BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

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

Commitmentswith potentially unfavorableconsequencesare measured for each generation of regulated home savings plans and for all regulated home savings accounts. A provision is recognized for the associated risks by discounting future potential earnings from at-risk outstandings: at-risk saving deposit outstandings correspond to the • uncertain future level of savings for plans in existence at the date the provision is calculated. This is estimated on a statistical basis for each future period taking account of historical investor behavior patterns, and corresponds to the difference between the probable outstandings and the minimum expected outstandings;

at-risk loans correspond to the loan outstandings granted • but not yet due at the calculation date plus statistically probable loan outstandings based on historical customer behavior patterns as well as earned and future rights relating to regulated home savings accounts and plans. The commitments are estimated using the Monte Carlo method in order to reflect the uncertainty of future interest rate trends and their impact on customerbehaviormodelsand at-riskoutstandings.On this basis, a provisionis recordedfor a given generationof contracts in the event of a situation liable to be detrimental for the Group, with no netting between generations. The provision is recognized under liabilities in the balance sheet and changes are recorded in net interest income and expenses.

Reversals unused

Other changes (1)

12/31/2019

Increase

Used

12/31/2020

in millions of euros

775 235 906 230

109

(76)

(56)

2

753 132 820 299

Provisions for employee benefits (2) Provisions for restructuring costs (3)

46 24

(135)

(3)

(11) (79) (38)

Legal and tax risks (4)

(14)

(16)

Loan and guarantee commitments (5)

470

(362)

Provisions for regulated home savings products

2

3

Other operating provisions TOTAL PROVISIONS

511

259 908

(22)

(62)

(56)

630

2,659 2,637 Other changes notably include the revaluation differences of post-employment defined-benefit plans (-€16 million before tax) and the currency translation adjustments (-€70 (1) million). Including €720 million for post-employment defined-benefit plans and other long-term employee benefits. (2) At December 31, 2020, provisions for restructuring costs notably included: (3) (247) (500) (182)

5

€120 million for the voluntary redundancy plan initiated at Crédit Foncier (compared to €191 million at December 31, 2019); • €7 million for the employment protection plan for BPCE International (compared to €20 million at December 31, 2019). • Provisions for legal and tax risks include €503 million for the net exposure on the Madoff fraud. (4) Provisions for loan and guarantee commitments are detailed in Note 7.1.3. (5)

5.14

SUBORDINATED DEBT

Accounting principles Subordinated debt differs from other debt and bonds in that it will be repaid only after all the senior and unsecured creditors, but before the repayment of participating loans and securities and deeply subordinated notes. Subordinated debt which the issuer is obliged to repay is classified as debt and initially recognized at fair value less any transaction costs. It is subsequently measured at amortizedcost at each balance sheet date using the effectiveinterest method.

441

UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE