BPCE - 2018 Registration document

FINANCIAL REPORT Controls of accounting and financial reporting quality

CHANGES IN THE MECHANISM IN 2018 In 2018, the Group continued its efforts on accounting standardization and the streamlining of working methods for the production of consolidated accounting and financial data, while adapting them to internal and regulatory changes, in particular: the finalization of work on the Business Line View program, aimed ● at providing the Finance Control department with a system to consolidate and steer Groupe BPCE’s financial performances by allocating scarce Group resources for each business segment and for all entities according to liquidity, capital adequacy and profitability. The new mechanism was gradually rolled out in 2018 for the chosen process. The Budget/Medium-Term Plan process was launched mid year in order to consolidate the 2019 budget and the related Medium-Term Plan in a collaborative process with the entities. The new mechanism is interfaced with local information systems and central calculators (solvency, liquidity, ALM, accounting). It is based on shared standards and management rules and an innovative technological platform; the updating of information systems and Group processes in ● preparation for the implementation of IFRS 9 – Financial Instruments, applicable as of accounting production during the first quarter of 2018; the adaptation of information systems and Group processes in ● preparation for the implementation of IFRS 16 – Leases, applicable to leases as of January 1, 2019. This will mainly include the recognition in lessees’ balance sheets: under assets: of a right to use the leased assets, - under liabilities: of a debt corresponding to the present value of - lease payments; the implementation of requirements set out in Recommendation ● No. 239 published by the Basel Committee on Banking Supervision on January 9, 2013 relating to the necessity for banks to introduce measures aimed at improving risk data aggregation processes and their reporting, in particular through: continuing work carried out on a plan (EDGAR: Exactitude des - Données Gouvernance – Analyse & Reporting; Accuracy of Governance Data – Analysis & Reporting) aimed at adapting the Group to regulatory requirements as part of its digital transformation and data valuation objective, drawing up a framework for the drafting and publication of - reports and oversight indicators which defines the rules and usages aimed at harmonizing and improving oversight reporting practices and thus strengthening governance; the migration of Crédit Coopératif’s information systems to Caisses ● d’Epargne’s IT platform (ITCE) in May 2018 and the launch of a project to migrate Banque Palatine’s information systems to Banques Populaires’ IT platform (IBP), scheduled for April 2020; the establishment of a technical platform and service center for ● processing the financial transactions of Groupe BPCE companies for the Caisse d’Epargne network, BPCE SA, CASDEN, Crédit Coopératif and Crédit Foncier de France. The goal is to standardize the processing and quality of information on financial transactions within the Group, to improve controls on financial transactions and to provide a platform that addresses Groupe BPCE’s management and reporting issues. The migration for the Banques Populaires banks is scheduled for May 2019.

This standard also includes the analysis and interpretation of new texts issued during a given time scale. The policies are regularly circulated via : Group instructions to affiliate institutions that present common ● accounting, tax and prudential management rules (changes in scope of consolidation, a schedule of various work to help respect deadlines, any changes to the information systems, reminder of accounting and prudential regulatory changes, etc.); Group procedures and working methods aimed at the production ● processes for reporting statements; the presentation of Accounting and Tax days which provide details, ● including regulatory changes, that impact the accounting, prudential and fiscal work of affiliate institutions and the Group; training and activities aimed in particular at the accounting teams ● of consolidated entities. The uniformity of the IT system Data consolidation takes place quarterly based on the financial statements of each Group entity. Data from the entities are entered into a central database where consolidation adjustments are then carried out. The organization of the consolidation system is based on a combined solution for the Group’s business lines: for the majority of Group entities and in particular Caisses ● d’Epargne and the Banque Populaire banks: information is communicated on an individual basis to ensure a more detailed view of each entity’s contribution to Groupe BPCE’s financial statements and ratios. The system is based on a single consolidation tool specific to these entities and to all sub-consolidation work. This ensures internal consistency as regards scopes, accounting treatment and analysis; for the Natixis sub-group: Natixis has a consolidation tool that ● produces its financial statements and ratios on a consolidated basis, ensuring the consistency of data and provides a transparent overview of its subsidiaries. For the production of Group financial statements, Natixis submits a consolidation package that represents its financial statements and ratios. The central consolidation tool has archiving and security procedures including the daily back-up of the consolidation database. System restoration tests are regularly carried out. The body of documents To ensure the reliability of the production processes for accounting and financial information, the central institution has drawn up and deployed a comprehensive body of documents in line with requirements set out in Articles 3 e), 11 e), 255 and 256 of the Ministerial Order of November 3, 2014 on Internal Control. This body of document includes: macro-processes and/or processes that describe activities from ● beginning to end, identifying the persons and tools involved; procedures which document process flows to implement processes; ● working methods used by the business lines in their daily activities ● and which provide details of transactions under their responsibility, self-checks, or level one operational controls (including hierarchical) that must be carried out.

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Registration document 2018