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									         2005




Annual
Report
                                             President’s           Statement                        3




                                    I n 2005, CIC won more than 160,000 new individual,
                                      self-employed professional and corporate clients. New
                                    loan business continued apace, with growth of more than
                                    23%. Home loans were particularly buoyant, with figures
                                    up 32% year-on-year and CIC currently accounting for
                                    6% of new mortgages in France, as against 3% in 1998.
                                    Consumer loans were also strong, rising 13%, and investment
                                    and capital asset loans to self-employed professional
                                    and corporate customers soared by upwards of 30%.

The group saw the fruit of its reorganization initiatives: the expansion of the network was
instrumental in enabling it to increase net income desite the sale of the risks on its structured
products portfolio. The growth also bears out the group’s enduring commitment to employee
training and technological progress as means of providing customers with the best products
and services to match their needs. The major projects implemented on the back of privatization
are now in the completion stages and also showing results.

The regional banks, organized into five regional divisions, achieved economies of scale
and renewed growth thanks to their first full year’s access to the group-wide IT system.

Other projects have gone forward: the CIC brand is now established throughout the group
and shared resources have been streamlined; over the past six years 1,940 branches (over
half the network), have been renovated and some 286 new branches have been opened.

The global and cross-sectional businesses have been restructured in a similar vein to the
segment-specific subsidiaries. This is already the case for private banking and private equity
and the other businesses are due to come on board in the course of 2006.

These sea changes have been backed up by a substantial employee training program,
which equips staff for value-enhanced positions in a constantly changing professional
environment.

CIC’s success in developing activities upstream and downstream of retail banking activities
can be seen in its strong foothold in the private equity market – a direct result of the sound
reputation it has built up in the corporate world.

While further changes remain to be implemented, the group is already in good working order.
Its financial strength has been confirmed by the rating agencies, with its long-term rating
maintained by Standard and Poor’s (A+ with a positive outlook) and Moody’s (A1). Fitch has
upgraded its rating to AA-.

Strengthened by the advances that have been made, CIC and its majority shareholder,
Crédit Mutuel Centre Est Europe, are now ready to move ahead with all initiatives that
will ensure the achievement of its strategic targets.




                                                                              Michel Lucas
                                                          President of the Executive Board
CONTENTS                                    45 SUSTAINABLE DEVELOPMENT
                                            46 Ethics and compliance
 5 CIC group profile
                                            46 Internal control
 6 Key consolidated figures
                                            46 Report of the Chairman of the
 7 REVIEW OF OPERATIONS                        Supervisory Board on internal
                                               control procedures
 8 CIC group simplified organization chart
                                            50 Risk management
 10 Retail banking
                                            58 Human resources
20 Financing and capital markets
                                            59 Technological capabilities
26 Private banking
                                             61 Client relations
30 Private equity
                                            62 Shareholder relations
32 Regional and international directory
                                            63 FINANCIAL INFORMATION
35 CORPORATE GOVERNANCE
                                            64 Consolidated financial statements
36 Management team
                                            118 Financial statements of the bank
38 Report of the Chairman of the                (extracts)
   Supervisory Board on the preparation
   and organization of the Board’s work     133 LEGAL INFORMATION
39 Executive Board and Supervisory          134 Shareholders’ Meeting of May 11, 2006
   Board members
                                            146 Additional information
                                            150 General information
                                            152 Person responsible for the registration
                                                document (document de référence)
                                                and Statutory Auditors

                                            153 Cross-reference table
                                                            CIC group profile                    5




    CIC, the group holding company and network bank serving the Paris
    region, comprises eight regional banks and specialist entities covering
    all areas of finance – both in France and abroad – and insurance.




         3,627,922 clients, including:

         2,985,849 individuals                   23,265 employees
         500,845 self-employed
                        professionals
         138,468 corporates



                            1,940 agencies in France
                            3 foreign branches and
                            37 foreign representation
                               offices




CIC has been part of Crédit Mutuel since 1998
and together they have become France’s:
                                                Fourth-largest banking group
                                                  Second-largest retail bank
                                                    Leader in bancassurance
                                                        Number two player in
                                                 electronic payment systems
                                                              Figures as at December 31, 2005
6      Key consolidated figures

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                                                                                      2005                        2004

      Net banking income                                                             3,265                        3,374

      Operating income                                                                   655                       760

      Net income                                                                         578                       550

      Cost/income ratio                                                                 77%                       71.7%




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                                7




     Review of
operations




     8 CIC group simplified
       organization chart
    10 Retail banking
    20 Financing and capital
       markets
    26 Private banking
    30 Private equity
    32 Regional and international
       directory
8   REVIEW OF OPERATIONS




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                                                          CIC GROUP SIMPLIFIED ORGANIZATION CHART             9




                                                             The CIC group is made up of:
  ����          ����
                                                             • CIC (Crédit Industriel et Commercial), the holding
                                                               company and head of the CIC group’s bank
   ���           ���                                           network. It is also the network’s bank serving the
���������      �������                                         Paris region and houses the group’s investment,
���������     ����������                                       financing and capital markets activities;
                                                             • eight regional banks, each of which services
                                                               a clearly-defined region;

  ����                                                       • specialist entities and service companies that
                                                               serve the whole group.
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  ������                                                     was as follows:
  ������
                                                             - BFCM (Banque Fédérative du Crédit Mutuel):
                                                               70.81% and Ventadour Investissement: 22.06%,
                                                               representing a total interest of 92.87% for Crédit
                                                               Mutuel Centre Est Europe;
                                                             - Caisse Centrale de Crédit Mutuel: 0.99%;
                                                             - Crédit Mutuel Nord Europe: 0.87%;
                                                             - Compagnie Financière de Crédit Mutuel: 0.75%;
                                                             - Crédit Mutuel Maine-Anjou, Basse-Normandie:
                                                               0.69%;
                                                             - Crédit Mutuel Océan: 0.69%;
  ����          ����         �����          �����            - Crédit Mutuel Centre: 0.57%;

   ���                                                       - Crédit Mutuel Loire-Atlantique Centre-Ouest: 0.35%;
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 �������                     ������      ��������������      - Crédit Mutuel de Normandie: 0.07%;
              ���������
 ���������                 �����������   ������������        - Employees: 0.58%.
                                                             The remaining 1.56% of shares are held by the public.
10        REVIEW OF OPERATIONS




                                                                         In 2005, CIC passed a new milestone in terms of group-wide
                                                                         harmonization of pricing practices, which will facilitate sales
                                                                         efforts and the implementation of a nationwide multimedia plan.
                                                                         Retail banking operations were bolstered by continued expansion
                                                                         of the client base, particularly in personal banking (+5%), and by
                                                                         a new surge in home loans despite the slowdown in the market.
                                                                         CIC now accounts for about 6% of new home loans in France
                                                                         compared to 3% in 1998. Over this same period, the market grew
                                                                         by 172% (new loans excluding renegotiations).
                                                                         Other important developments were the increased take-up of
                                                                         risk insurance policies (new personal risk insurance was up 57%)
                                                                         and online banking; the success of Acti-trésorerie, the new
                                                                         automated cash management service for SMEs; and the strong
                                                                         demand in service contracts for individual customers (218,000
                                                                         new Contrats Personnels signed), spurred by the popularity of
                                                                         the Starts Jeunes Actifs offering launched at the beginning of the
                                                                         summer.



Retail
                                                                         The significant increase in business linked to the growth in fees
                                                                         and a new drop in loss provisions resulted in an improvement in
                                                                         retail banking income.



banking                                                                  Network
                                                                           Network development
Retail banking activities registered
                                                                         1,940 branches
significant growth in 2005, and profits
                                                                         In 2005, 50 new branches were opened, bringing the total to
were up sharply.                                                         1,940. Through this ongoing extension of its local network, CIC
                                                                         continued to develop its capacity to serve retail customers, self-
In France, demand for home loans                                         employed professionals and businesses.

gradually subsided over the year, while                                  2,014 ATMs and 387 automatic deposit machines
still remaining high. This relative decline                              With the addition of 115 ATMs over the year, 2,014 units are now
was counterbalanced by rising demand                                     available to cardholders. New technological advances have
                                                                         been incorporated into the ATMs. These machines were originally
for consumer loans and signs of an                                       limited to cash withdrawals alone but CIC clients can now use
upturn in the financing needs of SMEs.                                    them for a variety of account management operations. In
                                                                         addition, non-banking services are now offered, such as reloading
                                                                         SFR prepaid telephone cards. In the same spirit of client service,
                                                                         ATMs in the Paris area can reload Navigo passes following an
                                                                         agreement signed with RATP, the Paris public transport agency.
                                                                         CIC also installed 387 automatic deposit machines which clients
                                                                         can use to deposit checks and cash without having to go to the
Key figur es                                                             bank counter. This is also possible with 40% of the CM-CIC ATMs.
                                                               Change
Retail banking                                  2005
                                                             2005/2004
(in € millions)

Net banking income                             2,685)          + 3.0%
General operating expenses                     (1,974)        + 2.8%
Operating income before provisions                    711)     + 3.5%
Provisions                                        (116)       - 52.3%
Income before tax                                660)         + 36.1%
Net income                                       448)        + 40.4%

Source: 2005 consolidated financial statements: IFRS
2004: pro forma IFRS excluding IAS 32-39 and IFRS 4
                                                                                            RETAIL BANKING    11




Filbanque connections soar
Demand for online banking, offered through Filbanque Particuliers,
Filbanque Professionnel and Filbanque Entreprises, surged, with
more than 800,000 new subscribers (+17%) and nearly 63 million
logins (+22%). On average, each subscriber made nearly 80
“clicks” per year to view account balances and carry out
transactions. CIC continued to improve its tools by harmonizing
configurations for transfers, tightening identification procedures,
etc. Certain functions are now accessible on mobile phones
through WAP and i-mode technologies. A new contract, Filibanque
connexion, comprising all the management and pay-per-use
functions, was launched to meet the needs of occasional users.




  Personal banking clients

CIC won 145,000 new personal banking clients in 2005, bringing
the total number of personal banking clients to 2,986,000 (+5%).
This increase was attributable to:
• a vigorous client acquisition drive through real estate loans,
  savings products and property/casualty insurance;
• ongoing branch network expansion, with 50 new openings;
• a sustained focus on young people through the Starts Jeunes
  Actifs line geared to the market segment of the under-28
  population entering working life, which won 30,000 subscribers.

Growth in client deposits
Demand deposits grew by 13% as a result of the policy of winning
new clients and systematically offering bancassurance services.
In addition, passbook savings accounts increased by 6.8% and the
line of stepped-rate term deposits by 8.8%. Amounts in PEL home
savings plan accounts stagnated, however, due to their reduced
attractiveness as a result of regulatory changes.
The rise in interest rates in the last quarter led to an appreciable
increase in spreads.

Managed savings
Despite a strong performance in marketing guaranteed funds, FIP
local investment funds and FCPI innovation funds, the total amount
invested in CIC group mutual funds did not increase significantly.
Life insurance sales, on the other hand, continued to grow, up
27.5% to €2.3 billion.




                                                                       HIGHLIGHTS:
                                                                       • Number of clients: 3,627,922 (+5%)
                                                                       • Demand deposits: €18,382 million (+8%)
                                                                       • Property/casualty (comprehensive
                                                                         homeowner and automobile insurance
                                                                         policies): 478,582 (+34%)
                                                                       • New home loans: €10,953 million (+32%)
12     REVIEW OF OPERATIONS




     Lending                                                                   Self-employed professionals
     New home loans reached €8.9 billion, bringing total outstandings
     to €23 billion (+29%). A tool for running mortgage loan simulations
     and preparing applications was launched on the cic.fr website.          In 2005, the CIC group continued to pursue a two-pronged
     In the sphere of consumer loans, the Crédits Maîtrisés advertising      strategy with, on the one hand, a global approach to this market,
     campaigns were coupled with a sales drive, helping to take total        providing clients with one-stop business and personal services
     outstandings to €2.8 billion (+8%).                                     through a network of more than 1,500 dedicated relationship
                                                                             managers and a program of promotional activities; and, on the
     Thanks to the increase in outstanding loans, net interest income        other, a segment-based approach separately targeting self-
     rose, despite increasing competition, particularly in real estate       employed professionals, retailers, tradespeople, micro-businesses
     loans.                                                                  and even specific professions.

     Service contracts                                                       The year saw the winning of new clients through targeted or high-
                                                                             tech offerings and the take-up of services by existing clients thanks
     Marketing efforts were particularly directed at new accounts or
                                                                             to structured marketing programs integrating the group’s business
     those with little activity. The result was the signing of 147,000 new
                                                                             centers.
     Contrats Personnels - an increase of more than 50%.
                                                                             Services and commissions
     Online banking
                                                                             Of particular note was the deployment of the Contrat Professionnel,
     97,000 additional clients took up the Filbanque particuliers
                                                                             a comprehensive package of products, services and flat-rate
     service, bringing the total number of subscribers to 674,000. The
                                                                             commissions that yielded more than 18,000 signed contracts
     number of logins increased by 22%, with a ten-fold increase in
                                                                             and 17,705 new clients.
     WAP use in two years.
                                                                             Online banking continued to develop with the signing of 15,738
     Property/casualty and personal risk insurance                           new multimedia contracts integrating business and personal
                                                                             account management and transactions.
     With 163,000 new automobile and homeowner insurance policies,
     the total number of policies in each category increased by 30%          CIC maintained its lead in electronic payment systems by
     and 20% respectively.                                                   incorporating into its line an electronic payment terminal using
                                                                             DSL connections and a specific offering for the restaurant and
     Personal risk insurance has found its place as a natural component
                                                                             catering sector. The number of active payment terminals rose
     of the offering, with 85,000 new policies written, taking the total
                                                                             5.5% to 107,000 by the end of the year, with net commissions
     number of policies in force to 344,000.
                                                                             from this activity up 9.7%
     Telephony
                                                                             Lending
     At the end of 2005, the marketing of mobile telephony in partnership
                                                                             Investment loans climbed 30% to over €1.8 billion.
     with NRJ Mobile met with considerable success, particularly among
     young people. Over two months, sales totaled 15,000.                    Lease financing picked up in 2005 with €330 million in new
                                                                             business, in particular through a range of vehicle financing
     Commissions and charges                                                 products including Autoconfort Pro, a finance lease with a built-in
                                                                             maintenance contract developed by CM-CIC Bail.
     The increase in client take-up, combined with the vigor of financial
     markets, resulted in a nearly 14% increase in commissions from          The self-employed professionals market accounted for €1.9 billion
     services.                                                               in new home loans, i.e., 18% of total new home loans for the CIC
                                                                             group.

                                                                             Insurance
                                                                             In 2005 personal risk insurance took off with nearly 12,000 new
                                                                             policies written.

                                                                             Savings inflows
                                                                             Thanks in particular to the Epargne Evolutive campaign, new
                                                                             funds invested in life insurance and endowment policies topped
                                                                             €340 million.
                                                                                                               RETAIL BANKING         13




Segment-based marketing                                                   Corporates
In 2005 an agreement was signed with CSOEC, the French
accounting regulatory body, clearing the way for CIC’s remote
transmission of clients’ bank statements to their accountants via       The sales organization is closely attuned to companies’ needs. In
the Jedeclare.com portal.                                               each region, corporate clients benefit from all the skills and
Several promotional initiatives from previous years were repeated,      resources of the group’s national and international business
such as taking part in the national convention of certified public       centers. In addition to the services of a dedicated relationship
accountants, as well as that of dentists, to promote a lease            manager, they have access to experts in lease financing, cash
finance offering. CIC also took part in the convention organized         management, international development, factoring, employment
by the French national bar association, highlighting its strong         and retirement savings plans, and financial engineering.
relationships with CARPAs (treasury and accounting organizations
for French lawyers) - of which nearly one in three is a client of the   Winning new clients
group.                                                                  At the end of 2005, the corporate client base totaled 138,468, a
Measures to increase penetration in the micro-business segment          1.9% increase year on year.
were also maintained. An offering aimed at business start-ups,          The bank’s approach to business development focuses on
CreaCIC, was launched along with the revamping of the                   qualified companies with growth potential, as demonstrated by its
Entrepreneur’s Guide.                                                   relationships with 30% of all A-rated French companies.
For associations, 2005 saw the rollout of a dedicated offering
                                                                        Corporate treasury management
and the establishment of further national partnerships. The
agreement with private Catholic schools and Catholic education          Deposits rose 5.1% overall.
governing bodies was renewed and extended. An agreement was             Demand for the automated cash management tool CIC Acti-
signed with UNEP, the French association of landscaping                 trésorerie, which tracks companies’ surplus balances on a day-
professionals, in conjunction with an employee savings plan             to-day basis, has increased sharply since 2004, with a 60% rise in
agreement signed by CIC Epargne Salariale.                              the number of contracts in force compared to end-2003, while
Last but not least, marketing efforts targeting farmers were            over the same period demand deposits grew 2%.
continued, with a dedicated product range and specialist sales          The stepped-rate term deposit account is very popular with
force, that were represented for the first time at the agricultural      companies that are looking to earn a guaranteed and increasing
equipment fair.                                                         return on sustained cash surpluses. Total amounts deposited in
                                                                        such accounts rose 62% in 2005.
14     REVIEW OF OPERATIONS




     Lending                                                             Card-based security solutions were also made available to clients
                                                                         for their online transactions, such as a personal keys card and a
     Total outstanding loans rose 7% (+€1,350 million).
                                                                         banking authentication card.
     As part of the process of providing a comprehensive solution to
                                                                         Additional security features were added to the Vcom product
     companies’ need for financing throughout their operating cycle,
                                                                         (closed list management in particular) and it is now operational
     Factocic, the group’s specialized factoring subsidiary, has
                                                                         for euro transactions in Europe.
     developed a range of innovative and high-performance tools that
     include imaged promissory notes, flash transfers and e-médiat        In order to facilitate online payment, especially following the
     transactions.                                                       lowering of the sales threshold beyond which companies are
                                                                         required to file VAT returns online, an additional agreement was
     As for investment financing, €3.9 billion (+33%) in capital asset
                                                                         entered into with a second certification authority.
     loans were granted.
                                                                         The number of payment cards held by client companies rose 17%
     New equipment lease financing amounted to €1 billion.
                                                                         to reach 47,300.
     In 2005, the corporates segment made a significantly larger
     contribution to the real estate lease financing activity of the      Employee savings plans and pension solutions
     CM-CIC Lease specialized business center, registering 19 trans-
                                                                         A holistic approach to employee savings and pension benefits
     actions totaling €32.8 million compared to 18 transactions
                                                                         was implemented through the launch of the unique bilan salarial
     totaling €20.6 million (+59%).
                                                                         offering, developed with CIC Epargne Salariale and Assurances du
                                                                         Crédit Mutuel (ACM).
     Cash management
                                                                         CIC Epargne Salariale established 408 new relationships repre-
     A variety of developments were introduced to meet clients’ needs
                                                                         senting €36 million in new funds and ACM-CIC Assurances wrote
     for streamlining and simplifying cash management operations,
                                                                         462 new statutory retirement bonus policies, which brought in
     while optimizing processing security.
                                                                         €11 million in new funds.
     The CIC Cash offering was enhanced through the implementation
     of a single operating process for all banks and countries.          International operations
     New features that facilitate reporting and the transmission of      Fifty-three per cent of CIC client companies do business abroad.
     cash management orders were incorporated into Filibanque
                                                                         Aidexport, the group’s specialized subsidiary, offers services to
     Entreprises, CIC’s online banking service. This enhancement also
                                                                         assist companies with international development. The company
     made it possible to exchange files through the website without
                                                                         has attracted extensive media attention, with favorable coverage
     having to install or use bank interchange software, which greatly
                                                                         that underscored CIC’s commitment to supporting its clients in
     contributed to the 6.8% increase in client subscribers, to
                                                                         foreign markets.
     46,000.
                                                                       RETAIL BANKING   15




Support services
Insurance
All CIC Assurances activities – life insurance, personal insurance
and property/casualty insurance – grew in 2005, generating
€188 million in commissions paid to CIC group banks.

Life insurance
Life premium income climbed 27.5% to €2,309 million, of which
53% was from non-unit-linked policies.
In response to client demand, the line comprises two major
products –the non-unit-linked Livret Assurance Retraite policy
and the unit-linked Plan Assur Horizons policy. The offering is
rounded out by the PERP Plan Retraite Revenus pension savings
vehicle and the Capital Croissance endowment policy. The high-
net-worth client segment was offered a unit-linked product called
Plan Patrimonio.
An intensive drive to market pension solutions to self-employed
professionals involved offering both the Plan Assur Horizons
policy (which lies outside the scope of the Madelin Act), and its
new version, Plan Assur Horizons Pro, which meets Madelin Act
conditions.

Personal insurance offerings
The personal risk insurance product range was overhauled to
make it more client-friendly. From bank account protection for
the youngest clients to specific products for senior citizens, a full
range of solutions is offered. The Plans Prévoyance policy, for
example, can guarantee payment, depending on the client’s
needs, of a lump sum in case of death or total disability, daily
benefits in case of unfitness for work and a pension in case of
disability. Another new feature is a rente éducation educational
annuity policy that can be taken out separately or to top up Plans
Prévoyance guarantees.
Personal risk insurance activity grew sharply in 2005, with over
85,000 new policies (up 53% compared to 2004) bringing the
total number of policies in force to 344,400.
In parallel, Sécurépargne strengthened the offer in banking risk
insurance. This basic product offers a performance guarantee for
most types of accrual savings vehicles, such as PEL home savings
plans, PEA personal equity plans or life insurance.
Three policies – Santé CIC, Santé Senior and Santé Parcours J –
comprise the supplementary health insurance range. These
products include high-quality customer service through their
helpful call centers: TelSanté provides information on insurance
coverage and benefits; TelSanté Conseils advises clients on their
dental and eye care prescriptions, and provides contact
information for a network of partner service providers offering
preferential rates to CIC policyholders. Since 2005, policyholders
using the Avance Santé payment card for healthcare expenses
can avoid paying out of pocket for medication or doctor and
dentist visits.
16     REVIEW OF OPERATIONS




     Property/casualty offerings                                             These assets include €3,637 million in employee savings funds
                                                                             and €7,603 million in mutual funds for which bookkeeping has
     More than 163,000 new automobile and home insurance policies
                                                                             been subcontracted to CM-CIC AM. The €44,792 million in public
     were written, bringing the total number of policies in force to
                                                                             and dedicated mutual funds are split between the following fund
     440,600.
                                                                             categories:
     A complete marketing package was rolled out to support the
                                                                             • equity and diversified funds: €7,283 million;
     network during the busy autumn insurance period. For two
                                                                             • guaranteed funds: €2,292 million;
     months, in addition to posters, mail shots and other standard
                                                                             • money market funds: €30,023 million;
     media, a video raising awareness of the offering was posted on
                                                                             • bond funds: €2,391 million;
     the website. CIC Assurances also sponsored the weather report,
                                                                             • dedicated funds: €2,803 million.
     and call center employees phoned clients to remind them to
     renew their coverage.                                                   As in 2004, net new money taken in – excluding employee
                                                                             savings plans – mainly went into money market funds (nearly
     Two new options rounded out automobile insurance coverage -
                                                                             €1,500 million) and structured funds (€300 million).
     Automobile Club and Assistance Tracking. Targeting high-end
     vehicles, Assistance Tracking provides a system for locating the        Despite the recovery in stock market indexes, the public’s lack
     vehicle in the event of theft as well as specific assistance services.   of interest in traditional equity mutual funds persisted.
     These guarantees will be maintained in the new policy to be             CM-CIC AM accordingly focused its efforts on products that
     launched in spring 2006 at the same time as a new home                  come to grips with savers’ low appetite for risk:
     insurance policy.
                                                                             • guaranteed funds indexed to stock exchanges (CIC Optimum
                                                                               Monde); these straightforward products that varied little from
     Investment funds                                                          one campaign to the next were regularly promoted without
     In 2005 CM-CIC AM won recognition as one of the major French              excluding market conditions permitting more opportunistic and
     asset managers.                                                           sophisticated products such as CIC Tonus avril 2011 intended for
                                                                               more knowledgeable clients; this expanded offering served to
     The new company, the result of the merger of Crédit Mutuel Finance        recycle structured funds that had come to maturity and build
     and CIC Asset Management, boasts a team of 183 including 60               market share in this asset class;
     managers and management assistants. It ranks sixth by managed           • for high-net-worth individuals, the absolute performance fund
     assets, with €49,149 million invested in nearly 850 funds.                Union Réactif Valorisation, which doubled its assets thanks in
                                                                               part to highly respectable results; its features (4%-6% annual
                                                                               return regardless of market conditions, controlled volatility)
                                                                               clearly provided many investors with the risk/return combination
                                                                               they were seeking.
                                                                             To win back savers who had come in for rough treatment during
                                                                             previous stock market bubbles, a new line of funds, Stratigestion
                                                                             (dynamic, balanced, moderate) was rolled out. These profiled
                                                                             funds are intended to provide clients with services tailored to
                                                                             their needs, including the detailed reporting they expect.
                                                                             In 2005, the CM-CIC AM teams once again received market
                                                                             recognition by winning for the third straight year the Lauriers d’or
                                                                             FCP award from Investir magazine for top-quality investment
                                                                             funds and by the excellent ranking in the Edhec Alpha League,
                                                                             thus confirming CM-CIC AM’s ability to generate steady and
                                                                             significant added value through its management activity.
                                                                                                              RETAIL BANKING          17




Employee savings management                                           Factoring
After the migration in 2004 to a new accounting software system,      In a high-growth market, Factocic reached a volume of €6.9 billion
a second major improvement was launched in 2005: electronic           in receivables purchased in 2005, up 10.4% compared to 2004.
document management. This innovation optimizes processing             With an 11% rise in the number of active clients, Factocic now
procedures with greater speed and security while increasing the       works with over one in ten companies using factoring services.
reliability of transactions. For the time being, it is used in
                                                                      The factoring offering for international transactions – both
notifications of fund allocation options and should be extended
                                                                      import and export – was bolstered and met with clear success, as
to withdrawals in 2006. The imaging of documents naturally
                                                                      evidenced by the 63% expansion in Factexport’s business
meets the Afnor Z42-013 standard which certifies that the digital
                                                                      volumes. The Orféo product, which provides tailored receivables
document corresponds to the original.
                                                                      financing and management solutions to medium- and large-
Marketing efforts met with success as witnessed by the €51 million    sized companies, also saw sharp 28% volume growth.
in new money and 2,620 new client companies such as Sylis,
                                                                      Factocic has established itself as a strategic center of expertise
Rexel, UNEP, Heppner and Nature et Découverte. This sales
                                                                      for CIC and offers the group’s corporate and self-employed
growth will be reinforced through the interfacing of employee
                                                                      professional clients a complete range of factoring solutions. The
savings management tools with the IT systems of the regional
                                                                      sales push, coupled with the expansion of Crédit Mutuel Factor’s
banks. Data and performance analysis tools will thus be fully
                                                                      business with the Crédit Mutuel networks, delivered €1.85 billion in
integrated into employee savings management, strengthening
                                                                      revenues from new contracts during 2005.
branch teams’ knowledge of savings products and their ability to
sell them. The PEE savings plan kit and the PERCOI intercorporate     The year also saw the operational rollout of highly competitive
collective pension savings plan kit (launched in September 2004)      products for the imaging of invoices and payments and the
have already benefited from these advances; the kit for SMEs           enhancement of the Internet service offering. Satisfaction
should also be positively impacted in 2006. These three kits were     surveys carried out with clients and business referral partners
awarded Dossiers de l’épargne magazine’s Label of Excellence for      confirmed that service quality is deemed to be very high.
the quality of information provided to clients as well as for their   Despite pressure on margins, the factoring business generated
competitiveness.                                                      operating revenues of €58 million in 2005. Net income rose 3.3%
The year also brought with it the bilan salarial tool which is        to €14.1 million.
exclusive to CIC Epargne Salariale and highlights the potential
payroll tax savings. The company can thus clearly and immediately
see the effects of proposed solutions as part of a medium- to
long-term remuneration policy.
In 2005, the Breton Act, which aims to promote and clarify certain
employee savings provisions, extended the benefits of employee
profit-sharing to company owners and their spouses. Measures
to promote employee stock ownership plans in non-listed
companies have also been adopted.
18     REVIEW OF OPERATIONS




     Receivables purchasing                                             The year’s achievements are reflected in:
                                                                        • a 12% increase in assignments, with the processing of 208,000
     CM-CIC Laviolette Financement, the group’s specialized center of
                                                                          invoices representing inflows of €1,051 million;
     expertise for purchasing of assigned business receivables,
                                                                        • a 15% increase in banking income before payments to the
     continued its expansion in 2005 and passed the symbolic
                                                                          regional banks, to €16.2 million;
     €1 billion mark in sales processed.
                                                                        • 8% growth in overall profitability to €8 million before payment
     In addition, four new partnerships were begun with CIC Banque        of fees to partner banks;
     CIO, the Fédérations du Crédit Mutuel Centre-Est Europe and        • a 27 % rise in fees paid to partner banks to €6.6 million, i.e., 82%
     Savoie-Mont Blanc and Banque Commerciale du Marché Nord              of overall profitability.
     Europe.
                                                                        Net income was €0.9 million compared to €0.6 million in 2004.
                                                                                                               RETAIL BANKING        19




Real estate financing                                                    Equipment leasing
CM-CIC real estate interests                                            After two years marked by far-reaching changes – IT migrations
                                                                        to bring the management of all operations onto the same
Working with real estate developers through the acquisition of
                                                                        software and the merger of the group’s various lease financing
interests in SCI (non-trading real estate company) consortia for
                                                                        structures – 2005 was devoted to consolidating and organizing
the financing of residential real estate, in 2005 CM-CIC Soparim
                                                                        CM-CIC Bail, as well as developing new tools, improving
invested €4.3 million in 19 new projects (roughly 1,150 housing
                                                                        productivity and embarking on the strategies provided for in the
units), with a market value for the SCIs of €213 million.
                                                                        medium-term plan.
Net income was €1.6 million.
                                                                        Due to increasing demand, two new staff members were taken on
CM-CIC realty                                                           to strengthen the team in charge of equipment manufacturer
                                                                        relations. In addition, to support marketing efforts, experts in
CM-CIC Afedim, which is licensed to do business as a realtor under      leasing techniques now work with the sales team in putting
the Hoguet Act, sells new residential properties on behalf of the       together complex deals, and they also contribute to the creation
Crédit Mutuel and CIC networks.                                         of new tools and test and put in place new offerings and new
Its primary targets are investors who are clients of the regional       distribution channels.
banks, but it also sells to first-time buyers. The programs put on       Bail marine, a new boat financing offering which is managed and
the market are approved in advance by a committee composed              distributed from the Nantes office, was made available to the
of representatives of the banks’ lending, asset management and          networks. It was promoted during nautical shows in La Rochellle
sales teams.                                                            and Paris.
In 2005, 3,070 homes were sold, representing a total of €483 million    CM-CIC Bail won 41,000 new leasing contracts amounting to
and generating €20 million in fees before taxes.                        €1.7 billion, a 16% increase in a market that grew 7.6% (over the
                                                                        12-month period ending September 30). The fleet of vehicles
CM-CIC Lease                                                            managed in connection with Auto confort increased by 50% and
For the third year in a row, total new real estate lease financing in    an additional staff member was taken on to handle the extra work.
France exceeded €4 billion, with a total of €4.6 billion in officially
                                                                        Thanks to the increase in new leasing and productivity gains, a
recorded contracts.
                                                                        total of €30 million was paid out to the business referral
CM-CIC Lease is one of the five largest players in the sector and        networks.
handles transactions averaging €1.5 million. In 2005, its business
                                                                        Lastly, CM-CIC Bail received approval to market its services in
volume grew 10% to reach €344 million in new real estate lease
                                                                        Luxembourg and has applied for authorization in Belgium.
financing (€328 million in signed contracts).
During the year, CM-CIC Lease fully integrated into its management
platform all of the contracts resulting from the mergers at the end
of 2004 (Lorbail, Solybail, Sofebail and CIAL Finance). The volume
of outstanding real estate lease financing doubled in less than a
year and overheads were reduced.
In November, the migration to a single IT platform for the CM-CIC
group enabled the company to act fully as the group’s specialist
real estate financing arm and greatly facilitated daily management
of the contracts.
The composition of the leasing portfolio is quite stable, consisting
of 55% industrial premises and warehouses, 23% retail premises,
12% offices and 10% miscellaneous properties.
Shareholders’ equity stands at €84.8 million.
20        REVIEW OF OPERATIONS




                                                                        Large corporates and institutional investors
                                                                        In 2005, lackluster business conditions led many companies to
                                                                        rebuild their cash position and limit their use of credit. Total CIC
                                                                        commitments to large corporates and institutional investors
                                                                        averaged €16 billion over the year, including €3.7 billion in balance
                                                                        sheet loans (down slightly from 2004) and €12.3 billion in
                                                                        off balance sheet commitments in the form of undrawn credit
                                                                        lines, guarantees and other signature commitments (up slightly
                                                                        from 2004).
                                                                        These commitments tended to increase towards the end of the
                                                                        year, reaching €16.7 billion in December, including €4.2 billion in
                                                                        balance sheet loans and €12.5 billion in off balance sheet
                                                                        commitments, providing a tangible sign of a slight upturn in
                                                                        overall economic conditions.
                                                                        Commitments remained spread across a wide range of sectors, as


Financing                                                               shown by the breakdown at December 31, 2005: construction/
                                                                        services to local government: 14.2%; transport/construction
                                                                        materials: 10.1%; retail/apparel: 9.3%; automobile/auto parts: 8.9%;


and capital
                                                                        IT/mechanical engineering: 7.2%; institutional: 6.5%; aerospace:
                                                                        6%; energy/engineering: 5.6%; luxury goods/healthcare: 4.6%;
                                                                        steel/chemical: 4.4%; media: 4.2%; telecommunications: 3.6%;



markets
                                                                        hotel management/tourism: 2.6%; other: 12.8%.
                                                                        Selectivity remained CIC’s watchword, making counterparty quality
                                                                        a central concern. All borrowers are given an internal credit rating
                                                                        between A+ and E. At December 31, 2005, counterparties rated
                                                                        from A+ to C- accounted for 90.5% of total commitments (A+:
                                                                        2.5%; A-: 8.5%; B+: 28%; B-: 21.6%; C+: 12%; C-: 17.9%).
One of the main events of 2005                                          This approach made it possible to further reduce the amount of
was CIC’s sale of risks on its                                          provisions booked in 2005 compared to the previous year. New
                                                                        provisions were below reversals, yielding a net balance of €8
structured equities portfolio                                           million. Provisions on commitments to large corporates and
(see page 21).                                                          institutional investors had already been reduced to 0.1% of
                                                                        commitments in 2004.
At the same time, CIC remained                                          Because of the vast amounts of liquidity available in the various
focused on pursuing a strategy                                          markets, pressure on margins remained high, and in some cases
                                                                        increased. As a result, net banking income (excluding cross-
of sector diversification and                                            selling) declined to €104.9 million from €117.9 million in 2004 and
selectivity, particularly with regard                                   operating income before provisions decreased to €82 million
                                                                        from €97.3 million.
to large risks, and support for its
                                                                        The bank bolstered its presence in corporate loan syndications,
clients’ international operations.                                      participating in 77 major deals during the year (up from 68 in
                                                                        2004 and 39 in 2003), as a mandated lead arranger in 18 of
                                                                        those cases.
                                                                        The dedicated technical and sales team of the cash management
Key figures                                                             services business worked on 26 large-scale calls for tender and
Financing and capital                                                   won seven of its bids. Two CMS products, Vcom and swiftnet, were
                                                              Change
markets                                         2005
                                                            2005/2004   set up as part of partnership agreements with clients.
(in € millions)
                                                                        A number of prestigious French and non-French groups were
Net banking income                                    17)     n.m.
                                                                        added to the high-quality client roster in 2005, further
General operating expenses                      (273)         n.m.      contributing to its richness and diversity, including AEM spa, KLM,
Operating income/(loss) before provisions       (256)         n.m.      Whirlpool, Böhler Uddeholm, Voith, RAG, Trader Classified Media,
                                                                        neuf cegetel, EDF-Energies Nouvelles, Fondation Foch and
Provisions                                        24)         n.m.      Hôpital Foch, Magenta Participation, Sofiproteol and La Chaîne
Income/(loss) before tax                        (232)         n.m.      Française d’Information Internationale.

Net income/(loss)                               (148)         n.m.

Source: 2005 consolidated financial statements: IFRS
2004: pro forma IFRS excluding IAS 32-39 and IFRS 4
                                                                                               FINANCING AND CAPITAL MARKETS                 21




Capital markets                                                          Refinancing
                                                                         CIC treasury teams are now fully integrated with BFCM staff within
There two main developments in 2005 for capital markets
                                                                         the refinancing business, which handles funding for the entire
operations:
                                                                         CMCEE-CIC group. The Treasury department continued to
• a large-scale restructuring of trading room operations and             diversify its sources of financing, both by market and by type of
  processes, including the sale of risks related to the structured       investor.
  equity derivatives portfolio, which resulted in the posting of an
                                                                         Proprietary trading
  after-tax loss of €320 million for the full year;
                                                                         Proprietary operations were thoroughly revamped in 2005 to
• setting up a single trading room for the Crédit Mutuel Centre-
                                                                         harmonize operating procedures between CIC Banque CIAL and
  Est Europe - CIC group, by bringing together into a single
                                                                         CIC trading teams, the aim being to implement an effective strategy,
  operating department the trading room teams of CIC,
                                                                         within a strict risk control framework, using the best available know-
  CIC Banque CIAL and BFCM. The new entity, called CM-CIC
                                                                         how and making it serve the needs of group clients.
  Marchés, will serve both as a vehicle for group refinancing of its
  own business development and as a trading room serving the             Traders have been divided into the ten specific areas of index
  various client segments, including large corporates, other             arbitrage, event-driven trading, long-short equities, hybrid
  companies, local governments, as well as private banking and           arbitrage, fixed-income arbitrage, credit arbitrage, asset-backed
  institutional clients interested in the innovative capital markets     securities arbitrage, correlation arbitrage, global macro and
  products developed by CIC proprietary trading teams.                   short-term trends, and proprietary distribution. Performance and
                                                                         risks are carefully monitored for each area.
Business development                                                     The proprietary distribution business aims to develop, throughout
The trading room markets its products to French and European             the CMCEE-CIC group, a range of alternative and structured
clients through a 70-strong sales force. The domestic sales              investment products, as CIC Banque CIAL did over the past few
teams are based in Paris and in regional centers, while European         years with its Libre Arbitre range.
sales are conducted from Frankfurt and London as well as Paris.          It is worth noting that, with the exception of the structured equity
Networks                                                                 products portfolio, on which all associated risks were sold during the
In close cooperation with relationship managers at the group’s           year, the business posted good results in 2005 and that this bodes
regional banks, the sales platforms of Paris, Lyon, Lille, Strasbourg,   well for the future of the new organization currently being established.
Nancy, Bordeaux and Nantes market interest-rate and forex                Net banking income for the year ended December 31, 2005 from
hedging products as well as investment offerings.                        operations other than structured equities was €211 million.
Large corporates                                                         The overall net banking result for capital market operations over
The trading room plays a leading role in intermediation for              the period was a net loss of €273 million, down from net banking
domestic and European money market securities. The sales team            income of €126 million for the year ended December 31, 2004.
for Europe was particularly active in 2005 in supporting group           The 2005 net loss was due to the one-time charge of €484
corporate banking teams working with German, Swiss and                   million recognized in the financial statements for the six months
Scandinavian clients.                                                    ended June 30, 2005, corresponding to the sale of all risks related
                                                                         to the structured equities portfolio. The structured products
Bond origination
                                                                         business had recorded a net banking loss of €156 million for the
On the primary market, CM-CIC Origination, the group business in
                                                                         year ended December 31, 2004 (see management report, p. 67).
charge of bond origination and syndication for CMCEE-CIC,
developed advisory services and responded to calls for tender
from large corporates, branches, local government bodies and
financial institutions. The group was involved in about fifteen
major transactions on senior and junior debt. CM-CIC Origination
was on two occasions appointed joint lead manager by Caisse de
Refinancement de l’Habitat (AAA/AAA), and was named senior
co-lead manager for the Tier II issue of Crédit Logement (AA2/
AA) – the French leader in mortgage loan guarantees – and was
also co-lead for a government-guaranteed issue by Unedic, the
French unemployment insurance agency, in addition to handling
the debt issues of several major corporate clients – among them
Bouygues, LVMH, Cap Gemini, Daimler, Alstom and Valeo.
22     REVIEW OF OPERATIONS




     Brokerage                                                              • La Bourse rencontre l’informatique, which focuses on IT and
                                                                              software companies;
     Acting as a broker-dealer, clearing agent and custodian, CM-CIC        • European Small & Mid Cap in London, bringing together twice a
     Securities meets all the needs of institutional investors, private       year ESN’s selection of 40 quality mid-cap companies from 11
     asset management companies and issuers.                                  European countries.
     Its net banking income for the year ended December 31, 2005            CM-CIC Securities also promotes the Horizon Stratégie, Horizon
     was €66.1 million and its income before tax came to €3.6 million.      Value, Horizon Ethique and Horizon Emetteur discussion fora, at
     As a member of ESN LLP, a “multi-local” network of 11 brokers          which experts debate issues of topical interest.
     operating in European equity markets (Germany, Netherlands,            As custodian, CM-CIC Securities serves 80 asset management
     Belgium, United Kingdom, Ireland, Italy, Spain, Finland, Portugal,     companies, including six new mandates won in 2005. It adminis-
     Greece and France), CM-CIC Securities is able to trade on the          ters approximately 40,000 personal investor accounts and 155
     German, Dutch, Italian and Spanish cash markets from its Paris         mutual funds.
     dealing room.
                                                                            In 2005, CM-CIC Securities finalized its structuring of CM-CIC
     Organized into 29 sectors and covering 800 European                    Emetteur, a dedicated unit for listed clients and companies
     companies, the research team comprises 130 analysts and                contemplating IPOs, that offers a fully integrated range of
     strategists, 25 of whom are based in Paris. The equity sales force     services that includes financial administration services, securities
     consists of 137 salespeople, including 49 in Paris and four in New     middle-office services, primary market transactions (IPO and
     York (employed by ESN North America Inc, a 65% subsidiary of           subsequent), liquidity contracts and financial communications.
     CM-CIC Securities). The Paris sales force is split into three teams:
     European large caps, European mid-caps and generalist.                 Financial transactions
     Development of value research and SRI (socially responsible
     investment) continued during the year, leading CM-CIC Securities       The CM-CIC group enhanced its competitiveness and perfor-
     to obtain the label of Mid-cap Specialist, recently created by         mance in the field of financial transactions by leveraging synergies
     Euronext.                                                              among its various entities specialized in equity financing (CIC
                                                                            Banque de Vizille, CIC Finance, IPO) and brokerage (CM-CIC
     CM-CIC Securities is a non-clearing member of Euronext Liffe SA,       Securities) and adding to the strength of its branch network.
     a direct clearing member of Eurex and a broker-dealer and
     clearing member of Monep SA.                                           CM-CIC was instrumental in the successful privatizations of Sanef,
                                                                            GDF and EDF as co-lead manager for placement to individual
     Its index and equity derivatives sales team is composed of nine        investors, thanks to strong support from the branch network and,
     persons. In traditional and convertible bonds, the marketing team      through CM-CIC Securities, as co-manager for placement to
     comprises eight salespeople and dealers.                               institutional investors throughout Europe using the ”multi-local”
     CM-CIC Securities organizes over 250 events a year, including          ESN network.
     company presentations, roadshows and seminars in France and            CM-CIC Securities was also a listing sponsor for Sidetrade on
     abroad. The most widely attended are:                                  Alternext, making a private placement that was one of the very
     • Perspective, at which the research team presents its selection       first IPOs for this new segment of the French market. In addition,
       of the best investment ideas for the coming year;                    CM-CIC Securities carried out Capelli’s transfer onto Eurolist and
                                                                            launched Atland’s takeover bid for Tanneries de France.
                                                                                             FINANCING AND CAPITAL MARKETS              23




Among the other major transactions of the year, CM-CIC
Securities was co-manager for Latécoère’s stock issue (carried
out with CIC Société Bordelaise) and the IPO of Nextradiotv (with
CIC Ile-de-France), and was in charge of the placement of stock
issues for Naturex and GL Events as well as of the IPO of Akka
Technologies (all three operations were managed jointly with CIC
Banque de Vizille).

Specialized financing
In 2005, outstanding loans remained on par with the prior year,
despite numerous early repayments, as decreases in mainland
France were offset by expansion in foreign branches. Revenue
growth also remained on the same track as in 2004, thanks to
stable overheads. No new provisions for doubtful loans needed to
be booked, and a number of existing provisions were reversed,
bringing total provisions at December 31, 2005 down to €5.4
million. Income before tax amounted to €34.7 million, compared
with €31.2 million in 2004.

Acquisition financing
Business volume and performance continued to rise, buoyed by
growth in buyouts involving investment funds as well as industrial
and family-owned groups. Operating income before provisions
was stable, and income before tax climbed to €21.4 million in
2005 from €17 million in 2004. Provisions remained under
control. The market has become more complex due to the
increasing number of banks involved in this segment and to the
role of specialized funds that now take up a substantial share of
senior debt issues.                                                      Project financing
The subsidiary specialized in mezzanine financing for SMEs                The project financing business enjoyed a satisfactory year overall,
enjoyed brisk business and had its first repayments of loans on           as new deals outpaced early repayments. Its operations are now
which it netted significant gains.                                        clearly segmented by region, with surging business in continental
                                                                         Europe – Germany included, firm results in the Middle East and
In addition, the regional banks were heavily involved in acquisitions-
                                                                         Asia, but little new investment in North America.
related bond issues. The acquisition financing unit, which provides
a uniform offering to CM-CIC clients throughout France, acted as         In Europe, the project management team, which now acts as both
lead arranger or co-lead arranger for some 50 deals in this area         arranger and underwriter, won several mandates in the wind power
in 2005.                                                                 sector.
                                                                         In the area of infrastructure, the project finance team works with
Asset financing                                                           large corporate clients and the regional banks on calls for tender
In 2005, CIC confirmed that is a major player in shipping finance          related to outsourced public services and public/private
deals, winning several arranger mandates with French ship owners.        partnerships (PPP). A meeting on PPP financing was organized
CIC was also the co-arranger in a highly innovative scheme to            among staff from the various networks, with the aim of bolstering
finance a shipping fleet through securitization.                           the group’s capabilities in this domestic market. A similar meeting
Business remained strong in aircraft financing, particularly for the      will soon be held on renewable energy projects.
New York branch.                                                         Average new provisions remained low, at €1.6 million, and a
The new dedicated asset financing office at the Singapore branch           substantial amount of provisions in the cable television and power
handled both ship and aircraft financing in 2005.                         industries were reversed.

Income before tax was €5 million in 2005, compared with                  Income before tax amounted to €8.2 million, up from €7.6 million
€6.8 million in 2004.                                                    in 2004.
24     REVIEW OF OPERATIONS




                                                                             The group’s logistics and branch network were reorganized with a
                                                                             view to marketing these services more effectively:
                                                                             • transactions are processed by a single business unit composed
                                                                               of five regional centers that, alongside the corporate banking
                                                                               branches, provide specialized services close to home;
                                                                             • the group strengthened its international network by opening a
                                                                               representation office in Romania;
                                                                             • the group is better able to support its clients abroad as a result
                                                                               of strategic partnerships established in China with the Bank of
                                                                               East Asia, in North Africa with Banque Marocaine du Commerce
                                                                               Extérieur and Banque de Tunisie, and in Italy with Banca Popolare
                                                                               di Milano.


                                                                             International branches and representation
                                                                             offices spanning the globe
     International operations
                                                                             London
     The main focus of CIC’s international strategy in 2005 remained
                                                                             In a market awash with liquidity, the demand for financing of
     to support clients in their international development, with diverse
                                                                             acquisitions and corporate development remained strong. Major
     offerings that the group is constantly tailoring to companies’
                                                                             transactions were completed with the UK-based subsidiaries of
     changing needs.
                                                                             large corporate clients of CIC and relationships with British
     Through CIC Développement International, CIC provides a wide            companies investing in France were strengthened. SME clients
     variety of cutting-edge services to assist SMEs aiming to expand        aiming to gain a foothold in the British market were able to rely on
     outside the domestic market, such as conducting market surveys,         the support of the London branch through the CIC Développement
     organizing visits to target countries to test local reactions to        International offer.
     clients’ products and services, or sounding out potential local
                                                                             The branch policy of strict risk selection and management helped
     partners and the viability of greenfield operations.
                                                                             drive solid financial performance. Provisions booked in 2005
     These services are delivered with the backing of the group’s            amounted to €6.1 million, compared with €4 million in 2004.
     specialist international consulting subsidiary Aidexport, and of
                                                                             The branch coped effectively with difficult conditions in capital
     the group’s foreign branches and representation offices. They
                                                                             markets and the group was able to raise large amounts of capital
     are promoted on an ongoing basis by the branch network and at
                                                                             on the London market.
     special events such as one-day seminars and country-specific
     discussion fora.                                                        Net income generated by the branch in 2005 came to €7.5 million.
     CIC provides its investment clients with a research service that
                                                                             New York
     analyzes the credit risk of major French and international bond
     issuers and the main sectors of the European and global                 Although market conditions were challenging in many respects, US
     economies.                                                              economic growth did provide impetus to most of the business lines
                                                                             represented at the New York branch. Business volume remained
     In the area of import and export financing, documentary credit
                                                                             high in the areas of specialized and corporate financing.
     and guarantees, continued improvement in country risks and the
     soaring oil revenues of many emerging countries caused demand           The branch continues to boast a high-quality portfolio as a result
     for bank loans to shrink and the number of early repayments to          of its cautious approach to risk selection and management.
     rise. A significant rise in demand was nonetheless observed in           In the area of cash management, the branch managed its portfolios
     Asia, Eastern and Southern Europe, the Persian Gulf states and          carefully and diversified its operations.
     Iran. CIC’s offerings have been tailored to this geographical shift
     in the global development of French firms.                               Income before tax amounted to €36.8 million, compared with
                                                                             €43 million in 2005.
     Having finalized agreements with partner banks, CIC rounded out
     its offerings in the area of international transaction processing,
     particularly cash management, opening accounts and obtaining
     financing abroad.
     CIC also makes available a varied mix of services to its clientele of
     French and foreign banks.
                                                                         FINANCING AND CAPITAL MARKETS   25




Singapore and Hong Kong
Growth in the Asia-Pacific region strengthened over the year and
sovereign risks eased accordingly. The Singapore branch benefited
from the improved conditions, buoyed by a prudent development
strategy prioritizing countries with favorable risk profiles and better
opportunities: Singapore, Australia, Taiwan and South Korea.
In investment banking and specialized financing, outstanding
loans continued to grow with a satisfactory profitability, despite
sharp pressure on margins and a high level of early repayments.
Capital markets operations were broadened in response to the
needs of private, corporate and institutional clients.
Newly reinforced private banking sales teams now market their
operations under the CIC Banque Privée banner. In addition, the
Singapore office of Banque Transatlantique offers a full range of
banking products and services to its client base of French
expatriates.
Net income totaled €5.3 million.
26        REVIEW OF OPERATIONS




                                                                         For the new CIC Banque Privée business set up in 2004,
                                                                         2005 was the first full year of operation. Its results
                                                                         exceeded objectives, in terms of new clients, new money
                                                                         invested by clients and earnings from investments.
                                                                         Private banking operations outside France continued
                                                                         to develop, through Banque de Luxembourg, CIC Banque
                                                                         CIAL Suisse, CIC Private Banking-Banque Pasche (Geneva)
                                                                         and the CIC branch in Singapore. Development potential
                                                                         is especially strong in Asia. The launch of BT Belgium,
                                                                         a dedicated wealth management subsidiary, further
                                                                         extended the group’s international presence.
                                                                         The private banking business draws on:
                                                                         • Sérénis Vie life insurance polices tailored to the
                                                                           needs of high-net-worth clients, and, where necessary,
                                                                           additional policies taken out with outside partners;
                                                                         • asset management which uses both CM-CIC mutual


Private                                                                    funds and multimanagement opportunities based
                                                                           on open architecture, benefiting from the expert
                                                                           selections of Fund Market, a specialized Banque


banking                                                                    de Luxembourg subsidiary;
                                                                         • real estate offerings for high-net-worth individuals,
                                                                           currently being launched by Afedim, a CM-CIC subsidiary.




Private banking, one of CIC’s core
businesses, mainly targets high-net-
worth and wealthy business owners and
individuals that are seeking a long-term
advisory relationship.

Its services are provided nationally
and internationally, through the regional
networks and the branches established in
countries with strong potential for wealth.




Key figur es
                                                               Change
Private banking                                 2005
                                                             2005/2004
(in € millions)

Net banking income                                331)         + 5.8%
General operating expenses                      (207)           + 2%
Operating income before provisions               124)         + 12.7%
Provisions                                            (4)     - 42.9%
Income before tax                                 119)        + 15.5%
Net income                                            71))    + 14.5%

Source: 2005 consolidated financial statements: IFRS
2004: pro forma IFRS excluding IAS 32-39 and FRS 4
                                                                                                              PRIVATE BANKING          27




The private banking                                                    Revenues of the wholly-owned subsidiary BLC Gestion climbed
                                                                       39% to €3.8 million, while income before tax and non-recurring
business at CIC                                                        items surged 55% to €1 million, yielding net income of €0.6 million.
A key priority for CIC Banque Privée is winning new clients.           MBL, a joint subsidiary of CIC Banque Transatlantique and the
Corporate divestments and successions are the main drivers of          Crédit Mutuel group, had 2005 net banking income of nearly
this business, which calls for a structured approach based on          €5 million, while its net income soared 64% to €1.6 million.
highly creative and effective financial engineering and asset
management, bringing to bear investment and service offerings          Business development
that are practically made to measure for each client.
                                                                       The bank offers a comprehensive range of services in the areas of
Because a private banker’s outlook cannot be anything less than        personalized asset allocation, asset management and financing
global, CIC clients have access to the entire international network    of family projects.
of CIC Banque Privée.
                                                                       Private asset management
                                                                       Positioned at the top end of the market, the wealth management
CIC Banque Privée in France                                            business boasts extremely skilled teams that apply the highest
CIC Banque Privée comprises 53 private asset management                professional standards. Its clientele grew by 9% in 2005 and
branches, integrated into the group’s regional networks and            assets under management expanded by more than 20%.
covering the whole of France. These branches report to six             Offering the same range of options as in portfolio management,
regional offices and to a national head office. Throughout the           the private asset management business includes discretionary
country, unified processes have been defined in relation to the          management, advisory management services and direct
approach to clients and prospects, business development,               management through a Web-based service. By developing
products and services, activities and management methods. In           multimanagement based on an open architecture, establishing
this way, clients can be sure that the advice, investment products     partnerships both inside and outside the group, and relying on its
and services they are offered will be of the same high level of        team of legal and tax-planning specialists, it is able to offer
quality and effectiveness, irrespective of their place of residence    comprehensive services and unrivalled financial performance
in France.                                                             and security.
This business line is designed to provide long-term satisfaction to    Several additions to the prestigious client roster, mainly business
clients and prospects with a potential net worth of at least one       owners selling their companies, confirmed the significance of this
million euros. These clients are offered the most reactive and         business for the bank’s development.
results-focused financial engineering solutions, taking into
account all financial, tax, legal and family considerations to          The expatriate market
produce an individually designed wealth management strategy.
                                                                       This rapidly growing business covers different markets, serving a
Two publications, ”Le cahier de CIC Banque Privée” and the             high-profile international client base made up of diplomats,
”Patrimoine et Stratégies” newsletter, provide CIC clients with a      international civil servants, French expatriate executives, French
ready source of information and advice.                                business owners living abroad, and non-French managers working
                                                                       in France for major multinationals.
                                                                       The business has expanded its teams and launched two new
Specialized entities                                                   products. The first, Transat Expat Santé, covers healthcare
                                                                       expenses outside France. The second, Cap Transat, includes
                                                                       international account management, advisory services and
  France                                                               assistance with tax planning, opening bank accounts abroad and
                                                                       managing the non-banking issues caused by distance. Any
                                                                       expatriate group client can sign up for either product without
CIC Banque Transatlantique                                             having to switch to another branch.

In 2005, the bank continued to refocus its operations on personal      The business has also gained a number of high-net-worth French
banking clients and to redesign its processes in three key             resident clients as a result of boosting its prospecting resources
directions:                                                            in the Paris area and strengthening its expertise in the areas of
                                                                       tax planning for real estate projects and financial engineering.
• implementing cross-selling synergies with the various group
  entities;                                                            Transaction volumes were also high in stock options management
• developing the pooling of resources with group support functions     operations, on the back of bullish trends in European stock
  in the areas of organization, training, payroll management,          markets and of favorable movements in dollar-to-euro exchange
  accounting, security and other back-office roles;                     rates. The bank processed a record number of transactions on
• further raising the headcount and quality of its sales teams and     the exercise of stock options and expanded its assets held in
  specialized functions.                                               custody. Stock-option holders are offered financing that matches
                                                                       their needs, as well as expertise in hedging securities positions
Net banking income amounted to €48.2 million, down 7.3%                using options. In 2005, the bank won new mandates from French
(€52 million in 2004). However, excluding the impact of the transfer   and foreign blue-chip issuers to administer stock option plans
at the end of 2004 of its Corporates arm, CIC Banque Transatlantique   and advise grantees.
recorded 4% growth in net banking income. A tight rein on overheads
and very low loan loss provisions allowed net income to reach €9.2
million, representing a year-on-year leap of 48.7%.
28      REVIEW OF OPERATIONS




     Subsidiaries                                                           BT Jersey Limited
     A new subsidiary was created in Belgium, broadening the scope of       The business volumes and results of this entity remained merely
     operations.                                                            symbolic.
     CIC Banque Transatlantique also has representation offices in
     Washington, London and Singapore.                                      Dubly-Douilhet
                                                                            Dubly-Douilhet, an investment company providing discretionary
     Banque Transatlantique Belgium
                                                                            management services to high-net-worth individuals in northern
     Based in Brussels, it targets both French expatriates and an           and eastern France, saw significant growth in 2005.
     affluent Belgian clientele. It is positioned as a ”family bank”, able
                                                                            Managed assets reached nearly €789 million and net income was
     to provide a full range of services in wealth engineering, discre-
                                                                            €1.5 million.
     tionary management, family office services and loans.
                                                                            The bank’s balance sheet is healthy, with €9 million of equity.
     BLC Gestion
     This company specializing in discretionary management and
     advisory management services draws most of its income from               CIC Private Banking network
     equity brokerage. Management of mutual funds, especially the
     Brongniart range, accounted for nearly a third of its net banking
     income in 2005 and services to third parties – in the form of
                                                                            Banque de Luxembourg
     advisory management services to CIC and Crédit Mutuel Ile-de-
     France clients – are developing in a promising way.                    Banque de Luxembourg’s brisk sales growth in 2005 delivered a
                                                                            40% increase in cash assets and securities deposited by clients,
     Mutual Bank Luxembourg (MBL)                                           to €50.3 billion. Net income was up 16.5%, to €60 million.
     This bank enjoyed sustained demand for its asset management            These results are attributable to a management style that favors
     and financing services in 2005.                                         asset protection and consistent yields over the long term. The
                                                                            best illustration of this philosophy at work is to be found in the
                                                                            performance of its range of mutual funds, which was recognized
                                                                            for the third consecutive year as ”Best Fund Manager” at the
                                                                            European Fund Awards organized by the Lipper rating agency.
                                                                                                              PRIVATE BANKING          29




In its discretionary management of individual portfolios, the bank
emphasizes a multimanagement approach that combines its own
funds with a selection of the best international funds. The bank’s
know-how in this field is derived from its specialized subsidiary
Fund Market, a provider of investment fund advice and the CM-
CIC group’s source of expertise in the selection of third-party
funds and multimanager opportunities.
Banque de Luxembourg also meets the specific tax and succession
planning needs of non-resident clients. In addition, following
Luxembourg’s abolition of the wealth tax which came into effect
on January 1, 2006, the bank also provided advisory assistance
to a certain number of high-net-worth investors.
The bank has continued to share its know-how with the
professional investment management community through a
comprehensive range of services, mainly in the areas of custodian
banking, investment funds and the engineering and distribution
of financial products and solutions. In 2005, it also honed its
expertise in terms of structured products, dedicated investment
funds, hedge funds, private equity and venture capital.
                                                                       CIC Private Banking – Banque Pasche
CIC Banque CIAL Suisse                                                 CIC Private Banking - Banque Pasche continued its expansion in
                                                                       2005, based on a long-term strategy of increasing market
The bank, which has been established for nearly a century at six       share.
sites in Switzerland, continued to develop its services to corporate
and individual clients in 2005. Cash assets and securities deposited   Over the past five years the bank has tripled its assets under
by clients reached a total of CHF 7.3 billion at December 31, 2005,    management. It offers its international clientele – for the most
while outstanding client loans increased 12% to CHF 1.7 billion.       part from Asia, Africa and the Middle East – a full range of value-
                                                                       added services, rooted in the concept of the ”family office”.
This growth in lending led to a 13% rise in net interest income for    In the context of a relocation, clients can find high-level
2005, to CHF 31 million. Riding on buoyant trends in stock             asset management and succession planning expertise, help in
markets, commission income climbed 7% year-on-year, to CHF             purchasing property, or an analytical and comparative review of
46.2 million. Capital markets operations generated net banking         their portfolios carried out by independent experts.
income of CHF 11.3 million in 2005, 18% more than in 2004.
                                                                       In 2005, net banking income was up nearly 6%, operating income
Net income, totaling CHF 14.8 million, was up 22% on 2004,             before provisions jumped 20.4% and net income rose 10.4% to
despite new operational risks that required provisioning.              CHF 6.2 million (compared with CHF 5.6 million in 2004). These
In its private banking operations, CIC Banque CIAL Suisse offers       results confirmed the place of CIC Private Banking – Banque
individually tailored investment advice and discretionary portfolio    Pasche as one of the CM-CIC group’s key players in private
management services. Among the bank’s key strengths are the            banking.
building of stable relationships over time between clients and
managers, a policy of cautious management matching the needs           CIC Branch – Singapore and Hong Kong
of each client, the ability to select appropriate products and
                                                                       It was in 2002 that CIC launched private banking operations in
packages, as well as access to leading-edge technical resources.
                                                                       Asia, from its Singapore branch. Sales teams in Hong Kong and
CIC Banque CIAL Suisse also works with companies based in              Singapore advise Asian clients from Hong Kong, Taiwan, China,
Switzerland, granting them operating or investment loans,              Indonesia, Malaysia and Thailand. Assets under management
providing mortgage loans, handling forex transactions or issuing       have now crossed the billion-dollar mark.
documentary credit.
                                                                       In June 2005, Asian private banking was brought under the CIC
                                                                       Banque Privée banner, with support from the group’s other private
                                                                       banking entities.
                                                                       The development of private banking in the city-state and the
                                                                       government’s efforts to support the process are turning Singapore
                                                                       into one of the world’s key financial centers. The group is thus
                                                                       aiming to establish itself as a significant presence in Asian private
                                                                       banking, initially by leveraging its European experience and later
                                                                       on by rounding out the advisory services offered in Europe with
                                                                       the contributions of an Asian hub.
30        REVIEW OF OPERATIONS




                                                                       Paris and Northeastern France
                                                                       CIC Finance
                                                                       To support the development of the Crédit Mutuel-CIC group client
                                                                       base, CIC Finance provides both private equity and M&A advisory
                                                                       services. The bank carries out proprietary investments through
                                                                       its subsidiary CIC Capital-Développement. Third-party invest-
                                                                       ments are made through the funds managed by CM-CIC Capital
                                                                       Privé (seven FCPI innovation funds and 5 investment funds) and
                                                                       CIC LBO Partners (a management company dedicated to majority
                                                                       LBOs).
                                                                       Managed portfolios registered significant growth in 2005, with an



Private
                                                                       estimated €522 million in net assets at December 31, of which
                                                                       €209 million were third-party investments. CM-CIC Capital Privé
                                                                       has become one of the leading players in France for FCPI innova-
                                                                       tion funds and FIP investment funds.


equity                                                                 With over 100 equity interests, CIC Finance is active in every
                                                                       segment of the investment business, including venture capital,
                                                                       private equity, LBOs and funds of funds. New investments in 2005
                                                                       – e.g., in Club Sagem, Saur, and Carré Blanc – exceeded €118
                                                                       million. Disposals, which included Maisons du Monde, Sandinvest
  For the private equity business, now                                 and Mistergooddeal, came to €97 million and netted capital
                                                                       gains of €38 million.
  organized into three regional segments
                                                                       The recently strengthened mergers and acquisitions teams also
  covering all of France, 2005 was a year                              had a strong year, carrying out an assignment for Sagem in its
  of vigorous activity and strong profitability.                        merger with Snecma, that resulted in the creation of the Safran
                                                                       group, and another for Eurazeo in its acquisition of B&B.
  Investments totaled more than €256 million                           The consolidated net income of CIC Finance rose sharply to
  and disposals generated substantial gains.                           €37 million for the year ended December 31, 2005. Based on IFRS
                                                                       rules, which came into effect on January 1, 2005 and require that
  The total portfolio of managed equity                                changes in the fair value of the portfolio over the year be included
  holdings was worth nearly €1.1 billion                               in earnings, net income amounted to €63 million. Shareholders’
                                                                       equity totaled €213 million.
  at December 31, 2005.




Key figures
                                                             Change
Private equity                                  2005
                                                           2005/2004
(in € millions)

Net banking income                               247)        n.m.
General operating expenses                       (26)        n.m.
Operating income before provisions               221)        n.m.
Provisions                                            1)     n.m.
Income before tax                                222)        n.m.
Net income                                       213)        n.m.

Source: 2005 consolidated financial statements: IFRS
2004: pro forma IFRS excluding IAS 32-39 and IFRS 4
                                                                                                               PRIVATE EQUITY          31




Western France                                                       Southern France
IPO                                                                  CIC Banque de Vizille
IPO, a 76.6%-owned subsidiary of CIC, has been present in the        In 2005, CIC Banque de Vizille delivered a string of strong
Loire, Brittany, Normandy, Central France and Poitou-Charentes       performances that confirmed its place as a major player in the
regions for 25 years, and has recently extended its coverage to      investment banking sector
Southwestern France. Its 12-strong team based in Nantes
                                                                     • In 2005, the bank invested €101 million in 35 major projects
manages a portfolio worth €151.5 million, which is invested in the
                                                                       spanning all segments of the investment business – venture
capital of 126 regional corporate groups.
                                                                       capital, minority-stake partnerships and majority-stake LBOs.
IPO had a very active year in 2005, investing €42 million in 19        This level of investment, which has now been maintained for
projects involving 20 companies. Disposals and redemptions,            three years, reflects the close synergies established with all
totaling €34.1 million, generated €18.1 million in gains and           group businesses, particularly private banking and structured
redemption premiums. Net income came to €32.5 million based            finance. The new investments, half of which involved minimum
on IFRS (and €21.2 million based on French GAAP).                      contributions of under €3 million – a sure sign of the bank’s
                                                                       deep roots in local economic life – included the following
IPO is a long-term investor and therefore frequently partners its
                                                                       companies: Courtepaille (restaurant chain), GL Events (events
clients through several stages of their corporate lives, from
                                                                       management), Plastic Omnium (plastics), as well as ORTEC,
development to changes in ownership structure and succession.
                                                                       NORAC and Office Log (in partnership with IPO).
This was the case in 2005 with QFD (hardware and tools), Abaque
                                                                     • The total value of divestments, at cost, was €46 million, and they
Finance (polishing disks for optical lenses), Forteam (training),
                                                                       generated an average return on investment (ROI) of 22.7%.
the Vendôme group (carpentry), Office Log (office supplies) and
                                                                     • CIC Vizille Capital-Finance’s advisory services arm also turned in
Le Normandy (physical medicine and rehabilitation). IPO also
                                                                       a satisfactory year, billing a total of €2.3 million. In mergers and
formed new partnerships, for example with Sofibo (furniture),
                                                                       acquisitions, four mandates came to a successful outcome. The
Altawest (mechanical and thermal engineering), ORTEC Expansion
                                                                       capital markets engineering teams carried out France’s first IPO
(industrial services), Fouchard (climate control engineering),
                                                                       on the Eurolist (with Akka), conducted two debt issues and
Norac (baked goods and catering), Trésor du patrimoine (mail-
                                                                       finalized the delisting of Paul Prédault on behalf of William
order sales of collectible coins and medals), Emeraude
                                                                       Saurin.
Participations (thermal lacquering), Vitalitec (surgical devices)
                                                                     • The bank posted impressive results for 2005, with net banking
and Maison du Monde (home decoration).
                                                                       income surging to €56.1 million from €29.9 million in 2004 and
As from January 1, 2006, IPO Ingénierie will also be in charge of      consolidated net income (including Lyonnaise de Participations)
discretionary management of the portfolios of Financière Ar Men        of €62.8 million.
and Financière Voltaire, in preparation for winding up these two     • Unrealized gains from the total portfolio of managed invest-
subsidiaries of CIC Banque CIO. At December 31, 2005, these two        ments came to €64.4 million at December 31, 2005. In this
portfolios included 55 companies and were valued at €31 million.       respect, the switch to IFRS will make a significant difference, by
Disposals from the two portfolios in 2005 totaled €11.6 million        allowing genuine comparisons in the annual performances of all
and generated gains of €5.5 million. Financière Ar Men invested        market players (including managed funds). Thanks to the
€3.2 million in four companies over the course of the year.            ongoing renewal in its portfolio of managed holdings, currently
                                                                       valued at €401 million, CIC Banque de Vizille is expected to be a
                                                                       major source of value creation in the coming years.
32     REVIEW OF OPERATIONS




Regional and
international
directory
                                                                     CIC Lyonnaise de Banque           CIC Société Bordelaise
                                                                     8 rue de la République            Cité Mondiale
     Contact details                                                 69001 Lyon                        20 quai des Chartrons
                                                                     Tel: +33 (0)4 78 92 02 12         33058 Bordeaux Cedex
     for CIC’s regional banks                                        http://www.lyonnaisedebanque.fr   Tel: +33 (0)5 57 85 55 00
                                                                     Chairman and Chief Executive      http://www.sb.cic.fr
     CIC                             CIC Banque                      Officer: Rémy Weber                Chairman and Chief Executive
                                     Scalbert Dupont                 Deputy Chief Operating            Officer: Jean-Jacques Tamburini
     6 avenue de Provence
     75009 Paris                     33 avenue Le Corbusier          Officers: Michel Bodoy,            Chief Operating Officer:
     Tel: +33 (0)1 45 96 96 96       59800 Lille                     Isabelle Bourgade, Yves Manet     Jean-Philippe Brinet
     http://www.cic.fr               Tel: +33 (0)3 20 12 64 64
     Chairman of the Supervisory     E-mail: contactbsd@bsd.cic.fr
                                                                     CIC Banque CIAL                   CIC Banque CIO
     Board: Etienne Pflimlin          http://www.bsd.tm.fr
                                                                     31 rue Jean Wenger-Valentin       2 avenue Jean-Claude Bonduelle
     President of the Executive      Chairman and Chief Executive
                                                                     67000 Strasbourg                  44000 Nantes
     Board: Michel Lucas             Officer: Gérard Romedenne
                                                                     Tel: +33 (0)3 88 37 61 23         Tel: +33 (0)2 40 12 91 91
     Vice-President of the           Chief Operating Officer:
                                                                     http://www.banquecial.fr          http://www.cio.fr
     Executive Board: Alain Fradin   Stelli Prémaor
     Members of the Executive                                        Chairman and Chief Executive      Chairman and Chief Executive
     Board: Bernard Bartelmann,                                      Officer: Philippe Vidal            Officer: Michel Michenko
                                     CIC Banque CIN                  Chief Operating Officer:           Chief Operating Officer:
     Jean Huet, Jean-Jacques
     Tamburini, Philippe Vidal,      15 place de la Pucelle          Pierre Jachez                     Gérard Goulet
     Rémy Weber                      76000 Rouen
                                     Tel: +33 (0)2 35 08 64 00
                                                                     CIC Banque SNVB                   CIC Banque BRO
                                     E-mail: contactcin@cin.cic.fr
                                     http://www.cin.fr               4 place André Maginot             7 rue Gallois
                                                                     54000 Nancy                       41000 Blois
                                     Chairman and Chief Executive
                                                                     Tel: +33 (0)3 83 34 50 00         Tel: +33 (0)2 54 56 54 56
                                     Officer: Gérard Romedenne
                                                                     http://www.snvb.fr                http://www.bro.fr
                                     Chief Operating Officer:
                                     Stelli Prémaor                  Chairman: Philippe Vidal          Chairman and Chief Executive
                                                                     Chief Executive Officer:           Officer: Michel Michenko
                                                                     Luc Dymarski                      Chief Operating Officer:
                                                                     Chief Operating Officer:           Jean-Pierre Bichon
                                                                     Thierry Marois
                                                                                         REGIONAL AND INTERNATIONAL DIRECTORY                       33




International network and specialist network

Contact details                      Italy                                   Turkey                               Middle East
for the CIC group’s                  Corso di Porta Vittoria 29              INONU Cad.
international network                20122 Milan                             Miralay Sefik Bey Sok. no. 5-8        Israel
                                     Tel: +39 02 55 19 62 42                 80090 Gumussuyu Istanbul             Y.S. Consulting
Europe                               E-mail: cicmilano@cicmilano.it          Tel: +90 212 251 35 41               Beit Hatasiya
                                     Hubert de Saint Paul                    E-mail: bazyarme@cicturkey.com       (Industry House)
Germany                                                                                                           29, Hamered Street, Suite 1028
                                                                             Mehmet Bazyar
Wilhelm-Leuschner                    Poland                                                                       POB 50156
Strasse 9-11                         Ul Stawki 2                                                                  Tel Aviv 61500
                                                                             Africa
D 60329 Frankfurt am Main            Warsaw 00-193                                                                Tel: +972 3 517 22 71
Tel: +49 69 97 14 61 01              Tel: +48 22 860 65 01/02/03             South Africa                         E-mail: cic-il@zahav.net.il
E-mail: infofra@frankfurt.cic.fr     E-mail: cicvarsovie@cicvarsovie.pl                                           Jacob Shtofman
                                                                             Portofino 302
André Wurtz                          Krzysztof Potocki                       30, 9th Street                       Lebanon
Belgium and the Netherlands                                                  Killarney 2193
                                     Portugal                                                                     Achrafieh
                                                                             Johannesburg
41 avenue A. Milcamps                Avenida de Berna no. 30, 3° A                                                Rue de La Sagesse
                                                                             Tel: +27 11 646 09 30/47
1030 Brussels                        1050-042 Lisbon                                                              Sagesse Building 754
                                                                             E-mail: uzac@sentechsa.com
Tel: +32 2 511 23 58                 Tel: +351 21 790 68 43/44                                                    8e étage
E-mail: cicbruxelles@cicbanques.be                                           Philippe Uzac                        Beirut
                                     E-mail: ciclisboa@mail.telepac.pt
Yolande van der Bruggen                                                      Algeria                              Tel: +961 1 56 04 50
                                     Henrique Real
                                                                                                                  E-mail: cicba@cyberia.net.lb
C.E.I.                                                                       36 rue des Frères Benali Hydra
                                     Romania                                                                      Blanche Ammoun
                                                                             16000 Algiers
9, k.2A                              Ste. Cpt. Av. Gheorghe Marasoiu no. 3   Tel: +213 21 60 15 55
Kutuzovskiy prospekt                 Sector 1                                                                     The Americas
                                                                             E-mail: cicbalg@cicalgeria.com
119248 Moscow                        011907 Bucharest
Russian Federation                                                           Ahmed Mostefaoui
                                     Tel: +40 21 203 80 83                                                        Argentina
Tel: +7 495 974 12 44                E-mail: cic@cicbucarest.ro              Egypt                                Av. Callao 1870 - Piso 4
E-mail: cic@mail.tcnet.ru
                                     Adela Bota                              28, rue Cherif                       1024 Buenos Aires
Jean-Jacques Vrignaud                                                        Cairo 11-111                         Tel: +54 11 48 06 88 77
                                     Czech Republic
Spain                                                                        Tel: +20 2 393 60 45                 E-mail: cicbuenosaires@mriod
                                     Mala Stepanska 9                        E-mail: cicegypt@soficom.net          elaplata.com.ar
Calle Marquès de la Ensenada         12000 Prague CZ
no. 2-3                                                                      Hussein M. Lotfy                     Miguel de Larminat
                                     Tel: +420 2 24 91 93 98
28004 Madrid                         E-mail: cicprague@cicprague.cz          Morocco                              Brazil
Tel: +349 1 310 32 81/82
                                     Alexandre Berthier                      12 boulevard Brahim Roudani          Avenida Paulista 2073
E-mail: cicmadrid@cicmadrid.com
                                                                             Résidence Zeïna                      Horsa I
Rafael Gonzalez-Ubeda                Sweden
                                                                             1er étage appartement 102            11° Andar-cj.1116
                                     Grev Magnigatan 6                       20000 Casablanca                     01311 940 - Sao Paulo SP
United Kingdom
                                     SE - 114.55 Stockholm                   Tel: +212 22 20 67 67/68 16          Tel: +55 11 3251 1421
Veritas House                        Tel: +46 8 611 47 11                                                         E-mail: cicbrasil@brasil-cic.com.br
                                                                             E-mail: cicbbm@wanadoopro.ma
125 Finsbury Pavement                E-mail: cicstockholm@cic.pp.se
London EC2A IHX                                                              Mahmoud Belhoucine                   Luiz Mendes de Almeida
                                     Martine Wahlström
Tel: +44 20 74 54 54 00                                                      Tunisia                              Chile
Telex: (051) 886 725 CIC LDN G       Switzerland
                                                                             Immeuble Carthage Center             Edificio World Trade Center
Ubaldo Bezoari                       29, Avenue de Champel                   Rue du Lac de Constance              Santiago
                                     1211 Geneva 12                          2045 Les Berges du Lac - Tunis       Av. Nueva Tajamar 481
Greece
                                     Tel: +41 22 839 35 06                   Tel: +216 71 962 333/963 078         Torre Norte - Oficina 1401
Vassileos Alexandrou 5-7             E-mail: nadine.johnson@cial.ch                                               Las Condes - Santiago de Chile
                                                                             E-mail: bureau.tunis@cic-tunis.com
11528 Athens                                                                                                      Tel: +56 2 203 67 90
                                     Nadine Johnson                          Emna Ben Amor – Dimassi
Tel: +30 210 72 22 531/541                                                                                        E-mail: cicbanqueschili@entelchile.net
E-mail: cicgrece@otenet.gr
                                                                                                                  Sylvie Le Ny
Georges Anagnostopoulos
                                                                                                                  United States
Hungary
                                                                                                                  CIC
Budapesti képviseleti Iroda Fö                                                                                    520 Madison Avenue
ucta 10                                                                                                           New York, N.Y. 10022
H-1011 Budapest                                                                                                   Tel: +1 212 715 44 00
Tel: +36 1 489 03 40                                                                                              Telex: (023) 62160 CIC NY
E-mail: cicbudapest@cicbudapest.hu                                                                                E-mail: sbellanger@cicny.com
Kalman Marton                                                                                                     Serge Bellanger
34      REVIEW OF OPERATIONS




     Mexico                             Korea                               Vietnam                           Switzerland
     World Trade Center                 Samsug Marchen House 601            c/o Openasia Group                Private banking
     Montecito no. 38 piso 8 -          Jang-han-Dong 752                   6B Ton Duc Thang Street           CIC Banque CIAL Suisse
     oficina 24                          IL-SAN 410-837                      1st Floor                         11-13 place du Marché
     Col. Napoles C.P. 03810 Mexico     South Korea                         District 1                        4001 Basel
     D.F.                               Tel: +82 2 965 1609                 Ho Chi Minh City                  Tel: +41 61 264 12 00
     Tel: +52 55 54 88 26 93/95         E-mail: hahnasso@unitel.co.kr       Tel: +848 910 50 29               E-mail: info@cial.c
     E-mail: cicmexico@prodigy.net.mx   Isabelle Hahn                       E-mail: hcm-openasia@hcm.vnn.vn
                                                                                                              Paul Maibach
     Santiago de Leon Trevino           India                               Daitu Doan Viet                   Henri Fauche
     Venezuela                          A-58 Nizamuddin East                                                  CIC Private Banking-
     Centro Plaza - Torre A - Piso 12   New Delhi 110 013                   Specialist network                Banque Pasche
     Oficina 1                           Tel: +91 11 24 35 59 01/10/20                                         10 rue de Hollande
     Avenida Francisco de Miranda       E-mail: cicindia@fwacziarg.com      France                            Case Postale 5760
     Caracas                            Francis Wacziarg                    Private banking                   1211 Geneva 11
     Postal Address:                                                        CIC Banque Transatlantique        Tel: +41 22 818 82 22
                                        Japan
     Apartado Postal 60583                                                  26 avenue Franklin D. Roosevelt   E-mail: pasche@pasche.ch
     Caracas 1060                       D.F. Building 7F                    75008 Paris                       Christophe Mazurier
     Tel: +58 212 285 45 85/            2-2-8 Minami Aoyama                 Tel: +33 (0)1 56 88 77 77
                  286 25 03             Minato-Ku                                                             Hong Kong
                                                                            http://www.
     E-mail: insercom@cantv.net         Tokyo 107-0062                      banquetransatlantique.com         Private banking
                                        Tel: +81 3 3402 66 23
     Pierre Roger                                                           Chairman and Chief Executive      CIC Investor Services Ltd
                                        Telex: (072) 22728 NORBANK J
                                                                            Officer: Bruno Julien-Laferrière   2904A-7 One Exchange Square
     Asia                               E-mail: cictokyo@cic-banks.jp
                                                                            Chief Operating Officer:           8 Connaught Place
                                        Frédéric Laurent                    Christine Zanetti                 Central Hong Kong
     North China/Beijing
                                        Singapore                                                             Tel: +85 2 21 06 03 88
     Room 310, Tower 1, Bright China                                        Private equity                    E-mail: loti@hongkong.cic.fr
     Chang An Building                  63 Market Street                    CIC Finance
                                        #15-01                                                                Timothy Lo
     No. 7 Jianguomennei Dajie                                              4 rue Gaillon
     Dong Cheng District                Singapore 048942                    75107 Paris Cedex 02              Singapore
     Beijing 100005 P.R.                Tel: +65 65 36 60 08                Tel: +33 (0)1 42 66 76 63         CM-CIC Asset Management
     Tel: +86 10 65 10 21 67/68         Telex: RS 29070 CIC SGP             E-mail: cabesssi@cic.fr           Singapore Ltd
     E-mail: cicbj@public.bta.net.cn    E-mail: angladje@singapore.cic.fr
                                                                            Sidney Cabessa                    63 Market Street #15-01
                                        Website: www.cic.com.sg
     Wenlong Bian                                                                                             Singapore 048942
                                        Jean-Luc Anglada                    CIC Banque de Vizille
                                                                                                              Tel: +65 62 31 97 99
     South China/Hong Kong                                                  Espace Cordeliers
                                        Taiwan                                                                E-mail: guyonvpi@cicmsg.cic.fr
                                                                            2 rue Président Carnot
     290 A, 29/F, One Exchange                                                                                Website: www.cic-am.com
                                        380 Linshen North Road              69002 Lyon
     Square
                                        10 F (101 room)                     Tel: +33 (0)4 72 56 91 00         Pierre Guyonvarch
     8 Connaught Place
                                        Taipei                              E-mail:
     Central Hong Kong                                                                                        Private banking
                                        Tel: +886 2 2543 26 62/63           contact@banquedevizille.fr
     Tel: +85 2 25 21 61 51                                                                                   CIC Banque Transatlantique
     E-mail: cicbanks@netvigator.com    E-mail: autech01@ms71.hinet.net     Antoine Jarmak
                                                                                                              63 Market Street #15-01
     David Ting                         Henri Wen                           IPO                               Singapore 048942
                                        Thailand                            32 avenue Camus                   Tel: +65 65 36 60 08
     East China/Shanghai
                                                                            44000 Nantes                      E-mail: conanyv@singapore.cic.fr
     Room 1105                          622, Emporium Tower
                                                                            Tel: +33 (0)2 40 35 75 31         Website: www.transat.tm.fr
     Shanghai Overseas Chinese          14th floor
                                                                            E-mail: ipo@ipo.fr                Yves Conan
     Mansion                            Sukhumvit 24 Road
                                        Klongton, Klongtoey                 Pierre Tiers
     No. 129 Yan An Xi Road (w)
     Shanghai 200040                    Bangkok 10110                       Luxembourg
     Tel: +86 21 62 49 66 90/69 27      Tel: +662 6649270
                                        E-mail: cicthai@loxinfo.co.th       Private banking
     E-mail: cicshg@online.sh.cn
                                        Abhawadee Devakula                  Banque de Luxembourg
     Shan Hu                                                                14 boulevard Royal
                                                                            L 2449 Luxembourg
                                                                            Tel: +352 49 92 41
                                                                            E-mail:
                                                                            banque.de.luxembourg@bdl.lu
                                                                            Robert Reckinger
                                                                            Pierre Ahlborn
                                           35




                               Corporate
            governance




36 Management team
38 Report of the Chairman
   of the Supervisory Board
   on the preparation
   and organization
   of the Board’s work
39 Executive Board and
   Supervisory Board members
36     CORPORATE GOVERNANCE




       Management team

     Supervisory Board
     Members of the Supervisory Board elected at the AGM:
                                          Etienne Pflimlin     Chairman of Confédération Nationale du Crédit Mutuel, Crédit Mutuel
                                                 Chairman     Centre-Est Europe, and Banque Fédérative du Crédit Mutuel
                                     Gérard Cormorèche        Chairman of Crédit Mutuel du Sud-Est
                                           Vice-Chairman


                   Banque Fédérative du Crédit Mutuel         represented by Christian Klein - Director
                                          Gérard Bontoux      Chairman of Crédit Mutuel Midi-Atlantique
                                           Luc Chambaud       CEO of Crédit Mutuel de Normandie
                                          Maurice Corgini     Director of BFCM
                                      Bernard Daurensan       CEO of Crédit Mutuel Océan
                                            Pierre Filliger   Chairman of Crédit Mutuel Méditerranéen
                                      Jean-Louis Girodot      Chairman of Crédit Mutuel Ile-de-France
                                           Daniel Leroyer     Chairman of Crédit Mutuel Maine-Anjou, Basse-Normandie
                                       Roberto Mazzotta       Chairman of Banco Popolare di Milano
                                             André Meyer      Director of Crédit Mutuel Centre Est Europe
                                      Bernard Morisseau       Chairman of Crédit Mutuel Loire-Atlantique Centre-Ouest
                                           Paul Schwartz      Vice-Chairman of Banque Fédérative du Crédit Mutuel
                                           Roland Truche      CEO of Crédit Mutuel du Centre
                                         Philippe Vasseur     Chairman of Crédit Mutuel Nord Europe
                                   Jean-Claude Martinez       Employee of CIC Banque CIAL, representing employee-shareholders




     Members of the Supervisory Board elected by employees:
                                             Michel Cornu     Manager, CIC Banque Scalbert Dupont
                                      Jean-Marc Crosnier      Employee, CIC Banque Scalbert Dupont
                                        Patrick Demblans      Account Manager, CIC Société Bordelaise


     The following persons also attend Supervisory Board meetings:
                                        Stéphane Marché       Representing CIC’s Works Council
                      François de Lacoste Lareymondie         CIC Company Secretary, Secretary to the Supervisory Board


     Members of the Supervisory Board are elected for a period of 5 years. Members elected by the shareholders were elected at the AGM of
     May 15, 2003, except for the employee-shareholders’ representative who was elected at the AGM of April 28, 2004. Members of the
     Supervisory Board elected by employees were elected in September 2003. Daniel Leroyer was appointed by the Supervisory Board at its
     meeting of May 19, 2005 to replace Jean-Pierre Schneider, who had resigned.
     No fees were paid to the members of the Supervisory Board in 2005.
                                                                                                          MANAGEMENT TEAM           37




Executive Board




    From left to right: Michel Lucas, President - Alain Fradin, Vice-President
    Bernard Bartelmann - Jean Huet - Philippe Vidal - Rémy Weber - Jean-Jacques Tamburini



The Executive Board is responsible for determining the CIC group’s overall business strategy (Article 17 of Act no. 84-46 of January 24,
1984 governing the activities and supervision of credit institutions).
Michel Michenko and Gérard Romedenne also attend the Executive Board meetings in their capacity as managing executives of significant
subsidiaries of the group, CIC Banque CIO and CIC Banque BRO in the first case, CIC Banque Scalbert Dupont and CIC Banque CIN in the
second. As such, they are a part of the group’s management.
The Executive Board meets in principle twice a month.
CIC’s Company Secretary acts as secretary to the Executive Board.
38   CORPORATE GOVERNANCE




     Report of the Chairman of the Supervisory Board
     on the preparation and organization of the Board’s work
     (Article L. 225-68 of the French Commercial Code (Code de commerce), arising from Article 117 of the French Financial Security
     Act 2003-706 of August 1, 2003)




                                                                             The Supervisory Board meets every quarter, in accordance with
                                                                             legal requirements, based on a predefined schedule that allows it
                                                                             to examine the Executive Board’s report and focus its discussions
                                                                             on one or more previously-determined subjects:
                                                                             • two meetings are devoted to reviewing CIC’s financial statements:
                                                                               in February for the annual financial statements and in September
                                                                               for the half-yearly financial statements. The Statutory Auditors
                                                                               attend these two meetings in order to report to the Board on
                                                                               their audits and, if applicable, present the issues raised in the
                                                                               course of the closing process;
                                                                             • one meeting is held in December, dealing with the budget and
                                                                               with medium-term forecasts;
                                                                             • during the meeting of the Supervisory Board in May, the head of
                                                                               group internal audit reports to the Board on internal control, risk
                                                                               measurement and monitoring, and compliance with the code of
                                                                               ethics, for both CIC and CIC group activities. An interim report is
                                                                               given at the December meeting.
                                                                             Information packs are prepared and sent to the members of the
                                                                             Supervisory Board in advance of each meeting, containing all
                                                                             necessary information about matters on the agenda.
                                                                             Detailed minutes of each meeting are drawn up, recording the
                                                                             decisions and votes of each member present.
                                                                             The Supervisory Board has set up a three-member Remunerations
                                                                             Committee (Etienne Pflimlin, André Meyer and Paul Schwartz),
                                                                             which meets at least once a year to review the situation and
                                                                             compensation of the members of the Executive Board and make
                                                                             any relevant recommendations.


                                                                                                                                 Etienne Pflimlin
                                                                                                            Chairman of the Supervisory Board
                                                                     EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS                     39




  Executive Board
  and Supervisory
  Board members



To the best of CIC’s knowledge, there are no conflicts of interest
between the obligations towards CIC of the members of the
Executive Board and their personal interests or other obligations.    Alain Fradin
Apart from regulated agreements, no arrangements or agreements        Vice-President of the Executive Board
have been entered into with the main shareholders, clients,           Born May 16, 1947 in Alençon, France
suppliers or others pursuant to which a member of the Executive       Other directorships and positions held:
Board has been selected.                                              Chairman and Chief Executive Officer of CM-CIC Bail • CIC
No service agreement exists binding the members of the Executive      Migrations.
Board to one of the group’s companies.                                Chief Executive Officer of Fédération du Crédit Mutuel Antilles-
                                                                      Guyane • Caisse Fédérale du Crédit Mutuel Antilles-Guyane •
                                                                      Fédération des Caisses du Crédit Mutuel du Sud-Est • Caisse de
Executive Board Members                                               Crédit Mutuel du Sud-Est.
                                                                      Chief Operating Officer of Fédération du Crédit Mutuel Centre
Michel Lucas                                                          Est Europe • CFCMCEE (Caisse Fédérale du Crédit Mutuel Centre
President of the Executive Board                                      Est Europe).
Born May 4, 1939 in Lorient, France                                   Member of the Board of Directors of Boréal • Confédération
Other directorships and positions held:                               Nationale du Crédit Mutuel • CM-CIC Titres • Groupe Sofémo •
Chief Executive Officer of Confédération Nationale du Crédit           Banque du Crédit Mutuel Ile-de-France.
Mutuel • Caisse Centrale du Crédit Mutuel.                            Member of the Management Committee of Bischenberg.
Chairman of the Board of Directors of Groupe des Assurances           Permanent representative of CFCMCEE (Vice-Chairman of
du Crédit Mutuel • Assurances du Crédit Mutuel Vie et IARD SA •       Caisse Centrale du Crédit Mutuel) • CIC (Director of CIC Information)
Assurance du Crédit Mutuel Vie SFM • Banque du Crédit Mutuel          • CIC Participations (Director of CIC Banque Scalbert Dupont, CIC
Ile-de-France.                                                        Banque CIO, CIC Banque CIN) • Groupement des Assurances du
Chairman of Crédit Mutuel Cartes de Paiements.                        Crédit Mutuel (Director of Télévie).
Chairman of the Supervisory Board of Euro Information
Production - Groupement Informatique CM-CIC.                          Bernard Bartelmann
Vice-Chairman of Europay France • Mastercard Europe                   Member of the Executive Board
(Brussels) • Banque de Luxembourg (Luxembourg).                       Born April 12, 1944 in Strasbourg, France
Member of the Board of Directors and CEO of Fédération du
Crédit Mutuel Centre Est Europe • Caisse Fédérale du Crédit           Other directorships and positions held:
Mutuel Centre Est Europe • Banque Fédérative du Crédit Mutuel.        President of the Executive Board of Banque de l’Économie
Member of the Board of Directors of ACMN IARD • Assurances            du Commerce et de la Monétique.
Générales des Caisses Desjardins (Québec) • Banque de Tunisie         Chairman of the Supervisory Board of CM-CIC Lease.
(Tunis) • CIC Banque BRO • CIC Banque Transatlantique • Banque        Member of the Supervisory Board of Caisse de Crédit Mutuel
Transatlantique Belgium • Caisse de Crédit Mutuel ”Cronenbourg”       ”Esplanade”.
• Crédit Mutuel Paiements Électroniques • CIC Capital                 Permanent representative of BFCM (Director of ”L’Alsace” -
Développement • CIC Information • CIC Finance • Eurocard              Société Française d’Édition de Journaux et d’Imprimés
Holding • CIC Lyonnaise de Banque • NC Inc (New York) • CIC           Commerciaux), member of the Board of Directors of CIC Banque
Banque SNVB • SOFEDIS • SURAVENIR.                                    de Vizille, Soderec.
Member of the Supervisory Board of Fonds de Garantie des              Legal manager of SNC Foncière du Crédit Mutuel.
Dépôts • Banque de l’Économie du Commerce et de la Monétique
• CM-CIC AM • Société Alsacienne de Publications ”L’Alsace” •
GIE CIC Production • Manufacture Beauvillé • SAFRAN.
Member of the Management Committee of Euro Information.
40     CORPORATE GOVERNANCE




     Jean Huet                                                               Philippe Vidal
     Member of the Executive Board                                           Member of the Executive Board
     Born October 29, 1941 in Saint-Jeanvrin, France                         Born August 26, 1954 in Millau, France
     Other directorships and positions held:                                 Other directorships and positions held:
     Chairman and Chief Executive Officer of Gesteurop SAS.                   Chairman and Chief Executive Officer of CIC Banque CIAL.
     Chairman of the Supervisory Board of Compagnie de Finance               Chairman of the Board of Directors of CIC Banque SNVB •
     pour l’Industrie.                                                       CIAL Invest.
     Chairman of the Board of Directors of AEE Ile-de-France.                Chairman of Fund Market France SAS.
     Member of the Management Committee of Dynavente Plus.                   Vice-Chairman of the Board of Directors of CM-CIC Bail •
     Permanent representative of CIC (Director of CM-CIC Bail,               Banque de Luxembourg (Luxembourg).
     Paris Capitale Economique, Matignon Investissement et Gestion,          Director of Saint-Gobain PAM • Bank CIAL Schweiz (Basel) •
     Vice-Chairman of Union pour la Valorisation du Patrimoine) •            Cigogne Management (Luxembourg) • Banque Transatlantique
     Gesteurop (Director of Factocic) • EFSA (Director of CIC Banque         Belgium • CM-CIC Titres • SNVB Financements.
     Transatlantique).                                                       Member of the Supervisory Board of Foncière des Régions •
     Director of Fondation de France.                                        Est Gestion.
                                                                             Member of the Management Committee of SNVB Participations
                                                                             SAS • Finances et Stratégies SAS.
     Jean-Jacques Tamburini                                                  Permanent representative of CIC Banque SNVB (member of
     Member of the Executive Board
                                                                             the Management Committee of CIC Information SAS) • CIC
     Born December 9, 1947 in Chambéry, France
                                                                             Banque CIAL (member of the Supervisory Board of CM-CIC AM) •
     Other directorships and positions held:                                 CIAL Invest (Director of CIAL Equipement) • CIC (Director of
     Chairman and Chief Executive Officer of CIC Société Bordelaise           Dubly-Douilhet)• ADEPI (Director of ACM Vie).
     • CIC Participations SAS • Adepi SAS.
     Chairman of the Supervisory Board of CM-CIC AM.
     Director of CIC Capital Développement • CIC Finance • Banca
                                                                             Rémy Weber
                                                                             Member of the Executive Board
     Populare di Milano (Milan) • Banca di Legnano (Milan) • IPO (Institut
                                                                             Born November 18, 1957 in Strasbourg, France
     de Participation de l’Ouest).
     Member of the Audit Committee of Banque marocaine du                    Other directorships and positions held:
     commerce extérieur (Casablanca).                                        Chairman and Chief Executive Officer of CIC Lyonnaise de
     Permanent representative of CIC (Director of Banque de                  Banque.
     Tunisie and CIC Banque de Vizille) • CIC Participations (Director of    Chairman of the Supervisory Board of CIC Banque de Vizille.
     CIC Banque BRO, CIC Banque CIAL, CIC Epargne Salariale, CIC             Vice-Chairman of CIC Private Banking - Banque Pasche
     Lyonnaise de Banque, CIC Banque SNVB) • BFCM (Director of               (Geneva).
     ACM IARD SA) • CIC Société Bordelaise (Director of SFAP).               Director of Euro Information SAS • Euro P3C.
                                                                             Member of the Supervisory Board of GIE CIC Production.
                                                                             Member of the Executive Committee of Danifos SAS.
                                                                             Permanent representative of CIC Lyonnaise de Banque
                                                                             (Director of CIC Bonnasse Lyonnaise de Banque, CIC Information
                                                                             SAS, Union pour la Valorisation du Patrimoine (association) •
                                                                             Sérénis (Director of Télévie) • CIC Banque de Vizille (Director of
                                                                             Descours et Cabaud) • CIC (Director of Sofemo, CM-CIC AM) •
                                                                             Groupe des ACM (Director of ACM IARD SA).
                                                                   EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS                  41




The Supervisory Board                                               Banque Fédérative du Crédit Mutuel
                                                                    Member of the Supervisory Board
Etienne Pflimlin                                                     Other directorships and positions held:
Chairman of the Supervisory Board                                   Chairman of Bischenberg • CM-CIC Agence Immobilière • Devest 8.
Born October 16, 1941 in Thonon-Les-Bains, France                   Vice-Chairman of Crédit Mutuel Paiements Electroniques.
Other directorships and positions held:                             Director of Assurances du Crédit Mutuel SFM, Assurances du
Chairman of the Board of Directors of Confédération                 Crédit Mutuel Vie et IARD SA • Batigère • Boréal • Caisse Centrale
Nationale du Crédit Mutuel • Caisse Centrale du Crédit Mutuel •     du Crédit Mutuel • CM-CIC Securities • CM-CIC Participations
Fédération du Crédit Mutuel Centre Est Europe • Caisse Fédérale     Immobilières • CM-CIC SCPI Gestion • Crédit Mutuel Cartes de
du Crédit Mutuel Centre Est Europe • Banque Fédérative du Crédit    Paiements • Crédit Mutuel Habitat Gestion • Crédit Mutuel
Mutuel • Caisse de Crédit Mutuel ”Esplanade” • Le Monde             Participations • Critel • Euro Information Direct Service •
Entreprises.                                                        Financière du Crédit Mutuel • Forêts Gestion • Groupe des
Chairman of the Supervisory Board of Banque de l’Écono-             Assurances du Crédit Mutuel • Groupe Sofémo • Institut Lorrain
mie du Commerce et de la Monétique • Editions Coprur • Soderec      de Participations • Parcus • Sarest • SEM Action 70 • SEM CAEB-
(Société d’Etudes et de Réalisation pour les Équipements            Bischheim • SEM CALEO - Guebwiller • SEM Destination 70 • SEM
Collectifs) • Société Alsacienne de Publications ”L’Alsace”.        Euro Moselle Développement • SEM Micropolis • SEM Nautiland •
Director of Groupe des Assurances du Crédit Mutuel • “L’Alsace”     SEM Patinoire Les Pins • SEM pour la promotion de la ZAC Forbach
(Société Française d’Édition de Journaux et d’Imprimés              Sud • SEM Semibi Biesheim • SEM TRACE • SEMDEA • SEM
Commerciaux).                                                       Mulhouse • SIBAR • Société Fermière de la Maison de L’Alsace •
Member of the Supervisory Board of ”Le Monde” • Le Monde            ”L’Alsace” (Société Française d’Édition de Journaux et d’Imprimés
et partenaires associés • Société éditrice du Monde.                Commerciaux) • SOFEDIS • UES PACT ARIM • Ventadour
Permanent representative of Caisse Centrale du Crédit               Investissement.
Mutuel (member of the Supervisory Board of CM-CIC AM,               Member of the Management Committee of Euro Information
Management Committee of Euro Information) • CIC (Director of        • Euro Protection Surveillance • Euro TVS.
CIC Banque CIAL, CIC Banque Scalbert Dupont, CIC Banque CIO,        Member of the Supervisory Board of CIC Banque de Vizille •
CIC Banque CIN, CIC Société Bordelaise).                            CM-CIC AM • SAEM Mulhouse Expo • SCPI Crédit Mutuel Habitat 2
Non-voting director of Fimalac.                                     • SCPI Crédit Mutuel Habitat 3 • SCPI Crédit Mutuel Habitat 4 •
                                                                    SCPI Crédit Mutuel Immobilier 1 • SCPI Finance Habitat 1 • SCPI
                                                                    Finance Habitat 2 • Soderec • STET – Systèmes Technologiques
Gérard Cormorèche                                                   d’Échanges et de Traitement.
Vice-Chairman and member of the Supervisory Board                   Non-voting director of SEM E Puissance 3.
Born July 3, 1957 in Lyon, France
Other directorships and positions held:                             Christian Klein
Chairman of Fédération du Crédit Mutuel du Sud-Est • Caisse de      Member of the Supervisory Board, representing
Crédit Mutuel du Sud-Est • CECAMUSE • Caisse Agricole du Crédit     Banque Fédérative du Crédit Mutuel
Mutuel • Caisse de Crédit Mutuel de Neuville-sur-Saône.             Born January 9, 1951 in Metz, France
Member of the Board of Directors of Confédération Nationale
du Crédit Mutuel • Banque Fédérative du Crédit Mutuel • Caisse      Other directorships and positions held:
Fédérale du Crédit Mutuel Centre Est Europe • Société des           Member of the Board of Directors of Cigogne Management
Agriculteurs de France.                                             SA (Luxembourg) • Sicav Gestion 365 • ESN North America (New
Legal manager of SCEA Cormorèche Jean-Gérard • SARL                 York) • Investessor.
Cormorèche.                                                         Permanent representative of Banque Fédérative du Crédit
Permanent representative of Caisse de Crédit Mutuel du Sud-         Mutuel (Director of CM-CIC Securities, Sarest, Groupe Sofémo,
Est (Director of ACM Vie).                                          Boréal, member of the Supervisory Board of CM-CIC AM) •
                                                                    Sofinaction (Director of CM-CIC Bail, CM-CIC Lease) • Cicoval
                                                                    (Director of CIC Lyonnaise de Banque).


                                                                    Gérard Bontoux
                                                                    Member of the Supervisory Board
                                                                    Born March 7, 1950 in Toulouse, France
                                                                    Other directorships and positions held:
                                                                    Chairman of Fédération du Crédit Mutuel Midi-Atlantique •
                                                                    Caisse Fédérale du Crédit Mutuel Midi-Atlantique.
                                                                    Director of Confédération Nationale du Crédit Mutuel • Caisse
                                                                    Centrale du Crédit Mutuel • Groupe des Assurances du Crédit
                                                                    Mutuel.
42     CORPORATE GOVERNANCE




     Luc Chambaud                                                      Pierre Filliger
     Member of the Supervisory Board                                   Member of the Supervisory Board
     Born March 24, 1956 in Angoulême, France                          Born November 27, 1943 in Rixheim, France
     Other directorships and positions held:                           Other directorships and positions held:
     Vice-Chairman of the Board of Directors of NORFI.                 Chairman of Caisse Régionale du Crédit Mutuel Méditerranéen •
     Chief Executive Officer of Caisse Fédérale du Crédit Mutuel de     Caisse Interfédérale Sud Europe Méditerranée • Caisse de Crédit
     Normandie • Fédération du Crédit Mutuel de Normandie.             Mutuel Marseille-Prado.
     Director of SA Euro-P3C • SAS Cloé.                               Chairman of the Supervisory Board of ACTIMUT SA, CAMEFI
     Member of the Supervisory Board of Groupement Technique           Banque.
     des Organismes du Crédit Mutuel.                                  President of the Executive Board of Caisse Méditerranéenne
     Non-voting director of Groupement des Assurances du Crédit        de Financement (CAMEFI).
     Mutuel • Assurances du Crédit Mutuel IARD.                        Vice-Chairman of Caisse Fédérale du Crédit Mutuel Agricole et
     Permanent representative of Caisse fédérale de Crédit Mutuel      Rural Provence-Languedoc.
     de Normandie (Director of Financière du Crédit Mutuel, GIE Cloé   Director of France Luxembourg Invest Advisory.
     Services, Assurances du Crédit Mutuel Vie SA, member of the
     Management Board of Euro Information SA and CIC Informations
     SA) • SAS Cloé (member of the Management Board of Euro GDS).
                                                                       Jean-Louis Girodot
                                                                       Member of the Supervisory Board
                                                                       Born February 10, 1944 in Saintes, France
     Maurice Corgini                                                   Other directorships and positions held:
     Member of the Supervisory Board
                                                                       Chairman of the Board of Directors of Fédération du Crédit
     Born September 27, 1949 in Beaume-Les-Dames, France
                                                                       Mutuel Ile-de-France • Caisse Régionale de Crédit Mutuel Ile-de-
     Other directorships and positions held:                           France (CRCMIDF) • Caisse de Crédit Mutuel (Paris-Montmartre
     Chairman of the Board of Directors of Caisse de Crédit Mutuel     Grands Boulevards).
     de Baume-Valdahon-Rougemont • Caisse de Crédit Mutuel du          Chairman and Chief Executive Officer of CODLES.
     district de Franche-Comté Sud.                                    Chairman of Chambre Régionale de l’Économie Sociale-CRES •
     Director of Banque Fédérative du Crédit Mutuel • Fédération du    Conférence nationale des CRES • Syndicat de la Presse d’Infor-
     Crédit Mutuel Centre Est Europe.                                  mation Spécialisée (SPMS) • Caisses de Crédit Mutuel (Chatou,
     Legal Manager of Cogit’Hommes Franche-Comté.                      Fontenay-sous-Bois, Drancy, Paris 13 Grande Bibliothèque, Paris
                                                                       19 Flandres, Rueil 2000, Versailles St-Louis).
                                                                       Vice-Chairman of Conseil économique et social d’Ile-de-France
     Bernard Daurensan                                                 • CEGES (Conseil des Entreprises et Groupements de l’Économie
     Member of the Supervisory Board
                                                                       Sociale).
     Born October 31, 1943 in Lyon, France
                                                                       Director of BFCM • Caisse Fédérale du Crédit Mutuel Centre Est
     Other directorships and positions held:                           Europe • Confédération Nationale du Crédit Mutuel • Messageries
     Chairman and Chief Executive Officer of Financière du Crédit       lyonnaises de presse • Coopérative d’information et d’édition
     Mutuel.                                                           mutualiste • Messageries lyonnaises de presse.
     Chairman of the Supervisory Board of Sodelem.                     Vice-Chairman of the Supervisory Board of Cosmedias.
     Chairman of Crédit Mutuel Paiements Electroniques.                Member of the Supervisory Board of GTOCM.
     Chief Executive Officer of Caisse Fédérale du Crédit Mutuel        Permanent representative of CRCMIDF (Director of GACM,
     Océan (CFCMO) • Crédit Mutuel Agricole et Rural Océan.            Commmision paritaire des publications et agences de presse).
     Director of Europay France • Holding Eurocard • Océan             Member of Conseil National de la Vie Associative-CNVA • Comité
     Participations.                                                   consultatif de l’économie sociale.
     Permanent representative of CFCMO (Chairman of LLD
     Participations, Director of ACM IARD, Crédit Mutuel Cartes de
     Paiements, Caisse Centrale du Crédit Mutuel, member of the
     Supervisory Board of CM-CIC AM, CMO Gestion; Legal manager
     of CMO Immobilier, Sodelem Services) • CCCM (Director of
     Factocic).
                                                                  EXECUTIVE BOARD AND SUPERVISORY BOARD MEMBERS   43




Daniel Leroyer
Member of the Supervisory Board
Born April 15, 1951 in Saint-Siméon, France
Other directorships and positions held:
Chairman of the Board of Directors of Fédération du Crédit
Mutuel de Maine-Anjou, Basse-Normandie • Caisse Fédérale du
Crédit Mutuel Maine-Anjou, Basse-Normandie • Caisse Générale
de Financement (CAGEFI) • Créavenir (Association) • Caisse de
Crédit Mutuel du Pays Fertois.
Member of the Supervisory Board of Société de réassurance
Lavalloise (SOCREAL SA).
Director of SAS Cloé • SAS MABN Participations • SAS Assurances
du Crédit Mutuel Maine-Anjou-Normandie (ACMAN) • Confédération
Nationale du Crédit Mutuel.
Permanent representative of Fédération du Crédit Mutuel de
Maine-Anjou, Basse-Normandie (Director of GIE Cloé Services) •
Caisse Fédérale du Crédit Mutuel Maine-Anjou, Basse-Normandie
(Director of Groupe des Assurances du Crédit Mutuel).


