2020 Universal registration document and annual financial report - BNP PARIBAS54

2 CorPorate GovernanCe and internal Control

2

Report on Corporate governance

■ acknowledged the Bank s action plan to develop and strengthen the analysis of the environmental, social and governance ( ESG ) risks of the Group s loan portfolio;

■ approved the creation of an alternative Private Equity fund for the Principal Investments business;

■ monitored the disposals of the Group s equity investments in North and West Africa;

■ was informed of the action plan defined by the Bank following the recommendations issued by the ECB on credit risk under the Supervisory Review and Evaluation Process (SREP) adapted in the context of the health crisis;

■ monitored the implementation of the Bank s IT and information systems strategy;

■ approved the Bank s outsourcing strategy;

■ examined the adjustments required by Brexit on the Bank s organisation and its consequences;

■ acknowledged the Group s Code of tax conduct;

■ monitored changes in the shareholding structure and share price;

■ reviewed the Bank s relative performance compared with its competitors;

■ reviewed the regulatory ratios of the main systemically important banks;

■ was informed of the way in which the Group had decided to adapt its system of listening to employees and the results of targeted surveys among employees measuring their satisfaction at work;

■ examined the opinion of the Central Works Council on the Bank s strategic guidelines and acknowledged the clarifications provided by the Human Resources Department;

■ examined the issuance amounts of debt securities in the form of senior and subordinated debt;

■ continued to monitor the amount of funds allocated to the various objectives of the Company s share buyback program authorised by the Annual General Meeting during the first half of 2020;

■ understood the Executive Management s comments on the net margin generated on new lending in 2019 and in the first half of 2020;

■ authorised the delegations of authority for the issuance of debt securities, particularly for bonds and similar;

■ examined the related-party agreements entered into and authorised in previous years but still in force in the past year;

■ renewed the delegation of responsibility for the internal control of regulated subsidiaries so requesting and received a report from the subsidiaries in question;

■ reviewed and approved the answers to written questions submitted by shareholders at the Annual General Meeting;

■ renewed the Group s American Depositary Receipt program.

For the sixth time, SSM representatives from the ECB and representatives of the Autorité de contrôle prudentiel et de résolution (ACPR) attended a Board meeting (on 26 February 2020). They outlined their priorities for banking supervision for 2020, which were followed by an exchange of views with the members of the Board.

As in previous years, the Board of directors met on 17 December 2020 for a strategic seminar devoted, among other things, to the impact of the

Covid-19 crisis on the businesses within Domestic Markets, Corporate and Institutional Banking and International Financial Services as well as the challenges of the next strategic plan.

2.b Work performed by the Financial Statements Committee and work approved by the Board of directors in 2020

MeetingsNumber of members Attendance

rate 5 4 100%

Examination of the financial statements and financial information The Financial Statements Committee:

■ conducted quarterly reviews of the financial statements based on the documents and information provided by Executive Management and the work carried out by the Statutory Auditors;

■ each quarter, analysed summary reports of the consolidated results and annualised return on equity, as well as results and profitability by field of activity;

■ each quarter, reviewed the Group s consolidated balance sheet and changes to said balance sheet; on that occasion, it was given an update on off-balance sheet commitments;

■ each quarter, examined the report on internal audit control points flagged by Group entities in the context of the certification of their financial statements. It analysed the change in the risk level observed for each of the thirty major accounting controls;

■ each quarter, reviewed the work to make models used to calculate credit risk provisions more reliable under IFRS 9;

■ reviewed changes in equity and the capital adequacy ratio with regard to the new prudential solvency regulations and new requirements imposed by the regulator;

■ examined trends in revenues and the cost/income ratio by business for each quarter;

■ reviewed the dividend distribution policy in view of the ECB s recommendation on compliance with prudential and solvency rules and the recommendation issued regarding the Covid-19 crisis;

■ kept track of the changes in prudential requirements and reviewed changes in risk-weighted assets;

■ examined the provisions for litigation on a regular basis;

■ reviewed goodwill;

■ conducted a detailed analysis of the composition of the Group s balance sheet;

■ read the explanations relating to Credit Valuation Adjustment (CVA) adjustments.

Each quarter, when reviewing the results, it:

■ heard the comments of the Chief Financial Officer and senior executive in charge of accounting and financial reporting;

■ interviewed the Chief Financial Officer, without the presence of the Executive Management;