BPCE - 2018 Risk report / Pillar III

NON-COMPLIANCE, SECURITY AND OPERATIONAL RISKS Compliance

French Banking Separation and Regulation Act (SRAB) Groupe BPCE regularly updates the mapping of its market activities, calling for the creation of internal units subject to an exemption within the meaning of act No. 2013-672 of July 26, 2013 on the separation and regulation of banking activities.

In conjunction with the calculations and other work done in accordance with the SRAB, an enhanced compliance program was adopted and implemented as from July 2015 in response to the Volcker Rule (a sub-section of the US Dodd-Frank Act) within the scope of BPCE SA group and its subsidiaries. Taking a broader approachthan that of the French Banking Separationand Regulation Act, this program aims to map out all the financial and commercial activities of BPCE SA group, notably to ensure that they comply with the two major bans imposed by the Volcker Rule: the ban on proprietary tradingand oncertainactivitiesrelatedto coveredfunds. In March 2018, the Group certified its compliance with the Volcker Rule with the US regulator,as it has every year since July 2015. Note: in early 2017, Groupe BPCE appointed a SRAB-Volcker officer, responsiblefor the security of banking segregationmechanisms.This officer also oversees the requirementsset forth by US regulationson Legal EntityManagement (LEM).

Since May 2015, the Group has used the mapping of its market activities to calculate, on a quarterly basis, the required indicators referred to in Article 6 of the MinisterialOrder of September 9, 2015. It also calculates additional annual indicators for documentation purposesand quantitativeindicatorssuch as the economicNBI or VaR of the internalunits. Based on the work carriedout by the Group, it has not been necessary to create a ring-fenced subsidiary, and mandates have been implemented at the institutions in order to handle the various activities. In July 2017, the AMF and the ACPR published directives on market-making indicators aimed at harmonizing the calculation methodologies of banking institutions in the French marketplace. These harmonized methodologies are now implemented across the entire Group.

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Risk Report Pillar III 2018