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56, rue de Lille - 75356 Paris 07 SPPhone: +33 1 58 50 00 00www.caissedesdepots.fr

Annual Report

This annual report and the complete version,with the consolidated financial statements,are available at : www.caissedesdepots.frThey both are also available upon request to Group Corporate Communications: [email protected]: +33 1 58 50 31 86

EditorCaisse des Dépôts et Consignations

Group Corporate Communications

Design and production

CreditsJean-Marc Pettina - Richard Phelps Frieman

Patrick SordoilletGoodshoot - Photodisc

The images used toillustrate this annual reportcombine traditional photoswith 360° panoramic views,

which provide an originalpresentation of the

architectural diversity of the offices used by

Caisse des Dépôts. Building styles range from

the classical (the Belle-Isleand Pomereu townhouses)

to the modern (the Austerlitz, Athos

and Atrium buildings).

Profile Caisse des Dépôts et Consignations is a major French

public-sector institution. It was established in 1816 to

safeguard private deposits which required investment

in low risk securities. It has worked with French authorities since

then to carry out that charge, using the deposits to fund advances

in the country's social and economic development and to moder-

nize its financial system.

Caisse des Dépôts has become a powerful financial group and

fund manager, conducting both public-sector and open-market

activities. Total balance sheet assets amount to €349 billion. It

manages saving funds exceeding €209 billion and, through its

CDC IXIS Asset Management subsidiary, third-party assets of

nearly €300 billion. Caisse des Dépôts operates under the super-

vision of an independent Supervisory Board composed of

representatives of the French Parliament, the Judiciary and the

Treasury, and the Governor of the Banque de France, the coun-

try’s central bank.

In line with its overall strategy, Caisse des Dépôts Group has imple-

mented a restructuring plan that includes the separation of

public-interest activities from competitive businesses. Caisse des

Dépôts Group now has an optimal structure with which it can

express its values and realize its ambitions. Public-interest acti-

vities have been strengthened and the competitive businesses

have been grouped together into three major subsidiaries. The

first of these is EULIA, a financial institution 50.1% – owned by

Caisse des Dépôts and 49.9% – owned by Caisse Nationale des

Caisses d’Epargne, which groups together the two owners’ com-

petitive banking businesses, including in particular the investment

banking and financing unit, CDC IXIS. The other two subsidiaries

are CNP Assurances and C3D.

Caisse des Dépôts Group had consolidated net income of

€710 million in 2002. Its own investment activities accounted

for 45% of this total, while the three competitive businesses

accounted for the remaining 55%.

While remaining open to other partnership arrangements in Europe,

Caisse des Dépôts Group, through its CDC IXIS and CNP Assu-

rances subsidiaries, has a natural calling to work in partnership

with Caisses d’Epargne and La Poste as they change and expand

their competitive financial activities.

The objective of C3D and its subsidiaries is to ensure the con-

tinued growth of their mature businesses by transferring them to

the private sector or opening their capital to the market. Caisse

des Dépôts Group has already begun this process with respect

to three subsidiaries, namely Compagnie des Alpes, Médica

France and Egis Port. It will continue to support its other sub-

sidiaries that provide services and support for local develop-

ment so that they reach the required critical size in their markets,

which have become European or global in scale.

39,770 employees

Consolidated balance sheet 2002€349 billion

Consolidated net income 2002€710 million

2 Message from the Chairman of the Supervisory Board

3 Message from the Chairman and Chief Executive Officer

4 Key figures 2002: consolidated income statement and balance sheet

8 Socially responsible investment and sustainable development: a company-wide process

10 Caisse des Dépôts,long-term institutional investor

11 Risk management

Caisse des DépôtsGroup

Caisse des Dépôts, 56, rue de Lille – Paris

Last year, Caisse des Dépôts recorded consolidated net

income of €710 million, a 49% decrease in a deteriorating

financial market environment. Excluding non-recurring items

such as provision charges for the equity portfolios and accelerated

goodwill amortization, consolidated net income fell by only 8%.

This reflects the sound performance of the Caisse des Dépôts

Group’s competitive businesses, which accounted for 55% of

consolidated net income.

In early 2003, Caisse des Dépôts developed its new five-year

strategic plan in conjunction with the French government and

Parliament represented by the Supervisory Board. This plan

reaffirms the legitimacy of a large, State-owned public institution

focusing exclusively on the public interest at both the national and

local levels and operating in a now totally privatized banking and

financial landscape. The planned changes will have to respect three

principles: preserving the State’s ownership interests; enhancing

the strategic interests of our businesses; and maintaining social

responsibility through the fair and equitable treatment of the men

and women who make up the company.

Caisse des Dépôts will refocus its public-interest missions on the

major challenges facing the country. It will work on behalf of financial

decentralization. Indeed, the local and regional governments are

looking to Caisse des Dépôts to serve as a qualified and impartial

advisor and investor. They seek support for their development

projects, especially in the areas of regional venture capital, local

and regional digital infrastructure, urban renewal and the fight

against social exclusion. As retirement systems evolve, the company

must also become the benchmark fund manager for the

governmental and quasi-governmental retirement systems. The

company will mobilize its technical and financial expertise in order

to help develop public/private partnerships aimed at financing large-

scale public works. Finally, it will assist the government in the area

of public housing, especially by helping to promote home

ownership.

EULIA, which consolidates the company’s competitive businesses,

must be recast in order to create a sustainable and balanced alliance

with the Caisses d'Epargne Group. Currently, EULIA is in need of

fundamental changes, greater financial transparency and a more

efficient operating structure. We must work with the Regional

Savings Banks to redefine a workable company that will create

value for our financial business, notably CDC IXIS, and that is open

to French and European partnerships.

CNP Assurances has proven the success of its development model.

Now we must consolidate the gains made to date by stabilizing the

shareholders’ agreement between Caisse des Dépôts, the Caisses

d'Epargne and La Poste. We must also provide further support for

the company’s European expansion.

Our goal for C3D is to ensure the continued growth of its subsidiaries

that have reached maturity, either through a transfer to the private

sector or a public offering. Caisse des Dépôts has already begun

this process for three subsidiaries: Compagnie des Alpes, Médica

France and Egis Port. We will continue to support the development

of our other engineering and local and regional government services

companies. Our goal is to enable them to reach critical mass in

their markets, which have become European or global in scope. In

this capacity, Caisse des Dépôts is once again playing its traditional

role as an incubator for business activities.

Within five years, Caisse des Dépôts will have solidified its position

as a major financial institution focused on safeguarding the savings

and retirement funds of French citizens. It also aims to be a major

player in financial decentralization on behalf of the local and regional

governments. As a natural partner of the Caisses d'Epargne and

La Poste, the company will support their changes and the

development of their own competitive financial activities even as it

remains open to European partnerships.

Once again, Caisse des Dépôts will adroitly serve the country’s

needs and, while remaining true to its traditional values, will reconcile

the long-term goals and changes with current reforms.

Caisse des Dépôts Group - Annual Report 2002 32

Message from the Chairman and Chief Executive Officer

Message from the Chairman of the Supervisory Board

Francis Mayer

2002was a year of consolidation for the public-

interest missions and competitive businesses

of Caisse des Dépôts Group in a difficult and uncertain economic

environment.

The economic slowdown that began in 2001 became more

pronounced, as France‘s average annual GDP growth fell to 1%

and growth in the euro zone was a meager 0.7%.

Meanwhile, the financial risks in the banking sector increased as

a result of the economic weakness. Balance sheet restructurings,

cost reduction efforts and the postponement or even cancellation

of investment projects by companies all weighed heavily on the

economy. Lastly, the main stock market index in France plummeted

by more than half from its 2000 highs, with the CAC 40 falling from

6 600 in August 2002 to 3 064 at the end of the year.

In 2002, Caisse des Dépôts Group recorded consolidated net

income of €710 million, down 49% from the previous year. Excluding

non-recurring items, consolidated net income totaled €1,280 million,

down 8% from the €1,390 million recorded in 2001.

The Public Institution contributed €227 million to consolidated net

income, down from the €631 million contribution in 2001 as a

result of substantial impairment provisions charged against the

portfolios. EULIA, CNP Assurances and C3D accounted for 68%

of this figure.

The dividend paid to the State totaled €0.35 billion.

For its public-interest missions, Caisse des Dépôts continued

to expand its three business activities. As a public investor, the

company made private equity investments of €448 million on

behalf of national and local public policy initiatives (urban

renewal, business start-ups, local and regional development

and new communications and information technologies).

The fund management business was characterized by an increase

in the average volume of regulated deposits as well as enhanced

productivity in the area of retirement fund management. However,

income from the overall savings fund management business fell

sharply to €527 million, less than one-fourth the previous year’s

figure. This decline was due to the relatively high interest paid on

depositors’ accounts and a lower return on the assets.

The Supervisory Board would like to see the recommendations

put forth by Messrs Nasse and Noyer in their report implemented

as soon as possible.

Finally, in the lending business, Caisse des Dépôts pursued its

financing activities on behalf of public housing and urban renewal.

EULIA’s net income of €142 million was down 68% relative to

2001. This performance reflected the financial market downturn

that negatively affected the activities of CDC IXIS.

CNP Assurances turned in an above-average performance relative

to the personal insurance market, as premiums earned rose

by 6.2%.

C3D maintained its positions, with revenue up 23% and a

€107 million contribution to consolidated net income, up 43%

relative to 2001.

The role of the Supervisory Board, which was renewed in

September 2002, is to ensure that Caisse des Dépôts is managed

in an extremely prudent manner.

It ensures that the financial statements are accurate, and oversees

the protection of savings funds and the institution’s good governance.

Philippe Auberger