BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF GROUPE BPCE AS AT DECEMBER 31, 2020

Amendments to IAS 39 and IFRS 9: interest rate benchmark reform (phase 1 and phase 2)

On November 3, 2017, the European Commission adopted the amendment to IFRS 4 applying IFRS 9 “Financial instruments” with IFRS 4 “Insurance contracts” with specific provisions for financial conglomerates, applicable from January 1, 2018. European regulations therefore allow European financial conglomerates to opt to defer application of IFRS 9 for their insurance activities until January 1, 2021 (effective date of new IFRS 17, Insurance contracts), provided they: do not transfer financial instruments between the insurance • sector and other sectors of the conglomerate (with the exception of financial instruments designated at fair value through profit or loss for the two sectors affected by the transfer); indicate the insurance entities that apply IAS 39; • disclose specific additional information in the notes to the • financial statements. At its meeting on March 17, 2020, the IASB decided to defer its application by two years, as clarifications still need to be given regarding certain key aspects of the standard. It also decided to defer the expiry of insurance companies’ temporary exemption from IFRS 9 to January 1, 2023, to align it with the application of IFRS 17. An amendment was published on June 25, 2020. This amendment improves the application of IFRS 17. As Groupe BPCE is a financial conglomerate, it elected to apply this provision to its insurance businesses, which continue to be covered by IAS 39. The main entities affected by this measure are CEGC, the insurance subsidiaries of COFACE, Natixis Assurances, BPCE Vie and its consolidated funds, Natixis Life, BPCE Prévoyance, BPCE Assurances, BPCE IARD, Muracef, Surassur, Oney Insurance, Oney Life, Prépar Vie and Prépar IARD. In accordance with the Implementing Regulation of November 3, 2017, the Group took the necessary steps to prohibit any transfer of financial instruments between its insurance sector and the rest of the Group that would lead to derecognition for the transferring entity; this restriction is not, however, required for transfers of financial instruments measured at fair value through profit or loss by the two sectors involved. Regulation (EU) 2017/2395 dated December 12, 2017 relating to transitional arrangements for mitigating the impact of the introduction of IFRS 9 on capital and for the large exposures treatment of certain public-sector exposures was published in the Official Journal on December 27, 2017. Groupe BPCE has decided not to opt to neutralize IFRS 9 transitional impacts at the prudential level due to the limited impact when applying the standard. IFRS 16 IFRS 16 “Leases” replaces IAS 17 “Leases” and the interpretations applicable from January 1, 2019. At its meeting of November 26, 2019, the IFRS Interpretation Committee (IFRS IC) issued clarifications on the application of IFRS 16 pertaining to lease terms. On July 3, 2020, the Autorité des normes comptables published a summary of conclusionson the application of IFRS 16, replacing that published on February 16, 2018. As a result, the Group reviewed the way it applied accounting principles to determine the terms of French law commercial leases with automatic renewal. The changes made had no material impact on the financial statements.

Note that, in September 2019,the IASB published amendments to IFRS 9 and IAS 39 to provide relief for instruments eligible for hedge accounting in the lead up to the interest rate benchmark reform (phase 1). These amendments were adopted by the European Commission on January 16, 2020 and apply from January 1, 2020, with early adoption possible. Groupe BPCE chose to apply the amendment early as of December 31, 2019. On August 27, 2020, the IASB published amendments dealing with issues related to the replacement of benchmark rates by their alternative benchmark rate (phase 2). These amendments involved IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 regarding modificationsof financial assets and financial liabilities (including lease liabilities), whether or not these are related to the enforcement of existing contractual clauses ( i.e. fallback clauses), hedge accounting, and disclosures. These amendments were adopted by the European Commission on January 13, 2021. Their application date is January 1, 2021 and they may be applied early. Groupe BPCE chose to apply the amendment early as of December 31, 2020. The uncertainties related to the benchmark rate reform and the organization implemented by Groupe BPCE are presented in Note 5.20. New definition of default Guidelines issued by the European Banking Authority (EBA) on the application of the definition of default under Article 178 of European Regulation 575/2013, effective from January 1, 2021, and Regulation (EU) 2018/1845 of the European Central Bank on the threshold for assessing the materiality of credit obligations past due, effective by December 31, 2020 at the latest, will make European banks more consistent in the way they identify loans in default. The definition of loans in default is tightened up by the introduction of relative and an absolute thresholds for past due payments to identify defaults, clearer criteria for returning to performing status with the introduction of a probationary period and explicit criteria for classifying restructured loans as in default. Groupe BPCE applied these new methods for identifying loans in default from October 22, 2020. The new method for identifying loans in default is consistent with the criteria used to classify non-performingloans in Stage 3 under IFRS 9 rules for recognizing expected loss due to credit risk. Changes resulting from the new rules on loans in default have no material impact on the consolidated financial statements. The other standards, amendments and interpretations adopted by the European Union did not have a material impact on the Group’s financial statements. NEW STANDARDS PUBLISHED AND NOT YET APPLICABLE IFRS 17 IFRS 17 “Insurance contracts” was published by the IASB on May 18, 2017 and will replace IFRS 4 “Insurance contracts”. Initially applicable on January 1, 2021, with a comparison at January 1, 2020, this standardis only expectedto come into force from January 1, 2023. At its meeting on March 17, 2020, the IASB decided to defer its application by two years, as clarifications still need to be given regarding key aspects of the standard. It also decided to defer the expiry of insurance companies’ temporary exemption from IFRS 9 to January 1, 2023, to align it with the application of IFRS 17. An amendment was published on June 25, 2020. This amendment improves the application of IFRS 17. Regulation (EU) 2020/2097 of

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE