BPCE_REGISTRATION_DOCUMENT_2017

5 FINANCIAL REPORT

BPCE parent company financial statements

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 banking networks:14 Banque Populaire banks and the 16 Caisses d’Epargne. Each of the two networks owns an equal share in BPCE, theGroup’scentralinstitution. The BanquePopulairenetworkconsistsof the BanquePopulairebanks and the Mutual Guarantee Companies 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 institutionlicensedto operate as a bank, was created pursuant to Law No. 2009-715of June 18, 2009. BPCE was incorporatedas a Frenchlimitedliabilitycompanygovernedby a ManagementBoardand a SupervisoryBoard, whose share capital is owned jointly and equally by the 14Banque Populaire banks and the 16 Caissesd’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. BPCE’s main subsidiaries,including Natixis, a 71.02%-owned (1) listed company, are organized around three main businesslines: Retail Banking and Insurance includes the Banque Populaire and ● Caisse d’Epargne networks, the Natixis Specialized Financial Services (Specialized Financing, Payments and Financial services) and Insurance business line and Other networks (Crédit Foncier, Banque Palatine and BPCE International); Asset & Wealth Management; ● Corporate and 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 these transactions in the broader interests of the Group. BPCE also providesbanking services to the other Group entities. 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 networks. 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. BPCEmanagesthe Banque Populaire networkfund,the Caissed’Epargne et dePrévoyancenetworkfundand theMutual Guarantee Fund. The Banque Populairenetworkfund was formed by a depositmade 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 Caisses d’Epargneet de Prévoyancenetwork fund by the Caisses of € 450 million was 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 € 181.3million as of December 31, 2017. The total amount of deposits made to BPCE in respect of the Banque Populaire network fund, the Caisse d’Epargne et de Prévoyance network fund and the Mutual Guarantee Fund may not be less than 0.15% and may not exceed 0.3% of the total risk-weightedassets of the Group. Each deposit made by a Banque Populaire bank or Caisse d’Epargne gives rise to the allocation of an equivalent amount to the fund for general banking risks of the institution in question. 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’Epargneet de Prévoyancewhich is the shareholderof the local savingscompanyin question. GUARANTEE MECHANISM

The shareholding stands at 70.99% including the treasury shares held by Natixis. (1)

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Registration document 2017