Asset portfolio

 
Ensuring a controlled run-off of its balance sheet to minimize the risks for the States and the global financial system is the key mission of Dexia.
 
Over the first quarter of 2014, Dexia Group finalized the entity disposal process of its operational entities considered viable as requested by the European Commission under the orderly resolution plan. Having reached its target balance sheet size, the Group now focuses fully on the management of its residual assets in run-off.
In line with the commitment made to the European Commission not to enter into any new commercial activity, the Group’s balance sheet will decline over time as a result of the natural amortization of the remaining assets. To a limited extent, the Group can engage in opportunistic deleveraging from a risk point of view. 

 

Portfolio management strategy

Dexia’s portfolio management strategy is defined by the orderly resolution plan as approved by the European Commission in December 2012: the aim is to wind down the residual assets until extinction while protecting the interests of the State shareholders and guarantors such as to avoid a recapitalization of the Group or the activation of the government guarantee.
This involves a cautious management of the portfolio and careful monitoring of the risks, which constitutes the objectives of the “Assets” business line and the “Credit Risk” activity line of Dexia Group.
The “Assets” business line ensures the follow-up of all assets, in each market, to protect and optimize their value. In order to protect Dexia’s capital base, it’s mission is to take advantage of market opportunities, to contain losses and to protect margins when restructuring assets, early terminating commitments or derisking the portfolio.
 
The Group’s portfolio exposures are monitored closely by the “Credit Risk” activity line, taking into account specific concentrations on counterparties and sectors. Its mission is to identify and manage risk, proactively alert and propose corrective actions where applicable. In particular the “Credit Risk” activity line decides on the amount of provisions deemed necessary or even on the deleveraging of specific assets in collaboration with the “Assets” business line.
 

Portfolio distribution

Following the historical activity of Dexia Crédit Local S.A., the residual portfolio of the Group is significantly concentrated on sovereigns and on public sector entities, representing around 69% of the total asset portfolio as at 30 June 2016. The majority of these sovereign and public sector exposures relates to the European Union as well as to the U.S.
 

 

  


 


 
 

Portfolio breakdown by maturity

As at 30 September 2016, around 60% of Dexia’s Group portfolio has a remaining maturity of more than 10 years. This long term profile stems from the specific nature of Dexia Crédit Local’s Public Finance activity, which consist mainly of medium and long term loans granted to the local public sector.
 

Breakdown by maturity (EAD1 in %)

 
 



 
 

Portfolio breakdown by rating class

The average good quality of Dexia Group’s portfolio is reflected by an investment grade rating share of 89% as at 30 September 2016.
 


 
 
(1) Exposure at default (EAD) on 30 September 2016 corresponds to the best estimate of credit risk exposure at default by the debtor.