BPCE - 2018 Risk report / Pillar III

10 LEGAL RISKS

Legal and arbitration proceedings – Natixis

MMRclaim In 2007, Ixis Corporate & Investment Bank (the predecessor of Natixis) issued EMTNs (Euro Medium Term Notes) indexed to a fund that invested in the Bernard Madoff Investment Securities fund. Renstone Investments Ltd (the apparent predecessor of MMR Investment Ltd) is alleged to have subscribed, via a financial intermediary acting as the placement agent, for these bonds in the amount of $50million. Union Mutualiste Retraite In June 2013, UnionMutualisteRetraite(UMR) filed three complaints againstAEWSA (previouslyAEWEurope)in relationto the acquisition and management of two real estate portfolios in Germany between 2006 and 2008.The amountsclaimed by UMRtotal € 149 million. On October 25, 2016, the CommercialCourt of Paris ordered the two Insurance schemes involved to honor, in respect of AEW SA, the sanctions covered by the policies that may be ruled in favor of UMR in connection with the litigation and to cover the defense costs incurred by AEW SA. Several of the insurers concerned appealed this decision. Securitization in the United States Since 2012, five separate legal proceedings regarding residential mortgage-backed security (RMBS) transactions executed between 2001 and mid-2007 have been initiated against Natixis Real Estate Holdings LLC before the New York Supreme Court. Two of these proceedings relate to accusations of fraud. One was dismissedin 2015 as time-barredas were some of the claims related to the second proceeding,and in 2018 Natixissettled the outstanding claims before the courtissued afinal ruling onthe merits of the case. EDA – Selcodis On June 18, 2013, through two separate complaints, Selcodis and EDA brought proceedings before the Commercial Court of Paris against Compagnie Européenne de Garanties et Cautions for the sudden terminationof commercial relations following the refusal by the latter to grant EDA aguarantee. Through two new complaints filed on November 20, 2013, Selcodis and EDA also brought claims before the Commercial Court of Paris against Natixis, BRED and CEGC for unlawful agreements, alleging that such actions led to the refusal by CEGC to grant a guaranteeto EDA and to the termination of various loansby BRED. Selcodis is asking for compensation for the losses purportedly suffered as a result of the court-ordered liquidation of its EDA

In April 2012, MMR InvestmentLtd filed a joint claim against Natixis and the financial intermediarybefore the CommercialCourt of Paris, claiming not to have received the bonds, despite having paid the subscription price to the financial intermediary. The claim mainly concerns the reimbursementof the subscription price of the bonds and, as an alternative, the annulment of the subscription on the grounds of defect in consent. On February 6, 2017, the Commercial Court of Paris dismissed all of MMR Investment Ltd’s claims. This ruling wasupheld by the Paris Court of Appeal on October22, 2018.

On June 26, 2018, the Paris Court of Appeal ordered a stay of proceedingsopposing AEW SA and its insurers, until a final ruling is issued on the case opposing UMR and AEW SA, currently before the Commercial Court of Paris. The matter of the Insurance cover provided by the insurers, as set by the ruling issued by the CommercialCourt of Paris on October 25, 2016, and the coverage of AEW SA’s legal fees, were not challenged by the Paris Court of Appeal. The proceeding opposing UMR and AEW SA isongoing.

Three of these proceedings have been brought against Natixis, purportedly on behalf of certificate holders, alleging that Natixis failed to repurchasedefectivemortgagesfrom certain securitizations. Natixis considers the claims brought against it before the New York Supreme Court to be without merit for multiple reasons, including that they are time-barredunder applicablestatute of limitations(two proceedings have already been dismissed for these reasons but are open to appeal)and that the claimantsdo not have the legal standing to file the suit,and intends to defenditself vigorously.

subsidiary, and is requesting that the defendants be ordered to pay damagesand interest,which it assessesto be € 32 million.For its part, EDA is requesting that the defendants be ordered to bear the asset shortfall in its entirety, with its amount being calculated by the court-appointed receiver. Natixis and CEGC consider all of these claims to be unfounded. On December 6, 2018, the Commercial Court of Paris, after the joining of cases, ruled that the statute of limitations had been reached and the cases are now closed. The plaintiffs filed an appeal againstthis ruling inJanuary 2019.

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Risk Report Pillar III 2018