BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2017

A structured entity frequently exhibits some or all of the following characteristics: well-defined activities; (a) a specific and well-defined aim, for example: implementing a (b) tax-efficient lease, carrying out research and development, providing an entity with a source of capital or funding, or providing investors with investment options by transferring associated risk and advantages to the structuredentity’sassets; insufficientequity for the structuredentity to finance its activities (c) without subordinated financial support; financing through the issue, to investors, of multiple instruments (d) inter-related by contract and which create concentrations of credit risk or other credit (“tranches”). The Group therefore uses, among others, collective investment vehicles within the meaning of the French Monetary and Financial Code and equivalent bodies governed by foreign law as structured entities. Full consolidation method The full consolidation of a subsidiary in the Group’s consolidated financial statements begins at the date on which the Group takes control and ends on the day on which the Group loses control of this entity. The portion of interest which is not directly or indirectly attributable to the Group corresponds to a non-controlling interest. Income and all components of other comprehensive income (gains and losses recognized directly in other comprehensive income) are divided between the Group and non-controlling interests. The comprehensiveincome of subsidiaries is divided between the Group and non-controllinginterests, including when this division results in the allocation of aloss tonon-controlling interests. Changesto the percentageof interest in subsidiariesthat do not lead to a changein controlare recognizedas transactionsaffectingequity. The effects of these transactions are recognized in equity at their after-tax amount and therefore do not impact consolidated income attributable to equityholdersof the parent. Exclusion from the scope of consolidation Non-material controlled entities are excluded from the scope in accordance withthe principleset out inNote 17.5. Employee pension funds and supplementary health insurance plans are excluded from the scope of consolidationinsofar as IFRS 10 does not apply to either post-employmentbenefitfunds or other long-term employee benefit plans to which IAS 19, “Employee Benefits”, applies. Likewise, interests acquired with a view to their subsequent short-termdisposal are recorded as available for sale and recognized in accordancewith the provisionsof IFRS 5 “Non-currentassets held in view of saleand discontinued activities”.

financial and operating policy decisions of an entity, without exercising control or joint control over those policies. It is presumed to exist if the Group holds, directly or indirectly,20% or more of the voting rights of an entity. A joint venture is a partnership in which the parties which exercise joint controlover the entity have rights over its net assets. Joint control is the contractually agreed sharing of control over a company, which exists only when the strategic decisions require the unanimous consent of the parties sharing control. Equity method Income, assets and liabilities of investments in associates and joint ventures are accounted for in the Group’s consolidated financial statements using theequitymethod. An investmentin an associateor a joint ventureis initiallyrecognized at its acquisitioncost and subsequentlyadjusted for the Group share in the income and other comprehensiveincome of the associate or joint venture. The equity method is applied from the date on which the entity becomes an associate or a joint venture. On the acquisition of an associate or a joint venture, the difference between the cost of investmentand the Group’s share in the net fair value of the entity’s identifiableassets and liabilitiesare recognizedin goodwill.When the net fair value of the entity’s identifiableassets and liabilitiesis higher than the cost of investment,the difference isrecognized inincome. The share of net income of entities accounted for under the equity method isincluded inthe Group’s consolidated income. When a Group entity carries out a transaction with a Group joint venture or associate,the profit or loss resulting from this transaction is recognizedin interestsheld by third parties in the associateor joint venture. The provisions of IAS 39 “Financial Instruments: Recognition and Measurement”are applied to determine whether impairment testing is required for its investment in an associate or joint venture. If necessary, the total carrying amount of the investment (including goodwill)is subject to impairmenttesting accordingto the provisions of IAS 36 “Impairment of Assets”. Exception to the equity method When the investment is held by a venture capital organization, an investmentfund, an investmentcompany with variable share capital or a similar entity such as an insurance asset investment fund, the investormay choose not to recognizethe investmentusing the equity method. Revised IAS 28 “Investments in Associates and Joint Ventures” authorizes, in this case, the investor to recognize the investmentat its fair value (with changes in fair value recognizedin income) inaccordance with IAS39. These investmentsare thereforerecognizedas “Financialassets at fair value throughprofit or loss”. The Natixis Group’s private equity subsidiaries have chosen to measure the relevant holdings in this way, considering that this valuation method providesmore relevant information.

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3.2.2

Investments in Associates and Joint Ventures

Definitions

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the

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Registration document 2017