BPCE - 2018 Risk report / Pillar III

LIQUIDITY, INTEREST RATE AND FOREIGN EXCHANGE RISKS Quantitative disclosures

Funding strategy and conditions in 2018 One of the Group’s priorities in terms of medium- and long-term funding on the markets is to ensure that sources of funding are properly diversified, in terms of types of investors, vehicles, geographic regionsand currencies. Another priority is extending the average maturity of its liabilities to help strengthen Groupe BPCE’s funding structure. In recent years, Groupe BPCE has also implementeda policy designed to control the percentage of encumbered assets so as to protect its creditors holding unsecureddebt. As a result, secured MLT funding is limited to about one-third of total MLT funding. Under the 2018 wholesale medium- and long-term funding plan, Groupe BPCE raised a total of € 27.5 billion; public issues made up 66% of thisamount and private placements 34%.

The breakdownby currencyof unsecuredissues is a good indicatorof the diversity of the Group’s medium- and long-termfunding sources. In all, 48% were issued in currencies other than the euro; the two largest currencies were the USD (32%) and the JPY (9%). The breakdown of 2018 issues by currency isas follows:

DIVERSIFICATION OF INVESTOR BASE ➡

CHF 1%

CNH 1% GBP 1% AUD 4% JPY 9%

UNSECURED BOND SEGMENT ➡

Senior non preferred €7.3bn

EUR 52%

USD 32%

48% in currencies other than the euro

Public issues €3.5bn

Vanilla private placements €0.4bn

The average maturity at issuane for Groupe BPCE as a whole was 7.4 years in 2018 compared with an average maturity of 7.1 years in 2017. The unsecured bondsegment (senior preferred + senior non-preferred) accounted for 66% of funds raised and the covered bond segment 34% (31%coveredbonds and 4% RMBS).GroupeBPCE thereforemet the guidance it gave the market in early 2018 (70% unsecured/30% covered bond). The vast majority of medium- and long-term funding raised in 2018 was at a fixed rate. In general, the fixed rate is swappedto a floating rate in accordance with the Group’s interest rate risk management policy. New solutions to meetnew investor priorities: “sustainable development” bonds Groupe BPCE issued3 social bonds in2018 totaling € 2.3 billion: 2 “humanitarian” bonds totaling € 1 billion issued on the ● Samurai market; 1 “local economic development” bond for € 1.25 billion, the ● first of its kind issuedon the Euro market. In January 2019, the Group issued € 404 million in “local economic development” social bonds onthe Samurai market.

Structured private placements €6.8bn

9

COVERED BOND SEGMENT ➡

BPCE SFH €2.5bn

Compagnie de Financement Foncier €5.7bn

RMBS €1bn

Natixis Pfandbriefbank €0.3bn

In 2018, funds raised in the unsecured bond segment stood at € 18.1 billion, of which € 10.8 billion in senior preferred debt and € 7.3 billion in senior non-preferreddebt; funds raised in the covered bond segment amounted to € 8.4 billion and € 1 billion in RMBS backed by with home loans issued by the BanquePopulaireand Caisse d’Epargne networks.

183

Risk Report Pillar III 2018