Roberto Mazzotta
Member of the Supervisory Board
Born November 3, 1940 in Milan, Italy
Other directorships and positions held:
Chairman of Banco Popolare di Milano (Milan).
Director of Dexia Banque.
Executive Committee of ABI (Italian Banking Association).


André Meyer
Member of the Supervisory Board
Born March 31, 1934 in Stotzheim, France
Other directorships and positions held:
Honorary Chairman of the Board of Directors of Caisse de
Crédit Mutuel de l’Ungersberg.
Director of Fédération du Crédit Mutuel Centre Est Europe •
Confédération Nationale du Crédit Mutuel.
Member of the Board of Directors and Honorary Chairman
of Union des Caisses de Crédit Mutuel du district de Sélestat.
Legal manager of SCI Binnweg.


Bernard Morisseau
Member of the Supervisory Board
Born August 7, 1943 in Grand Fougeray, France
Other directorships and positions held:
Chairman of the Board of Directors of Caisse Fédérale de
Crédit Mutuel de Loire-Atlantique Centre-Ouest • Fédération du
Crédit Mutuel de Loire-Atlantique Centre-Ouest • Caisse de
Crédit Mutuel de Pornichet • Suravenir Assurances.
Chairman of Progreffe.
Vice-Chairman of the Board of Directors of Confédération
Nationale du Crédit Mutuel • Suravenir Assurances Holding.
Vice-Chairman of the Supervisory Board of BCME • Infolis.
Director of BFCM.
Permanent representative of Caisse Fédérale CMLACO
(member of the Supervisory Board of Suravenir and Ataraxia
SAS, Director of Groupement des Assurances du Crédit Mutuel) •
EFSA (Director of CIC Banque CIO) • Fédération du CMLACO
(Chairman of INESTLACO).
44     CORPORATE GOVERNANCE




                                                                            Philippe Vasseur
                                                                            Member of the Supervisory Board
                                                                            Born August 31, 1943 in Le Touquet, France
                                                                            Other directorships and positions held:
                                                                            Chairman of Caisse Fédérale du Crédit Mutuel Nord Europe •
                                                                            Caisse de Crédit Mutuel Lille Liberté • CMNE France (SA) • Société
                                                                            de Développement Régional de Normandie (SA) • Crédit Mutuel
                                                                            Nord Europe Belgium SA (Belgium) • Banque du Brabant (Belgium)
                                                                            • Crédit Professionnel Interfédéral (Belgium).
                                                                            Chairman of the Supervisory Board of Banque Commerciale
                                                                            du Marché Nord Europe (SA).
                                                                            Director of Heineken France SA • Holder (SAS) • Nord Europe
                                                                            Assurances (SAS) • Nord Europe Asset Management (SAS) •
     Paul Schwartz                                                          Crédit Professionnel Interfédéral (Belgium) • BKCP Securities SA
     Member of the Supervisory Board                                        (Belgium) • Middenstands Depositoen Kredietkantoor (Belgium)
     Born on January 29, 1937 in Bitche, France                             • Nord Europe Private Bank (Luxembourg).
                                                                            Non-voting director of Crédit Mutuel Nord Immobilier (SA).
     Other directorships and positions held:
                                                                            Member of the Supervisory Board of Saint Louis Sucre (SA).
     Vice-Chairman of the Board of Directors of Banque
                                                                            Permanent representative of CMNE France SA (Director of
     Fédérative du Crédit Mutuel • Fédération du Crédit Mutuel Centre
                                                                            Groupe des Assurances du Crédit Mutuel) • Crédit Mutuel Nord
     Est Europe.
                                                                            Europe Belgium SA (Vice-Chairman of Federal Kas Voor Het
     Chairman of Union des Caisses de Crédit Mutuel du district de
                                                                            Beroeskrediet).
     Sarreguemines.
     Chairman of the Board of Directors of Caisse de Crédit Mutuel
     de Bitche.                                                             Jean-Claude Martinez
     Director of Confédération Nationale du Crédit Mutuel • Caisse          Member of the Supervisory Board
     Centrale du Crédit Mutuel • Mutuel Bank Luxembourg.                    representing employee-shareholders
     Member of the Supervisory Board of Banque de l’Économie                Born on November 6, 1949 in Oran (Algeria)
     du Commerce et de la Monétique.
                                                                            Other directorships and positions held:
     Permanent representative of Banque Fédérative du Crédit
                                                                            Chairman of the Supervisory Board of FCPE ACTICIC.
     Mutuel (Director of Soparim - Société de Participation Immobilière -
                                                                            Vice-Chairman of Caisse de Retraite du groupe.
     Sofédim, Caisse Centrale du Crédit Mutuel) • Caisse Fédérale
     Crédit Mutuel Centre Est Europe (Director of Groupe des
     Assurances du Crédit Mutuel) • Groupe des Assurances du Crédit         Michel Cornu
     Mutuel (Director of Assurances du Crédit Mutuel Vie et IARD SA).       Member of the Supervisory Board
                                                                            representing employee-shareholders
                                                                            Born on July 2, 1947 in Marcq-en-Barœul, France
     Roland Truche
     Member of the Supervisory Board                                        Other directorships and positions held:
     Born August 2, 1944 in Aix-les-Bains, France                           Director of CIC Banque Scalbert Dupont (representing employees).

     Other directorships and positions held:
     President of the Executive Board of Caisse Fédérale de Crédit          Jean-Marc Crosnier
     Mutuel du Centre.                                                      Member of the Supervisory Board
     Chairman of the Supervisory Board of CM-CIC AM.                        representing employee-shareholders
     Director of La République du Centre (SA, workers’ participation)       Born on September 30, 1950 in Eragny-sur-Oise, France
     • CIC Information (SAS) • Cloé (SAS).                                  Other directorships and positions held:
     Permanent representative of Caisse Fédérale CMC (Director              Director of CIC Banque Scalbert Dupont (representing employees).
     of ACM IARD SA, member of the Management Committee of Euro
     Information SAS, non-voting director of Financière du Crédit
     Mutuel SA) • CICOVAL SAS (member of the Supervisory Board of           Patrick Demblans
     CM-CIC Lease).                                                         Member of the Supervisory Board
                                                                            representing employee-shareholders
                                                                            Born on March 30, 1950 in Blagnac, France
                                                                            Other directorships and positions held:
                                                                            Director of CIC Société Bordelaise (representing employees)
                                                                            • ASSEDIC Midi-Pyrénées.
                                                                            Co-Legal manager of SCI EMDAMA.
                                      45




     Sustainable
development




      46 Ethics and compliance
      46 Internal control
      46 Report of the Chairman
         of the Supervisory Board
         on internal control procedures
      50 Risk management
      58 Human resources
      59 Technological capabilities
      61 Client relations
      62 Shareholder relations
46     SUSTAINABLE DEVELOPMENT




       Ethics and compliance                                                   Internal control


     Code of ethics                                                          In 2005, the group maintained its focus on bolstering internal
     The CIC group’s code of ethics outlines the rules of good conduct       control systems.
     to be adhered to by all employees, especially with respect to           The development and enhancement of audit and control tools
     client relations. It sets out the following principles:                 continued in close cooperation with Crédit Mutuel.
     • the client’s interests must always come first;                         The internal control portal at the service of the branch network
     • professional secrecy must be respected at all times;                  has proved its effectiveness. To facilitate its use, new automated
     • transactions must be handled diligently and fairly;                   requests have been added. The portal now offers uniform
     • employees must behave with integrity.                                 functionalities that are shared throughout the CMCEE-CIC group.
     Specific provisions are also laid down for employees working in          The remote-controlled tools used for risk monitoring and
     ”sensitive” areas who may be faced with a potential conflict of          administrative control, interfaced with the main information
     interest or who have access to confidential or privileged information.   system (as is the portal), were further upgraded during the year.
     Appendices to the code of ethics contain explicit guidelines            The system also includes an internal control module for use in
     concerning capital markets activities, financial transactions and        audit assignments throughout the network.
     the management of securities portfolios.                                In 2006, the organization of the group’s internal control
     Management is responsible for ensuring compliance with these            procedures will be adapted to take account of the new regulatory
     rules, which is verified through regular controls.                       requirements introduced by the French Banking and Financial
                                                                             Regulatory Committee (CRBF 97-02, as amended).
     Combating money laundering
     and the financing of terrorism
     The drive to combat money laundering and the financing of
     terrorism has been considerably stepped up across the group in
     recent years. Measures have been taken to ensure that the group
     does not enter into any relationship with a client whose activities
     are suspect, and to detect and prevent any suspect transactions.          Report of the Chairman
     Further initiatives taken in 2005 included new tools, regular             of the Supervisory Board
     procedural reviews, and awareness and training programs for all           on internal control procedures
     employees throughout the branch network and in head office
     departments.


                                                                             As stated in Article L.225-68 of the French Commercial Code (Code
                                                                             de commerce), ”… The Chairman of the Supervisory Board shall
                                                                             submit to the annual general meeting a report, attached to the
                                                                             report mentioned in the previous paragraph and in Article L.233-26,
                                                                             … concerning the internal control procedures implemented by the
                                                                             Company”.

                                                                             Introduction
                                                                             CIC is responsible for internal control at both group level and for
                                                                             its own operations.
                                                                             The same principles are applied in both cases. Internal control is an
                                                                             integral part of corporate life, carried out in all segments based on
                                                                             documented processes with the aim of going beyond compliance
                                                                             with legal requirements to ensure better risk management, greater
                                                                             operational security and higher performance.
                                                                             This report has been compiled in conjunction with internal control
                                                                             teams based on the procedures deemed useful. A review has
                                                                             been performed of the main internal control work carried out in
                                                                             2005.
                              REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD ON INTERNAL CONTROL PROCEDURES                             47




Group-level internal control process                                     Organization of internal control at CIC
                                                                         This section mentions only the CIC group’s in-house oversight
A - A structured internal control process
                                                                         bodies, but the bank must also report on its operations to
The group has set up an internal control process that meets              supervisory authorities, such as the Commission bancaire and
regulatory requirements and its own standards, ensuring that the         the Autorité des marchés financiers in France and similar bodies
organization instituted matches its size, the nature of its operations   in foreign countries where it is based. These authorities regularly
and the scale of risks to which it is exposed.                           carry out audits at the facilities of the various group entities.
The group also ensures that its internal control and risk
measurement systems completely cover the full range of its
                                                                         A - Control practices at CIC
operations and those of the companies under its control. These           Supervisory Board
systems must make it possible to identify, assess and track
operational and counterparty risks at both Company and group             In accordance with regulatory requirements, internal control
levels, in a consistent manner based on group standards.                 reports are submitted to the Supervisory Board twice a year. The
                                                                         annual internal control reports for the group and for CIC include
B - A permanent internal control process                                 the program of work for the upcoming year.

One of the key purposes of the organization set up at group              Different levels of control
level is to verify on an ongoing basis the quality, reliability and
                                                                         Chain-of-command controls
completeness of the internal control system. For both CIC and
                                                                         As part of their ongoing operations, bank staff regularly perform
its subsidiaries, the group ensures that the internal control
                                                                         controls under the responsibility of management, with the help of
system is underpinned by a set of procedures and operational
                                                                         purpose-built tools such as the internal control portal used by the
limits that match regulatory requirements and applicable
                                                                         branch network to monitor its operations.
standards. Its work is based on group methodology and on
generally applied rules in the area of internal control audits.          Departments in charge of ongoing controls
                                                                         The departments in charge of ongoing controls monitor the
The system has been designed in such a way that the full scope
                                                                         bank’s operations using remote inspection tools. Their main task
of operations for each group entity is regularly monitored at
                                                                         is to verify compliance with applicable regulations and in-house
various control levels via the chain of command, ongoing
                                                                         procedures, particularly as regards risk management standards.
control of the appropriateness and regulatory compliance of
                                                                         They also monitor the implementation of any corrective action
operations, and audits for in-depth investigations.
                                                                         recommended.
The group constantly seeks to strike the appropriate balance
                                                                         CIC Internal Audit Department
between the objectives assigned to internal control and the
                                                                         Audits within CIC and the regional banks
resources at its disposal.
                                                                         CIC’s Internal Audit Department carries out audits throughout the
                                                                         group and within CIC itself. Following on-site controls based on
C - An independent internal control process
                                                                         accounting evidence, the internal audit team issues reports to
Internal audit teams at the regional banks report to the head of         senior management, as well as to the audited entities. The team is
internal audit for CIC and the group, who reports to the President       responsible for ensuring that the recommendations contained in
of the Executive Board and enjoys the independence required for          its reports are implemented.
the fulfillment of his responsibilities. In accordance with regulatory
                                                                         The heads of internal audit for the regional banks regularly report
requirements, the CIC Internal Audit Department issues an annual
                                                                         to the group head of internal audit. The migration of the various
internal control report for the CIC group and for CIC’s banking
                                                                         banks to a shared information system involving the use of identical
operations. Both reports contain sections on risk measurement
                                                                         tools facilitates ongoing, consistent controls and has helped create
and monitoring.
                                                                         even stronger links between the various departments involved in
                                                                         the internal control process.
                                                                         Audits within CIC subsidiaries
                                                                         CIC’s Internal Audit Department performs audits of the group’s
                                                                         businesses that fall within its remit. It verifies the adequacy of
                                                                         their internal control organization on a regular basis and monitors
                                                                         key action taken in this area. The quality of the annual internal
                                                                         control reports produced is also verified.
48      SUSTAINABLE DEVELOPMENT




     B - Internal control framework                                           C - Development of the internal control system
     Guidelines and tools                                                     Work is in progress at group level to adapt the internal control
                                                                              organization to the new regulatory requirements applicable from
     Several documents used by the entire group provide the basis for         2006 (CRBF 97-02, as amended). Whereas periodic and ongoing
     internal control work.                                                   controls will be performed by distinct functions, a dedicated
     Internal control charter and guidelines                                  compliance unit will have specific responsibility for the application
     The charter defines the core principles on which internal control is      of legal and regulatory provisions, and conformity to professional
     based within the group, while the internal control guidelines            and internal standards. The standardization of internal control
     provide detailed instructions concerning the practical applica-          processes within the CMCEE-CIC group will also be pursued.
     tion of those principles. The appendices include a review of the         A Control and Compliance Committee will be formed to oversee
     different types of controls to be performed for each of the main         the quality and efficiency of the organization set up.
     business segments. They also describe the key risks to which the
     bank is exposed in its operations and the systems to be put in
     place to assess and control them.                                        Accounting data and control at CIC
     Compendium of internal control and internal audit tools
                                                                              and group levels
     This reference manual describes the main tools used in internal          CIC’s group Accounting Department, which is responsible for
     audit assignments and internal control. The tools draw upon the          producing and validating the financial statements, is organized
     many opportunities offered by the CMCEE-CIC group information            into three sections – individual and consolidated accounting
     system, providing automated controls and fluid follow-up through          data, accounting controls and subsidiaries’ accounting data. The
     very detailed reporting. With many controls now performed                information used for financial reporting is produced and validated
     remotely, monitoring is continuous and on-site work is more              by the group Accounting Department.
     effective.
     Risk coverage plan                                                       A - Controls of the financial statements
     This plan, based on detailed risk analysis, allows the Internal Audit        of the bank
     Department to plan its work over several years representing a full
                                                                              Accounting system
     audit cycle. It is derived from in-house methodologies and is
     regularly updated to reflect audit findings, as well as changes in         System architecture
     operations. The risk coverage plans defined for each of the               All CIC banks now use the same chart of accounts and requests
     regional banks are implemented alongside the group-level risk            for changes are centralized at CIC level.
     coverage plan.                                                           Procedure for data aggregation
                                                                              In accordance with the model defined by CMCEE, CIC’s majority
     General guidelines
                                                                              shareholder, accounting data are aggregated for the following
     Code of ethics                                                           entities:
     The group’s code of ethics sets out the principles of conduct that
                                                                              • a group (e.g., the CIC group);
     must be respected by each employee. It is divided into a general
                                                                              • a ”Federation” made up of one or more banks or other legal
     section and appendices dealing with a certain number of areas
                                                                                entities;
     that call for specific processes. It also contains the rules applicable
                                                                              • a bank belonging to a ”Federation”.
     to employees working in ”sensitive” areas and the obligations to
     which those employees are subject.                                       All bank operations (head office and field operations) are broken
                                                                              down into ”branches”, which represent the base unit of the
     Guidelines for combating money laundering
                                                                              accounting system. Accounting entries are recorded at the level
     and the financing of terrorism
                                                                              of the ”branch”.
     Aside from the general procedure on combating money laundering
     and the financing of terrorism, which reviews the various tools put       Accounting consistency of management accounting data
     in place in this area, these guidelines describe the specific processes   Each ”branch” includes an ”external” section that records
     applicable to certain specialized businesses and provide regulatory      financial accounting data and an “internal” section that records
     and technical reference documents.                                       cost accounting data. At the individual ”branch” level, the figures
                                                                              used for management accounting purposes are obtained by
     Procedures                                                               combining the ”internal” and ”external” data. Final outputs are
     The procedures applicable within the CIC group, particularly with        derived by adding together the resulting balances for the various
     regard to risk control, are posted on the corporate intranet and         ”branches”.
     may be accessed at all times by employees with the help of search        Links are established between financial accounting captions and
     engines. Access is facilitated by the tools put in place and links       the codes attributed to the products marketed by the bank.
     have been created to make it easier to look up and apply the
     procedures.                                                              Cost accounting data are used to determine the results by
                                                                              business segment that are needed to prepare the consolidated
                                                                              financial statements.
                              REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD ON INTERNAL CONTROL PROCEDURES                             49




Control methods                                                          Reporting and consolidation
Procedures put in place                                                  The consolidation packages of entities using the shared
Accounting procedures and templates are documented.                      information system are completed automatically. These purpose-
The procedures are posted on the intranet of each regional bank.         designed packages are subject to multiple cross-checks as part
                                                                         of a validation process. Since January 1, 2005, entities have been
Control levels
                                                                         required to submit a consolidation package under French GAAP
Daily accounting controls are performed by the appropriate staff
                                                                         (as formulated by the CNC) and a consolidation package under
within each ”branch”.
                                                                         international accounting standards (IFRS).
The Accounting Control Department is also responsible for more
                                                                         Each accounting department is responsible for the packages
general controls, including mandatory controls for regulatory
                                                                         sent to the CIC Consolidation Department. The Consolidation
purposes, verification of the supporting evidence for internal
                                                                         Department is responsible for program settings and consolidation
accounting data, monitoring of ”branch”-related data, control of
                                                                         adjustments. The consolidation is performed on a software package
the foreign exchange position, control of net banking income by
                                                                         used by the vast majority of French banks.
business segment, agreement of accounting procedures and
templates with CMCEE, and assurance of the interface between             A tax group set up since 1995 includes virtually all the French
back offices and the auditors for the half-yearly and annual              entities of CIC. The tax group’s tax liability is calculated using a
closes.                                                                  software package and cross-checks are performed between the
                                                                         tax and accounting reporting packages.
As part of its functions, the Internal Audit Department periodically
performs accounting controls.                                            Analysis of financial and accounting data
Control practices                                                        The consolidated financial statements are analyzed in relation to
                                                                         the previous year, to the budget and to quarterly accounting and
Automated accounting controls
                                                                         financial reporting. Each analysis covers a specific area, such as
An automated daily control procedure based on the bank’s daily
                                                                         provisions for loan losses and outstanding loans and deposits.
balance allows the verification of balance sheet and off balance
                                                                         Observed trends are corroborated by the departments concerned,
sheet positions, asset/liability balances by ”branch” and by currency,
                                                                         such as the Lending Department and the Management Accounting
and the monitoring of technical accounts.
                                                                         Department. Each entity’s contribution to the consolidated finan-
This control procedure is also applied to the general ledger at the      cial statements is also analyzed.
end of each month.
                                                                         The findings of all of the above analyses are submitted to the
Evidencing of accounts                                                   Executive Board, whose members include the Chairmen of group
A procedure has been set up for evidencing the internal accounts,        banks.
using the Accounting Control Department’s automated process in a
number of areas. The data reported by each of the teams in charge
                                                                         Conclusion
of evidencing the accounts are checked against control findings.
                                                                         Based on common principles shared by all group entities and
B - Controls of the consolidated                                         using tools developed on a unified information system, CIC’s
    financial statements                                                  internal control mechanism is designed to permanently monitor
IFRS compliance took effect within group entities on January 1,          all of the bank’s operations. We remain committed to reinforcing
2005. The options and accounting principles adopted and the              processes and enhancing internal control efficiency. Further action
related quantitative impacts at the beginning of the 2004 and            will be taken in 2006 in connection with the new internal control
2005 financial years were disclosed at the time of publication of         organization for the entire CMCEE-CIC group.
consolidated net income for the first six months of 2005.
                                                                                                                          Etienne Pflimlin
Accounting principles and methods                                                                       Chairman of the Supervisory Board
CIC and CMCEE jointly define the French and international
accounting principles and methods (issued by the CNC and IASB
respectively) to be applied by all group entities in their statutory
financial statements. Foreign subsidiaries use this information to
restate their local accounts in accordance with French GAAP and
international accounting standards in their consolidation packages
and for financial reporting purposes.
The accounting managers of the various group entities meet
twice a year to prepare the half-yearly and annual closes.
The statutory financial statements under international accounting
standards (IFRS) are prepared for the entities using the GTOCM
central IT platform. The closing process for the IFRS statutory
financial statements uses the same organization and team as
those for the statutory financial statements under French GAAP
(as formulated by the CNC).
50     SUSTAINABLE DEVELOPMENT




                                                                            Credit risk
       Risk management
                                                                            Risk management structure
                                                                            The organization of risk management within CIC is as follows:

                                                                              CUSTOMER
                                                                                              APPROVAL    DISBURSEMENT   MONITORING   COLLECTION
     Effective risk management is essential to the development of the        INFORMATION

     CIC group. The group’s aim is to make sure that all risks are
     properly assessed and that they are compatible with the group’s        Commitments in the main customer segments are monitored by
     earnings capacity and capital resources.                               the banks using advanced risk detection tools, which are based on
     Four categories of risk have been identified:                           both external and internal criteria, including account histories.
                                                                            These indicators help identify and deal with potential problem
     • credit risk;
                                                                            loans before payment incidents arise.
     • asset-liability management risk;
     • market risk;                                                         Specialized units within the group banks may be called upon to
     • operational and legal risk.                                          manage and collect problem loans.
     CIC’s strategy is to incorporate risk management considerations        There are three separate phases in the collection process. Initially,
     at all levels of decision-making. In line with this strategy, senior   borrowers who are behind with their payments are chased up. The
     management of both the group and each of the regional banks            second phase consists of seeking a negotiated settlement. If this
     participate actively in individual decisions and overall risk          fails, legal action is taken.
     management through the implementation of standardized                  Risk management is organized around each subsidiary’s lending
     systems and procedures.                                                department, which reports directly to senior management and is
     The banks within the group leverage the close ties that they have      independent of line management.
     formed in their respective regional economies to obtain information    The lending departments have two main responsibilities:
     about existing and prospective customers.
                                                                            • ensure the quality of lending decisions, by checking that loan
     Customer segments have been defined and risk-profiled, allowing            conditions are in line with the risk profile;
     marketing efforts to be targeted more effectively.                     • enhance tools for analyzing, managing and tracking credit risk.
     Risk assessment is carried out at several stages following formal      Regular risk reviews are carried out to assess changes in the overall
     procedures. All employees receive regular training in this area,       quality of the loan book and to ensure that an appropriate spread
     including refresher courses.                                           of risks is maintained by economic sector and business line.
     Credit approval processes vary according to the market. They           Sensitive loans, loans to customers that have banking relations
     seek to meet the requirements of customers while keeping risks         with several group banks and credit authorizations that are at the
     to a minimum, based on:                                                ceilings set according to subsidiaries’ respective equity are
     • the weighting of products in accordance with the type of risk        reviewed by the group Risk Committee. In addition, the Lending
       involved and guarantees offered;                                     Committee sets risk management policies with respect to CIC’s
     • customers’ individual credit ratings;                                major customers.
     • risk studies of business sectors and industries;
     • clearly identified delegations of authority;                          Risk assessment and monitoring systems
     • the principle of dual verification;                                   An in-house, 12-point customer rating system has been defined
     • rules for the setting of maximum discretionary lending limits in     for both CIC and Crédit Mutuel. CIC also uses a range of different
       proportion to the lending bank’s equity.                             tools to assess the group’s consolidated risk exposure. For
     Loans representing large amounts are submitted to the Lending          example, the information system can perform real-time
     Committee of each bank or to the group for approval.                   calculations of consolidated exposures by counterparty for all
                                                                            CIC group operations. In addition, the automated process for
                                                                            loan reclassification from performing to non-performing complies
                                                                            with prevailing regulations.
                                                                                                         RISK MANAGEMENT          51




Customer risks
Total customer loans, excluding non-performing loans, provisions
for loan losses and repurchase/resale agreements, rose 15.8% to
€73.9 billion in 2005. The breakdown by type of loan is as
follows:


Customer loans by type

                                                     Outstanding balance
 (in € billions)                                     at December 31, 2005          Change 2005/2004               Weighting
 Short-term loans                                             22.1                      + 13.0%                      30.0%
 Customer accounts in debit                                    4.1                           - 5.6%                    5.6%
 Commercial loans                                              4.3                          + 13.6%                    5.8%
 Treasury facilities                                          13.4                          + 20.0%                   18.2%
 Export credit                                                 0.3                             n.m.                    0.4%
 Medium- and long-term loans                                  51.6                          + 17.1%                  70.0%
 Capital asset financing                                        11.5                          + 4.5%                   15.6%
 Home loans                                                   30.9                          + 27.0%                   41.9%
 Finance leases                                                5.6                           + 2.3%                    7.6%
 Other                                                         3.6                             n.m.                    4.9%
 Total customer loans
 (excluding non-performing loans, provisions                  73.7                      + 15.8%                       100%
 for loan losses and repurchase/resale agreements)



Customer loans based on Banque de France ratings                      Industry risks
(loans drawn down)
                                                                      The following business sectors represented over 2% of outstand-
                                                                      ing corporate loans at December 31, 2005:
 Banque de France rating                 2005         2004
                   0                      51%         49%
                   3                      15%          13%                                                           2005

                   4                      16%          17%             Company administration                        19.3%

                   5                      12%          14%             Real estate rental                            16.2%

                 6 and 7                   3%           3%             Wholesaling                                    5.1%

                   P                       1%           2%             Construction                                   4.4%

            Undetermined                  2%            2%             Brokerage                                      4.4%
                                                                       Retailing                                      4.3%
                                                                       Real estate development/dealing                3.2%
                                                                       Food                                           3.1%
                                                                       Healthcare and social work                     2.1%

                                                                      At December 31, 2005, the total exposure of CIC (excluding Asset
                                                                      Management) to certain specific industries was as follows:


                                                                                                                     2005
                                                                       Telecommunications                        €1,430 million
                                                                       Tourism                                     €754 million
                                                                       Air transport                               €706 million
52     SUSTAINABLE DEVELOPMENT




     Real estate risk


      (in € millions)                                                                           2005                        2004
      Outstanding loans                                                                         1,380                        1,197
      Off balance sheet commitments                                                             1,020                        988
      Total provisions                                                                             52                         66
      Commercial real estate                                                                     36%                         34%
      Residential real estate                                                                    64%                         66%

      Real estate developers                                                                     45%                         40%
      Real estate dealers                                                                        16%                         14%
      Real estate companies                                                                      15%                         22%
      Investors                                                                                  19%                         19%
      Other                                                                                       5%                          5%




     Interbank risks                                                        Country risks
     CIC and Crédit Mutuel use the same 12-point rating system for          Countries are rated on an 11-point group scale. Limits are set by
     interbank risks. The system is used to set exposure limits for each    country based on a group methodology that takes into account
     banking group based on its rating, its capital base and that of CIC.   the bank’s equity and the country’s risk rating. If so recommended
                                                                            by the International Operations and Specialized Financing
     Interbank loans by geographic area                                     Committee, CIC’s Lending Committee can set more restrictive
                                                                            limits depending on changes in country risks and in the group’s
                                                       2005                 exposure level.
      North America                                     23%
      Western Europe (excluding France)                 52%
      France                                            19%
      Other                                                6%


     Breakdown of interbank loans by rating


         A          A-          B+         B-         C+          C-
         6%        49%          31%        11%        1%         0%


                                                                 Not
         D+         D-          E+         E-          F        rated
         0%         0%          0%         0%         0%         2%
                                                                                                             RISK MANAGEMENT             53




Net additions to provisions for loan losses                           Credit derivatives
In 2005, net additions to provisions for loan losses, excluding the
                                                                      Credit derivatives are used by two entities within the CIC group: CIC
collective impairment provision, totaled €102 million. Expressed
                                                                      and its foreign branches, and CIC Banque CIAL. Two approaches
as a percentage of total outstanding loans before provisions, the
                                                                      are applied.
relative cost was below that for previous years.
                                                                      The CM-CIC group’s trading rooms, which continued to operate
                                                                      through CIC and CIC Banque CIAL in 2005, carry all credit
 (in € millions)                        2005            2004          derivatives in their trading portfolios:

 Net additions to provisions                                          • CIC’s trading room in Paris uses credit default swaps (CDS) both to
 for loan losses (excluding the          102             286            hedge the exposures of its securities portfolios (118 open hedges
 collective impairment provision)                                       at end-2005, representing €953 million) and as a vehicle for
                                                                        risk-taking (84 transactions representing €696 million, exclu-
 Excluding the collective
                                                                        sively concerning investment-grade issuers). The majority of
 impairment provision and               0.13%           0.42%
                                                                        issuers are European and the typical maturity is five years.
 as a percentage of total loans
                                                                      • CIC Banque CIAL hedges its convertible bond portfolio by buying
                                                                        credit default swaps (total hedges representing €420 million,
                                                                        with more than half relating to Asian issuers) or asset-backed
The collective impairment provision is designed to cover the            securities (ABS, representing €618 million). It also engages in
credit risk on loans that are not individually assessed for             credit arbitrage (credit exposure via bonds, identically hedged
impairment, but for which an indication of impairment exists. The       by credit default swaps, for an amount of €1,468 million) or
amounts set aside, which are deducted from total customer               equities/CDS arbitrage (protection worth €303 million via credit
loans, stood at €70 million at January 1, 2005 and €64 million at       default swaps). In all, protection sold is negligible and exclusively
December 31, 2005.                                                      concerns investment-grade issuers.
Non-performing loans amounted to €3,462 million at December           The branches in London (two transactions representing
31, 2005, down 3.4% from €3,585 million at December 31, 2004.         US$20 million and €20 million, maturing in March and July
Total customer loans rose 15.8% year-on-year.                         2006) and Singapore (eight transactions for a total amount of
Non-performing loans expressed as a percentage of total loans         US$60 million) use credit derivatives to a marginal extent for
retreated to 4.5% at December 31, 2005 from 5.3% one year             risk-taking and systematically to manage the credit risk on their
earlier.                                                              loan portfolios. Credit default swaps are used as substitutes for
                                                                      standard credit in loan portfolios.
The coverage ratio of non-performing loans (excluding provisions
for country risks and the collective impairment provision) was        Credit derivatives are included in the credit/counterparty risk
65.3% at December 31, 2005.                                           management and oversight process.
                                                                      Trading rooms are subject to exposure limits by issuer or
Control of large exposures                                            counterparty for all types of products, including credit default
Like any banking institution, CIC is required to comply with          swaps. Outstanding amounts are monitored on a daily basis and
prudential rules on the diversification of credit risks:               exposure limits are reviewed periodically by the Lending Committees
                                                                      and Capital Markets Committees.
• total risk-weighted exposure to a group of customers consid-
  ered as representing a single borrower may not exceed 25% of        As they belong to the trading account portfolio, credit default
  the group’s consolidated capital base;                              swaps are marked to market. Loan-portfolio credit default swaps
• the sum of individual exposures representing over 10% of the        undergo the same screening process as standard loans, including
  group’s consolidated capital base may not represent more than       credit analysis, credit rating and setting of limits.
  8 times the capital base.
CIC complied with regulatory requirements concerning large
exposures at December 31, 2005.
54     SUSTAINABLE DEVELOPMENT




     Asset-Liability management (ALM) risk                                  Liquidity risk
                                                                            The CIC group attaches great importance to managing liquidity risks
     Roles and responsibilities                                             in conjunction with its shareholder BFCM, which handles the group’s
     The roles and responsibilities of ALM Departments in each of the       long-term refinancing. Various regulatory liquidity indicators are
     regional banks and CIC are clearly defined:                             monitored:
     • Asset-Liability Management is identified as a function completely     • the group’s one-month liquidity ratio – corresponding to the
       separate from trading-room operations and has its own budget           weighted average ratio of group banks and representing the
       and teams.                                                             group’s short-term liquidity position – stood at 132% at June 30,
     • Its primary objective is to shelter lending margins from the           2005 and 118% at December 31, 2005, compared with the
       effects of interest and exchange rate fluctuations and to               regulatory requirement of 100%;
       stabilize income.                                                    • the weighted own-funds and permanent capital ratio represents
     • It is also responsible for ensuring that the banks have sufficient      the group’s medium- and long-term liquidity position. It is
       liquidity to meet their funding commitments and weather a              calculated by weighting the liquidity ratios of the individual
       crisis.                                                                banks by their total average net medium- and long-term loans.
     • Asset-Liability Management does not operate as a profit center          At December 31, 2005, the ratio stood at 70%, compared with
       – its role is to enhance the bank’s profitability and support its       the regulatory minimum of 60%.
       strategic development.                                               In 2005, retail loan originations for the CIC group again grew at a
     CIC’s Asset-Liability Management teams, which are in constant          faster pace than customer deposits (+10.7% and +5.9% on
     contact with sales teams throughout the network, contribute            average respectively).
     actively to defining the bank’s sales and marketing policy in terms     The group regularly turns to institutional lenders such as the
     of lending criteria, rules governing the internal transfer rate and    European Investment Bank or Caisse de Refinancement de
     designing new products to meet customer needs.                         l’Habitat for financing its expansion. It also borrows on the
     The teams also pool data from the regional banks in order to           financial markets through BFCM, the group’s refinancing arm.
     determine the group’s overall position and ensure compliance
     with regulatory capital ratios.                                        Currency risk
                                                                            Customer transactions in foreign currencies are hedged by each
     Organization                                                           of the group’s banks. The residual exposure is very limited. CIC
     The CIC group has for the past several years opted for a managed       does not have any long-term or recurring positions in foreign
     decentralization of ALM operations. Standardized ALM agreements        currencies, except for capital contributions to foreign branches.
     and exposure limits are presented in ”group ALM Risk Guidelines”
     applicable to the whole Crédit Mutuel-CIC group.                       Equity risk
                                                                            CIC is exposed to various types of equity risks. Equities held in
     Interest rate risk                                                     the trading portfolio (€5,664 million at December 31, 2005 and
     Interest rate risks incurred in commercial operations stem from        €6,696 million at January 1, 2005) and the related market risks
     interest rate differentials and differences in benchmark lending       are discussed in Note 6c to the consolidated financial
     and deposit rates. For the purpose of analyzing interest rate risks,   statements.
     account is also taken of the volatility of products with no fixed       Equities carried under the fair value option through profit or loss
     maturity and embedded options (early repayment, rollover               and classified as ”held for sale” concern private equity transactions
     options and options for loans and credit line drawdowns, etc.).        and various investments in companies, together representing
     Interest rate risks are analyzed on the basis of aggregate positions   €1,581 million (see Notes 6b and 8a to the consolidated financial
     and general hedges are established for net balance sheet               statements).
     positions. Specific hedges may also be set up for individual high-
     value or specially structured transactions. Risk limits are
     determined in relation to the projected net banking income of the
     individual banks and the CIC group as a whole.
     Sensitivity to interest rate risks is expressed as the percentage
     impact on net interest income based on a national scenario
     (+/- 1% for short- and long-term rates, +/- 33% for inflation).
     In 2006, the risk faced by the majority of the group’s banks is that
     of an upward shift in interest rates, leading to a 0.13%-1.5%
     decrease in net interest income for the year. In the case of CIC
     Banque Scalbert Dupont, CIC Banque BRO and CIC Banque
     Transatlantique, the impact on 2006 net interest income is
     estimated at 0.8%-2.9%.
     At December 31, 2005, the CIC group’s total fixed-rate deposits
     exceeded total fixed-rate loans (after early repayments) by
     €2 billion, based on three-year and seven-year time frames.
                                                                                                              RISK MANAGEMENT            55




Market risk                                                             Description of internal control structures
                                                                        The role of internal control teams is to ensure that daily and
General structure                                                       periodic reports are consistently produced in a timely fashion. The
Capital markets transactions are carried out by the CIC trading         reports contain full details of the results and risks relating to the
rooms in Paris, London, New York and Singapore, and by CIC              group’s various activities. The internal control teams also prepare
Banque CIAL’s trading rooms in Strasbourg. The regional banks           analyses of the reports for presentation to the management of
have a sales role with respect to capital markets operations,           each business area.
channeling customer transactions to CIC’s trading rooms.
                                                                        The above-mentioned in-depth reorganization of the group’s
At end-2005, CIC and CIC Banque CIAL together accounted for             capital markets activities entails a revamp of internal control
over 90% of the CIC group’s overall market risk, as determined for      structures, which began in 2005 and will be completed in 2006:
the purpose of compliance with the requirements of the European
                                                                        • All capital markets activities (front office, control function, back
Capital Adequacy Directive (CAD).
                                                                          office) are under the responsibility of a member of CIC’s
During 2005, the group’s capital markets transactions continued           Executive Board. The member in question is charged with
to be conducted by CIC and CIC Banque CIAL via their respective           submitting risk limits and capital allocation for validation by the
trading rooms and transaction-recording and monitoring units.             group’s decision-making bodies (CIC Executive Board or BFCM’s
At the same time, the reorganizational measures initiated in 2004         Board of Directors) and with reporting on activities.
to house operations within a single CIM-CIC trading room (which         • The front-office units that execute transactions are segregated
would also include BFCM’s trading room) continued in 2005 to              from those responsible for the monitoring of risks and results
enable the group to attain its objectives with respect to capital         (control function) and from those in charge of transaction
markets transactions, as follows:                                         validation, settlement and recording (back-office function).
                                                                        • Ongoing control is assured by:
• Refinancing of the entire CM-CIC group: in mid-2005, BFCM’s
  and CIC’s teams were amalgamated within a single unit, which           - two control teams (one at each site), one of which controls
  provides refinancing for retail banking activities and subsidiaries,      risks and results, while the other is tasked with middle-office
  corporate finance and specialized financing, proprietary trading           accounting and regulatory issues;
  by the CM-CIC trading room and for the instruments used to             - the Capital Markets Internal Control Department, which
  meet the group’s liquidity needs. These activities will be carried       operates under the responsibility of another member of the
  in BFCM’s balance sheet.                                                 Executive Board and performs continuous second-tier
• More vigorous promotion of capital markets products to                   controls for the group’s specialized businesses.
  customers: tools and products will be harmonized for all sales        • Periodic checks are carried out by the Internal Audit Department,
  teams in Paris and the regions. The emphasis will be on price           which performs regular assignments with a specialized audit
  optimization and the preservation of margins (by reversing              team.
  positions). These activities will be carried by CIC.                  • The back office is organized by product line. Teams based in
• Profitability enhancement through high-performance proprietary           Paris and Strasbourg handle all transaction administration.
  trading: proprietary trading is conducted in Paris and Strasbourg     • Capital markets activities are overseen by two committees:
  in the context of about ten activities, mainly arbitrage-related,
                                                                         - a Risk Committee that meets monthly to monitor strategy,
  previously handled in the Paris and/or Strasbourg trading rooms
                                                                           results and risks in relation to the limits prescribed by the
  (event-driven operations, index arbitrage, long/short equities,
                                                                           Executive Board;
  hybrid arbitrage instruments, fixed income arbitrage, credit
                                                                         - a Steering Committee that meets weekly to coordinate all
  arbitrage, ABS arbitrage, correlation arbitrage, global macro and
                                                                           operational aspects (information system, budget, human
  short-term strategies, and proprietary distribution). These
                                                                           resources and procedures).
  activities are called upon to create value in a disciplined risk
  environment and to drive commercial development. In 2005, the
  decision was taken to cease market-making operations. All
  of these activities will be transferred to CIC’s balance sheet by
  end-2006.
56     SUSTAINABLE DEVELOPMENT




     Risk management                                                          • M&A and miscellaneous equities: the capital requirement
                                                                                generated by equity risk stood at €268 million at end-2005
     The system used to set exposure limits for market risk is based on:
                                                                                and was 75%-attributable to M&A strategies (takeovers and
     • potential loss limits;                                                   share swaps). Compliance with the CAD is particularly onerous in
     • CIC internal rules and scenarios (including historical VaR, stress       M&A, the related potential loss being about three times higher
       tests and CAD ratios), which convert exposures into potential            than that obtained using the group’s in-house measurement
       losses.                                                                  approach. The potential exposure represents about €2 billion;
     The limits set by the Capital Markets Committee cover various            • Fixed income: positions relate to yield-curve arbitrage, typically
     types of market risk (interest rate, currency, equity and                  with an underlying security. The group has a swap spread position
     counterparty risks). The aggregate limit is broken down into sub-          (long position in a security, short position in a swap, with matching
     limits for each desk. Netting between different types of risk is not       amounts and maturities) representing €10 billion, mainly in euro
     permitted.                                                                 zone countries. There are also arbitrage transactions involving
                                                                                OECD government securities with identical maturities but different
     Risks are monitored based on first-tier indicators (sensitivity to          issuers, or with the same issuers but with different maturities.
     various market risk factors), mainly for traders, and also on
     second-tier indicators (potential losses), which provide an
     overview of capital markets exposures for the specific attention
     of decision-makers.
     Monitoring methodologies within the CM-CIC trading room will be
     harmonized in 2006. Market risk (CAD) by CIC group activity at
     December 31, 2005 is shown in the following table:

                                                                              GRInterest        SRInterest
      CAD risk in € millions                                                    rates             rates            REquities            Total
      Yield curve                                                                32.6                 1.5               1.4             35.5
      Credit and hybrid arbitrage                                                12.9              88.5                8.2             109.6
      M&A and miscellaneous equities                                              2.7                2.3             268.1             273.1
      Fixed income                                                               39.9                1.0               0.0              40.9
      Treasury/Refinancing                                                         0.9                0.2               0.0                 1.1
      Commercial                                                                   3.5               0.8               0.5                4.8
      TOTAL                                                                     78.0               95.4             247.3             420.7




     The principal trading room risks are as follows:
     • yield curve risks: this relates to the position taken on interest
       rate movements for the roughly ten main OECD currencies. The
       above CAD measurement (between €30 million and €40 million)
       gives a sound indication of average risks on the portfolios
       concerned. The majority of risks involve the euro and the US
       dollar, but arbitrage positions on Hungarian and Polish rates are
       also noteworthy;
     • credit and hybrid arbitrage: these positions correspond to either
       directional risk-taking or securities/CDS arbitrage operations.
       Credit correlation positions (first-to-default/CDS, CDS/equities)
       are also taken, but the related amounts are not significant. Note
       that:
      - underlying securities are bank or corporate bonds (60%),
        convertible bonds (30%) and ABS (10%), representing net
        outstandings of roughly €8 billion,
      - less than 2% of risks (about €120 million, including €15 million
        relating to issuers rated BB- or below (Japan Airlines only, exclu-
        sively in OECD countries) concern non-investment grade
        issuers and less than 6% (roughly €450 million, including €60
        million for Artemis, €28 million for Elior, €44 million for Havas,
        €70 million for Rallye and just under €100 million for Asian
        issuers) are not rated by rating agencies.
                                                                                                               RISK MANAGEMENT            57




European capital adequacy ratio                                           This overall policy covers the objectives, responsibilities and
                                                                          organization of the operational risk management function. It also
Since January 1, 1996, banks have been required to include market
                                                                          deals with the means of coordinating risk management and
risks – corresponding mainly to interest rate, currency, equity and
                                                                          monitoring within the group, the principles governing the
settlement/counterparty risks on trading portfolios – in the
                                                                          dedicated information system and the main focuses of the
calculation of their capital adequacy ratio, in accordance with the
                                                                          processes for measuring, reducing and financing risks.
terms of the European Capital Adequacy Directive (CAD).
                                                                          The group’s key objectives in this area are to ensure overall
The overall capital requirement is equal to the sum of the capital
                                                                          consistent management of operational risks, mitigate losses
required to cover credit risks on total risk-weighted assets,
                                                                          stemming from operational risks, bolster disaster-recovery plans
excluding the trading portfolio, and that required to cover market
                                                                          for mission-critical operations and efficiently meet the challenges
risks on the trading portfolio, plus any additional requirement in
                                                                          of Basel II, in particular by optimizing allocated capital.
respect of large exposures.
                                                                          In keeping with the terms of the new Capital Accord, operational
The CIC group calculates the capital requirement for market risk
                                                                          risks include the risk of loss resulting from inadequate or failed
using the standard regulatory model.
                                                                          internal processes, people and systems or from external events.
The capital requirement is equal to 8% of weighted net risks.             They also include legal risks and the risk of indirect losses.
                                                                          Thus, for all regulatory business lines determined by the Basel
                                                                2004      Committee, operational risks comprise:
                                                      2005    Pro forma
 (in € millions)                                      IFRS      IFRS      • damage to property or persons resulting from a technical error,
 Credit risk                                                                accident, fire, natural disaster, human error or negligence,
                                                                            malicious intent or fraud, subcontracting, etc.;
 • on customer transactions                           5,568     4,971
                                                                          • civil or criminal liability incurred in the conduct of an activity
 • on interbank transactions                           507       389        (professional liability, operational liability) or attributable to
 • on other transactions                               306       380        corporate officers (directors’ and officers’ liability);
                                                                          • loss of revenue following a loss, damage or liability incurred
 Market risk                                           453       298
                                                                            (cessation or significant reduction of activity until the resump-
 TOTAL CAPITAL REQUIREMENT                            6,834    6,038        tion of normal business operations).
 Total regulatory capital                             8,563    8,087
                                                                          The operational risk management function
 o/w Tier One capital                                 5,873     5,419
                                                                          The operational risk management function within CIC has been
 Capital adequacy ratio (basis 8%)                    125%      134%
                                                                          defined, along with its scope of responsibility and relationship with
 Total capital adequacy ratio*                         10%     10.7%      other functions. It comprises:
 Tier One ratio*                                       6.9%     7.2%      • a central group team that coordinates and consolidates the
* Regulatory capital divided by weighted net risks.
                                                                            entire process, and liaises with the regional groups’ operational
                                                                            risk managers;
Credit risks on customer transactions rose 12%. This rise reflects a       • regional correspondents trained in risk management method-
14.7% increase in customer loans, excluding repurchase/resale               ologies, who implement the process in accordance with group
agreements. Growth in home loans reached 27%.                               operational risk management guidelines and with the help of
Credit risk on customer transactions accounted for 81.5% of total           line managers and internal control and quality assurance
risks. CAD risks represented 6.6%.                                          teams.

Operational risk                                                          Risk management information system
CIC is continuing to implement a comprehensive management                 In 2005, all CM-CIC group entities were equipped with risk
system for its operational risks under the responsibility of senior       management software. The software will initially be used to manage
management. Group-wide guidelines describe the risks concerned            losses, but its use will gradually extend to risk mitigation and
and the quantitative evaluation methods to be used to achieve             financing.
compliance with the new capital adequacy regulations.                     The operational risk management system comprises:
                                                                          • a complete software package for managing operational risks,
Overall policy and organization
                                                                            embedded in the group’s IT architecture and made available to the
The CM-CIC group’s overall policy for operational risk management           staff members concerned on standardized, secure workstations;
was approved in 2005 by the group’s executive bodies (Executive           • databases containing information on losses and potential risks;
Board and senior management teams) and deliberative bodies                • the necessary documentary resources, notably in the areas of
(Supervisory Board and Boards of Directors).                                risk-mapping and disaster-recovery planning;
                                                                          • self-training modules covering all package tools.
58      SUSTAINABLE DEVELOPMENT




     Identification and control of risks
     Data on historical loss experience have been collected since                         Human resources
     2001, based on group guidelines. Since 2002, they include not
     only losses for the year, but also provisions booked for detected
     risks. Since 2005, the data have been managed on the group’s
     risk management software.
                                                                                       Staff levels
     Risk experience showed a slight improvement in 2005. The annual
     cost of operational risks for the CIC group was approximately                     In 2005 as in prior years, CIC aimed both to support business
     €40 million, corresponding to recognized losses and the change                    growth through new branch creations and expansions of existing
     in provisions relative to 2004*. The cost of potential risks is being             sites, and to control growth in staff numbers. As a result, total
     finalized using the advanced methods set out in Basel II.                          headcount in France remained on a par with 2004 – a decrease
                                                                                       in headquarters staff offsetting growth in branch network
     In the sphere of risk-mapping, the first complete set of risk maps                 employee numbers.
     by outside experts was completed in 2005.
                                                                                       Due to further increases in the number of long-term absences,
     The probability-based models culled from the work of outside                      particularly from employees in pre-retirement schemes, the
     experts permit assessment of capital requirements pursuant to the                 number of actually employed workers declined 1.26%.
     Advanced Measurement Approach (AMA) prescribed in Basel II.
     Risk-reducing preventive action identified during the mapping                                   ��������������������
     process is implemented directly by line employees and by internal                              �������������������������������
     control and quality assurance teams.
     Safeguards have emphasized disaster-recovery, logistics and IT




                                                                                                                                      ������
                                                                                                                       ������
                                                                                                    ������
     solutions for all mission-critical operations. Disaster-recovery
     planning for the business lines got under way in 2004 and the
     most urgent plans should be completed in 2006. A holistic and
     consistent crisis-management process, linked to the French
     Banking Federation’s system for interbank operations, has been
     rolled out.
     For the financing of the net residual risk, the insurance program
     has been renewed in its basic form. Self-insurance has been
     stepped up for losses that are below the deductibles of external
     insurers.                                                                                    ����                ����            ����
                                                                                       * Full-time equivalent
     As risks are mapped, existing financing plans are reassessed
     against risk levels and adjusted as required.
                                                                                       Training
     Action is also being taken to reflect the risk-mitigating impact of
                                                                                       CIC makes training a priority for its employees, to ensure that
     insurance in the amount of regulatory capital held for operational
                                                                                       they not only maintain but expand their skill sets and continually
     risk, as allowed under Basel II.
                                                                                       develop a better command of software tools. Training is also
     The cumulative insured value for all types of coverage (including                 essential for the redeployment of headquarters functions to the
     auto insurance) under the group insurance program stands at                       branch network.
     nearly €300 million. Total annual insurance premiums paid to
                                                                                       Training expenditure represented over 5% of payroll in 2005.
     external insurers amount to €6.3 million.

     Reporting and general oversight
     Loss summaries were initiated in 2001 and their content will be
     extended in 2006 to potential risks and compliance monitoring
     with respect to the general risk management policy.
     Operational risks are monitored on a regular basis by the executive
     and deliberative bodies of the group and of the regional entities.
     The Internal Audit Department is currently assessing the risk
     measurement and reduction mechanism, which satisfies the
     qualifying criteria for Basel II’s AMA.



     * The annual cost includes €27.3 million corresponding to people-related risks:
      - fraud and theft: €14.7 million;
      - employee relations: €2.4 million;
      - errors (human, procedural) €10.2 million.
      It also includes legal risks amounting to €11.8 million:
      - liability suits: €13 million;
      - tax reassessments: –€1.4 million;
      - supplier disputes: €0.2 million.
                                                                                                    TECHNOLOGICAL CAPABILITIES              59




The main focus was on strengthening capabilities within each of
the businesses, with special emphasis on selling insurance                  Technological capabilities
products. Three of the banks continued to hold courses on
mastering the theoretical and practical aspects of development
tools. These courses will be further rolled out to the other banks in
2006 and will eventually be offered to every group employee.
                                                                          Euro Information
Employee relations
                                                                          Production sites continued to be brought together in 2005, with
As in prior years, a wage agreement was negotiated for 2006, and
                                                                          the Mulhouse data processing teams transferring to Strasbourg
signed by all trade unions.
                                                                          and Valence personnel joining the Lyon and Nantes facilities. The
Other, non-recurring agreements were reached, on conditions               aim is to bring the total number of sites to six, including one backup
governing retirement at the employer’s initiative, on the inclusion       site, to reduce costs, streamline operations, boost productivity and
of a number of subsidiaries in the employee profit-sharing                 raise customer satisfaction.
scheme, on the length of employee representatives’ terms of
                                                                          Efforts to enhance quality in data processing have yielded
office and on harmonizing rates for contributions to supplemen-
                                                                          sustained results, as shown by strong quality indicators and the
tary retirement savings accounts.
                                                                          award of ISO 9001 certification to all production sites. Among the
Finally, negotiations have also started on harmonizing conditions         continuing upgrades, the Strasbourg central desk that oversees
applicable to employee representative bodies across the various           the running of all other sites over the weekend shifted to 24/7
companies.                                                                operation in January 2006.

Employee profit sharing and incentive bonuses                              New developments
More than €82 million, representing slightly more than 10% of             New products or services:
payroll, was distributed to employees in 2005 in the form of
profit-sharing payouts and incentive bonuses.                              • completion of the roll-out of Vire, a single-input system for
                                                                            processing wire transfers;
The group-level agreement on incentive bonuses will be applicable         • deployment of IDC Pro, a management tool for business loans;
for the first time in 2006, in respect of 2005 results, and will involve   • continued investment in remote bancassurance;
three-quarters of group employees. The companies accounting               • changes in group-level document production to keep postal
for the remaining 25% of staff will be applying their previous              costs down and improve communication with customers;
agreement for one final year. Thanks to these two group-level              • decentralized input of employee savings account agreements.
agreements on profit-sharing and incentive bonuses, all employees
will be able to share more equitably in the fruits of the group’s         Insurance:
positive performance, regardless of which company employs them.           • posting on the Intranet of insurance client profiles and of an
In 2006, the amounts distributed are expected to represent slightly         overview of insurance operations;
less than 10% of payroll.                                                 • gradual roll-out of electronic document management (EDM) to
No management or employee stock option plans have been                      all insurance segments;
established.                                                              • ramp-up of the Locass project aimed at decentralizing to re-
                                                                            gional sites the management of life and term life insurance
                                                                            policies.

                                                                          Changes in regulations:
                                                                          • commencement of live IFRS processing in June 2005;
                                                                          • upgrades as part of the Basel II compliance project, including
                                                                            the use of specific ratings, management of provisions and data
                                                                            mining tools.
60     SUSTAINABLE DEVELOPMENT




     Production                                                            Key directions
     In response to rising transaction volumes and the need for greater    The major overhaul of credit operations will continue, with two key
     processing capability, the central sites have upped their technical   focuses:
     resources as follows:
                                                                           • transferring to Intranet-based technology the processing of
     • installed capacity across all sites totaled 25,000 MIPS (million      home loans;
       instructions per second) at December 31, 2005, 23% more than        • redesigning the engine for managing installment loans and
       a year earlier. A new state-of-the-art computer came on stream        revolving loans.
       in Strasbourg to process insurance and securities operations;
                                                                           In the area of Electronic Document Management, the project on
     • disk storage capacity rose 125% year-on-year, to 602 terabytes
                                                                           back-office streamlining and paperless management will be
       (602,000 billion characters).
                                                                           launched, to bring simpler procedures to branches and do away
     The share of continuous printing also continued to grow, to 240       with and/or digitize paper records.
     million pages out of the 537 million pages printed annually.
                                                                           As regards online purchases of products, following the completion
     The pilot project on remote asynchronous disk mirroring for data      of an initial stage focused on running simulations, specific tools
     backup between Strasbourg and Metz was completed in 2005.             will be developed, beginning with credit and savings offerings.
                                                                           All further efforts will help advance the international compatibility
     Initiatives
                                                                           of the information system, by making the newly defined rules and
     The new ATM technology was used for the first time for payment         standards part of the basic platform of any new developments.
     operations involving SFR and NRJ Mobile mobile-phone services,
     the Navigo passes on the Paris subway and bus network, and the        GIE CT6
     reloading of Monéo electronic-wallet cards.
     Network resources based on the IP (Internet Protocol) standard        This subsidiary’s operations continued to grow in 2005, against
     were broadened, to include telephony, alarms, multipurpose            the backdrop of the establishment of the Single Euro Payment
     photocopiers, video surveillance, video conferencing and more.        Area (SEPA).

     Reinforced identification systems were developed and imple-            With over 116,000 retailer contracts and €14.2 billion in sales (up
     mented to enhance the protection of remotely managed                  5.7%), CIC maintained its market share. End-of-year volumes
     accounts and, for optimum security, deployment of the safe site       were particularly high, as each Saturday in December beat the
     toolbar that authenticates the CM-CIC websites.                       previous record for the number of authorizations processed.

     Further optimization of the information system was carried out.       The group managed 1,852,000 cards at December 31, 2005,
                                                                           thanks to 5.4% year-on-year growth which is once again in line
     Outsourced IT management contracts were signed to run IT and          with the market average.
     hot-line operations for NRJ Mobile and the IT department of
     AXXES.                                                                Highlights of the year included:

     The benefits of Crédit Mutuel and CIC IT Department employees          • migration to the new EMV global standard for smart cards had
     were harmonized based on the CMCEE collective-bargaining                been carried out for 1,216,000 cards and 67,000 terminals by
     agreement, plus other agreements dealing specifically with IT            December 31, 2005; it is due to be completed in the first half of
     operations. Preparations were made for the January 1, 2006,             2006;
     implementation of the plan to gather all IT staff into three          • fraudulent use of cards outside France fell significantly, reversing
     organizations – Euro Information, Euro Information Production,          the trend of the past three years, thanks to the EMV deployment
     Euro Information Développements.                                        and to prevention tools such as DIANE;
                                                                           • new sales offerings included the DSL credit-card terminal that
                                                                             speeds up processing time for retailers and a gift card that will
                                                                             be marketed in March 2006;
                                                                           • group tools, including ICARS, GESICA, DIANE, OTOCAR and the
                                                                             EDM project, continued to be rolled out.
                                                                        CLIENT RELATIONS   61




  Client relations



Quality and client relations
In 2005, CIC regional banks took further steps to enhance their
facilities and optimize the services made available to clients,
aiming for excellence in operations and high-quality client
service.
Quality assurance action plans developed around the new
application for managing and monitoring client complaints have
led to a simplifying and harmonization of procedures.
The steps taken are based on two core principles:
• minimizing the distance between clients and the processing of
  their transactions;
• employee accountability at all levels in the company.
Several operational applications of electronic document manage-
ment (EDM) implemented in 2005, such as insurance claims
management, employee savings payments or loan data archiving,
confirmed the benefits of EDM for greater responsiveness to client
needs, higher-quality processing and increased automation of
processes. These successes were the forerunners of a program of
administrative streamlining and paperless management in all
branches.
The drive for operational excellence among the business centers
serving the entire group led to the certification of all IT production
sites.
And the following steps were taken to enhance client relations by
providing convenient and locally available services:
• opening 50 new sales outlets;
• major renovations, transfers and enlargements for 134 branches;
• setting up self-serve areas within branches, open from 7:00 am
  to 10:00 pm;
• intensive use of remote banking channels, including the Internet,
  secure e-mail and call centers, which together receive 68 million
  client contacts annually.

Ombudsman
An ombudsman, who was appointed at the end of 2002, can be
called upon by clients to examine any problems that fall within his
remit. Any opinions issued by the ombudsman are considered
binding by the group. This resource is in addition to processes
set up within each of the group’s banks to ensure attention to
client needs.
62     SUSTAINABLE DEVELOPMENT




                                                                                          The shareholders’ letter is also available on request by calling
                                                                                          +33 (0)1 45 96 77 40.
       Shareholder relations                                                              CIC shareholders are thus kept regularly informed of the
                                                                                          company’s results and of key events.
                                                                                          The CIC website, www.cic.fr, contains press releases and the group’s
                                                                                          annual report. The annual report is also available online on the
     Financial communications                                                             Autorité des marchés financiers website (www.amf-france.org) by
     The Executive Board of CIC is scheduled to meet on September 7,                      accessing the ”Decisions and Financial Information” page and
     2006 to approve the financial statements for the first six months                      clicking on the various search links.
     of 2006 and submit them for approval to the Supervisory Board.
     A press release will be published at that time in the financial press.
                                                                                          Stock market performance
     The financial statements for the year ended December 31, 2006                         Over the 12 months to December 31, 2005, the CIC share price
     are due to be approved in February 2007.                                             declined to €156, from €177.4.
     The Executive Board of CIC organizes regular meetings with the                       The year began on an upward trend, with a high of €190 in March,
     press and financial analysts specializing in the banking sector in                    after which the price fell to €169 in June, following CIC’s decision
     order to present the CIC group’s results and answer their questions.                 to dispose of its portfolio of structured products. The share price
     This ensures coverage of the CIC group’s results in specialized                      remained on a downward trend, ending the year at €156, 12%
     publications and in the main national daily newspapers.                              lower than a year earlier.
     CIC publishes a shareholders’ letter every six months, keeping                       In the course of the year, 148,779 CIC shares were traded on the
     investors informed about the group’s results and the latest                          Paris Bourse, representing €25.4 million. Regular listing and
     developments. Over 30,000 copies are distributed to individual                       constant liquidity meant that shareholders were always able to
     shareholders and employee shareholders, including those who                          find a buyer on the market.
     have elected to place their shares in a company mutual fund.



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                          63




Financial
 information




    64 CONSOLIDATED
       FINANCIAL
       STATEMENTS
     64 Executive Board report
        on the consolidated
        financial statements
     68 Recent developments
        and outlook
     69 Executive remuneration
     70 Financial statements

    118 FINANCIAL
        STATEMENTS
        OF THE BANK
        (extract)
     119 Executive Board report
         on the accounts of CIC
    120 Financial statements
64   CONSOLIDATED FINANCIAL STATEMENTS




                                           Executive Board report
                                           on the consolidated
                                           financial statements

                                         Worldwide growth picked up pace in the third quarter of 2005
                                         after a slack spring, underlining the global economy’s resilience in
                                         the face of a generally tight market.
                                         After the strong performances registered in 2003 and 2004 for
                                         the first time since the explosion of the internet bubble, at the
                                         beginning of 2005 activity slowed, only to level out and even gain
                                         in momentum through the summer and autumn. According to the
                                         IMF, world growth came in at 4.3% in 2005 compared with 5.1% in


Consolidated
                                         2004, with OECD countries registering growth of 2.7%.
                                         Set against the almost year-long upward spiral in oil prices, with
                                         prices for crude oil doubling in the last twelve months, these


financial
                                         growth figures paint a positive picture. The oil price situation
                                         almost hit boiling point at the end of the summer, when oil reached
                                         US$ 70 a barrel, and the markets feared a serious recession due


statements
                                         to expected shortages.
                                         2005 also witnessed continuing high levels of credit. Long-term
                                         yields held firm, even with the yield on 10-year French government
                                         bonds – close to 3.40% – below the thresholds observed at the
                                         beginning of the year, when they peaked at 3.85% in March.
                                         The world economy in 2005 therefore held up well to a series of
                                         starkly different events:
                                         • spiraling energy and raw material costs;
                                         • global competition and a cut-back in industrial prices in an
                                           international arena marked by the increasing importance of
                                           emerging industrial countries with low labor costs, which
                                           succeeded in attracting investment and production spend
                                           (outsourcing, offshoring).
                                         The good news, surprisingly, stemmed from the stock markets,
                                         which performed far better than expected, with unhoped-for
                                         strong showings from Japan and Europe in particular. The Nikkei
                                         gained more than 35%, and the CAC 40 index more than 22%,
                                         breaking the 4,600-point barrier for the first time since spring
                                         2002, and ending the year above 4,700 points. The Dax gained
                                         more than 24% in Germany. And while the Dow Jones registered
                                         a gain of under 1% in the US, the Nasdaq performed better
                                         (+4.4%), against a backdrop of moderate economic sentiment
                                         and a rising dollar.
                                         The upturn in the stock markets reflects:
                                         • better-than-expected profits and an upswing in growth at the
                                           end of the year;
                                         • low yields, causing investors to turn increasingly to the stock
                                           market;
                                         • strong pace of restructuring operations, mergers and
                                           acquisitions, and flotations, which drove the momentum in the
                                           European markets in particular. The rise in the dollar also
                                           boosted markets in Europe to the detriment of the US, despite
                                           some strong intrinsic performances.
                                                 EXECUTIVE BOARD REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS                     65




Although these upbeat trends have also been a feature of the         CIC is fully consolidated by Banque Fédérative du Crédit Mutuel
early part of 2006, certain risks nevertheless remain:               (BFCM), which directly and indirectly holds 92.87% of CIC’s
                                                                     capital.
• households have yet to bear the energy costs of the past winter
  and their reaction to a cut in purchasing power is uncertain.      Particularly noteworthy in 2005 was the sale by CIC of the risks on
  Energy prices remain sensitive to the larger geopolitical arena,   its structured products portfolio in the first half of the year.
  such as for example the situation in Iran or Russia;
• monetary policies will need to be able to contain inflationary      Analysis of the consolidated balance sheet
  tendencies without hindering growth; they will also have an        The main changes in balance sheet items can be analyzed as
  impact on exchange rates and hence on trade in different           follows:
  geographical areas;
• in Europe, where domestic demand is still soft, a dependency on    • Customer loans, including lease financing and excluding resale
  exports and the lack of any room for manoeuver on budgets for        agreements, amounted to €75.6 billion at December 31, 2005,
  the majority of member states (including the economically            up 14.7% on the year-earlier figure.
  wealthiest) have prompted major structural reforms in an             This increase reflects a 27% growth in home loans, and a more
  attempt to avoid seeing the nascent downward trend in                modest increase in corporate loans (particularly to large
  unemployment figures peter out. The political context is also         corporates), due to the group’s more selective approach to new
  sensitive due to the imminence of elections in Europe.               lending;
                                                                     • Customer deposits (excluding repurchase agreements)
Companies remain cautious and appear determined to clean their         advanced by 5% to €55 billion, and customer funds invested in
accounts and scale back debt, while capital spending commitments       savings products reached €190.3 billion.
have not been in tune with profits. However, a continuation of the
upbeat trend in growth figures throughout 2006 depends on             Tier 1 capital used to calculate the capital adequacy ratio totaled
maintaining strong corporate momentum.                               €5.9 billion, up 9.3% on the €5.4 billion recorded at December 31,
                                                                     2004. Including Tier 2 capital, the group’s total regulatory capital
                                                                     came to €8.5 billion at December 31, 2005, representing a
                                                                     European capital adequacy ratio of 10%. Tier 1 capital represented
GROUP BUSINESS PERFORMANCE AND RESULTS                               6.9% of the total.

                                                                     Analysis of the consolidated income statement
The consolidated financial statements at December 31, 2005 are        In 2005, the CIC group reported a 5.1% rise in net income for the
presented in accordance with European regulation 1606/2002           year, from €550 million to €578 million, thanks to a positive
on international accounting standards. The group has applied         contribution from all business lines, with the exception of the
International Financial Reporting Standards (IFRS) as adopted by     capital markets activity.
the European Union at December 31, 2005.
                                                                     Net banking income fell 3.2% to €3,265 million. This mainly
The published consolidated financial statements for 2004 were         reflects a €388 million drop in 2005 net banking income from the
prepared in accordance with French generally accepted                capital markets activity due to the sale of the risks on the
accounting standards (French GAAP). The 2004 consolidated            structured products portfolio in the first half of the year.
financial statements (”IFRS excluding IAS 32-39”) that are
presented with the 2005 consolidated financial statements were        General operating expenses rose 4%, to €2,515 million.
prepared in accordance with the IFRSs applicable in 2004, which      Net additions to provisions for detected risks declined 0.42% to
do not include IAS 32, IAS 39 and IFRS 4; these standards are        0.13% of total outstanding loans, or €102 million, compared with
applied with effect from January 1, 2005, as allowed by IFRS 1.      €287 million in 2004.
The impacts of the first-time adoption of IFRS are detailed in        The coverage ratio of non-performing and litigious loans was
Note 1 to the consolidated financial statements. IFRS accounting      65% at end-2005.
principles are described in Note 2.
                                                                     Income before tax came in at €724 million, compared with
Details of companies consolidated for the first time in 2005 are      €809 million in 2004.
provided below:
                                                                     Return on equity came in at 10.8% and earnings per share at
• at the beginning of 2005, CIC raised its interest in Banque de     €16.42 for 2005.
  Tunisie to 20%; this entity has been accounted for by the equity
  method since January 1, 2005;
• Atout SA, a Luxembourg-based subsidiary of Banque de
  Luxembourg, has been fully consolidated;
• Banque Transatlantique Belgium has been fully consolidated;
• Cigogne Management, the Luxembourg-based fund manager
  and Cigogne Fund, the investment fund in which the group holds
  a majority stake, have been fully consolidated;
• a number of entities holding convertible bonds issued by Banca
  Popolare di Milano (BPM) have also been fully consolidated for
  the first time.
66     CONSOLIDATED FINANCIAL STATEMENTS




     BUSINESS PERFORMANCE                                                  Private banking encompasses all banks engaged in wealth
                                                                           management, both in France (CIC Banque Transatlantique, Dubly-
                                                                           Douilhet SA, BLC Gestion) and internationally (Banque de
     Description of business segments                                      Luxembourg, CIC Banque CIAL Suisse, Mutuel Bank Luxembourg,
                                                                           CIC Private Banking-Banque Pasche).
     The CIC group’s reportable business segments reflect its organi-
     zation structure (see chart on page 8).                               Private equity, conducted on a proprietary basis, is a major
                                                                           contributor to group earnings. The business has a three-pronged
     Retail banking comprises the regional bank network, the CIC
                                                                           structure organized around CIC Finance, CIC Banque de Vizille
     network in the greater Paris region and all specialist activities
                                                                           and IPO.
     whose products are distributed via the network. These include life
     insurance and property-casualty insurance, equipment leasing,         Headquarters and holding company services encompass
     real estate leasing, factoring, fund management, employee             all unallocated activities and units that provide solely logistical
     savings plans and real estate.                                        support, whose expenses are billed in their entirety to user entities.
                                                                           They include intermediate holding companies, business premises
     Financing and capital markets encompasses:
                                                                           held by specific companies and in-house IT companies that serve
     • credit facilities for large corporates and institutional clients,   the group’s various businesses.
       specialized financing (project and asset financing, export
       financing, etc.), international operations and foreign branches;
     • capital markets operations in general, spanning customer and
       proprietary transactions involving interest rate instruments,
       foreign currencies and equities, including brokerage services.




     RESULTS BY BUSINESS SEGMENT


     Retail banking
                                                                                                                                Change
      (in € millions)                                                              2005                   2004                2005/2004
      Net banking income                                                           2,685                  2,608                   + 3.0%
      Operating income before provisions                                              711                    687                  + 3.5%
      Income before tax                                                              660                     485                  + 36.1%
      Net income                                                                     448                     319                 + 40.4%



     In recent years, the retail banking business has steadily expanded    2005 was another successful year for bancassurance operations,
     its client base. The business had 3.63 million customers at the end   with new comprehensive home and motor insurance business up
     of 2005, compared to 3.46 million at end-2004. Underpinning           38% and life insurance revenues advancing 27%.
     this growth was a proactive policy based on refurbishing, expand-
                                                                           Retail banking net banking income – which accounts for 82% of
     ing, relocating and creating branches: 50 branches were opened
                                                                           group net banking income – rose 3%. Operating income before
     in 2005.
                                                                           provisions climbed 3.5%.
     New installment loans in 2005 totaled €18,706 million, a 23%
                                                                           Income before tax increased 36.1% from €485 million to
     increase on 2004.
                                                                           €660 million. Net income for the year came in at €448 million,
     Savings deposits also grew, driven by a 8% rise in demand deposits,   representing 77.5% of group net income.
     and a 3% expansion in special savings accounts.
                                                    EXECUTIVE BOARD REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS                          67




Financing and capital markets
                                                                                                                               Change
 (in € millions)                                                                 2005                    2004                2005/2004
 Net banking income                                                                 17)                   431                     n.m.
 Operating income/(loss) before provisions                                       (256)                    197                     n.m.
  Income/(loss) before tax                                                       (232)                    253                     n.m.
  Net income/(loss)                                                               (148)                   166                     n.m.


Net banking income from the financing and capital markets                 was highly concentrated on certain maturities and stocks that could
segment contracted to €17 million in 2005 from €431 million a year       have led to significant losses.
earlier. This mainly reflects the June 30, 2005 sale of the risks on
                                                                         The group decided to sell substantially all of the risks associated with
the structured equity products portfolio. The sale of the portfolio
                                                                         the portfolio in June 2005. The portfolio currently contains a residual
risks did not result in material costs in the second half of the year.
                                                                         amount of €2.5 billion, for which a €24 million provision was set aside
Excluding structured equity products, the business posted good           in the interim 2005 financial statments. The provision was based on
financial results in 2005. Net banking income from other capital          an external assessment of the corresponding risks.
markets operations came in at €211 million for the year to
                                                                         Capital losses generated on the sale amounted to €597 million.
December 31, 2005.
                                                                         The management loss for the first half of the year is €46 million
The capital markets and brokerage business reported a net banking        (€156 million in 2004). After taking into account the positive
loss of €207 million in 2005, compared to net banking income of          €183 million impact of IFRS (day one profit and loss and bid/ask), net
€181 million in 2004. This figure includes a charge of €484 million       banking income generated by the structured products business for
corresponding to the sale of the risks on the structured equity          first-half 2005 came in at a negative €484 million. The negative
portfolio reflected in the financial statements at June 30, 2005.          impact, net of tax, on 2005 net income is €320 million.
The structured products business had recorded a net banking loss
                                                                         For large corporates and specialized financing, net banking
of €156 million for the year ended December 31, 2004.
                                                                         income declined from €181 million in 2004 to €156 million in
Extracts from the press release for the six months to June 30,           2005. Foreign branches reported an increase of €3 million in net
2005                                                                     income due to reduced risk.
The structured products portfolio, representing almost 400               The financing and capital markets business reported a net loss of
contracts worth €17 billion, chiefly consisted of structured equities,    €148 million for 2005.
multi-underlyings and barrier options. The portfolio’s risk exposure



Private banking
                                                                                                                                Change
 (in € millions)                                                                 2005                    2004                 2005/2004
 Net banking income                                                               331                      313                   + 5.8%
 Operating income before provisions                                               124                      110                  + 12.7%
 Income before tax                                                                 119                    103                   + 15.5%
 Net income                                                                         71                     62                   + 14.5%




Net banking income from the private banking business (represen-          Net income reported by the private banking business came in at
ting 10% of group net banking income) advanced 5.8% to                   €71 million, accounting for 12.3% of the group total.
€331 million, while operating income before provisions climbed
12.7% to €124 million from €110 million.
68     CONSOLIDATED FINANCIAL STATEMENTS




     Private equity
                                                                                                                                Change
      (in € millions)                                                                2005                  2004               2005/2004
       Net banking income                                                             247                   70                      n.m.
      Operating income before provisions                                              221                    43                     n.m.
      Income before tax                                                               222                    45                     n.m.
      Net income                                                                      213                    43                     n.m.




     Net banking income from this business segment (representing 8% of       Net income for 2005 jumped five-fold to €213 million.
     the group total) came in 3.5 times higher thanks to a strong business
     momentum and the impact of IFRS (classification of investments in
     non-controlled companies at fair value).




     Headquarters and holding company
                                                                                                                                Change
      (in € millions)                                                                2005                  2004               2005/2004
      Net banking loss                                                                (14)                  (49)                 - 71.4%
      Operating loss before provisions                                               (48)                   (82)                 - 41.5%
      Loss before tax                                                                (45)                   (77)                 - 41.6%
      Net loss                                                                         (6)                  (41)                - 85.4%




     The contribution of headquarters and holding company services to        this segment include costs that cannot be billed to other entities,
     the group’s overall performance is not material and the same            the cost of allocating economic capital and the favorable impact of
     applies to year-on-year comparisons. The amounts reported for           group tax relief which cannot be allocated to a specific business.




       Recent developments
       and outlook


     Recent developments                                                     Outlook for 2006
     To optimize management of market risks, give coherence to the           With signs of an economic recovery and a stock market upturn,
     businesses and help develop a consistent commercial policy, all         CIC expects to meet its objectives and targets for 2006, including:
     French capital markets activities have been grouped within a            • expanding the business base of its network;
     single trading room used by CIC, BFCM and CIC Banque CIAL, and          • bolstering and streamlining its specialized businesses;
     based in Paris and Strasbourg. The trading room has been placed         • broadening product and service offerings in all of the group’s
     under the authortity of a joint management team and is organized          markets.
     around three key business lines:
     • Treasury and refinancing, which will act as the CM-CIC group’s
       interface with the market;
     • Sales, geared towards the group’s customers, from corporates
       and institutions to government agencies;
     • Proprietary activities comprising arbitrage, book
       management and alternative fund management.
     After-market units (such as the back-office and risk management)
     will be common to all group entities.
                                                                                                                EXECUTIVE REMUNERATION                  69




  Executive remuneration


Remuneration received by the group’s key executives is detailed                  The group’s key executives are also entitled to the same welfare
in the table below.                                                              and top-up pension benefits as all employees, in respect of either
                                                                                 Crédit Mutuel (for those carrying out part of their activities
Part of the remuneration received by some of the group’s key
                                                                                 therein) or in respect of CIC.
executives relates to their duties as employees or corporate officers
of Crédit Mutuel. Remuneration accruing to other executives relates              However, the group’s key executives do not have any specific
exclusively to their activities within the CIC group.                            benefits. They have not been awarded any CIC shares or share
                                                                                 equivalents. They are entitled to attendance fees in consideration
Executive remuneration is set by the Supervisory Board based on
                                                                                 for their functions within the group, but not for the offices they
recommendations made by a special three-member committee
                                                                                 hold within group companies or other entities.
(see page 38). Remuneration comprises a fixed and variable
component. The fixed portion is determined in the light of market                 The group’s key executives may have been granted credit notes
rates of pay for positions carrying equivalent responsibilities. The             or loans by group banks, subject to the same terms and conditions
variable portion is determined based on a specific percentage                     as those offered to all of the group’s employees. The oustanding
and approved by the meeting of the Supervisory Board following                   principal on loans taken out by the group’s key executives
the Shareholders’ Meeting called to approve the financial                         amounted to €516,260 at December 31, 2005.
statements for the year in respect of which the variable
remuneration is paid.



Remuneration paid to the group’s key executives in 2005 (a)
                                                  In respect of                  In respect of CIC               Benefits-in-kind
                                                  Crédit Mutuel              Fixed             Variable               (b)                    Total
 Michel Lucas                                        426,687               230,299              200,000                                    856,986
 Alain Fradin                                                              247,378              120,000                 5,271              372,649
 Bernard Bartelmann                                   347,716                                                                               347,716
 Jean Huet                                                                 230,346              100,000                3,880               334,226
 Jean-Jacques Tamburini                                                    230,805              100,000                3,000               333,805
 Philippe Vidal                                                             231,125             100,000                                     331,125
 Rémy Weber                                                                 230,715             100,000                 3,636               334,351
 Michel Michenko                                                           200,346              100,000                11,243               311,589
 Gérard Romedenne                                                          216,049              100,000                9,600               325,649

(a) Gross amount (before tax).
(b) Company cars only, except in the case of Gérard Romedenne, who benefits solely from a company apartment and Michel Michenko, who benefits from both
    a company car and apartment.
70     CONSOLIDATED FINANCIAL STATEMENTS




       Financial statements




     C ONSOLIDATED          BALANCE SHEET


      ASSETS
                                                                         Notes   Dec. 31, 2005   Jan. 1, 2005
      (in € millions)                                                                IFRS            IFRS

      Cash and amounts due from central banks and post office banks         5         2,622           1,588
      Financial assets at fair value through profit or loss                 6         58,318         52,745
      Derivatives used for hedging purposes                                7           722             322
      Available-for-sale financial assets                                   8        12,982           14,174
      Loans and receivables due from credit institutions                   5        28,970          23,253
      Loans and receivables due from customers                             9        75,558         65,862
      Remeasurement adjustment on interest rate risk hedged portfolios    10             17                 21
      Held-to-maturity financial assets                                     11         1,106           1,170
      Current tax assets                                                  12           193            260
      Deferred tax assets                                                  13          224             251
      Accruals and other assets                                           14         12,901         10,945
      Investments in associates                                            15          654             555
      Investment property                                                 16             14                 15
      Property and equipment and finance leases (lessee accounting)         17         1,362           1,310
      Intangible assets                                                   18           108              96
      Goodwill                                                            19            84              86




      TOTAL ASSETS                                                                 195,835        172,653
                                                                           FINANCIAL STATEMENTS          71




LIABILITIES AND SHAREHOLDERS’ EQUITY
                                                                   Notes    Dec. 31, 2005   Jan. 1, 2005
(in € millions)                                                                  IFRS           IFRS

Due to central banks and post office banks                           20                             59
Financial liabilities at fair value through profit or loss            21        32,378           31,140
Derivatives used for hedging purposes                                7           1,203            702
Due to credit institutions                                          20          64,160        48,904
Due to customers                                                    22         55,065          52,448
Debt securities                                                     23         19,809          18,559
Remeasurement adjustment on interest rate risk hedged portfolios     10           189             284
Current tax liabilities                                              12           190             166
Deferred tax liabilities                                             13            213            235
Accruals and other liabilities                                      24          12,838         10,961
Provisions for contingencies and charges                            25            632             616
Subordinated debt                                                   26          2,683           2,782
Shareholders’ equity                                                            6,475           5,797
Attributable to equity holders of the parent                                    6,079           5,439
- Capital stock                                                                   563             563
- Additional paid-in capital                                                      736             736
- Reserves                                                                       3,936          3,452
- Unrealized or deferred gains and losses                           27            266             138
- Net income                                                                      578             550
Minority interests                                                                396             358


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                    195,835        172,653
72      CONSOLIDATED FINANCIAL STATEMENTS




     C ONSOLIDATED             STATEMENT OF INCOME


                                                                                             2005            2004
       (in € millions)                                                               Notes    IFRS     IFRS excl. IAS 32-39

       Interest income                                                                30b    7,784)          9,196)
       Interest expense                                                               30b    (7,121)        (8,328)
       Commission income                                                              31b    1,736)          1,674)
       Commission expense                                                             31b     (453)           (420)
       Net gains on financial transactions                                                    1,308)           1,219)
       Net gain/(loss) on financial instruments at fair value through profit or loss    32b     1,221)           884)
       Net gain/(loss) on available-for-sale financial assets                          33b       87)            335)
       Income from other activities                                                   34b       58)              56)
       Expense on other activities                                                    34b      (47)             (23)
       Net banking income                                                                    3,265)         3,374)
       Payroll costs                                                                  35a    (1,547)         (1,473)
       Other general operating expenses                                               35c     (799)           (770)
       Depreciation and amortization                                                  36b     (169)            (176)
       Operating income before provisions                                                     750)            955)
       Net additions to provisions for loan losses                                    37b      (95)            (195)
       Operating income after provisions                                                      655)            760)
       Share of income/(loss) of associates                                           15b       59)              45)
       Net gain/(loss) on disposals of other assets                                   38b       10)               4)
       Income before tax                                                                      724)            809)
       Corporate income tax                                                           39b      (89)           (226)
       Net income before minority interests                                                   635)             583)
       Minority interests                                                                       57)              33)


       NET INCOME                                                                             578)            550)
       Earnings per share (in €)*                                                            16.42)          15.62)


     * Diluted earnings per share are identical to basic earnings per share.
                                                                                        FINANCIAL STATEMENTS              73




C ONSOLIDATED         STATEMENT OF CASH FLOWS


                                                                                           2005               2004
(in € millions)                                                                             IFRS        IFRS excl. IAS 32-39

Income before tax                                                                            724)               809)
Net depreciation/amortization expense on property and equipment and intangible assets         170)                177)
Impairment of goodwill and other non-current assets                                                 )                 )
Net additions to provisions                                                                   (70)                (78)
Share of income/loss of associates                                                            (59)                (45)
Net loss/gain from investing activities                                                       (12)                (20)
Income/expense from financing activities                                                             )                 )
Other movements                                                                              (478)               577)
Non-monetary items included in income before tax and other adjustments                       275)             1,420)
Cash flows relating to interbank transactions (a)                                            7,058)              1,326)
Cash flows relating to customer transactions (b)                                            (6,805)                 151)
Cash flows relating to other transactions affecting financial assets or liabilities (c)       (1,021)           (2,632)
Cash flows relating to other transactions affecting non-financial assets or liabilties          276)                161)
Taxes paid                                                                                    (41)              (208)
Net decrease/(increase) in assets and liabilities from operating activities                  (533)           (1,202)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES (A)                                          (258)                218)
Cash flows relating to financial assets and investments (d)                                     (95)             (797)
Cash flows relating to investment property (e)                                                      2)                1)
Cash flows relating to property and equipment and intangible assets (f)                       (211)             (234)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (B)                                          (304)            (1,030)
Cash flows relating to transactions with shareholders (g)                                     (158)               (67)
Other net cash flows relating to financing activities (h)                                     (567)              (293)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (C)                                          (725)              (360)

IMPACT OF MOVEMENTS IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (D)                                            (21)
Net increase/(decrease) in cash and cash equivalents (A + B+ C + D)                        (1,288)            (1,193)
Net cash flows from (used in) operating activities (A)                                        (259)                218)
Net cash flows from (used in) investing activities (B)                                        (304)            (1,030)
Net cash flows from (used in) financing activities (C)                                         (725)              (360)
Impact of movements in exchange rates on cash and cash equivalents (D)                              )             (21)
Cash and cash equivalents at beginning of year                                              3,635)            4,828)
Cash accounts and accounts with central banks and post office banks                          1,528)              3,178)
Demand loans and deposits – credit institutions                                             2,107)             1,650)
Cash and cash equivalents at end of year                                                    2,347)            3,635)
Cash accounts and accounts with central banks and post office banks                          2,621)             1,528)
Demand loans and deposits – credit institutions                                              (274)             2,107)


CHANGE IN CASH AND CASH EQUIVALENTS                                                         (1,288)           (1,193)
74      CONSOLIDATED FINANCIAL STATEMENTS




     C ONSOLIDATED              STATEMENT OF CHANGES IN SHAREHOLDERS ’ EQUITY


                                                           Equity attributable to equity holders of the parent                                      Minority         General
                                                                                                                                                   interests         banking
                                                                                         Unrealized or deferred                                                        risks
                                                                                           gains and losses                                                          reserve
                                                  Additional                 Cumulative on AFS                  Income
                                       Capital     paid-in                   translation financial on hedging for the
                                        stock      capital Reserves(1)       adjustment assets(3) instruments year                     Total
      Equity at Jan. 1, 2004             563         736        2,490)           (19)                                      462)        4,232)         227)             689)
      (as published)
      Impact of the adoption                                        640)          19)                                                    659)            10)          (689)
      of IFRS
      Equity at Jan. 1, 2004             563         736         3,130)                                                    462)        4,891)         237)
      (pro forma)
      Consolidated income                                                                                                   550)          550)           33)
      for the year
      Appropriation of prior                                        462)                                                   (462)
      year earnings
      Dividends paid                                                (115)                                                                 (115)          (11)
      Translation adjustments                                                     (11)                                                      (11)
      Restructuring and                                                (1)                                                                   (1)
      internal asset sales
      Impact of changes                                                                                                                                 86)
      in group structure
      Other movements                                                  7)                                                                    7)
      Equity at Dec. 31, 2004 (2)        563         736         3,483)          (11)                                      550)        5,321)         345)
      Equity at Jan. 1, 2005             563         736         3,483)          (11)                                      550)        5,321)         345)
      (pro forma)
      Impact of the adoption                                        (20)                           142            (5)                      117)          13)
      of IFRS
      Equity at Jan. 1, 2005             563         736         3,463)          (11)             142            (5)       550)        5,438)         358)
      (pro forma)
      Consolidated income                                                                                                   578)          578)           57)
      for the year
      Appropriation of prior                                        550)                                                   (550)
      year earnings
      Dividends paid                                                (133)                                                                 (133)         (32)
      Translation adjustments                                                     30)                                                      30)
      Impact of remeasurement                                         (2)                                                                   (2)
      Change in fair value                                                                         127             2)                     129)             1)
      of AFS financial assets (3)
      Restructuring and                                                (1)                                                                   (1)
      internal asset sales
      Impact of changes                                                41                                                                   41)          13)
      in group structure
      Other movements                                                  (1)                                                                   (1)          (1)
      Equity at Dec. 31, 2005            563         736          3,917           19)            269             (3)        578)      6,079)          396)

     (1) At December 31, 2005, reserves comprised the legal reserve for €56 million, the special long-term capital gains reserve for €287 million, unappropriated retained
         earnings for €840 million, other CIC reserves for €268 million and post-acquisition retained earnings of subsidiaries for €2,466 million.
         CIC’s capital stock was made up of 35,208,166 common shares with a par value of €16.
     (2) Equity at December 31, 2004 (as published) amounted to €4,979 million, including minority interests for €335 million but not including the general banking risks reserve.
     (3) AFS: available for sale. At the Shareholders’ Meeting, shareholders were asked to approve a payout of €4.1 per share, representing a total dividend of €144 million.
                                                                                                                 FINANCIAL STATEMENTS              75




                                                                               • as allowed by IFRS 1, at January 1, 2004 cumulative translation
NOTES TO THE CONSOLIDATED                                                        adjustments have been recognized in full in shareholders’ equity
FINANCIAL STATEMENTS                                                             and the balance reset to zero;
                                                                               • IAS 32/39 and IFRS 4 have been applied with effect from January
                                                                                 1, 2005. The 2004 consolidated financial statements and in
The notes are presented in millions of euros (€m).
                                                                                 particular the opening balance sheet at January 1, 2004 have
                                                                                 not been restated; several reclassifications and measurement
Note 1 - Impacts of the adoption of International                                adjustments are reflected in the opening balance sheet at
         Financial Reporting Standards (IFRS)                                    January 1, 2005;
         on the consolidated financial statements                               • hedge accounting rules as set out in IAS 39 and amended by the
Pursuant to European regulation 1606/2002 on international                       European Union have been applied with effect from January 1,
accounting standards, the consolidated financial statements for                   2005. Instruments designated as hedges under French GAAP but
the year ended December 31, 2005 have been prepared in                           that do not meet the criteria for hedge accounting in IFRS or for
accordance with International Financial Reporting Standards                      which CIC decided, where appropriate, not to reflect the hedging
(IFRS), as adopted for use in the European Union at that date.                   relationship, are shown in the opening balance sheet under assets
                                                                                 and liabilities at fair value through profit or loss. Instruments that
The International Financial Reporting Standards that were applied
                                                                                 qualify as hedges under IFRS or that the group was able to
by the group to prepare its consolidated financial statements
                                                                                 reallocate to identifiable assets and liabilities (operations
include International Accounting Standards (IAS) and IFRS 1 – 5, as
                                                                                 classified as macro-hedges under previous GAAP) have been
well as the related interpretations adopted for use in the European
                                                                                 recognized as such in the opening IFRS balance sheet;
Union at December 31, 2005.
                                                                               • margins generated on transactions involving structured
The 2004 consolidated financial statements as published were                      products that are not traded on an active market and which are
prepared in accordance with French generally accepted accounting                 measured on the basis of internal models and non-observable
standards (French GAAP). The 2004 consolidated financial                          parameters are restated retrospectively. The recognition of this
statements (”IFRS excluding IAS 32-39”) which are presented with                 margin in income is based on the specific nature of the
the 2005 consolidated financial statements were prepared in                       structured product;
accordance with the IFRSs applicable in 2004, which do not include             • all securities in the private equity portfolio are measured at fair
IAS 32, IAS 39 and IFRS 4; these standards are applied with effect               value through profit or loss.
from January 1, 2005, as allowed by IFRS 1.
                                                                               1-1 Impact of the change in accounting
Main options and exemptions applied                                                policies on shareholders’ equity
upon first-time adoption of IFRS
                                                                               Overview
IFRS have been applied for the first time in accordance with                    Under IFRS 1, changes in accounting methods should be applied
IFRS 1 – First-time Adoption of International Financial Reporting              retrospectively – subject to a limited number of exceptions – as
Standards. Under IFRS 1, changes in accounting policies should                 if the new policies had always been applied. The impact of the
be applied retrospectively and adjusted through opening                        first-time adoption of IFRS is recognized in shareholders’ equity
shareholders’ equity at January 1, 2004. IFRS 1 also offers a                  in the opening balance sheet at January 1, 2004. In order to
number of mandatory and optional exemptions. CIC has chosen                    permit meaningful comparisons with 2005 data, the consolidated
to apply the following:                                                        financial statements for 2004 have been restated to reflect these
• business combinations carried out prior to January 1, 2004 have              policy changes. Exceptionally, IFRS 1 allows entities to postpone
  not been restated;                                                           first-time adoption of IAS 32 and IAS 39 (financial instruments)
• property and equipment continue to be recorded at cost, rather               and IFRS 4 (insurance contracts) to January 1, 2005. Consolidated
  than remeasured at fair value;                                               financial data for 2004 is not required to be restated.


 Impact of the change in accounting policies on shareholders’ equity                                                                Total equity
                                                                                                                                      (in €m)
 Consolidated shareholders’ equity under CNC rules (French GAAP) at January 1, 2004 before minority interests                         4,459)
 Depreciation of non-current assets using the components approach: property assets are split into components based                         (9)
 on their estimated useful lives and depreciated over this period. Property assets continue to be carried at historical cost.
 Leasehold rights are no longer amortized but tested for impairment.                                                                      26)
 Capital gains generated on leaseback transactions are recognized over the life of the finance lease agreement.                            (34)
 Deferred taxes on the afore-mentioned adjustments.                                                                                        (5)
 Reclassification of the general banking risks reserve as a component of equity.                                                          689)
 Negative goodwill is recognized immediately in equity.                                                                                     1)
 Accumulated impact of changes in accounting methods in 2004                                                                          + 668)
 Consolidated shareholders’ equity under IFRS (excl. IAS 32-39 and IFRS 4) at January 1, 2004                                          5,127)
76    CONSOLIDATED FINANCIAL STATEMENTS




     Consolidated shareholders’ equity under IFRS (excl. IAS 32-39 and IFRS 4) at January 1, 2005                                     5,665)
     Commission
     Commission treated as an additional component of interest and hence an integral part of the effective interest rate                (68)
     is recognized over the life of the corresponding loans. This item mainly comprises handling charges and syndication
     fees on corporate loans, or specialized financing arrangements.
     Term deposits
     Term deposits subject to a stepped rate are recognized based on a constant effective rate of interest.                               (6)
     Provisions for individual impairment of loans
     Provisions for detected risks are now calculated based on the difference between the initial contractual payments, less            (88)
     payments already received, and forecast future payments discounted at the interest rate applicable to the loan agreement.
     ”Net additions to provisions for loan losses” includes movements in the provision for individual impairment, except those
     relating to the unwinding of the discount recognized in interest received (net banking income).
     Provisions for collective impairment of loans
     Under IFRS, loans that are not individually impaired may be impaired on a collective basis, by grouping together loans
     with similar characteristics, should a loss event occur.
     The collective provision for impairment is based on outstanding loans that have not been individually impaired.                    (70)
     The provision for collective impairment of loans is calculated based on data obtained from work carried out in respect
     of Basel II, or on external information.
     The general provision for credit risks included in the parent company financial statements has been eliminated,
     as it is not compatible with IFRS.
     Movements in provisions for collective impairment are included in net additions to provisions for loan losses.                     288)
     Provisions for risks arising from commitments on home savings accounts and plans
     Provisions are set aside for commitments regarding loan entitlement that are unfavorable to the bank, and for the obligation       (118)
     to pay interest at higher-than-market rates.
     Available-for-sale financial assets
      Provisions for impairment of available-for-sale financial assets recognized in the French GAAP financial statements                  69)
     which do not classify as provisions for lasting impairment under IFRS have been reclassified in a specific equity account,
     ”Unrealized or deferred gains and losses”. These include provisions for interest rate risk on debt instruments and
     provisions for impairment of equities that are not deemed to cover a long-term impairment risk.
     The adjustment arising from the remeasurement of these assets at fair value and the recognition of unrealized capital              145)
     gains and losses is recorded directly in the specific equity account, ”Unrealized or deferred gains and losses”, net of the
     deferred tax effect.
     Financial assets at fair value through profit or loss                                                                               (80)
     These include:
     - interbank loans and borrowings relating to market arbitrage activities (fair value option);
     - derivatives in isolated open positions classified as trading securities in IFRS;
     - specifically-hedged assets and liabilities that do not meet the criteria for hedge accounting in IFRS and accounted
       for under the fair value option;
     - hedging derivatives not recognized as such under IFRS.
     These adjustments result in a positive impact of €5 million.
     Securities held in the private equity portfolio
     All securities in the private equity portfolio are carried at fair value through profit or loss, resulting in a positive impact
     of €129 million.
     Hedge accounting under IFRS
     Fair value hedges have no impact on equity as the measurement of the derivative instrument at fair value is offset
     by changes in the fair value of the interest rate component of the hedged item. Derivatives classified as hedges
     in accordance with CNC standards (French GAAP) that do not qualify for hedge accounting under IFRS have been
     classified as trading securities. The impact of measuring these items at fair value is reflected in trading activities.
     Changes in the fair value of derivatives used in a cash flow hedge had a negative impact of €5 million on equity.
     Derivatives – structured products
     Retrospective application of rules regarding day one profit: gains/losses generated on the sale of structured products
     are recognized in income over a specific period based on the products concerned, leading to a negative impact
     of €183 million (including the bid/ask on structured products).
     Bid/ask
     Long positions are measured at the bid price and short positions at the ask price, leading to a negative impact
     of €26 million excluding structured products. Provisions for future management expenses are reversed.
     Other (pensions and other employee benefit commitments)                                                                               (6)
     Deferred taxes
     The impacts of first-time application are presented before the tax effect. The tax effect resulting from these changes               65)
     in accounting method is reflected under ”Deferred taxes”. Only available-for-sale financial asset reserves and cash flow
     hedging reserves are presented directly net of the tax effect.
     Accumulated impact of changes in accounting methods in 2005                                                                       + 131)
     Consolidated shareholders’ equity under IFRS (including IAS 32-39 and IFRS 4 ) at January 1, 2005                                5,796)
                                                                                                              FINANCIAL STATEMENTS         77




Summary of changes in accounting methods presented                             and plans were fine-tuned for the December 31 closing, leading
at the time of the publication of the interim accounts                         to a change in the figures presented in the initial IFRS
for the six months ended June 30, 2005                                         information;
The positive impacts of the first-time adoption of IFRS totaled               • securities held in the private equity portfolio are measured at
€131 million at January 1, 2005 and €668 million at January 1, 2004.           fair value through profit or loss at December 31, 2005, whereas
                                                                               securities in the portfolio that were less than 20%-owned were
The positive impacts of applying IFRS presented at the time of
                                                                               classified as available-for-sale at June 30, 2005. This led to a
the publication of the interim financial statements for the six
                                                                               reclassification within equity of the impacts of first-time
months ended June 30, 2005 were €100 million at January 1,
                                                                               adoption, from ”Unrealized or deferred gains and losses” on
2005 and €668 million at January 1, 2004 (amount unchanged).
                                                                               available-for-sale financial assets to reserves;
The €31 million difference at January 1, 2005 has only a minor
                                                                             • other minor adjustments were made to financial instruments;
€5,665 million impact on shareholders’ equity at January 1, 2005,
                                                                             • the negative €6 million impact of first-time adoption on
and results from the following:
                                                                               pensions and other employee benefit commitments results
• the methods used to calculate fees and commissions, provisions               from a change in presentation.
  for individual and collective impairment of loans, and provisions
  for risks arising from commitments on home savings accounts


1-2 Impact of the change in accounting policies on income

Impacts on 2004 net income (in millions of euros)
                                                                                                                                2004
 Net income before minority interests under French GAAP                                                                          565
 Depreciation of property assets using the components approach and cancellation of amortization of leasehold rights                 3.0
 Deferred tax effect                                                                                                               - 1.0
 Recognition of the gain relating to leaseback transactions over the life of the lease agreement, net of the tax effect             5.2
 Cancellation of goodwill amortization                                                                                             10.5
 Net income before minority interests under IFRS, excluding IAS 32-39 and IFRS 4                                                 583
78     CONSOLIDATED FINANCIAL STATEMENTS




     1-3 Reconciliation of the presentation of income                            Changes in the presentation of the income statement with respect
         under CNC recommendations and under IFRS                                to 2004 led to:
     The IFRS financial statements have been prepared in accordance
                                                                                 1. Reclassification of income from variable-income securities,
     with the presentation rules set out in CNC recommendation
                                                                                    and other banking income and expense, which is grouped
     2004-R.03. To permit meaningful comparisons with the 2005
                                                                                    together;
     IFRS income statement, the income statement for 2004 prepared
                                                                                 2. Reclassification of net gains on financial transactions from net
     in accordance with IFRS excluding IAS 32-39 is also presented
                                                                                    gains on disposals of fixed assets (under French GAAP) to
     according to the IFRS format. In the 2004 financial statements
                                                                                    available-for-sale assets (IFRS);
     prepared in accordance with IFRS as applicable in 2004:
                                                                                 3. Other reclassifications include:
     • financial instruments at fair value through profit or loss include
                                                                                 • income from securities lending and borrowing transactions,
       only instruments from the trading book;
                                                                                   which was reclassified to net gains on financial transactions;
     • available-for-sale financial assets include securities in the held-
                                                                                 • amortization of premiums on debt securities, which was reclas-
       for-sale and private equity portfolios, investments in subsidiaries
                                                                                   sified from income to expenses.
       and affiliates and other long-term investments. In 2004, these
       instruments continued to be accounted for in accordance with
       French GAAP as applicable at December 31, 2004.



     2004 INCOME STATEMENT UNDER IFRS
     (EXCLUDING IAS 32-39)

                                                                              CNC                                                    IFRS
      (in € millions)                                                        format            1           2           3            format
      Interest income                                                        9,280)                                   (84)           9,196)
      Interest expense                                                       (8,334)                                    6)          (8,328)
      Income from variable-income securities                                    53)           (53)
      Commission income                                                       1,674)                                                 1,674)
      Commission expense                                                      (420)                                                   (420)
      Net gains on financial transactions                                      1,057)           53)         31)         77)            1,219)
      Net gains on trading account securities                                  794)
      Net gains on held-for-sale securities                                    263)
      Other banking income                                                      56)                                                     56)
      Other banking expense                                                    (23)                                                    (23)
      Net banking income                                                     3,343)                        31)                       3,374)
      Net gains on disposals of fixed assets                                     34)                       (31)                           4)
      Income before non-recurring items                                        809)                                                   809)
                                                                                                       FINANCIAL STATEMENTS             79




1-4 Pro forma balance sheet at December 31, 2004
    and pro forma income statement for the year
    then ended, prepared in accordance with IFRS
The balance sheet and income statement set out below include
figures calculated in accordance with IFRS as applicable in 2004
(excluding IAS 32-39 and IFRS 4), presented under the CNC format
used for the published 2004 financial statements.


2004 FINANCIAL STATEMENTS RESTATED IN ACCORDANCE WITH IFRS EXCLUDING IAS 32-39
French GAAP format (CRC standards 2000-03 and 2000-04)

BALANCE SHEET
 ASSETS                                                           Dec. 31, 2004    Dec. 31, 2004      Jan. 1, 2004    Jan. 1, 2004
                                                                    As published    Pro forma IFRS     As published   Pro forma IFRS
 (in € millions)                                                                    excl. IAS 32-39                   excl. IAS 32-39

 Interbank transactions                                                31,417            31,417          29,003          29,003
 Government securities                                                23,087           23,087             21,455          21,455
 Customer transactions                                                61,033            61,033           56,868          56,868
 Lease financing                                                        5,329             5,329            4,967            4,967
 Bonds, equities and other fixed- and variable-income securities       32,638            32,638           28,820          28,820
  - Bonds and other fixed-income securities                           24,648            24,648             18,461          18,461
  - Equities and other variable-income securities                      7,990             7,990            10,359          10,359
 Investments in non-consolidated companies
                                                                        1,140             1,140              850             850
 and other long-term investments
 Intangible assets, property and equipment                              1,432             1,423            1,387            1,370
 Goodwill                                                                  74                86               65               65
 Accruals and other assets                                            14,993            14,999            12,423          12,429
 Total assets                                                        171,143          171,152          155,838         155,827



LIABILITIES AND SHAREHOLDERS’ EQUITY                              Dec. 31, 2004    Dec. 31, 2004      Jan. 1, 2004    Jan. 1, 2004
                                                                   As published     Pro forma IFRS     As published   Pro forma IFRS
(in € millions)                                                                     excl. IAS 32-39                   excl. IAS 32-39

Interbank transactions                                               57,973            57,974            53,218          53,218
Customer transactions                                                55,215            55,215            50,518          50,518
Debt securities                                                      20,746           20,746            19,559           19,559
Accruals and other liabilities                                       27,947           27,959            23,654          23,665
Negative goodwill                                                                                               1
Provisions for contingencies and charges                                 811                811             970             969
Subordinated debt                                                     2,782             2,782             2,770           2,770
General banking risks reserve                                           690                                689
Minority interests                                                      335               345               227             237
Shareholders’ equity                                                  4,644             5,320             4,232           4,891
 - Capital stock                                                        563               563               563             563
 - Additional paid-in capital                                           736               736               736             736
 - Reserves                                                           2,813              3,471            2,471            3,130
 - Net income                                                           532               550               462             462
Total liabilities and shareholders’ equity                          171,143          171,152          155,838         155,827
80     CONSOLIDATED FINANCIAL STATEMENTS




      INCOME STATEMENT                                                                                      2004                2004
                                                                                                          As published       Pro forma IFRS
      (in € millions)                                                                                                        excl. IAS 32-39

      Interest income                                                                                       9,280)              9,280)
      Interest expense                                                                                      (8,334)             (8,334)
      Income from variable-income securities                                                                    53)                  53)
      Commission income                                                                                      1,674)              1,674)
      Commission expense                                                                                     (420)                (420)
      Net gains on trading account securities                                                                 794)                 794)
      Net gains on held-for-sale securities                                                                   263)                 263)
      Other banking income                                                                                      56)                 56)
      Other banking expense                                                                                    (23)                 (23)
      Gross margin from insurance operations
      Net banking income                                                                                    3,343)              3,343)
      Payroll costs                                                                                         (1,473)             (1,473)
      Other general operating expenses                                                                       (770)                (770)
      Depreciation and amortization                                                                           (179)               (176)
      General operating expenses                                                                          (2,422)              (2,419)
      Operating income before provisions                                                                      921)                924)
      Net additions to provisions for loan losses                                                             (195)               (195)
      Operating income after provisions                                                                       726)                729)
      Income from companies accounted for by the equity method                                                  46)                 45)
      Net gains on disposals of fixed assets                                                                     29)                  34)
      Income before non-recurring items                                                                       801)                809)
      Net non-recurring income/(expense)
      Corporate income tax                                                                                   (225)                (226)
      Amortization of goodwill                                                                                  (11)
      Net allocation to general banking risks reserve
      Net income before minority interests                                                                    565)                583)
      Minority interests                                                                                        33)                  33)
      Net income                                                                                              532)                550)




     Note 2 - Summary of significant accounting                             Loans and receivables
              policies and presentation methods                            Loans and receivables are non-derivative financial assets with
              applied with effect from January 1, 2005                     fixed or determinable payments that are not quoted in an active
     IFRS are effective January 1, 2004, except for IAS 32, IAS 39 and     market. Loans and receivables include credit granted directly by
     IFRS 4 which are applicable with effect from January 1, 2005.         the group or its share in syndicated loans, purchased loans and
                                                                           unlisted debt instruments. Loans and receivables are initially
     The accounting principles and policies described in this note that
                                                                           measured at fair value – which is usually the net amount disbursed
     have been applied since January 1, 2004 are marked with an
                                                                           at inception – and subsequently carried at amortized cost using
     asterisk (*). Accounting principles and policies not marked with an
                                                                           the effective interest rate method.
     asterisk are applicable with effect from January 1, 2005.
                                                                           Commissions directly related to setting up the loan and treated
     Presentation of financial statements                                   as an additional component of interest are recognized over the
     The financial statements prepared under IFRS are presented in          life of the loan using the effective interest method and are shown
     accordance with CNC recommendation 2004-R.03.                         under interest items in the income statement.
                                                                                                            FINANCIAL STATEMENTS            81




Provisions for impairment of loans and receivables,                         Basis for recognition and measurement
and financing and guarantee commitments                                      of related income and expenses
                                                                            Held-to-maturity investments are recognized at fair value upon
Provision for individual impairment of loans
                                                                            acquisition. Transaction costs are deferred and included in the
Impairment is recognized when there is objective evidence of a
                                                                            calculation of the effective interest rate except when they are not
measurable decrease in value as a result of an event occurring
                                                                            material, in which case they are taken to income at inception.
after inception of a loan or group of loans, and which may lead to
                                                                            Held-to-maturity investments are subsequently measured at
a loss. Loans are tested for impairment on an individual basis at
                                                                            amortized cost using the effective interest rate method, which
each balance sheet date. The amount of impairment is equal to
                                                                            builds in amortization of premium and discount (corresponding
the difference between the carrying amount and the present
                                                                            to the difference between the purchase price and redemption
value of the estimated future cash flows associated with the loan,
                                                                            value of the asset).
discounted at the original effective interest rate. For variable-
rate loans, the last known contractual interest rate is used.               Income earned from this category of investments is included in
                                                                            ”Interest income” in the income statement.
Loans on which one or more installments are more than three
months past due (six months in the case of real estate loans and            Should a credit risk arise, impairment on held-to-maturity
nine months for local authority loans) are deemed to represent              financial assets is calculated in the same way as for loans and
objective evidence of impairment. Likewise, an impairment loss is           receivables.
recognized when it is probable that the borrower will not be able
to repay the full amount due, when an event of default has
                                                                            Available-for-sale financial assets
occurred, or where the borrower is subject to court-ordered                 Classification
liquidation.                                                                Available-for-sale financial assets are assets that are designated
                                                                            as available for sale or have not been classified as loans and
The impairment loss is recognized in the form of a provision. Any
                                                                            receivables, held-to-maturity financial assets or financial assets
movements in the provision are included in net additions to
                                                                            at fair value through profit or loss.
provisions for loan losses, except those relating to the unwinding
of the discount, which are recognized in net banking income                 Basis for recognition and measurement
under interest income.                                                      of related income and expenses
                                                                            Available-for-sale financial assets are carried at fair value until
Provisions for individual impairment of loans are deducted from
                                                                            disposal. Changes in fair value are shown on the ”Unrealized or
assets, while impairment losses on financing and guarantee
                                                                            deferred gains and losses” line within a specific equity account.
commitments are included in liabilities under provisions for risks
                                                                            On disposal or recognition of a lasting impairment in value, the
arising on financing and guarantee commitments.
                                                                            unrealized gains and losses recorded in equity are transferred to
Provisions for collective impairment of loans                               the income statement.
Customer loans that are not individually impaired are risk-
                                                                            Income derived from fixed-income available-for-sale securities
assessed on the basis of loans with similar characteristics. This
                                                                            is recognized in the income statement under ”Interest income”,
assessment draw upon internal and external rating systems, the
                                                                            using the effective interest method. Dividend income relating to
estimated probability of default, the loss rate, and the amount of
                                                                            variable-income available-for-sale securities is taken to income
loans outstanding.
                                                                            under ”Net gain/(loss) on available-for-sale financial assets”.
Financial guarantees given                                                  Impairment of available-for-sale financial assets
Financial guarantees that meet the definition of a derivative are            An impairment loss is recognized on available-for-sale financial
recognized in accordance with IAS 39 (financial instruments).                assets when there is a lasting and/or material decline in their fair
Financial guarantees not meeting this definition are accounted for           value in relation to their cost. Impairment losses on available-for-
in accordance with IFRS 4 on insurance contracts and a provision            sale financial assets comprising equity or similar instruments
is set aside in accordance with IAS 37 dealing with liabilities.            recognized in the income statement may not be reversed while the
                                                                            instruments are carried on the balance sheet. They are recorded in
Purchased securities                                                        ”Net gain/(loss) on available-for-sale financial assets”.
Securities held by the group are classified in one of the three              Impairment losses on bonds classified in this category may be
categories provided by IAS 39: financial instruments at fair value           reversed and are recognized in ”Net additions to provisions for
through profit or loss, held-to-maturity financial assets, and                loan losses” when they concern credit risk.
available-for-sale financial assets.
                                                                            Financial instruments at fair value through profit or loss
Held-to-maturity financial assets
                                                                            Classification
Classification                                                               Financial instruments at fair value through profit or loss comprise:
Held-to-maturity financial assets are non-derivative financial assets
with fixed or determinable payments and fixed maturity that the               a) Financial instruments classified as held for trading, including
group has the positive intention and ability to hold to maturity, other        mainly instruments:
than those that the group designated at fair value through profit or           - acquired or incurred principally for the purpose of selling or
loss or as available for sale. The positive intention and ability to hold       repurchasing them in the near term, or which are part of a
to maturity are assessed at each balance sheet date.                            portfolio of identified financial instruments that are managed
                                                                                together and for which there is evidence of a recent actual
                                                                                pattern of short-term profit-taking, or derivatives (except for a
                                                                                derivative that is designated an effective hedging instrument).
82      CONSOLIDATED FINANCIAL STATEMENTS




     b) Financial instruments designated at inception at fair value            Financial instruments at fair value through profit
        through profit or loss in accordance with the option provided           or loss – derivatives
        by IAS 39, for which application guidance was provided in the
                                                                               A derivative is a financial instrument:
        amendment published in June 2005. The fair value option is
        designed to help entities produce more relevant information,           a) whose fair value changes in response to the change in a
        by enabling:                                                              specified interest rate, financial instrument price, commodity
                                                                                  price, foreign exchange rate, credit rating or credit index, or
       - certain hybrid (combined) financial instruments to be measured
                                                                                  other variable – sometimes called the ”underlying”);
         at fair value without separating out embedded derivatives
                                                                               b) which requires no initial net investment or an initial net invest-
         which could not be measured with a sufficient degree of
                                                                                  ment that is smaller than would be required for other types of
         reliability; a significant reduction in accounting mismatches
                                                                                  contracts that would be expected to have a similar response to
         regarding certain assets and liabilities; and a group of financial
                                                                                  changes in market factors;
         assets and/or liabilities to be managed in accordance with a
                                                                               c) which is settled at a future date.
         documented risk management or investment strategy.
                                                                               Derivatives are classified as financial instruments held for trading
         This category mainly includes securities held in the private
                                                                               except when they are part of a designated hedging relationship.
         equity portfolio and balance sheet items associated with
         capital markets activities.                                           Derivatives are recorded on the balance sheet under financial
                                                                               instruments at fair value through profit or loss. Changes in fair value
     Basis for recognition and measurement
                                                                               and interest accrued or payable are recognized in net gains and
     of related income and expenses
                                                                               losses on financial instruments at fair value through profit or loss.
     Financial instruments included in this category are recognized in
     the balance sheet at fair value up to the date of their disposal.         Derivatives qualifying for hedge accounting in accordance with
     Changes in fair value are taken to the income statement under             IAS 39 are classified as fair value hedges or cash flow hedges, as
     ”Net gain/(loss) on financial instruments at fair value through            appropriate. All other derivatives are classified as trading items,
     profit or loss”. Income earned on fixed-income securities in this           even if they were contracted for the purpose of hedging one or
     category is included in the income statement under ”Interest              more risks.
     income”. Purchases and sales of securities at fair value through          Embedded derivatives
     profit or loss are recognized on the settlement date. Any changes          An embedded derivative should be separated from the host
     in fair value between the transaction date and settlement date            contract and accounted for as a derivative if, and only if, the
     are taken to income. Fair value also incorporates an assessment           economic characteristics and risks of the embedded derivative
     of counterparty risk on these securities.                                 are not closely related to the economic characteristics and risks
     Fair value                                                                of the host contract. If the host contract is not valued at fair value
     Fair value is the amount for which an asset could be exchanged,           through profit or loss, the embedded derivative(s) is (are)
     or a liability settled, between knowledgeable willing parties in an       separated from the host contract and accounted for separately
     arm’s length transaction. The fair value of an instrument upon            as a derivative.
     initial recognition is generally its transaction price.
                                                                               Financial instruments at fair value through profit
     If the instrument is traded in an active market, the best estimate        or loss – structured products
     of fair value is the quoted price or market value.
                                                                               Structured products are products created by bundling basic
     The appropriate quoted market price for an asset held or liability        instruments – generally options – to exactly meet client needs.
     to be issued is usually the current bid price, and for an asset to be     CIC offers various categories of structured products based on
     acquired or liability held, the asking price.                             traditional options, binary options, barrier options, Asian options,
     When the bank has assets and liabilities with offsetting market           look-back options, options on several assets and index swaps.
     risks, the net position is valued at the bid price for a net asset held   There are three main methods of valuing these products: methods
     or a net liability to be issued and at the ask price for a net asset to   consisting of solving a partial differential equation, discrete time
     be acquired or liability held.                                            tree methods and Monte Carlo methods. CIC uses the first and
     A market is deemed to be active if quoted prices are readily and          third methods. The analytical methods used are those applied by
     regularly available and represent actual and regularly occurring          the market to model the underlyings.
     market transactions on an arm’s length basis.                             The valuation parameters applied correspond to observed values
     If the market for a financial instrument is not active, fair value is      or values determined using a standard observed values model at
     established using a valuation technique.                                  the balance sheet date. If the instruments are not traded on an
                                                                               organized market, they are valued by reference to the values
     Derivatives are remeasured based on available observable                  quoted by the most active dealers in the corresponding products
     market data such as yield curves to which the bid/ask price is then       or by extrapolating quoted values. All parameters are based on
     applied.                                                                  historical data. The parameters applied to measure the value of
     A multi-criteria approach is adopted to determine the value of            unquoted forward financial instruments are determined using a
     securities held in the private equity portfolio, backed by historical     system that provides a snapshot of market prices. Every afternoon,
     experience of valuing unlisted companies.                                 at a fixed time, the bid and offer prices quoted by several market
                                                                               players, as displayed on the market screens, are recorded in the
                                                                               system. A single price is fixed for each relevant market parameter.
                                                                                                        FINANCIAL STATEMENTS            83




Certain complex financial instruments – mainly customized equity         Fair value hedges
barrier options with single or multiple underlyings presenting low      In a fair value hedge, changes in the fair value of the derivative
levels of liquidity and long maturities – are measured using            instrument are taken to income under ”Interest income/expense
internal models and valuation inputs such as long volatilities,         – derivatives designated as hedges” symmetrically with the
correlations, and expected dividends payable where no observable        change in interest income/expense relating to the hedged item.
data can be obtained from active markets. Upon initial recognition,
                                                                        In a fair value hedging relationship, the derivative instrument is
these complex financial instruments are recorded in the balance
                                                                        measured at fair value through profit or loss under ”Net gain/
sheet at their transaction price, which is deemed to be the best
                                                                        (loss) on financial instruments at fair value through profit or loss”
indication of fair value even though the result of the model-based
                                                                        symmetrically with the remeasurement of the hedged item to
valuation may differ. The difference between the price at which a
                                                                        reflect the hedged risk. This rule applies when the hedged item is
complex instrument is traded and the value obtained from internal
                                                                        recognized at amortized cost or is classified as available-for-
models, which generally represents a gain, is known as ”day one
                                                                        sale. If the hedging relationship is fully effective, any changes in
profit”. IFRS prohibit the recognition of a margin on products
                                                                        the fair value of the hedging instrument will offset changes in the
valued using models and parameters that are not observable on
                                                                        fair value of the item hedged.
active markets. The margin is therefore deferred. The margin
realized on options with a single underlying and no barrier is
recognized over the life of the instrument. The margin on products
with barrier options is recognized upon maturity of the structured
product, due to the specific risks associated with the management
of these barriers.

Hedge accounting
IAS 39 describes three types of hedging relationship, which are
designated on the basis of the type of risk being hedged. A fair
value hedge is a hedge of the exposure to changes in fair value of a
financial asset or liability. CIC uses fair value hedges to hedge the
interest rate risk on fixed-rate assets and demand deposits, as
permitted by the European Union. A cash flow hedge is a hedge of
the exposure to variability in cash flows relating to a financial asset
or liability, firm commitment or highly probable forecast transaction.
Cash flow hedges are used in particular to hedge interest rate risk
on adjustable-rate assets and liabilities, including rollovers, and
foreign exchange risk on highly probable foreign currency revenues.
Hedges of a net investment in a foreign operation are a special         Hedges must be highly effective to qualify for hedge accounting.
type of cash flow hedge.                                                 Changes in the fair value or cash flows of the hedging instrument
                                                                        must offset changes in the fair value or cash flows of the item
At the inception of the hedge, the group documents the hedging          hedged within a range of 80%-125%.
relationship. This documentation describes the hedging strategy,
as well as the type of risk covered, the hedged item and hedging        If the hedging relationship no longer fulfils the hedge effectiveness
instrument, and the methods used to assess the effectiveness of         criteria, hedge accounting is discontinued on a prospective basis.
the hedging relationship.                                               The related derivatives are transferred to the trading book and
                                                                        accounted for using the treatment applied to this asset category.
Hedge effectiveness is assessed at the inception of the hedge and       The carrying amount of the hedged item in the balance sheet is
subsequently at least at each balance sheet date.                       no longer adjusted to reflect changes in fair value and the
The ineffective portion of the hedge is recognized in the income        cumulative adjustment recorded in respect of the transactions is
statement under ”Net gain/(loss) on financial instruments at fair        amortized over the remaining life of the item hedged. If the
value through profit or loss”.                                           hedged item no longer appears in the balance sheet, in particular
                                                                        due to prepayments, the cumulative adjustment is taken
                                                                        immediately to income.
84     CONSOLIDATED FINANCIAL STATEMENTS




     Fair value hedge accounting for a portfolio hedge                      Debt securities
     of interest rate risk
                                                                            Debt securities are initially recognized at fair value – which is
     In October 2004, the European Union amended IAS 39 to allow
                                                                            generally the net amount received – and subsequently measured
     demand deposits to be included in portfolios of liabilities
                                                                            at amortized cost using the effective interest method.
     contracted at fixed rates.
                                                                            Certain ”structured” debt instruments may contain embedded
     At each balance sheet date, CIC verifies that the hedging
                                                                            derivatives. Embedded derivatives are separated from the host
     contracted for each portfolio of assets and liabilities is not
                                                                            contract when they meet the criteria for separate recognition
     excessive.
                                                                            and can be measured reliably.
     The fixed-rate liability portfolio comprises demand deposits
                                                                            The host contract is subsequently measured at amortized cost.
     whose maturities are modeled by Asset-Liability management.
                                                                            Fair value is based on quoted market prices or valuation models.
     Changes in fair value of a portfolio hedge of interest rate risk are
     recognized on a specific line of the balance sheet, under               Conversion of assets and liabilities denominated
     ”Remeasurement adjustment on interest rate risk hedged port-           in foreign currency (*)
     folios”, with the offsetting entry in income.                          Assets and liabilities denominated in a currency other than the
     Cash flow hedges                                                        local currency are converted at the year-end exchange rate.
     In the case of cash flow hedges, the portion of the gain or loss on     The resulting foreign currency gains and losses on monetary
     the hedging instrument that is determined to be an effective hedge     financial assets and liabilities are recognized in income under
     is recognized directly in equity under ”Unrealized or deferred gains   ”Net gain/(loss) on financial instruments at fair value through
     and losses on cash flow hedges”, while the ineffective portion is       profit or loss”.
     included in ”Net gain/(loss) on financial instruments at fair value
                                                                            Foreign currency gains and losses arising on the translation of
     through profit or loss”. The amounts recognized in equity are
                                                                            non-monetary financial assets and liabilities are recognized in
     reclassified into profit and loss under ”Interest income/expense” in
                                                                            income if the items are classified at fair value through profit or
     the same period or periods during which the cash flows attributable
                                                                            loss under ”Net gain/(loss) on financial instruments at fair value
     to the hedged item affect profit or loss. The hedged items continue
                                                                            through profit or loss”, or under ”Unrealized or deferred gains and
     to be accounted for using the treatment applicable to the asset
                                                                            losses” if they are classified as available-for-sale.
     category to which they belong.
                                                                            When consolidated foreign currency investments are financed by
     If the hedging relationship no longer fulfils the hedge effectiveness
                                                                            a loan taken out in the same currency, the loan concerned is
     criteria, hedge accounting is discontinued on a prospective basis.
                                                                            covered by a cash flow hedge.
     The cumulative amounts recognized in shareholders’ equity as a
     result of the remeasurement of the hedging instrument remain in        Property and equipment and intangible assets (*)
     equity until the hedged transaction itself impacts income, or until
                                                                            Property and equipment and intangible assets shown in the
     the transaction is no longer expected to occur, at which point
                                                                            balance sheet comprise assets used in operations and investment
     they are transferred to the income statement.
                                                                            property. Assets used in operations are those used in the provision
     Regulated savings                                                      of services or for administrative purposes. They include assets
                                                                            other than those held under operating leases. Investment
     Home savings accounts (comptes épargne logement - ”CEL”)
                                                                            property comprises property assets held to earn rentals or for
     and home savings plans (plans épargne logement – ”PEL”) are
                                                                            capital appreciation, or both. Investment property is accounted
     government-regulated retail products sold in France. Account
                                                                            for at cost, in the same way as assets used in operations.
     holders receive interest on amounts paid into these accounts
     over a certain period (initial savings phase), at the end of which     Assets are carried at acquisition cost plus any costs directly
     they are entitled to a mortgage loan (secondary borrowing              attributable to bringing the asset to the location and condition
     phase). Home savings products generate two types of obligation         necessary for it to be capable of operating in the manner intended
     for the bank:                                                          by management. Borrowing costs incurred in the construction or
                                                                            adaptation of property assets are not capitalized.
     • an obligation to pay interest on paid-in amounts at a fixed rate
       (in the case of PEL accounts only, as interest accruing on CEL       Subsequent to initial recognition, property and equipment and
       accounts is regularly revised on the basis of an indexation          intangible assets are measured at amortized cost, which
       formula and is therefore treated as a variable rate);                represents cost less accumulated depreciation, amortization and
     • an obligation to lend to customers at their request, at a rate set   any accumulated impairment losses.
       on inception of the contract (both PEL and CEL products).            The depreciable amount of an asset is its cost less its residual
     The cost represented by these obligations has been estimated on        value net of costs to sell. Property and equipment and intangible
     the basis of behavioral statistics and market data. A provision is     assets are not presumed to have a residual value as their useful
     recognized in liabilities to cover the future costs relating to the    life is generally the same as their economic life.
     risk that future loans will be granted at conditions unfavorable to    Depreciation amortization is calculated on a straight-line basis
     the bank, i.e., where the bank has offered higher interest rates       over the estimated useful life of the assets, based on the manner in
     than those paid on similar non-regulated savings products. This        which the economic benefits embodied in the assets are expected
     approach is managed based on groups of regulated PEL savings           to be consumed by the entity. Assets that have an indefinite useful
     products with similar characteristics. The impacts on income are       life are not amortized. Depreciation and amortization on property
     included in interest paid to customers.                                and equipment and intangible assets is recognized in ”Depreciation,
                                                                            amortization and impairment” in the income statement.
                                                                                                         FINANCIAL STATEMENTS            85




Where an asset consists of a number of components that may              Post-employment benefits covered by defined
require replacement at regular intervals, or that have different        benefit plans (*)
uses or different patterns of consumption of economic benefits,          The projected unit credit method is used to determine the present
each component is recognized separately and depreciated using           value of the group’s defined benefit obligations and the related
a method appropriate to that component. CIC has adopted the             service cost, based on actuarial assumptions. The effect of
components approach for property used in operations and                 changes in these assumptions and experience adjustments (the
investment property. These items are depreciated over the               effects of differences between the previous actuarial assumptions
following useful lives:                                                 and what has actually occurred) give rise to actuarial gains and
• 40-80 years for the shell;                                            losses.
• 15-30 years for structural components;                                Plan assets are measured at fair value and the expected return on
• 10-25 years for equipment;                                            these assets is recognized in the income statement. The difference
• 10 years for fixtures and fittings.                                     between the expected return on plan assets and the actual return
Leasehold rights paid are not amortized but are tested for              is an actuarial gain or loss.
impairment. New occupancy fees paid to the owner are amortized          The group defers recognition of some actuarial gains and losses,
over the life of the lease as additional rent. Other intangible items   inasmuch as it only recognizes the portion of net cumulative
are amortized over a period of 10 years (acquired customer              actuarial gains and losses that exceeds the greater of the present
contract portfolios).                                                   value of the defined benefit obligation and 10% of the fair value of
Depreciable and amortizable assets are tested for impairment            any plan assets (corridor method). This portion is accounted for
when evidence exists at the balance sheet date that the items           in the income statement by way of a provision.
may be impaired. Non-depreciable and non-amortizable assets             Gains or losses on the curtailment or settlement of a defined
are tested for impairment at least annually.                            benefit plan are recognized in the income statement when the
If there is an indication of impairment, the recoverable amount of      curtailment or settlement occurs.
the asset is compared with its carrying amount. If the asset is         Supplementary pensions covered by pension funds
found to be impaired, an impairment loss is recognized in income,       Under the terms of the AFB transitional agreement dated
and the depreciable amount is adjusted prospectively. This loss is      September 13, 1993, the banking industry pension schemes were
reversed in the event of a change in the estimated recoverable          discontinued and bank employees joined the government-
amount or if there is no longer an indication of impairment.            sponsored Arrco and Agirc schemes effective from January 1, 1994.
Impairment is recognized under ”Depreciation, amortization and          The four pension funds to which CIC group banks contributed still
impairment” in the income statement.                                    exist and pay the various benefits not covered by the transitional
Gains and losses on disposals of assets used in operations are          agreement. In the event that fund assets are not sufficient to cover
recognized in the income statement in ”Net gain/(loss) on               these benefit obligations, the banks are required to make additional
disposals of other assets”.                                             contributions. The average contribution rate for the next ten years
                                                                        is capped at 4% of the payroll. A detailed actuarial valuation of the
Gains and losses on disposals of investment property are shown          pension funds’ commitments is performed every two years, with the
in the income statement under ”Income from other activities” or         last one performed at the end of 2004.
”Expense on other activities”.
                                                                        Other post-employment benefits covered
Provisions for contingencies (*)                                        by defined benefit plans
                                                                        Provisions are made in the financial statements of the individual
A provision is recognized when it is probable that an outflow of
                                                                        group companies for commitments in relation to retirement
resources embodying economic benefits will be required to settle
                                                                        bonuses and supplementary pensions (including special retirement
an obligation arising from a past event, and a reliable estimate
                                                                        regimes). The amount of these commitments corresponds to the
can be made of the amount of the obligation. The amount of
                                                                        discounted present value of the vested benefit entitlements of
such obligations is discounted in order to determine the amount
                                                                        active employees. Staff turnover rates taken into account in the
of the provision.
                                                                        calculation correspond to the rates observed in each individual
Movements in provisions for contingencies are classified by type         group entity. Account is also taken of projected future salary levels
under the corresponding income/expense caption.                         and the related payroll taxes. At least 60% of the commitments of
                                                                        the group’s French banks relating to retirement bonuses are
Pension and other employee benefit commitments (*)
                                                                        covered by insurance taken out with ACM Vie, a Crédit Mutuel
Provisions are recorded for these commitments and movements             Centre Est Europe insurance company which is consolidated by CIC
are taken to income. The assumptions used to calculate                  by the equity method.
commitments for pensions and other employee benefits in 2005
                                                                        Defined contribution post-employment benefits
were a discount rate determined by reference to the market yield on
                                                                        Bank employees are eligible for a group-funded money purchase
long-term government bonds (TEC 10) at the balance sheet date.
                                                                        pension scheme.
The rate of future salary increases is measured based on a long-
term estimation of inflation and actual rises in salaries.               Other long-term benefits
                                                                        Employees receive long-service awards after 20, 30, 35 and 40
                                                                        years of service. Commitments in relation to long-service awards
                                                                        are valued in the same way as for retirement bonuses.
86      CONSOLIDATED FINANCIAL STATEMENTS




     Early retirement plan                                                    any adjustments to the fair value of the net assets of the acquired
     A framework agreement for the implementation of a ”CATS” early-          entity, made as a result of factors not directly related to the
     retirement plan within the CIC group was signed on June 27, 2001.        acquisition. Goodwill representing amounts of less than €1 million
     CIC and most of the regional banks have implemented this                 is written down immediately. Goodwill is presented on a separate
     agreement. Under this plan, beneficiaries may retire two to three         line of the balance sheet, even when it relates to an equity-
     years early and receive benefits of between 57.5% and 65% of              accounted company.
     their salary. The plan is open until March 31, 2006. The future          The group tests goodwill for impairment at least annually, to
     benefit obligation is estimated over the entire life of the               ensure that there is no evidence of a lasting decline in value. If the
     commitment. A provision is set aside for this expense on a straight-     recoverable amount of the cash generating unit (CGU) to which
     line basis between the date on which the framework agreement             goodwill has been allocated is less than its carrying amount, an
     came into force (on approval by the French Labor Ministry) and           impairment loss is recognized for the amount of the difference.
     the date from which the employee(s) is (are) entitled to take early      Impairment losses on goodwill – which are taken to income – are
     retirement. In view of the limited duration of the agreement, future     not reversed. The group’s CGUs are based on its business lines.
     cash flows have not been discounted and future salary increases
     have not been taken into account. The number of potential                Fair value adjustments
     beneficiaries who retire early under the plan has been estimated          At the date of acquisition of a new entity, assets, liabilities and
     on an entity-by-entity basis.                                            contingent liabilities used in operations are measured at fair
                                                                              value. Fair value adjustments corresponding to the difference
     Insurance contracts and financial contracts                               between the carrying amount and fair value are recognized in the
     of insurance companies                                                   consolidated financial statements.
     Assets and liabilities generated by insurance contracts and financial     Intercompany transactions and balances
     contracts written by insurance companies are accounted for in            Intercompany transactions and balances and gains on intercom-
     accordance with IFRS 4. Assets relating to unit-linked business are      pany sales of assets are eliminated in all cases where the amounts
     carried at fair value through profit or loss. The remeasurement of        involved are material.
     assets generated by insurance contracts and financial contracts
                                                                              Intercompany receivables, payables, commitments, income and
     represents the source of the discretionary participation feature.
                                                                              expenses between fully or proportionally consolidated companies
     The accounting treatment of technical provisions of insurance
                                                                              are also eliminated.
     companies under IFRS is in line with their treatment under French
     GAAP, except for a portion of the claims equalization provision          Foreign currency translation
     which is restated. The capitalization reserve set up in the individual   The balance sheets of foreign subsidiaries are translated into
     financial statements is part of shareholders’ equity after deduction      euros at the official year-end exchange rate. Differences arising
     of the deferred tax effect. Other assets and liabilities of insurance    from the retranslation at the year-end rate of opening capital
     companies are accounted for in accordance with the policies              stock, reserves and retained earnings are recorded as a separate
     generally applied throughout the group.                                  component of shareholders’ equity, under ”Cumulative translation
                                                                              adjustment”. The income statements of foreign subsidiaries are
                                                                              translated into euros at the average exchange rate for the year.
                                                                              Differences arising on translation are also recorded under
                                                                              ”Cumulative translation adjustment”. On liquidation or disposal of
                                                                              some or all of the interests held in a foreign entity, these amounts
                                                                              are reclassified to income.
                                                                              As allowed by IFRS 1, the balance of cumulative translation
                                                                              adjustments was reset to zero in the opening balance sheet at
                                                                              January 1, 2004.
                                                                              Adjustments
                                                                              In the interests of consistency, the financial statements of con-
                                                                              solidated entities are adjusted, where necessary, to comply with
                                                                              the group’s accounting principles.
     Basis of consolidation (*)
                                                                              Organization expense
     Goodwill
                                                                              Share issuance costs incurred by the consolidating entity are
     In accordance with IFRS 3, assets, liabilities and contingent liabi-
                                                                              charged against related premiums for their amount net of tax. All
     lities relating to an entity in which the group has acquired a
                                                                              other share issuance costs are charged to the income statement.
     controlling interest, are measured at fair value at the acquisition
     date. Goodwill corresponds to the difference between the cost of         Finance leases – Group as lessor
     shares in consolidated subsidiaries and the group’s equity in the        In accordance with IAS 17, lease financing operations are included in
     underlying assets, liabilities and contingent liabilities at the date    the consolidated balance sheet in an amount corresponding to the
     of acquisition after fair value adjustments. Goodwill is recognized      net investment in the lease. The difference between accumulated
     in assets, while negative goodwill is included immediately in            book depreciation of the leased assets and accumulated amortiza-
     income under ”Goodwill fair value adjustments”. Goodwill may be          tion of the net investment in the lease is recorded in shareholders’
     adjusted in the 12 months following the acquisition in the case of       equity, net of deferred taxes calculated on the total difference.
                                                                                                             FINANCIAL STATEMENTS             87




Finance leases – Group as lessee                                           Companies over which the group exercises significant influence
In accordance with IAS 17, assets acquired under finance leases             are accounted for by the equity method. Significant influence is
are included in property and equipment and an obligation in the            considered as being exercised in cases where CIC holds at least
same amount is recorded as a liability. Lease payments are                 20% of the voting rights, directly or indirectly. Companies that are
broken down between principal repayments and interest.                     20%-50% owned by the group’s private equity businesses are
                                                                           excluded from the scope of consolidation and accounted for
Leaseback transactions
                                                                           under the fair value option.
In accordance with IAS 17, the proceeds on the disposal of a
previously owned property asset to a leasing company in order to           Use of estimates
be leased back to the buyer, is recognized over the life of the
                                                                           Preparation of the financial statements requires the use of
lease agreement.
                                                                           assumptions and estimates that are reflected in the measurement
Deferred taxes                                                             of income and expense in the income statement and of assets
In accordance with IAS 12, deferred taxes are recognized for               and liabilities in the balance sheet, and in the disclosure of
temporary differences between the carrying amount of assets                information in the notes to the financial statements.
and liabilities and their tax basis, except for goodwill and fair value
                                                                           This requires managers to draw upon their own experience,
adjustments on intangible assets that cannot be sold separately
                                                                           exercise their judgment and make use of information available at
from the acquired business.
                                                                           the date of the preparation of the financial statements when
Deferred taxes are calculated by the liability method, based on            making their estimates. This applies in particular to:
the latest enacted tax rate.
                                                                           • impairment losses recorded in respect of credit risks;
Net deferred tax assets are recognized only in cases where their           • the use of internally developed models to measure positions in
recovery is considered probable. This is deemed to be the case               financial instruments that are not quoted in organized markets;
for companies in the CIC tax group.                                        • calculations of the fair value of unquoted financial instruments
The recoverability of net deferred tax assets of other group                 classified in ”Available-for-sale financial assets”, ”Financial
                                                                             assets at fair value through profit or loss” or ”Financial liabilities
entities is reviewed each year. If recovery is determined to be
                                                                             at fair value through profit or loss”, and more generally,
probable, only net deferred tax assets arising from temporary
                                                                             calculations of the fair value of financial instruments subject to
differences are recognized; otherwise, deferred tax assets are
                                                                             a fair value disclosure requirement;
recognized only to the extent that they are matched by deferred
                                                                           • impairment tests performed on intangible assets;
tax liabilities expected to reverse in the same period.
                                                                           • calculations of provisions for contingencies and charges.
Non-recoverable taxes payable on probable or certain dividend
payments by consolidated companies are taken into account.                 Summary of significant accounting
Current and deferred taxes are recognized as tax income or                 policies and presentation methods applied
expense, except deferred taxes relating to unrealized or deferred          in preparing the consolidated financial
gains and losses, which are taken directly to equity.                      statements at December 31, 2004
                                                                           The 2004 consolidated financial statements are prepared in
Basis and scope of consolidation (*)                                       accordance with CRC standard 99-07 issued by the Comité de la
All material companies that are controlled exclusively by CIC are          Réglementation Comptable (French accounting standards
fully consolidated. Exclusive control is considered as being               committee – CRC) and presented in accordance with CRC
exercised in cases where the group holds a majority of the shares,         standard 2000-04. As IAS 32-39 and IFRS 4 are applicable with
directly or indirectly, and either the majority of the voting rights or    effect from January 1, 2005, the following main items continued
the power to appoint the majority of members of the Board of               to be accounted for using French generally accepted accounting
Directors, Management Board or Supervisory Board, or where the             principles (French GAAP).
group exercises controlling influence.
                                                                           Lending
A special purpose entity is consolidated if it meets the conditions
                                                                           Loans are recorded in the balance sheet at nominal value.
for consolidation set out in SIC 12 (i.e., the activities of the SPE are
being conducted on behalf of the group according to its specific            Loans are classified as non-performing when one or more install-
business needs; the group has the decision-making powers to                ments are more than three months past due (six months in the
obtain the majority of the benefits of the activities of the SPE; the       case of real estate loans and nine months for local authority
group has rights to obtain the majority of benefits; the group              loans) or when it is probable that the borrower will not be able to
retains the majority of the residual or ownership risks related to the     repay the full amount due.
SPE or to its assets in order to obtain benefits from its activities).      Loans classified as irrecoverable include loans where an event of
Entities controlled exclusively by the group are included in the           default has occurred and the total amount due is repayable
scope of consolidation when their full consolidation individually          immediately; loans classified as non-performing for more than 12
affects at least 1% of the main consolidated balance sheet and             months, or loans where the debtor is subject to court-ordered
income statement items. Subsidiaries that are not consolidated             liquidation.
represent less than 5% of the main consolidated balance sheet              Where a non-performing loan is restructured at below market
and income statement items. However, smaller entities may be               rates and reclassified as sound, a discount is recorded as an
included in the consolidated group if (i) CIC considers they               expense and is taken into account in the lending margin over the
represent a strategic investment; (ii) one of their core businesses        term of the loan.
is the same as that of the group; or (iii) when they hold shares in
consolidated companies.
88     CONSOLIDATED FINANCIAL STATEMENTS




     Securities portfolio                                                    These securities are stated at cost. Provisions for impairment in
                                                                             value are determined separately for each line of securities, at
     Securities are recognized in accordance with Comité de la
                                                                             each period-end. Unrealized gains are not recognized. Fair value
     Réglementation Bancaire (CRB) standard 90-01, as amended by
                                                                             is determined based on the issuer’s general business outlook over
     CRB standard 95-04, as well as CRC standard 2000-02, and
                                                                             the planned holding period. For quoted securities, the average
     Commission Bancaire (CB) instruction 94-07, as amended by
                                                                             stock market price over a sufficiently long period may be used.
     instruction CB 2000-12.
                                                                             Other long-term investments, investments in non-
     In accordance with these standards, government securities,
                                                                             consolidated companies and investments in affiliates
     bonds and other fixed-income securities such as interbank
                                                                             Other long-term investments, investments in non-consolidated
     instruments, money market securities and other marketable
                                                                             companies and investments in affiliates are securities purchased
     securities are allocated to the trading, held for sale or investment
                                                                             with the aim of promoting the development of long-term business
     portfolios; equities and other variable-income securities are
                                                                             relations with the issuer, but without influencing the management
     classified as trading, held for sale or portfolio securities, or as
                                                                             of its operations. Investments in non-consolidated companies
     investments in non-consolidated companies, investments in
                                                                             represent investments that the group intends to hold on a long-
     affiliates or other long-term investments.
                                                                             term basis because they are useful in connection with its business,
     Trading securities                                                      particularly because they allow the group to exercise influence or
     Trading securities are securities purchased with the intention of       control over the issuer.
     selling them within six months. They are stated at cost, including
                                                                             They are stated at cost, or revalued cost in the case of investments
     accrued interest.
                                                                             held at the time of the 1976 legal revaluation or acquired through
     At each period-end, trading securities are marked to market,            a merger or equivalent transaction. Provisions for impairment in
     based on the market price quoted on the last trading day of the         value are determined separately for each line of securities, at
     year. Mark-to-market gains and losses are netted off and the net        each period-end. Unrealized gains are not recognized. Fair value
     gain or loss is recorded in the income statement.                       represents the amount that the entity would be willing to pay to
     Securities held for sale                                                purchase the securities if they were not already held, taking into
     These are securities purchased with the intention of holding them       account the purpose of holding them. Various valuation criteria
     for over six months but not to maturity. They are stated at cost,       are applied, including the group’s equity in the underlying net
     excluding transaction expenses. Premiums and discounts are              assets or revalued net assets, the issuer’s earnings potential or
     amortized over the remaining life of the securities.                    average stock market prices of the preceding months.

     Provisions for impairment in value are determined separately at         Securities sold under collateralized repurchase
     each period-end for each line of securities or, in the case of bonds,   agreements
     for each group of securities with similar characteristics. Unrealized   Securities sold under collateralized repurchased agreements
     gains are not recognized or netted off against unrealized losses.       continue to be recorded in assets, with a matching entry in liabilities
     The probable realizable value is the average price for the last         representing the obligation to the purchaser. The valuation and
     month of the period in the case of equities quoted on the Paris         revenue recognition principles are the same as those applied to
     Bourse, and the most recent price in the last month of the period in    the portfolio from which the securities have been taken.
     the case of equities quoted on international markets and bonds.
                                                                             Interest rate and currency futures
     Investment securities
                                                                             The CIC group conducts proprietary transactions on various
     Investment securities are securities acquired with the intention of
                                                                             organized and over-the-counter forwards, futures and options
     holding them to maturity. They are stated at cost, excluding
                                                                             markets, as part of its strategy to manage risks associated with
     transaction expenses. Premiums and discounts – corresponding
                                                                             interest rate and currency positions on assets and liabilities.
     to the difference between the cost of the securities and their
     redemption price – are amortized over the remaining life of the         Transactions on organized markets
     securities. Investment securities are either match-funded or            Futures and options traded on organized markets are valued in
     hedged against interest rate risks.                                     accordance with Comité de la Réglementation Bancaire standards.
                                                                             At each period-end, they are marked to market and the resulting
     Provisions are booked only in cases where the issuer’s financial
                                                                             unrealized gain or loss is recorded in the income statement.
     position is such that there is a risk of the securities not being
     redeemed at maturity.                                                   Over-the-counter transactions
                                                                             CRB standard 90-15 is applied to all over-the-counter interest
     Portfolio securities
                                                                             rate instruments including interest and currency swaps, FRAs,
     Portfolio securities are securities acquired with the sole aim of
                                                                             caps and floors.
     selling them at a profit in the medium-term, without investing in
     the business over the long term or taking part in managing its          In accordance with CRB standard 90-15, the instruments are
     operations. Investments are made on an ongoing basis and in             allocated at the outset to the relevant portfolio (open positions,
     material amounts by dedicated structures whose profits are               specific hedges, balance sheet and off balance sheet manage-
     essentially derived from disposal gains.                                ment positions, specialist management).
                                                                             Instruments recorded in the ”open positions” portfolio are stated
                                                                             at the lower of cost and market.
                                                                                                        FINANCIAL STATEMENTS             89




Income and expenses on instruments recorded in the ”specific            Movements in provisions to cover the principal of non-performing
hedges” portfolio are recorded in the income statement on a            loans are recorded under ”Net additions to provisions for loan
symmetrical basis with the expenses and income on the hedged           losses”, while provisions concerning accrued interest on these
items.                                                                 loans are deducted from interest income.
Income and expenses on instruments recorded in the ”balance            Movements in provisions for contingencies and charges are
sheet and off balance sheet management positions” portfolio are        classified by type under the corresponding expense caption.
recognized in the income statement on an accruals basis.
                                                                       Provisions are deducted from the carrying value of the loans
Instruments recorded in the ”specialist management” portfolio are      concerned which are shown in the balance sheet at net book
marked to market. Mark-to-market gains and losses are recorded         value. Provisions for off balance sheet items are included in
in the income statement after adjustment for counterparty risks        provisions for contingencies and charges.
and future management expenses.
                                                                       Provisions for sovereign and emerging market risks are deter-
Structured products                                                    mined based on the economic situation of the borrower country.
Structured products are products created by bundling basic             Specific provisions are deducted from the carrying value of the
instruments – generally options – to exactly meet client needs.        related loans.
CIC offers various categories of structured products based on
traditional options, binary options, barrier options, Asian options,   General provisions for credit risks
look-back options, options on several assets and index swaps.          Since 2000, CIC has set up general provisions for credit risks,
There are three main methods of valuing these products: methods        designed to cover incurred but undetected risks on performing
consisting of solving a partial differential equation, discrete time   loans and commitments given on behalf of customers. These
tree methods and Monte-Carlo methods. CIC uses the first and            provisions are determined as follows:
the third methods. The analytical methods used are those applied       • for lending transactions other than specialized financing, based
by the market to model the underlyings.                                  on estimated average losses over the long term, corresponding
The products are marked to market. The valuation parameters              to 0.5% of sound loans;
applied correspond to observed values or values determined             • for specialized financing transactions and for branches outside
using a standard observed values model at the balance sheet              France, based on estimated average losses determined according
date. If the instruments are not traded on an organized market,          to the rating attributed to the loans. This method takes into
they are valued by reference to the values quoted by the most            account any reduction in risk dispersion or any increase in the size
active dealers in the corresponding products or by extrapolating         of individual loans producing higher volatility.
quoted values. All parameters are based on historical data.            These general provisions for credit risks will be reversed following
Where instruments are valued using complex models, the market          the occurrence of any of the events they are designed to cover.
parameters used for the valuation are adjusted on a conservative       They may also include a general provision to cover major group
basis to take into account market liquidity and the relevance of       risks.
market data over long maturities.
                                                                       General banking risks reserve
Unquoted forward financial instruments
The parameters applied to measure the value of unquoted                In accordance with Article 3 of CRB standard 90-02, as a measure
forward financial instruments are determined using a system that        of prudence, a general banking risks reserve has been set up,
provides a snapshot of market prices. Every afternoon, at a fixed       corresponding to reserves that are not allocated to precise,
time, the bid and offer prices quoted by several market players,       identifiable risks. Allocations and reversals of these reserves are
as displayed on the market screens, are recorded in the system.        decided by management and are debited or credited to the
A single price is fixed for each relevant market parameter.             income statement.

Accruals and other assets                                              Interest and commissions
Up to December 31, 1999, debt issuance costs were amortized in         Interest is recorded in the income statement on an accruals basis.
the year of issue. Costs related to debt issues carried out since      Commissions are recognized on a cash basis, except for commissions
that date are amortized over the life of the related debt.             on financial transactions which are recognized at the close of the
                                                                       issue period or when they are billed.
Bond call premiums are amortized on a straight-line basis over
the life of the bonds                                                  Since 2003, interest on irrecoverable loans is no longer recorded
                                                                       in income.
Provisions                                                             Commissions comprise banking revenues for services provided to
Provisions are recorded for probable losses on non-performing          third parties, with the exception of revenues that are equivalent
loans based on estimates of the amounts recoverable.                   to interest and are calculated based on the duration and amount
Interest payments that are more than three months past due (six        of the loan or commitment provided.
months in the case of real estate loans and nine months in that of
local authority loans) are credited to the income statement and
provided for in full.
90     CONSOLIDATED FINANCIAL STATEMENTS




     Note 3 - Analysis of assets, liabilities and income by business segment and geographic area

     The bank carries out the following activities:
     • Retail banking, which comprises the regional bank network, the CIC network in the greater Paris region and all specialist activities whose
       products are distributed via the network. These include equipment leasing, real estate leasing, factoring, fund management, employee
       savings plans and real estate. The insurance business – which is consolidated by the equity method – is included in this business
       segment.
     • Financing and capital markets, which includes:
       a) credit facilities for large corporates and institutional clients, specialized financing, international operations and foreign branches;
       b) capital markets operations in general, spanning customer and proprietary transactions involving interest rate instruments, foreign
          currencies and equities, including brokerage services.
     • Private banking, which encompasses all banks engaged in wealth management, both in France and internationally.
     • Private equity, which conducts proprietary transactions and includes financial engineering services.
     • Headquarters and holding company services, which encompass all unallocated activities and units that provide logistical support.
       They include intermediate holding companies, business premises held by specific companies and in-house IT entities.
     Each consolidated company is included in only one business segment, corresponding to its core business in terms of contribution to CIC
     group results. The only two exceptions are CIC, due to the wide range of businesses conducted by the bank, and CIC Banque CIAL, as
     regards its capital markets business.

     Analysis of assets and liabilities by business segment

                                                                    Financing                                      HQ and holding
                                                       Retail      and capital       Private          Private        company
      ASSETS at Dec. 31, 2005                         banking        markets         banking          equity          services          Total
      Cash and amounts due from central
                                                        684            1,669             269                                             2,622
      banks and post office banks
      Financial assets at fair value through
                                                         339         56,253              393           1,278               55           58,318
      profit or loss
      Derivatives used for hedging purposes              661              27              34                                               722
      Available-for-sale financial assets                482            1,536          10,473              53              438           12,982
      Loans and receivables due from credit
      institutions                                     2,318         25,244             1,105              5              298          28,970

      Loans and receivables due from customers         64,111          7,751           3,334                1             361           75,558
      Held-to-maturity financial assets                  800             299                 7                                             1,106
      Investments in associates                         654                                                                                654



                                                                    Financing                                      HQ and holding
      LIABILITIES AND SHAREHOLDERS’                    Retail      and capital       Private          Private        company
      EQUITY at Dec. 31, 2005                         banking        markets         banking          equity          services          Total
      Due to central banks and post office banks
      Financial liabilities at fair value through
                                                         188          32,125              65                                            32,378
      profit or loss
      Derivatives used for hedging purposes              595              47             561                                             1,203
      Due to credit institutions                      19,515         40,928            3,465                             252            64,160
      Due to customers                                40,853           3,614          10,523                               75          55,065
      Debt securities                                  4,245          15,549               15                                           19,809
                                                                                                                     FINANCIAL STATEMENTS            91




Breakdown of income by business segment

                                                                       Financing                                         HQ and holding
 2005                                               Retail            and capital          Private      Private            company
 IFRS                                              banking              markets            banking      equity              services            Total
 Net banking income                                 2,685)                   17)             330)          247)                 (14)            3,265)
 General operating expenses                         (1,974)                (273)            (208)          (26)                 (34)            (2,515)
 Operating income before provisions                    711)                (256)             122)          221)                 (48)              750)
 Net additions to provisions for loan losses           (116)                 24)               (4)              1)                                 (95)
 Net gains on disposals of other assets*                65)                                                                       4)               69)
 Income before tax                                    660)                 (232)             118)          222)                 (44)              724)


                                                                       Financing                                         HQ and holding
 2004                                                Retail           and capital          Private       Private           company
 IFRS excl. IAS 32-39                               banking             markets            banking       equity             services            Total
 Net banking income                                  2,608)                431)              313)          70)                  (48)            3,374)
 General operating expenses                           (1,921)              (234)            (203)         (27)                   (34)           (2,419)
 Operating income before provisions                    687)                197)              110)          43)                  (82)             955)
 Net additions to provisions for loan losses           (243)                55)               (7)                                                (195)
 Net gains on disposals of other assets*                  41)                 1)                               2)                 5)               49)
 Income before tax                                     485)                253)             103)           45)                  (77)             809)


 Presentation under the IFRS format (CNC recommendation 2004-R.03).



Breakdown of assets and liabilities by geographic area

 ASSETS
                                                                  Dec. 31, 2005                             2004 - IFRS excl. IAS 32-39
                                                                Europe                                           Europe
                                                               excluding      Other                            excluding        Other
                                                France          France      countries* Total          France     France      countries* Total
 Cash and amounts due from central
                                                  2,352           268                 2       2,622    1,353            233               2       1,588
 banks and post office banks
 Financial assets at fair value through
                                                 51,959          3,299             3,060     58,318   47,953           1,685       2,274         51,912
 profit or loss
 Derivatives used for hedging purposes              697               20              5        722       310              9               3        322
 Available-for-sale financial assets               1,272         10,430             1,280     12,982    2,524           9,978        1,672        14,174
 Loans and receivables due from credit
                                                22,662           5,100             1,208    28,970    18,789           3,621            843     23,253
 institutions
 Loans and receivables due from customers       70,074           3,594             1,890     75,558   60,801           3,431        1,630       65,862
 Held-to-maturity financial assets                   857           249                         1,106    1,895             108                     2,003
 Investments in associates                          620                              34        654      555                                        555


 LIABILITIES AND
 SHAREHOLDERS’ EQUITY                                             Dec. 31, 2005                          Dec. 31, 2004 - IFRS excl. IAS 32-39
                                                                Europe                                             Europe
                                                               excluding      Other                               excluding     Other
                                                France          France      countries* Total          France       France     countries* Total
 Due to central banks and post office banks                                                                               60)                        60
 Financial liabilities at fair value through
                                                27,669           4,698                11     32,378   27,772           3,365)             3)     31,140
 profit or loss
 Derivatives used for hedging purposes              654            547                2       1,203       53            650)              (1)      702
 Due to credit institutions                      57,391          3,945             2,824     64,160   42,537           4,532)          1,835)   48,904
 Due to customers                               44,423          10,190              452      55,065   41,978          10,060)           410)    52,448
 Debt securities                                 13,208          2,663             3,938     19,809   15,227            (690)      4,022)        18,559

* United States, Singapore and Tunisia.
92      CONSOLIDATED FINANCIAL STATEMENTS




     Breakdown of income by geographic area


                                                                              2005                                    Dec. 31, 2004 - IFRS excl. IAS 32-39
                                                                        Europe                                                  Europe
                                                                       excluding    Other                                      excluding     Other
                                                          France        France    countries** Total                France       France     countries** Total
      Net banking income                                  2,903)          284)               78)       3,265)      3,021)        269)            84)   3,374)
      General operating expenses                          (2,307)         (168)              (40)      (2,515)     (2,219)       (160)       (40)      (2,419)
      Operating income before provisions                     596)          116)              38)         750)        802)         109)           44)    955)
      Net additions to provisions for loan losses            (110)              11)              4)         (95)    (204)             4)          5)    (195)
      Net gains on disposals of other assets*                  67)                               2)         69)          49)                                49)
      Income before tax                                      553)          127)              44)         724)        647)         113)           49)    809)


     ** United States, Singapore and Tunisia.


     Note 4 - Basis and scope of consolidation

     Changes in the scope of consolidation during 2005 were as follows:
     • Newly consolidated companies: Banque de Tunisie, 20%-owned and accounted for by the equity method; Atout SA, a Luxembourg-
       based joint stock corporation (société anonyme) 100%-owned by the Banque de Luxembourg and fully consolidated; Banque
       Transatlantique Belgium, 100%-owned and fully consolidated; Luxembourg-based Cigogne Management and Cigogne Fund and several
       holding companies – all fully consolidated;
     • Deconsolidated companies: Compagnie de Finance pour l’Industrie (CFI) and CIC Développement, due to the discontinuance of business
       operations.
     • Mergers: SCI Champ de Mars with CIC Banque CIO; UBR with CIC.


