BPCE_REGISTRATION_DOCUMENT_2017

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

Note 1

General background

GROUPE BPCE 1.1 Groupe BPCE comprises the Banque Populaire network, the Caisse d’Epargne network,the BPCE centralinstitution andits subsidiaries. Two banking networks: the Banque Populaire banks and the Caisses d’Epargne Groupe BPCE is a cooperativegroup whose shareholdersown the two local retail bankingnetworks:the 14 Banque Populairebanks and the 16 Caisses d’Epargne.Each of the two networks owns an equal share in BPCE, the Group’s central institution. The BanquePopulairenetworkconsistsof the BanquePopulairebanks and the mutual guarantee companies (sociétés de caution mutuelle) granting them the exclusive benefit of their guarantees. The Caisse d’Epargne network consists of the Caisses d’Epargne and the local savingscompanies (LSCs). The Banque Populaire banks are fully-owned by their cooperative shareholders. The capital of the Caisses d’Epargne is wholly-owned by the LSCs. Local savings companies are cooperativestructures with open-ended share capital owned by cooperativeshareholders.The LSCs are tasked with coordinatingthe cooperative shareholder base, in line with the general objectives defined by the individual Caisse d’Epargne with which theyare affiliated, and cannot perform banking transactions. BPCE BPCE, a central institution as defined by French banking law and a credit institutionlicensed to operate as a bank, was created pursuant to law No. 2009-715 of June 18, 2009. BPCE was incorporatedas a French limited liability company governed by a Management Board and a Supervisory Board, whose share capital is owned jointly and equally by the 14 Banque Populaire banks and the 16 Caisses d’Epargne. BPCE’s corporatemission embodies the continuity of the cooperative principles underlying the Banque Populaire banks and the Caisses d’Epargne. Specifically, BPCE represents the interests of its various affiliates in dealings with the supervisory authorities, defines the range of productsand servicesofferedby them, organizesdepositorprotection, approves key appointments of company directors and oversees the smooth functioning of the Group’s institutions. As a holdingcompany,BPCE is the head entity of the Group and holds the joint ventures between the two networks in Retail Banking and Insurance, corporate banking and financial services, and their productionunits. It definesthe Group’scorporatestrategyand growth and expansion policies. The network and BPCE’s main subsidiaries, including Natixis, a 71.02%-owned listed company, are organized around three core business lines: Retail Banking and Insurance, including Specialized Financial ● Services and Insurance provided by Natixis, and Other networks (Crédit Foncier, Banque Palatine, BPCE International);

these transactions in the broader interests of the Group. BPCE also providesbanking services to the other Group entities.

GUARANTEE MECHANISM 1.2 Pursuant to Article L. 512-107-6 of the French Monetary and FinancialCode, the guaranteeand solidaritymechanismwas set up to ensure the liquidity and capital adequacy of the Group and its associates, and to organize financial support within the Banque Populaireand Caisse d’Epargne network. BPCE is tasked with taking all measures necessary to guarantee the capital adequacy of the Group and each of the networks, including implementingthe appropriate internal financing mechanisms within the Group and establishing a Mutual Guarantee Fund common to both networks, for which it determines the operating rules, the conditionsfor the provisionof financial support to the existing funds of the two networks,as well as the contributionsof associatesto the fund’s initial capital endowment and reconstitution. BPCE manages the Banque Populaire network Fund and the Caisse d’EpargneNetwork Fund and has put in place the Mutual Guarantee Fund. The Banque Populaire network fund was formed by a deposit made by the Banks of € 450 million that was booked by BPCE in the form of a 10-year term accountwhich is indefinitely renewable. The deposit made to the Caisse d’Epargne network fund by the Caisses of € 450 millionwas booked by BPCE in the form of a 10-year term accountwhich is indefinitely renewable. The Mutual Guarantee Fund was formed by deposits made by the Banque Populaire banks and the Caisses d’Epargne. These deposits were bookedby BPCE in the form of 10-yearterm accountswhich are indefinitely renewable. The amount of the deposits by network was € 181 million as of December31, 2017. The total amount of deposits made to BPCE in respect of the Banque Populaire network fund, the Caisse d’Epargne Network Fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3%of the total risk-weighted assets of the Group. The booking of deposits in the institutions’individualaccounts under the guarantee and solidarity system results in the recording of an item of an equivalent amount under adedicated capital heading. The mutual guarantee companies (sociétés de caution mutuelle), whose sole corporatepurpose is to guaranteeloans issued by Banque Populaire banks, are covered by the liquidity and capital adequacy guaranteeof the Banque Populaire banks with which they are jointly licensed in accordancewith Article R. 515-1 of the French Monetary and Financial Code. The liquidity and capital adequacy of the Caisses de Crédit Maritime Mutuel are guaranteed in respect of each individual Caisse, by the Banque Populaire bank which is both the core shareholder and provider of technical and operational support for the Caisse in relation to the partnerBanque Populairebank. The liquidity and capital adequacyof the local savings companiesare secured, firstly, at the level of each individual local savings company by the Caisse d’Epargne of which the local savings company in question is ashareholder. BPCE’s ManagementBoard holds all the requisite powers to mobilize the resources of the various contributors without delay and in accordancewith the agreed order, on the basis of prior authorizations given to BPCE by the contributors.

5

Asset &Wealth Management; ● Corporate &Investment Banking. ●

In respect of the Group’s financial functions, BPCE is responsible, in particular, for the centralizedmanagementof surplus funds, for the execution of any financial transactionsrequired to develop and fund the Group, and for choosing the most appropriate counterparty for

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Registration document 2017