BPCE - 2019 Universal Registration Document

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RISK REPORT

LEGAL RISKS

Legal risks 6.10

Legal and arbitration proceedings – BPCE 6.10.1

CHECK IMAGING EXCHANGE (ÉCHANGE IMAGE CHÈQUES) COMMISSIONS Marketplace antitrust case initially involving Banques Populaires Participations (BP Participations) and Caisses d’Epargne Participations (CE Participations) and BPCE since it merged with and absorbed BP Participations and CE Participations. On March 18, 2008, BFBP and CNCE received, as was the case for other banks on the marketplace, a notice of grievance from the French anti-trust authority. The banks are accused of having established and mutually agreed on the amount of the check imaging exchange commission, as well as related check commissions. The anti-trust authority delivered its decision on September 20, 2010 to fine the banks found guilty (€90.9 million for BPCE). These banks (except for the Banque de France) lodged an appeal. On February 23, 2012, the Paris Court of Appeals overruled the anti-trust authority’s decision and the €90.9 million fine paid by BPCE was refunded. On March 23, 2012, the anti-trust authority launched an appeal of the Court of Appeals’ ruling. On the referral of the anti-trust authority, on April 14, 2015, the Court of Cassation overturned the Court of Appeals’ 2012 ruling due to breach of procedure. The banks were once again required to pay the fine. MADOFF FRAUD Outstanding Madoff assets as expressed in euros were estimated at €551 million at December 31, 2019 and were fully provisioned at that date. The actual impact of this exposure will depend on both the extent of recovery of assets invested in Natixis’ name and the outcome of the measures taken by the bank, notably in terms of legal procedures. Furthermore, in 2011 a dispute emerged over the application of the insurance policy for professional liability in this case, which had been taken out with successive insurers for a total amount of €123 million. In November 2016, the Paris Court of Appeal vindicated the Commercial Court’s prior ruling that primary insurers were liable for covering the losses incurred by Natixis due to the Madoff fraud, up to the amount for which the bank was insured. On September 19, 2018, the Court of Cassation subsequently annulled the judgment under appeal and referred the case back to the Paris Court of Appeal with a differently constituted bench. On September 24, 2019, the Court issued a ruling against Natixis, overturning the ruling of the Paris Commercial Court. Natixis filed an appeal in December 2019.

BPCE, along with the other accused banks, referred this ruling to the Paris Court of Appeals, requesting that it purge this breach of procedure and uphold its 2012 decision, ensuring that BPCE will ultimately be reimbursed. The Second Court of Appeals ruled on December 21, 2017 and confirmed the 2010 analysis of the anti-trust authority, thus contradicting the initial decision by the Paris Court of Appeals in 2012. The Court considered that the introduction of the EIC commission and CSCs constitute anti-competitive practice in its nature and upheld the conviction to pay the fine set by the ADLC. However, the Court reduced the amount of Caisse d’Epargne’s fine by €4.07 million, by canceling the 10% increase to the fine imposed by ADLC on certain banks for their key roles in negotiations. BPCE, standing in for CE Participations, should retrieve this amount of €4.07 million from the Treasury. On January 22, 2018, the banks filed an appeal with the Court of Cassation. On January 29, 2020, the Court of Cassation rendered its verdict and overturned the appeal for lack of legal grounds on the demonstration of collusion. The ruling referred the case back to the Court of Appeal, with the banks returning to their position subsequent to the ADLC (anti-competition authority) ruling. Consequently, the Court of Appeal will have to issue a ruling in favor of Caisse d’Epargne before the fine will be reimbursed.

Legal and arbitration proceedings – Natixis 6.10.2

the United States Bankruptcy Court for the Southern District of New York against several banking institutions, including a $400 million claim against Natixis. Natixis denies the allegations made against it and has taken the necessary steps to defend its position and protect its rights. Natixis has launched appeals, including a motion to dismiss the case on a preliminary basis, or prior to any ruling on the merits, and a motion to withdraw the reference to transfer certain matters to the United States district court. These proceedings have been subject to numerous rulings and appeals and are still ongoing. A November 2016 ruling by the bankruptcy court dismissed a number of restitution claims initiated by the trustee on the grounds of extraterritoriality. In September 2017, the Second Circuit Court granted the BMIS trustee and the defendants the right to appeal the bankruptcy court’s ruling on the grounds of extraterritoriality directly through the Second Circuit, thereby avoiding the need to file an intermediary appeal with the district court. In February 2019, the Court of Appeals for the Second Circuit overturned the bankruptcy court’s extraterritoriality ruling. In August 2019, Natixis joined the defendants having filed a motion for permission to appeal the ruling of the Second Circuit Court to the Supreme Court. The motion is pending before the Supreme Irving H. Picard, the court-appointed trustee for Bernard Court, expected to decide in 2020 whether or not it agrees to L. Madoff Investment Securities LLC (BMIS), submitted a hear the case.

restitution claim concerning the liquidation of amounts received prior to the discovery of the fraud through a complaint filed with

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UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE

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