BPCE - 2018 Risk report / Pillar III

9 LIQUIDITY, INTEREST RATE AND FOREIGN EXCHANGE RISKS Liquidity risk management policy

BPCE, either directly as BPCE or through BPCE SFH, which issues ● legal covered bonds ( obligationsde financementde l’habitat – OH), a categoryof secured bondbacked by Frenchlegislation; and Compagniede FinancementFoncier, a subsidiary of Crédit Foncier, ● which issues covered bonds known as obligations foncières (OF), also backedby French legislation. Note that BPCE is also responsible for the medium and long-term funding activitiesof Natixis, which no longer carries out public issues on the markets(but still conductsstructuredprivate placements),and Crédit Foncier. BPCE has short-term funding programs (short-term notes, Euro Commercial Paper and US Commercial Paper) and MLT funding programs (Medium-Term Notes (MTNs), Euro Medium-Term Notes (EMTNs),US MTNs, AUD MTNs and a securitizedbond programvia its subsidiary BPCE SFH, backed by Banque Populaire and Caisse d'Epargne home loans). In addition, Natixis (through structured private placements) and two other Group covered bond issuers – Compagnie de Financement Foncier (with an asset pool combining home loans and public-sectorassets, but planningto specializein the public sector) and Natixis Pfandbriefbank(with a pool of commercial real estate loans) – contributeto Groupe BPCE’s MLT funding. Lastly, the Group also carries out securitizations,consistingmainly of RMBS with home loans issued by the BanquePopulaireand Caisse d’Epargne networks.

All Group assets and liabilitiesare subject to internalliquiditypricing, whose guidelines are decided by the Group’s Asset and Liability Management Committee and aim to reflect changes in market liquidity costs and asset/liability matching. CENTRALIZED COLLATERAL MANAGEMENT Collateral managementis one of the key componentsof the Group’s liquidity managementsystem. Itis based onthe following principles: the central institution defines the collateral management ● indicators. These indicators are monitored by the Group’s ALM Committee; investment- and management-relateddecisions are made by the ● entities and subsidiaries following rules set out by the central institution; entity collateral is pooled with the central institutionwith the aim ● of improving oversight and operationality of collateral management. For entities with a 3G Pool (Natixis, SCF, BRED, Crédit Coopératif, Banque Palatine), each entity is responsible for its own collateral. Nonetheless, these entities cannot directly participate in ECB refinancing operations without prior approval from the central institution.

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Risk Report Pillar III 2018