General framework The consolidated accounts are made up of the general framework, the consolidated financial statements and the notes to the financial statements. COVERAGE OF LIQUIDITY AND SOLVENCY RISKS, AND BANK RESOLUTION As part of the legal mechanism of internal financial solidarity provided for in article L. 511-31 of the Code monétaire et financier (CMF - French Monetary and Financial Code), Crédit Agricole S.A., in its capacity as central body, must take all necessary measures to guarantee the liquidity and solvency of each affiliated credit institution and of the network as a whole. In this way, each member of the network benefits from this internal financial solidarity. The general provisions of the CMF have been supplemented by internal provisions setting out the operational measures to be taken under this legal solidarity mechanism. As part of Crédit Agricole S.A.'s IPO, CNCA (now Crédit Agricole S.A.) signed a memorandum of understanding with the Regional Banks in 2001, the main purpose of which was to govern internal relations within the Crédit Agricole network. In particular, the agreement provides for the creation of a Fonds pour Risques Bancaires de Liquidité et de Solvabilité (FRBLS - Liquidity and Solvency Banking Risks Fund) to enable Crédit Agricole S.A. to fulfil its role as a central body by intervening on behalf of affiliates that run into difficulties. The main provisions of the agreement are set out in Chapter III of Crédit Agricole S.A.'s Reference Document, registered with the Commission des Opérations de Bourse (French stock exchange commission) on 22 October 2001 under number R. 01-453. The European system for resolving banking crises was adopted during 2014 by Directive (EU) 2014/59 (known as "BRRD” - Banking Recovery and Resolution Directive), transposed into French law by Order 20151024 of 20 August 2015, which also adapted French law to the provisions of European Regulation 806/2014 of 15 July 2014 having established the rules and a uniform procedure for the resolution of credit institutions in the context of a single resolution mechanism and a single Banking Resolution Fund. Directive (EU) 2019/879 of 20 May 2019, known as "BRRD2", amended the BRRD and was transposed by Ordinance 2020-1636 of 21 December 2020. This mechanism, which includes measures for preventing and resolving banking crises, aims to preserve financial stability, ensure the continuity of the activities, services and operations of institutions whose failure would have serious consequences for the economy, protect depositors and avoid or limit as far as possible recourse to public financial support. In this context, the European resolution authorities, including the Single Resolution Board, have been given very broad powers to take any necessary measures in connection with the resolution of all or part of a credit institution or the group to which it belongs. For cooperative banking groups, the resolution authorities favour the "extended single point of entry" ("extended SPE") resolution strategy, whereby the resolution tool would be applied simultaneously at the level of Crédit Agricole S.A. and affiliated entities. In this respect, and in the event of the Crédit Agricole Group being placed in resolution, it is the scope made up of Crédit Agricole S.A. that will be affected. (in its capacity as the central body) and its affiliated entities, which would be regarded as a whole as the single extended point of entry. 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 they consider 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 CFM Indosuez Wealth Management 68
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