                                                                                             Dec. 31, 2005                             Dec. 31, 2004
                                                                                           Percent         Method                   Percent          Method
                                                                                      Voting                                   Voting
      Company                                            Currency                     rights    Interest     *                 rights    Interest      *
      Consolidating company: CIC (Crédit Industriel et Commercial)
      A. Commercial banks
      CIC Banque CIAL Suisse                                CHF                        100            100           FC          100        100         FC
      Banque de Luxembourg                                                              71             71           FC           71         71         FC
      CIC Private Banking - Banque Pasche                   CHF                        100            100           FC          100        100         FC
      Banque Pasche Monaco                                                              98            98            FC          100        100         FC
      CIC Banque BRO                                                      (i)          100            100           FC          100        100         FC
      CIC Banque Scalbert Dupont                                          (i)          100            100           FC          100        100         FC
      CIC Banque Transatlantique                                          (i)          100            100           FC          100        100         FC
      Banque Transatlantique Belgium                                                   100            98            FC                                 NC
      Banque Transatlantique Jersey                         GBP                        100            100           FC          100        100         FC
      Banque de Tunisie                                     TND                         20            20           EM                                  NC
      CIC Bonnasse Lyonnaise de Banque                                    (i)          100            100           FC          100        100         FC
      CIC Crédit Fécampois                                                              89            89            FC           87        87          FC
      CIC Banque CIAL                                                     (i)          100            100           FC          100        100         FC
      CIC Banque CIN                                                      (i)          100            100           FC          100        100         FC
      CIC Banque CIO                                                      (i)          100            100           FC          100        100         FC
      CIC Lyonnaise de Banque                                             (i)          100            100           FC          100        100         FC
      Mutuel Bank Luxembourg                                                            60            60            FC          60         60          FC
      CIC Société Bordelaise                                              (i)          100            100           FC          100        100         FC
      CIC Banque SNVB                                                     (i)          100            100           FC          100        100         FC
      Union de Banques Régionales                                         (i)                                       M           100        100         FC
     * Method: FC = full consolidation; EM = equity method; NC = not consolidated; M = merged.
     ** Based on the consolidated financial statements.
     (i) = members of the tax consolidation group set up by CIC.
                                                                                       FINANCIAL STATEMENTS        93




                                                                Dec. 31, 2005                  Dec. 31, 2004
                                                              Percent         Method        Percent          Method
                                                         Voting                        Voting
Company                                 Currency         rights    Interest     *      rights    Interest      *
B. Specialist credit institutions
Bail Ouest                                         (i)    100       100        FC       100        100        FC
CIAL Equipement                                    (i)    100       100        FC       100        100        FC
CIAL Finance                                       (i)    100       100        FC       100        100        FC
CM-CIC Bail                                        (i)     98        98        FC        98        98         FC
CM-CIC Lease                                               54        54        FC        54        54         FC
Factocic                                                   51        51        FC        51         51        FC
CM-CIC Laviolette Financement                      (i)    100       100        FC       100        100        FC
SNVB Financements                                  (i)    100       100        FC       100        100        FC
C. Other companies
Adepi                                              (i)    100       100        FC       100        100        FC
Atout SA                                                  100        71        FC                             NC
BLC gestion                                        (i)    100       100        FC       100        100        FC
CIC Capital-Développement                                 100       100        FC       100        100        FC
CIC Développement                                                              NC       100         57        FC
CIC Epargne salariale                              (i)    100       100        FC       100        100        FC
CIC Finance                                        (i)    100       100        FC       100        100        FC
CIC Information                                            57        57        FC        57         57        FC
CIC Lyonnaise de Participations                           100        99        FC       100        99         FC
CIC Migrations                                     (i)    100       100        FC                             NC
CIC Nord Ouest gestion                             (i)    100       100        FC       100        100        FC
CIC Participations                                 (i)    100       100        FC                             NC
CIC Production GIE                                        100       100        FC       100        100        FC
CIC Régions Expansion                                     100       100        FC       100        100        FC
Cicor                                              (i)    100       100        FC                             NC
Cicoval                                                   100       100        FC                             NC
Cigogne Fund                                               55        55        FC                             NC
Cigogne Management                                         60        54        FC                             NC
CM-CIC Securities                                  (i)    100       100        FC       100        100        FC
CM-CIC Asset Management                                    24        24        EM        24        24         EM
CM-CIC Mezzanine                                          80         80        FC                             NC
Compagnie de Finance pour l’Industrie                                          NC       99         99         FC
Dubly-Douilhet                                             63        63        FC        64        64         FC
Efsa                                                      100       100        FC                             NC
Finances et Stratégies                             (i)    100       100        FC       100        100        FC
Financière Ar Men                                         100       100        FC       100        100        FC
Financière Voltaire                                (i)    100       100        FC       100        100        FC
Gesteurop                                          (i)    100       100        FC       100        100        FC
Gestunion 2                                               100       100        FC                             NC
Imofinance                                          (i)    100       100        FC       100        100        FC
Impex Finance                                             100       100        FC                             NC
IPO                                                        77        77        FC        78        78         FC
Marsovalor                                                100       100        FC                             NC
Pargestion 2                                              100       100        FC                             NC
Placinvest                                         (i)    100       100        FC                             NC
94     CONSOLIDATED FINANCIAL STATEMENTS




                                                                              Dec. 31, 2005                  Dec. 31, 2004
                                                                            Percent         Method        Percent          Method
                                                                       Voting                        Voting
     Company                                        Currency           rights    Interest     *      rights    Interest      *
     Saint-Pierre SNC                                            (i)    100       100        FC       100          100            FC
     SCI Champs de Mars                                                                      M        100          100            FC
     SNVB Participations                                                100       100        FC       100          100            FC
     Sofiholding 2                                                       100       100        FC                                   NC
     Sofim                                                        (i)    100       100        FC       100          100            FC
     Sofinaction                                                         100       100        FC                                   NC
     Sud Est Gestion                                             (i)    100       100        FC       100          100            FC
     Sudinnova                                                           49        46        FC        49              47         FC
     Transatlantique Finance                                     (i)    100       100        FC       100          100            FC
     Ufigestion 2                                                        100       100        FC                                   NC
     Ugépar Service                                                     100       100        FC                                   NC
     Valimar 2                                                          100       100        FC                                   NC
     CIC Banque de Vizille                                               94        94        FC        93              93         FC
     Vizille Capital Finance                                            100        94        FC       100              93         FC
     Vizille Capital Innovation                                         100        94        FC       100              93         FC
     VTP1                                                        (i)    100       100        FC                                   NC
     VTP5                                                               100       100        FC                                   NC
     D - Insurance companies
     Groupe des Assurances du Crédit Mutuel
                                                                         21        21        EM        21              21         EM
     (GACM)**




     N OTES      TO THE BALANCE SHEET               –   ASSETS



     Note 5 - Cash and amounts due from central banks and post office banks
              Loans and receivables due from credit institutions

                                                                                                      Dec. 31, 2005         Jan. 1, 2005
      Cash and amounts due from central banks and post office banks
      Central banks                                                                                           2,351)            1,340)
      Of which statutory reserves                                                                              573)              450)
      Cash and amounts due from post office banks                                                               271)              248)
      TOTAL                                                                                                  2,622)            1,588)
      Loans and receivables due from credit institutions
      Current accounts in debit                                                                              2,473)             3,333)
      Loans                                                                                                  8,521)             4,478)
      Other receivables                                                                                        917)              738)
      Securities not quoted in an active market                                                                249)              203)
      Resale agreements                                                                                     16,672)            14,424)
      Individually-impaired loans and receivables                                                               29)               20)
      Accrued interest                                                                                         123)                74)
      Provisions                                                                                                (14)              (17)
      TOTAL                                                                                                 28,970)           23,253)
      including non-voting loan stock                                                                          225)               195)
      including subordinated loans                                                                               9)                 6)
                                                                                   FINANCIAL STATEMENTS         95




Note 6 - Financial assets at fair value through profit or loss
                                                                                    Dec. 31, 2005   Jan. 1, 2005
  Financial assets accounted for under the fair value option                            14,904        20,235
  Financial assets held for trading                                                     43,414         32,510
  TOTAL                                                                                58,318         52,745




Note 6a - Financial assets accounted for under the fair value option

                                                                                    Dec. 31, 2005   Jan. 1, 2005
  Securities
  Government securities                                                                 2,039          7,903
  Bonds and other fixed-income securities
  - Quoted                                                                              2,906           3,594
  - Not quoted                                                                            445             508
  Equities and other variable-income securities         (1)


  - Quoted                                                                                324             295
  - Not quoted                                                                            993             485
  Other financial assets
  - Resale agreements                                                                   5,998           6,170
  - Other loans and term deposits                                                        2,199          1,280
  TOTAL                                                                                14,904        20,235

(1) This item relates mainly to investments held by the private equity business.




Note 6b - Financial assets held for trading (1)

                                                                                    Dec. 31, 2005   Jan. 1, 2005
  Securities
  Government securities                                                                20,848          14,568
  Bonds and other fixed-income securities
  - Quoted                                                                              12,114         7,598
  - Not quoted                                                                              2
  Equities and other variable-income securities
  - Quoted                                                                              5,664          6,696
  - Not quoted
  Derivatives held for trading                                                          4,786          3,648
  TOTAL                                                                                43,414         32,510

(1) Comprising financial assets held by the capital markets business.
96     CONSOLIDATED FINANCIAL STATEMENTS




     Note 6c - Analysis of derivative instruments


                                                              Dec. 31, 2005                               Jan. 1, 2005
                                                   Notional                                   Notional
                                                   amount        Assets       Liabilities     amount        Assets         Liabilities
     Derivatives held for trading
     Interest rate derivatives
       Swaps                                       523,047        1,059           808          563,864       1,078              555
       Futures and forward contracts               58,430            17              1           79,135          6                2
       Options                                        3,621         143           134            2,887         152              162
     Foreign currency derivatives
       Swaps                                                        25              41                         103               82
       Futures and forward contracts                   143         526            462               151        563              501
       Options                                      43,911           17             18           51,446         16               19
     Other derivatives
       Swaps                                        34,472          79             23           25,927           2               211
       Futures and forward contracts                27,642                                      37,828                             1
       Options                                     66,249        2,920          3,272           54,066       1,728            2,325
     Sub-total                                     757,515       4,786          4,759         815,304       3,648            3,858
     Derivatives used
     for hedging purposes
     Derivatives designated
     as fair value hedges
        Swaps                                         3,178        719           1,191            4,319        319              691
       Futures and forward contracts
       Options                                          47
     Derivatives designated
     as cash flow hedges
        Swaps                                           82            1             12              82            1               11
        Futures and forward contracts
       Options                                                       2                                           2
     Sub-total                                      3,307          722          1,203            4,401        322              702
     TOTAL                                     760,822           5,508         5,962          819,705       3,970            4,560




     Note 7 - Derivatives used for hedging purposes
                                                                                  Dec. 31, 2005                  Jan. 1, 2005
                                                                              Assets        Liabilities     Assets         Liabilities
     Derivatives designated as cash flow hedges                                      3              12             3                11
     Of which changes in value recognized in equity                                 3              12             3                11
     Of which changes in value recognized in income
     Derivatives designated as fair value hedges                                  719            1,191          319              691
      TOTAL                                                                      722           1,203           322              702
                                                                                                    FINANCIAL STATEMENTS            97




Note 8 - Available-for-sale financial assets

                                                                                                     Dec. 31, 2005    Jan. 1, 2005
 Government securities                                                                                       18                 3
 Bonds and other fixed-income securities
 - Quoted                                                                                                11,492          11,557
 - Not quoted                                                                                               167            975
 Equities and other variable-income securities
 - Quoted                                                                                                   196            323
 - Not quoted                                                                                               68             387
 Long-term investments
 - Investments in non-consolidated companies                                                               446             347
 - Other long-term investments                                                                              291            235
 - Investments in affiliates                                                                                  93             117
 - Translation adjustments
 Accrued interest                                                                                           211            230
 TOTAL                                                                                                  12,982          14,174
 Of which unrealized gains/losses recognized directly in equity                                            237              120
 Of which provisions for impairment recognized in income                                                     (2)             (6)
 Of which listed investments in non-consolidated companies                                                  351            226




Note 8a - List of main investments in non-consolidated companies

                                                                                                       Net banking
                                                                           Shareholders’   Total         income          Net
                                                                  % held      equity       assets       or sales       income
 Veolia                                         Listed            < 5%         3,563       36,265       24,673            125
 Crédit logement                                Unlisted          < 5%         1,372        6,207          178             55
 Banca Popolare di Milano                       Listed            < 5%        2,630        34,669     Not available       128


Figures (excluding those for the percent interest held) relate to financial year 2004.
98     CONSOLIDATED FINANCIAL STATEMENTS




     Note 9 - Loans and receivables due from customers

                                                                                                                 Dec. 31, 2005   Jan. 1, 2005
      Sound loans
      Commercial loans                                                                                               4,258)          3,750)
      Of which factoring accounts                                                                                     1,409)          1,241)
      Other loans and receivables
      - Home loans                                                                                                  30,901)         24,324)
      - Other loans and miscellaneous receivables including resale agreements                                       33,499)         30,945)
      Accrued interest                                                                                                 155)            137)
      Securities not quoted in an active market                                                                        235)            270)
      Individually-impaired loans and receivables                                                                     3,343)         3,456)
      Provisions for individual impairment                                                                           (2,195)        (2,279)
      Provisions for collective impairment                                                                             (64)            (70)
      Sub-total                                                                                                     70,132)        60,533)
      Finance leases (net investment)
      Equipment                                                                                                       3,401)          3,317)
      Real estate                                                                                                     1,987)         1,965)
      Individually-impaired finance lease receivables                                                                    119)           129)
      Provisions for individual impairment of finance lease receivables                                                  (81)           (82)
      Sub-total                                                                                                      5,426)         5,329)
      TOTAL                                                                                                         75,558)        65,862)
      of which non-voting loan stock
      of which subordinated loans                                                                                        91)           100)


     Finance lease transactions                                          Jan. 1, 2005 Acquisitions   Disposals         Other     Dec. 31, 2005
     Gross                                                                5,652)         487)          (186)          (180)        5,773)
     Impairment of non-recoverable rent                                    (323)         (80)            50)             6)         (347)
     Net                                                                 5,329)         407)           (136)          (174)       5,426)




     Note 10 - Remeasurement adjustment on interest rate risk hedged portfolios
               Description of hedged assets and liabilities and hedging instruments

                                                             Dec. 31, 2005                Jan. 1, 2005
                                                          Assets      Liabilities     Assets       Liabilities        Change in fair value
     Fair value of portfolio interest rate risk              17           189            21           284               (4)          (95)




     Note 11 - Held-to-maturity financial assets

                                                                                                                 Dec. 31, 2005   Jan. 1, 2005
      Securities
      Government securities                                                                                            701)           758)
      Bonds and other fixed-income securities                                                                          396)            392)
      Accrued interest                                                                                                  12)            23)
      TOTAL GROSS                                                                                                    1,109)          1,173)
      Provisions for impairment                                                                                         (3)             (3)
      TOTAL NET                                                                                                      1,106)          1,170)
                                                                                             FINANCIAL STATEMENTS            99




Note 11a - Movements in provisions

                                                      Jan. 1, 2005   Additions   Reversals        Other       Dec. 31, 2005
Loans and receivables due from credit institutions          (17)                      1             2)              (14)
Loans and receivables due from customers                 (2,431)       (612)        714            (11)          (2,340)
Available-for-sale securities                             (156)          (7)         13            82)             (68)
Held-to-maturity securities                                  (3)                                                     (3)
TOTAL                                                  (2,607)        (619)        728             73)          (2,425)




Note 12 - Current or payable taxes
                                                                                              Dec. 31, 2005    Jan. 1, 2005
 Assets                                                                                            193            260
 Liabilities                                                                                       190             166




Note 13 - Deferred taxes

                                                                                              Dec. 31, 2005    Jan. 1, 2005
 Deferred tax assets dealt with though income                                                      222             249
 Deferred tax assets dealt with through equity                                                       2               2
 Deferred tax liabilities dealt with through income                                                148            208
 Deferred tax liabilities dealt with through equity                                                 65              27




Note 14 - Accruals and other assets

                                                                                              Dec. 31, 2005    Jan. 1, 2005
 Accruals
 Collection accounts                                                                              5,729           3,808
 Currency adjustment accounts                                                                         14             84
 Accrued income                                                                                     544             554
 Other accruals                                                                                    1,361          2,258
 Sub-total                                                                                        7,648           6,704
 Other assets
 Securities settlement accounts                                                                    1,148             541
 Miscellaneous receivables                                                                         4,101           3,693
 Inventories and other                                                                                                   1
 Other                                                                                                    4              5
 Sub-total                                                                                        5,253           4,240
 TOTAL                                                                                           12,901          10,944
100      CONSOLIDATED FINANCIAL STATEMENTS




      Note 15 - Investments in associates
                Share of net income/(loss) of associates

                                                                                    2005                                                  2004
                                                                      Shareholding Reserves                   Income    Shareholding     Reserves        Income
       ACM group – Not quoted                                             20.52%              557               56              21%        506)             42
       Banque de Tunisie – Quoted                                         20.00%               32                2
       CM-CIC Asset Management – Not quoted                                23.52%                6               1              24%             6)            1
       IPO – Quoted    (1)
                                                                                                                                                (2)           2
       TOTAL GROSS                                                                           595                59                         510)             45

      (1) Accounted for by the equity method until June 30, 2004 and fully consolidated thereafter.

      CIC recognized a fair value adjustment on the first-time consolidation of the ACM group under the equity method at June 30, 2002.
      The adjustment is amortized based on the associated future net cash flows as estimated at the date of consolidation, and amounted
      to €105 million at January 1, 2005 and €99 million at December 31, 2005.
      The fair value of Banque de Tunisie at December 31, 2005 was €60 million.




      Note 16 - Investment property
                                                                                                                                        Other
                                                                            Jan. 1, 2005         Increases           Decreases        movements       Dec. 31, 2005
       Historical cost                                                            30)                    1)             (4)                1               28)
       Depreciation and impairment                                               (15)                   (1)              2)                                (14)
       Net                                                                        15)                     )             (2)                1               14)

      The fair value of investment property carried at amortized cost is comparable to its carrying amount.




      Note 17 - Property and equipment

                                                                                                                                        Other
                                                                            Jan. 1, 2005         Increases           Decreases        movements       Dec. 31, 2005
       Historical cost
       Land used in operations                                                   289)                    2)                1)              1)             293)
       Buildings used in operations                                             1,439)                 134)             (52)             (24)            1,497)
       Other property and equipment                                              865)                  139)             (113)             20)              911)
       TOTAL                                                                  2,593)                  275)             (164)              (3)           2,701)
       Depreciation and impairment
       Land used in operations
       Buildings used in operations                                             (687)                  (81)              38)              22)             (708)
       Other property and equipment                                             (596)                  (85)              57)              (7)             (631)
       TOTAL                                                                 (1,283)                  (166)             95)               15)           (1,339)
       Net                                                                     1,310)                 109)             (69)               12)           1,362)
       Of which property held under finance leases
       Land used in operations                                                     45                                                                       45
       Buildings used in operations                                                51                  (2)                                                  49
       TOTAL                                                                      96                   (2)                                                 94
                                                                                             FINANCIAL STATEMENTS           101




Note 18 - Intangible assets

                                                                                                 Other
                                                      Jan. 1, 2005   Increases   Decreases     movements       Dec. 31, 2005
Historical cost
Internally developed intangible assets
Purchased intangible assets                                 196)        15)         (20)           (17)             174)
- Software                                                                                           1)               1)
- Other                                                     196)        15)         (20)           (18)             173)
TOTAL                                                       196)        15)        (20)            (17)            174)
Amortization and impairment
Internally developed intangible assets
Purchased intangible assets                              (100)          (2)          18)            18)             (66)
- Software                                                                                          (1)               (1)
- Other                                                  (100)          (2)          18)            19)             (65)
TOTAL                                                    (100)          (2)         18)            18)             (66)
Net                                                         96)         13)         (2)              1)            108)




Note 19 - Goodwill

                                                                                                 Other
                                                      Jan. 1, 2005   Increases   Decreases     movements       Dec. 31, 2005
Gross value                                                 132)                                     (6)            126)
Impairment                                                  (46)                                      4)            (42)
Carrying amount                                             86)                                      (2)            84)
Of which relating to ACM group (net amount)                  54)                                                     54)




N OTES    TO THE BALANCE SHEET            –   LIABILITIES




Note 20 - Due to central banks and post office banks
          Due to credit institutions

                                                                                               Dec. 31, 2005   Jan. 1, 2005
 Due to central banks and post office banks
 Central banks                                                                                                        59
 Post office banks
 TOTAL                                                                                                                59
 Due to credit institutions
 Other current accounts in debit                                                                                    1,935
 Loans                                                                                              1,174          1,060
 Other borrowings                                                                                30,938           16,207
 Repurchase agreements                                                                            31,660          29,433
 Accrued interest                                                                                   388              269
 TOTAL                                                                                           64,160          48,904
102      CONSOLIDATED FINANCIAL STATEMENTS




      Note 21 - Financial liabilities at fair value through profit or loss

                                                                                                     Dec. 31, 2005   Jan. 1, 2005
        Financial liabilties held for trading                                                          20,840            17,179
        Financial liabilities accounted for under the fair value option                                  11,538          13,961
        TOTAL                                                                                           32,378          31,140




      Note 21a - Financial liabilities held for trading (1)

                                                                                                     Dec. 31, 2005   Jan. 1, 2005
        Short sales of securities                                                                       15,678          12,838
        - Government securities                                                                                         12,758
        - Bonds and other fixed-income securities                                                        13,664              58
        - Equities and other variable-income securities                                                  2,014              22
        Securities given under repurchase agreements
        Derivatives held for trading                                                                     4,759           3,858
        Other financial liabilities held for trading                                                        403             483
        - Debts in respect of borrowed securities                                                          403             483
        TOTAL                                                                                          20,840           17,179

      (1) Liabilities held by the capital markets business.




      Note 21b - Financial liabilities accounted for under the fair value option

                                                                                     Dec. 31, 2005                   Jan. 1, 2005
                                                                          Carrying    Amount due                      Carrying
                                                                          amount      at maturity     Difference      amount
       Securities issued
       - Bonds
       - Certificates of deposit
       - Other, of which interbank securities                              2,223         2,224              (1)          2,161
       Debts in respect of securities given under repurchase agremeents    9,314         9,325             (11)        11,666
       Subordinated debt
       Payables
       - Interbank items
       - Due to customers                                                      1             1                            134
       Other liabilities accounted for under the fair value option
       TOTAL                                                              11,538        11,550             (12)        13,961
                                                     FINANCIAL STATEMENTS          103




Note 22 - Due to customers
                                                      Dec. 31, 2005   Jan. 1, 2005
 Special savings accounts
 - Demand                                                 11,787          11,197
 - Term                                                   8,667          8,686
 Accrued interest                                            37              45
 Sub-total                                               20,491         19,928
 Current accounts in debit                               22,672          19,933
 Term deposits and borrowings                             10,329         10,879
 Repurchase agreements                                     1,527          1,662
 Payable to reinsurance companies
 Accrued interest                                            46              46
 Sub-total                                               34,574        32,520
 TOTAL                                                   55,065        52,448




Note 23 - Debt securities
                                                      Dec. 31, 2005   Jan. 1, 2005
 Retail certificates of deposit                               36              56
 Interbank instruments and money market securities        19,133         17,375
 Bonds                                                      316             740
 Accrued interest                                           324             388
 TOTAL                                                   19,809         18,559




Note 24 - Accruals and other liabilities

                                                      Dec. 31, 2005   Jan. 1, 2005
Accruals
Accounts unavailable due to recovery procedures            5,922          4,995
Currency adjustment accounts                                 273            275
Accrued expenses                                            509             570
Other accruals                                             1,259          2,085
Sub-total                                                 7,963          7,925
Other liabilities
Securities settlement accounts                             1,766            754
Oustanding amounts payable on securities                      39             42
Miscellaneous creditors                                    3,070          2,239
Sub-total                                                  4,875         3,035
TOTAL                                                     12,838        10,960
104     CONSOLIDATED FINANCIAL STATEMENTS




      Note 25 - Provisions for contingencies

                                                                                       Reversals      Reversals
                                                                                        (utilized      (surplus       Other        Dec. 31,
                                                           Jan. 1, 2005   Additions    provisions)    provisions)   movements       2005
       Provisions for counterparty risks
       On signature commitments                                 78           45            (9)             (32)           1)           83
       On financing and guarantee commitments                    12            2                             (2)          (6)            6
       On country risks                                          2            1                             (1)                         2
       Provisions for risks on miscellaneous receivables        65           19            (3)             (24)           7)          64
       Other provisions for counterparty risks                   5                                          (2)          2)             5
       Other provisions
       (excluding counterparty risk)
       Provisions for pension costs                             211          28            (13)            (20)          (1)         205
       Provisions for claims and litigation                      14          20            (2)              (2)          (8)           22
       Provisions for home savings accounts and plans           118                         (1)            (25)                       92
       Provisions for taxes                                     43           35                             (9)           5)           74
       Other contingency provisions                             68           41            (14)            (17)           1)           79
       Other                                                                               56)             (56)
       TOTAL                                                   616          191            14)           (190)            1)         632




      Note 25a - Pension and other employee benefit commitments


                                                                             Jan. 1,                                   Other       Dec. 31,
                                                                             2005       Additions      Reversals     movements      2005
       Defined benefit plans not covered by pension funds
       (excluding retirement bonuses)
       Retirement bonuses                                                         45        16             (7)            (2)         52
       Top-up payments                                                            55         2             (1)            (4)         52
       Commitments for long-service awards (other long-term benefits)              33         2                            (1)         34
       Total commitments recognized                                           133           20            (8)             (7)        138
       Supplementary defined benefit pensions
       covered by group pension funds
       Commitments to serving and retired employees                               42          1            (4)            (0)         39
       Total commitments recognized                                            42             1           (4)            (0)          39
       Commitments relating to early retirement plans
       Commitments                                                                36          7            (1)           (14)         28
       Total commitments recognized                                            36            7             (1)          (14)         28

      The discount rate used to calculate pension and other employee benefit commitments is determined by reference to the market yield on
      long-term government bonds (TEC 10). The difference between the discount rate and the rate of estimated future salary increases is 1.1%.
      This rate was 1.4% in 2004.
      Assumptions regarding the estimated retirement age of employees are revised on an annual basis in light of regulatory conditions in the
      countries in which the group operates. The AFB agreement dated March 29, 2005 is also covered by this review.
                                                                                                                                 FINANCIAL STATEMENTS            105




                                                                                Change in            Actuarial Payments
 Pension fund                     Jan. 1,      Discounting       Interest      accounting   Partial gains and   made to  Subsidies Dec. 31,
 shortfalls                       2005           impact          income          method   settlement losses beneficiaries received   2005
 Commitments                        140)              5                                                            (8)              (7)                     130
 Fund assets                        100)                              4)                                               9)           (7)            3)       109

 Deferred actuarial gains             (5)                                                                          17)                                         12
 and losses
 Provision                           35)              5             (4)                                                                           (3)          33
 Foreign subsidiaries                 7)                             (1)                                                                                         6
 TOTAL                               42)              5             (5)                                                                           (3)          39

Fund assets include 35,000 CIC shares.




Note 25b - Provisions for risks arising from commitments on home savings accounts and plans

                                                                                                                                  Dec. 31, 2005     Jan. 1, 2005
 Provisions for risks arising from commitments on home savings accounts                                                                     28            46
 Balance of home savings accounts giving rise to provisions for risks                                                                      818           861
 Provisions for risks arising on home savings loans                                                                                          9            12
 Balance of home savings loans giving rise to provisions for risks                                                                         289           367
                                                                                                                  More than
                                                Maturity of home savings plans         0-4 years 4-10 years                 Dec. 31, 2005           Jan. 1, 2005
                                                                                                                   10 years
 Provisions for risks arising from commitments on home savings plans                         14             3               37              54            59
 Amounts outstanding under home savings plans                                            2,034           779           3,871          6,684




Note 26 - Subordinated debt
                                                                                                                                  Dec. 31, 2005     Jan. 1, 2005
 Subordinated notes                                                                                                                       1,204          1,337
 Non-voting loan stock                                                                                                                     156            156
 Perpetual subordinated debt                                                                                                               323            323
 Other debt                                                                                                                                937           897
 Accrued interest                                                                                                                           63             69
 TOTAL                                                                                                                                2,683             2,782


Subordinated debt representing more than 10% of total subordinated debt at December 31, 2005


                                                                                                                                     Early            Early
 Main subordinated                                                                                                                redemption       redemption
 debt issues                         Date of issue         Amounts          Currency         Rate           Maturity                feature         conditions
 Subordinated notes                   July 19, 2001         €300 million       EUR              *         July 19, 2013
 Subordinated notes                  Sept. 30, 2003 USD 350 million            USD             **        Sept. 30, 2015
 Non-voting loan stock               May 28, 1985            €137 million      EUR             ***              ****
 Perpetual subordinated notes         June 11, 1997          €191 million      EUR           *****
 TOTAL

* 3-month Euribor +89.5 basis points.
** 6-month USD Libor +55 basis points.
*** Minimum 85% (TAM+TMO)/2, Maximum 130% (TAM+TMO)/2.
**** Repayable at borrower’s discretion as from May 28, 1997 at 130% of the face value incremented at the rate of 1.5% for the following years.
***** 6.60% fixed rate up to 2007, then 3-month Euribor + 2.25%.
106      CONSOLIDATED FINANCIAL STATEMENTS




      Note 27 - Unrealized or deferred gains and losses

                                                                                                                                          Dec. 31, 2005          Jan. 1, 2005
       Unrealized or deferred gains and losses* relating to:
       Available-for-sale financial assets                                                                                                      269)                  142)
       Derivatives designated as cash flows hedges                                                                                                 (3)                 (5)
       Property assets (IAS 16)
       Other
       TOTAL                                                                                                                                   266)                 137)

      * Amounts net of tax.




      Note 28 - Analysis of assets and liabilities by residual maturity

                                                            Less than
                                                            3 months
                                                               and         3 months                            Over                                Accrued
                                                             demand        to 1 year       1 to 5 years       5 years          Perpetual           interest           Total
       Assets

       Loans and receivables due
       from credit institutions (1)                          33,094           4,032             1,679             366                                   145           39,316

       Loans and receivables due from customers (1)            16,139          6,176          21,590          24,896                 19                 155          68,975
       Bonds and other fixed-income securities (3)                474           1,207           7,638            5,885               53                  253           15,510
       Liabilities
       Due to credit institutions (2)                         41,693         16,932             8,719           5,693                 8                 425          73,470
       Customer deposits (2)                                 49,288           2,364            2,355              874               99                   83          55,063
       Debt securities (2)
        - Retail certificates of deposit                            21              9                5                 1                                   1                 37
        - Interbank instruments
                                                              13,982           3,733            1,228            1,444                                  310          20,697
          and money market securities
        - Bonds                                                    211            36               82                4                3                  11              347
        - Subordinated debt                                        62           227              395            1,486             450                   63             2,683
        - Other                                                  274             199             497                 2                                    1              973

      Balance sheet items are presented by contractual maturity date.
      Excluding accrued interest, non-performing loans and provisions for impairment in value.
       (1) Carried at amortized cost and fair value.
      (2) Carried at amortized cost and fair value.
      (3) Only securities classified as available-for-sale, at fair value through profit or loss, held-to-maturity or securities not quoted on an active market.
                                                                                                       FINANCIAL STATEMENTS                 107




Note 29 - Commitments given and received

 Commitments and guarantees given                                                                            Dec. 31, 2005   Jan. 1, 2005
 Financing commitments
 Commitments given to banks                                                                                      1,544             1,358
 Commitments given to customers                                                                                19,669             19,233
 Guarantees given
 Guarantees given to banks                                                                                        969               585
 Guarantees given on behalf of customers                                                                        8,447             8,327


 Commitments and guarantees received                                                                         Dec. 31, 2005   Jan. 1, 2005
 Financing commitments received
 Financing commitments received from banks                                                                          17                18
 Guarantees received
 Guarantees received from banks                                                                                 12,118            6,899




N OTES     TO THE INCOME STATEMENT

Data relating to 2004 were prepared in accordance with IFRS excluding IAS 32-39 and IFRS 4.
Accordingly, no meaningful comparison can be made of data presented in notes 30 to 34 in respect of financial years 2004 and 2005.



Note 30 - Interest income and expense

                                                                                              2005                         2004
                                                                                     Income       Expense        Income           Expense
 Credit institutions and central banks                                                 996         (2,292)         2,018           (2,997)
 Customers                                                                            4,821        (2,546)         4,504           (2,476)
 Of which finance leases                                                               1,878        (1,644)         1,790            (1,551)
 Financial assets/liabilities designated at fair value under the fair value option
 Derivatives used for hedging purposes                                                1,398        (1,534)         1,710           (2,210)
 Available-for-sale financial assets                                                    503                          845
 Held-to-maturity financial assets                                                       66                           119
 Debt securities                                                                                     (731)                          (625)
 Subordinated debt                                                                                    (18)                            (20)
 TOTAL                                                                               7,784         (7,121)        9,196           (8,328)
108     CONSOLIDATED FINANCIAL STATEMENTS




      Note 31 - Commissions

                                                                                                     2005                                2004
                                                                                          Income         Expense            Income              Expense
       Credit institutions                                                                      6             (4)                   7                (6)
       Customers                                                                               531            (5)                544                 (6)
       Securities transactions                                                                 455           (15)              422                  (16)
       Derivative instruments                                                                   14           (27)                   15              (32)
       Currency transactions                                                                    24           (12)                20                  (11)
       Financing and guarantee commitments                                                      2             (3)                   3                (3)
       Provision of services                                                                   704         (387)               663                (346)
       TOTAL                                                                                1,736          (453)             1,674                (420)




      Note 32 - Net gain/(loss) on financial instruments at fair value through profit or loss

                                                                                                                          2005                  2004
       Derivatives held for trading                                                                                         862)                 862)
       Instruments designated at fair value under the fair value option                                                     382)
       Ineffective portion of hedges                                                                                        (33)
       Foreign exchange gain/(loss)                                                                                           9)                   22)
       TOTAL CHANGES IN FAIR VALUE                                                                                        1,221)                 884)
       Of which derivatives held for trading                                                                              (1,244)               (1,229)

      The structured products portfolio held by the capital markets business (representing 400 contracts for an outstanding amount of €17 billion)
      was composed mainly of equity barrier options with multiple underlyings.
      In 2005, CIC sold its exposure on this portfolio, which had generated a net banking loss of €484 million and €156 million in 2005 and
      2004, respectively.




      Note 33 - Net gain/(loss) on available-for-sale financial assets

                                                                   2005                                                   2004
                                                            Gain/loss                                           Gain/loss
                                               Dividends    realized      Impairment   Total     Dividends      realized         Impairment         Total

       Government securities, bonds
       and other fixed-income securities                         19)            1)       20)                         125                              125

       Equities and other
                                                   8            33)            1)       42)           22            159                  (20)         161
       variable-income securities
       Long-term investments                      25             3)           (3)       25)           17             14                   15)          46
       Other                                                                                                          3                                   3
       TOTAL                                      33            55)           (1)       87)           39            301                   (5)        335
                                                FINANCIAL STATEMENTS          109




Note 34 - Income/expense on other activities

                                                     2005         2004
 Income from other activities
 Investment property                                    1)              1)
 Other income                                          57)         55)
 Sub-total                                            58)          56)
 Expense on other activities
 Investment property                                   (1)             (1)
 Other expense                                        (46)         (22)
 Sub-total                                            (47)        (23)
 NET INCOME/EXPENSE ON OTHER ACTIVITIES                11)         33)




Note 35 - General operating expenses

                                                     2005         2004
 Payroll costs                                       (1,547)      (1,473)
 Other expenses                                       (799)        (770)
 TOTAL                                              (2,346)      (2,243)




Note 35a - Payroll costs

                                                     2005         2004
 Wages and salaries                                   (934)        (923)
 Payroll taxes                                        (443)        (414)
 Of which funded pension plan                          (25)        (22)
 Employee profit-sharing and incentive bonuses          (86)         (89)
 Payroll-based taxes                                   (87)            (82)
 Other                                                   3)            35)
 TOTAL                                              (1,547)      (1,473)




Note 35b - Average number of employees

                                                     2005         2004
Banking staff                                        14,744       15,068
Management                                           8,645        8,894
TOTAL                                               23,389       23,962




Note 35c - Other operating expenses

                                                     2005         2004
Other taxes and duties                                (105)            (98)
External services                                     (719)        (709)
Rebilling of expenses                                   29)             38)
Other miscellaneous expenses                            (4)             (1)
TOTAL                                                (799)        (770)
110     CONSOLIDATED FINANCIAL STATEMENTS




      Note 36 - Movements in depreciation, amortization and provisions for
                impairment of property and equipment and intangible assets

                                                                                                                         2005            2004
       Depreciation and amortization
       Property and equipment                                                                                            (166)           (172)
       Intangible assets                                                                                                   (3)             (4)
       Impairment
       Property and equipment
       Intangible assets                                                                                                                         )
       TOTAL                                                                                                             (169)           (176)

      Intangible assets mainly include leasehold rights. Accordingly, they are not amortized but are tested for impairment in the same way as other
      non-current assets.



      Note 37 - Net additions to provisions for loan losses

                                                                          Loan losses       Loan losses        Recovery
                                                                           covered         not covered     of loans written
                                                 Additions Reversals     by provisions     by provisions   off in prior years    Total     2004
       Credit institutions                                        3              (1)                                                2)               2)
       Customers
       - Finance leases                                 (6)       11            (4)              (5)                 1             (3)               1)
       - Other customer items                         (581)    680           (204)              (19)               24            (100)     (279)
       Sub-total                                    (587)      694           (209)             (24)                25            (101)    (276)
       Held-to-maturity financial assets
       Available-for-sale financial assets               (1)                                                          1                           (2)
       Other, including financing
                                                      (68)       73                                                  1             6)        83)
       and guarantee commitments
       TOTAL                                       (656)       767           (209)             (24)                27             (95)     (195)




      Note 38 - Net gain/(loss) on disposals of other assets

                                                                                                                         2005            2004
       Property and equipment and intangible assets                                                                       10)              4)
       - Losses on disposals                                                                                              (9)             (7)
       - Gains on disposals                                                                                               19)              11)
       Gains and losses on disposals of investments in consolidated companies
       TOTAL                                                                                                              10)              4)




      Note 39 - Corporate income tax

                                                                                                                         2005            2004
       Current taxes                                                                                                     (145)            (165)
       Deferred tax income and expense                                                                                    50)             (64)
       Adjustments in respect of prior periods                                                                              6)               3)
       TOTAL                                                                                                             (89)            (226)

      The deferred tax rate is calculated based on the expected timing of reversal. For French companies, this rate is 34.43%.
                                                                                                       FINANCIAL STATEMENTS                        111




 Reconciliation between corporate income tax recorded in the accounts and the theoretical tax charge                                 2005
 Theoretical tax rate                                                                                                                34.9%
 Impact of preferential ”SCR” and ”Sicomi” rates                                                                                    - 10.9%
 Impact of reduced rate on long-term capital gains                                                                                   - 3.5%
 Impact of different tax rates paid by foreign subsidiaries                                                                          - 1.0%
 Permanent differences                                                                                                                - 1.1%
 Tax credits                                                                                                                         - 3.7%
 Other                                                                                                                                - 1.3%
 Effective tax rate                                                                                                                  13.4%
 Taxable income *                                                                                                                     665
 Tax charge                                                                                                                           (89)

* Pre-tax income of fully consolidated companies.

CIC has set up a tax group with its main subsidiaries (more than 95%-owned) and the regional banks. Each regional bank that is part of the
overall tax group forms a sub-group that includes its own subsidiaries. The companies included in the tax group are shown with an (i) in
front of their name in the list of consolidated companies.
For 2005, group relief generated a tax benefit of €227 million.


                                                                                                                            2005
 Breakdown of main deferred taxes by type                                                                  Assets                  Liabilities
 Temporary differences on:                                                                                  309)                     (235)
 Provisions                                                                                                  130)
 Leasing provisions (difference between book depreciation and amortization of net investment)                                         (45)
 Income from flow-through entities                                                                                 5)                   (27)
 Other temporary differences                                                                                 174)                     (163)
 Netting                                                                                                     (87)                      87)
 Total deferred tax assets and liabilities                                                                  222)                     (148)

Deferred taxes are calculated using the liability method. The deferred tax rate for French companies is 34.43%.




Note 40 - Earnings per share
                                                                                                            2005                     2004
 Net income                                                                                                        578                    550
 Number of shares at beginning of year                                                                   35,208,166                35,208,166
 Number of shares at end of year                                                                         35,208,166                35,208,166
 Weighted average number of shares                                                                       35,208,166                35,208,166
 Basic earnings per share                                                                                     16.42                     15.62
 Weighted average number of shares assuming full dilution                                                              0)                      0
 Diluted earnings per share                                                                                   16.42                     15.62
112      CONSOLIDATED FINANCIAL STATEMENTS




      Note 41 - Credit risk on financial instruments


      Credit risk is the risk of incurring a loss as a result of failure by a   The CMCEE-CIC committee deals with major risks and comprises
      borrower to fulfill a contractual obligation. Credit risk arises on        three members of CIC’s Executive Board, as well as managers of
      loans and debt securities held, and encompasses counterparty              major companies and the Head of Lending. CIC has also set up
      risk on capital markets transactions.                                     specialized committees for each activity: for example, the group
                                                                                Risk Committee is chiefly responsible for ensuring that each
      Credit risk management                                                    group entity’s risk division is effectively organized.
      CIC’s strategy is to incorporate risk management considerations at
      all levels of decision-making. In line with this strategy, senior         Monitoring
      management of both the group and each of the regional divisions           The risk organization implemented by CIC enables the bank to
      participate actively in individual decisions and overall risk             monitor both individual counterparties and portfolios, for example
      management through the implementation of standardized systems             in terms of outstanding loans and new loan grants.
      and procedures.
                                                                                In order to monitor individual counterparties, details of the bank’s
      The organization of risk management within CIC is set up as follows:      commitments in respect of a counterparty for a given scope can
                                                                                be obtained from databases. Information can be obtained on all
      Customer knowledge                                                        appropriate issues, such as products, geographic location,
      The banks within the group leverage the close ties they have              borrowers, etc.). For financing and investment banking, counter-
      formed in their respective regional economies to obtain informa-          parties are subject to a regular review. A procedure has been set
      tion about existing and prospective customers. Customer segments          up in the retail banking business to detect emerging risks.
      have been defined and risk-profiled, allowing marketing efforts to          Commitments in the main customer segments are monitored
      be targeted more effectively. An industry risk assessment is also         using advanced risk detection tools, which are based both on
      available for sensitive business segments.                                external and internal criteria, including account histories. These
                                                                                indicators help to identify and deal with potential problem loans
      All counterparties are graded using a system developed in line with
                                                                                before payment incidents arise.
      the new capital requirements framework (Basel II). The internal
      ratings system is used throughout the CMCEE-CIC group.                    In the case of loan portfolios, data can be obtained from
                                                                                information systems that allow the bank to monitor and carry out
      Decision-making                                                           both static and dynamic analyses of portfolios classified by main
      The decision-making framework is based on a series of                     type of activity. These analyses look at outstanding loans, and
      authorization procedures for the retail banking business, and a           the volume and quality of new loans granted, and are managed
      series of committees for the financing and investment banking              by teams involved in risk management activities as well as the
      business. The Lending Department is responsible for providing             client manager and his or her superior. The Executive Board and
      risk oversight, and is tasked with monitoring the risk process and        different committees receive the information they require to
      ensuring that the decision-making party or committee has                  track portfolios of commitments made by the bank.
      access to adequate information on all aspects of a particular file
                                                                                Recovery and collection
      (counterparty, market, transaction, etc.).
                                                                                The system for detecting problem loans and downgrading loans
      The lending powers granted vary in accordance with the
                                                                                to doubtful is in line with current regulations.
      experience of the authorized person, the relative risk-weighting
      of the counterparty and the type of transaction or product                Specialized units may be called upon for managing and collecting
      involved. Computerizing the process for delegating powers                 problem loans. There are three separate phases in the collection
      enhances the security of the procedure.                                   process: settlement in the ordinary course of business, out-of-
                                                                                court settlement, and court-ordered settlement.




       Exposure                                                                                                 Dec. 31, 2005       Jan. 1, 2005
       Loans and receivables
       Credit institutions                                                                                          28,984            23,270)
       Customers                                                                                                     77,817            68,211)
       Gross exposure                                                                                              106,801            91,481)
       Provisions for impairment
       Credit institutions                                                                                               (14)              (17)
       Customers                                                                                                     (2,259)           (2,349)
       Net exposure                                                                                                104,528            89,115)
                                                               FINANCIAL STATEMENTS          113




 Exposure                                                      Dec. 31, 2005    Jan. 1, 2005
 Financing commitments given
 Credit institutions                                               1,544            1,358
 Customers                                                        19,669          19,233
 Guarantee commitments given
 Credit institutions                                                969              585
 Customers                                                         8,447           8,327
 Provision for risks arising on commitments given                    90               90



                                                               Dec. 31, 2005    Jan. 1, 2005
                                                                 Carrying         Carrying
 Debt securities                                                 amount           amount
 Government securities                                            22,823)          22,401)
 Bonds                                                            27,522)         24,624)
 Derivative instruments                                            5,508)          3,970)
 Repurchase agreements and securities lending                      5,998)           6,170)
 Gross exposure                                                   61,851)         57,165)
 Provisions for impairment of securities                              (5)              (9)
 Net exposure                                                     61,846)         57,156)



                                                                               Dec. 31, 2005
 Interbank loans by rating                                                          in %
 AAA and AA+                                                                         6
 AA and AA-                                                                         49
 A+ and A                                                                            31
 A- and BBB+                                                                         11
 BBB and below                                                                       3



                                                               Dec. 31, 2005    Jan. 1, 2005
 Interbank loans by geographic area                                 in %            in %
 France                                                             83               73
 Other Eurozone countries                                            8               12
 Other European countries                                             3               4
 North America                                                        3               5
 Rest of the World                                                    3               6



Credit risks on customer items

                                                               Dec. 31, 2005    Jan. 1, 2005
 Breakdown of loans by customer type                                in %            in %
 Public (individuals and self-employed professionals)               58              56
 Corporates                                                         28               30
 Large corporates                                                    7                8
 Other (of which specialized financing and local authorities)         7                6
114     CONSOLIDATED FINANCIAL STATEMENTS




                                                                                                                 Dec. 31, 2005     Jan. 1, 2005
       Geographic breakdown of risks on customer items                                                                in %             in %
       France                                                                                                          90               90
       Other Eurozone countries                                                                                         4                4
       North America                                                                                                    2                2
       Other OECD countries                                                                                             2                2
       Rest of the World                                                                                                2                2



       Concentration of customer risk                                                                            Dec. 31, 2005     Jan. 1, 2005
       Commitments exceeding €300 million                Number                                                         18                12
                                                         Loans in € million                                           1,811            1,067
                                                         Financing and guarantee commitments in € million            6,586             5,401
                                                         Securities in € million                                        33               32
       Commitments exceeding €100 million                Number                                                         39               30
                                                         Loans in € million                                          2,936            2,284
                                                         Financing and guarantee commitments in € million            9,196            7,958
                                                         Securities in € million                                        37              100



       Risk quality                                                                                              Dec. 31, 2005     Jan. 1, 2005
       Individually-impaired loans and receivables                                                                   3,462)            3,585)
       Provisions for individual and collective impairment                                                          (2,259)           (2,349)
       Coverage ratio                                                                                                 65.3%            65.5%



                                                                                                                 Dec. 31, 2005     Jan. 1, 2005
       Breakdown of industry risks                                                                                   in %              in %
       Commerce                                                                                                         9                9
       Manufacturing                                                                                                   11               12
       Agriculture, hunting, forestry                                                                                   1                1
       Company administration                                                                                           2                2
       Leasing and business services                                                                                   11               11
       Real estate development and other                                                                               15               15
       Other real estate                                                                                                2                2
       Healthcare                                                                                                       2                2
       Hotels and catering                                                                                              2                2
       Transport and communications                                                                                     4                4
       Private individuals (households)                                                                                33              32
       Other                                                                                                            8                8




      Note 42 - Note on interest rate, liquidity, and foreign currency risks relating to financial instruments

      Asset-Liability Management risk                                              • Asset/Liability Management is identified as a function com-
                                                                                     pletely separate from trading room operations and has its own
      Roles and responsibilities                                                     budget and teams.
      The roles and responsibilities of ALM Departments in each of CIC’s           • Its primary objective is to shelter lending margins from the
      regional banks are clearly defined:                                             effects of interest and exchange rate fluctuations and to
                                                                                     stabilize income.
                                                                                                       FINANCIAL STATEMENTS          115




• It is also responsible for ensuring that the bank concerned can      Currency risk
  meet its funding commitments and has sufficient liquidity to
                                                                       Customer transactions in foreign currency are hedged by the
  weather a crisis.
                                                                       trading rooms in the various group banks. The residual exposure
• Asset/Liability Management does not operate as a profit center
                                                                       is very limited. CIC does not have any long-term or recurring
  – its role is to enhance the bank’s profitability and support its
                                                                       positions in foreign currency, except for capital contributions to
  strategic development.
                                                                       foreign branches.
CIC’s Asset/Liability Management teams, which are in constant
contact with sales teams throughout the network, contribute
actively to defining the bank’s sales and marketing policy, in terms    Accounting treatment of interest rate hedges
of lending criteria, rules governing the internal transfer rate, and
                                                                       Designation of hedged risk and hedging relationships
designing new products to meet customer needs.
                                                                       CIC takes out hedges to protect its balance sheet against
The CIC group has for the past several years opted for a managed
                                                                       fluctuations in interest rates. The interest rate risk relating to
decentralization of ALM operations. Standardized ALM agreements
                                                                       capital markets activities is managed directly by the trading
and exposure limits are presented in ”group ALM Risk Guidelines”
                                                                       rooms and is not part of the ALM’s remit.
applicable to the whole Crédit Mutuel-CIC group.
                                                                       All such transactions are accounted for in accordance with the
Interest rate risk                                                     principles of IAS 39 (AG114-AG132: ”portfolio hedge of interest
Interest rate risk incurred in commercial operations stems from        rate risk” as set out in the October 2004 document issued by the
interest rate differentials and differences in benchmark lending       European Commission (IAS 39 ”carve-out”).
and deposit rates. For the purpose of analyzing interest rate risk,    Several hedging relationships are defined:
account is also taken of the volatility of products with no fixed
                                                                       • a hedge of fixed-rate deposits by receive-fixed, pay-variable
maturity and embedded options (early repayment and rollover
                                                                         interest rate swaps;
options for loans and credit line drawdown options, etc.).
                                                                       • a hedge of fixed-rate loans by receive-variable, pay-fixed
Interest rate risk is analyzed on the basis of aggregate positions       interest rate swaps.
and general hedges are established for net balance sheet positions.
Specific hedges may also be set up for individual high-value or         Designation of hedged items
specially structured transactions. Risk limits are determined in       1/ Fixed-rate liability portfolio: demand deposits
relation to projected net banking income of the individual banks         The hedged items are customer deposits hedged by receive-
and the CIC group as a whole.                                            fixed, pay-variable swaps.
The risk-sensitiveness of net banking income (expressed as a           2/ Fixed-rate asset portfolio: loans
percentage) is based on assumptions specific to France.
                                                                         The hedged items are fixed-rate loans hedged by pay-fixed,
Liquidity risk                                                           receive-variable swaps.

The CIC group attaches great importance to managing liquidity          Expected maturities factor in prepayment risk but do not reflect
risk in conjunction with its shareholder BFCM, which handles the       assumptions regarding new loan issues. Consequently, over time,
group’s long-term refinancing. Various regulatory liquidity             the hedged portfolios will reduce to reflect the installment
indicators are monitored:                                              payments and early repayments made.

• the group’s one-month liquidity ratio – corresponding to the         Hedging instruments
  weighted average ratios of group banks and representing the          The hedging instruments are swaps initiated and/or monitored by
  group’s short-term liquidity position;                               Asset/Liability Management and classified in the individual
• the weighted own funds and permanent capital ratio –                 financial statements as specific or general hedges. These swaps
  representing the group’s medium- and long-term liquidity             are allocated to one of the two portfolios indicated above.
  position, which is calculated by weighting the liquidity ratios of
  the individual banks by their total average net medium- and          Effectiveness tests justifying the hedging relationship
  long-term loans.                                                     Effectiveness tests are carried out at the inception of the hedge
The group regularly turns to institutional lenders such as the         and at the end of each quarter.
European Investment Bank or Caisse de Refinancement de                  In the event of ”under-hedging”, the hedge is deemed to be fully
l’Habitat for financing its expansion. It also borrows on the           effective.
financial markets, either from clients or through BFCM.
116     CONSOLIDATED FINANCIAL STATEMENTS




      Interest rate profiles of financial instruments                         Non-financial instruments and equities are not included.
      The table below presents the interest rate profiles of financial        Contracts are deemed to be taken out at a variable rate when
      instruments excluding those taken out in respect of the capital       they are based on an index subject to revision at least once a
      markets activity, which are monitored separately.                     year. All other instruments are deemed to be contracted at fixed
      The profiles are obtained using ALM assumptions regarding the          rates.
      probable deposit period of demand and regulated savings               A net asset position results in a positive gap, while a net liability
      deposits, and taking into account prepayment assumptions for          results in a negative gap.
      customer loans.

                                                                               Less than         3 months              1-5         More than
       Interest rate profiles of financial instruments                Total      3 months          to 1 year            years         5 years
       Fixed-rate gap                                              5,243        - 11,251           4,804              10,497           1,193
       Floating-rate gap                                          - 1,625


      Fair value of financial instruments carried                            Certain group entities may also apply assumptions whereby fair
      at amortized cost                                                     value is deemed to equal the carrying amount for those contracts
      The estimated fair values presented are calculated based on           indexed to a floating rate, or whose residual life is equal to or less
      observable parameters at December 31, 2005, and obtained by           than one year.
      computing estimated discounted future cash flows using a yield         Excluding held-to-maturity financial assets, financial instruments
      curve that does not reflect the counterparty risk inherent to the      carried at amortized cost are not sold or are not intended to be
      debtor.                                                               sold prior to maturity. Accordingly, capital gains and losses are
      The financial instruments discussed in this note relate to loans       not recognized.
      and borrowings. They do not include non-monetary items (e.g.          However, if financial instruments carried at amortized cost were to
      equities), trade accounts payable and other asset accounts, or        become the object of a sale transaction, the price of such sale may
      other liabilities and accruals. Non-financial instruments are not      differ significantly from the fair value calculated at December 31.
      discussed in this section.
      The fair value of demand and regulated savings deposits equals
      the amount that may be requested by the customer, i.e., the
      carrying amount.

                                                                                                     Carrying amount             Fair value
       Assets
       Loans and receivables due from credit institutions                                                  28,970                 28,988
       Loans and receivables due from customers                                                              70,132                71,937
       Held-to-maturity financial assets                                                                       1,106                  1,113
       Liabilities
       Due to credit institutions                                                                            64,159               64,029
       Due to customers                                                                                    55,065                 55,081
       Debt securities                                                                                     19,808                 19,842
       Subordinated debt                                                                                     2,683                 2,626


      Effective interest rate of financial instruments                       For fixed-rate contracts, the effective interest rate is the rate that
      carried at amortized cost                                             exactly discounts the future cash flows associated with the
      The financial instruments dealt with in this section do not concern    instrument to the carrying amount. For variable-rate contracts,
      those contracted by the capital markets activity. Non-financial        the effective interest rate is taken to be the latest available yield
      instruments and equities are also excluded.                           curve.

