BPCE - 2019 Universal Registration Document

FINANCIAL REPORT

BPCE PARENT COMPANY ANNUAL FINANCIAL STATEMENTS

4.4

EQUITY INTERESTS, AFFILIATES AND OTHER LONG-TERM INVESTMENTS

Accounting principles Investments in associates and affiliates

Other long-term investments Other long-term investments are securities acquired with the intention of promoting the development of lasting business relationships, by creating special ties with the issuer, without taking an active part in its management due to the small percentage of voting rights that the investment represents. Other long-term investments are recognized at acquisition cost, less transaction costs. They are included in the balance sheet at the lower of historical cost or value in use. Value in use is determined for listed and unlisted securities based on the amount the company would agree to pay to obtain the securities, given its investment objective, if it were to acquire them. An impairment charge is recognized for any unrealized capital losses. Unrealized capital gains are not recognized. Securities classified as other long-term investments may not be transferred to any other accounting category.

Securities falling into this category are securities which, if held over the long term, are deemed useful for the company’s operations, mainly by allowing the company to exercise significant influence or control over the administrative bodies of the issuing companies. Investments in associates and affiliates are recorded at cost, including transaction costs, if the amounts are significant. They are individually measured at the balance sheet date at the lower of acquisition cost or value in use. Value in use is determined, in particular, on the basis of criteria such as the strategic nature of the investment, the intention to support the business or retain the investment, share price performance, net assets or restated net assets, and forecasts. Impairment is recognized for any unrealized capital losses, calculated for each line of securities, and is not offset with unrealized capital gains. Unrealized capital gains are not recognized. Securities recorded under investments in associates and affiliates cannot be transferred to any other accounting category.

4.4.1

CHANGES IN EQUITY INTERESTS, AFFILIATES AND OTHER LONG-TERM INVESTMENTS

Other changes

12/31/2018

Increase

Decrease Conversion

12/31/2019

in millions of euros

Equity interests and other long-term investments

3,999

23

(81) (31)

24

73

4,038

Investments in affiliates

24,743

3,377

(450)

27,639

5

o/w current account advances & perpetual deeply subordinated notes

2,800

21 24

2,821

Gross amount

28,742

3,400

(112)

(377)

31,677

Equity interests and other long-term investments

(411)

(26)

7

(430)

Investments in affiliates

(4,813)

(2,185)

1,172

(5,826)

o/w current account advances & perpetual deeply subordinated notes

0

0

Impairment

(5,224) 23,518

(2,211)

1,179 1,067

0

0

(6,256) 25,421

TOTAL

1,189

24

(377)

Shares in real estate companies are non-material. Other long-term investments include partner and association certificates for the Deposit Guarantee Fund (for an insignificant amount). The principal investments in associates acquired in 2019 included: acquisitions from Natixis and Crédit Foncier of their • subsidiaries Compagnie Européenne de Garanties et de Cautions, BPCE Factor, BPCE Lease, BPCE Financement and SOCFIM, which now form the Financial Solutions and Expertise business line (€2,766 million); subscriptions for Banque Palatine and SPORTS IMAGINE • capital increases (€205 million); other increases in investments in associates (€393 million), • including Oney Bank. The principal reductions in investments in associates in 2019 were: a capital reduction by BP Covered Bond (BPCB) (€80 million); •

the conversion of Informatique Banque Populaire (i-BP) into an • economic interest group (EIG) (€27 million). Other changes mainly included: a reduction in investments in associates through the total • transfer of the assets and liabilities of 3F Holding and IXION (€347 million). The main reversals of provisions for impairment in investments in associates were as follows: BPCE International and Crédit Foncier (€1,018 million); • 3F Holding and IXION, following the aforementioned total • transfers of assets and liabilities (€135 million); the conversion Informatique Banque Populaire (i-BP) into an • economic interest group (EIG) (€27 million). The main provisions for impairment in investments in associates included: Natixis (€1,954 million), primarily related to the payout of an • exceptional dividend of €1,069 million; Banque Palatine (€231 million). •

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE