Défense Cedex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 – 2006 

Alternates 

Jean Autissier 1 

2, rue du Colonel Moll 

75017 Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2002 – 2006 

Gérard Gaultry 

1, cours Valmy 

92923 Paris La Défense Cedex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001 – 2006 

1 Further to the resignation of Cabinet Alain Lainé from its function of incumbent Statutory Auditor and of Mr. Jean Autissier from its 

function of alternate Statutory Auditor, the General Meeting held on 12 May 2004 appointed : 

– RSM Salustro Reydel, incumbent Statutory Auditor, 

– Mr. Benoît Lebrun, alternate Statutory Auditor, 

for the remainder of the term of their predecessors. 

145


Cross-reference table between Autorités des Marchés Financiers 

requirements and pages in the CCF Annual Report and Accounts 

AMF REQUIREMENTS 

Page in the CCF 

Annual report 

and Accounts 

Declarations of persons responsible 

– Declaration of persons responsible for the reference document 143 to 145 

– Declaration of statutory auditors 115 to 122 

Statutory information 

Issuer 127 

Share capital 

– Authorised unissued share capital 127 

– Potential share capital 127 

– Movements in share capital over five years 128 to 129 

Share performance 

– Dividends 131 

Share capital and voting rights 

– Ownership of share capital and voting rights 130 

– Changes in ownership structure 131 

Business operations 

– Group organisation (parent company/subsidiary relations, information on subsidiaries) 104 to 109 

– Key consolidated figures 44 to 47 

– Segmental and geographical analysis of operations 3 to 6 

– Markets and competitive positioning 3 to 6 

– Investment policy 110 to 112 

Risk management 

– Risk factors 34 to 40 

– Insurance and risk coverage 40 

Assets, financial position and earnings 

– Consolidated financial statements and notes 48 to 89 

– Contingent commitments and liabilities 77 to 79 

– Statutory auditors’ fees 20 

– Pro forma financial information 47, 61, 82 

– Regulatory prudential ratios (banking, insurance, brokerage) 38 to 39 

– Parent company financial statements and notes 90 to 103 

Corporate governance 

– Composition and operation of governing bodies 

(Board of Directors, Supervisory Board, etc.) 10 to 18, 21 to 22 

– Composition and operation of special committees 23 to 24 

– Executive directors (emoluments, share options granted and exercised, share warrants) 19 to 20, 138 

– Top ten employees excluding executive directors (share options granted and exercised) 138 

– Regulated related-party agreements 114 

Recent developments and outlook 

– Recent developments 141 

– Outlook 141 to 142 

146


Network of offices 

RETAIL BANK AND DISTRIBUTION 

FRANCE 


218 branches 

103, avenue des Champs-Élysées 

75419 Paris Cedex 08 

Telephone: 33 1 40 70 70 40 

Facsimile: 33 1 40 70 70 09 

Web: www.ccf.com 

Banque Chaix 

66 branches 

Pierre-Marie Bonaccorsi 

43, cours Jean-Jaurès 

84000 Avignon 

Telephone: 33 4 90 27 27 27 

Facsimile: 33 4 90 27 27 01 

Banque Dupuy, de Parseval 

46 branches 

Alain Gros 

10, rue du Général de Gaulle 

34200 Sète 

Telephone: 33 4 67 46 29 30 

Facsimile: 33 4 67 74 36 54 

Banque Hervet 

85 branches 

François Morlat 

184, avenue Frédéric et Irène Joliot Curie 

TSA 50003 

92729 Nanterre Cedex 

Telephone: 33 1 57 66 50 00 

Facsimile: 33 1 57 66 53 39 

Banque de Baecque Beau 

(Subsidiary Banque Hervet) 

1 branch 

Olivier Motte 

3, rue des Mathurins 


Telephone: 33 1 44 94 42 42 

Facsimile: 33 1 44 94 42 00 

Banque Marze 

10 branches 

Jean-Louis Chave 

Avenue de Roqua - BP 76 

07205 Aubenas Cedex 

Telephone: 33 4 75 87 49 10 

Facsimile: 33 4 91 13 33 16 

Banque Pelletier 

11 branches 

Jean-François Lorin 

Cours Julia Augusta 

40100 Dax 

Telephone: 33 5 58 56 88 70 

Facsimile: 33 5 58 56 88 80 

Banque de Picardie 

16 branches 

Benoît d’Audiffret 

3, rue de la Sous-Préfecture 

60200 Compiègne 

Telephone: 33 3 44 38 73 00 

Facsimile: 33 3 44 38 73 21 

Banque de Savoie 

55 branches 

Luc Hermet 

6, boulevard du Théâtre 

73000 Chambéry 

Telephone: 33 4 79 33 93 10 

Facsimile: 33 4 79 33 91 04 

Crédit Commercial du Sud-Ouest 

54 branches 

Bernard Francisoud 

17, allée James Watt 

33700 Mérignac 

Telephone: 33 5 56 13 72 72 

Facsimile: 33 5 56 34 47 91 

Société Marseillaise de Crédit 

157 branches 

Joseph Perez 

75, rue Paradis 

13006 Marseille 

Telephone: 33 4 91 13 33 33 

Facsimile: 33 4 91 13 33 16 

Union de Banques à Paris 

55 branches 

Pierre Jammes 

184, avenue Frédéric et Irène Joliot Curie 

TSA 50003 


Telephone: 33 1 57 66 60 00 

Facsimile: 33 1 57 66 64 60 

CCF Change 

Number of offices: 12 

Bertrand de la Comble 

60, rue Saint André des Arts 

75006 Paris 

Telephone: 33 1 56 81 11 20 

Facsimile: 33 1 56 81 11 22 

Elysées Factor 

Gilles Bucheton 

103, avenue des Champs-Elysées 

75008 Paris 

Telephone: 33 1 41 11 84 84 

Facsimile: 33 1 41 11 84 85 

Netvalor 

Olivier Costa de Beauregard 

64, rue Galilée 

75008 Paris 

Telephone: 33 1 56 56 21 50 

Facsimile: 33 1 56 56 21 56 

INVESTMENT BANKING AND MARKETS 

HSBC CCF Securities (France) SA 

Samir Assaf 

103, avenue des Champs-Élysées 


Telephone: 33 1 40 70 33 49 

Facsimile: 33 1 40 70 35 54 

e-mail: hsbc-ccfsecurities@ccf.fr 

ASSET MANAGEMENT AND INSURANCE 

HSBC CCF Asset Management Holding 

Christophe de Backer 

Immeuble Ile-de-France 

4, place de la Pyramide - La Défense 9 


Telephone: 33 1 41 02 40 00 

Facsimile: 33 1 41 02 46 86 

HSBC Asset Management (Europe) SA 

Christophe de Backer 


4, place de la Pyramide - La Défense 9 


Telephone: 33 1 41 02 40 00 

Facsimile: 33 1 41 02 46 86 

Vernet Valor 

Guy-Hervé Coffin 

93, rue des Trois Fontanot 

92000 Nanterre 

Telephone: 01 41 02 48 73 

Facsimile: 01 41 02 67 34 

HSBC CCF Epargne Entreprise 

Luc Roux 



Telephone: 33 1 41 02 41 49 

Facsimile: 33 1 41 02 69 58 

Site Internet : www.hsbc2e.com 

Sinopia Asset Management 

Philippe Goimard 

66, rue de la Chaussée d’Antin 

75009 Paris 

Telephone: 33 1 53 32 52 00 

Facsimile: 33 1 53 32 52 00 

Erisa 

Joëlle Durieux 

15, rue Vernet 


Telephone: 33 1 41 02 40 40 

Facsimile: 33 1 41 02 49 84 

Erisa Iard 

Gilles Jobert 


92000 Nanterre 

Telephone: 33 1 41 02 87 97 

Facsimile: 33 1 58 13 17 40 

PRIVATE BANKING 


Gérard de Bartillat 

20, place Vendôme 

75001 Paris 

Telephone: 33 1 44 86 18 61 

Facsimile: 33 1 42 60 05 62 

OTHER HSBC GROUP OFFICES IN FRANCE 

HSBC Bank plc 

Nicolas Fourré 

15, rue Vernet 


Telephone: 33 1 40 70 70 40 

Facsimile: 33 1 58 13 96 48 

HSBC Multimanager (Europe) 


La Défense 9 


Telephone: 33 1 58 13 98 50 

Facsimile: 33 1 58 13 98 51 

147


Network of offices (continued) 

OTHER EUROPEAN OFFICES 

BELGIUM 


Bernard de Bellefroid 

avenue de Tervueren 270 

1150 Brussels 

Telephone: 32 2 227 88 11 

Facsimile: 32 2 513 05 16 


Daniel Olave 

Avenue de Tervueren 270 

1150 Brussels 

Telephone: 32 2 227 88 11 

Facsimile: 32 2 227 88 99 

HSBC Dewaay S.A. 

Bernard de Bellefroid 

Avenue de Tervueren 270 

1150 Brussels 

Telephone: 32 2 227 88 11 

Facsimile: 32 2 227 88 99 


Christophe Keusters 

Maarschalk Gerard Straat n° 19 

B 2000 - Anvers - 1 

Telephone: 32 3 231 39 07 

Facsimile 32 3 225 10 40 

SPAIN 


Peter Atkins 

Torre Picasso – 33 e étage 

Plaza Pablo Ruiz Picasso, 1 

28020 – Madrid 

Telephone: 349 1 456 61 00 

Facsimile: 349 1 456 6200 

ITALY 


Alessandro Baroni 

Piazzetta Bossi 1 

20121 Milan 

Telephone: 39 02 72 43 71 

Facsimile: 39 02 72 43 78 00 

HSBC Asset Management (Europe) SA 

Piazzetta Bossi 1 

20121 Milan 

Telephone: 39 02 72 43 74 91 

Facsimile: 39 02 72 43 74 90 

LUXEMBOURG 


Richard Schneider 

18, boulevard Royal 

BP 843 

L-2449 Luxembourg 

Telephone: 352 22 93 91 

Facsimile: 352 22 13 04 

LGI 

Subsidiary – HSBC Private Bank France 

Christian Guilloux 

17, boulevard Roosevelt 

L - 2450 Luxembourg 

Telephone: 352 22 38 331 

Facsimile: 352 22 38 34 

NETHERLANDS 


Andy Hipwell 

Karspeldreef 6 H 

1101 CJ Amsterdam 

Telephone: 31 20 565 0060 

Facsimile: 31 20 565 0065 

UNITED KINGDOM 

Framlington Group Ltd 

Subsidiary – Asset Management 

Peter Chambers 

155 Bishopsgate 

London EC2M 3XJ 

Telephone: 44 20 7374 4100 

Facsimile: 44 20 7330 6644 

Sinopia International Ltd 

Lee Chautin 

25 Bruton street 

London W1X7 DB 

Telephone: 44 20 73 55 53 05 

Facsimile: 44 20 73 55 53 09 

e-mail : lchautin@sinopia.co.uk 

GREECE 


Hervé Grange 

109/111 Messoghion avenue 

11526 Athens 

Telephone: 30 210 699 9852 

Facsimile: 30 210 692 0541 

148

© Copyright CCF S.A. 2004 

All rights reserved 

No part of this publication may be reproduced, stored 

in a retrieval system, or transmitted, in any form or by 

any means, electronic, mechanical, photocopying, 

recording, or otherwise, without the prior written 

permission of CCF. 

Published by Corporate Communications, CCF, Paris. 

Designed by Group Public Affairs, The Hongkong and 

Shanghai Banking Corporation Limited, Hong Kong. 

Printed by Franklin Partners, Paris, on Magno Satin 

paper. Made in Sweden, this paper is 100% virgin 

fibers. 

Photography credits: 

All photos by Philippe Schaff 

except Charles-Henri Filippi et Jean Beunardeau, 

by Pascal Pinson.


103, avenue des Champs-Elysées 


France 

Telephone: (33 1) 40 70 70 40 

Facsimile: (33 1) 40 70 70 09 

Web: www.ccf.com

The world's local bank Annual Report and Accounts CCF - HSBC

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?