BPCE - 2019 Universal Registration Document

BPCE MANAGEMENT REPORT FINANCIAL REPORT

BPCE management report 5.5

Significant events of 2019

Ten years after it was established, Groupe BPCE continued to strengthen its full-service cooperative banking model. With regard to strategic advances, in 2019 Groupe BPCE • acquired a 50.1% stake in Oney Bank, thereby strengthening its development potential in specialized financial services and in particular consumer finance and payments. Operating in more than ten countries, with 7.7 million customers and over 400 brick-and-mortar and online retail partners, Oney Bank will benefit from the joint expertise of BPCE and Auchan Holding with a view to accelerating its growth and expanding its presence in Europe in payment, financing and digital identification solutions. Local digital banking will round out the customer offering. The plan to integrate Crédit Foncier’s operations and teams • into the Group was implemented in accordance with the established procedures and timetable. In accordance with the agreement entered into with Crédit Foncier’s management and labor representatives, employees whose jobs were to be cut were offered positions at other Group companies in January 2019. These employees, who also had the option of transferring outside the Group under a voluntary redundancy plan, joined their new companies in early April 2019. Loan origination by Crédit Foncier was redeployed within the BPCE networks starting in April, at the end of a transition phase. A new real estate partnership management structure was set up at Group level. Intra-group disposals of Crédit Foncier’s main subsidiaries were initiated, in particular the sale of SOCFIM to BPCE SA, which was finalized at end-2019. On December 19, 2019, Groupe BPCE, Natixis and La Banque • Postale announced the broad outline of an extended business partnership with the creation of a major Retail Banking and Insurance division. There are several stages to the plan, including the merger of certain asset management activities in France. Under the plan, Ostrum Asset Management will develop euro fixed-income and credit strategies, as well as insurance strategies for Ostrum Asset Management and LBP Asset Management, with the goal of establishing an asset manager that fully observes the principles of socially responsible investment. The future entity will be 55%-owned by Natixis (through its subsidiary Natixis Investment Managers) and 45%-owned by LBP (through its subsidiary LBP Asset Management), under a balanced governance structure. In addition, in a bid to bolster the multi-partnership model in place at CNP, to which BPCE and LBP are deeply committed, Groupe BPCE and CNP Assurances extended the term of the agreements signed between BPCE/Natixis and CNP Assurances in 2015 (covering payment protection insurance, provident insurance and collective health insurance in particular) from December 31, 2022 to December 31, 2030, with an effective date of January 1, 2020. These agreements also provide for the transition to a 50-50 coinsurance split between Natixis Assurances (BPCE Vie and BPCE Prévoyance) and CNP Assurances for collective payment protection insurance and for CNP Assurances to reinsure 34% of the individual payment protection insurance policies underwritten by BPCE Vie.

Alongside the CNP Assurances/La Banque Postale merger scheduled for early January 2020, and following the termination at the end of June 2019 by La Banque Postale of the current CNP Assurances shareholders’ agreement set to expire on December 31, 2019, BPCE and La Banque Postale entered into a new agreement in their capacity as shareholders of CNP Assurances (holding respective stakes of 16.11% and 62.13%), in force through end-2030. Groupe BPCE will continue to be represented on the CNP Assurances Board of Directors, with two members, and on its special committees. The plan to set up the Financial Solutions and Expertise • division within BPCE SA was completed. This new division includes the businesses transferred from Natixis ( via the acquisition of the factoring, leasing, sureties & guarantees, and consumer finance subsidiaries and the assets and liabilities of the securities services business). It also includes subsidiaries SOCFIM and Pramex International. This change in the structure of Groupe BPCE will enable better provision of services to the customers of the Banques Populaires and the Caisses d’Epargne. With the expansion of BPCE’s scope of activities, • 669 employees were transferred from Natixis (employees of EuroTitres, the senior management team and IT department of the former Specialized Financial Services division) and 58 from Crédit Foncier. To finance the acquisition of the Financial Solutions and • Expertise subsidiaries, BPCE carried out a €1,200 million capital increase, fully subscribed for by the Banques Populaires and Caisses d’Epargne. As the holding company, BPCE received dividends totaling • €2,006 million, o/w €1,737 million in respect of Natixis (including an exceptional dividend of €1,069 million relating to the transfer of the SFS business lines). In 2019, BPCE took over 3F Holding (the holding company that • owns FIDOR BANK) under a total transfer of assets and liabilities. The former workout portfolio management activity (GAPC) • tasked with running off Natixis CIB exposures was wound up in 2019, generating income of €345 million for BPCE SA in 2019, mostly related to the recognition in income of an option premium that was not recognized before maturity, in accordance with French GAAP. In its Financial Management business line, on September 30, • 2019, BPCE exercised its early redemption option at par on two issues of perpetual deeply subordinated notes eligible as additional Tier 1 regulatory capital, for €374 million and $444 million. BPCE granted redeemable subordinated loans to Compagnie Européenne de Garanties et de Cautions totaling €250 million in October, and to Oney Bank totaling €33 million in December. BPCE issued €5.4 billion in senior non-preferred debt, • enhancing Groupe BPCE’s capital while improving its TLAC and MREL ratios. A reversal of 50% of the fund for general banking risks, set up • in 2009, generated income of €65 million in 2019.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE