The bank
for a changing
world
ANNUAL REPORT
2021
BNP PARIBAS FORTIS SA/NV
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ANNUAL REPORT 2021
INTRODUCTION
BNP Paribas Fortis is a limited liability company (naamloze vennootschap (NV)/société
office address at Warandeberg 3, 1000 Brussels and registered under number BE VAT
0403.199.702 (hereinafter referred to as the ‘Bank’ or as ‘BNP Paribas Fortis’).
The BNP Paribas Fortis annual report 2021 contains both the audited consolidated and
non-consolidated financial statements, preceded by the report of the Board of Directors,
the statement of the Board of Directors and a section on corporate governance including
the composition of the Board of Directors. The audited BNP Paribas Fortis consolidated
financial statements 2021, with comparative figures for 2020, prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the European
Union, are followed by the audited non-consolidated financial statements 2021 of
BNP Paribas Fortis, prepared on the basis of the rules laid down in the Belgian royal
decree of 23 September 1992 on the annual accounts of credit institutions.
The BNP Paribas Fortis annual report 2021 is available in English, French and Dutch. The
English version is the original one while the other versions are unofficial translations.
Every effort has been made to ensure that the language versions correspond to one
another. If a difference should exist, the English version would take precedence.
It is considered that the information included in the note 7.j ‘Scope of consolidation’,
together with the information included in the report of the Board of Directors and
in the corporate governance statement, complies with the requested information in
article 168, §3 of the Belgian act of 25 April 2014 on the legal status and supervision
of credit institutions.
All amounts in the tables of the consolidated financial
statements are denominated in millions of euros , unless
stated otherwise. All amounts in the tables of the non-
consolidated financial statements are denominated in
thousands of euros, unless stated otherwise. Because figures
have been rounded off, small discrepancies with previously
reported figures may appear. Certain reclassifications
have been made with regard to the prior year’s financial
statements in order to make them comparable for the year
under review.
BNP Paribas Fortis refers in the consolidated financial
statements to the BNP Paribas Fortis SA/NV consolidated
situation unless stated otherwise. BNP Paribas Fortis
refers in the non-consolidated financial statements to the
BNP Paribas Fortis SA/NV non-consolidated situation, unless
stated otherwise.
All information contained in the BNP Paribas Fortis annual
report 2021 relates to the BNP Paribas Fortis consolidated
and non-consolidated financial statements and does not cover
the contribution of BNP Paribas Fortis to the BNP Paribas
Group consolidated results, which can be found on the BNP
Paribas website: www.bnpparibas.com.
The BNP Paribas Fortis annual report 2021 is available on the
website: www.bnpparibasfortis.com.
CONTENTS
Introduction 3
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021 9
Report of the Board of Directors 10
A word from the Chairman and the CEO 10
Economic context 14
Core Businesses 15
Corporate Social Responsibility (CSR) 21
Changes in the scope of consolidation 27
BNP Paribas Fortis credit ratings at 28/02/2022 27
Forward-looking Statements 27
Comments on the evolution of the results 28
Comments on the evolution of the balance sheet 30
Liquidity and solvency 31
Principal risks and uncertainties 32
Statement of the Board of Directors 33
Corporate Governance Statement 34
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021 47
Profit and loss account for the year ended 31 December 2021 48
Statement of net income and change in assets and liabilities recognised directly in equity
49
Balance sheet at 31 December 2021 50
Cash flow statement for the year ended 31 December 2021 51
Statement of changes in shareholders’ equity between 1 January 2020 and 31 December 2021
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021 53
1 Summary of significant accounting policies applied by BNP Paribas Fortis 54
1.a Accounting standards 54
1.b Segment reporting 56
1.c Consolidation 57
1.d Translation of foreign currency transactions 61
1.e Net interest income, commissions and income from other activities 62
1.f Financial assets and liabilities 63
1.g Property, plant, equipment and intangible assets 75
1.h Leases 76
1.i Non-current assets held for sale and discontinued operations 77
1.j Employee benefits 77
1.k Share-based payments 79
1.l Provisions recorded under liabilities 79
1.m Current and deferred tax 80
1.n Cash flow statement 80
1.o Use of estimates in the preparation of the financial statements 81
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2 Notes to the profit and loss account for the year ended 31 December 2021 83
2.a Net interest income 83
2.b Commission income and expense 84
2.c Net gain on financial instruments at fair value through profit or loss 85
2.d Net gain on financial instruments at fair value through equity 86
2.e Net income from other activities 86
2.f Other operating expenses 86
2.g Cost of risk 87
2.h Net gain on non-current assets 96
2.i Corporate income tax 96
3 Segment information 97
3.a Operating segments 97
3.b Information by operating segment 98
3.c Country-by-country reporting 99
4 Notes to the balance sheet at 31 December 2021 101
4.a Financial assets, financial liabilities and derivatives at fair value through profit or loss 101
4.b Derivatives used for hedging purposes 103
4.c Financial assets at fair value through equity 107
4.d Measurement of the fair value of financial instruments 107
4.e Financial assets at amortised cost 117
4.f Impaired financial assets (Stage 3) 122
4.g Financial liabilities at amortised cost due to credit institutions and customers 123
4.h Debt securities and subordinated debt 123
4.i Current and deferred taxes 124
4.j Accrued income/expense and other assets/liabilities 125
4.k Equity-method investments 126
4.l Property, plant, equipment and intangible assets used in operations, investment property 129
4.m Goodwill 130
4.n Provisions for contingencies and charges 132
4.o Offsetting of financial assets and liabilities 133
4.p Transfers of financial assets 136
5 Commitments given or received 138
5.a Financing commitments given or received 138
5.b Guarantee commitments given by signature 138
5.c Securities commitments 138
5.d Other guarantee commitments 139
6 Salaries and employee benefits 141
6.a Salary and employee benefit expenses 141
6.b Post-employment benefits 141
6.c Other long-term benefits 147
6.d Termination benefits 147
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7 Additional information 148
7.a Contingent liabilities: legal proceedings and arbitration 148
7.b Business combinations and other changes of the consolidation scope 148
7.c Minority interests 150
7.d Significant restrictions in subsidiaries, associates and joint ventures 151
7.e Structured entities 152
7.f Compensation and benefits awarded to BNP Paribas Fortis’ corporate officers 155
7.g Other related parties 159
7.h Financial instruments by maturity 161
7.i Fair value of financial instruments carried at amortised cost 162
7.j Scope of consolidation 164
7.k Fees paid to the statutory auditors 169
7.l Events after the reporting period 170
RISK MANAGEMENT AND CAPITAL ADEQUACY 171
1 Risk management organization 173
2 Risk measurement and categories 175
3 Capital adequacy 177
4 Credit and counterparty credit risk 180
5 Market risk 185
6 Sovereign risks 188
7 Operational risk 189
8 Compliance and reputation risk 190
9 Liquidity risk 191
REPORT OF THE ACCREDITED STATUTORY AUDITOR 193
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED) 203
Report of the Board of Directors 204
Comments on the evolution of the balance sheet 204
Comments on the evolution of the income statement 205
Proposed appropriation of the result for the accounting period 207
Information regarding related party transactions 208
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED) 209
OTHER INFORMATION 215
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BNP PARIBAS FORTIS BNP PARIBAS FORTIS
CONSOLIDATED ANNUAL REPORT 2021CONSOLIDATED ANNUAL REPORT 2021
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
REPORT OF THE BOARD OF DIRECTORS
A word from the Chairman and the CEO
1
Excluding non-recurrent items, i.e. at constant scope, constant exchange rates, and excluding other one-off results.
In 2021 we continued to focus our #PositiveBanking approach entirely on providing services and
solutions to make life easier for our customers and help them grow, while also promoting a sustain-
able economy.
2021 was a pivotal year for our customers, our staff and the bank as a whole. The COVID-19 epidemic
was not quelled as quickly as originally expected. Meanwhile the challenges around sustainability
and climate change were making themselves felt intensively in day-to-day life in Belgium and
elsewhere. On the macro-economic front, there were supply chain issues and inflation rose to levels
not seen for a long time, while interest rates in the euro zone remained low. However, the Belgian
economy bounced back up again – albeit not at the same tempo in all sectors – resulting in stronger
consumption figures and higher corporate investments.
Partly due to the health crisis, the digital transformation of society progressed at greater speed. The
limitations on movement and restrictions on social contacts led our customers to make greater use of
all our digital channels. We saw an increase of over 100,000 in the number of customers actively using
the Easy Banking App (EBA) or Easy Banking Web, which reached 2.5 million by the end of the year.
We made great efforts in 2021 to provide a broad range of assistance to customers wishing to improve
their digital skills – running digital workshops at our branches, posting educational videos about
our EBA on social media and offering a Digital Maturity Assessment programme for business clients.
We launched a new digital ‘Hello bank! Pro’ service for the self-employed and members of the
professions, enabling them to request a company number and open a business account online with
just a few mouse-clicks.
During the year, we continued our information campaigns for both customers and staff to keep them
up to date with the various payment moratoria available on loan repayments and insurance premiums;
to advise them on the mechanisms for remote access to the bank; and to help them comply with the
health-related rules when using our branches and self-banking facilities.
In 2021 we stepped up the pace of our repositioning as a bancassurance provider, inter alia incor-
porating into our product range the fire insurance solutions for professional people provided by our
partner AG Insurance and recruiting some 50 insurance experts. During the July flooding episode,
we gave high priority to customers affected by providing them with assistance and helping them file
their damage claims. In total we processed 6,200 claims related to the floods.
Strong financial results
In the context of a rebounding Belgian economy, the bank was able to achieve strong financial results.
Consolidated net profit came in at EUR 2,593 million, a 29.5%
1
increase on the 2020 figure. Meanwhile
the persistent downward pressure on interest rate income in our Belgian retail banking business
was offset by increased revenues, mainly from higher commission income, a lower cost of risk, and
efficiency gains. There was continued growth in lending products (+2.4%) and deposits (+6.0%) in
Belgium across all customer segments. Corporate & Institutional Banking posted very good results.
We also saw a rise in revenues from our Arval, Leasing Solutions and Personal Finance subsidiaries.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
The cost of risk for 2021 came to 17 basis points, a 43% decrease in amount versus 2020. Meanwhile
our solvency, with an 18% CET1 ratio, and liquidity, with an LCR of 192%, remain robust, enabling us
to invest to the full in supporting the recovery of the Belgian economy.
Our bank in 2025: sustainable, growing, accessible
We aim to be a sustainable, growth-oriented and accessible bank, in line with our purpose: “Together
we commit to a better society as the trusted financial companion at all moments of our clients’ lives”.
To that end we are working to adapt our service model to the changing behaviours and expectations
of our customers as their lives evolve.
Our plans focus strongly on customer satisfaction; the development of an organisation designed to
serve the needs of all types of customers; highly committed staff; efficient operational processes;
and the creation of both value and sustainability through our financial products and services. We
have identified a number of key levers that will help us achieve these goals.
A sustainable bank
Sustainability criteria will continue to be a critical focus in all aspects of our service, and we are
looking at diverse ways to provide banking services and platforms that can deliver added value in
terms of sustainability. Examples include offering more attractive interest rates on ‘green’ car loans
at our retail banking arm, and systematically promoting hybrid or fully electric vehicles under our
‘top deals’ with our partner and leasing subsidiary Arval.
We fully support our clients with sustainable housing solutions. Green Mortgage loans for construction
and renovation increased to reach 40% of the total granted in 2021. We now have EUR 3.6 billion in
green mortgages and EUR 169 million in energy loans outstanding. We also saw a strong demand
from retail, affluent and private banking clients for our sustainable investment products, so that
sustainable investments for these clients now amount to EUR 40 billion.
Our Private Equity business, in which we intend to invest one billion euros by 2025, also includes
a strong sustainability component, as witnessed by our recent investments in companies such as
Hannecard, Nobi and Aerospacelab. We also plan to go further with our Sustainability Linked Loans
for enterprises, such as the financing of a EUR 500 million credit line for Umicore, for which our bank
acted as Sustainability Coordinator.
Moreover, our partnership with Climact enables BNP Paribas Fortis company clients to obtain from
Climact an analysis of their climate footprint and suggestions for strategies and solutions in this
field, in cooperation with our Sustainable Business Competence Centre.
We are not only offering sustainable solutions to our clients but also building sustainable practices
in all our operations. For example, our new Montagne du Parc headquarters sets new standards in
the field of sustainability, and will not only enable us to manage our building stock in Brussels more
efficiently, but will also serve as an example for buildings management.
Our sustainability drive is fully in line with the commitments made by our parent BNP Paribas, which
confirmed its ESG leadership within the banking sector in 2021 and positioned itself in the top 6% of
banks assessed in the annual extra-financial rating of SAM, the S&P Global Corporate Sustainability
Assessment (CSA).
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
A growing bank
After running bpost bank in a 50-50 joint venture together with national postal operator Bpost for
the past 25 years, we have been able to further consolidate our network by acquiring the remaining
50% of bpost bank’s shares, while also renewing our partnership agreement with Bpost for seven
years. The transaction adds EUR 12 billion to our balance and makes us the 100% supplier of bpost
bank’s 600,000 customers. Through our unique co-operation model, we can now offer individuals
and families the best of both worlds, namely the financial expertise of BNP Paribas Fortis and the
distribution strength of Bpost.
Regarding our business customers, we see facilitating the daily management of incoming payments
as key to their growth and development. The creation of our acquiring specialist Axepta gave us a
unique position as bank-acquirer in the Belgian market, and we further stepped up our investment in
merchant payment services with the acquisition of Ingenico’s card payment processing and terminals
in Belgium and Luxembourg, which was concluded in November. Following the Ingenico deal we now
have 30,000 active merchant clients linked to 38,000 terminals. We aim to grow our volume to a
market share of 15% in Belgium.
Meanwhile we are further developing our integrated transaction banking service for enterprises,
which brings capital management, trade finance and factoring under one roof.
Other areas in which we also intend to further develop our capabilities are the insurance field, with
a dedicated insurance expertise line and an improved product and service range for self-employed
professionals, in collaboration with AG Insurance; and the investment field, with an extension of our
investment products to a greater number of customer segments.
An accessible bank
Building a new commercial organisation designed to provide the very best services in an efficient,
high-quality manner suited to the needs of all our diverse customers segments includes creating a
new distribution model that aims for 100% easy digital access to our banking and insurance services.
Through our digital and remote channels we intend to provide simplified products and services
with a strong focus on high quality and operational excellence in order to make life easier for all
our customers. As part of this project we are committed to undertaking concrete actions to combat
digital exclusion. We are one of the driving forces behind the Digital Inclusion Charter, whose aim is
to narrow the digital divide in Belgium.
Staying close to our customers
One consequence of this digital sales approach is a reorganisation of our branch network. We will
progressively upgrade our BNP Paribas Fortis and Fintro branches to focus much more on personal
advice and services following the sale of more complex products. Meanwhile, by 1 January 2024 bpost
bank will be fully integrated into BNP Paribas Fortis. We will then be able to provide a seamless
service to all our individual customers via a network of approximately 880 branches: the combination
of BNP Paribas Fortis and sales points operating within post offices.
Our network is further complemented by our investments in the Batopin automated cash dispensers
that we share with other banks. The aim is to ensure that 95% of all bank customers have a cash
point located no further than 5 kilometres from their front door.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
In addition, we are going to introduce an elementary banking service, entitled ‘Nickel’, which will
be provided through press shops, for those customers whose needs can be fully met through simple
financial products – i.e. a bank card linked to a single bank account. Nickel has already been suc-
cessfully rolled out by BNP Paribas in France where it serves 2.4 million customers.
In addition, our affluent & private banking clients and enterprise clients are to be brought together
into a set of 16 Client Houses offering combined expertise, in which the Relationship Manager will
play a prominent role. All skills and expertise, whether in the field of finance, investment or insurance
will work together to provide integrated solutions for these clients.
In 2022 our bank will be celebrating its 200th anniversary. A constant theme throughout our history
has been that we have always been able to help our customers grow by continually adapting,
reinventing ourselves and staying ahead.
It is with this same mindset – a determination to be there for all our customers, providing the right
solutions for all their banking and insurance needs in all circumstances – that we’re now looking to
the future. Our plans should enable us to continue providing an up-to-date service based on secure,
fast and comprehensive financial and insurance solutions.
As part of a top European group, we possess tools, unique in Belgium, to help us deploy our banking
ecosystem so as to deliver added value to our customers in the management of their finances.
We’re convinced that by making life easier for our customers in a sustainable manner, we will be
able to cement and maintain long-term relationships with them going forward.
We would like to thank our customers for the trust they continue to place in our products and services.
We would also like to thank our colleagues, whose unfailing commitment during this past year has
enabled the bank to go on providing an excellent service.
Max Jadot
Chief Executive Officer
Herman Daems
Chairman of the Board of Directors
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Economic context
The Belgian economy saw sustained growth during a large part
of 2021, with GDP showing a strong increase in the second and
third quarters. Anti-COVID vaccination was rolled out progres-
sively during the early months of the year and the vaccination
rate among the population reached a sufficient level to enable
a gradual re-opening of the economy from the month of May
2021 onwards. This explains the vibrant consumption and
investment figures recorded from that moment.
During the second quarter, private consumption rose by more
than 14% year-on-year, while capital investment by businesses
surged by just under 32%. In parallel with the firming up of
economic activity, the employment market also picked up
again, a considerable number of jobs were created and the
unemployment rate dipped once again below the 6% mark.
Although the gap between job vacancies and the number of
job-seekers remains higher than in neighbouring countries,
this was already the case before the COVID epidemic struck,
and is largely due to structural factors peculiar to Belgium,
including generous unemployment benefits, low job-mobility in
some regions, and an inadequate match between job vacancies
and available skills.
However, there was a slowdown in activity during the last
three months of the year because of the difficulties in step-
ping up production which businesses encountered due to
soaring prices arising from the delivery bottlenecks that
appeared practically all over the world as demand took off
again. The worsening public health situation brought about
by the appearance of the Omicron variant of the virus from
November onwards exacerbated these difficulties as infection
rates surged everywhere. In the end, GDP rose by only 0.5%
in the final quarter of the year, leaving growth for the year
as a whole at 6.1%.
On the whole, a number of indicators show that the recovery
in the world economy lost momentum in the second half of
2021. In fact, after seeing powerful growth at the start of the
year, world industrial production began to stagnate and goods
imports fell away somewhat as early as the second quarter.
Basically, growth ran into problems linked to shortages of both
labour and supplies of intermediate goods that are affecting
many of the developed countries. Surveys among Procurement
Managers reveal that at world level, delivery times in the
industrial sector reached an all-time peak at the end of 2021
and no improvement in the situation is expected in the short
term, mainly because a number of Asian countries are pursuing
a ‘zero-COVID’ policy which is leading to the abrupt closure
of many factories on which the entire world depends for its
supply of goods.
The year 2021 was also marked by the unexpected return of
inflation, which beat a 40-year-old record in the United States
by reaching over 7% in December, and prices everywhere began
to climb. In Belgium, while inflation averaged just 3% for 2021
as a whole, it was accelerating continuously throughout the
entire year, with price rises surging from 0.5% in January to
5.7% in December. This acceleration in the rate of inflation was
mainly due to increases in energy prices, especially for natural
gas, to a rise in production costs resulting from disturbances in
supply chains worldwide, and to supply constraints, creating
tensions in both goods and services markets.
Unsurprisingly, this hike in inflation led to a change of direc-
tion at the monetary level in several countries. Although we
did not see any changes in the lead interest rates during
2021, a number of central banks started to reduce their asset
purchases, which caused long-term interest rates to start
rising again in the United States and Europe.
Any rise in interest rates remains a worrying development,
given that public finances have been somewhat weakened
by the current health crisis. In Belgium, the budget deficit,
which stood at 9.1% of GDP at the end of 2020, finished the
year 2021 slightly lower, at 7% of GDP. The national debt is
still hovering around 112%, slightly below the level it reached
at end-2020. As all the developed countries saw their public
finances weaken to a similar extent, no-one appears to have
focused on this point in 2021 and of course we will have to
see how quickly these levels can subsequently be brought
down. Any who fail to do so quickly enough will however find
themselves penalised by the higher interest rates that will
inevitably be a feature of the world to come.
The year 2021 was also marked by the phenomenon of many
households stepping up their investments in real estate,
motivated by a desire a) to avoid having to live through any
future lockdowns in an inappropriate dwelling and b) to take
advantage of historically low mortgage rates. The price of resi-
dential property kept on increasing month after month, posting
a rise of over 8% year-on-year in the third quarter. We have
to go back to 2007 to find such a large percentage increase.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Meanwhile, the Belgian banking sector continued to play
its core role in financing economic activity, with a sharply
increased level of lending, both to individual borrowers and
businesses, during the year that has just ended. Total out-
standing loans made by the banks rose at a steadily increasing
rate to reach EUR 231.1 billion and EUR 136.1 billion to indi-
vidual borrowers and businesses respectively at the end of
2021. Year-on-year, this represents a rise of 7.1% in lending
to households and 7.6% in lending to businesses.
Core Businesses
BNP Paribas Fortis
a total of 10,532 FTEs in Belgium.
Retail Belgium
BNP Paribas Fortis Retail banking activities comprise banking
services to a range of client types, including individual custom-
ers, self-employed people and those in the liberal professions,
small and medium-sized companies, local businesses, cor-
porate clients and non-profit organisations. Retail Belgium
provides its services via two networks, which operated in
2021 under a segmented business approach: Retail & Private
Banking Belgium and Corporate Banking Belgium.
Retail & Private Banking Belgium
BNP Paribas Fortis is the market leader in the individual
customer segment in Belgium and enjoys a strong position in
the self-employed/small business category, with 3.4 million
clients. BNP Paribas Fortis is also the leading Private Banking
provider in this country.
Retail & Private Banking (RPB) serves individual customers,
business owners, and small or medium-sized enterprises
based on a ‘hybrid’ banking approach whereby the cus
-
tomer is able to choose between the branch network and
digital channels:
The commercial network consists of 386 branches (172
of which are run as independent agencies) organised into
33 branch groups situated across Belgium’s nine regions,
plus 16 dedicated Bank for Entrepreneurs centres. These
are complemented by 226 franchises working under the
Fintro brand, plus 657 bpost bank sales points.
RPB’s digital platform manages a network of 1,215 ATMs,
the online Easy Banking service and the Mobile Banking
service, with an aggregate total of 2.5 million active users.
Customers may also contact the Bank via the Easy
Banking Centre, which currently handles up to 80,000
calls every week.
The RPB service range also includes Hello bank!, a digital bank
currently serving 505,000 customers.
Private Banking services are available to clients with over
EUR 250,000 available for investment, while the Wealth
Management department of our Private Banking arm
serves customers whose disposable assets total in excess
of EUR 5 million. These clients are served at our 30 Private
Banking centres, one remote Private Banking Centre by James
and two Wealth Management centres.
Highlighting the Bank as a trusted finan-
cial partner
As the COVID-19 crisis took its toll, we continued with our
information campaigns aimed both at customers and RPB
staff to keep them up to date with the latest arrangements for
payment deferments and moratoria on both loan reimburse-
ments and insurance premiums; for remote access to the Bank;
and regarding the precautionary rules at our branches and
self-banking points.
As a good number of our customers were seriously affected
by the July floods, we adjusted our marketing and publicity
campaigns, giving priority to assisting – in close collaboration
with our insurance partner AG Insurance – those customers
who needed to file damage and loss claims.
In the service of our Individual customers, we continued
throughout the year to implement our Financial Well-Being
approach, producing specific information sheets on the themes
of mobility & transportation, budgeting, investment, and plan-
ning for the future.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Meanwhile we provided our Professional customer segment
with more convenient access to our expertise in various fields
through a series of six interactive webinars on topics ranging
from taxation to job mobility, digital payments and insurance,
plus also special assistance to those wishing to start up a
business. We backed up these free-of-charge web seminars,
which were offered to all our Bank for Entrepreneurs clients,
with newsletters geared to specific client needs, and also
conducted publicity campaigns on social media, featuring our
experts on various themes.
On the investment side, we continued during 2021 to develop
and promote our MyExperts platform, which provides our
Private Banking, Wealth Management and Priority Exclusive
clients with access to written articles and webinars designed to
help them take investment decisions. In addition, we launched
a new theme entitled #MyFuture, aimed at the Millennial
generation. As part of our overall Family Approach, this new
initiative provides specific content geared to assisting the chil-
dren of our Private Banking and Wealth Management clients.
We also made a special effort to improve the transparency of
our information regarding the charges made for our various
solutions and services, by listing up all tariff changes twice per
year – in May and November – and taking proactive measures
to clearly inform all clients affected by price changes.
Speeding up our repositioning as a banking-and-
insurance provider
In 2019, BNP Paribas Fortis began the process of reposi-
tioning itself as a provider of solutions and advice in both
the financial and insurance fields. This process picked up
pace during 2021. We ran a large-scale publicity campaign
throughout the year, with three waves of advertising on TV,
radio, digital channels and social media designed to raise
awareness among both existing and prospective clients of the
capabilities of BNP Paribas Fortis in providing insurance for
individual customers. The advertising campaign was backed
up by direct marketing campaigns offering existing customers
a free check-up on the current state of their insurance policies.
In addition, 2021 saw BNP Paribas Fortis RPB incorporate Fire,
Accident & General Risks insurance solutions of our partner
AG Insurance into the Bank’s information and sales channels.
We also recruited some 50 business insurance experts so as
to enable us to offer our self-employed/professional clients
solutions to meet the full range of their financial and insurance
requirements in a ‘one-stop shop’ approach designed to make
their lives easier.
Roll-out of the hybrid model goes ahead
As in 2020, the ongoing COVID-19 crisis, which entailed lock-
downs and restrictions on personal movements and human
contact, also led to a marked increase during 2021 in our
customers’ use of the Bank’s digital channels. We saw a rise of
almost 65,000 in the number of video calls, mainly for remote
advice, and an increase of 112,826 customers making active
use of Easy Banking App or Easy Banking Web (to 2,490,357 at
end-2021). These developments have also led to an increase in
the proportion of direct sales – i.e. those carried out remotely
and via digital channels – which now stand at 50%.
Other digital innovations and developments designed to make
life easier for our customers include a new homepage for our
Easy Banking App, plus a range of new functionality suited to
the various customer profiles.
Helping customers make a comfortable transition
to the digital era
In October, at a moment when the country enjoyed a brief
respite from the ravages of COVID-19, we took the opportunity
to relaunch the series of Digital Workshops which had started
up at our branches in 2019, before having once again to
suspend these customer training events. In parallel, between
June and December, we ran on social media a widespread
campaign of educational videos designed to help customers
make best possible use of the full range of functionality offered
by our Easy Banking App.
We have moreover been making special efforts to ensure that
our customers remain protected while using digital tools in
their day-to-day lives. During the year we put out regular
information – interactive videos and specific practical tips –
on how to maintain online security and guard against such
attacks as phishing attempts.
In 2021 we also continued our efforts to help our entrepreneur
and business-owning clients digitalise their businesses. To
this end, we offer them a Digital Maturity Assessment and
also recommend the point-of-sale or digital payment solu-
tions provided by our subsidiary Axepta, which has recently
strengthened its position on the Belgian market with the
acquisition of the Ingenico In Store businesses in Belgium
and Luxembourg.
17
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Stepping up overall customer support
In 2021, RPB continued rolling out a determined policy of
providing each and every customer with the appropriate type
of advice and support, with clear and transparent charges.
For our Bank for Entrepreneurs clients we embarked on the
second phase of our roll-out of the Advice Pro model, which
combines proactive overall support plus a package of solu-
tions and services for a fixed quarterly fee. Meanwhile we
continued the process of transitioning our Individual custom-
ers to relationship models such as Priority, Priority Exclusive
or the wealth management contracts offered by our Private
Banking and Wealth Management arms, according to their
precise needs.
Assisting the transition to greener mobility
In line with our overall strategic vision of supporting the
transition towards a more sustainable economy, we have
launched a number of publicity campaigns explaining how
we are able to advise both Individual customers and Self-
Employed Professionals on the subject of green transportation.
We publish articles and videos produced by our automobile
taxation experts, we offer more attractive interest rates on
‘green’ car loans, and we systematically promote the purchase
of hybrid or full-electric vehicles, offering top deals via our
leasing subsidiary Arval.
New tailored offerings for business starters
The Bank has always sought to play a dynamic role in the
local economy. We have now adjusted our approach in order
to provide the best possible support to new and future entre-
preneurs, meeting all their needs so as to help them bring
their promising ideas to fruition and launch their business. In
2021 we set out this new improved approach via a radio and
online publicity campaign.
In addition, we launched a new digital Hello Bank! Pro offering
for self-employed customers with a self-managed business
who have very straightforward banking needs. In just a few
clicks, these customers are able to request a company number,
open an online business account, and also access useful advice
in the form of expert articles.
Innovative solutions designed to make life easier
for our customers
Our launch during the year of a new exclusive Visa Debit card
for all our customers – both Individual account holders and
Self-Employed/Professional clients – provides yet another
concrete example of our determination to make life easier
for our customers. This new card makes it easier to carry out
online purchases in full security.
Supporting investment beyond basic savings
Given recent developments in financial market conditions,
especially the persistence of extremely low interest rates, we
have now adjusted our traditional savings offering – in a first
phase for legal entities with savings in excess of EUR 500,000
and subsequently for physical persons, both Individual cus-
tomers and Self-Employed/Professional clients whose savings
account balances regularly stand in excess of EUR 250,000. As
a trusted partner to our customers, we guide them through
the transition in their savings approach towards investment
vehicles that match their real needs and profiles.
Our expertise continues to earn recognition
In 2021, for the fifth consecutive year, BNP Paribas Fortis was
awarded the prestigious title of Bank of the Year – Belgium
by Financial Times Group publication The Banker. The awards
jury made specific reference to the Bank’s ongoing innovation
drive, the new service models resulting from the launch of our
subsidiary Axepta, the renewal of our partnership with bpost,
and the alignment of the Bank’s investment policies with the
Sustainable Development Goals set out by the United Nations.
Corporate Banking
With its well-developed, diversified and integrated business
and service model, the BNP Paribas Fortis Corporate Banking
(CB) division is well equipped to serve a wide range of clients,
including small and medium-sized companies, Belgian and
other European corporates, financial institutions, institutional
investors, public entities and local authorities. CB has a strong
client base among large and medium-sized companies and is
the market leader in these two categories, as well as being a
strong challenger in the public sector category.
Providing a wide range of both traditional and bespoke special-
ised solutions and services and drawing on the international
network of the BNP Paribas Group across 68 countries, CB
continues to meet the precise financing, transaction banking,
investment banking and insurance needs of its clients, in
Belgium and abroad.
In 2021, Corporate Banking continued making strenuous efforts
to be the preferred bank for corporates in Belgium by providing
them with convenient access to unique banking solutions using
innovative digital tools.
It also continued to play a major role in providing support to
the Belgian economy during the year. The Corporate Banking
division further pursued its roadmap on digital transformation
and process efficiency improvement. It also enhanced its ser-
vicing model by accelerating the roll-out of digital capabilities
and remote contact channels.
18
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
With the Sustainable Business Competence Centre, CB is firmly
positioning itself as the Sustainable Corporate Bank. During
the year the division stepped up its efforts to help clients
make the transition to more sustainable practices and busi-
ness models and to invest in transformative projects needed
to address the huge challenges of harmful climate change
and shrinking biodiversity. We devoted increased attention to
the fields of energy transition, decarbonisation, circular- and
regenerative economy and biochemistry. CB also widened its
expertise on the regulatory framework of the EU Green Deal
and Environmental, Social and Corporate Governance (ESG)
business criteria.
In 2021, BNP Paribas Fortis won for the second year in a
row the title of Belgium’s Best Investment Bank, conferred
by Euromoney magazine as part of its annual Awards
for Excellence.
In addition, BNP Paribas Fortis was declared Market Leader
in Euromoney’s Cash Management Non-Financial Institutions
survey in 2021.
Arval
Arval is a BNP Paribas Fortis subsidiary which specialises
in full-service vehicle leasing and new sustainable mobility
solutions. Arval provides its corporate clients – ranging from
large international corporates to small and medium-sized
enterprises – its partners, their employees, plus also individual
customers, with flexible solutions to help make their journeys
seamless and sustainable.
At end-2021, Arval had permanent establishments in 30 coun-
tries, employing 7,500 staff, managing just under 1.5 million
leased vehicles. The company mainly does business in Europe,
where it holds a leading position. It has also entered into a
number of strategic partnerships through the Element-Arval
Global Alliance, the world leader in this sector with around
three million leased vehicles in 53 countries. With the signing
of a partnership with Sixt Transporent, this alliance was
extended to three additional countries – Latvia, Lithuania and
Estonia – in October 2021.
In March 2021, we launched a new service known as Arval
Mobility Consulting, whose purpose is to help our customers
make a successful energy transition. Based on a comprehen-
sive analysis, Arval’s experts assist customers in implementing
alternative mobility solutions and fleet electrification. With
a target of leasing 700,000 electrified vehicles by 2025 and
the aim of offering sustainable mobility solutions via all its
businesses, Arval is positioning itself as a leader in sustainable
mobility. Moreover, since June 2021, for each electric vehicle
leased by Arval, one tree has been planted in the country
where the vehicle was delivered. Arval’s Platinum status
on the EcoVadis CSR platform provides tangible proof of
its commitment.
BNP Paribas Leasing Solutions
BNP Paribas Leasing Solutions helps both companies and
members of the professions to develop their businesses by
providing them with leasing and financing solutions, together
with a range of services designed to meet their needs.
The expert teams of BNP Paribas Leasing Solutions support
and assist:
Equipment manufacturers and business software pub-
lishers, providing them with exclusive, comprehensive
solutions designed to support and boost the sales achieved
by their distribution networks and/or dealerships;
Distributors, dealers and integrators of business equip-
ment, providing them with sales support solutions plus a
wide range of financial products and services designed to
meet the needs of their customers;
Businesses, local authorities, members of the professions
and craftsmen and -women, providing solutions for financ-
ing their investments in equipment.
BNP Paribas Leasing Solutions provides assistance to players
in the real economy by financing purchases of all major
types of business and professional equipment, including for
the agricultural, medical, logistics and IT sectors, and also
helps clients make the transition to more environmentally-
friendly practices by financing both the purchase of equipment
designed to make a positive impact and circular economy
enterprise.
End 2020, BNP Paribas Leasing Solutions was named ‘European
Lessor of the Year’ by Leasing Life, the leading magazine
reporting on the Leasing profession in Europe, also winning
the annual ‘Vendor Finance’ award conferred by the same
publication.
BGL BNP Paribas SA
With some 3,700 employees, the BGL BNP Paribas companies
and business lines in Luxembourg meet the needs of individu-
als and businesses, investors, and corporate and institutional
clients in three core business fields: Retail Banking & Services,
International Financial Services and Institutional Banking.
19
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Retail Banking and Services: meeting
the needs of individual consumers and
businesses
The Luxembourg Retail Banking business line offers its clients
– consisting of private individuals, members of the professions
and self-employed people – products and services ranging
from day-to-day management to financing for acquisition or
construction projects, as well as savings, bancassurance and
investment products. The range of retail banking products pro-
vided by this business line is one of the widest in Luxembourg.
The commercial network comprises 34 branches supported by
14 teams specialising in mortgage lending, investment, clients
who are self-employed or members of the professions, and
non-resident clients.
Corporate Banking is a leading banking partner in Luxembourg
for large firms and SMEs, the public and institutional sector,
real estate professionals, social organisations and start-ups.
Private Banking Luxembourg provides high-net-worth
clients who live in Luxembourg or the Greater Region with
general or customised financial and wealth management
solutions through its various Private Banking Centres across
Luxembourg including the Villa, located on Boulevard Royal
in Luxembourg City.
The three business lines in Luxembourg – Retail Banking,
Corporate Banking and Private Banking – work in close
collaboration.
International Financial Services: a
comprehensive service to investors
BNP Paribas Wealth Management offers tailor-made wealth
and financial management solutions as well as a range of
high-end services: investment advice, discretionary man-
agement, wealth planning and organisation, financing, and
expertise in asset diversification.
BNP Paribas Asset Management Luxembourg (BNPP AM Lux)
is the BNP Paribas Group platform dedicated to the creation
and launch of investment funds for the BNP Paribas Group’s
clients, third-party distributors, and large institutional clients.
BNPP AM Lux is making efforts to amplify the range of services
and products available to the business line, is determined to
achieve sustained growth in the BNP Paribas Group’s domestic
markets and has the ambition of developing rapidly in new
markets, particularly in Asia.
Cardif Lux Vie offers a wide range of life insurance products
(savings, pensions and protection) to both individual clients
and bancassurance or brokerage professionals. The Company
provides international high-net-worth clients with customised
solutions distributed via an extensive network of prestig-
ious partners.
BNP Paribas Real Estate provides solutions with support at
every stage of a real estate project, in the form of a multi-
expertise service involving six real estate business lines:
property management, expertise, advice, transaction, property
development, and investment management. BNP Paribas Real
Estate Investment Management offers a range of real estate
funds to institutional clients worldwide.
Institutional Banking: a high-performance
service for institutional clients
BNP Paribas Securities Services offers longstanding, proven
expertise in fund administration, international bond issues,
custody and transfer agency services and their respective
engineering. BNP Paribas Securities Services also provides
unique expertise to clients in market transactions, inves-
tor services, risk management and portfolio performance
optimisation.
GreenStars BNP Paribas is a credit insurance company that
is also equipped to issue bonds. A sophisticated reinsurance
programme allows GreenStars BNP Paribas to support BNP
Paribas in its distribution for capital allocation management
and credit and country risk management. Through this
insurance company, the BNP Paribas Group is able to offer
its clients more attractive solutions, including the granting
of credit lines on more favourable terms.
Türk Ekonomi Bankası A.Ş. (TEB)
BNP Paribas Fortis operates in Turkey through TEB, in which
it holds a 48.7% stake via TEB Holding and BNP Paribas Fortis
Yatırımlar Holding A.Ş.
On 30 September 2021, TEB, which provides the full range
of BNP Paribas Group Retail products and services in Turkey,
stood 10th in the country’s deposit bank rankings in terms of
market share of deposits and loans.
20
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
TEB Retail and Private Banking is steadily attracting greater
numbers of customers through both our branch network and
online channels, with our diversified product range, quality
of service and the banking experience we offer. Our goal is
to be the primary bank for all our customers and we are
therefore pursuing a digital transformation strategy geared
to improving our service channels and the overall customer
experience, which is central to all our activities: TEB applies
human-centric design and customer journey methodologies
and runs advocacy programmes designed to obtain and make
good use of customer insights.
At the close of 2021, TEB Digital Channels was serving just
under 2.2 million active online customers. The CEPTETEB
Digital Banking Platform, launched in March 2015 to provide
both financial and non-financial services, numbered more than
1.5 million customers at end-2021, with deposits totalling TRY
12.1 billion. CEPTETEB continued to develop its digital channel
experience during the year, expanding the customer base and
launching new features on the CEPTETEB Mobile Application
and the TEB FX platform. Incorporating the latest technology
and innovations, CEPTETEB also features chatbot platforms
named TELEPATİ and Fon Danışmanım (My Fund Advisor),
an automated, algorithm-driven portfolio builder for funds.
Throughout 2021, TEB continued to focus on affluent cus-
tomers (clients with assets totalling between TRY 125,000
and TRY 1.5 million). Following the re-launch of our Affluent
Value Proposition in 2020, our main goal has been to increase
the number of affluent customers, expand digitalisation and
deepen customer loyalty. Affluent banking KPIs were positively
impacted throughout 2021 by the re-launch campaign, and
the number of customers reached 116,000 at end-December
2021 (28% higher than at end-December 2020). Privileges
offered to this client segment via CEPTETEB Digital Banking
are having a positive impact on digital activity, with 78% of
affluent customers now making use of the mobile app.
In 2021 TEB Private Banking added new features to the
customised CEPTETEB mobile application for Private
Banking customers, including the Financial Analysis Report
– Performance Analysis. This report enables Private Banking
customers to analyse their portfolio’s net value, view the
performance of their investments, and share this information
with others. We also started sending the investment agenda,
together with the specific fund and investment recommenda-
tions of the week, to both advisory and non-advisory clients
via push notification each Monday morning.
Throughout the year we held TEB Private Online Customers
Meetings and hosted experts who gave advice on such
topics as Art Collecting as an Investment, the Paris Climate
Agreement and the EU Green Deal, and Economy & Markets.
TEB Private Banking has also launched a prestigious Visa credit
card, TEB Private Infinite Card. We are offering a metal version
of TEB Private Visa Infinite to our Wealth Management clients.
The card offers a range of benefits and advantages which can
be used worldwide.
TEB has always focused on small and medium-sized enter-
prises (SMEs) because of the important role they play in
Turkey’s economic growth; and since 2005 we have been taking
a consultant banking approach to all our SME Banking activi
-
ties. Drawing on the worldwide organisational capabilities
and expertise of the BNP Paribas Group, TEB offers exclusive
tailor-made financial and non-financial products and services
to small and medium-sized businesses, providing an outstand-
ing customer experience by acting as a consultant bank rather
than taking a ‘classical’ banking approach.
In the field of SME Banking, TEB is organised into separate
business lines so as to offer a specialised service to clients that
require different products and services on a different scale. In
addition to SME and Agricultural Banking, TEB provides solu-
tions to clients with specialised structures in Start-up, Gold
and Municipality Banking and supports them with guidance,
training and networking opportunities in non-financial fields.
Focusing on efficiency, value creation and excellence in cus-
tomer experience provision, TEB is constantly improving its
products and services, assisting SMEs with diversified solu-
tions in various areas, such as growth and competition, which
are invariably the biggest challenges facing such companies.
Looking beyond the limits of traditional banking, TEB under-
stands the digital future, which is now being accelerated by
the COVID-19 pandemic. This accelerated digital transforma-
tion is altering customers’ requirements and expectations and
so shaping the banking of tomorrow. Customer data analytics
models therefore form a necessary element for the improve-
ment of our service model. Developing more effective and
comprehensive digital tools and offerings constitutes a very
high priority for TEB. The digital transformation team is part
of the SME Banking structure.
21
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Nowadays, the accelerated digital transformation of business
and society is shaping business clients’ demands and expecta-
tions. It is therefore a priority for TEB to develop more effective
and comprehensive digital tools and offerings for these clients.
In 2021 TEB enhanced the capabilities of ‘CEPTETEB İŞTE’,
a mobile app for businesses launched in 2019, by offering
solutions not only for daily banking transactions but also for
sales functions, always with an optimal user experience in
mind. Within a year of its launch, CEPTETEB İŞTE received
awards from six international organisations for its customised
and differentiated features.
The TEB Corporate Banking Group provides services including
international trade finance, structured finance, cash manage-
ment, credit services and hedging of currency, interest-rate
and commodity risk.
In a fast-transforming world with new technological develop-
ments, where customer expectations and requirements are
changing at a rapid pace, TEB Corporate Banking focuses
hard on maintaining product quality and the overall customer
experience at the highest level by anticipating and responding
to those changing customer expectations and needs.
During the year, we succeeded in maximising customer satis-
faction by meeting our customers’ diverse needs through our
sales channels. In line with our long-term customer relations
approach, we continued to provide tailored high-quality ser-
vices through a total of 12 corporate branches, five of which
are located in Istanbul. The Bank provides its services through
foreign trade centres staffed with experienced specialists
and a branch organisation specifically designed to meet the
requirements of multinational companies.
Corporate Social Responsibility (CSR)
BNP Paribas Fortis takes its responsibilities towards the wider
society very seriously and has therefore made a firm policy
decision to incorporate Sustainability into everything the
Bank does.
BNP Paribas Fortis company engagement is geared to three
main aims: to increase the positive impact of its financing and
investment activities; reduce its environmental and social
footprint; and help finance socially beneficial projects through
corporate philanthropy.
Increasing the positive impact of
our activities
BNP Paribas Fortis is making great efforts to increase the posi-
tive impact of its activities. Accordingly, the Bank intends to
considerably step up the proportion of loans it makes to pro-
jects in line with the United Nations Sustainable Development
Goals (SDGs); it helps both individual customers and business
clients to make the transition to a more sustainable business
model; and it strongly supports social entrepreneurship.
Firmly convinced that fostering collaboration between people
of different genders and backgrounds makes a company more
creative, more attractive and more effective, BNP Paribas
Fortis is also pursuing a conscious policy of promoting diversity
and inclusion.
Lending in line with the SDGs
BNP Paribas Fortis aims to significantly increase the proportion
of loans it makes to projects that meet the objectives of the
Sustainable Development Goals. These include projects in the
environmental field (renewable energies, recycling, durable
construction, renovation, soft mobility), in the non-commercial
sector (hospitals, schools, universities and associations),
plus also lending to social businesses. In 2021, the lending
to clients of BNP Paribas Fortis sa/nv in these categories
totalled EUR 12.4 billion (including consumer loans at Alpha
Crédit). This represents a 16% increase compared to the 2020
figure. This growth is for 10% due to a change in ESG reporting
methodology.
22
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
In 2021, the Bank lent a total of EUR 4.5 billion with regard to
the transition to a more environmental-friendly low-carbon
economy, taking into account the preservation of biodiversity,
the use of renewable energy sources and the principles of the
circular economy. ‘Green’ mortgage loans came to EUR 3.57
billion, 5% lower than the 2020
1
figure.
Helping our clients to make the energy
transition
Established in 2009, the Bank’s Sustainable Business
Competence Centre (SBCC) provides knowhow and assistance
to companies wishing to design and finance renewable energy
production infrastructure or improve energy efficiency at their
premises. The team includes experts in the fields of clean-
tech (innovative environmental solutions), life sciences, and
information & communication technologies (ICTs). Its aim is
to help company clients move towards a sustainable business
model that, inter alia, addresses issues around climate change.
In 2021, the SBCC processed 89 loan applications totalling
EUR 640 million worth of sustainable financing.
In 2021, a new unit, entitled Sustainability Approach, was set
up inside the Bank’s Retail & Private Banking division with
the aim of building out our Sustainability policies towards
individual customers, entrepreneurs and small businesses.
This approach is based around a number of priorities: encour-
aging customers to take decisions geared to sustainability;
providing financial training to financially insecure persons, or
those at risk of falling into financial insecurity; and ensuring
that customers benefit from maximum access to the Bank’s
services, through either physical or digital contact.
Meanwhile the BNP Paribas Group has set up a Low-Carbon
Transition Group, whose purpose is to help international
businesses and institutional clients speed up their transition
towards low-carbon and other sustainable practices. This
expertise is also available to BNP Paribas Fortis clients.
1
This figure represents a decrease versus 2020 due to the application of different criteria for defining a ‘green’ mortgage loan. BNP Paribas Fortis is in fact
the first Belgian bank to adopt the European Energy Efficient Mortgage label, whose purpose is to verify the environmental aim of ‘green’ mortgage loans.
Partnerships and financing geared to
sustainability
The Bank has extended for a period of three years its partner-
ship with sustainable chemicals incubator BlueChem. This will
enable BlueChem to continue to provide backing for startups
and growth companies in developing their sustainability-ori-
ented innovations at industrial scale and so help the chemicals
sector make the transition initiated by the European Green
Deal. The incubator provides tailored laboratory infrastructure,
bespoke advice and access to a broad network consisting of
international chemicals companies, research centres and uni-
versities. A dozen startups and university spin-offs are working
at the lab on new recycling techniques, climate-oriented CO
2
capture and re-use technologies, circular production processes
and more sustainable food production. BNP Paribas Fortis has
formed a partnership with engineering consultants Climact,
with a view to helping business clients make the transition
towards a zero-carbon economy. Climact provides companies
with an in-depth analysis of their climate footprint and offers
specific solutions designed to make their businesses more
environmentally sustainable.
The services of BNP Paribas 3 Step IT, a BNP Paribas Group
subsidiary that provides company clients with solutions for
managing their IT equipment in a more sustainable way, have
also been available in Belgium since January 2021.
In addition, the Bank offers clients specific financing solutions
for their sustainable development. Skysun, a company special-
ising in actions to combat climate change, has installed over
1.2 hectares of solar panels on the roof of the old Anderlecht
abattoirs, which is now a national listed monument. This is
the largest photovoltaic installation to date on a building in
an urban setting in Europe. The installation, which gener-
ates electricity equivalent to the annual consumption of 700
households, was financed in large part by BNP Paribas Fortis.
Socially Responsible Investment (SRI)
In the new European SFDR methodology (Sustainable Finance
Disclosure Regulation), which came into effect at the beginning
of 2021, sustainable investments stood at EUR 43.6 billion, of
which EUR 38.21 billion carry the Febelfin Sustainability Label,
a rise of 28% versus 2020. More than 646,000 BNP Paribas
Fortis clients hold at least one SRI product in their portfolio.
23
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
At end-2021, over 100 investment products
1
offered by the
Bank carried the ‘Towards Sustainability’ label conferred by
Belgian banking sector federation Febelfin, and 78.7% of the
volume (in EUR) placed in investment funds via BNP Paribas
Fortis was in funds carrying this label.
The Bank also uses the methodology applied across the BNP
Paribas Group for determining ‘sustainability’, whereby all
financial instruments that make up the investment universe
we follow are given a Sustainability rating with marks from 0
to 10. This enables a comparison of the degree of sustainability
to be made between the various financial instruments within
a given asset class or between different asset classes.
Social Business
Social enterprises are businesses whose main aim is to make
a positive impact on society. These firms generally work in
fields as adapted work, the circular economy, energy efficiency
and decarbonisation.
At end-2021, 479 social entrepreneurs were being assisted by
BNP Paribas Fortis and the Bank’s outstanding loans to social
businesses totalled some EUR 120 million.
Social enterprises receiving financing from the Bank in 2021
included Oak Tree Projects, which helps to combat social
marginalisation by providing needy persons with socially
inclusive accommodation through communal-living projects.
Our support has enabled this charitable organisation to acquire
several apartments in the city of Leuven. We also assisted
Danish company Børneloppen – whose shop selling second-
hand items for children in the Liège region helps to promote
the circular economy – with financing for its installations.
Diversity and inclusion
Beyond the legal and regulatory requirements with which
the Bank must comply, BNP Paribas Fortis has for close to
15 years now been pursuing a committed policy in favour of
diversity and inclusion.
The year 2021 saw the launch of a dynamic tool designed to
track progress in a set of gender-linked indicators such as
the existence of ‘glass ceilings’ in the Bank’s various busi-
nesses and departments. This ‘barometer’ helps the Bank to
draw up tailored action plans that take account of the special
characteristics of each business/department.
An action plan on gender equality was also approved and
launched at the IT department and the Easy Banking Centre.
1
Including 72 BNP Paribas Asset Management products.
Meanwhile the Bank’s internal PRIDE Belgium network
launched a new interactive platform offering three training
modules on sexual identity, gender expression and sexual
orientation.
The Bank’s annual Diversity Week addressed once again in
2021 the issue of stereotypes and prejudices. This year’s 100%
digital event extended over several weeks, attracting close
to a thousand participants at the conferences, interviews,
workshops and other events that were held.
BNP Paribas Fortis also makes efforts in this field outside
the Bank’s walls, helping during 2021 to create the ‘inclusive
panels’ run by Febelfin (Women in Finance) to promote the
constitution of balanced panels in terms of gender, diver-
sity and age.
Reducing our environmental and
social footprint
The Bank is making great efforts to reduce or prevent any
negative impact arising from our activities, both by adhering
to strict rules governing our lending and investment busi-
nesses and by reducing the environmental footprint of our
own operations.
BNP Paribas joined the Net-Zero Banking Alliance (NZBA)
launched in spring 2021 as part of the United Nations
Environment Programme Finance Initiative (UNEP FI). The
signatories commit inter alia to bring the greenhouse gas
(GHG) emissions arising from their financing activities and
own-account investments on to the required trajectory to
achieve carbon neutrality by 2050 (limiting global warming
to 1.5°C above pre-industrial levels).
Sector-specific policies and ‘duty of care’
BNP Paribas Fortis is determined to support the economy
in an ethical manner and has therefore drawn up a set of
sector-specific policies embodying strict rules governing
financing and investment activities in ‘sensitive’ sectors. The
Bank declines to finance or invest in companies which do
not meet the established conditions regarding human rights
and environmental care. However, before excluding such
companies from its client base, the Bank will always attempt
to discuss the issues with them and encourage them to adjust
their existing practices.
24
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
In 2021, out of 529 proposed transactions subjected to a thor-
ough analysis by the Company Engagement and Compliance
unit, 26 were rejected as they did not meet the conditions set
out in our sector-specific policies.
The Bank takes steps to ensure that all the sector-specific
policies are properly applied in practice by all our businesses
and departments, with related monitoring procedures. In
addition, special vigilance is also applied to a dozen other
sectors due to the sensitive nature of the countries in which
the activities are carried out.
The BNP Paribas Group has now made an initial provisional
commitment to reduce its lending exposure to oil & gas explo-
ration and production by 10% by 2025.
Following a series of web seminars on Human Rights, the
Bank held in December a seminar on the ‘duty of care’, which
brought together experts in the subject, company representa-
tives, political office-holders and NGO officials. To mark the
event, a brochure setting out the list of commitments on
Human Rights made by the Bank and the wider BNP Paribas
Group was published on the Internet.
Reducing our own footprint
BNP Paribas Fortis has cut its CO
2
emissions by 66% and
reduced its paper consumption by 79% since 2012.
Since 2015, the Bank has pursued a policy of purchasing 100%
‘green’ electricity. Moreover, we make every effort to limit our
direct GHG emissions and seek to further reduce our overall
carbon footprint by taking steps to offset any residual emissions.
The roofs of the BNP Paribas Fortis logistics building in
Brussels have now been equipped with photovoltaic panels
that produce on average 314,000 kWh of electricity a year –
equivalent to the annual power consumption of 90 households.
Today the Bank’s own production of ‘green’ electricity totals
the annual consumption of around 140 households.
Meanwhile, towards the end of the year, the first staff
members moved into their office space in our new Montagne
du Parc building, which is designed with a range of exemplary
environmental features. Thanks to its innovative thermal man-
agement system, the heat consumption of this new building
is just one seventh that of the former building. Moreover,
the photovoltaic panels installed on the roof have led to an
increase in renewable energy production.
The Bank also launched in 2021 an information and aware-
ness-raising campaign on sustainable digital practices, aimed
at staff. Centred on three themes – email management, data
storage and Internet use – this drive led inter alia to over
1.5 million e-mails being deleted from the systems. The
environmental impact of the campaign was moreover entirely
offset by the planting of almost 10,000 trees in Zambia, thanks
to our partnership with the WeForest organisation.
Working for digital inclusiveness
In our rapidly-changing society, it is absolutely vital for all
citizens to possess basic digital skills. With this in mind, the
Bank helped to create in 2020 an alliance, entitled DigitAll,
which brings together companies, social organisations and
public authorities that have committed to helping bridge
the digital divide in Belgium. In 2021, this initiative made
further progress with the signing of the first ‘Charter for Digital
Inclusiveness’ in this country.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Philanthropy helping to finance social solidarity work
In 2021, the Bank and its employees provided financial support
totalling EUR 5.25 million to a number of social solidarity
projects variously through the BNP Paribas Fortis Foundation
Fund set up within the King Baudouin Foundation Fund; the
Venture Philanthropy Fund supported by BNP Paribas Fortis
Private Banking; and the BNP Paribas Group’s Rescue &
Recovery Fund. In addition, a large number of staff take part
in social solidarity activities or assist charities and non-profit
organisations by donating their time and skills on a voluntary
basis. Moreover, large numbers of Bank staff showed solidarity
with the victims of the floods which struck the country during
the year, donating over EUR 97,000 to the Belgian Red Cross
and also providing assistance to the victims on the ground.
In addition, BNP Paribas Fortis works to promote financial
inclusiveness and actively supports micro-lending, mainly
through microStart, the number one microfinance institution
de in Belgium.
BNP Paribas Fortis Foundation Fund
Since 2019, the Bank has mainly pursued its philanthropic
efforts via the BNP Paribas Fortis Foundation Fund, which is
embedded within the King Baudouin Foundation Fund. The
main aim of this activity is to combat social exclusion among
children and teenagers from disadvantaged backgrounds.
Every year, through the ‘10 Champions’ programme, each
of ten charitable organisations receives a donation totalling
EUR 50,000 spread over a period of two years. In addition to
this financial support, these non-profits receive tailor-made
assistance and practical help from Bank staff who wish to
undertake volunteer work on behalf of the organisation based
in their home region.
For the sixth consecutive year, BNP Paribas Fortis Foundation
supported the ‘Back to School’ action run by the ‘Goods to
Give’ charity. Donations made jointly by Bank employees
and the Foundation totalled EUR 27,615, which was used to
provide children from deprived backgrounds with brand-new
school-related items.
Solidarity with flood victims
BNP Paribas employees mobilised to help bring aid to
the victims of the floods which struck Belgium during the
summer. Donations from staff reached a record amount of
EUR 97,090, to which the Bank added a further EUR 100,000,
while Private Banking contributed one million euros, making
a total of EUR 1,197,090 donated to the Red Cross. This sum
was earmarked to assist schools and those of their pupils who
were directly affected by the flooding.
Venture Philanthropy Fund
Established in 2009 on the initiative of the King Baudouin
Foundation, the Venture Philanthropy Fund enjoys the support
of BNP Paribas Fortis Private Banking. Every year since 2015,
the Bank has transferred part of the BNPPF Private SRI Fund
management fees to the Venture Philanthropy Fund. This
has enabled financial grants totalling over EUR 8.5 million
to date to be made to 123 social work projects in Belgium,
including EUR 1.5 million for 25 new initiatives in 2021. Each
year, customers and staff are invited to vote for their favour-
ite non-profit organisation. In 2021, their choice fell on the
Comprendre et Parler (Understanding and Speaking) Centre, a
therapy clinic for children and teenagers with hearing difficul-
ties; and Oak Tree Projects, a non-profit organisation which
provides communal-living dwellings for people in need of care.
Sustainable investment fund fees donated to
charities
Every year, BNP Paribas Fortis donates part of the entry fees
and management fees from sustainable investments to chari-
table organisations including the Red Cross, the Foundation
Against Cancer, microStart and Natagora/Natuurpunt. In
2021, this financial support provided by the Bank totalled
EUR 534,135.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
#ourjob2 - 1MillionHours2Help
The BNP Paribas Fortis #ourjob2 initiative encourages
BNP Paribas Fortis staff and employees of BNP Paribas
Group entities in Belgium to make a practical contribution
to society or the environment by taking part in activities
designed to raise awareness of social responsibility issues
or the volunteer programme 1MillionHours2Help. In spite of
the pandemic, 9,542 staff took part in the initiative in 2021.
The social commitment of our staff received a further boost
with the creation by the BNP Paribas Group of a programme
entitled 1MillionHours2Help, which enables every employee
to devote a half day of remunerated working time to a vol-
unteering activity. The BNP Paribas Group has set a target of
one million hours of volunteer work. During 2021, 554 of our
staff provided a total of 2,400 hours of assistance to chari-
ties, non-profits and social businesses under this programme
despite the health restrictions in force. Moreover, for every
hour spent on #ourjob2 activities, the Bank undertakes to
plant a tree in a forest in Zambia, as part of the reforestation
initiative run by the WeForest organisation. Since 2017, a total
of 117,519 trees have been planted in this way (of which
9,297 for the awareness campaign on sustainable digital prac-
tices). As during the previous year, most of these volunteering
activities were carried out remotely in 2021 because of the
COVID-19 pandemic.
Microfinance
BNP Paribas Fortis is one of the founders and the main share-
holder of microStart, the largest micro-lending institution
in Belgium.
Since it was set up in 2011, microStart has provided a total of
6,225 loans worth EUR 50 million to micro-entrepreneurs in
this country, thus backing 4,670 business projects and helping
to create or perpetuate more than 7,400 jobs. The survival
rate of the businesses backed by microStart is 70% after two
years. During 2021, 665 micro-loans totalling EUR 6.5 million
were granted to 665 business projects. In addition, some 2,500
micro-entrepreneurs received assistance free of charge from
microStart experts.
Academic chairs
Funding university chairs is also an integral element of
BNP Paribas Fortis CSR policy and part of the Bank’s engage-
ment with the wider society. By supporting academic chairs,
the Bank brings together scientific research, teaching institutes
and businesses in order to promote promising new develop-
ments for the economy. The aim of these partnerships is to
build bridges between the business world and the academic
world. At end-2021, the Bank was supporting four academic
chairs at universities, including the BNP Paribas Fortis
Transport, Logistics and Ports chair at Antwerp University,
which has now been in existence for ten years. The latest new
chair, set up to promote the study of Digital Inclusiveness and
Human Rights, was launched at the VUB (Vrije Universiteit
Brussel) in the latter part of the year 2021.
Additional information
BNP Paribas Fortis discloses comprehensive and updated
information about the bank’s Corporate Social Responsibility
on its corporate website (https://www.bnpparibasfortis.com/
our-commitment) together with the publication of an annual
Corporate Social Responsibility report since 2015.
BNP Paribas Fortis contributes to the BNP Paribas Group’s
strategic initiatives. More information is available in the
chapter 7 of the BNP Paribas Group’s universal registration
document (“Information concerning the economic, social,
civic and environmental responsibility of BNP Paribas”), in
its “Task Force on Climate Disclosure (TCFD) report”, and on
its corporate website.
27
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Changes in the scope of consolidation
Information on the changes in the scope of consolidation
is provided in note 7.b ‘Business combinations and other
changes of the consolidation scope’ and note 7.j ‘Scope of
consolidation’.
BNPParibas Fortis credit ratings at 28/02/2022
Long-term Outlook Short-term
Standard & Poor’s A+ Stable Outlook A-1
Moody’s A2 Stable Outlook P-1
Fitch Ratings A+ Stable Outlook F1
The table above shows the main BNP Paribas Fortis credit
ratings and outlook on 28 February 2022.
Each of these ratings reflects the view of the rating agency
specifically at the moment when the rating was issued; any
explanation of the significance of a given rating is to be
obtained from the rating agency which issued it.
Forward-looking Statements
It should be noted that any statement of future expectations
and other forward-looking elements are based on the com-
pany’s current views and assumptions including a certain
degree of risk and uncertainty, especially given the current
general economic and market conditions.
28
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Comments on the evolution of the results
BNP Paribas Fortis realised a net income attributable to
equity holders of EUR 2,593 million in 2021, compared to
EUR 1,870 million in 2020, up by EUR 723 million or 39%.
Please note that the comments in the present section have
been written by referring to the financial statements and the
respective notes. For a more business oriented analysis, please
refer to the Press Release of BNP Paribas Fortis available on
the corporate website. This analysis focuses on the underlying
evolution, which excludes scope changes (acquisition, sale and
transfer of activities), foreign exchange impacts and one-off
results. By excluding these effects, BNP Paribas Fortis showed
an increasing underlying net income attributable to equity
holders by 29% compared to 2020.
Operating income amounted to EUR 3,476 million in 2021,
up by EUR 801 million or 30% compared to EUR 2,675 million
in 2020. The increase was the result of higher revenues
by EUR 519 million or 7%, a slight increase of the costs by
EUR (35) million or 1% and a decrease of the cost of risk by
EUR 317 million or (47%).
Non-operating items (share of earnings of equity-method
entities, net gain or loss on non-current assets and goodwill)
were up by EUR 129 million whereas the corporate income
tax increased by EUR (163) million.
The comparison between the 2021 and 2020 results was
impacted by the following elements:
the pandemic crisis in 2020 and in 2021 with effects on
the Belgian, European and world economy;
few scope changes, of which mainly Greenval Insurance
DAC in the scope of Arval activities;
foreign exchange variations, and more in particular the
continuous depreciation of the Turkish lira against euro
(from 8.04 EUR/TRY on average in 2020 to 10.49 EUR/TRY
on average in 2021).
Based on the segment information, 50% of the revenues were
generated by banking activities in Belgium, 32% by other
domestic markets, 8% by banking activities in Luxembourg,
8% by banking activities in Turkey and 2% by other activities.
Net interest income reached EUR 4,694 million in 2021,
a decrease of EUR (58) million or (1)% compared to 2020.
Excluding the scope changes (EUR 2 million) and foreign
exchange effect of the Turkish lira (EUR (159) million), net
interest income increased by EUR 99 million.
In Belgium, the net interest income slightly decreased in a
persistently low interest rate environment. Furthermore there
was a positive evolution on the interest expenses on treasury
borrowings with central banks. On the contrary, there was less
interest income on customer loans (mainly term and mortgage
loans) essentially due to lower interest rate margins.
Outside Belgium, there was an overall increase of the net
interest income, mainly supported by the growth of the activi-
ties at Leasing Solutions and Personal Finance, and also in
Turkey when excluding the foreign exchange effect of the
Turkish lira, and despite a decrease in Luxembourg driven by
the persistently low interest environment.
Net commission income amounted to EUR 1,395 million in
2021, up by EUR 121 million compared to 2020. Excluding
the scope changes (EUR (8) million) and the foreign exchange
effect of the Turkish lira (EUR (30) million), net commission
income increased by EUR 159 million.
In Belgium there was an increase of the advisory and the
assets management fees.
Outside Belgium, there was an overall increase in net com-
mission income, mainly supported by the banking activities
in Luxembourg, and also in Turkey when excluding the foreign
exchange effect of the Turkish lira.
Net results on financial instruments at fair value
through profit or loss stood at EUR 196 million, up by
EUR 15 million compared to 2020. Excluding the scope changes
(EUR 1 million) and the foreign exchange effect of the Turkish
lira (EUR 17 million), net results on financial instruments at
fair value through profit or loss decreased by EUR (3) million.
This increase was mainly due to the revaluation of the equity
instruments classified mandatorily at fair value through profit
or loss in Belgium. Outside Belgium, there was an overall
decrease driven by Turkey due to lower results on interest
rate swaps and cross currency swaps.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Net results on financial instruments at fair value through
equity amounted to EUR 37 million in 2021, increasing by
EUR 26 million compared to 2020. The 2021 result was marked
by higher capital gains income than in 2020, not only on the
disposal of fixed-income securities, but also on dividends
income, mainly in Belgium.
Net gain or loss on the derecognition of financial assets at
amortised cost amounted to EUR 2 million in 2021 compared
to EUR (5) million in 2020.
Net income from insurance activities amounted to
EUR 80 million in 2021. Greenval Insurance DAC, which is
the single contributor to this caption, has been sold by BNP
Paribas Ireland to Arval Service Lease in December 2020.
Greenval Insurance DAC is a fleet motor insurance company
registered in Ireland dedicated to customers of Arval.
Net income from other activities amounted to
EUR 2,008 million in 2021, increasing by EUR 328 million
(or 20%) compared to 2020. The main contributor remained
Arval within Other Domestic Markets where revenues were
supported by the increased sale price of used-cars and the
continuous growth of the financed fleet.
Salary and employee benefit expenses amounted to EUR
(2,402) million in 2021 i.e. a decrease of EUR 8 million
compared to 2020. Excluding the scope changes (EUR (8)
million) and the foreign exchange effect of the Turkish lira
(EUR 53 million), there was an increase of EUR (37) million.
In Belgium there were less staff expenses, mainly due to
lower FTEs.
Outside Belgium, there was an overall increase of staff
expenses driven by Other Domestic Markets with more FTEs
than in 2020 to support the growth of the businesses, miti-
gated by a decrease in Luxembourg, in Turkey and at Personal
Finance, mainly because of a reduction in FTEs. When exclud-
ing the foreign exchange effect of the Turkish lira, there was
an increase in Turkey mainly due to the higher inflation.
Other operating expenses amounted to EUR (1,814) million in
2021, i.e. an increase of EUR (63) million compared to 2020.
Excluding the scope changes (EUR (7) million) and the foreign
exchange impact of the Turkish lira (EUR 33 million), other
operating expenses increased by EUR (89) million. In Belgium,
the other operating expenses slightly decreased: increase of
the banking taxes and levies compensated by the decrease of
the other operating expenses.
Outside Belgium, the other operating expenses increased
due to, among others, the growth of the activities in Other
Domestic Markets, as well as higher IT expenses, the banking
taxes in Luxembourg, and the higher inflation in Turkey when
excluding the foreign exchange effect of the Turkish lira.
Depreciation charges stood at EUR (361) million in 2021,
versus EUR (381) million compared to previous year, i.e. a
decrease of EUR 20 million.
Cost of risk totalled EUR (359) million in 2021, i.e. a decrease
of EUR 317 million compared to 2020. Excluding the foreign
exchange impact of the Turkish lira (EUR 42 million), there
was a net decrease of EUR 275 million.
In Belgium, cost of risk decreased mainly thanks to some
specific files and to the provisioning of performing loans (stage
1 and 2). Stage 1 and 2 provisions are mainly impacted by a
review of the macro-economic scenarios.
Outside Belgium, cost of risk also decreased mainly thanks to
lower provisions in stage 3 whereas the provisions in stages
1 and 2 were relatively stable with a limited increase at
Arval and in Turkey offset by a decrease in Luxembourg and
at Leasing Solutions.
Share of earnings of equity-method entities totalled
EUR 322 million in 2021, the same amount as last year. The
decrease in Belgium and the lower contribution from the
equity-method entity in Poland was offset by higher contribu-
tions from other equity-method entities with the most material
increase coming from AG Insurance.
Net gain on non-current assets amounted to EUR 15 million in
2021 versus EUR (114) million in 2020. This increase is mainly
related to the participation in bpost bank: at the end of 2020,
BNP Paribas Fortis signed a non-binding letter of intent on
the remaining 50% of the shares of bpost bank held by Bpost.
This has triggered an impairment of EUR 130 million on our
current stake.
Corporate income tax in 2021 totalled EUR (752) million com-
pared to EUR (589) million in 2020, an increase of EUR (163)
million. Excluding the share of earnings of equity-method
entities (reported net of income taxes), the effective tax rate
stood at 22% in 2021 (22% in 2020).
Net income attributable to minority interests amounted to
EUR 468 million in 2021, compared to EUR 424 million in 2020.
Net income attributable to equity holders amounted to
EUR 2,593 million in 2021, compared to EUR 1,870 million in 2020.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Comments on the evolution of the balance sheet
The total balance sheet of BNP Paribas Fortis amounted to
EUR 341.6 billion as at 31 December 2021, up by EUR 6.5 billion
or 2.0% compared with EUR 335.1 billion at 31 December 2020.
Based on the segment information, 66% of the assets were
contributed by banking activities in Belgium, 17% by other
domestic markets, 10% by banking activities in Luxembourg,
4% by banking activities in Turkey and 3% by other segments.
Assets
Cash and amounts due from central banks amounted to
EUR 61.3 billion, an increase of EUR 11.2 billion compared
to 31 December 2020. This increase is mainly related to the
excess cash placed at the central banks, namely in Belgium
and in Luxemburg.
Financial instruments at fair value through profit or loss
stood at EUR 13.6 billion, down by EUR (4.2) billion com-
pared to last year. A decrease of EUR (4.2) billion in ‘Derivative
financial instruments’ was mainly related to the increase of
the interest rate curve which impacted in a symmetrical way
both the fair value of derivative financial instruments on the
asset and liability side.
Derivatives used for hedging purposes decreased by EUR (1.2)
billion and amounted to EUR 2.0 billion on the asset side,
while on the liability side, we saw also a decrease of EUR
(2.0) billion. The net of both captions showed an increase in
fair value of derivatives used for hedging purposes of EUR 0.8
billion, mainly following the increase in interest rate curve.
Financial assets at fair value through equity decreased by
EUR (1.9) billion to EUR 7.9 billion following the disposals
and reimbursements of government bonds, in Belgium, in
Luxembourg and in Turkey.
Financial assets at amortised cost amounted to EUR 213.2
billion as at 31 December 2021, up by EUR 2.6 billion com-
pared with EUR 210.7 billion as at 31 December 2020.
Loans and advances to customers amounted to EUR 194.1
billion, up by EUR 5.4 billion mainly related to the increase in
mortgage and term loans granted in Belgium and the increase
of the factoring loans granted by the factoring entities. Outside
Belgium, the increase was mainly located in Luxembourg,
driven by mortgage and term loans, at Leasing Solutions, and
in Turkey when excluding the foreign exchange effect of the
Turkish lira, driven by term and consumer loans. In addition,
‘Loans and advances to credit institutions’ decreased by EUR
(1.1) billion due to lower interbank loans in Belgium. Debt
securities at amortised cost decreased by EUR (1.7) billion,
following disposals and reimbursements of government bonds
mainly in Belgium.
Current and deferred tax assets amounted to EUR 1.3 billion,
down by EUR (0.3) billion compared to EUR 1.6 billion at
31 December 2020.
Accrued income and other assets stood at EUR 9.2 billion as
at 31 December 2021, down by EUR (1.2) billion compared to
EUR 10.4 billion at 31 December 2020.
Equity-method investments slightly increased by EUR 0.1
billion and stood at EUR 3.8 billion.
Property, plant and equipment and Investment property
amounted to EUR 26.1 billion as at 31 December 2021, up by
EUR 2.2 billion compared to EUR 23.9 billion at 31 December
2020 mainly related to the growth of the financed fleet at
Arval in Other Domestic Markets.
Liabilities and Equity
Deposits from central banks stood at EUR 0.4 billion,
up by EUR 0.3 billion compared to EUR 0.1 billion at
31 December 2020.
Financial instruments at fair value through profit or loss
decreased by EUR (3.6) billion, totaling EUR 22.4 billion
as at 31 December 2021 compared to EUR 26.0 billion at
31 December 2020. The decrease of EUR (4.1) billion in
‘Derivative financial instruments’ was mainly related to
the increase of the interest rate curve which impacted in a
symmetrical way both the fair value of derivative financial
instruments on the asset and liability side.
Financial liabilities at amortised cost amounted to EUR 270.8
billion as at 31 December 2021, up by EUR 11.7 billion com-
pared with EUR 259.1 billion at 31 December 2020.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Deposits from customers increased by EUR 5.3 billion mostly
attributable to an increase on current and saving accounts
compensating a decrease of the term accounts, especially in
Belgium. Outside Belgium, the increase was mainly located
in Luxembourg and in Turkey when excluding the foreign
exchange effect of the Turkish lira, in both cases driven by
current and term accounts.
Deposits from credit institutions increased by EUR 5.8 billion
mainly due to an increase in Belgium in interbank borrowings
driven by, among others, the participation to the TLTRO III
(Targeted Longer-Term Refinancing Operations).
Debt securities and subordinated debt remained stable and
stood at EUR 12.9 billion and at EUR 2.3 billion, respectively.
The decrease observed in Belgium due to reimbursements is
offset by an increase in issued debt at Arval.
Accrued expenses and other liabilities decreased by EUR (0.2)
billion, amounting to EUR 8.0 billion as at 31 December 2021,
compared with EUR 8.2 billion at 31 December 2020.
Provisions for contingencies and charges came in at EUR 4.2
billion, a slight decrease of EUR (0.1) billion compared to the
situation at 31 December 2020.
Shareholders’ equity amounted to EUR 25.9 billion as at
31 December 2021, up by EUR 1.4 billion or 5.6% compared
with EUR 24.5 billion at 31 December 2020. The total capital,
retained earnings and net income for the period were mainly
impacted by the net income attributable to shareholders for
the year 2021 (EUR 2.6bn) and the dividend distribution in the
course of 2021 (EUR (0.9bn)). Foreign translation differences
impacted negatively the shareholders equity for EUR (0.3)
billion, mainly related to adverse impact resulting from the
depreciating Turkish lira.
Minority interests remained stable at EUR 5.3 billion as at
31 December 2021.
Liquidity and solvency
To prevent potential impacts of the sanitary crisis on BNP
Paribas Group’s liquidity, BNP Paribas Fortis has in 2020
further strengthened the close monitoring of its liquidity
position with dedicated committees involving the senior
management of the Bank. During the period, with the Bank’s
liquidity position remaining strong and high liquidity excess,
BNP Paribas Fortis developed its financing activity and there-
fore supported the economy.
BNP Paribas Fortis’ liquidity remained sound, with customer
deposits standing at EUR 199 billion and customer loans at
EUR 194 billion.
Customer deposits consist of the ‘due to customers’ figure
excluding ‘repurchase agreements’. Customer loans are loans
and receivables due from customers excluding ‘debt securities
at amortised cost’ and ‘reverse repurchase agreements’.
BNP Paribas Fortis’ solvency stood well above the minimum
regulatory requirements. At 31 December 2021, BNP Paribas
Fortis’ phased-in Basel III Common Equity Tier 1 ratio (CET1
ratio, taking into account the CRD4 rules with application
of the current transitional provisions) stood at 18.0%. Total
risk-weighted assets amounted to EUR 120.9 billion at
31 December 2021, of which EUR 95.5 billion are related to
credit risk, EUR 1.2 billion to market risk and EUR 8.5 billion
to operational risk, while counterparty risk, securitisation and
equity risk worked out at EUR 1.7 billion, EUR 1.2 billion and
EUR 12.8 billion respectively.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Principal risks and uncertainties
BNP Paribas Fortis’ activities are exposed to a number of risks,
such as credit risk, market risk, liquidity risk and operational
risk. To ensure that these risks are identified and adequately
controlled and managed, the Bank adheres to a number of
internal control procedures and refers to a whole array of risk
indicators, which are further described in the Chapter ‘Risk
management and capital adequacy’ of the BNP Paribas Fortis
consolidated financial statements 2021.
BNP Paribas Fortis is involved as a defendant in various claims,
disputes and legal proceedings in Belgium and in some foreign
jurisdictions, arising in the ordinary course of its banking
business, as further described in note 7.a ‘Contingent liabili-
ties: legal proceedings and arbitration’ to the BNP Paribas
Fortis consolidated Financial Statements 2021 and in the
BNP Paribas Fortis ‘Pillar 3 disclosure’ 2021.
Since February 2020, Europe has been strongly affected by the
COVID-19 epidemic. BNP Paribas Fortis monitors the situation
closely and keeps accompanying in particular its clients during
this difficult period.
33
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
STATEMENT OF THE BOARD OF DIRECTORS
The Board of Directors of BNP Paribas Fortis is responsible for preparing the BNP Paribas Fortis
consolidated financial statements as at 31 December 2021 in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union, and the BNP Paribas Fortis non-
consolidated financial statements as at 31 December 2021 in accordance with rules laid down in the
Belgian Royal Decree of 23 September 1992 on the annual accounts of credit institutions.
The Board of Directors reviewed the BNP Paribas Fortis consolidated and non-consolidated financial
statements on 10 March 2022 and authorised their issue.
The Board of Directors of BNP Paribas Fortis declares that, to the best of its knowledge, the BNP Paribas
Fortis consolidated financial statements and the BNP Paribas Fortis non-consolidated financial
statements give a true and fair view of the assets, liabilities, financial position and profit and loss
of BNP Paribas Fortis and the undertakings included in the consolidation and that the information
herein contains no omissions likely to modify significantly the scope of any statements made.
The Board of Directors of BNP Paribas Fortis also declares that, to the best of its knowledge, the
report of the Board of Directors includes a fair review of the development, results and position of
BNP Paribas Fortis and the undertakings included in the consolidation, together with a description
of the principal risks and uncertainties with which they are confronted.
The BNP Paribas Fortis consolidated financial statements and the BNP Paribas Fortis non-consolidated
financial statements as at 31 December 2021 will be submitted to the annual General Meeting of
Shareholders for information and for approval on 21 April 2022.
Brussels, 10 March 2022
The Board of Directors of BNP Paribas Fortis
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
CORPORATE GOVERNANCE STATEMENT
BNP Paribas Fortis complies with the ‘2020 Belgian Code on Corporate Governance’ (hereafter referred to as the ‘Code’).
The Code can be consulted on https://www.corporategovernancecommittee.be/en.
1. Compliance with the Code
BNP Paribas Fortis is of the opinion that it complies with
the large majority of the requirements of the Code. The main
remaining deviation relates to principle 8 of the Code “The
company shall treat all shareholders equally and respect
their rights“. The reason that makes the company unable to
comply with all the provisions of principle 8 of the Code lies
within the structure of the shareholdership of BNP Paribas
Fortis. Specifically, BNP Paribas SA , a public limited company
(‘société anonyme’/’naamloze vennootschap’), having its
registered office address at Boulevard des Italiens 16, 75009
Paris, France, registered under number 662 042 449 RCS
Paris, holds 99.94% of the shares of BNP Paribas Fortis. The
remaining 0.06% of the shares is held by minority sharehold-
ers. Nevertheless, BNP Paribas Fortis communicates on an
ongoing basis with its various stakeholders through its website
and other media and actively answers to the questions raised
by its minority shareholders in the framework of the general
shareholders’ meetings.
BNP Paribas Fortis’ Corporate Governance Charter is available
on its public website.
BNP Paribas SA itself is a Euronext-listed company, which
implies that BNP Paribas Fortis, its directors and its staff, must
take into account certain legal provisions on the disclosure of
sensitive information to the market. The Board of Directors
of BNP Paribas Fortis is anyway determined to protect the
interests of all shareholders of BNP Paribas Fortis at all times
and will provide them with the necessary information and
facilities to exercise their rights, in compliance with the Code
on companies and associations.
BNP Paribas Fortis did not receive any transparency declara-
tions within the meaning of the Law of 2 May 2007 on the
disclosure of significant shareholdings.
2. Governing bodies
Board of Directors
Role and responsibilities
In general, the Board of Directors is responsible for BNP Paribas
Fortis in accordance with the applicable law. In particular,
and in accordance with article 23 of the law of 25 April 2014
on the legal status and supervision of credit institutions and
stockbroking firms (the ‘Banking Law’), the Board of Directors
defines and supervises among others:
the strategy and goals of BNP Paribas Fortis;
the risk policy (including the risk tolerance) of
BNP Paribas Fortis;
the organization of BNP Paribas Fortis for the provision of
investment services and activities;
the integrity policy;
BNP Paribas Fortis’ Internal Governance Memorandum,
Corporate Governance Charter and the Policy on the skills,
knowledge and expertise required for directors.
Size and membership criteria
The Board of Directors of BNP Paribas Fortis consists of no
less than five (5) and no more than thirty five (35) directors
(legal persons cannot be members of the Board of Directors).
Directors are appointed for one (1) or more renewable periods,
each individual period covering no more than four (4) full
accounting years of BNP Paribas Fortis.
The composition of the Board of Directors of BNP Paribas Fortis
has to be balanced in terms of (i) skills and competences,
(ii) gender, and (iii) non-executive and executive directors,
whether independent or not. The Board of Directors cannot
consist of a majority of executive directors.
As at 10 March 2022, the Board of Directors of BNP Paribas
Fortis is made up of fifteen (15) members, five (5) of which
are women.
It moreover includes nine (9) non-executive directors, four (4)
of them being independent directors within the meaning of
the Code and six (6) executive directors.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
All directors must at all times be fit (‘passende
deskundigheid’/‘expertise adéquate’) and proper (‘profes
-
sionele betrouwbaarheid’//‘honorabilité professionelle’) for
the exercise of their function. All are preselected and assessed
based on a predefined list of selection criteria. In general,
a director is considered to be ‘fit’ if he has the knowledge,
experience, skills and professional behaviour suitable for the
exercise of his director’s mandate. A director is considered
to be ‘proper‘ if there are no elements suggesting differently
and if there is no reason to question the reputation of the
concerned director.
BNP Paribas Fortis will assess and determine the suitability
of each nominee director (including in case of a mandate
renewal) prior to his (re-)appointment. BNP Paribas Fortis
will assess all directors continuously during their directorship,
at least once a year at the occasion of the periodic suitability
assessment, and every time a new element requires so.
The decision is subject to a separate suitability assessment,
performed by the competent supervisor.
Composition
As at 10 March 2022, the composition of the Board of Directors
is as follows:
DAEMS Herman
Chairman of the Board of Directors. Non-executive director.
Member of the Board of Directors since 14 May 2009.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
JADOT Maxime
Executive director. Chairman of the Executive Board.
Member of the Board of Directors since 13 January 2011.
The current board member mandate has been renewed on
18 April 2019.
It will expire at the end of the 2023 annual general meeting
of shareholders.
ANSEEUW Michael
Executive director.
Member of the Board of Directors since 19 April 2018.
The board member mandate will expire at the end of the
2022 annual general meeting of shareholders.
d’ASPREMONT LYNDEN Antoinette
Independent non-executive director.
Member of the Board of Directors since 19 April 2012.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
AUBERNON Dominique
Non-executive director.
Member of the Board of Directors since 21 April 2016.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
BEAUVOIS Didier
Executive director.
Member of the Board of Directors since 12 June 2014.
The current board member mandate has been renewed on
18 April 2019.
It will expire at the end of the 2023 annual general meeting
of shareholders.
BOOGMANS Dirk
Independent non-executive director.
Member of the Board of Directors since 1 October 2009.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
de CLERCK Daniel
Executive director.
Member of the Board of Directors since 12 December 2019.
The board member mandate will expire at the end of the
2023 annual general meeting of shareholders.
DECRAENE Stefaan
Non-executive director.
Member of the Board of Directors since 18 April 2013.
The current board member mandate has been renewed on
22 April 2021.
It will expire at the end of the 2025 annual general meeting
of shareholders.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
DUTORDOIR Sophie
Independent non-executive director.
Member of the Board of Directors since 30 November 2010.
The current board member mandate has been renewed on
18 April 2019.
It will expire at the end of the 2023 annual general meeting
of shareholders.
MERLO Sofia
Non-executive director.
Member of the Board of Directors since 21 April 2016.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
VAN AKEN Piet
Executive director.
Member of the Board of Directors since 3 June 2016.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
VAN WAEYENBERGE Titia
Independent non-executive director.
Member of the Board of Directors since 18 April 2019.
The board member mandate will expire at the end of the
2023 annual general meeting of shareholders.
VARÈNE Thierry
Non-executive director.
Member of the Board of Directors since 14 May 2009.
The current board member mandate has been renewed on
23 April 2020.
It will expire at the end of the 2024 annual general meeting
of shareholders.
VERMEIRE Stéphane
Executive director.
Member of the Board of Directors since 19 April 2018.
The board member mandate will expire at the end of the
2022 annual general meeting of shareholders.
Between 1 January 2021 and 31 December 2021, the composi
-
tion of the Board of Directors was as follows:
DAEMS, Herman
Chairman of the Board of Directors
JADOT, Maxime
Executive director and chairman of the Executive Board
ANSEEUW, Michael
Executive director
d’ASPREMONT LYNDEN, Antoinette
Independent non-executive director
AUBERNON, Dominique
Non-executive director
BEAUVOIS, Didier
Executive director
BOOGMANS, Dirk
Independent non-executive director
de CLERCK, Daniel
Executive director
DECRAENE, Stefaan
Non-executive director
DUTORDOIR, Sophie
Independent non-executive director
LABORDE, Thierry
Non-executive director until May 18, 2021
MERLO, Sofia
Non-executive director
VAN AKEN, Piet
Executive director
VAN WAEYENBERGE, Titia
Independent non-executive director
VARÈNE, Thierry
Non-executive director
VERMEIRE, Stéphane
Executive director
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Attendance at meetings
The Board of Directors held fourteen (14) meetings in 2021.
Attendance at these meetings was as follows:
Director
Number of
Meetings
Attended
DAEMS, Herman 14
JADOT, Maxime 14
ANSEEUW, Michael 14
d’ASPREMONT LYNDEN, Antoinette 14
AUBERNON, Dominique 14
BEAUVOIS, Didier 14
BOOGMANS, Dirk 14
de CLERCK, Daniel 13
DECRAENE, Stefaan 14
DUTORDOIR, Sophie 13
LABORDE, Thierry (until May 18, 2021) 9
MERLO, Sofia 12
VAN AKEN, Piet 13
VAN WAEYENBERGE, Titia 14
VARENE, Thierry 13
VERMEIRE, Stéphane 14
Assessment of the Board of Directors and of
the directors
At least once a year, the Governance and Nomination
Committee and the Board of Directors perform an evaluation
of the Board of Directors and of all directors. At the occasion
of this evaluation, any element that may impact the suit-
ability assessment performed previously, as well as the time
dedicated and the efforts delivered to perform one’s mandate
properly, is reviewed. As part of this annual evaluation, recom-
mendations on how to manage and resolve any identified
weaknesses are formulated.
The last evaluation process of the Board of Directors ended in
October 2021 and the one of the directors individually ended
in February 2022.
Remuneration
Information regarding the total remuneration for the cor-
porate year 2021, including the remunerations, benefits in
kind and pension plans, of all directors, paid and payable by
BNP Paribas Fortis, can be found in note 7.f ‘Compensation
and benefits awarded to BNP Paribas Fortis’ corporate officers’
to the BNP Paribas Fortis Consolidated Financial Statements.
Executive Board
Role and responsibilities
In accordance with article 24 of the Banking Law and
article 21 of the Articles of association of BNP Paribas
Fortis, the Board of Directors has set up an Executive Board
(‘Directiecomité’/’Comité de Direction’). The members of
the Executive Board are hereafter referred to as the ‘execu-
tive directors’.
Size and membership criteria
The Executive Board is exclusively composed out of executive
directors of BNP Paribas Fortis. Taking into account article 24,
§2 of the Banking Law, the total number of members of the
Executive Board must be inferior to half of the total number
of directors. In addition, the Executive Board must keep the
number of its members within limits, ensuring that it operates
effectively and with the requisite flexibility.
Since all members of the Executive Board are to be considered
as effective leaders, certain suitability criteria apply in addition
to the suitability criteria generally imposed upon directors.
The decision whether or not to appoint a member of the
Executive Board belongs to the competence of the Board of
Directors. It will rely on a recommendation of the Governance
and Nomination Committee. The decision will be subject to a
separate suitability assessment subsequently performed by
the competent supervisor.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Composition
As at 10 March 2022, the composition of the Executive Board
is as follows:
JADOT Maxime
Executive director and chairman of the Executive Board
ANSEEUW Michael
Executive director
BEAUVOIS Didier
Executive director
de CLERCK Daniel
Executive director
VAN AKEN Piet
Executive director
VERMEIRE Stéphane
Executive director
Other Board of Directors’ committees
Article 27 of the Banking Law provides that the Board of
Directors must set up four (4) board committees: an audit
committee, a risk committee, a remuneration committee and
a nomination committee.
The existence of these committees does not in any way impinge
upon the Board’s right to set up further ad hoc committees
to deal with specific matters, as and when the need arises.
The Board of Directors has used this right to set up a.o. an
ad hoc board committee composed of three (3) directors and
chaired by an independent director to assess, if and when
necessary, whether an intended transaction falls within the
scope of article 72 of the Banking Law and ascertain that the
requirements of said article are complied with.
This right is also used by the Board of Directors when, in the
context of transactions between related parties, it sets up
a special board committee (for more information reference
is made to the chapter ‘Information regarding related party
transactions’).
Each board committee has an advisory function towards the
Board of Directors.
Besides the ad hoc committee that convenes within the frame-
work of article 72 of the Banking Law and of which the Chief
Risk Officer is a member while being an executive director, all
members of the other committees are non-executive direc-
tors. In addition to the criteria applicable to non-executive
directors, the chairperson of a committee must also meet the
requirements of his function.
The criteria to be met by directors composing a board com-
mittee are similar to those of the other directors.
The appointment of these committees’ members is further
based on (i) their specific competencies and experience, in
addition to the general competency requirements for any
board members, and (ii) the requirement that each committee
must, as a group, possess the competencies and experience
needed to perform its tasks.
A specific committee (the Governance and Nomination
Committee – see further) will assess whether the suitability
requirements applicable to the members and chairperson of
each committee are met. For this assessment, the Governance
and Nomination Committee will take into account the induc-
tion program that BNP Paribas Fortis will provide to any new
member of these committees.
The four (4) committees function in accordance with the
organisation set out below.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Audit committee (AC)
In accordance with article 27 of the Banking Law, BNP Paribas
Fortis is required to set up a separate AC to assist the Board
of Directors with audit related matters.
Role and responsibilities
The competences of the AC are set forth in the Banking Law
and are listed in the Code on companies and associations. It
concerns, in general, the following domains: finance, internal
control and risk management, internal and external audit. The
AC shall, upon request of the Board of Directors, assist (and
make recommendations to) the Board of Directors in all audit
and accounting related matters.
Membership criteria
In addition to the suitability requirements for non-executive
directors, the members of the AC must collectively have the
necessary skills and competences relating to BNP Paribas
Fortis’ activities and to audit and accounting. At least one
(1) member of the AC must have an expertise in audit and/or
accounting. Both independent directors, currently members
of the BNP Paribas Fortis AC, have a specific expertise in audit
and accounting.
Composition
The AC is composed of at least three (3) non-executive direc-
tors, of which at least two (2) directors are independent within
the meaning of the Code.
The chairperson of the AC must be an independent director.
The chairpersons of the AC and RC (see below) meet on a
regular basis with the chairpersons of the AC’s and RC’s of
the most important entities within the governance perimeter
of BNP Paribas Fortis.
Composition as at 10 March 2022:
Antoinette d’Aspremont Lynden (non-executive, independ-
ent director), chairwoman
Dirk Boogmans (non-executive, independent director)
Dominique Aubernon (non-executive director)
Attendance at meetings
The AC met six (6) times in 2021. Attendance was as follows:
Committee Member
Number of
meetings
attended
d'ASPREMONT LYNDEN, Antoinette 6
AUBERNON, Dominique 6
BOOGMANS, Dirk 6
Risk committee (RC)
In accordance with article 27 of the Banking Law, BNP Paribas
Fortis is required to set up a separate RC to assist the Board
of Directors with risk related matters.
Role and responsibilities
The competences of the RC are set forth in the Banking Law
and concern: (i) the strategy and risk appetite, (ii) the price
setting, and (iii) the remuneration policy. The RC shall, upon
request of the Board of Directors, assist (and make recommen-
dations to) the Board of Directors in all risk related matters.
Membership criteria
In addition to the suitability requirements for non-executive
directors, the members of the RC must individually have the
required knowledge, expertise, experience and skills in order
to be able to understand and apprehend BNP Paribas Fortis’
risk strategy and tolerance.
Composition
The RC is composed of at least three (3) non-executive direc-
tors, of which at least two (2) directors are independent within
the meaning of the Code.
The chairperson of the RC must be an independent director.
The chairpersons of the AC and RC meet on a regular basis with
the chairpersons of the AC’s and RC’s of the most important
entities within the governance perimeter of BNP Paribas Fortis.
Composition as at 10 March 2022:
Dirk Boogmans (non-executive, independent director),
chairman
Dominique Aubernon (non-executive director)
Titia Van Waeyenberge (non-executive, independent director)
Attendance at meetings
The RC met five (5) times in 2021. Attendance was as follows:
Committee Member
Number of
meetings
attended
BOOGMANS, Dirk 5
AUBERNON, Dominique 5
VAN WAEYENBERGE, Titia 5
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Governance and nomination committee (GNC)
In accordance with article 27 of the Banking Law, BNP Paribas
Fortis is required to set up a separate GNC to assist the Board
of Directors with governance and nomination related matters.
Role and responsibilities
The competences of the GNC are set forth in the Banking Law
and the regulations of the Belgian National Bank. They concern
the expression of a relevant and independent judgment on
the composition and functioning of the Board of Directors
and the other management bodies of BNP Paribas Fortis, and
specifically on the individual and collective expertise of their
members, their integrity, reputation, independence of mind
and time commitment.
Membership criteria
In addition to the suitability requirements for non-executive
directors, the members of the GNC have collectively and
individually the necessary skills and competences in the field
of governance and nomination regulation and practices within
the Belgian banking sector.
Composition
The GNC is composed of at least three (3) non-executive
directors, of which at least two (2) directors are independent
within the meaning of the Code.
The chairperson of the GNC must be an independent director.
Composition as at 10 March 2022:
Sophie Dutordoir, (non-executive, independent
director), chairwoman
Herman Daems (non-executive director)
Titia Van Waeyenberge (non-executive,
independent director)
Attendance at meetings
The GNC met eleven (11) times in 2021. Attendance was
as follows:
Committee Member
Number of
meetings
attended
DUTORDOIR, Sophie 11
DAEMS, Herman 11
VAN WAEYENBERGE, Titia 11
Remuneration committee (RemCo)
In accordance with article 27 of the Banking Law, BNP Paribas
Fortis is required to set up a separate RemCo to assist the
Board of Directors with remuneration related matters.
Role and responsibilities
The competences of the RemCo are set forth in the Banking
Law. They concern the expression of a relevant and independ-
ent judgement on the remuneration policies, reward practices
and related incentives, taking into account BNP Paribas Fortis’
risk management, equity needs and liquidity position.
Membership criteria
In addition to the suitability criteria for non-executive direc-
tors, the members of the RemCo individually and collectively
have the necessary skills, competences and expertise in the
field of remuneration, and in particular those applicable to
the Belgian banking sector.
Composition
The RemCo is composed of at least three (3) non-executive
directors, of which at least two (2) directors are independent
within the meaning of the Code.
The chairperson of the RemCo must be an independent director.
Composition as at 10 March 2022:
Sophie Dutordoir (non-executive, independent
director), chairwoman
Antoinette d’Aspremont Lynden (non-executive,
independent director)
Sofia Merlo (non-executive director)
Attendance at meetings
The RemCo met five (5) times in 2021. Attendance was
as follows:
Committee Member
Number of
meetings
attended
DUTORDOIR, Sophie 5
d'ASPREMONT LYNDEN, Antoinette 5
LABORDE, Thierry (until May 18, 2021) 3
MERLO, Sofia (as from June 1, 2021) 2
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Executive Committee
BNP Paribas Fortis has set up an Executive Committee, in
order to assist the Executive Board with the fulfilment of its
missions and responsibilities and to advise the Executive Board
as the case may be.
The Executive Committee currently consists of twelve (12)
members, of which six (6) are executive directors. It brings
together the Executive Board and the six (6) key heads of
businesses and support functions.
Composition as at 10 March 2022:
Maxime JADOT
Executive director, chairman of the Executive Board/
Executive Committee, chief executive officer
Michael ANSEEUW
Executive director, member of the Executive Committee,
chief retail banking
Didier BEAUVOIS
Executive director, member of the Executive Committee,
chief corporate banking
Pierre BOUCHARA
Member of the Executive Committee, chief financial officer
Marc CAMUS
Member of the Executive Committee, chief information officer
Jo COUTUER
Member of the Executive Committee, chief data officer
Daniel de CLERCK
Executive director, member of the Executive Committee,
chief operating officer
Carine DE NYS
Member of the Executive Committee, chief compliance officer
Khatleen PAUWELS
Member of the Executive Committee, head of client
service center
Piet VAN AKEN
Executive director, member of the Executive Committee,
chief risk officer
Stéphane VERMEIRE
Executive director, member of the Executive Committee,
chief private banking and wealth management
Sandra WILIKENS
Member of the Executive Committee, chief human
resources officer
3. Internal Control Procedures
Missions and Activities of the Finance
Department – Finance Charter
The Finance Function, under the authority of the Chief
Financial Officer, reporting to the Chief Executive Officer, is
responsible for preparing and processing accounting and
financial information. This responsibility is further defined in
a specific Charter and consists of:
Elaborating financial information and ensuring that pub-
lished financial and prudential information is accurate and
fairly stated, in accordance with regulatory framework
and standards;
Providing Executive Management with the necessary infor-
mation for the financial steering at organizational levels;
Defining accounting, performance management and
selected prudential policies and lead their opera
-
tional insertion;
Defining, deploying and supervising the permanent control
framework associated with financial information;
Assisting Executive Management in defining the entity’s
strategy, benchmarking the entity’s performance and
initiating and investigating merge & acquisition operations;
Proceeding to the analysis and the financial structuring
of the external and internal acquisition, partnership and
divestment projects;
Managing the financial communications, ensuring a high
quality and a clear perception by the markets;
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Monitoring changes to the regulatory/prudential frame
-
work; elaborate and communicate the entity’s position
statements thereupon;
Coordinating banking supervisory issues, notably relation-
ship with the ECB;
Defining/running the Finance function’s organization and
monitor its resources and costs;
Driving the Target Operating Model implementation,
contribute to the definition of the functional architec
-
ture and the design of Finance systems and proceed to
their deployment.
Producing financial information
Policies and rules
The local financial statements for each entity are prepared
under local GAAP while the BNP Paribas Fortis Consolidated
Financial Statements are prepared under International
Financial Reporting Standards (IFRS) as endorsed by the
European Union.
A dedicated team within Accounting & Reporting (A&R), section
of the Finance department, draws up the accounting policies
based on IFRS as endorsed by the European Union and to be
applied by all BNP Paribas Fortis entities. These are aligned
with BNP Paribas Group accounting policies. This A&R team
monitors regulatory changes and prepares new internal
accounting policies in line with the level of interpretation
necessary to adapt them to the operations carried out by
BNP Paribas Fortis. A BNP Paribas Group accounting manual
is available, together with additional documentation and
guidance related to the specific BNP Paribas Fortis products
and scope. This IFRS accounting manual is distributed to
all accounting and reporting teams. It is regularly updated
to reflect regulatory changes. The dedicated A&R team also
handles requests for specific accounting analysis made by the
local entities and the Core Businesses/Business Lines.
The Management Control department follows up the manage-
ment accounting and reporting rules as determined by BNPP
Group Finance.
At Finance level, the changes in the prudential reporting are
followed up by the Financial Management department and dis-
cussed during the Prudential Affairs Coordination Committee.
The reporting principles and rules associated with solvency
are within the remit of Risk Management, and those associated
with liquidity are within the remit of ALM – Treasury.
Preparation of financial information
There are two distinct reporting channels involved in the
process of preparing financial information:
the financial accounting and reporting channel: the
particular responsibility of this channel is to perform the
entities’ financial and cost accounting, and to prepare the
BNP Paribas Fortis’ consolidated financial statements in
compliance with the policies and standards. It also pro-
duces information on solvency and liquidity, ensuring that
it is consistent with the accounting at each level. This
channel certifies the reliability of the information produced
by using dedicated control tools and by applying internal
certification procedures (described below) at the first level
of control;
the management accounting and reporting channel: this
channel prepares the management information (from
the Divisions/OEs/business lines compiled from the data
per entity) that is relevant to the economic management
of activities, complying with the established internal
principles and standards. It ensures the consistency of
the management data with the accounting data, at every
level. This channel is also responsible for the preparation
of solvency and liquidity ratios and for their analysis. This
channel certifies the reliability of the information produced
by applying internal certification procedures (described
below) at the first level of control.
BNP Paribas Group Finance designs, distributes and admin-
isters the reporting tools for the two channels. These tools
are designed to suit the channels’ individual objectives and
necessary complementarity, and provide information for the
entire BNP Paribas Group. In particular, BNP Paribas Group
Finance promotes the use of standard accounting and report-
ing systems in the BNP Paribas Group entities. The systems are
designed at BNP Paribas Group level and progressively rolled
out. This approach promotes the sharing of information and
facilitates the implementation of cross-functional projects in
the context of the development of pooled account processing
and synthesis within the BNP Paribas Group.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
For the preparation of liquidity-related data as well as sol-
vency data, the Bank has adopted the principle of integrating
internal management data and those required for regulatory
reporting, based on the following building blocks:
governance involving Finance, ALM-Treasury and Risk
Management;
policies and methodologies applicable as required by
regulations;
dedicated tools ensuring data collection and the produc-
tion of internal and regulatory reports.
Permanent control - Finance
Internal control within the Finance Function
Internal control at Finance is certified by a dedicated second
level of control team that is supported by specialized tools,
encompassing accounting controls and other operational
permanent control areas. The basis of their controls is the
control results and certification of the first level of control
done in the operational departments and other functions.
The mission of this team is to ensure, on a permanent basis,
the reliability of the processes used for producing and validat-
ing the financial figures for BNP Paribas Fortis, and to ensure
compliance with the legal and regulatory reporting require-
ments. Next to performing this second level of control, the
department’s activities consist of maintaining relations with
the external auditors and ensuring that their recommenda-
tions are correctly applied throughout BNP Paribas Fortis.
Internal Certification Process
BNP Paribas Fortis monitors the accounting and reporting risk
through a certification process, whose purpose is to report
on the quality of the information provided in the different
reporting systems. The results of the certification process
related to the financial reporting are presented quarterly to
the BNP Paribas Fortis Audit Committee.
Based on general rules, set by BNP Paribas Group, each entity
submitting a reporting package is required to certify the accu-
racy of the reporting package on a quarterly basis, using the
Finance Accounting Control Tool, an application designed to
support the certification process across the BNP Paribas Group.
Certificates are made up of standardized questions, included
in a generic control plan, addressing the main accounting and
financial risk areas.
Permanent control within Finance provides a level of comfort
to the CFO, BNP Paribas Group Finance, the BNP Paribas
Fortis Audit Committee, the external auditors and also the
National Bank of Belgium that the internal control measures
are being properly maintained, by performing a second level
of control on these certificates and ensuring the final valida-
tion by the CFO.
The certification process encompasses:
the certification that the accounting and reporting data are
reliable and comply with the BNP Paribas Group account-
ing and reporting policies;
the certification that the accounting and reporting internal
control system designed to ensure the quality of data is
operating effectively.
This internal certification process forms part of the overall
permanent control monitoring system and enables the
BNP Paribas Fortis Finance department to be informed of
any incidents relating to the preparation of the financial
statements, to monitor the implementation by the accounting
entities of appropriate corrective measures and, if necessary,
to book appropriate provisions. As regards BNP Paribas Fortis
in Belgium, the certification process is supported by an exten-
sive set of sub-certificates which cover all activities that may
generate accounting and financial risks for the company.
The certification system is also used in liaison with Risk
Management for information forming part of the regulatory
reporting on credit risk and solvency ratios. Those contributing
to the reports attest that they have complied with the stand-
ards and procedures and that the data used are of appropriate
quality. They further describe the results of the controls carried
out at the various stages of producing the reports, including
the accounting data to credit-risk data reconciliation. On the
same principles, a certification system has been installed
for liquidity-related data. The various contributors report on
compliance with standards and the results of key controls
performed to ensure the quality of the reporting.
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BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
Control of the value of financial instruments
and the use of valuation in determining the
results of market activities and accounting
reports
The Finance department delegates the determination and
control of market value or models of financial instruments
to the various departments involved in measuring financial
instruments within the overall process of monitoring market
risk and management data. However, it remains the respon-
sibility of the Finance department to oversee the accuracy of
these operations.
The purpose of these control procedures within Finance is:
to ensure that transactions involving financial instruments
are properly recorded in BNP Paribas Fortis’ financial and
management data;
to guarantee the quality of the measurement and report-
ing of financial instruments used both in preparing the
financial and management accounts and in managing and
monitoring market and liquidity risks; and
to ensure that the results of market transactions are
accurately determined and correctly analysed.
Periodic control – General Inspection
General Inspection has a team of inspectors who are special-
ists in accounting and finance audit. This reflects its strategy
of strengthening audit capability in accountancy, as regards
both the technical complexity of its work and its coverage of
accounting risk.
Its action plan is based on the remote accounting internal
control tools available to BNP Paribas Fortis and the risk
evaluation chart set up by General Inspection.
The core aims of the team are as follows:
to constitute a hub of accounting and financial expertise
in order to reinforce the capability of General Inspection
when carrying out inspections in such areas;
to identify via risk assessments and inspect risk areas at
the level of BNP Paribas Fortis.
Relations with the statutory auditors
In 2021, the accredited statutory auditor was PwC
Bedrijfsrevisoren bv / PwC Reviseurs d’Entreprises srl, repre-
sented by Mr. Jeroen BOCKAERT.
The statutory auditor is appointed by the Annual General
Meeting of Shareholders, based on advice from the Audit
Committee and upon a proposal by the Board of Directors
and the Works Council.
The statutory auditor is required to issue an audit report every
financial year, in which he gives his opinion regarding the
true and fair view of the consolidated financial statements
of BNP Paribas Fortis and its subsidiaries. A summary of the
control findings and recommendations is presented to the
Audit Committee in the ‘2021 Internal Control findings &
recommendations’ document.
Next to this report, the statutory audit issues an Internal
Control Report describing the review of the functioning of the
internal control environment for this entity.
The statutory auditor also carries out specified procedures for
the BNP Paribas Group auditors and audit/review procedures
for the prudential regulator.
As part of their statutory audit assignment and based on his
audit tasks, he:
examines any significant changes in accounting standards
and presents his recommendations to the Audit Committee
regarding choices that have a material impact;
presents his findings, observations and recommendations
for improving the internal control system to the relevant
Bank entities and to Finance.
The Audit Committee of the Board of Directors is informed
about any accounting choices that have a material impact on
the financial statements, so that they can submit these choices
to the Board of Directors for a final decision.
45
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
4. Conflicts of Interest
In addition to the legal provisions on conflicts of interest in
the Code on companies and associations, BNP Paribas Fortis
is required to comply with the provisions of the Banking Law
and the substance of a number of circular letters issued by
the National Bank of Belgium (NBB) whose purpose is to avoid
conflicts of interest between BNP Paribas Fortis and its direc-
tors or executive management, inter alia in relation to external
functions exercised and loans.
In addition, BNP Paribas Fortis has in place a general integ-
rity policy and specific codes of conduct regarding conflicts
of interest, which state that the attainment of commercial,
financial, professional or personal objectives must not stand
in the way of compliance with the following basic principles:
1.
customers’ interests (this includes understanding custom-
ers’ needs, ensuring the fair treatment of customers and
protecting the customers’ interests, …);
2.
financial security (this includes fighting against money
laundering & terrorist financing, against external
bribery & corruption and terrorist financing, sanctions &
embargoes…);
3.
market integrity (this includes promoting free and fair
competition, complying with market abuse rules,…);
4.
professional ethics (this includes avoiding conflicts of
interests in outside activities, taking measures against
internal bribery and corruption,…);
5.
respect for colleagues (this includes applying best
standards in professional behavior, rejecting any forms of
discrimination and ensuring the safety of the workplace);
6.
group protection (this includes building and protecting
the BNP Paribas Group’s long-term value, protecting the
Group’s information, communicating responsibly,…);
7.
involvement with society (this includes promoting the
respect for human rights, protecting the environment and
combating climate change and acting responsibly in public
representation).
Finally, BNP Paribas Fortis directors have been assessed by
the relevant supervisor before their formal appointment, in
accordance with the Banking Law. Before issuing its approval
for an appointment, the relevant supervisor conducts an
assessment which involves verifying that certain conflicts of
interest do not exist.
46
BNP PARIBAS FORTIS CONSOLIDATED ANNUAL REPORT 2021
BNP PARIBAS FORTIS CONSOLIDATED BNP PARIBAS FORTIS CONSOLIDATED
FINANCIAL STATEMENTS 2021FINANCIAL STATEMENTS 2021
Prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
48
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021
Profit and loss account for the year ended 31 December 2021
In millions of euros Note Year to 31 Dec. 2021 Year to 31 Dec. 2020
Interest income
(1)
2.a 7,017 6,834
Interest expense
(1)
2.a (2,323 ) (2,082 )
Commission income 2.b 2,199 1,998
Commission expense 2.b (804 ) (724 )
Net gain or loss on financial instruments at fair value through profit or loss 2.c 196 181
Net gain or loss on financial instruments at fair value through equity 2.d 37 11
Net gain or loss on the derecognition of financial assets at amortised cost 2 (5 )
Net income from insurance activities 80
Income from other activities 2.e 13,408 11,539
Expense on other activities 2.e (11,400 ) (9,859 )
REVENUES 8,412 7,893
Salary and employee benefit expenses 6.a (2,402 ) (2,410 )
Other operating expenses 2.f (1,814 ) (1,751 )
Depreciation, amortisation and impairment of property, plant and equipment
and intangible assets
4.l (361 ) (381 )
GROSS OPERATING INCOME 3,835 3,351
Cost of risk 2.g (359 ) (676 )
OPERATING INCOME 3,476 2,675
Share of earnings of equity-method entities 4.k 322 322
Net gain or loss on non-current assets 15 (114 )
PRE-TAX INCOME 3,813 2,883
Corporate income tax 2.i (752 ) (589 )
NET INCOME 3,061 2,294
of which net income attributable to minority interests 468 424
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS 2,593 1,870
49
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021
Statement of net income and change in assets and liabilities recognised
directly in equity
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Net income for the period 3,061 2,294
Changes in assets and liabilities recognised directly in equity (490 ) (462 )
Items that are or may be reclassified to profit or loss (489 ) (428 )
Changes in exchange rate items (470 ) (472 )
Changes in fair value of financial assets at fair value through equity
Changes in fair value recognised in equity (10 ) 35
Changes in fair value reported in net income (4 ) (1 )
Changes in fair value of investments of insurance activities
Changes in fair value recognised in equity - 3
Changes in fair value reported in net income 1 3
Changes in fair value of hedging instruments
Changes in fair value recognised in equity 21 144
Changes in fair value reported in net income (2 ) (3 )
Income tax (5 ) (42 )
Changes in equity-method investments (20 ) (95 )
Items that will not be reclassified to profit or loss (1 ) (34 )
Changes in fair value of financial assets at fair value through equity
Changes in fair value recognised in equity 15 )
Debt remeasurement effect arising from BNP Paribas Fortis issuer risk 4
Remeasurement gains (losses) related to post-employment benefit plans (26 ) 1
Income tax 5 (1 )
Changes in equity-method investments 16 (19 )
Total 2,571 1,832
Attributable to equity shareholders 2,323 1,565
Attributable to minority interests 248 267
50
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021
Balance sheet at 31 December 2021
In millions of euros Note 31 December 2021 31 December 2020
Assets
Cash and balances at central banks 61,263 50,074
Financial instruments at fair value through profit or loss 13,634 17,832
Securities 4.a 1,317 1,564
Loans and repurchase agreements 4.a 4,282 4,055
Derivative financial instruments 4.a 8,035 12,213
Derivatives used for hedging purposes* 4.b 1,982 3,178
Financial assets at fair value through equity 7,861 9,773
Debt securities 4.c 7,547 9,460
Equity securities 4.c 314 313
Financial assets at amortised cost 213,208 210,656
Loans and advances to credit institutions 4.e 7,394 8,531
Loans and advances to customers 4.e 194,102 188,742
Debt securities 4.e 11,712 13,383
Remeasurement adjustment on interest-rate risk hedged portfolios 1,812 2,712
Financial investments of insurance activities 248 235
Current and deferred tax assets 4.i 1,342 1,564
Accrued income and other assets 4.j 9,188 10,360
Equity-method investments 4.k 3,809 3,747
Property, plant and equipment and Investment property 4.l 26,144 23,914
Intangible assets 390 368
Goodwill 4.m 767 722
Total assets 341,648 335,135
Liabilities
Deposits from central banks 426 71
Financial instruments at fair value through profit or loss 22,372 25,987
Securities 4.a 159 132
Deposits and repurchase agreements 4.a 13,060 12,540
Issued debt securities 4.a 3,028 3,135
Derivative financial instruments 4.a 6,125 10,180
Derivatives used for hedging purposes* 4.b 3,215 5,257
Financial liabilities at amortised cost 270,821 259,145
Deposits from credit institutions 4.g 56,610 50,820
Deposits from customers 4.g 199,037 193,770
Debt securities 4.h 12,878 11,815
Subordinated debt 4.h 2,296 2,740
Remeasurement adjustment on interest-rate risk hedged portfolios 472 1,449
Current and deferred tax liabilities 4.i 768 771
Accrued expenses and other liabilities 4.j 8,012 8,207
Technical reserves and other insurance liabilities 156 128
Provisions for contingencies and charges 4.n 4,209 4,282
Total liabilities 310,451 305,297
Equity
Share capital, additional paid-in capital and retained earnings 24,735 23,808
Net income for the period attributable to shareholders 2,593 1,870
Total capital, retained earnings and net income for the period attributable to
shareholders
Changes in assets and liabilities recognised directly in equity (1,436 ) (1,165 )
Shareholders' equity 25,892 24,513
Minority interests 7.c 5,305 5,325
Total equity 31,197 29,838
Total liabilities & equity 341,648 335,135
* ”Derivatives used for Hedging purposes” should be restated for the comparative period of 31 December 2020 by decreasing respectively assets and liabilities with
the amount of EUR (799 ) million. In December 2020, no netting of the fair value of the fixed and floating leg was applied on the macro hedge derivative with the
counterparty LCH (contrary to 31 December 2021). The effect of the retrospective application of the netting in the “Derivatives used for Hedging purposes” for the
comparative period also results to the restatement of the captions “Total assets”, “Total liabilities” and “Total liabilities and equity” by the amount of EUR (799 ) million.
51
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021
Cash flow statement for the year ended 31 December 2021
In millions of euros Note Year to 31 Dec. 2021 Year to 31 Dec. 2020
Pre-tax income 3,813 2,883
Non-monetary items included in pre-tax net income and other adjustments 7,607 5,193
Net depreciation/amortisation expense on property, plant and equipment and
intangible assets
Impairment of goodwill and other non-current assets (23 ) 11
Net addition to provisions 404 579
Share of earnings of equity-method entities (322 ) (322 )
Net expense (income) from investing activities (14 ) 115
Net expense from financing activities 4 3
Other movements 3,074 668
Net increase in cash related to assets and liabilities generated by operating
activities
Net increase in cash related to transactions with customers and credit institutions 9,914 45,479
Net increase in cash related to transactions involving other financial assets and
liabilities
Net decrease in cash related to transactions involving non-financial assets and
liabilities
(9,779 ) (7,692 )
Taxes paid (537 ) (349 )
Net increase in cash and equivalents generated by operating activities 14,389 46,259
Net increase (decrease) in cash related to acquisitions and disposals of
consolidated entities
Net decrease related to property, plant and equipment and intangible assets (280 ) (132 )
Net decrease in cash and equivalents related to investing activities (31 ) (349 )
Net decrease in cash and equivalents related to transactions with shareholders (1,258 ) (86 )
Net increase (decrease) in cash and equivalents generated by other financing
activities
(105 ) 1,004
Net increase (decrease) in cash and equivalents related to financing activities* (1,363 ) 918
Effect of movement in exchange rates on cash and equivalents (1,706 ) (868 )
Net increase in cash and equivalents 11,289 45,960
Balance of cash and equivalent accounts at the start of the period 51,534 5,574
Cash and amounts due from central banks 50,084 4,405
Due to central banks (70 ) (708 )
On-demand deposits with credit institutions 4.e 2,828 2,990
On-demand loans from credit institutions 4.g (1,308 ) (1,113 )
Balance of cash and equivalent accounts at the end of the period 62,823 51,534
Cash and amounts due from central banks 61,270 50,084
Due to central banks (425 ) (70 )
On-demand deposits with credit institutions 4.e 3,456 2,828
On-demand loans from credit institutions 4.g (1,478 ) (1,308 )
Net increase in cash and equivalents 11,289 45,960
Additional information:
Interest paid (2,616 ) (2,161 )
Interest received 6,873 6,700
Dividend paid/received (987 ) 124
* Changes in liabilities arising from financing activities other than those arising from cash flows amount to EUR 194 million, due to foreign exchange and
revaluation effect, for respectively EUR 202 million and EUR (12 ) million
52
BNP PARIBAS FORTIS CONSOLIDATED FINANCIAL STATEMENTS 2021
Statement of changes in shareholders’ equity between 1 January 2020 and
31 December 2021
In million of euros
Capital and retained
earnings
Changes in assets and
liabilities recognised
directly in equity that
will not be reclassified
to profit or loss
Changes in assets and liabilities
recognised directly in equity
that may be reclassified to
profit or loss
Total Shareholders' equity
Minority interests (note 7.c)
Total consolidated equity
Share capital
Subordinated equity instruments
Non distributed reserves
Total capital and retained earnings
Financial instruments designated as at fair value
through equity
Own-credit valuation adjustment of debt securities
designated as at fair value through profit or loss
Remeasurement gains (losses) related to post-
employment benefits plans
Total
Exchange rate
Financial instruments at fair value through equity
Financial investments of insurance activities
Derivatives used for hedging purposes
Total
Capital and
retained earnings at
1 January 2020
Other movements - - (21 ) (21 ) - - - - - - - - - (21 ) (28 ) (49 )
Acquisition (note 7b) - - (16 ) (16 ) - - - - - - - - - (16 ) - (16 )
Dividends - - - - - - - - - - - - - - (84 ) (84 )
Changes in assets
and liabilities
recognised directly in
equity
- - - - (3 ) - (12 ) (15 ) (315 ) 21 (23 ) 27 (290 ) (305 ) (157 ) (462 )
Net income for 2020 - - 1,870 1,870 - - - - - - - - - 1,870 424 2,294
Capital and
retained earnings at
31 December 2020
Other movements - - 6 6 - - - - - - - - - 6 23 29
Dividends - - (950 ) (950 ) - - - - - - - - - (950 ) (291 ) (1,241 )
Changes in assets
and liabilities
recognised directly in
equity
- - - - - 3 (9 ) (6 ) (253 ) (52 ) (2 ) 43 (264 ) (270 ) (220 ) (490 )
Net income for 2021 - - 2,593 2,593 - - - - - - - - 2,593 468 3,061
Capital and
retained earnings at
31 December 2021
NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS 2021FINANCIAL STATEMENTS 2021
Prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES APPLIED BY BNP PARIBAS FORTIS
1.a Accounting standards
1
The full set of standards adopted for use in the European Union can be found on the website of the European Commission at: https://ec.europa.eu/info/
business-economy-euro/company-reporting-and-auditing/company-reporting_en
1.a.1 Applicable accounting standards
The coronavirus outbreak characterised by the World Health
Organisation as a pandemic on 11 March 2020 as well as
measures introduced by governments and regulators to tackle
the outbreak have affected the global supply chain as well as
demand for goods and services and therefore had a significant
impact on the global growth. At the same time, fiscal and
monetary policies have been eased to sustain the economy.
The consolidated financial statements of BNP Paribas Fortis
have been prepared on a going concern basis. The impacts
of the coronavirus pandemic, mitigated by all countercycli-
cal measures such as government and financial support to
customers, mainly relate to expected credit losses and asset
valuation. These impacts were estimated against a background
of uncertainty about the magnitude of the impact of the out-
break on local and global economies.
The consolidated financial statements of BNP Paribas
Fortis have been prepared in accordance with international
accounting standards (International Financial Reporting
Standards – IFRS), as adopted for use in the European Union
1
.
Accordingly, certain provisions of IAS 39 on hedge accounting
have been excluded.
In relation to the IBOR and Eonia rates reform, at the
end of 2018 the BNP Paribas Group launched a global
programme, involving all business lines and functions.
The aim of the programme is to manage and implement
the transition from the old benchmark interest rates to
the new ones in major jurisdictions and currencies (euro,
pound sterling, US dollar, Swiss franc and Japanese yen),
while reducing the risks associated with this transition and
meeting the deadlines set by the competent authorities.
The Group contributed to market-wide workshops with
central banks and financial regulators.
The announcements by public authorities in the United
Kingdom and the United States and by the Libor admin-
istrator (ICE BA) at the end of November 2020 changed
the transition period, which was initially scheduled to
be completed by the end of 2021. For the GBP and JPY
Libor, a synthetic Libor will be published beyond the end of
2021 for use in certain contracts known as ‘tough legacy‘
contracts, i.e. contracts that have not switched from Libor
to a replacement index. In the United States, the decision
was taken to continue publishing the USD Libor until mid-
2023, as a legislative solution is being sought for some
asset classes, including floating-rate bonds.
For contracts referencing the CHF Libor which cannot be
renegotiated before it is phased out at the end of 2021, the
European Commission has provided a legislative solution
replacing this rate with a daily capitalised SARON (Swiss
Average Rate Overnight) rate, plus a spread aimed at
ensuring the economic neutrality of this change.
In Europe, the Eonia-€STR transition, which is purely
technical given the fixed link between these two indices,
was finalised at the end of December 2021 while the
maintenance of Euribor on a sine die basis was confirmed.
Based on the progress made in 2020 and 2021, notably
with the definition of a detailed plan and its execution, the
Bank is confident in its operational capacity to manage the
transition process of large volumes of transactions to the
new benchmark rates.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
The reform of IBOR rates exposes the Bank to various risks
that the programme aims to manage closely, including in
particular:
change management risks, but also litigation and
conduct risks linked to negotiations with customers
and market counterparties to amend existing contracts;
operational risks related to changes in the Bank’s IT
systems and processes;
economic risks in case of financial market distur-
bances linked to the various transitions induced by the
IBOR reform;
valuation risks in a scenario of reduced liquidity during
the transition in certain derivative market segments.
In September 2019, the IASB published “Phase 1” amend-
ments to IAS 39 and IFRS 7, amending the hedge accounting
requirements so that hedges affected by the benchmark
interest rate reform can continue despite the uncertainty
during the transition of the hedged items or hedging
instruments to the reformed benchmark rates. These
amendments, endorsed by the European Commission on
15 January 2020, have been applied by BNP Paribas Fortis
since 31 December 2019.
In August 2020, the IASB published ‘Phase 2’ amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 introducing
several changes applicable during the effective transition
to the new benchmark interest rates. These amendments
allow for changes in the contractual cash flows of finan-
cial instruments resulting from the IBOR rates reform
to be treated as a simple reset of their variable interest
rate, provided, however, that such changes are made on
an economically equivalent basis. They also allow the
continuation of hedging relationships, subject to amend-
ments to their documentation to reflect changes in hedged
instruments, hedging instruments, hedged risk, and/or the
method for measuring effectiveness during the transition
to the new benchmark rates. The measures introduced in
this framework also include:
the possibility of documenting an interest rate as a
hedged risk component even if this rate is not imme-
diately separately identifiable, provided that it can
reasonably be expected to become so within 24 months;
the possibility of resetting cumulative fair value changes
to zero in the hedge ineffectiveness test;
and the obligation in the framework of portfolio hedges
to isolate in subgroups instruments referring to the new
risk-free rates (RFR).
These amendments, adopted by the European Commission
in December 2020, have been applied by BNP Paribas
Fortis since 31 December 2020 to maintain its existing
hedging relationships which have been modified as a result
of the transition to the new RFRs.
BNP Paribas Fortis has documented hedging relation-
ships in respect of the benchmark interest rates in the
scope of the reform, mainly Eonia, Euribor, and Libor.
For these hedging relationships, the hedged items and
hedging instruments will be progressively amended, where
necessary, to incorporate the new rates. The ‘Phase 1’
amendments to IAS 39 and IFRS 7 are applicable when
the contractual terms of the hedged instruments or of
the hedging instruments have not yet been amended (i.e.
with the inclusion of a “fallback” clause), or if they have
been amended, when the terms and the date of the transi
-
tion to the new benchmark interest rates have not been
clearly stipulated. Conversely, the ‘Phase 2’ amendments
are applicable when the contractual terms of the hedged
instruments or of the hedging instruments have been
amended, and the terms and date of transition to the new
benchmark interest rates have been clearly stipulated.
The notional amounts of hedging instruments documented
in the hedging relationships impacted by the benchmark
interest rate reform are presented in note 4.b Derivative
instruments used for hedging purposes.
As at December 31, 2021, 1,721 contracts remain backed by
USD Libor, including 1,285 contracts with a maturity date
beyond 30 June 2023, including 1,041 derivative contracts.
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In May 2021, the IFRIC (IFRS Interpretations Committee)
issued a proposal for a decision, validated by the
International Accounting Standards Board, which modi-
fies the way of calculating the social commitments for
certain defined benefit plans such as indemnities payable
on retirement. These plans, essentially French, gradually
grant entitlement to benefits which will only be paid in
the event of effective retirement while applying a cap to
the number of years of entitlement. Previously, benefits
were recognised on a straight-line basis from the date
of joining the company until the effective date of retire-
ment without taking into account the entitlements cap.
They are now recognised on a straight-line basis, from
the beginning of the acquisition of the rights up to the
date of retirement. The resulting adjustment net of tax of
EUR 3.9 million mainly relates to our French subsidiaries
and associates and is recognised as at 1 January 2021 as
an increase in Equity.
1
On 25 June 2020, the IASB published “Amendments to IFRS 17” including in particular the deferral of the mandatory initial application of IFRS 17 for two years.
The introduction of other standards, amendments and inter-
pretations that are mandatory as from 1 January 2021 had no
effect on the 2021 financial statements.
BNP Paribas Fortis did not early adopt any of the new
standards, amendments, and interpretations adopted by the
European Union, when the application in 2021 was optional.
1.a.2 New major accounting
standards, published but not
yet applicable
IFRS 17 ‘Insurance Contracts’, issued in May 2017 and amended
in June 2020, will replace IFRS 4 ‘Insurance Contracts’. It was
adopted by the European Union in November 2021 and shall
enter into force on a mandatory basis for fiscal years beginning
on or after 1 January 2023
1
.
1.b Segment reporting
The Bank considers that within the legal and regulatory scope
of BNP Paribas Fortis (‘controlled perimeter’), the nature and
financial effects of the business activities in which it engages
and the economic environments in which it operates are best
reflected through the following segments:
banking activities in Belgium;
banking activities in Luxembourg;
banking activities in Turkey;
other domestic markets;
other.
Operating segments are components of BNP Paribas Fortis:
that engage in business activities from which it may earn
revenues and incur expenses;
whose operating results are regularly reviewed by the
Board of Directors of BNP Paribas Fortis in order to make
decisions about resources to be allocated to that segment
and to assess its performance;
for which discrete financial information is available.
The Board of Directors of BNP Paribas Fortis is deemed to be
the chief operating decision maker (CODM) within the meaning
of IFRS 8 ‘Operating Segments’, jointly overseeing the activi-
ties, performance and resources of BNP Paribas Fortis.
BNP Paribas Fortis, like many other companies with diverse
operations, organises and reports financial information to the
CODM in more than one way.
BNP Paribas Fortis and the legal entities that are part of the
BNP Paribas Fortis Group exercise management control over
the full legal and regulatory scope, known as the ‘controlled
perimeter’, including the establishment of appropriate govern-
ance structures and control procedures.
Within this organisational structure and in the context of the
regulatory scope (‘controlled perimeter’) of BNP Paribas Fortis,
the operating segments mentioned above are best aligned
with the core principles and criteria for determining operating
segments as defined in IFRS 8 ‘Operating Segments’.
Transactions or transfers between the operating segments are
entered into under normal commercial terms and conditions
as would be the case with non-related third parties.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.c Consolidation
1.c.1 Scope of consolidation
The consolidated financial statements of BNP Paribas Fortis
include entities that are controlled by BNP Paribas Fortis,
jointly controlled, and under significant influence, with the
exception of those entities whose consolidation is regarded as
immaterial to BNP Paribas Fortis. Companies that hold shares
in consolidated companies are also consolidated.
Subsidiaries are consolidated from the date on which
BNP Paribas Fortis obtains effective control. Entities under
temporary control are included in the consolidated financial
statements until the date of disposal.
1.c.2 Consolidation methods
Exclusive control
Controlled enterprises are fully consolidated. BNP Paribas
Fortis controls a subsidiary when it is exposed, or has rights,
to variable returns from its involvement with the entity and
has the ability to affect those returns through its power over
the entity.
For entities governed by voting rights, BNP Paribas Fortis gen
-
erally controls the entity if it holds, directly or indirectly, the
majority of the voting rights (and if there are no contractual
provisions that alter the power of these voting rights) or if the
power to direct the relevant activities of the entity is conferred
on it by contractual agreements.
Structured entities are entities established so that they are
not governed by voting rights, for instance when those voting
rights relate to administrative tasks only, whereas the relevant
activities are directed by means of contractual arrangements.
They often have the following features or attributes: restricted
activities, a narrow and well-defined objective and insufficient
equity to permit them to finance their activities without sub-
ordinated financial support.
For these entities, the analysis of control shall consider the
purpose and design of the entity, the risks to which the entity is
designed to be exposed and to what extent BNP Paribas Fortis
absorbs the related variability. The assessment of control
shall consider all facts and circumstances able to determine
BNP Paribas Fortis’ practical ability to make decisions that
could significantly affect its returns, even if such decisions
are contingent on uncertain future events or circumstances.
In assessing whether it has power, BNP Paribas Fortis consid-
ers only substantive rights which it holds or which are held
by third parties. For a right to be substantive, the holder must
have the practical ability to exercise that right when decisions
about the relevant activities of the entity need to be made.
Control is reassessed if facts and circumstances indicate that
there are changes to one or more of the elements of control.
Where BNP Paribas Fortis contractually holds the decision-
making power, for instance where BNP Paribas Fortis acts as
fund manager, it shall determine whether it is acting as agent
or principal. Indeed, when associated with a certain level of
exposure to the variability of returns, this decision-making
power may indicate that BNP Paribas Fortis is acting on its
own account and that it thus has control over those entities.
Minority interests are presented separately in the consolidated
profit and loss account and balance sheet within consolidated
equity. The calculation of minority interests takes into account
the outstanding cumulative preferred shares classified as
equity instruments issued by subsidiaries, when such shares
are held outside BNP Paribas Fortis.
As regards fully consolidated funds, units held by third-party
investors are recognised as debts at fair value through profit
or loss, inasmuch as they are redeemable at fair value at the
subscriber’s initiative.
For transactions resulting in a loss of control, any equity
interest retained by BNP Paribas Fortis is remeasured at its
fair value through profit or loss.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Joint control
Where BNP Paribas Fortis carries out an activity with one
or more partners, sharing control by virtue of a contractual
agreement which requires unanimous consent on relevant
activities (those that significantly affect the entity’s returns),
BNP Paribas Fortis exercises joint control over the activity.
Where the jointly controlled activity is structured through a
separate vehicle in which the partners have rights to the net
assets, this joint venture is accounted for using the equity
method. Where the jointly controlled activity is not structured
through a separate vehicle or where the partners have rights
to the assets and obligations for the liabilities of the jointly
controlled activity, the BNP Paribas Fortis accounts for its
share of the assets, liabilities, revenues and expenses in
accordance with the applicable IFRS.
Significant influence
Companies over which BNP Paribas Fortis exercises significant
influence or associates are accounted for by the equity method.
Significant influence is the power to participate in the financial
and operating policy decisions of a company without exercis-
ing control. Significant influence is presumed to exist when
BNP Paribas Fortis holds, directly or indirectly, 20% or more
of the voting rights of a company. Interests of less than 20%
can be included in the consolidation scope if BNP Paribas
Fortis effectively exercises significant influence. This is the
case for example for entities developed in partnership with
other associates, where BNP Paribas Fortis participates in
strategic decisions of the enterprise through representation
on the Board of Directors or equivalent governing body, or
exercises influence over the enterprise’s operational manage-
ment by supplying management systems or senior managers,
or provides technical assistance to support the enterprise’s
development.
Changes in the net assets of associates (companies accounted
for under the equity method) are recognised on the assets side
of the balance sheet under ‘Investments in equity-method
entities’ and in the relevant component of shareholders’
equity. Goodwill recorded on associates is also included under
‘equity-method investments’.
Whenever there is an indication of impairment, the carry-
ing amount of the investment consolidated under the equity
method (including goodwill) is subjected to an impairment
test, by comparing its recoverable value (the higher of value-
in-use and market value less costs to sell) to its carrying
amount. Where appropriate, impairment is recognised under
‘Share of earnings of equity-method entities’ in the consoli-
dated income statement and can be reversed at a later date.
If BNP Paribas Fortis’ share of losses of an equity-method
entity equals or exceeds the carrying amount of its investment
in this entity, BNP Paribas Fortis discontinues including its
share of further losses. The investment is reported at nil value.
Additional losses of the equity-method entity are provided
for only to the extent that BNP Paribas Fortis has contracted
a legal or constructive obligation, or has made payments on
behalf of this entity.
Where BNP Paribas Fortis holds an interest in an associate,
directly or indirectly through an entity that is a venture
capital organisation, a mutual fund, an open-ended invest-
ment company or similar entity such as an investment-related
insurance fund, it may elect to measure that interest at fair
value through profit or loss.
Realised gains and losses on investments in consolidated
undertakings are recognised in the profit and loss account
under ‘Net gain on non-current assets’.
The consolidated financial statements are prepared using
uniform accounting policies for similar transactions and other
events occurring in similar circumstances.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.c.3 Consolidation rules
Elimination of intragroup balances and
transactions
Intragroup balances arising from transactions between
consolidated enterprises, and the transactions themselves
(including income, expenses and dividends), are eliminated.
Profits and losses arising from intragroup sales of assets are
eliminated, except where there is an indication that the asset
sold is impaired. Unrealised gains and losses included in the
value of financial instruments at fair value through equity are
maintained in the consolidated financial statements.
Translation of accounts expressed in foreign
currencies
The consolidated financial statements of BNP Paribas Fortis
are prepared in euros.
The financial statements of enterprises whose functional
currency is not the euro are translated using the closing rate
method. Under this method, all assets and liabilities, both
monetary and non-monetary, are translated using the spot
exchange rate at the balance sheet date. Income and expense
items are translated at the average rate for the period.
The same method is applied to the financial statements of
enterprises located in hyperinflationary economies, after
adjusting for the effects of inflation by applying a general
price index.
Differences arising from the translation of balance sheet items
and profit and loss items are recorded in shareholders’ equity
under ‘Exchange differences’ and in ‘Minority interests’ for the
portion attributable to outside investors. Under the optional
treatment permitted by IFRS 1, BNP Paribas Fortis has reset
to zero all translation differences, by booking all cumulative
translation differences attributable to shareholders and to
minority interests in the opening balance sheet at 1 January
2004 to retained earnings.
On liquidation or disposal of some or all of an interest held in
a foreign enterprise located outside the eurozone, leading to
a change in the nature of the investment (loss of control, loss
of significant influence or loss of joint control without keeping
a significant influence), the cumulative exchange difference
at the date of liquidation or sale, determined according to
the step method, is recognised in the profit and loss account.
Should the percentage of interest change without leading to
a modification in the nature of the investment, the exchange
difference is reallocated between the portion attributable to
shareholders and that attributable to minority interests, if
the entity is fully consolidated; if the entity is consolidated
under the equity method, it is recorded in profit or loss for
the portion related to the interest sold.
1.c.4 Business combination and
measurement of goodwill
Business combinations
Business combinations are accounted for using the pur-
chase method.
Under this method, the acquiree’s identifiable assets and lia-
bilities assumed are measured at fair value at the acquisition
date except for non-current assets classified as assets held for
sale, which are accounted for at fair value less costs to sell.
The acquiree’s contingent liabilities are not recognised in the
consolidated balance sheet unless they represent a present
obligation on the acquisition date and their fair value can be
measured reliably.
The cost of a business combination is the fair value, at the date
of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued to obtain control of the acquiree.
Costs directly attributable to the business combination are
treated as a separate transaction and recognised through
profit or loss.
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Any contingent consideration is included in the cost, as soon as
control is obtained, at fair value on the date when control was
acquired. Subsequent changes in the value of any contingent
consideration recognised as a financial liability are recognised
through profit or loss.
BNP Paribas Fortis may recognise any adjustments to the pro-
visional accounting within 12 months of the acquisition date.
Goodwill represents the difference between the cost of the
combination and the acquirer’s interest in the net fair value
of the identifiable assets and liabilities of the acquiree at
the acquisition date. Positive goodwill is recognised in the
acquirer’s balance sheet, while negative goodwill is recognised
immediately in profit or loss, on the acquisition date. Minority
interests are measured at their share of the fair value of the
acquiree’s identifiable assets and liabilities. However, for each
business combination, BNP Paribas Fortis can elect to measure
minority interests at fair value, in which case a proportion of
goodwill is allocated to them. To date, BNP Paribas Fortis has
never used this latter option.
Goodwill is recognised in the functional currency of the
acquiree and translated at the closing exchange rate.
On the acquisition date, any previously held equity interest in
the acquiree is remeasured at its fair value through profit or
loss. In the case of a step acquisition, the goodwill is therefore
determined by reference to the acquisition-date fair value.
Since the revised IFRS 3 has been applied prospectively, busi
-
ness combinations completed prior to 1 January 2010 were
not restated for the effects of changes to IFRS 3.
As permitted under IFRS 1, business combinations that took
place before 1 January 2004 and were recorded in accord-
ance with the previously applicable accounting standards
(Belgian GAAP), had not been restated in accordance with the
principles of IFRS 3.
1
The notion used under IAS 36 for homogenous group of businesses in “Cash-generating units”.
Measurement of goodwill
BNP Paribas Fortis tests goodwill for impairment on a
regular basis.
Cash-generating units
BNP Paribas Fortis has split all its activities into cash-gen-
erating units
1
. representing major business lines. This split is
consistent with the organisational structure and management
methods of BNP Paribas Fortis, and reflects the independence
of each unit in terms of results and management approach. It is
reviewed on a regular basis in order to take account of events
likely to affect the composition of cash-generating units, such
as acquisitions, disposals and major reorganisations.
Testing cash-generating units for impairment
Goodwill allocated to cash-generating units is tested for
impairment annually and whenever there is an indication that
a unit may be impaired, by comparing the carrying amount
of the unit with its recoverable amount. If the recoverable
amount is less than the carrying amount, an irreversible
impairment loss is recognised, and the goodwill is written
down by the excess of the carrying amount of the unit over
its recoverable amount.
Recoverable amount of a cash-generating unit
The recoverable amount of a cash-generating unit is the
higher of the fair value of the unit less costs to sell, and its
value in use.
Fair value is the price that would be obtained from selling
the unit at the market conditions prevailing at the date of
measurement, as determined mainly by reference to actual
prices of recent transactions involving similar entities or on
the basis of stock market multiples for comparable companies.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Value in use is based on an estimate of the future cash flows
to be generated by the cash-generating unit, derived from
the annual forecasts prepared by the unit’s management and
approved by the Executive Management, and from analyses
of changes in the relative positioning of the unit’s activities
on their market. These cash flows are discounted at a rate
that reflects the return that investors would require from an
investment in the business sector and region involved.
Transactions under common control
Transfers of assets or exchange of shares between entities
under common control do not fall within the scope of IFRS 3
‘Business Combinations’ or other IFRS standards. Therefore,
based on IAS 8, which requires management to use its judge-
ment in developing and applying an accounting policy that
1
Monetary assets and liabilities are assets and liabilities to be received or paid in fixed or determinable amounts of cash.
provides relevant and reliable financial statement informa-
tion, BNP Paribas Fortis has decided to adopt a predecessor
basis of accounting. Under this method, BNP Paribas Fortis,
as acquiring party, recognises those assets and liabilities at
their carrying amount as determined and reported by the
transferring entity in the consolidated financial statements of
BNP Paribas Fortis at the date of the transfer. Consequently,
no new goodwill (other than the existing goodwill relating to
either of the combining entities) is recognised. Any difference
between the consideration paid/transferred and the share in
the net assets measured at the predecessor carrying amount
is presented as an adjustment in equity. This predecessor
basis of accounting for the business combinations under
common control is applied prospectively from the date of
the acquisition.
1.d Translation of foreign currency transactions
The methods used to account for assets and liabilities relating
to foreign currency transactions entered into by BNP Paribas
Fortis, and to measure the foreign exchange risk arising on
such transactions, depend on whether the asset or liability in
question is classified as a monetary or a non-monetary item.
Monetary assets and liabilities
1
expressed in
foreign currencies
Monetary assets and liabilities expressed in foreign currencies
are translated into the functional currency of the relevant
entity at the closing rate. Foreign exchange differences are
recognised in the profit and loss account, except for those
arising from financial instruments designated as a cash flow
hedge or a net foreign investment hedge, which are recognised
in shareholders’ equity.
Non-monetary assets and liabilities
expressed in foreign currencies
Non-monetary assets may be measured either at historical
cost or at fair value. Non-monetary assets expressed in foreign
currencies are translated using the exchange rate at the date
of the transaction (i.e. date of initial recognition of the non-
monetary asset) if they are measured at historical cost, and
at the closing rate if they are measured at fair value.
Foreign exchange differences relating to non-monetary assets
denominated in foreign currencies and recognised at fair value
(equity instruments) are recognised in profit or loss when the
asset is classified in ‘Financial assets at fair value through
profit or loss’ and in equity when the asset is classified under
‘Financial assets at fair value through equity’.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.e Net interest income, commissions and income from other activities
1.e.1 Net interest income
Income and expenses relating to debt instruments measured
at amortised cost and at fair value through shareholders’
equity are recognised in the income statement using the effec-
tive interest rate method.
The effective interest rate is the rate that ensures the dis-
counted value of estimated future cash flows through the
expected life of the financial instrument or, when appropriate,
a shorter period, is equal to the carrying amount of the asset
or liability in the balance sheet. The effective interest rate
measurement takes into account all fees received or paid
that are an integral part of the effective interest rate of the
contract, transaction costs, and premiums and discounts.
Commissions considered as an additional component of
interest are included in the effective interest rate, and are
recognised in the profit and loss account in ‘Net interest
income’. This category includes notably commissions on
financing commitments when it is considered that the setting
up of a loan is more likely than unlikely. Commissions received
in respect of financing commitments are deferred until they
are drawn and then included in the effective interest rate
calculation and amortised over the life of the loan. Syndication
commissions are also included in this category for the portion
of the commission equivalent to the remuneration of other
syndication participants.
1.e.2 Commissions and income from
other activities
Commissions received with regards to banking and similar
services provided (except for those that are integral part of
the effective interest rate), revenues from property develop-
ment and revenues from services provided in connection with
lease contracts fall within the scope of IFRS 15 ‘Revenue from
Contracts with Customers’.
This standard defines a single model for recognising revenue
based on five-step principles. These five steps enable to
identify the distinct performance obligations included in the
contracts and allocate the transaction price among them. The
income related to those performance obligations is recognised
as revenue when the latter are satisfied, namely when the
control of the promised goods or services has been transferred.
The price of a service may contain a variable component.
Variable amounts may be recognised in the income statement
only if it is highly probable that the amounts recorded will not
result in a significant downward adjustment.
Commission
BNP Paribas Fortis records commission income and expense
in profit or loss:
either over time as the service is rendered when the client
receives continuous service. These include, for example,
certain commissions on transactions with customers when
services are rendered on a continuous basis, commissions
on financing commitments that are not included in the
interest margin, because the probability that they give
rise to the drawing up of a loan is low, commissions on
financial collateral, clearing commissions on financial
instruments, commissions related to trust and similar
activities, securities custody fees, etc.
Commissions received under financial guarantee com
-
mitments are deemed to represent the initial fair value
of the commitment. The resulting liability is subse-
quently amortised over the term of the commitment, in
Commission Income.
or at a point in time when the service is rendered, in
other cases. These include, for example, distribution fees
received, loan syndication fees remunerating the arrange-
ment service, advisory fees, etc.
Income from other activities
Income from services provided in connection with lease
contracts is recorded in profit or loss ‘Income from other
activities’ as the service is rendered, i.e. in proportion to the
costs incurred for maintenance contracts.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.f Financial assets and liabilities
Financial assets are classified at amortised cost, at fair value
through shareholders’ equity or at fair value through profit
or loss depending on the business model and the contractual
features of the instruments at initial recognition.
Financial liabilities are classified at amortised cost or at fair
value through profit or loss at initial recognition.
Financial assets and liabilities are recognised in the balance
sheet when BNP Paribas Fortis becomes a party to the con-
tractual provisions of the instrument. Purchases and sales
of financial assets made within a period established by the
regulations or by a convention in the relevant marketplace
are recognised in the balance sheet at the settlement date.
1.f.1 Financial assets at
amortised cost
Financial assets are classified at amortised cost if the follow-
ing two criteria are met: the business model objective is to
hold the instrument in order to collect the contractual cash
flows and the cash flows consist solely of payments relating
to principal and interest on the principal.
Business model criterion
Financial assets are managed within a business model whose
objective is to hold financial assets in order to collect cash
flows through the collection of contractual payments over the
life of the instrument.
The realisation of disposals close to the maturity of the instru-
ment and for an amount close to the remaining contractual
cash flows, or due to an increase in the counterparty’s credit
risk is consistent with a business model whose objective is to
collect the contractual cash flows (‘collect’). Sales imposed
by regulatory requirements or to manage the concentration
of credit risk (without an increase in the asset’s credit risk)
are also consistent with this business model when they are
infrequent or insignificant in value.
Cash flow criterion
The cash flow criterion is satisfied if the contractual terms
of the debt instrument give rise, on specified dates, to cash
flows that are solely repayments of principal and interest on
the principal amount outstanding.
The criterion is not met in the event of a contractual charac-
teristic that exposes the holder to risks or to the volatility of
contractual cash flows that are inconsistent with those of a
non-structured or ‘basic lending’ arrangement. It is also not
satisfied in the event of leverage that increases the variability
of the contractual cash flows.
Interest consists of consideration for the time value of money,
for the credit risk, and for the remuneration of other risks (e.g.
liquidity risk), costs (e.g. administration fees), and a profit
margin consistent with that of a basic lending arrangement.
The existence of negative interest does not call into question
the cash flow criterion.
The time value of money is the component of interest - usually
referred to as the ‘rate’ component - which provides consid-
eration for only the passage of time. The relationship between
the interest rate and the passage of time shall not be modified
by specific characteristics that would likely call into question
the respect of the cash flow criterion.
Thus, when the variable interest rate of the financial asset
is periodically reset on a frequency that does not match the
duration for which the interest rate is established, the time
value of money may be considered as modified and, depending
on the significance of that modification, the cash flow criterion
may not be met. Some financial assets held by BNP Paribas
Fortis present a mismatch between the interest rate reset
frequency and the maturity of the index, or interest rates
indexed on an average of benchmark rate. BNP Paribas Fortis
has developed a consistent methodology for analysing this
alteration of the time value of money.
Regulated rates meet the cash flow criterion when they
provide a consideration that is broadly consistent with the
passage of time and does not expose to risks or volatility in
the contractual cash flows that would be inconsistent with
those of a basic lending arrangement.
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Some contractual clauses may change the timing or the
amount of cash flows. Early redemption options do not call
into question the cash flow criterion if the prepayment amount
substantially represents the principal amount outstanding and
the interest thereon, which may include a reasonable compen-
sation for the early termination of the contract. For example,
as regards loans to retail customers, the compensation limited
to six months of interest or 3% of the capital outstanding is
considered as reasonable. Actuarial penalties, corresponding
to the discount value of the difference between the residual
contractual cash flows of the loan, and their reinvestment in
a loan to a similar counterparty or in the interbank market for
a similar residual maturity are also considered as reasonable,
even when the compensation can be positive or negative (i.e.
so called ‘symmetric’ compensations). An option that permits
the issuer or the holder of a financial instrument to change the
interest rate from floating to fixed rate does not breach the
cash flow criterion if the fixed rate is determined at origination,
or if it represents the time value of money for the residual
maturity of the instrument at the date of exercise of the option.
In the particular case of financial assets contractually linked
to payments received on a portfolio of underlying assets and
which include a priority order for payment of cash flows
between investors (‘tranches’), thereby creating concentra-
tions of credit risk, a specific analysis is carried out. The
contractual characteristics of the tranche and those of the
underlying financial instruments portfolios must meet the
cash flow criterion and the credit risk exposure of the tranche
must be equal or lower than the exposure to credit risk of the
underlying pool of financial instruments.
Certain loans may be ‘non-recourse’, either contractually, or in
substance when they are granted to a special purpose entity.
That is in particular the case of numerous project financing
or asset financing loans. The cash flow criterion is met as
long as these loans do not represent a direct exposure on
the assets acting as collateral. In practice, the sole fact that
the financial asset explicitly gives rise to cash flows that are
consistent with payments of principal and interest is not
sufficient to conclude that the instrument meets the cash
flows criterion. In that case, the particular underlying assets
to which there is limited recourse shall be analysed using the
‘look-through’ approach. If those assets do not themselves
meet the cash flows criterion, an assessment of the existing
credit enhancement is performed. The following aspects are
considered: structuring and sizing of the transaction, own
funds level of the structure, expected source of repayment,
volatility of the underlying assets. This analysis is applied to
‘non-recourse’ loans granted by BNP Paribas Fortis.
The ‘financial assets at amortised cost’ category includes,
in particular, loans granted by BNP Paribas Fortis, as well
as, reverse repurchase agreements and securities held by
BNP Paribas Fortis ALM Treasury in order to collect contractual
flows and meeting the cash flows criterion.
Recognition
On initial recognition, financial assets are recognised at their
fair value, including transaction costs directly attributable to
the transaction as well as commissions related to the origina-
tion of the loans.
They are subsequently measured at amortised cost, includ-
ing accrued interest and net of repayments of principal and
interest during the past period. These financial assets are also
subject from initial recognition to the measurement of a loss
allowance for expected credit losses (note 1.f.4).
Interest is calculated using the effective interest method
determined at inception of the contract.
1.f.2 Financial assets at fair value
through shareholders’ equity
Debt instruments
Debt instruments are classified at fair value through share-
holders’ equity if the following two criteria are met:
business model criterion: financial assets are held in
a business model whose objective is achieved by both
holding the financial assets in order to collect contractual
cash flows and selling the financial assets (‘collect and
sale’). The latter is not incidental but is an integral part
of the business model;
cash flow criterion: the principles are identical to those
applicable to financial assets at amortised cost.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
The securities held by BNP Paribas Fortis ALM Treasury in
order to collect contractual flows or to be sold and meeting the
cash flow criterion are in particular classified in this category.
On initial recognition, financial assets are recognised at their
fair value, including transaction costs directly attributable to
the transaction. They are subsequently measured at fair value
and changes in fair value are recognised, under a specific
line of shareholders’ equity entitled ‘Changes in assets and
liabilities recognised directly in equity that may be reclassified
to profit or loss’. These financial assets are also subject to the
measurement of a loss allowance for expected credit losses
on the same approach as for debt instruments at amortised
cost. The counterparty of the related impact in ‘Cost of risk’
is recognised in the same specific line of shareholders’ equity.
On disposal, changes in fair value previously recognised in
shareholders’ equity are reclassified to profit or loss.
In addition, interest is recognised in the income statement
using the effective interest method determined at the incep-
tion of the contract.
Equity instruments
Investments in equity instruments such as shares are classified
on option, and on a case by case basis, at fair value through
shareholders’ equity (under a specific line). On disposal of the
shares, changes in fair value previously recognised in equity
are not recognised in profit or loss. Only dividends, if they
represent remuneration for the investment and not repayment
of capital, are recognised in profit or loss. These instruments
are not subject to impairment.
Investments in mutual funds puttable to the issuer do not
meet the definition of equity instruments. They do not meet
the cash flow criterion either, and thus are recognised at fair
value through profit or loss.
1.f.3 Financing and
guarantee commitments
Financing and financial guarantee commitments that are not
recognised as derivative instruments at fair value through
profit or loss are presented in the note relating to Financing
and guarantee commitments. They are subject to the measure-
ment of a loss allowance for expected credit losses. These loss
allowances are presented under ‘provisions for contingencies
and charges’.
1.f.4 Impairment of financial assets
measured at amortised cost and debt
instruments measured at fair value
through shareholders’ equity
The impairment model for credit risk is based on
expected losses.
This model applies to loans and debt instruments measured
at amortised cost or fair value through equity, to loan com-
mitments and financial guarantee contracts that are not
recognised at fair value, as well as to lease receivables, trade
receivables and contract assets.
General model
BNP Paribas Fortis identifies three stages that correspond
each to a specific status with regards to the evolution of coun-
terparty credit risk since the initial recognition of the asset.
12-month expected credit losses (‘Stage 1’): If at the
reporting date, the credit risk of the financial instrument
has not increased significantly since its initial recogni-
tion, this instrument is impaired at an amount equal to
12-month expected credit losses (resulting from the risk
of default within the next 12 months);
Lifetime expected credit losses for non-impaired assets
(‘Stage 2’): The loss allowance is measured at an amount
equal to the lifetime expected credit losses if the credit
risk of the financial instrument has increased significantly
since initial recognition, but the financial asset is not
considered credit impaired or doubtful;
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Lifetime expected credit losses for credit-impaired or
doubtful financial assets (‘Stage 3’): the loss allowance
is also measured for an amount equal to the lifetime
expected credit losses.
This general model is applied to all instruments within the
scope of IFRS 9 impairment, except for purchased or originated
credit-impaired financial assets and instruments for which a
simplified model is used (see below).
The IFRS 9 expected credit loss approach is symmetrical, i.e.
if lifetime expected credit losses have been recognised in a
previous reporting period, and if it is assessed in the current
reporting period that there is no longer any significant increase
in credit risk since initial recognition, the loss allowance
reverts to a 12-months expected credit loss.
As regards interest income, under ‘stage’ 1 and 2, it is calcu-
lated on the gross carrying amount. Under Stage 3, interest
income is calculated on the amortised cost (i.e. the gross
carrying amount adjusted for the loss allowance).
Definition of default
The definition of default is aligned with the Basel regulatory
default definition, with a rebuttable presumption that the
default occurs no later than 90 days past-due. This definition
takes into account the EBA guidelines of 28 September 2016,
notably those regarding the thresholds applicable for the
counting of past-due and probation periods.
The definition of default is used consistently for assessing the
increase in credit risk and measuring expected credit losses.
Credit-impaired or doubtful financial assets
Definition
A financial asset is considered credit-impaired or doubtful
and classified in Stage 3 when one or more events that have
a detrimental impact on the estimated future cash flows of
that financial asset have occurred.
At an individual level, objective evidence that a financial asset
is credit-impaired includes observable data regarding the fol-
lowing events:
the existence of accounts that are more than 90
days past due;
knowledge or indications that the borrower meets
significant financial difficulties, such that a risk can be
considered to have arisen regardless of whether the bor-
rower has missed any payments;
concessions with respect to the credit terms granted to
the borrower that the lender would not have considered
had the borrower not been meeting financial difficulty
(see section ‘Restructuring of financial assets for financial
difficulties’).
Specific cases of purchased or originated credit-
impaired assets
In some cases, financial assets are credit-impaired at their
initial recognition.
For these assets, there is no loss allowance accounted for
at initial recognition. The effective interest rate is calculated
taking into account the lifetime expected credit losses in the
initial estimated cash flows. Any change in lifetime expected
credit losses since initial recognition, positive or negative, is
recognised as a loss allowance adjustment in profit or loss.
Simplified model
The simplified approach consists in accounting for a loss
allowance corresponding to lifetime expected credit losses
since initial recognition, and at each reporting date.
BNP Paribas Fortis applies this model to trade receivables
with a maturity shorter than 12 months.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Significant increase in credit risk
A significant increase in credit risk may be assessed on an
individual basis or on a collective basis (by grouping financial
instruments according to common credit risk characteristics)
taking into account all reasonable and supportable information
and comparing the risk of default of the financial instrument
at the reporting date with the risk of default of the financial
instrument at the date of initial recognition.
Assessment of deterioration is based on the comparison of
the probabilities of default or the ratings on the date of initial
recognition with those existing at the reporting date.
There is also, according to the standard, a rebuttable pre-
sumption that the credit risk of an instrument has significantly
increased since initial recognition when the contractual pay-
ments are more than 30 days past due.
In the consumer credit specialised business, a significant
increase in credit risk is also considered when a past due
event has occurred within the last 12 months, even if it has
since been regularised.
In the context of the health crisis, the granting of moratoria
that meet the criteria defined in the EBA guidelines published
on 2 April 2020, and amended on 2 December 2020, has not
been considered, in isolation, as an indicator of a significant
increase in credit risk leading to an automatic transfer to stage
2. The granting of “private” moratoria that meet equivalent
criteria to those defined in the EBA guidelines has followed
the same treatment. Moratoria do not trigger the counting
of past-due days as long as the new schedule of payment
is respected.
The principles applied to assess the significant increase in
credit risk are detailed in note 2.g ‘Cost of risk’.
Measurement of expected credit losses
Expected credit losses are defined as an estimate of credit
losses (i.e. the present value of all cash shortfalls) weighted
by the probability of occurrence of these losses over the
expected life of financial instruments. They are measured on
an individual basis, for all exposures.
In practice, for exposures classified in Stage 1 and Stage 2,
expected credit losses are measured as the product of the
probability of default (‘PD’), loss given default (‘LGD’) and
exposure at default (‘EAD’), discounted at the effective interest
rate of the exposure (EIR). They result from the risk of default
within the next 12 months (Stage 1), or from the risk of default
over the maturity of the facility (Stage 2). In the consumer
credit specialised business, because of the specificity of credit
exposures, the methodology used is based on the probability
of transition to term forfeiture, and on discounted loss rates
after term forfeiture. The measurement of these parameters is
performed on a statistical basis for homogeneous populations.
For exposures classified in Stage 3, expected credit losses
are measured as the value, discounted at the effective inter-
est rate, of all cash shortfalls over the life of the financial
instrument. Cash shortfalls represent the difference between
the cash flows that are due in accordance with the contract,
and the cash flows that are expected to be received. Where
appropriate, the estimate of expected cash flows takes into
account a cash flow scenario arising from the sale of the
defaulted loan or group of loans. The proceeds of sale are
net of costs to sell.
The methodology developed is based on existing concepts and
methods (in particular the Basel framework) on exposures
for which capital requirement for credit risk is measured
according to the IRBA methodology. This method is also
applied to portfolios for which capital requirement for credit
risk is measured according to the standardised approach.
Besides, the Basel framework has been adjusted in order to
be compliant with IFRS 9 requirements, in particular the use
of forward-looking information.
Maturity
All contractual terms of the financial instrument are taken
into account, including prepayment, extension and similar
options. In the rare cases where the expected life of the finan-
cial instrument cannot be estimated reliably, the residual
contractual term is used.
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
The standard specifies that the maximum period to consider
when measuring expected credit losses is the maximum
contractual period. However, for revolving credit cards and
overdrafts, in accordance with the exception provided by IFRS
9 for these products, the maturity considered for expected
credit losses measurement is the period over which the
entity is exposed to credit risk, which may extend beyond the
contractual maturity (notice period). For revolving credits
and overdrafts to non-retail counterparties, the contractual
maturity can be taken, for example if the next review date is
the contractual maturity as they are individually managed.
Probabilities of Default (PD)
The Probability of Default is an estimate of the likelihood of
default over a given time horizon.
The measurement of expected credit losses requires the
estimation of both 1 year probabilities of default and lifetime
probabilities of default:
1-year PDs are derived from long-term average regulatory
‘through the cycle’ PDs to reflect the current situation
(‘point in time’ or ‘PIT’);
lifetime PDs are determined from the rating migration
matrices reflecting the expected rating evolution of the
exposure until maturity, and the associated probabilities
of default.
Loss Given Default (LGD)
Loss Given Default is the difference between contractual cash
flows and expected cash flows, discounted using the effective
interest rate (or an approximation thereof) at the default date.
The LGD is expressed as a percentage of the EAD.
The estimate of expected cash flows takes into account cash
flows resulting from the sale of collateral held or other credit
enhancements if they are part of the contractual terms and
are not accounted for separately by the entity (for example, a
mortgage associated with a residential loan), net of the costs
of obtaining and selling the collateral.
For state-guaranteed loans originated in the context of the
health crisis, the guarantee is considered as integral to the
loan agreement if it is embedded in the contractual clauses of
the loan, or it was granted at origination of the loan, and if the
expected reimbursement amount can be attached to a loan in
particular (i.e. absence of pooling effect by means of a tranch-
ing mechanism, or the existence of a global cap for a whole
portfolio). In such case, the guarantee is taken into account
when measuring the expected credit losses. Otherwise, it is
accounted for as a separate reimbursement asset.
The LGD used for IFRS 9 purposes is derived from the Basel
LGD parameters. It is retreated for downturn and conservatism
margins (in particular regulatory margins), except for margins
for model uncertainties.
Exposure At Default (EAD)
The Exposure At Default (EAD) of an instrument is the antici-
pated outstanding amount owed by the obligor at the time
of default. It is determined by the expected payment profile
taking into account, depending on the product type: the con-
tractual repayment schedule, expected early repayments and
expected future drawings for revolving facilities.
Forward looking
The amount of expected credit losses is measured on the
basis of probability-weighted scenarios, in view of past events,
current conditions and reasonable and supportable economic
forecasts.
The principles applied to take into account forward looking
information when measuring expected credit losses are
detailed in note 2.g ‘Cost of risk’.
Write-offs
A write-off consists in reducing the gross carrying amount of a
financial asset when there are no longer reasonable expecta-
tions of recovering that financial asset in its entirety or a
portion thereof, or when it has been fully or partially forgiven.
The write-off is recorded when all other means available to
the Bank for recovering the receivables or guarantees have
failed, and also generally depends on the context specific to
each jurisdiction.
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
If the amount of loss on write-off is greater than the accu-
mulated loss allowance, the difference is an additional
impairment loss posted in ‘Cost of risk’. For any receipt
occurring when the financial asset (or part of it) is no longer
recognised on the balance-sheet, the amount received is
recorded as an impairment gain in ‘Cost of risk’.
Recoveries through the repossession of the
collateral
When a loan is secured by a financial or a non-financial asset
serving as a guarantee and the counterparty is in default,
BNP Paribas Fortis may decide to exercise the guarantee
and, according to the jurisdiction, it may then become owner
of the asset. In such a situation, the loan is written-off in
counterparty of the asset received as collateral.
Once ownership of the asset is carried out, it is accounted
for at fair value and classified according to the intent of use.
Restructuring of financial assets for
financial difficulties
A restructuring due to the borrower’s financial difficulties is
defined as a change in the terms and conditions of the initial
transaction that BNP Paribas Fortis is considering only for
economic or legal reasons related to the borrower’s financial
difficulties.
For restructurings not resulting in derecognition of the finan-
cial asset, the restructured asset is subject to an adjustment
of its gross carrying amount, to reduce it to the discounted
amount, at the original effective interest rate of the asset, of
the new expected future flows. The change in the gross carry-
ing amount of the asset is recorded in the income statement
in ‘Cost of risk’.
The existence of a significant increase in credit risk for the
financial instrument is then assessed by comparing the risk of
default after the restructuring (under the revised contractual
terms) and the risk of default at the initial recognition date
(under the original contractual terms). In order to demonstrate
that the criteria for recognising lifetime expected credit losses
are no longer met, good quality payment behaviour will have
to be observed over a certain period of time.
1
Moratoria qualified as «COVID-19 General moratorium Measure» (i.e. meeting the criteria defined in EBA Guidelines published on 2 April 2020) or similar
measures that do not lead to a transfer in stage 3.
When the restructuring consists of a partial or total exchange
against other substantially different assets (for example, the
exchange of a debt instrument against an equity instrument), it
results in the extinction of the original asset and the recogni-
tion of the assets remitted in exchange, measured at their
fair value at the date of exchange. The difference in value is
recorded in the income statement in ‘Cost of risk’.
As a reminder, in response to the health crisis, several mora-
toria have been granted to clients. These moratoria mostly
consisted in payment suspension of a few months, with inter-
ests that may or not continue to accrue during the suspension
period. To that extent, the modification was generally con-
sidered as not substantial. The associated discount (linked to
the absence of interest accruing, or interest accruing at a rate
that was lower than the EIR of the loan) was thus accounted
for in NBI, subject to the respect of certain criteria
1
. In such
cases, the moratorium was considered as not being granted
in response to the borrower encountering financial difficulties,
but in response to a temporary liquidity crisis and the credit
risk was not considered to have significantly increased.
Modifications to financial assets that are not due to a bor-
rower’s financial difficulties, or granted in the context of a
moratorium (i.e. commercial renegotiations) are generally
analysed as the early repayment of the former financial asset,
which is then derecognised, followed by the set-up of a new
financial asset at market conditions. They consist in reset-
ting the interest rate of the loan at market conditions, with
the client being in a position to change its lender and not
encountering any financial difficulties.
Probation periods
BNP Paribas Fortis applies observation periods to assess the
possible return to a better stage. Thus, a probation period of
three months is observed for the transition from stage 3 to
stage 2. This period is extended to 12 months in the event of
restructuring due to financial difficulties.
For the transition from stage 2 to stage 1, a probation period
of two years is observed for loans that have been restructured
due to financial difficulties.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.f.5 Cost of risk
‘Cost of risk’ includes the following items of profit or loss:
impairment gains and losses resulting from the accounting
of loss allowances for 12-month expected credit losses
and lifetime expected credit losses (‘Stage 1’ and ‘Stage
2’) relating to debt instruments measured at amortised
cost or at fair value through shareholders’ equity, loan
commitments and financial guarantee contracts that are
not recognised at fair value as well as lease receivables,
contract assets and trade receivables;
impairment gains and losses resulting from the accounting
of loss allowances relating to financial assets (including
those at fair value through profit or loss) for which there
is objective evidence of impairment (‘Stage 3’), write-offs
on irrecoverable loans and amounts recovered on loans
written-off.
It also includes expenses relating to fraud and to disputes
inherent to the financing activity.
1.f.6 Financial instruments at fair
value through profit or loss
Trading portfolio and other financial assets
measured at fair value through profit or loss
The trading portfolio includes instruments held for trading
(trading transactions), including derivatives.
Other financial assets measured at fair value through profit or
loss include debt instruments that do not meet the ‘collect’
or ‘collect and sale’ business model criterion or that do not
meet the cash flow criterion, as well as equity instruments
for which the fair value through shareholders’ equity option
has not been retained.
All those financial instruments are measured at fair value
at initial recognition, with transaction costs directly posted
in profit or loss. At reporting date, they are measured at fair
value, with changes presented in ‘Net gain/loss on financial
instruments at fair value through profit or loss’. Income,
dividends and realised gains and losses on disposal related
to held-for-trading transactions are accounted for in the same
profit or loss account.
Financial liabilities designated as at fair
value through profit or loss
Financial liabilities are recognised under option in this cat-
egory in the two following situations:
for hybrid financial instruments containing one or more
embedded derivatives which otherwise would have been
separated and accounted for separately. An embedded
derivative is such that its economic characteristics and
risks are not closely related to those of the host contract;
when using the option enables the entity to eliminate
or significantly reduce a mismatch in the measurement
and accounting treatment of assets and liabilities that
would otherwise arise if they were to be classified in
separate categories.
Changes in fair value due to the own credit risk are recognised
under a specific heading of shareholders’ equity.
1.f.7 Financial liabilities and
equity instruments
A financial instrument issued or its various components
are classified as a financial liability or equity instrument, in
accordance with the economic substance of the legal contract.
Financial instruments issued by BNP Paribas Fortis are
qualified as debt instruments if the entity in the Group of
BNP Paribas Fortis issuing the instruments has a contractual
obligation to deliver cash or another financial asset to the
holder of the instrument. The same applies if BNP Paribas
Fortis is required to exchange financial assets or financial
liabilities with another entity under conditions that are
potentially unfavourable to BNP Paribas Fortis, or to deliver a
variable number of BNP Paribas Fortis’ own equity instruments.
Equity instruments result from contracts evidencing a residual
interest in an entity’s assets after deducting all of its liabilities.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Debt securities and subordinated debt
Debt securities and subordinated debt are measured at amor-
tised cost unless they are recognised at fair value through
profit or loss.
Debt securities are initially recognised at the issue value
including transaction costs, and are subsequently measured
at amortised cost using the effective interest method.
Bonds redeemable or convertible into own equity are hybrid
instruments that may contain a debt component and an
equity component, determined upon initial recognition of the
transaction.
Equity instruments
The term ‘own equity instruments’ refers to shares issued by
BNP Paribas Fortis and by its fully consolidated subsidiaries.
External costs that are directly attributable to an issue of
new shares are deducted from equity net of all related taxes.
Own equity instruments held by BNP Paribas Fortis, also
known as treasury shares, are deducted from consolidated
shareholders’ equity irrespective of the purpose for which
they are held. Gains and losses arising on such instruments
are eliminated from the consolidated profit and loss account.
When BNP Paribas Fortis acquires equity instruments issued
by subsidiaries under the exclusive control of BNP Paribas
Fortis, the difference between the acquisition price and the
share of net assets acquired is recorded in retained earnings
attributable to shareholders of BNP Paribas Fortis. Similarly,
the liability corresponding to put options granted to minority
shareholders in such subsidiaries, and changes in the value
of that liability, are offset against minority interests, with
any surplus offset against retained earnings attributable to
BNP Paribas Fortis shareholders. Until these options have been
exercised, the portion of net income attributable to minority
interests is allocated to minority interests in the profit and loss
account. A decrease in BNP Paribas Fortis’ interest in a fully
consolidated subsidiary is recognised in BNP Paribas Fortis’
accounts as a change in shareholders’ equity.
Financial instruments issued by BNP Paribas Fortis and clas-
sified as equity instruments (e.g. Undated Super Subordinated
Notes) are presented in the balance sheet in ‘Capital and
retained earnings’.
Distributions from a financial instrument classified as an equity
instrument are recognised directly as a deduction from equity.
Similarly, the transaction costs of an instrument classified as
equity are recognised as a deduction from shareholders’ equity.
Own equity instrument derivatives are treated as follows,
depending on the method of settlement:
as equity instruments if they are settled by physical deliv-
ery of a fixed number of own equity instruments for a fixed
amount of cash or other financial asset. Such instruments
are not revalued;
as derivatives if they are settled in cash or by choice
by physical delivery of the shares or in cash. Changes
in value of such instruments are taken to the profit and
loss account.
If the contract includes an obligation, whether contingent
or not, for the Bank to repurchase its own shares, the Bank
recognises the debt at its present value with an offsetting
entry in shareholders’ equity.
1.f.8 Hedge accounting
BNP Paribas Fortis retained the option provided by the stand-
ard to maintain the hedge accounting requirements of IAS 39
until the future standard on macro-hedging is entered into
force. Furthermore, IFRS 9 does not explicitly address the fair
value hedge of the interest rate risk on a portfolio of financial
assets or liabilities. The provisions in IAS 39 for these portfolio
hedges, as adopted by the European Union, continue to apply.
Derivatives contracted as part of a hedging relationship are
designated according to the purpose of the hedge.
Fair value hedges are particularly used to hedge interest rate
risk on fixed rate assets and liabilities, both for identified
financial instruments (securities, debt issues, loans, borrow-
ings) and for portfolios of financial instruments (in particular,
demand deposits and fixed rate loans).
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Cash flow hedges are particularly used to hedge interest rate
risk on floating-rate assets and liabilities, including rollovers,
and foreign exchange risks on highly probable forecast foreign
currency revenues.
At the inception of the hedge, BNP Paribas Fortis prepares
formal documentation which details the hedging relation-
ship, identifying the instrument, or portion of the instrument,
or portion of risk that is being hedged, the hedging strategy
and the type of risk hedged, the hedging instrument, and
the methods used to assess the effectiveness of the hedging
relationship.
On inception and at least quarterly, BNP Paribas Fortis
assesses, in consistency with the original documentation, the
actual (retrospective) and expected (prospective) effectiveness
of the hedging relationship. Retrospective effectiveness tests
are designed to assess whether the ratio of actual changes
in the fair value or cash flows of the hedging instrument to
those in the hedged item is within a range of 80% to 125%.
Prospective effectiveness tests are designed to ensure that
expected changes in the fair value or cash flows of the deriva-
tive over the residual life of the hedge adequately offset those
of the hedged item. For highly probable forecast transactions,
effectiveness is assessed largely on the basis of historical data
for similar transactions.
Under IAS 39 as adopted by the European Union, which
excludes certain provisions on portfolio hedging, interest rate
risk hedging relationships based on portfolios of assets or
liabilities qualify for fair value hedge accounting as follows:
the risk designated as being hedged is the interest rate
risk associated with the interbank rate component of
interest rates on commercial banking transactions (loans
to customers, savings accounts and demand deposits);
the instruments designated as being hedged correspond,
for each maturity band, to a portion of the interest rate
gap associated with the hedged underlying;
the hedging instruments used consist exclusively of ‘plain
vanilla’ swaps;
prospective hedge effectiveness is established by the fact
that all derivatives must, on inception, have the effect
of reducing interest rate risk in the portfolio of hedged
underlying. Retrospectively, a hedge will be disqualified
from hedge accounting once a shortfall arises in the
underlying specifically associated with that hedge for each
maturity band (due to prepayment of loans or withdrawals
of deposits).
The accounting treatment of derivatives and hedged items
depends on the hedging strategy.
In a fair value hedging relationship, the derivative instru-
ment is remeasured at fair value in the balance sheet, with
changes in fair value recognised in profit or loss in ‘Net gain/
loss on financial instruments at fair value through profit or
loss’, symmetrically with the remeasurement of the hedged
item to reflect the hedged risk. In the balance sheet, the fair
value remeasurement of the hedged component is recognised
in accordance with the classification of the hedged item in the
case of a hedge of identified assets and liabilities, or under
‘Remeasurement adjustment on interest rate risk hedged
portfolios’ in the case of a portfolio hedging relationship.
If a hedging relationship ceases or no longer fulfils the effec-
tiveness criteria, the hedging instrument is transferred to the
trading book and accounted for using the treatment applied to
this category. In the case of identified fixed-income instruments,
the remeasurement adjustment recognised in the balance sheet
is amortised at the effective interest rate over the remaining life
of the instrument. In the case of interest rate risk hedged fixed-
income portfolios, the adjustment is amortised on a straight-line
basis over the remainder of the original term of the hedge. If
the hedged item no longer appears in the balance sheet, in
particular due to prepayments, the adjustment is taken to the
profit and loss account immediately.
In a cash flow hedging relationship, the derivative is measured
at fair value in the balance sheet, with changes in fair value
taken to shareholders’ equity on a separate line, ‘Changes in
fair value recognised directly in equity’. The amounts taken to
shareholders’ equity over the life of the hedge are transferred
to the profit and loss account under ‘Net interest income’ as
and when the cash flows from the hedged item impact profit
or loss. The hedged items continue to be accounted for using
the treatment specific to the category to which they belong.
If the hedging relationship ceases or no longer fulfils the
effectiveness criteria, the cumulative amounts recognised
in shareholders’ equity as a result of the remeasurement of
the hedging instrument remain in equity until the hedged
transaction itself impacts profit or loss, or until it becomes
clear that the transaction will not occur, at which point they
are transferred to the profit and loss account.
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
If the hedged item ceases to exist, the cumulative amounts
recognised in shareholders’ equity are immediately taken to
the profit and loss account.
Whatever the hedging strategy used, any ineffective portion of
the hedge is recognised in the profit and loss account under
‘Net gain/loss on financial instruments at fair value through
profit or loss’.
Hedges of net foreign currency investments in subsidiaries
and branches are accounted for in the same way as cash
flow hedges. Hedging instruments may be foreign exchange
derivatives or any other non-derivative financial instrument.
1.f.9 Determination of fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants in the principal market or most advanta-
geous market, at the measurement date.
BNP Paribas Fortis determines the fair value of financial
instruments either by using prices obtained directly from
external data or by using valuation techniques. These valua-
tion techniques are primarily market and income approaches
encompassing generally accepted models (e.g. discounted cash
flows, Black-Scholes model, and interpolation techniques).
They maximise the use of observable inputs and minimise
the use of unobservable inputs. They are calibrated to reflect
current market conditions and valuation adjustments are
applied as appropriate, when some factors such as model,
liquidity and credit risks are not captured by the models or
their underlying inputs but are nevertheless considered by
market participants when setting the exit price.
The unit of measurement is the individual financial asset or
financial liability but a portfolio-based measurement can be
elected subject to certain conditions. Accordingly, BNP Paribas
Fortis retains this portfolio-based measurement exception
to determine the fair value when some group of financial
assets and financial liabilities and other contracts within the
scope of the standard relating to financial instruments with
substantially similar and offsetting market risks or credit risks
are managed on the basis of a net exposure, in accordance
with the documented risk management strategy.
Assets and liabilities measured or disclosed at fair value are
categorised into the three following levels of the fair value
hierarchy:
Level 1: fair values are determined using directly quoted
prices in active markets for identical assets and liabilities.
Characteristics of an active market include the existence
of a sufficient frequency and volume of activity and of
readily available prices;
Level 2: fair values are determined based on valuation
techniques for which significant inputs are observable
market data, either directly or indirectly. These techniques
are regularly calibrated and the inputs are corroborated
with information from active markets;
Level 3: fair values are determined using valuation tech-
niques for which significant inputs are unobservable or
cannot be corroborated by market-based observations, due
for instance to illiquidity of the instrument and significant
model risk. An unobservable input is a parameter for which
there are no market data available and that is therefore
derived from proprietary assumptions about what other
market participants would consider when assessing fair
value. The assessment of whether a product is illiquid or
subject to significant model risks is a matter of judgment.
The level in the fair value hierarchy within which the asset or
liability is categorised in its entirety is based upon the lowest
level input that is significant to the entire fair value.
For financial instruments disclosed in Level 3 of the fair value
hierarchy and marginally some instruments disclosed in Level
2, a difference between the transaction price and the fair value
may arise at initial recognition. This ‘Day One Profit’ is deferred
and released to the profit and loss account over the period
during which the valuation parameters are expected to remain
non-observable. When parameters that were originally non-
observable become observable, or when the valuation can be
substantiated in comparison with recent similar transactions
in an active market, the unrecognised portion of the day one
profit is released to the profit and loss account.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.f.10 Derecognition of financial assets
and financial liabilities
Derecognition of financial assets
BNP Paribas Fortis derecognises all or part of a financial asset
either when the contractual rights to the cash flows from the
asset expire or when BNP Paribas Fortis transfers the contrac-
tual rights to the cash flows from the asset and substantially
all the risks and rewards of ownership of the asset. Unless
these conditions are fulfilled, BNP Paribas Fortis retains the
asset in its balance sheet and recognises a liability for the
obligation created as a result of the transfer of the asset.
Derecognition of financial liabilities
BNP Paribas Fortis derecognises all or part of a financial
liability when the liability is extinguished in full or in part.
Repurchase agreements and securities
lending/borrowing
Securities temporarily sold under repurchase agreements
continue to be recognised in the BNP Paribas Fortis balance
sheet in the category of securities to which they belong. The
corresponding liability is recognised at amortised cost under
the appropriate ‘Financial liabilities at amortised cost’ cat-
egory on the balance sheet, except in the case of repurchase
agreements contracted for trading purposes, for which the
corresponding liability is recognised in ‘Financial liabilities
at fair value through profit or loss’.
Securities temporarily acquired under reverse repurchase
agreements are not recognised in the BNP Paribas Fortis
balance sheet. The corresponding receivable is recognised
at amortised cost under the appropriate ‘Financial assets at
amortised cost’ category in the balance sheet, except in the
case of reverse repurchase agreements contracted for trading
purposes, for which the corresponding receivable is recognised
in ‘Financial assets at fair value through profit or loss’.
Securities lending transactions do not result in derecognition
of the lent securities, and securities borrowing transactions
do not result in recognition of the borrowed securities on
the balance sheet. In cases where the borrowed securities
are subsequently sold by BNP Paribas Fortis, the obligation
to deliver the borrowed securities on maturity is recognised
on the balance sheet under ‘financial liabilities at fair value
through profit or loss’.
1.f.11 Offsetting financial assets and
financial liabilities
A financial asset and a financial liability are offset and the
net amount presented in the balance sheet if, and only if,
BNP Paribas Fortis has a legally enforceable right to set
off the recognised amounts, and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
Repurchase agreements and derivatives that meet the two
criteria set out in the accounting standard are offset in the
balance sheet.
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.g Property, plant, equipment and intangible assets
Property, plant and equipment and intangible assets shown in
the consolidated balance sheet are composed of assets used
in operations and investment property. Rights-of-use related
to leased assets (see note 1.h.2) are presented by the lessee
within fixed assets in the same category as similar assets held.
Assets used in operations are those used in the provision of
services or for administrative purposes, and include non-
property assets leased by BNP Paribas Fortis as lessor under
operating leases.
Investment property comprises property assets held to gener-
ate rental income and capital gains and is recognised at cost.
Property, plant and equipment and intangible assets are ini-
tially recognised at purchase price plus directly attributable
costs, together with borrowing costs where a long period of
construction or adaptation is required before the asset can be
brought into service.
Software developed internally by BNP Paribas Fortis that fulfils
the criteria for capitalisation is capitalised at direct develop-
ment cost, which includes external costs and the labour costs
of employees directly attributable to the project.
Subsequent to initial recognition, property, plant and equipment
and intangible assets are measured at cost less accumulated
depreciation or amortisation and any impairment losses.
The depreciable amount of property, plant and equipment and
intangible assets is calculated after deducting the residual
value of the asset. Only assets leased by BNP Paribas Fortis
as the lessor under operating leases are presumed to have a
residual value, as the useful life of property, plant and equip-
ment and intangible assets used in operations is generally the
same as their economic life.
Property, plant and equipment and intangible assets are
depreciated or amortised using the straight-line method over
the useful life of the asset. Depreciation and amortisation
expense is recognised in the profit and loss account under
‘Depreciation, amortisation and impairment of property, plant
and equipment and intangible assets’.
Where an asset consists of a number of components which
may require replacement at regular intervals, or which have
different uses or generate economic benefits at different rates,
each component is recognised separately and depreciated
using a method appropriate to that component. BNP Paribas
Fortis has adopted the component-based approach for prop-
erty used in operations and for investment property.
The depreciation periods used for office property are as
follows: 80 years or 60 years for the shell (for prime and
other property respectively); 30 years for facades; 20 years for
general and technical installations; and 10 years for fixtures
and fittings.
Software is amortised, depending on its type, over periods of
no more than 8 years in the case of infrastructure develop-
ments and 3 years or 5 years in the case of software developed
primarily for the purpose of providing services to customers.
Software maintenance costs are expensed as incurred.
However, expenditure that is regarded as upgrading the
software or extending its useful life is included in the initial
acquisition or production cost.
Depreciable property, plant and equipment and intangible
assets are tested for impairment if there is an indication
of potential impairment at the balance sheet date. Non-
depreciable assets are tested for impairment at least annually,
using the same method as for goodwill allocated to cash-
generating units.
If there is an indication of impairment, the new recoverable
amount of the asset is compared with the carrying amount. If
the asset is found to be impaired, an impairment loss is rec-
ognised in the profit and loss account. This loss is reversed in
the event of a change in the estimated recoverable amount or
if there is no longer an indication of impairment. Impairment
losses are taken to the profit and loss account in ‘Depreciation,
amortisation and impairment of property, plant and equipment
and intangible assets’.
Gains and losses on disposals of property, plant and equipment
and intangible assets used in operations are recognised in the
profit and loss account in ‘Net gain on non-current assets’.
Gains and losses on disposals of investment property are
recognised in the profit and loss account in ‘Income from other
activities’ or ‘Expense on other activities’.
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.h Leases
BNP Paribas Fortis’ companies may either be the lessee or the
lessor in a lease agreement.
1.h.1 BNP Paribas Fortis as lessor
Leases contracted by BNP Paribas Fortis as lessor are catego-
rised as either finance leases or operating leases.
Finance leases
In a finance lease, the lessor transfers substantially all the
risks and rewards of ownership of an asset to the lessee. It is
treated as a loan made to the lessee to finance the purchase
of the asset.
The present value of the lease payments, plus any residual
value, is recognised as a receivable. The net income earned
from the lease by the lessor is equal to the amount of interest
on the loan, and is taken to the profit and loss account under
‘Interest income’. The lease payments are spread over the
lease term, and are allocated to reduction of the principal and
to interest, such that the net income reflects a constant rate
of return on the net investment outstanding in the lease. The
rate of interest used is the rate implicit in the lease.
Impairments of lease receivables are determined using the
same principles as applied to financial assets measured at
amortised cost.
Operating leases
An operating lease is a lease under which substantially all the
risks and rewards of ownership of an asset are not transferred
to the lessee.
The asset is recognised under property, plant and equipment
in the lessor’s balance sheet and depreciated on a straight-line
basis over its useful life. The depreciable amount excludes the
residual value of the asset. The lease payments are taken to
the profit and loss account in full on a straight-line basis over
the lease term. Lease payments and depreciation expenses are
taken to the profit and loss account under ‘Income from other
activities’ and ‘Expense on other activities’.
1.h.2 BNP Paribas Fortis as lessee
Lease contracts concluded by BNP Paribas Fortis, with the
exception of contracts whose term is shorter than or equal
to 12 months and low-value contracts, are recognised in the
balance-sheet in the form of a right of use on the leased
asset presented under fixed assets, along with the recognition
of a financial liability for the rent and other payments to
be made over the leasing period. The right-of-use assets are
amortised on a straight-line basis and the financial liabilities
are amortised on an actuarial basis over the lease period.
Dismantling costs corresponding to specific and significant
fittings and fixtures are included in the initial right-of-use
estimation, in counterparty of a provision liability.
The key hypothesis used by BNP Paribas Fortis for the meas-
urement of rights of use and lease liabilities are the following:
The lease term corresponds to the non-cancellable period
of the contract, together with periods covered by an exten-
sion option if BNP Paribas Fortis is reasonably certain to
exercise this option. In Belgium, the standard commercial
lease contract is the so-called ‘three, six, nine’ contract
for which the maximum period of use is nine years, with
a first non-cancellable period of three years followed by
two optional extension periods of three years each; hence,
depending on the assessment, the lease term can be of
three, six or nine years. When investments like fittings or
fixtures are performed under the contract, the lease term
is aligned with their useful lives. For tacitly renewable
contracts, with or without an enforceable period, related
right of use and lease liabilities are recognised based on
an estimate of the reasonably foreseeable economic life of
the contracts, minimal occupation period included.
The discount rate used to measure the right of use and
the lease liability is assessed for each contract as the
interest rate implicit in the lease, if that rate can be readily
determined, or more generally based on the incremental
borrowing rate of the lessee at the date of signature. The
incremental borrowing rate is determined considering the
average term (duration) of the contract;
When the contract is modified, a new assessment of the
lease liability is made taking into account the new residual
term of the contract, and therefore a new assessment of
the right of use and the lease liability is established.
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.i Non-current assets held for sale and discontinued operations
Where BNP Paribas Fortis decides to sell assets or a group of
assets and liabilities and it is highly probable that the sale will
occur within 12 months, these assets are shown separately in
the balance sheet, on the line ‘Assets held for sale’. Any liabili-
ties associated with these assets are also shown separately
in the balance sheet, on the line ‘Liabilities associated with
assets held for sale’. When BNP Paribas Fortis is committed
to a sale plan involving loss of control of a subsidiary and the
sale is highly probable within 12 months, all the assets and
liabilities of that subsidiary are classified as held for sale.
Once classified in this category, assets and the group of assets
and liabilities are measured at the lower of carrying amount
or fair value less costs to sell.
Such assets are no longer depreciated. If an asset or group of
assets and liabilities becomes impaired, an impairment loss is
recognised in the profit and loss account. Impairment losses
may be reversed.
Where a group of assets and liabilities held for sale represents
a cash generating unit, it is categorised as a ‘discontinued
operation’. Discontinued operations include operations that
are held for sale, operations that have been shut down, and
subsidiaries acquired exclusively with a view to resell.
In this case gains and losses related to discontinued opera-
tions are shown separately in the profit and loss account,
on the line ‘et income from discontinued activities’. This line
includes after tax profits or losses of discontinued operations,
after tax gain or loss arising from remeasurement at fair value
less costs to sell, and after tax gain or loss on disposal of
the operation.
1.j Employee benefits
Employee benefits are classified in one of four following
categories:
short-term benefits, such as salary, annual leave, incentive
plans, profit-sharing and additional payments;
long-term benefits, including compensated absences,
long-service awards, and other types of cash-based
deferred compensation;
termination benefits;
post-employment benefits.
Short-term benefits
BNP Paribas Fortis recognises an expense when it has
used services rendered by employees in exchange for
employee benefits.
Long-term benefits
These are benefits, other than short-term benefits, post-
employment benefits and termination benefits. This relates, in
particular, to compensation deferred for more than 12 months
and not linked to the BNP Paribas share price, which is accrued
in the financial statements for the period in which it is earned.
The actuarial techniques used are similar to those used for
defined-benefit post-employment benefits, except that the
revaluation items are recognised in the profit and loss account
and not in equity.
Termination benefits
Termination benefits are employee benefits payable in
exchange for the termination of an employee’s contract as a
result of either a decision by BNP Paribas Fortis to terminate
a contract of employment before the legal retirement age, or
a decision by an employee to accept voluntary redundancy in
exchange for these benefits. Termination benefits due more
than 12 months after the balance sheet date are discounted.
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Post-employment benefits
In accordance with IFRS, BNP Paribas Fortis draws a distinction
between defined-contribution plans and defined-benefit plans.
Defined-contribution plans do not give rise to an obligation for
BNP Paribas Fortis and do not require a provision. The amount
of the employer’s contributions payable during the period is
recognised as an expense.
Only defined-benefit schemes give rise to an obligation for
BNP Paribas Fortis. This obligation must be measured and
recognised as a liability by means of a provision.
The classification of plans into these two categories is based
on the economic substance of the plan, which is reviewed to
determine whether BNP Paribas Fortis has a legal or construc-
tive obligation to pay the agreed benefits to employees.
Post-employment benefit obligations under defined-benefit
plans are measured using actuarial techniques that take
demographic and financial assumptions into account.
The net liability recognised with respect to post-employment
benefit plans is the difference between the present value of the
defined-benefit obligation and the fair value of any plan assets.
The present value of the defined-benefit obligation is meas-
ured on the basis of the actuarial assumptions applied by
BNP Paribas Fortis, using the projected unit credit method.
This method takes into account various parameters, specific
to each country or entity of BNP Paribas Fortis, such as demo-
graphic assumptions, the probability that employees will leave
before retirement age, salary inflation, a discount rate, and
the general inflation rate.
When the value of the plan assets exceeds the amount of the
obligation, an asset is recognised if it represents a future eco-
nomic benefit for BNP Paribas Fortis in the form of a reduction
in future contributions or a future partial refund of amounts
paid into the plan.
The annual expense recognised in the profit and loss account
under ‘Salaries and employee benefits’, with respect to
defined-benefit plans includes the current service cost (the
rights vested by each employee during the period in return
for service rendered), the net interests linked to the effect of
discounting the net defined-benefit liability (asset), the past
service cost arising from plan amendments or curtailments,
and the effect of any plan settlements.
Remeasurements of the net defined-benefit liability (asset) are
recognised in shareholders’ equity and are never reclassified
to profit or loss. They include actuarial gains and losses, the
return on plan assets and any change in the effect of the
asset ceiling (excluding amounts included in net interest on
the defined-benefit liability or asset).
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.k Share-based payments
Share-based payment transactions are payments based on
shares issued by BNP Paribas, whether the transaction is
settled in the form of equity or cash of which the amount is
based on trends in the value of BNP Paribas shares.
Stock option and share award plans
The expense related to stock option and share award plans is
recognised over the vesting period, if the benefit is conditional
upon the grantee’s continued employment.
Stock options and share award expenses are recorded under
salary and employee benefits expenses, with a corresponding
adjustment to shareholders’ equity. They are calculated on
the basis of the overall plan value, determined at the date of
grant by the Board of Directors.
In the absence of any market for these instruments, financial
valuation models are used that take into account any perfor-
mance conditions related to the BNP Paribas share price. The
total expense of a plan is determined by multiplying the unit
value per option or share awarded by the estimated number
of options or shares awarded vested at the end of the vesting
period, taking into account the conditions regarding the
grantee’s continued employment.
The only assumptions revised during the vesting period,
and hence resulting in a remeasurement of the expense,
are those relating to the probability that employees will
leave BNP Paribas Fortis and those relating to performance
conditions that are not linked to the price value of BNP
Paribas shares.
Share price-linked cash-settled deferred
compensation plans
The expense related to these plans is recognised in the
year during which the employee rendered the correspond-
ing services.
If the payment of share-based variable compensation is
explicitly subject to the employee’s continued presence at the
vesting date, the services are presumed to have been rendered
during the vesting period and the corresponding compensation
expense is recognised on a pro rata basis over that period.
The expense is recognised under salary and employee benefits
expenses with a corresponding liability in the balance sheet.
It is revised to take into account any non-fulfilment of the
continued presence or performance conditions and the change
in BNP Paribas share price.
If there is no continued presence condition, the expense is not
deferred, but recognised immediately with a corresponding
liability in the balance sheet. This is then revised on each
reporting date until settlement to take into account any
performance conditions and the change in the BNP Paribas
share price.
1.l Provisions recorded under liabilities
Provisions recorded under liabilities (other than those relating
to financial instruments and employee benefits) mainly relate
to restructuring, claims and litigation, fines and penalties.
A provision is recognised when it is probable that an outflow
of resources embodying economic benefits will be required to
settle an obligation arising from a past event, and a reliable
estimate can be made of the amount of the obligation. The
amount of such obligations is discounted, where the impact
of discounting is material, in order to determine the amount
of the provision.
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.m Current and deferred tax
The current income tax charge is determined on the basis of
the tax laws and tax rates in force in each country in which
BNP Paribas Fortis operates during the period in which the
income is generated.
Deferred taxes are recognised when temporary differences
arise between the carrying amount of an asset or liability in
the balance sheet and its tax base.
Deferred tax liabilities are recognised for all taxable temporary
differences other than:
taxable temporary differences on initial recognition
of goodwill;
taxable temporary differences on investments in enter-
prises under the exclusive or joint control of BNP Paribas
Fortis, where BNP Paribas Fortis is able to control the
timing of the reversal of the temporary difference and it
is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences and unused carryforwards of tax losses only to
the extent that it is probable that the entity in question will
generate future taxable profits against which these temporary
differences and tax losses can be offset.
Deferred tax assets and liabilities are measured using the
liability method, using the tax rate which is expected to apply
to the period when the asset is realised or the liability is
settled, based on tax rates and tax laws that have been or will
have been enacted by the balance sheet date of that period.
They are not discounted.
Deferred tax assets and liabilities are offset when they arise
within the same tax group, they fall under the jurisdiction
of a single tax authority, and there is a legal right to offset.
As regards the assessment of uncertainty over income tax
treatments, BNP Paribas Fortis adopts the following approach:
BNP Paribas Fortis assesses whether it is probable that a
taxation authority will accept an uncertain tax treatment;
any uncertainty shall be reflected when determining the
taxable profit (loss) by considering either the most likely
amount (having the higher probability of occurrence), or the
expected value (sum of the probability-weighted amounts).
Current and deferred taxes are recognised as tax income
or expenses in the profit and loss account, except for those
relating to a transaction or an event directly recognised in
shareholders’ equity, which are also recognised in sharehold-
ers’ equity. This concerns in particular the tax effect of coupons
paid on financial instruments issued by BNP Paribas Fortis
and qualified as equity instruments, such as Undated Super
Subordinated Notes.
When tax credits on revenues from receivables and securities
are used to settle corporate income tax payable for the period,
the tax credits are recognised on the same line as the income
to which they relate. The corresponding tax expense continues
to be carried in the profit and loss account under ‘Corporate
income tax’.
1.n Cash flow statement
The cash and cash equivalents balance is composed of the net
balance of cash accounts and accounts with central banks,
and the net balance of interbank demand loans and deposits.
Changes in cash and cash equivalents related to operating
activities reflect cash flows generated by the BNP Paribas
Fortis’ operations, including those relating to negotiable
certificates of deposit.
Changes in cash and cash equivalents related to investing
activities reflect cash flows resulting from acquisitions and
disposals of subsidiaries, associates or joint ventures included
in the consolidated group, as well as acquisitions and dispos-
als of property, plant and equipment excluding investment
property and property held under operating leases.
Changes in cash and cash equivalents related to financing
activities reflect the cash inflows and outflows resulting
from transactions with shareholders, cash flows related to
bonds and subordinated debt, and debt securities (excluding
negotiable certificates of deposit).
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
1.o Use of estimates in the preparation of the financial statements
Preparation of the financial statements requires managers of
core businesses and corporate functions to make assumptions
and estimates that are reflected in the measurement of income
and expense in the profit and loss account and of assets and
liabilities in the balance sheet, and in the disclosure of infor-
mation in the notes to the financial statements.
This requires the managers in question to exercise their judge-
ment and to make use of information available at the date
of the preparation of the financial statements when making
their estimates. The actual future results from operations
where managers have made use of estimates may in reality
differ significantly from those estimates, mainly according
to market conditions. This may have a material effect on the
financial statements.
This applies in particular to:
the analysis of the cash flow criterion for specific finan-
cial assets;
the measurement of expected credit losses. This applies
in particular to the assessment of significant increase in
credit risk, the models and assumptions used to measure
expected credit losses, the determination of the different
economic scenarios and their weighting;
the analysis of renegotiated loans, in order to assess
whether they should be maintained on the balance-sheet
or derecognised;
the assessment of an active market, and the use of
internally-developed models for the measurement of
the fair value of financial instruments not quoted in an
active market classified in ‘Financial assets at fair value
through equity’ or in ‘Financial instruments at fair value
through profit or loss’, whether as assets or liabilities, and
more generally calculations of the fair value of financial
instruments subject to a fair value disclosure requirement;
the assumptions applied to assess the sensitivity to
each type of market risk of the market value of financial
instruments and the sensitivity of these valuations to the
main unobservable inputs as disclosed in the notes to the
financial statements;
the appropriateness of the designation of certain derivative
instruments such as cash flow hedges, and the measure-
ment of hedge effectiveness;
the impairment tests performed on goodwill and intan-
gible assets;
the impairment testing of investments in equity-
method entities;
the estimation of residual assets values under simple
lease agreements. These values are used as a basis for
the determination of depreciation as well as any impair-
ment, notably in relation to the effect of environmental
considerations on the evaluation of future prices of second-
hand vehicles;
the deferred tax assets;
the measurement of uncertainty over income tax
treatments and other provisions for contingencies and
charges. In particular, while investigations and litigations
are ongoing, it is difficult to foresee their outcome and
potential impact. Provision estimation is established by
taking into account all available information at the date of
the preparation of the financial statements, in particular
the nature of the dispute, the underlying facts, the ongoing
legal proceedings and court decisions, including those
related to similar cases. BNP Paribas Fortis may also use
the opinion of experts and independent legal advisers to
exercise its judgement.
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
2 NOTES TO THE PROFIT AND LOSS ACCOUNT FOR
THE YEAR ENDED 31 DECEMBER 2021
2.a Net interest income
BNP Paribas Fortis includes in ‘interest income’ and ‘interest
expense’ all income and expense calculated using the effec-
tive interest method (interest, fees and transaction costs)
from financial instruments measured at amortised cost and
financial instruments measured at fair value through equity.
These items also include the interest income and expense
of non-trading financial instruments, the characteristics of
which do not allow for recognition at amortised cost or at
fair value through equity, as well as of financial instruments
that the Bank has designated as at fair value through profit
or loss. The change in fair value on financial instruments at
fair value through profit or loss (excluding accrued interest)
is recognised under ‘Net gain on financial instruments at fair
value through profit or loss’.
Interest income and expense on derivatives accounted for as
fair value hedges are included with the revenues generated
by the hedged item. Similarly, interest income and expense
arising from derivatives used to hedge transactions designated
as at fair value through profit or loss is allocated to the same
accounts as the interest income and expense relating to the
underlying transactions.
In the case of a negative interest rates related to loans and
receivables or deposits from customers and credit institutions,
they are accounted for in interest expense or interest income
respectively.
In millions of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
Income Expense Net Income Expense Net
Financial instruments at amortised cost 6,251 (1,735) 4,516 6,077 (1,498) 4,579
Deposits, loans and borrowings 4,976 (1,499) 3,477 4,941 (1,196) 3,745
Repurchase agreements 63 (36) 27 31 (59) (28)
Finance leases 981 (86) 895 928 (79) 849
Debt securities 231 - 231 177 - 177
Issued debt securities and subordinated debts - (114) (114) - (164) (164)
Financial instruments at fair value through equity 93 - 93 138 - 138
Debt securities 93 - 93 138 - 138
Financial instruments at fair value through profit or loss
(Trading securities excluded)
8 (30) (22) 9 (29) (20)
Cash flow hedge instruments 175 (174) 1 183 (260) (77)
Interest rate portfolio hedge instruments 490 (374) 116 427 (282) 145
Lease liabilities - (10) (10) - (13) (13)
Net interest income/expense 7,017 (2,323) 4,694 6,834 (2,082) 4,752
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Interest income on individually impaired loans amounted to
EUR 31 million in the year ending 31 December 2021, compared
with EUR 38 million in the year ending 31 December 2020.
BNP Paribas Fortis subscribed to the TLTRO III (targeted
longer-term refinancing operations) program, as modified by
the Governing Council of the European Central Bank in March
2020 and in December 2020 (see note 4.g). BNP Paribas Fortis
expects to achieve the lending performance thresholds that
would enable it to benefit from a favourable interest rate
(average rate of the deposit facility minus 50 basis points for
the first two years and average rate of the deposit facility for
the following year). This floating interest rate is considered
as a market rate as it is applicable to all financial institutions
meeting the lending criteria defined by the European Central
Bank. The effective interest rate of these financial liabilities
is determined for each reference period, its two components
(reference rate and margin) being adjustable. The effective
interest rate was -1% in both 2020 and 2021.
2.b Commission income and expense
In millions of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
Income Expense Net Income Expense Net
Customer transactions 107 (83) 24 97 (73) 24
Securities and derivatives transactions 930 (227) 703 845 (160) 685
Financing and guarantee commitments 160 (18) 142 155 (13) 142
Asset management and other services 750 (45) 705 648 (75) 573
Others 252 (431) (179) 253 (403) (150)
Net Commission income/expense 2,199 (804) 1,395 1,998 (724) 1,274
Of which net commission income related to trust and
similar activities through which BNP Paribas Fortis
holds or invests assets on behalf of clients, trusts,
pension and personal risk funds or other institutions
472 (2) 470 392 (4) 388
Of which commission income and expense on
financial instruments not measured at fair value
through profit or loss
390 (144) 246 394 (157) 237
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
2.c Net gain on financial instruments at fair value through profit or loss
Net gain on financial instruments measured at fair value
through profit or loss includes all profit and loss items relat-
ing to financial instruments managed in the trading book,
non-trading equity instruments that BNP Paribas Fortis did
not choose to measure at fair value through equity, financial
instruments that the Bank has designated as at fair value
through profit or loss, as well as debt instruments whose cash
flows are not solely repayments of principal and interest on
the principal or whose business model is not to collect cash
flows nor to collect cash flows and sell the assets.
These income items include dividends on these instruments
and exclude interest income and expense from financial
instruments designated as at fair value through profit or
loss and instruments whose cash flows are not only repay-
ments of principal and interest on the principal or whose
business model is not to collect cash flows nor to collect cash
flows and sell the assets, which are presented in ‘interest
income’ (note 2.a).
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Trading Book 162 173
Interest rate and credit instruments 3 (13)
Equity financial instruments 136 48
Foreign exchange financial instruments (19) 103
Loans and repurchase agreements 42 35
Other financial instruments - -
Financial instruments designated as at fair value through profit or loss (103) (4)
Other financial instruments at fair value through profit and loss 143 4
Debt instruments 15 (1)
Equity instruments 128 5
Impact of hedge accounting (6) 8
Fair value hedging derivatives 338 (380)
Hedged items in fair value hedge (344) 388
Net gain or loss on financial instruments at fair value through profit or loss 196 181
Gains and losses on financial instruments designated as at fair
value through profit or loss are mainly related to instruments
whose changes in value may be compensated by changes
in the value of economic hedging trading book instruments.
Net gains on the trading book in 2021 and 2020 include a
non-material amount related to the ineffective portion of cash
flow hedges.
Potential sources of ineffectiveness can be the differences
between hedging instruments and hedged items, notably
generated by mismatches in the terms of hedged and hedging
instruments, such as the frequency and timing of interest
rates resetting, the frequency of payment and the discounting
factors, or when hedging derivatives have a non-zero fair value
at inception date of the hedging relationship. Credit valuation
adjustments applied to hedging derivatives are also sources
of ineffectiveness.
Cumulated changes in fair value related to discontinued cash
flow hedge relationships, previously recognised in equity and
included in the 2021 profit and loss account were not material,
whether the hedged item ceased to exist or not.
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
2.d Net gain on financial instruments at fair value through equity
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Net gain on debt instruments at fair value through equity 16 7
Net gain on debt instruments
(1)
16 7
Net gain on equity instruments at fair value through equity 21 5
Dividend income on equity instruments 21 5
Net gain or loss on financial instruments at fair value through equity 37 11
(1) Interest income from debt instruments is included in ‘Net interest income’ (Note 2.a), and impairment losses related to potential issuer default are included
in ‘Cost of risk’ (Note 2.g)
Unrealised gains and losses on debt securities previously
recorded under ‘Changes in assets and liabilities recognised
directly in equity that may be reclassified to profit or loss’
and included in the pre-tax income, amount to a net gain of
EUR 5 million for the year ended 31 December 2021 compared
with EUR 2 million for the year ended 31 December 2020.
2.e Net income from other activities
In millions of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
Income Expense Net Income Expense Net
Net income from investment property 86 (15) 71 86 (37) 49
Net income from assets held under operating leases 12,326 (10,461) 1,865 10,695 (9,099) 1,596
Other net income 996 (924) 72 758 (723) 35
Total net income from other activities 13,408 (11,400) 2,008 11,539 (9,859) 1,680
2.f Other operating expenses
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
External services and other operating expenses (1,400) (1,343)
Taxes and contributions
(1)
(414) (408)
Other operating expenses (1,814) (1,751)
(1)
Contributions to European resolution funds, including exceptional contributions, amount to EUR (89) million in 2021 (EUR (68) million in 2020)
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
2.g Cost of risk
The BNP Paribas Fortis general model for impairment
described in note 1.f.4 used by the Bank relies on the following
two steps:
assessing whether there has been a significant increase
in credit risk since initial recognition, and
measuring impairment allowance as either 12-month
expected credit losses or lifetime expected credit loss (i.e.
loss expected at maturity).
Both steps shall rely on forward looking information.
Significant increase in credit risk
The assessment of increase in credit risk is done at instrument
level based on indicators and thresholds that vary depending
on the nature of the exposure and the type of the counterparty.
Wholesale (Corporates / Financial
institutions / Sovereigns) and bonds
The indicator used for assessing increase in credit risk is the
internal counterparty rating of the obligor of the facility.
The deterioration in credit quality is considered significant,
and the facility is therefore placed in stage 2, if the difference
between the counterparty rating at origination and the one
as at the reporting date is equal or superior to 3 notches (for
instance, a downgrade from 4- to 5-).
The low risk expedient permitted by IFRS 9 (i.e. whereby
bonds with an investment grade rating at reporting date are
considered as stage 1, and bonds with a non-investment grade
rating at reporting date are considered as stage 2) is used
only for debt securities for which no ratings are available at
acquisition date.
SME Corporates facilities and Retail
As far as SME Corporates exposures are concerned, the indi-
cator used for assessing increase in credit risk is also the
internal counterparty rating of the obligor of the facility. Due
to a higher volatility in the rating system applied, deterioration
is considered significant, and the facility is therefore placed
in stage 2, if the difference between the counterparty rating
at origination and the one as at the reporting date is equal or
superior to 6 notches.
For retail exposures, two alternative risk indicators of increase
in credit risk can be taken into consideration:
probability of default (PD): changes in the 1-year
probability of default are considered as a reasonable
approximation of changes in the lifetime probability
of default. Deterioration in credit quality is considered
significant, and the facility is therefore placed in stage 2,
if the ratio (1 year PD at the reporting date / 1 year PD at
origination) is higher than 4.
existence of a past due within the last 12 months: in the
consumer credit specialised business, the existence of a
past due that has occurred within the last 12 months,
even if regularised since, is considered as a significant
deterioration in credit risk and the facility is therefore
placed into stage 2.
Furthermore, for all portfolios (except
consumer loan specialised business):
the facility is assumed to be in stage 1 when its rating is
better than or equal to 4- (or its 1 year PD is below or
equal to 0.25%) at reporting date, since changes in PD
related to downgrades in this zone are less material, and
therefore not considered as “significant”.
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
when the rating is worse than or equal to 9+ (or the 1 year
PD is above 10%) at reporting date considering the Bank’s
practice in terms of credit origination, it is considered as
significantly deteriorated and therefore placed into stage 2
(as long as the facility is not credit-impaired).
Forward Looking Information
The Bank considers forward-looking information both when
assessing significant increase in credit risk and when measur-
ing Expected Credit Losses (ECL).
Regarding the assessment of significant increase in credit risk,
beyond the rules based on the comparison of risk parameters
between initial recognition and reporting date (see “significant
increase in credit risk” section), the determination of significant
increase in credit risk is supplemented by the consideration
of more systemic forward looking factors (such as macro-
economic, sectorial and geographical risk drivers) that could
increase the credit risk of some exposures. These factors can
lead to tighten the transfer criteria into stage 2, resulting in
an increase of ECL amounts for exposures deemed vulnerable
to these forward looking drivers. Thus, for loans that have not
experienced a significant deterioration in credit quality since
origination, this mechanism may lead to the classification of
facilities in stage 2 in anticipation of a future downgrade of
their individual rating beyond the deterioration threshold, in
relation to the macroeconomic outlook of their sector.
Regarding the measurement of expected credit losses, the
Bank has made the choice to use 3 macroeconomic scenarios
by geographic area covering a wide range of potential future
economic conditions:
a baseline scenario, consistent with the scenario used for
budgeting;
an adverse scenario, corresponding to the scenario used
quarterly in BNP Paribas Group stress tests;
a favourable scenario, allowing to capture situations where
the economy performs better than anticipated.
The link between the macroeconomic scenarios and the ECL
measurement is mainly achieved through a modelling of the
probabilities of default and deformation of migration matrices
based on internal rating (or risk parameter). The probabilities
of default determined according to these scenarios are used
to measure expected credit losses in each of these situations.
The weighting of the expected credit losses under each sce-
nario is performed as follows:
50% for the baseline scenario;
the weighting of the two alternative scenarios is computed
using a relationship with the position in the credit cycle.
In this approach, the adverse scenario receives a higher
weight when the economy is in strong expansion than in
lower growth period in anticipation of a potential down-
turn of the economy.
In addition, when appropriate, the ECL measurement can take
into account scenarios of sale of the assets.
Macroeconomic scenarios:
The three macroeconomic scenarios are defined over a three-
year projection horizon. They correspond to:
a baseline scenario which describes the most likely path
of the economy over the projection horizon. This scenario
is updated on a quarterly basis and is prepared by the
Group Economic Research department in collaboration
with various experts within the Group, including those of
BNP Paribas Fortis. Projections are designed for each key
market of the Bank) using key macroeconomic variables
(Gross Domestic Product - GDP - and its components,
unemployment rate, consumer prices, interest rates,
foreign exchange rates, oil prices, real estate prices, etc.)
which are key drivers for modeling risk parameters used
in the stress test process;
As from 31 December 2020, in addition to the geographic
breakdown, prospective parameters are detailed at sector
level to better reflect the heterogeneity of economic tra-
jectories in conjunction with lockdown measures or the
partial interruption in activity;
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
an adverse scenario which describes the impact of the
materialisation of some of the risks weighing on the
baseline scenario, resulting in a much less favourable
economic path than in the baseline scenario. The starting
point consists of a shock on GDP. This shock is applied with
variable magnitudes, but at the same time to economies
as the crisis is considered to be a global crisis. Generally,
these assumptions are broadly consistent with those
proposed by the regulators. The calibration of shocks on
other variables (unemployment, consumer prices, interest
rates) is based on models and expert judgment;
a favourable scenario which reflects the impact of
the materialisation of some of the upside risks for the
economy, resulting in a much more favourable economic
path. To achieve an unbiased estimation of provisions, the
favourable scenario is designed in such a way that the
probability of the shock on GDP growth (on average over
the cycle) is equal to the probability of the corresponding
shock in the adverse scenario. The magnitude of favour-
able GDP shocks generally corresponds to 80%-95% of
the magnitude of adverse GDP shocks. Other variables
(unemployment, inflation, interest rates) are defined in
the same way as in the adverse scenario.
Since 30 June 2021, the favourable shocks to activity were
substantially reduced. Most of the positive events, previ-
ously included in the favourable scenario, are now included
in the baseline scenario. Furthermore, any stronger-than-
expected rebound compared to the central scenario would
be limited by constraints on the factors of production.
Factoring the specific features of the health crisis
in the baseline scenario:
After a historical drop in 2020, reflecting the strict contain-
ment measures implemented by governments in response
to the increase in coronavirus cases, activity has rebounded
sharply in 2021, reflecting (i) a mechanical catch-up, (ii) gov-
ernment and central bank support measures, and (iii) positive
developments in terms of vaccines rollout.
The magnitude of the rebound has notably varied among
economies depending on the improvement in the health
situation and the extent of fiscal measures. After a marked
improvement in 2021, the pace of growth is expected to
normalise from 2022 onwards. Activity is expected to return
to its pre-crisis level between the fourth quarter of 2021 and
the first half of 2022 in most mature economies.
The graph below presents a comparison between GDP projec-
tions used in the baseline scenario for the calculation of ECLs
as at 31 December of the years 2019, 2020, and 2021.
85
90
95
100
105
110
Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Dec 23
Dec 24
GDP index
Euro zone GDP: index base 100 at the fourth quarter of 2019
Central scenario at 31 December 2020
Central scenario at 31 December 2019
Central scenario at 31 December 2021
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
GDP growth rate, central scenario as at 31 December 2021
(annual average of quarterly projections)
2021 2022 2023 2024
Euro area 5.1% 3.8% 1.9% 1.5%
France 6.7% 3.5% 1.6% 1.4%
Italy 6.2% 3.0% 1.0% 0.7%
Belgium 6.0% 3.0% 1.4% 1.3%
United States 5.4% 3.2% 2.5% 2.2%
10-year sovereign bond yields, central scenario as at
31 December 2021 (annual average)
2021 2022 2023 2024
Germany -0.33% -0.08% 0.03% 0.05%
France -0.04% 0.26% 0.33% 0.35%
Italy 0.73% 1.03% 1.13% 1.18%
Belgium -0.05% 0.23% 0.33% 0.35%
United States 1.45% 1.85% 2.05% 2.10%
Adverse Scenario
The adverse scenario supposes the materialisation of certain
risks for the economy, resulting in a much less favourable
economic path than in the baseline scenario.
Despite the improvement in the health situation observed
in recent quarters, the emergence of possibly more virulent
forms of the coronavirus could have a more marked impact
on activity than expected in the central scenario. In addition,
supply disruptions and reduced supportive fiscal measures
could have negative effects in certain sectors and economies.
The following risks appear strengthened in the context of the
health crisis:
Possible negative effects on demand: the pandemic could
have more lasting consequences (some permanently
affected sectors, deteriorated public finances, sharp
rise in private debt in some economies) and short-term
developments (unemployment, bankruptcies, etc.) could
be less favourable than expected as governments put
an end to measures aimed at helping households and
businesses during the crisis. Such developments could
weigh on demand.
Pressure on financial institutions’ profitability: some bor-
rowers may experience difficulties in repaying their debt
with the withdrawal of government support measures. In
addition, possible financial turbulences and still extremely
low interest rates might weigh on banking profitability and
credit availability.
Market corrections: market corrections could affect some
financial and real estate markets, given sometimes very
favourable developments in asset values in the aftermath
of the health crisis, notably reflecting supportive monetary
and fiscal policies.
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Tensions related to public finances: given the extent of the
contraction in activity and the amount of fiscal support
provided by governments to compensate for this major
shock on activity, debt-to-GDP ratios have substantially
increased in some countries and often reached unprece-
dented levels. Although current extremely accommodating
monetary policies are limiting this risk now, a sharp dete-
rioration in public finance metrics could lead to future
tensions on the financial markets and austerity measures
in certain countries. Such developments could lead to a
knock-on negative effect on activity. While the euro area
looks more exposed to this risk than other areas for struc-
tural reasons, the ECB has shown in recent years that it
has tools to limit the magnitude of such potential shocks.
Further difficulties in China: following the health crisis,
additional difficulties cannot be excluded, either in terms
of activity or on other fronts (e.g. public finances, dif-
ficulties in the real estate markets, political tensions).
Given the weight of the Chinese economy, these difficulties
could impact global financial markets, global trade and
commodities prices.
Difficulties in emerging markets: some emerging markets
are under pressure for various reasons (e.g. domestic
economic imbalances and political tensions, deteriorating
international relationships) and the health crisis may have
added to these fragilities (delayed vaccination campaigns
compared to mature economies). Argentina, Brazil, Hong
Kong and Turkey are among large emerging markets that
are worth monitoring.
Other risks, not directly linked to the health crisis, were also
embedded in the adverse scenario:
Trade risks: disagreements between the United States and
China geopolitical issues, intellectual property protection,
technology transfers or industrial policies are likely to
persist. Following the health crisis, the United States and
other mature economies are also likely to try to become
less reliant on China in some areas deemed strategic.
Tensions related to trade and globalisation are therefore
likely to remain or even worsen.
Geopolitical risks: Tensions, in the Middle East and East
Asia, have in particular the potential to weigh on the global
economy through shocks to commodity prices, financial
markets, and business confidence.
Under the adverse scenario, it is assumed that these latent
risks materialise as from the first quarter of 2022.
Among considered countries, GDP levels in the adverse
scenario stand between 5.8% and 12.2% lower than in the
baseline scenario at the end of the shock period (three years),
at 31 December 2021 (same as at 31 December 2020). In
particular, this deviation reaches 7.1% on average in the Euro
zone and 5.8% in the United States.
Scenario weighting and cost of risk sensitivity:
At 31 December 2021, the weighting of the adverse scenario
is 25% (25% for the favourable scenario), versus 14% at
31 December 2020 (36% for the favourable scenario), reflecting
a balanced position at the credit cycle within December 2021.
The sensitivity of the amount of expected credit losses for
all financial assets at amortised cost or at fair value through
equity and credit commitments is assessed by comparing the
estimated expected losses resulting from the weighting of the
above scenarios with the estimated expected loss resulting
from each of the two alternative scenarios weighted at 100%
(and the baseline scenario weighted at 0%):
an increase in ECL of 20%, or EUR 126.4 million weighting
the adverse scenario at 100% (increase of 15% compar to
31 December 2020);
a decrease in ECL of (12)%, or EUR (74.8) million weighting
the favorable scenario at 100% (decrease of (8)% compar
to 31 December 2020).
Adaptation of the ECL assessment process to
factor in the specific nature of the health crisis:
Macroeconomic scenarios provisioning the models:
The measurement of the impact of macroeconomic scenarios
on expected credit losses has been adjusted to reflect the
specificities of the current health crisis. Given the exceptional
nature of the shock in the first semester of 2020 linked to the
temporary lockdown measures and strong support provided by
governments and central banks, macroeconomic parameters
for each country or geographic area included in the pre-exist-
ing models (calibrated on past crises) have been adapted in
order to extract the information on the medium-term impacts
on macroeconomic environment and thus minimize excessive
short-term volatility.
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In 2020, the medium-term perspective adopted for the base-
line scenario reduced the loss of income for the eurozone
by an amount much lower than that of governments and
European Central Bank support measures. Conversely, it has
led to a moderation in the favourable impacts of the economic
rebounds observed in 2021.
Post-model adjustments:
Conservative adjustments were also taken into account when
the models used were based on indicators that show unusual
levels in the context of the health crisis and the support pro-
grammes, such as the increase in deposits and the decrease
in past due events for retail customers and entrepreneurs.
In Belgium, the exposure to Transportation (aviation, cruises),
Retail (non-food), Commercial Real Estate Retail Stores and
Hotels, Tourism & Leisure amounts to 2%, 1%, 1% and 1%
respectively of the total exposure (total loans and off-balance
sheet commitments). These exposures are considered by the
Bank as most exposed to the COVID-19 crisis.
Cost of credit risk for the period
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Net allowances to impairment (353) (674)
Recoveries on loans and receivables previously written off 23 30
Losses on irrecoverable loans (29) (32)
Total cost of risk for the period (359) (676)
Cost of risk for the period by accounting category and asset type
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Cash and balances at central banks (6) (4)
Financial instruments at fair value through profit or loss 7 3
Financial assets at fair value through equity (6) (3)
Financial assets at amortised cost (346) (648)
of which loans and receivables (343) (646)
of which debt securities (3) (2)
Other assets 6 (8)
Financing and guarantee commitments and other items (14) (16)
Total cost of risk for the period (359) (676)
Cost of risk on unimpaired assets and commitments (79) (194)
of which Stage 1 22 (86)
of which Stage 2 (101) (108)
Cost of risk on impaired assets and commitments - Stage 3 (280) (482)
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Credit risk impairment
Change in impairment by accounting category and asset type during the period
In millions of euros
31 December
2020
Net
allowance to
impairment
Impairment
provisions
used
Effect of exchange
rate movements
and other items 31 December 2021
Assets impairment
Amounts due from central banks 10 7 - (5) 12
Financial instruments at fair value
through profit or loss
19 (3) - (6) 10
Impairment of financial assets at fair
value through equity
24 7 - 1 32
Financial assets at amortised cost 3,124 342 (245) (173) 3,048
of which loans and receivables 3,121 339 (245) (171) 3,044
of which debt securities 3 3 - (2) 4
Other assets 19 (9) (1) - 10
Total impairment of financial assets 3,196 344 (246) (183) 3,112
of which Stage 1 315 (15) - (32) 268
of which Stage 2 449 85 - (51) 483
of which Stage 3 2,432 274 (246) (100) 2,361
Provisions recognised as liabilities
Provisions for commitments 217 15 - (2) 230
Other provisions 19 (6) - 16 29
Total provisions recognised for credit
commitments
236 9 - 14 259
of which Stage 1 55 (10) - (1) 44
of which Stage 2 51 15 - - 66
of which Stage 3 130 4 - 15 149
Total impairment and provisions 3,432 353 (246) (169) 3,371
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Change in impairment by accounting category and asset type during the previous period
In millions of euros 1 January 2020
Net
allowance to
impairment
Impairment
provisions
used
Effect of exchange
rate movements
and other items 31 December 2020
Assets impairment
Amounts due from central banks 8 4 - (2) 10
Financial instruments at fair value
through profit or loss
29 (9) - (1) 19
Impairment of financial assets at fair
value through equity
35 4 (11) (4) 24
Financial assets at amortised cost 2,965 657 (289) (209) 3,124
of which loans and receivables 2,963 655 (289) (208) 3,121
of which debt securities 2 2 - (1) 3
Other assets 11 7 - - 19
Total impairment of financial assets 3,048 663 (300) (216) 3,196
of which Stage 1 263 70 - (18) 315
of which Stage 2 402 93 (1) (45) 449
of which Stage 3 2,383 500 (299) (153) 2,432
Provisions recognised as liabilities
Provisions for commitments 221 12 - (16) 217
Other provisions 29 (1) (9) - 19
Total provisions recognised for credit
commitments
250 11 (9) (16) 236
of which Stage 1 49 12 - (6) 55
of which Stage 2 42 16 - (7) 51
of which Stage 3 159 (17) (9) (3) 130
Total impairment and provisions 3,298 674 (309) (232) 3,432
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Change in impairment of amortised cost financial assets during the period
In millions of euros
Impairment on
assets subject to
12-month Expected
Credit Losses
(Stage 1)
Impairment on
assets subject to
lifetime Expected
Credit Losses
(Stage 2)
Impairment
on doubtful
assets
(Stage 3) Total
At 31 December 2020 301 430 2,392 3,123
Net allowances to impairment (22) 79 285 342
Financial assets purchased or originated during the period 114 116 - 230
Financial assets derecognised during the period
(1)
(54) (77) (357) (488)
Transfer to Stage 2 (27) 229 (57) 145
Transfer to Stage 3 (3) (50) 279 226
Transfer to Stage 1 20 (134) (9) (123)
Other allowances/reversals without stage transfer
(2)
(72) (5) 429 352
Impairment provisions used - - (245) (245)
Effect of exchange rate movements and other items (26) (54) (92) (172)
At 31 December 2021 253 455 2,340 3,048
(1)
Including disposals
(2)
Including amortisation
Change in impairment of amortised cost financial assets during the
previous period
In millions of euros
Impairment on
assets subject to
12-month Expected
Credit Losses
(Stage 1)
Impairment on
assets subject to
lifetime Expected
Credit Losses
(Stage 2)
Impairment
on doubtful
assets
(Stage 3) Total
At 1 January 2020 252 382 2,330 2,964
Net allowances to impairment 63 92 502 657
Financial assets purchased or originated during the period 104 142 - 246
Financial assets derecognised during the period
(1)
(51) (94) (186) (331)
Transfer to Stage 2 (24) 208 (13) 171
Transfer to Stage 3 (3) (87) 372 282
Transfer to Stage 1 14 (115) (6) (107)
Other allowances/reversals without stage transfer
(2)
23 38 335 396
Impairment provisions used - (1) (288) (289)
Effect of exchange rate movements and other items (14) (43) (152) (209)
At 31 December 2020 301 430 2,392 3,123
(1)
Including disposals
(2)
Including amortisation
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
2.h Net gain on non-current assets
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Net gain on investments in consolidated undertakings 1 (130)
Net gain on tangible and intangible assets 13 16
Net gain on non-current assets 14 (114)
The net negative gain on non-current assets in December 2020
mainly result from EUR (130) million impairment on our stake
in bpost bank, triggered by the signing of a non-binding letter
of intent on the remaining 50% of the shares of bpost bank
still owned by Bpost at 31 December 2020.
2.i Corporate income tax
Reconciliation of the effective tax expense to the theoretical tax
expense at standard tax rate in Belgium
Year to 31 Dec. 2021 Year to 31 Dec. 2020
In millions
of euros Tax rate
In millions
of euros Tax rate
Corporate income tax expense on pre-tax income at standard tax rate
(1)
(873) 25.00% (640) 25.00%
Impact of differently taxed foreign profits 5 (0.1%) (3) 0.1%
Impact of changes in tax rates 16 (0.5%) 8 (0.3%)
Impact of dividends and disposals taxed at reduced rate 15 (0.4%) 10 (0.4%)
Impact of previously unrecognised deferred taxes (tax losses and
temporary differences)
22 (0.6%) 8 (0.3%)
Impact of using tax losses for which no deferred tax asset was previously
recognised
4 (0.1%) 9 (0.4%)
Other items 59 (1.7%) 19 (0.7%)
Corporate income tax expense (752) 21.54% (589) 23.01%
of which
Current tax expense for the year to 31 December (526) (408)
Deferred tax expense for the year to 31 December (Note 4.i) (226) (181)
(1)
Restated for the share of profits in equity-method entities and goodwill impairment
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
3 SEGMENT INFORMATION
3.a Operating segments
Banking activities in Belgium
In Belgium, BNP Paribas Fortis offers a comprehensive package
of financial services to private individuals, the self-employed,
members of the professions and SMEs. The Bank also provides
high net worth individuals, corporations and public and finan-
cial institutions with customised solutions, for which it is able
to draw on the know-how and international network of the
mother company, BNP Paribas.
In Retail & Private Banking (RPB), BNP Paribas Fortis has a
solid footprint, serving 3.4 million individuals, profession-
als, SMEs and private banking customers. It has a very
strong presence in the local market, through a network of
386 branches, plus other channels such as ATMs and online
banking facilities, including mobile banking. In its Retail
banking activities, BNP Paribas Fortis operates under four
complementary brands: the main brand BNP Paribas Fortis,
plus Fintro, bpost bank/banque and Hello bank!, a 100% digital
mobile banking service. In the insurance sector, BNP Paribas
Fortis works in close cooperation with the Belgian market
leader, AG Insurance.
Corporate Banking (CB) serves a wide range of clients, includ-
ing small and medium-sized companies, Belgian and European
corporates, financial institutions, institutional investors, public
entities and local authorities. CB has a strong client base
among large and medium-sized companies and is the market
leader in these two categories, as well as a strong challenger
in the public sector.
Providing a wide range of both traditional and bespoke
specialised solutions and services, and drawing on the inter-
national network of the BNP Paribas Group in 68 countries, CB
continues to meet the precise financing, transaction banking,
investment banking and insurance needs of its clients.
Banking activities in Luxembourg
BGL BNP Paribas ranks among the leading banks operat-
ing in the Luxembourg financial marketplace. It has made
a significant contribution to the country’s emergence as a
major international financial centre and is deeply rooted in
Luxembourg’s economic, cultural, sporting and social life.
As a partner with a longstanding commitment to the national
economy, BGL BNP Paribas offers a wide range of products
both for individuals and for professional and institutional
clients. Ranked as the number one bank for corporates and
the number two bank for resident individuals in the Grand
Duchy of Luxembourg, BGL BNP Paribas is also the leader in
bancassurance, providing combined offerings of insurance
and banking services.
Banking activities in Turkey
BNP Paribas Fortis operates in Turkey via Türk Ekonomi Bankasi
(TEB), in which it has a 48.7% stake. Retail Banking products
and services consist of debit and credit cards, personal loans,
and investment and insurance products distributed through
the TEB branch network and via internet and phone banking.
Corporate banking services include international trade finance,
asset and cash management, credit services, currency hedging,
interest and commodity risk, plus factoring and leasing.
Through its commercial and SME banking departments, the
bank offers an array of banking services to small and medium-
sized enterprises.
Other Domestic Markets
The operating segment ‘Other Domestic Markets’ mainly
comprises BNP Paribas Leasing Solutions and Arval.
Fully owned by BNP Paribas Fortis, Arval specialises in full
service vehicle leasing. Arval offers its customers – large
international corporates, SMEs and professionals – tailored
solutions that optimise their employees’ mobility and out-
source the risks associated with fleet management. Expert
advice and service quality, which are the foundations of Arval’s
customer promise, are delivered in 30 countries.
BNP Paribas Leasing Solutions is a European leader in leasing
for corporate and small business clients. It specialises in rental
and finance solutions, ranging from professional equipment
leasing to fleet outsourcing.
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Other
This segment mainly comprises BNP Paribas Asset
Management, AG Insurance, BNP Paribas Bank Polska,
Cardif Lux Vie, Personal Finance and the foreign branches of
BNP Paribas Fortis.
3.b Information by operating segment
Income and expense by operating segment
In millions of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
Banking
activities in
Belgium
Banking
activities in
Luxembourg
Banking
activities in
Turkey
Other
Domestic
Markets
Other
Total
Banking
activities in
Belgium
Banking
activities in
Luxembourg
Banking
activities in
Turkey
Other
Domestic
Markets
Other
Total
Revenues 4,204 681 633 2,690 204 8,412 3,983 730 736 2,245 199 7,893
Operating expense (2,505) (380) (364) (1,250) (78) (4,577) (2,538) (377) (404) (1,144) (79) (4,542)
Cost of risk (120) (2) (66) (113) (58) (359) (261) (16) (174) (188) (37) (676)
Operating Income 1,579 299 203 1,327 68 3,476 1,184 337 158 913 83 2,675
Non-operating items 20 - 1 - 316 337 (95) 1 1 (2) 303 208
Pre-tax income 1,599 299 204 1,327 384 3,813 1,089 338 159 911 386 2,883
Assets and liabilities by operating segment
In millions of euros
31 December 2021 31 December 2020
Banking
activities in
Belgium
Banking
activities in
Luxembourg
Banking
activities in
Turkey
Other
Domestic
Markets
Other
Total
Banking
activities in
Belgium
Banking
activities in
Luxembourg
Banking
activities in
Turkey
Other
Domestic
Markets
Other
Total
Assets 226,250 32,735 13,731 57,525 11,407 341,648 226,308 28,029 16,246 53,280 11,272 335,135
of which
investments in
associates and
Joint ventures
841 97 3 80 2,788 3,809 832 93 4 67 2,751 3,747
Liabilities 209,725 26,695 12,865 52,753 8,413 310,451 210,786 21,980 15,117 49,091 8,323 305,297
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
3.c Country-by-country reporting
The country-by-country reporting has been prepared to comply
with the requirements set out in Article 89 of the European
Union Capital Requirements Directive IV. The information is
presented using the same basis as the Consolidated Financial
Statements of BNP Paribas Fortis for the period ending
31 December 2021, which are prepared in accordance with
IFRS as adopted by the European Union. The country informa-
tion relates to the country of incorporation or residence of
branches and subsidiaries.
In millions of euros,
Year to 31 Dec. 2021
(*)
Revenues
Pre-tax
income Current tax
Deferred
tax
Corporate
income tax
FTE
(**)
as
at 31 Dec.
2021 Nature of activities
Belgium 4,418 1,669 (154) (208) (362) 11,751
of which: BNP Paribas Fortis
SA/NV (Including Bass &
Esmée Master Issuer NV)
3,982 1,444 (97) (215) (312) 10,532 Credit institution
Turkey 677 259 (36) (23) (59) 9,148
of which: Türk Ekonomi
Bankası AS
531 145 (19) (16) (35) 8,501 Credit institution
Luxembourg 753 360 (66) 12 (53) 2,083
of which: BGL BNP Paribas 672 292 (70) 8 (62) 1,997 Credit institution
France 710 221 (48) (14) (61) 3,421
of which: BNP Paribas Lease
Group BPLG
160 54 (19) 5 (14) 1,424 Leasing firm
Germany 211 97 (28) - (28) 736
Poland 52 20 (12) 8 (4) 527
United Kingdom 398 231 (44) 6 (38) 1,233
Spain 254 158 (4) (18) (22) 921
The Netherlands 112 62 (13) (2) (16) 413
Italy 475 249 (88) 11 (77) 1,123
Other 352 165 (33) 2 (32) 1,955
Total 8,412 3,491 (526) (226) (752) 33,311
(*)
The financial data correspond to the contribution to consolidated income of fully consolidated entities under exclusive control
(**)
Full-time equivalents (FTE) at 31 December 2021 in fully consolidated entities under exclusive control
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4 NOTES TO THE BALANCE SHEET AT
31 DECEMBER 2021
4.a Financial assets, financial liabilities and derivatives at fair value through
profit or loss
Financial assets and liabilities at fair value through profit or loss
Financial assets and financial liabilities at fair value through
profit or loss consist of held-for-trading transactions - includ-
ing derivatives -, of certain liabilities designated by the Bank
as at fair value through profit or loss at the time of issuance
and of non-trading instruments whose characteristics
prevent their accounting at amortised cost or at fair value
through equity.
31 December 2021 31 December 2020
In millions of euros
Trading Book
Financial instruments
designated as at fair value
through profit or loss
Other financial assets at fair
value through profit or loss
Total
Trading Book
Financial instruments
designated as at fair value
through profit or loss
Other financial assets at fair
value through profit or loss
Total
Securities 372 - 945 1,317 433 - 1,131 1,564
Loans and repurchase agreements 4,213 2 67 4,282 3,952 2 101 4,055
Financial assets at fair value through profit
or loss
4,585 2 1,012 5,599 4,385 2 1,232 5,619
Securities 159 - - 159 132 - - 132
Deposits and repurchase agreements 12,900 160 - 13,060 12,369 171 - 12,540
Issued debt securities (note 4.h) - 3,028 - 3,028 - 3,135 - 3,135
Of which subordinated debt - 931 - 931 - 835 - 835
Of which non subordinated debt - 2,097 - 2,097 - 2,300 - 2,300
Financial liabilities at fair value through
profit or loss
13,059 3,188 - 16,247 12,501 3,306 - 15,807
Detail of these assets and liabilities is provided in note 4.d.
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Financial liabilities designated as at fair
value through profit or loss
Financial liabilities designated as at fair value through profit
or loss mainly consist of issued debt securities, originated and
structured on behalf of customers, where the risk exposure
is managed in combination with the hedging strategy. These
types of issued debt securities contain significant embedded
derivatives, whose changes in value may be compensated by
changes in the value of economic hedging derivatives.
The redemption value of debt issued and designated as at
fair value through profit or loss at 31 December 2021 was
EUR 3,153 million (EUR 3,362 million at 31 December 2020).
Other financial assets measured at fair
value through profit or loss
Other financial assets at fair value through profit or loss are
financial assets not held for trading:
Debt instruments that do not meet the criteria defined
by IFRS 9 to be classified as financial instruments at ‘fair
value through equity’ or at ‘amortised cost’:
their business model is not to ‘collect contractual cash
flows’ nor ‘collect contractual cash flows and sell the
instruments’; and/or
their cash flows are not solely repayments of principal
and interest on the principal amount outstanding;
Equity instruments that the Bank did not choose to classify
as at ‘fair value through equity’.
Derivative financial instruments
The majority of derivative financial instruments held for
trading are related to transactions initiated for trading
purposes. They may result from market-making or arbitrage
activities. BNP Paribas Fortis actively trades in derivatives.
Transactions include trades in ‘ordinary’ instruments such as
interest rate swaps, and structured transactions with complex
risk profiles tailored to meet the needs of its customers. The
net position is in all cases subject to limits.
Some derivative instruments are also contracted to hedge
financial assets or financial liabilities for which the Bank
has not documented a hedging relationship, or which do not
qualify for hedge accounting under IFRS.
In millions of euros
31 December 2021 31 December 2020
Positive
market value
Negative
market value
Positive
market value
Negative
market value
Interest rate derivatives 5,736 4,595 10,306 8,842
Foreign exchange derivatives 1,522 1,468 1,276 1,316
Credit derivatives - 2 - 3
Equity derivatives 777 60 631 19
Other derivatives - - - -
Derivative financial instruments 8,035 6,125 12,213 10,180
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
The table below shows the total notional amount of trading
derivatives. The notional amounts of derivative instruments
are merely an indication of the volume of BNP Paribas Fortis’
activities in financial instruments markets, and do not reflect
the market risks associated with such instruments.
In millions of euros
31 December 2021 31 December 2020
Exchange- traded
Over-the-counter,
cleared through
central clearing
houses
Over-the-counter
Total
Exchange- traded
Over-the-counter,
cleared through
central clearing
houses
Over-the-counter
Total
Interest rate derivatives 84,115 27,387 333,860 445,362 56,697 35,009 648,320 740,026
Foreign exchange derivatives 49 9 121,333 121,391 125 - 101,798 101,923
Credit derivatives - - 17 17 - - 21 21
Equity derivatives 1,223 - 1,404 2,627 101 - 1,878 1,979
Other derivatives - - - - - - - -
Derivative financial instruments 85,387 27,396 456,614 569,397 56,923 35,009 752,017 843,949
4.b Derivatives used for hedging purposes
The table below shows the notional amounts and the fair value
of derivatives used for hedging purposes.
In millions of euros
31 December 2021 31 December 2020
Notional
amounts
Positive
fair value
Negative
fair value
Notional
amounts
Positive
fair value
Negative
fair value
Fair value hedges
129,750 1,779 3,094 131,145 2,895 5,105
Interest rate derivatives 129,343 1,772 3,088 130,322 2,843 5,078
Foreign exchange derivatives 407 7 6 823 52 27
Cash flow hedges 15,909 188 121 14,789 277 152
Interest rate derivatives 3,831 35 15 5,725 72 60
Foreign exchange derivatives 12,078 153 106 9,064 205 92
Other derivatives - - - - - -
Net foreign investment hedges 200 15 - 200 6 -
Foreign exchange derivatives 200 15 - 200 6 -
Derivatives used for hedging purposes * 145,859 1,982 3,215 146,134 3,178 5,257
* ‘Derivatives used for Hedging purposes’ should be restated for the comparative period of 31 December 2020 by decreasing respectively assets and liabilities
with the amount of EUR (799) million. In December 2020, no netting of the fair value of the fixed and floating leg was applied on the macro hedge derivative
with the counterparty LCH (contrary to 31 December 2021). The effect of the retrospective application of the netting in the ‘Derivatives used for Hedging
purposes’ for the comparative period also results to the restatement of the captions ‘Total assets’, ‘Total liabilities’ and ‘Total liabilities and equity’ by the
amount of EUR (799) million.
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Interest rate risk and foreign exchange risk management
strategies are described in chapter ‘Risk Management and
Capital Adequacy’ of the annual report.
The table below shows the detail of the identified fair value
hedge relationships and the financial instruments portfolios
still hedged as at 31 December 2021:
31 December 2021
In millions of euros
Hedging instruments Hedged instruments
Notional amounts
Positive fair value
Negative fair value
Cumulated change in fair
value used as the basis for
recognising ineffectiveness
Carrying amount - asset
Cumulated amount
of fair value hedge
adjustments - assets
Carrying amount - liabilities
Cumulated amount
of fair value hedge
adjustments - liabilities
Fair value hedges of identified instruments 11,711 269 1,940 (1,648) 9,492 1,529 2,395 56
Interest rate derivatives hedging the interest rate risk
related to
11,304 263 1,934 (1,649) 9,453 1,532 2,023 58
Loans and receivables 876 15 273 (244) 856 244 - -
Securities 8,449 178 1,660 (1,463) 8,597 1,288 - -
Deposits 33 1 - - - - 34 -
Debt securities 1,946 69 1 58 - - 1,989 58
Foreign exchange derivatives hedging the interest rate
and foreign exchange risks related to
407 6 6 1 39 (3) 372 (2)
Loans and receivables - - - - - - - -
Securities 39 3 1 3 39 (3) - -
Deposits 22 - - - - - 23 -
Debt securities 346 3 5 (2) - - 349 (2)
Interest-rate risk hedged portfolios 118,039 1,510 1,154 149 29,385 309 57,943 458
Interest rate derivatives hedging the interest rate risk
related to
118,039 1,510 1,154 149 29,385 309 57,943 458
Loans and receivables 47,581 385 806 (309) 29,385 309 - -
Deposits 70,458 1,125 348 458 - - 57,943 458
Foreign exchange derivatives hedging the interest rate
and foreign exchange risks related to
- - - - - - - -
Loans and receivables - - - - - - - -
Deposits - - - - - - - -
Total fair value hedge 129,750 1,779 3,094 (1,499) 38,877 1,838 60,338 514
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
The table below shows the detail of the identified fair value
hedge relationships and the financial instruments portfolios
still hedged as at 31 December 2020:
31 December 2020
In millions of euros
Hedging instruments Hedged instruments
Notional amounts
Positive fair value
Negative fair value
Cumulated change in fair
value used as the basis for
recognising ineffectiveness
Carrying amount - asset
Cumulated amount
of fair value hedge
adjustments - assets
Carrying amount - liabilities
Cumulated amount
of fair value hedge
adjustments - liabilities
Fair value hedges of identified instruments 14,985 368 2,478 (2,113) 11,087 2,046 4,100 115
Interest rate derivatives hedging the interest rate risk
related to
14,162 315 2,451 (2,121) 10,738 2,048 3,671 108
Loans and receivables 937 14 280 (252) 917 252 - -
Securities 9,610 171 2,160 (1,978) 9,821 1,796 - -
Deposits 40 2 - 1 - - 41 1
Debt securities 3,575 128 11 108 - - 3,630 107
Foreign exchange derivatives hedging the interest rate
and foreign exchange risks related to
823 53 27 8 349 (2) 429 7
Loans and receivables 259 46 - 1 202 (2) - -
Securities 139 2 10 - 147 - - -
Deposits 20 - - 1 - - 21 1
Debt securities 405 5 17 6 - - 408 6
Interest-rate risk hedged portfolios 116,160 2,527 2,627 (217) 32,776 1,648 55,309 1,431
Interest rate derivatives hedging the interest rate risk
related to
116,160 2,527 2,627 (217) 32,776 1,648 55,309 1,431
Loans and receivables 49,566 399 2,134 (1,647) 32,776 1,648 - -
Securities - - - - - - - -
Deposits 66,594 2,128 493 1,430 - - 55,309 1,431
Foreign exchange derivatives hedging the interest rate
and foreign exchange risks related to
- - - - - - - -
Loans and receivables - - - - - - - -
Deposits - - - - - - - -
Total fair value hedge 131,145 2,895 5,105 (2,330) 43,863 3,694 59,409 1,546
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
An asset or a liability or set of assets and liabilities, can be
hedged over several periods of time with different derivative
financial instruments. Besides, some hedges are achieved by
the combination of two derivative instruments (for example, to
exchange the variable rate index of the first instrument from
Euribor to Eonia). In this case, the notional amounts add up
and their total amount is higher than the hedged amount. The
first situation is observed more particularly for interest rate
risk hedged portfolios and the second for hedges of issued
debt securities.
As regards discontinued fair value hedge relationships where
the derivative contract was terminated, the cumulated amount
of fair value adjustments to be amortised over the residual life
of the hedged items amounts to EUR 1,503 million assets as
at 31 December 2021, and to EUR 14 million in liabilities, for
hedges of portfolios of financial instruments. At 31 December
2020, these amounts were EUR 1,064 million in assets and
EUR 18 million in liabilities.
The change in assets is mainly due to a modification in
hedging strategy which entailed the replacement of deriva-
tives hedging portfolios of loans and receivables in order to
modify the floating rate fixing frequency of the swaps. Both the
terminated swaps and the new hedging swaps have the same
notional. The maturity of the related hedged items spreads
out until 2040.
The notional amount of cash flow hedge derivatives is
EUR 15,909 million as at 31 December 2021. Changes in
assets and liabilities recognised directly in equity amount to
EUR 20 million. At 31 December 2020, the notional amount of
cash flow hedge derivatives was EUR 14,789 million and the
changes in assets and liabilities recognised directly in equity
amount was EUR 9 million.
Notional amounts of hedge instruments by maturity date are
detailed as follows:
31 December 2021
In millions of euros
Maturity date
Less than 1 year Between 1 to 5 years Over 5 years
Fair value hedges 20,797 52,801 56,152
Interest rate derivatives 20,581 52,610 56,152
Foreign exchange derivatives 216 191 -
Cash flow hedges 12,212 3,197 500
Interest rate derivatives 1,627 1,704 500
Foreign exchange derivatives 10,585 1,493 -
Other derivatives - - -
Net foreign investments hedges 100 100 -
Foreign exchange derivatives 100 100 -
31 December 2020
In millions of euros
Maturity date
Less than 1 year Between 1 to 5 years Over 5 years
Fair value hedges 32,442 49,008 49,695
Interest rate derivatives 31,992 48,703 49,627
Foreign exchange derivatives 450 305 68
Cash flow hedges 9,105 4,912 772
Interest rate derivatives 2,265 2,688 772
Foreign exchange derivatives 6,840 2,224 -
Other derivatives - - -
Net foreign investments hedges - 200 -
Foreign exchange derivatives - 200 -
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.c Financial assets at fair value through equity
In millions of euros
31 December 2021 31 December 2020
Fair value
of which changes
in value taken
directly to equity Fair value
of which changes
in value taken
directly to equity
Debt securities 7,547 25 9,460 47
Governments 2,791 21 4,208 52
Other public administrations 2,408 22 2,750 21
Credit institutions 1,641 4 1,716 10
Other 707 (22) 786 (36)
Equity securities 314 256 313 256
Total financial assets at fair value through equity 7,861 281 9,773 303
The option to recognise certain equity instruments at fair
value through equity was retained in particular for shares
held through strategic partnerships and shares that the Bank
is required to hold in order to carry out certain activities.
During 2021, the Bank did not sell any of these investments
and no unrealised gains or losses were transferred to ‘retained
earnings’.
4.d Measurement of the fair value of financial instruments
Valuation process
BNP Paribas Fortis has retained the fundamental principle that
it should have a unique and integrated processing chain for
producing and controlling the valuations of financial instru-
ments that are used for the purpose of daily risk management
and financial reporting. All these processes are based on a
common economic valuation which is a core component of
business decisions and risk management strategies.
Economic value is composed of mid-market value, to which
add valuation adjustments.
Mid-market value is derived from external data or valua-
tion techniques that maximise the use of observable and
market-based data. Mid-market value is a theoretical addi-
tive value which does not take account of i) the direction
of the transaction or its impact on the existing risks in the
portfolio, ii) the nature of the counterparties, and iii) the aver-
sion of a market participant to particular risks inherent in
the instrument, the market in which it is traded, or the risk
management strategy.
Valuation adjustments take into account valuation uncertainty
and include market and credit risk premiums to reflect costs
that could be incurred in case of an exit transaction in the
principal market. Fair value generally equals the economic
value, subject to limited adjustments, such as own credit
adjustments, which are specifically required by IFRS standards.
The valuation methodologies have not been significantly
changed following COVID-19.
The main valuation adjustments are presented in the
section below.
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Valuation adjustments
Valuation adjustments retained by BNP Paribas Fortis for
determining fair values are as follows:
Bid/offer adjustments: the bid/offer range reflects the
additional exit cost for a price taker and symmetrically the
compensation sought by dealers to bear the risk of holding
the position or closing it out by accepting another dealer’s
price. BNP Paribas Fortis assumes that the best estimate of
an exit price is the bid or offer price, unless there is evidence
that another point in the bid/offer range would provide a more
representative exit price.
Input uncertainty adjustments: when the observation of prices
or data inputs required by valuation techniques is difficult or
irregular, an uncertainty exists on the exit price. There are
several ways to gauge the degree of uncertainty on the exit
price such as measuring the dispersion of the available price
indications or estimating the possible ranges of the inputs to
a valuation technique.
Model uncertainty adjustments: these relate to situations
where valuation uncertainty is due to the valuation technique
used, even though observable inputs might be available. This
situation arises when the risks inherent in the instruments
are different from those available in the observable data, and
therefore the valuation technique involves assumptions that
cannot be easily corroborated.
Credit valuation adjustment (CVA): the CVA adjustment applies
to valuations and market quotations whereby the credit wor-
thiness of the counterparty is not reflected. It aims to account
for the possibility that the counterparty may default and that
BNP Paribas Fortis may not receive the full fair value of the
transactions.
In determining the cost of exiting or transferring counterparty
risk exposures, the relevant market is deemed to be an inter-
dealer market. However, the determination of CVA remains
judgemental due to i) the possible absence or lack of price
discovery in the inter-dealer market, ii) the influence of the
regulatory landscape relating to counterparty risk on the
market participants’ pricing behaviour and iii) the absence of
a dominant business model for managing counterparty risk.
The CVA model is grounded on the same exposures as those
used for regulatory purposes. The model attempts to estimate
the cost of an optimal risk management strategy based on i)
implicit incentives and constraints inherent in the regula-
tions in force and their evolutions, ii) market perception of
the probability of default and iii) default parameters used for
regulatory purposes.
Funding valuation adjustment (FVA): when valuation tech-
niques are used for the purpose of deriving fair value, funding
assumptions related to the future expected cash flows are an
integral part of the mid-market valuation, notably through the
use of appropriate discount rates. These assumptions reflect
what the Bank anticipates as being the effective funding
conditions of the instrument that a market participant would
consider. This notably takes into account the existence and
terms of any collateral agreement. In particular, for non- or
imperfectly collateralized derivative instruments, they include
an explicit adjustment to the interbank interest rate.
Own-credit valuation adjustment for debts (OCA) and for
derivatives (debit valuation adjustment - DVA): OCA and DVA
are adjustments reflecting the effect of credit worthiness of
BNP Paribas Fortis, on respectively the value of debt securi-
ties designated as at fair value through profit or loss and
derivatives. Both adjustments are based on the expected
future liability profiles of such instruments. The own credit
worthiness is inferred from the market-based observation
of the relevant bond issuance levels. The DVA adjustment is
determined after taking into account the Funding Valuation
Adjustment (FVA).
As a result, the carrying value of issued debt securities des-
ignated as at fair value through profit or loss is increased by
EUR 24 million as at 31 December 2021, compared with an
increase in value of EUR 27 million as at 31 December 2020,
i.e. a EUR (3) million variation recognised directly in equity
that will not be reclassified to profit and loss.
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Instrument classes and classification
within the fair value hierarchy for
assets and liabilities measured
at fair value
As explained in the summary of significant accounting
policies (note 1.f.9), financial instruments measured at fair
value are categorised into a fair value hierarchy consisting
of three levels.
The disaggregation of assets and liabilities into risk classes
is meant to provide further insight into the nature of the
instruments:
Securitised exposures are further broken down by col-
lateral type;
For derivatives, fair values are broken down by dominant
risk factor, namely interest rate, foreign exchange, credit
and equity. Derivatives used for hedging purposes are
mainly interest rate derivatives.
In millions of euros
31 December 2021
Trading Book
Instruments at fair value
through profit or loss not held
for trading
Financial assets at fair value
through equity
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Securities 320 46 5 371 195 164 587 946 6,826 838 197 7,861
Governments 113 - - 113 - - - - 2,658 87 - 2,745
Asset Backed Securities - - - - - 120 - 120 - 528 - 528
Other debt securities 165 46 5 216 - 41 97 138 4,051 223 - 4,274
Equities and other equity
securities
42 - - 42 195 3 490 688 117 - 197 314
Loans and repurchase
agreements
- 3,961 253 4,214 - 11 57 68 - - - -
Loans - - - - - 11 57 68 - - - -
Repurchase agreements - 3,961 253 4,214 - - - - - - - -
Financial assets at fair value 320 4,007 258 4,585 195 175 644 1,014 6,826 838 197 7,861
Securities 159 - - 159 - - - -
Governments 159 - - 159 - - - -
Other debt securities - - - - - - - -
Equities and other equity
securities
- - - - - - - -
Borrowings and repurchase
agreements
- 12,799 101 12,900 - 160 - 160
Borrowings - 14 - 14 - 160 - 160
Repurchase agreements - 12,785 101 12,886 - - - -
Issued debt securities (Note 4.h) - - - - - 2,030 998 3,028
Subordinated debt (Note 4.h) - - - - - 931 - 931
Non subordinated debt (Note 4.h) - - - - - 1,099 998 2,097
Financial liabilities at fair value 159 12,799 101 13,059 - 2,190 998 3,188
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In millions of euros
31 December 2020
Trading Book
Instruments at fair value
through profit or loss not held
for trading
Financial assets at fair value
through equity
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Securities 382 49 3 434 327 292 511 1,130 8,512 1,013 248 9,773
Governments 116 - - 116 - - - - 3,975 207 - 4,182
Asset Backed Securities - - - - - 182 - 182 - 603 - 603
Other debt securities 160 49 3 212 - 108 97 205 4,423 203 50 4,676
Equities and other equity
securities
106 - - 106 327 2 414 743 114 - 198 312
Loans and repurchase
agreements
- 3,886 65 3,951 - 20 84 104 - - - -
Loans - - - - - 20 84 104 - - - -
Repurchase agreements - 3,886 65 3,951 - - - -
Financial assets at fair value 382 3,935 68 4,385 327 312 595 1,234 8,512 1,013 248 9,773
Securities 121 11 - 132 - - - -
Governments 121 - - 121 - - - --
Other debt securities - 11 - 11 - - - --
Equities and other equity
securities
- - - - - - - -
Borrowings and repurchase
agreements
- 12,369 - 12,369 - 171 - 171
Borrowings - 19 - 19 - 171 - 171
Repurchase agreements - 12,350 - 12,350 - - - -
Issued debt securities (Note 4.h) - - - - - 1,918 1,217 3,135
Subordinated debt (Note 4.h) - - - - - 835 - 835
Non subordinated debt (Note 4.h) - - - - - 1,083 1,217 2,300
Financial liabilities at fair value 121 12,380 - 12,501 - 2,089 1,217 3,306
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In millions of euros
31 December 2021
Positive market value Negative market value
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Interest rate derivatives - 5,693 43 5,736 - 4,535 60 4,595
Foreign exchange derivatives - 1,517 5 1,522 - 1,458 10 1,468
Credit derivatives - - - - - 2 - 2
Equity derivatives - 777 - 777 - 60 - 60
Other derivatives - - - - - - - -
Derivative financial instruments not
used for hedging purposes
- 7,987 48 8,035 - 6,055 70 6,125
Derivative financial instruments
used for hedging purposes
- 1,982 - 1,982 - 3,215 - 3,215
In millions of euros
31 December 2020
Positive market value Negative market value
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Interest rate derivatives - 10,199 107 10,306 - 8,772 70 8,842
Foreign exchange derivatives - 1,270 6 1,276 - 1,313 3 1,316
Credit derivatives - - - - - 3 - 3
Equity derivatives - 631 - 631 - 19 - 19
Other derivatives - - - - - - - -
Derivative financial instruments not
used for hedging purposes
- 12,100 113 12,213 - 10,107 73 10,180
Derivative financial instruments
used for hedging purposes
- 3,178 - 3,178 - 5,257 - 5,257
Transfers between levels may occur when an instrument
fulfils the criteria defined, which are generally market and
product dependent. The main factors influencing transfers
are changes in the observation capabilities, passage of time,
and events during the transaction lifetime. The timing of
recognising transfers is determined at the beginning of the
reporting period.
During 2021, transfers between Level 1 and Level 2 were not
significant.
Description of main instruments
in each level
The following section provides a description of the instru-
ments in each level in the hierarchy. It describes notably
instruments classified in Level 3 and the associated valuation
methodologies.
For main trading book instruments and derivatives classified
in Level 3, further quantitative information is provided about
the inputs used to derive fair value.
Level 1
This level encompasses all derivatives and securities that
are listed on exchanges or quoted continuously in other
active markets.
Level 1 includes notably equity securities and liquid bonds,
short selling of these instruments, derivative instruments
traded on organised markets (futures, options…). It includes
shares of funds and UCITS, for which the net asset value is
calculated on a daily basis, as well as debt representative of
shares of consolidated funds held by third parties.
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Level 2
The Level 2 stock of securities is composed of securities which
are less liquid than the Level 1 bonds. They are predominantly
government bonds, corporate debt securities, mortgage backed
securities, fund shares and short-term securities such as cer-
tificates of deposit. They are classified in Level 2 notably when
external prices for the same security can be regularly observed
from a reasonable number of market makers that are active
in this security, but these prices do not represent directly
tradable prices. This comprises amongst other, consensus
pricing services with a reasonable number of contributors
that are active market makers as well as indicative runs from
active brokers and/or dealers. Other sources such as primary
issuance market, collateral valuation and counterparty col-
lateral valuation matching may also be used where relevant.
Repurchase agreements are classified predominantly in Level
2. The classification is primarily based on the observability
and liquidity of the repo market, depending on the underlying
collateral and the maturity of the repo transaction.
Debts issued designated as at fair value through profit and
loss, are classified in the same level as the one that would
apply to the embedded derivative taken individually. The issu-
ance spread is considered observable.
Derivatives classified in Level 2 comprise mainly the following
instruments:
Vanilla instruments such as interest rate swaps, caps,
floors and swaptions, credit default swaps, equity/foreign
exchange (FX)/commodities forwards and options;
Structured derivatives such as exotic FX options, mono-
and multi-underlying equity/funds derivatives, single curve
exotic interest rate derivatives and derivatives based on
structured rates.
The above derivatives are classified in Level 2 when there
is a documented stream of evidence supporting one of the
following:
Fair value is predominantly derived from prices or
quotations of other Level 1 and Level 2 instruments,
through standard market interpolation or stripping tech-
niques whose results are regularly corroborated by real
transactions;
Fair value is derived from other standard techniques such
as replication or discounted cash flows that are calibrated
to observable prices, that bear limited model risk and
enable an effective offset of the risks of the instrument
through trading Level 1 or Level 2 instruments;
Fair value is derived from more sophisticated or proprietary
valuation techniques but is directly evidenced through
regular back-testing using external market-based data.
Determining of whether an over-the-counter (OTC) deriva-
tive is eligible for Level 2 classification involves judgement.
Consideration is given to the origin, transparency and reli-
ability of external data used, and the amount of uncertainty
associated with the use of models. It follows that the Level
2 classification criteria involve multiple analysis axis within
an ‘observability zone’ whose limits are determined by i) a
predetermined list of product categories and ii) the underlying
and maturity bands. These criteria are regularly reviewed and
updated, together with the applicable valuation adjustments,
so that the classification by level remains consistent with the
valuation adjustment policy.
Level 3
Level 3 securities of the trading book mainly comprise units
of funds and unlisted equity shares measured at fair value
through profit or loss or through equity.
Unlisted private equities are systematically classified as Level
3, with the exception of UCITS with a daily net asset value
which are classified in the Level 1 of the fair value hierarchy.
Shares and other unlisted variable income securities in Level
3 are valued using one of the following methods: a share of
revalued net book value, multiples of comparable companies,
future cash flows method, multi-criteria approach.
Repurchase agreements: mainly long-term or structured
repurchase agreements on corporate bonds and ABSs: The
valuation of these transactions requires proprietary meth-
odologies given the bespoke nature of the transactions and
the lack of activity and price discovery in the long-term repo
market. The curves used in the valuation are corroborated
using available data such as the implied basis of the relevant
benchmark bond pool, recent long-term repo trade data
and price enquiry data. Valuation adjustments applicable
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
to these exposures are commensurate with the degree of
uncertainty inherent in the modelling choices and amount
of data available.
Debts issued designated as at fair value through profit or loss,
are classified in the same level as the one that would apply
to the embedded derivative taken individually. The issuance
spread is considered observable.
Derivatives
Vanilla derivatives are classified in Level 3 when the exposure
is beyond the observation zone for rate curves or volatility
surfaces, or relates to less liquid markets such as tranches
on old credit index series or emerging markets interest rates
markets. The main instruments are:
Interest rate derivatives: exposures mainly comprise swap
products in less liquid currencies. Classification is driven
by the lower liquidity of some maturities, while observa-
tion capabilities through consensus may be available. The
valuation technique is standard, and uses external market
information and extrapolation techniques;
Credit derivatives (CDS): exposures mainly comprise CDSs
beyond the maximum observable maturity and, to a much
lesser extent, CDSs on illiquid or distressed names and
CDSs on loan indices. Classification is driven by the lack
of liquidity while observation capabilities may be avail-
able notably through consensus. Level 3 exposures also
comprise CDS and Total Return Swaps (TRS) positions
on securitised assets. These are priced along the same
modelling techniques as the underlying bonds, taking into
consideration the funding basis and specific risk premium;
Equity derivatives: exposures essentially comprise long
dated forward or volatility products or exposures where
there is a limited market for optional products. The marking
of the forward curves and volatility surfaces beyond the
maximum observable maturity relies on extrapolation
techniques. However, when there is no market for model
input, volatility or forward is generally determined on the
basis of proxy or historical analysis.
Similarly, long-term transactions on equity baskets are
also classified in Level 3, based on the absence of equity
correlation observability on long maturities.
These vanilla derivatives are subject to valuation adjustments
linked to uncertainty on liquidity, specialised by nature of
underlying and liquidity bands.
Structured derivatives classified in Level 3 predominantly
comprise structured derivatives of which hybrid products
(FX/Interest Rates hybrids, Equity hybrids), credit correlation
products, prepayment-sensitive products, some stock basket
optional products and some interest rate optional instruments.
The main exposures are described below, with insight into the
related valuation techniques and on the source of uncertainty:
Structured interest rate options are classified in Level 3
when they involve currencies where there is not sufficient
observation or when they include a quanto feature where
the pay-off is measured with a forex forward fixed rate
(except for the main currencies). Long term structured
derivatives are also classified in Level 3;
Hybrid FX/Interest rate products essentially comprise
a specific product family known as Power Reverse Dual
Currency (PRDC). The valuation of PRDCs requires sophisti-
cated modelling of joint behaviour of FX and interest rate,
and is notably sensitive to the unobservable FX/ interest
rate correlations, such products are classified as level 3.
PRDCs valuations are corroborated with recent trade data
and consensus data;
Securitisation swaps mainly comprise fixed rate swaps,
cross currency or basis swaps whose notional is indexed
to the prepayment behaviour of some underlying portfolio.
The estimation of the maturity profile of securitisation
swaps is corroborated by statistical estimates using
external historical data;
Forward volatility options are generally products whose
pay-off is indexed to the future variability of a rate index
such as volatility swaps. These products involve material
model risk as it is difficult to infer forward volatility infor-
mation from the market-traded instruments. The valuation
adjustment framework is calibrated to the uncertainty
inherent in the product, and to the range of uncertainty
from the existing external consensus data;
114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Inflation derivatives classified in Level 3 mainly comprise
swap products on inflation indices that are not associated
with a liquid indexed bond market, optional products on
inflation indices (such as caps and floors) and other forms
of inflation indices involving optionality on the inflation
indices or on the inflation annual rate. Valuation tech
-
niques used for inflation derivatives are predominantly
standard market models. Proxy techniques are used for a
few limited exposures. Although the valuations are cor-
roborated through monthly consensus data, these products
are classified as Level 3 due to their lack of liquidity and
some uncertainties inherent in the calibration;
The valuation of bespoke CDOs requires correlation of
default events. This information is inferred from the active
index tranche market through a proprietary projection
technique and involves proprietary extrapolation and
interpolation techniques. Multi-geography CDOs further
require an additional correlation assumption. Finally, the
bespoke CDO model also involves proprietary assumptions
and parameters related to the dynamic of the recovery
factor. CDO modelling, is calibrated on the observable
index tranche markets, and is regularly back-tested
against consensus data on standardised pools. The
uncertainty arises from the model risk associated with
the projection and geography mixing technique, and the
uncertainty of associated parameters, together with the
recovery modelling;
N to Default baskets are other forms of credit correlation
products, modelled through standard copula techniques.
The main inputs required are the pair-wise correlations
between the basket components which can be observed
in the consensus and the transactions. Linear baskets are
considered observable;
Equity and equity-hybrid correlation products are instru-
ments whose pay-off is dependent on the joint behaviour
of a basket of equities/indices leading to a sensitivity of
the fair value measurement to the correlation amongst the
basket components. Hybrid versions of these instruments
involve baskets that mix equity and non-equity underlyings
such as commodity indices or foreign exchange rates. Only
a subset of the Equity/index correlation matrix is regularly
observable and traded, while most cross-asset correla-
tions are not active. Therefore, classification in Level 3
depends on the composition of the basket, the maturity,
and the hybrid nature of the product. The correlation input
is derived from a proprietary model combining historical
estimators, and other adjustment factors, that are corrobo-
rated by reference to recent trades or external data. The
correlation matrix is essentially available from consensus
services, and when a correlation between two underlying
instruments is not available, it might be obtained from
extrapolation or proxy techniques.
These structured derivatives are subject to specific valua-
tion adjustments to cover uncertainties linked to liquidity,
parameters and model risk.
Valuation adjustments (CVA, DVA and FVA)
The valuation adjustment for counterparty credit risk (CVA),
own-credit risk for derivatives (DVA) and the explicit funding
valuation adjustment (FVA) are deemed to be unobservable
components of the valuation framework and therefore clas-
sified in Level 3. This does not impact, in general cases, the
classification of individual transactions into the fair value
hierarchy. However, a specific process allows to identify
individual deals for which the marginal contribution of these
adjustments and related uncertainty is significant. Are par-
ticularly concerned some insufficiently collateralized vanilla
interest rate instruments with very long residual maturity.
The table below provides the range of values of main
unobservable inputs for the valuation of Level 3 financial
instruments. The ranges displayed correspond to a variety
of different underlying instruments and are meaningful only
in the context of the valuation technique implemented by
BNP Paribas Fortis. The weighted averages, where relevant
and available, are based on fair values, nominal amounts or
sensitivities.
The main unobservable parameters used for the valuation of
debt issued in Level 3 are equivalent to these of their economic
hedge derivative. Information on those derivatives, displayed
in the following table, is also applicable to these debts.
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Risk classes
Balance Sheet
valuation
(In millions
of euros)
Main product types composing the
Level 3 stock within the risk class
Valuation technique
used for the product
types considered
Main unobservable
inputs for the
product types
considered
Range of
unobservable
input across
Level 3
population
considered
Weighted average
Asset
Liability
Interest rate
derivatives
43 60
Floors and caps on inflation rate or
on the cumulative inflation (such as
redemption floors), predominantly
on European and Belgian inflation
Inflation pricing
model
Volatility of
cumulative inflation
0.7% to 8.8%
(a)
Volatility of the year
on year inflation rate
0.3% to 2.7%
Forward volatility products such as
volatility swaps, mainly in euro
Interest rates option
pricing model
Forward volatility of
interest rates
0.4% to 0.7%
(a)
(a)
No weighting since no explicit sensitivity is attributed to these inputs
Table of movements in Level 3 financial instruments
For Level 3 financial instruments, the following movements occurred between 31 December 2020 and 31 December 2021:
In millions of euros
Financial assets Financial liabilities
Financial instruments at fair
value through profit or loss
held for trading
Financial instruments
designated as at fair value
through profit or loss not
held for trading
Financial assets at fair value
through equity
Total
Financial instruments at fair
value through profit or loss
held for trading
Financial instruments
designated as at fair value
through profit or loss not
held for trading
Total
At 31 December 2020 181 595 248 1,024 73 1,217 1,290
Purchases - 127 - 127 - - -
Issues - - - - - 86 86
Sales - (165) - (165) - - -
Settlements
(1)
158 (6) (57) 95 76 (269) (193)
Transfers to Level 3 - - - - 62 - 62
Transfers from Level 3 - - - - (10) (25) (35)
Gains or (losses) recognised in profit or loss with respect
to transactions expired or terminated during the period
- 96 - 96 - (11) (11)
Gains or (losses) recognised in profit or loss with respect
to unexpired instruments at the end of the period
(33) - - (33) (30) - (30)
Changes in fair value of assets and liabilities recognised
directly in equity
- - - - - - -
- Items related to exchange rate movements - (3) (6) (9) - - -
- Changes in assets and liabilities recognised in equity - - 12 12 - - -
At 31 December 2021 306 644 197 1,147 171 998 1,169
(1)
For the assets, includes redemptions of principal, interest payments as well as cash inflows and outflows relating to derivatives. For the liabilities, includes
principal redemptions, interest payments as well as cash inflows and outflows relating to derivatives the fair value of which is negative
116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Transfers out of Level 3 of derivatives at fair value include
mainly the update of the observability tenor of certain yield
curves, and of market parameters related to repurchase agree-
ments and credit transactions but also the effect of derivatives
becoming only or mainly sensitive to observable inputs due
to the shortening of their lifetime.
Transfers into Level 3 of instruments at fair value reflect the
effect of the regular update of the observability zones.
Transfers have been reflected as if they had taken place at
the beginning of the reporting period.
The Level 3 financial instruments may be hedged by other
Level 1 and Level 2 instruments, the gains and losses of which
are not shown in this table. Consequently, the gains and losses
shown in this table are not representative of the gains and
losses arising from management of the net risk on all these
instruments.
Sensitivity of fair value to reasonably possible changes in Level 3 assumptions
The following table summarises those financial assets and
financial liabilities classified as Level 3 for which alternative
assumptions in one or more of the unobservable inputs would
change fair value significantly.
The amounts disclosed are intended to illustrate the range of
possible uncertainty inherent to the judgement applied when
estimating Level 3 parameters, or when selecting valuation
techniques. These amounts reflect valuation uncertainties
that prevail at the measurement date, and even though
such uncertainties predominantly derive from the portfolio
sensitivities that prevailed at that measurement date, they
are not predictive or indicative of future movements in fair
value, nor do they represent the effect of market stress on
the portfolio value.
In estimating sensitivities, BNP Paribas Fortis either remeas-
ured the financial instruments using reasonably possible
inputs, or applied assumptions based on the valuation adjust-
ment policy.
For the sake of simplicity, the sensitivity on cash instruments
that are not relating to securitised instruments was based on a
uniform 1% shift in the price. More specific shifts were however
calibrated for each class of the Level 3 securitised exposures,
based on the possible ranges of the unobservable inputs.
For derivative exposures, the sensitivity measurement is based
on the credit valuation adjustment (CVA), the explicit funding
valuation adjustment (FVA) and the parameter and model
uncertainty adjustments related to Level 3.
Regarding the credit valuation adjustment (CVA) and the
explicit funding valuation adjustment (FVA), the uncertainty
was calibrated based on prudent valuation adjustments
described in the technical standard ‘Prudent Valuation’ pub-
lished by the European Banking Authority. For other valuation
adjustments, two scenarios were considered: a favourable
scenario where all or portion of the valuation adjustment is
not considered by market participants, and an unfavourable
scenario where market participants would require twice the
amount of valuation adjustments considered by BNP Paribas
Fortis for entering into a transaction.
In millions of euros
31 December 2021 31 December 2020
Potential impact
on income
Potential impact
on equity
Potential impact
on income
Potential impact
on equity
Fixed-income securities +/-1 +/-0 +/-1 +/-1
Equities and other equity securities +/-5 +/-2 +/-4 +/-2
Loans and repurchase agreements +/-3 +/-2
Derivative financial instruments +/-11 +/-12
Interest rate and foreign exchange derivatives +/-11 +/-12
Credit derivatives +/-0 +/-0
Equity derivatives +/-0 +/-0
Other derivatives +/-0 +/-0
Sensitivity of Level 3 financial instruments +/-20 +/-2 +/-19 +/-3
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Deferred margin on financial instruments measured using techniques developed
internally and based on inputs partly unobservable in active markets
Deferred margin on financial instruments (‘Day One Profit’)
primarly concerns the scope of financial instruments eligible
for Level 3 and to a lesser extent some financial instruments
eligible for Level 2 where valuation adjustments for uncertain-
ties regarding parameters or models are important compared
to the initial margin.
The day one profit is calculated after setting aside valuation
adjustments for uncertainties as described previously and
released to profit or loss over the expected period for which
the inputs will be unobservable.
The deferred margin not taken to the profit and loss account
but contained in the price of the derivatives sold to clients
and measured using internal models based on non-observable
parameters (‘Day one profit’) is less than EUR 1 million.
4.e Financial assets at amortised cost
Detail of loans and advances by nature
In millions of euros
31 December 2021 31 December 2020
Gross value
Impairment
(note 2.g)
Carrying
amount Gross value
Impairment
(note 2.g)
Carrying
amount
Loans and advances to credit institutions 7,458 (64) 7,394 8,590 (59) 8,531
On demand accounts 3,417 (1) 3,416 2,802 (1) 2,801
Loans
(1)
3,070 (63) 3,007 4,406 (58) 4,348
Repurchase agreements 971 - 971 1,382 - 1,382
Loans and advances to customers 197,082 (2,980) 194,102 191,804 (3,062) 188,742
On demand accounts 4,094 (500) 3,594 3,535 (469) 3,066
Loans to customers 172,538 (1,985) 170,553 169,182 (2,104) 167,078
Finance leases 20,450 (495) 19,955 19,087 (489) 18,598
Repurchase agreements - - - - - -
Total loans and advances at amortised cost 204,540 (3,044) 201,496 200,394 (3,121) 197,273
(1)
Loans and advances to credit institutions include term deposits made with central banks, which amounted to EUR 62 million as at 31 December 2021 (EUR
276 million as at 31 December 2020)
118
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Detail of debt securities by type of issuer
In millions of euros
31 December 2021 31 December 2020
Gross value
Impairment
(note 2.g)
Carrying
amount Gross value
Impairment
(note 2.g)
Carrying
amount
Governments 8,210 (4) 8,206 8,903 (3) 8,900
Other public administrations 1,919 - 1,919 2,660 - 2,660
Credit institutions 1,149 - 1,149 1,356 - 1,356
Other 438 - 438 467 - 467
Total debt securities at amortised cost 11,716 (4) 11,712 13,386 (3) 13,383
Detail of financial assets at amortised cost by stage
In millions of euros
31 December 2021 31 December 2020
Gross value
Impairment
(note 2.g)
Carrying
amount Gross value
Impairment
(note 2.g)
Carrying
amount
Loans and advances to credit institutions 7,458 (64) 7,394 8,590 (59) 8,531
Stage 1 7,293 (1) 7,292 8,431 - 8,431
Stage 2 100 (1) 99 98 (1) 97
Stage 3 65 (62) 3 61 (58) 3
Loans and advances to customers 197,082 (2,980) 194,102 191,804 (3,062) 188,742
Stage 1 168,002 (248) 167,754 164,631 (298) 164,333
Stage 2 24,780 (454) 24,326 22,123 (429) 21,694
Stage 3 4,300 (2,278) 2,022 5,050 (2,335) 2,715
Debt securities 11,716 (4) 11,712 13,386 (3) 13,383
Stage 1 11,712 (4) 11,708 13,386 (3) 13,383
Stage 2 4 - 4 - - -
Stage 3 - - - - - -
Total financial assets at amortised cost 216,256 (3,048) 213,208 213,780 (3,124) 210,656
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Exposures subject to legislative and non legislative moratoria
In millions of
euros
31 December 2021
Gross carrying amount
Accumulated impairment, accumulated negative
changes in fair value due to credit risk
Gross carrying amount - Inflows to non performing exposures
Performing Non performing Performing Non performing
Of which:
exposures with forbearance measures
Of which: Instruments with significant increase in credit risk
since initial recognition but not credit-impaired (Stage 2)
Of which:
exposures with forbearance measures
Of which:
Unlikely to pay that are not past-due or past-due <= 90 days
Of which:
exposures with forbearance measures
Of which: Instruments with significant increase in credit risk since
initial recognition but not credit-impaired (Stage 2)
Of which:
exposures with forbearance measures
Of which:
Unlikely to pay that are not past-due or past-due <= 90 days
Loans and
advances subject
to moratorium
10,835 10,390 308 1,728 445 280 201 (159) (58) (13) (42) (101) (47) (43) 54
Of which
Households
3,375 3,325 10 565 49 6 19 (13) (9) (1) (7) (4) (1) (1) 8
of which
collateralised
by residential
immovable
property
3,242 3,204 35 535 38 5 18 (8) (6) - (5) (2) - (1) 7
Of which
Non-financial
corporations
7,105 6,716 293 1,075 389 268 179 (143) (47) (13) (32) (96) (46) (41) 46
of which
small and
Medium-sized
Enterprises
3,586 3,413 201 619 173 85 59 (92) (31) (10) (22) (61) (20) (14) 29
of which
collateralised
by commercial
immovable
property
3,663 3,496 100 519 167 133 142 (43) (11) (2) (7) (32) (22) (25) 16
In response to the sanitary crisis, several moratoria have been granted to clients. Those moratoria mostly consist in payment
suspension of a few months. Most of the moratoria were expired at 31 December 2021.
120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Breakdown of exposures subject to legislative and non legislative moratoria(*) by residual
maturity of moratoria
In millions of
euros
31 December 2021
Number
of
obligors
Gross carrying amount
Of which:
legislative
moratoria
Of
which:
expired
Residual maturity of moratoria
<= 3 months
> 3 months
<= 6 months
> 6 months
<= 9 months
> 9 months
<= 12
months > 1 year
Loans and
advances
for which
moratorium was
offered
133,923 10,848
Loans and
advances subject
to moratorium
(granted)
133,748 10,835 697 10,815 18 1 1 - -
of which:
Households
3,375 108 3,375 - - - - -
of which:
Collateralised
by residential
immovable
property
3,215 17 3,215 - - - - -
of which:
Non-financial
corporations
7,105 590 7,085 18 1 1 - -
of which:
Small and
Medium-sized
Enterprises
3,587 545 3,581 5 1 - - -
of which:
Collateralised
by commercial
immovable
property
3,664 63 3,664 - - - - -
(*) Moratoria qualified as ‘COVID-19 General moratorium Measure’ meeting the criteria defined in EBA Guidelines published on 2 April 2020, and amended
2 December 2020
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Loans and advances subject to public guarantee schemes
In millions of euros
31 December 2021
Gross carrying amount
Maximum
amount
of the guarantee
that can be
considered
Gross carrying
amount
of which:
forborne
Public
guarantees
received
Inflows to
non-performing
exposures
Newly originated loans and advances subject to public
guarantee schemes
177 8 139 6
of which: Households 6 -
of which: Collateralised by residential immovable property 1 -
of which: Non-financial corporations 169 8 133 6
of which: Small and Medium-sized Enterprises 115 5
of which: Collateralised by commercial immovable property 44 1
At 31 December 2021, the amount of loans subject to public
guarantee schemes granted by BNP Paribas Fortis stands at
EUR 0.2 billion, mainly in Belgium and Luxembourg.
In Belgium, most of the moratoria were granted in the frame-
work of the Febelfin charters. In line with the EBA guidelines,
moratoria granted under a general scheme are not classified
automatically as exposures with forbearance measures, with
the exception of moratoria having a total payment deferral
period of more than 9 months.
Contractual maturities of finance leases
In millions of euros 31 December 2021 31 December 2020
Gross investment 21,749 20,340
Receivable within 1 year 6,869 6,393
Receivable after 1 year but within 5 years 13,561 12,685
Receivable beyond 5 years 1,319 1,262
Unearned interest income (1,299) (1,253)
Net investment before impairment 20,450 19,087
Receivable within 1 year 6,330 5,881
Receivable after 1 year but within 5 years 12,903 12,048
Receivable beyond 5 years 1,217 1,158
Impairment provisions (495) (489)
Net investment after impairment 19,955 18,598
122
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.f Impaired financial assets (Stage 3)
The following tables present the carrying amounts of impaired
financial assets carried at amortised cost and of impaired
financing and guarantee commitments, as well as related
collateral and other guarantees.
The amounts shown for collateral and other guarantees cor-
respond to the lower of the value of the collateral or other
guarantee and the value of the secured assets.
In millions of euros
31 December 2021
Stage 3 assets
Collateral receivedGross value Impairment Net
Loans and advances to credit institutions (note 4.e) 65 (62) 3 -
Loans and advances to customers (note 4.e) 4,300 (2,278) 2,022 1,548
Debt securities at amortised cost (note 4.e) - - - -
Total amortised cost impaired assets (Stage 3) 4,365 (2,340) 2,025 1,548
Financing commitments given 159 (30) 129 46
Guarantee commitments given 250 (90) 160 89
Total off-balance sheet impaired commitments (Stage 3) 409 (120) 289 135
In millions of euros
31 December 2020
Stage 3 assets
Collateral receivedGross value Impairment Net
Loans and advances to credit institutions (note4.e) 61 (58) 3 6
Loans and advances to customers (note 4.e) 5,050 (2,335) 2,715 1,687
Debt securities at amortised cost (note 4.e) - - - -
Total amortised cost impaired assets (Stage 3) 5,111 (2,393) 2,718 1,693
Financing commitments given 252 (19) 233 76
Guarantee commitments given 271 (92) 179 37
Total off-balance sheet impaired commitments (Stage 3) 523 (111) 412 113
The table below shows information regarding the variations of the gross outstandings in Stage 3:
Gross value Impaired financial assets (Stage 3)
In millions of euros 31 December 2021 31 December 2020
Opening balance 5,111 4,792
Transfer to Stage 3 1,313 1,785
Transfer to Stage 1 or Stage 2 (598) (404)
Amounts Written offs (269) (305)
Other changes (1,192) (757)
Closing balance 4,365 5,111
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.g Financial liabilities at amortised cost due to credit institutions and customers
In millions of euros 31 December 2021 31 December 2020
Deposits from credit institutions 56,610 50,820
On demand accounts 1,478 1,308
Interbank borrowings
(1)
51,100 48,790
Repurchase agreements 4,032 722
Deposits from customers 199,037 193,770
On demand deposits 97,120 91,296
Savings accounts 84,934 83,693
Term accounts and short-term notes 16,983 18,781
Repurchase agreements - -
(1)
Interbank borrowings from credit institutions include term borrowings from central banks, including EUR 27.8 billion of TLTRO III at 31 December 2021 (EUR
25.2 billion at 31 December 2020).
4.h Debt securities and subordinated debt
This note covers all debt securities and subordinated debt measured at amortised cost and designated as at fair value through
profit or loss.
Debt securities measured at amortised cost
In millions of euros 31 December 2021 31 December 2020
Negotiable certificates of deposit and other debt securities 9,342 8,792
Bond issues 3,536 3,023
Total debt securities at amortised cost 12,878 11,815
Debt securities and subordinated debt at fair value through profit and loss
In millions of euros 31 December 2021 31 December 2020
Debt securities 2,097 2,300
Subordinated debt 931 835
Total debt securities and subordinated debt at fair value through profit or loss 3,028 3,135
124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Subordinated debt measured at amortised cost
In millions of euros 31 December 2021 31 December 2020
Redeemable subordinated debt 2,296 2,711
Undated subordinated debt - 29
Total subordinated debt measured at amortised cost 2,296 2,740
The subordinated debt designated at fair value through profit
or loss mainly consists of Convertible And Subordinated Hybrid
Equity linked Securities (CASHES) issued by BNP Paribas Fortis
(previously Fortis Banque) in December 2007.
The CASHES are perpetual securities but may be exchanged for
Ageas (previously Fortis SA/NV) shares at the holder’s sole dis-
cretion at a price of EUR 239.40. However, as of 19 December
2014, the CASHES will be automatically exchanged into Ageas
shares if their price is equal to or higher than EUR 359.10 for
twenty consecutive trading days. The principal amount will
never be redeemed in cash. The rights of the CASHES holders
are limited to the Ageas shares held by BNP Paribas Fortis
and pledged to them.
Ageas and BNP Paribas Fortis have entered into a Relative
Performance Note (RPN) contract, the value of which varies
contractually so as to offset the impact on BNP Paribas Fortis
of the relative difference between changes in the value of the
CASHES and changes in the value of the Ageas shares.
On 7 May 2015, BNP Paribas and Ageas reached a new agree-
ment which allows BNP Paribas to purchase outstanding
CASHES under the condition that these are converted into
Ageas shares, leading to a proportional settlement of the RPN.
The agreement between Ageas and BNP Paribas has expired
on 31 December 2016.
On 24 July 2015, BNP Paribas obtained the prior agreement
from the European Central Bank to proceed to purchase
CASHES within a limit of EUR 200 million nominal amount.
In 2016, this agreement has been used for EUR 164 million
converted into Ageas shares.
On 8 July 2016, BNP Paribas obtained a new agreement from
the European Central Bank to proceed to purchase CASHES
within a limit of EUR 200 million nominal amount. This agree-
ment superseded the previous one.
On 11 August 2017, the European Central Bank accepted the
request formulated by BNP Paribas to cancel the agreement
to purchase CASHES.
As at 31 December 2021, the subordinated liability is eligible to
Tier 1 capital for EUR 205 million (considering the transitional
period, which will end in 2022).
4.i Current and deferred taxes
In millions of euros 31 December 2021 31 December 2020
Current taxes 94 87
Deferred taxes 1,248 1,477
Current and deferred tax assets 1,342 1,564
Current taxes 138 178
Deferred taxes 630 593
Current and deferred tax liabilities 768 771
125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Changes in deferred tax by nature over the period
In millions of euros
31 December 2020
Changes recognised
through profit or loss
Changes recognised
through equity that may
be reclassified to profit
or loss
Changes recognised
through equity that will
not be reclassified to
profit or loss
Changes in the
consolidation scope,
in exchange rate
movements and other
items
31 December 2021
Financial instruments (23) (72) (3) (3) 14 (87)
Provisions for employee benefit obligations 98 2 8 (7) 101
Unrealised finance lease reserve (186) 14 7 (165)
Credit risk impairment 525 3 (18) 510
Tax loss carryforwards 837 (210) (2) 625
Other items (367) 37 (36) (366)
Net deferred taxes 884 (226) (3) 5 (42) 618
Deferred tax assets 1,477 1,248
Deferred tax liabilities 593 630
In order to determine the amount of the tax loss carryfor-
wards recognised as assets, BNP Paribas Fortis conducts every
year a specific review for each relevant entity, based on the
applicable tax regime – notably incorporating any time limit
rules – and a realistic projection of their future revenues and
charges in line with their business plan.
Deferred tax assets recognised on tax loss carryforwards are
mainly related to BNP Paribas Fortis SA for EUR 452 million,
with a 4-year expected recovery period (unlimited carryfor-
ward period).
Unrecognised deferred tax assets totalled EUR 165 million as
at 31 December 2021 compared with EUR 166 million as at
31 December 2020.
4.j Accrued income/expense and other assets/liabilities
In millions of euros 31 December 2021 31 December 2020
Guarantee deposits and bank guarantees paid 2,478 3,361
Collection accounts 53 54
Accrued income and prepaid expenses 971 887
Other debtors and miscellaneous assets 5,686 6,058
Total accrued income and other assets 9,188 10,360
Guarantee deposits received 840 1,017
Collection accounts 438 425
Accrued expense and deferred income 1,880 1,744
Lease liabilities 287 353
Other creditors and miscellaneous liabilities 4,567 4,668
Total accrued expense and other liabilities 8,012 8,207
126
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.k Equity-method investments
Cumulated financial information of associates and joint ventures is presented in the following table:
In millions of euros
Year to 31 Dec. 2021
31 December
2021 Year to 31 Dec. 2020
31 December
2020
Share of net income
Share of changes in
assets and liabilities
recognised directly in
equity
Share of net income and
changes in assets and
liabilities recognised
directly in equity
Equity-method
investments
Share of net income
Share of changes in
assets and liabilities
recognised directly in
equity
Share of net income and
changes in assets and
liabilities recognised
directly in equity
Equity-method
investments
Joint ventures 15 30 45 115 24 (49) (25) 69
Associates
(1)
307 (34) 273 3,694 298 (65) 233 3,678
Total equity-method entities 322 (4) 318 3,809 322 (114) 208 3,747
(1)
Including controlled but non material entities consolidated under the equity method
Financing and guarantee commitments given by BNP Paribas
Fortis to joint ventures and associates are listed in the Note
7.g ‘Other related parties’.
The carrying amount of the BNP Paribas Fortis’ investment
in the main joint ventures and associates is presented in the
following table:
In millions of euros
Country of
registration
Activity
31 December 2021 31 December 2020
Interest %
Equity-
method
investments Interest %
Equity-
method
investments
Joint ventures
bpost bank Belgium Retail banking 50% 111 50% 114
Associates
AG Insurance Belgium Insurance 25% 1,851 25% 1,832
BNP Paribas Asset Management France Asset management 30.9% 903 30.9% 933
BNPP Bank Polska Poland Retail banking 24.1% 597 24.1% 631
127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Bpost bank
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Total net income 3 37
Changes in assets and liabilities recognised directly in equity (10) (32)
In millions of euros 31 December 2021 31 December 2020
Total assets 12,219 12,109
Total liabilities 11,737 11,620
Net assets of the equity associate 482 489
AG Insurance
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Total net income 586 515
Changes in assets and liabilities recognised directly in equity 59 (189)
In millions of euros 31 December 2021 31 December 2020
Total assets 82,056 82,350
Total liabilities 75,028 75,419
Net assets of the equity associate 7,028 6,931
BNP Paribas Asset Management
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Total net income 135 241
Changes in assets and liabilities recognised directly in equity (28) 46
In millions of euros 31 December 2021 31 December 2020
Total assets 3,175 2,424
Total liabilities 2,112 1,265
Net assets of the equity associate 1,063 1,159
BNPP Bank Polska SA
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Total net income 43 145
Changes in assets and liabilities recognised directly in equity (190) 34
In millions of euros 31 December 2021 31 December 2020
Total assets 27,472 25,359
Total liabilities 25,072 22,808
Net assets of the equity associate 2,400 2,551
128
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Impairment testing on investments in equity associates
IFRS-rules require to assess at the end of each reporting period
whether there is any objective evidence that (the value of) an
investment in an equity-method entity should be tested for
impairment or not. Upon testing, if the recoverable amount
of this investment (being the highest of its fair market value
and its value in use) is lower than its book value, the book
value is reduced to its recoverable amount by recording
an impairment.
The DCF approach (discounted cash flows) is used to deter-
mine the value-in-use.
The DCF method is based on a number of assumptions in terms
of future revenues, expenses and cost of risk (cash flows)
based on medium-term business plans over a period of five
years. Cash flow projections beyond the five-year forecast
period are based on a growth rate to perpetuity and are nor-
malised when the short-term environment does not reflect
the normal conditions of the economic cycle.
The key parameters which are sensitive to the assumptions
made are the cost of capital, the cost/income ratio, the cost
of risk and the growth rate to perpetuity.
Cost of capital is determined on the basis of a risk-free rate,
an observed market risk premium weighted by a risk factor
based on comparables specific to each investment. The values
of these parameters are obtained from external informa-
tion sources.
Allocated capital is determined for each investment based
on the Common Equity Tier 1 regulatory requirements for
the legal entity to which the investment belongs, with a
minimum of 7%.
The growth rate to perpetuity used is 2% for mature economies
in Europe.
At 31 December 2021, impairment tests were performed on
the investments held by BNP Paribas Fortis in bpost bank, in
BNP Paribas Asset Management, in BNP Paribas Bank Polska
and in AG Insurance. None of these tests demonstrated the
need to record an impairment on the investments.
The table below shows the sensitivity of the estimated value
of the investments to a 10-basis point change in the cost of
capital, a 1% change in the cost/income ratio in terminal value,
a 5% change of the cost of risk in terminal value and a 50-basis
point change in the growth rate to perpetuity.
In millions of euros
31 December 2021
BNP Paribas Asset
Management BNP Paribas Bank Polska SA AG Insurance
Cost of capital
Adverse change (+10 basis points) (18) (14) (29)
Positive change (-10 basis points) 18 15 30
Cost/income ratio
Adverse change (+1%) (24) (24) (41)
Positive change (-1%) 24 24 41
Cost of risk
Adverse change (+5%) - (10) -
Positive change (-5%) - 10 -
Long-term growth rate
Adverse change (-50 basis points) (58) (31) (105)
Positive change (+50 basis points) 66 35 122
129
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.l Property, plant, equipment and intangible assets used in operations,
investment property
31 December 2021 31 December 2020
In millions of euros
Gross
value
Accumulated
depreciation,
amortisation
and impairment
Carrying
amount
Gross
value
Accumulated
depreciation,
amortisation
and impairment
Carrying
amount
Investment property 291 (136) 155 421 (201) 220
Land and buildings 3,043 (1,702) 1,341 2,928 (1,762) 1,166
Equipment, furniture and fixtures 708 (528) 180 849 (648) 201
Plant and equipment leased as lessor under
operating leases
33,588 (9,317) 24,271 30,056 (8,182) 21,874
Other property, plant and equipment 378 (181) 197 666 (213) 453
Property, plant and equipment 37,717 (11,728) 25,989 34,499 (10,805) 23,694
of which right of use 793 (523) 270 825 (494) 331
Purchased software 230 (185) 45 368 (305) 63
Internally-developed software 926 (607) 319 692 (406) 286
Other intangible assets 53 (27) 26 69 (50) 19
Intangible assets 1,209 (819) 390 1,129 (761) 368
Investment property
Land and buildings leased by the Bank as lessor under operating leases are recorded in ‘Investment property’.
The estimated fair value of investment property accounted for at amortised cost at 31 December 2021 is EUR 268 million,
compared with EUR 311 million for the year ended 31 December 2020.
Operating leases
Operating leases and investment property transactions are in certain cases subject to agreements providing for the following
future minimum payments:
In millions of euros 31 December 2021 31 December 2020
Future minimum lease payments receivable under non-cancellable leases 7,762 7,369
Payments receivable within 1 year 3,369 3,170
Payments receivable after 1 year but within 5 years 4,341 4,139
Payments receivable beyond 5 years 52 60
Future minimum lease payments receivable under non-cancellable leases are payments that the lessee is required to make
during the lease term.
130
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Intangible assets
Other intangible assets include leasehold rights, goodwill and trademarks acquired by the BNP Paris Fortis.
Depreciation, amortisation and impairment
The total depreciation, amortisation and impairment of prop-
erty, plant and equipment and intangible assets for the year
ending 31 December 2021 was EUR (361) million, compared
with EUR (381) million for the year ending 31 December 2020.
The above mentioned amounts include a net reversal to
impairment provisions taken into account to the profit
and loss account in the year ending 31 December 2021 for
EUR 3 million, compared with a net charge to impairment pro-
visions of EUR 1 million for the year ended 31 December 2020.
4.m Goodwill
In millions of euros 31 December 2021 31 December 2020
Carrying amount at start of period 722 730
Acquisitions 31 6
Divestments - -
Impairment recognised during the period - -
Exchange rate adjustments 13 (13)
Other movements 1 (1)
Carrying amount at end of period 767 722
Gross value 919 888
Accumulated impairment recognised at the end of period (152) (166)
Goodwill by homogeneous group of businesses is as follows:
In millions of euros
Carrying amount
Impairment recognised
during the period Acquisitions of the period
31 December
2021
31 December
2020
Year to 31
Dec. 2021
Year to 31
Dec. 2020
Year to 31
Dec. 2021
Year to 31
Dec. 2020
BNP Paribas Fortis in Belgium 59 28 - - 31 -
Alpha Credit 22 22 - - - -
Axepta 31 - - - 31 -
Factoring 6 6 - - - -
BNP Paribas Fortis in Luxembourg 186 185 - - - 1
BNP Paribas Leasing Solutions 148 147 - - - 1
Wealth Management Luxemburg 38 38 - - - -
BNP Paribas Fortis in other countries 522 509 - - - 5
Arval 522 509 - - - 5
Total goodwill 767 722 - - 31 6
131
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
BNP Paribas Fortis activities are divided into homogeneous
group of businesses, representing reporting entities or groups
of reporting entities of BNP Paribas Fortis. The breakdown is
consistent with BNP Paribas Fortis’ organisational structure
and management methods, and reflects the independence of
the reporting entities in terms of results and management
approach. This is reviewed on a regular basis in order to take
into account events likely to affect the composition of homo-
geneous group of businesses, such as acquisitions, disposals
and major reorganisations.
The homogeneous group of businesses to which goodwill is
allocated are:
Alpha Credit is the bank’s consumer credit specialist. It
provides a comprehensive range of consumer loans at
points of sale (retail stores and car dealerships) and
directly to clients. It distributes also its products through
the bank’s retail network, through bpost bank and via
brokers. It is the market leader in Belgium and Luxembourg;
Factoring is a homogeneous group of businesses regroup-
ing all the factoring subsidiaries of the Bank. It is mainly
active in Belgium, Germany, UK and The Netherlands. It
is the market leader in Belgium;
BNP Paribas Leasing Solutions uses a multi-channel
partnership approach (direct sales, sales via referrals,
partnerships and banking networks) to offer corporate
and small business clients an array of leasing and rental
solutions, ranging from equipment financing to fleet
outsourcing;
Wealth Management Luxembourg: ABN AMRO Wealth
Management Luxembourg was acquired by BGL BNP
Paribas on September 3 2018 and subsequently integrated
into its Wealth Management business unit. This integration
allowed BGL to reinforce its leadership position on the
wealth management market in Luxembourg, and more
specifically in the segment of European entrepreneurs;
Arval is a specialist in vehicle long-term leasing and
mobility. Arval offers corporates (from multinational
companies to small business companies), employees and
individuals tailored solutions that optimise their mobility.
Impairment tests
According to IFRS-rules, goodwill should be tested for impair-
ment at least on an annual basis or upon occurrence of a
triggering event by comparing the carrying amount of the
entity with the recoverable amount. The recoverable amount
corresponds to the highest of fair market value of an entity and
its value in use. The DCF approach (discounted cash flows) is
used to determine the value-in-use. If the recoverable amount
is lower than the carrying amount (or book value), an impair-
ment loss is recognised for the difference.
The DCF method is based on a number of assumptions in terms
of future revenues, expenses and cost of risk (cash flows)
based on medium-term business plans over a period of five
years. Cash flow projections beyond the five-year forecast
period are based on a growth rate to perpetuity and are nor-
malised when the short-term environment does not reflect
the normal conditions of the economic cycle.
The key parameters which are sensitive to the assumptions
made are the cost of capital, the cost/income ratio, the cost
of risk and the growth rate to perpetuity.
Cost of capital is determined on the basis of a risk-free rate,
an observed market risk premium weighted by a risk factor
based on comparables specific to each homogeneous group
of businesses. The values of these parameters are obtained
from external information sources.
Allocated capital is determined for each homogeneous group
of businesses based on the Common Equity Tier 1 regulatory
requirements for the legal entity to which the homogeneous
group of businesses belongs, with a minimum of 7%.
The growth rate to perpetuity used is 2% for mature economies
in Europe.
At year-end 2021, an impairment test was performed for each
of the following four homogeneous groups of businesses: Alpha
Credit, BNP Paribas Leasing Solutions, Wealth Management
Luxembourg and Arval. None of these tests demonstrated the
need to record an impairment.
The goodwill recognised on Factoring is considered as non-
material and is therefore not tested for impairment.
The goodwill recognised on Axepta BNPP Benelux following
the transaction closed in November 2021 will be tested
starting in 2022.
132
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Sensitivities
The table below shows the sensitivity of the main goodwill
valuations to a 10-basis point change in the cost of capital,
a 1% change in the cost/income ratio in terminal value, a 5%
change of the cost of risk in terminal value and a 50-basis
point change in the growth rate to perpetuity. There would
be no need to depreciate any goodwill when using any of the
unfavourable variations in the table.
In millions of euros
31 December 2021
Alpha Credit
BNP Paribas
Leasing Solutions Arval
Wealth
Management
Luxembourg
Cost of capital
Adverse change (+10 basis points) (14) (78) (187) (8)
Positive change (-10 basis points) 14 80 192 8
Cost/income ratio
Adverse change (+1%) (15) (92) (192) (13)
Positive change (-1%) 15 92 192 13
Cost of risk
Adverse change (+5%) (14) (42) (39) -
Positive change (-5%) 14 42 39 -
Long-term growth rate
Adverse change (-50 basis points) (37) (211) (574) (28)
Positive change (+50 basis points) 42 245 663 32
4.n Provisions for contingencies and charges
In millions of euros
31 December 2020
Net additions to
provisions
Provisions used
Changes in value
recognised directly
in equity
Effect of movements
in exchange
rates and other
movements
31 December 2021
Provisions for employee benefits 3,633 180 (237) (51) (25) 3,500
of which post-employment benefits (Note 6.b) 3,213 126 (142) (45) (19) 3,133
of which post-employment healthcare benefits (Note 6.b) 97 2 (2) (6) - 91
of which provision for other long-term benefits (Note 6.c) 74 21 (19) - (2) 74
of which provision for voluntary departure, early retirement
plans, and headcount adaptation plan (Note 6.d)
236 25 (69) - (3) 189
of which provision for share-based payment 13 6 (5) - (1) 13
Provisions for home savings accounts and plans - - - - - -
Provisions for credit commitments 247 - - - 25 272
Provisions for litigation 88 (16) (11) - (3) 58
Other provisions for contingencies and charges 314 134 (69) - - 379
Total provisions for contingencies and charges 4,282 298 (317) (51) (3) 4,209
133
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.o Offsetting of financial assets and liabilities
The following tables present the amounts of financial assets
and liabilities before and after offsetting. This information,
required by IFRS 7 aims to enable the comparability with the
accounting treatment applicable in accordance with generally
accepted accounting principles in the United States (US GAAP),
which are less restrictive than IAS 32 as regards offsetting.
‘Amounts set off on the balance sheet’ have been determined
according to IAS 32. Thus, a financial asset and a financial
liability are offset and the net amount presented on the
balance sheet when and only when, BNP Paribas Fortis has a
legally enforceable right to offset the recognised amounts and
intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously. The amounts offset
derive mainly from repurchase agreements and derivative
instruments traded with clearing houses.
The ‘Impacts of Master Netting Agreements and similar
agreements’ are relative to outstanding amounts of transac-
tions within an enforceable agreement, which do not meet
the offsetting criteria defined by IAS 32. This is the case of
transactions for which offsetting can only be performed in case
of default, insolvency or bankruptcy of one of the contract-
ing parties.
‘Financial instruments given or received as collateral’ include
guarantee deposits and securities collateral recognised at
fair value. These guarantees can only be exercised in case
of default, insolvency or bankruptcy of one of the contract-
ing parties.
Regarding Master Netting Agreements, the guarantee deposits
received or given in compensation for the positive or nega-
tive fair values of financial instruments are recognised in the
balance sheet in ‘Accrued income or expenses’ and ‘Other
assets or liabilities’.
134
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
31 December 2021
In millions of euros
Gross amounts of
financial assets
Gross amounts set off
on the balance sheet
Net amounts
presented on the
balance sheet
Impact of Master
Netting Agreements
(MNA) and similar
agreements
Financial instruments
received as collateral
Net amounts
Assets
Financial instruments at fair value through profit or loss 17,391 (1,775) 15,616 (7,662) (2,392) 5,562
Securities 1,317 1,317 - - 1,317
Loans and repurchase agreements 6,057 (1,775) 4,282 (1,933) (2,074) 275
Derivative financial instruments (including derivatives
used for hedging purposes)
10,017 - 10,017 (5,729) (318) 3,970
Financial assets at amortised cost 213,208 - 213,208 (438) (470) 212,300
of which repurchase agreements 971 - 971 (438) (470) 63
Accrued income and other assets 9,188 - 9,188 - (1,392) 7,796
of which guarantee deposits paid 2,477 - 2,477 - (1,392) 1,085
Other assets not subject to offsetting 103,636 - 103,636 - - 103,636
Total assets 343,423 (1,775) 341,648 (8,100) (4,254) 329,294
31 December 2021
In millions of euros
Gross amounts of
financial liabilities
Gross amounts set off
on the balance sheet
Net amounts
presented on the
balance sheet
Impact of Master
Netting Agreements
(MNA) and similar
agreements
Financial instruments
received as collateral
Net amounts
Liabilities
Financial instruments at fair value through profit or loss 27,362 (1,775) 25,587 (7,541) (11,793) 6,253
Securities 159 159 - - 159
Deposits and repurchase agreements 14,835 (1,775) 13,060 (1,812) (10,495) 753
Issued debt securities 3,028 - 3,028 - - 3,028
Derivative financial instruments (including derivatives
used for hedging purposes)
9,340 - 9,340 (5,729) (1,298) 2,313
Financial liabilities at amortised cost 270,821 - 270,821 (559) (3,240) 267,022
of which repurchase agreements 4,032 - 4,032 (559) (3,240) 233
Accrued expense and other liabilities 8,012 - 8,012 - (213) 7,799
of which guarantee deposits received 840 - 840 - (213) 627
Other liabilities not subject to offsetting 6,031 - 6,031 - - 6,031
Total liabilities 312,226 (1,775) 310,451 (8,100) (15,246) 287,105
135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
31 December 2020
In millions of euros
Gross amounts of
financial assets
Gross amounts set off
on the balance sheet
Net amounts
presented on the
balance sheet
Impact of Master
Netting Agreements
(MNA) and similar
agreements
Financial instruments
received as collateral
Net amounts
Assets
Financial instruments at fair value through profit or loss 22,521 (1,511) 21,010 (9,921) (2,377) 8,712
Securities 1,564 1,564 1,564
Loans and repurchase agreements 5,566 (1,511) 4,055 (1,151) (2,087) 817
Derivative financial instruments (including derivatives
used for hedging purposes)*
15,391 - 15,391 (8,770) (290) 6,331
Financial assets at amortised cost 210,656 - 210,656 (392) (711) 209,553
of which repurchase agreements 1,382 - 1,382 (392) (711) 279
Accrued income and other assets 10,360 - 10,360 - (3,152) 7,208
of which guarantee deposits paid 3,361 - 3,361 - (3,152) 209
Other assets not subject to offsetting 93,109 - 93,109 - - 93,109
Total assets 336,646 (1,511) 335,135 (10,313) (6,240) 318,582
31 December 2020
In millions of euros
Gross amounts of
financial liabilities
Gross amounts set off
on the balance sheet
Net amounts
presented on the
balance sheet
Impact of Master
Netting Agreements
(MNA) and similar
agreements
Financial instruments
received as collateral
Net amounts
Liabilities
Financial instruments at fair value through profit or loss 32,755 (1,511) 31,244 (10,229) (13,336) 7,679
Securities 132 132 - - 132
Deposits and repurchase agreements 14,051 (1,511) 12,540 (1,459) (10,337) 744
Issued debt securities 3,135 - 3,135 - - 3,135
Derivative financial instruments (including derivatives
used for hedging purposes)*
15,437 - 15,437 (8,770) (2,999) 3,668
Financial liabilities at amortised cost 259,145 - 259,145 (84) (595) 258,466
of which repurchase agreements 722 - 722 (84) (595) 43
Accrued expense and other liabilities 8,207 - 8,207 - (589) 7,618
of which guarantee deposits received 1,017 - 1,017 - (589) 428
Other liabilities not subject to offsetting 6,701 - 6,701 - - 6,701
Total liabilities 306,808 (1,511) 305,297 (10,313) (14,520) 280,464
* ‘Derivatives used for Hedging purposes’ should be restated for the comparative period of 31 December 2020 by decreasing respectively assets and liabilities
with the amount of EUR (799) million. In December 2020, no netting of the fair value of the fixed and floating leg was applied on the macro hedge derivative
with the counterparty LCH (contrary to 31 December 2021). The effect of the retrospective application of the netting in the ‘Derivatives used for Hedging
purposes’ for the comparative period also results to the restatement of the captions ‘Total assets’, ‘Total liabilities’ and ‘Total liabilities and equity’ by the
amount of EUR (799) million.
136
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
4.p Transfers of financial assets
BNP Paribas Fortis enters into transactions in which it trans-
fers financial assets held on the balance sheet and as a result
may either be eligible to derecognise the transferred asset in
its entirely or must continue to recognise the transferred asset
to the extent of any continuing involvement. More informa-
tion is included in Note 1 ‘Summary of significant accounting
policies applied by BNP Paribas Fortis’.
Financial assets that have been transferred but not derecog-
nised by BNP Paribas Fortis are mainly composed of securities
sold temporarily under repurchase agreements or securities
lending transactions, as well as securitised assets. The liabili-
ties associated to securities sold under repurchase agreements
consist of debts recognised under the ‘Repurchase agreements’
heading. The liabilities associated to securitised assets consist
of the securitisation notes purchased by third parties.
Securities lending, repurchase agreements and other transactions
31 December 2021 31 December 2020
In millions of euros
Carrying amount
of transferred
assets
Carrying amount
of associated
liabilities
Carrying amount
of transferred
assets
Carrying amount
of associated
liabilities
Securities lending operations
Financial instruments at fair value through profit
or loss
- - 38 -
Financial assets at amortised cost 3,316 - 3,043 -
Financial assets at fair value through equity 97 - 310 -
Repurchase agreements
Financial instruments at fair value through profit
or loss
71 71 64 64
Financial assets at amortised cost 6,280 6,280 6,666 6,666
Financial assets at fair value through equity 1,622 1,622 1,175 1,175
Total 11,386 7,973 11,296 7,905
137
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Securitisation transactions partially refinanced by external investors, whose
recourse is limited to the transferred assets
31 December 2021
In millions of euros
Carrying amount
of transferred
assets
Carrying amount
of associated
liabilities
Fair value of
transferred
assets
Fair value of
associated
liabilities Net position
Securitisation
Financial instruments at fair value through
profit or loss
- - - - -
Financial assets at amortised cost 31,862 1,655 32,864 1,639 31,225
Financial assets at fair value through equity - - - - -
Total 31,862 1,655 32,864 1,639 31,225
31 December 2020
In millions of euros
Carrying amount
of transferred
assets
Carrying amount
of associated
liabilities
Fair value of
transferred
assets
Fair value of
associated
liabilities Net position
Securitisation
Financial instruments at fair value through
profit or loss
- - - - -
Financial assets at amortised cost* 27,500 1,275 29,112 1,237 27,875
Financial assets at fair value through equity - - - - -
Total 27,500 1,275 29,112 1,237 27,875
*’Financial assets at amortised cost’ should be restated for the comparative period of 31 December 2020 by increasing the ‘carrying amount of transferred
assets’, ‘fair value of transferred assets’ and ‘fair value of associated liabilities’ by respectively EUR 3,841 million, EUR 3,973 million and EUR 23 million
.
There have been no significant transfers leading to partial or full derecognition of the financial assets where the Bank has a
continuing involvement in them.
138
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
5 COMMITMENTS GIVEN OR RECEIVED
5.a Financing commitments given or received
Contractual value of financing commitments given and received by BNP Paribas Fortis:
In millions of euros 31 December 2021 31 December 2020
Financing commitments given
- to credit institutions 193 196
- to customers 51,727 55,026
Confirmed financing commitments 40,275 43,206
Other commitments given to customers 11,452 11,820
Total financing commitments given 51,920 55,222
of which Stage 1 45,947 50,267
of which Stage 2 5,814 4,703
of which Stage 3 159 252
Financing commitments received
- from credit institutions 3,053 7,269
- from customers 209 211
Total financing commitments received 3,262 7,480
5.b Guarantee commitments given by signature
In millions of euros 31 December 2021 31 December 2020
Guarantee commitments given
- to credit institutions 2,665 2,751
- to customers 15,795 15,451
Property guarantees - -
Sureties provided to tax and other authorities, other sureties 12,648 12,215
Other guarantees 3,147 3,236
Total guarantee commitments given 18,460 18,202
of which Stage 1 15,912 16,316
of which Stage 2 2,298 1,615
of which Stage 3 250 271
5.c Securities commitments
In connexion with the settlement date accounting for securities, commitments representing securities to be delivered or
securities to be received are the following:
In millions of euros 31 December 2021 31 December 2020
Securities to be delivered 209 137
Securities to be received 181 133
139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
5.d Other guarantee commitments
Financial instruments given as collateral
In millions of euros 31 December 2021 31 December 2020
Financial instruments (negotiable securities and private receivables) lodged with central
banks and eligible for use at any time as collateral for refinancing transactions after haircut
30,107 32,840
Used as collateral with central banks 28,138 26,006
Available for refinancing transactions 1,969 6,834
Securities sold under repurchase agreements 18,874 15,229
Other financial assets pledged as collateral for transactions with credit institutions,
financial customers
22,038 23,676
The fair value of the financial instruments given as collateral
or transferred under repurchase agreements by BNP Paribas
Fortis that the beneficiary is authorised to sell or reuse as
collateral amounted to EUR 18,886 million at 31 December
2021 (EUR 15,370 million at 31 December 2020).
Financial instruments received as collateral
In millions of euros 31 December 2021 31 December 2020
Financial instruments received as collateral (excluding repurchase agreements) 9,416 9,109
of which instruments that BNP Paribas Fortis is authorised to sell and reuse as
collateral
962 819
Securities received under repurchase agreements 6,872 6,856
The fair value of financial instruments received as col-
lateral or under repurchase agreements that BNP Paribas
Fortis effectively sold or reused as collateral amounted to
EUR 5,664 million at 31 December 2021 (compared with
EUR 5,443 million at 31 December 2020).
Financial instruments given or received as collateral are
mainly measured at fair value.
140
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
6 SALARIES AND EMPLOYEE BENEFITS
6.a Salary and employee benefit expenses
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Fixed and variable remuneration, incentive bonuses and profit-sharing (1,806) (1,804)
Employee benefit expense (583) (593)
Payroll taxes (13) (13)
Total salary and employee benefit expenses (2,402) (2,410)
6.b Post-employment benefits
IAS 19 distinguishes between two categories of plans, each
handled differently depending on the risk incurred by the
entity. When the entity is committed to pay a fixed amount,
stated as a percentage of the beneficiary’s annual salary,
for example, to an external entity handling payment of the
benefits based on the assets available for each plan member, it
is described as a defined-contribution plan. Conversely, when
the entity’s obligation is to manage the financial assets funded
through the collection of contributions from employees and to
bear the cost of benefits itself or to guarantee the final amount
subject to future events, it is described as a defined-benefit
plan. The same applies if the entity entrusts management
of the collection of premiums and payment of benefits to a
separate entity, but retains the risk arising from management
of the assets and/or from future changes in the benefits.
Defined-contribution pension plans of BNP Paribas Fortis entities
BNP Paribas Fortis has implemented since several years
a wide campaign of converting defined-benefit plans into
defined-contribution plans.
Since defined-benefit plans have been closed to new employ-
ees in most countries, they are offered the benefit of joining
defined contribution pensions plans.
The amount paid into defined-contribution post-employ-
ment plans for the year ended 31 December 2021 was
EUR 91 million, compared with EUR 93 million for the year
ended 31 December 2020.
The breakdown by major contributors is determined as follows
Contribution amount
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Belgium 2 2
France 38 37
Eurozone (except Belgium and France) 22 21
United Kingdom 4 4
Turkey 24 27
Other 1 2
TOTAL 91 93
142
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Defined-benefit pension plans of BNP Paribas Fortis entities
In Belgium, BNP Paribas Fortis funds a defined benefit plan,
based on final salary and number of years of service for its
management and employees who joined the Bank before
its pension plans were harmonised on 1 January 2002.
Actuarial liabilities under this scheme are pre-funded at 93%
at 31 December 2021 (97% at 31 December 2020) through
AG Insurance, in which BNP Paribas Fortis owns a 25%
equity interest.
BNP Paribas Fortis senior managers are covered by a top-up
pension plan paying a lump sum based on the number of years
of service and final salary. This plan is pre-funded at 100%
(101% at end 2020) through AXA Belgium and AG Insurance.
Since 1 January 2015 this plan is closed for new senior manag-
ers. Those are offered a new defined-contribution scheme,
which also applies to senior managers already in service at
that date who chose to join this new scheme.
In addition, the law requires employers to guarantee a
minimum return on assets accumulated under defined-
contribution schemes. As a result of this obligation, these plans
are accounting wise classified as defined-benefit schemes.
At the end of 2015, a new law introduced new modalities for
the calculation of this guaranteed minimum return.
As a consequence, BNP Paribas Fortis measures its Belgian
defined-contribution pension schemes according to the
‘Projected Unit Credit Method’ since 2016. But, as BNP Paribas
Fortis considers that none of these defined-contribution
pension schemes have the so-called ‘back-end loaded’ fea-
tures as defined under IAS19, BNP Paribas Fortis attributes
benefit to period of service under the plan’s benefit formula. It
is indeed not considered that employee service in later years
lead to materially higher level of benefit than in earlier years.
Plan assets and reimbursement rights, under insurance poli-
cies under which the insurer guarantees some or all of the
benefits payable under the plan, are measured as the present
value of the related obligation due by the insurance companies
(art.113 IAS19R) as from the end of 2017, except for pension
schemes covered by a segregated fund. In the latter case, the
fair value of the plan assets/reimbursement rights is equal
to the market value of the segregated investments available
to cover the obligation.
In Turkey, the pension plan replaces the national pension
scheme (these obligations should in the future be transferred
to the Turkish State and are measured based on the terms
of the transfer) and offers guarantees exceeding the minimal
legal requirements. At the end of 2021, obligations under
this plan are fully funded by financial assets held with an
external foundation; these financial assets exceed the related
obligations, but since it is not refundable, this surplus is not
recognised as an asset by BNP Paribas Fortis. The funding rate
for the scheme as at 31 December 2021 stood at 178% (223%
at 31 December 2020).
143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Obligations under defined-benefit plans
Assets and liabilities recognised on the balance sheet
In millions of
euros, at 31
December 2021
Defined-benefit
obligation arising from
wholly or partially
funded plans
Defined-benefit
obligation arising from
unfunded plans
Present value of
defined-benefit
obligation
Fair value of plan
assets
Fair value of
reimburse- ment
rights
(1)
Effect of asset ceiling
Net obligation
of which asset
recognised in the
balance sheet for
defined-benefit plans
of which net assets of
defined-benefit plans
of which fair value of
reimbursement rights
of which obligation
recognised in the
balance sheet for
defined-benefit plans
Belgium 3,095 - 3,095 (66) (2,930) - 99 (2,930) - (2,930) 3,029
United Kingdom 221 - 221 (288) - - (67) (67) (67) - -
Turkey 134 32 166 (238) - 104 32 - - - 32
Others 187 46 233 (162) (1) - 70 (2) (1) (1) 72
TOTAL 3,637 78 3,715 (754) (2,931) 104 134 (2,999) (68) (2,931) 3,133
In millions of
euros, at 31
December 2020
Defined-benefit
obligation arising from
wholly or partially
funded plans
Defined-benefit
obligation arising from
unfunded plans
Present value of
defined-benefit
obligation
Fair value of plan
assets
Fair value of
reimburse- ment
rights
(1)
Effect of asset ceiling
Net obligation
of which asset
recognised in the
balance sheet for
defined-benefit plans
of which net assets of
defined-benefit plans
of which fair value of
reimbursement rights
of which obligation
recognised in the
balance sheet for
defined-benefit plans
Belgium 3,123 24 3,147 (48) (3,048) - 51 (3,048) - (3,048) 3,099
United Kingdom 229 - 229 (258) - - (29) (29) (29) - -
Turkey 148 32 180 (331) - 182 31 - - - 31
Others 201 50 251 (168) (1) - 82 (1) - (1) 83
TOTAL 3,701 106 3,807 (805) (3,049) 182 135 (3,078) (29) (3,049) 3,213
(1)
The reimbursement rights are principally found on the balance sheet of the BNP Paribas Fortis’ insurance subsidiaries and associated companies - notably
AG Insurance with respect to BNP Paribas Fortis’ defined-benefit plan - to hedge their commitments to other BNP Paribas Fortis’ entities that were transferred
to them to cover the post-employment benefits of certain employee categories.
144
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Changes in the present value of the defined benefit obligation
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Present value of defined-benefit obligation at start of period 3,807 3,784
Current service cost 126 131
Interest cost 18 28
Past service costs - (17)
Settlements 1 -
Actuarial (gains)/losses on change in demographic assumptions (3) 1
Actuarial (gains)/losses on change in financial assumptions (73) 175
Actuarial (gains)/losses on experience gaps 148 (2)
Actual employee contributions 10 10
Benefits paid directly by the employer (32) (29)
Benefits paid from assets/reimbursement rights (219) (220)
Exchange rate (gains)/losses on the obligation (84) (64)
(Gains)/losses on the obligation related to changes in the consolidation scope 20 10
Others (4) -
Present value of defined-benefit obligation at end of period 3,715 3,807
Change in the fair value of plan assets and reimbursement rights
Plan assets Reimbursement rights
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020 Year to 31 Dec. 2021 Year to 31 Dec. 2020
Fair value of assets at start of period 805 852 3,049 3,002
Expected return on assets 34 37 2 13
Settlements - - - -
Actuarial (gains)/losses on assets 41 38 (29) 113
Actual employee contributions - - 10 9
Employer contributions 17 20 98 110
Benefits paid from assets (20) (21) (199) (199)
Exchange rate (gains)/losses on assets (134) (123) - -
Gains/(losses) on assets related to changes
in the consolidation scope
11 2 - 1
Other - - - -
Fair value of assets at end of period 754 805 2,931 3,049
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Components of the cost of defined-benefit plans
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Administration fees 1 1
Service costs 127 114
Current service cost 126 131
Past service cost - (17)
Settlements 1 -
Net financial expense 3 3
Interest cost 18 28
Interest income on plan assets (35) (38)
Interest income on reimbursement rights (2) (13)
Return on Asset Limitation 22 26
Total recognised in ‘Salary and employee benefit expense’ 131 118
Other items recognised directly in equity
In millions of euros Year to 31 Dec. 2021 Year to 31 Dec. 2020
Other items recognised directly in equity (24) 2
Actuarial (losses)/gains on plan assets or reimbursement rights 12 151
Actuarial (losses)/gains of demographic assumptions on the present value of obligations 3 (1)
Actuarial (losses)/gains of financial assumptions on the present value of obligations 73 (175)
Experience (losses)/gains on obligations (148) 2
Variation of the effect of asset limitation 36 25
Main actuarial assumptions used to calculate obligations
In the Eurozone and United Kingdom, BNP Paribas Fortis
discounts its obligations using the yields of high quality
corporate bonds, with a term consistent with the duration
of the obligations.
The ranges of rates used are as follows:
In %
31 December 2021 31 December 2020
Discount rate
Compensation
increase rate
(1)
Discount rate
Compensation
increase rate
(1)
Eurozone 0.00% - 1.10% 1.90% - 3.60% 0.00% - 0.80% 1.70% - 3.20%
United Kingdom 1.90% 3.50% 1.30% 3.20%
Turkey 20.00% 17.00% 14.50% 11.03%
(1)
Including price increases (inflation)
146
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In the Eurozone, the observed weighted average discount rates
are as follows: 0.45% at 31 December 2021, and 0.07% at
31 December 2020.
The impact of a 100bp change in discount rates on the present
value of post-employment benefit obligations is as follows:
Change in the present value of obligations
In millions of euros
31 December 2021 31 December 2020
Discount rate
-100bp
Discount rate
+100bp
Discount rate
-100bp
Discount rate
+100bp
Eurozone 366 (298) 347 (300)
United Kingdom 49 (38) 51 (39)
Turkey 15 (12) 16 (13)
Actual rate of return on plan assets and reimbursement rights over the period
In %
(1)
31 December 2021 31 December 2020
Range of value
(existence of several plans
in the same country)
Range of value
(existence of several plans
in the same country)
Belgium (5.65%) – 9.00% (1.14%) – 4.84%
United Kingdom 6.60% - 7.50% 8.60% - 9.30%
Turkey 20.60% 12.87%
(1)
Range of value, reflecting the existence of several plans in the same country.
Breakdown of plan assets
In %
31 December 2021 31 December 2020
Shares
Governmental
bonds
Non-
Governmental
bonds
Real-estate
Deposit account
Others
Shares
Governmental
bonds
Non-
Governmental
bonds
Real-estate
Deposit account
Others
Belgium 7% 55% 15% 1% 0% 22% 6% 53% 18% 1% 0% 22%
United Kingdom 9% 75% 12% 0% 2% 2% 8% 76% 13% 0% 1% 2%
Turkey 0% 0% 0% 3% 94% 3% 0% 0% 0% 4% 94% 2%
Others 7% 31% 16% 2% 2% 42% 6% 26% 21% 2% 1% 44%
BNP Paribas Fortis 7% 52% 14% 1% 6% 20% 6% 49% 16% 1% 8% 20%
BNP Paribas Fortis introduced an asset management gov-
ernance for assets backing defined-benefit pension plan
commitments, the main objectives of which are the manage-
ment and control of the risks in terms of investment.
It sets out investment principles, in particular, by defining
an investment strategy for plan assets, based on financial
objectives and financial risk management, to specify the way in
which plan assets have to be managed, via financial manage-
ment servicing contracts.
The investment strategy is based on an assets and liabilities
management analysis that should be realised at least every
three years for plans with assets in excess of EUR 100 million.
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Post-employment healthcare benefits
In Belgium, BNP Paribas Fortis has a healthcare plan for retired
employees. This plan is closed to new entrants.
The present value of obligations relating to post-employment
healthcare benefits stood at EUR 91 million at 31 December
2021, compared to EUR 97 million at 31 December 2020,
implying a decrease of EUR 6 million during the year 2021.
The expense for post-employment healthcare benefits amounts
to EUR 2 million for the year at 31 December 2021, against
EUR 2 million for the year at 31 December 2020.
Other items related to post-employment healthcare and
directly accounted for in equity amount to EUR (6) million for
31 December 2021, against EUR 3 million at 31 December 2020.
6.c Other long-term benefits
BNP Paribas Fortis offers its employees various long-term ben-
efits, mainly long-service awards, the ability to save up paid
annual leave in time savings accounts, and certain guarantees
protecting them in the event they become incapacitated.
The net provision amounted to EUR 74 million at 31 December
2021 (EUR 74 million at 31 December 2020).
As part of the BNP Paribas Fortis variable compensation policy,
annual deferred compensation plans are set up for certain
high-performing employees or pursuant to special regula-
tory frameworks.
Under these plans, payment is deferred over time and is
subject to the performance achieved by the business lines,
divisions and BNP Paribas Fortis.
In millions of euros 31 December 2021 31 December 2020
Net provisions for other long-term benefits 74 74
Asset recognised in the balance sheet under ‘Other long-term benefits’ - -
Obligation recognised in the balance sheet under ‘Other long-term benefits’ 74 74
6.d Termination benefits
BNP Paribas Fortis has implemented a number of voluntary
redundancy plans and headcount adaptation plans for employ-
ees who meet certain eligibility criteria. The obligations to
eligible active employees under such plans are provided for
as soon as a bilateral agreement or a bilateral agreement
proposal for a particular plan is made. Besides, BNP Paribas
Fortis recognises costs related to redundancy plans in a
restructuring context as soon as Bank formalises a detailed
plan which has been notified to the interested parties.
In millions of euros 31 December 2021 31 December 2020
Provision for voluntary departure and early retirement plans, and headcount adaptation plans 189 236
148
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7 ADDITIONAL INFORMATION
7.a Contingent liabilities: legal proceedings and arbitration
BNP Paribas Fortis (and its consolidated subsidiaries) is
involved as a defendant in various claims, disputes and legal
proceedings in Belgium and in a number of foreign jurisdic-
tions, arising in the ordinary course of its banking business,
including inter alia in connection with its activities as lender,
employer, investor and taxpayer.
BNP Paribas Fortis makes provisions for such matters when,
in the opinion of its management and after consulting its
legal advisors, it is probable that a payment will have to be
made by BNP Paribas Fortis and when the amount can be
reasonably estimated.
With respect to certain other claims and legal proceedings
against BNP Paribas Fortis (and its consolidated subsidiaries)
of which management is aware (and for which, according to
the principles outlined above, no provision has been made),
the management is of the opinion, after due consideration
of appropriate advice, that, while it is often not feasible to
predict or determine the ultimate outcome of all pending or
threatened legal and regulatory proceedings, such proceed-
ings are without legal merit, can be successfully defended or
that the outcome of these actions is not expected to result
in a significant loss in the BNP Paribas Fortis Consolidated
Financial Statements.
Like many other companies in the banking, investment,
mutual funds and brokerage sectors, BNP Paribas Fortis (and
its consolidated subsidiaries) has received or may receive
requests for information from supervisory, governmental or
self-regulatory agencies. BNP Paribas Fortis responds to such
requests, cooperates with the relevant regulators and other
parties and helps to address any issues they might raise.
After the acquisition and merger of ABN AMRO Bank
(Luxembourg) S.A. in H2 2018, BNP Paribas Fortis’ subsidiary
BGL BNP Paribas S.A. integrated ABN AMRO Bank (Luxembourg)
S.A.’s custodian operations. In the context of these operations,
a fund, for which ABN AMRO Bank (Luxembourg) S.A. acted as
custodian between 19 April 2012 and 31 March 2015, issued
BGL BNP Paribas with a court summons. At this stage, no
provision has been set aside with respect to this case, but BGL
BNP Paribas has decided to protect its interests by exercis-
ing the liability guarantee agreed as part of the acquisition.
Moreover, BGL BNP Paribas has decided to wind up these
operations and has terminated custodian agreements together
with the associated banking relationships. As per 31 December
2021, two legal cases have been brought against BGL BNP
Paribas following these measures.
7.b Business combinations and other changes of the consolidation scope
Operations realised in 2021
Axepta BNPP Benelux SA/NV
Axepta BNP Paribas Benelux NV/SA, a wholly owned subsidiary
of BNP Paribas Fortis, and Worldline have signed an agree-
ment under which Axepta BNP Paribas Benelux acquired part
of Ingenico’s in-store business in Belgium and Worldline’s
business in Luxembourg. The agreement relates to Worldline’s
/ Ingenico’s merchant acquiring (card payment processing)
business and terminals in Belgium and Luxembourg.
In a rapidly changing payment services industry, the acquisition
of these activities meets Axepta BNP Paribas Benelux’ aim of
increasing its presence in merchant acquiring in Belgium and
Luxembourg – two of its domestic markets – and of freshening
up the sector by offering innovative, high-performance and
competitive services to public- and private-sector companies,
retailers and independent professionals.
This transaction closed in Q4 2021 following approval by
the European Commission and National Bank of Belgium and
generated a goodwill of EUR 31 million in the Balance sheet.
149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Operations without impact in the
Annual Financial Statements 2021
Bpost bank SA/NV
Bpost bank is a retail bank selling banking (daily banking,
save & invest, lending) and insurance products (provided by
AG Insurance) to its client base of almost 1 million clients,
predominantly in Belgium. Bpost bank is a 50/50 joint-venture
between BNP Paribas Fortis and Bpost.
On 3 January 2022, BNP Paribas Fortis purchased the residual
50% stake in bpost bank, leading to the exclusive control and
a full consolidation of this entity from 2022. This operation
will enable BNP Paribas Fortis to optimise the Retail Banking
activity in Belgium. The impacts in the consolidated Balance
Sheet and Profit and Loss for Q1 2022 are disclosed in the
note 7.l Events after the reporting period.
Operations realised in 2020
Greenval Insurance DAC
Greenval Insurance DAC is a fleet motor insurance company
registered in Ireland dedicated to customers of Arval.
Following the approval received from the Irish Regulatory
authorities, Greenval Insurance DAC has been sold by BNP
Paribas Ireland to Arval Service Lease in December 2020.
The transaction generated a negative impact in Shareholder’s
Equity amounting to EUR (16) million and an impact of
EUR 314 million in total balance sheet (EUR 235 million in
Assets “Financial Investments of Insurance activities” and
EUR 125 million in Liabilities “Technical Reserves and other
Insurance liabilities”).
Arval Fuhrparkmanagement GmbH
Arval Fuhrparkmanagement GmbH, former “UniCredit Leasing
Fuhrparkmanagement” was the fleet leasing & manage-
ment subsidiary of UniCredit Bank Austria with a fleet of
6,000 vehicles.
Arval Austria has signed in July the agreement with UniCredit
to purchase 100% of the shares of UniCredit Leasing
Fuhrparkmanagement GmbH allowing Arval Austria to further
strengthen its position in the market.
The transaction generated a goodwill of EUR 5.2 million in
Arval Austria. The impact balance sheet is EUR 112 million.
Allfunds UK Ltd
BNPP Asset Management Holding consolidated via equity
method acquired 6,3% of the new entity Allfunds UK Ltd, an
European market leader in fund distribution platforms.
The transaction generated an impact in total balance sheet
EUR 54.9 million.
Changes in the consolidation scope
Axepta BNPP Benelux SA/NV
Axepta BNPP Benelux SA/NV provides card payment solutions
(acquiring of credit and debit card payment transactions) to
merchants in Belgium.
In January 2019 BNP Paribas Fortis incorporated BNP Paribas
Fortis Merchant Payment Services NV/SA (renamed as “Axepta
BNPP Benelux”). As of Q3 2020 Axepta BNPP Benelux is fully
consolidated.
The full consolidation generates no material result impact
in 2020. The impact on the balance sheet is EUR 12 million.
150
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.c Minority interests
In millions of euros
Capital and
retained
earnings
Changes in assets
and liabilities
recognised directly
in equity that will
not be reclassified to
profit or loss
Changes in assets
and liabilities
recognised directly
in equity that may be
reclassified to profit
or loss
Minority
interests
Capital and retained earnings at 1 January 2020 5,712 65 (607) 5,170
Other movements (28) - - (28)
Dividends (84) - - (84)
Changes in assets and liabilities recognised directly in equity - (20) (137) (157)
Net income for 2020 424 - - 424
Capital and retained earnings at 31 December 2020 6,024 45 (744) 5,325
Other movements 23 - - 23
Dividends (291) - - (291)
Changes in assets and liabilities recognised directly in equity - 7 (227) (220)
Net income for 2021 468 - - 468
Capital and retained earnings at 31 December 2021 6,224 52 (971) 5,305
Main minority interests
The assessment of the material nature of minority inter-
ests is based on the contribution of the subsidiaries to the
BNP Paribas Fortis’ balance sheet (before elimination of
intra-group transactions) and to the BNP Paribas Fortis’ result.
31 December 2021 Year to 31 Dec. 2021
In millions of euros
Total assets
before elimination
of intra-group
transactions
Revenues
Net income
Net income and changes
in assets and liabilities
recognised directly in
equity
Interest (%)
Net income attributable
to minority interests
Net income and changes
in assets and liabilities
recognised directly in
equity - attributable to
minority interests
Dividends paid to
minority shareholders
Contribution of the entities belonging to
the BGL BNP Paribas Group
62,032 1,606 559 513 50% 369 346 284
Other minority interests 99 (99) 7
TOTAL 468 247 291
151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
31 December 2020 Year to 31 Dec. 2020
In millions of euros
Total assets
before elimination
of intra-group
transactions
Revenues
Net income
Net income and changes
in assets and liabilities
recognised directly in
equity
Interest (%)
Net income attributable
to minority interests
Net income and changes
in assets and liabilities
recognised directly in
equity - attributable to
minority interests
Dividends paid to
minority shareholders
Contribution of the entities belonging to
the BGL BNP Paribas Group
56,516 1,588 544 505 50% 349 303 79
Other minority interests 75 (36) 5
TOTAL 424 267 84
Internal restructuring that led to a change in minority shareholders’ interest in
the equity of subsidiaries
No significant internal restructuring operation occurred during 2021, nor during 2020.
Commitments to repurchase minority shareholders’ interests
In connection with the acquisition of certain entities,
BNP Paribas Fortis granted minority shareholders put options
on their holdings.
The total value of these commitments, which are recorded as a
reduction in shareholders’ equity, amounts to EUR 103 million
at 31 December 2021, compared with EUR 189 million at
31 December 2020.
7.d Significant restrictions in subsidiaries, associates and joint ventures
Significant restrictions relating to the ability of entities to transfer cash to
BNP Paribas Fortis
The ability of entities to pay dividends or to repay loans and
advances depends, inter alia, on local regulatory require-
ments for capitalisation and legal reserves, as well as the
entities’ financial and operating performance. During 2021, no
BNP Paribas Fortis entities were subject to significant restric-
tions other than those related to regulatory requirements.
Significant restrictions relating to BNP Paribas Fortis’ ability to use the assets
lodged in consolidated structured entities
Access to the assets of consolidated structured entities in
which third-party investors (other than BNP Paribas Group
entities) have invested is limited in as much as these entities’
assets are reserved for the holders of units or securities. At the
end of 31 December 2021 and 2020 respectively, the involved
assets were immaterial.
152
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Significant restrictions relating to BNP Paribas Fortis’ ability to use assets
pledged as collateral or under repurchase agreements
The financial instruments pledged by BNP Paribas Fortis as
collateral or under repurchase agreements are reported in
Note 4.p and 5.d.
Significant restrictions relating to liquidity reserves
Significant restrictions related to liquidity reserves corre-
spond to the mandatory deposits placed with central banks
presented in Chapter ‘Risk management and capital adequacy
- Liquidity and refinancing risk’.
7.e Structured entities
BNP Paribas Fortis considers that it has sponsored a structured
entity when it has been involved in its design.
BNP Paribas Fortis is engaged in transactions with sponsored
structured entities primarily through its activities of securitisa-
tion of financial assets as either the originator or the sponsor,
fund management and specialised asset financing.
In addition, BNP Paribas Fortis is also engaged in transactions
with structured entities that it has not sponsored, notably in
the form of investments in funds or securitisation vehicles.
The method for assessing control of structured entities is
detailed in Note 1.c.2 ‘Consolidation methods’.
Consolidated structured entities
The main category of consolidated structured entities is:
Proprietary securitisation: proprietary securitisation positions
originated and held by BNP Paribas Fortis.
Unconsolidated structured entities
BNP Paribas Fortis has entered into relations with unconsolidated structured entities in the course of its business activities in
order to meet the needs of its customers.
Information relating to interests in sponsored structured entities
The main categories of unconsolidated sponsored structured
entities are as follows:
Securitisation: BNP Paribas Fortis structures securitisation
vehicles for the purposes of offering customers financing solu-
tions for their assets, either directly or through consolidated
ABCP conduits. Each vehicle finances the purchase of custom-
ers’ assets (receivables, bonds, etc.) primarily by issuing bonds
backed by these assets, whose redemption is linked to their
performance.
Funds: BNP Paribas Fortis structures and manages funds
in order to offer investment opportunities to its customers.
Dedicated or public funds are offered to institutional and
individual customers, and are distributed and commercially
monitored by BNP Paribas Fortis. The BNP Paribas Fortis
entities responsible for managing these funds may receive
management fees and performance commission. Moreover,
BNP Paribas Fortis may hold units in these funds.
153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Asset financing: BNP Paribas Fortis finances structured enti-
ties that acquire assets (ships, export finance etc.) intended
for lease, and the lease payments received by the structured
entity are used to repay the financing, which is guaranteed
by the asset held by the structured entity.
Other: On behalf of its customers, BNP Paribas Fortis may
also structure entities which invest in assets or are involved
in debt restructuring.
An interest in an unconsolidated structured entity is a con-
tractual or non-contractual link that exposes BNP Paribas
Fortis to variable returns from the performance of the entity.
BNP Paribas Fortis’ assets and liabilities relating to the
interests held in sponsored structured entities are as follows:
Interests on BNP Paribas Fortis balance sheet
In millions of euros
31 December 2021
Securitisation Funds Asset financing Others Total
ASSETS
Financial instruments at fair value through profit
and loss
- - - - -
Derivatives used for hedging purposes - - - - -
Financial assets at fair value through equity - - - - -
Financial assets at amortised cost - - - 9 9
Other assets - 93 - - 93
TOTAL ASSETS - 93 - 9 102
LIABILITIES
Financial instruments at fair value through profit
and loss
14 - - - 14
Derivatives used for hedging purposes - - - - -
Financial liabilities at amortised cost 631 3 - 22 656
Other liabilities 5 - - - 5
TOTAL LIABILITIES 650 3 - 22 675
Funded exposure - 93 - 9 102
Unfunded exposure - - - 39 39
Financing commitments - - - 39 39
Guarantee commitments and derivatives - - - - -
MAXIMUM EXPOSURE TO LOSS - 93 - 48 141
SIZE OF STRUCTURED ENTITIES
(1)
267 152 - 462 881
154
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Interests on BNP Paribas Fortis balance sheet
In millions of euros
31 December 2020
Securitisation Funds Asset financing Others Total
ASSETS
Financial instruments at fair value through profit
and loss
- - - - -
Derivatives used for hedging purposes 5 - - - 5
Financial assets at fair value through equity - - - - -
Financial assets at amortised cost - - 124 9 133
Other assets - 50 - - 50
TOTAL ASSETS 5 50 124 9 188
LIABILITIES
Financial instruments at fair value through profit
and loss
- - - 19 19
Derivatives used for hedging purposes - - - - -
Financial liabilities at amortised cost 267 10 - 525 802
Other liabilities - - - - -
TOTAL LIABILITIES 267 10 - 544 821
Funded exposure 5 50 124 9 188
Unfunded exposure - - 109 55 164
Financing commitments - - - 55 55
Guarantee commitments and derivatives - - 109 - 109
MAXIMUM EXPOSURE TO LOSS 5 50 233 64 352
SIZE OF STRUCTURED ENTITIES
(1)
272 79 235 465 1,051
(1)
The size of sponsored structured entities equals the total assets of the structured entity for securitisation vehicles, the net asset value for funds (excluding
management mandates) and the structured entity’s total assets or the amount of BNP Paribas Fortis commitment for asset financing and other structures
The BNP Paribas Fortis’ maximum exposure to losses on
sponsored structured entities is the carrying amount of the
assets, excluding, for financial assets at fair value through
equity, changes in value taken directly to equity, as well as the
nominal amount of the financing commitments and guarantee
commitments given and the notional amount of credit default
swaps (CDS) sold.
Information relating to interests in non-
sponsored structured entities
The main interests held by BNP Paribas Fortis when it acts
solely as an investor in non-sponsored structured entities are
detailed below:
units in other funds not managed by BNP Paribas Fortis:
as part of its trading business, BNP Paribas Fortis invests
in structured entities without any involvement in either
managing or structuring these entities (investments in
mutual funds, securities funds or alternative funds), par-
ticularly as economic hedge for structured products sold
to customers. BNP Paribas Fortis also invests in minority
holdings in support of companies as part of its venture
capital business. In 31 December 2021 the Bank didn’t
perform any investments and in December 2020 they were
very limited.
investments in securitisation vehicles: the investments
in securitisation vehicles amounted to EUR 0,6 billion as
at 31 December 2021 (EUR 0,8 billion as at 31 December
2020). Furthermore, BNP Paribas Fortis also has positions
on SPVs that are sponsored by BNP Paribas Group, but not
sponsored by BNP Paribas Fortis, these investments were
immaterial at 31 December 2021 and 2020.
155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.f Compensation and benefits awarded to BNP Paribas Fortis’ corporate officers
1
With the exception of the Chairman of the Board of Directors, who receives the use of a company car and mobile phone.
The remuneration policy for the Board of Directors and
Executive Board did not change significantly during 2021.
Remuneration of the Members of the Board of Directors
Remuneration policy with regard to the Members of the Board of Directors
The members of the Board of Directors receive a remunera-
tion based on the principles set out below, as approved by
the Ordinary General Shareholders’ Meeting of 22 April
2021, during which the principle of keeping the Board remu-
neration at a total of maximum EUR 1.1 million per annum
was confirmed.
Since January 1
st
2018, mandates held by emplovees of
the BNP Paribas Group in a subsidiary of the BNP Paribas
Group (whether in France or abroad), are exercised without
remuneration.
This rule does not impact the independent non-executive
directors of BNP Paribas Fortis SA/NV. The non-executive
directors that are BNP Paribas SA employees do not receive
any remuneration for their mandates held within BNP Paribas
Fortis SA/NV. The executive directors of BNP Paribas Fortis
SA/NV, are not entitled to receive any remuneration for their
mandates held within subsidiaries of BNP Paribas Group, with
the obvious exception for their executive mandate held within
BNP Paribas Fortis SA/NV itself. Moreover, there is an exception
for the mandates held within BGL BNP Paribas SA.
Annual fixed salary Chairman Board of Directors EUR 50,000 (gross)
Annual fixed salary Board Members EUR 25,000 (gross)
Attendance fee Chairman Board of Directors EUR 4,000 (gross)
Attendance fee Members Board of Directors EUR 2,000 (gross)
Attendance fee Chairman Board Committees EUR 4,400 (gross)
Attendance fee Members Board Committees EUR 2,200 (gross)
The non-executive members of the Board of Directors do not
receive any variable pay, pension plan or insurances, nor any
other benefits
1
.
156
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Remuneration for the year
The table below shows the gross Board remuneration paid in
2021 to members of the Board of Directors.
In euros Fixed fees
Attendance
fees board* Total 2021
Herman DAEMS Chairman 50,000 124,600 174,600
Michael ANSEEUW Executive director 25,000 26,000 51,000
Didier BEAUVOIS Executive director 25,000 26,000 51,000
Dirk BOOGMANS Non-executive and independent director 25,000 105,200 130,200
Antoinette d'ASPREMONT LYNDEN Non-executive and independent director 25,000 100,800 125,800
Daniel de CLERCK Executive director 25,000 24,000 49,000
Sophie DUTORDOIR Non-executive and independent director 25,000 107,600 132,600
Maxime JADOT Executive director 25,000 26,000 51,000
Piet VAN AKEN Executive director 25,000 24,000 49,000
Titia VAN WAEYENBERGE Non-executive and independent director 25,000 76,600 101,600
Stéphane VERMEIRE Executive director 25,000 26,000 51,000
300,000 666,800 966,800
(*)
This column includes the Board fees for all sub committees of the Board of Directors
Remuneration of the members of the Executive Board
Remuneration policy regarding the members of the Executive Board
The members of the Executive Board have a self-employed
status and receive a Board remuneration based on the
same principles as non-executive members of the Board of
Directors. In addition, they are rewarded for their function
in the Executive Board through the following components: (i)
fixed monthly remuneration; (ii) variable annual remuneration
based on the achievement of clear performance criteria and
risk monitoring linked to collective and individual performance
criteria (as mentioned below); (iii) a company insurance plan
(pension plan, hospital plan, life insurance and disability
benefits); (iv) benefits in kind (the use of a company car,
mobile phone, tablet and internet); and (v) the opportunity
to obtain share-based long-term incentive payments. Their
remuneration is subject to strict regulation under the European
Capital Requirements Directive IV (‘CRD IV’) and the Belgian
Banking Law.
The remuneration structure and the policy on the levels
of remuneration are determined by the Board of Directors,
upon a recommendation of the Remuneration Committee with
reference to common practices and market benchmarking for
determining appropriate executive management compensa-
tion, and with guidance from specialised consultancy firms.
The governance relating to this remuneration followed the
same principles and processes as last year and it is expected
to continue to do so in the coming years.
Performance criteria used to determine variable remuneration
The entire process described hereunder is audited by the
Inspection Générale, which is BNP Paribas Fortis’ internal
audit department.
Individual performance
A self-assessment is prepared by each Executive Board
member, which is then challenged by the Chief Executive
Officer, who decides on the scoring in close discussion with
the Chairman of the Board of Directors. An overall assessment
is also made by the Risk and Compliance departments.
The individual performance aims at attaining personal objec-
tives and managerial performance as assessed by the Board
of Directors.
157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Team performance based on Bank Key
Performance Indicators (KPIs)
Collective performance is based on Key Performance Indicators
(KPIs), designed to show that the Executive Board is acting as
one team. Every year, BNP Paribas Fortis draws up a strategic
plan, from which are derived indicators enabling the Executive
Board to measure and assess BNP Paribas Fortis’ collective
performance. The performance criteria measured for each
business are: financial results, cost management, risk manage-
ment/compliance, long term developments, Corporate Social
Responsibility, and people management. On a yearly basis,
the Executive Board receives a score for its overall collective
performance.
The appraisal period during which performance is assessed is
January to December of each year. The methods used to assess
the performance against targets are both qualitative (customer
satisfaction, sound risk governance, Global People Survey
results, Team motivation barometer, people management, etc.)
and quantitative (net operating profit, gross income, evolution
cost of risk, increase in market share, etc.).
Future performance applied to the deferred part of
the variable remuneration
The variable part of the remuneration is subject to the defer-
ral principle, whereby the deferred part is conditional on
the future performance of BNP Paribas Fortis and on sound
risk management.
Remuneration for the year
The table below shows the gross remuneration paid or payable
to the members of the Executive Board for the year 2021,
including benefits in kind and director’s fees.
In euros
2021 2020
Chief Executive
Officer
Other Members of
the Executive Board
Chief Executive
Officer
Other Members of
the Executive Board
Remuneration
Fixed 998,513 2,169,500 993,513 2,097,000
Cash part of variable 261,800 532,880 140,480 471,616
Deferred part of variable 252,700 365,120 157,520 233,184
Multi-annual variable compensation
(1)
140,000 335,700 53,200 152,880
Director's fees
(2)
111,016 328,516 113,016 333,516
Benefits in Kind
(3)
3,565 23,978 3,816 26,496
Pension, life insurance and orphan's pension
(4)
298,184 276,787 292,350 268,015
Total 2,065,778 4,032,481 1,753,895 3,582,707
(1) In order to fully comply with CRD V applicable to the credit institutions, the multi-annual variable compensation indicated is the amount related to the
performance of the year under review and not the amount allocated during the year under review. As from 2016, in order to comply with the European Banking
Authority (“EBA”) Guidelines of 21 December 2016, the multi-annual variable compensation is disclosed, taking into account the fair value determined at the
time the compensation was granted
(2) In order to comply with article 3:6 of the Code on Companies and associations, the board fees received in the controlled perimeter are included
(3) The members of the Executive Board each have a company car and a mobile phone
(4) For defined contribution plan and defined benefit plan; sum of contributions by BNP Paribas Fortis
Information on Multi-annual variable compensation
Contingent Sustainable and International Scheme (‘CSIS’)
2016, 2017, 2018, 2019, 2020 and 2021
CSIS is designed to compensate Material Risk Takers, identified
as key employees of BNP Paribas Group, for their performance
on terms that are compliant with EU rules, provided that
they act in the long-term interests of the BNP Paribas Group.
The scheme is intended to support the effective alignment of
compensation with prudent risk-taking behavior. In compliance
with CRD IV, the CSIS provides for the award of instruments
that can be fully written down to adequately reflect the credit
quality of the BNP Paribas Group as a going concern.
To this end, payments under the CSIS will be cancelled if,
whenever during the Plan duration the BNP Paribas Group’s
CET1 ratio falls below 7% or if the BNP Paribas Group enters
into a resolution procedure.
In addition, in order to reflect the BNP Paribas Group ambition
to grow while acting with environmental, economic and social
responsibility, the BNP Paribas Group has also decided:
158
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
to make:
85% of the CSIS Award subject to a condition based on
the operating performance of the BNP Paribas Group
(‘Group Performance Indicator – GPI’);
15% of the CSIS Award subject to a condition based on
the Corporate Social Responsibility (‘CSR’) performance,
as it is considered essential that the BNP Paribas Group
acts at all levels, and in a significant way, to promote
greater environmental, economic and social respon-
sibility; and
to condition any payment under the scheme to the BNP
Paribas Group Pre-Tax Income being positive.
The CSIS Award is a cash amount denominated in local cur-
rency (the ‘Notional Instrument Amount’) bearing an interest
rate (the ‘Interest Amount’).
For 2016 the Vesting Period started on 1 January 2017
and ends on 1 January 2022. There is a retention period of
6 months between 1 January 2022 and 30 June 2022. The
beneficiary is entitled to receive on the Date of Payment an
amount of interest calculated from 1 January 2022 to 30 June
2022. The annual interest rate is equal to 2.19%.
For 2017 the Vesting Period started on 1 January 2018
and ends on 1 January 2023. There is a retention period of
6 months between 1 January 2023 and 30 June 2023. The
beneficiary is entitled to receive on the Date of Payment an
amount of interest calculated from 1 January 2023 to 30 June
2023. The annual interest rate is equal to 1.25%.
For 2018 the Vesting Period started on 1 January 2019
and ends on 1 January 2024. There is a retention period of
6 months between 1 January 2024 and 30 June 2024. The
beneficiary is entitled to receive on the Date of Payment an
amount of interest calculated from 1 January 2024 to 30 June
2024. The annual interest rate is equal to 2.09%.
For 2019 the Vesting Period started on 1 January 2020
and ends on 1 January 2025. There is a retention period of
6 months between 1 January 2025 and 30 June 2025. The
beneficiary is entitled to receive on the Date of Payment an
amount of interest calculated from 1 January 2025 to 30 June
2025. The annual interest rate is equal to 1.1%.
For 2020 the Vesting Period started on 1 January 2021
and ends on 1 January 2026. There is a retention period of
6 months between 1 January 2026 and 30 June 2026. The
beneficiary is entitled to receive on the Date of Payment an
amount of interest calculated from 1 January 2026 to 30 June
2026. The annual interest rate is equal to 0.8%.
For the allocation in respect with the performance year
2021 the Vesting Period starts on 1 January 2022 and ends
on 1 January 2027. There is a retention period of 6 months
between 1 January 2027 and 30 June 2027. The beneficiary
is entitled to receive on the Date of Payment an amount of
interest calculated from 1 January 2027 to 30 June 2027. The
annual interest rate is equal to 1.28%.
Growth Technology Sustainability scheme (GTS)
The Growth, Technology, Sustainability (« GTS ») scheme is
designed to have selected key employees of the Group associ-
ated with BNP Paribas’ 2025 strategic plan. This scheme is
exceptionally awarded in 2022 and is intended to retain and
motivate the Beneficiaries by aligning their interests with the
Group’s objectives in terms of average annual operational
performance over the duration of the strategic plan GTS 2025.
The Award will be paid on June 30th 2026, subject to the
respect of personal conditions and of the following perfor-
mance conditions:
The payment will be linked to the average annual evolu-
tion of the Gross operating income (GOI), excluding SRF
(contribution to the Single Resolution Fund) of the BNP
Paribas Group over the duration of the strategic plan, i.e.
between 2021 and 2025, with the application of a grid
from 0% to 100% of the allocated amount.
The Award will not be paid, and any rights to it will lapse
if the BNP Paribas Group Pre-Tax Income for the financial
year 2025 is negative.
Information on severance pay
In 2021 no termination benefits were paid to members of the
Executive Board.
Relations with key management personnel
At 31 December 2021, total outstanding loans and guarantees
granted to the members of the Board of Directors and their
close family members, amounted to EUR 4.2 million. These
loans and guarantees constitute normal transactions, carried
out at normal market and/or client conditions.
159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.g Other related parties
Other related parties of the BNP Paribas Fortis comprise:
BNP Paribas (and all its subsidiaries) which has control
over BNP Paribas Fortis;
consolidated companies of BNP Paribas Fortis (including
entities consolidated under the equity method);
and entities managing post-employment benefit plans
offered to BNP Paribas Fortis’ employees.
Transactions between BNP Paribas Fortis and related parties
are carried out on an arm’s length basis.
Relations between consolidated companies
A list of companies consolidated by BNP Paribas Fortis is
provided in note 7.j ‘Scope of consolidation’. Transactions and
outstanding balances between fully-consolidated entities of
BNP Paribas Fortis are eliminated.
Tables below show transactions carried out with entities
consolidated under the equity method and entities of the BNP
Paribas Group.
Outstanding balances of related party transactions
In millions of euros
31 December 2021 31 December 2020
Entities of the
BNP Paribas
Group
Joint
ventures Associates
(1)
Entities of the
BNP Paribas
Group
Joint
ventures Associates
(1)
ASSETS
Demand accounts 2,366 - 44 1,593 - 33
Loans 3,544 112 190 4,714 93 230
Securities 100 - 97 72 - 97
Other assets 210 - 121 303 - 111
Total assets 6,220 112 452 6,682 93 471
LIABILITIES
Demand accounts 605 122 368 511 99 461
Other borrowings 24,854 20 1,039 21,622 30 1,408
Other liabilities 308 - 18 501 - 25
Total liabilities 25,767 142 1,425 22,634 129 1,894
FINANCING COMMITMENTS AND
GUARANTEE COMMITMENTS
Financing commitments given 22 23 70 523 43 63
Guarantee commitments given 5,877 1,468 87 5,920 2,106 82
Total 5,899 1,491 157 6,443 2,149 145
(
1
) Including controlled but non material entities consolidated under the equity method
BNP Paribas Fortis also carries out trading transactions with related parties involving derivatives (swaps, options and forwards,…)
and financial instruments (equities, bonds,….).
160
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
Related-party profit and loss items
In millions of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
Entities of the
BNP Paribas
Group
Joint
ventures Associates
(1)
Entities of the
BNP Paribas
Group
Joint
ventures Associates
(1)
Interest income 315 7 5 321 6 6
Interest expense (612) (3) (3) (657) (4) (6)
Commission income 140 3 604 117 3 552
Commission expense (101) - (14) (93) - (11)
Services provided
(2)
74 - 37 78 - 37
Services received
(2)
(187) - (67) (204) - (62)
Lease income 41 - 11 42 - 12
Total (330) 7 573 (396) 5 528
(1) Including controlled but non material entities consolidated under the equity method
(2) The comparative figures have been adapted in order to include the profit and loss linked to non-core banking activities
BNP Paribas Fortis entities managing certain post-employment benefit plans
offered to employees
BNP Paribas Fortis funds a number of pension schemes
managed by AG Insurance in which BNP Paribas Fortis has a
25% equity interest.
161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.h Financial instruments by maturity
The table below gives a breakdown of balance sheet items
by contractual maturity for single-maturity contracts, and by
cash flows for assets with a repayment date. The source of
the data in this table is identical to that used to prepare the
regulatory liquidity reporting (such as the Liquidity Coverage
Ratio or the Net Stable Funding Ratio).
Financial liabilities are mainly classified under the heading ‘on
demand’ given the importance of sight deposits and savings
deposits, while financial assets are mostly classified under the
heading ‘more than one year’, as a result of the long maturities
of term loans and mortgage loans.
The maturities of the ‘trading portfolio’ transactions reported
under financial assets and liabilities measured at fair value
through profit or loss are regarded as ‘undetermined’ insofar
as these instruments are intended to be sold or redeemed
before their contractual maturity dates.
The maturities of derivative hedging instruments and the
remeasurement adjustment on interest-rate risk hedged
portfolios are also deemed to be ‘undetermined’.
In millions of euros
at 31 December 2021
Not
determined
Overnight or
demand
Up to 1
month (excl.
overnight)
1 to
3 months
3 months to
1 year
1 to 5 years
More than
5 years
TOTAL
Cash and balances at central banks - 61,263 - - - - - 61,263
Financial instruments at fair value
through profit or loss
7,610 1 3,162 425 1,807 618 11 13,634
Derivatives used for hedging purposes 1,982 - - - - - - 1,982
Remeasurement adjustment on interest-
rate risk hedged portfolios
1,812 - - - - - - 1,812
Financial assets at fair value through
equity
310 - 192 341 668 2,815 3,535 7,861
Financial assets at amortised cost - 7,126 8,082 13,450 27,741 80,755 73,702 210,856
Financial assets by maturity 11,714 68,390 11,436 14,216 30,216 84,188 77,248 297,408
Deposits from central banks - 426 - - - - - 426
Financial instruments at fair value
through profit or loss
4,526 - 11,824 489 2,451 1,458 1,625 22,373
Derivatives used for hedging purposes 3,215 - - - - - - 3,215
Remeasurement adjustment on interest-
rate risk hedged portfolios
472 - - - - - - 472
Financial liabilities at amortised cost - 183,894 9,992 14,866 11,107 39,093 2,302 261,254
Financial liabilities by maturity* 8,213 184,320 21,816 15,355 13,558 40,551 3,927 287,740
*The disclosure does not contain information with regard to Arval where the external funding of this activity amounts to EUR 9.6 billion, for which the biggest
part arrives at maturity within 1 to 5 years, the remaining funding being within 1 year.
162
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
In millions of euros
at 31 December 2020
Not
determined
Overnight or
demand
Up to 1
month (excl.
overnight)
1 to
3 months
3 months to
1 year
1 to 5 years
More than
5 years
TOTAL
Cash and balances at central banks - 50,074 - - - - - 50,074
Financial instruments at fair value
through profit or loss
12,266 - 2,519 369 1,956 702 20 17,832
Derivatives used for hedging purposes** 3,178 - - - - - - 3,178
Remeasurement adjustment on interest-
rate risk hedged portfolios
2,712 - - - - - - 2,712
Financial assets at fair value through
equity
313 - 82 178 1,282 4,128 3,790 9,773
Financial assets at amortised cost - 4,996 13,267 12,327 27,909 80,429 71,728 210,656
Financial assets by maturity 18,469 55,070 15,868 12,874 31,147 85,259 75,538 294,225
Deposits from central banks - 71 - - - - - 71
Financial instruments at fair value
through profit or loss
8,802 - 12,139 520 1,265 2,261 1,000 25,987
Derivatives used for hedging purposes** 5,257 - - - - - - 5,257
Remeasurement adjustment on interest-
rate risk hedged portfolios
1,449 - - - - - - 1,449
Financial liabilities at amortised cost - 175,669 12,138 13,024 14,479 40,617 3,218 259,145
Financial liabilities by maturity 15,508 175,740 24,277 13,544 15,744 42,878 4,218 291,909
** ”Derivatives used for Hedging purposes” should be restated for the comparative period of 31 December 2020 by decreasing respectively assets and liabilities
with the amount of EUR (799) million. In December 2020, no netting of the fair value of the fixed and floating leg was applied on the macro hedge derivative
with the counterparty LCH (contrary to 31 December 2021). The effect of the retrospective application of the netting in the “Derivatives used for Hedging
purposes” for the comparative period also results to the restatement of the captions “Total assets”, “Total liabilities” and “Total liabilities and equity” by the
amount of EUR (799) million.
7.i Fair value of financial instruments carried at amortised cost
The information supplied in this note must be used and interpreted with the greatest caution for the following reasons:
these fair values are an estimate of the value of the
relevant instruments as of 31 December 2021. They are
liable to fluctuate from day to day as a result of changes
in various parameters, such as interest rates and credit
quality of the counterparty. In particular, they may differ
significantly from the amounts actually received or paid
on maturity of the instrument. In most cases, the fair value
is not intended to be realised immediately, and in practice
might not be realised immediately. Consequently, this fair
value does not reflect the actual value of the instrument
to BNP Paribas Fortis as a going concern;
most of these fair values are not meaningful, and hence
are not taken into account in the management of the com-
mercial banking activities which use these instruments;
estimating a fair value for financial instruments carried
at historical cost often requires the use of modelling
techniques, hypotheses and assumptions that may vary
from bank to bank. This means that comparisons between
the fair values of financial instruments carried at his-
torical cost as disclosed by different banks may not be
meaningful;
163
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
the fair values shown below do not include the fair values
of finance lease transactions, non-financial instruments
such as property, plant and equipment, goodwill and other
intangible assets such as the value attributed to demand
deposit portfolios or customer relationships. Consequently,
these fair values should not be regarded as the actual
contribution of the instruments concerned to the overall
valuation of BNP Paribas Fortis.
31 December 2021
In millions of euros
Estimated fair value
Carrying value Level 1 Level 2 Level 3 Total
FINANCIAL ASSETS
Loans and advances to credit institutions and customers
(1)
- 14,961 169,931 184,892 181,541
Debt securities at amortised cost (note 4.e) 10,733 866 175 11,774 11,712
FINANCIAL LIABILITIES
Deposits from credit institutions and customers - 255,854 - 255,854 255,647
Debt securities (note 4.h) - 12,746 - 12,746 12,878
Subordinated debt (note 4.h) - 2,298 - 2,298 2,296
31 December 2020
In millions of euros
Estimated fair value
Carrying value Level 1 Level 2 Level 3 Total
FINANCIAL ASSETS
Loans and advances to credit institutions and customers
(1)
- 14,357 169,360 183,717 178,675
Debt securities at amortised cost (note 4.e) 11,640 1,864 146 13,650 13,383
FINANCIAL LIABILITIES
Deposits from credit institutions and customers - 244,845 - 244,845 244,590
Debt securities (note 4.h) - 11,394 - 11,394 11,815
Subordinated debt (note 4.h) - 2,740 - 2,740 2,740
(1) Finance leases excluded
The valuation techniques and assumptions used by
BNP Paribas Fortis ensure that the fair value of financial
assets and liabilities carried at amortised cost is measured
on a consistent basis throughout the Bank. Fair value is based
on prices quoted in an active market when these are avail-
able. In other cases, fair value is determined using valuation
techniques such as discounting of estimated future cash flows
for loans, liabilities and debt securities at amortised cost, or
specific valuation models for other financial instruments as
described in note 1 ‘Summary of significant accounting policies
applied by BNP Paribas Fortis’. The description of the fair value
hierarchy levels is also presented in the accounting principles
(note 1.f.9). In the case of loans, liabilities and debt securities
at amortised cost that have an initial maturity of less than
one year (including demand deposits) or of most regulated
savings products, fair value equates to the carrying amount.
These instruments have been classified in Level 2, except for
loans to customers which are classified in Level 3.
164
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
New entries (E) in the scope of consolidation
E1 Passing qualifying thresholds
E2 Incorporation
E3 Purchase, gain of control or significant influence
Removals (S) from the scope of consolidation
S1 Cessation of activity (including dissolution, liquidation)
S2 Disposal, loss of control or loss of significant influence
S3 Entities removed from the scope
because < qualifying thresholds
S4 Merger, Universal transfer of assets and liabilities
Variance (V) in voting or ownership interest
V1 Additional purchase
V2 Partial disposal
V3 Dilution
V4 Increase in %
Miscellaneous
D1 Consolidation method change
not related to fluctuation in
voting or ownership interest
Prudential scope of consolidation
1 Jointly controlled entities under proportional consolidation for prudential purposes.
2 Entities consolidated under the equity method in the prudential scope.
Full Full consolidation
Equity Equity Method
FV Investment in associates measured at Fair Value through P&L
7.j Scope of consolidation
31 December 2021 31 December 2020
Name Country Method
Voting
(%)
Interest
(%)
Ref. Method
Voting
(%)
Interest
(%) Ref.
Consolidating company
BNP Paribas Fortis Belgium
Belgium
AG Insurance Belgium Equity 25.0% 25.0% Equity 25.0% 25.0%
Alpha Crédit SA Belgium Full 100.0% 99.9% Full 100.0% 99.9%
Arval Belgium NV SA Belgium Full 2 100.0% 99.9% Full 100.0% 99.9%
Axepta BNPP Benelux Belgium Full 100.0% 99.9% Full 100.0% 99.9% E1
Bancontact Payconiq Company Belgium Equity 22.5% 22.5% Equity 22.5% 22.5%
Banking Funding Company SA Belgium Equity 33.5% 33.5% Equity 33.5% 33.5%
Batopin Belgium Equity 25.0% 25.0% E1
Belgian Mobile ID Belgium Equity 12.2% 12.2% V3 Equity 15.0% 15.0%
BNP Paribas 3 Step IT (Belgium Branch) Belgium Full 100.0% 12.8% Full 100.0% 12.8%
BNP Paribas Fortis Factor NV SA Belgium Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Fortis Private Equity Belgium NV Belgium Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Fortis Private Equity Expansion Belgium Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Fortis Private Equity Management
Belgium Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Lease Group Belgium Belgium Full 100.0% 25.0% Full 100.0% 25.0%
BNPP Fortis Film Finance Belgium Full 99.9% 99.9% V4 Full 99.0% 99.0%
bpost bank Belgium Equity 1 50.0% 50.0% Equity 1 50.0% 50.0%
CNH Industrial Capital Europe Belgium Branch
Belgium Full 100.0% 12.5% Full 100.0% 12.5%
Credissimo Belgium Full 100.0% 99.9% Full 100.0% 99.9%
Credissimo Hainaut SA Belgium Full 99.7% 99.7% Full 99.7% 99.7%
Crédit pour Habitations Sociales Belgium Full 81.7% 81.7% Full 81.7% 81.7%
Eos Aremas Belgium S.A./N.V. Belgium Equity 49.9% 49.9% Equity 49.9% 49.9%
Es-Finance Belgium Full 100.0% 99.9% Full 100.0% 99.9%
Fortis Lease Belgium Belgium Full 100.0% 25.0% Full 100.0% 25.0%
FScholen Belgium Equity 1 50.0% 50.0% Equity 1 50.0% 50.0%
Immobilière Sauvenière S.A. Belgium Full 100.0% 99.9% Full 100.0% 99.9%
Private Equity Investments (a) BE/FR/LU FV FV
Isabel SA NV Belgium Equity 25.3% 25.3% Equity 25.3% 25.3%
Locadif Belgium Full 2 100.0% 99.9% Full 100.0% 99.9%
Microstart Belgium Full 42.3% 76.8% V3 Full 70.3% 76.8%
Sowo Invest SA NV Belgium Full 87.5% 87.5% Full 87.5% 87.5%
165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
New entries (E) in the scope of consolidation
E1 Passing qualifying thresholds
E2 Incorporation
E3 Purchase, gain of control or significant influence
Removals (S) from the scope of consolidation
S1 Cessation of activity (including dissolution, liquidation)
S2 Disposal, loss of control or loss of significant influence
S3 Entities removed from the scope
because < qualifying thresholds
S4 Merger, Universal transfer of assets and liabilities
Variance (V) in voting or ownership interest
V1 Additional purchase
V2 Partial disposal
V3 Dilution
V4 Increase in %
Miscellaneous
D1 Consolidation method change
not related to fluctuation in
voting or ownership interest
Prudential scope of consolidation
1 Jointly controlled entities under proportional consolidation for prudential purposes.
2 Entities consolidated under the equity method in the prudential scope.
Full Full consolidation
Equity Equity Method
FV Investment in associates measured at Fair Value through P&L
31 December 2021 31 December 2020
Name Country Method
Voting
(%)
Interest
(%)
Ref. Method
Voting
(%)
Interest
(%) Ref.
Belgium - Special Purpose Entities
Bass Master Issuer NV Belgium Full Full
Esmée Master Issuer Belgium Full Full
FL Zeebrugge Belgium Full Full
Belgium - Structured Entities
Epimede Belgium Equity Equity
Luxembourg
Arval Luxembourg SA Luxembourg Full 2 100.0% 99.9% Full 100.0% 99.9%
BGL BNP Paribas Luxembourg Full 50.0% 50.0% Full 50.0% 50.0%
BNP Paribas Fortis Funding S.A. Luxembourg Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Lease Group Luxembourg S.A. Luxembourg Full 100.0% 50.0% Full 100.0% 50.0%
BNP Paribas Leasing Solutions Luxembourg Full 50.0% 25.0% Full 50.0% 25.0%
Cardif Lux Vie Luxembourg Equity 33.3% 16.7% Equity 33.3% 16.7%
Cofhylux S.A. Luxembourg Full 100.0% 50.0% Full 100.0% 50.0%
Luxhub SA Luxembourg Equity 28.0% 14.0% Equity 28.0% 14.0%
Visalux Luxembourg Equity 25.3% 12.6% V3 Equity 25.3% 12.7%
Rest of the world
Aprolis Finance France Full 51.0% 12.8% Full 51.0% 12.8%
Artegy France Full 100.0% 25.0% Full 100.0% 25.0%
Artel France Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval AB Sweden Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval AS Denmark Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval AS Norway Norway Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Austria GmbH Austria Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Benelux BV
The Netherlands
Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Brasil LTDA Brazil Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval BV
The Netherlands
Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval CZ SRO Czech Republic Full 2 100.0% 99.9% Full 100.0% 99.9%
166
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
New entries (E) in the scope of consolidation
E1 Passing qualifying thresholds
E2 Incorporation
E3 Purchase, gain of control or significant influence
Removals (S) from the scope of consolidation
S1 Cessation of activity (including dissolution, liquidation)
S2 Disposal, loss of control or loss of significant influence
S3 Entities removed from the scope
because < qualifying thresholds
S4 Merger, Universal transfer of assets and liabilities
Variance (V) in voting or ownership interest
V1 Additional purchase
V2 Partial disposal
V3 Dilution
V4 Increase in %
Miscellaneous
D1 Consolidation method change
not related to fluctuation in
voting or ownership interest
Prudential scope of consolidation
1 Jointly controlled entities under proportional consolidation for prudential purposes.
2 Entities consolidated under the equity method in the prudential scope.
Full Full consolidation
Equity Equity Method
FV Investment in associates measured at Fair Value through P&L
31 December 2021 31 December 2020
Name Country Method
Voting
(%)
Interest
(%)
Ref. Method
Voting
(%)
Interest
(%) Ref.
Arval Deutschland GmbH Germany Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Fleet Services France Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Fuhrparkmanagement GmbH Austria S4 Full 100.0% 99.9% E3
Arval Hellas Car Rental SA Greece Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval India Private Ltd India S3 Full 100.0% 99.9%
Arval LLC Russia Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Magyarorszag KFT Hungary Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Maroc SA Morocco Full 2 66.7% 66.7% Full 66.7% 66.7%
Arval Oy Finland Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Relsa SPA Chile Equity 50.0% 50.0% Equity 1 50.0% 50.0%
Arval Schweiz AG Switzerland Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease France Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease Aluger Operational
Automoveis SA
Portugal Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease Italia SPA Italy Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease Polska SP ZOO Poland Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease Romania SRL Romania Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Service Lease SA Spain Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Slovakia SRO Slovakia Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval Trading France Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval UK Group Ltd United Kingdom Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval UK Leasing Services Ltd United Kingdom Full 2 100.0% 99.9% Full 100.0% 99.9%
Arval UK Ltd United Kingdom Full 2 100.0% 99.9% Full 100.0% 99.9%
Bantas Nakit AS Turkey Equity 1 33.3% 16.7% Equity 1 33.3% 16.7%
BGL BNP Paribas S.A. (Germany Branch) Germany Full 100.0% 50.0% Full 100.0% 50.0%
BNL Leasing SPA Italy Equity 26.2% 6.5% Equity 26.2% 6.5%
BNP Paribas 3 STEP IT France Full 51.0% 12.8% Full 51.0% 12.8%
BNP Paribas 3 Step IT (Germany Branch) Germany Full 100.0% 12.8% Full 100.0% 12.8%
BNP Paribas 3 Step IT (Italy Branch) Italy Full 100.0% 12.8% Full 100.0% 12.8%
BNP Paribas 3 Step IT (Netherlands Branch)
The Netherlands
Full 100.0% 12.8% Full 100.0% 12.8%
BNP Paribas3 Step It (United kingdom Branch)
United Kingdom
Full 100.0% 12.8% Full 100.0% 12.8%
BNP Paribas Commercial Finance Limited United Kingdom Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Factor AS Denmark Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Factor Gmbh Germany Full 100.0% 99.9% Full 100.0% 99.9%
BNP Paribas Finansal Kiralama A.S. Turkey Full 100.0% 26.1% Full 100.0% 26.1%
BNP Paribas Fortis (Spain branch) Spain Full 100.0% 100.0% Full
100.0% 100.0%
BNP Paribas Fortis (U.S.A branch) United States Full 100.0% 100.0% Full 100.0% 100.0%
BNP Paribas Fortis Yatirimlar Holding AS Turkey Full 100.0% 100.0% Full 100.0% 100.0%
BNP Paribas Lease Group France Full 100.0% 25.0% Full 100.0% 25.0%
167
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
New entries (E) in the scope of consolidation
E1 Passing qualifying thresholds
E2 Incorporation
E3 Purchase, gain of control or significant influence
Removals (S) from the scope of consolidation
S1 Cessation of activity (including dissolution, liquidation)
S2 Disposal, loss of control or loss of significant influence
S3 Entities removed from the scope
because < qualifying thresholds
S4 Merger, Universal transfer of assets and liabilities
Variance (V) in voting or ownership interest
V1 Additional purchase
V2 Partial disposal
V3 Dilution
V4 Increase in %
Miscellaneous
D1 Consolidation method change
not related to fluctuation in
voting or ownership interest
Prudential scope of consolidation
1 Jointly controlled entities under proportional consolidation for prudential purposes.
2 Entities consolidated under the equity method in the prudential scope.
Full Full consolidation
Equity Equity Method
FV Investment in associates measured at Fair Value through P&L
31 December 2021 31 December 2020
Name Country Method
Voting
(%)
Interest
(%)
Ref. Method
Voting
(%)
Interest
(%) Ref.
BNP Paribas Leasing Solutions IFN S.A. Romania Full 99.9% 24.9% Full 99.9% 24.9%
BNP Paribas Lease Group Leasing Solutions
S.P.A.
Italy Equity 26.2% 6.5% Equity 26.2% 6.5%
BNP Paribas Lease Group Milan Branch Italy Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Lease Group PLC United Kingdom Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Lease Group Rentals Limited United Kingdom S1 Full 100.0% 25.0%
BNP Paribas Lease Group (Germany Branch) Germany Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Lease Group Sa (Portugal Branch)
Portugal Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Lease Group Sa ( Spain Branch) Spain Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Lease Group Sp. Z.O.O Poland Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Leasing Solutions Ltd. United Kingdom Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Leasing Solutions N.V.
The Netherlands
Full 100.0% 25.0% Full 100.0% 25.0%
BNP Paribas Leasing Solutions Suisse SA Switzerland Full 100.0% 25.0% Full 100.0% 25.0%
BNPP Asset Management Holding France Equity 33.3% 30.9% Equity 33.3% 30.9%
BNPP Bank Polska SA Poland Equity 24.1% 24.1% Equity 24.1% 24.1%
BNPP Factor AB Sweden S1 Full 100.0% 99.9%
BNPP Factor NV
The Netherlands
S1 Full 100.0% 99.9%
BNPP Factoring Support
The Netherlands
Full 100.0% 99.9% Full 100.0% 99.9%
BNPP Fleet Holdings Ltd
United Kingdom
Full 2 100.0% 99.9% Full 100.0% 99.9%
BNPP Lease Group GmbH & Co KG Austria S4 Full 100.0% 25.0%
BNPP Leasing Solution AS Norway Full 100.0% 25.0% Full 100.0% 25.0%
BNPP Leasing Solutions AB Sweden Full 100.0% 25.0% E1
BNPP Leasing Solutions GmbH
(Ex - All In One Vermietung GmbH)
Austria Full 100.0% 25.0% Full 100.0% 25.0%
BNPP Rental Solutions Ltd United Kingdom Full 100.0% 25.0% Full 100.0% 25.0%
BNPP Rental Solutions SPA Italy Full 100.0% 25.0% Full 100.0% 25.0%
Claas Financial Services France Full 51.0% 12.8% Full 51.0% 12.8%
Claas Financial Services (Germany Branch) Germany Full 100.0% 12.8% Full 100.0% 12.8%
Claas Financial Services (Italy Branch) Italy Full 100.0% 12.8% Full 100.0% 12.8%
Claas Financial Services Ltd United Kingdom Full 51.0% 12.8% Full 51.0% 12.8%
Claas Financial Services (Poland Branch). Poland Full 100.0% 12.8% Full 100.0% 12.8%
Claas Financial Services (Spain Branch) Spain Full 100.0% 12.8% Full 100.0% 12.8%
Cent ASL France Full 2 100.0% 99.9% E2
CNH Industrial Capital Europe Gmbh Austria Full 100.0% 12.5% Full 100.0% 12.5%
CNH Industrial Capital Europe France Full 50.1% 12.5% Full 50.1% 12.5%
CNH Industrial Capital Europe BV
The Netherlands
Full 100.0% 12.5% Full 100.0% 12.5%
CNH Industrial Capital Europe (Italy Branch) Italy Full 100.0% 12.5% Full 100.0% 12.5%
CNH Industrial Capital Europe Ltd United Kingdom Full
100.0% 12.5% Full 100.0% 12.5%
CNH Industrial Capital Europe (Poland Branch)
Poland Full 100.0% 12.5% Full 100.0% 12.5%
168
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
New entries (E) in the scope of consolidation
E1 Passing qualifying thresholds
E2 Incorporation
E3 Purchase, gain of control or significant influence
Removals (S) from the scope of consolidation
S1 Cessation of activity (including dissolution, liquidation)
S2 Disposal, loss of control or loss of significant influence
S3 Entities removed from the scope
because < qualifying thresholds
S4 Merger, Universal transfer of assets and liabilities
Variance (V) in voting or ownership interest
V1 Additional purchase
V2 Partial disposal
V3 Dilution
V4 Increase in %
Miscellaneous
D1 Consolidation method change
not related to fluctuation in
voting or ownership interest
Prudential scope of consolidation
1 Jointly controlled entities under proportional consolidation for prudential purposes.
2 Entities consolidated under the equity method in the prudential scope.
Full Full consolidation
Equity Equity Method
FV Investment in associates measured at Fair Value through P&L
31 December 2021 31 December 2020
Name Country Method
Voting
(%)
Interest
(%)
Ref. Method
Voting
(%)
Interest
(%) Ref.
CNH Industrial Capital Europe (Germany Branch)
Germany Full 100.0% 12.5% Full 100.0% 12.5%
CNH Industrial Capital Europe (Spain Branch) Spain Full 100.0% 12.5% Full 100.0% 12.5%
Cofiparc France Full 2 100.0% 99.9% Full 100.0% 99.9%
Fortis Lease France Full 100.0% 25.0% Full 100.0% 25.0%
Fortis Lease Deutschland Gmbh Germany Full 100.0% 25.0% Full 100.0% 25.0%
Fortis Lease Iberia SA Spain Full 100.0% 41.0% Full 100.0% 41.0%
Fortis Lease Portugal Portugal Full 100.0% 25.0% Full 100.0% 25.0%
Fortis Lease Uk Ltd United Kingdom Full 100.0% 25.0% Full 100.0% 25.0%
Fortis Vastgoedlease B.V.
The Netherlands
Full 100.0% 25.0% Full 100.0% 25.0%
Greenval Insurance DAC Ireland Full 2 100.0% 99.9% Full 2 100.0% 99.9% E2
Heffiq Heftruck Verhuur BV
The Netherlands
Full 50.1% 12.5% Full 50.1% 12.5%
JCB Finance France Full 100.0% 12.5% Full 100.0% 12.5%
JCB Finance Holdings Ltd United Kingdom Full 50.1% 12.5% Full 50.1% 12.5%
JCB Finance (Italy Branch) Italy Full 100.0% 12.5% Full 100.0% 12.5%
JCB Finance (Germany Branch) Germany Full 100.0% 12.5% Full 100.0% 12.5%
Louveo France Full 2 100.0% 99.9% Full 100.0% 99.9%
Manitou Finance Ltd. United Kingdom Full 51.0% 12.8% Full 51.0% 12.8%
MGF France Full 51.0% 12.8% Full 51.0% 12.8%
MGF (Germany Branch) Germany Full 100.0% 12.8% Full 100.0% 12.8% E2
MGF (Italy Branch) Italy Full 100.0% 12.8% Full 100.0% 12.8% E2
Public Location Longue Durée France Full 2 100.0% 99.9% Full 100.0% 99.9%
RD Leasing IFN SA Romania S4 Full 100.0% 25.0%
Same Deutz Fahr Finance France Full 100.0% 25.0% Full 100.0% 25.0%
TEB Arval Arac Filo Kiralama A.S. Turkey Full 2 100.0% 74.9% Full 100.0% 74.9%
TEB ARF Teknoloji Anonim Sirketi Turkey Full 100.0% 48.7% E2
TEB Faktoring A.S. Turkey Full 100.0% 48.7% Full 100.0% 48.7%
TEB Holding A.S. Turkey Full 50.0% 49.9% Full 50.0% 49.9%
TEB Sh A Serbia Full 100.0% 49.9% Full 100.0% 49.9%
TEB Yatirim Menkul Degerler A.S. Turkey Full 100.0% 48.7% Full 100.0% 48.7%
Turk Ekonomi Bankasi A.S. Turkey Full 76.2% 48.7% Full 76.2% 48.7%
Rest of the world - Special Purpose Entities
Folea Grundstucksverwaltungs und
Vermietungs Gmbh & Co
Germany Full Full
Pixel 2021 France Full E2
(a) At 31 December 2021, 11 Private Equity investment entities versus 12 entities at 31 December 2020
169
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.k Fees paid to the statutory auditors
As of fiscal year 2018, all audit tasks are now performed by PWC as the Bank’s sole auditor.
The table below shows the fees paid to the auditors (PwC, Deloitte, Mazars and others) of all consolidated entities.
Excluding tax,
in thousands of euros
Year to 31 Dec. 2021 Year to 31 Dec. 2020
PwC Others Total PwC Others Total
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Audit
Statutory audit engagement 1,869 75% 5,650 93% 7,519 88% 1,650 90% 5,389 82% 7,039 84%
- BNP Paribas Fortis 1,296 52% - 0% 1,296 15% 1,166 64% - 0% 1,166 14%
- Consolidated subsidiaries 573 23% 5,650 93% 6,223 73% 484 26% 5,389 82% 5,873 70%
Services other than those required for
the statutory audit engagement
628 25% 401 7% 1,029 12% 189 10% 1,148 18% 1,337 16%
- BNP Paribas Fortis 310 12% 14 0% 324 4% 153 8% 312 5% 465 6%
- Consolidated subsidiaries 318 13% 387 7% 705 8% 36 2% 836 13% 872 10%
TOTAL 2,497 100% 6,051 100% 8,548 100% 1,839 100% 6,537 100% 8,376 100%
The fees paid to the various networks of the Statutory
Auditors other than the one certifying the Consolidated and
Non-Consolidated Financial Statements of BNP Paribas Fortis
(Deloitte and Mazars), shown in the table above, amount to
EUR 6,051,000 for the year 2021.
In 2021, the increase of EUR 219,000 in PwC’s fees for the
auditing of the financial statements is due to:
an exceptional increase of the audit fees for the accounts
of BNPP Fortis due to additional audit work related to the
impact of the COVID-19 situation on the 2020 financial
statements;
in 2021, a regulatory requirement to ensure compliance of
the annual report with the European Standard Electronic
Format (ESEF);
an increase of the fees for the consolidated entities fol-
lowing the attribution of a new mandate to the Greenval
Insurance DAC entity in Ireland in 2021.
The increase of EUR 261,000 in Mazars’ and Deloitte’s fees
related to the certification of the financial statements for the
consolidated entities is mainly related to the renegotiation of
Arval’s global fees dedicated to the audit work of the consoli-
dated accounts in 2021.
In 2021, the increase of EUR 439,000 in non-audit services
provided by PwC is due to:
an assistance to BNP Paribas Fortis in the TIBER BE (Threat
Intelligence based Ethical Red teaming) project imposed
by the National Bank to resist to cyber attacks;
a due diligence assignment within Axepta;
a legal and regulatory compliance work related to the
Solvency II certification for Greenval Insurance DAC;
a contribution of expertise related to assets securitisation
within BNPP Lease Group;
a cover monitoring during the issuance of mortgaged-
backed securities of Turk Ekonomi Bankasi AS.
In 2021, the decrease of EUR 747,000 in services other than the
certification of the financial statements of the other Statutory
Auditors (Deloitte and Mazars) is explained by;
a specific ‘Compliance and AML (anti Money Laundering)’
service provided by Deloitte in 2020 within BNP Paribas Fortis;
an important review in 2020 of the consolidated and
combined financial statements provided by Mazars to
Arval Service Lease for the implementation of an EMTN
programme (Euro Medium Term Note);
a specific risk assessment assignment by Mazars in 2020
for BNPP Factor AS.
This reduction is slightly compensated by several one-off
missions carried out by Deloitte within Turk Ekonomi Bankasi
AS, Arval UK Group ltd and BGL BNPP.
170
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2021
7.l Events after the reporting period
Bpost bank
On 3 January 2022, BNP Paribas Fortis purchased the residual
50% stake in bpost bank, leading to the exclusive control and
a full consolidation of this entity from 2022.
This operation will enable the Bank to optimise the Retail
Banking activity in Belgium.
The estimated impact on the Bank’s balance sheet at acquisi-
tion date is approximately EUR 12 billion, of which EUR 8
billion in Loans and advances to customers at amortised cost.
This operation generates an estimated positive impact of
EUR 0.2 billion net of tax, to be recognised in the profit and
loss account of 2022.
Geopolitical risk
Since the closing at 31 December 2021, the world witnessed a
sudden sharp deterioration in geopolitical relations concerning
Ukraine, followed by the invasion of Ukraine by Russia together
with economic sanctions being imposed by governments
across the world. The total impact on the financial markets
and the business environment has been significantly nega-
tive and the long-term consequences on the global economy,
and in particular the European and Belgian economy are still
uncertain. BNP Paribas Fortis monitors the situation closely,
and implements the sanctions imposed by governments
worldwide against Russia.
The total loan and off-balance sheet commitments towards
Russian or Ukrainian counterparties are very limited and
represent a non-significant share of the total activity of
BNP Paribas Fortis (less than 0,05% of total assets). Arval, a
subsidiary of BNP Paribas Fortis, has activities in Russia, which
only represents 0,9% of the total leased fleet of the Arval Group
and less than 0,05% of BNP Paribas Fortis consolidated assets.
BNP Paribas Fortis is evaluating the consequences of this
unfolding crisis on its clients.
As it concerns non-adjusting events, it does not impact the
financial statements at 31/12/2021.
RISK MANAGEMENT AND RISK MANAGEMENT AND
CAPITAL ADEQUACY CAPITAL ADEQUACY
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INTRODUCTION
The information presented in this chapter reflects the risks carried by BNP Paribas Fortis. It provides
a description of BNP Paribas Fortis’ risk management organisation and a quantitative and qualitative
overview of BNP Paribas Fortis’ risk exposure at year-end 2021.
BNP Paribas Fortis’ risk measures are presented according to the Basel III principles under the
prudential scope of consolidation. These risks, calculated using methods approved by the Belgian
banking supervisor, i.e. the National Bank of Belgium (NBB) and the European banking supervisor, i.e.
the European Central Bank (ECB), are measured and managed as consistently as possible with the
BNP Paribas Risk methodologies. A more detailed picture of BNP Paribas Fortis’ risk management and
risk exposure according to Pillar 3 requirements is provided in the ‘Pillar 3 disclosure’.
Further details on the BNP Paribas Group’s approach to the measuring and managing of risks result-
ing from banking activities can be found in the Registration Document and the BNP Paribas Annual
Financial Report 2021.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
1 RISK MANAGEMENT ORGANIZATION
1.a Mission and organisation
Risk management is key in the banking business. At BNP
Paribas Group and BNP Paribas Fortis, operating methods and
procedures throughout the organisation are geared towards
addressing risks effectively. The entire process is supervised
primarily by the Risk department, which is responsible
for measuring and controlling risks at BNP Paribas Group
and BNP Paribas Fortis level. Risk is independent from the
Core Business divisions, Business Lines and territories and
reports directly to Group and BNP Paribas Fortis Executive
Management.
The guiding principles of the mission and organisation of
BNP Paribas Fortis’ Risk department are aligned:
with the mission of BNP Paribas Risk namely to:
advise the Bank’s management on risk appetite
and policy;
provide a ‘second pair of eyes’ so that risks taken by the
Bank are aligned with its policies and are compatible
with its profitability and solvency objectives;
report to and alert Bank management, Core Business
division heads and the special committee of the Board
of Directors on the status of the risks to which the Bank
is exposed;
ensure compliance with banking regulations in the risk
area, in liaison with other relevant group functions.
and with its organisational principles:
a single integrated Risk entity, which is responsible for
risk aspects across all businesses;
independent from business–line management;
organised with local and global reporting lines
(matrix principle).
The BNP Paribas Fortis Risk department was integrated
into BNP Paribas Risk function in November 2009. The Chief
Risk Officer (CRO) of BNP Paribas Fortis is a Member of the
Executive Board and also has a reporting line to the BNP
Paribas Head of Risk Domestic Markets. The CRO has no
hierarchical link to the heads of businesses or of countries.
This structure is designed to:
ensure objective risk control;
ensure that swift, objective and complete information is
provided in the event of increased risk;
maintain a single set of high-quality risk management
standards throughout the Bank;
ensure that the Bank’s risk professionals implement
and further develop methods and procedures of the
highest quality in line with its international competitors’
best practices.
The CRO heads the various Risk functions:
Risk Enterprise Risk Architecture is responsible for the
regulatory affairs, risk analytics and modelling, risk
strategic analysis, reporting and provisioning, risk ALM
– treasury and liquidity;
Risk CIB is tasked to provide full transparency and a
dynamic analysis of market & counterparty risks to all
BNP Paribas Fortis businesses and is responsible for the
management of credit risks on Financial Institutions, on
Sovereigns and on Corporates belonging to BNP Paribas
Fortis CIB;
Risk Belgian Retail Banking is responsible for the man-
agement of credit risks arising from all Business Lines
within the perimeter of BNP Paribas Fortis (Retail & Private
Banking Belgium, Corporate Banking excl.CIB);
Risk Function COO is responsible for operational perma-
nent control (ensuring second-line control of the Risk
function and of business continuity), the Risk Operating
Office (coordinating the non-core support functions), com-
munication and the RISK Strategy Team that is in charge
of shaping the change projects in the RISK function and of
the liaison with Agile Impulse;
Tribe Risk & Credits is a new entity created as of July 2020
in the overall Agile Impulse context. It is responsible for
products, processes, IT assets and data related to credit
and risk management;
RISK IRC (RISK Independent Review & Control) is responsible
for model risk management and the independent review
of models in the area of 1) credit risk, 2) market- and
counterparty risk, 3) insurance risk and 4) operational risk;
Risk ORM (Operational Risk Management) BNP Paribas
Fortis Belgium provides reasonable assurance of the
existence and the efficient functioning of an operational
permanent control framework within BNP Paribas Fortis
in Belgium that meets the supervisory requirements of
BNP Paribas Fortis as well as those of BNP Paribas Group;
Risk DPO (Data Protection Officer) is responsible for
monitoring compliancy with regulatory requirements in
the context of personal data privacy and protection.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
Outside Belgium, alongside the existing local and global
reporting lines, the CROs of companies that remain within the
BNP Paribas Fortis perimeter report to the CRO of BNP Paribas
Fortis in order to ensure compliance with internal and
external rules.
The key principle of the Bank’s overall risk governance (cov-
ering all risk types including credit, market, counterparty,
liquidity risk, operational risk, etc.) is the double-walled
defence, as stated in the BNP Paribas Fortis Risk Policy that
is reviewed by the Executive Board and the Audit, Risk &
Compliance Committee.
The primary responsibility for risk lies with the businesses
(first line of defense), which are responsible for the approval,
monitoring and management of the risks arising from
their activities.
The Risk function provides a ‘second pair of eyes’, helping to
ensure that the risks taken by the Bank are compliant and
compatible with its policies; it represents the second line of
defense in accordance with the mission stated above, contrib-
uting strongly to joint decision making with the businesses
and increasing the emphasis on risk monitoring and controls.
1.b BNPParibas Fortis Risk committees
Risk Committee (RC): in accordance with article 27 of the
Belgian Banking Law, BNP Paribas Fortis is required to set
up a separate risk committee to assist the board of direc-
tors with risk related matters. Prior to the entering into
force of the Belgian Banking Law, the risk committee was
part of the ARCC. The risk committee shall, upon request of
the board of directors, assist (and make recommendations
to) the board of directors in all risk related matters. In
addition, several special competences of the risk commit-
tee are set forth in article 29 of the Belgian Banking Law
and are listed herewith: (i) risk tolerance, (ii) price setting
and (iii) remuneration policy.
Central Credit Committee: the highest Credit Committee of
BNP Paribas Fortis, which acts in line with the authority
of the delegations held by its members (CEO and Heads
of Business Lines, together with the CRO and other senior
Risk representatives); it ensures that customer-level
credit decisions are taken within the desired credit risk
profile, the formulated credit policies and the Bank’s legal
lending limits.
Capital Markets Risk Committee: defines and enforces the
Risk strategy, policies, methods and thresholds for capital
markets, including investment portfolios, at activity and
transaction levels.
Risk Policy Committee: defines the risk profile at portfolio
level, approves policies, reviews exposures and examines
risks in the light of market conditions, business strategy
and profitability, and enforces risk decisions.
Bank Asset and Liability Committee: manages the liquidity
position of the Bank and the interest rate risk and foreign
exchange risk in the Banking Book.
Internal Control Committee (ICC): focuses on the manage-
ment of the operational permanent control framework
and the management of operational risks and risks of
non-compliance. The ICC allows operational entities and
control functions signaling and debating about the most
significant operational risks, and risks of non-compliance,
and weaknesses in the permanent control framework.
Provision Committee makes final decisions on consolidated
provisions and impairments.
Exceptional Transactions Committee: validates and
approves exceptional transactions.
New Activity Committee: validates and approves new
activities and products, including any significant changes
in current activities.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
2 RISK MEASUREMENT AND CATEGORIES
2.a Risk measurement
Risk measurement is a crucial step in the risk manage-
ment process.
To assess and measure risks, BNP Paribas Fortis uses several
qualitative and/or quantitative methodologies. These range
from regular reporting on matters such as concentration
and quantitative and qualitative portfolio overviews to more
sophisticated quantitative risk models for estimating internal
risk parameters. The latter include probability of default, loss
given default, exposure at default and expected loss (for credit
risk) and Value at Risk (for market risk).
The development and review of these models, and their
validation, are subject to Bank-wide standards in order to
ensure adequacy and consistency.
The monitoring of the observed risk parameters, stress tests
and model-based expectations are then compared to a frame-
work of limits and risk guidelines.
Ultimately, all these risk measurements, together with stress
tests, are then consolidated in Risk dashboards, which provide
a general overview for senior management. These summary
documents are intended to provide a basis for well-founded
decisions and are subject to on-going improvements.
2.b Risk taxonomy
The risk categories reported below evolve in line with methodological developments at BNP Paribas and regulatory requirements.
Credit and counterparty risk
Credit risk is the risk of incurring a loss on financial assets
(existing or potential due to commitments given) resulting
from a change in the credit quality of the Bank’s debtors, which
may ultimately result in default. The probability of default and
the expected recovery on the loan or receivable in the event of
default are key components of the credit quality assessment.
Credit risk is measured at portfolio level, taking into account
correlations between the values of the loans and receivables
making up the portfolio.
Counterparty risk is the credit risk embedded in payments
or transactions between counterparties. Those transactions
typically include bilateral contracts such as over-the-counter
(OTC) derivative contracts, which expose the Bank to the risk
of counterparty default. The amount of this risk may vary over
time in line with changing market parameters, which in turn
impacts the replacement value of the relevant transactions
or portfolio.
Market risk
Market risk is the risk of incurring a loss of value (or a loss
of interest income in the case of interest rate risk due to
banking intermediation activities) due to adverse changes in
market prices or parameters (rates), whether quoted in the
market or not.
Quoted market parameters include, but are not limited to,
exchange rates, prices of securities and commodities (whether
listed or obtained by reference to a similar asset), prices of
derivatives and other parameters that can be directly inferred
from them, such as interest rates, credit spreads, volatilities
and implied correlations or other similar parameters.
Non-quoted parameters are those based on working assump-
tions such as parameters contained in models or based
on statistical or economic analyses, non-ascertainable
in the market.
Liquidity is an important component of market risk. In times
of limited or no liquidity, instruments or goods may not be
tradable or may not be tradable at their estimated value.
This may arise, for example, due to low transaction volumes,
legal restrictions or a strong imbalance between demand and
supply for certain assets.
The market risk relating to banking activities encompasses the
risk of loss on equity holdings on the one hand, and the inter-
est rate and foreign exchange risks stemming from banking
intermediation activities on the other hand.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
Operational risk
Operational risk is the risk of incurring a loss due to inadequate
or failed internal processes, or due to external events, whether
deliberate, accidental or natural occurrences. Management of
operational risk is based on an analysis of the ‘cause-event-
effect’ chain.
Internal processes giving rise to operational risk may involve
employees and/or IT systems. External events include, but are
not limited to: floods, fire, earthquakes and terrorist attacks.
Credit or market events such as default or fluctuations in value
do not fall within the scope of operational risk.
Operational risk encompasses fraud, human resources risks,
legal risks, non-compliance risks, tax risks, information
system risks, conduct risks (risks related to the provision of
inappropriate financial services), risks relating to failures in
operating processes, including loan procedures or model risks,
as well as any potential financial implications resulting from
the management of reputational risk.
Compliance and reputational risk
Compliance risk is the risk of legal, administrative or disci-
plinary sanctions, together with the significant financial loss
that a Bank may suffer as a result of its failure to comply with
all the laws, regulations, codes of conduct and standards of
good practice applicable to banking and financial activities,
including instructions given by an executive body, particularly
in the application of guidelines issued by a supervisory body.
By definition, compliance risk is a sub-category of operational
risk. However, as certain implications of compliance risk
involve more than a purely financial loss and may actually
damage the institution’s reputation, the Bank treats compli-
ance risk separately.
Reputational risk is the risk of damaging the trust placed in
a corporation by its customers, counterparties, suppliers,
employees, shareholders, regulators and any other stake
-
holder whose trust is an essential condition for the corporation
to carry out its day-to-day operations.
Reputational risk is primarily contingent on all the other risks
borne by the Bank.
Asset-liability management risk
Asset-liability management risk is the risk of incurring a loss as
a result of mismatches in interest rates, maturities or nature
between assets and liabilities. Asset-liability management
risk arises in non-trading portfolios and primarily relates to
global interest rate risk.
Liquidity and refinancing risk
Liquidity and refinancing risk is the risk of the Bank being
unable to fulfil its obligations at an acceptable price in a given
place and currency.
Environmental risk
Environmental risks and, more particularly, those associated
with climate change are a financial risk for the Bank. They may
affect it, either directly on its own operations, or indirectly via
its financing and investment activities. There are two main
types of risks related to climate change: (i) transition risks,
which result from changes in the behaviour of economic and
financial actors in response to the implementation of energy
policies or technological changes; (ii) physical risks, which
result from the direct impact of climate change on people
and property through extreme weather events or long-term
risks such as rising water levels or increasing temperatures. In
addition, liability risks may arise from both categories of risk.
They correspond to the damages that a legal entity would have
to pay if it were found to be responsible for global warming.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
3 CAPITAL ADEQUACY
Framework
As a credit institution, BNP Paribas Fortis is subject to regula-
tory supervision.
The Belgian Banking Act of 25 April 2014 on the status and the
supervision of credit institutions aligns the Belgian legislation
in accordance with the EU regulatory framework. The Capital
Requirements Directive (CRD IV) is the legal framework for
the supervision of credit institutions in all Member States of
the European Union and is the basis of the Single Supervisory
Mechanism (SSM), composed of the European Central Bank
(ECB) and the national competent authorities, such as the
National Bank of Belgium (NBB). The Capital Requirements
Regulation (CRR) was published under reference number
575/2013 on June 26th 2013 in the Official Journal of the
European Union and is in force as of June 27th 2013, while
the supervised entities within its scope are subject to it as of
January 1st 2014. The CRD and CRR have been amended by
the European parliament and council on May 20th 2019 with
a majority of provisions applicable as of June 28th 2021.
As such BNP Paribas Fortis is supervised, at consolidated
and statutory level, by the ECB and the NBB. BNP Paribas
Fortis’ subsidiaries may also be subject to regulation by
various supervisory authorities in the countries where these
subsidiaries operate.
Regulators require banks to hold a minimum level of qualifying
capital under the 1st Pillar of the Basel III framework.
Since January 1st 2014, BNP Paribas Fortis has been computing
its qualifying capital and its risk-weighted assets under the
CRR/CRD IV.
The NBB (previously the CBFA, which was the former Belgian
supervisor) has granted to BNP Paribas Fortis its approval
for using the advanced approaches for calculating the risk-
weighted assets under the Basel regulations: Advanced
Internal Ratings Based Approach for credit and market risk
and Advanced Measurement Approach for operational risk.
Some subsidiaries of BNP Paribas Fortis have not received
such approval and therefore use the Standardised Approach
for calculating risk-weighted assets.
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Breakdown of regulatory capital
Qualifying capital for regulatory purpose is calculated at
consolidated level based on IFRS accounting standards, taking
into account prudential filters and deductions imposed by the
regulator, as described in the CRR/CRD IV and transposed into
the Belgian Banking Law published in April 2014.
The table below details the composition of the regulatory
capital of BNP Paribas Fortis:
In millions of euros
31 December 2021
Basel III
of which transitional
arrangements *
Common Equity Tier 1 (CET1) capital: instruments and reserves
Capital instruments and the related share premium accounts 11,905 -
Retained earnings 12,327 -
Accumulated other comprehensive income (and other reserves) (1,417) -
Funds for general banking risk - -
Minority interests (amount allowed in consolidated CET 1) 1,387 -
Independently reviewed interim profits net of any foreseeable charge or dividend - -
COMMON EQUITY TIER 1 (CET1) CAPITAL BEFORE REGULATORY ADJUSTMENTS 24,203 -
Common Equity Tier 1 (CET1): regulatory adjustments (2,499) -
COMMON EQUITY TIER 1 (CET1) CAPITAL 21,704 -
Additional Tier 1 (AT1) capital: instruments 956 205
Additional Tier 1 (AT1) capital: regulatory adjustments - -
ADDITIONAL TIER 1 (AT1) CAPITAL 956 205
TIER 1 CAPITAL (T1 = CET1 + AT1) 22,660 205
Tier 2 (T2) capital: instruments and provisions 1,314 30
Tier 2 (T2) capital: regulatory adjustments (240) -
TIER 2 (T2) CAPITAL 1,074 30
TOTAL CAPITAL (TC = T1 + T2) 23,734 235
(*)
By virtue of regulation (EU) N° 575/2013
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RISK MANAGEMENT AND CAPITAL ADEQUACY
The table below shows the key capital indicators (phase-in):
In millions of euros 31 December 2021 31 December 2020
Common equity Tier 1 Capital (CET1) 21,704 21,504
Tier 1 Capital 22,660 22,461
Total Capital 23,734 25,060
Risk weighted commitments
Credit risk 95,451 110,904
Securitisation 1,248 1,259
Counterparty Risk 1,689 2,274
Equity Risk 12,800 7,993
Market risk 1,168 1,443
Operational risk 8,528 11,633
TOTAL RISK WEIGHTED COMMITMENTS 120,884 135,506
CET 1 ratio 18.0% 15.9%
Tier 1 ratio 18.7% 16.6%
Total capital ratio 19.6% 18.5%
The table below shows the leverage ratio (phase-in):
At 31 December 2020, the leverage ratio was 7.4% after taking into account the temporary exemption of deposits held with
Eurosystem central banks. The ratio would have stand at 6.4% if this exemption were not applied.
This exemption is not applied anymore at 31 December 2021.
In millions of euros 31 December 2021 31 December 2020
On-Balance Exposure (Excl. repo & derivatives) 320,395 266,791
Repo's and derivatives 11,658 15,596
Repurchase agreements and securities lending/borrowing 10,417 11,015
Replacement cost of derivatives transactions 2,367 5,004
Add-on for potential future risk derivatives 1,791 3,174
Cash variation margins (2,917) (3,597)
Off-Balance Exposure (adjusted for conversion to credit equivalent. art.429 CRR) 26,580 25,371
TOTAL EXPOSURE 358,633 307,758
Regulatory adjustments (2,499) (3,035)
Tier 1 capital 22,660 22,461
Leverage Ratio 6.36% 7.37%
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RISK MANAGEMENT AND CAPITAL ADEQUACY
4 CREDIT AND COUNTERPARTY CREDIT RISK
4.a Credit risk
Exposure to Credit Risk
The following table shows all BNP Paribas Fortis’ financial assets, including fixed-income securities, which are exposed to
credit risk. Credit risk exposure does not include collateral and other security taken by the Bank in its lending business or
purchases of credit protection.
Exposure to credit risk(*) by Basel asset class
In millions of euros
31 December 2021 31 December 2020
IRBA
Standardised
Approach Total IRBA
Standardised
Approach Total
Central governments and central banks 72,477 6,752 79,229 64,878 7,796 72,674
Corporates 124,630 16,400 141,030 112,753 24,073 136,826
Institutions (**) 13,589 5,414 19,003 15,798 7,278 23,076
Retail 92,840 30,188 123,028 89,019 31,687 120,706
Securitisation positions 4,492 841 5,333 4,498 888 5,386
Other non-credit-obligation assets (***) 548 4,035 4,583 469 18,708 19,177
TOTAL EXPOSURE 308,576 63,630 372,206 287,415 90,430 377,845
(*) Exposure to credit risk excludes DTA’s risk weighted at 250% and default fund contributions to CCPs
(**) Institutions asset class comprises credit institutions and investment firms, including those recognised in other countries. It also includes some exposures to
regional and local authorities, public sector agencies and multilateral development banks that are not treated as central government authorities
(***) Other non-credit-obligation assets include tangible assets, accrued income and residual values
The table above shows the entire prudential scope based on
the asset classes defined in accordance with Article VI.2 of the
CBFA Regulation of 17 October 2006 on capital requirements
for credit institutions and investment firms.
Diversification of exposure to credit risk
Credit risk concentration is any exposure to a counterparty or
an aggregate of exposures to a number of positively correlated
counterparties (i.e. tendency to default under similar circum-
stances) with the potential to produce a significant amount of
capital loss due to a bankruptcy or failure to pay. Avoidance
of concentrations is therefore fundamental to BNP Paribas
Fortis’ credit risk strategy of maintaining granular, liquid and
diversified portfolios.
In order to identify potential linkages between exposures to
single counterparties, BNP Paribas Fortis applies the concept
of ‘Total Group Authorisation’. This implies that groups of con-
nected counterparties are deemed to be a ‘Business Group’ for
the management of credit risk exposure.
To manage the diversity of credit risk, BNP Paribas Fortis’
credit risk management policy seeks to spread credit risk
across different sectors and countries. The table below shows
the industry concentration of BNP Paribas Fortis’ customer
credit portfolio at 31 December 2021.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
Breakdown of credit risk(*) by Basel III Asset Class and by corporate industry at 31 December 2021
In millions of euros
31 December 2021 31 December 2020
Exposure % Exposure %
Agriculture, Food, Tobacco 13,284 4% 13,920 4%
Financial services 77,914 21% 75,060 20%
Chemicals excluding Pharmaceuticals 2,920 1% 2,842 1%
Construction 10,574 3% 11,165 3%
Retailers 5,202 1% 7,170 2%
Equipment excluding IT 5,108 1% 6,944 2%
Real estate 28,193 8% 26,261 7%
Metals & Mining 6,520 2% 5,381 1%
Wholesale & Trading 11,761 3% 12,067 3%
Business services 38,294 10% 38,703 10%
Transportation & Logistics 9,610 3% 9,290 3%
Utilities (electricity, gas, water, etc.) 10,980 3% 10,622 3%
Retail 91,018 25% 98,688 27%
Sovereign & public sector 20,512 6% 23,106 6%
Other 34,984 10% 31,241 8%
TOTAL 366,874 100% 372,460 100%
(*) Credit risk exposure excludes DTA’s risk weighted at 250%, default fund contributions to CCPs and securitisation positions
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RISK MANAGEMENT AND CAPITAL ADEQUACY
Geographical breakdown of credit risk(*) at 31 December 2021 by counterparty’s country
of location
Country concentration risk is the sum of all exposures to obligors in the country concerned. The table below shows the
geographical concentration of BNP Paribas Fortis’ customer credit portfolio at 31 December 2021.
In millions of euros
31 December 2021
Basel III
Central
governments
and central
banks Corporates Institutions Retail Total %
Europe 74,332 126,029 16,460 120,834 337,655 92%
Belgium 55,241 66,928 8,548 90,557 221,274 60%
Netherlands 226 5,226 1,215 2,326 8,993 2%
Luxembourg 14,528 11,382 428 9,794 36,132 10%
France 961 9,666 4,328 5,163 20,118 5%
Other European countries 3,376 32,827 1,941 12,994 51,138 14%
North America 152 3,542 548 94 4,336 1%
Asia & Pacific 106 988 329 76 1,499 0%
Rest of the World 4,639 10,471 1,667 6,607 23,384 6%
TOTAL 79,229 141,030 19,004 127,611 366,874 100%
In millions of euros
31 December 2020
Basel III
Central
governments
and central
banks Corporates Institutions Retail Total %
Europe 66,978 120,653 20,011 130,867 338,509 91%
Belgium 50,280 63,366 8,439 87,595 209,680 56%
Netherlands 355 7,035 1,216 2,628 11,234 3%
Luxembourg 10,597 11,708 375 9,169 31,849 9%
France 1,396 6,362 7,436 9,223 24,417 7%
Other European countries 4,350 32,182 2,545 22,252 61,329 16%
North America 154 3,366 536 93 4,149 1%
Asia & Pacific 148 883 365 84 1,480 0%
Rest of the World 5,394 11,924 2,165 8,839 28,322 8%
TOTAL 72,674 136,826 23,077 139,883 372,460 100%
(*) Credit risk exposure excludes DTA’s risk weighted at 250%, default fund contributions to CCPs and securitisation positions
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RISK MANAGEMENT AND CAPITAL ADEQUACY
General credit policy
BNP Paribas Fortis’ lending activities are governed by
the Global Credit Policy, which applies to all BNP Paribas
Group entities. It is approved by the BNP Paribas Group
Risk Committee, chaired by the Chief Executive Officer and
endorsed by the BNP Paribas Fortis Executive Board, chaired
by the Chief Executive Officer. The policy is underpinned by
core principles relating to compliance with the BNP Paribas
Group’s ethical standards, compliance policies, clear defini-
tion of responsibilities (Business and Risk), and the existence
and implementation of procedures and requirements for a
thorough analysis of risks. It is cascaded in the form of specific
policies tailored to types of businesses or counterparties. The
framework for the governance of credit risks within the Bank
is further detailed in a specific, transversal approach which
is built upon key credit routing principles, rules governing the
granting of delegations of authority and the role of the Central
Credit Committee, which is the highest-level credit committee
at the Bank. It also reiterates and reinforces the key principle
that the Risk function is independent from the Businesses.
BNP Paribas Fortis’ lending activities are also governed by
Sector Policies. The Bank, makes great efforts to finance
projects that score well in the field of environmental care.
BNP Paribas Fortis has currently 9 sector policies in place
setting out the guidelines for its financing and investment
activities in sectors facing major social and environmen-
tal challenges.
The Bank’s strategy and commitment in this regard is fully
in line with that of the BNP Paribas Group. More information
thereon can be found in part 7 of the Universal Registration
Document of BNP Paribas.
Internal rating system
The Bank has a comprehensive internal rating system for
determining risk-weighted assets used to compute capital
adequacy ratios. A periodic assessment and control process
has been deployed to ensure that the system is appropriate
and correctly implemented. For corporate loans, the system
is based on three parameters: the counterparty’s probability
of default expressed via a rating; loss given default, which
depends on the structure of the transaction; and the credit
conversion factor (CCF), which estimates the portion of off-
balance sheet exposure at risk.
