BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

TRANSACTIONS IN FOREIGN CURRENCIES 2.5.2 The method used to account for assets and liabilities relating to foreign currency transactions entered into by the Group depends upon whether the asset or liability in question is classified as a monetary or a non-monetary item. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the Group entity on whose balance sheet they are recognized, at the exchange rate prevailing at the balance sheet date. All resulting foreign exchange gains and losses are recognized in income. However, there are two exceptions to this rule: only the portion of the foreign exchange gains and losses • calculated based on the amortized cost of financial assets at fair value through other comprehensive income is recognized in income, with any additional gains and losses being recognized in “Gains and losses recognized directly in other comprehensive income”; foreign exchange gains and losses arising on monetary items • designated as cash flow hedges or as part of a net investment in a foreign operation are recognized in “Gains and losses recognized directly in other comprehensive income”. Non-monetary assets carried at historic cost are translated using the exchange rate prevailing at the transaction date. Non-monetary assets carried at fair value are translated using the exchange rate in effect at the date on which the fair value was determined. Foreign exchange gains and losses on non-monetary items are recognized in profit or loss if gains and losses relating to the items are recorded in profit or loss, and in “Gains and losses recognized directly in other comprehensive income” if gains and losses relating to the items are recorded in “Gains and losses recognized directly in other comprehensive income”.

All other financial assets are recorded at fair value through profit or loss. These financial assets include financial assets held for trading, financial assets at fair value through profit or loss and non-SPPI assets. Financial assets may only be designated at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch. This option enables the elimination of accounting mismatches stemming from the application of different valuation rules to instruments managed under a single strategy. Embedded derivatives are no longer recognized separately to their host contract when these are financial assets, such that the entire hybrid instrument must now be recognized at fair value through profit or loss when it does not meet the SPPI criterion. For financial liabilities, the classification and measurement rules set out in IAS 39 are carried forward to IFRS 9 unchanged, with the exception of those applicable to financial liabilities that the entity chooses to record at fair value through profit or loss (fair value option), for which revaluation adjustments related to changes in own credit risk are recorded under gains and losses recognized directly in other comprehensive income, without being subsequently reclassified through profit or loss. The provisions of IAS 39 on the derecognitionof financial assets and liabilities remain unchanged in IFRS 9. The amendment to IFRS 9 of October 12, 2017 clarified the treatment under IFRS 9 of modifications of liabilities recognized at amortized cost if the modification does not result in derecognition: the profit or loss resulting from the difference between the original cash flows and the modified cash flows discounted at the original effective interest rate must be recognized in profit or loss. CONSOLIDATING ENTITY 3.1 Due to the Group’s structure as described in Note 1, Groupe BPCE’s consolidating entity includes: the Banques Populaires, namely the 12 Banque Populaire • regional banks, CASDEN Banque Populaire and Crédit Coopératif; the 15 Caisses d’Epargne; • the Mutual Guarantee Companies (sociétés de caution • mutuelle) collectively affiliated with the Banques Populaires to which they are linked; the Group’s central institution, BPCE. • In addition, the Group comprises: the subsidiaries of the Banques Populaires; • the subsidiaries of the Caisses d’Epargne, including CE • Holding Participations and its subsidiaries; the subsidiaries owned by the central institution, including • Natixis, Crédit Foncier, Banque Palatine, the entities of the Financial Solutions and Expertise unit, BPCE International and Oney. Consolidation Note 3

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SCOPE OF CONSOLIDATION – CONSOLIDATION AND VALUATION METHODS

3.2

The Group’s financial statements include the financial statements of all the entities over which it exercises control or significant influence, whose consolidation had a material impact on the aforementioned financial statements. The scope of entities consolidatedby Groupe BPCE is described in Note 13 – Scope of consolidation. 3.2.1 The subsidiaries controlled by Groupe BPCE are fully consolidated. Definition of control Control exists when the Group has the power to govern an entity’s relevant activities, when it is exposed to or is entitled to variable returns due to its links with the entity and has the ability to exercise its power over the entity to influence the amount of returns it obtains. ENTITIES CONTROLLED BY THE GROUP

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE