BPCE - 2018 Registration document

5 FINANCIAL REPORT

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

SIGNIFICANT EVENTS 1.3 Project to integrate Crédit Foncier’s operations and expertise into Groupe BPCE Timeline and content On June 25 and 26, 2018, respectively, the BPCE Supervisory Board and the Crédit Foncier Board of Directors gave their approval, in principle, to start a project to integrate Crédit Foncier’s operations and redeploy its expertise throughout Groupe BPCE’s entities. On July 20, 2018, Crédit Foncier’s Executive Management team began the information and consultation process with the Works Council as provided for in Articles L. 1233-30 and L. 2223-31 of the French Labor Code, and started negotiations with the labor unions pursuant to regulations. These negotiations led to the signing of two majority agreements on the implementation of the project on October 26, 2018 – an Occupation and Skills Forecasting (GPEC) agreement and an employment protection plan (PSE). The employment protection plan is subject to administrative approval and was approved by the competent Regional Directorate for Enterprise, Competition Policy, Consumer Affairs, Labor and Employment (DIRECCTE) in December 2018. After consulting the Works Council, the CFF Board of Directors confirmed the effective implementation of the project at its meeting of November 21, 2018. The operational part of the integration, which will primarily take effect in the first half of 2019, includes the following: new loan production will be redeployed in the Group’s entities: ● Individual customer loans within the Banque Populaire banks and Caisses d’Epargne, Corporate financing shared by the Caisses d’Epargne and Banque Populaire banks for social housing, and Natixis for project and infrastructure financing; Socfim, which will become a direct subsidiary of BPCE SA group, ● will position itself as a global player in corporate real estate financing by combining long-term financing for real estate professionals with financing for developers; Crédit Foncier Immobilier will become a direct subsidiary of ● BPCE SA group; the special expertise and the projects initiated by Crédit Foncier ● will continue on a national level; Crédit Foncier will refocus on managing its outstanding loans and ● on the funding of public sector assets originated by the Group, through Compagnie de Financement Foncier. On December 20, 2018, Crédit Foncier filed a delisting offer for shares in its subsidiary Locindus. Subject to approval by the Autorité des Marchés Financiers (French Financial Markets Authority), the delisting will be completed in the first quarter of 2019. Human resources provisions are consistent with the aim of the project – the development of Crédit Foncier’s activities and the reorganization of its expertise in Groupe BPCE’s entities. Accordingly, employees whose positions will become redundant (around 1,400 people) will primarily be transferred to other Group entities, with financial arrangements in place to facilitate external mobility where applicable. The employment protection plan agreement, which provides for redundancy for economic reasons for those concerned, subject to the terms of the Crédit Foncier employment framework

(termination benefits aligned with seniority), will therefore only apply in exceptional cases to employees not wishing to take advantage of the more beneficial terms of the GPEC agreement. The GPEC agreement provides for the following: an “advance” voluntary redundancy plan allowing all employees ● whose positions will become redundant to leave on December 31, 2018 and benefit from various support measures, including financial support (termination benefits, retraining leave, etc.). As of December 31, 2018, 126 employees had volunteered for this option; in January 2019, all employees concerned who did not opt for the ● advance redundancy plan will be offered a similar position, in an equivalent category and the same geographical region in another Groupe BPCE company, with effect from April 1, 2019. Alternatively, after a cooling-off period if necessary, employees who do not wish to accept the proposed reclassification may opt for voluntary redundancy with the same terms as under the advance plan; for employees whose position is maintained (around 600 people), ● various provisions to maintain theirmployability (in particular via training) will be available. In addition, if further redundancies prove necessary to adapt the organizational structure and headcount to changes in the activities maintained by Crédit Foncier, the employees concerned will benefit from the same provisions as those set out above. Accounting impacts at December 31, 2018 In accounting terms, the integration of Crédit Foncier’s activities and the transfer of its expertise within Groupe BPCE will not call into question its operation as a going concern within the meaning of IAS 1. This project constitutes a restructuring as per IAS 37. The conditions that justify the recognition of a provision for restructuring costs are met. This provision will cover expenses arising for internal and external mobility, the expenses arising from the closure of the branch network and compensation for exclusive agents. The provision recorded for this purpose under operating expenses at December 31, 2018 amounted to € 334 million before tax and breaks down as follows: human resources costs: € 234 million. These essentially comprise ● termination benefits, the cost of retraining leave and various support measures based on assumptions regarding the choices made by employees between reclassification within Groupe BPCE or voluntary redundancy; operational costs: € 100 million. These mainly include the costs of ● the discontinuation of lending activities (lease termination costs, compensation for exclusive agents, the scrapping of branch fixtures and fixed assets). A conservative valuation of Crédit Foncier Immobilier led to the recognition of impairment on the full amount of the corresponding goodwill at December 31, 2018 ( € 13 million). Occurrence of an exceptional risk In the fourth quarter of 2018, Natixis recognized a decrease in revenues of € 259 million in connection with its equity derivatives activities, due to the occurrence of an exceptional risk related to the deterioration of the Asian markets.

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Registration document 2018