Agricole S.A. (in its capacity as central body) and affiliated entities would be considered as a whole as the single enlarged entry point. In view of the foregoing and the solidarity mechanisms existing within the network, a member of the Crédit Agricole network cannot be placed under individual resolution. The resolution authorities may initiate resolution proceedings against a credit institution where it considers that: the failure of the institution is proven or foreseeable, there is no reasonable prospect that another private measure will prevent the failure within a reasonable timeframe, a resolution measure is necessary and a winding-up procedure would be insufficient to achieve the objectives of resolution set out above. The resolution authorities may use one or more resolution instruments, as described below, with the aim of recapitalising or restoring the viability of the institution. Resolution instruments should be implemented in such a way that holders of equity securities (shares, CCI, CCA) bear the losses first, followed by other creditors, provided they are not excluded from the internal bailout by regulation or by decision of the resolution authorities. French law also provides for a measure of protection when certain resolution instruments or measures are implemented, such as the principle whereby the holders of equity securities and creditors of an institution in resolution cannot bear losses greater than those they would have suffered if the institution had been wound up in a judicial liquidation procedure governed by the Code de commerce [French Commercial Code] (NCWOL principle referred to in Article L. 613-57.I of the CMF). Thus, investors have the right to claim compensation if the treatment they receive in resolution is less favourable than the treatment they would have received if the institution had been subject to normal insolvency proceedings. In the event that the resolution authorities decide to place the Crédit Agricole Group in resolution, they will first reduce the par value of CET1 equity instruments (shares, CCIs and CCAs), additional Tier 1 equity instruments and Tier 2 equity instruments, in order to absorb losses, and then possibly convert the additional Tier 1 equity instruments and Tier 21 equity instruments 1 into equity securities. Secondly, if the resolution authorities decide to use the bail-in resolution tool, they could apply this bail-in tool to debt instruments2, i.e. decide to write them down in full or in part or to convert them into capital in order to absorb losses. The resolution authorities could decide to implement, in a coordinated manner, write-down or conversion measures and, where appropriate, bail-in measures in respect of the central body and all affiliated entities. In this case, these write-down or conversion measures and, where applicable, these internal bailout measures would apply to all entities in the Crédit Agricole network, regardless of the entity in question and regardless of the origin of the losses. The hierarchy of creditors in resolution is defined by the provisions of article L 613-55-5 of the CMF in force on the date the resolution is implemented. Holders of equity securities and creditors ranking pari passu or enjoying identical rights in liquidation would then be treated equally regardless of which Group entity they are creditors of. The scope of this bail-in, which is also intended to recapitalise the Crédit Agricole Group, is based on capital requirements at consolidated level. Investors should be aware that there is a significant risk that holders of shares, CCIs and CCAs and holders of debt instruments of a member of the network will lose all or part of their investment in the event of the implementation of a bank resolution procedure on the Group, regardless of the entity of which they are a creditor. The other banking resolution tools available to the resolution authorities are essentially the total or partial transfer of the institution's activities to a third party or a bridge institution and the separation of the institution's assets. This resolution mechanism does not call into question the legal mechanism of internal financial solidarity provided for in article L. 511-31 of the CMF, applied to the Crédit Agricole network as defined by article R 512-18 of the same Code. Crédit Agricole S.A. considers that, in practice, this mechanism should be exercised prior to any resolution measure. The application of the resolution procedure to the Crédit Agricole Group thus assumes that the legal mechanism of internal solidarity would not have been able to remedy the failure of one or more entities of the network, and therefore of the network as a whole. It is also likely to limit the conditions under which the guarantee of Crédit Agricole S.A.'s obligations granted in 1988 in favour of its third-party creditors by all the Regional Banks, jointly and severally, and up to the amount of their aggregate shareholders' equity, can be implemented. It should be noted that this guarantee may be triggered in the event of Crédit Agricole S.A. having insufficient assets following its compulsory liquidation or dissolution. 1 Articles L. 613-48 and L. 613-48-3 of the CMF (Code monétaire et financier - French Monetary and Financial Code) 2 Articles L. 613-55 and L. 613-55-1 of the CMF (Code monétaire et financier - French Monetary and Financial Code) Supplemented in June 2019 by Regulation (EU) 2019/876 and in June 2020 by Regulation (EU) 2020/873 Annual Report 2023 59
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