                                                                                                                               Interest rate
       Assets
       Loans and receivables due from credit institutions                                                                           3.1%
       Loans and receivables due from customers                                                                                    4.4%
       Held-to-maturity financial assets
       Liabilities
       Due to credit institutions                                                                                                  3.0%
       Due to customers                                                                                                             1.8%
                                                                                                           FINANCIAL STATEMENTS            117




Managing market risks                                                       broken down into sub-limits for each desk. Netting between
                                                                            different types of risk is not permitted.
The system used to set exposure limits for market risk is based on
internal rules and scenarios – including historical VaR, stress tests       Risks are monitored based on first-tier indicators (sensitivity to
and CAD ratios), which convert exposures into potential losses.             the various market risk factors), mainly for traders, and also on
                                                                            second-tier indicators (potential losses), to provide an overview
The limits set cover various types of market risk (interest rate,
                                                                            of capital markets exposures for decision-makers.
currency, equities and counterparty risks). The aggregate limit is




Note 43 - Related-party balance sheet items

                                                                                  Dec. 31, 2005                      Jan. 1, 2005
                                                                          Associates                        Associates
                                                                          (accounted                        (accounted
                                                                           for by the         Parent         for by the          Parent
                                                                        equity method)       company      equity method)        company
 Assets
 Loans, advances and securities
 - Loans and receivables due from credit institutions                                         6,337               4              3,880
 - Loans and receivables due from customers                                                      39             26                   32
 - Securities                                                                                    40                                 79
 Other assets                                                                  9                  2                                   2
 TOTAL                                                                         9              6,418             30               3,993
 Liabilities
 Deposits
 - Due to credit institutions                                                 10             22,148                               11,173
 - Due to customers                                                                                              10
 Debt securities                                                               6                 97                                255
 Other liabilities                                                                               19                                  16
 TOTAL                                                                        16            22,264              10              11,444
 Financing and guarantee commitments
 Financing commitments given                                                                      6
 Guarantee commitments given                                                                     40                                  25
 Financing commitments received
 Guarantee commitments received                                                                 303                                 167


                                                                                      2005                              2004
                                                                          Associates                        Associates
                                                                          (accounted                        (accounted
 Income statement items related to transactions                            for by the       Parent           for by the       Parent
 carried out with related parties                                       equity method)     company        equity method)     company
 Interest received                                                                            168)                                 88)
 Interest paid                                                                               (426)                               (285)
 Commissions received                                                         292               18)             250                10)
 Commissions paid                                                                               (7)                                (4)
 Other income and expenses                                                      9              (21)                6                (1)
 General operating expenses                                                     3             (133)                6              (82)
 TOTAL                                                                       304             (401)              262             (274)


The parent company is BFCM, a majority shareholder of CIC, and                Transactions carried out with the parent company mainly cover
the entities controlling BFCM (Crédit Mutuel CEE).                            loans and borrowings taken out for the purposes of treasury
                                                                              management, as BFCM is the group’s refinancing vehicle, as well
                                                                              as IT services billed with Euro Information companies.
118     FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      Relations with the group’s key executives
      The seven members of the Executive Board are responsible for
      determining the CIC group’s overall business strategy. Two people
      also attend Executive Board meetings in their capacity as
      managers of the group’s major subsidiaries and are therefore
      deemed to be key executives.
      Part of the remuneration received by some of the group’s key
      executives relates to their status as employees or corporate officers
      of Crédit Mutuel. Remuneration accruing to the other executives
      relates exclusively to their activities within the CIC group.
      Executive remuneration is set by the Supervisory Board based on
      recommendations made by a special 3-member committee.
      Remuneration comprises a fixed and variable component. The
      fixed portion is determined in the light of market rates of pay for
                                                                              Financial
                                                                              statements
      positions carrying equivalent responsibilities. The variable portion
      is determined based on a specific percentage and approved by
      the meeting of the Supervisory Board following the Shareholders’



                                                                              of the bank
      Meeting called to approve the financial statements for the year in
      respect of which the variable remuneration is paid.
      The group’s key executives are also entitled to the same welfare



                                                                              (extracts)
      and top-up pension benefits as all group employees, in respect of
      either Crédit Mutuel (for those carrying out part of their activities
      therein) or in respect of CIC. However, the group’s key executives
      do not have any specific benefits. They have not been awarded
      any CIC shares or share equivalents. Furthermore, they are
      entitled to attendance fees in consideration for their functions
      within the group, but not for the offices they hold within group
      companies or other entities.
      The group’s key executives may have been granted credit notes or
      loans by group banks, subject to the same terms and conditions as
      those offered to all of the group’s employees. The outstanding
      principal on loans taken out by the group’s key executives
      amounted to €516 thousand at December 31, 2005.


       Total remuneration paid to the group’s key executives
       (7 members of the Executive Board + 2 additional people)
                          Fixed        Variable     Benefits-
       In € thousands     salary        salary       in-kind       Total
       Key
                           1,817         920            37        2,774
       executives




      Note 44 - Subsequent events
                and other information

      No events occurred between December 31, 2005 and the date of
      publication of the accounts that would be likely to have a material
      impact on the financial statements. The consolidated financial
      statements of CIC for the year ended December 31, 2005 were
      approved by CIC’s Executive Board on February 20, 2006.
                                                                       EXECUTIVE BOARD REPORT ON THE ACCOUNTS OF CIC                     119




                                                                       Financing and capital markets
  Executive Board report                                               Outstanding loans in financing and capital markets contracted in
  on the accounts of CIC                                               2005, due to a more selective approach to risk-taking.

                                                                       2005 results
                                                                       Net banking income edged up to €1,155 million from €1,011 million.
                                                                       Net commission income slid by 6% to €190 million.
There were a number of changes in accounting methods in 2005,
relating mainly to:                                                    Dividends received from subsidiaries and affiliates totaled
                                                                       €472 million (2004: €469 million), the majority of which derived
• standard CRC 2002-10 and standard CRC 2004-06. These
                                                                       from regional banks.
  standards primarily provide for the breakdown of property into
  different components based on the expected useful life and the       General operating expenses inched up 2.2%.
  depreciation over this period. The impact of this change in          The number of full-time equivalent employees at the year end
  method came to a negative €14.3 million;                             was 4,611.
• article 13 of standard CRC 2002-03. Provisions for detected
  risks are now calculated based on the difference between the         Operating income before provisions came to €556 million,
  initial contractual payments, less payments already received,        compared with €426 million a year earlier.
  and forecast future payments discounted at the interest rate         The bank recorded net reversals of €9 million in relation to
  applicable to the contract. The impact of this change in method      provisions for loan losses.
  was a negative €21.3million;
                                                                       General provisions for credit risks stood at €157 million at
• standard CRC 2005-03 relating to discounts applicable to
                                                                       December 31, 2005.
  restructured loans which had a non-material impact.
                                                                       Net gains on disposals of fixed assets amounted to €23 million.
The new accounting methods have been applied retrospectively,
as if they had always been applied. The impact of first-time adop-      Net non-recurring expense includes the loss on the June 2005
tion is recognized in shareholders’ equity at January 1, and adjusts   sale of risks relating to the structured products portfolio (see the
the opening balance sheet.                                             Executive Board report on the consolidated financial statements)
                                                                       in an amount of €681 million.
The total impact on retained earnings at January 1, 2005 totaled
a negative €64.3 million.                                              CIC’s total tax charge includes corporate income tax payable on
                                                                       CIC’s net income and the net benefit from tax consolidation.
A provision for risks relating to the home savings accounts and
plans has been recorded this year as authorized by the Conseil         CIC ended the year with net income of €97 million – including a
National de la Comptabilité in its press release of December 20,       €41.7 million contribution from foreign subsidiaries - compared
2005. This provision covers commitments arising on the                 with €528 million in 2004.
obligation to pay a fixed rate of interest on future savings which is   Shareholders’ equity, including the general banking risks reserve,
set upon inception of the contract for an indefinite period. The        amounted to €3,266 million at December 31, 2005.
provision also covers commitments relating to loans granted at a
                                                                       Details of executive compensation are provided on page 69 of the
particular interest rate set upon inception of the loan.
                                                                       Executive Board report on the consolidated financial statements.
Exceptionally, for tax purposes, the impact of the first-time
                                                                       Information relating to CIC’s share ownership structure as well as
adoption of the property savings provision at January 1, 2005 was
                                                                       changes during the year and dividends paid are provided on
recorded as a non-recurring expense of €16.4 million.
                                                                       pages 147-149 of the legal section of this report under ”Additional
                                                                       information”.
Significant events of the year
                                                                       The operations of CIC’s subsidiaries are described on pages 126
In 2005, UBR was merged into CIC. The impact of this transfer
                                                                       to 132.
of assets and liabilities on the income statement was a negative
€1 million.                                                            Outlook for 2006
The CIC greater Paris region network                                   The restructuring of the CM-CIC group’s capital markets business
                                                                       in order to enhance operational risk management in this area will
CIC continued to expand its network in the greater Paris region,
                                                                       result in the capital markets activities of the various entities being
which by the end of the year was made up of 192 personal banking
                                                                       combined into a single balance sheet.
branches and 45 corporate banking branches.
                                                                       The capital markets business of CIC Banque CIAL will also start
The number of clients totaled 576,326, including 479,956 personal
                                                                       being merged into CIC during 2006.
banking clients.
Outstanding loans rose 16% to €8.9 billion. Home loans were the
main growth driver, posting a 26.3% increase.
Overall, customer deposits rose 5%, with bank savings accounts
climbing 6%.
Operating fees and commissions advanced 17% and commissions
from financial services climbed 31%.
120     FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




        Financial statements




      B ALANCE        SHEET


       ASSETS
       (in € millions)                                          Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
       Cash, central banks and postal checking accounts             1,746           875          2,738
       Government securities                                         1,416        4,007         4,886
       Interbank loans and advances                                21,853         20,913        18,528
       Customer transactions                                       16,870         15,233        13,752
       Bonds and other fixed-income securities                       7,656         6,596          6,701
       Equities and other variable-income securities                3,134         5,650          4,858
       Shares in subsidiaries and other long-term investments         528           524            198
       Investments in affiliates                                     2,273          2,178         2,122
       Lease financing
       Intangible assets                                               113          104            44
       Property and equipment                                         533           533           542
       Unpaid capital
       Own shares
       Other assets                                                 4,676         4,056          2,196
       Accruals and other assets                                    3,719          3,637         3,970




       TOTAL ASSETS                                                64,517       64,307         60,535




      O FF   BALANCE SHEET ITEMS


       (in € millions)                                          Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
       Commitments and guarantees received
       Financing commitments received
       Commitments received from banks
       Guarantees received
       Guarantees received from banks                               7,875          5,717         3,975
       Securities commitments received
       Optional repurchase agreements
       Other commitments received                                     961           704           579
                                                           FINANCIAL STATEMENTS         121




 LIABILITIES AND SHAREHOLDERS’ EQUITY
 (in € millions)                              Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
 Central banks and postal checking accounts
 Interbank loans and deposits                    21,516         18,606       22,006
 Customer transactions                           11,659         14,086        10,551
 Debt securities                                 15,609         12,904        12,618
 Other liabilities                                6,502          8,501         5,835
 Accruals and other liabilities                   3,247         4,097          3,701
 Provisions for contingencies and charges           383           340             453
 Subordinated debt                                2,335          2,432         2,443
 General banking risks reserve                      379           378             378
 Shareholders’ equity                             2,887         2,962         2,550
 - Capital stock                                    563           563             563
 - Additional paid-in capital                       736           736             736
 - Reserves                                         612           616           596
 - Revaluation reserve                               44            44              45
 - Untaxed provisions                                27
 - Retained earnings                               808            474             383
 - Net income for the year                           97           528             227


 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY      64,517        64,307        60,535




O FF   BALANCE SHEET ITEMS


 (in € millions)                              Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
 Commitments and guarantees given
 Financing commitments given
 Commitments given to banks                       1,588          1,366         1,332
 Commitments given to customers                  10,768         12,529        12,094
 Guarantees given
 Guarantees given on behalf of banks               802            677          1,109
 Guarantees given on behalf of customers          5,342          5,677         5,497
 Securities commitments given
 Optional reselling agreements
 Other commitments and guarantees given            1,183         1,067            435
122     FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      I NCOME     STATEMENT

       (in € millions)                                              2005      2004      2003
       Interest income                                              1,848)    2,884     2,946
       Interest expense                                             (1,904)   (2,916)   (2,812)
       Income from variable-income securities                         472)      469       315
       Commission income                                              312)      326       308
       Commission expense                                            (122)     (124)      (114)
       Net gains on trading account securities                        517)      316       351
       Net gains on securities held for sale                           23)       50         15
       Other banking income                                             3)        7         8
       Other banking expense                                            6)        (1)       (3)
       Net banking income                                           1,155)    1,011     1,014
       Payroll costs                                                 (345)      (315)    (330)
       Other general operating expenses                              (218)     (221)     (216)
       Depreciation and amortization                                  (36)      (50)       (31)
       General operating expenses                                    (599)    (586)     (577)
       Operating income before provisions                             556)     426       437
       Net reversals of/(additions to) provisions for loan losses       9)       48       (161)
       Operating income after provisions                              565)     474       276
       Gains and losses on disposals of fixed assets                    23)        (0)       13
       Income before non-recurring items                              587)      473      289
       Net non-recurring income/(expense)                             (716)       (3)
       Corporate income tax                                           227)       57        18
       Net allocation to general banking risks reserve                                    (80)
       Net allocation to untaxed provisions                             (2)


       NET INCOME                                                      97)     528       227
                                                                                                            FINANCIAL STATEMENTS            123




F IVE   YEAR FINANCIAL SUMMARY


                                                                 2001            2002              2003           2004              2005
1. At December 31
Capital stock (in €)                                           560,141,376     560,141,376      563,330,656     563,330,656      563,330,656
Number of shares issued                                        35,008,836      35,008,836        35,208,166      35,208,166       35,208,166
”A” series common shares                                       35,008,836      35,008,836        35,208,166      35,208,166       35,208,166
”D” series preferred shares                                        -               -                -               -                 -
Preferred investment certificates                                   -               -                -               -                 -
Ordinary investment certificates                                    -               -                -               -                 -
2. Results of operations (in € thousands)
Banking income                                                  5,527,658       4,894,268         3,942,663       4,052,927         3,174,371
Net income before tax, employee profit-sharing, depreciation,
                                                                 408,200          533,440          486,685          492,031         608,727
amortization, provisions and net non-recurring items
Corporate income tax                                               37,810              5,826         18,132          56,881         227,268
Employee profit-sharing for the year                                    5,545        19,732           12,328             13,125         9,439
Net income                                                        228,673         328,418          227,399         527,795           96,882
Dividends                                                          82,621          95,224           115,483         133,087          144,353
 3. Earnings per share (in €)
Income after tax and employee profit-sharing,
                                                                       12.58           14.84            13.84           15.09          23.22
but before depreciation, amortization and provisions
Net income                                                              6.53            9.38            6.48            14.99             2.75
Dividend per ”A” series share                                           2.36            2.72            3.28             3.78             4.10
Dividend per ”D” series share and investment certificates           -               -                -               -                 -
4. Employee information (excluding foreign branches)
Number of employees (average full-time equivalents)                 4,000               4,131           4,164           4,394          4,460
Total payroll                                                  165,177,777      169,741,151     173,709,290     173,239,934       181,061,113
Total benefits (Social Security, etc.)                          97,794,681      86,856,207        89,652,736      97,182,075      98,960,725
124      FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      INVESTMENTS IN SUBSIDIARIES AND AFFILIATES AT DECEMBER 31, 2005

       Company and address                                                                                        Capital stock         Reserves
       Detailed information about investments in French and foreign companies
       with a carrying value representing more than 1% of CIC’s capital stock

       A/SUBSIDIARIES (50% to 100%-owned by CIC)
       A.1 RETAIL BANKS
       A 1-1 Banking
       CIC Banque CIAL - 31, rue Jean Wenger-Valentin, 67000 Strasbourg - Siren no. 548 502 392                       26,755,660         142,007,000
       CIC Banque CIN - 15, place de la Pucelle, 76000 Rouen - Siren no. 570 504 613                                 100,000,000           11,398,000
       CIC Banque CIO - 2, avenue Jean-Claude Bonduelle, 44000 Nantes - Siren no. 855 801 072                         63,432,000         217,440,000
       CIC Banque BRO - 7, rue Gallois, 41000 Blois - Siren no. 595 520 255                                           34,752,000          49,958,000
       CIC Banque Scalbert Dupont - 33, avenue Le Corbusier, 59800 Lille - Siren no. 455 502 096                      101,598,272         85,082,000
       CIC Banque SNVB - 4, place André Maginot, 54000 Nancy - Siren no. 754 800 712                                 60,000,000           96,805,000
       CIC Banque Transatlantique - 26, avenue Franklin D. Roosevelt, 75008 Paris - Siren no. 302 695 937              18,529,350         47,328,000
       CIC Société Bordelaise - Cité Mondiale, 20, quai des Chartrons, 33000 Bordeaux - Siren no. 456 204 809        155,300,000          47,866,000
       CIC Lyonnaise de Banque - 8, rue de la République, 69001 Lyon - Siren no. 954 507 976                        228,290,262           69,641,000
       A.1-2 Equipment leasing
       CM-CIC Bail - 12, rue Gaillon, 75002 Paris - Siren no. 642 017 834                                             12,493,668          117,325,000
       A.1-3 Real estate leasing
       CM-CIC Lease - 48, rue des Petits Champs, 75002 Paris - Siren no. 332 778 224                                  64,399,232           22,211,000

       A.2 INVESTMENT BANKING
       A.2-1 Stockbroking
       CM-CIC Securities - 6, avenue de Provence, 75009 Paris - Siren no. 467 501 359                                  14,778,498          11,073,000
       A.2-2 Private equity
       CIC Finance - 4 et 6, rue Gaillon, 75002 Paris - Siren no. 562 118 299                                         63,953,200          130,537,000
       Institut de Participations de l’Ouest ”IPO” - 32 avenue Camus, 44000 Nantes - Siren no. 319 658 530             79,781,370         64,671,000

       A.3 INSURANCE
       Adepi - 6, rue Gaillon, 75002 Paris - Siren no. 331 618 074                                                   189,892,608         335,480,000

       A.4 HEADQUARTERS AND HOLDING COMPANIES
       CIC Participations - 4, rue Gaillon, 75002 Paris - Siren no. 349 744 193                                        8,375,000           18,412,000
       CIC Associés - 60, rue de la Victoire, 75009 Paris - Siren no. 331 719 708                                     15,576,000            2,505,142
       CIC Epargne Salariale - 12, rue Gaillon, 75002 Paris - Siren no. 692 020 878                                   10,932,000             497,000

       B/AFFILIATES (10% to 50%-owned by CIC)
       Banque Marocaine du Commerce Extérieur - 140 avenue Hassan II, 20000 Casablanca (Morocco)                1,587,514,000 MAD   3,613,716,000 MAD(*)
       Banque de Tunisie - 2, rue de Turquie, 1001 Tunis (Tunisia)                                               50,000,000 TND      204,915,000 TND
       CIC Information - 4, rue de Ventadour, 75001 Paris - Siren no. 423 974 385                                     45,000,000          17,690,000
       Groupe Sofemo - 34, rue du Wacken, 67000 Strasbourg - Siren no. 339 943 680                                     11,050,000           8,126,501

       General information on other subsidiaries and affiliates
       SUBSIDIARIES
       French companies
       Foreign companies
       AFFILIATES
       French companies
       Foreign companies

      * Figures at December 31, 2004.
                                                                                            FINANCIAL STATEMENTS           125




               Book value of shares            Loans        Guarantees       Last          Last published       Dividends
Percent                                    and advances       given        published        net income/        received by
interest      At cost           Net        granted by CIC     by CIC       net sales           (loss)          CIC in 2005




100.00     152,882,760      152,882,760                                   420,124,000       139,564,000          90,112,776
100.00      101,170,641      101,170,641                                  122,909,000          7,128,000        13,749,962
100.00     195,020,765      195,020,765                                   343,344,000        48,957,000         45,032,505
100.00     145,340,097      145,340,097                                   101,585,000          7,681,000          11,337,751
100.00     150,267,681      150,267,681                                  250,727,000         20,466,000         24,129,557
100.00      87,519,956       87,519,956                                  338,999,000          61,771,000        43 079,838
100.00       82,315,861       82,315,861                                  48,206,000           9,216,000         6,238,159
100.00     220,670,272      220,670,272                                   161,920,000          8,315,000        16,142,840
100.00     286,779,517      286,779,517                                    511,913,000        81,888,000       183,515,490


 91.96      79,039,770       79,039,770                                     11,528,000        (1,148,000)        2,642,394


 53.88      22,309,854       22,309,854                                    34,168,000        18,626,000          5,587,953




100.00      31,899,048       31,899,048                                   66,080,000           3,563,000                  0


 99.95     180,610,863      180,610,863                                    27,943,000         18,695,000          7,733,334
  51.47    125,878,816      125,878,816                                    22,655,000        21,098,000          5,062,518



100.00     420,636,885      420,636,885                                     7,235,000         7,226,000                   0



100.00     40,267,900        25,548,866                                       253,000          1,560,000           301,499
100.00      19,787,882        19,651,720                                            63           421,946         1,600,000
 99.99      24,156,093        10,931,220                                   13,842,000         (3,724,000)                 0



  9.99      72,948,247       72,948,247                                  24,873,141,722    4,550,844,100         2,095,344
 20.00      31,502,357       31,502,357                                    84,599,309          21,146,727        1,527,546
 40.20      18,090,000       18,090,000                                        69,000         13,573,000                  0
 33.30       7,820,000        7,820,000                                    18,772,942          2,776,019           172,500




            48,325,354        41,733,454                                                                         2,062,279
                        1              1                                                                                  0


             12,093,198       9,558,657                                                                           1,571,545
            88,995,575       88,995,575                                                                            169,065




                                                                          MAD/€ exchange rate at December 31, 2005: €10.9276.
                                                                           TND/€ exchange rate at December 31, 2005: €1.61259.
126      FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      B USINESS          AND RESULTS OF SUBSIDIARIES AND AFFILIATES


      Regional banks(1)


      CIC Banque Scalbert Dupont

                                                                                                       2005                       2004
                                                                                               Bank       Consolidated   Bank         Consolidated
       (in € millions)                                                                         CNC           CNC         CNC             CNC
       Number of employees at December 31                                                     1,936          1,936       1,943           1,943
       Total assets                                                                           7,373          7,490       6,341           6,397
       Shareholders’ equity and general banking risks reserve                                   241            318        258              312
       Customer deposits                                                                      4,203          4,203       3,883           3,883
       Customer loans                                                                         5,545          5,538       4,813           4,810
       Net income                                                                                20             49         25               33



      CIC Banque CIN

                                                                                                       2005                       2004
                                                                                               Bank       Consolidated   Bank         Consolidated
       (in € millions)                                                                         CNC           CNC         CNC             CNC
       Number of employees at December 31                                                       912            979        894              961
       Total assets                                                                           3,883          4,174       3,199           3,434
       Shareholders’ equity and general banking risks reserve                                   124             141        136             145
       Customer deposits                                                                      2,025          2,213       1,863           2,037
       Customer loans                                                                         2,969          3,203       2,455           2,655
       Net income                                                                                 7             20         14               15



      CIC Lyonnaise de Banque

                                                                                                       2005                       2004
                                                                                               Bank       Consolidated   Bank         Consolidated
       (in € millions)                                                                         CNC           IFRS        CNC         Pro forma IFRS
       Number of employees at December 31                                                      4,102         4,694       4,027            4,591
       Total assets                                                                           15,950        18,567       13,327          15,294
       Shareholders’ equity and general banking risks reserve                                   406            673         521             677
       Customer deposits                                                                      7,428          8,530        7,113           8,236
       Customer loans                                                                         9,397          13,130      9,397           10,578
       Net income                                                                                82            165          84             102

      (1) Customer deposits do not include certificates of deposit or repurchase agreements.
          Customer loans include lease financing transactions but exclude resale agreements.
                                                                                    FINANCIAL STATEMENTS          127




CIC Banque CIAL

                                                                  2005                           2004
                                                          Bank       Consolidated       Bank         Consolidated
(in € millions)                                           CNC           IFRS            CNC         Pro forma IFRS
Number of employees at December 31                        2,312          3,194          2,410            3,276
Total assets                                             60,789         77,089         46,128            61,811
Shareholders’ equity and general banking risks reserve     334            979             283             863
Customer deposits                                         4,153         12,659          3,989           12,978
Customer loans                                            5,588          7,885           5,114           7,987
Net income                                                 140            160             90              136



CIC Banque SNVB

                                                                  2005                           2004
                                                          Bank       Consolidated       Bank         Consolidated
(in € millions)                                           CNC           CNC             CNC             CNC
Number of employees at December 31                       2,451          2,451          2,437            2,437
Total assets                                             8,367          8,529          7,800            7,958
Shareholders’ equity and general banking risks reserve     248            384            239              373
Customer deposits                                        4,622          4,622           4,333           4,332
Customer loans                                           7,209          7,459          6,320            6,320
Net income                                                  62             71             44              56
128     FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      CIC Banque CIO

                                                                         2005                       2004
                                                                Bank        Consolidated   Bank         Consolidated
      (in € millions)                                           CNC            CNC         CNC             CNC
      Number of employees at December 31                       2,533              2,568    2,509              2,588
      Total assets                                             10,352             10,624   9,096              9,377
      Shareholders’ equity and general banking risks reserve     338                442     303                379
      Customer deposits                                        4,973              4,974    4,640              4,634
      Customer loans                                            8,241             8,555    6,955              7,409
      Net income                                                  49                 84      45                 52



      CIC Banque BRO

                                                                         2005                       2004
      (in € millions)                                                   Bank CNC                   Bank CNC
      Number of employees at December 31                                   857                        901
       Total assets                                                      3,103                      2,619
      Shareholders’ equity and general banking risks reserve               100                         111
      Customer deposits                                                  1,877                      1,726
      Customer loans                                                     2,471                      2,162
       Net income                                                            8                         12



      CIC Société Bordelaise

                                                                         2005                       2004
      (in € millions)                                                   Bank CNC                   Bank CNC
      Number of employees at December 31                                  1,156                     1,080
       Total assets                                                      4,195                      3,290
      Shareholders’ equity and general banking risks reserve               215                        189
      Customer deposits                                                  1,997                      1,693
      Customer loans                                                     3,367                      2,670
      Net income                                                             8                         16
                                                                       FINANCIAL STATEMENTS   129




Specialist subsidiaries – Retail banking


CIC Epargne Salariale

                                                             2005                2004
(in € millions)                                             Bank CNC            Bank CNC
Number of employees at December 31                             123                 154
Shareholders’ equity                                             8                   7
Total assets                                                    38                 103
Assets under management (excluding current bank accounts)    2,965                2,431
Net income/(loss)                                             (3.7)               (4.5)



CM-CIC Bail

                                                             2005                2004
(in € millions)                                             Bank CNC            Bank CNC
Number of employees at December 31                             101                   71
Shareholders’ equity and general banking risks reserve         128                 133
Total assets                                                 2,760               2,252
Outstanding lease financing                                   2,655                2,183
Net income/(loss)                                              (1.1)              10.4



CM-CIC Laviolette Financement

                                                             2005                2004
(in € millions)                                             Bank CNC            Bank CNC
Number of employees at December 31                             92                   81
Shareholders’ equity and general banking risks reserve          5                   5
Total assets                                                  187                  175
Net factored receivables                                     1,050                935
Net income                                                    0.9                 0.6
130      FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      CM-CIC Lease

                                                                                                       2005                       2004
       (in € millions)                                                                                Bank CNC                   Bank CNC
       Number of employees at December 31                                                                39                          34
       Shareholders’ equity and general banking risks reserve                                            106                        108
       Total assets                                                                                    2,064                      2,066
       Outstanding lease financing                                                                      1,978                       1,953
       Net income                                                                                       18.7                       14.1



      Factocic

                                                                                                       2005                       2004
       (in € millions)                                                                                Bank CNC                   Bank CNC
       Number of employees at December 31                                                                187                        185
       Total assets                                                                                    1,534                       1,373
       Shareholders’ equity and general banking risks reserve                                             91                         81
       Factored receivables                                                                            6,912                      6,262
       Net income                                                                                       14.1                       13.7




      Specialist subsidiary - Financing and capital markets


      CM-CIC Securities

                                                                                                       2005                       2004
       (in € millions)                                                                                Bank CNC                   Bank CNC
       Number of employees at December 31                                                               258                         233
       Total assets                                                                                    2,167                       1,553
       Customer assets in custody                                                                     17,253                      14,106
       Net income                                                                                        3.6                        1.4




      Specialist subsidiaries – Private banking


      CIC Banque Transatlantique (1)

                                                                                                       2005                       2004
                                                                                              Bank        Consolidated   Bank         Consolidated
       (in € millions)                                                                        CNC            CNC         CNC             CNC
       Number of employees at December 31                                                      212               247       214               286
       Total assets                                                                            941             1,028      921               1,001
       Shareholders’ equity and general banking risks reserve                                   85                93       87                 91
       Customer funds invested in group savings products                                      3,765            4,978     2,845              3,777
       Customer deposits                                                                       678               790      662                769
       Customer loans                                                                          654               670      639                648
       Net income                                                                              9.2               7.6      6.2                4.5

      (1) Customer deposits do not include certificates of deposit or repurchase agreements.
          Customer loans include lease financing transactions but exclude resale agreements.
                                                                           FINANCIAL STATEMENTS   131




CIC Banque CIAL Suisse

 Key figures prepared under local accounting standards          2005                  2004
 (in CHF millions)                                             Bank                  Bank
 Number of employees at December 31                             264                     274
 Shareholders’ equity                                            170                    163
 Total assets                                                  2,595                  2,541
 Assets in custody                                             5,127                  4,982
 Net income                                                     14.8                   12.1



CIC Private Banking - Banque Pasche

 Key figures prepared under local accounting standards         2005                   2004
 (in CHF millions)                                         Consolidated*          Consolidated*
 Number of employees at December 31                              73                     64
 Total assets                                                   422                    458
 Total customer funds (assets in custody and deposits)         1,737                 1,630
 Net income                                                     6.2                    5.6

* Banque Pasche Geneva + Banque Pasche Monaco.




Banque de Luxembourg
 Key figures prepared under local accounting standards          2005                  2004
 (in € millions)                                               Bank                  Bank
 Number of employees at December 31                              618                   592
 Shareholders’ equity and general banking risks reserve*        494                    464
 Total assets                                                 12,799                 13,254
 Assets in custody                                            43,281                 28,530
 Net income                                                      60                    51.5

* Shareholders’ equity includes untaxed provisions.




Dubly-Douilhet SA

                                                              2005                    2004
 (in € millions)                                            Bank CNC                Bank CNC
 Number of employees at December 31                             35                     37
 Total assets                                                   39                     38
 Shareholders’ equity                                            9                      9
 Assets in custody                                             789                    671
 Net income                                                     1.5                    1.1
132      FINANCIAL STATEMENTS OF THE BANK (EXTRACTS)




      Specialist subsidiaries – Private equity


      CIC Banque de Vizille

                                                                                                      2005              2004
                                                                                                   Consolidated*   Consolidated*
       (in € millions)                                                                                 IFRS        Pro forma IFRS
       Number of employees at December 31                                                               40               36
       Shareholders’ equity                                                                            437              330
       Total assets                                                                                    452              337
       Value of portfolio                                                                              390              316
       Net income                                                                                       45               22

      * Banque de Vizille SA + Vizille Capital Innovation + Vizille Capital Finance + Sudinnova.




      CIC Capital Développement

                                                                                                      2005             2004
       (in € millions)                                                                              Bank CNC         Bank CNC
       Shareholders’ equity                                                                            138              103
       Total assets                                                                                     141              114
       Value of portfolio                                                                               177             139
       Net income                                                                                       18              4.8



      CIC Finance

                                                                                                      2005             2004
       (in € millions)                                                                              Bank CNC         Bank CNC
       Number of employees at December 31                                                                27              25
       Shareholders’ equity                                                                             213              172
       Total assets                                                                                    259              230
       Value of portfolio*                                                                              354             279
       Net income                                                                                      18.7              7.8

      * including the investments of its subsidiary CIC Capital Développement.




      IPO

                                                                                                      2005             2004
       (in € millions)                                                                                Bank             Bank
       Number of employees at December 31                                                                13               11
       Shareholders’ equity                                                                             169              159
       Total assets                                                                                     166              154
       Value of portfolio                                                                               192              156
       Net income                                                                                      21.2             11.9
                                    133




                   Legal
information




    134 Ordinary Shareholders’
        Meeting of May 11, 2006
    146 Additional information
    150 General information
    152 Person responsible for
        the registration document
        (document de référence)
        and Statutory Auditors
134     LEGAL INFORMATION




                                                                              First of all, an amount should be allocated to the special reserve
                                                                              provided for by Article 238 bis AB of the French Tax Code for
        Ordinary Shareholders’
                                                                              €146,000.00. This involves the tax deduction resulting from the
        Meeting of May 11, 2006                                               purchase of a musical instrument provided to a musical composer
                                                                              and performer.
                                                                              The Executive Board then suggests that you distribute a dividend
      Executive Board’s report to the Ordinary                                calculated by applying the same rate of distribution to
      Shareholders’ Meeting of May 11, 2005                                   consolidated net income as that applied in previous years (25%).
      We have called this Ordinary Shareholders’ Meeting to discuss           The balance should be credited to the retained earnings account
      the matters included on the agenda that are the subject of the          to enable CIC to pursue its reserve policy, and thus to increase
      resolutions submitted for your approval. The business activities        shareholders’ equity and its financial strength as shown, in
      and results of the bank and the CIC group for 2005 are discussed        particular, by the group’s capital adequacy ratio.
      in the Executive Board reports provided with the statutory and          The Executive Board therefore suggests that you:
      consolidated financial statements that have been made available
                                                                              • distribute a dividend of €144,353,480.60 to holders of “A” series
      or provided to you. These reports also include details of business
                                                                                shares in respect of fiscal year 2005;
      developments since the beginning of the year and prospects for
                                                                              • enter the available balance, i.e., €760,576,649.71, in the retained
      the full year.
                                                                                earnings account.
      1. Approval of the financial statements                                  Accordingly, each share will carry a dividend of €4.10. Dividends
         for the fiscal year ended December 31, 2005                           will be distributed on May 29, 2006. As provided under the new
      (first and second resolutions)                                           tax regime applicable to distributions, it is specified that the entire
                                                                              dividend distributed is eligible for the 40% tax abatement
      The financial statements of Crédit Industriel et Commercial, which
                                                                              mentioned in point 2° of Article 158 (3) of the French Tax Code.
      were approved by the Executive Board at its February 20, 2006
      meeting, show income of €96,881,712.36. The Executive Board             In accordance with the provisions of French law, the Shareholders’
      report provided with the financial statements gives details of the       Meeting is reminded that:
      various elements that make up this income.                              • for 2004, a dividend of €133,086,867.48 was distributed,
      The consolidated financial statements of the CIC group show net            representing €3.78 per share eligible for the 50% tax abatement
      income of €578 million. The related Executive Board report shows          mentioned in point 2° of Article 158 (3) of the French Tax Code;
      how this income was generated and how the group’s various               • for 2003, a dividend of €115,482,784.48 was distributed,
      businesses and entities contributed to such income.                       representing €3.28 per share, plus a tax credit of €1.64 subject
                                                                                to the provisions of the French Tax Code applicable to the
      You have been given the opportunity to review the reports of the
                                                                                particular situation of the beneficiaries;
      President of the Supervisory Board enclosed with the Executive
                                                                              • for 2002, a dividend of €95,224,033.92 was distributed,
      Board report regarding internal control and the functioning of the
                                                                                representing €2.72 per share, plus a tax credit of €1.36, subject
      Board, the Supervisory Board’s report, and the Statutory Auditors’
                                                                                to the provisions of the French Tax Code applicable to the
      reports.
                                                                                particular situation of the beneficiaries.
      We ask you to approve the statutory and consolidated financial
      statements as presented to you.                                         3. Agreements referred to in Article L.225-86
                                                                                 of the French Commercial Code
      2. Appropriation of income
                                                                              (fourth resolution)
      (third resolution)
                                                                              In the Statutory Auditors’ special report, the Auditors list the
      Retained earnings as they stood after voting of the 4th resolution      regulated agreements governed by Article L.225-86 of the
      of the Combined Ordinary and Extraordinary Shareholders’                French Commercial Code that were entered into or that remained
      meeting of May 19, 2005 amounted to €872,519,916.56 (after              in effect during 2005 with the Supervisory Board’s consent.
      distribution of the dividend for fiscal year 2004). The changes in
      accounting method that have taken place pursuant to CRC                 4. Ratification of the cooptation of a member
      regulations 2002-03 and 2002-10, as discussed in substance in              of the Supervisory Board
      the Executive Board report and in the notes to the 2005 financial        (fifth resolution)
      statements, led to a deduction of €64,329,742.61 from opening
                                                                              Pursuant to Article 12 of the bylaws, the Supervisory Board co-
      retained earnings. Conversely, opening retained earnings were
                                                                              opted Mr. Daniel Leroyer to replace Mr. Jean-Pierre Schneider,
      credited for the amount of the dividend which should have been
                                                                              who has resigned, at its May 19, 2005 meeting.
      allocated to the shares not eligible for dividends, and in particular
      those held within the scope of the liquidity agreement that was         Mr. Leroyer’s term of office will expire at the end of his predeces-
      the subject of the 9th resolution. Accordingly, retained earnings       sor’s office, i.e., at the close of the Shareholders’ Meeting called
      amount to €808,194,417.95.                                              to approve the financial statements for fiscal year 2007.
      Income for the fiscal year amounts to €96,881,712.36. After              The Executive Board suggests that you ratify this cooptation.
      incorporation of the retained earnings of €808,194,417.95, the
      amount to be allocated by the Shareholders’ Meeting amounts
      to €905,076,130.31.
                                                                          ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                    135




5. Appointment of a new member
   of the Supervisory Board
(sixth resolution)
In view of the fact that Article 12 (I) of the bylaws provides that the
Supervisory Board consists of between fifteen and eighteen
members appointed by the Shareholders’ Meeting, without
prejudice to the number of employee representatives, the
Executive Board suggests that you appoint, in addition to the
members appointed on May 15, 2003 and May 19, 2005, an                    7. Authorization for the Executive Board
additional member of the Supervisory Board. This member will be              to buy back CIC’s ”A” series shares
Mr. Albert Peccoux, born on November 2, 1939 in Saint-Martin-
                                                                          (ninth resolution)
Bellevue (Haute-Savoie, France), and residing at 162, route de
l’Eglise, 74370 Saint-Martin-Bellevue. Mr. Peccoux’s term of              We ask you to cancel the authorization previously given to the
office will cover a period of five years and will expire at the close of    Executive Board to trade in CIC’s ”A” series shares on the stock
the Ordinary Shareholders’ Meeting called to approve the financial         exchange with immediate effect and to give it a new authorization
statements for fiscal year 2010.                                           for this purpose. It must be stressed that the legal framework for
                                                                          this is laid down in Articles L.225-209 et seq. of the French
6. Appointment of a principal Statutory                                   Commercial Code, and in Title IV of Book II of the general
   Auditor and an alternate Statutory Auditor                             regulations of the Autorité des marchés financiers, and in its
(seventh and eighth resolutions)                                          implementing instructions. Within this framework, CIC wishes to
                                                                          trade on the stock exchange as follows:
The appointment of principal Statutory Auditor, currently held by
PricewaterhouseCoopers, a firm of auditors registered with the             • shares will be traded in accordance with the liquidity agreement
Paris Statutory Auditors’ Board, will expire at the May 11, 2006            entered into by CIC and BFCM with the CM-CIC Securities firm of
Shareholders’ Meeting called to approve the financial statements             stockbrokers, in the capacity of investment service provider,
for fiscal year 2005.                                                        which is the trader;
                                                                          • the provisions of this liquidity agreement have been brought
Pursuant to Article L.225-228 of the French Commercial Code, at
                                                                            into compliance with the AFEI’s code of ethics;
its February 23, 2006 meeting, the Supervisory Board suggested
                                                                          • shares will be traded freely by the firm of stockbrokers with the
that this appointment be renewed for a further period of six years,
                                                                            sole aim of ensuring the liquidity and regular listing of CIC’s
i.e. until the Shareholders’ Meeting called to approve the financial
                                                                            shares on the Paris stock exchange;
statements for fiscal year 2011, because of the knowledge it has
                                                                          • bearing in mind that, according to this regulatory framework, it
gained of CIC and in order to maintain continuity in external
                                                                            is only necessary to set a maximum purchase price in order to
auditing within the CIC group.
                                                                            expressly cap the corresponding commitment; the maximum
The alternate Statutory Auditor’s appointment held by Mr. Pierre            purchase price will be set at €240, i.e. the limit applied for the
Coll will also expire at the May 11, 2006 Shareholders’ Meeting             previous authorization;
called to approve the financial statements for fiscal year 2005.            • the shares held by the firm of stockbrokers within this context
The Supervisory Board has proposed to appoint Mr. Etienne Boris             will not be cancelled;
to replace him for a period of six years, i.e. until the Shareholders’    • the maximum number of shares that may be purchased within
Meeting called to approve the financial statements for fiscal year            this context remains unchanged at 100,000, i.e. 0.28% of the
2011.                                                                       capital at the beginning of this Shareholders’ Meeting, it being
The French Banking Commission, which was previously consulted               specified that the maximum commitment that may result from
with regard to these two proposals, approved such appointment               the use of this amount in full, taking into account the price limit
in its March 15, 2006 letter to CIC.                                        set, will amount to €24 million;
                                                                          • CIC will provide the AMF with the statistics relating to the trading
As a result, the Executive Board submits the appointment of                 of these shares every month and with a statement every six
PricewaterhouseCoopers as principal Statutory Auditor (seventh              months.
resolution) and the appointment of Mr. Etienne Boris as alternate
Statutory Auditor (eighth resolution) for your approval.                  For information purposes, as of December 31, 2005, the liquidity
                                                                          group set up in connection with the agreement in force held
                                                                          4,000 ”A” series CIC shares after purchasing 14,203 shares and
                                                                          selling 11,573 shares in 2005. As of February 28, 2006, it held
                                                                          4,879 shares.

                                                                          8. The tenth resolution concerns powers to be given.
136     LEGAL INFORMATION




      Supervisory Board’s report to the
      Shareholders’ Meeting of May 11, 2006
      The Supervisory Board met at regular intervals as required by
      French law, and was able to fulfill its duties and responsibilities
      completely based on the business reports presented by the
      Executive Board at each meeting.
      The main business developments in 2005 and details of the
      components of income are presented in the accounting
      documents concerning the financial statements of the bank and
      the consolidated financial statements (balance sheet, income
      statement, notes to the financial statements and Executive Board
      report) presented by the Executive Board. At its February 23,
      2006 meeting, the Supervisory Board reviewed these documents,
      verified the accounts to which they relate and heard the
      observations of the Statutory Auditors. The Supervisory Board
      has no additional observation to make in this respect.
      The Supervisory Board notes that the appointment as principal
      Statutory Auditor held by PricewaterhouseCoopers will expire at
      the Shareholders’ Meeting called to approve the financial
      statements for fiscal year 2005, and suggests that the
      shareholders renew such appointment. Likewise, the Supervisory
      Board suggests that Mr. Etienne Boris be appointed as alternate
      Statutory Auditor to replace Mr. Pierre Coll whose appointment
      will also expire. An application for authorization from the French
      Banking Commission was made in respect of both these
      suggestions.
      The Supervisory Board recommends that you approve CIC’s
      income and the other resolutions being put to you.
      The Supervisory Board would particularly like to thank the
      Executive Board and all the employees of the bank for the
      progress they have made and the results they have achieved
      throughout the year in a difficult economic climate, without
      weakening growth momentum and while continuing to restructure
      the group. The progress achieved has given the group a more
      uniform and consistent image throughout its network and
      specialist subsidiaries, most of which are now shared with Crédit
      Mutuel. Mobilizing all our employees is required more than ever
      to allow us to succeed on our chosen path.

                                                The Supervisory Board.
                                                                                ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                137




Statutory Auditors’ report on the                                               financial statements, as well as evaluating the overall financial
consolidated financial statements                                                statement presentation. We believe that our audit provides a
                                                                                reasonable basis for our opinion.
Year ended December 31, 2005
This is a free translation into English of the Statutory Auditors’ report       In our opinion, the consolidated financial statements give a true
issued in the French language and is provided solely for the convenience        and fair view of the assets and liabilities, and of the financial
of English speaking readers. The Statutory Auditors’ report includes            position of the group at December 31, 2005, as well as of the
information specifically required by French law in all audit reports, whether    results of operations for the year then ended in accordance with
qualified or not, and this is presented below the opinion on the consolidated
                                                                                IFRS as adopted by the European Union.
financial statements. This information includes an explanatory paragraph
discussing the auditors’ assessments of certain significant accounting
and auditing matters. These assessments were considered for the purpose         II - Justification of our assessments
of issuing an audit opinion on the consolidated financial statements taken
                                                                                In accordance with the requirements of Article L. 823-9 of the
as a whole and not to provide separate assurance on individual account
captions or on information taken outside of the consolidated financial           French Commercial Code relating to the justification of our
statements.                                                                     assessments, we bring to your attention the following matters:
This report, together with the Statutory Auditors’ report addressing            • the group records provisions to cover the credit risks inherent
financial and accounting information in the Chairman’s report on internal          to its business, as described in Note 2 to the consolidated
control, should be read in conjunction with, and construed in accordance
with, French law and professional auditing standards applicable in France.        financial statements. We examined the control systems
                                                                                  applicable for the monitoring of credit risk, the methods for
To the Shareholders,                                                              setting aside provisions, the assessment of the risk of non-
In accordance with the terms of our appointment at the Annual                     recovery and the determination of individual and collective
Shareholders’ Meeting, we have audited the accompanying                           impairment provisions to cover these risks;
consolidated financial statements of CIC for the year ended                      • the group uses internal models and methods to value financial
December 31, 2005.                                                                instruments that are not traded on active markets, as well as to
                                                                                  book certain provisions and assess the appropriateness of the
These consolidated financial statements have been approved by                      classification of certain transactions as hedges. We examined
the Executive Board. Our responsibility is to express an opinion on               the control systems applicable to the verification of these
the financial statements based on our audit.                                       models and the determination of the criteria used;
These financial statements have been prepared for the first time                  • the group records provisions for employee benefit commitments,
in accordance with International Financial Reporting Standards                    as described in Notes 2 and 25 to the consolidated financial
(IFRS) as adopted by the European Union. They include                             statements. As part of our audit we reviewed the assumptions
comparative information in respect of financial year 2004,                         and calculation methods used.
restated in accordance with the same standards, with the                        The assessments were made in the context of our audit of the
exception of IAS 32, IAS 39 and IFRS 4 which are only applied as                consolidated financial statements, taken as a whole, and there-
from January 1, 2005, as allowed by IFRS.                                       fore contributed to the formation of the unqualified opinion
                                                                                expressed in the first part of this report.
I - Opinion on the consolidated financial
    statements                                                                  III - Specific verification
We conducted our audit in accordance with French generally                      We also examined in accordance with the auditing standards
accepted auditing standards. Those standards require that we                    applicable in France the information given in the Executive Board
plan and perform our audit to obtain reasonable assurance about                 report.
whether the financial statements are free from material misstate-
ment. An audit includes examining, on a test basis, evidence                    We have no comments to make as to the fair presentation of this
supporting the amounts and disclosures in the financial state-                   information and its conformity with the consolidated financial
ments. An audit also includes assessing the accounting principles               statements.
used and significant estimates made in the preparation of the
                                                                                                               Neuilly-sur-Seine, April 24, 2006


                                                                  The Statutory Auditors
                   PricewaterhouseCoopers Audit                                                     Barbier, Frinault & Autres
                                                                                                         Ernst & Young
                   Jacques Lévi – Agnès Hussherr                                                 Richard Olivier – Olivier Durand
138      LEGAL INFORMATION




      Statutory Auditors’ report on the financial                                      • the CNC press release of December 20, 2005, concerning future
      statements                                                                        commitments arising on home savings accounts and plans.
      Year ended December 31, 2005
                                                                                      II - Justification of our assessments
      This is a free translation into English of the Statutory Auditors’ report
      issued in the French language and is provided solely for the convenience        In accordance with the requirements of Article L.823-9 of the
      of English speaking readers. The Statutory Auditors’ report includes            French Commercial Code relating to the justification of our
      information specifically required by French law in all audit reports, whether    assessments, we bring to your attention the following matters:
      qualified or not, and this is presented below the opinion on the financial
      statements. This information includes an explanatory paragraph discussing       • as part of our assessment of the accounting rules and principles
      the auditors’ assessments of certain significant accounting and auditing           applied by the bank, we obtained assurance about the
      matters. These assessments were considered for the purpose of issuing an          appropriateness of the change in accounting method set out
      audit opinion on the financial statements taken as a whole and not to              above and the description provided thereof in the notes to the
      provide separate assurance on individual account captions or on
      information taken outside of the financial statements.                             financial statements;
                                                                                      • the bank records provisions to cover the credit risks inherent to
      This report, together with the Statutory Auditors’ report addressing
      financial and accounting information in the Chairman’s report on internal
                                                                                        its business, as described in Note 1 to the financial statements.
      control, should be read in conjunction with, and construed in accordance          We examined the control systems applicable for the monitoring
      with, French law and professional auditing standards applicable in France.        of credit risk, the assessment of the risk of non-recovery and
                                                                                        the determination of specific and general provisions to cover
      To the Shareholders,                                                              these risks;
      In accordance with the terms of our appointment at the Annual                   • the bank uses internal models and methods to value its positions
      Shareholders’ Meeting, we present below our report for the year                   relating to financial instruments which are not listed on
      ended December 31, 2005, on:                                                      organized markets, and to calculate certain provisions, as
      • our audit of the accompanying financial statements of CIC;                       described in Note 1 to the financial statements. We examined
      • the justification of our assessments;                                            the control systems applicable to the verification of these
      • the specific verifications and information required by law.                       models and the determination of the criteria used;
                                                                                      • the group records provisions for pensions and other post-
      These financial statements have been approved by the Executive
                                                                                        employment benefits, as described in Note 1 to the financial
      Board. Our responsibility is to express an opinion on the financial
                                                                                        statements. As part of our audit we reviewed the assumptions
      statements based on our audit.
                                                                                        and calculation methods used.
      I - Opinion on the financial statements                                          As part of our assessments, we obtained assurance that the
                                                                                      resulting estimates were reasonable.
      We conducted our audit in accordance with French generally
      accepted auditing standards. Those standards require that we plan               The assessments were made in the context of our audit of the
      and perform our audit to obtain reasonable assurance about whether              financial statements, taken as a whole, and therefore contributed
      the financial statements are free from material misstatement. An                 to the formation of the unqualified opinion expressed in the first
      audit includes examining, on a test basis, evidence supporting the              part of this report.
      amounts and disclosures in the financial statements. An audit also
      includes assessing the accounting principles used and significant                III – Specific verifications and information
      estimates made in the preparation of the financial statements, as well           We have also performed the specific verifications required by law, in
      as evaluating the overall financial statement presentation. We believe           accordance with the professional standards applicable in France.
      that our audit provides a reasonable basis for our opinion.                     We have no matters to report regarding the fair presentation and
      In our opinion, the financial statements give a true and fair view of            the conformity with the financial statements of the information
      the bank’s financial position and its assets and liabilities at                  given in the report of the Executive Board, and in the documents
      December 31, 2005, and of the results of its operations for the                 addressed to the shareholders with respect to the financial
      year then ended, in accordance with the accounting rules and                    position and financial statements.
      principles applicable in France.                                                In accordance with French law, we draw your attention to the fact
      Without qualifying the opinion expressed above, and in                          that the report of the Executive Board does not provide full
      accordance with Article L.232-6 of the French Commercial Code                   disclosure as required under Article L. 225-102-1 of the French
      (Code de commerce), we draw your attention to Note 1 to the                     Commercial Code, in relation to the following matters:
      financial statements which describes the change in accounting                    • the disclosure required under said Article relating to manage-
      method resulting from the first-time application of:                               ment compensation. This information does not include compen-
      • CRC standard 2002-10 concerning the depreciation, amortization                  sation paid to members of the Supervisory Board;
        and impairment of assets, and CRC standard 2004-06 regarding                  • human resources data as required by said Article.
        the definition, recognition and measurement of assets;                         As required by law, we have verified that the information provided
      • Article 13 of CRC standard 2002-3 concerning the discounting of               concerning acquisitions of equity interests and the identity of
        recoverable amounts to calculate provisions for detected risks;               shareholders is disclosed in the report of the Executive Board.
      • standard CRC 2005-03 relating to discounts on restructured
        loans;                                                                                                        Neuilly-sur-Seine, April 24, 2006

                                                                        The Statutory Auditors
                         PricewaterhouseCoopers Audit                                                     Barbier, Frinault & Autres
                                                                                                               Ernst & Young
                         Jacques Lévi – Agnès Hussherr                                                 Richard Olivier – Olivier Durand
                                                                             ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                   139




