Instruction No. 2014-I-16 of December 8, 2014, amending Instruction No. 2011-I-06 regarding the coverage ratio of land credit companies and housing finance companies

PRUDENTIAL CONTROL AND RESOLUTION AUTHORITY

Instruction No. 2014-I-16 amending Instruction No. 2011-I-06 regarding the coverage ratio of land credit companies and housing finance companies

The Prudential Control and Resolution Authority, Having regard to the Monetary and Financial Code, particularly Articles L. 513-2 to L. 513-33 as well as L. 612-24 and R. 513-1 to R. 513-21; Having regard to the regulation of the Banking and Financial Regulation Committee No. 99-10 of July 9, 1999, as amended, regarding land credit companies and housing finance companies; Having regard to Instruction No. 2011-I-06 of June 15, 2011, regarding the coverage ratio of land credit companies and housing finance companies; Having regard to the opinion of the Prudential Affairs Consultative Committee dated November 26, 2014, Decides:

Article 1 Instruction No. 2011-I-06 of June 15, 2011 is hereby amended as follows:

1° Article 2 is replaced by the following provisions:

"Land credit companies and housing finance companies shall submit to the Prudential Control and Resolution Authority the statement 'Elements for the calculation of the coverage ratio and control of limits' (Annex 1) containing information on:

• the calculation of the coverage ratio mentioned in Article L. 513-12 of the Monetary and Financial Code;
• compliance with limits regarding the composition of assets;
• the calculation of amounts eligible for refinancing through privileged resources.

This statement is prepared four times a year based on figures finalized on March 31, June 30, September 30, and December 31. It is transmitted to the General Secretariat of the Prudential Control and Resolution Authority, electronically signed by a responsible executive, within three months following the finalization date, in XML-XBRL format according to the technical specifications required for processing by the Prudential Control and Resolution Authority. The certification by the specific auditor, in application of Article L. 513-23 of the Monetary and Financial Code, is transmitted by mail."

2° Article 7 (Transitional Provisions) is added, comprising the following provisions:

"By way of exception to Article 2 of this Instruction:

• the information cited in Article 2 of this Instruction and established based on figures finalized on September 30, 2014 may be transmitted to the General Secretariat of the Prudential Control and Resolution Authority within four months following the finalization date;
• institutions declare the information cited in the same article on authenticated paper support signed by an authorized signatory, and in this case, complete this paper submission by transmitting electronic data in the form of '.xls' files until the deadline of December 31, 2015."

Article 2 The statement 'Elements for the calculation of the coverage ratio and control of limits' presented in Annex 1 of Instruction No. 2011-I-06 is modified and replaced by that of Annex 1 to this Instruction.

Article 3 Title VI is added to Annex 2 to Instruction No. 2011-I-06, comprising the following provisions:

"VI – Elements for the calculation of the limit of exposure to assets on affiliated companies The statement 'Elements for the calculation of the limit of exposure to assets on affiliated companies' must present the elements allowing the control of the calculation performed to apply to the numerator of the coverage ratio the deduction provided for in the last paragraph of Article 9 of CRBF Regulation No. 99-10: a) Exposures on companies mentioned in the third paragraph of Article R. 513-8 of the Monetary and Financial Code: only assets entering into the calculation of the numerator of the coverage ratio are taken into account in these exposures, after application of the second paragraph of Article R. 513-8; b) Non-privileged resources; c) Potential assets received as collateral, pledge, or full ownership in application of Articles L. 211-36 to L. 211-40, L. 313-23 to L. 313-35, and L. 313-42 to L. 313-49 of the Monetary and Financial Code: only assets received against exposures under a) enter into this calculation. They are then retained according to the weightings fixed in Article 9 of CRBF Regulation No. 99-10; d) Amount to be deducted from assets: this amount is always positive or zero."

Article 4 This Instruction enters into force upon its publication. Paris, December 8, 2014 The President of the Prudential Control Authority and Resolution, [Christian NOYER]

Annex 1 to Instruction No. 2014-I-16 Elements for the calculation of the coverage ratio and control of limits

Amounts 1.1 2 2.1 2.2 2.3.1 3.2 3.3 3.4 3.5 3.6 3.7 4 5 5.1 6 7 NOMINAL AMOUNT OF PRIVILEGED RESOURCES ("1.1" + "2.3" + "3.7") P Elements for the calculation of the coverage ratio and control of limits RESOURCES BENEFITTING FROM THE PRIVILEGE DEFINED IN ARTICLE L. 513-11 OF THE MONETARY AND FINANCIAL CODE: elements of liabilities SUMS DUE UNDER THE CONTRACT PROVIDED FOR IN ARTICLE L. 513-15 OF THE MONETARY AND FINANCIAL CODE including nominal amount Subtotal To be deducted: land bonds or housing finance bonds issued and subscribed by the institution subject to them when they are not allocated as security for credit operations of the Bank of France Debts attached to these securities PRIVILEGED RESOURCES (1 + 2 + 3 + 4 + 5 + 6) DEBT RESULTING FROM INCIDENTAL MENTIONED IN THE LAST PARAGRAPH OF ARTICLE L. 513-11 OF THE MONETARY AND FINANCIAL CODE including impact of exchange rate variations on the nominal amount of privileged resources SUMS DUE UNDER FINANCIAL INSTRUMENTS WITH MATURITY BENEFITING FROM THE PRIVILEGE DEFINED IN ARTICLE L. 513-11 OF THE MONETARY AND FINANCIAL CODE Non-financial clients Financial clients PRIVILEGED RESOURCES FROM CLIENTS including nominal amount PRIVILEGED RESOURCES FROM CREDIT INSTITUTIONS Other securities benefiting from the privilege Negotiable debt securities Land bonds or housing finance bonds SECURITIES BENEFITTING FROM THE PRIVILEGE including nominal amount

Net values accounting or eligible amounts for refinancing Weighting (in %) Weighted amounts 2 1 2 3 7.3 Shares, stocks, and debt securities issued by a securitization vehicle or a similar entity whose asset elements have been sold exclusively by entities belonging to the same consolidation perimeter as the land credit company or housing finance company meeting the conditions of 2-b) of the annex to Regulation 99-10: shares, stocks, and debt securities acquired or financed by the land credit company or housing finance company after 12/31/2011 and shares or stocks and debt securities acquired or financed prior to this date which benefit from the highest credit quality rating from 01/01/2015 100% including: 7.3.1 Assets constituted by at least 90% of loans to individuals to finance housing 7.3.2 Assets constituted by 90% of loans mentioned in Article L. 513-3 which do not fall under R.513-3 II 7.3.3 Assets constituted by 90% of exposures defined in Article L. 513-4 7.4 Shares, stocks, and debt securities issued by a securitization vehicle or a similar entity whose asset elements have been sold exclusively by entities belonging to the same consolidation perimeter as the land credit company or housing finance company meeting the conditions of 2-b) of the annex to Regulation 99-10: shares, stocks, and debt securities acquired or financed by the land credit company or housing finance company after 12/31/2011 and shares or stocks and debt securities acquired or financed prior to this date which benefit from the 2nd highest credit quality rating from 01/01/2015 50% including: 7.4.1 Assets constituted by at least 90% of loans to individuals to finance housing 7.4.2 Assets constituted by 90% of loans mentioned in Article L. 513-3 which do not fall under R.513-3 II 7.4.3 Assets constituted by 90% of exposures defined in Article L. 513-4 7.5 Shares, stocks, and debt securities issued by a securitization vehicle or a similar entity whose some asset elements have been sold by an entity not belonging to the consolidation perimeter of the land credit company or housing finance company meeting the conditions of 3-a) of the annex to Regulation 99-10: shares, stocks, and debt securities acquired or financed by the land credit company or housing finance company before 12/31/2011 which benefit from the highest credit quality rating (until 12/31/2014) 100% including: 7.5.1 Assets constituted by at least 90% of loans to individuals to finance housing 7.5.2 Assets constituted by 90% of loans mentioned in Article L. 513-3 which do not fall under R.513-3 II 7.5.3 Assets constituted by 90% of exposures defined in Article L. 513-4 7.6 Shares, stocks, and debt securities issued by a securitization vehicle or a similar entity whose some asset elements have been sold by an entity not belonging to the consolidation perimeter of the land credit company or housing finance company meeting the conditions of 3-a) of the annex to Regulation 99-10: shares, stocks, and debt securities acquired or financed by the land credit company or housing finance company before 12/31/2011 which benefit from the 2nd highest credit quality rating (until 12/31/2014) 50% including: 7.6.1 Assets constituted by at least 90% of loans to individuals to finance housing 7.6.2 Assets constituted by 90% of loans mentioned in Article L. 513-3 which do not fall under R.513-3 II 7.6.3 Assets constituted by 90% of exposures defined in Article L. 513-4 7.7 Shares, stocks, and debt securities issued by a securitization vehicle or a similar entity whose some asset elements have been sold by an entity not belonging to the consolidation perimeter of the land credit company or housing finance company meeting the conditions of 3-b) of the annex to Regulation 99-10: shares, stocks, and debt securities acquired or financed by the land credit company or housing finance company after 12/31/2011 and shares or stocks and debt securities acquired or financed prior to this date which benefit from the highest credit quality rating from 01/01/2015 100% including: 7.7.1 Assets constituted by at least 90% of loans to individuals to finance housing 7.7.2 Assets constituted by 90% of loans mentioned in Article L. 513-3 which do not fall under R.513-3 II 7.7.3 Assets constituted by 90% of exposures defined in Article L. 513-4 8 OTHER ASSET ELEMENTS 100% 8.1 Other elements of class 1 100% 8.2 Other elements of class 2 100% 8.3 Other elements of class 3 100% 8.4 Other elements of class 4 100% 9 OPERATIONS COMING IN DEDUCTION OF ASSETS 100% 9.1 Sums received from clients pending allocation, carried to the balance sheet liabilities 100% 9.2 Repurchase agreements: securities given in repurchase 100% 9.3 Claims mobilized under the conditions set by Articles L 313-23 to L 313-34 of the Monetary and Financial Code 100% 9.4 Assets deducted in application of the last paragraph of Article 9 of CRBF Regulation No. 99-10 10 TOTAL OF WEIGHTED AMOUNTS OF ASSET ELEMENTS (1+2+3+4+5+6+7+8-9) COVERAGE RATIO (with 2 decimals) (A / P x 100) Elements for the calculation of the coverage ratio and control of limits ASSET ELEMENTS COMING IN COVERAGE OF PRIVILEGED RESOURCES

