BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

LOYALTY AND PERFORMANCE PLANS SETTLED IN CASH Some employees are awarded deferred cash-settled loyalty and employee benefits”. The estimated expense takes into account performance bonus benefits. These bonuses are subject to an actuarial estimate of these conditions being met. It is spread presence and performance conditions. In terms of accounting over the rights vesting period. The amount recognized in respect treatment, they are accounted for under “Other long-term of fiscal year 2020 was:

Fiscal year 2020 (in millions of euros)

Fiscal year 2019 (in millions of euros)

Year of plan

Grant date

Vesting date March 2018 March 2019 March 2019 March 2020 March 2020 March 2021 March 2021 March 2022 March 2022 March 2023

2016 plan

04/10/2017

(1)

2017 plan

02/23/2018

(1)

(9)

2018 plan

02/26/2019

(5)

1

2019 plan

01/22/2020

(3)

(12)

2020 plan

01/20/2021

(8)

TOTAL

(17)

(21)

Note 9

Insurance businesses

Key points Insurance businesses cover life insurance and non-life insurance activities. In Groupe BPCE these activities are performed by dedicated subsidiaries subject to the specific regulations applicable to the insurance sector. On November 3, 2017, the European Commission adopted the amendment to IFRS 4 applying IFRS 9 “Financial instruments”with IFRS 4 “Insurancecontracts”with specific provisions for financial conglomerates, applicable as of January 1, 2018. European regulations therefore allow European financial conglomerates to opt to defer application of IFRS 9 for their insurance activitiesuntil January 1,2021 (effectivedate of the new IFRS 17, Insurance contracts). At its meeting on March 17, 2020, the IASB decided to defer applicationof the standard by two years, as clarificationsstill need to be given regardingkey aspects of it. It also decided to defer the expiry of insurancecompanies’temporaryexemptionfrom IFRS 9 to January 1, 2023, to align it with the applicationof 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 entities concernedare listed in Note 14.4 on the scope of consolidation. Financial assets and liabilities of insurance businesses are therefore recognized in accordance with the provisions of IAS 39. They are classified into categories defined by this standard, which calls for specific approachesto measurement and accounting treatment. Pending amendmentsto IFRS 4, insurance liabilities continue to be measured broadly in line with French GAAP. In accordancewith Phase I of IFRS 4, insurancecontracts are classified into three categories:

policies that expose the insurer to a significant insurance • risk within the meaning of IFRS 4: this category comprises policies covering provident insurance, pensions, property and casualty and unit-linked savings carrying a minimum guarantee. These policies continue to be measured under the rules provided under local GAAP for measuring technical reserves; financial contracts such as savings contracts that do not • expose the insurer to a significant insurance risk are recognized in accordance with IFRS 4 if they contain a discretionary profit sharing feature, and continue to be measured in accordance with the rules for measuring technical reserves provided under local GAAP; financial contracts without a discretionary profit sharing • feature, such as unit-linked policies without a non-unit-linked component and without a minimum guarantee, are accounted for in accordance with IAS 39; most financial contracts issued by Group entities contain • discretionary profit sharing features. The discretionary profit sharing feature grants life insurance policyholders the right to receive a share of the financial income generated, in addition to guaranteed benefits. For these contracts, in accordance with shadow accounting principles defined by IFRS 4, the provision for deferred profit sharing is adjusted to include the policyholders’ share in the unrealized capital gains or losses on financial instruments measured at fair value in application of IAS 39. The share of the gains or losses attributableto policyholdersis determined on the basis of the characteristics of contracts likely to generate such gains or losses. Any change in deferred profit sharing is taken to other comprehensiveincome where it results from changes in the value of available-for-salefinancial assets and to profit or loss where it arises from changes in the value of financial assets at fair value through profit or loss.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE