BPCE - 2019 Universal Registration Document

ROLE AND OPERATING RULES OF GOVERNING BODIES REPORT ON CORPORATE GOVERNANCE

assisting the Supervisory Board in regularly reviewing the • policies established to comply with the provisions of the Ministerial Order of November 3, 2014 on internal control of banking sector companies, assessing the effectiveness of these policies and that of the provisions and procedures implemented for the same purposes as well as any corrective measures undertaken in the event of failures; reviewing the annual report(s) on risk measurement and • supervision and on the conditions under which internal control is conducted throughout the Group; proposing to the Board the materiality criteria and thresholds • referred to in Article 98 of the Ministerial Order of November 3, 2014 on internal control of banking sector companies, i.e. the criteria and thresholds used to identify incidents that must be brought to the Board’s attention; ensuring the independence of Groupe BPCE’s Inspection • Générale division, which is authorized to request or access all items, systems, or information required for the successful completion of its duties; reviewing the annual schedule of the Group’s Inspection • Générale division; ensuring that the findings of audits performed by the ACPR • and/or the ECB and the Group’s Inspection Générale division, whose summaries regarding the company and Groupe BPCE entities are disclosed to it, are addressed; reviewing the follow-up letters sent by the ACPR and/or by the • ECB and issuing an opinion on the draft replies to these letters; determining, in accordance with its purview, if the prices of • products and services (referred to in Books II and III of the French Monetary and Financial Code: financial instruments, savings products, bank transactions, investment services, etc.) offered to customers are compatible with the company’s risk strategy and, if not, presenting a corrective action plan to the Supervisory Board; determining if incentives provided by the company’s pay • practices and policy are compatible with the risks incurred by the company, its capital and liquidity and the likelihood that the expected benefits will vest, as well as their staggered vesting over time. ACTIVITY The Risk Committee met eight times between January 1 and December 31, 2019. The average attendance rate at these meetings was 95.56%. The main issues that it addressed were as follows: follow-up on the reports and investigations of the Autorité de • contrôle prudentiel et de résolution (ACPR – French Prudential Supervisory and Resolution Authority) and the European Central Bank (ECB), and on the recommendations made by the Group’s Inspection Générale division; analysis and follow-up of the Supervisory Board Chairman’s • report on internal control and risk management; review of reports on internal control prepared in accordance • with Article 258 of the Ministerial Order of November 3, 2014 on internal control of banking sector companies and on risk measurement and supervision, prepared in accordance with Article 262 of the Ministerial Order of November 3, 2014 on internal control of banking sector companies: work carried out by the Group’s Inspection Générale division, annual compliance report (annual report of the Investment Services Compliance Officer [RCSI], report on the annual check control program, report on credit risks), update on accounting risks;

review of compliance work; • review of the work performed by the Group’s Inspection • Générale division and presentation of the 2020 audit plan; review of risk management and measurement work, and • particularly the review of Group risk monitoring mechanisms (monitoring of consolidated risks, review of the impact of conditions in Europe on the Group, forward-looking risk management approach, oversight of the Group’s market and credit limits); analysis of Group risk measurement and quantification • systems, and review of their performance; review of the ALM risk limit criteria (Article 98 of the • Ministerial Order of November 3, 2014 on internal control of banking sector companies); review of the anti-money laundering system; • review of Groupe BPCE’s risk governance; • annual review and reconsideration of Groupe BPCE’s risk • appetite; review of the architecture and tools used to monitor interest • rate and liquidity risks; review of the results of alternative crisis scenarios and • measures taken on liquidity; review of Groupe BPCE’s overall credit risk policy; • analysis of EBA stress testing methods and review of the • methods and results of the 2019 internal stress tests carried out to assess BPCE’s resilience under certain extreme scenarios, especially the “reverse stress test”, which aims to define a scenario based on a specific solvency impact; review of the methods and results of the annual ICAAP • (Internal Capital Adequacy Assessment Process) process intended to analyze capital adequacy; review of the economic viability of the transactions and credit • risks of Groupe BPCE’s banking institutions, in accordance with Article L. 511-94 of the French Monetary and Financial Code; monitoring of internal caps and Group limits (credit risks, market • risks, interest rate risks and liquidity risks); review of changes made to a resilience threshold related to • risk appetite; review of the model risk management policy; • review of the senior management report (SMR) on the • effectiveness of the compliance mechanism in accordance with the Volcker rule’s specifications; review of the Contingency and Business Continuity Plan • (CBCP); follow-up on the implementation of the BCBS 239 regulatory • provisions on data quality, risk data aggregation and risk reporting; review of cybersecurity throughout Groupe BPCE; • review of the Leveraged Buy Out and Collateralized Loan •

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Obligation situation; review of autocalls; • update to Groupe BPCE’s Recovery Plan (RP); •

progress update on the “New definition of default” project; • review of work associated with the General Data Protection • Regulation one year later; presentation of the final 2018 Volcker Certification; • update on the EDGAR program. •

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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