SFIL Annual financial report 2018

5 Annual Financial Report 2018 SFIL Management report Report on corporate governance Consolidated financial statements in accordance with IFRS Annual financial statements in accordance with French GAAP Shareholders’ Meeting of May 29, 2019 General information Since January 31, 2013, SFIL holds 100% of the capital of Caisse Française de Financement Local (CAFFIL), its sole subsidiary, with the status of société de crédit foncier (SCF) and governed by articles L.513-2 et seq of the French Mon‑ etary and Financial Code ( Code monétaire et financier ). SFIL serves as a backer for CAFFIL’s activities, as specified by regulations concerning its SCF status, in particular in accordance with articles L.513-15 and L.513-2 of the French Monetary and Financial Code. In this context, SFIL is CAF‑ FIL’s servicer, and provides full operational management of its subsidiary within the framework of the management agreement it signed with CAFFIL. SFIL is at the heart of the system that embodies the State’s determination to provide French local government entities and public hospitals with uninterrupted, efficient access to long-term bank financing, in addition to the offers provided by commercial banks and French or European public insti‑ tutions operating in this segment. This system, which was launched following European Commission authorization on December 28, 2012, makes it possible to refinance La Ban‑ que Postale’s loans to French local government entities and assist the relevant borrowers in their efforts to reduce their outstanding sensitive loans. In 2015, the State entrusted SFIL with a second public interest mission: refinancing buyer credits insured by Bpi‑ france Assurance Export and thereby helping to increase the competitiveness of the large export contracts negoti‑ ated by French companies. The objective is to provide mar‑ ket financing with the volumes and maturities adapted to export credits of significant amounts and under conditions that match those of the most highly rated issuers of French covered bonds, relying on the issuance capacities of SFIL and its subsidiary CAFFIL. This refinancing is available for all partner banks of French exporters for their buyer cred‑ its insured by Bpifrance Assurance Export in the name and under the guarantee of the French State. SFIL was authorized as a bank by the Collège de l’Autorité de contrôle prudentiel et de résolution on January 16, 2013. Since SFIL was created, the French State has played a special role in its operation by contributing 75% of its capital and, as the reference shareholder, assuring prudential authorities of its strong commitment to provide financial support, in keeping with current banking regulations. Caisse des dépôts et consignations and La Banque Postale respectively hold 20% and 5% of the Company’s capital. This wholly public shareholder structure, which will remain so in the context of the project announced in 2018 involving entrusting control of SFIL to Caisse des dépôts et consignations, is a char‑ acteristic of the public development bank model that SFIL espouses. The objective of public development banks is not to maximize profitability or market share, but to carry out public policy missions entrusted by State, regional or local authorities to compensate for identified market failures, while ensuring the conditions for their own viability are in place. SFIL is a key component of the financing system for local government entities and public hospitals established in early 2013 to provide a sustainable response to the con‑ traction in supply of long-term financing for the local public sector. From 2015, SFIL was also entrusted with responsibil‑ ity for refinancing major export credit contracts as part of a market system designed to strengthen the French export industry’s competitiveness. Capital structure of SFIL and its sole subsidiary CAFFIL (1) (1) SFIL and CAFFIL make up the SFIL Group. Management report Context