Statutory Auditors’ special report                                           2.2 Agreement on managing insurance
on regulated agreements                                                          policies of the CIC group
Year ended December 31, 2005                                                 This agreement, authorized by the CIC Supervisory Board on May
                                                                             30, 2002 and signed on January 2, 2002, is aimed at defining
This is a free translation into English of the Statutory Auditors’ special
report issued in the French language and is provided solely for the          internal rules for pooling premiums and for handling claims of the
convenience of English speaking readers. This report should be read in       CIC group banks, subsidiaries and business centers. The agree-
conjunction with, and construed in accordance with, French law and           ment applies to all losses occurring as from January 1, 2002.
professional auditing standards applicable in France.                        The agreement does not, however, apply to the following entities:
To the Shareholders,                                                         CM-CIC Securities, CIC’s branches in London, New York and
                                                                             Singapore, and the foreign subsidiaries of the group banks.
In our capacity as Statutory Auditors of CIC, we present below our
report on regulated agreements.                                              As part of its process of updating the group’s professional liability
                                                                             insurance program, on September 11, 2003 the Supervisory
In application of Article 225-88 of the French Commercial Code               Board authorized the Executive Board to sign and implement
(Code de commerce), we were informed of agreements approved                  amendments to the management agreement relating to profes-
in advance by the CIC Supervisory Board.                                     sional liability insurance contracts.
Our responsibility does not include identifying any undisclosed              CIC paid €13.1 million in connection with the amendments to this
agreements. We are required to report to shareholders, based on              agreement in 2005.
the information provided, about the main terms and conditions of
agreements that have been disclosed to us, without commenting                2.3 Premiums and claims pooling agreement
on their relevance or substance. Under the provisions of Article                 for CIC group insurance policies
117 of the March 23, 1967 decree, it is the responsibility of                All the terms and provisions of the premiums and claims pooling
shareholders to determine whether the agreements are                         agreement for CIC group insurance policies, signed by the CIC
appropriate and should be approved.                                          group banks in May 1997 and amended by addendum in December
                                                                             1998 were replaced – effective from January 1, 2000 – by an
I - Agreements entered into during the year                                  agreement signed on May 10, 2000, which was authorized by the
We were not informed of any new agreements signed during the                 Supervisory Board on March 16, 2000.
year that would be governed by Article 225-86 of the French                  The agreement applies to all losses that occurred prior to January 1,
Commercial Code.                                                             2003. In 2005, the losses pooled under the agreement amounted
                                                                             to €945,724 for the group, leading to a credit of €94,111 for CIC.
II - Agreements entered into in prior years which
     remained in effect during the year                                      2.4 Secondment agreement

In application of the March 23, 1967 decree, we were advised of              At its September 12, 2002 meeting, the CIC Supervisory Board
the following agreements approved in prior years, which remained             authorized the Executive Board to establish an agreement
in force during the year.                                                    between CIC and Caisse Fédérale du Crédit Mutuel CEE, providing
                                                                             for the full-time secondment of Alain Fradin to CIC in the capacity
2.1 Subordinated loans granted by CIC to CIC Banque                          of Executive Board member. In accordance with this agreement,
    CIO, CIC Lyonnaise de Banque, and CIC Banque                             the compensation paid by Caisse Fédérale du Crédit Mutuel CEE
    Scalbert Dupont                                                          (salary and expenses) to Alain Fradin is repaid in full to Caisse
The CIC Supervisory Board approved subordinated loans to CIC                 Fédérale du Crédit Mutuel CEE by CIC.
Banque Scalbert Dupont on March 7, 2002, to CIC Banque CIO on                In 2005, CIC paid a gross taxable amount of €603,207 to Caisse
March 8, 2001 and to CIC Lyonnaise de Banque on May 26, 1999,                Fédérale du Crédit Mutuel CEE in connection with this agreement.
with a view to financing their development plans. The loans
amounted to €50 million, €30.5 million, and €55 million, respec-             2.5 Secondment agreements concerning
tively, and were granted in April 2002 for CIC Banque CIO, July                  CIC group bank Chief Executive Officers
2001 for CIC Lyonnaise de Banque, and May 1999 for CIC Banque                In accordance with CIC group policy, the Chief Executive Officers
Scalbert Dupont.                                                             of the group’s banks are on the payroll of CIC, and are seconded
The life of the loans granted to CIC Banque Scalbert Dupont, CIC             as corporate officers to the various banks.
Banque CIO and CIC Lyonnaise de Banque is ten years and their                The Supervisory Board authorized the signature of the secondment
amounts were unchanged at December 31, 2005. The interest                    agreements between CIC and the banks concerned on September
rate of the loans is 1% with a variable rate after the third year            15, 1999, September 12, 2002, and April 28, 2004.
indexed on growth of operating income before provisions.
                                                                             For 2005, CIC invoiced a total gross taxable amount of €2,166,945
In 2005, interest received by CIC from CIC Banque Scalbert                   to the entities concerned.
Dupont, CIC Banque CIO and CIC Lyonnaise de Banque amounted
to €500,000, €675,563 and €2,250,500 respectively.
140     LEGAL INFORMATION




      2.6 Agreement entered into between Factocic                          and tax consolidation agreements set up with Intersem and
          and the banks of the CIC group                                   Aidexport. In 2002, the CIC Supervisory Board authorized the
                                                                           withdrawal of CIC Epargne Salariale, effective from January 1,
      Due to the significant role played by CIC as a referral agent, the
                                                                           2002. It also authorized Est Gestion to join the tax group as from
      shareholders of Factocic have agreed upon a new compensation
                                                                           the same date. In 2003, your Supervisory Board authorized the
      system. This system offers more incentives for referral agents
                                                                           withdrawal of CIC Asset Management, effective from January 1,
      and is geared to the threefold aim of winning market share, foste-
                                                                           2003. At its meeting of December 15, 2005, your Supervisory
      ring customer loyalty and achieving earnings growth. On May 30,
                                                                           Board authorized the withdrawal of Cicotitres and Gesteurop
      2001, the CIC Supervisory Board authorized the Executive Board
                                                                           effective from January 1, 2005, and of CIC Régions-Finances, Est-
      to sign the above agreement.
                                                                           Gestion, CIC Ouest Gestion and CIC Nord-Ouest Gestion effective
      This was carried out on July 4, 2001. The agreement provides for     from January 1, 2006. These companies join the CIC sub-group.
      performance-related top-up commissions in addition to ordinary
                                                                           • Agreement between CIC, as parent company
      commissions, as well as additional ”loyalty” commissions for
                                                                             of the sub-group, and its direct subsidiaries
      contracts with a term of more than 12 months.
                                                                           CIC (formerly Compagnie Financière de CIC et de l’Union
      An addendum was attached to this agreement in 2002 concer-
                                                                           Européenne), in its capacity as parent company of the sub-group,
      ning the implementation of a specific procedure for any referral
                                                                           signed an agreement on June 30, 1995 with its direct subsidiaries
      business exceeding €15 million. A further addendum was then
                                                                           other than regional banks.
      signed in 2003 relating to the treatment of factoring agreements
      entered into with major corporate clients.                           Two addenda were attached to the agreement in 1996 and in
                                                                           1998 concerning payment of the surtaxes due by companies
      In 2005, CIC received net fees and commissions of €349,067.
                                                                           subject to corporate income tax. By virtue of the December 31,
      2.7 Tax consolidation agreements                                     1999 merger between Compagnie Financière de CIC et de l’Union
      • Agreements signed by CIC in its capacity as parent                 Européenne and CIC, the CIC tax group was extended to include
        company of the tax group                                           the entities that were previously members of the CIC Paris tax
                                                                           sub-group.
      On June 28, 1995 a master tax consolidation agreement was
      signed between CIC (formerly Compagnie Financière de CIC et de       Pursuant to approval by the Supervisory Board on December 19,
      l’Union Européenne), parent company of the tax group, and eight      2001, a third addendum was attached to the agreement for the
      regional banks, in their capacity as parent company of the sub-      purpose of deleting Article I-2 of the master agreement, relating
      groups. Similar agreements were signed with three other regional     to the payment date of taxes arising from the disposal of fixed
      banks and five common subsidiaries, which joined the tax group        assets owned by the group.
      as of January 1, 1996. Placinvest also joined the tax group on       An addendum related to the withdrawal of BLC from the tax group
      September 22, 1998. In 2001 another agreement was signed with        was authorized by the Supervisory Board on December 17, 2002
      CIC Banque Transatlantique, with effect from January 1, 2002.        and signed on December 18, 2002. Also on December 18, 2002,
      Under these agreements, each regional bank and CIC (formerly         a tax consolidation agreement was signed with CIC Epargne
      Compagnie Financière de CIC et de l’Union Européenne) forms a        Salariale, effective from January 1, 2002, following authorization
      sub-group for tax consolidation purposes. Each sub-group             received from the Supervisory Board on December 17, 2002.
      retains the benefit of any tax savings arising from tax consolida-    On December 18, 2003, the Supervisory Board authorized an
      tion and any gains realized at consolidated level are used to        addendum related to the tax consolidation of CIC Capital Privé,
      strengthen the subsidiaries’ shareholders equity or finance joint     SNC EL Chapulin 389, SNC EL Chapulin 706, SCI des Succursales
      projects.                                                            and SCI 28 Opéra, effective from January 1, 2004, and of CIC
      The master tax consolidation agreement has six addenda, two of       Asset Management, effective from January 1, 2003.
      which (numbers 1 and 3) relate to the payment, within the CIC tax    At its meeting of December 16, 2004, the Supervisory Board
      group, of the surtaxes due by companies subject to corporate         authorized the signature of an addendum whereby CIC Nord
      income tax. Two others concern the withdrawal of CIC Bonnasse        Ouest Gestion and Sofim became members of the tax group,
      Lyonnaise de Banque and Banque Régionale de l’Ain, sub-group         effective January 1, 2004 and January 1, 2005, respectively.
      parent companies, in 1997 and 1999 respectively, due to their
                                                                           At its meeting of December 15, 2005, the Supervisory Board
      joining the CIC Lyonnaise de Banque tax group. A fifth addendum
                                                                           authorized the signature of agreements whereby the following
      was signed in 2001 for the purpose of deleting Article II-2 of the
                                                                           entities became members of the CIC sub-group:
      master agreement, relating to the payment date of taxes arising
      from the disposal of fixed assets owned by the group.                 • SNC Corentin, Siméon and Louis-Philippe, effective from
                                                                             January 1, 2006;
      In addition, an agreement specifically concerning ”joint subsidia-
                                                                           • Cicotitires and Gesteurop, effective from January 1, 2005;
      ries” was signed on December 24, 1996. An addendum was
                                                                           • Finances et Stratégies, CIC Régions Finance, Est Gestion, CIC
      attached to this agreement in 1999 relating to the withdrawal of
                                                                             Ouest Gestion, CIC Nord Ouest Gestion, Sud-Est Gestion and
      UBR from the tax group. In 2001, a third addendum was signed
                                                                             GSO Finance, effective from January 1, 2006.
      concerning the withdrawal of Adepi and Fidecic from the tax group
                                                                        ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                 141




2.8 Agreement concerning the appointment                                2.10 Agreements between CIC and CIC Banque
    of Jean Huet as Executive Vice President,                                Scalbert Dupont, CIC Banque CIN and CIC
    Banking Activities                                                       Crédit Fécampois
In accordance with the Board of Directors’ June 20, 1996 decision,      Agreements were signed between CIC and CIC Banque Scalbert
the Chief Operating Officer of CIC Paris, member of the Board of         Dupont on June 1, 2002 and with CIC Banque CIN and CIC Crédit
Compagnie Financière de CIC et de l’Union Européenne, also held         Fécampois (CF) on December 1, 2002. These agreements were
the position of Executive Vice President, Banking Activities.           approved by the CIC Supervisory Board on March 6, 2003.
Following the end-1999 merger between Compagnie Financière              Under the terms of the agreements, CIC provides trading services
de CIC et de l’Union Européenne and CIC Paris, Jean Huet, member        for capital markets transactions carried out on behalf of the
of the Executive Board of CIC, also holds the position of Executive     clients of CIC Banque Scalbert Dupont, CIC Banque CIN and CIC
Vice President, Banking Activities in CIC.                              Crédit Fécampois. The trading orders are forwarded to CIC which
                                                                        executes the trades in its own name on behalf of the banks’
2.9 Agreement with CM-CIC Asset Management
                                                                        clients, acting as a del credere commission agent in compliance
As part of the pooling of CIC group fund management activities, a       with Article 132-1 of the French Commercial Code. CIC guarantees
marketing agreement was signed on December 20, 2000,                    settlement and delivery of the transactions but the banks
amended by addendum on February 14, 2001, between CIC and               continue to bear the counterparty risk in respect of their clients.
CIC Asset Management. This agreement specifies the fee to be
                                                                        The three regional banks will pay CIC a del credere commission
paid to CIC for marketing CICAM funds to its customer base. Since
                                                                        equal to 25% of the net profit on each transaction.
January 1, 2001, the fee has been set at 85% of net commission
income received by CICAM (except for certain funds). Under an           CIC received €232,613 in related net fees and commission in 2005.
addendum to this marketing agreement – authorized on April 28,
                                                                        We conducted our assignment in accordance with the professional
2004 by the CIC Supervisory Board – the fee was set at 95%.
                                                                        standards applicable in France. Those standards require that we
CIC received €22.8 million in related net fees and commission in        carry out the necessary procedures to verify the consistency of
2005.                                                                   the information disclosed to us with the source documents.



                                                                                                        Neuilly-sur-Seine, April 24, 2006



                                                          The Statutory Auditors
                 PricewaterhouseCoopers Audit                                               Barbier, Frinault & Autres
                                                                                                 Ernst & Young
                 Jacques Lévi – Agnès Hussherr                                           Richard Olivier – Olivier Durand
142      LEGAL INFORMATION




      Statutory Auditors’ report, prepared in                                         It is our responsibility to report to you our observations on the
      accordance with Article L.225-235 of the                                        information set out in the Chairman’s report on the internal
      French Commercial Code, on the report                                           control procedures relating to the preparation and processing of
      prepared by the Chairman of the Supervisory                                     financial and accounting information.
      Board on the internal control procedures                                        We performed our procedures in accordance with professional
      relating to the preparation and processing                                      guidelines applicable in France. Those guidelines require us to
      of financial and accounting information                                          perform procedures to assess the fairness of the information set
      Year ended December 31, 2005                                                    out in the Chairman’s report on the internal control procedures
                                                                                      relating to the preparation and processing of financial and
      This is a free translation into English of the Statutory Auditors’ report
      issued in the French language and is provided solely for the convenience        accounting information. These procedures notably consisted of:
      of English speaking readers. This report should be read in conjunction with,    • acquiring an understanding of the objectives and general
      and construed in accordance with, French law and professional auditing
                                                                                        organization of internal control, as well as the internal control
      standards applicable in France.
                                                                                        procedures relating to the preparation and processing of
      To the Shareholders,                                                              financial and accounting information, as set out in the
      In our capacity as Statutory Auditors of CIC, and in accordance                   Chairman’s report;
      with the provisions of Article L. 225-235 of the French Commercial              • acquiring an understanding of the work performed to support
      Code (Code de commerce), we report to you on the report                           the information given in the report.
      prepared by the Chairman of the Supervisory Board in accor-
                                                                                      On the basis of these procedures, we have no matters to report in
      dance with Article L. 225-68 of the French Commercial Code for
                                                                                      connection with the information given on the internal control
      the year ended December 31, 2005, on the internal control
                                                                                      procedures relating to the preparation and processing of financial
      procedures relating to the preparation and processing of finan-
                                                                                      and accounting information, contained in the report of the
      cial and accounting information.
                                                                                      Chairman of the Supervisory Board, prepared in accordance with
      It is for the Chairman of the Supervisory Board to give an account,             the final paragraph of Article L. 225-68 of the French Commercial
      in his report, notably of the conditions in which the work of the               Code.
      Supervisory Board is prepared and organized and the internal
      control procedures in place within CIC in accordance with the                                                   Neuilly-sur-Seine, April 24, 2006
      provisions of Article L.621-18-3 of the French Monetary and
      Financial Code.


                                                                        The Statutory Auditors
                         PricewaterhouseCoopers Audit                                                     Barbier, Frinault & Autres
                                                                                                               Ernst & Young
                         Jacques Lévi – Agnès Hussherr                                                 Richard Olivier – Olivier Durand
                                                                                ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                  143




Statutory Auditors’ report on the data                                          • floor: 85% x (TAM + fixed-rate bond index, or ”TMO”)/2;
used to determine interest payable                                              • cap: 130% x (TAM + TMO)/2.
on non-voting loan stock                                                        The agreement further stipulates that the participation ratio (PR)
Year ended December 31, 2005                                                    corresponding to the ratio between 2004 and 2005 consolidated
                                                                                net income will be adjusted to take into account changes in
This is a free translation into English of the Statutory Auditors’ report
issued in the French language and is provided solely for the convenience        shareholders’ equity, group structure or consolidation methods
of English speaking readers. This report should be read in conjunction with,    between the two years.
and construed in accordance with, French law and professional auditing
                                                                                Since 2005, CIC publishes its financial statements under IFRS. In
standards applicable in France.
                                                                                accordance with the resolution submitted for your approval, the
To the holders of CIC non-voting loan stock,                                    calculation of interest is based on consolidated net income for
                                                                                2004 and 2005, as determined by applying the same accounting
In our capacity as Statutory Auditors of CIC, and in application of
                                                                                procedures and consolidation methods based on a comparable
Article L.228-37 of the French Commercial Code (Code de
                                                                                group structure and comparable shareholders’ equity in accor-
commerce), we present below our report on the data used to
                                                                                dance with such standards (with the exception of IAS 32, IAS 39
determine interest payable on non-voting loan stock.
                                                                                and IFRS 4, which did not apply in 2004), giving a participation
On April 24, 2006, we presented our reports on the financial                     ratio (PR) of 14.667 for 2005 versus 14.764 for 2004.
statements of the bank and the consolidated financial statements
                                                                                The interest rate obtained by applying the above formula stands
for the year ended December 31, 2005.
                                                                                at 14.91% before application of the cap. The floor and cap rates
The interest computation method provided for at the time of                     are 2.49% and 3.80%, respectively.
issue of non-voting loan stock in May 1985 can be summarized
                                                                                Therefore, in accordance with the provisions of the issue agreement,
as follows:
                                                                                the gross interest paid in 2006 will amount to €5.79 per security.
• component equal to 40% of the annual monetary reference
                                                                                We conducted our audit in accordance with French generally
  rate, or ”TAM”;
                                                                                accepted auditing standards. Those standards require that we
• component equal to 43% of the TAM rate multiplied by a
                                                                                carry out the necessary procedures to verify the conformity and
  participation ratio (PR). For the interest due on May 28, 2006,
                                                                                consistency of the data used to calculate the interest due on
  the participation ratio is as follows:
                                                                                non-voting loan stock with the issue agreement and the audited
                          2005 adjusted consolidated net income                 financial statements of the bank and the group.
PR 2006 = PR 2005 x
                          2004 adjusted consolidated net income
                                                                                We have no matters to report concerning the data used to
The issue agreement sets a cap and a floor on interest payments,                 calculate the interest due on non-voting loan stock.
as follows:
                                                                                                                Neuilly-sur-Seine, April 24, 2006


                                                                  The Statutory Auditors
                   PricewaterhouseCoopers Audit                                                     Barbier, Frinault & Autres
                                                                                                         Ernst & Young
                   Jacques Lévi – Agnès Hussherr                                                 Richard Olivier – Olivier Durand
144     LEGAL INFORMATION




      Draft resolutions
      First resolution
      Approval of the financial statements of the bank
      for the fiscal year ended December 31, 2005
      After reviewing the terms of the Executive Board’s report to the
      Shareholders’ Meeting, its management report, the attached
      reports of the Chairman of the Supervisory Board regarding
      internal control and the functioning of the Board, the Supervisory      • for 2003, a dividend of €115,482,784.48 was distributed,
      Board’s report, the Statutory Auditors’ report and the annual             representing €3.28 per share, plus a tax credit of €1.64 subject
      financial statements for the fiscal year ended December 31, 2005,           to the provisions of the French Tax Code applicable to the
      the Shareholders’ Meeting approves said annual financial                   particular situation of the beneficiaries;
      statements as presented to it, which show net after-tax income of       • for 2004, a dividend of €133,086,867.48 was distributed,
      €96,881,712.36.                                                           representing €3.78 per share eligible in full for the 50% tax
                                                                                abatement mentioned in point 2° of Article 158 (3) of the French
      Second resolution
                                                                                Tax Code.
      Approval of the consolidated financial statements
      for the fiscal year ended December 31, 2005                              Fourth resolution
      After reviewing the terms of the Executive Board’s report to the        Agreements mentioned in Article L.225-86
      Shareholders’ Meeting, its management report, the attached              of the French Commercial Code
      reports of the Chairman of the Supervisory Board regarding              After reviewing the terms of the Statutory Auditors’ special report
      internal control and functioning of the Board, the Supervisory          on the transactions and agreements mentioned in Article L.225-
      Board’s report, the Statutory Auditors’ report and the consolidated     86 of the French Commercial Code, and deliberating on the basis
      financial statements for the fiscal year ended December 31, 2005,         of this report, the Shareholders’ Meeting approves the transac-
      the Shareholders’ Meeting approves said annual financial                 tions and agreements referred to in said report.
      statements as presented to it, which show net after-tax income of
      €578 million.                                                           Fifth resolution
                                                                              Ratification of the cooptation of a member
      Third resolution
                                                                              of the Supervisory Board
      Appropriation of income
                                                                              Pursuant to Article 12 of the bylaws, the Shareholders’ Meeting
      The Shareholders’ Meeting:                                              ratifies the Supervisory Board’s cooptation of Mr. Daniel Leroyer
      • notes that income for the fiscal year amounts to €96,881,712.36;       on May 19, 2005 to replace Mr. Jean-Pierre Schneider, who has
      • notes that retained earnings amount to €808,194,417.95;               resigned. Mr. Leroyer’s term of office will expire at the close of the
      • notes that, as a result, distributable income amounts to              Shareholders’ Meeting called to approve the financial statements
        €905,076,130.31,                                                      for fiscal year 2007.

      and decides to allocate this amount as follows:                         Sixth resolution
       - allocation to the special reserve provided for by Article 238 bis    Appointment of a new member
         AB of the French Tax Code for €146,000.00,                           of the Supervisory Board
       - dividend for ”A” series shares in respect of 2005 in the amount
                                                                              The Shareholders’ Meeting appoints Mr. Albert Peccoux as a
         of: €144,353,480.60;
                                                                              member of the Supervisory Board as from the date hereof for a
       - remaining balance to be entered in the retained earnings
                                                                              term of five years, to expire at the close of the Shareholders’
         account in the amount of: €760,576,649.71.
                                                                              Meeting called to approve the financial statements for fiscal
      As a result, the Shareholders’ Meeting sets the dividend to be          year 2010.
      paid for each series ”A” share at €4.10. However, the dividend that
      should be allocated to shares that are not eligible for dividends       Seventh resolution
      under French law will be paid into retained earnings.                   Appointment of a principal Statutory Auditor
      The dividend will be distributed on May 29, 2006.                       The Shareholders’ Meeting notes that the appointment as
      The total dividend distributed is eligible for the 40% tax abatement    principal Statutory Auditor of Pricewaterhouse Coopers, a firm of
      mentioned in point 2° of Article 158 (3) of the French Tax Code.        auditors registered with the Paris Statutory Auditors’ Board whose
                                                                              registered office is located at 63, rue de Villiers, 92200 Neuilly-
      In accordance with the provisions of French law, the Shareholders’      sur-Seine, will expire at the close of this meeting, and, at the
      Meeting is reminded that:                                               Supervisory Board’s suggestion and following the favorable
      • for 2002, a dividend of €95,224,033.92 was distributed, repre-        opinion of the French Banking Commission, the Shareholders’
        senting €2.72 per share, plus a tax credit of €1.36, subject to the   Meeting decides to renew the appointment as principal Statutory
        provisions of the French Tax Code applicable to the particular        Auditor of Pricewaterhouse Coopers for a period of six years, i.e.
        situation of the beneficiaries;                                        until the close of the Shareholders’ Meeting called to approve the
                                                                              financial statements for fiscal year 2011.
                                                                         ORDINARY SHAREHOLDERS’ MEETING OF MAY 11, 2006                  145




Eighth resolution                                                        Tenth resolution
Appointment of an alternate Statutory Auditor                            Powers
The Shareholders’ Meeting notes that the appointment of Mr.              The Shareholders’ Meeting gives full powers to the bearer of a
Pierre Coll as alternate Statutory Auditor will expire at the close of   copy of or excerpt from the minutes of this meeting to carry out
this meeting, and, at the Supervisory Board’s suggestion and             all the formalities required by French law or the French authorities
following the favorable opinion of the French Banking Commission,        and to carry out all filing and publicity formalities required by the
the Shareholders’ Meeting decides to appoint Mr. Etienne Boris,          laws in force.
63, rue de Villiers, 92200 Neuilly-sur-Seine, as alternate
Statutory Auditor for a period of six years, i.e., until the close of
the Shareholders’ Meeting called to approve the financial
statements for fiscal year 2011.

Ninth resolution
Authorization for the Executive Board to buy back
the bank’s ”A” series shares
After reviewing the terms of the Executive Board’s report, the
Shareholders’ Meeting:
• cancels, with immediate effect, the authorization given to the
  Executive Board under the ninth resolution of the May 19, 2005
  Combined Ordinary and Extraordinary Shareholders’ Meeting to
  trade in the bank’s ”A” series shares in order to stabilize the
  market price thereof;
• within the scope of the provisions of Articles L.225- 209 et seq.
  of the French Commercial Code, and Title IV of Book II of the
  general regulations of the Autorité des marchés financiers and
  its implementing instructions, authorizes the Executive Board,
  with immediate effect, to trade in the bank’s ”A” series shares on
  the stock exchange under the following conditions:
 - shares must be purchased and sold pursuant to a liquidity
   agreement entered into with an investment service provider in
   accordance with the regulations in force;
 - these operations will be carried out by the service provider
   with a view to ensuring the liquidity and proper listing of CIC
   shares on the Paris stock exchange;
 - the maximum purchase price is set at €240 per share;
 - the maximum number of shares that may be purchased is set
   at 100,000, representing a maximum potential commitment
   of €24 million;
 - shares held in connection with the liquidity agreement will not
   be cancelled.
This authorization will remain in effect until October 31, 2007
inclusive.
The Shareholders’ Meeting grants full powers to the Executive
Board to enter into all agreements, carry out all formalities, and,
in general, take all the necessary steps within the aforementioned
framework.
146     LEGAL INFORMATION




                                                                             Authorized capital and expiration date
                                                                             of the authorizations
        Additional information
                                                                             Under its eleventh to fourteenth resolutions, the May 19, 2005
                                                                             Shareholders’ Meeting authorized the Executive Board to
                                                                             increase the capital with or without pre-emptive subscription
                                                                             rights or to make a public exchange offer. These authorizations
                                                                             are valid for a twenty-six month period. The maximum limit for the
      Capital                                                                increases in capital under this authorization is set at €150 million;
                                                                             furthermore, if the Executive Board were to issue debt securities
      General information about the capital
                                                                             granting rights to the capital, the par value of these securities
      Amount and composition of capital                                      would in turn be capped at one billion six-hundred million euros.
      At December 31, 2005, CIC’s capital amounted to €563,330,656
      divided into 35,208,166 ”A” series common shares with a par            On the basis of the price of the CIC share at December 31, 2005,
      value of €16, all fully paid up.                                       these authorizations would make it possible in theory to create
      As authorized by the Combined Ordinary and Extraordinary               9,375,000 new shares for a total issue amount of slightly over
      Shareholders’ Meeting of May 26, 1999, the Executive Board             €1,462 million.
      converted the bank’s capital into euros following its decision of      None of these authorizations were used in 2005. As these
      June 19, 2001. The par value of each share was changed to €16          authorizations are valid until July 19, 2007, there is no need to
      from FRF 100, resulting in a capital increase of €26,435,111.72.       renew them in 2006.
      During 2003, Banque Fédérative du Crédit Mutuel transferred to
                                                                             Securities not carrying the right to a stake in equity
      CIC 705,000 shares in Fédébail, representing 94% of that
      company’s capital. This transfer – which was approved by the           None
      Extraordinary Shareholders’ Meeting of May 15, 2003 – was
      financed through the issue of 199,330 new CIC shares with a par
      value of €16 to BFCM. Following this transaction, CIC’s capital
      increased from €560,141,376 to €563,330,656.


      Changes in capital

                                                      2001                              2002
                                          Number              Amount        Number              Amount
                                          of shares            in €         of shares            in €
       At January 1                      35,008,836      533,706,264        35,008,836         560,141,376
       Capital increase in cash
       o/w additional paid-in capital
       Share contribution
       Capital increase                                        26,435,111
       by capitalizing reserves
       TOTAL CAPITAL                     35,008,836          560,141,376    35,008,836       560,141,376
       AT DECEMBER 31


                                                      2003                              2004                                2005
                                          Number              Amount        Number              Amount          Number              Amount
                                          of shares            in €         of shares            in €           of shares            in €
       At January 1                      35,008,836          560,141,376    35,208,166       563,330,656        35,208,166       563,330,656
       Capital increase in cash
       o/w additional paid-in capital
       Share contribution                   199,330            3,189,280
       Capital increase
       by capitalizing reserves
       TOTAL CAPITAL                     35,208,166          563,330,656    35,208,166      563,330,656         35,208,166       563,330,656
       AT DECEMBER 31
                                                                                                          ADDITIONAL INFORMATION            147




Ownership structure at December 31, 2005
(shareholders holding more than 0.5% of the capital, or Supervisory Board members)

                                                                             Details of CIC shares purchased and sold by the bank on the market
                                             Number           %
                                             of shares      capital          are given on the next page.

 Banque Fédérative du Crédit Mutuel         24,931,049         70.81         The Combined Ordinary and Extraordinary General Meeting of
                                                                             shareholders and holders of voting rights certificates held on June
 Ventadour Investissement                     7,768,401       22.06
                                                                             17, 1998:
 Caisse Centrale de Crédit Mutuel              350,088         0.99
                                                                             • authorized shareholders to hold their ”A” series common shares
 Crédit Mutuel du Nord                          304,871         0.87           in either bearer or registered form;
 Cie Financière du Crédit Mutuel               264,650          0.75         • authorized the bank to obtain details of identifiable holders of
                                                                               shares and securities from Sicovam;
 Crédit Mutuel Maine-Anjou,                     242,523        0.69          • decided to add an article to the bylaws setting disclosure
 Basse-Normandie
                                                                               thresholds in addition to those prescribed by law.
 Crédit Mutuel Océan                           242,500         0.69
                                                                             There are no double voting rights. The 4,000 shares of treasury
 Current and former employees                  203,885          0.58
                                                                             stock held by CIC at December 31, 2005 are stripped of voting
 Crédit Mutuel Centre                           202,100         0.57         rights but do not have a material impact on the ownership structure
 Crédit Mutuel Loire-Atlantique                                              set out opposite or the allocation of voting rights between
                                                123,240         0.35
 Centre-Ouest                                                                shareholders.
 Crédit Mutuel de Normandie                      24,250         0.07
 Public, other shareholders                    550,609          1.56
 and liquidity agreement
 TOTAL                                     35,208,166       100.00


Changes in ownership structure over the past three years
                                                       At December 31, 2003           At December 31, 2004          At December 31, 2005
                                                      Number of                      Number of                     Number of
                                                       shares           %             shares           %             shares         %
 Banque Fédérative du Crédit Mutuel                    24,810,054        70.47%      24,892,604        70.70%      24,931,049         70.81%
 Ventadour Investissement                                7,768,401      22.06%         7,768,401      22.06%        7,768,401        22.06%
 Caisse Centrale du Crédit Mutuel                         350,088         0.99%         350,088         0.99%         350,088         0.99%
 Crédit Mutuel Nord                                       350,358          1.00%         318,864        0.91%         304,871         0.87%
 Cie Financière du Crédit Mutuel                                                                                      264,650          0.75%
 Crédit Mutuel Maine-Anjou, Basse-Normandie               242,523         0.69%         242,523         0.69%         242,523         0.69%
 Crédit Mutuel Océan                                      242,500         0.69%         242,500         0.69%         242,500         0.69%
 Current and former employees                             465,144          1.32%        358,706         1.02%         203,885         0.58%
 Crédit Mutuel Centre                                     202,100         0.57%         202,100         0.57%         202,100          0.57%
 Crédit Mutuel Loire Atlantique Centre-Ouest              123,240         0.35%          123,240        0.35%         123,240          0.35%
 Crédit Mutuel de Normandie                                24,250         0.07%          24,250         0.07%          24,250         0.07%
 Public, other shareholders and liquidity agreement       629,508          1.79%        684,890         1.95%         550,609          1.56%
 TOTAL                                                35,208,166       100.00%       35,208,166     100.00%       35,208,166       100.00%


Following the agreements entered into on September 11, 2001 between CIC, BFCM, GAN and Groupama, GAN’s 23% stake in CIC was
acquired by Ventadour Investissement, a wholly-owned BFCM subsidiary. In accordance with its contractual commitments, BFCM acquired
the shares sold by current and former employees of the CIC group who took part in the 1998 privatization. 463,394 CIC shares were sold
in July 2003 following the expiration of the 5-year vesting period. BFCM moreover received 199,330 new CIC shares as payment for the
transfer of 705,000 Fédébail shares, as approved by the Shareholders’ Meeting of May 15, 2003.
148     LEGAL INFORMATION




      Controlling shareholders                                               Market for CIC shares
      At December 31, 2005, CIC was controlled by Banque Fédérative
      du Crédit Mutuel which directly held 70.81% of the bank’s capital.     CIC ”A” series common shares
      Together with CIC, Crédit Mutuel is one of the major players in the    CIC common shares, or ”A” series shares, have been listed on the
      French banking industry, with a strong presence in retail banking      Paris Bourse since June 18, 1998.
      and bancassurance.                                                     CIC’s bylaws do not contain any clauses restricting the sale of ”A”
      Crédit Mutuel Centre Est Europe (CMCEE) is the largest of the 18       series shares. However, shareholders that increase or reduce
      Crédit Mutuel regional groups. Along with Crédit Mutuel du Sud-        their interest by 0.5% or more of the bank’s capital are required to
      Est and Crédit Mutuel Ile-de-France, it has 1,206 local branches       disclose their new interest.
      in the 30 départements that make up its territory.                     The Combined Ordinary and Extraordinary Shareholders’ Meeting
      With consolidated balance sheet assets of €318.5 billion at            of May 19, 2005, in its ninth resolution, renewed the authorization
      December 31, 2005, the CMCEE/SE/IDF-CIC group manages                  for the bank to trade in its own ”A” series common shares in order
      €309.2 billion worth of customer savings, including €89.7 billion      to stabilize the market price.
      in deposits, €178.5 billion in bank-type savings products and €41      CIC has a 45% stake in a liquidity group which in 2005:
      billion in insurance-type savings products. In 2005, the CMCEE/
                                                                             • purchased 14,203 CIC ”A” series shares at an average price per
      CIC group moreover granted loans totaling €122.8 billion.
                                                                               share of €177.02;
      At December 31, 2005, Banque Fédérative du Crédit Mutuel (BFCM),       • sold 11,573 CIC ”A” series shares at an average price per share of
      which is 95%-owned by Caisse Fédérale de Crédit Mutuel Centre            €177.25.
      Est Europe (CFCMCEE), held 92.87% of the capital of CIC, both          At December 31, 2005, the liquidity group held 4,000 CIC ”A”
      directly and through its subsidiary Ventadour Investissement.          series shares with a par value of €16, purchased at an average
      Banqe Fédérative du Crédit Mutuel, a holding company of the            price of €156.
      Crédit Mutuel Centre Est Europe group, owns a portfolio of interests
                                                                             At the Shareholders’ Meeting called for May 11, 2006, shareholders
      in four main business segments: banking and financial services,
                                                                             will be asked to renew the authorization given to the bank to trade
      insurance, real estate and technology. It performs financial
                                                                             in its own ”A” series common shares in order to stabilize the
      management, treasury and refinancing services for the group. It
                                                                             market price.
      also offers lending, financial engineering, fund flow management
      and securities dealing services to a clientele of major companies
                                                                             Market data – CIC ”A” series common shares
      and institutions.
      Crédit Mutuel Centre Est Europe/Sud-Est/Ile-de-France is                                                   Average         Share price
                                                                                                   Number        monthly
      pursuing a four-pronged strategy providing for the simultaneous                              of shares       value        Low      High
      development of retail banking, bancassurance, e-banking and                                   traded     in € millions    in €     in €
      mutual banking services. The strategy is now being implemented          January 2004           23,156         3.334      132.20     153.50
      jointly with CIC, by leveraging synergies and optimizing technical      February 2004           9,430         1.422      147.00    153.00
      resources, while maintaining each network’s specific identity,           March 2004            24,693          3.723      148.00    153.00
      market approach and structure. On January 1, 2006, the
                                                                              April 2004              8,222         1.230      136.50    150.90
      Fédération du Crédit Mutuel Savoie-Mont Blanc with its network
                                                                              May 2004                1,859         0.276      145.00    150.80
      of 60 banks and local branches joined those of CEE-SE-IDF in the
                                                                              June 2004              10,533          1.571     144.50     151.00
      scope of the Caisse interfédérale commune (CFCMCEE) and is
                                                                              July 2004               3,494         0.523      147.50     151.00
      now fully associated with group policy and development. These
      inter-federation alliances offer the group new prospects for            August 2004            9,206          1.368      145.00      151.40
      growth in high-potential regions. 60 points of sale are to be           September 2004        35,448          5.267      144.00     151.90
      created over the next two years within the group’s new scope.           October 2004           30,531         4.810       147.10   165.00
                                                                              November 2004         58,970         10.169      165.00    180.00
                                                                              December 2004         36,999           6.38      168.80    178.90
                                                                              January 2005          13,274           2.411     175.20    189.30
                                                                              February 2005          9,036         1.692       185.00    192.70
                                                                              March 2005             11,783         2.193      177.00     191.50
                                                                              April 2005             6,425          1.203       176.10    191.00
                                                                              May 2005                9,617         1.783      176.20    189.80
                                                                              June 2005             15,572          2.721      166.00    183.40
                                                                              July 2005             35,455         5.779        159.10   169.20
                                                                              August 2005            4,262         0.684       159.50    164.40
                                                                              September 2005        10,272          1.638      158.00    160.20
                                                                              October 2005          12,365         1.998        158.10   166.00
                                                                              November 2005           5,341        0.858       157.20    164.00
                                                                              December 2005         15,377         2.404        154.10   163.00
                                                                              January 2006          38,249          6.110      156.00    166.90
                                                                              February 2006           8,577        1.469       162.20    184.50
                                                                              March 2006             16,810        3.142       172.00    203.50
                                                                                                         ADDITIONAL INFORMATION            149




Dividends and dividend policy
Outstanding shares and securities
                                                           2001          2002                 2003             2004               2005
 Number of ”A” series shares                            35,008,836     35,008,836           35,208,166       35,208,166         35,208,166
 Net dividend on ”A” series shares (in €)                   2.36          2.72                 3.28             3.78               4.10
 TOTAL DIVIDEND PAYOUT (IN € MILLIONS)                      82.6          95.2                115.5            133.0              144.3
 Consolidated net income (in € millions)                    330           380                  462              532                578
 Payout ratio                                              25.0%         25.0%                25.0%            25.0%              25.0%



Non-voting loan stock                                                  2006 PR is equal to:
The non-voting loan stock issued in 1985 by Compagnie                  2005 PR x €578,253 thousand
Financière de Crédit Industriel et Commercial, which has since                   €582,088
become Crédit Industriel et Commercial, entitles holders to an         i.e., 14.764 x 0.9934 = 14.667
annual coupon made up of fixed and variable components.
Coupons are payable on May 28 of each year. This year’s coupon
                                                                       2006 coupon
is therefore payable on May 28, 2006. The coupon rate cannot           The coupon rate calculated from the income shown above,
be less than 85%, or more than 130%, of the sum of the annual          including both the fixed and variable components, came to 14.911%,
monetary reference rate (TAM) plus the fixed-rate bond index            which exceeds the cap provided for in the issue contract.
(TMO), divided by 2.                                                   Consequently, under the terms of the issue contract, the coupon
• The fixed-rate bond index (TMO) is the arithmetic mean of the         rate paid to holders of non-voting loan stock in May 2006, will be
  monthly average yields on the settlement dates for subscriptions     capped at 130% of the sum of the annual monetary reference
  of government-guaranteed bonds and equivalents. It is                rate (TAM) plus the fixed-rate bond index (TMO) divided by 2.
  established by France’s National Institute of Statistics and         The coupon rate will be 3.798%, on the basis of an annual
  Economic Studies (INSEE) for the period from April 1 to March 31     monetary reference rate of 2.2233% and an average fixed-rate
  prior to each maturity date.                                         bond index of 3.6233%. This means that the gross coupon due in
• The annual monetary reference rate (TAM) is the compounded           May 2006, will amount to €5.79 for each stock with a face value
  yield that would be earned on a monthly investment reinvested        of €152.45.
  each month at the average monthly money market rate
  calculated by the French Banking Association (AFB) during the        Coupon payments since 2002
  twelve months up to March.                                           (year paid)
Since January 1, 1999, this rate has been calculated by compoun-                                                      Coupon       Gross
ding the EONIA (Euro Overnight Index Average) instead of the                         PR        TAM %       TMO %       rate %     coupon
average monthly money market rate.                                      2002        9.431      4.1425      5.3192      6.150       €9.38
The fixed component of the coupon is 40% of the annual mone-             2003     10.484        3.2543      4.8992      5.300       €8.08
tary reference rate, as defined above. The variable component is
                                                                        2004      12.774       2.1932      4.4008      4.286       €6.53
43% of the annual monetary reference rate, as defined above,
multiplied by the ”participation ratio” (PR).                           2005     14.764        2.1058      4.2433      4.127       €6.29
The participation ratio used to calculate the variable component        2006     14.667        2.,2233     3.6233      3.798       €5.79
of the coupon due in May 2006 – 2006 PR – is equal to:
2005 PR x 2005 income as defined in the issue contract                  Non-voting loan stock price movements since 2001
          2004 income as defined in the issue contract
                                                                                       High                Low €                Close
The contract defines income as consolidated income adjusted for
                                                                        2001          146.00               136.00               140.00
changes in shareholders’ equity, changes in CIC group structure and
changes in consolidation methods.                                       2002          148.40               130.00               130.00

CIC group adjusted consolidated net income for 2005 and 2004, as        2003          146.00               130.00               150.00
determined by applying the same accounting procedures and               2004          175.00               145.00               172.00
consolidation methods on a comparable group structure basis,
                                                                        2005          179.80               179.80               179.80
amounted to €578,253 thousand and €582,088 thousand
respectively.                                                          On October 18, 1999, CIC non-voting loan stock with a face value of
2005 income has been calculated on the basis of IFRS, in accordance    FRF 1,000 was converted into stock with a face value of €152.45.
with the regulations in force. 2004 income is in fact 2004 pro forma
IFRS income excluding IAS 32-39 & IFRS 4.
150      LEGAL INFORMATION




                                                                               Fiscal year
        General information                                                    January 1 to December 31.

                                                                               Income appropriation (Article 30 of the bylaws)
                                                                               Income for the year corresponds to total revenues less general
      Legal information about CIC                                              operating expenses and other expenses of the bank, including
                                                                               depreciation, amortization and provisions.
      Name and registered office                                                At least 5% of net income for the year, less any losses brought
      The company name is:                                                     forward from prior years, is credited to the legal reserve until such
      Crédit Industriel et Commercial                                          time as the legal reserve represents one-tenth of the bank’s
      abbreviated to: CIC                                                      capital.

      This abbreviation can be used on its own.                                The balance remaining after effecting all necessary allocations to
                                                                               the long-term capital gains reserves and adding any retained
      Its registered office is located at: 6, avenue de Provence, 75009 Paris   earnings brought forward from prior years, corresponds to income
                                                                               available for appropriation.
      Applicable legislation and legal form
                                                                               The Shareholders’ Meeting may appropriate all or part of this
      Bank organized as a French société anonyme (corporation)                 amount to any revenue reserves or to retained earnings. Any
      governed by the Companies Act of July 24, 1966 (Act no. 66-537)          balance remaining after these appropriations is distributed to
      and the Banking Act of January 24, 1984 (Act no. 84-46). The bank        shareholders pro rata to their interests in the bank’s capital.
      has a two-tier management structure, with a Supervisory Board
      and an Executive Board.                                                  Dividends are paid on the date set by the Shareholders’ Meeting
                                                                               or, failing that, on the date chosen by the Executive Board.
      Company governed by French law                                           The Annual General Meeting may decide to offer each shareholder
                                                                               the option of receiving all or part of the dividend or any interim
      Incorporation date and expiration date
                                                                               dividend either in cash or in the form of shares.
      The bank was incorporated on May 7, 1859. Its term will expire on
      December 31, 2067, unless it is dissolved or its term is extended        General Meetings of Shareholders
      before that date.
                                                                               (summary of Articles 20 to 27 of the bylaws)
      Purpose (summary of Article 5 of the bylaws)                             All shareholders are entitled to attend General Meetings.
      The purpose of the bank is to acquire, hold and manage interests         There are no double voting rights.
      in all banking, financial, real estate, industrial and commercial
      companies in France and abroad.                                          Disclosure requirements
      The business of the bank is to carry out all banking operations and      (summary of Article 9 of the bylaws)
      to provide all investment services and related services for its own      In addition to statutory requirements, the bylaws require
      account and for all third parties, as well as insurance broking.         disclosure of any changes in ownership that result in shareholdings
                                                                               exceeding or falling below 0.5% of the share capital or any multiple
      Registration number and APE business                                     thereof. If a shareholder fails to comply with this requirement, the
      identifier code                                                           shares held in excess of the disclosure threshold may be stripped
      542 016 381 PARIS TRADE AND COMPANIES REGISTRY                           of voting rights on a motion tabled by one or more shareholders
                                                                               holding shares or voting rights at least equal to the smallest
      Business identifier code: 651 C.
                                                                               proportion of share capital or voting rights requiring disclosure,
      Legal documents relating to the bank                                     duly noted in the minutes of the Shareholders’ Meeting.

      The bylaws, minutes of shareholders’ meetings and reports can
                                                                               Dependence
      be consulted at the registered office located at 6, avenue de
      Provence, 75009 Paris (Corporate Secretary’s office).                     The CIC group is not dependent on any patents, licenses or indus-
                                                                               trial, commercial or financial supply agreements for the conduct
                                                                               of its business.
                                                                         GENERAL INFORMATION   151




Background
The bank was founded on May 7, 1859 under the name of ”Société
Générale de Crédit Industriel et Commercial”.
Since its formation, it has overseen the establishment of regional
banks in France’s leading cities. It opened its first foreign branch in
London in 1895.
In 1918 and 1927, the bank acquired interests in several regional and
local banks, including Banque Dupont, Banque Scalbert, Société
Normande de Banque et de Dépôts, Crédit Havrais, Crédit Nantais,
Crédit de l’Ouest and Banque Régionale de l’Ouest. It built up a group
of affiliated banks, which was extended further during the economic
crisis of the 1930s.
In 1968, the CIC group became a member of the Suez-Union des
Mines group.
In 1982, most of the banks in the CIC and Compagnie Financière de
Suez group were nationalized.
In 1984, after the French government had given the bank full
ownership of Banque de l’Union Européenne and enough shares in
the regional banks for it to control 51% of their share capital, the
banking businesses were spun off into a subsidiary created for this
purpose, named CIC Paris.
The bank became the parent company for the group and took the
name Compagnie Financière de Crédit Industriel et Commercial.
In 1985, GAN acquired an interest in Compagnie Financière de CIC.
GAN’s interest then increased as the interests of the Suez group and
the government decreased.
In 1987, the government transferred its remaining shares in the
regional banks to Compagnie Financière de CIC, which has owned the
entire capital of its banking subsidiaries since then.
In 1990, Compagnie Financière de CIC merged with Banque de
l’Union Européenne to form Compagnie Financière de CIC et de
l’Union Européenne, which operated under the business name of
”Union Européenne de CIC”.
On April 27, 1998, GAN sold a 67% interest in Compagnie Financière
de CIC et de l’Union Européenne to Banque Fédérative du Crédit
Mutuel (BFCM), in connection with the privatization of the CIC group
launched by the government on August 1, 1996.
On December 31, 1999, Compagnie Financière de CIC et de l’Union
Européenne merged with its wholly-owned subsidiary, Crédit Industriel
et Commercial. The merger was backdated to January 1, 1999 for
legal and accounting purposes and was carried out using the
simplified procedure. The merged company took the name Crédit
Industriel et Commercial and transferred its head office to 6, avenue
de Provence, Paris.
Following the agreements signed on September 11, 2001, between
CIC, BFCM, GAN and Groupama, GAN’s 23% stake in CIC was
acquired by Ventadour Investissement, a wholly-owned BFCM
subsidiary.
152     LEGAL INFORMATION




                                                                             Statutory Auditors
        Person responsible for
                                                                             Principal Statutory Auditors
        the registration document
                                                                             Name: PricewaterhouseCoopers Audit.
        (document de référence)                                              Address: Crystal Park - 63, rue de Villiers
        and Statutory Auditors                                               92208 Neuilly-sur-Seine Cedex.
                                                                             Represented by Jacques Lévi and Agnès Hussherr.
                                                                             First appointment began on: May 25, 1988.
                                                                             Length of current appointment: 6 fiscal years as from May 31, 2000.
                                                                             This appointment expires at the close of the Shareholders’
      Person responsible for the registration                                Meeting called to approve the financial statements for the fiscal
      document                                                               year ended December 31, 2005.
                                                                             Name: Barbier, Frinault et Autres, Ernst & Young.
      Person in overall charge of the registration
                                                                             Address: 41, rue Ybry - 92576 Neuilly-sur-Seine Cedex.
      document
                                                                             Represented by Richard Olivier and Olivier Durand.
      Michel Lucas, President of the Executive Board.                        First appointment began on May 26, 1999.
                                                                             Length of current appointment: 6 fiscal years as from May 19, 2005.
      Declaration by the person responsible                                  This appointment expires at the close of the Shareholders’
      for the registration document                                          Meeting called to approve the financial statements for the fiscal
      I declare that, having taken all reasonable care to ensure that        year ending December 31, 2010.
      such is the case, the information contained in the registration
                                                                             Alternate Statutory Auditors
      document is, to the best of my knowledge, in accordance with the
      facts and contains no omission likely to affect its import.            Pierre Coll, Pascal Macioce.

      I obtained a statement from the auditors – PricewaterhouseCoopers
      Audit, Barbier, Frinault et Autres and Ernst & Young – at the end of
      their engagement, in which they state having verified information
      relating to the financial position and the financial statements set
      out in this registration document, and having read the whole of
      the registration document.

                                                    Paris, April 24, 2006

                                                           Michel Lucas
                                       President of the Executive Board




      Fees paid by the group to the Auditors and members of their network
                                                                             PricewaterhouseCoopers           Barbier, Frinault et Autres
                                                                                      Audit                        Ernst & Young
       (in € millions)                                                         2005          2004               2005             2004
       Audit
       - Statutory audit and contractual audits                                2.40              2.10             1.74              1.50
       - Other engagements                                                     0.45                              0.03              0.07
       Other services
       - Legal and tax advisory services                                       0.20              0.10             0.01             0.09
       - Information technology
       - Internal audit
       - Other                                                                 0.02                              0.08
       TOTAL                                                                   3.07             2.20             1.86              1.66
                                                                                                                                         153




     Cross-reference table



Annex 1 of EU regulation no. 809/2004                                                                                            Pages

1      Persons responsible                                                                                                              152
2      Statutory Auditors                                                                                                               152
3      Selected financial information                                                                                                    5-6
4      Risk factors                                                                                                      50-58 / 112-117
5      Information about the issuer                                                                                          65 / 150-151
6      Principal activities                                                                                        5 / 8-32 / 66-68 / 150
7      Organizational structure                                                                                                8 / 92-94
8      Property, plant and equipment                                                                                                100-101
9      Operating and financial review                                                                                      65-68 / 70-72
10     Capital resources                                                                                                     73-74 / 106
11     Research and development, patents and licences                                                                                    NA
12     Trend information                                                                                                            68 / 119
13     Profit forecasts or estimates                                                                                                      NA
14     Administrative, management, and supervisory bodies and senior management                                                      36-44
15     Remuneration and benefits                                                                                              36 / 69 / 118
16     Board practices                                                                                                               36-44
17     Employees                                                                                                             58-59 / 147
18     Major shareholders                                                                                                           147-148
19     Related party transactions                                                                                                    117-118
20     Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses        64-132 / 149
21     Additional information                                                                                               111 / 146 / 150
22     Material contracts                                                                                                                NA
23     Third party information and statement by experts and declarations of interest                                                     NA
24     Documents on display                                                                                                         62 / 153
25     Information on holdings                                                                                              100 / 124-125


In accordance with Article 28 of European regulation No. 809-2004 on prospectuses and Article 212-11 of the general regulations issued by
the French Financial Markets Authority (Autorité des marchés financiers - AMF), the following are incorporated by reference:
• the consolidated financial statements, management report and Statutory Auditors’ report on the consolidated financial statements for
  the year ended December 31, 2004, presented on pages 68 to 105 and page 126, respectively, of registration document (document de
  référence) D. 05-0551 filed with the Autorité des marchés financiers on April 26, 2005 ;
• the consolidated financial statements, management report and Statutory Auditors’ report on the consolidated financial statements for
  the year ended December 31, 2003, presented on pages 44 to 98 and page 120, respectively, of registration document (document de
  référence) D. 04-0620, filed with the Autorité des marchés financiers on April 30, 2004.
The chapters of registration documents D. 05-0551 and D. 04-0620 not referred to above are either not relevant for the investor, or are
covered elsewhere in this registration document.




        This registration document was filed with the Autorité des marchés financiers on April 24, 2006, pursuant to Article 212-13
                                                      of the AMF’s General Regulations.
           It may only be used in connection with a financial transaction if it is acompanied by a memorandum approved by the AMF.
                This document is also available online on the Autorité des marchés financiers website (www.amf-france.org)
                    by accessing the “Decisions and Financial Information” page and clicking on the various search links.
                                          Website: www.cic.fr



                                                 Persons Responsible for Information
                                                   Hervé Bressan - Finance Director
                                                       Tel: +33 (0)1 45 96 81 90
                                            Bruno Brouchiquan - Communications Director
                                                      Tel: +33 (0)1 45 96 92 20


                                                             Published by
                                                                  CIC
                                                    External Relations Department




Designed and produced by
TroisQuatorze

Photo credits
Caroline Doutre




 The English-language version of this annual report is a translation of the original French text provided for information purposes only.
                                               It is not in any event a binding document.
       In the event of a conflict of interpretation, reference should be made to the French version which is the authentic text.
            The Auditors’ report applies to the French version of the Executive Board Report and the financial statements.
                                CIC –Société anonyme with an Executive Board and a Supervisory Board. Capital: €563,330,656
6, avenue de Provence – 75009 Paris – Tel: +33 (0)1 45 96 96 96 – Fax: +33 (0)1 45 96 96 66 – Telex: 688314 CICP – swift cmcifrpp – website: http://www.cic.fr
 Bank governed by Article L.511-1 of the French Monetary and Financial Code – Registered in Paris under no. 542 016 381 – Postal adress: 75452 Paris Cedex 09

								
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