EFTA01378327.pdf

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > Europe Investment Grade BANQUE FED CRED MUTUEL Updated: Oct 30, 2015 Trade Idea: Buy Investment Rationale: - BFCM presents very solid fundamentals. It is part of the CM11-CIC Group (solidarity mechanism) which has a 13% market share of the French retail banking market. Strong geographic focus on France (around 74%), but small positions in Germany (Targobank), Benelux and Spain. - The business profile is healthy, with retail banking comprising around 70% of net banking income. BFCM released for 1H15 a net income of EUR919m (+2.6% yoy) based on higher net banking income (+9.5% yoy; increase in NIM, net fee in retail banking, and large contributions from gains on financial instruments at fair value and AfS assets), and slightly lower risk costs (-1.6% yoy). In regard to the capital adequacy levels the French regulator is focusing on the parent company Groupe CM11. The CET1 ratio was estimated at a solid 14.6% (under transitional rules) and the leverage ratio at 5.9%. Although the spreads recently recovered nicely there seems to be some juice left. Recommendation(s): Trade Ratings Issue Spread Cash View Horizon Ticker CPN Maturity CCY Size Yield Price ISIN S&P Mcody's Entry Target Loss Outpedorm 12 mo BFCM 3 05/21202 BBB A3 EUR 1,000 2 32 200 175 220 105.17 X51069549761 4 • Levels as of 10/30/2015 29 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075496 CONFIDENTIAL SDNY_GM_00221680 EFTA01378327