BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT BPCE parent company financial statements

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. 1.3 As part of the group’s digital transformation,BPCE subscribedto the capital increase (for € 89 million) of Fidor Bank AG, a German digital bank, whose acquisition was finalized on December 22, 2016. At December31, 2017 BPCE owned a 98.48%stake in Fidor Bank AG via its subsidiary 3F Holding. In accordancewith the strategicplan, the groupcontinuedto combine Groupe BPCE’s payment activities within Natixis. This reflects the Group’s ambitionsin terms of paymentsolutions,a strategicbusiness line which is a source of both growth and value creation, to improve the competitiveness of the Banque Populaire banks and Caisses d’Epargne. In 2017, BPCE sold its entire stake in S-money and its subsidiaries (Lakooz, Serenipay and E-cotiz) to Natixis Payment Holding,generatinga capitalgain ondisposal of € 21 million. In November2017, BPCE made a subscriptioncommitmentin Truffle Financial Innovation Fund. The remit of this institutionalfund is to create, support and finance 12 to 15 future Fintech and Insurtech leaders in France and Europe. For Groupe BPCE, the objectivesof this partnershipare: activating technological monitoring in targeted areas (artificial ● intelligence, machine learning, data, new economic credit and insurance models and digital marketing); taking a significant share in the investment in companies created ● or co-created, sourced by Truffle or initiated by Groupe BPCE (spin-offs)and considered to be future technological leaders; identifying and challenging the target start-ups by drawing on ● Groupe BPCE’s digital experts, and involving them in the development of companies (e.g.: presence on the Board, ad hoc partnerships with the start-ups concerned, etc.). Groupe BPCE’s ambition is to support the companies until an advanced stage of their development. In December 2017, BPCE participated in Paylib Services’ reserved capital increase for € 480,000 and owns 16.66% of the company in equal proportionswith five other banks. Paylib Services aims to offer a range of services including online payment, proximity mobile paymentand moneytransfer between individuals. Natixis is the largest dividend received by the Holding business line, amounting to € 779.5million for BPCE. A number of major transactionswere carried out by BPCE as part of the streamliningof the group’sequity interests. BPCE acquiredCrédit Foncier’sstake in GCE Foncier Coinvest(holding an indirect stake in MFC Prou-Investissements) for € 58.4 million. GCE Foncier Coinvest was a holding company 51%-owned by BPCE and 49%-owned by Crédit Foncier. Following this acquisition, BPCE wound up GCE Foncier Coinvest through the total transfer of assets and liabilities, with no significant impact. Following this transaction, BPCE directly owns 49% of MFC Prou-Investissementsfor an initial value of € 100 million. Moreover, BPCE purchased the Crédit Logement shares held by the Caisses d’Epargne for € 103 million, taking its stake to 8.5% of the capital. SIGNIFICANT EVENTS

BPCE purchased COVEA’s stake in Société d’Exploitation MAB (1,180,527shares) for € 9 million, or € 7.62 per share, on January 31, 2017 taking itsstake in Société d’Exploitation MAB to 99.99%. In February 2017, BPCE subscribed to BPCE International’s capital increase (for € 100 million), to enable it to finance the activity of its subsidiaries. In the CorporateCenter business line, BPCE continuedits withdrawal strategy, by selling or restructuringseveral mortgage loan and public asset securitizationpositions for a nominal amount of € 1 billion. In 2017, the lines concernedgeneratedincome under French accounting standards of + € 6.4 million in net banking income, a capital loss of - € 6.9 million in “gains or losses on long-terminvestments”and a cost of risk of - € 2.3 million. In the Lenderof last resortbusinessline, BPCEfullyredeemedperpetual deeply subordinatednotes issues in July, Septemberand October2017 for € 1,063 million.These issues, which are not eligibleunder Basel III, were redeemedat par at scheduledearly call dates.BPCE subscribedto the perpetualdeeply subordinatednotes issued by Natixis in February 2017 and then in December2017 (for $500 million each issue). These notesare eligible forAdditional Tier1 capital underBasel III. In 2017, BPCE issued € 4.9 billion of non-preferredsenior bonds with maturitiesrangingfrom5 to 15 years,including1.7 billionin eurosand 2.3 billionin dollars.These Tier 3 issueshelp strengthenGroupeBPCE’s balance sheet due to theireligibilityfortheTLACregime. Groupe BPCE consolidated two new special purpose entities (two securitization funds) as at June 30, 2017: BPCE Home Loans FCT 2017_5 and BPCE Home Loans FCT 2017_5 Demut, both of which arose from an intra-group securitization transaction by the Banque Populairebanks and the Caisses d’Epargne onMay 22, 2017. Under this transaction, € 10.5 billion in home loans was transferredto BPCE Home Loans FCT 2017_5, and the institutions that transferred the loans subscribed for the securities issued by the special purpose entities. The deal extended the ongoing BPCE Master Home Loans transactions implemented in May 2014 and May 2016, based on a transfer of home loans and personal loans, and expanded on Groupe BPCE’s centralized cash management. As in the case of previoustransactions,the securitiesconcernedwere then loaned by the BanquePopulairebanks and the Caisses d’Epargne to BPCE. These transactionshelped ensure that the amountof Groupe BPCE’s collateral eligible for Eurosystem refinancing operations remainedhigh while also diversifyingthe assets availablefor this type of transaction. The first amended Finance Act for 2017 introducing two additional contributionsof corporate tax (15% each) took the general tax rate for this tax to 44.43% in 2017 for the BPCE tax consolidationgroup. The impact represents an additional chargeof € 64 million. € 395 million in tax rebates for prior periods were also recognized under tax, covering an adjustment in the tax treatment of certain Crédit Foncier transactionswhere deductibilityhad not been entirely taken into account during the event year. € 287 million has already been returned to Crédit Fonicer and the remaining € 108 million was provisioned.

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1.4 There are nopost-balancesheet events to report.

POST-BALANCE SHEET EVENTS

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Registration document 2017