BPCE - 2018 Registration document

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

It emerged in the fourth quarter that, for certain specific products managed on behalf of clients in Asia, the business model used led to the introduction of a hedging strategy that proved to be inadequate in the market conditions at year-end. The products involved are indexed to the worst performance of an underlying basket of shares or index and allow investors to receive enhanced periodic coupons in return for a risk of loss of capital at maturity, with the possibility that the product may expire early. This situation explains the decrease in revenues recognized by Natixis’ capital markets activities in the fourth quarter of 2018, amounting to € 86 million, plus € 173 million of impairment to cover the management of these products. This decrease in revenues is exceptional and regards an activity whose revenues did not significantly contribute to the medium-term plan. It in no way calls into question the objectives of the strategic plan. Planned sale by Natixis and acquisition by BPCE SA group of the Factoring, Sureties & Financial Guarantees, Leasing, Consumer Finance and Securities Services business lines On September 12, 2018, Natixis and BPCE announced Natixis’ plan to sell its Factoring, Sureties & Financial Guarantees, Leasing, Consumer Finance and Securities Services business lines to BPCE SA group for € 2.7 billion. This transaction, if completed, will contribute significantly to the achievement of Natixis and BPCE’s strategic plans. In particular, it will allow Natixis to step up the development of its asset-light model and BPCE to strengthen its universal banking model. This is an internal transaction with no impact on the Group’s consolidated financial statements. The sale is scheduled to take place by the end of Q1 2019, subject to the conditions precedent being lifted; in particular, BPCE must complete a capital increase – and the newly issued shares acquired by the Banque Populaire banks and Caisses d’Epargne – and the necessary regulatory approvals must be obtained. During the fourth quarter of 2018, the operational implementation of the project was prepared and the various stages leading to the completion of the transaction initiated.

Madagascar, Banque des Mascareignes Madagascar, to the Moroccan cooperative group Banque Centrale Populaire (BCP Maroc). This disposal had no material impact on income for the year. On December 21, 2018, BPCE International signed an agreement with BCP Maroc for the sale of its other African subsidiaries, Banque Tuniso Koweitienne and its subsidiaries, Banque Commerciale Internationale (BCI) in Congo, BICEC in Cameroon and Banque Malgache de l’Océan Indien in Madagascar. This disposal is subject to the approval of the banks’ regulatory authorities. These entities’ assets and liabilities are presented in accordance with IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations” and are detailed in Note 5.7. On February 12, 2019, Groupe BPCE announced it was in exclusive negotiations with Auchan Holding for the acquisition of a 50.1% interest in Oney Bank SA to further its European growth in local digital banking and consumer credit under the Oney brand and to ramp up Oney Bank’s development with the Group’s expertise, in particular in payments. This transaction is consistent with the Group’s strategy of expanding in retail banking in Europe by drawing on its expertise in specialized financial services and in particular payments. This project remains subject to the usual consultation process and conditions precedent for this type of deal, and in particular the approval of the French and European regulatory authorities. It is scheduled for completion in the second half of 2019. On February 8, 2019, BPCE’s Board of Directors and the Steering and Supervisory Board of Caisse d’Epargne Ile-de-France approved the sale of Banque de Tahiti and Banque de Nouvelle-Calédonie and a portfolio of loans to Caisse d’Epargne Ile-de-France. At December 31, 2018 and pursuant to IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), the assets and liabilities of these two entities were reclassified as assets and liabilities of entities held for sale. POST-BALANCE SHEET EVENTS 1.4 Planned acquisition of an interest in Oney Bank SA Disposal of Banque de Tahiti and Banque de Nouvelle-Calédonie

5

Planned disposal of BPCE International’s African subsidiaries

On October 16, 2018, BPCE International sold Banque des Mascareignes, a bank based in Mauritius, and its subsidiary in

Note 2

Applicable accounting standards and comparability

REGULATORY FRAMEWORK 2.1 The consolidated financial statements of Groupe BPCE were prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union and applicable at the reporting date, excluding certain provisions of lAS 39 relating to hedge accounting. 2.2 The standards and interpretations used and detailed in the annual financial statements as at December 31, 2017 were complemented by standards, amendments and interpretations whose application is mandatory for reporting periods starting from January 1, 2018. ACCOUNTING STANDARDS

New IFRS 9 “Financial Instruments” was adopted by the European Commission on November 22, 2016 and is applicable retrospectively as of January 1, 2018. IFRS 9 replaces IAS 39 and defines the new rules for classifying and measuring financial assets and liabilities, the new impairment methodology for the credit risk of financial assets, and hedge accounting, except for macro-hedging, which the International Accounting Standards Board (IASB) is currently studying in a separate draft standard.

427

Registration document 2018