BPCE - 2018 Registration document

FINANCIAL REPORT IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2018

Note 1

General background

GROUPE BPCE 1.1 Groupe BPCE comprises the Banque Populaire network, the Caisse d’Epargne network, the BPCE central institution and its subsidiaries. Two banking networks: the Banque Populaire banks and the Caisses d’Epargne Groupe BPCE is a cooperative group whose shareholders own the two retail banking networks: the 14 Banque Populaire banks and the 15 Caisses d’Epargne. Each of the two networks owns an equal share in BPCE, the Group’s central institution. The Banque Populaire network consists of the Banque Populaire banks and the Mutual Guarantee Companies granting them the exclusive benefit of their guarantees. The Caisse d’Epargne network consists of the Caisses d’Epargne and the Local Savings Companies (LSCs). The Banque Populaire banks are wholly-owned by their cooperative shareholders. The capital of the Caisses d’Epargne is wholly-owned by the LSCs. Local savings companies are cooperative structures with open-ended share capital owned by cooperative shareholders. The LSCs are tasked with coordinating the cooperative shareholder base, in line with the general objectives defined by the individual Caisse d’Epargne with which they are affiliated, and cannot perform banking transactions. BPCE BPCE, a central institution as defined by the French Banking Law and a credit institution licensed to operate as a bank, was created pursuant to law No. 2009-715 of June 18, 2009. BPCE was incorporated as a French limited liability company governed by a Management Board and a Supervisory Board, whose share capital is owned jointly and equally by the 14 Banque Populaire banks and the 15 Caisses d’Epargne. BPCE’s corporate mission embodies the continuity of the cooperative principles underlying the Banque Populaire banks and the Caisses d’Epargne. Specifically, BPCE represents the interests of its various affiliates in dealings with the supervisory authorities, defines the range of products and services offered by them, organizes depositor protection, approves key appointments of company directors and oversees the smooth functioning of the Group’s institutions. As a holding company, BPCE is the head entity of the Group and holds the joint ventures between the two networks in Retail Banking and Insurance, corporate banking and financial services, and their production units. It defines the Group’s corporate strategy and growth and expansion policies. The network and BPCE’s main subsidiaries, including Natixis, a 70.78%-owned listed company, are organized around three core business lines: Retail Banking and Insurance includes the Banque Populaire and ● Caisse d’Epargne networks, the Natixis Specialized Financial Services and Insurance business line and Other networks (Crédit Foncier, Banque Palatine and BPCE International);

these transactions in the broader interests of the Group. BPCE also provides banking services to the other Group entities.

GUARANTEE MECHANISM 1.2 Pursuant to Articles L. 511-31 and L. 512-107-6 of the French Monetary and Financial Code, the guarantee and solidarity mechanism was set up to ensure the liquidity and capital adequacy of the Group and its associates, and to organize financial support within the Banque Populaire and Caisse d’Epargne networks. BPCE is tasked with taking all measures necessary to guarantee the capital adequacy of the Group and each of the networks, including implementing the appropriate internal financing mechanisms within the Group and establishing a Mutual Guarantee Fund common to both networks, for which it determines the operating rules, the conditions for the provision of financial support to the existing funds of the two networks, as well as the contributions of associates to the fund’s initial capital endowment and reconstitution. BPCE manages the Banque Populaire Network Fund and the Caisse d’Epargne Network Fund and has put in place the Mutual Guarantee Fund. The Banque Populaire Network Fund was formed by a deposit made by the Banque Populaire banks of € 450 million that was booked by BPCE in the form of a 10-year term account which is indefinitely renewable. The deposit made to the Caisse d’Epargne Network Fund by the Caisses d’Epargne of € 450 million was booked by BPCE in the form of a 10-year term account which is indefinitely renewable. The Mutual Guarantee Fund was formed by deposits made by the Banque Populaire banks and the Caisses d’Epargne. These deposits were booked by BPCE in the form of 10-year term accounts which are indefinitely renewable. The amount of the deposits by network was € 181 million as of December 31, 2018. The total amount of deposits made to BPCE in respect of the Banque Populaire Network Fund, the Caisse d’Epargne Network Fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3% of the total risk-weighted assets of the Group. The booking of deposits in the institutions’ individual accounts under the guarantee and solidarity system results in the recording of an item of an equivalent amount under a dedicated capital heading. The Mutual Guarantee Companies (sociétés de caution mutuelle), whose sole corporate purpose is to guarantee loans issued by Banque Populaire banks, are covered by the liquidity and capital adequacy guarantee of the Banque Populaire banks with which they are jointly licensed in accordance with Article R. 515-1 of the French Monetary and Financial Code. The liquidity and capital adequacy of the Caisses de Crédit Maritime Mutuel are guaranteed in respect of each individual Caisse, by the Banque Populaire bank which is both the core shareholder and provider of technical and operational support for the Caisse in relation to the partner Banque Populaire bank. The liquidity and capital adequacy of the Local Savings Companies are secured, firstly, at the level of each individual local savings company by the Caisse d’Epargne of which the local savings company in question is a shareholder. BPCE’s Management Board holds all the requisite powers to mobilize the resources of the various contributors without delay and in accordance with the agreed order, on the basis of prior authorizations given to BPCE by the contributors.

5

Asset & Wealth Management; ● Corporate & Investment Banking. ●

In respect of the Group’s financial functions, BPCE is responsible, in particular, for the centralized management of surplus funds, for the execution of any financial transactions required to develop and fund the Group, and for choosing the most appropriate counterparty for

267

Registration document 2018