BPCE - 2019 Universal Registration Document

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FINANCIAL REPORT

BPCE PARENT COMPANY ANNUAL FINANCIAL STATEMENTS

General framework

Note 1

GROUPE BPCE 1.1 Groupe BPCE comprises the Banque Populaire network, the Caisse d’Epargne network, the BPCE central institution and its subsidiaries. TWO BANKING NETWORKS: BANQUE POPULAIRE AND CAISSE D’EPARGNE Groupe BPCE is a cooperative group whose shareholders own the two retail banking networks: the 14 Banques Populaires and the 15 Caisses d’Epargne. Each of the two networks owns an equal share in BPCE, the Group’s central institution. The Banque Populaire network consists of the Banques Populaires and the Mutual Guarantee Companies which grant them the exclusive benefit of their guarantees. The Caisse d’Epargne network consists of the Caisses d’Epargne and the local savings companies (LSCs). The Banques Populaires are wholly-owned by their cooperative shareholders. The capital of the Caisses d’Epargne is wholly-owned by the LSCs. Local savings companies are cooperative structures with open-ended share capital owned by cooperative shareholders. The LSCs are tasked with coordinating the cooperative shareholder base, in line with the general objectives defined by the individual Caisse d’Epargne with which they are affiliated, and cannot perform banking transactions. BPCE BPCE, a central institution as defined by the French Banking Act and a credit institution licensed to operate as a bank, was created pursuant to Act No. 2009-715 of June 18, 2009. BPCE was incorporated as a French limited liability company (société anonyme) governed by a Management Board and a Supervisory Board, whose share capital is owned jointly and equally by the 14 Banques Populaires and the 15 Caisses d’Epargne. BPCE’s corporate mission embodies the continuity of the cooperative principles underlying the Banques Populaires and the Caisses d’Epargne. Specifically, BPCE represents the interests of its various affiliates in dealings with the supervisory authorities, defines the range of products and services offered by them, organizes depositor protection, approves key appointments of company directors and oversees the smooth operation of the Group’s institutions. As a holding company, BPCE is the head entity of the Group and holds the joint ventures between the two networks in Retail Banking and Insurance, corporate banking and financial services, and their production units. It defines the Group’s corporate strategy and growth and expansion policies. BPCE’s main subsidiaries, including Natixis, a 70.6831%-owned (1) listed company, are organized around three main business lines: Retail Banking and Insurance, which includes the Banque • Populaire network, the Caisse d’Epargne network, the Financial Solutions and Expertise business line (including factoring, consumer finance, leasing, sureties & financial guarantees, securities services, Natixis’ payments and insurance business lines and Other Networks (primarily Banque Palatine);

In respect of the Group’s financial functions, BPCE is responsible, in particular, for the centralized management of surplus funds, for the execution of any financial transactions required to develop and fund the Group, and for choosing the most appropriate counterparty for these transactions in the broader interests of the Group. BPCE also provides banking services to the other Group entities. 1.2 Pursuant to Articles L. 511-31 and L. 512-107-6 of the French Monetary and Financial Code, the guarantee and solidarity mechanism was set up to ensure the liquidity and capital adequacy of the Group and its associates, and to organize financial support within the Group. BPCE is tasked with taking all measures necessary to guarantee the capital adequacy of the Group and each of the networks, including implementing the appropriate internal financing mechanisms within the Group and establishing a Mutual Guarantee Fund common to both networks, for which it determines the operating rules, the conditions for the provision of financial support to the existing funds of the two networks, as well as the contributions of associates to the fund’s initial capital endowment and reconstitution. BPCE manages the Banque Populaire Network Fund and the Caisse d’Epargne Network Fund and has established the Mutual Guarantee Fund. The Banque Populaire Network Fund was formed by a deposit made by the Banques Populaires of €450 million that was booked by BPCE in the form of a 10-year term account which is indefinitely renewable. The deposit made to the Caisse d’Epargne Network Fund by the Caisses d’Epargne of €450 million was booked by BPCE in the form of a 10-year term account which is indefinitely renewable. The Mutual Guarantee Fund was formed by deposits made by the Banques Populaires and the Caisses d’Epargne. These deposits were booked by BPCE in the form of 10-year term accounts which are indefinitely renewable. The amount of the deposits by network was €179 million at December 31, 2019. The total amount of deposits made to BPCE in respect of the Banque Populaire Network Fund, the Caisse d’Epargne et de Prévoyance Network Fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3% of the Group’s total risk-weighted assets. The booking of deposits in the institutions’ individual accounts under the guarantee and solidarity system results in the recording of an item of an equivalent amount under a dedicated capital heading. The Mutual Guarantee Companies (sociétés de caution mutuelle), whose sole corporate purpose is to guarantee loans issued by Banques Populaires, are covered by the liquidity and capital adequacy guarantee of the Banques Populaires with which they are jointly licensed in accordance with Article R. 515-1 of the French Monetary and Financial Code. The liquidity and capital adequacy of the local savings companies are secured, firstly, at the level of each individual local savings company by the Caisse d’Epargne et de Prévoyance of which the local savings company in question is a shareholder. BPCE’s Management Board holds all the requisite powers to mobilize the resources of the various contributors without delay and in accordance with the agreed order, on the basis of prior authorizations given to BPCE by the contributors. GUARANTEE MECHANISM

Asset & Wealth Management; • Corporate & Investment Banking. •

(1) The stake stands at 70.64% including the treasury shares held by Natixis.

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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