Each of the credit risk parameters is back-tested annually to
check the system’s performance for each of the Bank’s busi-
ness segments. Back-testing consists of comparing estimated
and actual results for each parameter.
There are twenty counterparty ratings. Seventeen cover
performing clients with credit assessments ranging from
‘excellent’ to ‘very concerning’, and three relate to clients
classified as in default, as per the definition published by the
banking regulator.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
Breakdown of IRBA exposure by internal rating – Sovereign, Financial Institutions and Corporate
31 December 2020 31 December 2021
in mln
0
20 000
40 000
60 000
80 000
100 000
120 000
0,00 < 0,15
1 - 3
0,15 < 0,25
3 - 4
0,25 < 0,50
4 - 6
0,50 < 0,75
6 - 7
0,75 < 2,50
7 - 11
2,50 < 10
11 - 15
10 < 100
15 - 17
100,00
18 - 20
Average PD at
one year horizon
Internal rating
Breakdown of IRBA exposure by internal rating – retail activities
31 December 2020 31 December 2021
in mln
0
5000
10 000
15 000
20 000
25 000
30 000
0,00 < 0,15
1 - 3
0,15 < 0,25
3 - 4
0,25 < 0,50
4 - 6
0,50 < 0,75
6 - 7
0,75 < 2,50
7 - 11
2,50 < 10
11 - 15
10 < 100
15 - 17
100,00
18 - 20
Average PD at
one year horizon
Internal rating
4.b Counterparty credit risk
Counterparty credit risk (CCR) is the translation of the credit
risk embedded in the financial transactions, investments
and/or settlement between counterparties. The transac
-
tions encompass bilateral contracts - i.e. over-the-counter
(OTC) – and cleared contracts through a clearing house. The
amount at risk changes over the contract’s lifetime together
with the risk factors that impact the potential future value of
the transactions.
Counterparty credit risk lies in the fact that a counterparty
may default on its obligations to pay the Bank the full present
value of a transaction or portfolio for which the Bank is a net
receiver. Counterparty credit risk is linked to the replacement
cost of a derivative or portfolio in the event of the counterparty
default. Hence, it can be seen as a market risk in case of
default or a contingent risk.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
5 MARKET RISK
Market risk is the risk of incurring a loss of value due to
adverse moves in market prices or parameters, whether
directly observable or not.
Observable market parameters include, but are not limited to,
exchange rates, prices of securities and commodities (whether
listed or obtained by reference to a similar asset), prices of
derivatives, and other parameters that can be directly inferred
from them, such as interest rates, credit spreads, volatilities
and implied correlations or other similar parameters.
Non-observable factors are those based on working assump-
tions such as parameters contained in models or based
on statistical or economic analyses, non-ascertainable in
the market.
In the bond portfolios, the credit instruments are valued on
the basis of the interest rates and the credit spreads, which
are considered as market parameters like interest rates and
foreign exchange risk. The risk on the issuer of the instruments
is also a market risk, called issuer risk.
Liquidity is an important component of market risk. In times
of limited or no liquidity, instruments or securities may not
be tradable or may not be tradable at their estimated value.
This may arise, for example, due to low transaction volumes,
legal restrictions or a strong imbalance between demand and
supply for certain assets.
The market risk related to banking activities encompasses the
risk of loss on equity holdings as well as the interest rate and
foreign exchange risks stemming from banking intermedia-
tion activities.
Market risk is split into two parts:
market risk linked to trading activities and corresponding
to trading instruments and derivative contracts;
market risk linked to banking activities covering the inter-
est rate and foreign exchange risks originating from the
bank’s intermediation activities.
5.a Capital requirement for market risk
Market Risk Capital Requirement
In millions of euros
RWAs Capital requirements
31 December
2021
31 December
2020 Variation
31 December
2021
31 December
2020 Variation
Internal model 879 1,074 (195) 71 86 (15)
VAR 134 373 (239) 11 30 (19)
Stressed VAR 600 568 32 48 45 3
Incremental Risk Charge (IRC) 145 133 12 12 11 1
Comprehensive Risk Measure (CRM) - - - - - -
Standardised approach 289 369 (80) 23 30 (7)
Trading book securitisation positions - - - - - -
MARKET RISK 1,168 1,443 (275) 94 116 (22)
The market risk calculated using the standardised approach
covers the market risk of some entities of the Bank that are
not covered by internal models. The standardised approach is
used to calculate foreign exchange risk for the banking book
(See section 5.C Market risk related to banking activities).
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RISK MANAGEMENT AND CAPITAL ADEQUACY
5.b Market risk related to trading activities
Market risk arises from trading activities carried out by the
Corporate and Institutional Banking business and encompasses
different risk factors:
Interest rate risk is the risk that the value of a finan-
cial instrument will fluctuate due to changes in market
interest rates;
Foreign exchange risk is the risk that the value of an
instrument will fluctuate due to changes in foreign
exchange rates;
Equity risk arises from changes in the market prices and
volatility of equity shares and/or equity indices;
Commodity risk arises from changes in the market prices
and volatility of commodities and/or commodity indices;
Credit spread risk arises from the change in the credit
quality of an issuer and is reflected in changes in the cost
of purchasing protection on that issuer;
Option products carry by nature volatility and correlation
risks, for which risk parameters can be derived from option
market prices observed in an active market.
The trading activities of BNP Paribas Fortis and its subsidiaries
are justified by the economic relations with the direct custom-
ers of the business lines, or indirectly as market-maker.
Within Risk, three departments are responsible for monitoring
market risk:
Risk Global Markets (Risk GM) covers the market risk
activities of Global Markets;
Risk Enterprise Risk Architecture (Risk ERA - ALMT) covers
the ALM Treasury activities;
Risk International Retail Banking (Risk IRB) covers inter-
national retail market activities.
This mission consists of defining, measuring and analysing
risk factors and sensitivities, as well as measuring and con-
trolling Value at Risk (VaR), the global indicator of potential
losses. Risk ensures that all business activities comply with
the limits approved by the various committees and approves
new activities and major transactions, reviews and approves
position valuation models and conducts a monthly review of
market parameters in association with the Valuation and Risk
Control Department.
5.c Market risk relating to banking activities
Market risk relating to banking activities encompasses the risk
of loss on equity positions on the one hand, and the interest
rate and currency risks stemming from banking intermediation
activities and investments on the other.
5.c.1 Equity risk
Equity interests held by the Bank outside the Trading Book
refers to securities which convey a residual, subordinated
claim on the assets or income of the issuer or have a similar
economic substance.
5.c.2 Currency risk
Currency risk relates to all transactions whether part of the
Trading Book or not.
Except for BNP Paribas Fortis Belgium’s currency exposure,
which is calculated using the BNP Paribas Fortis internal
model approved by the banking supervisor, exposure to cur-
rency risk is determined under the Standardised approach,
using the option provided by the banking regulator to limit
the scope to operational currency risk.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
5.c.3 Interest rate risk
5.c.3.1 Organisation of Interest rate risk management
The Board of directors assigns responsibility to the Chief
Executive Officer for management of interest rate risk in
the banking book; the Chief Executive Officer delegates the
management responsibility to the Bank Asset and Liability
Management Committee (ALCo).
The permanent members of the Bank ALCo are the Chief
Executive Officer (Chairperson), the Executive Board members
heading up core businesses, the Chief Risk Officer, the Chief
Financial Officer (alternate Chairperson), the Head of ALM
Treasury, the Head of BNP Paribas ALM Treasury Domestic
Markets Steering and the Head of the Bank ALM Treasury
Steering; other ALCo members belong to ALM Treasury, Risk
or Finance. The Bank ALCo which meets on a monthly basis
is responsible for defining the interest rate risk profile of the
Bank’s Banking Book and for defining and tracking interest rate
risk monitoring indicators and assigning limits.
ALM Treasury is in charge of the operational implementation
of decisions related to the management of the interest rate
risk of the Banking Book.
The Risk function participates in the ALCo and oversees the
implementation by ALM Treasury of the relevant decisions
made by this committee. It also provides second-line control
by reviewing the models & risk indicators, monitoring the
level of risk indicators and ensuring compliance with the
limits assigned.
The Banking Book includes all interest bearing assets and
liabilities of all the Business Lines of BNP Paribas Fortis
(including the ALM Treasury own investment and hedging
transactions) with the exception of authorised trading activi-
ties (being client hedging and market making).
Transactions initiated by each BNP Paribas Fortis Business Line
are systematically transferred to ALM Treasury by internal
analytical contracts booked in the management accounts or
by loans and borrowings.
The Bank’s strategy for managing interest rate risk is mainly
based on closely monitoring the sensitivity of the Bank’s
interest earnings to changes in interest rates, factoring in all
interest rate risks (repricing or gap risk, basis risk and optional
risk); the objective is to ensure the stability and regularity
of the total net interest margin. This management process
requires an accurate assessment of the risks incurred so that
the Bank can determine and implement the most optimal
hedging strategies.
Interest rate risk is mitigated using a range of different instru-
ments, the most important of which are derivatives - primarily
interest rate swaps and options. Interest rate swaps are used
to change the linear risk profile, which is mainly due to long-
term fixed-rate assets and liabilities. Options are used to
reduce non-linear risk, which is mainly caused by embedded
options sold to clients, e.g. prepayment options on mortgages,
floors on deposits.
5.c.3.2 Management and Hedging of Interest rate Risk
The hedging strategies for interest rate risk in the Banking
Book are defined and implemented by currency.
The hedges can comprise swaps and options and are typically
accounted for as fair value or cash flow hedges. They may also
take the form of HQLA (High Quality Liquid Asset) securities
which are accounted for in ’Hold to Collect and Sell’.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
6 SOVEREIGN RISKS
Sovereign risk is the risk of a State defaulting on its debt, i.e. a
temporary or prolonged interruption of debt servicing (interest
and/or principal). The Bank is thus exposed to credit, counter-
party or market risk according to the accounting category of
the financial asset issued by the Sovereign State.
Exposure to sovereign debt mainly consists of bonds.
The Bank holds sovereign bonds as part of its liquidity man-
agement process. Liquidity management is based amongst
others on holding bonds which are eligible as collateral
for refinancing by central banks; a substantial share of this
‘liquidity buffer’ consists of highly rated debt securities issued
by governments, supra-national authorities and agencies,
representing a low level of risk. A part of this same portfolio
has interest rate characteristics that contribute to the banking
book interest rate risk hedging strategies.
BNP Paribas Fortis’ sovereign bond portfolio is shown in the
table below. Figures in this table are now reported under the
prudential scope whereas in previous years’ disclosures, they
were reported under the accounting scope.
Banking Book
In millions of euros 31 December 2021 31 December 2020
Eurozone
Belgium 7,674 8,840
Italy 831 934
Spain 706 776
Luxembourg 281 219
The Netherlands 223 340
France 143 385
Finland 66 67
Germany 36 -
Austria 26 184
Portugal - 56
Total eurozone 9,986 11,801
Other countries in European Economic Area (EEA) -
Czech Republic 48 51
Others 1 12
Total other EEA 49 63
Other countries - -
Turkey 1,771 2,326
Others 35 26
Total other countries 1,806 2,352
TOTAL 11,841 14,216
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RISK MANAGEMENT AND CAPITAL ADEQUACY
7 OPERATIONAL RISK
Risk management framework
Regulatory framework
In line with the BNP Paribas Group framework, BNP Paribas
Fortis has implemented an all-embracing, single, operational
Risk Management framework for the entire Bank, which com-
plies with the Basel III criteria laid down in the Advanced
Measurement Approach (‘AMA’). This approach supports the
organisation by offering better management of risk through
heightened operational risk awareness. It ensures effective
measurement and monitoring of the operational risk profile.
Key players and governance
An appropriate risk management structure has been created
around a model with three levels of defense, which places the
primary responsibility for operational risk management and
mitigation with the Businesses. Within BNP Paribas Fortis, the
main control functions providing the second line of defence
are Compliance, Legal and RISK. Their role is to ensure that
the operational Risk Management framework is properly
embedded, that the operational risks that are identified,
assessed, measured and managed reflect the true risk profile
and that the resulting levels of own funds are adequate. The
third line of defense is provided by the General Inspection
(internal audit) department, which provides assurance that
risk structures and policies are being properly implemented.
The main governance bodies for the areas of Operational Risk
& Internal Control are the Internal Control Committees (ICCs).
The Internal Control Committee (ICC) aims at
providing a clear and comprehensive consolidated view
to the management with respect to the entity’s situation
in terms of operational risk and risk of non-compliance;
raising alerts and escalating when necessary on weak-
nesses in the framework to the executive management;
materializing the involvement of the executive manage-
ment in these topics – among others by constituting a
forum for analysis and decision.
The ICC gathers the key stakeholders from the three lines of
defence to discuss and agree on the main topics pertaining
to operational risks, including operational and organiza-
tional aspects.
190
RISK MANAGEMENT AND CAPITAL ADEQUACY
8 COMPLIANCE AND REPUTATION RISK
Compliance mission
The overall mission of the Compliance department is to
provide reasonable assurance of the consistency and effective-
ness of the compliance of BNP Paribas Fortis’ activities and
to safeguard the Bank’s reputation through binding advices,
oversight and independent controls.
The Compliance department’s role, as a second line of defense,
is to supervise the effective management of compliance risk.
This involves policy-setting, providing advice, performing
controls, providing assurance that the Bank is complying with
rules and regulations and raising the awareness of colleagues
of the need to follow key compliance principles:
financial security: customer due diligence, anti-money
laundering, combating the financing of terrorism, finan-
cial sanctions/embargoes and disclosure to financial
intelligence units, fiscal deontology, anti-bribery and
anti-corruption;
customer protection: compliance of the Bank’s organisation
and processes with the customer protection regulatory
obligations regarding invest, lending, insurance and daily
banking services;
employee integrity: covers codes of conduct, gifts policy,
conflicts of interest and a personal transactions policy;
market integrity: market abuse, banking laws, conflicts
of interest.
The Compliance department sets policies and gives binding
advice in these areas. The advice from Compliance may be
escalated to a higher level until consensus is found, so as to
ensure appropriate issue resolution.
Compliance organisational setup
The Compliance function is organised as an independent,
integrated and decentralized function.
Compliance has direct, independent access to the Board’s
Risk Committee, Audit Committee and Remediation Monitoring
Committee and is a permanent invitee to these Committees.
The Chief Compliance Officer is a member of the Bank’s
Executive Committee.
Basic principles
The management of compliance risks is based on the following
fundamental principles:
individual responsibility: compliance is everyone’s respon-
sibility, not solely the responsibility of the Compliance
department;
exhaustive and comprehensive approach: the scope
of compliance extends to all banking activities. In this
respect, the Compliance department has unrestricted
access to all required information;
independence: compliance staff exercise their mission in a
context which guarantees their independence of thought
and action;
Primacy of Group policies over local policies as far as is
consistent with national law.
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RISK MANAGEMENT AND CAPITAL ADEQUACY
9 LIQUIDITY RISK
Liquidity risk is the risk of the Bank being unable to fulfil
current or future foreseen or unforeseen cash or collateral
requirements, across all time horizons, from the short to
the long term.
This risk may stem from the reduction in funding sources, draw
down of funding commitments, a reduction in the liquidity of
certain assets, or an increase in cash or collateral margin
calls. It may be related to the bank itself (reputation risk) or
to external factors (risks in some markets).
The Bank’s liquidity risk is managed under a global liquid-
ity policy approved by the Board of Directors. This policy is
based on management principles designed to apply both in
normal conditions and in a liquidity crisis. The Bank’s liquidity
position is assessed on the basis of internal standards and
regulatory ratios.
Objectives of the liquidity risk management policy
The objectives of the Bank’s liquidity risk management policy
are to secure a balanced financing structure for the develop-
ment of the BNP Paribas Fortis business activities, and to
ensure it is sufficiently robust to cope with crisis situations.
The liquidity risk management framework relies on:
management indicators:
by volume, to ensure that businesses or activities comply
with their liquidity targets set in line with the Bank’s
financing capacity;
by price, based on internal liquidity pricing;
the definition of monitoring indicators which enable
assessment of the Bank’s liquidity position under normal
conditions and in crisis situations, the efficiency of actions
undertaken and compliance with regulatory ratios;
the implementation of liquidity risk management strate-
gies based on diversification of funding sources with
maturities in line with needs, and the constitution of
liquidity reserves.
The Bank’s liquidity policy defines the management principles
that apply across all BNP Paribas Fortis entities and busi-
nesses and across all time horizons.
192
RISK MANAGEMENT AND CAPITAL ADEQUACY
Governance
As for all risks, the Chief Executive Officer is granted authority
by the Board of Directors to manage the Bank’s liquidity risk.
The Chief Executive Officer delegates this responsibility to the
Asset & Liability Committee (ALCo).
The Risk Committee reports quarterly to the Board of Directors
on liquidity policy principles and the Bank’s liquidity position.
The Asset & Liability Committee is responsible for:
defining the Bank’s liquidity risk profile;
monitoring compliance with regulatory liquidity ratios;
deciding and monitoring management indicators and
calibrating the quantitative thresholds set for the Bank’s
businesses;
deciding and monitoring the liquidity risk indicators
and associating quantitative thresholds to them where
necessary;
deciding and overseeing implementation of liquidity risk
management strategies, including monitoring of business
lines, in normal and stressed conditions.
In particular, the Asset & Liability Committee is informed about
funding programmes and programmes to build up liquidity
reserves, simulations in crisis conditions (stress test), and
about all events that may arise in crisis situations. The
Liquidity Crisis Committee, a subset of the Asset & liability
Committee, is tasked with defining the management approach
in periods of crisis (emergency plan).
The Asset & Liability Committee meets every month.
Across the Bank, ALM Treasury is responsible for the opera-
tional implementation of the Asset & Liability Committee
liquidity management decisions. The Asset & Liability
Committees in entities or groups of entities are responsible
for local implementation of the strategy decided by the Bank’s
Asset & Liability Committee to manage the Bank’s liquidity risk.
ALM Treasury is responsible for managing liquidity for the
entire Bank across all maturities. In particular, it is responsible
for funding and short-term issuance (certificates of deposit,
commercial paper, etc.), for senior and subordinated debt
issuance (MTNs, bonds, medium/long- term deposits, covered
bonds, etc.), (retained) loan securitisation and (retained)
covered bond programmes for the Bank. ALM Treasury is
tasked with providing internal financing to the Bank’s core
businesses, operational entities and business lines, and invest-
ing their surplus cash. It is also responsible for building up and
managing liquidity reserves, which comprise assets that can
be easily sold in the event of a liquidity squeeze.
The Risk function participates in the Asset & Liability Committee
and the local ALCo’s and oversees implementation by ALM
Treasury of the relevant decisions made by these committees.
It provides second-line control by reviewing the models and
risk indicators (including liquidity stress tests), monitoring risk
indicators and ensuring compliance with the limits assigned.
The Finance function is responsible for producing the stand-
ardised regulatory liquidity indicators, as well as the internal
monitoring indicators. Finance oversees the consistency of
the internal monitoring indicators defined by the Bank’s ALM
Committee. The Finance function takes part in the Asset &
Liability Committee and the local ALCo’s.
REPORT OF THE ACCREDITED REPORT OF THE ACCREDITED
STATUTORY AUDITOR STATUTORY AUDITOR
194
REPORT OF THE ACCREDITED STATUTORY AUDITOR
Statutory auditor’s report to the general shareholders’ meeting of
BNP Paribas Fortis SA/NV on the consolidated accounts for the year
ended 31 december 2021
We present to you our statutory auditor’s report in the context of our statutory audit of the con-
solidated accounts of BNP Paribas Fortis SA/NV (the “Company”) and its subsidiaries (jointly “the
Group”). This report includes our report on the consolidated accounts, as well as the other legal and
regulatory requirements. This forms part of an integrated whole and is indivisible.
We have been appointed as statutory auditor by the general meeting of 23 April 2020, follow-
ing the proposal formulated by the board of directors and following the recommendation by the
audit committee and the proposal formulated by the works’ council. Our mandate will expire on
the date of the general meeting which will deliberate on the annual accounts for the year ended
31 December 2022. We have performed the statutory audit of the Company’s consolidated accounts
for 23 consecutive years.
Report on the consolidated accounts
Unqualified opinion
We have performed the statutory audit of the Group’s consolidated accounts, which comprise the profit
and loss account for the year ended 31 December 2021, the statement of net income and change in
assets and liabilities recognised directly in equity, the balance sheet at 31 December 2021, the cash
flow statement for the year ended 31 December 2021, the statement of changes in shareholders’ equity
between 1 January 2020 and 31 December 2021, and notes to the consolidated financial statements,
including a summary of significant accounting policies and other explanatory information, and which
is characterised by a consolidated balance sheet total of EUR 341.648 ‘000.000’ and a consolidated
profit for the year of EUR 3.061 ‘000.000’.
In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity and
consolidated financial position as at 31 December 2021, and of its consolidated financial performance
and its consolidated cash flows for the year then ended, in accordance with International Financial
Reporting Standards as adopted by the European Union and with the legal and regulatory require-
ments applicable in Belgium.
Basis for unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable
in Belgium. Furthermore, we have applied the International Standards on Auditing as approved by
the IAASB which are applicable to the year-end and which are not yet approved at the national
level. Our responsibilities under those standards are further described in the “Statutory auditor’s
responsibilities for the audit of the consolidated accounts” section of our report. We have fulfilled
our ethical responsibilities in accordance with the ethical requirements that are relevant to our
audit of the consolidated accounts in Belgium, including the requirements related to independence.
We have obtained from the board of directors and Company officials the explanations and information
necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
195
REPORT OF THE ACCREDITED STATUTORY AUDITOR
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated accounts of the current period. These matters were addressed in the
context of our audit of the consolidated accounts as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Impairment allowances for loans and advances
Description of the Key Audit Matter:
BNP Paribas Fortis SA/NV’s consolidated accounts show loans and advances for an amount of
EUR 201.496 ‘000.000’ at year-end 2021. IFRS 9 imposes an expected loss model of provisioning
and requires credit exposures to be classified according to three stages. Impairment allowances are
posted on all loans and receivables to address an expected loss event that has an impact on the
estimated future cash flows of these loans and receivables.
For defaulted loans, the identification and determination of the recoverable amount are part of an
estimation process which includes, among others, assessing the existence of a default event and of
the financial position of the counterparty, estimating the expected future cash flows and assessing
the value of collateral received.
The determination of the impairment allowances involves judgement in determining assumptions,
methodology, modelling techniques and parameters.
Due to the substantial amount of loans and advances recognized in the balance sheet, of the cost of
risk recognized in the income statement (EUR 359 ‘000.000’), the significant impact of the judgments
applied on the carrying amount of loans and advances and the increased uncertainty inherent to the
COVID-19 pandemic, auditing the process described above is considered a Key Audit Matter.
We refer to Notes 4.e and 2.g to the consolidated accounts. In addition, the Board of Directors has
described the process for managing credit risks and for reviewing impairment losses in more detail in
its directors’ report on the consolidated accounts and in the credit risk section in the risk management
and capital adequacy disclosures.
How our audit addressed the Key Audit Matter:
Based on our risk assessment, we have examined the impairment losses and challenged the methodol-
ogy applied as well as the assumptions made by management as described in the preceding paragraph:
We have evaluated the governance process of assessing the stage of credit risk (as defined by IFRS
9) and downgrading, including the continuous re-assessment of the appropriateness of assump-
tions used in the impairment models for determining the loan losses. We have not identified
significant weaknesses impacting the overall effectiveness of the related control environment;
We have tested the design, implementation and operating effectiveness of the key controls over
the models and manual processes for identification of impairment events or significant changes in
credit risk, collateral valuation, estimates of recovery on default and determination of the impair-
ment. We have not identified significant weaknesses on their adequacy and operating effectively;
196
REPORT OF THE ACCREDITED STATUTORY AUDITOR
Together with our experts, and based on our risk assessment, we have audited the underlying
models including the model approval and validation process. We have challenged, the methodolo-
gies applied by using our industry knowledge and experience, focusing on potential changes since
the implementation of IFRS 9 and found those to be in line with our expectations;
We have assessed the appropriateness of impairments on loans on an individual basis: we
verified that a periodic review of the counterparties under surveillance was carried out by the
Company and assessed, on the basis of samples, the assumptions and data used by management
to estimate the impairments.
Finally, we assessed the completeness and accuracy of the disclosures and determined whether the
disclosures are in compliance with the requirements of the IFRS as adopted by the European Union.
Valuation of goodwill, of goodwill embedded in investments consolidated by
applying the equity-method and of options to minority shareholders of consoli-
dated entities
Description of the Key Audit Matter:
The Company’s 31 December 2021 consolidated accounts show a ‘Goodwill’ caption amounting
to EUR 767 ‘000.000’, and an ‘Equity-method investments’ caption of EUR 3.809 ‘000.000’. The
consolidated accounts moreover contain the fair value of written put options to minority shareholders
of consolidated entities, under caption ‘Minority interests’, for an amount of EUR 103 ‘000.000’. These
intangible and financial assets and the embedded goodwill included in the equity-method consolidated
investments have arisen as a result of the acquisitions of some of BNP Paribas Fortis SA/NV’s (direct
and indirect) subsidiaries in previous accounting periods. The IFRS standards prescribe that goodwill
is subject to an annual impairment assessment, and that written options be valued at the intrinsic
value of the financial instrument.
We identified these intangible and financial assets and the embedded goodwill included in the
equity-method consolidated investments as a Key Audit Matter due to the significance of the balance
and because the impairment assessment requires significant judgement of management with regards
to the valuation methodology applied and the underlying assumptions used, mainly those relating
to the ability to generate future free cash flows, and to the discount factor applied to these cash
flows, taking into account the appropriate risk factors. The significance of these judgements to the
consolidated accounts has increased due to the uncertainty inherent to the COVID-19 pandemic.
We refer to the consolidated accounts, including the Note 4.m ‘Goodwill’, the Note 4.k ‘Equity-method
investments’ and the Note 7.c ‘Minority Interests’.
197
REPORT OF THE ACCREDITED STATUTORY AUDITOR
How our audit addressed the Key Audit Matter:
We focused our audit effort on (i) the valuation models used by the Company for the valuation of the
underlying business, (ii) the appropriateness of the discount rates and terminal growth rates used
in the models and (iii) the future cash flow forecasts:
Together with our valuation experts, we have assessed the appropriateness of the valuation
methods used by management and discussed the underlying hypotheses to the use of these
models with management. We found the models used to be appropriate, in the circumstances;
We have evaluated the governance process over the future cash flow forecasts used for the
valuations, i.e. the development and approval of the financial plan and management’s annual
comparison of previous forecasts to actual performance. We found that management had followed
their process for drawing up future cash flow forecasts, which was subject to timely oversight
and challenge. We discussed with management the impact of regulatory and business evolutions
which have the potential to significantly affect the future cash flows of these entities on which
goodwill had been recognized, and found that these had been considered in drawing up the
future cash flows;
Based on our risk assessment, together with our valuation experts, we challenged the main
management’s assumptions in their forecasts such as the long-term growth rates and the discount
rates.We challenged management on the adequacy of their sensitivity calculations. We found the
assumptions to be consistent and in line with our expectations;
Finally, we assessed the completeness and accuracy of the disclosures and assessed the compli-
ance of the disclosures with the requirements of the IFRS as adopted by the European Union.
Estimation uncertainty with respect to the valuation of financial instruments
accounted for at fair value
Description of the Key Audit Matter:
The current economic conditions and low interest rate environment impact the fair value measure-
ments of financial instruments. In addition, the COVID-19 pandemic brought additional uncertainty
and volatility to the financial markets. Valuation techniques and models used for certain financial
instruments are inherently subjective and involve various assumptions regarding pricing. The use of
different valuation techniques and assumptions could produce significantly different estimates of fair
value. Furthermore, market value adjustments (reserves) are recognized on all positions measured
at fair value with fair value changes reported in the income statement or in equity.
The IFRS require the use of fair value for the determination of the carrying amount of many assets and
liabilities, and generally require the disclosure of the fair value of those items not valued at fair value.
As the use of different assumptions could produce different estimates of fair value and considering
the significance of fair values in the determination of the carrying amount of certain balance sheet
captions and of the result, we consider this a Key Audit Matter.
Please refer to Notes 4.d ‘Measurement of the fair value of financial instruments’ and 1 ‘Summary
of significant accounting policies applied by BNP Paribas Fortis’.
198
REPORT OF THE ACCREDITED STATUTORY AUDITOR
How our audit addressed the key audit matter:
We obtained an understanding of the internal control framework related to the valuation of financial
instruments, including price testing, model validation and value adjustments (value allowances)
methodologies. On a cyclical basis, we tested the design and operating effectiveness of those controls
we assessed to be key for our audit:
We assessed and challenged the appropriateness of the model validation methodology with the
assistance of our valuation experts and we performed a recalculation of the fair valuation on a sample
basis. This includes the assessment of market data, inputs and key assumptions as critical factors
used in the fair value models, based on our experience and market practice;
Finally, we assessed the completeness and accuracy of the disclosures relating to the fair values of
these financial instruments to determine compliance with the disclosure requirements of the IFRS
as adopted by the European Union.
Responsibilities of the board of directors for the preparation of the
consolidated accounts
The board of directors is responsible for the preparation of consolidated accounts that give a true and
fair view in accordance with International Financial Reporting Standards as adopted by the European
Union and with the legal and regulatory requirements applicable in Belgium, and for such internal
control as the board of directors determine is necessary to enable the preparation of consolidated
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated accounts, the board of directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the board of directors either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Statutory auditor’s responsibilities for the audit of the consolidated
accounts
Our objectives are to obtain reasonable assurance about whether the consolidated accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated accounts.
In performing our audit, we comply with the legal, regulatory and normative framework applicable to
the audit of the consolidated accounts in Belgium. A statutory audit does not provide any assurance
as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’
current or future business management at Group level. Our responsibilities in respect of the use of
the going concern basis of accounting by the board of directors’ are described below.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain profes-
sional skepticism throughout the audit. We also:
199
REPORT OF THE ACCREDITED STATUTORY AUDITOR
Identify and assess the risks of material misstatement of the consolidated accounts, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit proce-
dures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group’s internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the board of directors;
Conclude on the appropriateness of the board of directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our statutory auditor’s report to the related disclosures in the consolidated accounts
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our statutory auditor’s report. However, future events
or conditions may cause the Group to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the consolidated accounts, including
the disclosures, and whether the consolidated accounts represent the underlying transactions
and events in a manner that achieves fair presentation;
Obtain sufficient and appropriate audit evidence regarding the financial information of the enti-
ties or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the audit committee, we determine those matters that were
of most significance in the audit of the consolidated accounts of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter.
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REPORT OF THE ACCREDITED STATUTORY AUDITOR
Other legal and regulatory requirements
Responsibilities of the board of directors
The board of directors is responsible for the preparation and the content of the directors’ report on
the consolidated accounts and the other information included in the annual report on the consoli-
dated accounts.
Statutory auditor’s responsibilities
In the context of our engagement and in accordance with the Belgian standard which is complemen-
tary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is
to verify, in all material respects, the directors’ report on the consolidated accounts and the other
information included in the annual report on the consolidated accounts and to report on these matters.
Aspects related to the directors’ report on the consolidated accounts
and to the other information included in the annual report on the
consolidated accounts
In our opinion, after having performed specific procedures in relation to the directors’ report on the
consolidated accounts, this directors’ report is consistent with the consolidated accounts for the year
under audit and is prepared in accordance with article 3:32 of the Companies’ and Associations’ Code.
In the context of our audit of the consolidated accounts, we are also responsible for considering,
in particular based on the knowledge acquired resulting from the audit, whether the directors’
report on the consolidated accounts and the other information included in the annual report on the
consolidated accounts, containing:
The Statement of the Board of Directors;
The Risk Management and Capital Adequacy chapter; and
The other information chapter.
are materially misstated or contains information which is inadequately disclosed or otherwise
misleading. In light of the procedures we have performed, there are no material misstatements we
have to report to you.
Statement related to independence
Our registered audit firm and our network did not provide services which are incompatible with the
statutory audit of the consolidated accounts, and our registered audit firm remained independent
of the Group in the course of our mandate.
The fees for additional services which are compatible with the statutory audit of the consolidated
accounts referred to in article 3:65 of the Companies’ and Associations’ Code are correctly disclosed
and itemized in the notes to the consolidated accounts.
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REPORT OF THE ACCREDITED STATUTORY AUDITOR
European Uniform Electronic Format (ESEF)
We have also verified, in accordance with the draft standard on the verification of the compliance
of the financial statements with the European Uniform Electronic Format (hereinafter “ESEF”), the
compliance of the ESEF format with the regulatory technical standards established by the European
Delegate Regulation No. 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”).
The board of directors is responsible for the preparation, in accordance with ESEF requirements, of
the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter
“consolidated financial statements”) included in the annual financial report.
Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking
language of the digital consolidated financial statements comply in all material respects with the
ESEF requirements under the Delegated Regulation.
Based on the work we have performed, we believe that the format of and marking of information in
the official version of the digital consolidated financial statements included in the annual financial
report of the Group per 31 December 2021 comply in all material respects with the ESEF requirements
under the Delegated Regulation.
Other statements
This report is consistent with the additional report to the audit committee referred to in article 11
of the Regulation (EU) N° 537/2014.
Diegem, 28 March 2022
The statutory auditor
PwC Reviseurs d’Entreprises SRL / PwC Bedrijfsrevisoren BV
Represented by
Jeroen Bockaert
Réviseur d’Entreprises / Bedrijfsrevisor
202
REPORT OF THE ACCREDITED STATUTORY AUDITOR
BNP PARIBAS FORTIS BNP PARIBAS FORTIS
ANNUAL REPORT 2021 ANNUAL REPORT 2021
(NON-CONSOLIDATED) (NON-CONSOLIDATED)
204
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED)
REPORT OF THE BOARD OF DIRECTORS
In conformity with Article 3:32 of the Belgian companies’ and associations’ Code and to avoid repetition, BNP Paribas Fortis
has combined the non-consolidated report and the consolidated report of the Board of Directors. The consolidated report of
the Board of Directors can be found at the beginning of this annual report.
Comments on the evolution of the balance sheet
The total balance sheet as at 31 December 2021 amounted
to EUR 252.8 billion, up by EUR 5.8 billion or 2% compared
with 31 December 2020. As at 31 December 2021, the yield
on assets was 1%. BNP Paribas Fortis has 2 foreign branches,
located in New York and Madrid.
Assets
Cash in hand, balances with central banks and giro offices
increased by EUR 6.1 billion and stood at EUR 44.1 billion.
This increase is mainly related to the excess cash resulting
from treasury activities which is placed at the central bank.
Amounts receivable from credit institutions stood at EUR 12.0
billion and increased by EUR 0.7 billion compared to the situ-
ation at the end of 2020. The evolution was mainly due to
transactions with entities of the BNP Paribas Group.
Amounts receivable from customers stood at EUR 129.3 billion
as at 31 December 2021, up by EUR 4.2 billion compared to
31 December 2020.
In Belgium, the amount of term loans increased by EUR 1.9
billion, spread over different type of loans such as investment
loans to companies and funding given to subsidiaries. In a still
low interest rate environment, mortgage loans continued to
increase by EUR 1.7 billion.
The term loans in the foreign branches of BNP Paribas Fortis
stayed stable at EUR 0.3 billion and are only related to the
activity in the BNP Paribas Fortis’ branch in New York.
Bonds and other fixed-income securities stood at EUR 45.0
billion as at 31 December 2021, down by EUR (1.9) billion
compared with EUR 46.9 billion as at 31 December 2020.
The amount of EUR 45.0 billion consists mostly of bonds issued
by public bodies (EUR 10.0 billion, down by EUR (1.5) billion
compared with 2020 mainly following reimbursements), by
‘Special Purpose Vehicles’ (EUR 31.3 billion, the same amount
as last year) and by other issuers (EUR 3.7 billion, down by
EUR (0.4) billion) compared with the situation end of 2020.
Financial fixed assets amounted to EUR 9.3 billion as at
31 December 2021, in line with the situation at the end of 2020.
Intangible and tangible fixed assets amounted to EUR 1.1
billion as at 31 December 2021, in line with the situation at
the end of 2020.
Deferred charges and accrued income stood at EUR 10.5
billion as at 31 December 2021, down by EUR (3.1) billion
compared with EUR 13.6 billion as at 31 December 2020
mainly following the evolution of the interest rate deriva-
tives. The fair value of those instruments was impacted by
the increase of the interest rate curve, which impacted in a
symmetrical way both the fair value of the trading derivative
financial instruments on the asset and liability side.
205
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED)
Liabilities and Equity
Amounts owed to credit institutions totalled EUR 52.5 billion
as at 31 December 2021, up by EUR 5.1 billion compared with
31 December 2020. Part of the evolution (increase of EUR 2.6
billion) was attributable to the increased participation in the
TLTRO III (‘Targeted Longer-Term Refinancing Operations’) of
the ECB. There is also an increase of the repos and a decrease
of the interbanking borrowing mainly with entities of the BNP
Paribas Group and central banks.
Amounts payable to clients stood at EUR 154.7 billion as at
31 December 2021, up by EUR 4.7 billion or 3% compared with
EUR 150.0 billion as at 31 December 2020.
In Belgium, saving accounts and current accounts increased
respectively by EUR 3.3 billion and by EUR 3.2 billion. Term
deposits decreased by EUR (2.1) billion.
Debts evidenced by certificates amounted to EUR 10.5 billion
as at 31 December 2021, representing a decrease by EUR (1.0)
billion, mainly due to the arrival at maturity of some issued
debt (which were not renewed) in Belgium.
Other liabilities stood at EUR 5.5 billion, up by EUR 2.6 billion
compared with 31 December 2020, following the amount of
dividends to be distributed.
Accrued charges and deferred income stood at EUR 6.8 billion,
down by EUR (3.3) billion compared with 31 December 2020,
following the evolution of the interest rate derivatives. The
fair value of those instruments was impacted by the increase
of the interest rate curve, which impacted in a symmetrical
way both the fair value of the trading derivative financial
instruments on the asset and liability side.
Subordinated liabilities amounted to EUR 3.6 billion as at
31 December 2021, a decrease of EUR (0.4) billion compared
to the situation at the end of 2020.
Shareholders’ equity stood at EUR 18.1 billion as at
31 December 2021, down by EUR (1.1) billion compared with
31 December 2020. The evolution was mainly impacted by the
inclusion of the profit of the year 2021 (EUR 2.0 billion), more
than counterbalanced by the distribution of an intermediary
and an ordinary dividend of EUR (3.1) billion.
Comments on the evolution of the income statement
BNP Paribas Fortis realised a net profit of the year of
EUR 2,002 million, compared to EUR 1,251 million in 2020.
The interest margin (Headings I and II) amounted to
EUR 2,665 million in 2021, down by EUR (42) million compared
to 2020, essentially in Belgium.
In Belgium, the net interest income slightly decreased in a
persistently low interest rate environment. Furthermore there
was a positive evolution on the interest expenses on treasury
borrowings with central banks. On the contrary, there was less
interest income on customer loans (mainly term and mortgage
loans) essentially due to lower interest rate margins.
Income from variable-yield securities (Heading III) amounted
to EUR 795 million in 2021, up by EUR 431 million compared
to 2020, mainly due to an increase in dividends received from
enterprises linked by participating interests.
Commissions (Headings IV and V) amounted to
EUR 1,539 million in 2021, up by EUR 153 million compared
to 2020. In Belgium there was an increase of the advisory and
the assets management fees.
Profit on financial operations (Heading VI) amounted to
EUR 117 million, down by EUR (2) million compared to pre-
vious year.
General administrative expenses (Heading VII) came to EUR
(2,135) million, a decrease of EUR 26 million compared to 2020.
In Belgium there were less staff expenses (decrease of
EUR 44 million), mainly due to lower FTEs.
Other administrative expenses increased by EUR (18) million
compared to previous year. The evolution was mainly due
to the increase of the temporary staff, the professional fees
and other costs partly not compensated by the decrease of
the IT costs.
Depreciation and amounts written off on formation expenses,
intangible and tangible fixed assets (Heading VIII) amounted
to EUR (73) million compared to EUR (91) million in 2020.
206
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED)
Amounts written off on the amounts receivable and the
investment portfolio (Headings IX and X) totalled EUR (145)
million, compared to EUR (185) million in 2020, i.e. a decrease
of EUR 40 million mainly following the reversal of some provi-
sions on the investment portfolio.
Provisions for risks and charges (Headings XI and XII) showed
a net dotation of EUR (35) million in 2021 against a net dota-
tion of EUR (1) million in 2020.
Other operating income (Heading XIV) amounted to
EUR 154 million in 2021, up by EUR 19 million compared to
previous year.
Other operating charges (Heading XV) amounted to EUR (379)
million in 2021, down by EUR 8 million compared to 2020.
Extraordinary income (Heading XVII) came to EUR 200 million
in 2021, up by EUR 170 million compared to 2020. The
evolution was mainly driven by the gains on disposal of an
important financial fixed asset.
Extraordinary charges (Heading XVIII) came to EUR (140)
million in 2021, a decrease by EUR (32) million compared
to 2020 due to an increase of write-downs on financial
fixed assets.
Income taxes (Heading XX) amounted to EUR (85) million in
2021, a decrease by EUR 9 million compared to 2020.
207
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED)
PROPOSED APPROPRIATION OF THE RESULT FOR THE
ACCOUNTING PERIOD
Profit for the year for appropriation EUR 2,001.8 million
Profit brought forward from the previous year EUR 5,613.0 million
Profit to be appropriated EUR 7,614.8 million
Profit to be carried forward EUR 4,534.0 million
Dividend EUR 3,063.4 million
Other allocations* EUR 17.5 million
* This amount represents the profit bonus of 2.35% which is calculated on the individual annual remuneration of the employees of BNP Paribas Fortis NV/SA and
a one-off lump of EUR 275 gross in accordance with the Law of May 22th 2001 (Law concerning the employees participation in the capital of companies and
on the set up of a profit bonus for the employees). The non-current one-off increase is to reward our collaborators for the realisation of the results of 2021.
In accordance with the aforementioned appropriation of the
result for the financial year 2021, the Board of Directors of
BNP Paribas Fortis SA/NV will request the approval of the
General Meeting of Shareholders to distribute an ordinary
gross dividend of EUR 4.58 per share, or EUR 2,588.6 million.
The Extraordinary General Shareholders’ Meeting of 7 October
2021 approved the distribution of an intermediary gross
dividend of EUR 0.84 per share, or EUR 474.8 million in total.
208
BNP PARIBAS FORTIS ANNUAL REPORT 2021 (NON-CONSOLIDATED)
INFORMATION REGARDING RELATED PARTY
TRANSACTIONS
Board of Directors’ Procedure
Background
Article 7:97 of the Code on companies and associations
imposes a specific procedure for listed companies in the
context of transactions between related parties. Even if this
provision does not apply to BNP Paribas Fortis, its Board of
Directors, upon advice of the GNC and in line with its internal
governance principles, adopted on 15 December 2011 a ‘Board
of Directors’ Procedure for Related Party Transactions’ (the
‘Procedure’) that is inspired on, but not identical to the actual
article 7:97 of the Code on companies and associations (former
article 524 of the Companies Code).
In the course of 2021, no transaction required the application
of this ‘Procedure’.
BNP PARIBAS FORTIS BNP PARIBAS FORTIS
FINANCIAL STATEMENTS 2021 FINANCIAL STATEMENTS 2021
(NON-CONSOLIDATED)(NON-CONSOLIDATED)
210
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED)
N° BE 0403.199.702 F-estb 2.1
BALANCE SHEET AFTER APPROPRIATION
In thousands of euros Codes Current period Previous period
ASSETS
I. Cash in hand, balances with central banks and giro offices 10100 44,103,571 37,986,738
II. Government securities eligible for refinancing with the central bank 10200 - -
III. Amounts receivable from credit institutions 10300 12,025,353 11,324,238
A. At sight 10310 2,267,932 3,289,830
B. Other amounts receivable (at fixed term or period of notice) 10320 9,757,421 8,034,408
IV. Amounts receivable from customers 10400 129,352,410 125,073,252
V. Bonds and other fixed-income securities 10500 44,987,681 46,916,188
A. Issued by public bodies 10510 10,001,348 11,541,479
B. Issued by other borrowers 10520 34,986,333 35,374,709
VI. Shares and other variable-yield securities 10600 55,601 69,425
VII. Financial fixed assets 10700 9,323,932 9,361,357
A. Participating interests in affiliated enterprises 10710 5,715,528 5,774,038
B.
Participating interests in other enterprises linked by participating
interests
10720 2,576,254 2,535,568
C. Other shares held as financial fixed assets 10730 376,506 414,356
D.
Subordinated loans to affiliated enterprises and to other
enterprises linked by participating interests
10740 655,644 637,395
VIII. Formation expenses and intangible fixed assets 10800 28,618 75,696
IX. Tangible fixed assets 10900 1,053,744 1,032,700
X. Own shares 11000 - -
XI. Other assets 11100 1,363,842 1,600,252
XII. Deferred charges and accrued income 11200 10,527,406 13,599,518
TOTAL ASSETS 19900 252,822,158 247,039,364
211
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED)
N° BE 0403.199.702 F-estb 2.2
In thousands of euros Codes Current period Previous period
LIABILITIES
BORROWINGS 201/208 234,745,228 227,883,474
I. Amounts owed to credit institutions 20100 52,463,048 47,376,574
A. At sight 20110 959,416 880,084
B. Amounts owed as a result of the rediscounting of trade bills 20120 - -
C. Other debts with agreed maturity dates or periods of notice 20130 51,503,632 46,496,490
II. Amounts payable to clients 20200 154,696,063 150,011,896
A. Savings deposits 20210 70,007,559 66,675,801
B. Other debts 20220 84,688,504 83,336,095
1. At sight 20221 76,792,884 73,609,072
2. At fixed term or period of notice 20222 7,895,620 9,727,023
3. As a result of the rediscounting of trade bills 20223 - -
III. Debts evidenced by certificates 20300 10,489,246 11,468,470
A. Debt securities and other fixed-income securities in circulation 20310 7,269,930 7,718,149
B. Other 20320 3,219,316 3,750,321
IV. Other amounts payable 20400 5,507,422 3,721,443
V. Accrued charges and deferred income 20500 6,841,939 10,118,991
VI. Provisions and deferred taxes 20600 298,079 297,471
A. Provisions for risks and charges 20610 298,079 297,471
1. Pensions and similar obligations 20611 -
2. Fiscal charges 20612 494 14,514
3. Other risks and charges 20613 297,585 282,957
B. Deferred taxes 20620 - -
VII. Fund for general banking risks 20700 871,681 871,681
VIII. Subordinated liabilities 20800 3,577,750 4,016,948
SHAREHOLDERS' EQUITY 209/213 18,076,930 19,155,890
IX. CAPITAL 20900 10,964,768 10,964,768
A. Subscribed capital 20910 10,964,768 10,964,768
B. Uncalled capital (-) 20920 - -
X. Share premium account 21000 940,582 940,582
XI. Revaluation surpluses 21100 - -
XII. Reserves 21200 1,637,546 1,637,546
A. Statutory reserve 21210 1,096,477 1,096,477
B. Reserves not available for distribution 21220 36,988 36,988
1. In respect of own shares held 21221 - -
2. Other 21222 36,988 36,988
C. Untaxed reserves 21230 150,790 150,790
D. Reserves available for distribution 21240 353,291 353,291
XIII. Profits (losses (-)) brought forward (+)/(-) 21300 4,534,034 5,612,994
TOTAL LIABILITIES 29900 252,822,158 247,039,364
212
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED)
N° BE 0403.199.702 F-estb 3
INCOME STATEMENT (presentation in vertical form)
In thousands of euros Codes Current period Previous period
I. Interest receivable and similar income 40100 3,362,054 3,368,316
A. Of which: from fixed-income securities 40110 421,881 428,950
II. Interest payable and similar charges 40200 696,823 661,577
III. Income from variable-yield securities 40300 794,697 363,805
A. From shares and other variable-yield securities 40310 6,568 43,420
B. From participating interests in affiliated enterprises 40320 546,120 120,096
C.
From participating interests in other enterprises linked by
participating interests
40330 222,747 197,796
D. From other shares held as financial fixed assets 40340 19,262 2,493
IV. Commissions receivable 40400 1,539,234 1,386,260
A. Brokerage and related commissions 40410 535,878 460,273
B. Management, consultancy and conservation commissions 40420 360,382 285,291
C. Other commissions received 40430 642,974 640,696
V. Commissions paid 40500 476,392 476,779
VI. Profit (loss) on financial transactions (+)/(-) 40600 117,191 118,777
A. On trading of securities and other financial instruments 40610 138,113 106,904
B. On disposal of investment securities 40620 (20,922) 11,873
VII. General administrative expenses 40700 2,135,008 2,161,196
A. Remuneration, social security costs and pensions 40710 1,126,611 1,170,738
B. Other administrative expenses 40720 1,008,397 990,458
VIII.
Depreciation/amortization of and other write-downs on
formation expenses, intangible and tangible fixed assets.
40800 72,488 90,983
IX.
Decrease in write downs on receivables and in provisions for
off-balance sheet captions ‘I. Contingent liabilities’ and
‘II. Commitments which could give rise to a credit risk’.
(+)/(-) 40900 185,721 166,955
X.
Decrease in write-downs on the investment portfolio of bonds,
shares and other fixed-income or
variable-yield securities.
(+)/(-) 41000 (40,789) 18,120
XI.
Utilization and write-backs of provisions for liabilities and
charges other than those included in the off-balance sheet
captions.
(+)/(-) 41100 (30,530) (35,146)
XII.
Provisions for risks and charges other than those included in
the off-balance sheet captions.
41200 65,522 35,947
XIII.
Transfer from (Appropriation to) the fund for general banking
risks.
(+)/(-) 41300 - -
XIV. Other operating income 41400 153,639 134,289
XV. Other operating charges 41500 379,072 371,478
XVI. Profits (losses) on ordinary activities before taxes. (+)/(-) 41600 2,027,108 1,423,558
213
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED)
N° BE 0403.199.702 F-estb 3
In thousands of euros
Codes Current period Previous period
XVII. Extraordinary income 41700 199,924 29,618
A.
Adjustments to depreciation/amortization of and to other
write-downs on intangible and
and tangible fixed assets
41710 1,167 990
B. Adjustments to write-downs on financial fixed assets 41720 43,985 7,370
C.
Adjustments to provisions for extraordinary risks and
charges
41730 - -
D. Capital gains on disposal of fixed assets 41740 154,758 19,756
E. Other extraordinary income 41750 14 1,502
XVIII. Extraordinary charges 41800 139,520 107,745
A.
Extraordinary depreciation/amortization of and
extraordinary write-downs on formation expenses
and intangible and tangible fixed assets
41810 - -
B. Write-downs on financial fixed assets 41820 132,607 103,149
C. Provisions for extraordinary risks and charges (+)/(-) 41830 - -
D. Capital losses on disposal of fixed assets 41840 5,354 3,849
E. Other extraordinary charges 41850 1,559 747
XIX. Profits (Losses) for the period before taxes (+/-) 41910 2,087,512 1,345,431
XIXbis.
A. Transfer to deferred taxes 41921 - -
B. Transfer from deferred taxes 41922 - -
XX. Income taxes (+)/(-) 42000 85,663 93,948
A. Income taxes 42010 118,529 98,400
B. Adjustment of income taxes and write-back of tax provisions 42020 32,866 4,452
XXI. Profits (Losses) for the period (+)/(-) 42100 2,001,849 1,251,483
XXII. Transfer to (or from) untaxed reserves (+)/(-) 42200 - -
XXIII. Profit (Losses) for the period available for appropriation (+)/(-) 42300 2,001,849 1,251,483
214
BNP PARIBAS FORTIS FINANCIAL STATEMENTS 2021 (NON-CONSOLIDATED)
N° BE 0403.199.702 F-estb 5.18
XVIII. STATEMENT OF CAPITAL AND SHAREHOLDING STRUCTURE
In thousands of euros Codes Current period Previous period
A. Capital statement
1. Shareholders equity
a. Subscribed capital
at the end of the previous financial year 20910P xxxxxxxxxxxxxx 10,964,768
at the end of the financial year (20910) 10,964,768
Codes Amounts Number of shares
Changes during the financial year
b. Structure of the capital
Categories of shares
Common 10,964,768 565,194,208
Registered shares 51801 xxxxxxxxxxxxxx 565,021,791
Bearer and or dematerialized shares 51802 xxxxxxxxxxxxxx 172,417
Codes Uncalled capital
Called but unpaid
capital
2. Capital not paid up
a. Uncalled capital (20920) - xxxxxxxxxxxxxx
b. Called but unpaid capital 51803 xxxxxxxxxxxxxx -
c. Shareholders still owing capital payment
Codes Current period
3. Own shares
a. Held by the reporting institution itself
* Amount of capital held 51804 -
* Corresponding number of shares 51805 -
b. Held by its subsidiaries
* Amount of capital held 51806 -
* Corresponding number of shares 51807 -
4. Share issuance commitments
a. Following the exercise of conversion rights
* Amount of convertible loans outstanding 51808 -
* Amount of capital to be subscribed 51809 -
* Maximum corresponding number of shares to be issued 51810 -
b. Following the exercise of subscription rights
* Number of subscription rights outstanding 51811 -
* Amount of capital to be subscribed 51812 -
* Maximum corresponding number of shares to be issued 51813 -
5. Authorized capital not issued 51814 10,964,768
6. Shares not representing capital
a. Repartition
* Number of parts 51815 -
* Number of votes 51816 -
b. Breakdown by shareholder
* Number of parts held by the reporting institution itself 51817 -
* Number of parts held by its subsidiaries 51818 -
B. Shareholders structure of the institution at year end according to the notifications received by the institution
- Pursuant to article 7:225 and article 7:83 of the companies and associations Code;
- Pursuant to article 14, paragraph 4, of the law of 2 May 2007 on the disclosure of major shareholdings
or pursuant to article 5 of the Royal Decree of 21 August 2008 on the rules for certain multilateral trading facilities
After verification, BNP Paribas Fortis did not receive any notifications
OTHER INFORMATIONOTHER INFORMATION
216
OTHER INFORMATION
Monthly high and low prices for BNP Paribas Fortis shares at the weekly
auctions in 2021
The monthly high and low prices for BNP Paribas Fortis shares at the weekly auctions of Euronext Brussels (Euronext Expert
Market) in 2021 were as follows (in EUR):
Month Low High
January 22.2 22.2
February 26.8 27.0
March 29.0 31.6
April 26.6 26.6
May 26.6 26.6
June 22.4 23.2
July 23.0 24.0
August 23.2 23.4
September NA NA
October 30.2 30.2
November 23.6 27.0
December 27.0 30.0
External functions held by directors and effective leaders on the 31st of
December 2021 that are subject to a legal disclosure requirement
Pursuant to the Regulation of the National Bank of Belgium
of 6 December 2011 on the exercise of external functions
by managers of regulated companies (‘Reglement van de
Nationale Bank van België van 6 december 2011 met betrek-
king tot de uitoefening van externe functies door leiders
van gereglementeerde ondernemingen’ / ‘Règlement de la
Banque Nationale de Belgique du 6 décembre 2011 concer-
nant l’exercice de fonctions extérieures par les dirigeants
d’entreprises réglementées’) (the ‘Regulation’), the Board
of Directors of BNP Paribas Fortis has adopted its ‘Internal
rules governing the exercise of external functions by effective
leaders of BNP Paribas Fortis (‘Internal Rules’).
This Regulation, as well as the Internal Rules, stipulate a.o.
that certain external functions held by the directors and effec
-
tive leaders must be disclosed in the annual report.
The effective leaders of BNP Paribas Fortis are set forth in a
list submitted to the Belgian National Bank, which is kept up
to date in accordance with the applicable regulations. This list
includes the members of the Executive Board of BNP Paribas
Fortis and the heads of its foreign branches.
According to the Regulation and the Internal Rules, the
external functions subject to disclosure are the executive or
non-executive directorships and the functions involving taking
part in the management or running of a company, exercised
by a board member or effective leader of BNP Paribas Fortis
in a commercial company or in a company with a commercial
legal form, in an undertaking with another Belgian or foreign
legal form or in a Belgian or foreign public institution with an
industrial, commercial or financial activity, apart from those
exercised within the BNP Paribas group.
217
OTHER INFORMATION
Name, Surname
(Post)
Company Business Activity (Post) Listed
Herman DAEMS
(Chairman of the Board of Directors)
Domo Investment Group SA/NV Holding company -
(Chairman of the Board of Directors)
Unibreda SA/NV Holding company -
(Chairman of Board of Directors - independent director)
Max JADOT
(Chairman of the Executive Board)
Baltisse SA/NV Investment Company -
(Non-executive director)
Dominique AUBERNON
(Non-executive director)
Sicovam Holding SA Holding company -
(Non-executive director)
Dirk BOOGMANS
(Independent director)
Smile Invest SA/NV Investment Company -
(Member of the Investment Committee)
Smile Invest Management Company SA/NV Investment Company -
(Non-executive director)
Newton Biocapital I SA/NV Investment Fund -
(Non-executive director and chairman of the Audit Committee)
Newton Biocapital II SA/NV Investment Fund -
(Non-executive director and chairman of the Audit Committee)
Vinçotte International SA/NV Inspection, control and certification services -
(Non-executive director, chairman of the Audit Committee and
member of the Remuneration Committee)
Vinçotte Controlatum SA/NV Inspection, control and certification services -
(Non-executive director)
Vinçotte Academy SA/NV Inspection, control and certification services -
(Non-executive director)
Vinçotte SA/NV Inspection, control and certification services -
(Non-executive director)
Antoinette d’ASPREMONT LYNDEN
(Independent director)
Groupe Bruxelles Lambert SA/NV Holding Company Euronext Brussels
(Non-executive director and chairwoman of the Audit Committee)
Stefaan DECRAENE
(Non-executive director)
Ardo Foods SA/NV Holding Company -
(Non-executive director)
218
OTHER INFORMATION
Name, Surname
(Post)
Company Business Activity (Post) Listed
Sophie DUTORDOIR
(Independent director)
Nationale Maatschappij der Belgische
Spoorwegen SA/NV
Railway -
(Chief Executive Officer – executive director)
Eurogare SA/NV Railway -
(Non-executive director)
HR Rail SA/NV Railway -
(Non-executive director)
Thi Factory SA/NV Railway -
(Chairwoman of the Board of Directors)
Thalys International SCRL/CVBA Railway -
(Chairwoman of the Board of Directors)
Aveve SA/NV Agriculture and horticulture -
(Non-executive director)
Titia VAN WAEYENBERGE
(Independent director)
De Eik SA/NV Investment company -
(Chairwoman of the Board of Directors, non-executive director,
member of the Nomination and Remuneration Committee)
Paratodos SA/NV Agribusiness -
(Chief Executive Officer - executive director)
Indufin Capital partners Sicar Investment company -
(Non-executive director)
Tattersal Leasing SA Leasing company -
(Non-executive director)
Indufin Investment fund SA/NV Investment fund -
(Chairwoman of the Board of Directors)
Stéphane VERMEIRE
(Executive director)
Procomin SA/NV Gears and propulsions -
(Chairman of the Board of Directors)
Aciers Crustin SA/NV Metal, steel -
(Chairman of the Board of Directors)
Vermeire Aandrijvingen SA/NV Gears and propulsions -
(Chairman of the Board of Directors)
Vermeire Transmissions SA/NV Machines and tools -
(Chairman of the Board of Directors)
The bank
for a changing
world
BNP PARIBAS FORTIS SA/NV
REGISTERED OFFICE
Montagne du Parc/Warandeberg 3
1000 Brussels (Belgium)
Brussels Business Register
Company Number: 0403.199.702
www.bnpparibasfortis.com
BNP PARIBAS FORTIS SA/NV
|
ANNUAL REPORT 2021