BPCE_REGISTRATION_DOCUMENT_2017

RISK REPORT Liquidity, interest rate and foreign exchange risks

3.9.5

Managingstructural foreignexchange risk

Structuralforeign exchangerisk is defined as the risk of a realized or unrealizedloss due to an unfavorablefluctuationin foreign currency exchange rates. The management system distinguishes between the structural exchange risk policy and the management of operational foreign exchange risk. FOREIGN EXCHANGE RISK OVERSIGHT AND MANAGEMENT SYSTEM For Groupe BPCE (excluding Natixis), foreign exchange risk is monitored using regulatory indicators (measuring corresponding capital adequacy requirements by entity). The residual foreign exchange positions held by the Group (excluding Natixis) are not material because virtually all foreign currency assets and liabilities are match-funded inthe same currency. As regards international trade financing transactions, risk-taking must be limitedto counterpartiesin countrieswith freely-translatable

currencies, on the condition that translation can be technically carried out by the entities’ information systems. Natixis’ structural exchange rate positions on net investments in foreign operationsfunded by buying currencyforwardsare trackedon a quarterlybasis by its Asset and LiabilityManagementCommitteein terms of sensitivity as well as solvency. The resulting risk indicators are submitted to the Group Asset and Liability Management Committee ona quarterlybasis. QUANTITATIVE DISCLOSURES For the period ended December 31, 2017, Groupe BPCE, subject to regulatory capital requirements for foreign exchange risk, saw its foreign exchange position decrease to € 2,792 million versus € 2,993 million at end-2016, with € 228 million for foreign exchange risk compared to € 257 million at end-2016. The foreign exchange position ismainlycarried by Natixis.

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Registration document 2017