As part of setting its Risk Appetite, Societe Generale seeks a sustainable development based on a diversified and balanced banking model with a strong European foothold and a global presence targeted on a few areas of strong business expertise. The Group also aims to maintain long-term relationships with its customers built on well-earned trust, and to respond responsibly to the expectations of all of its stakeholders.




The Group seeks sustainable profitability, relying on a robust financial strength profile, consistent with its diversified banking model. In terms of financial ratios(1), the Group calibrates its objectives to ensure a sufficient margin of safety in relation to regulatory requirements. As of 31 December 2021, the Group’s CET1 ratio stood at 13.7% compared to 13.4% at the end of 2020, well above the regulatory requirement of 9.02% (“MDA” threshold - Maximum Distributable Amount, calculated as of January 1, 2022).

As of 31 December 2021, the Group’s leverage ratio stood at 4.9%, taking into account an amount of Tier 1 capital of EUR 57.9 billion compared to a leverage exposure of EUR 1,189 billion. euros (compared to 4.8% as of 31 December 2020, with EUR 56.2 billion and EUR 1,179 billion respectively).


In addition, as of 31 December 2021, the Group has a TLAC (Total Loss Absorbing Capacity) ratio of 29.2% of weighted exposures (compared to 28.6% as of 31 December 2020, for a regulatory requirement of 19.5% at the end of 2021).

Regarding its risk profile, the Group has a balanced distribution of risk-weighted exposures (RWA) between its Global Banking and Investor Solutions divisions (36% as of 31 December 2021), Retail Banking and International Financial Services (33% as of 31 December 2021), Retail Banking in France (26% as of 31 December 2021) and Corporate Center (5% as of 31 December 2021). In terms of change, the Group’s weighted exposures stood at EUR 363 billion as of 31 December 2021 compared to EUR 352 billion as of 31 December 2020, an increase of +3%, mainly driven by the Banking division. Retail and International Financial Services.



The solvency and leverage prudential ratios, as well as the amounts of regulatory capital and RWA featured here take into account the IFRS 9 phasing (fully-loaded CET1 ratio of 13.55% at end 2021, the phasing effect being +16 bps).



(In EURbn)

Credit and

counterparty credit



Total 31.12.2021

French Retail Banking





International Retail Banking and Financial Services





Global Banking and Investor Solutions





Corporate Centre










(In EURbn)

Credit and

counterparty credit



Total 31.12.2020

French Retail Banking





International Retail Banking and Financial Services





Global Banking and Investor Solutions





Corporate Centre










In addition, the Group presents its unconsolidated structured entities in Note 2.4 of the financial statements of the 2022 Universal Registration Document. Intra-group transactions are governed by a credit granting process respecting different levels of delegation within the Business Units, the Risk Department and the Finance Department. The entities’ structural risk management and oversight systems are also submitted to the Finance Department and the Risk Department.




Weighted exposures for credit risk and counterparty risk represent the Group’s main risk with an amount of risk-weighted exposures (RWA) of EUR 304.9 billion as of 31 December 2021, i.e. 84% of the total RWAs. These weighted exposures increased by 6% compared to 31 December 2020 and are mainly based on the internal model approach (63% of credit and counterparty risk RWA). This increase is mainly due to a growth in activity (+18 billion euros), mainly located in the Global Banking activity and by a foreign exchange effect (+5 billion euros), mainly linked to the appreciation the US dollar and the Czech koruna against the euro, partially offset by an improvement in the overall quality of the assets (-1 billion euros).

The credit portfolio presents a diversified profile. As of 31 December 2021, exposure to credit and counterparty risk represented an amount of EAD of 1,079 billion euros, up (+8%) compared to the end of 2020, driven in particular by the increase in exposures ” Companies”. The breakdown of the portfolio between main customer categories is balanced: Corporates (31%), Sovereigns (28%), Retail customers (19%), Institutions (11%) and Others (11%).

In terms of geographic breakdown of the portfolio, exposure to emerging countries remains limited: the Group’s exposure is 67% in Western Europe (including 46% in France) and 14% in over North America. In sectoral terms, only the Financial Activities sector represents more than 10% of the Group’s Corporate exposures, followed by the Real Estate Activities and Business Services sectors.

With regard more specifically to counterparty risk, exposure represents an amount of EAD of 144 billion euros, increased (+15%) compared to the end of 2020, linked to the significant increase in exposure to Institutions and to a lesser extent on corporate exhibitions.

As of 31 December 2021, EAD’s exposure to Russia represented 1.7% of the Group’s exposure to credit and counterparty risk, i.e. EUR 18.6 billion (including EUR 15.4 billion on its subsidiary Rosbank and 3.2 billion euros of off-shore exposure, mainly made up of operations set up as part of the financing activities of Global Banking and Investor Solutions)(1).

(See details in Chapter 6 “Credit risk” and Chapter 7 “Counterparty credit risk”.)



* Institutions: Basel classification bank and public sector portfolios.



Regarding the Group’s net cost of risk, it amounts to EUR -0.7 billion in 2021, down -79% compared to 2020. The cost of risk is thus down sharply compared to 2020, due to a very low level of cost of risk on defaulted outstandings (stage 3) and moderate reversals of provisions on sound outstandings (stage 1/stage 2) while maintaining a prudent provisioning policy in an environment that remains marked by strong uncertainties.

Expressed in basis points (bp), the cost of risk thus stands at 13 bp for the year 2021 compared to 64 bp in 2020. This cost of risk is down across the three pillars Retail banking in France (5 bp full year 2021 vs. 52 bp for full year 2020), International Retail Banking and Financial Services (38 bp for full year 2021 vs. 96 bp for full year 2020) and Global Banking and Investor Solutions (5 bp for the year 2021 against 57 bp for the year 2020).

The gross coverage rate for doubtful outstandings decreased slightly to 51% as of 31 December 2021 (compared to 52% as of 31 December 2020), mainly due to the downward revision of the provisioning rates on defaulted outstandings of individual customers and professionals in France, reflecting improved collection performance and portfolio sales.

(See details in section 6 of Chapter 6 “Credit risk”.)


See also section 2.10 “Post-closing events” of the 2022 Universal Registration Document.


(In EURbn)



Group gross doubtful loans ratio(1)



Doubtful loans (Stage 3)



Stage 3 Provisions



Group gross doubtful loans coverage ratio




Customer loans and advances, deposits at banks and loans due from banks, finance leases, excluding loans and advances classified as held for sale, cash balances at central banks and other demand deposits, in accordance with the EBA/ITS/2019/02 Implementing Technical Standards amending Commission Implementing Regulation (EU) No 680/2014 with regard to the reporting of financial information (FINREP).

(In bps)



Cost of risk






As of 31 December 2021, operational risk-weighted exposures represented EUR 46.8 billion, or 13% of the Group’s RWA, down -5% compared to the end of 2020 (EUR 49.2 billion). These weighted exposures are mainly determined using the internal model (95% of the total). Their variation is mainly due to the update of the scenario analyses, the costing of which may change downwards for certain categories of operational risk events.

(See details in section 4 of Chapter 10 “Operational risk”.)





Market risk-weighted exposures are mainly determined using internal models (88% of the total at the end of 2021). These weighted exposures amounted to EUR 11.6 billion at the end of 2021, i.e. 3% of the Group’s total RWA, down -24% compared to the end of 2020 (EUR 15.3 billion).

The drop in capital requirements for market risk is explained in particular by the continued decline in VaR in 2021 across all activities to reach historically low levels in the fourth quarter, the decrease in IRC and the CRM linked to the reduction of positions on debt instruments by the front office and by the fall in RWA calculated using the standard approach for interest rate risk.

(See details in Chapter 9 “Market risk”.)


(In EURm)



VaR (1 day, 99%) average value



SVaR (1 day, 99%) average value






The LCR (Liquidity Coverage Ratio) ratio stood at 129% at the end of 2021 (compared to 149% at the end of 2020), corresponding to excess liquidity of EUR 51 billion (compared to EUR 78 billion at the end of 2020), compared to a regulatory requirement of 100%. This change compared to 31 December 2020 is mainly due to strong commercial production activity combined with an increase in consumption of market activities impacting the securities inventory.

Liquidity reserves amounted to EUR 229 billion as of 31 December 2021 (compared to EUR 243 billion as of 31 December 2020). This variation is mainly due to a decrease in HQLA securities available for sale on the market (after discount), partially offset by an increase in central bank deposits (excluding mandatory reserves).

(See details in sections 5 and 6 of Chapter 12 “Liquidity risk”.)




The amount of sensitivity of the Group’s value to a rate change of +10 bps was EUR -20 million as of 31 December 2021 (compared to EUR +345 million as of 31 December 2020). The sensitivity of the Group’s net interest margin over the next three years is low. In the event of a parallel rise in yield curves of +10bp, it is positive and represents less than 1% of net banking income.

(In EURm)


Amount of sensitivity (31.12.2021)


Amount of sensitivity (31.12.2020)


(See details in section 2 of Chapter 11 “Structural interest rate and exchange rate risks”.)




In 2021, the Group sold its asset management subsidiary Lyxor(1). This disposal is in line with Societe Generale’s strategy in terms of savings, which consists of operating in an open architecture and offering its clients investment and asset management solutions through partnerships with investment managers, external assets.

This sale generated a capital gain of EUR 0.4 billion as well as an impact of +18bps on the Group’s CET1 ratio and EUR -0.6 billion in RWA. Assets managed by Lyxor Asset Management totaled approximately EUR 140 billion at the end of December 2020, including EUR 124 billion within the scope of the transaction in question.

The Group has also finalized the program to refocus its activities started in 2017.




(In EURm)









Common Equity Tier 1 (CET1) capital 







Tier 1 capital 







Total capital 








Total risk-weighted assets








Common Equity Tier 1 ratio (%)







Tier 1 ratio (%)







Total capital ratio (%)







EU 7a

Additional own funds requirements to address risks other than the risk of excessive leverage (%) 






EU 7b

of which to be made up of CET1 capital (%)






EU 7c

of which to be made up of Tier 1 capital (%)






EU 7d

Total SREP own funds requirements (%)








Capital conservation buffer (%)






EU 8a

Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%)







Institution-specific countercyclical capital buffer (%)






EU 9a

Systemic risk buffer (%)







Global Systemically Important Institution buffer (%)






EU 10a

Other Systemically Important Institution buffer







Combined buffer requirement (%)






EU 11a

Overall capital requirements (%)







CET1 available after meeting the total SREP own funds requirements (%)








(In EURm)









Leverage ratio total exposure measure(2)







Leverage ratio







EU 14a

Additional own funds requirements to address the risk of excessive leverage (%) 






EU 14b

of which to be made up of CET1 capital (%)






EU 14c

Total SREP leverage ratio requirements (%)(3)







EU 14d

Leverage ratio buffer requirement (%)






EU 14e

Overall leverage ratio requirements (%)(3)








Total high-quality liquid assets (HQLA) (Weighted value – average)






EU 16a

Cash outflows – Total weighted value 






EU 16b

Cash inflows – Total weighted value 







Total net cash outflows (adjusted value)







Liquidity coverage ratio (%)








Total available stable funding







Total required stable funding







NSFR ratio (%)







From 1 March 2022 onwards, the own funds requirements applicable to Societe Generale group in relation to Pillar 2 will reach 2.12% (of which 1.19% in CET1), resulting in a total SREP own funds requirements of 10.12%.


Over the whole historical period considered, the measurement of the leverage exposure has been taking into account the option to exempt temporarily some central bank exposures in accordance with the European regulation.


The leverage ratio requirement applicable to Societe Generale group is 3.09% (enhancement of the initial regulatory requirement of 3% in relation to the abovementioned central bank exemption).

(in EURm)









Own funds and eligible liabilities 







Total RWA of the Group







Own funds and eligible liabilities as a percentage of RWA







Total exposure measure of the Group







Own funds and eligible liabilities as percentage of the total exposure measure







Does the subordination exemption in Article 72b(4) of the CRR apply? (5% exemption)







Pro-memo item: Aggregate amount of permitted non-subordinated eligible liabilities in-struments If the subordination discretion as per Article 72b(3) CRR is applied (max 3.5% exemption)







Pro-memo item: If a capped subordination exemption applies under Article 72b (3) CRR, the amount of funding issued that ranks pari passu with excluded liabilities and that is recognised under row 1, divided by funding issued that ranks pari passu with excluded Liabilities and that would be recognised under row 1 if no cap was applied (%)







With IFRS 9 phasing effect taken into account over the whole historical period considered.


As at 31 December 2021, the Group presents a TLAC ratio of 31.1% of risk-weighted assets (RWA) with the option of Senior preferred debt limited to 2.5% of RWA (the ratio being 29.2% without this option) for a regulatory requirement of 19.5%, and of 9.5% of the leverage exposure for a regulatory requirement of 6%.








This section describes the various types of risks and the risks to which Societe Generale is exposed.




The Group’s risk management framework involves the following main categories:

credit risk: risk of losses arising from the inability of the Group’s customers, issuers or other counterparties to meet their financial commitments. This risk includes the risk linked to market transactions and securitisation activities and may be further amplified by individual, country and sector concentration risk;

counterparty credit risk: Credit risk of a counterparty on a market transaction, combined with the risk of changes in exposure;

market risk: risk of a loss of value on financial instruments arising from changes in market parameters, the volatility of these parameters and correlations between them. These parameters include, but are not limited to, exchange rates, interest rates, the price of securities (equity, bonds), commodities, derivatives and other assets;

operational risk: risk of losses resulting from inadequacies or failures in processes, personnel or information systems, or from external events. It includes:


non-compliance risk: risk of court-ordered, administrative or disciplinary sanctions, financial loss or reputational damage due to failure to comply with legal and regulatory requirements or professional/ethical standards and practices applicable to banking,


reputational risk: risk arising from a negative perception on the part of customers, counterparties, shareholders, investors or regulators that could negatively impact the Group’s ability to maintain or engage in business relationships and to sustain access to sources of financing,


misconduct risk: risk resulting from actions (or inactions) or behavior of the Bank or its employees inconsistent with the Group’s Code of Conduct, which may lead to adverse consequences for our stakeholders, or place the Bank’s sustainability or reputation at risk,


IT and Information Systems Security risk (cybercrime, IT systems failures, etc.);

structural risk: risk of losses in interest margin or banking book value if interest rates, exchange rates, or credit spreads change. This risk is related to the Bank’s commercial and proprietary activities, it includes the distortion of the structural difference between assets and liabilities related to pension obligations, as well as the risk related to longer terms of future payments;

liquidity and funding risk: liquidity risk is defined as the inability of the Group to meet its financial obligations: debt repayments, collateral supply, etc. Funding risk is defined as the risk that the Group will not be able to finance its business growth on a scale consistent with its commercial objectives and at a cost that is competitive compared to its competitors;

model risk: Risk of losses due to decisions reached based on results of internal modeling due to errors in development, implementation or use of these models;

risk related to insurance activities: through its insurance subsidiaries, the Group is also exposed to a variety of risks linked to this business. In addition to balance sheet management risks (interest rate, valuation, counterparty and exchange rate risk), these risks include premium pricing risk, mortality risk and the risk of an increase in claims;

strategic/business risk: risks resulting from the Group’s inability to execute its strategy and to implement its business plan for reasons that are not attributable to the other risks in this list; for instance, the non-occurrence of the macroeconomic scenarios that were used to construct the business plan or sales performance that was below expectations;

private equity risk: risk of reduction in the value of our equity ownership interests;

residual value risk: through its specialized financing activities, mainly in its long-term vehicle leasing subsidiary, the Group is exposed to residual value risk (where the net resale value of an asset at the end of the leasing contract is less than expected);

settlement/delivery risk: risk arising on market transactions in the case of transactions (commodities spot, OTC securities spot, Forex spot, OTC derivatives, Securities Financing Transactions, etc.) whose payment type is FoP (Free of Payment), inducing an asynchronous settlement/delivery of the flows to be paid and received.

In addition, risks associated with climate change, both physical (increase in the frequency of extreme climatic events) and transition-related (New Carbon Regulation), have been identified as factors that could aggravate the Group’s existing risks.




This section identifies the main risk factors that the Group estimates could have a significant effect on its business, profitability, solvency or access to financing.

The risks inherent to the Group’s business are presented below under six main categories, in accordance with Article 16 of the Regulation (EU) 2017/1129, also known as “Prospectus 3” regulation of 14 June 2017:

risks related to the macroeconomic, geopolitical, market and regulatory environments;

credit and counterparty risks;

market and structural risks;

operational risks (including risk of inappropriate conduct) and model risks;

liquidity and funding risks;

risks related to insurance activities.

Risk factors are presented based on an evaluation of their materiality, with the most material risks indicated first within each category. The risk exposure or measurement figures included in the risk factors provide information on the Group’s exposure level but are not necessarily representative of any future evolution of these risks.

2.2.1  RISKS RELATED TO THE MACROECONOMIC, GEOPOLITICAL, MARKET AND REGULATORY ENVIRONMENTS The global economic and financial context, geopolitical tensions, as well as the market environment in which the Group operates, may adversely affect its activities, financial position and results of operations.

As a global financial institution, the Group’s activities are sensitive to changes in financial markets and economic conditions generally in Europe, the United States and elsewhere around the world. The Group generates 49% of its business in France (in terms of net banking income for the financial year ended 31 December 2021), 32% in Europe, 7% in the Americas and 12% in the rest of the world. The Group could face significant deteriorations in market and economic conditions resulting from, in particular, crises affecting capital or credit markets, liquidity constraints, regional or global recessions, sharp fluctuations in commodity prices (notably oil), currency exchange rates or interest rates, inflation or deflation, rating downgrades, restructuring or defaults of sovereign or private debt, or adverse geopolitical events (including acts of terrorism and military conflicts). Such events, which can develop quickly and thus may not have been anticipated and hedged, could affect the Group’s operating environment for short or extended periods and have a material adverse effect on its financial position, cost of risk and results of operations.

The economic environment remains very uncertain despite the good performance of industry and world trade. Although initially rapid, the economic recovery was severely disrupted in 2021 by the effect of, firstly, production delays due to occasional factory closures, absenteeism due to illness, and shortages of labor, components (especially electronic components) and electricity in certain regions, and secondly, delays in transport deliveries due to, among other things, congestion in ports. In addition, the Russian-Ukrainian conflict starting in the beginning of 2022 has generated historically high tensions with Western countries, with significant potential impacts on global growth and energy prices and a humanitarian impact. These disruptions could persist in 2022 and have a significant impact on the activity and profitability of certain Group counterparties in 2022.

Disruptions in global supply chains, accompanied by tensions in the labour market, and rising energy prices are also leading to higher inflation, particularly in the United States, where a massive fiscal stimulus package has provided a strong boost to demand. Europe and emerging countries are also facing inflationary pressures. The longer the pandemic lasts, the more persistent these disruptions will be, with a potentially lasting impact on inflation, consumer purchasing power and ultimately on economic activity. The Russian-Ukrainian conflict is likely to accentuate some of these disruptions, particularly in Europe where, for example, natural gas prices have risen sharply and remain highly volatile.

The economic and financial environment remains exposed to intensifying geopolitical risks. Tensions between Russia and Western countries over the situation in Ukraine have increased significantly since mid-February 2022. The exceptional economic and financial sanctions put in place by a large number of countries, particularly in Europe and the United States, against Russia and Belarus could significantly affect operators with links to Russia, with a material impact on the Group’s risks (credit and counterparty, market, reputation, compliance, legal, operational, etc.). Based on the sanctions published on 27 February 2022, the Group’s local exposure to corporate and financial institution counterparties subject to sanctions is low at EUR 0.2 billion, and counterparties under sanctions account for approximately EUR 0.7 billion of the Group’s net off-shore exposure. Any new international sanction or Russian countermeasure could have an impact on the global economy and consequently on the Group’s risks. The Group will continue to analyse in real time the developments in the global impact of this crisis and, together, will enforce the necessary measures to comply with legislation in force and protect the Group’s franchise.

Uncertainty about the consequences of the situation in Ukraine makes it difficult to predict the impact on the global economy and the Group. Several scenarios remain conceivable for the Group. The estimated impact on the property rights on its banking assets in Russia would be of approximately -50 basis points of CET1 capital ratio based on Rosbank’s net book assets equivalent to EUR 2.1 billion at 31 December 2021, with EUR 0.5 billion of subordinated debt and taking into account the cancellation of the associated weighted assets.

This crisis could also exacerbate the already visible increase in prices and availability of hydrocarbons, as well as on the price of certain foodstuffs and metals. It could also generate strong volatility on the financial markets and a significant drop in the price of certain financial assets. In addition, the Russian government and certain Russian financial institutions could experience payment defaults, with consequences that are difficult to anticipate for the Group.

As of 31 December 2021, EAD exposures on Russia represented 1.7% of the Group’s exposure to credit and counterparty risks, i.e. EUR 18.6 billion (of which EUR 15.4 billion on its subsidiary Rosbank) and EUR 3.2 billion of off-shore exposures, mainly consisting of transactions set up as part of the financing activities of the Corporate and Investment Banking division). In 2021, activities located in Russia represented 2.8% of the Group’s net banking income and 2.7% of its net income. In addition, Société Générale has a minor exposure in Ukraine (less than EUR 80 million at 31 December 2021), mainly through its subsidiary ALD. See also section 2.10 “Post-closing events” of the 2022 Universal Registration Document.

Furthermore, the U.S.-China confrontation brings with it trade tensions and the risk of a technological fragmentation. In Africa, a series of political coups in the Sahel region has heightened awareness of the fragility of the institutional frameworks of countries exposed to terrorism.

Continued high geopolitical risks are an additional source of instability that could also weigh on economic activity and credit demand, while increasing volatility in financial markets. In the context of Brexit, the topic of non-equivalence of clearing houses (central counterparties, or CCPs) remains a point of vigilance, with possible impacts on financial stability, notably in Europe, and therefore on the Group’s business.

Over the last decade, the financial markets have thus experienced significant disruptions resulting notably from concerns over the evolution of central bank interest rate policies, the trajectory of the sovereign debt of several Eurozone countries, Brexit, the persistence of commercial and political tensions (namely between the United States and China) or fears of a major slowdown of growth in China, fostered again recently by the financial difficulties of Chinese real estate development companies, the disruption of value and supply chains caused by the Covid-19 crisis or more recently by the tensions linked to the crisis in Ukraine. Given the magnitude of external financing needs, several emerging countries would face increasing difficulties if U.S. interest rates were to rise, and their financial conditions were to tighten.

The long period of low interest rates in the Eurozone and the United States, driven by accommodating monetary policies, has affected the Group’s net interest margin for several years. Growth in the volume of loans made to non-financial companies, already high before the pandemic, significantly increased in 2020 with the implementation of government-guaranteed loan programmes (such as the Prêt Garanti par l’Etat programme in France). In 2021, this growth has slowed with the repayment of a part of the credit lines drawn in 2020. Should an overly fragile economic recovery materialise, it may provoke a rise in the volume of non-performing loans and create a weak investment dynamic in a context where companies’ balance sheets are already fragile. The environment of low interest rates tends to lead to an increased risk appetite of some participants in the banking and financial system, lower risk premiums compared to their historical average and high valuation levels of certain assets. These market conditions could change rapidly in the event of a more rapid increase in key interest rates by the major central banks, which could cause a marked correction in asset prices.

Furthermore, the environment of abundant liquidity that has been at the origin of the upturn in credit growth in the Eurozone and particularly in France, amplified by the implementation of the French government-guaranteed loan programme, could lead in the future to additional regulatory measures by supervisory authorities in order to limit the extension of credit or to further protect banks against a financial cycle downturn.

The Group’s results are thus significantly exposed to economic, financial, political and geopolitical conditions in the principal markets in which it operates.

Furthermore, the situation related to the Covid-19 crisis is a further aggravating factor in the various risks faced by the Group. See also section “The coronavirus (Covid-19) pandemic and its economic consequences could adversely affect the Group’s business and financial performance”.

At 31 December 2021, the Group’s EAD to credit and counterparty risks were concentrated in Europe and the United States (together accounting for 90%), with a predominant exposure to France (46% of EAD). The other exposures concern Western Europe excluding France (accounting for 21%), North America (accounting for 14%), Eastern European members of the European Union (accounting for 7%) and Eastern Europe excluding the European Union (accounting for 2%).

In France, the Group’s principal market, the good growth performance during the 2016-2019 period and low interest rates have fostered an upturn in the housing market. A reversal of activity in this area could have a material adverse effect on the Group’s asset value and business, by decreasing demand for loans and resulting in higher rates of non-performing loans.

The Group also operates in emerging markets, such as Russia or Africa and the Middle East (5% of the Group’s credit exposure). A significant adverse change in the macroeconomic, health, political or financial environment in these markets could have a material adverse effect on the Group’s business, results and financial position. These markets may be adversely affected by uncertainty factors and specific risks, such as a new increase in oil and natural gas prices, which would weigh on the financial position of importing countries as well as their growth and exchange rates. The correction of macroeconomic or budgetary imbalances that would result could be imposed by the markets with an impact on growth and on exchange rates. A major source of uncertainty currently comes from the ongoing conflict in Ukraine and its humanitarian, economic and financial consequences. In the longer term, the energy transition to a “low-carbon economy” could adversely affect fossil energy producers, energy-intensive sectors of activity and the countries that depend on them. In addition, capital markets (including foreign exchange activity) and securities trading activities in emerging markets may be more volatile than those in developed markets and may also be vulnerable to certain specific risks, such as political instability and currency volatility. These elements could negatively impact the Group’s activity and results of operations. The coronavirus pandemic (Covid-19) and its economic consequences could adversely affect the Group’s business and financial performance.

In December 2019, a new strain of coronavirus (Covid-19) emerged in China. The virus has since spread to numerous countries around the world, with a high concentration of cases in certain countries where the Group operates. The World Health Organization declared the outbreak of a pandemic in March 2020. The Covid-19 pandemic and the health measures taken in response to it (border closures, lockdown measures, restrictions on certain economic activities, etc.) have had and may continue to have a significant impact, both direct and indirect, on the global economic situation and financial markets.

The deployment of vaccination programmes has reduced the risk of severe illness from Covid-19 infections among the vaccinated population and the need for strict lockdowns in the event of high virus circulation in countries where vaccines have been deployed on a large scale. The persistence of the pandemic and the emergence of new variants (such as the highly transmissible Omicron variant) have led, and may again lead, to new targeted restrictive measures or an increase in absenteeism and work stoppages, exacerbating the disruptions already present in global supply chains, and thus adversely affecting the Group’s business, financial performance and results.

The impact of the crisis related to the Covid-19 will also have lasting consequences that remain difficult to be assessed, notably through the loss of human capital (loss of skills due to long periods of inactivity, lower quality of training, etc.) and increasing public and corporate debts.

The different restrictive measures had also led, especially in the beginning of the sanitary crisis, to a decline in the Group’s commercial activity and results due to the reduced opening of its retail network and lower demand from its customers, despite a rapid adaptation. New phases of lockdown measures or curfews in the countries where the Group operates could again impact the Group’s financial results.

In many jurisdictions in which the Group operates, national governments and central banks have taken or announced exceptional measures to support the economy and its actors (government-guaranteed loan facilities programmes, tax deferrals, facilitated recourses to part-time working, compensation, etc.) or to improve liquidity in financial markets (asset purchases, etc.). While these support measures have been effective in addressing the immediate effects of the crisis, the mechanisms put in place may not be sufficient to sustain the recovery over the long term.

The various restrictive measures implemented since the beginning of the pandemic in several of the main countries where the Group operates (with Western Europe representing 67% of the Group’s EAD (Exposure at Default) at 31 December 2021, of which 46% was in France) have had a significant impact on economic activity. The risk of new restrictive measures (especially in the event of new pandemic waves) as well as a slower-than-expected recovery of demand (particularly in certain economic sectors) could increase the economic difficulties resulting from the health crisis. This, combined with a high level of public and corporate indebtedness, may constitute a brake on economic growth and lead to significant adverse repercussions on the credit quality of the Group’s counterparties (affected in particular by the gradual cessation of government support measures or by difficulties in extending these measures) and the level of non-performing loans for both businesses and individuals.

2020 was characterised by a significant increase in the cost of risk, mainly due to the provisioning for Stages 1 and 2 in anticipation of future defaults. In 2021, the net cost of risk was low in the absence of default, while the Group continued to maintain a provisioning policy for Stages 1 and 2 in the event that defaults begin to materialise. The Group’s cost of risk could be affected in future years by its participation in the French government-guaranteed loan programmes (in respect of the unguaranteed residual exposure) on which the observed defaults remain to be quantified.

Within the Corporate portfolio, at 31 December 2021, the most impacted sectors were the automotive sector (0.9% of the Group’s total exposure), hotels, catering and leisure (0.6% of the Group’s total exposure), non-food retail distribution (the entirety of the retail distribution sector represents 1.6% of the Group’s total exposure) and air transport (less than 0.5% of the Group’s total exposure).

The Group’s results and financial position were affected by unfavourable developments in global financial markets due to the Covid-19 crisis, especially in March and April 2020 (extreme volatility and dislocation of term structure, alternate sharp declines and rapid rebounds in the equity markets, widening of credit spreads, unprecedented declines in, or cancellation of, dividend distributions, etc.). These exceptional conditions have particularly affected the management of structured equity-linked products. Since then, these activities have been thoroughly reconsidered to improve and reduce the risk profile. Although monetary and fiscal stimuli — as well as medical advances — have supported economies and financial markets, the Group remains attentive to the risk of correction that could occur in particular in the event of new epidemic waves.

For information purposes, risk-weighted assets (RWA) related to market risks were thus down 24% at the end of December 2021 compared to the situation at the end of December 2020, to EUR 11.6 billion. The Global Markets and Investor Services sector, which mainly concentrates the Group’s market risks, represented a net banking income of EUR 5.6 billion, or 22% of the Group’s total revenues in 2021.

Restrictive measures have led the Group to massively implement remote working arrangements, particularly for a significant part of its market activities. This organisation, which was deployed in immediate response to the crisis, increases the risk of operational incidents and the risk of cyber-attacks. Even though the Group has put in place adaptation and support measures, these risks remain higher in periods of widespread recourse to remote working. All employees remain subject to health risks at the individual level. Prolonged remote working also increases psychosocial risk, with potential impacts in terms of organisation and business continuity in the event of prolonged absences.

The unprecedented environment resulting from the Covid-19 crisis could alter the performance of the models used within the Group (particularly in terms of asset valuation and assessment of own funds requirements for credit risk), due in particular to calibration carried out over periods that are not comparable to the current crisis or to assumptions that are no longer valid, taking the models beyond their area of validity. The temporary decline in performance and the recalibration of these models could have an adverse impact on the Group’s results.

The ECB recommendation to restrict dividend distribution and share buybacks for all banks placed under its direct supervision expired on 30 September 2021. As from this date, dividend distribution and share buybacks policies will be determined in accordance with the provisions of the applicable prudential regulation.

Uncertainty as to the duration and impact of the Covid-19 pandemic makes it difficult to predict its impact on the global economy. Consequences for the Group will depend on the duration of the pandemic, the measures taken by national governments and central banks and developments in the health, economic, financial and social context. The Group’s failure to achieve its strategic and financial objectives disclosed to the market could have an adverse effect on its business, results of operations and the value of its financial instruments.

At the time of the publication of its annual results on 10 February 2022, the Group communicated new guidance on its operating expenses, cost of risk and solvency. The Group targets an underlying cost/income ratio (excluding the Single Resolution Fund - SRF) between 66% and 68% in 2022 and with further improvement thereafter. Over 2022, the Group’s cost of risk should not exceed 30 basis points. In consideration of the situation in Ukraine, the Group communicated on 3 March 2022 that it was not changing its cost-of-risk target and that it would update it, if necessary, at the time of its Q1 2022 results publication. The Group manages its CET1 ratio with a margin of flexibility of between 200 and 250 basis points higher than regulatory requirements, defined as the Maximum Distributable Amount (MDA), including under Basel IV.

These expectations are based on a number of assumptions related to the macroeconomic, geopolitical and health context. The non-occurrence of these assumptions (including in the event of the occurrence of one or more of the risks described in this section) or the occurrence of unanticipated events could compromise the achievement of Group’s strategic and financial objectives and negatively affect its activity, results and financial situation.

More precisely, the Group’s “Vision 2025” project anticipates the merger between the Retail Banking network of Société Générale in France and Crédit du Nord. Although this project has been designed to enable a controlled deployment, the merger could have a short-term material adverse effect on the Group’s business, financial position and costs. System reconciliations could face delays, delaying part of the expected merger benefits. The project could lead to the departure of a number of employees, requiring replacements and efforts related to new employee training, thus potentially generating additional costs. The merger could also lead to the departure of a portion of the Group’s customers, resulting in loss of revenue. The legal and regulatory aspects of the transaction could result in delays or additional costs. In October 2021, the Group presented the detailed “Vision 2025” project, specifying that the timetable and ambitions remained aligned with the initial presentation of the project. In addition, the effective sale of Lyxor was finalised on 31 December 2021. The Group also announced the signature by Société Générale and ALD of two memoranda of understanding providing for the acquisition by ALD of 100% of LeasePlan, with a view to creating a global leader in sustainable mobility solutions. The Group also announced on 1 February 2022 that Boursorama had signed a memorandum of understanding with ING. Under this agreement, exclusive new customer offers, and a simplified subscription process (depending on the product) are expected to be proposed to ING customers who wish to become Boursorama customers.

The Group may however face an execution risk on these strategic projects, which are to be carried out simultaneously. Any difficulty encountered during the process of integrating activities (particularly from a human resource standpoint) is likely to result in higher integration costs and lower-than-anticipated savings, synergies or benefits. Moreover, the process of integrating the acquired operational businesses into the Group could disrupt the operations of one or more of its subsidiaries and divert management’s attention, which could have a negative impact on its business and results. These acquisitions may not materialise, in whole or in part, resulting in a reduced level of expected earnings.

Furthermore, the Group is committed to becoming a leading bank in the field of responsible finance through, among others:

more than EUR 150 billion in financing granted to support the energy transition, above the 2019-2023 target of EUR 120 billion, two years ahead of schedule;

strong targets for decarbonizing the Group’s portfolios, including a planned total exit from thermal coal and a 10% reduction in the Group’s overall exposure to the oil and gas extraction sector (upstream) by 2025;

the signing as co-founder of the Principles for a Responsible Banking Sector, through which the Group undertakes to strategically align its business with the Sustainable Development Objectives set by the United Nations and the Paris Agreement on Climate Change;

a key role as a founding member of the Net-Zero Banking Alliance initiative, with a commitment to align its portfolios on trajectories aimed at global carbon neutrality by 2050 in order to reach the objective of limiting global warming to 1.5°C.

These measures (and additional measures that may be taken in the future) could in some cases affect decrease the Group’s results in the sectors concerned. The Group is subject to an extended regulatory framework in each of the countries in which it operates and changes to this regulatory framework could have a negative effect on the Group’s businesses, financial position and costs, as well as on the financial and economic environment in which it operates.

The Group is subject to the regulations of the jurisdictions in which it operates. French, European and U.S. regulations as well as other local regulations are concerned, given the cross-border activities of the Group, among other factors. The application of existing regulations and the implementation of future regulations requires significant resources that could affect the Group’s performance. In addition, possible non-compliance with regulations could lead to fines, damage to the Group’s reputation, forced suspension of its operations or the withdrawal of operating licences. By way of illustration, exposures to credit and counterparty risks (EAD) in France, the 27-member European Union (including France) and the United States represented 46%, 67% and 14%, respectively as of 31 December 2021.

Among the regulations that could have a significant influence on the Group:

several regulatory changes are still likely to degrade the environment for market activities: (i) the possible strengthening of transparency constraints and investor protection measures (review of MiFID II/MiFIR, IDD, ELTIF (European Long-Term Investment Fund Regulation), (ii) the implementation of the fundamental review of the trading book, or FRTB, which may significantly increase requirements applicable to European banks and (iii) despite the European Commission’s decision of 8 February 2022 to extend the equivalence granted to UK central counterparties until 30 June 2025, possible relocations could be requested;

in the United States, the implementation of the Dodd-Frank Act has been almost finalised. The new Securities and Exchange Commission (SEC) regulations related to security-based swap dealers have been applicable since 2021 and requires Société Générale’s registration with the SEC as a Securities Based Swap Dealer and compliance with related regulations. Further, once the SEC has issued a final order on substituted compliance for France, a portion of the SEC’s rules could be satisfied by demonstrating compliance with home country laws;

European measures aimed at restoring banks’ balance sheets, especially through active management of non-performing loans (“NPLs”), which are leading to a rise of prudential requirements and an adaptation of the Group’s strategy for managing NPLs. More generally, additional measures to define a framework of good practices for granting (e.g., loan origination orientations published by the European Banking Authority) and monitoring loans could also impact the Group;

the strengthening of data quality and protection requirements and a potential strengthening of cyber-resilience requirements in relation to the publication on 24 September 2020 of the proposed European regulation on digital operational resilience for the financial sector;

the implementation of the European sustainable finance regulatory framework, with an increase in non-financial reporting obligations, enhanced inclusion of environmental, social and governance issues in risk management activities and the potential inclusion of such risks in the supervisory review and assessment process (Supervisory Review and Evaluation Process, or SREP);

the strengthening of the crisis prevention and resolution regime set out in the Bank Recovery and Resolution Directive of 15 May 2014 (“BRRD”), as revised, gives the Single Resolution Board (“SRB”) the power to initiate a resolution procedure towards a credit institution when the point of non-viability is considered reached. In this context, the SRB could, in order to limit the cost to the taxpayer, force some creditors and the shareholders of the Group to incur losses in priority. Should the resolution mechanism be triggered, the Group could, in particular, be forced to sell certain of its activities, modify the terms and conditions of the remuneration of its debt instruments, issue new debt instruments, or be subjected to a depreciation of its debt instruments or their conversion into equity securities. Furthermore, the Group’s contribution to the annual financing of the Single Resolution Fund (“SRF”) is significant and will grow steadily until 2023, with 2024 being the year of the full endowment of the fund. The contribution to the banking resolution mechanisms is described in Note 7.3.2 “Other provisions for risks and expenses” of the 2022 Universal Registration Document.

New legal and regulatory obligations could also be imposed on the Group in the future, such as:

the ongoing implementation in France of consumer and social-oriented measures affecting retail banking (limitation of banks’ fees for individuals and extension of such measures to small and medium-sized businesses, and protection measures for vulnerable customers);

the potential requirement at the European level to open more access to banking data (savings books, investments) to third-party service providers and/or to pool customer data;

new obligations arising from a package of proposed measures announced by the European Commission on 20 July 2021 aiming to strengthen the European supervisory framework around the fight against money laundering and terrorist financing, as well as the creation of a new European agency to fight money laundering;

new measures arising from changes to bankruptcy laws relating to the management of the health crisis caused by the Covid-19 pandemic, including those facilitating recourse to accelerated safeguard procedures;

new requirements resulting from the EU banking regulation reform proposal presented on 27 October 2021 by the European Commission. The reform consists of several legislative instruments to amend the directive on capital requirements (European Parliament and EU Council, directive 2013/36/EU, 26 June 2013) as well as the regulation on capital requirements (CRR) (European Parliament and EU Council, regulation (EU) No. 575/2013, 26 June 2013).

The Group is also subject to complex tax rules in the countries where it operates. Changes in applicable tax rules, uncertainty regarding the interpretation of certain evolutions or their effects may have a negative impact on the Group’s business, financial position and costs.

Moreover, as an international bank that handles transactions with US persons, denominated in US dollars, or involving US financial institutions, the Group is subject to US regulations relating in particular to compliance with economic sanctions, the fight against corruption and market abuse. More generally, in the context of agreements with US and French authorities, the Group has undertaken to implement, through a dedicated programme and a specific organisation, corrective actions to address identified deficiencies and strengthen its compliance programme. In the event of a failure to comply with relevant US regulations, or a breach of the Group’s commitments under these agreements, the Group could be exposed to the risk of (i) administrative sanctions, including fines, suspension of access to US markets, and even withdrawals of banking licences, (ii) criminal proceedings, and (iii) damage to its reputation. Increased competition from banking and non-banking operators could have an adverse effect on the Group’s business and results, both in its French domestic market and internationally.

Due to its international activity, the Group faces intense competition in the international and local markets in which it operates, whether from banking or non-banking actors. As such, the Group is exposed to the risk of not being able to maintain or develop its market share in its various activities. This competition may also lead to pressure on margins, which would be detrimental to the profitability of the Group’s activities.

Consolidation in the financial services industry could result in the competitors benefiting from greater capital, resources and an ability to offer a broader range of financial services. In France and in the other main markets where the Group operates, the presence of major domestic banking and financial actors, as well as new market participants (notably neo-banks and online financial services providers), has increased competition for virtually all products and services offered by the Group. New market participants such as “fintechs” and new services that are automated, scalable and based on new technologies (such as blockchain) are developing rapidly and are fundamentally changing the relationship between consumers and financial services providers, as well as the function of traditional retail bank networks. Competition with these new actors could be exacerbated by the emergence of substitutes for central bank currency (crypto-currencies, digital central bank currency, etc.).

Moreover, competition is also enhanced by the emergence of non-banking actors that, in some cases, may benefit from a regulatory framework that is more flexible and in particular less demanding in terms of equity capital requirements.

To address these challenges, the Group has implemented a strategy, in particular with regard to the development of digital technologies and the establishment of commercial or equity partnerships with these new actors (such as Lumo, the platform offering green investments, or Shine, the neobank for professionals). In this context, additional investments may be necessary for the Group to be able to offer new innovative services and to be competitive with these new actors. This intensification of competition could, however, adversely affect the Group’s business and results, both on the French market and internationally. Environmental, social and governance (ESG) risks, in particular related to climate change, could have an impact on the Group’s activities, results and financial situation in the short-, medium- and long-term.

Environmental, social and governance (ESG) risks are defined as risks stemming from the current or prospective impacts of ESG factors on counterparties or invested assets of financial institutions. ESG risks are seen as aggravating factors to the traditional categories of risks (credit and counterparty risk, market and structural risk, operational risk, reputational risk, compliance risk, liquidity and funding risk, risks related to insurance activities) and are likely to impact the Group’s activities, results and financial position in the short-, medium- and long-term.

The Group is thus exposed to environmental risks, and in particular climate change risks through its financing, investment and service activities. Concerning climate risks, a distinction is made between (i) physical risk, with a direct impact on entities, people and property stemming from climate change and the multiplication of extreme weather events; and (ii) transition risk, which results from the process of transitioning to a low-carbon economy, such as regulatory or technological disruptions or changes in consumer preferences.

The Group could be exposed to physical risk resulting from a deterioration in the credit quality of its counterparties whose activity could be negatively impacted by extreme climatic events or long-term gradual changes in climate, and through a decrease in the value of collateral received (particularly in the context of real estate financing). The Group’s insurance activities could also be impacted with exposure in regions and countries that are particularly vulnerable to climate change.

The Group may also be exposed to transition risk through its credit portfolio in a limited number of sensitive sectors that are subject to more stringent regulations or due to technological disruptions, and may be exposed to reputation risk in the event it does not comply with its commitments in favor of environmental transition or if these commitments are considered insufficient by its stakeholders.

Beyond the risks related to climate change, risks more generally related to environmental degradation (such as the risk of loss of biodiversity) are also aggravating factors to the Group’s risks. The Group could notably be exposed to credit risk on a portion of its portfolio, linked to lower profitability of some of its counterparties due, for example, to a significant decline in revenues following changes in customer behavior or to increasing legal and operating costs (for instance due to the implementation of new environmental standards).

In addition, the Group is exposed to social risks, related for example to non-compliance by some of its counterparties with labor rights or workplace health and safety issues, which may trigger or aggravate non-compliance, reputational and credit risks for the Group.

Similarly, risks relating to governance of the Group’s counterparties and stakeholders (suppliers, service providers, etc.), such as an inadequate management of environmental and social issues or non-compliance with corporate governance codes related to, among others, anti-money laundering issues, could generate credit and reputational risks for the Group.

Beyond the risks related to its counterparties or invested assets, the Group could also be exposed to risks related to its own activities. Therefore, the Group is exposed to physical climate risk with respect to its ability to maintain its services in geographical areas impacted by extreme events (floods, etc.).

The Group also remains exposed to specific social and governance risks, relating for example to compliance with labor laws, the management of its human resources and ethical issues, transparency or the composition (such as in terms of diversity) of its Board of Directors or staff.

All of these risks could have an impact on the Group’s business, results and reputation in the short-, medium- and long-term. The Group is subject to regulations relating to resolution procedures, which could have an adverse effect on its business and the value of its financial instruments.

The BRRD and Regulation (EU) No. 806/2014 of the European Parliament and of the Council of the European Union of 15 July 2014 (the Single Resolution Mechanism, or “SRM”) define an European Union-wide framework for the recovery and resolution of credit institutions and investment firms. The BRRD provides the authorities with a set of tools to intervene early and quickly enough in an institution considered to be failing so as to ensure the continuity of the institution’s essential financial and economic functions while reducing the impact of the failure of an institution on the economy and the financial system (including the exposure of taxpayers to the consequences of the failure). Under the SRM Regulation, a centralised resolution authority is established and entrusted to the SRB and national resolution authorities. The powers granted to the resolution authority under the BRRD and the SRM Regulations include write-down/conversion powers to ensure that capital instruments and eligible liabilities absorb the Group’s losses and recapitalise it in accordance with an established order of priority (the “bail-in tool”). Subject to certain exceptions, losses are borne first by the shareholders and then by the holders of additional Tier 1 and Tier 2 capital instruments, then by the non-preferred senior debt holders and finally by the senior preferred debt holders, all in the order of their claims in a normal insolvency proceeding. The conditions for resolution provided by the French Monetary and Financial Code implementing the BRRD are deemed to be met if: (i) the resolution authority or the competent supervisory authority determines that the institution is failing or likely to fail; (ii) there is no reasonable perspective that any measure other than a resolution measure could prevent the failure within a reasonable timeframe; and (iii) a resolution measure is necessary to achieve the resolutions’ objectives (in particular, ensuring the continuity of critical functions, avoiding a significant negative effect on the financial system, protecting public funds by minimizing the recourse to extraordinary public financial support, and protecting customers’ funds and assets) and the winding up of the institution under normal insolvency proceedings would not meet these objectives to the same extent.

The resolution authority could also, independently of a resolution measure or in combination with a resolution measure, proceed with the write-down or conversion of all or part of the Group’s capital instruments (including subordinated debt instruments) into equity if it determines that the Group will no longer be viable unless it exercises this write-down or conversion power or if the Group requires extraordinary public financial support (except where the extraordinary public financial support is provided in the form defined in Article L. 613-48 III, 3° of the French Monetary and Financial Code).

The bail-in tool could result in the write-down or conversion of capital instruments in whole or in part into ordinary shares or other ownership instruments.

In addition to the bail-in tool, the BRRD provides the resolution authority with broader powers to implement other resolution measures with respect to institutions that meet the resolution requirements, which may include (without limitation) the sale of the institution’s business segments, the establishment of a bridge institution, the split of assets, the replacement or substitution of the institution as debtor of debt securities, changing the terms of the debt securities (including changing the maturity and/or amount of interest payable and/or the imposition of a temporary suspension of payments), the dismissal of management, the appointment of a provisional administrator and the suspension of the listing and admission to trading of financial instruments.

Before taking any resolution action, including the implementation of the bail-in tool, or exercising the power to write down or convert relevant capital instruments, the resolution authority must ensure that a fair, prudent and realistic valuation of the institution’s assets and liabilities is made by a third party independent of any public authority.

The application of any measure under the French implementing provisions of the BRRD or any suggestion of such application to the Group could have a material adverse effect on the Group’s ability to meet its obligations under its financial instrument and, as a result, holders of these securities could lose their entire investment.

In addition, if the Group’s financial condition deteriorates, the existence of the bail-in tool or the exercise of write-down or conversion powers or any other resolution tool by the resolution authority (independently of or in combination with a resolution) if it determines that Société Générale or the Group will no longer be viable could result in a more rapid decline in the value of the Group’s financial instruments than in the absence of such powers.






This section describes Societe Generale’s risk management approaches and strategies. It describes how the functions in charge of risk management are organised, how these functions guarantee their independence and how they broadcast the risk culture within the Group.





The Pillar 3 report, published under the responsibility of Societe Generale Group’s Senior Management, sets out, in accordance with the CRR regulation, the quantitative and qualitative information on Societe Generale’s capital, liquidity and risk management to ensure transparency in respect of the various market players. This information has been prepared in compliance with the internal control procedures approved by the Board of Directors in the course of the validation of the Group Risk Appetite Framework and Group Risk Appetite Statement, and are based, among other things, on the annual review, by General Management in the Group Internal Control Coordination Committee (GICCC) and by the Risk Committee of the Board of Directors, of Societe Generale’s Risk division, particularly in its ability to exercise its role as the second line of defense for the entire Group.




Risk appetite is defined as the level of risk that the Group is prepared to accept to achieve its strategic and financial goals.

The Group’s ambition is to push ahead with sustainable development based on a diversified and balanced banking model with a strong European anchor and a targeted global presence in selected areas of strong business expertise. The Group also wishes to maintain long-term relationships with its clients built on the mutual confidence deserved and to meet the expectations of all of its stakeholders by providing them with responsible and innovative financial solutions.

This is reflected in:

an organisation with 16 Business Units offering various products and services to the Group’s clients in different geographic locations;

balanced selective capital allocation between activities:


a preponderance of retail banking activities in France and abroad, which currently represent around 60% of risk weighted assets (“RWA”) of the Group,


limitation of Business Unit Global Markets’ share in the RWA of the Group. In accordance with its client-focused development strategy, the Group ceased its trading activities for its own account(1) in 2019, and finalised its project to simplify the products processed in 2021,


non-bank services activities, in particular Insurance and vehicle fleet management and financing, are conducted in line with the business strategy; they demonstrate a disciplined risk profile and thus generate profitability compliant with the Group’s expectations;

a geographically balanced model:


in Retail Banking, the Group focuses on international development leveraging historic presence, extensive market knowledge and top-tier positions,


as regards Global Banking and Investor Solutions, apart from historical establishments, the Group targets activities for which it can leverage international expertise;

a targeted growth policy, favoring existing areas of expertise, a sound quality business fund and the search for synergies in the diversified banking model;

a positive and sustainable contribution to the transformations of our economies, in particular with regard to the technological revolution, and economic, social and environmental transitions; CSR concerns are therefore at the heart of its strategy and the Group’s relationships with stakeholders;

a strong vigilance as regards its reputation, deemed by the Group to be a high-value asset which must be protected.


In accordance with French Banking Law, the few residual trading activities of the Group unrelated to clients were isolated in a dedicated subsidiary called Descartes Trading.


The Group seeks to achieve sustainable profitability, relying on a robust financial profile consistent with its diversified banking model, by:

aiming for profitable and resilient business development;

maintaining a target rating allowing access to financial resources at a cost consistent with the development of the Group’s businesses and its competitive positioning;

calibrating its capital and hybrid debt targets to ensure:


meeting the minimum regulatory requirements on regulatory capital ratios,


compliance with the financial conglomerate ratio which considers the combined solvency of the Group’s banking and insurance activities,


one-year coverage of the “internal capital requirement” using available CET1 capital,


a sufficient level of creditor protection consistent with a debt issuance program that is particularly hybrid consistent with the Group’s objectives in terms of rating and regulatory ratios such as Tier 1, TLAC (“Total Loss Absorbing Capacity”), MREL (“Minimum Required Eligible Liabilities”), and the leverage ratio;

ensuring resilience of its liabilities, which are calibrated by taking into account a survival horizon in a liquidity stress ratio, compliance with LCR (Liquidity Coverage Ratio) and NSFR (Net Stable Funding Ratio) regulatory ratios and the level of dependence on short-term fundings and the foreign exchange needs of the Group’s businesses, particularly in dollars;

controlling the leverage ratio through a leverage ratio target.

Credit risk appetite is managed through a system of credit policies, risk limits and pricing policies.

When it takes on credit risk, the Group focuses on medium- and long-term client relationships, targeting both clients with which the Bank has an established relationship of trust and prospects representing profitable business development potential over the mid-term.

Acceptance of any credit commitment is based on in-depth client knowledge and a thorough understanding of the purpose of the transaction.

In a credit transaction, risk acceptability is based first on the borrower’s ability to meet its commitments, in particular through the cash flows which will allow the repayment of the debt. For medium and long-term operations, the funding duration must remain compatible with the economic life of the financed asset and the visibility horizon of the borrower’s cash flow.

Security interests are sought to reduce the risk of loss in the event of a counterparty defaulting on its obligations, but may not, except in exceptional cases, constitute the sole justification for taking the risk. Security interests are assessed with prudent value haircuts and paying special attention to their actual enforceability.

Complex transactions or those with a specific risk profile are handled by specialised teams within the Group with the required skills and expertise.

The Group seeks risk diversification by controlling concentration risk and maintaining a risk allocation policy through risk sharing with other financial partners (banks or guarantors).

Counterparty ratings are a key criterion of the credit policy and serve as the basis for the credit approval authority grid used in both the commercial and risk functions. The rating framework relies on internal models. Special attention is paid to timely updating of ratings (which, in any event, are subject to annual review(1)).

The risk measure of the credit portfolio is based primarily on the Basel parameters that are used to calibrate the capital need. As such, the Group favors the so-called advanced Basel models (IRBA), which are more risk-sensitive and more adapted to the specific characteristics of the bank’s portfolio. These measures are complemented by an internal stress-sized risk assessment, either at the global portfolio level or at the sub-portfolio level, linking risk measures and rating migration to macro-economic variables. In addition, the calculation of expected losses under the provisions of IFRS 9, used to determine the level of impairment on healthy outstandings, provides additional insight into assessing portfolio risk.

In consultation with the Risk Department, the businesses implement, most of the time, pricing policies that are differentiated according to the level of risk of counterparties and transactions. The purpose of pricing a transaction is to ensure acceptable profitability, in line with the objectives of ROE (Return on Equity) of the business or entity, after taking into account the cost of the risk of the transaction in question. The pricing of an operation can nevertheless be adapted in certain cases to take into account the overall profitability and the potential customer relationship development. The intrinsic profitability of products and customer segments is subject to periodic analysis in order to adapt to changes in the economic and competitive environment.

Proactive management of counterparties whose situation has deteriorated is key to containing the risk of final loss in the event of counterparty failure. As such, the Group has put in place rigorous procedures for monitoring non retail counterparties and/or for closer monitoring of retail counterparties whose risk profiles are deteriorating. In addition, the businesses and entities, in conjunction with the Risk and Finance Departments, and through collaborators specialising in recovery and litigation, work together to effectively protect the Bank’s interests in the event of default.

The future value of exposure to a counterparty as well as its credit quality are uncertain and variable over time, both of which are affected by changes in market parameters. Thus, counterparty credit risk management is based on a combination of several types of indicators:

indicators of potential future exposures (potential future exposures, or PFE), aimed at measuring exposure to our counterparties:


the Group controls idiosyncratic counterparty credit risks via a set of CVaR (Counterparty VaR)(2) limits. The CVaR measures the potential future exposure linked to the replacement risk in the event of default by one of the Group’s counterparties. The CVaR is calculated for a 99% confidence level and different time horizons, from one day until the maturity of the portfolio,


For none automated processes.


The CVaR economic indicator is built on the same modeling assumptions as the regulatory Effective Expected Positive Exposure (EEPE) indicator used to calculate RWAs.


in addition to the risk of a counterparty default, the CVA (Credit Valuation Adjustment) measures the adjustment of the value of our portfolio of derivatives and repos account the credit quality of our counterparties;

the abovementioned indicators are supplemented by stress test frameworks or on nominal ones in order to capture risks that are more difficult to measure:


the more extreme correlation risks are measured via stress tests at different levels (wrong-way risk, stress monitoring at sector level, risk on collateralised financing activities and agency),


the CVA risk is measured via a stress test in which representative market scenarios are applied, notably involving the credit spreads of our counterparties;

exposures to central counterparty clearing houses (CCP) are subject to specific supervision:


the amount of collateral posted for each segment of a CCP: the initial posted margins, both for our principal and agency activities, and our contributions to CCP default funds,


in addition, a stress test measures the impact linked to the default of an average member on all segments of a CCP and the failure of a major member on a segment of a CCP;

the Global Stress Test on market activities includes cross market-counterparty risks, it is described in more detail in the “Market risk” section.

The Group’s market activities are carried out as part of a business development strategy primarily focused on meeting client requirements through a full range of products and solutions.

Market risk is managed through a set of limits for several indicators (such as stress tests, Value at Risk (VaR) and stressed Value at Risk (SVaR), “Sensitivity” and “Nominal” indicators). These indicators are governed by a series of limits proposed by the business lines and approved by the Risk Division during the course of a discussion-based process.

The choice of limits and their calibration reflect qualitatively and quantitatively the fixing of the Group’s appetite for market risks. A regular review of these frameworks also enables risks to be tightly controlled according to changing market conditions with, for example, a temporary reduction of limits in case of a deterioration. Warning thresholds are also in place to prevent the possible occurrence of overstays.

Limits are set at different sub-levels of the Group, thereby cascading down the Group’s risk appetite from an operational standpoint within its organisation.

Within these limits, the Global Stress Test limits on market activities and the Market Stress Test limits play a pivotal role in determining the Group’s market risk appetite; in fact, these indicators cover all operations and the main market risk factors as well as risks associated with a severe market crisis which helps limit the total amount of risk and takes account of any diversification effects.

The Group is exposed to a diversity of operational risks inherent in its business: execution errors, internal and external fraud, IT system failures, malicious acts against IT systems, loss of operational resources, commercial disputes, failure to comply with tax obligations, but also risk of non-compliance, unappropriated behavior or even reputation.

As a general rule, the Group has no appetite for operational risk or for non-compliance risk. Furthermore, the Group maintains a zero-tolerance policy on incidents severe enough to potentially inflict serious harm to its image, jeopardise its results or the trust displayed by customers and employees, disrupt the continuity of critical operations or call into question its strategic focus.

The Group underscores that it has is no or very low tolerance for operational risk involving the following:

internal fraud: the Group does not tolerate unauthorised trading by its employees. The Group’s growth is founded on trust, as much between employees as between the Group and its employees. This implies respecting the Group’s principles at every level, such as exercising loyalty and integrity. The Group’s internal control system must be capable of preventing acts of major fraud;

cybersecurity: The Group has zero tolerance for fraudulent intrusions, in particular those resulting in the theft of customer data or a major operational disruption. The Group intends to introduce effective means to prevent and detect this risk. It is adequately organised to deal with potential incidents;

data leaks: the Group is committed to deploying the necessary resources and implementing controls to prevent, detect and remediate data leaks. It does not tolerate any leaks of its most sensitive information, in particular that of customer data;

business continuity: the Group relies heavily on its information systems to perform its operations and is therefore committed to deploying and maintaining the resilience of its information systems to ensure the continuity of its most essential services. The Group has very low tolerance for the risk of downtime in its information systems that perform essential functions, in particular systems directly accessible to customers or those enabling to conduct business on financial markets;

outsourced services: the Group seeks to achieve a high degree of thoroughness in the control of its activities entrusted to external service providers. As such, the Group adheres to a strict policy of reviewing its providers;

managerial continuity: the Group intends to ensure the managerial continuity of its organisation to avoid the risk of a long-term absence of a manager that would question the achievement of its strategic objectives, which might threaten team cohesion or disrupt the Group’s relationships with its stakeholders.

The Group measures and strictly controls structural risks. The mechanism whereby rate risk, foreign exchange risk and the risk on pension/long-service obligations is controlled is based on sensitivity or stress limits which are broken down within the various businesses (entities and business lines).

There are four main types of risk: rate level risk, curve risk book, optional risk (arising from automatic options and behavioral options) and basis risk, related to the impact of relative changes in interest rates indices. The Group’s structural interest rate risk management primarily relies on the sensitivity of Net Present Value (“NPV”) of fixed-rate residual positions (excesses or shortfalls) to interest rate changes according to several interest rate scenarios. The limits are established either by the Board of Directors or by the Finance Committee, at the Business Unit/Service Unit and Group levels. Furthermore, the Group measures and controls the sensitivity of its net interest margin (“NIM”) on different horizons.

The Group’s policy in terms of structural exchange rate risks consists of limiting as much as possible the sensitivity of its CET1 capital ratio to changes in exchange rates, so that the impact on the CET1 ratio of an appreciation or a depreciation of all currencies against the euro does not exceed a certain threshold in terms of bp by summing the absolute values of the impact of each currency.

Regarding risks to pension and long-service obligations, which are the Bank’s long-term obligations towards its employees, the amount of the provision is monitored for risk on the basis of a specific stress test and an attributed limit. The risk management policy has two main objectives: reduce risk by moving from defined-benefit plans to defined-contribution plans and optimise asset risk allocation (between hedge assets and performance assets) where allowed by regulatory and tax constraints.

Controlling liquidity risk is based primarily on:

compliance with regulatory liquidity ratios, with precautionary buffers: LCR (liquiditycoverage ratio) ratios that reflect a stress situation and NSFR (net stable funding ratio);

the definition of a minimum survival horizon under combined market and idiosyncratic stress;

framing of transformation and anti-transformation positions (price risk).

Controlling financing risk is based on:

maintaining a liability structure to meet the Group’s regulatory constraints (Tier1, Total Capital, Leverage, TLAC, NSFR, MREL) and complying with rating agencies’ constraints to secure a minimum rating level;

recourse to market financing: annual long-term issuance programs and a stock of moderate structured issues and short-term financing raised by supervised treasuries.

The Group is committed to defining and deploying internal standards to reduce model risk on the basis of key principles, including the creation of three independent lines of defence, the proportionality of due diligence according to each model’s level of risk inherent, the consideration of the models’ entire lifecycle and the appropriateness of the approaches within the Group.

The Group conducts Insurance activities (Life Insurance and Savings, Retirement savings, Property & Casualty Insurance, etc.) which exposes the Group to two major types of risks:

subscription risk related to pricing and fluctuations in the claims ratio;

risks related to financial markets (interest rate, credit and equity) and asset-liability management.

The Group has limited appetite for financial holdings, such as proprietary private equity transactions. The investments allowed are mainly related to:

commercial support for the network through the private equity activity of the Societe Generale and Crédit du Nord network and certain subsidiaries abroad;

taking stakes, either directly or through investment funds, in innovative companies via SG Ventures;

the takeover of stakes in local companies: Euroclear, Crédit Logement, etc.

Investments made in private equity are managed directly by the networks concerned (Societe Generale, Crédit du Nord and subsidiaries abroad) and are capped at EUR 25 million. Beyond this limit, the investment envelope must be validated by the Group Strategy Department on the basis of a file produced by the Business Unit with the assistance of its Finance Department. This file aims to justify this amount, the expected benefits, the profitability considering the consumption of associated equity, the characteristics of the investments (criteria, types, duration, etc.), a risk analysis and a governance proposal. If the amount exceeds EUR 50 million, it must be validated by the Group’s General Management, with the support of the opinion of the Strategy Department, the Finance Department, the General Secretariat and the Compliance Department. The Business Unit concerned must submit a report on operations and the investment envelope to the Strategy Department every six months.

The other minority holdings are subject to a dedicated validation process in both the investment and divestment phases: validation by the Managers of the Business Units and entities concerned and their Finance Department, the Strategy Department, or even the Group’s General Management (over EUR 50 million) or the Board of Directors (over EUR 250 million). These files are examined by the Strategy Department based on the opinions of the expert Services and Business Units concerned by the operation (at least the Finance Department, the Legal and Tax Departments within the General Secretariat and the Compliance Department). The instruction is based on an analysis of the participation concerned, the motivations and the investment context, the structuring of the operation, its financial and prudential impacts, as well as an assessment of the risks identified and the means implemented to track and manage them.

The settlement-delivery risk on financial instruments arises when transactions (over-the-counter in cash or forward) give rise to a time lag (usually of a few hours) between the payment and the delivery of the underlying (securities, raw materials, foreign exchange, etc.) during their settlement.

The Group defines a risk appetite for delivery risk in relation to the quality of the counterparty (via its rating) with larger limits granted to counterparties in the investment grade category (IG).




Risk appetite is determined at Group level and attributed to the businesses and subsidiaries. Monitoring of risk appetite is performed according to the principles described in the Risk Appetite Framework governance and implementation mechanism, which are summarised below.

As part of the supervision of risk appetite, the Group relies on the following organisation:

the Board of Directors:


approves each year the Group Risk Appetite Statement and the Group Risk Appetite Framework, as well as the Group Risk Appetite Framework,


approves in particular the main Group risk appetite indicators (Board of Directors indicators) validated beforehand by General Management,


ensures that risk appetite is relevant to the Group’s strategic and financial objectives and its vision of the risks of the macro-economic and financial environment,


reviews quarterly the risk appetite dashboards presented to it, and is informed of risk appetite overruns and remediation action plans,


sets the compensation of corporate officers, sets out the principles of the remuneration policy applicable in the Group, especially for regulated persons whose activities may have a significant impact on the Group’s risk profile, and ensures that they are in line with risk management objectives.

The Board of Directors relies primarily on the Risk Committee.

General Management:


approves the Risk Appetite Statement and its Risk Appetite Framework based on the proposal of the Chief Risk Officer and the Chief Financial Officer,


regularly ensures that risk appetite is complied with,


ensures the effectiveness and integrity of the risk appetite implementation system,


ensures that the risk appetite for the Group’s Business Units and eligible subsidiaries/branches is formalised and translated into frameworks consistent with the Group’s risk appetite,


ensures internal communication of risk appetite and its transposition in the Universal Registration Document.

In addition, the main mission of the Risk Department is to develop the Group’s risk appetite, as well as the implementation of a risk management, monitoring and control system.

The Finance Department contributes to setting this risk appetite in the framework of indicators under the responsibility of the Finance Committee (profitability, solvency, liquidity and structural risks).

The Compliance Department is also responsible for instructing the risk appetite setting for indicators falling within its scope.

The risk identification process is a cornerstone of the Group risk-management framework. It is a Group-wide process to identify all risks that are or might be material. The approach is comprehensive and holistic: it covers all risk types(1) and all Group exposures.

In addition to the annual review of the Group’s risk taxonomy, risk identification process is based on two pillars in order to ensure a complete and up-to-date view of all the material risks facing the Group:

risk management governance and key Committees such as CORISQs or COFI at Group or Business Unit level or New Product Committees making it possible to monitor changes in the risk profile for all types of risk (credit, market, operational, etc.). In addition to monitoring well-identified risks, this governance can also generate a debate between risk experts and senior management on emerging risks. This debate is fueled by the latest market news, early warning signals, internal alerts, and more;

a series of exercises aimed at identifying additional risks, for example arising from changes in macroeconomic or sectoral conditions, financial markets, regulatory constraints, competitors or market pressure, business model (concentration effects) and changes in banking organisations. These additional identification exercises are also organised by risk types, but include some identification of cross-risk effects (e.g. credit and market or credit and operational). For a given type of risk, these exercises analyse and segment the Group’s exposure along several axes (Business Unit, activity, customer, product, region, etc.). The underlying risk factors are identified for the perimeters where this risk is assessed as being significant.

When a significant risk is identified, a risk management system, which may include a quantitative risk appetite (risk ceiling or threshold) or a risk policy, is implemented.

In addition, where possible, the risk factors underlying a significant risk are identified and combined in a dedicated scenario, and the associated loss is then quantified by means of a stress test (see also section “Risk quantification and stress test system”).

For each identified material risk, indicators to measure this risk are introduced to ensure monitoring. These indicators can be based on measurements of outstandings (risk weighted or not), sensitivities to the variation of one or more risk factors (interest rate, etc.), impacts of stress tests based on scenarios, etc. These indicators can be expressed as ratios and are sometimes the subject of regulatory or publication requirements.


Risks are classified on the basis of the Group’s risk taxonomy, which names and defines risk categories and their possible sub-categories.


Regarding more specifically stress tests, or crisis simulations, they assess what would be the behavior of a portfolio, activity, entity or Group in a context of degraded activity.

Within the Group, stress tests contribute to the identification, measurement and management of risks, as well as to the assessment of the adequacy of capital and liquidity to the Group’s risk profile.

Hence, stress tests:

are a preferential measure providing information on the resilience of the Group, its activities and its portfolios, and are an integral part of the process of building risk appetite;

are based on hypothetical economic scenarios defined in conjunction with the Economic and Sectoral Studies Department, or historical scenarios. The stress tests break down these scenarios into impacts on the Group’s activities, by taking into account the reaction capacities of the activities, by systematically combining quantitative methods and expert judgment (risks, finance or business lines);

can also be based on sensitivity analysis (single or multi-factor risk).

The stress test system thus comprises:

a global stress test, integrated into the budget process (Strategic and financial plan), to ensure that the Group’s profile meets its objectives in the event of an adverse scenario, but also to quantify the deterioration in the profitability of the Business Units in this scenario. The stress test system is an integral part of the ICAAP (Internal Capital Adequacy Assessment Process);

specific stress tests by type of risk or portfolio:


stress tests on credit risk complete the overall analysis with a more granular approach, and thus shed light on the fixing of risk appetite at a portfolio, activity, etc. They are also used to refine the identification, measurement and operational management of this risk,


stress tests on market activities are based on historical and hypothetical scenarios and apply to the entire Group. They are supplemented by specific sensitivity stress tests on certain risk factors (rates, equities, etc.) or certain activities (emerging markets, etc.). A stress test limit is established for these different risk measures,


stress tests assess the sensitivity of structural interest rate risk. The exercise focuses on changes in the economic value of assets and liabilities in bank portfolios and on changes in the net interest margin generated by these assets and liabilities. The Group sets limits on these sensitivities in scenarios of translation and deformation (steepening and flattening) of the yield curves,


a stress test on social commitments consists of simulating the impact of variations in market risk factors (inflation, interest rate, etc.) on the Group’s net position (dedicated investments minus the corresponding social commitments). A stress test limit is established on this indicator,


liquidity stress tests,


an assessment of operational risk under stress uses the scenario analysis and loss modeling work to calibrate the Group’s capital requirement regarding operational risk, and makes it possible to understand the exposure to operational losses, including exposure to rare and severe losses not present in the history,


stress tests of insurance activities support the process of defining the risk appetite of the Insurance Business Unit, which is based on minimum profitability and solvency targets for a central and a stressed scenario. The Insurance Business Unit also uses also results from stress tests to define its hedging policy, the distribution of its assets and the dividend distribution policy;

reverse stress tests, both as part of the risk appetite and the recovery plan. The impact of these stress tests is typically defined by a breaking point in the solvency ratio or liquidity indicator, which poses a significant threat to the Bank. Hypothetical scenarios leading to this breaking point are then constructed in order to identify new weaknesses.

In addition to internal stress test exercises, the Group is part of the sample of European banks participating in major international stress test programs piloted by the EBA (European Banking Authority) and the ECB (European Central Bank).

More specifically on climate risk, the Group participated on a voluntary basis in exploratory climate stress exercises organised by the ACPR (Autorité de contrôle prudentiel et de résolution) and the European Banking Authority in 2020. A stress test coordinated by the ECB in which the Group is participating is also being performed in the first half of 2022.



Central scenario

The central scenario is based first of all on a set of observed factors such as recent economic situation and economic policy shifts (budgetary, monetary and exchange-rate policies). From these observed factors, economists calculate the most likely trajectory of economic and financial variables for the desired forecast horizon.

Stressed scenario

The severity of the stressed scenario, which is determined by the deviation of the GDP trajectory from the central scenario, is based on the magnitude of the 2008-2009 crisis and has been adjusted to take into account the impacts - health, economic and financial - of the Covid-19 crisis on the basis of current knowledge. The severity is constantly compared to that of various adverse scenarios produced by reputable institutions such as the ECB, the Bank of England or the Federal Reserve.

The Group’s risk appetite is formalised in a document (“Risk Appetite Statement”) which sets out:

the strategic profile of the Group;

its profile of profitability and financial soundness;

the frameworks relating to the management of the Group’s main risks (qualitative, through risk policies, and quantitative, through indicators).

Regarding the profile of profitability and financial soundness, the Finance Department proposes each year, upstream of the budgetary procedure, to the General Management, financial targets at Group level. These targets, supplemented by alert thresholds and crisis levels according to a “traffic light” approach, allow:

to respect, with a sufficient safety margin, the regulatory obligations to which the Group is subject (in particular the minimum regulatory solvency, leverage and liquidity ratios), by anticipating as best as possible the implementation of new regulations;

to ensure, via a safety margin, sufficient resistance to stress scenarios (stress standardised by regulators or stress defined according to a process internal to the Group).

The frameworks relating to risk management, also represented via a graduated approach (limits, alert thresholds, etc.), result from a process in which the needs expressed by the businesses are confronted with a contradictory opinion independent from the second line defence. The latter is based on:

independent analysis of risk factors;

the use of prospective measures based on stress approaches;

the proposal for a framework.

For the main risks, the frameworks set make it possible to consolidate the achievement of the Group’s financial targets and to orient the Group’s profitability profile.

The allocation of risk appetite in the organisation is based on the strategic and financial plan, and on risk management systems:

based on recommendations by the Finance Department to General Management, the financial targets defined at Group level are broken down into budget allocation targets at business level as part of the budget and the strategic and financial plan;

the breakdown of frameworks and risk policies is based on an understanding of the needs of the businesses and their business prospects and takes into account the profitability and financial strength targets of the Business Unit and/or the entity.




Implementing a high-performance and efficient risk management structure is a critical undertaking for Societe Generale Group in all businesses, markets and regions in which it operates, as is maintaining a balance between strong awareness of risks and promoting innovation. The Group’s risk management, supervised at the highest level, is compliant with the regulations in force, in particular the order of 3 November 2014 revised by the order of 25 February 2021 on the internal control of companies in the banking sector, payment services and investment services subject to the control of the French Prudential Supervisory and Resolution Authority (Autorité de contrôle prudentiel et de résolution – ACPR) and European Regulations Basel 3 (CRR/CRD). (See Board’s Expertise, p. 82 of the 2022 Universal Registration Document).

Two main high-level bodies govern Group risk management: the Board of Directors and General Management.

General Management presents the main aspects of, and notable changes to, the Group’s risk management strategy to the Board of Directors at least once a year (more often if circumstances so require).

As part of the Board of Directors, the Risk Committee (see Art. 11 of the Internal rules of the Board of Directors, p. 85 of the 2022 Universal Registration Document) advises the Board on overall strategy and appetite regarding all kinds of risks, both current and future, and assists the Board when the latter verifies that the strategy is being rolled out.

The Board of Directors’ Audit and Internal Control Committee (see Art. 10 of the Internal Rules of the Board of Directors, p. 84) ensures that the risk control systems operate effectively.

Chaired by General Management, the specialised Committees responsible for central oversight of internal control and risk management are as follows:

the Risk Committee (CORISQ), which met twenty-one times during the 2021 financial year, aims to define the Group’s main orientations in terms of risks (credit and counterparty risks, environmental risks, country, market risk, operational risk, model risk, etc.) within the framework of the risk appetite and the financial targets set by the Board, and to monitor compliance in such respect. Subject to the powers attributed to the Board of Directors, the CORISQ chaired by the Chief Executive Officer, based on proposals from the Risk Division, validates the main decisions relating to the management of these various risks. Along with the Risks Committee, the Major Risks Committee (Comité Grands Risques) is an ad hoc body that validates the commercial strategy and risk-taking with regard to large client groups;

the Finance Committee (COFI), chaired by the Chief Executive Officer, is responsible for setting out the Group’s financial strategy and for managing scarce resources (capital, liquidity, balance sheet, tax capacity). The COFI, based upon proposals from the Finance Division and the Risk Division, validates The Corporate Divisions provide the Group’s General Management with all the information needed to perform its role of managing Group strategy under the authority of the Chief Executive Officer. The Corporate Divisions report directly to General Management;

the Compliance Committee (COMCO), chaired by the Chief Executive Officer, defines the Group’s main guidelines and principles in terms of compliance and monitors, on an annual basis, the quality of the CSR risk management framework (including compliance with the French Duty Care law (’Devoir de Vigilance’) and the Modern Slavery Act UK);

the Digital Transformation Committee (DTCO), chaired by the Chief Executive Officer, in line with the Group Strategy Committee’s decisions, initiates and monitors changes in the information system and the relevant operational model which require approval by General Management due to their cross-business character or to the scale of the envisaged transformation;

the Group Internal Control Coordination Committee (GICCC), chaired by the Chief Executive Officer or, in his absence, by a Deputy Chief Executive Officer, aims to perform the regular review of the internal control framework and of non financial risks of each second line of defense, to assess it in terms of efficiency, consistency and completeness, to take corrective actions and to monitor their implementation;

the Supervisory Internal control coordination committee (SICCC), chaired by the Chief Executive Officer or, if absent, a Deputy Chief Executive Officer or a Deputy General Manager in charge of the area under review, aims to perform the regular review of the internal control framework and of non financial risks of each Business Units/Service Units of the first line of defence, to assess it in terms of efficiency, consistency and completeness, to take corrective actions and to monitor their implementation;

the Non Financial Risks Steering Committee, chaired by the Deputy Chief Executive Officer in charge of Risk and Internal Control supervision of the Group, aims to implement and instruct the orientations taken in the Group Internal Control Coordination Committee (GICCC) and those resulting from the CACI, to ensure the consistency, efficiency and effectiveness of the transformation of non financial risks (NFR) frameworks, to set targets in relation to the roadmaps, to validate, coordinate and steer the evolution of NFR frameworks throughout the Group, to identify risks and alerts related to NFR frameworks, to provide resources, to prioritise and decide on their allocation and to arbitrate if necessary;

the Responsible Commitments Committee (CORESP), chaired by the Chief Executive Officer, deals with topics related to the Group’s commitments and normative framework in CSR (including CSR sectoral policies), culture and conduct, or other topics that have an impact on the Group’s liability and are not already covered by an existing committee;

the Group Provisions Committee (COPRO), chaired by the Chief Executive Officer, meets quarterly and aims to review the Group’s provisions for the quarter in question.

The Group’s Corporate Divisions, which are independent from the core businesses, contribute to the management and internal control of risks.

The Corporate Divisions provide the Group’s General Management with all the information needed to perform its role of managing Group strategy under the authority of the Chief Executive Officer. The Corporate Divisions report directly to General Management.

the Risk Division aims to contribute to the development of the Group’s activities and sustainable profitabilityby developing, with the Finance Department and the Business Units/Service Units, the Group’s risk appetite (declined in the Group’s various businesses) as well as the implementation of a control and monitoring system risks as part of its role as a second line of defence. The Risk Division is under the supervision of the Group Chief Executive Officer.

When performing its work, the Risk Division reconciles independence from the businesses with a close working relationship with the Business Units, which are ultimately responsible for the risks associated with the transactions they initiate.

Accordingly, the Risk Division:


provides hierarchical and functional supervision for the Group’s Risk function,


examines, with the Finance Division, the setting of the Group’s risk appetite through the Group’s Risk Appetite Statement which is proposed to General Management and ultimately approved by the Board of Directors,


identifies all Group risks and identifies future needs,


implements a governance and monitoring system for these risks, including cross-business risks, and regularly reports on their nature and extent to General Management, the Board of Directors and the banking supervisory authorities,


helps define the risk policies, taking into account the objectives of the businesses and the relevant risk issues,


defines or validates the methods and procedures used to analyse, measure, approve and monitor risks,


implements a second-level control to ensure the correct application of these methods and procedures,


assesses and approves transactions and limits proposed by business managers,


defines or validates the architecture of the central risk information system, ensures its suitability to business requirements;

the Finance Division is organised according to three levels of supervision, each reporting to a Deputy Chief Financial Officer:


French Retail Banking, and International Retail Banking and Financial Services,


Global Banking and Investor Solutions,


cross-business functions, bringing together all the areas of expertise that are key to the Finance Division;

It also carries out extensive accounting and finance controls. As such:


the Group Accounting Department is responsible for coordinating the mechanism used to draw up the Group’s consolidated financial statements,


the Experts on Metrics and Reporting Department is responsible for producing the regulatory reports of the Group,


the Mutualised Transactions Processing Department manages the shared service centers of the Finance Division with the support of its Paris teams and the oversight of Finance teams in Bucharest and Bangalore,


the Finance Control Department is responsible for the second-level permanent control system across all the Finance processes,


the Asset and Liability Management Department is in charge of the ALM function for the Group, of controlling the Group’s liquidity and exchange rate risks, as well as the operational management of ALM for the Societe Generale Parent Company (SGPM);

The other cross-business functions perform various tasks for the Finance Division, in particular with the Finance Division of the Group Service Units, Group Investor Relations and Financial Communication, Human Resources and the Corporate Secretary.

the Finance Departments of the Business Units and Service Units, which report hierarchically to the Group Finance Division, ensure that the financial statements are prepared correctly at local level and control the quality of the information in the Financial Reports (accounting, management control, regulations, etc.);

the Group Compliance Division is responsible for the definition and consistency of the non-compliance risk prevention and control framework, related to banking and financial regulation and for coordinating the framework aimed at preventing, identifying, assessing and controlling non-compliance risk across the entire Group. It ensures that roles and responsibilities are identified with the appropriate level of expertise so that the regulatory watch framework and related normative documentation, including its deployment, are operational. In particular, it takes care to harmonise procedures and optimise (in conjunction with the BU/SUs) international resources in order to ensure the framework’s effectiveness and compliance with its rules. Within this framework, it has hierarchical and functional authority over the compliance teams of Group entities;

The Group Compliance Service Unit is organised around three broad categories of non-compliance risks :


financial security: know your customer (KYC); compliance with the rules and regulations on international sanctions and embargoes; countering money laundering and terrorist financing (AML/CTF), including reporting suspicious transactions to the appropriate financial intelligence authority when necessary,


regulatory risks: customers protection; integrity of the financial markets; countering bribery and corruption, ethics and good conduct; compliance with regulations related to tax transparency (based on knowledge of clients’ tax profile); compliance with regulations on social and environmental responsibility and the Group’s commitments,


protection of data, including personal data and in particular those of customers;

the Corporate Secretary brings together:


the Group Legal Department, which ensures in particular the security and legal regularity of the Group’s activities, drawing on the legal services of subsidiaries and branches where applicable,


the Group Tax Department, which ensures compliance with tax laws in France and abroad,


the Group Security Department, which oversees the Group’s security in conjunction with the Service Unit of the Resources and Digital Transformation Department regarding the security of information systems,


the Group’s Administrative Department, which provides the Group’s central administration services and provides support, as necessary, to the Secretary of the Board of Directors;

the Human Resources and Communication Department monitors the implementation of compensation policies, amongst other things;

the Corporate Resources and Innovation Department is specifically responsible for defining the policies to be applied in matters of information systems and information systems security policies;

the Group Internal Audit and General Inspection Department is in charge of internal audits and reports to the Head of Group Internal Audit.

Finally, the Sustainable Development Department reporting to General Management assists the Deputy Chief Executive Officer in charge of all ESG (CSR) policies and their effective translation into the trajectories of businesses and functions. It supports the Group’s CSR transformation to make it a major competitive advantage both in business development and in E&S risk management. the Sustainable Development Department provides advice to the General Management through three main tasks:


the definition and strategic management of the Group’s CSR ambition,


support for the CSR transformation of Business and Service Units,


the contribution towards promoting the Group’s CSR influence.

According to the last census carried out (on 31 December 2021), the full-time equivalent (FTE) workforce of :

the Group’s Risk Department for the second line of defence represents approximately 4,609 FTEs (1,550 within the Group’s Risk Department itself and 3,059 for the rest of the Risk function);

the Compliance Department or the second line of defence represents approximately 2,870 FTEs;

the Information System Security Department totals approximately 635 FTEs.

The Group’s risk measurement systems serve as the basis for the production of internal management reports allowing the monitoring of the Group’s main risks (credit risk, counterparty, market, operational, liquidity, structural, settlement/delivery) as well as the monitoring of compliance with the regulatory requirements.

The risk reporting system is an integral part of the Group’s risk management system and is adapted to its organisational structure. The various indicators are thus calculated at the level of the relevant legal entities and Business Units and serve as the basis for the various reportings. Departments established within the Risk, Finance and Compliance sectors are responsible for measuring, analysing and communicating these elements.

Since 2015, the Group has defined architecture principles common to the Finance and Risk functions, the TOM-FIR principles (Target Operating Model for Finance & Risk), in order to guarantee the consistency of the data and indicators used for internal management and regulatory production. The principles revolve around:

Risk and Finance uses, whether at the local level and at the various levels of consolidation subject to an organised system of “golden sources”, with a collection cycle adapted to the uses;

common management rules and language to ensure interoperability;

consistency of Finance and Risk usage data, via strict alignment between accounting data and management data.

The Group produces, via all of its internal reports for internal monitoring purposes by the Business Units and Service Units, a large number of risk metrics constituting a measure of the risks monitored. Some of these metrics are also produced as part of the transmission of regulatory reports or as part of the publication of information to the market.

The Group selects from these metrics a set of major metrics, able to provide a summary of the Group’s risk profile and its evolution at regular intervals. These metrics concern both the Group’s financial rating, its solvency, its profitability and the main risks (credit, market, operational, liquidity and financing, structural, model) and are included in the reports intended for internal management bodies.

They are also subject to a framework defined and broken down in line with the Group’s risk appetite, giving rise to a procedure for reporting information in the event of breaches.

Thus, the risk reports intended for the management bodies are guided in particular by the following principles:

coverage of all significant risks;

combination of a global and holistic view of risks and a more in-depth analysis of the different types of risk;

overview supplemented by focus on certain specific scopes, forward-looking elements (based in particular on the presentation of elements on the evolution of the macro-economic context) and elements on emerging risks;

balance between quantitative data and qualitative comments.

The main Risk reports for management bodies are:

monthly reporting to the Risk Committee of the Board of Directors aims to provide an overview of changes in the risk profile.

A dashboard for monitoring the Group’s Risk Appetite Statement indicators is also sent quarterly to the Board of Directors. These indicators are framed and presented using a “traffic light” approach (with distinction between thresholds and limits) in order to visually present monitoring of compliance with risk appetite. In addition, a compliance dashboard and a reputation dashboard are sent to the Risk Committee of the Board of Directors and provide an overview of each non-compliance risk.

monthly reporting to the Group Risk Committee (CORISQ) aims to regularly provide this committee with a risk analysis under its supervision, with a greater level of detail than reporting to the Risk Committee of the Board of Directors. In particular, a summary of the main credit files over the period covered by the reporting is presented;

reporting to the Finance Committee (COFI) for General Management gives rise in particular to the following two reports: a “Scarce resources trajectory” report allowing budget execution to be monitored and a “Structural risk monitoring (ALM)” report » making it possible to monitor compliance with the thresholds and limits relating to liquidity risks and structural interest and exchange rate risks;

the quarterly reporting of the Group Compliance Committee (COMCO) to General Management: the COMCO provides via dedicated reporting an overview of the main non-compliance risks, raises points of attention on compliance topics Group, decides on the main orientations and defines the Group principles in terms of compliance;

the quarterly reporting of the Provisions Committee (COPRO) to General Management is intended to provide an overview of changes in the level of provisions at Group level. In particular, it presents the change in the net charge of the cost of risk by pillar, by Business Unit and by stage;

reporting by the Group Internal Control Coordination Committee (GICCC) to General Management: this committee reviews, on the basis of a standardised dashboard for all Business Units/Service Units, the efficiency and the consistency of the permanent control system implemented within the Group, as well as, within the framework of the Risk Internal Governance Assessment (RIGA) process, the ability of the Risk function to exercise its role as the 2nd line of defence in the whole group. Finally, the Risk Department contributes, as a permanent member, to all GICCC meetings, through position papers on the subjects under review.

Although the above reports are used at Group level to monitor and review the Group’s risk profile in a global manner, other reports are transmitted to the Board of Directors or to the General Management in order to monitor and control certain types specific risks.

Ad hoc reports can also be produced. By way of illustration, the Group had to adapt its risk management system from the start of the Covid-19 crisis in March 2020. Governance was also strengthened during this period thanks to the activation of cells crisis and the implementation of dedicated reports, whether intended for General Management, the Board of Directors or the supervisor, produced at a higher frequency and including indicators adapted to the context (monitoring of sectors of activity sensitive/weakened by the economic crisis, business continuity, etc.). This crisis mechanism was gradually eased in 2021.

Additional information on risk reporting and assessment systems by type of risk is also presented in the following chapters.


Presentation of the reform

The interest rate benchmark reform (IBOR: InterBank Offered Rates), initiated by the Financial Stability Board in 2014, aims at replacing these benchmark rates with alternative rates, in particular the Risk-Free Rates (RFR). This reform accelerated on 5 March 2021, when the Financial Conduct Authority, the supervisor of LIBOR, announced the official dates for the cessation of loss of representativeness:

EUR and CHF LIBOR (all terms); GBP and JPY LIBOR (terms: overnight, one week, two months and twelve months); LIBOR USD (terms: one week and two months): the publication of these benchmark settings contributed by a panel of banks has permanently ceased as of 1 January 2022;

LIBOR GBP and JPY (terms: one, three and six months): these settings have not been contributed by a panel of banks since 1 January 2022 and are, from now on, published in a synthetic form; thus, their use is restricted to the wind-down of legacy positions;

LIBOR USD (terms: overnight, one, three, six and twelve months): the cessation of the publication of these benchmark settings contributed by a panel of banks is scheduled for end June 2023.

Besides, regarding the major euro area interest rate benchmark indexes:

EURIBOR: EMMI (European Money Markets Institute), administrator of the index, does not plan to cease its publication. The EURIBOR will thus be maintained in the coming years;

EONIA: Its publication ceased definitively on 3 January 2022. The successor rate recommended by the European Central Bank working group on the euro area is the €STR on which the EONIA was based since end 2019.

In parallel, other interest rate indexes based on LIBOR are also subject to reform (e.g.: SOR, MIFOR, THBFIX, ICE swap rate…). Local regulators or administrators continue clarifying the roadmap and issuing recommendations to reduce the risks associated with these transitions.

Impact of the reform for the Societe Generale Group

The Societe Generale Group supports these reforms and takes an active part in the working groups set up by the central banks of the currencies concerned. The Group is actively preparing for these changes, through specific transition program put in place in Summer 2018 and supervised by the Finance division.

For this purpose, the Group has undertaken active awareness and communication campaigns for its customers, supplemented by a monthly newsletter and a question and answer kit on the IBOR transition publicly available on the Societe Generale website.

With the cessation deadlines announced for LIBOR and EONIA in mind, the public authorities and the working groups set up by the central banks issued recommendations to the industry. These recommendations aim at stopping the production of new contracts referencing these indexes as well as at migrating the existing contracts referencing said indexes to alternative benchmark rates.

To ensure a consistent approach throughout the Societe Generale group, an internal Committee has been formed. Its role is to issue periodical orientations reflecting the market trends and recommendations from regulators and their working groups. At the time of writing of this note, ten internal guidelines have been issued and cover three main themes:

strengthening of the new contracts through the inclusion of fallback clauses and risk warnings;

cessation of the production of new transactions referencing LIBOR and EONIA (with some exceptions provided for by regulators on USD LIBOR) and use of alternative solutions;

fair and homogenous treatment of customers through the involvement of the compliance teams in the renegotiations of contracts.

At this stage, all directives are applied and widely circulated among the Group staff.

In order to acquire the capacity to deal on products referencing RFRs and thus ensure the continuity of its business after the disappearance of LIBOR and EONIA, the Societe Generale group updated its tools and processes in line with the major calculation methods recommended by the relevant working groups or professional associations. Nevertheless, the Group continues monitoring the developments in the use of RFRs and other alternative rates in order to implement any new conventions and meet its customers’ needs.

The progressive cessation of the production of new products indexed on LIBOR and EONIA started in Spring 2021 and the Societe Generale group has been offering to guide its customers towards alternative solutions since then. In parallel, the Group has introduced fallback clauses in line with the market standards in the new contracts that remain indexed on the IBOR indexes (EURIBOR included).

In 2021, the Group focused its action on transitioning its agreements referencing GBP LIBOR, CHF LIBOR, JPY LIBOR, and EUR LIBOR, as well as EONIA. This transition concerned in the first instance the customers of the investment banking and financing and advisory activities and, to a lesser extent, some customers of the French and International retail networks. Depending on the products, the transition has, overall, been carried out according to three major modalities:

loans and credit lines are subject to individual renegotiations, together with the related hedging instruments, in order to maintain their effectiveness;

most of the derivative products have been transitioned at the instigation of the clearing houses or through the activation of their fallback clauses (protocol set up by the ISDA and to which the Societe Generale group acceded in October 2020). Some derivative products have, however, been renegotiated bilaterally;

lastly, for some products (typically: cash accounts and similar), the transition has been done through an update of the general conditions.

In parallel, the Societe Generale group ensured that transitional solutions were provided regarding the few issuances having an early call option dependant on LIBOR in the event that these options were not exercised, The only issuance directly indexed to JPY LIBOR rate (ISIN JP525016CF64) has been switched to TONA RFR in December 2021 via a consent solicitation.

At the end of December 2021, the Societe Generale group considers that it has achieved more than 99.5% of its legal transition programme regarding the contracts on indexes ending or ceasing to be representative at the end of 2021. The remainder corresponds mainly to contracts being renegotiated at that date and for which the use of synthetic LIBORs will allow for the transition at the beginning of 2022.

Regarding the contracts referencing the major terms of USD LIBOR, and due to their disappearance scheduled for end of June 2023, the Societe Generale group has not yet launched a massive transition of its current stock but aims at completing it in June 2023. However, the Group offers a proactive switch to alternative solutions whenever it interacts with customers and supports customers wishing to opt in early in their transition process.

The table below presents an estimate of the exposures related to the contracts impacted by the benchmark reform and whose term is scheduled beyond the official cessation dates.

This table has been produced based on the project monitoring data and on the legal status of the contracts migration. At the end of January 2022, there were no significant exposures on the indexes ceasing to be representative as at 31 December 2021.

(In EURbn)



Current interest rate benchmarks(5)

New risk-free rates liable

to replace the current interest

rate benchmarks

Outstanding principal



assets(2) (excl.


impacted by

the reform





impacted by

the reform


impacted by

the reform

Indices whose listing ends on 31/12/2021 – Exposures as at 31 January 2022




EONIA - Euro OverNight Index Average

Euro Short-Term Rate (€STR)




LIBOR - London Interbank Offered Rate – GBP

Reformed Sterling Overnight Index Average (SONIA)




LIBOR - London Interbank Offered Rate - CHF

Swiss Average Rate Overnight (SARON)




LIBOR - London Interbank Offered Rate – JPY

Tokyo OverNight Average (TONA)




LIBOR - London Interbank Offered Rate – EUR

Euro Short-Term Rate (€STR)




Indices whose listing ends on 30/06/2023 – Exposures as at 30 November 2021




LIBOR - London Interbank Offered Rate - USD

Secured Overnight Financing Rate (SOFR)




SOR - Singapore Dollar Swap Offer Rate

Singapore Overnight Rate Average (SORA)





Notional used in combination with an interest rate benchmark in order to calculate derivative cash flows.


Including accounts receivable, loans, securities received under repurchase agreements, debt securities bearing interest at variable rates.


Including deposits, borrowings, transactions on securities delivered under repurchase agreements, debt issued in the form of securities bearing interest at variable rates.


Including firm instruments (swaps and futures) and conditional instruments.


Only the major interest rate benchmarks impacted by the IBOR reform are presented in this table. The EURIBOR construction methodology was reformed in 2019 and revised in 2020. Its cessation was announced neither by EMMI – its administrator - nor by ESMA – its regulator. Contracts exposed to this rate are therefore no longer presented in this table.



The risks related to the IBOR reform are now mainly limited to USD LIBOR for the period running until June 2023. They remain managed and monitored within the governance framework dedicated to the IBOR transition. They have been identified as follows:

program governance and execution risk, liable to cause delays and loss of opportunities, is monitored as part of the work of regular Committees and arbitration bodies;

legal documentation risk, liable to lead to post-transition litigations, is managed through fallback clauses inserted in the contracts depending on the availability of market standards;

market risk, with the creation of a basis risk between the rate curves associated with the different indexes, is the subject of close monitoring and supervision;

operational risks in the execution of the transition of transactions, depending in particular on the willingness and preparedness of our counterparties, the volume of transactions to be migrated and their spread over time;

liquidity risk related to increased drawdowns in a context of increased credit costs; the relevance of the integration of this component into the liquidity models will be assessed during the annual review of the drawdown models;

regulatory risk managed according to the Group guidelines which are in line with the recommendations of the regulators and working groups on the LIBOR transition; these guidelines concern the products which, by exception, continue referencing USD LIBOR;

misconduct risk, related to the end of LIBOR, notably managed through:


specific guidelines detailed by business line,


training of the teams,


communications to customers (conferences, events, bilateral discussions in particular with the less informed customers) are organized on the transition-related risks, the alternative solutions that may be implemented, and on how they could be affected.







This section describes the framework and application of internal control at Societe Generale.




Internal control is part of a strict regulatory framework applicable to all banking institutions.

In France, the conditions for conducting internal controls in banking institutions are defined in the Order of 3 November 2014 modified by the Order of 25 February 2021. This Order, which applies to all credit institutions and investment companies, defines the concept of internal control, together with a number of specific requirements relating to the assessment and management of the various risks inherent in the activities of the companies in question, and the procedures under which the supervisory body must assess and evaluate how the internal control is carried out.

The Basel Committee has defined four principles – independence, universality, impartiality, and sufficient resources – which underpin the internal control carried out by credit institutions.

The Board of Directors ensures that Societe Generale has a solid governance system and a clear organization ensuring:

a well-defined, transparent and coherent sharing of responsibilities;

effective procedures for the detection, management, monitoring and reporting of risks to which the Company could be exposed.

The Board tasks the Group’s General Management with rolling out the Group’s strategic guidelines to implement this set-up.

The Audit and Internal Control Committee is a Board of Directors’ Committee that is specifically responsible for preparing the decisions of the Board in respect of internal control supervision.

As such, General Management submits reports to the Audit and Internal Control Committee on the internal control of the Group. The Committee monitors the implementation of remediation plans when it considers the risk level to be justified.

Internal control is based on a body of standards and procedures.

All Societe Generale Group activities are governed by rules and procedures contained in a set of documents referred to collectively as the “Standard Guidelines”, compiled in the Societe Generale Code, which:

set out the rules for action and behavior applicable to Group staff;

define the structures of the businesses and the sharing of roles and responsibilities;

describe the management rules and internal procedures specific to each business and activity.

The Societe Generale Code groups together the standard guidelines which, in particular:

define the governance of the Societe Generale Group, the structures and duties of its Business Units and Services Units, as well as the operating principles of the cross-business systems and processes (Codes of Conduct, charters, etc.);

set out the operating framework of an activity and the management principles and rules applicable to products and services rendered, and also define internal procedures.

The Societe Generale Code has force of law within the Group and falls under the responsibility of the Group Corporate Secretary.

In addition to the Societe Generale Code, operating procedures specific to each Group activity are applied. The rules and procedures in force are designed to follow basic rules of internal control, such as:

segregation of functions;

immediate, irrevocable recording of all transactions;

reconciliation of information from various sources.

Multiple and evolving by nature, risks are present in all business processes. Risk management and control systems are therefore key to the Bank’s ability to meet its targets.

The internal control system is represented by all methods which ensure that the operations carried out and the organization and procedures implemented comply with:

legal and regulatory provisions;

professional and ethical practices;

the internal rules and guidelines defined by the Company’s management body of the undertaking in its executive function.

Internal control in particular aims to:

prevent malfunctions;

assess the risks involved, and exercise sufficient control to ensure they are managed;

ensure the adequacy and effectiveness of internal processes, particularly those which help safeguard assets;

detect irregularities;

guarantee the reliability, integrity and availability of financial and management information;

check the quality of information and communication systems.

The internal control system is based on five basic principles:

the comprehensive scope of the controls, which cover all risk types and apply to all the Group’s entities;

the individual responsibility of each employee and each manager in managing the risks they take or supervise, and in overseeing the operations they handle or for which they are responsible;

the responsibility of functions, in line with their expertise and independence, in defining normative controls and, for three of them, exercising second-level permanent control;

the proportionality of the controls to the materiality of the risks involved;

the independence of internal auditing.

The internal control framework is based on the “three lines of defense” model, in accordance with the Basel Committee and European Banking Authority guidelines:

the first line of defense comprises all Group employees and operational management, both within the Business Units and the Services Units in respect of their own operations.

Operational management is responsible for risks, their prevention and their management (by putting in place first-level permanent control measures, amongst other things) and for implementing corrective or remedial actions in response to any deficiencies identified by controls and/or process steering;

the second line of defense is provided by the risk and compliance functions, as well as by the finance function for the year 2021 (from the financial year 2022, the finance function will fall under the first line of defense).

Within the internal control framework, operational management is responsible for verifying the proper and continuous running of the risk security and management operation functions through the effective application of established standards, defined procedures, methods and requested controls.

Accordingly, these functions must provide the necessary expertise to define in their respective fields the controls and other means of risk management to be implemented by the first line of defense, and to ensure that they are effectively implemented; they conduct second-level permanent control over all of the Group’s risks, based in particular on the controls they have defined, as well as those defined, if necessary, by other expert functions (e.g. sourcing, legal, tax, human resources, information system security, etc.) and by the businesses;

the third line of defense is provided by the Internal Audit Division, which encompasses the General Inspection and Internal Audit functions. This division performs periodic internal audits that are strictly independent of the business lines and the permanent control function;

internal control coordination, which falls under the responsibility of a Deputy Chief Executive Officer for the year 2021 and the Chief Executive Officer from 2022, is also provided at Group level and is rolled out in each of the divisions and core businesses.



A Deputy Chief Executive Officer for 2021 and the Chief Executive Officer from 2022 is responsible for ensuring the overall consistency and effectiveness of the internal control system.

The Internal Control Coordination Committee is responsible for providing a consolidated overview of the Group’s internal control framework, assessing its effectiveness, completeness and consistency, taking corrective measures, and monitoring their implementation.

It is chaired by the Deputy Chief Executive Officer for 2021 and the Chief Executive Officer from 2022 and comprises the Chief Risk Officer, the Chief Financial Officer, the Group Chief Compliance Officer, the Group Chief Information Officer, the Head of Group Internal Audit, and the Head of Internal Control Coordination.

The Group Internal Control Coordination Committee met nine times in 2021. It addressed the following issues:

review of the effectiveness and consistency of the Group internal control framework;

review of the effectiveness of the permanent control in the Risk, Compliance and Finance Service Units, as well as the ability of the Risk and Compliance functions to exercise their role as the Second Line of Defense for the Group;

review of the Group quarterly permanent control dashboard prior to its communication to the Group Audit and Internal Control Committee (CACI);

cross-business review of cybersecurity controls and outsourced activities controls.

The Supervisory Internal Control Coordination Committee (SICCC) performs the regular review of the internal control framework and of risks of every second BU/SU, assessing it in terms of efficiency, consistency and completeness, taking corrective actions and monitoring their implementation.

It is chaired by the representative of General Management (Chief Executive Officer Deputy Chief Executive Officer or Deputy General Manager) in charge of the area under review and brings together the Heads of the second line of defense (CPLE, DFIN, RISQ), the Head of the Group’s Information Systems (RESG), the Head of the third line of Defense (IGAD), the Head of the Permanent Control Framework and the Coordination of Internal Control (DGLE/PIC), as well as the Heads Business Units and Service Units concerned with the agenda and transversal functions according to the agenda.

The organization implemented at Group level to coordinate the actions of the various participants in internal control is coordinated in each Business Unit (BU) and Service Unit (SU). All of the Group’s BUs and SUs have an Internal Control Coordination Committee. Chaired by the Head of the Business Unit or the Service Unit, these Committees bring together the competent Heads of Internal Audit and Permanent Control for the Business Unit and Service Unit in question, as well as the Head of Group Internal Control Coordination and the Heads of the Group-level control functions.

The Group’s permanent control system comprises:

the first-level permanent control, which is the basis of the Group’s permanent control, is performed by the businesses. Its purpose is to ensure the security, quality, regularity and validity of transactions completed at operational level;

the second-level permanent control, which is independent of the businesses and concerns three divisions, i.e. the Compliance, Risk and Finance Divisions.

In 2018, General Management initiated a transformation program of the Group’s permanent control system, which is under its direct supervision. Through a set of actions focusing on areas such as standards, methods, tools, procedures and training, the program served to consolidate the control culture and optimize risk control, and thus helps to improve the quality and the reliability of services provided to our customers and partners. In 2021, this program has been finalized and closed, and the transfer of the long-term activities to operating teams has been completed.

Permanent Level 1 controls, carried out on operations performed by BUs and the SUs, ensure the security and quality of transactions and the operations. These controls are defined as a set of provisions constantly implemented to ensure the regularity, validity, and security of the operations carried out at operational level.

The permanent Level 1 controls consist of:

any combination of actions and/or devices that may limit the likelihood of a risk occurring or reduce the consequences for the Company: these include controls carried out on a regular and permanent basis by the businesses or by automated systems during the processing of transactions, automated or non-automated security rules and controls that are part of transaction processing, or controls included in operational procedures. Also falling into this category are the organizational arrangements (e.g., segregation of duties) or governance, training actions, when they directly contribute to controlling certain risks;

controls performed by managers: line managers control the correct functioning of the devices for which they are responsible. As such, they must apply formal procedures on a regular basis to ensure that employees comply with rules and procedures, and that Level 1 controls are carried out effectively.

Defined by a Group entity within its scope, Level 1 controls include controls (automated or manual) that are integrated into the processing of operations, proximity controls included in operating procedures, safety rules, etc. They are carried out in the course of their daily activities by agents directly in charge of an activity or by their managers. These controls aim to:

ensure the proper enforcement of existing procedures and control of all risks related to processes, transactions and/or accounts;

alert management in the event of identified anomalies or malfunctions.

Permanent Level 1 controls are set by management and avoid, as far as possible, situations of self-assessment. They are defined in the procedures and must be traced without necessarily being formalized, e.g. preventive automated controls that reject transations that do not comply with system-programmed rules.

In order to coordinate the operational risk management system and the permanent Level 1 control system, the BUs/SUs deploy a specific department called CORO (Controls & Operational Risks Office Department).

The permanent Level 2 control ensures that the Level 1 control works properly:

the scope includes all permanent Level 1 checks, including managerial supervision checks and checks carried out by dedicated teams;

this review and these audits aim to give an opinion on (i) the effectiveness of Level 1 controls, (ii) the quality of their implementation, (iii) their relevance (including, in terms of risk prevention), (iv) the definition of their modus operandi, (v) the relevance of remediation plans implemented following the detection of anomalies, and the quality of their follow-up, and thus contribute to the evaluation of the effectiveness of Level 1 controls.

The permanent level 2 control, control of the controls, is carried out by teams independent of the operational.

These controls are performed centrally by dedicated teams within Risk Service Unit (RISQ/CTL), Compliance Service Unit (CPLE/CTL) and Finance Service Unit (DFIN/CTL) and locally by the second-level control teams within the BU/SUs or entities.

Reporting to the Group Head of Inspection and Audit, the Inspection and Audit Service Unit (IGAD) is the Group’s third line of defense.

The IGAD Service Unit comprises General Inspection (IGAD/INS), Internal Audit Departments (IGAD/AUD) and a support function (IGAD/COO). To fulfill its mandate, the Group’s IGAD Service Unit has adequate resources from a qualitative and quantitative point of view. The Group’s Inspection and Audit Service Unit has about 1,100 employees.

The Group Head of Inspection and Audit reports directly to the Group Chief Executive Officer, with whom it holds regular meetings. The Group Head of Inspection and Audit meets regularly with the Chairman of the Board of Directors. The Audit and Internal Control Committee and the Risk Committee refer to the Group Head of Inspection and Audit on their initiative or at his request on any subject. The Group Head of Inspection and Audit participates in the Internal Control Committee and the Risk Committee meetings. Moreover, bilateral meetings are held as needed between the Group Head of Inspection and Audit and the chairpersons of these Committees.

The Inspection and Audit Service Unit (IGAD) is part of the Group’s internal control framework. IGAD carries out an internal audit mandate through its missions. In its role as the third line of defense, it is strictly independent from the Group’s business units and permanent control functions.

In line with standards set by the IIA (Institute of Internal Auditors), IGAD’s internal audit mandate is defined as an independent and objective activity that provides the Group with assurance as to how effectively it is controlling its operations, advises on improvements and contributes to the creation of added value. By carrying out this mandate, Inspection and Internal Audit help the Group to achieve its targets by evaluating systematically and methodically its processes for risk management, control and corporate governance and making recommendations to increase their efficiency.

The Inspection and Audit Service Unit exercises a key role in the Group’s risk management set-up and can assess any of its components.

Under this mandate, the General Inspection and Internal Audit assess (i) the quality of risk management within an audited scope, (ii) the permanent control framework is adequately structured and effective, (iii) management’s risk awareness and compliance with conduct rules and expected professional practices.

Whilst Audit Departments perform solely an internal audit role, General Inspection has, in addition to its internal audit role, a mandate to undertake other assignments such as any type of analysis or research, be involved in the assessment of strategic projects or intervene on specific subjects as requested by General Management. Such assignments, limited with regards to resources dedicated to them, are carried out within a framework ensuring that ethical principles defined in Institute of Internal Auditors’ Standards are being met.

The General Inspection also supervises the rollout of data-analysis initiatives within the scope of Inspection and Audit activities. This mission is ensured via a dedicated data-lab (INS/DAT), under the responsibility of an Inspection Managing Director (Inspecteur principal). The General Inspection also supervises and coordinates the Service Unit’s relationship with regulators.

IGAD centrally has six distinct Audit Departments. Each of these Audit Departments is placed under the supervision of a Head of internal Audit responsible for the auditing on a specific scope of activities. A matrix organization allows coverage of the main cross-business issues at Group level. In France, the Internal Audit teams are hierarchically linked to the Inspection unit. Audit Department heads based in branches or affiliates overseas report to the local entity’s head. However, in their internal audit role they report directly to the Internal Audit Head in charge of their region or entity.

Inspection and Audit teams work together on an annual risk assessment to define the Inspection and Audit plans for the upcoming year. IGAD teams regularly work together on joint assignments. They issue recommendations to correct issues identified in risk management and generally improve operations and risk management. IGAD teams are subsequently in charge of monitoring the effective implementation of these recommendations.




There are many participants in the production of financial data:

the Board of Directors, and more specifically its Audit and Internal Control Committee, has the task of examining the draft financial statements which are to be submitted to the Board, as well as verifying the conditions under which they were prepared and ensuring not only the relevance but also the consistency of the accounting principles and methods applied. The Audit and Internal Control Committee’s remit also is to monitor the independence of the Statutory Auditors, and the effectiveness of the internal control, measurement, supervision and control systems for risk related to the accounting and financial processes. The Statutory Auditors meet with the Audit and Internal Control Committee during the course of their assignment;

the Group Finance Division gathers the accounting and management data compiled by the subsidiaries and the Business Units/Services Units in a set of standardized reports. It consolidates and verifies this information so that it can be used in the overall management of the Group and disclosed to third parties (supervisory bodies, investors, etc.). It also has a team in charge of the preparation of the Group regulatory reports.

In the framework of these missions, it is in charge of:


monitoring the financial aspects of the Group’s capital transactions and its financial structure,


managing its assets and liabilities, and consequently defining, managing and controlling the Group’s financial position and structural risks,


ensuring that the regulatory financial ratios are respected,


defining accounting and regulatory standards, frameworks, principles and procedures for the Group, and ensuring that they are observed,


verifying the accuracy of all financial and accounting data published by the Group;

the Finance Divisions of subsidiaries and Business Units/Services Units carry out certification of the accounting data and entries booked by the back offices and of the management data submitted by the front offices. They are accountable for the financial statements and regulatory information required at the local level and submit reports (accounting data, finance control, regulatory reports, etc.) to the Group Finance Division. They can perform these activities on their own or else delegate their tasks to Shared Service Centers operating in finance and placed under Group Finance Division governance;

the Risk Division consolidates the risk monitoring data from the Group’s Business Units/Services Units and subsidiaries in order to control credit, market and operational risks. This information is used in Group communications to the Group’s governing bodies and to third parties. Furthermore, it ensures in collaboration with the Group Finance Division, its expert role on the dimensions of credit risk, structural liquidity risks, rates, exchange rates, on the issues of recovery and resolution and the responsibility of certain closing processes, notably the production of solvency ratios;

the Back offices are responsible for all support functions to front offices and ensure contractual settlements and deliveries. Among other responsibilities, they check that financial transactions are economically justified, book transactions and manage means of payment.

Local financial statements are drawn up in accordance with local accounting standards, and the consolidated Group financial statements are prepared in accordance with the standards defined by the Group Finance Division, which are based on IFRS as adopted by the European Union.

The applicable standards on solvency and liquidity, promulgated by the Basel Committee, were translated into European law by a directive (CRD4) and a regulation (CRR). They were completed by the Regulation CRR2 and the Directive CRD5 which entered into force on 28 June 2019. These texts are supplemented by several delegated acts and implementation technical standards. As the Societe Generale Group is identified as a “financial conglomerate”, it is subjected to additional supervision.

The Group Finance Division has dedicated teams that monitor the applicable standards and draft new internal standards to comply with any changes in the accounting and regulatory framework.

Each entity in the consolidation scope of the Group prepares its own accounting and management statements on a monthly basis. This information is then consolidated each month at Group level and published for the markets on a quarterly basis. Data reported are subject to analytical reviews and consistency checks performed by Finance Divisions or delegated to financial shared service centers acting under their responsibility and sent to the Group Finance Division. The Group Finance Division forwards the consolidated financial statements, Management Reports and regulatory statements to General Management and any interested third parties.

In practice, procedures have been tailored to the growing complexity of products and regulations. Moreover, specific adaptation action plans can be implemented where necessary.

Accounting data are compiled independently of the front offices and the sales teams.

The quality and objectivity of the accounting and management data are ensured by the separation of sales functions and all the functions of operational processing and follow-up of the operations: back offices and middle offices integrated into Resources Division and teams in charge of result production integrated into Finance Division. These teams carry out a series of controls defined by Group procedures on financial and accounting data, in particular:

verification of the economic justification of all information reported;

reconciliation of accounting and management data, using specific procedures, respecting the specified deadlines;

for market activities, reconciliation between the accounting result, produced by the Finance Division and the economic result, produced by a dedicated expert department in the Risk Division.

Given the increasing complexity of the Group’s financial activities and organization, staff training and IT tools are regularly upgraded to ensure that the production and verification of accounting and management data are effective and reliable.

In practice, the internal control procedures implemented in the Group’s businesses are designed to guarantee the quality of financial and accounting information, and notably to:

ensure that the transactions entered in the Group’s accounts are exhaustive and accurate;

validate the valuation methods used for certain transactions;

ensure that transactions are correctly assigned to the corresponding fiscal period and recorded in the accounts in accordance with the applicable accounting regulations, and that the accounting aggregates used to prepare the Group financial statements are compliant with the regulations in force;

ensure the inclusion of all entities that must be consolidated in accordance with Group regulations;

check that the operational risks associated with the production and transmission of accounting data through the IT system are correctly controlled, that the necessary adjustments are accurately performed, that the reconciliation of accounting and management data is satisfactory, and that the flows of cash payments and other items generated by transactions are exhaustive and adequate.

The Finance Department of each subsidiary checks the accuracy and consistency of the financial statements with respect to the relevant accounting frameworks (local standards and IFRS for subsidiaries, as well as French standards for branches). It performs checks to guarantee the accuracy of the information disclosed.

The data received for consolidation from each subsidiary are drawn from corporate accounting data by the subsidiaries after they have been locally brought into compliance with Group accounting principles.

Each subsidiary must be able to explain the transition from the Company financial statements to the financial statements reported through the consolidation tool.

The Finance Departments of the Business Units/Services Units have a dedicated department for financial management and control.

Financial shared service centers perform the first-level controls necessary to ensure the reliability of accounting, tax and regulatory information on the financial statements they produce in accordance with local and IFRS standards and notably data quality and consistency checks (equity, securities, foreign exchange, financial aggregates from the balance sheet and income statement, deviations from standards), justification and certification of the financial statements under their responsibility, intercompany reconciliation of the financial statements, regulatory statement checks and verification of evidence of tax charges and balances (current, deferred and duties).

These controls are declared as part of the managerial supervision and Group accounting certification processes.

These controls allow the Shared Services Centers to provide all necessary information to the Finance Departments of Business Units/Services Units and the Group Finance and Accounting Division to ensure the reliability and consistency of the accounts prepared.

Once the financial statements prepared by the entities have been restated according to Group standards, they are entered into a central database and processed to produce the consolidated statements.

The service in charge of consolidation in the Group Accounting Officer Department checks that the consolidation scope complies with the applicable accounting standards and performs multiple checks on data received for consolidation purposes. These checks include:

confirmation that the data collected are properly aggregated;

verification of recurring and non-recurring consolidation entries;

exhaustive treatment of critical points in the consolidation process;

treatment of any residual differences in reciprocal or intercompany statements.

Last, this service ensures that the overall consolidation process has been conducted properly by performing analytical reviews of the summary data and verifying the consistency of the main aggregates of the financial statements. Changes in shareholders’ equity, goodwill, provisions and any deferred taxes consolidated in the fiscal year are also analyzed.

A team in this department is in charge of managing and coordinating the quarterly Group accounting certification framework to certify first-level controls on a quarterly basis (internal control certification).

The Group Finance Division has also a dedicated team, it which is responsible for ensuring second-level permanent controls on all Finance processes and for implementing the framework within the Group. Its mission is to ensure the effectiveness, quality and relevance of the Level 1 control framework by assessing it through process or activity reviews, testing controls and quarterly certifications. The team, reporting directly to the Group Finance Division, also reports to the Head of Permanent & Internal Control Division of Societe Generale Group.

The operational staff monitor their activity via a permanent supervision process under the direct responsibility of their management teams, repeatedly verifying the quality of the controls carried out on accounting data and the associated accounting treatment.

Internal Audit and the General Inspection define their audits and inspections using a risk-based approach and define an annual work program (Inspection and Audit plan schedule - plan de tournée). As part of their assignments, teams may verify the quality of the control environment contributing to the quality of the accounting and management data produced by the audited entities. They may check a certain number of accounts and assess the reconciliations between accounting and management data, as well as the quality of the permanent supervision procedures for the production and control of accounting data. They also assess the performance of IT tools and the accuracy of manual processing.

The department in charge of auditing the Group’s Central Divisions is responsible for auditing the Group Finance Division. Within that department, a distinct team, placed under the responsibility of a dedicated Audit Business Correspondent monitors and animates audit work related to accounting and financial matters on a Group-wide basis. The team provides expertise in identifying the Group’s main accounting risks and develops training sessions and methodologies to help share expertise in the auditing of accounting risks.

Audit missions pertaining to accounting matters are carried out by that team, for the subjects considered as the most material for the accuracy of the Group’s accounting information, as well as by Audit Departments based in the Group’s entities.

Based on their findings, these teams issue recommendations to the parties involved in the production and control of accounting, financial and management data. Departments being assigned these recommendations are responsible for their implementation. A monitoring is performed by IGAD.







This section provides details on capital resources, regulatory requirements and the composition of the leverage ratio.


Evolution of CET1 capital

+ EUR 2.5 bn*

(between 2020 and 2021)


Evolution of total regulatory capital

+ EUR 0.9 bn*


CET1 ratio at end 2021

13.7 %*

* Figures taking into account the IFRS 9 phasing (fully-loaded CET1 ratio of 13.55% at end 2021, the phasing effect being +16 bps)





Since January 2014, Societe Generale has been applying the Basel 3 regulations implemented in the European Union through a regulation and a directive (CRR and CRD4 respectively).

The general framework defined by Basel 3 is structured around three pillars:

Pillar 1 sets the minimum solvency, leverage and liquidity requirements and defines the rules that banks must use to measure risks and calculate the related capital requirements, according to standard or more advanced methods;

Pillar 2 concerns the discretionary supervision implemented by the competent authority, which allows them – based on a constant dialogue with supervised credit institutions – to assess the adequacy of capital requirements as calculated under Pillar 1, and to calibrate additional capital requirements taking into account all the risks to which these institutions are exposed;

Pillar 3 encourages market discipline by developing a set of qualitative or quantitative disclosure requirements which will allow market participants to better assess a given institution’s capital, risk exposure, risk assessment processes and, accordingly, capital adequacy.

Several amendments to European regulatory standards were adopted in May 2019 (CRR2/CRD5). The majority of the provisions came into force in June 2021.

The amendments include:

NSFR: The text introduces the regulatory requirements for the NSFR ratio. A ratio of 100% must now be respected from June 2021;

Leverage ratio: the minimum requirement of 3% to which will be added, from 2023, 50% of the buffer required as a systemic institution;

Derivatives counterparty risk (SA-CCR): the “SA-CCR” method is the Basel method replacing the “CEM” method for determining prudential exposure to derivatives in a standard approach;

Large Risks: the main change is the calculation of the regulatory limit (25%) on Tier 1 (instead of total own funds), as well as the introduction of a specific cross-limit on systemic institutions (15%);

TLAC: The ratio requirement for G-SIBs is introduced in CRR. In accordance with the Basel text, G-SIBs must respect an amount of own funds and eligible debt equal to the highest between 16%+weighted risk capital buffers and 6% of leverage exposure in 2019, with the ratio increasing to 18%+risk-weighted buffers and 6.75% leverage in 2022.

With regard to the implementation of the market risk reform (FRTB), after the publication of the first revised standard in January 2016 and of the consultation in March 2018 on this subject, the Basel Committee published in January 2019 its final text: BCBS457. In March 2020, the Basel Committee announced a one-year delay in the implementation of FRTB (1 January 2023 instead of 1 January 2022 as originally planned in the January 2019 text).

The European FRTB calendar would be as follows:

regarding reporting requirements:


the Standardised Approach (SA) has been effective since Q3 2021,


for the Internal Model Approach (IMA), reporting should start three years after the publication in the Official Journal of the European Union (OJEU) of three technical standards (RTS) of the EBA, which are expected for Q1 2022;

the capital requirements for FRTB: a two-year postponement (i.e. to 1 January 2027) could be applied in the event of unlevel playing field with the United States.

In December 2017, the Group of Central Bank Governors and Heads of Supervision (GHOS), the Basel Committee’s oversight body, endorsed the regulatory reforms aiming to complete Basel 3.

A first version of the transposition text was published by the European Commission on 27 October 2021 (“CRR3 - CRD6”) and will serve as support for the European Trialogue. The text will then have to be voted on by Parliament to become applicable.

These new rules, which were to take effect from 2022, have been postponed to January 2025 with an overall output floor: the risk-weighted assets (RWA) will be floored to a percentage of the standard method (credit, market and operational). The output floor level will increase gradually, from 50% in 2025 to 72.5% in 2030.

In the face of the health crisis and of its economic and financial consequences, a number of measures have been taken by the supervisory and regulatory authorities in 2020. Some of them are still in force. For example, the ECB announced the possibility to operate below the conservation cushion (CCB), as well as the countercyclical (CCyB) and the Systemic Risk Buffer (0% in France) ones.

Besides, the European Parliament and the Council reached an agreement through the CRR “quick fix” regulation, implemented as of 30 June 2020 part of whose provisions consisted in anticipating the implementation of CRR2/CRD5 measures that improve banks’ CET1 capital. The “quick fix” has postponed the implementation of the leverage buffer (0.5% for the Group) from 1 January 2022 to 1 January 2023 to be in line with the recommendation of the Basel Committee.

In 2021, the level of additional capital requirements in respect of Pillar 2 (P2R or “Pillar 2 Requirement”), effective since 1 March 2019, remained at 1.75%. In 2022, the European Central Bank notified the level of requirement in respect of P2R (Pillar 2 Requirement) for Societe Generale, which will apply from 1 March 2022. This level stands at 2.12%, including the additional requirement regarding Pillar 2 prudential expectations on the provisioning of non-performing loans granted before 26 April 2019.

Detailed information on the G-SIB requirements and other prudential information are available on the Group website, www.societe generale.com.

Throughout 2021, Societe Generale complied with the minimum ratio requirements applicable to its activities.




As part of its capital management, the Group (under the managment of the Finance Division and the supervision of Risk Division) ensures that its solvency level is always compatible with the following objectives:

maintaining its financial solidity and respecting the Risk Appetite;

preserving its financial flexibility to finance organic growth and growth through acquisitions;

allocating adequate capital to the various businesses, according to the Group’s strategic objectives;

maintaining the Group’s resilience in the event of stress scenarios;

meeting the expectations of its various stakeholders: supervisors, debt and equity investors, rating agencies, and shareholders.

The Group determines its internal solvency targets in accordance with these objectives and regulatory thresholds.

The Group has an internal process for assessing the adequacy of its capital that measures and explains the evolution of the Group’s capital ratios over time, taking into account any future regulatory constraints and changes in the scope.

This process is based on a selection of key metrics that are relevant to the Group in terms of risk and capital measurement, such as CET1, Tier 1 and Total Capital ratios. These regulatory indicators are supplemented by an assessment of the coverage of internal capital needs by available CET1 capital, thus confirming the relevance of the targets set in the risk appetite. Besides, this assessment takes into account the constraints arising from the other metrics of the risk appetite, such as rating, MREL and TLAC or leverage ratio.

All of these indicators are measured on a forward-looking basis in relation to their target on a quarterly or even monthly basis for the current year. During the preparation of the financial plan, they are also assessed on an annual basis over a minimum of three-year horizon according to a baseline and adverse scenarios, in order to demonstrate the resilience of the bank’s business model against adverse macroeconomic and financial environments. Capital adequacy is continuously monitored by the Executive Management and by the Board of Directors as part of the Group’s corporate governance process and is reviewed in depth during the preparation of the financial plan. It ensures that the bank always complies with its financial target with a buffer above the “Maximum Distributable Amount” (MDA) threshold.

Besides, the Group maintains a balanced capital allocation among its three strategic core businesses:

French Retail Banking;

International Retail Banking and Financial Services;

Global Banking and Investor Solutions.

Each of the Group’s core businesses accounts for around a third of total Risk-Weighted Assets (RWA), with a predominance of credit risk (84% of total Group RWA, including counterparty credit risk).

As at 31 December 2021, Group RWA were up 3% to EUR 363 billion, compared with EUR 352 billion at end December 2020.

The evolution of the business lines’ RWA is at the heart of the operational management of the Group’s capital trajectory based on a detailed understanding of the vectors of variations. Where appropriate, the General Management may decide, upon a proposal from the Finance Division, to implement managerial actions to increase or reduce the share of the business lines, for instance by validating the execution of synthetic securitisation or of disposals of performing or non-performing portfolios.




The Group’s prudential reporting scope includes all fully consolidated entities, with the exception of insurance entities, which are subject to separate capital supervision.

All regulated entities of the Group comply with their prudential commitments on an individual basis.

Non-regulated entities outside of the scope of prudential consolidation are subject to periodic reviews, at least annually.


The following table provides the main differences between the accounting scope (consolidated Group) and the prudential scope (Banking Regulation requirements).

Type of entity

Accounting treatment

Prudential treatment

Entities with a finance activity

Full consolidation

Full consolidation

Entities with an Insurance activity

Full consolidation

Equity method

Holdings with a finance activity by nature

Equity method

Equity method

Joint ventures with a finance activity by nature

Equity method

Proportional consolidation


The following table provides a reconciliation between the consolidated balance sheet and the accounting balance sheet within the prudential scope. The amounts presented are accounting data, not a measure of RWA, EAD or prudential capital. Prudential filters related to entities and holdings not associated with an insurance activity are grouped together on account of their non-material weight (< 0.1%).

Return on assets (i.e. net income divided by the balance sheet total as per the consolidated financial statements) for Societe Generale stood at 0.39% in 2021 and -0.02% in 2020. On a prudential basis, this ratio was 0.43% in 2021 and -0.02% in 2020, calculated by dividing the Group net income by the balance sheet total for prudential purposes (data in the table below).


ASSETS at 31.12.2021

(In EURm)

Balance sheet as

in published





linked to




linked to



Balance sheet

under regulatory

scope of


Reference to

table 14 (CC1)

Cash, due from banks






Financial assets at fair value through profit or loss






Hedging derivatives






Financial assets at fair value through other comprehensive income






Securities at amortised cost






Due from banks at amortised cost






o.w. subordinated loans to credit institutions






Customer loans at amortised cost






Revaluation differences on portfilios hedged against interest rate risk






Investment of insurance activities






Tax assets






o.w. deferred tax assets that rely on future profitability excluding those arising from temporary differences






o.w. deferred tax assets arising from temporary differences






Other assets






o.w. defined-benefit pension fund assets






Non-current assets held for sale






Investments accounted for using the equity method






Tangible and intangible assets






o.w. intangible assets exclusive of leasing rights



















Restatement of entities excluded from the prudential scope and reconsolidation of intra-group transactions relating to these entities.


LIABILITIES at 31.12.2021

(In EURm)

Balance sheet as

in published





linked to




linked to



Balance sheet

under regulatory

scope of


Reference to

table 14 (CC1)

Due to central banks






Financial liabilities at fair value through profit or loss






Hedging derivatives






Debt securities issued 






Due to banks






Customer deposits






Revaluation differences on portfolios hedged against interest rate risk






Tax liabilities






Other Liabilities






Non-current liabilities held for sale