BPCE - 2020 Universal Registration Document

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FINANCIAL REPORT

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

1.3 COVID-19

SIGNIFICANT EVENTS

the 29.5% interest sold to Arch Capital Group, measured at • the sale price less disposal costs directly related to the sale, recorded in a separate line on the balance sheet under “Non-current assets held for sale”, for €446 million; the residual 12.7% interest, which is not covered by the sale • agreement, continues to be consolidated under the equity method and is shown in the balance sheet under “Investments in associates”, in the amount of €159 million at December 31, 2020, after a -€57 million impairment charge based on Coface's closing price of €8.21 per share. This impairment is recorded on the line "Share in net income of companies accounted for by the equity method" in the consolidated income statement. H2O In Q4 2020, the Group entered negotiations on the sale of its entire stake in H2O, i.e. 50.01% of the share capital, via an own share buyback. At December 31, 2020, H2O remained fully consolidatedwithin the Group. In accordance with IFRS 5 "Non-current assets held for sale and discontinued operations", all assets and liabilities belonging to H2O were reclassified as, respectively, "Non-current assets held for sale" for €282 million and "Liabilities associated with non-current assetsheld for sale" for €55 million. The sale was suspended pending regulatory approval. At December 31, 2020, the net loss on disposal was estimated at -€48 million. This loss is booked under "Gains or losses on other assets" excluding tax effects. NATIXIS-BANQUE POSTALE PARTNERSHIP On October 31, 2020, following the granting of regulatory approval, Natixis and La Banque Postale (LBP) completed the merger of the fixed-income and insurance asset management activities of Ostrum Asset Management and La Banque Postale Asset Management (LBP AM) announced in 2019. The deal took the form of a transfer of LBP AM's assets to Ostrum. Following the transfer, Natixis holds a 55% stake in Ostrum and La Banque Postale the other 45%. Before the merger, Ostrum's activities unrelated to fixed-income and insurance asset managementwere transferred to other companies in the Natixis IM group. Regarding IFRS 10, the Group exercises exclusive control over the company which is therefore fully consolidated in its financial statements. The deal is treated in two stages for accounting purposes: a takeover of LBP AM booked as an acquisition giving rise to • goodwill of €52 million at December 31, 2020; a reduction in Ostrum AM's percentage interest without loss • of control due to the dilution of its holding, booked in "Equity attributable to equity holders of the parent" for +€12 million.

2020 was marked by the Covid-19 health crisis. The rapid spread of the virus, which the World Health Organization qualified as a pandemic on March 11, 2020, caused a slump in the global economy, affecting many business sectors and having major repercussions on economic activity in many countries. Restrictions on mobility in the affected regions and the disruption to supply chains caused by the closure of industrial and commercial companies had considerable effects on economic value chains in the regions and business sectors that were impacted (tourist revenue, air transportl,ocal sales, etc.). To support their economies during the public health crisis, national governments announced measures to provide financial and non-financial assistance to affected sectors. The Covid-19 crisis also spread to the world of finance, with extremely high levels of volatility and erratic fluctuations on the financial markets. Against a backdrop of high uncertainty, BPCE SA group took into account the effects of the crisis – as they could be understood at the reporting date – when measuring its financial assets and liabilities and the impairment and provisions recorded in its accounts at December 31, 2020. The impact of the crisis on the financial statements at December 31, 2020 is described in Note 1.5. DISPOSAL OF COFACE GROUP On February 25, 2020, Natixis announced it had signed an agreement with Arch Capital Group (a listed insurer and reinsurer in the United States) for the sale of 29.5% of the capital and voting rights in Coface, for a price of €10.70 per share. This price was revised on August 28, 2020 to €9.95 per share, which increased the loss on disposal recognized to €146 million. Completion of the transaction is contingent on regulatory approval. The signing of this agreement led Natixis to review the nature of its control of Coface. As the criteria for exclusive control under IFRS 10 are no longer met, Natixis, and hence the BPCE SA group, decided that as of February 25, 2020, it no longer exercised exclusive control over Coface and should therefore no longer apply the full consolidation method. However, it does continue to exercise significant influence. Accordingly, the residual 12.7% holding in Coface was consolidated under the equity method from January 1, 2020, to simplify calculations and better reflect the impact of this transaction in the consolidated financial statements. The transaction comprised two parts: first, the full disposal of shares in the subsidiary, and second, a new investment corresponding to the interest retained by the Group. At December 31, 2020, the loss of exclusive control led the Group to recognize in its financial statements: the gain or loss on disposal at the date of loss of control (i.e. • January 1, 2020), plus the impact of the price adjustment described above, which amounts to -€146 million presented on the line “Gains or losses on other assets” of the consolidated income statement;

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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