Amounts Weighting Weighted amounts 1 2 3 1 EXPOSURES ON COMPANIES MENTIONED IN THE THIRD PARAGRAPH OF ARTICLE R. 513-8 OF THE MONETARY AND FINANCIAL CODE 0 100% 0 including: 1.1 Claims and securities on credit institutions meeting the 1st and 3rd paragraphs of Article R. 513-6 of the Monetary and Financial Code 100% 0 1.2 Claims and guarantees falling under the 2nd paragraph of Article R. 513-6 of the Monetary and Financial Code (including claims and guarantees related to the management of financial instruments) 100% 0 1.3 Other assets 0 100% 0 1.3.1 Accrued interest on swaps 100% 0 1.3.2 Receivables 100% 0 1.3.3 Other 100% 0 2 NON-PRIVILEGED RESOURCES 100% 0 2.1 Amount of the 25% limit of non-privileged resources provided by the last paragraph of Article 9 of CRBF Regulation No. 99-10 0 3 POTENTIAL ASSETS RECEIVED AS COLLATERAL, PLEDGE, OR FULL OWNERSHIP UNDER 1 IN APPLICATION OF ARTICLES L. 211-36 to L. 211-40, L. 313-23 to L. 313-35, and L. 313-42 to L. 313-49 OF THE MONETARY AND FINANCIAL CODE 0 0 3.1 Assets benefiting from a 100% weighting 100% 0 3.2 Assets benefiting from an 80% weighting 80% 0 3.3 Assets benefiting from a 60% weighting 60% 0 3.4 Assets benefiting from a 50% weighting 50% 0 4 AMOUNT TO BE DEDUCTED FROM ASSETS 0 ELEMENTS FOR THE CALCULATION OF THE 25% LIMIT OF EXPOSURE TO ASSETS ON AFFILIATED COMPANIES IN APPLICATION OF THE LAST PARAGRAPH OF ARTICLE 9 OF REGULATION NO. 99-10 Elements for the calculation of the coverage ratio and control of limits